<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Check Express, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
(2) Aggregate number of securities to which transaction applies:
5,060,982
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): $1.20 cash
(4) Proposed maximum aggregate value of transaction: $6,073,178.40
(5) Total fee paid: $1,214.64
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[TO BE PLACED ON CHECK EXPRESS LETTERHEAD]
January 8, 1996
Dear Fellow Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Check Express, Inc. to be held on February 1, 1996 to vote on the merger of
Ace Acquisition Corporation with and into the Company (the "Merger"), pursuant
to an Agreement and Plan of Merger dated October 13, 1995 (and amended
December 20, 1995) (as amended, the "Merger Agreement"). Ace Acquisition
Corporation is a wholly owned subsidiary of Ace Cash Express, Inc., the largest
operator of check cashing stores in the country, and has recently been formed
for the purpose of consummating the Merger.
The Merger Agreement provides for the payment of $1.20 in cash, without
interest, for each share of the Company's Common Stock (other than any shares
as to which dissenters' rights have been properly demanded under Florida law),
if the Merger is consummated. As the result of the Merger, the Company will
become a wholly owned subsidiary of Ace Cash Express, Inc. Upon consummation
of the Merger, current shareholders of the Company will cease to have any
continuing interest in the Company, other than the right to payment in
accordance with the terms of the Merger Agreement. Details of the Merger
Agreement and the terms of the proposed Merger and other important information
appear in the accompanying Proxy Statement.
Your Board of Directors has unanimously approved and adopted the
Merger Agreement and approved the Merger, believes that consummation of this
Merger would be fair to and in the best interests of Check Express
shareholders, and unanimously recommends that you vote FOR approval and
adoption of the Merger Agreement and approval of the Merger. In addition,
certain principal shareholders of the Company, including certain directors and
officers of the Company, owning in the aggregate approximately 32.8% of the
Company's outstanding Common Stock, have already agreed to vote their shares in
favor of the Merger.
Assuming a quorum is present, the Merger will be approved only if
shareholders owning at least a majority of all of the Company's outstanding
Common Stock vote in favor of the Merger. Abstentions, broker non-votes and
shares not represented at the meeting all will have the effect of "no" votes or
as votes in opposition to the Merger. Accordingly, it is extremely important
that your shares be represented at the meeting.
In view of the importance of the action to be taken at the meeting, we
urge you to read the enclosed material carefully, and, whether or not you plan
to attend the meeting, we request that you complete, sign, date and mail the
enclosed proxy at your earliest convenience in the enclosed envelope.
If the Merger is consummated, the holders of record of the Company's
common stock who comply with the requirements of Sections 607.1301, 607.1302
and 607.1320 of the Florida Business Corporation Act, which are attached as
Appendix C to the accompanying Proxy Statement, may dissent from the Merger. A
vote in favor of the Merger will constitute a waiver of your dissenters' rights.
To exercise your dissenters' rights you must give notice to the Company prior
to the Special Meeting. See "RIGHTS OF DISSENTING SHAREHOLDERS" in the
accompanying Proxy
<PAGE> 3
Statement for a description of the procedures that must be followed to perfect
dissenter's rights under the Florida Business Corporation Act.
Please review the Proxy Statement and send in your proxy, indicating
your vote on the Merger, as soon as possible. We request that you give this
matter prompt attention so that the Merger can be consummated as scheduled.
We, or an exchange agent, will communicate with you later about the actual
exchange of your stock certificates for your cash payment. You do not need to
do anything now, other than complete, sign, date and return your proxy card in
the accompanying envelope.
Sincerely,
/s/ Larry F. Lang
-----------------
Larry F. Lang,
Chairman and CEO
PLEASE DO NOT SEND IN ANY OF YOUR CHECK EXPRESS, INC. STOCK CERTIFICATES AT
THIS TIME.
<PAGE> 4
CHECK EXPRESS, INC.
101 East Kennedy Boulevard, Suite 3800
Tampa, Florida 33602
(813) 223-3338
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
FEBRUARY 1, 1996
January 8, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Special Meeting") of Check Express, Inc. (the "Company") will be held at the
Hyatt Regency Tampa at Tampa City Center, Two Tampa City Center, 211 North
Tampa Street, Tampa, Florida, on Thursday, February 1, 1996 at 10:00 a.m.,
Tampa, Florida time, for the following purposes:
(1) To consider and approve and adopt the Agreement and Plan
of Merger dated October 13, 1995 and amended December 20, 1995 (as
amended, the "Merger Agreement"), by and among the Company, Ace
Acquisition Corporation ("Acquisition"), a Florida corporation, and
Ace Cash Express, Inc. ("Ace"), a Texas corporation, and consider and
approve the merger (the "Merger") of Acquisition with and into the
Company, pursuant to which (a) the Company will be the surviving
corporation and a wholly owned subsidiary of Ace, and (b) each share
of the Company's $.004 par value common stock ("Common Stock") (other
than shares held by shareholders who properly exercise dissenters'
rights under Florida law) will be converted into the right to receive
$1.20 in cash, without interest (the "Merger Consideration"), to be
paid to holders of shares entitled to receive such payment following
the consummation of the Merger, all as more fully described in the
accompanying Proxy Statement to which a copy of the Merger Agreement
is attached as Appendix A;
(2) To consider a proposal to adjourn the Special Meeting if
necessary to permit further solicitation of Proxies in the event there
are not sufficient votes at the time of the Special Meeting to approve
and adopt the Merger Agreement and approve the Merger; and
(3) To transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof.
Upon consummation of the Merger, current shareholders of the Company will cease
to have any continuing interest in the Company, other than the right to payment
of the Merger Consideration in accordance with the terms of the Merger
Agreement. See "THE MERGER" and the Agreement and Plan of Merger, dated October
13, 1995, and amended December 20, 1995 by and among the Company, Acquisition
and Ace, which is attached as Appendix A to the accompanying Proxy Statement
(as amended, the "Merger Agreement").
In addition to the conversion of the Common Stock, pursuant to the
Merger Agreement, each option to acquire shares of Common Stock (the "Options")
shall be canceled by agreement with the holder thereof, who shall thereupon be
entitled to receive cash consideration in the amount of (1) the difference
between the Merger Consideration per share and the exercise price per share
under the Option, multiplied by (2) the number of shares covered by the Option.
The Company has agreed to use its best efforts to cancel all other rights to
acquire shares of Common Stock (the "Warrants") prior to consummation of the
Merger, and the cancellation of all Options and Warrants is a condition of the
Merger. The Company also has issued Units, with each Unit comprising four
shares of Common Stock and a warrant to purchase two additional shares of
Common Stock at an exercise price of $3.00 per share (the "Units"). Under the
Merger Agreement, the Common Stock portion of the Units will be treated the
same as the rest of the Company's outstanding Common Stock, and the warrant
portion of the Units will be treated as Warrants. See "THE MERGER --
Outstanding Options and Warrants" in the accompanying Proxy Statement.
The Company's Board of Directors has fixed the close of business on
Monday, January 8, 1996 as the record date for determining the shareholders
entitled to notice of and to vote at the Special Meeting (the "Record
<PAGE> 5
Date"). Shareholders of record as of the close of business on the Record Date
are entitled to notice of and to vote at the Special Meeting or any adjournment
thereof. A list of shareholders of the Company entitled to notice of and to
vote at the Special Meeting will be available for inspection by any shareholder
for any purpose related to the Special Meeting during regular business hours at
the offices of the Company at 101 East Kennedy Boulevard, Suite 3800, Tampa,
Florida 33602, beginning on the date 10 days prior and continuing through the
date of the Special Meeting.
Ace has entered into a Shareholder Agreement and Irrevocable Proxy
("Shareholder Agreement") with each of certain principal shareholders of the
Company, including certain directors and officers of the Company, pursuant to
which Ace has the power to vote an aggregate of 1,657,606 shares of Common
Stock to approve the Merger, which represents approximately 32.8% of the
outstanding Common Stock. In addition, the Company has agreed in the Merger
Agreement to use its best efforts to obtain the approval and adoption of the
Merger by shareholders of the Company holding at least a majority of the shares
of Common Stock entitled to vote at the Special Meeting.
Any holder of shares of Common Stock as of the Record Date is entitled
to assert dissenters' rights with respect to any portion or all of such shares
("Dissenting Shares") pursuant to Sections 607.1301, 607.1302 and 607.1320 of
the Florida Business Corporation Act (the "Dissenters' Rights Statutes"). If
the Merger is consummated, holders of shares of Common Stock who do not vote in
favor of approval and adoption of the Merger Agreement and approval of the
Merger and who otherwise comply with the requirements of the Dissenters' Rights
Statutes will be entitled to receive, in lieu of the Merger Consideration, the
"fair value" of their Dissenting Shares, as determined pursuant to the
Dissenters' Rights Statutes. A copy of the Dissenters' Rights Statutes is
attached as Appendix C to the accompanying Proxy Statement. See "RIGHTS OF
DISSENTING SHAREHOLDERS" in the accompanying Proxy Statement for a description
of the procedures which must be followed to perfect dissenters' rights under
the Florida Business Corporation Act. Pursuant to the Shareholder Agreements,
the holders of 32.8% of the outstanding Common Stock have agreed with Ace not
to take any action or actions to perfect any dissenters' rights they may have
as a result of the Merger under the Dissenters' Rights Statutes or otherwise.
By Order of the Board of Directors,
/s/ Larry F. Lang
Larry F. Lang, Chairman and CEO
Tampa, Florida
January 8, 1996
The Merger will be consummated if, and only if, a majority of all outstanding
shares vote in favor of the Merger. Accordingly, it is important that your
shares be represented at the Special Meeting and be voted, whether or not you
are able to attend personally. If you will be unable to attend the Special
Meeting, we ask you to promptly complete, sign, date and mail the enclosed
Proxy in the enclosed envelope, which requires no postage. If you should be
present at the Special Meeting and desire to vote in person, you may withdraw
your Proxy at that time.
<PAGE> 6
CHECK EXPRESS, INC.
101 East Kennedy Boulevard, Suite 3800
Tampa, Florida 33602
(813) 223-3338
------------------------------
PROXY STATEMENT
------------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
FEBRUARY 1, 1996
------------------------------
INTRODUCTION AND GENERAL INFORMATION
This Proxy Statement is being furnished to the shareholders of Check
Express, Inc. (the "Company") in connection with the solicitation by the
Company's Board of Directors (the "Company Board") of proxies in the form
accompanying this Proxy Statement ("Proxies") for use in connection with the
Special Meeting of Shareholders to be held on Thursday, February 1, 1996 at the
Hyatt Regency Tampa at Tampa City Center, Two Tampa City Center, 211 North
Tampa Street, Tampa, Florida, at 10:00 a.m., Tampa, Florida time, or any
adjournment or postponement thereof (the "Special Meeting"). This Proxy
Statement and accompanying Notice of Special Meeting and form of Proxy are
first being sent to the shareholders of the Company on or about January 10,
1996.
This Proxy Statement relates to the proposed merger of Ace Acquisition
Corporation ("Acquisition"), a Florida corporation and wholly owned subsidiary
of Ace Cash Express, Inc. ("Ace"), a Texas corporation, with and into the
Company, pursuant to which (a) the Company will be the surviving corporation
and a wholly owned subsidiary of Ace, and (b) each share of the Company's $.004
par value common stock ("Common Stock") (other than shares held by shareholders
who properly exercise dissenters' rights under Florida law) will be converted
into the right to receive $1.20 in cash, without interest (the "Merger"). Upon
consummation of the Merger, current shareholders of the Company will cease to
have any continuing interest in the Company, other than the right to payment of
the Merger Consideration in accordance with the terms of the Merger Agreement.
In addition to the conversion of the Common Stock, pursuant to the
Merger Agreement, each option to acquire shares of Common Stock (the "Options")
shall be canceled by agreement with the holder thereof, who shall thereupon be
entitled to receive cash consideration in the amount of (1) the difference
between the Merger Consideration per share and the exercise price per share
under the option, multiplied by (2) the number of shares covered by the Option.
The Company has agreed to use its best efforts to cancel all other rights to
acquire shares of Common Stock (the "Warrants") prior to consummation of the
Merger, and the cancellation of all Options and Warrants is a condition of the
Merger. The Company also has issued Units, with each Unit comprising four
shares of Common Stock and a warrant to purchase two additional shares of
Common Stock at an exercise price of $3.00 per share (the "Units"). Under the
Merger Agreement, the Common Stock portion of the Units will be treated the
same as the rest of the Company's outstanding Common Stock and the warrant
portion of the Units will be treated as Warrants. See "THE MERGER --
Outstanding Options and Warrants" and the Agreement and Plan of Merger, dated
October 13, 1995 and amended December 20, 1995, by and among the Company,
Acquisition and Ace, which is attached as Appendix A hereto (as amended, the
"Merger Agreement").
The Company Board has fixed the close of business on Monday, January
8, 1996 as the record date for determining the shareholders entitled to notice
of and to vote at the Special Meeting (the "Record Date"). At the close of
business on the Record Date, there were 5,060,982 shares of Common Stock
outstanding held by approximately 176 holders of record. Holders of record of
Common Stock are entitled to one vote per share in connection with the matters
to be presented at the Special Meeting. All votes will be
<PAGE> 7
tabulated by representatives of the Company who will serve as inspectors of
election. The attendance, in person or by proxy, of the holders of a majority
of the issued and outstanding shares of Common Stock entitled to vote at the
Special Meeting is necessary to constitute a quorum to transact business.
Assuming a quorum is present, the Merger will be approved if a majority of all
the votes entitled to be cast are cast in favor of the Merger. Accordingly,
abstentions, broker non-votes and shares not represented at the Special Meeting
all will have the effect of "no" votes or as votes in opposition to the Merger.
Ace has entered into a Shareholder Agreement and Irrevocable Proxy
("Shareholder Agreement") with each of certain principal shareholders of the
Company, including certain directors and officers of the Company, pursuant to
which Ace has the power to vote an aggregate of 1,657,606 shares of Common
Stock to approve the Merger, which represents approximately 32.8% of the
outstanding Common Stock. In addition, the Company has agreed in the Merger
Agreement to use its best efforts to obtain the approval and adoption of the
Merger by shareholders of the Company holding at least a majority of the
shares of Common Stock entitled to vote at the Special Meeting. The Merger will
be consummated if, and only if, a majority of all outstanding shares of Common
Stock vote in favor of the Merger. Accordingly, it is important that your
shares be represented at the Special Meeting and be voted, whether or not you
are able to attend personally.
The accompanying Proxy is solicited by the Company Board to be voted
at the Special Meeting. If the accompanying Proxy is completed, signed and
returned, then unless such Proxy is subsequently revoked prior to or at the
Special Meeting, the shares represented thereby will be voted at the Special
Meeting as specified in the Proxy. All executed but unmarked Proxies will be
voted FOR approval and adoption of the Merger Agreement and approval of the
Merger. In addition, in the event there are not sufficient votes at the time
of the Special Meeting to approve and adopt the Merger Agreement and approve
the Merger, then there will be put forth a proposal to adjourn the Special
Meeting to permit further solicitation of Proxies, and all executed but
unmarked Proxies will be voted FOR approval of such proposal.
Any Proxy given pursuant to this solicitation may be revoked by the
person giving it at any time prior to the voting thereof by giving written
notice of revocation to the Secretary of the Company at its principal executive
offices at any time before the Proxy is voted, by executing and delivering a
later-dated proxy or by attending the Special Meeting and voting his or her
shares in person. Any written notice revoking a proxy should be sent to the
Company at its principal executive offices, 101 East Kennedy Boulevard, Suite
3800, Tampa, Florida 33602. No such notice of revocation or later-dated proxy,
however, will be effective unless and until received by the Company at or prior
to the Special Meeting.
Management of the Company does not intend to present any business at
the Special Meeting for the vote of shareholders other than the approval and
adoption of the Merger Agreement and approval of the Merger, and it has no
information that others will do so. If other matters requiring the vote of
shareholders properly come before the Special Meeting, the persons named in the
accompanying form of Proxy and acting thereunder will have discretion to vote
on such matters in accordance with their judgment.
The Special Meeting may be adjourned, and additional proxies
solicited, if at the time of the Special Meeting the number of proxies
necessary to approve and adopt the Merger Agreement and approve the Merger has
not been obtained. In such event, the persons named as Proxies in the enclosed
form of Proxy intend to vote in favor of such adjournment those Proxies which
they are entitled to vote in favor of such approval and adoption. Any
adjournment of the Special Meeting may be approved by the affirmative vote of
the holders of a majority of the Common Stock represented at the Special
Meeting, in person or proxy, even if less than a quorum.
The cost of preparing and mailing these materials and otherwise
soliciting Proxies will be borne entirely by the Company. Solicitation of
Proxies may be made by telephone or in person with some shareholders by regular
employees of the Company. In addition, arrangements will be made with
brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation material for the Special Meeting to beneficial owners and the
Company will reimburse them for their expense in so doing.
IN CONNECTION WITH THE MATTERS DESCRIBED HEREIN, NO PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
ii
<PAGE> 8
COMPANY. THIS PROXY STATEMENT DOES NOT CONSTITUTE A SOLICITATION OF A PROXY IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION
IN SUCH JURISDICTION.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Information in this Proxy Statement regarding the Company has been
furnished by the Company or its representatives, and information regarding Ace
and Acquisition has been furnished by Ace or its representatives.
AVAILABLE INFORMATION
The Company and Ace are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission"). These materials can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, or at the following Regional Offices of the Commission:
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can also be obtained from the Commission at
prescribed rates. Written requests for such material should be addressed to
the Public Reference Section, Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Common Stock is listed on the
Nasdaq Small Caps Market and Ace's common stock is listed on the Nasdaq
National Market, and such reports, proxy statements, and other information
concerning the Company and Ace can be inspected, and copies can be obtained, at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
PLEASE DO NOT SEND IN ANY OF YOUR CHECK EXPRESS, INC. STOCK CERTIFICATES AT
THIS TIME.
The date of this Proxy Statement is January 8, 1996.
iii
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION AND GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reasons for the Merger; Recommendations of the Board of Directors . . . . . . . . . . . . . . . . . 16
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Provisions of the Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Effect of the Merger on the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Source and Amount of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Outstanding Options and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Deregistration of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Regulatory Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
RIGHTS OF DISSENTING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
CERTAIN INFORMATION REGARDING ACE AND ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
BUSINESS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
MARKET PRICES OF THE COMMON STOCK AND UNITS AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . 48
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . 63
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
APPENDIX A: AGREEMENT AND PLAN OF MERGER, AND AMENDMENT THERETO
APPENDIX B: OPINION OF FINANCIAL ADVISOR
APPENDIX C: PROVISIONS OF FLORIDA BUSINESS CORPORATION ACT
REGARDING DISSENTERS' RIGHTS
APPENDIX D: AGREEMENT AND RELEASE ("LANG SEVERANCE AGREEMENT")
APPENDIX E: FORM OF SHAREHOLDER AGREEMENT AND IRREVOCABLE PROXY
</TABLE>
iv
<PAGE> 10
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN THIS
PROXY STATEMENT AND THE APPENDICES HERETO. IT IS NOT INTENDED TO BE A COMPLETE
STATEMENT OF ALL MATERIAL FEATURES OF THE MERGER AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN
THIS PROXY STATEMENT, THE APPENDICES HERETO AND THE DOCUMENTS REFERRED TO
HEREIN AND THEREIN. SHAREHOLDERS ARE URGED TO READ THIS PROXY STATEMENT AND
THE APPENDICES HERETO IN THEIR ENTIRETY. CERTAIN CAPITALIZED TERMS USED IN
THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS PROXY STATEMENT.
THE SPECIAL MEETING
Time, Date and Place of the Special Meeting
The Special Meeting will be held at 10:00 a.m., Tampa, Florida time, on
Thursday, February 1, 1996, at the Hyatt Regency Tampa at Tampa City Center,
Two Tampa City Center, 211 North Tampa Street, Tampa, Florida.
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider, approve and adopt
the Merger Agreement and approve the Merger of Acquisition with and into the
Company, pursuant to which (a) the Company will be the surviving corporation
and a wholly owned subsidiary of Ace and (b) each share of Common Stock (other
than shares held by shareholders who properly exercise dissenters' rights under
Florida law) will be converted into the right to receive $1.20 in cash, without
interest. Upon consummation of the Merger, current shareholders of the Company
will cease to have any continuing interest in the Company, other than the right
to payment of the Merger Consideration in accordance with the terms of the
Merger Agreement. See "THE MERGER -- General."
In addition, in the event there are not sufficient votes at the time of
the Special Meeting to approve and adopt the Merger Agreement and approve the
Merger, then there will be put forth a proposal to adjourn the Special Meeting
to permit further solicitation of Proxies, and all executed but unmarked
Proxies will be voted FOR approval of such proposal.
Record Date
Only holders of record of shares of the Common Stock on January 8, 1996
(the "Record Date") are entitled to notice of, and to vote at, the Special
Meeting.
Shares Outstanding and Holders of Record on the Record Date
At the close of business on the Record Date, there were 5,060,982 shares
of Common Stock outstanding held by approximately 176 holders of record.
Quorum Required
The presence (in person or by proxy) of the holders of record of a
majority of all of the issued and outstanding shares of Common Stock, which are
entitled to vote at the Special Meeting, will be required to constitute a
quorum. Abstentions and broker non-votes are each included in the
determination of the number of shares present at the Special Meeting.
Vote Required
Assuming a quorum is present, the Merger Agreement will be approved and
adopted and the Merger will be approved if, but only if, a majority of all the
votes entitled to be cast at the Special Meeting (i.e., a majority of all
outstanding shares of Common Stock) are cast in favor of the Merger.
Accordingly, abstentions, broker non-votes and shares not represented at the
Special Meeting all will have the effect of "no" votes or as votes in
opposition to the Merger. The Company has agreed in the Merger Agreement to
use its best efforts to obtain the
<PAGE> 11
approval and adoption of the Merger by shareholders of the Company holding at
least a majority of the shares of Common Stock entitled to vote at the Special
Meeting. Pursuant to the Shareholder Agreements, Ace has the power to vote at
the Special Meeting an aggregate of 1,657,606 shares of Common Stock to approve
the Merger, which represents approximately 32.8% of the outstanding Common
Stock on the Record Date.
Revocability of Proxies
Any Proxy given pursuant to this solicitation may be revoked by the
person giving it at any time prior to the voting thereof by giving written
notice of revocation to the Secretary of the Company at its principal executive
offices at any time before the Proxy is voted, by executing and delivering a
later-dated Proxy or by attending the Special Meeting and voting his or her
shares in person. Any written notice revoking a Proxy should be sent to the
Company at its principal executive offices, 101 East Kennedy Boulevard, Suite
3800, Tampa, Florida 33602, Attention: Corporate Secretary. No such notice of
revocation or later-dated Proxy, however, will be effective unless and until
received by the Company at or prior to the Special Meeting.
Accounting Treatment
The Merger will be accounted for using the purchase method of accounting
under generally accepted accounting principles. See "THE MERGER -- Accounting
Treatment."
Dissenters' Rights
Any holder of shares of Common Stock as of the Record Date is entitled
to assert dissenters' rights with respect to any portion of all of such shares
("Dissenting Shares") pursuant to Sections 607.1301, 607.1302 and 607.1320 of
the Florida Business Corporation Act (the "Dissenters' Rights Statutes"). If
the Merger is consummated, holders of shares of Common Stock who do not vote in
favor of approval and adoption of the Merger Agreement and approval of the
Merger and who otherwise comply with the requirements of Florida law will be
entitled to receive, in lieu of the Merger Consideration, the "fair value" of
their Dissenting Shares, as determined pursuant to the Dissenters' Rights
Statutes. A copy of the Dissenters' Rights Statutes are attached hereto as
Appendix C. See "RIGHTS OF DISSENTING SHAREHOLDERS." Pursuant to the
Shareholder Agreements, the holders of 32.8% of the outstanding Common Stock
have agreed with Ace not to take any action or actions to perfect any
dissenters' rights they may have as a result of the Merger under the
Dissenters' Rights Statutes or otherwise.
THE MERGER AND RELATED MATTERS
Effective Time of the Merger
If the Merger Agreement is approved and adopted and the Merger is
approved by the requisite vote of the shareholders of the Company and all other
conditions of closing specified in the Merger Agreement are satisfied or
waived, the Merger will become effective upon the filing of articles of merger
(the "Articles of Merger") with the Department of State of the State of Florida
(the "Effective Time"). Subject to the terms and conditions of the Merger
Agreement, it is currently expected that the Articles of Merger will be filed
on or shortly after the date of the Special Meeting if the Merger Agreement is
approved and adopted and the Merger is approved by the shareholders.
Conversion of Shares
Each share of Common Stock outstanding at the Effective Time (other than
shares as to which holders perfect their dissenters' rights under Florida law)
will be converted into the right to receive $1.20 per share in cash, without
interest (the "Merger Consideration"). Upon consummation of the Merger (the
"Closing"), the certificates currently representing the Common Stock will no
longer represent Common Stock and will represent only the right to receive the
Merger Consideration. Upon consummation of the Merger, current shareholders of
the Company will cease to have any continuing interest in the Company, other
than the right to payment of the Merger Consideration in accordance with the
terms of the Merger Agreement.
Surrender of Share Certificates
Promptly after the Effective Time, a letter of transmittal with
instructions from the Exchange Agent will be mailed to holders of record of
shares of Common Stock at the close of business on the date of the Effective
Time for use in surrendering their certificates representing their shares in
exchange for the Merger Consideration.
2
<PAGE> 12
CERTIFICATES SHOULD NOT BE SURRENDERED UNTIL THE LETTER OF TRANSMITTAL HAS BEEN
RECEIVED. See, "THE MERGER -- Surrender of Certificates."
Background of the Merger
The Company Board has for several years been disappointed with the
market performance of the Common Stock and, as has been previously announced,
as a result has engaged in a continuing effort to increase the value and
liquidity of the Common Stock for the benefit of its shareholders. As part of
such effort, the Company Board has evaluated a number of possible transactions
of varying types, including equity and debt financings, venture partner
arrangements, strategic combinations, divestiture of operating subsidiaries,
and asset and stock sales. Representatives of Paradise Valley Securities, Inc.
("Paradise"), the Company's principal market maker, the underwriter of the
Company's public offering of Units in 1993 and the brokerage firm through which
most of the Company's shareholders (other than directors and other affiliates
of the Company) acquired their shares of Common Stock and whose clients are
believed to own more than a majority of the outstanding shares of Common Stock,
advised the Company in several informal discussions over the past year that
those shareholders of the Company who are (or at the time were) affiliates of
Paradise strongly desire that the Company pursue either a major financing
transaction or a sale of the Company. Paradise has not been and will not be
compensated in connection with such advice to the Company. Because of these
factors, over the last year the Company Board has accelerated its efforts to
evaluate and pursue such a transaction.
Prior to entering into the Merger Agreement with Ace, the Company Board
engaged in discussions and some preliminary negotiations with a number of
parties who had expressed interest in either making a substantial investment in
the Company or acquiring control of the Company. However, none of such
discussions and negotiations resulted in an agreement. During the period from
May through October 1995 the Company and Ace negotiated and entered into,
first, a letter of intent and, then, the Merger Agreement. See "THE MERGER --
Background of the Merger."
Reasons for the Merger; Recommendations of the Board of Directors
In determining to recommend approval of the Merger, the Company Board
considered many factors, including (without limitation) the following: the
Company's need for cash in the near future, which it may not be able to borrow
or generate; evaluation of other potential offers to purchase; the advice of
the brokerage firm though which most of the Company's shareholders acquired
their shares of Common Stock; and the opinion of an independent investment
banking firm that the Merger is fair, from a financial point of view, to the
non-affiliated public shareholders of the Company. For a full discussion of
these and other factors, see "THE MERGER -- Reasons for the Merger;
Recommendations of the Board of Directors."
THE COMPANY BOARD BELIEVES THAT THE MERGER IS IN THE BEST INTEREST OF
THE SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE APPROVAL OF THE MERGER.
Opinion of Financial Advisor
First Equity Corporation of Florida (the "Financial Advisor"), an
independent investment banking firm retained by the Company, has advised the
Company Board that, in its opinion, the consideration to be paid in the Merger
to holders of shares of the Company's Common Stock is fair from a financial
point of view to such shareholders. A copy of such opinion, which sets forth
the factors considered by such firm in rendering its determination, is attached
as Appendix B to this Proxy Statement and should be read in its entirety. See
"THE MERGER -- Opinion of Financial Advisor."
3
<PAGE> 13
Interests of Certain Persons in the Merger
Certain of the Company's directors and officers own shares of Common
Stock and Options. Their Common Stock and Options will be treated the same as
those of other shareholders in the Merger and under the Merger Agreement. See
"THE MERGER -- Interests of Certain Persons in the Merger -- Interest in Stock
and Options."
Larry F. Lang, Chairman and CEO of the Company, has an employment
agreement entered into March 31, 1995 with the Company that by its terms will
not expire until March 31, 2000. Early in the negotiations between the Company
and Ace, Ace and Mr. Lang acknowledged that Mr. Lang's employment with the
Company would not continue after the acquisition of the Company by Ace.
However, under the terms of his employment agreement, upon termination of his
employment prior to March 31, 2000, Mr. Lang would be entitled to receive,
among other things, severance pay equal to his salary provided for under such
agreement through the scheduled expiration date of the agreement. The
termination of Mr. Lang's employment upon the Closing would, under the terms of
his employment agreement with the Company, require severance payments to Mr.
Lang in excess of $500,000. Mr. Lang has entered into an Agreement and Release
with Ace (the "Lang Severance Agreement"). Pursuant to that Agreement, Mr.
Lang has agreed that, among other things, (1) he will voluntarily terminate his
employment with the Company upon the Closing, more than four years in advance
of the stated termination date in his employment agreement with the Company;
and (2) he will not to compete with the Company for a period of three years.
In exchange, Mr. Lang will receive, among other things, (1) $287,000 over two
years, and (2) the right to purchase up to ten check cashing store franchises
without payment of initial franchise fees, with reduced monthly franchise
royalties and with certain other variances from the Company's usual form of
franchise agreement. In approving the Merger, the Company Board was aware of
and considered and approved the terms of the Lang Severance Agreement. See
"THE MERGER -- Interests of Certain Persons in the Merger -- Agreement and
Release."
Ace has entered into a Shareholder Agreement and Irrevocable Proxy with
each of certain principal shareholders of the Company pursuant to which Ace has
the power to vote an aggregate of 1,657,606 shares of Common Stock to approve
the Merger, which represents approximately 32.8% of the outstanding Common
Stock outstanding on the Record Date. See "THE MERGER -- Interests of Certain
Persons in the Merger -- Shareholder Agreements."
Conditions to and Termination of Merger
The obligations of the Company, Ace and Acquisition to effect the Merger
are subject to the satisfaction of certain conditions typical in acquisition
agreements. In addition to the typical conditions, Ace's and Acquisition's
obligations to effect the Merger are subject to (1) completing a due diligence
investigation of the Company and satisfaction in their sole discretion with the
results thereof, (2) the approval of the Merger by the shareholders of the
Company, with not more than 5% of the Company's shareholders having exercised
dissenters' rights, and (3) securing and closing financing arrangements
acceptable to Ace.
Because of the procedural steps required under the Merger Agreement and
under the Florida Business Corporation Act, there may be a period of time
between the date of the Special Meeting and the consummation of the Merger.
Though not expected, an extended delay, or a material change in the Company or
its prospects during such delay, could occur. However, such an occurrence
would not affect the validity or effect of the vote taken at the Special
Meeting. Under Florida law, shareholder approval would neither automatically
expire nor become subject to reconsideration in the event of such a delay or
material change. However, as further described below, the Company Board can,
under certain circumstances, terminate the Merger Agreement and abandon the
Merger after shareholder approval is obtained.
If the Merger Agreement is terminated (1) in connection with the
approval by the Company Board or the recommendation by the Company Board that
the Company's shareholders approve, or the consummation of a Competing
Transaction; (2) on account of the failure of the Company's shareholders to
approve the Merger; (3) on account of a breach by the Company of its
obligations under the Merger Agreement; or (4) on account of a material breach
of any representation or warranty of the Company that is within the knowledge
of certain key personnel, then the Company shall pay to Ace, promptly after
termination of the Merger Agreement, liquidated
4
<PAGE> 14
damages of $300,000 in immediately available funds. Such payment shall not
limit any right of Ace to recover monetary damages, including consequential and
punitive damages, in connection with any wrongful act of the Company.
If the Merger Agreement is terminated by the Company on account of a
breach by Acquisition or Ace of their obligations under the Merger Agreement or
on account of a material breach of any representation or warranty of Ace or
Acquisition, then Ace shall pay to the Company, promptly after termination of
the Merger Agreement, liquidated damages of $200,000 in immediately available
funds. Such payment shall not limit any right of the Company to recover
monetary damages, including consequential and punitive damages, in connection
with any wrongful act of Acquisition or Ace.
For a more complete description of the conditions to effect the Merger
and the rights to terminate the Merger Agreement, see "THE MERGER -- Provisions
of the Merger Agreement -- Conditions to the Merger" and "-- Termination and
Liquidated Damages."
Source of Funds
Ace intends to borrow from its money order supplier substantially all of
the amounts necessary to consummate the Merger and fulfill its obligations
under the Merger Agreement. All necessary amounts that Ace does not borrow
will be paid out of Ace's working capital. A condition to the Merger is that
Ace will be able to borrow the amount necessary to consummate the Merger and
meet its other obligations under the Merger Agreement. See "THE MERGER --
Source and Amount of Funds."
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO SHAREHOLDERS
The Merger will be a taxable event for the Company's shareholders for
federal income tax purposes and may also be taxable under applicable state,
local and foreign tax laws. All shareholders are urged to consult their own
tax advisors. See "THE MERGER -- Federal Income Tax Consequences."
To prevent the possibility of back-up federal income tax withholding on
payments made to the Company's shareholders with respect to shares of Common
Stock converted to cash pursuant to the Merger, each shareholder must provide
the Exchange Agent appointed to distribute the Merger Consideration with the
shareholder's correct taxpayer identification number by completing the
Substitute Form W-9 to be included with the letter of transmittal, or any other
forms as may be applicable.
CERTAIN INFORMATION REGARDING THE COMPANY
The Company, through its wholly owned subsidiaries owns, operates and
franchises retail check cashing stores. At December 27, 1995, the Company owned
and operated 28 stores: 18 in Florida, 6 in Washington and 4 in Indiana. In
addition, at December 27, 1995, there were 161 stores franchised by the
Company's subsidiaries open and operating in 26 states. The Company's stores
provide a range of services with primary emphasis on cashing checks for a fee.
Other services include money transfer services, sales of money orders,
electronic filing of income tax returns and corresponding refund anticipation
loans, sales of bus passes, mailbox rentals and other ancillary services. In
late 1993, the Company, through its wholly owned subsidiary Check Express
Finance, Inc., began a loan program providing small consumer loans and used
vehicle financing to individuals who generally do not qualify for traditional
sources of financing. The Company recently has entered into a letter of intent
contemplating the sale of that entity. However, whether or not such sale occurs
will not affect the amount of the Merger Consideration. See "THE
MERGER--Background of the Merger," "BUSINESS OF THE COMPANY," and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--Liquidity and Capital Resources."
5
<PAGE> 15
CERTAIN INFORMATION REGARDING ACE AND ACQUISITION
Ace is the largest owner and operator of check-cashing stores in the
United States. Ace stores offer check-cashing and other retail financial
services at competitive rates in clean, convenient settings. Ace's strategy is
to have the largest number of check-cashing stores in each of its markets, and
the proposed Merger is consistent with Ace's intent to grow by (in part)
strategic acquisitions of stores in targeted markets. Ace was incorporated
under the laws of Texas in 1982.
Acquisition is a Florida corporation recently organized by Ace for the
purpose of effecting the Merger. It has no material assets and has not engaged
in any activities except in connection with the Merger.
The principal executive office of each of Ace and Acquisition is at 1231
Greenway Drive, Suite 800, Irving, Texas 75038, and the telephone number of
each is (214) 550-5000. See "CERTAIN INFORMATION REGARDING ACE AND
ACQUISITION."
MARKET PRICES
The Common Stock and the Units are traded on the Nasdaq Small Caps
Market under the symbols CHXS and CHXSU, respectively. On August 30, 1995 (the
last trading day prior to the public announcement of the letter of intent to
enter into the Merger Agreement), the last reported sale prices of the Common
Stock and the Units were $1.00 and $3.38, respectively. On October 13, 1995
(the last trading day prior to the public announcement of the Merger
Agreement), the last reported sale prices of the Common Stock and the Units
were $1.00 and $4.00, respectively. On January 4, 1996 (the last trading day
prior to the printing of this Proxy Statement), the last reported sale prices
of the Common Stock and the Units were $.81 and $4.25, respectively. The
Company has never paid cash dividends on the Common Stock and, if the Merger is
not consummated, does not anticipate the payment of cash dividends on the
Common Stock in the foreseeable future. See "MARKET PRICES OF THE COMMON STOCK
AND UNITS AND DIVIDENDS."
SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial information for the
Company. Such information is qualified by the detailed information and
financial statements, including the notes thereto, included in this Proxy
Statement and should be read in conjunction therewith. The selected
information for the nine months ended September 30, 1995 and 1994 and the
balance sheets as of September 30, 1995 and 1994 were derived from unaudited
financial statements of the Company, which, in the opinion of management of the
Company, include all adjustments that are considered necessary for a fair
presentation of the results of operations for such periods. Results for the
interim periods are not necessarily indicative of results for the year. The
selected information for each of the two fiscal years ended December 31, 1994
and 1993 and balance sheets as of December 31, 1994 and 1993 were derived from
the audited financial statements as of those dates. As with any business,
there are uncertainties as to matters that could affect the Company, and the
data reflected below may not be indicative of the Company's future financial
condition or results of operations. See "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and the Financial Statements
and Notes thereto included elsewhere in this Proxy Statement.
6
<PAGE> 16
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
----------------------------- -------------------------------
1994 1993 1995 1994
---------- ----------- ---------- -----------
(unaudited) (unaudited)
(restated)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues . . . . . . . . . . . . . . . $ 7,532,619 $ 4,267,565 $ 6,014,366 $ 5,534,439
Income . . . . . . . . . . . . . . . . 66,642 130,694 65,192 157,319
Net Income . . . . . . . . . . . . . . 467 65,580 32,596 92,525
Earnings per share . . . . . . . . . . 0.00 0.02 0.01 0.02
Weighted average number of
shares outstanding . . . . . . . . . 4,864,832 3,284,774 5,019,970 4,806,597
COMPANY OPERATING DATA:
Company-operated stores in
operation at end of period 35 24 26 35
Franchise stores in operation
at end of period . . . . . . . . . . 149 137 167 151
BALANCE SHEET DATA:
Total Assets . . . . . . . . . . . . . $10,025,855 $6,630,897 $10,606,800 $9,954,951
Long Term Debt . . . . . . . . . . . . 1,944,096 597,995 1,965,676 2,126,122
(including capital lease obligation)
Total Liabilities . . . . . . . . . . . 5,950,973 2,629,520 6,454,505 5,791,187
Shareholders' Equity . . . . . . . . . 4,074,882 4,001,377 4,152,295 4,163,764
</TABLE>
THE MERGER
The following discussion includes summaries or descriptions of certain
provisions of the Merger Agreement. Such summaries and descriptions are
qualified in their entirety by reference to the text of the Merger Agreement
attached as Appendix A to this Proxy Statement.
GENERAL
If the Merger is approved by the requisite vote of shareholders and all
conditions of Closing are satisfied or waived, the Merger will become effective
upon the filing of the Articles of Merger with the Department of State of the
State of Florida. The Merger is to be consummated pursuant to and in accordance
with the terms of the Merger Agreement dated October 13, 1995 by and among the
Company, Ace and Acquisition. That original Merger Agreement was amended, by an
Amendment dated December 20, 1995, to revise one date set forth in the original
Merger Agreement to reflect the updated schedule for the Merger. In the Merger,
(a) Acquisition will be merged with and into the Company, which will be the
surviving corporation and become a wholly owned subsidiary of Ace, and (b) each
share of the Common Stock (other than shares held by shareholders who properly
exercise dissenters' rights under Florida law) will be converted into the right
to receive $1.20 in cash, without interest (the "Merger Consideration"), to be
paid following the Closing, all as more fully described below and in the Merger
Agreement attached as Appendix A. See "-- Terms of the Merger Agreement" below.
In addition to the conversion of the Common Stock, pursuant to the
Merger Agreement, each Option shall be canceled by agreement with the holder
thereof, who shall thereupon be entitled to receive cash consideration in the
amount of (1) the difference between the Merger Consideration per share and the
exercise price per share under the option, multiplied by (2) the number of
shares covered by the Option. The Company has agreed to use its best efforts
to cancel all other rights to acquire shares of Common Stock (the "Warrants")
prior to consummation of the Merger, and the cancellation of all Options and
Warrants is a condition of the Merger. The Company also has issued Units, with
each Unit comprising four shares of Common Stock and a warrant to purchase two
additional shares of Common Stock at an exercise price of $3.00 per share (the
"Units"). Under the Merger Agreement, the Common Stock portion of the Units
will be treated the same as the rest of the
7
<PAGE> 17
Company's outstanding Common Stock and the warrant portion of the Units will be
treated as Warrants. See "-- Outstanding Options and Warrants" below and the
Merger Agreement attached as Appendix A.
BACKGROUND OF THE MERGER
Reasons for Seeking a Merger Candidate; Preliminary Steps
The Company Board has for several years been disappointed with the
market performance of the Common Stock and, as has been previously announced,
as a result has engaged in a continuing effort to increase the value and
liquidity of the Common Stock for the benefit of its shareholders. As part of
such effort, the Company Board has evaluated a number of possible transactions
of varying types, including equity and debt financings, venture partner
arrangements, strategic combinations, divestiture of operating subsidiaries,
and asset and stock sales.
In 1993 the Company conducted a public offering of Units. The Company
Board had hoped that the funds obtained from such offering would support growth
sufficient to increase share value and liquidity. Through the latter part of
1994, the Company Board continued to focus on Company growth. The Company
aggressively pursued acquisitions of check-cashing stores from third parties
and completed several such acquisitions. However, share price has declined
since the public offering of the Units, and the Common Stock continues to be
thinly traded.
In the latter part of 1994 and in 1995, representatives of Paradise
Valley Securities, Inc. ("Paradise"), the Company's principal market maker, the
underwriter of the Company's public offering of Units in 1993 and the brokerage
firm through which most of the Company's shareholders (other than directors and
other affiliates of the Company) acquired their shares of Common Stock and
whose clients are believed to own more than a majority of the outstanding
shares of Common Stock, advised the Company in several informal discussions
that those shareholders of the Company who are (or at the time were)
affiliates of Paradise strongly desire that the Company pursue either a major
financing transaction or a sale of the Company. Based solely on the views of
such shareholders, the Paradise representatives also considered it reasonably
likely that some other shareholders of the Company would hold similar views.
Because of these factors, over the last year the Company Board has accelerated
its efforts to evaluate and pursue such a transaction.
Early in 1995 the members of Company Board determined in informal
discussions that, in addition to the efforts of the Company Board, a consulting
or investment banking firm should be formally engaged to assist the Company,
and management should identify and contact industry competitors and other
likely candidates regarding a possible acquisition of the Company.
Discussions with Parties Other than Ace
Prior to entering into the Merger Agreement with Ace, the Company Board
engaged in discussions and some preliminary negotiations with a number of
parties who had expressed interest in either making a substantial investment in
the Company or acquiring control of the Company.
In the fall of 1994, Peter F. Borer, Manager of Acquisitions for the
Company, had contacted Michael C. Stinson, President of Mr. Payroll Corp. ("Mr.
Payroll") to inquire as to Mr. Payroll's interest, if any, in an acquisition of
Mr. Payroll by the Company. Mr. Payroll is a franchisor of check cashing
kiosks located within convenience stores. Mr. Stinson advised Mr. Borer that
Mr. Payroll was not for sale, and that Mr. Payroll might have an interest in
acquiring the Company. Over the ensuing several months, Mr. Lang and Mr.
Stinson had a series of conversations regarding the possible advantages to Mr.
Payroll of an acquisition of the Company. In March 1995, Mr. Stinson orally
advised Mr. Lang that, because Mr. Payroll did not have expertise in operation
of company-owned stores and because Mr. Payroll's strategy was to expand its
franchise network only through
8
<PAGE> 18
convenience store kiosks and not through full service stores like those
franchised by the Company's subsidiaries, Mr. Payroll had determined not to
pursue a transaction with the Company.
Chris Formant, Managing Partner of the Bank Practices Group of the
national accounting firm Coopers & Lybrand, L.L.P. and a franchisee of the
Company, indicated in informal conversation with Mr. Lang in early 1995 that he
would be interested in forming a group to acquire control of the Company by way
of a substantial equity investment in the Company or otherwise. Mr. Formant
also had indicated that a business associate of his, Mr. Timothy Clark of
Growth Strategies, Inc., a business development consulting firm, might be
interested in participating in, or might be able to assist the Company in the
finding of, such a group.
On behalf of the Company Board, in February 1995 Mr. Lang communicated
with Messrs. Formant and Clark, inquiring as to their ability and interest in
either forming a group or locating a party interested in pursuing such an
acquisition of or substantial investment in the Company. In early March 1995,
Messrs. Formant and Clark indicated to Mr. Lang that they were engaged in
preliminary steps directed toward a possible major transaction for the Company.
At its March 9, 1995 meeting, the Company Board met with Messrs. Formant
and Clark. In such meeting they proposed that a new entity ("Newco") be
formed, to be financed and owned principally by one or more third parties
(including Messrs. Formant and Clark) but also by the Company's management, and
that Newco acquire the Company by way of a merger or similar transaction.
Messrs. Formant and Clark indicated to the Company Board that they had engaged
in informal discussions with several banks and financial institutions which had
expressed interest in a possible investment in, or acquisition of, the Company
by way of such a transaction. At that meeting Messrs. Formant and Clark did
not identify the parties with whom they had spoken, but did indicate the
general parameters of what they believed to be transactions that might
reasonably be consummated. Subsequent to that meeting the Company Board
members reviewed among themselves the presentation by Messrs. Formant and
Clark, and determined that it would be in the best interests of the Company to
further seek their assistance in consummating a transaction of the type they
had described in their presentation. On March 16, 1995, the Company engaged
Mr. Clark's firm, Growth Strategies, Inc., on a contingent fee basis, to assist
in arranging such a transaction.
Over the ensuing months, Messrs. Formant and Clark jointly reported
periodically to Mr. Lang on their efforts and progress. Their efforts
ultimately resulted in the receipt of proposals from Dauphin Deposit
Corporation and ADL Associates, discussed below.
On May 4, 1995, Larry F. Lang, the Company's Chairman and Chief
Executive Officer, met with representatives of Paradise. At that meeting the
Paradise representatives informed Mr. Lang that those shareholders of the
Company who are (or at the time were) affiliates of Paradise, and certain of
their other clients who had contacted Paradise, were unhappy with the valuation
and lack of liquidity for the Common Stock. They further informed Mr. Lang
that, as with other similarly situated companies, the Company's small size and
the lack of industry following would tend to make it difficult for the Company
to raise capital in the public markets. The possibility of obtaining
additional equity financing was discussed, but the Paradise representatives
indicated that, given the Company's circumstances, such financing would likely
not be obtainable on terms satisfactory to the Company. In addition, they
reiterated their prior statements to the effect that those shareholders of the
Company who are (or at the time were) affiliates of Paradise believed it to be
in the best interests of the Company and its shareholders that the Company be
restructured or sold.
By way of a memorandum dated May 8, 1995, Mr. Lang informed the Company
Board of his discussions with the Paradise representatives. Over the next
several days, the Company Board members again reviewed among themselves various
options available to the Company to increase shareholder value and liquidity.
In addition to Messrs. Formant and Clark, the Company determined to seek from
Paradise, and Paradise agreed to provide, without compensation, assistance in
locating a party interested in pursuing a major transaction with the Company.
9
<PAGE> 19
In May 1995, Mr. Lang contacted Monetary Management Corporation ("MMC"),
an industry competitor, and determined that MMC might be interested in
acquiring the Company. On May 26, 1995, senior management of the Company met
with representatives of MMC at their offices in Berwyn, Pennsylvania. On June
15, 1995, each member of the Company Board received a letter from MMC
expressing an indication of interest for an all cash purchase of the Company at
a range of $1.15 to $1.25 per share. On June 30, 1995, representatives of MMC
met with Company management at the Company's offices in Tampa and toured
several of the Company's stores. On July 17,1995, the Company received a
proposed letter of intent from Dollar Financial Group, Inc. ("DFG"), the parent
company of MMC, offering to acquire all of the outstanding stock of the Company
for $1.15 per share in cash. DFG's offer was contingent upon, among other
things, the sale of the Company's finance subsidiary, Check Express Finance,
Inc., concurrent with the closing of the transaction with the Company. After a
series of informal discussions with the other members of the Company Board, Mr.
Lang responded to DFG's offer by way of a letter dated July 27, 1995, wherein
he requested that DFG consider a higher offer for the Company and proposed that
Company's management use its best efforts to effect a sale of the finance
subsidiary, as opposed to the sale being a condition to closing of a
transaction with DFG. Over the next several weeks, the Company's management
team communicated with senior management of DFG and provided certain
information requested by DFG.
At its June 5, 1995 meeting, the Company Board met with representatives
of Paradise, who, in their capacity as an unpaid advisor to the Company,
presented the Company Board with a term sheet prepared by Paradise which
summarized certain terms of a proposed transaction from Mr. Arthur Meyer and
Mr. Stephen Selka ("Meyer-Selka"). Mr. Selka is a franchisee of the Company's
wholly-owned subsidiary Check-X-Change Corporation and a significant
shareholder of the Company. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT." The Company Board advised Paradise that the Company
would be receptive to a formal proposal from Meyer-Selka; however, no formal
offer was forthcoming. Mr. Selka has since entered into a Shareholder
Agreement with Ace. See "THE MERGER -- Interests of Certain Persons in the
Merger -- Shareholder Agreements."
Also at its June 5, 1995 meeting, the Company Board noted that the terms
of Mr. Lang's current employment agreement with the Company could require the
payment of a substantial sum to Mr. Lang upon consummation of a transaction of
the type then being considered by the Company. The Company Board acknowledged
that such requirement might affect the attractiveness of the Company to a
potential acquiror, and that consummation of any such transaction accordingly
would require agreement as to Mr. Lang's employment and/or severance,
satisfactory to both Mr. Lang and any acquiror of the Company. At that meeting
the directors reviewed the termination and other provisions of Mr. Lang's
employment agreement with the Company's legal counsel and evaluated the amount
of payment that would be required under various possible circumstances. The
other Company Board members inquired of Mr. Lang as to whether he might be
willing to accept a reduced payment under certain circumstances in order to
facilitate the consummation of a transaction, and Mr. Lang responded
affirmatively.
On June 11, 1995, Mr. Lang and Decker A. Todd, Vice President-Finance
and Chief Financial Officer of the Company, met with representatives of Dauphin
Deposit Corporation ("Dauphin"), a regional bank holding company, at their
offices in Harrisburg, Pennsylvania. The meeting was arranged and attended by
Messrs. Formant and Clark. At the meeting, the parties explored the potential
synergies which could result from an acquisition of the Company by Dauphin. On
June 12, each member of the Company Board received a letter from Dauphin
expressing an interest in a possible all cash acquisition of the Company,
subject to due diligence. On June 14, 1995, representatives of Dauphin met
with Company management at the Company's offices in Tampa, Florida. Over the
ensuing several weeks, Dauphin requested, and the Company provided, certain pro
forma and other information, which Dauphin requested in order to further
evaluate a possible transaction with the Company.
As a result of contact by Messrs. Formant and Clark, on June 13, 1995,
management of the Company met with representatives of Bank South Corporation at
the Company's offices and conducted exploratory discussions regarding the
Company's operations, including the Company's computerized check cashing
systems. Bank South informed the Company that it had an interest in a possible
transaction if there existed an opportunity to add value and cost efficiencies
to the Company's operations through its expertise in computerized operations
and systems. On June 27, 1995, Bank South informed the Company that it had
determined that it could not bring sufficient improvements to the Company's
operations to justify pursuing a transaction with the Company.
On August 18, 1995, with the discussions with Ace proceeding well, and
after several informal discussions with the other members of the Company Board,
Mr. Lang advised both Dauphin and DFG in writing that the Company expected to
receive a bona fide all cash offer from another party to purchase all of the
outstanding stock of the Company at a price within the range that he believed
sufficient for the Company Board to recommend to the Company's shareholders
that they vote in favor of the transaction. The Company requested that Dauphin
and
10
<PAGE> 20
DFG submit any offers or revised offers they might wish to make to the Company
no later than 12:00 P.M. on August 21, 1995.
Dauphin never submitted a formal proposal or offer to the Company, and
on August 18, 1995, Christopher Jennings, Dauphin's Chairman and Chief Executive
Officer, advised Mr. Lang that Dauphin was not interested in further pursuing
discussions with the Company and would not submit an offer to acquire the
Company.
Also on August 18, 1995, Jeffrey Weiss, Chief Executive Officer of DFG,
advised the Mr. Lang in writing that it DFG would not revise its offer.
On August 31, 1995, as further discussed below, the Company and Ace
entered into a letter of intent for the purchase by Ace, by way of a Merger of
the Company with Acquisition, of all of the outstanding Common Stock of the
Company at $1.20 per share.
On September 19, 1995, after the Company and Ace entered into a letter
of intent to consummate the Merger, the Company received a proposal from
another bank for the acquisition of the Company for $1.25 per share. The
identity of the bank and the particular terms of the offer are confidential
under the terms of the proposal. Over the next several days members of the
Company Board and senior management carefully evaluated the offer. Based on
the facts that the bank did not have prior experience in the operation and
franchising of check cashing stores and that the bank was not familiar with the
Company, and based also on discussions with representatives of the bank,
Company personnel were very concerned that completion of a transaction with the
bank might take considerably longer than is typical of similar transactions.
In addition, they noted that, because banking is a regulated industry, there
would be regulatory requirements to be met, not applicable to the transaction
with Ace, which could further lengthen the time to complete a transaction.
Management felt that these and other factors made the completion of a
transaction with the bank considerably less likely than the consummation of the
Merger transaction with Ace and Acquisition. Because of these and other
factors, the Company determined that the offer was not sufficient to warrant
terminating its letter of intent with Ace.
The Company received a proposal on September 21, 1995 from ADL
Associates ("ADL"), a capital group which invests in and acquires middle market
companies, which Mr. Lang transmitted to the other members of the Company Board
on September 22, 1995. A revised proposal was received by the Company on
September 28, 1995, and transmitted by Mr. Lang to the other Company Board
members the following day. ADL proposed, along with other terms, that it
purchase $3.5 million of newly issued convertible preferred stock of the
Company at an effective price of less than $1.20 per share. The proposal also
called for the issuance to ADL of warrants to purchase additional shares of
Common Stock at prices in the future pegged to current values, and the payment
of certain management fees to ADL in perpetuity. At its October 5, 1995
meeting, the Company Board met with Messrs. Formant and Clark, who had joined
ADL, and also Ehud D. Laska and Benjamin J. Douek, principals of ADL, to
discuss the proposal. After analysis and discussion of the ADL proposal over
the next several days, the members of the Company Board determined that it was
in the best interests of the Company and its shareholders for the Company to
continue to pursue the transaction with Ace. Mr. Lang advised Mr. Clark of the
Company's intent by telephone on October 10, 1995.
11
<PAGE> 21
Discussions and Negotiations with Ace
From April through November 1991, the Company and Ace engaged in
negotiations regarding the proposed acquisition of all of the Company's
outstanding capital stock in a cash merger having a basic structure similar to
that of the Merger. The parties entered into a letter of intent in July 1991,
but for various reasons did not complete the negotiation of or enter into a
definitive acquisition agreement. Although that transaction was not
consummated, the Company's management continued to communicate with Ace's
management from time to time. Ace grew rapidly, and the Company Board believed
that the Company might be an attractive acquisition candidate for Ace at some
point; and, in fact, on several occasions when the Company contacted Ace, Ace
expressed an interest in acquiring the Company's owned and operated locations
(the "Check Express Owned Stores").
Ace routinely reviews public announcements by its competitors in the
check-cashing industry, like the Company. At its meeting on April 24, 1995,
the Board of Directors of Ace (the "Ace Board") noted the public release of
earnings by the Company for its fiscal year ended December 31, 1994.
Shortly after the April 24, 1995 meeting of the Ace Board, Donald H.
Neustadt, the President and Chief Executive Officer of Ace, and Mr. Lang spoke
by telephone. In that conversation, Mr. Neustadt inquired about the Company's
interest in selling the Check Express Owned Stores. Mr. Lang informed Mr.
Neustadt that the Company would not consider a disposition of the Check Express
Owned Stores separate from the Company's franchising operations. Because Mr.
Neustadt indicated that Ace had an interest only in the Check Express Owned
Stores, the discussion did not continue.
On May 24, 1995, after informal discussions with the other Company Board
members and as determined at the Company Board's March 9, 1995 meeting, Mr.
Lang sent Mr. Neustadt a letter that outlined the strategic benefits available
to Ace if it were to acquire the Company and its subsidiaries and a set of pro
forma calculations based on the Company's historical financial information for
its 1994 fiscal year. Mr. Neustadt evaluated that information, but reiterated
to Mr. Lang Ace's interest only in the Check Express Owned Stores and stated
his belief that, based on the pro forma calculations, the Ace Board would
consider offering $3.8 million to $4.2 million for the Check Express Owned
Stores. Mr. Lang advised Mr. Neustadt that the Company Board believed it would
be in the best interests of the Company's shareholders if the Company were sold
as a whole.
Mr. Lang initiated a telephone conversation with Mr. Neustadt in
mid-June 1995 to inform Mr. Neustadt that the Company had recently received a
purchase proposal and to inquire as to Ace's interest in the Company. Mr.
Neustadt responded that Ace's interest had not changed since their previous
discussion.
On August 3, 1995, after informal discussion among the Company Board
members, the Company indicated in a public announcement that it would entertain
proposals or offers regarding the sale of the Company or to effect other
transactions to maximize shareholder value and liquidity. Mr. Lang called to
inform Mr. Neustadt about the press release and to encourage Ace to formulate
and make a proposal for the Company. Mr. Neustadt stated his belief that,
based on the most recent financial information about the Company and the pro
forma information provided to him in May, a price not significantly different
than the price range he previously expressed would be appropriate for the
entire Company if a market multiple were applied to the Company's earnings.
In separate informal discussions thereafter with certain other members
of the Ace Board, Mr. Neustadt and the other directors of Ace acknowledged that
any acquisition of the Company by Ace would have to involve not only the Check
Express Owned Stores, but also the Company's franchising operations. Mr.
Neustadt and the
12
<PAGE> 22
other members of Ace's management began to discuss the ways in which Ace might
approach the Company's franchising operations if they were acquired.
Mr. Neustadt reviewed the Company's public release, on August 14, 1995,
of its earnings for the fiscal quarter and six months ended June 30, 1995. The
following day Mr. Neustadt requested that Mr. Lang send additional financial
data of the Company for Ace's review. That data, which Mr. Lang then sent,
consisted of detailed profit and loss information for the Check Express Owned
Stores on a store by store basis and by business segment for the Company and
its subsidiaries for the six months ended June 30, 1995.
On August 16 - 18, 1995, Mr. Neustadt and other members of Ace's
management evaluated the data received from Mr. Lang and discussed among
themselves, with other members of the Ace Board, and with Ace's counsel the
possibility of making a proposal to acquire the Company. The other members of
Ace's management included R. Edward McCarty, Senior Vice President --
Operations, and Mike Edwards, Vice President -- Eastern United States
Operations. The key issues discussed were the operational synergies that might
result from an acquisition and the corresponding price range that Ace would be
willing to offer for the Company; the structure, cost, and time schedule for
the acquisition; the alternatives available to Ace for dealing with the
Company's franchising operations; and Ace's desire to avoid protracted
negotiations or becoming involved in a bidding contest. Mr. Neustadt
discovered from informal separate discussions with other members of the Ace
Board that the Ace Board would be willing to offer a purchase price in excess
of $4.5 million for the entire Company, based on the financial analysis
performed to date by Ace's management.
On August 18, 1995, at Mr. Neustadt's request, a representative of the
investment firm that had served as the managing underwriter for Ace's initial
public offering in December 1992 contacted a representative of Paradise to
inquire about the attitude of those principal shareholders of the Company,
who were affiliates of Paradise, regarding the sale of the Company in general,
the proposals or offers received by the Company to date, and the possibility of
an offer by Ace to acquire the Company. Ace thereby discovered that those
principal shareholders of the Company were quite interested in a sale of the
Company.
On that same date, Mr. Neustadt contacted Mr. Lang by telephone and
obtained assurances from Mr. Lang that the Company Board had not yet determined
to accept any other proposal or offer that the Company had received, that Mr.
Lang believed that the Company Board would seriously consider a proposal or
offer by Ace, and that Mr. Lang believed that the Company Board would be
willing to grant exclusivity to Ace or enter into an arrangement with Ace
involving a break-up fee, if Ace submitted a proposal or offer to acquire the
Company that was otherwise satisfactory to the Company Board and management of
the Company. Based on such assurances, Mr. Neustadt and Mr. Lang scheduled a
meeting of certain members of Ace's management and of the Company's management
for the following Monday at the Company's executive offices in Tampa, Florida.
On August 20, 1995, Messrs. Neustadt, McCarty and Edwards traveled to
Tampa for the next day's meeting and visited various locations of the Company
in the Tampa area.
The meeting on August 21, 1995 at the Company's executive offices
involved Messrs. Neustadt, McCarty and Edwards of Ace and Mr. Lang and certain
members of the Company's management in charge of its franchising operations.
The initial hours of the meeting were spent discussing the franchise operations
of the Company to permit Ace's representatives to better understand those
operations, and assess their potential benefits and risks to Ace, and identify
the alternatives available to Ace with respect to those operations if Ace
acquired the Company. Those alternatives identified by Ace were basically
three: continuation of the franchising operations as conducted by the Company;
continuation of the operations with existing franchisees, but without any
further or additional franchising; and restructuring or even ceasing such
operations by agreement with the existing franchisees. Thereafter at the
meeting, the participants discussed in detail other significant aspects of
13
<PAGE> 23
the Company's business and affairs, historical financial performance, and
prospects. Following such discussions, the representatives of Ace and the
Company negotiated the basic terms of the Merger, including the purchase price
of $1.20 per share of Common Stock to be paid by Ace, the circumstances in
which either party would be obligated to pay liquidated damages upon that
party's termination of their agreement, and the amount of such liquidated
damages payment.
On the same day, because of the progress of their discussions, the
representatives of Ace and the Company also negotiated, with their respective
counsel, and signed a Confidentiality Agreement between the Company and Ace,
containing mutual nondisclosure obligations with respect to the parties'
confidential information.
At the end of such day, having acknowledged that Mr. Lang's employment
with the Company would not continue after an acquisition by Ace, Mr. Lang and
Mr. Neustadt began discussions about the terms of a severance agreement between
the Company and Mr. Lang to be effective at the time of the acquisition. No
agreement regarding severance arrangements for Mr. Lang were reached at this
time. The other members of the Company Board were advised by Mr. Lang the
following day of the nature of his discussions with Mr. Neustadt regarding his
severance arrangements.
On August 22, 1995, Mr. Neustadt presented Mr. Lang with a proposed
term sheet that was intended to express in writing the basic terms of the
proposed transaction between the Company and Ace negotiated at the August 21st
meeting. On August 22 and 23 1995, Messrs. Lang and Neustadt, with counsel for
the Company and Ace, negotiated the term sheet. On August 23, 1995, after
informal discussions with the other members of the Company Board, including
advising such other Board members of discussions regarding his severance
arrangements, Mr. Lang presented Mr. Neustadt with a proposed revision of the
term sheet. A principal concern of the Company Board was the breakup fee
sought by Ace. Though the Company Board objected to Ace's proposals both as to
the amount of the breakup fee and the circumstances under which it would be
required to be paid, Mr. Neustadt indicated that Ace would not proceed if the
Company did not agree to that aspect of Ace's proposal. The Company Board
members believed that, notwithstanding the breakup fee provision, it would be
in the best interests of the Company and its shareholders to proceed with the
transaction. The term sheet was not completed or signed by the parties.
Instead, when Messrs. Lang and Neustadt determined that the basic terms were
sufficiently agreed, the Company and Ace and their respective counsel began
drafting and negotiating a letter of intent between the parties.
The proposed acquisition of the Company was the principal topic
discussed at the meeting of the Ace Board on August 24, 1995. At the meeting,
Mr. Neustadt reviewed for the Ace Board various pro forma calculations he had
prepared, based on financial data received from the Company, to indicate the
possible effects on Ace's business and performance of the proposed acquisition
of the Company, including the perceived benefits and risks related to the
Company's franchising operations and the alternatives available to Ace in
dealing with those operations. Mr. Neustadt also noted for the Ace Board the
possibility of significantly enhancing the revenue at the Check Express Owned
Stores by Ace's offering small consumer loans in those jurisdictions. As the
result of Mr. Neustadt's presentation and related factors discussed by Ace's
directors, the Ace Board authorized the management of Ace to negotiate and sign
a letter of intent to purchase the Company at the negotiated purchase price of
$1.20 per share of Common Stock.
From August 24 until August 31, 1995, the parties and their respective
counsel negotiated the letter of intent. As the result of the preparation and
negotiation of the term sheet, the principal remaining issues negotiated were
the term of the letter of intent and covenants regarding the conduct of the
business of the Company prior to the Closing. The letter of intent was signed
on August 31, 1995, and a public announcement thereof was made by the parties.
The Company Board ratified the letter of intent at its October 5, 1995 meeting.
The letter of intent contemplated that severance arrangements would be entered
into with the Company employees, but did not set forth, and as of the date
thereof there was no agreement as to, the terms of the Lang Severance
Agreement.
In September and the first part of October 1995, the parties and their
counsel prepared and negotiated the terms of the Merger Agreement. In addition
to the terms normally addressed in an acquisition agreement, the negotiations
focused on (a) Ace's desire to obtain from certain principal shareholders of
the Company an agreement to vote in favor of the Merger, and (b) a more
detailed description of the events that would require
14
<PAGE> 24
either party to pay liquidated damages (as a break-up fee) to the other party
in the event of a termination of the Merger Agreement. See "-- Provisions of
the Merger Agreement" below.
Also during this period, Mr. Lang and Mr. Neustadt had numerous
telephone conversations and other communications regarding Mr. Lang's severance
agreement with the Company, to be effective on the date of the Closing (the
"Closing Date"). The key issues negotiated included the severance amount to be
paid to Mr. Lang upon the early termination of his employment agreement with
the Company, the terms on which Mr. Lang would be entitled to obtain franchises
of locations from a subsidiary of the Company, the extent to which Mr. Lang
would release claims against the Company, the release of Mr. Lang from his
personal guarantee of certain indebtedness of the Company, and the extent of
Mr. Lang's covenant not to compete with Ace and its affiliates subsequent to
the Merger. During this period Mr. Lang kept the Company Board generally
advised of the progress of his discussions with Mr. Neustadt regarding his
severance agreement. In approving the Merger, the Company Board was aware of
and considered and approved the terms of the Lang Severance Agreement. See
"-- Interests of Certain Persons in the Merger -- Agreement and Release" below.
Mr. Neustadt discussed the progress of the negotiations of the Merger
Agreement with various other members of the Ace Board from time to time in
separate informal conversations, and one or more drafts of the Merger Agreement
were provided to the members of the Ace Board. By resolutions contained in a
written consent dated as of September 25, 1995, the members of the Ace Board
unanimously approved the Merger and the terms of the Merger Agreement they had
reviewed (and with such changes thereto as Mr. Neustadt or other members of
Ace's management may approve) and authorized the executive officers of Ace to
sign the definitive Merger Agreement when negotiated.
During the same period, Mr. Lang discussed the progress of the
negotiations of the Merger Agreement with various other members of the Company
Board from time to time in a series of informal conversations, and drafts of
the Merger Agreement were provided to the members of the Company Board. At a
meeting held on October 5, 1995, the Company Board unanimously determined that
the Merger is fair to, and in the best interests of, the Company's
shareholders, unanimously approved the Merger and the terms of the Merger
Agreement (with such changes thereto as Mr. Lang should approve), authorized
the executive officers of the Company to sign the definitive Merger Agreement
when negotiated, and determined to recommend approval by the Company's
shareholders. See "THE MERGER -- Reasons for the Merger; Recommendations of
the Board of Directors."
In early October 1995, Mr. Lang contacted certain principal shareholders
of the Company to obtain their written agreement to vote in favor of the Merger
and the Merger Agreement at the special meeting of the shareholders of the
Company that would be called to consider the Merger and the Merger Agreement
and to grant Ace a proxy with respect to such vote. Such voting agreements
from certain principal shareholders of the Company, as set forth in the
Shareholder Agreement and Irrevocable Proxy signed by each such shareholder
(collectively, "Shareholder Agreements"), were a condition to Ace's entering
into the Merger Agreement. Shareholders of the Company holding approximately
32.8% of the outstanding Common Stock signed the Shareholder Agreements in
favor of Ace. See "-- Interests of Certain Persons in the Merger --
Shareholder Agreement and Irrevocable Proxies" below.
On October 13, 1995, the Company, Ace and Acquisition signed and
publicly announced the Original Merger Agreement dated that day. For a
description of the terms of the Merger Agreement, see "-- Provisions of the
Merger Agreement" below. As of October 13, 1995, Mr. Lang, the Company and Ace
entered into the Agreement and Release, setting forth the terms of Mr. Lang's
severance pay and other rights effective on the Closing Date. In approving the
Merger, the Company Board was aware of and considered and approved the terms of
the Lang Severance Agreement. The Company Board noted the benefits to be
received thereunder by Mr. Lang, but further noted that Mr. Lang made
significant concessions under the Lang Severance Agreement, including but not
limited to foregoing a substantial sum of severance pay that otherwise would be
payable under his employment agreement upon consummation of the Merger. See
"--Interests of Certain Persons in the Merger -- Agreement and Release" below.
From October 18 through October 20, 1995, Messrs. Neustadt and McCarty
and other members of Ace's management met with Mr. Lang and other employees of
the Company at the Company's executive offices in order to gain a greater
knowledge of the Company's franchising operation, meet certain executive
officers and key
15
<PAGE> 25
employees of the Company, review certain employment records and evaluate recent
marketing efforts of the Company.
Following execution of the Merger Agreement, representatives of Ace also
began discussions with the Money Order Supplier (as defined below) regarding
financing for the Merger and submitted to the Money Order Supplier various
information regarding the Company and the proposed Merger.
On November 15, 1995, First Equity Corporation of Florida delivered its
written fairness opinion to the Company Board. See "-- Opinion of Financial
Advisor" below.
At a meeting on November 22, 1995, the Company Board ratified and
approved the Merger Agreement, determined that the Merger is fair to and in the
best interests of the Company and its shareholders, and determined to recommend
to the Company's shareholders that they approve and adopt the Merger Agreement
and approve the Merger. In approving the Merger, the Company Board was aware
of and considered and approved the terms of the Lang Severance Agreement. The
Company Board also approved the fairness opinion received from the Financial
Advisor and the form and content of this Proxy Statement.
On November 30, 1995, Ace lent the Company $450,000, See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Liquidity and Capital Resources."
The original Merger Agreement was amended, by an Amendment dated
December 20, 1995, to revise one date set forth in the original Merger
Agreement to reflect the updated schedule for the Merger. That Amendment is
part of the Merger Agreement accompanying this Proxy Statement as Appendix A.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARD OF DIRECTORS
In determining to recommend approval of the Merger, the Company Board
considered many factors; the following are all of the material factors
considered:
(1) The Company's core business, check cashing, requires substantial
amounts of cash "inventory" for operations. The Company believes that
with its present cash and credit lines it has sufficient capital to
continue its present level of operations. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Liquidity and Capital Resources." However, in order to realize what the
Company believes to be significant growth potential of its stores and to
continue to support the Company's expanding store and other operations,
the Company believes that, in the near future, it would have to obtain
additional cash. The Company's current credit relationships are such
that the Company Board is not confident that such funds can be obtained.
On the other hand, Ace has credit arrangements that would provide it
sufficient funds to operate all the Company's locations and realize
their growth potential. Consequently, Ace is in a position to offer a
price that reflects the Company's earnings potential, while the Company
may not be in a position to realize such potential.
(2) Before entering into the Merger Agreement, the Company, with the
involvement of its investment bankers and consultants, undertook a
comprehensive effort to locate other potential purchasers. As a result
of such effort, several offers and proposals to acquire the Company were
received. The Company Board evaluated all offers and indications of
interest on the basis of a number of factors, including each proposal's
underlying per share valuation of the Common Stock, the likelihood of
successfully completing the proposed transaction, the estimated timing
in completing the proposed transaction, and the anticipated costs of
completing the transaction. Prior to entering into the Merger Agreement
with Ace and Acquisition, all offers were at an effective valuation of
less than $1.20 per share. After announcing the Merger Agreement, the
Company received additional offers. But, no other offer received has
presented a high enough price and a high enough likelihood of completion
to justify terminating the Merger Agreement. See
"--Background of the Merger," above.
In addition, the Company has explored the availability of funds from
other sources, including lenders and third parties who had expressed
interest in making a substantial investment in the Company, but has not
located an adequate source of funds. Based on discussions with the
Company's investment bankers, the Company Board also has determined that
it would not be cost effective to raise capital in the public debt
16
<PAGE> 26
or equity markets. The Company Board believes that the Merger is the
best of the alternatives that has been offered or made available to the
Company and its shareholders.
(3) In informal discussions, Paradise, the brokerage firm through which
most of the Company shareholders (other than directors and other
affiliates of the Company) acquired their shares of Common Stock, has
indicated that it believes the Merger will be in the best interests
of the Company's shareholders, and more favorable to the shareholders
than other transactions that have been considered by the Company Board.
(4) The Board of Directors also has given significant weight to the
opinion of its Financial Advisor (attached as Appendix B hereto) to the
effect that the consideration to be paid to the shareholders of the
Company is fair to the shareholders from a financial point of view. See
"THE MERGER -- Opinion of Financial Advisor."
(5) Information available to the Company Board with respect to the
financial condition, results of operations and business of the Company
on both an historical and a prospective basis.
(6) The all-cash consideration to be received by shareholders in the
Merger and the opportunity for all shareholders to convert to cash all
of their shares of Common Stock.
(7) The financial ability of Ace and Acquisition to consummate the
Merger.
(8) The fact that the Merger Agreement permits the Company to pursue a
more favorable transaction should one materialize (although the Company
would then be required to pay Ace $300,000 in liquidated damages).
In view of the variety and number of factors considered in connection
with its evaluation of the Merger Agreement, the Company Board did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the factors considered in reaching its decision.
Upon consummation of the Merger, current shareholders of the Company will cease
to have any continuing interest in the Company, other than the right to payment
of the Merger Consideration in accordance with the terms of the Merger
Agreement. Accordingly, after consummation of the Merger, they will have no
opportunity to participate in any appreciation in the value of Common Stock,
other than the foregoing. However, the Company Board did not identify any
disadvantages to the Company's shareholders of consummation of the Merger.
THE COMPANY BOARD HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF, AND IS FAIR TO, THE HOLDERS OF SHARES OF THE COMPANY'S
COMMON STOCK. ACCORDINGLY, THE COMPANY BOARD HAS UNANIMOUSLY APPROVED AND
ADOPTED THE MERGER AGREEMENT AND APPROVED THE MERGER AND UNANIMOUSLY RECOMMENDS
THAT THE HOLDERS OF COMMON STOCK VOTE FOR THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND APPROVAL OF THE MERGER.
OPINION OF FINANCIAL ADVISOR
The Company has engaged First Equity Corporation of Florida (the
"Financial Advisor" or "First Equity") in connection with the transactions
contemplated by the Merger Agreement and to render its opinion as to the
fairness, from a financial point of view, to the shareholders of the Company, of
the Merger Consideration. The amount of the Merger Consideration was
determined through negotiations between the Company and Ace, and not the
Financial Advisor.
There is not and has not been any material relationship between the
Company or, to the Company's knowledge, any of the Company's affiliates and the
Financial Advisor, and no such relationship is contemplated.
On November 15, 1995, the Company Board received, and the Company Board
expects to receive as of the Closing, a written opinion from the Financial
Advisor that, as of such date, the consideration to be received by the
17
<PAGE> 27
Company's shareholders pursuant to the Merger Agreement is fair to such
shareholders from a financial point of view. The Financial Advisor's opinion
is addressed to the Company, the Company Board and the Company's shareholders,
and the Company's shareholders are entitled to rely upon such opinion. The
Financial Advisor has confirmed its written opinion as of the date of this
Proxy Statement.
THE FULL TEXT OF THE OPINION OF THE FINANCIAL ADVISOR, WHICH SETS FORTH
THE ASSUMPTIONS MADE, FACTORS CONSIDERED AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY THE FINANCIAL ADVISOR, DATED THE DATE OF THIS PROXY STATEMENT IS
ATTACHED AS APPENDIX B TO THIS PROXY STATEMENT. THE COMPANY'S SHAREHOLDERS ARE
URGED TO READ SUCH OPINION IN ITS ENTIRETY. THE FINANCIAL ADVISOR'S OPINION IS
DIRECTED ONLY TO THE FAIRNESS OF THE CONSIDERATION TO BE PAID IN THE MERGER TO
THE COMPANY'S SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY OF THE COMPANY'S SHAREHOLDERS AS TO HOW SUCH
SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE OPINION OF
THE FINANCIAL ADVISOR SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION ATTACHED AS APPENDIX B.
In rendering its opinion, the Financial Advisor: (1) reviewed the Merger
Agreement; (2) reviewed certain publicly available business and financial
information pertaining to the Company; (3) reviewed certain other information
provided to the Financial Advisor by the Company and prepared by the Company in
the ordinary course of its business; and (4) met with the management team of
the Company to discuss the business, financial condition and results of
operations, and prospects of the Company, as well as the Merger and the terms
of the Merger Agreement. The Financial Advisor also considered certain
financial and stock market data regarding the Company and compared that data
with similar data for other companies in businesses similar to those of the
Company, including Ace. In addition, the Financial Advisor considered the
financial terms of certain other business combinations that had recently been
effected or proposed. The Financial Advisor also considered such other
information, financial studies, analyses and investigations and financial,
economic and market data as it deemed relevant.
In connection with its review, the Financial Advisor did not independently
verify any of the foregoing information and relied on such information as being
complete and accurate in all material respects. With respect to any forecast
or projected financial information, the Financial Advisor assumed that such
information had been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of the Company as to the
future financial performance of the Company. In addition, the Financial
Advisor did not make an independent evaluation or appraisal of any of the
assets of the Company.
In connection with rendering its opinion, the Financial Advisor
considered a variety of valuation methods. The material valuation methods used
are summarized below. These analyses taken together provided the basis for the
Financial Advisor's opinion.
(1) Comparable Company Analysis. Using publicly available information,
the Financial Advisor attempted to identify other companies which, in the
Financial Advisor's judgment, were comparable to the Company for the purpose of
comparing historical operating and financial data, stock data and financial
ratios. In attempting to identify comparable companies, the Financial Advisor
considered such financial information as earnings per share for the latest
twelve months ("LTM"), fiscal 1994 and estimates for fiscal 1995; book value
per share; price multiples for LTM earnings per share, fiscal 1994 earnings
per share and estimated 1995 earnings per share; market capitalization; and
profitability. The Financial Advisor generally found that historical data
relating to the Company was not comparable to any other Companies considered.
Further, because of the Company's lack of earnings in recent periods, the
Financial Advisor did not develop any meaningful conclusions from this
analysis.
18
<PAGE> 28
(2) Selected Transaction Analysis. Using publicly available
information, the Financial Advisor also sought to identify recently completed
or pending transactions which, in the Financial Advisor's judgment, were
comparable to the Merger for the purpose of this analysis. The Financial
Advisor did not identify any such transactions, and no meaningful conclusions
were developed by the Financial Advisor from this analysis.
(3) Trading History of the Common Stock. The Financial Advisor
analyzed the price and trading volume history for the common stock of the
Selected Companies and the Company over the preceding year. The trading
history of the Selected Companies' common stock was reviewed to examine trends
in the industry and to examine industry factors affecting the Common Stock.
(4) Break-Up Analysis. The Financial Advisor performed a break-up
analysis to identify and value the principal asset components of the Company,
including installment notes receivable, Company owned stores and franchise
operations. In view of the lack of available information on comparable
companies and industry transactions, the break-up analysis incorporated
generally accepted industry valuation measures as well as traditional market
indications which were applied to determine a range of values for the
individual asset components. Other corporate assets not included within the
principal components were valued at book value. Intangibles were excluded from
the analysis. Total liabilities were then deducted to arrive at a net asset
valuation assuming the individual components and other assets could be
liquidated separately.
Installment Notes Receivable. At September 30, 1995, the Company had
installment notes receivable, net, of $2,691,957. These notes receivables
represent the major portion of the assets of the Company's subsidiary Check
Express Finance, Inc. ("CEF"), the Company's finance subsidiary operating mainly
in the used automobile financing industry. The Company has entered into a
letter of intent contemplating the sale of the assets or stock of CEF. See
"BUSINESS OF THE COMPANY -- General." In negotiating such letter of intent,
the Company valued its notes receivable at between 60% and 70% of the gross
amount of the receivables. The Financial Advisor determined that, based on a
gross amount of approximately $3,965,000 and a value of between 60% and 70% of
the gross amount, the installment notes receivable would have an estimated
value of between $2,379,000 and $2,776,000.
Company Stores. The Financial Advisor concluded that the check cashing
industry typically values check cashing stores at between 70% and 100% of gross
revenues and three times cash flow. This is consistent with the Company's
experience in acquiring other check cashing locations. The Financial Advisor
determined that, based on projected 1995 store revenues of $4,8000,000, the
Company's owned stores, including property and equipment, would have an
estimated value of between $3,360,000 and $4,800,000, while based on projected
1995 cash flow of $979,000 such stores would have an estimated value of
approximately $2,937,000.
Franchise Operations. The Financial Advisor determined that no industry or
other guidelines would be appropriate under the circumstances to value the
Company's franchise operations or franchise businesses in general. Two
approaches were considered in estimating the value of the Company's franchise
operations. The first approach capitalized the net income of the franchise
operations at a multiple which was derived from analysis of specialty financial
services companies, adjusted for size and risk. The average projected 1995
multiple for specialty financial services companies of 17.2 was converted to an
earnings yield of 5.8% (100% / 17.2). A risk premium of 50% was applied to
adjust for the size and uncertainty of the Company's franchise operations
relative to the publicly traded group of specialty financial services
companies. The resulting earnings yield of 8.7% was converted to a
price-earnings ratio of 11.5(100% / 8.7) and applied to adjusted net income of
the Company's franchise operations. In calculating adjusted net income,
expenses of $530,365 relating to the Company's operations support group were
added to total operating expenses for franchise operations. The Financial
Advisor determined that these expenses were substantially for the benefit of
franchise operations and, indeed, necessary to sustain the existing base of
royalties and franchise sales. Thus, stated pretax income from franchise
operations of $839,942 was reduced by $530,365 resulting in adjusted pretax
income of $309,577. Pro forma taxes of $117,639 were deducted using a 38% tax
rate resulting in adjusted net income of $191,938, indicating an estimated value
of approximately $2,207,000.
A second approach used to value franchise operations considered the ongoing
revenue stream from franchise royalties. This approach assumed that franchise
sales had no value since 1995 projected sales operating expenses of $551,439
exceeded projected sales revenues of $323,500. Franchise royalties for
December were annualized at $1,578,420. Franchise support expenses of $327,503
and operations support expenses of $530,365 were deducted to arrive at net
income from franchise royalties. Pro forma taxes of $273,810 were deducted
assuming a 38% tax rate, resulting in pro forma cash flow from royalties of
$446,742. In arriving at a discount factor, a five year estimated average
remaining life was used and a 10% interest rate was applied resulting in an
estimated value of approximately $1,693,000.
Other Corporate Assets. Other corporate assets, including cash, accounts
receivable, notes receivable, recoverable income taxes, prepaid expenses, and
other assets were valued at their respective balance sheet amounts at September
30, 1995 and totaled $3,584,000.
Total Assets. Based on the foregoing, the Financial Advisor estimated the
total value of the Company's assets to be between approximately $10,593,000 and
approximately $13,367,000.
Liabilities. Total liabilities at September 30, 1995 of $6,455,000 were
deducted from total assets to arrive at an estimated net asset value range for
the Company of between approximately $4,138,000 and approximately $6,912,000.
Net Asset Value Per Share. Estimated net asset value per share was calculated
by adding the proceeds from presently exercisable options to estimated net
asset value and dividing by the total number of shares outstanding after such
exercise, resulting in an estimated net asset value per share of between
approximately $0.82 per share and approximately $1.33 per share.
(5) Discounted Cash Flow Analysis. No discounted cash flow analysis
was performed except as to valuation of the Company's franchise operations as
part of the break-up analysis described above.
(6) General. The Financial Advisor also considered various industry
related and other factors.
In preparing its opinion to the Company Board, Financial Advisor
performed a variety of financial and comparative analyses, including those
described above. This summary of such analyses does not purport to be a
complete description of the analyses underlying the Financial Advisor's
opinion. The preparation of a fairness opinion is a complex analytical process
involving various determinations as to the most appropriate and relevant
methods of financial analyses and the application of those methods to the
particular circumstances. Therefore, such opinion is not readily susceptible
to a summary description. In arriving at its opinion, the Financial Advisor
did not attribute any particular weight to any analysis or factor considered by
it, but rather made qualitative judgments as to the significance and relevance
of each analysis and factor. The Financial Advisor believes that its analyses
must be considered as a whole and that selecting portions of its analyses and
other factors considered by it, without considering all analyses and factors,
could create a misleading view of the processes underlying its opinion. The
Financial Advisor made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many
of which are beyond the control of the Company and the Financial Advisor. Any
estimates contained in the Financial Advisor's analyses are not necessarily
indicative of actual values, which may be significantly more or less favorable
than as set forth therein. Estimates of the financial value of companies do
not purport to be appraisals or necessarily reflect the prices at which
companies actually may be sold. Because such estimates are inherently subject
to uncertainty, neither the Company, Ace, the Financial Advisor nor any other
person is responsible for their accuracy.
In rendering its opinion, the Financial Advisor expressed no view and
made no recommendations to the Company's shareholders with respect to how such
holders should vote on the Merger.
First Equity is a regionally recognized investment banking firm
regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, private placements and valuations for
estate, corporate and other purposes. The Company Board selected and retained
the Financial Advisor to act
19
<PAGE> 29
as financial advisor in connection with the Merger on the basis of such
experience and other relevant factors. See "-- Background of the Merger."
The Company has paid the Financial Advisor a fee of $25,000, and has
reimbursed the Financial Advisor for certain of its out-of-pocket expenses
aggregating less than $500, in connection with such firm's analysis and
opinion.
PROVISIONS OF THE MERGER AGREEMENT
Conversion of Shares
At the Effective Time, and without any action on the part of the
Company, Ace or Acquisition, or any holder of any shares of Common Stock, each
outstanding share of Common Stock (other than Dissenting Shares) will be
converted automatically into the right to receive the Merger Consideration.
See "--Surrender of Certificates" below. Dissenting Shares will have the right
to receive such consideration as may be determined to be due to the holders of
such shares pursuant to Florida law, but will have no other rights.
Each share of common stock, $0.01 par value of Acquisition outstanding
and held by Ace as of the Effective Time will be converted into and become one
fully paid and nonassessable share of Common Stock of the Company as the
surviving entity in the Merger. For a discussion of the treatment of Options
and Warrants in the Merger Agreement, see "-- Outstanding Options and Warrants"
below. For a discussion of the rights of holders of Dissenting Shares, see
"RIGHTS OF DISSENTING SHAREHOLDERS."
Conditions to the Merger
The obligations of the Company to effect the Merger are subject to the
satisfaction of certain conditions, including, among others, that (1)
Acquisition and Ace shall have fulfilled all their obligations under the Merger
Agreement; (2) all of the representations and warranties of Acquisition and Ace
shall have been true and correct as of the date of the Merger Agreement and
shall be true and correct as of the Closing Date; (3) the Company shall have
received an opinion of counsel to Acquisition and Ace as to certain matters;
(4) no action, proceeding, or order by any court or governmental body or agency
shall have been threatened in writing, asserted, instituted, or entered to
restrain or prohibit the carrying out of the Merger; and (5) all of the
agreements, documents and instruments contemplated by or attached as exhibits
to the Merger Agreement shall have been executed and delivered.
The obligations of Acquisition and Ace to effect the Merger are subject
to the satisfaction of certain conditions, including, among others, that (1)
the Company shall have fulfilled all its obligations under the Merger
Agreement; (2) all of the representations and warranties of the Company shall
have been true and correct as of the date of the Merger Agreement and shall be
true and correct as of the Closing; (3) Acquisition and Ace shall have received
an opinion of counsel to the Company as to certain matters; (4) there shall
have occurred no material adverse change in the amount of $25,000 or more in
the business, properties, assets, liabilities, results of operations,
prospects, or condition, financial or otherwise, of the Company from that
reflected in the Company's consolidated balance sheet as of June 30, 1995, and
the related consolidated statements of income, changes in shareholders' equity,
and changes in cash flow for the year then ended; (5) Acquisition and Ace shall
have completed a due diligence investigation of the Company and shall be
satisfied in their sole discretion with the results thereof; (6) the Company
shall have obtained all approvals and consents of third parties and any
governmental body that are necessary for the Company's Closing; (7) the Merger
shall have been approved by the Company's shareholders in accordance with
Florida law, and not more than 5% of the Company's shareholders shall have
exercised dissenters' rights under the Florida Business Corporation Act; (8) no
action,
20
<PAGE> 30
proceeding, or order by any court or governmental body or agency shall have
been threatened in writing, asserted, instituted, or entered to restrain or
prohibit the carrying out of the Merger; (9) all of the agreements, documents
and instruments contemplated by or attached as exhibits to the Merger Agreement
shall have been executed and delivered; and (10) Ace shall have secured and
closed a financing arrangement acceptable to Ace to provide the funds necessary
to consummate the Merger, and shall have received the consent of its senior
secured lender that is necessary for Ace's consummation of the financing and
transactions contemplated by the Merger Agreement.
Conduct of Business Pending the Merger
Pending consummation of the Merger, the Company has agreed
(1) to afford Ace, Acquisition and their representatives full access to
and the right to inspect, review, and make copies of its assets, properties,
books, contracts, commitments and records, view the Company's physical
properties and communicate with key employees and customers and suppliers, and
in connection therewith to furnish such information and materials as Ace and
Acquisition may reasonably request;
(2) to conduct its operations in the ordinary and usual course of
business consistent with past and current practices, and use its best efforts
to maintain and preserve intact its organization and goodwill, to retain the
services of key officers and employees, and to maintain current business
relationships;
(3) to advise Acquisition and Ace of material operational matters and
the general status of ongoing operations;
(4) to notify Acquisition and Ace of any emergency or other change in
the normal course of business, and of any governmental complaint,
investigation, hearing, or communication indicating the same may be
contemplated;
(5) to use its best efforts to take no action that, and not fail to take
any action the failure to take which, would cause or permit its representations
and warranties to be untrue in any respect at the Closing; and
(6) not to (i) declare, pay or set aside for payment any dividend or
distribution with respect to its capital stock; (ii) make any change in its
capital structure, (iii) redeem, purchase, or otherwise acquire any of the
Common Stock or any warrant or option to purchase Common Stock, except for an
amount not greater than the amount that would be paid therefor under the Merger
Agreement; (iv) make any material loan or advance to any shareholder, officer,
director or employee of the Company; or (v) increase the compensation of or pay
or accrue any bonus to any employee of the Company other than in accordance
with established practices.
Mutual Covenants
The Company on the one hand, and Acquisition and Ace on the other hand,
have agreed with each other (1) that each will notify the other or others in
writing of any facts that would make any of the notifying party's or parties'
representations and warranties under the Merger Agreement untrue in any
material respect, or that would otherwise constitute a material adverse change
in the business, results of operation, working capital, assets, liabilities, or
condition (financial or otherwise) of the notifying party or parties taken as a
whole; (2) to use their best efforts and cooperate in proceeding to Closing;
(3) to make all press releases and similar announcements jointly, subject to
regulatory and other requirements; (4) to provide to the other copies of all
Securities and Exchange Commission and other governmental filings; and (5) to
maintain the confidentiality of information received from the other or others.
21
<PAGE> 31
No Solicitation Provision
The Company has agreed not to (1) initiate, solicit or encourage, or
take any other action intended or designed, directly or indirectly, to
facilitate, any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any "Competing Transaction" (as defined
below), or (2) enter into discussions with or negotiate with any person or
entity or otherwise cooperate in any way in furtherance of such inquiries or to
obtain a Competing Transaction, or (3) agree to or endorse any Competing
Transaction, or authorize any person to take such action. The Company also
agreed to direct and instruct and use its best efforts to cause its
representatives not to take any such prohibited action, and to notify Ace of
the receipt and material terms of any such inquiries or proposals as are
received. "Competing Transaction" includes, among other things (other than the
transactions contemplated by the Merger Agreement), (1) any merger,
consolidation, share exchange, business combination, or other similar
transaction; (2) any sale, lease, exchange, mortgage, pledge, transfer, or
other disposition of ten percent or more of the assets of the Company or
issuance of ten percent or more of the outstanding voting securities of the
Company; (3) any tender or exchange offer for ten percent or more of the
outstanding Common Stock; (4) any solicitation of proxies in opposition to the
Merger; and (5) the acquisition by any person or group of persons acting
together of ten percent or more of the outstanding shares of Common Stock or of
control of the Company.
Notwithstanding the foregoing, the Company may review and respond to an
unsolicited proposal from a third party if and to the extent that the Company
Board, after consultation with legal counsel, determines in good faith that
such action is required or may reasonably be required for the Board of
Directors to comply with its fiduciary duties to the Company's shareholders,
provided that the Company obtains a confidentiality agreement from such party
and further provided that the Company notifies Ace prior to responding and
keeps Ace informed as to the matter.
Termination and Liquidated Damages
The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval by the Company's shareholders,
(1) by mutual consent of the parties to the Merger Agreement, (2) by either
party after February 15, 1996 if a condition to such party's obligations to
consummate the Merger has not been satisfied; (3) by Ace if there has been a
breach by the Company of any of its covenants, agreements, representations or
warranties under the Merger Agreement; (4) by the Company if there has been a
breach by Acquisition or Ace of any of their covenants, agreements,
representations or warranties under the Merger Agreement; (5) by either Ace or
the Company if any governmental action prevents or prohibits Closing; (6) by
either Ace or the Company if the Merger Agreement shall fail to receive the
requisite vote for approval by the Company's shareholders; (7) by either Ace or
the Company if the Company Board recommends to its shareholders any Competing
Transaction or if a third party consummates a Competing Transaction and gains
control of the Company. Provisions regarding confidentiality, press releases
and payment of expenses of the transaction shall survive termination of the
Merger Agreement.
If the Merger Agreement is terminated (1) in connection with the
approval by the Board of Directors, the recommendation by the Board of
Directors that the Company's shareholders approve, or the consummation of a
Competing Transaction; (2) on account of the failure of the Company's
shareholders to approve the Merger; (3) on account of a breach by the Company
of its obligations under the Merger Agreement; or (4) on account of a material
breach of any representation or warranty of the Company that is within the
knowledge of certain key personnel, then the Company shall pay to Ace, promptly
after termination of the Merger Agreement, liquidated damages of $300,000 in
immediately available funds. Such payment shall not limit any right of Ace to
recover monetary damages, including consequential and punitive damages, in
connection with any wrongful act of the Company.
22
<PAGE> 32
If the Merger Agreement is terminated by the Company on account of a
breach by Acquisition or Ace of their obligations under the Merger Agreement or
on account of a material breach of any representation or warranty of Ace or
Acquisition, then Ace shall pay to the Company, promptly after termination of
the Merger Agreement, liquidated damages of $200,000 in immediately available
funds. Such payment shall not limit any right of the Company to recover
monetary damages, including consequential and punitive damages, in connection
with any wrongful act of Acquisition or Ace.
Amendments and Waivers
The Merger Agreement may be amended, modified, or supplemented, at any
time before the Effective Time, only by a written instrument executed by the
parties against which enforcement of the amendment, modification, or supplement
is sought.
Shareholder approval of the Merger Agreement and the Merger will not
expire and is not subject to reconsideration in the event of an extended delay
or material change in the Company or its prospects. However, the Company Board
can, under certain circumstances, terminate the Merger Agreement and abandon
the Merger after shareholder approval is obtained.
EFFECT OF THE MERGER ON THE COMPANY
At the Effective Time, the Company, as the surviving corporation, will
continue to exist as a Florida corporation and will be a wholly owned
subsidiary of Ace. Consequently, the current shareholders of the Company will
have no continuing interest in the Company. Following the Merger, there will
be no public trading market for the capital stock of the Company, and the
Common Stock will be deregistered under the Securities Exchange Act of 1934, as
amended. Pursuant to the Merger Agreement, the Articles of Incorporation and
the Bylaws of the Company in effect immediately before the Effective Time will
be the Articles of Incorporation and the Bylaws of the Company as the surviving
corporation following the Merger.
SOURCE AND AMOUNT OF FUNDS
If the Merger is consummated, Ace will be required under the Merger
Agreement to pay cash to the holders of shares of Common Stock, Options and
Warrants in each case outstanding immediately before the Effective Time, in the
aggregate amount of approximately $6.2 million. In addition, Ace will be
obligated to pay an aggregate $287,000 to Mr. Lang over a two-year period
under the Lang Severance Agreement (see "-- Interests of Certain Persons in the
Merger -- Agreement and Release" below) and a maximum aggregate $360,000, over
a period of up to three years, as severance to certain other current key
employees of the Company whose employment may be terminated upon Closing.
Ace intends to borrow substantially all of such amounts from Ace's money
order supplier, American Express Travel Related Services Company, Inc. (the
"Money Order Supplier"), under the existing 1992 Master Agreement, as amended,
between Ace and the Money Order Supplier (the "Money Order Agreement").
The Money Order Agreement includes, among other things, a revolving
advance commitment by the Money Order Supplier, in the maximum aggregate amount
of $15.0 million, on which Ace may draw for the purpose of its expansion and
acquisition of new stores. Each borrowing by Ace under such commitment bears
interest at an annual rate of 1% over the prime rate (as currently published in
The Wall Street Journal) and is payable in equal monthly installments using a
60-month amortization until December 31, 1998, when all
23
<PAGE> 33
outstanding amounts will be due. Approximately $5.3 million of such commitment
is currently available to Ace, and Ace is currently negotiating an increase in
such commitment.
All necessary amounts that Ace does not borrow under the Money Order
Agreement will be paid out of Ace's working capital.
A condition to the Merger is that Ace will be able to borrow under the
Money Order Agreement an amount necessary to consummate the Merger. Ace's
ability to draw on the existing commitment is subject to certain conditions,
including verification by the Money Order Supplier of the proposed use of
proceeds, but Ace currently expects that such conditions will be satisfied.
SURRENDER OF CERTIFICATES
Exchange Agent
As of the Effective Time, Ace shall deposit with First Interstate Bank
of Texas, N.A. (the "Exchange Agent"), for the benefit of the shareholders of
the Company (other than shareholders who properly exercise dissenters' rights
under Florida law), the aggregate Merger Consideration (the "Exchange Fund")
to be paid to the shareholders in exchange for their outstanding shares of
Common Stock.
Exchange Procedures
Promptly after the Effective Time, Ace will instruct the Exchange Agent
to mail to each holder of record of a certificate of certificates which
immediately prior to the Effective Time represented outstanding shares of
Common Stock (other than shares held by shareholders who properly exercise
dissenters' rights under Florida law) (the "Certificates") (1) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in customary form) and (2)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. SHAREHOLDERS SHOULD NOT SUBMIT THEIR STOCK
CERTIFICATES FOR EXCHANGE UNTIL THE INSTRUCTIONS AND THE LETTER OF TRANSMITTAL
ARE RECEIVED. Upon surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration and the Certificates so surrendered will be canceled. In the
event of a transfer of ownership of shares of Common Stock which is not
registered in the transfer records of the Company, the Merger Consideration may
be paid to a transferee if the Certificates representing the Common Stock are
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrender as contemplated by the Merger
Agreement, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive, upon such surrender the Merger
Consideration.
No Further Rights in Common Stock
The payment of the Merger Consideration in accordance with the terms of
the Merger Agreement will be deemed to have been issued and paid in full
satisfaction of all rights pertaining to the Common Stock.
Termination of the Exchange Fund
Any portion of the Exchange Fund which remain undistributed to the
holders of the Certificates one year after the Effective Time will be delivered
to the Company, upon demand, and any holders of Common Stock
24
<PAGE> 34
(other than Dissenting Shares) who have not theretofore complied with the
exchange procedure must thereafter look only to the Company for the Merger
Consideration.
No Liability
Neither the Company nor Ace will be liable to any holder of a
Certificate for any Merger Consideration delivered to a public official
pursuant to any abandoned property, escheat or similar law.
Lost, Stolen or Destroyed Certificates
The Exchange Agent will pay in exchange for any lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof, the Merger Consideration. Ace may, however, require the owner
of such lost, stolen or destroyed Certificates to deliver a bond of indemnity
against any claim that may be made against Ace, the Company or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
OUTSTANDING OPTIONS AND WARRANTS
The Company has outstanding Options and Warrants to purchase, in the
aggregate, up to 1,678,500 shares of Common Stock at exercise prices ranging
from $.43 per share to $3.00 per share. As to such Options as to which the
exercise price is less than the Merger Consideration per share, the Company has
obtained the agreement of the holders thereof to surrender such options,
simultaneously with the Closing, in exchange for the difference between the
Merger Consideration of $1.20 per share and the exercise price per share under
the applicable option multiplied by the number of shares covered thereby.
Warrants, included in outstanding Units, to purchase up to 1,000,500 shares of
Common Stock at an exercise price of $3.00 per share are being redeemed by the
Company for $.01 per underlying share of Common Stock ($10,005 in the aggregate)
in accordance with the terms of the Units. Options and Warrants as to which
the exercise price is greater than the Merger Consideration per share are to
be canceled without any payment by the Company. See "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
DEREGISTRATION OF COMMON STOCK
Following the Closing, the shares of Common Stock will cease to be
registered under the Securities Exchange Act of 1934 and will cease to be
publicly traded.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Interests in Stock and Stock Options
Certain of the Company's directors and officers own shares of Common
Stock and will be entitled to receive the Merger Consideration. Certain of the
Company's directors and officers own Options and will be entitled to receive
the Merger Consideration less the exercise price of the Option for each share
of Common Stock covered by the Options. See "MANAGEMENT," "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" and "-- Outstanding Options and
Warrants" above. Such persons will receive the same Merger Consideration per
share as all other shareholders, and will not receive any special or additional
consideration for their shares of Common Stock or Options.
Agreement and Release
Larry F. Lang, Chairman and Chief Executive Officer of the Company, will
voluntarily terminate his employment with the Company in connection with the
Merger, as further described below. Mr. Lang has entered
25
<PAGE> 35
into an employment agreement with the Company providing for a term of
employment that began as of April 1, 1995 and is scheduled to terminate on
March 31, 2000. Under the employment agreement Mr. Lang receives $130,000 each
year in base salary, subject to possible increase (but not decrease) by the
Company Board after through March 31, 1996. In addition, he is entitled to
receive bonus compensation in an amount equal to ten percent (10%) of the
Company's pre-tax profit on a quarterly basis, subject to certain limits. Mr.
Lang also receives under his employment agreement, each year, an option to
purchase 50,000 shares of Common Stock at the closing bid price as of the close
of business on the last business day immediately preceding the grant date, as
well as certain fringe benefits. Under his employment agreement, if the
Company were to terminate his employment without good cause, then the Company
would be required to immediately pay to Mr. Lang, in a single lump sum payment,
the amount of basic compensation that would be payable over time were his
employment to continue until March 31, 2000, and also to continue to pay all
other compensation provided for in the employment agreement.
Early in the negotiations between the Company and Ace, Ace and Mr. Lang
acknowledged that Mr. Lang's employment with the Company would not continue
after the acquisition of the Company by Ace. Accordingly, Mr. Lang has entered
into an Agreement and Release with Ace (the "Lang Severance Agreement"),
pursuant to which Mr. Lang has agreed to resign as of the effective date of the
Merger. The following discussion includes summaries or descriptions of certain
provisions of the Lang Severance Agreement. Such summaries and descriptions
are qualified in their entirety by reference to the text of the Lang Severance
Agreement attached as Appendix D to this Proxy Statement.
Under the terms of the Lang Severance Agreement, Mr. Lang has (1)
accepted a reduction of his severance pay to $287,000, amounting to the
approximate equivalent of two years of continued base salary, to be paid over a
two year period; (2) released the Company from substantially all claims that he
might have against the Company; (3) agreed to provide consulting services to
Ace for one year for no additional consideration; and (4) agreed not to compete
with Ace for a period of three years. In exchange for such concessions, (1)
the Company will reimburse Mr. Lang for health insurance premiums for 18 months
after the effective date of the Merger, not to exceed $120 per month; (2) the
Company will use its best efforts to cause Mr. Lang to be released from all
personal guarantees by him of the Company's indebtedness, and will repay any
such indebtedness with respect to which a release is not obtained within 60
days after the effective date of the Merger; and (3) the Company has agreed
that for a period of ten years Mr. Lang will have the right to open up to ten
franchised check cashing stores under franchise agreements with Check Express
USA, Inc., one of the Company's franchising subsidiaries, without payment of
initial franchise fees, with reduced continuing monthly franchise royalties,
and with certain other variances from the Company's usual form of franchise
agreement.
The Company has entered into a letter of intent contemplating the sale
of the assets or stock of Check Express Finance, Inc. ("CEF"), the Company's
finance subsidiary operating mainly in the used automobile financing industry.
See "BUSINESS OF THE COMPANY -- General." However, in addition to the
foregoing, Ace has indicated that, if the assets or stock of CEF have not been
sold as of the Closing, Ace may desire to dispose of CEF. Ace has agreed to
pay Mr. Lang a fee of 10% of any gain upon the sale of CEF, determined in
accordance with generally accepted accounting principles, should CEF be sold to
a party introduced to Ace by Mr. Lang within one year of such introduction.
Shareholder Agreements and Irrevocable Proxies
Ace has entered into a Shareholder Agreement and Irrevocable Proxy with
each of certain principal shareholders of the Company, pursuant to which Ace
has the power to vote an aggregate of 1,657,606 shares of Common Stock to
approve the Merger, which represents approximately 32.8% of the outstanding
Common Stock on the Record Date. The shareholders that entered into the
Shareholder Agreements agreed (1) not to sell,
26
<PAGE> 36
transfer, pledge, encumber, assign, or otherwise dispose of their shares of
Common Stock, (2) not to take any action or actions to perfect any dissenters'
rights he or it may have as a result of the Merger under the Dissenters' Rights
Statutes or otherwise and (3) to cause any representatives or employees of such
shareholder who are members of the Company Board to vote to recommend approval
and adoption of the Merger Agreement by the shareholders of the Company,
subject to any contrary fiduciary duties. See "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT." A form of the Shareholder Agreement is
attached as Appendix E hereto. The preceding summary of the Shareholder
Agreement is qualified in its entirely by reference to the full text of the
Shareholder Agreement.
Severance Arrangement for Employees Other than Lang
The employment by the Company of some employees other than Mr. Lang will
terminate in connection with the consummation of the Merger, whereupon such
persons will receive severance pay either in accordance with Company policy or
on an individually negotiated basis. It is anticipated that the employment of
Decker A. Todd, Vice President-Finance and Chief Financial Officer of the
Company, may terminate in connection with consummation with the Merger, and
that upon such termination he will receive approximately $44,000 in severance
pay, equivalent to approximately seven months' salary for Mr. Todd. No officer
or other key employee, other than Messrs. Lang and Todd, is presently expected
to terminate his or her employment with the Company in connection with the
consummation of the Merger.
FEDERAL INCOME TAX CONSEQUENCES
The following description of the material federal income tax
consequences of the Merger to holders of shares of Common Stock is provided
without reference to the particular facts and circumstances of any particular
shareholder or to any state, local or foreign tax laws that may be applicable
in a particular case. IN VIEW OF THE INDIVIDUAL NATURE OF EACH SHAREHOLDER'S
TAX SITUATION, SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER.
The Merger will be a taxable event for any holder of shares of Common
Stock for federal income tax purposes and also may be a taxable event under
applicable state, local and foreign tax laws. A shareholder will recognize
gain or loss for federal income tax purposes measured by the difference between
the amount of cash received (less, in the case of dissenters, any amount
thereof that is deemed to be interest for federal income tax purposes) and such
shareholder's adjusted tax basis for the shares of Common Stock converted into
cash. The gain or loss recognized will be treated as a capital gain or loss if
the shares of Common Stock are held by the shareholder as a capital asset, and
will be a long-term capital gain or loss if the shareholder's holding period
for such shares exceeds one year.
To prevent the possibility of back-up federal income tax withholding on
payments made to the Company's shareholders with respect to shares of Common
Stock converted to cash pursuant to the Merger, each shareholder must provide
the Exchange Agent appointed to distribute the Merger Consideration with the
shareholder's correct taxpayer identification number by completing the
Substitute Form W-9 to be included with the letter of transmittal, or any other
forms as may be applicable.
ACCOUNTING TREATMENT
Ace will account for the Merger using the purchase method of accounting
under generally accepted accounting principles. Under the purchase method of
accounting, assets and liabilities of the Company would be recorded at their
fair value on the Closing Date, and any excess of the purchase price over the
fair value of the
27
<PAGE> 37
underlying net assets of the Company would be recorded as goodwill. For
accounting purposes, Ace will be deemed to be purchasing all outstanding shares
of Common Stock.
REGULATORY REQUIREMENTS
Neither the Company, Ace, or Acquisition is aware of any governmental
approvals required for consummation of the Merger, other than the compliance
with federal securities laws in connection with the solicitation of proxies.
Since the Company will become a wholly owned subsidiary of Ace, certain state
and local licenses and registrations relating to and necessary for the
continued conduct of the business of the Company will require filings,
amendments or notices under state and local laws due to such change of control.
RIGHTS OF DISSENTING SHAREHOLDERS
Pursuant to Sections 607.1301, 607.1302 and 607.1320 of the Florida
Business Corporation Act (the "Dissenters' Rights Statutes"), any shareholder
of the Company has the right to dissent from the Merger and obtain, instead of
the Merger Consideration, payment of the "fair value" of such person's shares
in the event of consummation of the Merger, provided that such holder complies
with applicable statutory requirements, summarized below. All references to
and summaries of the rights of dissenting shareholders are qualified in their
entirety by reference to the text of the Dissenters' Rights Statutes attached
to this Proxy Statement as Appendix C.
"Fair value" generally means the value of the shares of Common Stock as
of the close of business on the day prior to the date of the Special Meeting,
and is generally determined excluding any appreciation or depreciation in
anticipation of the Merger, unless exclusion would be inequitable. The Company
Board believes that, as reflected by the Company's market price per share in
recent years, the fair value of the Company's shares for purposes of this
statute would be less than $1.20 per share. It is important to remember that,
although a shareholder may exercise dissenters' rights in hope or anticipation
of receiving more than the Merger Consideration, it is possible for the
exercise of dissenters' rights to result in the receipt of a lower sale price
than the Merger Consideration. As described in more detail below, the
dissenters' rights procedure includes an offer by the Company to purchase the
dissenters' shares for what the Company estimates to be the "fair value" of the
shares. This offer generally serves as the beginning of a negotiation period,
and precedes any resort to the courts.
A shareholder exercising dissenters' rights (a "Dissenting Shareholder")
may dissent as to fewer than all the shares registered in such person's name.
In that event, the Dissenting Shareholder's rights shall be determined as if
the shares as to which the Dissenting Shareholder has dissented ("Dissenting
Shares") and such person's other shares were registered in the names of
different shareholders.
A shareholder entitled to dissent and obtain payment for such person's
shares under the Dissenters' Rights Statutes may not challenge the corporate
action creating such entitlement unless the action is unlawful or fraudulent
with respect to the shareholder or the corporation.
The procedures set forth in the Florida Business Corporation Act must be
strictly complied with. Failure to follow any such procedures will result in a
termination or waiver of dissenters' rights. Under Florida law, a Dissenting
Shareholder, as to such person's Dissenting Shares, must:
(1) Deliver to the Company, at the address set forth below, before the
vote on the Merger Agreement and the Merger is taken, written notice of
the Dissenting Shareholder's intent to demand payment for the Dissenting
Shares if the Merger is effectuated, and
28
<PAGE> 38
(2) Not vote the Dissenting Shares in favor of the Merger Agreement and
the Merger.
The notice of the Dissenting Shareholder's intent to demand payment for
Dissenting Shares must be made in writing and delivered to the Company. Any
such notice must be sent to the Company at its principal executive offices, 101
East Kennedy Boulevard, Suite 3800, Tampa, Florida 33602, Attention:
Corporate Secretary, and must be received at such address before the Special
Meeting.
The notice of the Dissenting Shareholder's intent to demand payment for
Dissenting Shares must be made by or for the holder of record of shares of
Common Stock. Accordingly, such demand must be executed by or for such
shareholder of record, fully and correctly, as such shareholder's name appears
on the stock certificates representing the Dissenting Shares. If the
applicable shares are owned of record in a fiduciary capacity, such as by
trustee, guardian or custodian, execution of the notice should be made in such
capacity, and if the applicable shares are owned of record by more than one
person, as in a joint tenancy or tenancy in common, such notice should be
executed by or for all joint owners. An authorized agent, including one of two
or more joint owners, may execute the notice. However, the agent must identify
the record owner(s) and expressly disclose the fact that, in executing the
notice, the agent is acting as agent for the record owner(s).
A record owner, such as a broker, who holds shares as nominee for other
persons may exercise dissenters' rights with respect to the shares held for all
or less than all of such other persons. In such case, the written notice
should set forth the number of Dissenting Shares covered by it. Where no
number of shares is expressly mentioned, the notice will be presumed to cover
all shares standing in the name of such record owner.
Within 10 days after the Special Meeting, if the Merger Agreement is
approved and adopted by the Company's shareholders, the Company must give
written notice of the approval and adoption of the Merger Agreement to each
Dissenting Shareholder who filed a notice of election to dissent. Within 20
days after the giving of such notice to him or her, any Dissenting Shareholder
electing to dissent shall file with the Company, at the address set forth
above, a notice of such election, stating the Dissenting Shareholder's name and
address, the number of Dissenting Shares, and a demand for payment of the fair
value of the Dissenting Shares. Any shareholder failing to file such election
to dissent within the period set forth shall be bound by the terms of the
Merger and will be entitled to receive the Merger Consideration per share. Any
shareholder filing an election to dissent must deposit his certificate or
certificates representing the Dissenting Shares with the Company simultaneously
with the filing of the election to dissent.
Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after the
Merger is effected, whichever is later (but in no case later than 90 days from
the date of the Special Meeting, the Company shall make a written offer to each
Dissenting Shareholder who has made demand as provided in the Dissenters'
Rights Statutes to pay an amount the Company estimates to be the fair value for
the Dissenting Shares. Such notice and offer shall be accompanied by
information specified in the Dissenters' Rights Statutes.
If within 30 days after the making of such offer any Dissenting
Shareholder accepts the same, payment for such person's Dissenting Shares shall
be made within 90 days after the making of such offer or the consummation of
the Merger, whichever is later. Upon payment of the agreed value, the
Dissenting Shareholder shall cease to have any interest in such Dissenting
Shares.
If the Company fails to make such offer within the specified period or
if it makes the offer and any Dissenting Shareholder or Shareholders fail to
accept the same within the period of 30 days thereafter, then the Company,
within 30 days after receipt of written demand from any Dissenting Shareholder
given within 60 days after the Special Meeting, shall, or at its election at
any time within such period of 60 days may, file an action in any court of
competent jurisdiction in Hillsborough County, Florida requesting that the fair
value of such shares be determined. The court shall also determine whether
each Dissenting Shareholder, as to whom the Company requests the court to make
such determination, is entitled to receive payment for his Dissenting Shares.
If the Company fails to institute such proceedings, any Dissenting Shareholder
may do so in the name of the Company. All Dissenting Shareholders (whether or
not residents of Florida), other than shareholders who have agreed with the
Company
29
<PAGE> 39
as to the value of their Dissenting Shares, shall be made parties to the
proceeding as an action against their Dissenting Shares. The Company shall pay
each Dissenting Shareholder the amount found to be due within 10 days after
final determination of the proceedings. Upon payment of the judgment, the
Dissenting Shareholder shall cease to have any interest in such Dissenting
Shares.
The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court. The costs and expenses of any such
proceeding shall be determined by the court and shall be assessed against the
Company, but all or any part of such costs and expenses may be apportioned and
assessed as the court deems equitable against any or all of the Dissenting
Shareholders who are parties to the proceeding, to whom the Company has made an
offer to pay for the shares, if the court finds that the action of such
shareholders in failing to accept such offer was arbitrary, vexatious, or not
in good faith.
A proxy or vote against the Merger Agreement and the Merger does not
constitute such a notice of intent to demand payment and is not sufficient to
assert dissenters' rights.
Upon filing a notice of election to dissent, the Dissenting Shareholder
shall thereafter be entitled only to payment as provided in the Dissenters'
Rights Statutes and shall not be entitled to vote or to exercise any other
rights of a shareholder. A notice of election may be withdrawn in writing by
the shareholder at any time before an offer is made by the Company, as set
forth below, to pay for the Dissenting Shares. After such offer, no such
notice of election may be withdrawn unless the Company consents thereto.
However, the right of such shareholder to be paid the fair value of the
Dissenting Shares shall cease, and the Dissenting Shareholder shall be
reinstated to have all rights as a shareholder as of the filing of his notice
of election, including any intervening preemptive rights and the right to
payment of any intervening dividend or other distribution or, if any such
rights have expired or any such dividend or distribution other than in cash has
been completed, in lieu thereof, at the election of the Company, the fair value
thereof in cash as determined by the Company Board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim, if:
(1) Such demand is withdrawn as provided in Section 607.1320 of the
Florida Business Corporation Act;
(2) The Merger is abandoned or rescinded or the shareholders revoke the
authority to effect such action;
(3) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in the statute; or
(4) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by the Dissenters' Rights
Statutes.
CERTAIN INFORMATION REGARDING ACE AND ACQUISITION
Ace is the largest owner and operator of check-cashing stores in the
United States. It owns and operates over 450 stores in 15 states and the
District of Columbia. Ace stores offer check-cashing and other retail
financial services at competitive rates in clean, convenient settings. Those
services include cashing payroll checks, government checks, and insurance
drafts; selling American Express Money Orders; providing money transfer
services using the American Express MoneyGram network; and electronic filing of
federal income tax returns and processing the related tax refund anticipation
loans for customers from third-party lenders. Some of
30
<PAGE> 40
Ace's stores also offer telephone and utility bill payment services, lottery and
lotto tickets, public transportation passes, photocopying and fax transmission
services, travelers checks, postage stamps, small consumer loans, and other
financial services.
Ace's strategy is to have the largest number of check-cashing stores in
each of its markets. The proposed Merger is consistent with Ace's growth
strategy, which is being implemented in part by strategic acquisitions of
stores in targeted markets, which are cities or metropolitan areas with a
population of 100,000 or more. The consummation of the Merger would result in
the acquisition by Ace of 26 additional stores. In addition, Ace intends to
open or acquire 30 to 40 new stores during its current fiscal year ending June
30, 1996.
Ace was incorporated under the laws of Texas in March 1982 and was
acquired by certain of its existing directors and officers in January 1987.
Acquisition was incorporated under the laws of Florida in September 1995
for the purpose of effecting the Merger. It is a wholly owned subsidiary of
Ace. It has no material assets and has not engaged in any activities other
than in connection with the Merger. If the Merger is consummated, Acquisition
will cease to exist at the Effective Time.
The principal executive office of each of Ace and Acquisition is at 1231
Greenway Drive, Suite 800, Irving, Texas 75038, and the telephone number of
each is (214) 550-5000.
BUSINESS OF THE COMPANY
GENERAL
The Company through its wholly-owned subsidiaries owns, operates and
franchises retail money centers. At September 30, 1995, the Company owned and
operated 26 stores: 17 in Florida, three in Indiana, and six in Washington. In
addition, the Company, through its wholly-owned subsidiaries Check Express USA,
Inc. and Check-X-Change Corporation, had 161 franchise stores open and
operating in 26 states.
Check Express and Check-X-Change money centers provide a range of
services with primary emphasis on cashing checks for a fee. Other services
include money transfer services, sale of money orders, electronic filing of
income tax returns and corresponding refund anticipation loans, sale of bus
passes, mailbox rentals and other ancillary services. The Company has
developed a proprietary computerized check cashing system which allows it to
cash most types of checks with minimal identification requirements and minimal
bad check losses. Unlike many of its competitors, Check Express and
Check-X-Change cash personal checks, two-party checks, out-of-state checks, and
checks for individuals with little or no identification, while historically
keeping bad check losses in Company-operated stores to an average of less than
0.2% of the face amount of checks cashed.
In late 1993, the Company through its wholly owned subsidiary Check
Express Finance, Inc. ("CEF") began a loan program providing small consumer
loans and used vehicle financing to individuals who generally do not qualify
for traditional sources of financing. Consumer loans are originated through a
limited number of its Company-owned money centers in Florida and Indiana. Used
vehicle financing is provided by acquiring or originating retail automobile
installment sales contracts from selected automobile dealers in Florida. The
Company has entered into a letter of intent contemplating the sale of the
assets or stock of Check Express Finance, Inc. ("CEF"). The letter of intent
calls for the sale of CEF or its assets for the Company's net investment in
those assets, meaning generally the net book value of those assets as reflected
on the Company's financial statements. There can be no assurance that such
transaction will be completed. If the transaction, is
31
<PAGE> 41
completed, the Company would expect to receive approximately $1,200,000, net of
bank debt collateralized by CEF's assets to be repaid upon closing the sale.
Ace has indicated that it would consider the receipt of such amount in exchange
for the stock or assets of CEF to be equivalent to its receipt in the Merger of
CEF as a going concern, and accordingly the Merger Consideration will not be
adjusted either upward or downward depending on whether the sale of CEF is
completed. See "THE MERGER -- Background of the Merger" and "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
Liquidity and Capital Resources."
INDUSTRY OVERVIEW
Operations
Money Centers
The core business of the Company's retail money centers and of
contemporary check cashing outlets ("CCOs") is cashing checks for a fee. The
fee is intended to provide the operator a profit after covering expenses, which
include the cost of maintaining the outlet, insurance and personnel costs. In
addition, because the check casher advances funds on checks that must
subsequently be cleared by a bank, CCOs incur interest on the advanced funds
and also bear the risk that some of the cashed checks will be uncollectible due
to insufficient funds or fraud. In order to minimize the risks associated with
cashing checks, many CCOs cash only payroll checks and government checks.
Check Express money centers cash personal checks, out-of-state checks, and
two-party checks, but charge a higher fee in order to compensate for the
additional risk.
Check cashing fees are typically expressed as a percentage of the face
value of the check. In most states, CCOs can charge whatever the market will
bear. However, some states currently set limits on these fees. See "--
Industry Regulation" below. Outside of the regulated states, commercial
check-cashing fees vary. CCOs also charge fees for other financial services
such as selling money orders and making wire transfers. These fees, however,
are typically comparable to (or less than) the fees charged by other service
providers. While the predominant source of revenue for most CCOs is
check-cashing fees, almost all provide services beyond check-cashing. These
services may include money orders, wire transfers, telephone and utility bill
payments, mailbox rentals, sales of lottery tickets and bus passes, income tax
preparation and electronic filing, and distribution of government payments and
food stamps.
Finance Activities
The National Automobile Dealers Association ("NADA") estimates that retail
sales of used vehicles in the United States are in excess of $100 billion
annually and has been steadily increasing over the past decade. The Company
believes that this trend will continue due to several factors, including higher
prices for new automobiles relative to individual income, and improvement in
the quality of automobiles resulting in longer vehicle life. The Company
provides financing for the non-prime credit market, which is comprised of those
individuals who do not qualify for traditional sources of financing due to
adverse or limited credit history, limited financial resources and other
factors. It is the Company's observation that the non-prime automobile credit
market is highly fragmented and serviced by a variety of lenders including the
used car dealer selling the automobile, automobile finance companies, small
loan companies, and individuals. The Company is not aware of any authoritative
statistics on the size of the non-prime automobile credit market.
Customers
Money Centers
The Federal Reserve Board has estimated that more than 25% of the adult
American population has no formal banking relationship; yet checks are still
the predominant form for payment of salaries, wages and
32
<PAGE> 42
government entitlements. The Consumer Bankers Association estimates that over
40 billion checks are written annually.
Most of the Company's customers are in the lower to lower-middle income
brackets who cash payroll checks and, to a lesser degree, government checks,
which is consistent with surveys of the check cashing industry. The Company
also cashes personal checks and checks for customers with limited or no
identification. Although studies indicate that, in comparison to the charges
of banks for their services, check cashing service fees may be more expensive,
consumers continue to utilize CCOs. Among the reasons cited for using check
cashing stores are convenient locations and hours, ready access to cash, lack
of funds to maintain bank minimum balances and high bank service charges.
Furthermore, the Company is willing to assume the risk that a check it cashes
will be uncollectible while many banks will not. Consequently, many banks
require the customer to either maintain sufficient funds to cover the check or
wait a few days for the check to clear.
Finance Activities
The Company's auto finance customers are primarily originated from two
used vehicle dealers in Florida. It is the Company's observation that these
customers generally fit the demographic profile of its money center customers.
Industry Growth
Money Centers
The check-cashing industry began in the 1930s as a response to banking
problems during the Depression and to changes in employer payment practices
from cash payrolls to payroll checks. Check cashing stores first appeared in
Chicago and New York and spread to other large urban areas. The industry has
experienced significant growth over the last decade. Because the industry is
largely unregulated, the primary source of information regarding industry
growth is American Business Information ("ABI"), a firm that tracks yellow-page
listings of businesses. According to ABI, the industry doubled in four years.
In 1991, ABI reported 4,289 listings of check-cashing outlets nationally as
compared to 2,151 outlets in 1987. As of February 1995, ABI listed 5,044 check
cashing outlets.
The Company believes that among the reasons behind the growth experienced
by the industry during the last decade were the strong growth in payroll
employment following the 1982 recession and a fall in employees' real incomes.
To the extent that lower income families had increased difficulty in
accumulating financial savings to maintain bank balances, they had an increased
incentive to use check cashing stores. The 1980s also brought banking
regulation which changed the cost and supply of banking services. As banking
became a more competitive business, the charges incurred by accounts with high
transaction volume and low balances rose, significantly increasing the cost of
using banks for many low and moderate-income consumers. Furthermore, in
response to competition, banks closed branches in unprofitable or
marginally-profitable areas, which were often low-income areas.
Finance Activities
The Company believes that the used automobile industry in the United
States is a mature but growing industry. The NADA estimates that over 20
million used vehicles are sold each year generating in excess of $100 billion
in retail sales. According to the United States Chamber of Commerce, the
number of retail sales of used automobiles between 1979 and 1992 grew in excess
of 10% annually. Furthermore, during the most recent five
33
<PAGE> 43
year period, the rate of sales of used vehicles has exceeded that of new cars.
The Company believes that the non-prime used automobile credit market will
continue to grow for many of the same economic reasons which have led to the
growth of the check cashing and small consumer loan industries.
Structure of the Industry
Money Centers
The check-cashing industry is dominated by local owner-operators, many of
whom own three to ten outlets in a given area. However, the industry's growth
over the last decade has led to the development of national chains such as Ace
and Monetary Management Corporation. See "-- Competition" below. Existing CCOs
are disproportionately located in major urban areas, generally in low and
moderate-income neighborhoods; although, the industry is beginning to expand
beyond this traditional concentration. CCOs have also expanded beyond those
few major urban areas where check-cashing establishments have long existed.
Finance Activities
The used car industry is also highly fragmented and characterized by a
large number of independent operators, many of whom are individuals, family
members and small groups of individuals. The ABI lists approximately 80,000
used car dealers in the United States. The Company believes that the used
automobile finance industry can be generally characterized according to the
type and amount of credit being advanced: "Prime" credit for the most credit
worthy individuals and, generally, higher priced vehicles; "Mid-market" credit
for individuals who may have some negative or limited credit history and for,
generally, mid-priced vehicles which may not meet prime credit underwriting
criteria; and "Non-prime" credit for individuals who are unable to qualify for
the first two, more traditional financing sources and, generally, for lower-end
vehicles.
Prime auto finance is provided primarily by banks and traditional
automobile finance companies such as GMAC and Ford Motor Credit. Mid-market
auto finance is primarily being provided by an increasing number of specialized
automobile finance companies such as Mercury Finance, Credit Acceptance Corp.,
and others. Certain used car dealers provide non-prime financing for their
customers ("buy here, pay here") and a number of specialized auto finance
companies such as Monaco Finance, Auto Finance Group and Regional Acceptance
Corporation have also targeted this segment of the market. The Company
believes that no one automobile finance company dominates either the
middle-market or non-prime used automobile credit industry.
Industry Regulation
Money Centers
CCOs are subject to regulation in some states. At least twelve states set
limits on check cashing fees: California, Connecticut, Delaware, Florida,
Georgia, Illinois, Indiana, Minnesota, New Jersey, New York, Ohio, and Rhode
Island. Several other states have licensing requirements some of which provide
for background investigations of principals, minimum net worth requirements,
posting of fees and certain record keeping requirements. In addition, check
cashers are subject to federal regulations which require the reporting of
certain currency transactions. See "-- Regulation" below.
34
<PAGE> 44
Finance Activities
There are numerous federal and state regulations which impose certain
requirements on the origination and collection of consumer receivables. To
some degree, all states set ceilings on consumer finance charges and impose
other requirements which create specific statutory liabilities for failure to
comply with those requirements. See "-- Regulation" below.
GROWTH STRATEGY
The Company's strategy has been to expand its retail money center
network, primarily by opening new franchise stores, opening or acquiring a
limited number of Company-owned stores and adding new products and services.
The following describes the Company's present growth strategy, which may be
affected if the Merger is consummated.
Money Centers
Franchise Stores
The Company intends to continue its expansion through the sale of new
franchises and the opening of additional units under existing franchise
agreements. The Company offers a full-service money center franchise, and a
kiosk money center franchise designed to operate within an existing business.
As of September 30, 1995, the Company had 161 franchise stores open and
operating in 26 states. Although there can be no assurances that the Company
will continue to be successful in selling new franchises or that all of the
stores under existing agreements will open, the Company believes that the
opening of new franchise stores will continue to play an important role in its
expansion.
Effective October 1993, the Company acquired Check-X-Change Corporation in
a stock-for-stock transaction. Prior to this acquisition, the Company had 45
franchise locations in 14 states and Check-X-Change was the nation's largest
franchisor of retail check cashing centers with 92 stores in 17 states. As a
result of this acquisition, the Company became the nation's second largest
network and largest franchisor of retail money centers providing check cashing
and related services.
In mid-1994, the Company began targeting convenience stores for its kiosk
franchises. A study entitled, 1995 Future Study: Convenience 2000, prepared by
Management Horizons, a consulting division of Price Waterhouse LLP,
characterized the demographic of the frequent convenience store customer as
lower income, blue collar occupations and teens through middle aged, which is
consistent with the demographic profile of the Company's existing money center
and finance customers. Convenience stores have been receptive to adding other
business concepts within their stores, as is evidenced by the increasing number
of branded fast food franchises in these stores. As of September 30, 1995, the
Company had opened five franchised kiosks in convenience stores. Based on
results to date, the Company believes that it has an opportunity to further
penetrate the convenience store market. Convenience store industry sources put
the number of convenience stores in the United States at more than 90,000.
Company Owned Stores
From January 1, 1995 through September 30, 1995, the Company has opened
one store in an existing market, sold six stores and closed four stores. The
Company believes expansion in existing markets allows it to take advantage of
its knowledge of the market, capitalize on its name recognition in the market
and benefit from certain economies of scale. Of the 26 Company-owned stores
operated by the Company at September 30, 1995, 16 were acquired, either from
competitors or from Check Express franchise owners. The Company has
35
<PAGE> 45
a right of first refusal to purchase any of its franchises by matching the
terms of any purchase offer from a third party.
The following table shows the number of Company-owned and franchise stores
open in each market area at the end of the indicated periods:
<TABLE>
<CAPTION>
December 31,
----------------------------
Company-Owned Stores: 1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
California:
Modesto . . . . . . . . . . . . . . . . . . . . 0 0 0 0 *2
Stockton . . . . . . . . . . . . . . . . . . . . 0 0 0 0 *4
Florida:
Brandon . . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
Jacksonville . . . . . . . . . . . . . . . . . . 3 0 0 0 0
Tampa/St. Petersburg . . . . . . . . . . . . . . 11 11 11 12 14
Orlando . . . . . . . . . . . . . . . . . . . . 2 2 4 4 4
West Palm Beach . . . . . . . . . . . . . . . . 0 0 0 2 0
Georgia:
Atlanta . . . . . . . . . . . . . . . . . . . . 0 0 0 1 0
Indiana:
Indianapolis . . . . . . . . . . . . . . . . . . 0 0 2 2 3
Oregon:
Portland . . . . . . . . . . . . . . . . . . . . 0 0 0 1 0
South Carolina:
Charleston . . . . . . . . . . . . . . . . . . . 2 3 2 2 0
Washington:
Seattle . . . . . . . . . . . . . . . . . . . . 2 2 2 0 2
Tacoma . . . . . . . . . . . . . . . . . . . . . 2 2 2 0 5
- - - - -
Total Company-Owned Stores . . . . . . . . . 22 20 23 24 35
</TABLE>
(*) Sold on January 31, 1995.
<TABLE>
<CAPTION>
Franchise Stores(1): 1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Alabama:
Birmingham . . . . . . . . . . . . . . . . . . . 0 1 1 1 1
Gadsden . . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
California:
Chico/Redding . . . . . . . . . . . . . . . . . 0 0 0 3 3
Fontana . . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Modesto/Stockton . . . . . . . . . . . . . . . . 0 0 0 3 1
Oakland . . . . . . . . . . . . . . . . . . . . 0 1 0 2 1
Ontario . . . . . . . . . . . . . . . . . . . . 0 0 1 1 1
Sacramento . . . . . . . . . . . . . . . . . . . 0 0 0 5 5
San Bernardino . . . . . . . . . . . . . . . . . 0 0 1 1 1
San Francisco . . . . . . . . . . . . . . . . . 0 0 0 3 3
San Jose . . . . . . . . . . . . . . . . . . . . 0 0 0 5 5
San Marcos . . . . . . . . . . . . . . . . . . . 0 1 0 0 0
Santa Rosa . . . . . . . . . . . . . . . . . . . 0 0 0 2 2
Vallejo . . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
</TABLE>
36
<PAGE> 46
<TABLE>
<CAPTION>
Franchise Stores (continued): 1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Colorado:
Aurora . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
Denver . . . . . . . . . . . . . . . . . . . . . 0 0 1 1 1
Florida:
Boynton Beach . . . . . . . . . . . . . . . . . 0 0 0 1 1
Bradenton . . . . . . . . . . . . . . . . . . . 0 1 1 1 1
Brandon . . . . . . . . . . . . . . . . . . . . 1 1 1 1 0
Daytona Beach . . . . . . . . . . . . . . . . . 0 0 0 1 1
Ft. Myers . . . . . . . . . . . . . . . . . . . 0 0 0 5 5
Gainesville . . . . . . . . . . . . . . . . . . 1 1 1 1 1
Jacksonville . . . . . . . . . . . . . . . . . . 3 4 4 4 5
Lauderhill . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Miami . . . . . . . . . . . . . . . . . . . . . 0 0 0 3 3
New Port Richey . . . . . . . . . . . . . . . . 1 1 1 2 2
Oneco . . . . . . . . . . . . . . . . . . . . . 0 1 1 1 0
Orlando . . . . . . . . . . . . . . . . . . . . 4 3 0 2 1
Port Charlotte . . . . . . . . . . . . . . . . . 0 0 0 1 1
Tampa/St. Petersburg . . . . . . . . . . . . . . 6 5 6 7 6
W. Palm Beach . . . . . . . . . . . . . . . . . 0 0 0 0 2
Georgia:
Atlanta . . . . . . . . . . . . . . . . . . . . 0 0 0 4 5
Augusta . . . . . . . . . . . . . . . . . . . . 0 0 0 1 2
Rossville . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Idaho:
Boise . . . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Tampa . . . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Indiana:
Ft. Wayne . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
Indianapolis . . . . . . . . . . . . . . . . . . 2 0 0 1 1
Mishawaka . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
South Bend . . . . . . . . . . . . . . . . . . . 0 0 0 2 2
Kansas:
Wichita . . . . . . . . . . . . . . . . . . . . 2 1 1 1 1
Kentucky:
Louisville . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
Maryland:
Baltimore . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
Massachusetts:
Boston . . . . . . . . . . . . . . . . . . . . . 0 0 0 2 2
Worcester . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Michigan:
Detroit . . . . . . . . . . . . . . . . . . . . 0 1 0 0 0
Lansing . . . . . . . . . . . . . . . . . . . . 2 2 2 2 2
Minnesota:
Brooklyn Park . . . . . . . . . . . . . . . . . 0 0 0 1 1
St. Paul . . . . . . . . . . . . . . . . . . . . 0 0 1 1 1
</TABLE>
37
<PAGE> 47
<TABLE>
<CAPTION>
Franchise Stores (continued): 1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Missouri:
St. Louis . . . . . . . . . . . . . . . . . . . 1 1 2 2 2
North Carolina:
Charlotte . . . . . . . . . . . . . . . . . . . 0 0 0 2 2
Durham . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
Wilmington . . . . . . . . . . . . . . . . . . . 0 0 0 2 2
Ohio:
Akron . . . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Columbus . . . . . . . . . . . . . . . . . . . . 0 0 0 6 7
Springfield . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Oregon:
Portland . . . . . . . . . . . . . . . . . . . . 0 0 0 4 5
Salem . . . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Pennsylvania:
York . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
Rhode Island:
Providence . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
South Carolina:
Charleston . . . . . . . . . . . . . . . . . . . 0 1 2 2 4
North Augusta . . . . . . . . . . . . . . . . . 0 0 0 1 1
Tennessee:
Chattanooga . . . . . . . . . . . . . . . . . . 0 0 0 1 0
Knoxville . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Nashville . . . . . . . . . . . . . . . . . . . 0 0 0 2 4
Texas:
Abilene . . . . . . . . . . . . . . . . . . . . 0 0 0 2 2
Austin . . . . . . . . . . . . . . . . . . . . . 0 2 3 3 3
Baytown . . . . . . . . . . . . . . . . . . . . 0 0 0 0 1
Beaumont . . . . . . . . . . . . . . . . . . . . 0 0 0 1 2
El Paso . . . . . . . . . . . . . . . . . . . . 0 0 0 1 2
San Antonio . . . . . . . . . . . . . . . . . . 0 2 0 0 0
Victoria . . . . . . . . . . . . . . . . . . . . 0 0 0 0 2
Virginia:
Norfolk . . . . . . . . . . . . . . . . . . . . 0 0 0 3 3
Richmond . . . . . . . . . . . . . . . . . . . . 0 0 1 1 1
Washington:
Bellevue . . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Seattle . . . . . . . . . . . . . . . . . . . . 0 0 2 12 10
Spokane . . . . . . . . . . . . . . . . . . . . 0 0 0 2 2
Tacoma . . . . . . . . . . . . . . . . . . . . . 0 0 2 2 0
Wisconsin:
Greenfield . . . . . . . . . . . . . . . . . . . 0 0 0 1 1
Milwaukee . . . . . . . . . . . . . . . . . . . 1 2 2 2 2
- - - - -
Total Franchise Stores . . . . . . . . . . . . 24 32 37 137 149
</TABLE>
(1) 1993 and 1994 stores include both Check Express and Check-X-Change
franchises.
<TABLE>
<S> <C> <C> <48> <C> <C>
TOTAL COMPANY-OWNED AND FRANCHISE STORES . . . . . . . . 46 52 60 161 184
== == == === ===
</TABLE>
38
<PAGE> 48
New Services
The Company believes that there are additional products and services
that can be profitably offered to its money center customers and it intends to
continue its exploration and evaluation of potential new products and services.
The Company does not intend to limit itself to financial or other services
traditionally offered by check cashing stores, and will consider offering any
product or service that it believes could be profitably marketed from its
existing locations, such as, for example, automobile insurance. New services
introduced in the past included electronic income tax filing, making refund
anticipation loans through third party banks, small consumer loans and selling
and renting personal pagers.
CUSTOMERS AND SERVICES
It is the Company's observation that most of its core customers are
comprised primarily of low to lower-middle income individuals between the ages
of 18 and 49 who are renters earning less than $35,000 per year and employed in
jobs such as laborers, tradesmen, service representatives and clerical workers
or who receive government entitlements. Although some customers have bank
accounts, the Company believes many customers prefer the convenience and
services provided by Check Express money centers.
Money Centers
The following table sets forth the major categories of services
currently provided by Check Express stores and the revenues earned by
Company-owned stores for the indicated periods:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1994 1993
---------------- ----------------
REVENUE CATEGORY Revenue % Revenue %
---------- ----- ----------- -----
<S> <C> <C> <C> <C>
Check cashing . . . . . . . . $4,411,453 78.0 $2,589,273 79.9
Money transfers . . . . . . . . 479,870 8.5 329,434 10.2
Electronic tax filings. . . . . 125,704 2.2 70,964 2.2
Money orders. . . . . . . . . . 166,058 2.9 75,854 2.3
Surcharges. . . . . . . . . . . 63,087 1.1 39,029 1.2
Other services. . . . . . . . . 408,221 7.3 135,196 4.2
---------- ----- ---------- -----
Total. . . . . . $5,654,393 100.0 $3,239,750 100.0
========== ===== ========== =====
</TABLE>
Revenues for 1995 are expected to be consistent with those in prior
years, with the exception of a reduction in electronic tax filing revenue (see
"-- Electronic Income Tax Filing and Refund Anticipation Loans" below and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS") and a reduction in money order fees resulting from a free money
order promotion conducted during the first six months of 1995.
Check Cashing
The primary business of Company-owned and franchise money
centers is to cash checks for a fee. Unlike many of its competitors, the
Company cashes all types of checks, including personal checks, payroll checks,
government entitlement checks, and insurance drafts. Management estimates that
approximately 80% of the checks cashed are payroll and government checks. The
Company's fee structure is based on the relative risk of the instrument to be
cashed and ranges from 1% to 10% of the face amount of the check. Most
government checks and checks from major companies, accompanied with valid ID,
are cashed at a base rate of
39
<PAGE> 49
approximately 2%. Because the Company is able to cash personal checks and
checks for individuals with limited identification, it is able to charge higher
fees for these checks, resulting in higher average fees than many competitors.
In 1993 and 1994, check cashing fees at Company-owned and operated stores
averaged 2.91% and 2.80 % of the face amount of checks cashed, respectively.
Average fees for 1995 are expected to be consistent with those in prior years.
The following table illustrates the relationship between the face amount
of checks cashed at Company-owned stores and the check cashing fees earned in
the indicated periods:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1994 1993
------------ -----------
<S> <C> <C>
Face amount of checks cashed . . . . . . . . . . . . . . . $157,773,650 $ 88,962,980
Number of checks cashed . . . . . . . . . . . . . . . . . . 594,281 348,371
Face amount of average check . . . . . . . . . . . . . . . $ 265 $ 255
Average fee per check . . . . . . . . . . . . . . . . . . . $ 7.42 $ 7.43
Fee as a percentage of average check . . . . . . . . . . . 2.80% 2.91%
</TABLE>
Returned checks are accounted for in the period in which they are
returned. Store and Area Managers are responsible for collections within their
respective stores. Managers have several remedies for collecting returned
checks. Many checks are returned for insufficient funds and when the account
indicates sufficient funds, either the check is redeposited or the manager
obtains a cashier's check from the maker's bank. In addition, managers may
enter into small claims proceedings to retrieve the funds. Although
occasionally stop payment orders are entered against checks cashed at Check
Express and Check-X-Change stores, the Company and its franchisees generally
have been successful in overcoming stop payment orders in court, if such action
is necessary.
The following table illustrates the returned check experience of
Company-owned stores for the indicated periods. The table excludes revenues
from surcharges imposed on returned checks (approximately $39,000 in 1993 and
$63,000 in 1994) and collection expenses (estimated at less than $20,000 per
year) such as court filing fees, personnel time and legal fees.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1994 1993
---------- ----------
<S> <C> <C>
Face amount of returned checks . . . . . . . . . . . . . . . . . . . $1,612,631 $ 776,682
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,266,653 648,018
---------- ----------
Net write-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 345,978 $ 128,664
========== ==========
Collections as a percentage of returned checks . . . . . . . . . . . 78.5% 83.4%
Net write-offs as a percentage of revenues . . . . . . . . . . . . . 6.1% 4.0%
Net write-offs as a percentage of check fees . . . . . . . . . . . . 7.8% 5.0%
Net write-offs as a percentage of the face amount
of checks cashed . . . . . . . . . . . . . . . . . . . . . . . . . 0.22% 0.14%
</TABLE>
Returned check fees for 1995 are expected to be consistent with the
Company's experience in 1994.
40
<PAGE> 50
Money Transfers
Money transfer services are offered at all Company-owned and franchise
stores under agency agreements with, primarily, Western Union and, to a lesser
degree, American Express. Through this agency network, customers can transfer
money electronically worldwide. The fees charged for money transfers are set
by Western Union and American Express which pay the Company and its franchise
stores commissions for each transaction.
Electronic Income Tax Filing and Refund Anticipation Loans
In 1987, the Company initiated its "Express Refund Program" which
enables the customer to file a tax return electronically and receive a refund
anticipation loan from a third-party bank. The Company does not act as lender,
but only as agent in arranging for a loan from the third-party bank. Risk of
loss for these loans is solely that of the lending institution. The Company's
owned stores and most franchise stores charge between $25.00 and $35.00
for the electronic filing and $45.00 for the refund anticipation loan, most of
which is paid to the lending institution, resulting in a gross profit to
Company-owned stores of approximately $40 per filing and loan. The fees are
typically deducted from the amount of the refund by the lending bank.
In 1995, the Internal Revenue Service (the "IRS") implemented certain
procedures which resulted in greater degree of risk to lending institutions
making refund anticipation loans. Furthermore, the IRS began auditing a
significant number of electronically filed returns which claim an Earned Income
Credit ("EIC"). Many of the Company's customers claim the EIC and the audit of
these returns has resulted in refunds being delayed as compared to prior years.
The net effect of the procedures implemented by the IRS is that, on a
comparative basis, fewer returns have been electronically filed through the
Company's money centers in 1995 as compared to 1994. The Company is unable to
determine at this time whether these procedures implemented by the IRS are
permanent or temporary.
Money Orders
Check Express money centers offer money orders in denominations up to
$500. The Company's check-cashing customers are issued money orders free of
charge as an incentive to cash checks with the Company; others pay a fee based
on the face amount of the money order. In September 1992, the Company began
issuing its own money orders in its Company-owned stores located in Florida and
Indiana. A third-party provides the processing and clearing services and does
not require the Company to provide funds to cover a money order until it clears
the bank upon which it is drawn. The sale of its own money orders provides the
Company with an increased daily cash float which currently ranges from a low of
approximately $600,000 to over $1,500,000. The Company's Washington stores
currently offer third-party money orders provided by Travelers Express.
Surcharges
The Company imposes surcharges for checks cashed at its stores and
returned, which are accounted for as additional revenue. Some of the Company's
competitors net these surcharges against returned checks, which has the effect
of reducing the net write-offs for returned checks.
41
<PAGE> 51
Other Services
Many of the Company-owned and franchise stores also offer mail box
rentals, notary public services, stamps, fax transmission, photo check cashing
cards, lamination, bus passes, pager rentals and other related services.
Hours
Check Express and Check-X-Change money centers are open after
traditional banking hours and on weekends and can, therefore, provide cash to
people who would otherwise be unable to obtain funds. Most of the
Company-owned and franchise stores are open from 9:00 a.m. to 8:00 p.m., Monday
through Saturday, and from 10:00 a.m. to 4:00 p.m. on Sundays and some
holidays. The Company's finance activities are primarily conducted during the
business hours of the home office, from 8:00 a.m. to 5:00 p.m., Monday through
Friday. However, payments may also be made at the Company's money centers.
Finance Activities
The Company has entered into a letter of intent contemplating the sale
of the assets or stock of Check Express Finance, Inc. ("CEF"), the Company's
finance subsidiary operating mainly in the used automobile financing industry.
See "--General," above. The following describes the Company's present finance
activities, which may be affected if the sale of CEF is consummated.
In late 1993, the Company entered the used automobile finance business
by purchasing a group of existing automobile receivables from two used car
dealers in Florida. The Company has since expanded this business through
additional purchases of receivables ("bulk loans") and by acquiring loans from
the dealers at the time of purchase of a vehicle ("indirect loans").
The Company purchases the bulk loans at a discount, ranging between 35%
and 40%, of the remaining unpaid installments. Interest rates on indirect
loans are negotiated between the dealer and the customer and, generally, range
from 20% to 28%. In addition to earning interest on the contracts, the Company
purchases indirect loans from the dealers at a discount ranging between $750
and $1,250 per loan, depending on the amount of the loan. The combination of
interest earnings and discount on indirect loans held to maturity results in
yields to the Company of over 40% on the principal advanced.
The Company has established recourse agreements and reserve accounts
with its dealers which limit the Company's risk. As a result, the Company's
loan loss experience has been minimal. There can be no assurance, however,
that the Company will be able to establish similar recourse agreements with
other dealers or that existing dealers will continue to honor their recourse
agreements.
The Company's auto finance customers may make their payments directly to
the dealer (who then remits the payment to the Company), mail their payment to
the Company's home office, or make their payment at one of the Company's money
centers. The Company believes that by encouraging customers to make payments
at its money centers, it has an opportunity to cross-sell its money center
services. The Company also believes that it can generate auto loans from its
money center customer base and direct these customers to its preferred dealers,
thereby building dealer loyalty.
STORE ECONOMICS
The 17 stores owned and operated by the Company that were open during all
of 1993 and 1994, had average store revenues of $162,494, average store
contribution (store revenues less direct store expenses and store-related
depreciation and amortization) of $34,712 and average store cash flow (store
revenues less direct store expenses, excluding store-related depreciation and
amortization) of $42,248 in 1994. Comparable store
42
<PAGE> 52
results through September 30, 1995 are discussed under "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
New stores typically generate positive cash flow (store revenues less
direct store expenses, excluding store-related depreciation and amortization)
in six months and mature in 18 to 24 months. Because of seasonality factors,
stores opened at different times during the year have varying growth rates. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- Seasonality."
There can be no assurance that the Company's stores will continue to
generate the same level of revenues or that new stores will experience similar
growth rates as in the past.
FRANCHISING ECONOMICS
The Company, through its wholly-owned subsidiaries, Check Express USA,
Inc. and Check-X-Change Corporation, is also a franchisor of retail check
cashing stores. The Company currently charges an initial franchise fee of
$24,500 for each single-site full-service store and $12,500 for each
single-site kiosk sold. The Company offers multiple-site franchise fee
discounts which vary according to the number of sites purchased.
The Company also receives ongoing monthly royalty fees and research and
development fees which differ between Check Express and Check-X-Change
full-service franchise stores. From each Check Express operating full-service
franchise store, the Company receives an ongoing royalty of $750 per month or
5% of gross revenues, whichever is higher ($600 per month or 5% of gross
revenues from each operating kiosk). For the Check-X-Change operating
franchise stores, currently there are two methods in place for the calculation
of royalty fees. For franchisees who executed contracts prior to June of 1992,
the franchisee remits $815 per month in royalty fees and $100 in research and
development fees for a total remittance of $915 per month. Multiple store
owners pay monthly royalties of $315 and $100 research and development fees for
the third and subsequent stores. In June 1992, the franchise agreement was
revised and the franchisee remits 6% of gross revenue, with a minimum
remittance of $450 and a maximum of $815, along with the $100 research and
development fee. In 1994, the Company had revenues of $183,000 from the sale
of new franchises and continuing royalty revenues (including research and
development fees) of $1,337,684. Franchise revenues through September 30,
1995, are discussed under "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS."
At September 30, 1995 the Company had 161 franchise stores open and
operating. There can be no assurances that the Company will be successful in
selling additional new franchises.
FINANCE ECONOMICS
The Company has entered into a letter of intent contemplating the sale of
the assets or stock of Check Express Finance, Inc. ("CEF"), the Company's
finance subsidiary operating mainly in the used automobile financing industry.
See "--General," above. The following describes the Company's present finance
activities, which may be affected if the sale of CEF is consummated.
In late 1993, the Company entered the used automobile finance business by
purchasing a group of existing automobile receivables from two used car dealers
in Florida. The Company has since expanded this business through additional
purchases of receivables (Bulk Loans) and by acquiring loans from the dealers
at the time of purchase of a vehicle (Indirect Loans). The Company purchases
the bulk loans at a discount, ranging between 35% and 40%, of the remaining
unpaid installments. Interest rates on indirect loans are negotiated between
the dealer and the customer and, generally, range from 20% to 28%. In addition
to earning interest on the contracts, the Company purchases indirect loans from
the dealers at a discount ranging between $750 and $1,250 per loan, depending
on the amount of the loan. The combination of interest earnings and discount
on indirect loans held to maturity results in yields to the Company of over 40%
of the principal advanced. The Company had auto finance revenues of
approximately $302,000 in 1994 and $594,000 through September 30, 1995.
43
<PAGE> 53
The Company has established recourse agreements and reserve accounts with
its dealers which limit the Company's risk and which has resulted in minimal
actual loan losses(approximately $16,000 in 1994 and $22,000 through October
31, 1995). There can be no assurance, however, that the Company will be able
to establish similar recourse agreements with other dealers or that existing
dealers will continue to honor their recourse agreements.
PHYSICAL FACILITIES
The Company seeks to locate its full-service money centers in active,
visible and accessible locations within its targeted demographic market.
Specific locations include free standing buildings, strip centers and regional
shopping centers and average approximately 1,100 square feet. All
Company-owned stores occupy leased space, with the exception of one store in
Tampa, Florida and one store in Indianapolis, Indiana, where the land and
building are owned by the Company. Leases typically provide for three to five
year terms with one or more options to renew. None of the leases involve
percentage rents.
The capital expenditures required to ready a new site for operation of a
full-service money center include primarily leasehold improvements and
furniture and equipment. For a new Company-owned store, these expenditures
typically total approximately $50,000 to $75,000. An acquired store typically
requires expenditures of approximately $25,000 to bring it up to the Company's
operating standards. The build-out process typically takes approximately 30 to
45 days for a new store.
The Company is also locating franchised kiosks within existing businesses,
primarily convenience stores. Expenditures for installation of the kiosk and
equipment typically range between $35,000 and $50,000. Some kiosks are modular
and pre-fabricated and can typically be installed in less than 10 days, while
others may take as long as a full-service store.
SECURITY
Because the Company's money center operations require that it have a
certain amount of cash on hand, each Check Express location is designed and
constructed to make the most efficient use of space and to maximize security.
The teller area is separated from the customer lobby by concrete block, or
steel-lined walls, and bullet-resistant plexiglass. Checks and cash are
exchanged between the teller and customer via pass-thru trays located in the
counter and under the bullet-resistant glass which ensures that the customer
and teller have no physical contact with each other during a transaction.
Entry to the teller area is through steel doors with a "man trap" in between.
Cash deliveries and deposits are handled by armored courier service through a
package exchange unit or through the man-trap. Each store has security alarms
monitored by a local central station.
Since beginning operations in 1982, the Company has experienced
non-employee thefts at Company-operated stores totaling less than $50,000. The
Company's computerized operations and its systems and procedures provide
management with information necessary to monitor store activity from the store
and from corporate headquarters. As a result cash shortages can be identified
immediately. Net cash shortages from employee errors or theft at Company-owned
stores totaled $2,700, or less than 0.1% of revenues, in 1993 and $41,000, or
0.7% of revenues, in 1994. Shortages for 1995 are expected to be consistent
with those experienced in 1994.
In the past, the Company has maintained a theft insurance policy which
provided coverage of up to $125,000 per occurrence per Company-owned store,
with a $5,000 deductible. The Company's security procedures have resulted in
minimal claims against this policy. Since the one year premium for this
coverage
44
<PAGE> 54
exceeded the total amount of losses collected under the policy by the Company
since 1982, the Company discontinued this coverage in 1992. The Company may
resume such coverage or obtain fidelity bonds on its employees if its
operations and/or a reduction in the cost of coverage warrant.
CHECK CASHING SYSTEM
The Company has developed a proprietary, computerized system which enables
store personnel to cash most types of checks, with little or no identification,
and with minimal losses. The system has been in use and been continually
refined since 1985 and has helped keep losses from returned checks to an
average of less than 0.2% of the face amount of checks cashed. The system
provides management with transaction data which is used to monitor and manage
each store. All stores within a city operate on a real-time data base which
enables instant recognition of customers and transactions which increases
customer convenience, reduces the opportunities for fraud and facilitates
regulatory reporting compliance.
PERSONNEL
Money Centers
Each Company-owned money center employs tellers under the direction of a
store manager who is responsible for the store's efficient and profitable
operation. The store manager reports to an area manager who oversees the
operations of four to eight stores. Area managers maintain daily contact with
their stores and visit each store frequently to observe operations and to
confirm cash counts. Area managers are also responsible for training new store
personnel. The area manager reports to a member of the operations support
group which oversees all Company-owned and franchise store activity.
Franchise money center operations are structured similarly, with the
exception of upper-level management. Due to the limited number of stores
operated by a single franchise owner, an area manager and regional manager are
generally not required. Franchise store managers generally report directly to
the franchise owner. The Company employs operations support personnel who are
responsible for providing ongoing operational assistance to franchise owners
and their employees. The Company's area managers and store managers also
participate in franchise training and support from time to time.
Finance Activities
The Company's finance activities are managed from its home office by the
Director of Finance who has more than 20 years experience in the consumer
finance and used automobile finance industries. At September 30, 1995, the
Company's finance subsidiary also employed one administrative assistant and one
collector. If CEF is sold, as is contemplated by the letter of intent referred
to above (see "--General"), such personnel would be expected to become employed
by the buyer. The Company has implemented a computerized finance management
system which allows it to manage its finance portfolio and which is linked to
the Company's money centers receiving loan payments.
45
<PAGE> 55
MARKETING STRATEGY
Money Center Advertising and Promotion
The Company's advertising and promotional activities stress service,
convenience and competitive rates to attract customers within its target
market. The Company promotes its Company-owned and franchise stores through a
program of print and broadcast advertisements. Print advertisements consist
primarily of listings in the appropriate Yellow Page directories and in direct
mailings targeted at individuals and local businesses. The Company also uses
radio and television advertising from time to time which is often financed with
co-op marketing funds from vendors such as Western Union. Customer loyalty is
promoted through the issuance of money orders at no fee to check cashing
customers (who typically pay bills with the money orders in lieu of checks) and
the sale of Check Express photo IDs which qualify the customer for discounted
check-cashing fees.
Franchise Sales
Franchise sales are solicited primarily through regular print
advertisements and in prominent business publications such as Inc.,
Entrepreneur and The Wall Street Journal. Additionally, franchise kiosks are
marketed by advertising in trade publications such as Convenience Store News,
Convenience Store People and Convenience Store Decisions. The ads are targeted
at mature, entrepreneurially-oriented individuals, preferably with a management
background. The Company's franchise subsidiary, Check Express USA, Inc., is
also a member of the International Franchise Association which the Company
believes lends credibility to its franchise program and which generates
additional sales prospects.
Finance Activities
The Company does not currently market its auto finance business and has
relied on its dealers to generate new loans.
EMPLOYEES
As of September 30, 1995, the Company had 121 employees: 24 at the
corporate headquarters, including 11 in management and accounting, 7 in
franchise and operations support, 3 in franchise sales and 3 in finance
activities; 4 area managers; 26 store managers; and 67 additional store
personnel. The Company does not generally bond its employees; however,
background checks are conducted by a third-party and the Company obtains a
credit report on all applicants prior to employment. The Company is not a
party to any collective bargaining agreement and considers its employee
relations to be excellent.
COMPETITION
Company-owned Money Centers
The check cashing industry is highly fragmented and is dominated by local
owner-operators, many of whom own three to ten stores in a given area. The
industry has experienced significant growth in the last decade which has led to
the emergence of several larger regional and national chains, such as Ace (over
450 locations), Monetary Management Corporation (approximately 180 locations),
MS Management (approximately 160 locations) and Payomatic Corporation
(approximately 100 locations). Some of the Company's competitors have
substantially greater financial resources than the Company.
46
<PAGE> 56
To a lesser degree, the Company also competes with other retail businesses
which cash checks or offer similar services provided by the Company. The
Company believes that the principal competitive factors in the check cashing
industry are service, convenience, location and physical facilities. The
Company believes that it competes successfully with other check cashing
operations primarily as a result of its ability to cash most types of checks
with minimal identification requirements, locations that are convenient to its
customer base, attractive facilities, and customer service. There can be no
assurance that the Company will be able to continue to compete successfully
with its competitors.
Franchising
The Company also competes with other franchisors of check cashing
stores, the largest of which is Mr. Payroll which franchises kiosks in
convenience stores (approximately 120 locations). The Company believes that
its next largest competitor has fewer than 20 franchise stores open and that
the Company is the largest check-cashing franchisor in the U.S.
Finance Activities
The used automobile finance industry is highly fragmented and highly
competitive. Competition for non-prime auto finance comes from used car
dealers carrying their own loans ("buy here, pay here"), local auto finance
companies and individuals, and from national auto finance companies such as
Monaco Finance, Auto Finance Group and Regional Acceptance Corp. Many of these
competitors have substantially greater financial resources than the Company.
If CEF is not sold, there can be no assurance that the Company will be able to
continue to compete successfully in financing activities with its competitors.
REGULATION
General
Company-owned and franchised money centers are subject to
varying jurisdictions, some of which regulate check cashing fees, money order
sales or require licensing of check cashing companies. In addition, the
Company and its franchise owners are subject to federal regulation which
requires the reporting of certain currency transactions. The Company's
financing activities are subject to local, state and federal regulations which,
among other things, require licensing, limit interest rates and fees, require
certain disclosures, and define collection procedures.
State Regulation
At least twelve states set limits on check cashing fees: California,
Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Minnesota, New
Jersey, New York, Ohio and Rhode Island. Several other states have licensing
requirements which may require background investigations of principals, minimum
net worth requirements, bonding, posting of fees and certain record keeping
requirements. Although the Company and its franchises currently operate
successfully in several of these states, the adoption of limits on check
cashing fees in jurisdictions where the Company and its franchises operate
could have an adverse affect on the Company's business, and the existence of
check cashing fee limits in some states could restrict the ability of the
Company to expand into some of those states.
The Company's franchising activities are also subject to varying state
regulations. Certain states require the Company to register its Franchise
Offering Circular and Franchise Agreement for review and approval. Some
47
<PAGE> 57
states merely require filing of those documents with the states, while other
states have no registration or filing requirement. In addition, most states
have established certain guidelines which govern the ongoing relationship
between the Company, as the franchisor, and its franchisees.
The Company began selling its own money orders in 1992 and is subject to
regulation relating to money order sales in Florida and Indiana. In addition
to certain record keeping and minimum net worth requirements, Florida and
Indiana require the posting of $250,000 and $130,000 bonds, respectively.
To date, the Company's finance activities have been limited to the State
of Florida where it is subject to certain licensing requirements, ceilings on
interest rates and other charges, collection procedures and consumer protection
laws. These requirements impose specific statutory liabilities upon creditors
who violate their provisions. Both the Company's small consumer loan and auto
finance programs have been audited by State of Florida representatives and
found to be in compliance in all respects.
Federal Regulation
Under the Bank Secrecy Act and the Financial Recordkeeping and Currency
and Foreign Transactions Reporting Act regulations of the U.S. Department of
the Treasury, each financial institution, which includes the Company and its
franchisees, must file a Currency Transaction Report ("CTR") for each deposit,
withdrawal, exchange of currency, or other payment or transfer by, through, or
to the financial institution, which involves a transaction in currency of more
than $10,000. In addition, any series of transactions within a twenty-four
hour period which total more than $10,000, and which the Company or
franchisee has knowledge were effected for the same individual, must also be
reported. Furthermore, the purchase of monetary instruments, such as money
orders, for cash in amounts from $3,000 to $10,000 must be recorded. The
Company believes its computerized operations and its training and supervision
assist the Company in complying with these reporting requirements.
The Company has elected to adopt the Uniform Franchise Offering Circular
("UFOC"), the form and content of which is prescribed by the United States
Federal Trade Commission, for use in all states where it markets franchises.
MARKET PRICES OF THE COMMON STOCK AND UNITS AND DIVIDENDS
The following table sets forth the range of closing high and low bid
prices for the periods and dates indicated, as reported by NASDAQ (symbols:
CHXS and CHXSU), for the Common Stock and the Units (each Unit consisting of
four shares of Common Stock, and a warrant to purchase two shares of Common
Stock at an exercise price of $3.00 per share), which are traded on the NASDAQ
Small Caps Market. The prices below may reflect interdealer prices, without
retail mark-up, mark-down or commission, and may not necessarily represent
actual transactions:
48
<PAGE> 58
<TABLE>
<CAPTION>
Common Stock Units
Bid Prices Bid Prices
Per Share Per Share
--------- ---------
Quarter Ended: High Low High Low
- - -------------- ---- ----- ---- -----
<S> <C> <C> <C> <C>
March 31, 1993 $ 1.44 $ .81
June 30, 1993 $ 1.81 $ 1.12 $ 6.50 $ 5.00
September 30, 1993 $ 1.31 $ .75 $ 5.88 $ 4.25
December 31, 1993 $ 1.25 $ 1.06 $ 5.38 $ 3.50
March 31, 1994 $ 1.25 $ 1.12 $ 5.00 $ 3.63
June 30, 1994 $ 1.12 $ .94 $ 5.00 $ 3.25
September 30, 1994 $ .94 $ .78 $ 3.50 $ 3.13
December 31, 1994 $ .94 $ .62 $ 3.25 $ 2.00
March 31, 1995 $ 1.00 $ .69 $ 4.00 $ 2.75
June 30, 1995 $ .94 $ .75 $ 3.50 $ 2.50
September 30, 1995 $ 1.03 $ .75 $ 3.88 $ 2.75
August 30, 1995(a) $ 1.00 $ 1.00 $ 3.38 $ 3.38
October 13, 1995(b) $ 1.00 $ 1.00 $ 4.00 $ 4.00
January 4, 1996(c) $ .81 $ .81 $ 4.25 $ 4.25
</TABLE>
(a) Date immediately prior to public announcement of signing of
letter of intent with Ace to enter into the Merger Agreement.
(b) Date immediately prior to public announcement of signing
Merger Agreement with Ace.
(c) Last trading day immediately prior to the printing of this
Proxy Statement
The Company has never paid cash dividends on the Common Stock and, if the
Merger is not consummated, does not anticipate the payment of cash dividends on
the Common Stock in the foreseeable future. Any declaration of future
dividends under such circumstances would be within the discretion of the Board
of Directors and would depend upon its judgment, based upon such factors as
earnings, capital requirements, and the operating and financial condition of
the Company, at the time.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AS COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1994
Revenues
Revenues for the quarter ended September 30, 1995, decreased 2%, or
$36,000, to $1,895,000 as compared to $1,931,000 for the prior year period.
49
<PAGE> 59
Check Cashing Service Fees
Company store revenues decreased 17%, or $241,000, to $1,195,000. The
decrease is comprised of a 13% increase in comparable store revenues (22 stores
which were open for both of the full two periods compared) of $112,000, an
increase in revenues of $103,000 from 4 stores acquired after the second
quarter 1994 plus $2,000 from a newly opened store, offset by a decrease in
revenues from 11 stores sold of $384,000 and a decrease in revenues from 5
stores closed of $73,000.
Franchise Revenues
Franchise revenues for the 1995 period increased 35%, or $133,000, to
$515,000 over the same period in 1994. Initial franchise sales fees increased
253%, or $109,000, to $152,000 for the period while continuing royalties
increased 7%, or $24,000, to $363,000.
Finance Revenues
The Company makes small consumer loans through selected Company-owned
stores and purchases at a discount loans receivable on used automobiles through
a limited number of dealers in Florida. Finance revenues for the quarter ended
September 30, 1995, were $207,000, an increase of $114,000, or 123%, over the
same period in 1994, primarily the result of an increase in used automobile
loans receivable. The Company's expansion of this operation is dependent upon
its ability to successfully acquire additional capital to fund the purchase of
new loans and/or to add selected used automobile dealers to its dealer network
for origination of loans.
Other Revenues
Other revenues decreased to ($23,000) from $20,000 in the prior period.
The other revenue for the 1994 period resulted from the gain on sale of a
Company-owned store, while the reduction of other revenues for the same period
in 1995 resulted principally from losses on the write-down of certain fixed
assets related to stores closed.
Store Expenses
Store expenses for the 1995 period decreased 11%, or $149,000, to
$1,193,000. Salaries and benefits decreased 18%, or $82,000; occupancy costs
decreased 20%, or $42,000; returned check write offs increased 43%, or $30,000;
store depreciation and amortization expense decreased 12%, or $11,000; other
store expenses increased 7%, or $25,000; and area and regional expenses
decreased 45%, or $68,000.
Salaries and benefits decreased as a result of the net effect of an
increase of $37,000 from the 22 comparable stores, an increase of 14% for those
stores, plus $38,000 from the 4 acquired stores and $3,000 from a newly opened
store, offset by a decrease of $121,000 from the 11 stores sold and $39,000
from the 5 closed stores. Occupancy expenses decreased as a result of fewer
stores operating in the 1995 quarter than in 1994. The increase in returned
check write-offs was comprised of an increase of $57,000 contributed by the 22
comparable stores, an increase of 163% for those stores, plus an increase of
$2,000 from the 5 closed stores and $1,000 from a newly opened store, offset by
a decrease of $28,000 from the 11 stores sold and a decrease of $2,000 from the
4 acquired stores. A significant amount of these uncollected returned items
were checks cashed for established, commercial account customers, most of which
are small businesses. These commercial customers have encountered financial
difficulties of one sort or another, some due to declining business, others as
a result
50
<PAGE> 60
of disputes between them and their customers over the acceptability of their
goods or services sold resulting in stop payments being placed on checks issued
to them by their customers as payment for their goods and services. Management
believes a significant portion of these returned items will ultimately be
collected. However, due to the nature of the items, the related disputes
between the makers of the checks and our commercial customers, collection of
these items generally requires our requesting the involvement of the State's
Attorney. As a result, the cycle time for successful collection of these
returned items is significantly longer than that, for example, for a payroll
check or even a personal check, which can typically be collected within a period
of several days. Depreciation and amortization decreased, with increases of
$13,000 from the 22 comparable stores, $5,000 from the 4 acquired stores and
$2,000 from the newly opened store being offset by a decrease of $26,000 from
the 11 stores sold and $5,000 from the 5 closed stores. The increase related to
comparable stores resulted from upgrades to older stores plus redesign and
upgrade of our training store, which is also utilized for training of our
franchisees. The increase in other store expenses resulted primarily from an
increase of $134,000 from the 22 comparable stores, an increase of 69% for those
stores, with significant contributors being bank charges, advertising, and the
corporate overhead expense allocation. This increase was offset by a net
decrease of $109,000 from the sold, closed, acquired and newly opened stores.
The decline in area and regional expenses is comprised of decreases of $40,000
from the 11 stores sold, $18,000 from the 5 stores closed, $8,000 from the 4
acquired stores and $2,000 from the 22 comparable stores. This decrease results
primarily from the elimination of two areas due to the sale of 5 stores in
California in January 1995 and 2 stores in South Florida during the fourth
quarter 1994, plus other savings resulting from stores sold and closed.
The Company implemented a management change in fourth quarter 1994 and
assigned responsibility for management of the Company-owned stores to the
operations support group, which also oversees franchise store operations. This
management change has resulted in the reduction of area and regional expenses,
primarily salaries. The Company has focused on attracting and retaining
quality personnel at the store level, the front lines of the check cashing
operation, which has resulted in an increase in salaries at the store level.
Management believes that this investment in attracting, training, motivating,
and thereby retaining quality store personnel will have a positive effect on
the future results of the check cashing operations.
Franchise Expenses
Franchise expenses for the 1995 period increased 38%, or $139,000, to
$501,000. Salaries and benefits increased 44%, or $56,000, to $183,000.
Advertising expense increased 38%, or $18,000, to $65,000, due to marketing of
franchise kiosks targeted at convenience stores which was initiated in the
third quarter of 1994, and an increase in full-service franchise marketing.
Fees associated with the installation of the Company's proprietary check
cashing computer system for new franchisees increased 500%, or $15,000, to
$18,000 due to a larger number of new franchisee store locations in 1995 versus
1994. Occupancy costs decreased 15%, or $3,000, to $17,000. Depreciation and
amortization expense decreased 23%, or $6,000, to $20,000 due to a reduction in
amortization of the excess purchase price recorded with respect to the
Check-X-Change acquisition, resulting from the final adjustment of purchase
accounting as of October 1, 1994, whereby goodwill was reduced by approximately
$190,000. Travel and lodging expense decreased 36%, or $41,000, to $73,000,
primarily due to a shift in timing for many franchise visits from the third
quarter in 1994 to the second quarter in 1995. Professional services expenses
increased 725%, or $29,000, to $33,000, all related to an increase in activity
related to licensing, registering and protecting the Check Express USA and
Check-X-Change trade names, trademarks and other intellectual property. Other
expenses increased 152%, or $38,000, to $63,000, primarily the result of
increased telephone expenses and other costs associated with additional sales
and other personnel. The corporate overhead allocation increased to $29,000
for 1995.
51
<PAGE> 61
Finance Expenses
Expenses associated with the Company's small consumer loan and auto loan
finance activities increased 63%, or $32,000, to $83,000 in 1995. Salaries and
benefits increased 14%, or $4,000, to $32,000, provision for loan losses
increased 222%, or $20,000, to $29,000, and other expenses increased 57%, or
$8,000, to $22,000. The increase in the provision for loan losses is due to
reserves established for losses anticipated related to installment notes
receivable purchased from a used automobile dealer, who has recently
experienced financial difficulties and, as a result, gone out of business. As
of October 31, 1995, the Company has thirty eight active accounts purchased
from this dealer, with an aggregate balance due net of unearned discount of
approximately $65,000, approximately $56,000 of which is contractually current
within 30 days on their payments due. As of the same date, the Company has ten
accounts from this dealer currently in repossession, such accounts having a
balance due net of unearned discounts of approximately $18,000. One of the
other two dealers with which the Company does business is assisting in
repossessing and either retailing or selling at auction the automobiles
underlying any of these installment notes receivable which are or may become
non-performing. The total balance due net of unearned discount from the
forty eight accounts purchased from this dealer is approximately $83,000, or 3%
of the Company's total installment notes receivable as of September 30, 1995 of
$2,692,000 and 132% of the reserve for doubtful accounts of $63,000 established
as of September 30, 1995.
Headquarters Expenses
Headquarters expenses decreased 23%, or $46,000, to $150,000, the net
result of increases to components of headquarters expenses offset by related
increases in allocations of certain expenses to the Company's operations.
Corporate overhead expenses, before allocations to operations, increased
18%, or $38,000, to $244,000. Salaries and benefits increased 32%, or $34,000,
to $141,000, due to additional personnel. Occupancy costs increased 38%, or
$3,000, to $11,000 as a result of an increase in the amount of rent expense
allocated to corporate overhead functions versus various operations functions.
Depreciation and amortization expense decreased 14%, or $3,000, to $19,000.
Other expenses increased 6%, or $4,000, to $73,000, primarily due to additional
expenses related to the 1994 business expansion.
Interest Expense
Interest expense increased 40%, or $32,000, to $111,000, primarily due
to increased interest paid to banks and individuals for loans made to help fund
acquisitions, plus interest paid to banks due to the growth in the Company's
portfolio of auto finance receivables. Approximately $63,000 of the interest
expense for the 1995 period is allocable to funding of the Finance operation.
Loss Before Income Taxes
Loss before income taxes increased 45%, or $45,000, to $145,000 for the
1995 period as compared to $100,000 in 1994.
Income Taxes Benefit
Benefit from income taxes for the 1995 period is $73,000 as compared to
$51,000 in 1994, representing estimated effective income tax rates of
approximately 50% for both periods. The effective tax rate for both periods
is higher than the statutory rate principally as a result of the amount of
goodwill amortization related to
52
<PAGE> 62
certain acquisition transactions which occurred principally at the end of 1993,
in relation to the amounts of pre-tax income for these periods. Those
acquisitions were structured as non-taxable reorganizations, which resulted in
the amortization of intangibles for book accounting purposes being
non-deductible for income taxes. Acquisitions made by the Company since then
have been structured as taxable transactions, which results in a deduction for
income tax purposes of amortization of intangibles.
Net Loss
The net effect of the matters discussed above is that the net loss for
the quarter ended September 30, 1995, increased to $72,000 (a loss of $.01 per
share on 5,060,982 weighted average number of shares outstanding) as compared
to $49,000 (a loss of $.01 per share on 4,815,976 weighted average number of
shares outstanding) for the prior year period.
NINE MONTHS ENDED SEPTEMBER 30, 1995 AS COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1994
Revenues
Revenues for the nine months ended September 30, 1995, increased 9%, or
$480,000, to $6,014,000 as compared to $5,534,000 for the prior year period.
Check Cashing Service Fees
Company store revenues decreased 9%, or $352,000, to $3,777,000. The
decrease was comprised of an increase in comparable store revenues (22 stores
which were open for both of the full two periods compared) of 7%, or $201,000,
in addition to an increase in revenues of $522,000 from 4 stores acquired after
the second quarter 1994, offset by a decrease in revenues from 11 stores sold
of $940,000 and a decrease in revenues from 5 stores closed of $135,000.
The increase in comparable store revenues includes a decrease in fees
from the Company's income tax electronic filing and refund anticipation loan
programs of $64,000, the direct result of changes made by the Internal Revenue
Service with respect to processing of income tax returns filed electronically
and applying for a refund anticipation loan. Check cashing fees in our 22
comparable stores continue to show improvements over the prior year, the
combined result of a slight fee increase on certain types of checks cashed and
an increase in the face amount of checks cashed.
Franchise Revenues
Franchise revenues for the 1995 period increased 21%, or $238,000, to
$1,375,000, compared to $1,137,000 for the same period in 1994. Initial
franchise sales fees increased 90%, or $139,000, to $293,000 for the period
while continuing royalties increased 10%, or $99,000, to $1,082,000.
Finance Revenues
The Company makes small consumer loans through selected Company-owned
stores and purchases at a discount loans receivable on used automobiles through
a limited number of dealers in Florida. Finance revenues for the nine months
ended September 30, 1995, were $608,000, an increase of $397,000, or 188%, over
the same period in 1994, primarily the result of an increase in used automobile
loans receivable. The Company's expansion of this operation is dependent upon
it's ability to successfully acquire additional capital to fund the
53
<PAGE> 63
purchase of new loans and/or to add selected used automobile dealers to its
dealer network for origination of loans.
Other Revenues
Other revenues increased to $253,000 from $57,000 in the prior period.
The other revenue for the 1994 period resulted primarily from the gain on sale
of a Company-owned store, while the other revenues for the same period in 1995
resulted principally from the gain on sale in January 1995 of 5 stores located
in California offset by losses on the write-down of certain fixed assets
related to stores closed during 1995.
Store Expenses
Store expenses for the 1995 period decreased 1%, or $34,000, to
$3,669,000. Salaries and benefits decreased $2,000, or less than 1%; occupancy
costs decreased 9%, or $49,000; returned check write offs increased 6%, or
$13,000; store depreciation and amortization expense decreased 4%, or $9,000;
other store expenses increased 16%, or $171,000; and area and regional expenses
decreased 40%, or $158,000.
Salaries and benefits decreased as a result of the net effect of
increases of $128,000 from the 22 comparable stores, an increase of 16% for
those stores, plus $203,000 from the 4 acquired stores and $5,000 from a newly
opened store, offset by decreases of $277,000 from the 11 stores sold and
$61,000 from the 5 closed stores. Occupancy expenses decreased as a result of
fewer stores operating in the 1995 period than in 1994. The increase in
returned check write-offs was comprised of increases of $88,000 contributed by
the 22 comparable stores, a 71% increase for those stores, $8,000 from the 4
acquired stores and $1,000 from a newly opened store, offset by a decrease of
$84,000 from the 11 stores sold. A significant amount of these uncollected
returned items were checks cashed for established, commercial account
customers, most of which are small businesses. These commercial customers have
encountered financial difficulties of one sort or another, some due to
declining business, others as a result of disputes between them and their
customers over the acceptability of their goods or services sold resulting in
stop payments being placed on checks issued to them by their customers as
payment for their goods and services. Management believes a significant
portion of these returned items will ultimately be collected. However, due to
the nature of the items, the related disputes between the makers of the checks
and our commercial customers, collection of these items generally requires our
requesting the involvement of the State's Attorney. As a result, the cycle
time for successful collection of these returned items is significantly longer
than that, for example, for a payroll check or even a personal check, which can
typically be collected within a period of several days. Depreciation and
amortization decreased, resulting from increases of $22,000 from the 22
comparable stores, $27,000 from the 4 acquired stores and $3,000 from the newly
opened store, offset by decreases of $56,000 from the 11 stores sold and $5,000
from the 5 closed stores. The increase related to comparable stores resulted
mainly from upgrades to older stores plus redesign and upgrade of our training
store, which is also utilized for training of our franchisees. The increase in
other store expenses resulted primarily from an increase of $232,000 from the
22 comparable stores, an increase of 39% for those stores, with significant
contributors being bank charges, advertising, and the corporate overhead
expense allocation. This increase was offset by a net decrease of $109,000
from the sold, closed, acquired and newly opened stores. The decline in area
and regional expenses reflects the net effect of an increase of $1,000 related
to a newly opened store offset by decreases of $88,000 from the 11 stores sold,
$34,000 from the 5 stores closed, $7,000 from the 4 acquired stores, and
$30,000 from the 22 comparable stores, comprised mainly of a reduction in
personnel costs offset by recruiting expenses related to the management trainee
program implemented during the first quarter 1995. The decrease in area and
regional expenses results primarily from the elimination of two areas due to
the sale of 5 stores in California in January 1995 and 2 stores in South
Florida during the fourth quarter 1994, plus other savings resulting from
stores sold and closed.
54
<PAGE> 64
The Company implemented a management change in fourth quarter 1994 and
assigned responsibility for management of the Company-owned stores to the
operations support group, which also oversees franchise store operations. This
management change has resulted in the reduction of area and regional expenses,
primarily salaries. The Company has focused on attracting and retaining
quality personnel at the store level, the front lines of the check cashing
operation, which has resulted in an increase in salaries at the store level.
Management believes that this investment in attracting, training, motivating,
and thereby retaining quality store personnel will have a positive effect on
the future results of the check cashing operations.
Franchise Expenses
Franchise expenses for the 1995 period increased 52%, or $430,000, to
$1,259,000. Salaries and benefits increased 30%, or $110,000, to $480,000.
Advertising expense increased 90%, or $80,000, to $169,000, due to marketing of
franchise kiosks targeted at convenience stores which was initiated in the
third quarter of 1994, and an increase in full-service franchise marketing.
Fees associated with the installation of the Company's proprietary check
cashing computer system for new franchisees increased 100%, or $15,000, to
$30,000 due to a larger number of new franchisee store locations in 1995 versus
1994. Occupancy expenses increased 22%, or $9,000, to $50,000. Depreciation
and amortization expense decreased 21%, or $16,000, to $60,000 due to a
reduction in amortization of the excess purchase price recorded with respect to
the Check-X-Change acquisition, resulting from the final adjustment of purchase
accounting as of October 1, 1994, whereby goodwill was reduced by approximately
$190,000. Travel and lodging expenses increased 1%, or $2,000, to $137,000.
Professional services expenses increased 393%, or $55,000, to $69,000, all
related to an increase in activity related to licensing, registering and
protecting the Check Express USA and Check-X-Change trade names, trademarks
and other intellectual property. Other expenses increased 75%, or $77,000, to
$179,000, primarily the result of increased telephone expenses and other costs
associated with additional sales and other personnel, plus the net costs
incurred by the Company in organizing and hosting an annual convention for its
franchise owners. The corporate overhead allocation increased to $85,000 for
1995.
Finance Expenses
Expenses associated with the Company's small consumer loan and auto loan
finance activities increased $76,000, or 63%, to $196,000 in 1995. Salaries
and benefits increased $28,000, or 46%, to $89,000, provision for loan losses
increased $30,000, or 150%, to $50,000, and other expenses increased 46%, or
$18,000, to $57,000. Approximately $20,000 of the increase in the provision
for loan losses is due to reserves established for losses anticipated related
to installment notes receivable purchased from a used automobile dealer, who
has recently experienced financial difficulties and, as a result, gone out of
business. As of October 31, 1995, the Company has thirty eight active accounts
purchased from this dealer, with an aggregate balance due net of unearned
discount of approximately $65,000, approximately $56,000 of which is
contractually current within 30 days on their payments due. As of the same
date, the Company has ten accounts from this dealer currently in repossession,
such accounts having a balance due net of unearned discounts of approximately
$18,000. One of the other two dealers with which the Company does business is
assisting in repossessing and either retailing or selling at auction the
automobiles underlying any of these installment notes receivable which are or
may become non-performing. The total balance due net of unearned discount from
the forty eight accounts purchased from this dealer is approximately $83,000,
or 3% of the Company's total installment notes receivable as of September 30,
1995 of $2,692,000 and 132% of the reserve for doubtful accounts of $63,000
established as of September 30, 1995. The other $10,000 of the increase in
provision for loan losses for the period results from growth of the reserve for
doubtful accounts in connection with the growth in the total portfolio of
installment notes receivable.
55
<PAGE> 65
Headquarters Expenses
Headquarters expenses decreased $46,000, or 8%, to $506,000 in 1995, the
net result of increases to components of headquarters expenses offset by
related increases in allocations of certain expenses to the Company's
operations.
Corporate overhead expenses, before allocations to operations, increased
29%, or $178,000, to $782,000. Salaries and benefits increased 32%, or
$108,000, to $443,000, due to additional personnel. Occupancy costs increased
50%, or $10,000, to $30,000 as a result of increased rent at the relocated
corporate offices and an increase in the amount of rent expense allocated to
corporate overhead functions versus various operations functions. Depreciation
and amortization expense increased 31%, or $14,000, to $59,000, primarily due
to additional telephone and computer equipment. Other expenses increased 23%,
or $46,000, to $250,000, primarily due to additional expenses related to the
1994 business expansion.
Interest Expense
Interest expense increased 84%, or $146,000, to $319,000, primarily due
to increased interest paid to banks and individuals for loans made to help fund
acquisitions, plus interest paid to banks due to the growth in the Company's
portfolio of auto finance receivables. Approximately $152,000 of the interest
expense for the 1995 period is allocable to funding of the Finance operation.
Income before Income Taxes
Income before income taxes decreased 59%, or $92,000, to $65,000 for the
1995 period as compared to $157,000 in 1994.
Income Taxes
Provision for income taxes for 1995 period is $33,000 as compared to
$65,000 in 1994, representing estimated effective income tax rates of
approximately 50% and 41%, respectively. The increase in effective tax rate
for 1995 as compared to 1994 and the relatively high effective tax rate for
both periods is principally the result of the increase in the amount of
goodwill amortization related to certain acquisition transactions which
occurred principally at the end of 1993, in relation to the amounts of pre-tax
income for these periods. Those acquisitions were structured as non-taxable
reorganizations, which resulted in the amortization of intangibles for book
accounting purposes being non-deductible for income taxes. Acquisitions made
by the Company since then have been structured as taxable transactions, which
results in a deduction for income tax purposes of amortization of intangibles.
Net Income
The net effect of the matters discussed above is that net income for the
nine months ended September 30, 1995, decreased to $33,000 ($.01 per share on
5,019,970 weighted average number of shares outstanding) as compared to $93,000
($.02 per share on 4,806,597 weighted average number of shares outstanding) for
the prior year period.
56
<PAGE> 66
YEAR ENDED DECEMBER 31, 1994 AS COMPARED TO DECEMBER 31, 1993.
Revenues
Revenues for the year ended December 31, 1994, increased 77%, or
$3,265,000, to $7,533,000 as compared to $4,268,000 for the year ended December
31, 1993.
Check Cashing Service Fees
Company store revenues increased 75%, or $2,415,000, to $5,654,000,
primarily due to an increase in the number of stores operated during 1994 as
compared to 1993. A decrease in comparable store revenues (17 stores which
were open for both of the full two years compared) of less than 1%, or $21,000,
to $2,762,000, was offset by $166,000 in revenues from one store opened in
fourth quarter 1993 and from two stores opened in 1994. During fourth quarter
1993 and throughout 1994, the Company acquired 20 stores and sold 6 stores (5
to Check Express franchisees and 1 to a third-party), resulting in a net
increase in Company store revenues of $2,264,000 in 1994 as compared to 1993.
Franchise Revenues
Franchise revenues increased 59%, or $567,000, to $1,521,000. A
decrease in initial franchise sales fees of 57%, or $241,000, to $183,000, was
offset by an increase in continuing royalties of 152%, or $808,000, to
$1,338,000. The acquisition of Check-X-Change Corporation in October of 1993
contributed 82%, or $660,000, of the increase in continuing royalties.
Finance Revenues
The Company began test marketing loans in fourth quarter 1993. Loans
ranging from $100 to $1,000 are made to customers at selected Company-owned
stores. The Company also purchases at a discount loans on used automobiles
through a limited number of dealers in Florida. Finance revenues increased to
$323,000 in 1994 from $11,000 in 1993. Based on results to date and provided
it is successful in acquiring additional capital to fund new loans, the Company
intends to expand its finance activities.
Other Revenues
Other revenues decreased 42%, or $28,000, to $35,000, primarily due to a
decrease in interest income.
Store Expenses
Store expenses for 1994 increased 82%, or $2,203,000, to $4,888,000,
primarily the result of the increased number of stores operated during 1994 as
compared to 1993. Salaries and benefits increased 68%, or $683,000, to
$1,690,000; occupancy costs increased 88%, or $360,000, to $769,000; store
depreciation and amortization increased 31%, or $76,000, to $320,000; and other
store expenses increased 84%, or $579,000, to $1,271,000, all primarily as a
result of the additional stores. Returned check write offs increased 169%, or
$217,000, to $346,000, in part due to the increased number of stores and, in
part, due to certain procedures not having been properly followed at the store
level. In order to re-establish store operating procedures, the Company
implemented a management change in fourth quarter 1994 and assigned
responsibility for management of the Company-owned stores to the operations
support group, which also oversees franchise store operations. The Company
believes that this change in management of Company-owned stores will, over time,
result in returned check
57
<PAGE> 67
write offs more consistent with historical levels. Returned check write offs
as a percentage of the face amount of checks cashed increased to 0.22% for 1994
as compared to 0.14% in 1993. Area and regional expenses increased 140%, or
$287,000, to $492,000, primarily as a result of an increase in the number of
area managers and related expenses resulting from the additional stores.
Franchise Expenses
Franchise expenses increased 61%, or $468,000, to $1,241,000, primarily
due to the acquisition of Check-X-Change in October of 1993. Salaries and
benefits increased 87%, or $249,000, to $536,000. Advertising expense
increased 188%, or $107,000, to $164,000, due to new marketing of franchise
kiosks targeted at convenience stores and an increase in full-service franchise
marketing. Depreciation and amortization expense increased 143%, or $39,000,
to $66,000 due to amortization of the Check-X-Change acquisition. Travel and
lodging expense increased 163%, or $101,000, to $163,000, primarily due to the
increased number of franchise stores. Other expenses decreased 18%, or
$57,000, to $255,000, primarily due to a decrease in computer expenses related
to the opening of new franchises.
Finance Expenses
Expenses associated with the Company's small consumer loan and auto loan
finance activities increased from $26,000 in 1993 to $168,000 in 1994.
Salaries and benefits increased to $83,000, occupancy costs increased to
$11,000, provision for loan losses increased to $32,000 and other expenses
increased to $42,000.
Headquarters Expense
Headquarters expenses increased 70%, or $366,000, to $888,000, primarily
due to an increase in salaries and benefits of 75% or $214,000, to $498,000,
due to additional accounting personnel and compensation, including $83,000 in
finders fees, paid to a new manager of acquisitions, of which approximately
$60,000 are related to stores acquired in California in 1994 which were sold
for an approximate gain of $290,000 in January 1995. Occupancy costs increased
74%, or $13,000, to $29,000 as a result of increased rent at the relocated
corporate offices. Depreciation and amortization expense increased 80%, or
$27,000, to $61,000 due to additional telephone and computer equipment. Other
expenses increased 60%, or $113,000, to $300,000, primarily due to additional
expenses related to the 1994 business expansion.
Interest Expense
Interest expense increased 114%, or $150,000, to $281,000, primarily
due to increased interest paid to banks and individuals for loans made to help
fund acquisitions and interest paid to banks due to the growth in the Company's
portfolio of consumer loans and auto finance receivables.
Income before Income Taxes
Income before income taxes decreased 49%, or $64,000, to $67,000, in
1994 as compared to $131,000 in 1993.
58
<PAGE> 68
Income Taxes
Provision for income taxes for 1994 is $66,000 as compared to $65,000 in
1993, representing effective income tax rates of approximately 100% and 50%,
respectively. The increase in effective tax rate for 1994 as compared to 1993
and the relatively high effective tax rate for both periods is principally the
result of the increase in the amount of goodwill amortization related to
certain acquisition transactions which occurred principally at the end of 1993,
in relation to the relatively low amounts of pre-tax income for these periods.
Those acquisitions were structured as non-taxable reorganizations, which
resulted in the amortization of intangibles for book accounting purposes being
non-deductible for income taxes. Acquisitions made by the Company since then
have been structured as taxable transactions, which results in a deduction for
income tax purposes of amortization of intangibles.
Net Income
The net effect of the matters discussed above is that net income for
1994 decreased to $467 ($.00 per share on 4,864,832 fully diluted number of
shares outstanding) as compared to $66,000 ($.02 per share on 3,284,774 fully
diluted number of shares outstanding) in 1993.
RECENT ACCOUNTING PRONOUNCEMENTS
During 1993, the Accounting Standards Executive Committee issued
Statement of Position 93-7 (SOP), Reporting on Advertising Costs, which the
Company adopted prospectively as required in 1995. The SOP requires that
advertising costs be expensed when incurred, with the exception of the costs of
direct-response advertising, which are capitalized and amortized over the
period that benefits are received. The Company's current policies are
generally in compliance with the SOP, and therefore, its adoption is not
expected to have a significant effect on the Company's financial position or
results of operations.
LIQUIDITY AND CAPITAL RESOURCES.
In January 1993, the Company entered into an agreement with its primary
bank which provided the Company with a $400,000 operating revolving credit line
at prime plus 1.25% and a $270,000 five year term loan (funded in April 1993)
at a floating rate of prime plus 1.25%, with monthly principal and interest
payments. The loan terms contain covenants which require the Company to
maintain a tangible net worth of at least $1,000,000 and a ratio of total debt
(excluding subordinated or junior debt) to tangible net worth of not more than
2.0 to 1.0. For such purposes, "tangible net worth" means (1) the aggregate
amount of assets (excluding intangible assets), equity, and similar items
reflected on the Company's balance sheet, plus the amounts of any subordinated
debt, junior debt and debt to stockholders, less (2) liabilities. The loans
contain cross-collateral provisions, are secured by substantially all of the
assets of the Company and are personally guaranteed by the Company's Chairman
and CEO.
The Company owes its primary bank approximately $91,000 under a ten year
promissory note bearing interest at 8.5% per annum, due May 18, 2003. The note
is secured by a mortgage on an improved site in Tampa, Florida, which was
purchased for $106,000 and at which the Company operates a Company-owned store.
In February 1994, the Company executed new loan agreements with its
primary bank which provided for an increase in the revolving credit line to
$500,000 and a new seven year $880,000 term loan at a fixed rate of 8.25%, with
monthly principal and interest payments. Proceeds from the term loan were used
to partially fund
59
<PAGE> 69
the acquisitions and purchases of stores and for working capital for the
acquired stores. In August 1994, the Company obtained an additional $250,000
in revolving credit line from its primary bank.
Effective August 31, 1995, the Company converted the two revolving lines
of credit totaling $750,000 into a thirteen month term loan of $650,000. This
term loan bears interest at 11.5% per annum and requires a monthly principal
and interest payment of $49,835. This loan is collateralized specifically by
certain installment notes receivable of the Company's wholly owned subsidiary,
Check Express Finance, Inc., is cross-collateralized with all other debt
provided by the Company's primary bank by substantially all the assets of the
Company, and is personally guaranteed by the Company's President and CEO.
The cumulative amount remaining due as of September 30, 1995 under the
three term loans with the Company's primary bank was $1,560,000.
In May 1994, the Company obtained a revolving credit line in the amount
of $100,000 (subsequently increased to $200,000) from a Washington bank to
supplement cash required during peak check cashing periods at its Washington
stores. The terms of this facility also include financial covenants measured
using the stand alone balances of the subsidiary and require compliance with
all covenants related to the debt provided by the Company's primary bank in
Florida. Amounts outstanding under this facility bear interest at prime plus
2% and are personally guaranteed by the Company's President and CEO.
The Company has obtained a series of three-year term notes payable to
another bank, $500,000 in December 1994, $400,000 in April 1995, $200,000 in
June 1995, $114,000 in October 1995, and $300,000 in November 1995,
collateralized by certain installment notes receivable of the Company's wholly
owned subsidiary, Check Express Finance, Inc. and personally guaranteed the
Company's President and CEO. The first three notes payable bear interest at
variable interest rates ranging from 10.625% per annum to 11.125%, to be
adjusted annually, with the October 1995 and November 1995 notes bearing
interest at a fixed rate of 11.125% per annum. These five notes payable
require an aggregate minimum monthly principal and interest payment totaling
$56,889. The Company has made additional principal payments on these notes
each month to the extent that collections on the underlying installment notes
receivable collateralizing the notes payable have exceeded the aggregate
minimum monthly principal and interest payment on the then outstanding notes
payable to the bank. The cumulative amount remaining due under the three term
notes payable outstanding as of September 30, 1995 was $468,000.
Also effective August 31, 1995, the Company and its wholly owned
subsidiary Check Express Finance, Inc. entered into a $500,000 revolving
credit agreement with another bank, and obtained an initial advance thereunder
of $500,000 under a two-year term note payable collateralized by certain
installment notes receivable of Check Express Finance, Inc. This term note
payable bears interest at a fixed rate of 10.75% per annum and requires a
minimum monthly interest and principal payment of $23,246. Additional
principal payments will be made monthly, as a result of early pay-downs or
payoffs of installment notes receivable collateralizing the loan, to the extent
the Borrowing Base calculated under the terms of the credit agreement and based
on the balances of the installment notes receivable outstanding at each month
end is less than the principal balance of the term note payable. Check Express
Finance, Inc. may request subsequent advances, in minimum increments of
$100,000, to the extent that the revolving credit facility of $500,000 is not
fully accessed. The Company and the Company's President and CEO have provided
guarantees to the bank regarding this term note payable.
The Company converted $82,000 of the $108,000 outstanding as of
September 30, 1995, of its 11% per annum unsecured notes payable which had
balloon payments due November 1, 1995, to term notes with the same monthly
payments of principal and interest until the balances are liquidated, October
1, 1997.
60
<PAGE> 70
In 1994, the Company expended approximately $1,090,000 in cash and
issued approximately $1,089,000 in notes as consideration for the acquisition
of 17 Company-owned stores, and received $90,000 in cash and $1,030,000 in
notes for the sale of six stores plus approximately $170,000 in cash. Through
September 30, 1995, the Company has received approximately $982,000 in cash for
5 Company-owned stores sold in January 1995.
In 1994, the Company expended approximately $285,000 in cash and $65,000
under capital lease agreements for the purchase of a new telephone system for
its corporate headquarters and for the purchase of additional computer
equipment for the headquarters and for the acquired stores. No amounts have
been expended under capital lease agreements through September 30, 1995.
In 1994, the Company expended $1,490,000 for its consumer loan and auto
finance receivables as compared to $98,000 in 1993. Through September 30,
1995, the Company has expended approximately $1,164,000 for similar installment
notes receivable.
Because the Company's operations consist primarily of check cashing and
other financial services, its combined liquidity is readily ascertainable. At
September 30, 1995, 15% of the Company's $10,607,000 in total assets consisted
of cash.
In November 1995, Seattle-First National Bank ("Seafirst"), the
Company's bank for its operations in the State of Washington, informed the
Company that it would no longer permit the Company access to funds represented
by account balances reflected by checks deposited with Seafirst but not yet
cleared through the banking system. As a result, cash availability to the
Company was expected to decline by between approximately $150,000 to $650,000,
depending on the day of the week and time of the month. This change, along
with scheduled debt payments of the Company and short-term anticipated
operating cash flows, resulted in a concern as to the adequacy of the Company's
cash availability, absent additional borrowings, to support anticipated levels
of store operations through consummation of the Merger. Mr. Larry F. Lang,
Chairman and CEO of the Company, informed Mr. Donald H. Neustadt, the President
and Chief Executive Officer of Ace, of such circumstance in late November. In
light of the pending Merger, Ace indicated its willingness to provide the
Company with cash on a short-term basis, and on November 30, 1995, the Company
borrowed $450,000 from Ace. The loan, which is evidenced by a promissory note
of the Company in favor of Ace, must be repaid with interest on demand by Ace.
The principal balance of the loan bears interest at a variable annual rate
equal to 2% above the prime rate, and payment of the promissory note is secured
by a security interest in all of the Company's assets at the Company's four
owned check-cashing locations in Indianapolis, Indiana. Ace does not expect to
make demand for payment so long as the parties continue to proceed toward
consummation of the Merger. If the Merger is not consummated, however, Ace
expects promptly to demand payment of the principal balance of the loan and all
accrued interest thereon.
If the Merger is not consummated and if CEF is not sold, then, after
repayment of the loan from Ace, the Company would require additional capital to
continue its present level of operations. The Company believes such capital
could be obtained by selling either a portion of its installment loan portfolio
or one or more of its Company-owned stores.
SPECIAL CONSIDERATIONS
The Company's business is subject to various continuing risks, including
those described below.
Competition
As described above, the Company is in competition with various other
businesses that cash checks, sell franchises and make loans. Many of the
Company's competitors have significantly greater financial resources than the
Company. There can be no assurance that the Company will be able to continue
to compete successfully with such other businesses.
Inherent Risks of Cash Business
The services provided at Company-owned money centers require each store
to maintain a certain amount of cash on hand which presents a risk of cash
shortages from employee error and theft. The Company has implemented controls
and security procedures to minimize this risk; however, the risk cannot be
totally eliminated. In addition, because the Company cashes checks, it is
subject to losses from returned checks. For fiscal years ended December 31,
1994 and 1993, returned checks, net of collections, and cash shortages totaled
6.1% and 4.0% of check cashing service fees, respectively. Through September
30, 1995, returned checks, net of collections, and cash shortages totaled 6.8%
of check cashing service fees.
Inherent Risks of Finance Business
The Company is making small consumer loans and providing used automobile
financing to individuals, most of whom can be characterized as high credit
risks. Although the Company's actual losses from its financing activities have
been minimal to date, there can be no assurance that the Company will be able
to continue to
61
<PAGE> 71
operate with similar loan loss experience in the future. The Company recorded
a $32,000 provision for loan losses in 1994 and a $50,000 provision through
September 30, 1995.
The used automobile financing installment notes receivable are secured
by the automobile and the Company has recourse agreements with each dealer such
that management (repossession and resale) of the collateral supporting non-
performing loans is the responsibility of the dealers. The Company currently
purchases these installment notes receivable primarily from two used automobile
dealers located in Central Florida.
Management does not feel that this concentration of business with two
dealers represents a significant credit risk as the Central Florida used
automobile industry is very strong, primarily because of the significance of
the entertainment and recreation service industry in this geographic region,
with a significant number of dealers. The dealer becomes part of the credit
risk management structure only at the point at which the loan is non-performing
and can not be recovered through the Company's collection efforts. At this
point the dealer is responsible under the recourse agreement for repossessing
and selling the automobile at auction in order to recover proceeds to the
extent practically feasible. This assumes the dealer can not or does not wish
to recondition and resell the automobile again; the normal course is for this
resale to occur and the note related to the repossession to be settled by the
dealer, typically at an amount representing break even on the net investment in
the note at repossession. The new note related to the resale may or may not be
purchased from the dealer, in accordance with the Company's normal purchase
criteria for such notes. In the event one of these dealers was unable to
fulfill his commitments with respect to the recourse agreement, the Company
would utilize the other dealer to manage non-performing loans. The other
dealer would be asked to repossess, recondition and resell the automobile,
which would be both in the best interest of the dealer, due to the profit
motive involved, and the best interest of the Company. The likelihood of both
dealers experiencing difficulty at the same time is considered remote. If that
were to occur, the Company would still have the ability to mitigate losses by
working with other dealers in the market, many of whom are familiar to
management personnel of the finance operation, to assist with management of
non-performing loans.
Government Regulation
There are some states which currently regulate check cashing stores.
Regulations vary from state to state and range from simple minimum licensing
requirements to limits on check cashing fees. The Company and several of its
franchisees operate in states which have regulations affecting check cashing
stores. In addition, federal and some state regulations require the reporting
of certain currency transactions. The Company began selling its own money
orders in September of 1992 and operates under money order licensing
regulations promulgated by the States of Florida and Indiana. The Company's
finance activities are subject to numerous local, state and federal
regulations. There can be no assurance that the Company will not be materially
adversely affected by legislation or regulations currently in existence or
which may be enacted in the future.
Seasonality
The check cashing business is seasonal, in large part the result of the
timing of income tax refunds and the fees earned from the cashing of income tax
refund and refund anticipation loan checks. Historically, most of the revenues
for these seasonal services are earned within the six months ending June 30.
The timing of the sale of new franchises is impossible to predict and can have
a material effect on the results of operations of a particular quarter.
However, the Company believes that the growth in continuing royalties, combined
with the growth in finance revenues, may serve to mitigate the seasonality
effect of the income tax season and the timing of new franchise sales.
Accordingly, the results of operations for any one quarter are not necessarily
indicative of the results of operations which may be realized for the full
year.
62
<PAGE> 72
Effect of Inflation
The Company believes that inflation does not currently have a material
effect on its results of operations.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of shares of the Common Stock as of November 30, 1995 by
(1) each person known by the Company to be the beneficial owner of more than 5%
of the outstanding Common Stock, (2) each director of the Company, (3) each
executive officer of the Company, and (4) all directors and executive officers
of the Company as a group. Except as reflected in footnote 14 to the following
table, the Company believes that each of the following shareholders has the
sole voting and dispositive power over the shares held by each shareholder.
<TABLE>
<CAPTION>
Amount and
Nature of
Name of Beneficial Owner Beneficial Percent
or Number in Group(1) Ownership(2) of Class(3)
------------------------ ------------ -----------
<S> <C> <C>
Larry F. Lang(4,14) 823,570 16.27
Joseph J. Wozniak(5,14) 160,552 3.17
Patrick J. McEnany(6,14) 151,686 2.99
W. Keith Schilit(7) 27,500 0.54
Decker A. Todd(8) 31,500 0.62
Stephen L. Selka(9,14) 487,000 9.62
Paradise Valley Securities, Inc.(10,13) 384,600 7.59
Hayden R. Fleming(11,13) 288,835 5.70
All Directors and Executive Officers
as a Group (5 persons)(12) 1,194,808 23.59
Ace Cash Express, Inc.(14) 1,657,606 32.75
</TABLE>
(1) Mr. Lang's mailing address is 101 East Kennedy Boulevard, Suite 3800,
Tampa, Florida, 33602. Mr. Wozniak's mailing address is 101 East
Kennedy Boulevard, Suite 3800, Tampa, Florida, 33602. Mr. McEnany's
mailing address is 16600 N.W. 54th Avenue, Miami, Florida 33014. Mr.
Schilit's mailing address is 101 East Kennedy Boulevard, Suite 3800,
Tampa, Florida, 33602. Mr. Todd's mailing address is 101 East Kennedy
Boulevard, Suite 3800, Tampa, Florida, 33602. Mr. Selka's mailing
address is 3420 Cleveland Avenue, Fr. Myers, Florida, 33901. Paradise
Valley Securities, Inc.'s mailing address is 11811 North Tatum Blvd.,
Suite 4040, Phoenix, AZ 85028. Mr. Fleming's mailing address is 11811
North Tatum Blvd., Suite 4040, Phoenix, AZ 85028.
(2) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission rules, includes shares as
to which a person has or shares voting power and/or investment power.
Except as otherwise indicated, all shares are held of record with sole
voting and investment power.
(3) As to each named person or group, assumes the exercise of all options
and warrants beneficially owned by such person or group, but not the
exercise of any options or warrants owned by any other person or group,
divided by 5,061,003 shares of Common Stock outstanding.
(4) 663,570 shares of Common Stock, and options/warrants to purchase 160,000
shares (2,500 shares at an exercise price of $1.00 per share expiring
December 31, 1997, 50,000 shares at an exercise price of $.875 per share
expiring February 28, 1998, 2,500 shares at an exercise price of $1.125
expiring September 12, 1998, 50,000 shares at an exercise price of
$1.1875 per share expiring March 31, 1999, 5,000 shares at an exercise
price of $.6875 per share expiring November 22, 1999, and 50,000 shares
at an exercise price of $.84 per share expiring March 31, 2000).
(5) 145,552 shares of Common Stock, and options/warrants to purchase 15,000
shares (2,500 shares at an exercise price of $1.00 per share expiring
December 6, 1997, 2,500 shares at an exercise price of $1.125 expiring
September 12, 1998, 1,000 shares at an exercise price of $1.125
expiring December 1, 1998, and 9,000 shares at an exercise price of
$.6875 expiring November 22, 1999).
63
<PAGE> 73
(6) 134,686 shares of Common Stock, and options/warrants to purchase 17,000
shares (2,500 shares at an exercise price of $1.00 per share expiring
December 6, 1997, 2,500 shares at an exercise price of $1.125 expiring
September 12, 1998, 3,000 shares at an exercise price of $1.125
expiring December 1, 1998, and 9,000 shares at an exercise price of
$.6875 per share expiring November 22, 1999).
(7) Options/warrants to purchase 27,500 shares (2,500 shares at an exercise
price of $1.00 per share expiring December 6, 1997, 12,500 shares at an
exercise price of $.85 per share expiring on December 6, 1997, 2,500
shares at an exercise price of $1.125 expiring September 12, 1998, 1,000
shares at an exercise price of $1.125 expiring December 1, 1998, and
9,000 shares at an exercise price of $.6875 expiring November 22, 1999).
(8) 1,500 shares of Common Stock, and options/warrants to purchase 30,000
shares (10,000 shares at an exercise price of $1.125 expiring December
1, 1998, and 20,000 shares at an exercise price of $.6875 expiring
November 22, 1999).
(9) 483,000 shares of common stock and options/warrants to purchase 4,000
shares at an exercise price of $3.00 per share expiring December 31,
1996.
(10) 25,000 shares of Common Stock, options/warrants to purchase 98,600
shares at an exercise price of $3.00 per share expiring December 31,
1996, and options/warrants to purchase up to 43,500 Units, each
comprised of four shares of Common Stock and two warrants to purchase
one share of Common Stock each at and exercise price of $3.00 per share,
at an exercise price of $6.60 per Unit expiring June 24, 1998.
(11) 191,835 shares of Common Stock, and options/warrants to purchase 97,000
shares at an exercise price of $3.00 per share expiring December 31,
1996.
(12) Mr. Lang is the Company's President and CEO and a director. Mr. Todd is
Vice President-Finance, CFO and a director. Messrs. McEnany, Wozniak,
and Schilit are directors.
(13) Paradise Valley Securities, Inc. and Mr. Fleming, a former employee of
Paradise Valley Securities, Inc., along with Mr. Anthony Silverman, a
person in a control relationship with Paradise Valley Securities, Inc.,
filed jointly a Schedule 13D dated March 21, 1995 with the Securities
and Exchange Commission, in which each person disaffirmed (i) beneficial
ownership of the other persons' securities and (ii) membership in a
group. As a result of Mr. Silverman's control relationship, his
beneficial ownership of Common Stock as of that date, which is less than
5% of the Common Stock outstanding, has been aggregated with that of
Paradise Valley Securities, Inc.
(14) Mr. Lang, Mr. Wozniak, Mr. McEnany, and Mr. Selka, H. Jeffrey Voss and
American National Bank of Cheyenne have each provided to Ace a
Shareholder Agreement and Irrevocable Proxy ("Shareholder Agreement,"
the form of which is attached as Appendix E to this Proxy Statement)
relating to all their respective shares in conjunction with the Merger
Agreement, as reported by Ace on a Schedule 13D dated October 20, 1995
filed with the Securities and Exchange Commission. Ace has no
beneficial interest in such shares except pursuant to the Shareholder
Agreements.
MANAGEMENT
EXECUTIVE OFFICERS, SIGNIFICANT EMPLOYEES AND DIRECTORS
The following table lists the executive officers, significant employees and
directors of the Company and certain information regarding each individual:
64
<PAGE> 74
<TABLE>
<CAPTION>
Name Age Position
- - ------------------------ ----- -------------------------------------
<S> <C> <C>
Larry F. Lang 47 Chairman of the Board of Directors, President, Chief
Executive Officer
Decker A. Todd 34 Vice President-Finance, Chief Financial Officer,
Secretary, and member of the Board of Directors
Roger D. Goertz 47 Executive Vice President of Operations; President,
Check Express USA, Inc. and Check-X-Change Corporation
Michael D. Riordon 45 Director of Franchise Sales
S. Gregg Bacon 50 Director of Finance Company Operations
W. Keith Schilit(1,2) 41 Outside member of Board of Directors
Patrick J. McEnany(1,2) 48 Outside member of Board of Directors
Joseph J. Wozniak(1,2) 57 Outside member of Board of Directors
</TABLE>
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee
Larry F. Lang was a founder of the Company in 1982, and has served as
Chairman of the Board, President and Chief Executive Officer since July 1992.
He serves as a director and the current President of the Florida Check Cashers
Association, and also is a director of the National Check Cashers Association.
From 1979 until 1986, he was the vice president and co-founder of Lang & Martin
Ltd., a land service company located in Denver, Colorado, which provided
services to the oil and gas industry. From 1977 to 1979, he served as land
manager of Puckett Energy Company. From 1974 until 1977, he was an independent
contract landman in the oil and gas industry.
Decker A. Todd joined the Company in October 1993 as Vice President of
Finance. From 1984 until 1993, he was employed by the international public
accounting firm of Price Waterhouse as a member of their audit department, as
an audit manager from July 1990 until leaving the firm in 1993.
Roger D. Goertz joined Check Express USA, Inc., a franchising subsidiary,
in October 1993 at the time the Company acquired Check-X-Change Corporation,
now also a franchising subsidiary, where Mr. Goertz had been President since
1989. From 1987 until 1989, Mr. Goertz was employed with Papa Aldo's
International, Inc. in Portland, Oregon, last holding the position of Chief
Operating Officer. From 1968 until 1987, he worked with Pizza Inn, Inc. in
Dallas, Texas, as Vice President of Operations over 350 company stores, and as
Vice President of Advertising.
S. Gregg Bacon joined Check Express Finance, Inc., the Company's finance
company subsidiary, in September 1993 as Director of Finance Company
Operations. From 1992 until 1993, Mr. Bacon was self-employed as a Financial
Consultant. From 1982 until 1992 Mr. Bacon was employed by Century Acceptance
Corporation in Kansas City, Missouri, last holding the position of Finance
Supervisor. In this capacity he was directly responsible for day-to-day
operations of as many as nine consumer finance offices in three states with an
installment notes receivable portfolio of over $30,000,000, and he was the
principal buyer of bulk installment notes receivable.
65
<PAGE> 75
Michael D. Riordon joined the Company in September 1990 as a franchise
sales representative and has served as the Director of Franchise Sales since
September of 1991. From 1989 until 1990, he served as Vice President of
Marketing for Phoenix Computer Corporation, a computer hardware reseller. From
1987 until 1989, he served as Vice President of Sales for Spacecoast Resources,
Inc., a company engaged in the sale and distribution of computer hardware and
software. From 1983 until 1987, he served as a sales representative for AFAR
Corporation and Southeast Integrated Health Resources, Inc., both in the
computer industry. From 1975 until 1984, he served as Sales Manager for
Southern Marketing, a company which presells cemetery plots nationwide.
W. Keith Schilit has served as a director of the Company since December
1992. Dr. Schilit is a professor of management and the Director of the Program
in Entrepreneurship at the University of South Florida, Tampa, Florida, having
served on the faculty of the University since 1985. Dr Schilit, who holds an
MBA and Ph.D. in strategic planning, is also an author, consultant and
lecturer. He has been the principal owner of Catalyst Ventures (and its
predecessors), a business consulting firm, since before 1982. From 1982 until
1985, he was on the faculty of Syracuse University. From 1979 until 1982, he
was on the faculty of University of Maryland. He also is a director of Chico's
FAS, Inc. and ASM Fund, Inc.
Patrick J. McEnany has served as a director of the Company since April
1988. He was a founder of Maidstone Capital, Inc., which reorganized with the
Company's predecessors in 1988. Since May 1990, he has served as President and
CEO of Royce Laboratories, Inc., a manufacturer of generic drugs. He has
served as President of Equisource Capital, Inc., a consulting company, since
1984. From 1973 until 1985, he was the President, Chief Executive Officer and
Chief Financial Officer of Zenex Synthetic Lubricants, Inc. In 1985 Zenex
merged into Home Intensive Care, Inc., a corporation involved in the health
care industry, where he served as a director and chairman of the audit
committee until that company was acquired by W. R. Grace Corporation in 1995.
Joseph J. Wozniak has served as a director of the Company since April
1988 and as a director of a predecessor company since 1983. He has been an
independent investor since 1978. From 1969 until 1978 he served as Senior Vice
President and Treasurer of General Construction Company. He is an officer and
a director of Big Brothers of King County, Seattle, Washington.
None of the Company's executive officers and directors are related to one
another. Officers are elected by and serve at the discretion of the Board of
Directors.
LEGAL PROCEEDINGS
The Company is engaged from time to time as plaintiff in small claims
court litigation relating to collection of returned checks and other litigation
to protect its service marks; however, such litigation has not historically had
any material effect on the Company's financial condition and results of
operations. Were the Company's franchise network to expand, it is reasonably
possible that the Company would be engaged in litigation with one or more of
its franchisees from time to time.
The Company, through its wholly owned subsidiary, was previously involved
in litigation against a former employee of Check-X-Change. The former employee
had made five separate claims against Check-X-Change related to breach of
contract and untimely payment or non-payment of compensation, several of which
overlapped and were not independent actions for separate damages. Arbitration
of these claims was completed during July
66
<PAGE> 76
1995 and damages for certain of the claims awarded. The damages awarded had no
material adverse impact on the Company's financial position.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Representatives of Grant Thornton LLP, the Company's firm of independent
certified public accountants, are expected to be present at the Special
Meeting. Such representatives will have the opportunity to make a statement if
they desire to do so and are anticipated to be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended, shareholders of the Company may present proper proposals for
inclusion in the Company's proxy statement and for consideration at the next
annual meeting of shareholders of the Company, which will occur only if the
Merger is not consummated before the date set for such meeting, by submitting
their proposals to the Company in a timely manner. The Company's proxy
statement relating to the 1994 annual meeting of shareholders of the Company
had indicated that, in order to be considered for the 1995 annual meeting of
shareholders of the Company, shareholder proposals must have been received by
the Company no later than March 13, 1995. However, because such meeting has
been postponed until an as yet undetermined date, shareholder proposals to be
considered at the next annual meeting of shareholders of the Company (if such
meeting takes place) may be submitted at any reasonable time prior to the
commencement of solicitation of proxies in connection with such meeting.
67
<PAGE> 77
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Financial Statement Page
-------------------------------------------------- ----
<S> <C>
Interim Unaudited Consolidated Balance Sheets 69
as of September 30, 1995 and December 31, 1994
Interim Unaudited Consolidated Statements of Income 70
for the three months and nine months ended
September 30, 1995 and September 30, 1994
Interim Unaudited Consolidated Statements of Cash Flows 71
for the nine months ended September 30, 1995 and
September 30, 1994
Notes to Interim Unaudited Consolidated Financial 73
Statements
Report of Independent Certified Public Accountants 80
Consolidated Balance Sheets as of December 31, 1994 81
and 1993
Consolidated Statements of Income for the years ended 82
December 31, 1994 and 1993
Consolidated Statements of Changes in Stockholders' 83
Equity for the years ended December 31, 1994 and 1993
Consolidated Statement of Cash Flows for the two years 84
ended December 31, 1994 and 1993
Notes to Consolidated Financial Statements 87
</TABLE>
68
<PAGE> 78
CHECK EXPRESS, INC. AND SUBSIDIARIES
INTERIM UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1995 1994
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,547,436 $ 1,539,527
Accounts receivable, net 927,160 634,945
Installment notes receivable, net 1,257,778 753,472
Notes receivable 91,815 73,977
Recoverable income taxes 23,107 41,334
Prepaid expenses and other current assets 318,162 389,287
------------ ------------
Total current assets 4,165,458 3,432,542
Notes receivable 894,837 953,099
Property and equipment, net 1,619,664 1,652,499
Accounts receivable, net 122,500 122,500
Installment notes receivable, net 1,434,179 825,418
Intangibles, net 2,209,321 2,906,695
Other assets, net 160,841 133,102
------------ ------------
Total assets $ 10,606,800 $ 10,025,855
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to banks $ 1,317,858 $ 1,280,000
Notes payable other - 338,944
Current maturities of capital lease obligations 23,711 35,118
Current maturities of senior long term debt 413,533 159,031
Current maturities of subordinated long term debt 223,870 298,880
Accounts payable 326,634 197,942
Unredeemed money orders 1,394,675 968,195
Income taxes payable - -
Other liabilities 281,641 296,898
Unearned income 113,823 39,911
------------ ------------
Total current liabilities 4,095,745 3,614,919
Capital lease obligations 48,210 65,880
Senior long term debt 1,189,700 1,078,874
Subordinated long term debt 727,766 799,342
Unearned income 193,500 193,500
Accrued franchise commissions 24,750 24,750
Deferred income taxes 174,834 173,708
------------ ------------
Total liabilities 6,454,505 5,950,973
------------ ------------
COMMITMENTS & CONTINGENCY - -
STOCKHOLDERS' EQUITY
Common stock - authorized, 10,000,000 shares, $.004 par value;
5,060,982 and 4,973,503 shares issued and outstanding at
September 30, 1995 and December 31, 1994, respectively 20,244 19,894
Additional paid-in-capital 3,698,370 3,653,903
Retained earnings 433,681 401,085
------------ ------------
Total stockholders' equity 4,152,295 4,074,882
------------ ------------
Total liabilities and stockholders' equity $ 10,606,800 $ 10,025,855
============ ============
</TABLE>
The accompanying Notes to Interim Unaudited Consolidated Financial Statements
are an integral part of these consolidated financial statements.
69
<PAGE> 79
CHECK EXPRESS, INC. AND SUBSIDIARIES
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1995 1994 1995 1994
------------ ------------ ------------ -----------
RESTATED RESTATED
------------ -----------
<S> <C> <C> <C> <C>
REVENUES:
Check cashing service fees $ 1,195,266 $ 1,435,721 $ 3,777,450 $ 4,129,097
Franchise fees 152,055 42,650 293,055 154,450
Franchise royalties 362,934 339,318 1,082,431 982,856
Finance revenues 207,427 93,008 608,004 211,368
Other revenues (22,722) 20,033 253,426 56,668
------------ ------------ ------------ ------------
Total revenues 1,894,960 1,930,730 6,014,366 5,534,439
EXPENSES:
Store expenses (includes $78,775, $89,525,
$230,009 and $238,664, respectively, of
depreciation and amortization) 1,193,404 1,341,729 3,669,390 3,703,066
Franchise expenses (includes $20,109, $25,702,
$60,432 and $76,169, respectively, of depreciation
and amortization) 501,187 362,012 1,259,009 829,087
Finance expenses (includes $637, $622, $1,912 and
$1,868, respectively, of depreciation and
amortization) 83,276 51,458 195,969 120,315
Headquarters expenses (includes $19,287, $21,897,
$58,557 and $44,689, respectively, of depreciation
and amortization) 150,466 196,424 506,010 551,855
Interest expense 111,434 78,741 318,796 172,797
------------ ------------ ------------ ------------
Total expenses 2,039,767 2,030,364 5,949,174 5,377,120
------------ ------------ ------------ ------------
Income (loss) before income taxes (144,807) (99,634) 65,192 157,319
Income taxes (benefit) (72,623) (50,835) 32,596 64,794
------------ ------------ ------------ ------------
Net income (loss) $ (72,184) $ (48,799) $ 32,596 $ 92,525
============ ============ ============ ============
Earnings per share $ (.01) $ (.01) $ .01 $ .02
============ ============ ============ ============
Weighted average number of shares of common
stock outstanding 5,060,982 4,815,976 5,019,970 4,806,597
============ ============ ============ ============
</TABLE>
The accompanying Notes to Interim Unaudited Consolidated Financial Statements
are an integral part of these consolidated financial statements.
70
<PAGE> 80
CHECK EXPRESS, INC. AND SUBSIDIARIES
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-----------------------------------
1995 1994
------------- -------------
RESTATED
-------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 32,596 $ 92,525
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 350,910 361,391
Provision for losses on receivables 48,459 23,091
Deferred income taxes 1,126 75,426
(Gain) loss on sale of assets (257,292) (53,923)
(Income) loss from joint venture on equity method (29,574) -
Changes in assets and liabilities (exclusive of
net assets acquired and disposed)
(Increase) decrease in:
Accounts receivable (292,215) 66,607
Recoverable income taxes 18,227 16,351
Prepaid expenses and other current assets 92,376 (182,336)
Other assets (35,233) (36,214)
Increase (decrease) in:
Accounts payable 128,692 (47,398)
Unredeemed money orders 426,480 50,671
Income taxes payable - -
Other liabilities (15,257) 83,105
Unearned income 73,912 43,761
------------- -------------
Net cash provided by (used in) operating activities 543,207 493,057
------------- -------------
Cash flows from investing activities:
Installment notes receivable, net (1,161,526) (1,078,313)
Notes receivable 40,424 7,449
Capital expenditures (350,774) (691,156)
Cash distributions received from joint venture under equity method 10,850 -
Net cash received (paid) for entities acquired and disposed 992,332 (1,233,636)
------------- -------------
Net cash (used in) provided by investing activities (468,694) (2,995,656)
------------- -------------
Cash flows from financing activities:
Borrowings under notes payable banks 1,450,410 900,000
Repayment of notes payable to banks (1,412,552) -
Borrowings under notes payable other 150,000 245,000
Repayment of notes payable other (488,944) (106,156)
Borrowings under long term debt 500,000 955,000
Repayment of borrowings under long term debt (281,258) (206,509)
Repayment of borrowings under capital lease agreements (29,077) (28,911)
Proceeds from issuances of common stock for
exercise of stock options 44,817 69,862
------------- -------------
Net cash (used for) provided by financing activities (66,604) 1,828,286
------------- -------------
Net increase (decrease) in cash 7,909 (674,313)
Cash at beginning of period 1,539,527 2,630,521
------------- -------------
Cash at end of period $ 1,547,436 $ 1,956,208
============= =============
</TABLE>
The accompanying Notes to Interim Unaudited Consolidated Financial Statements
are an integral part of these consolidated financial statements.
71
<PAGE> 81
CHECK EXPRESS, INC. AND SUBSIDIARIES
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 24,910 $ 4,800
Interest $ 309,455 $ 178,424
</TABLE>
Non-cash financing and investing activities:
In January 1994, the Company acquired two check cashing money centers in the
Tampa, Florida market from a Check Express USA, Inc. franchisee for a total of
$50,000 in cash and a note payable of $160,000.
In February 1994, the Company acquired all the outstanding common stock of
Peterlyn, Inc., a Washington corporation, which owned and operated four check
cashing money centers in the Seattle/Tacoma, Washington market under franchise
agreements with Check Express USA, Inc. The total consideration given was
$488,465 in cash and a note payable of $89,725.
In May 1994, the Company purchased three check cashing money centers in
Stockton, California for $250,000 in cash and a note payable of $225,000.
In July 1994, the Company purchased two check cashing money centers in Modesto,
California from a Check-X-Change franchisee for $100,000 in cash and a note
payable of $40,144.
In August 1994, the Company acquired three check cashing money centers in
Tacoma, Washington for $100,000 in cash and a note payable of $500,000.
In September 1994, the Company acquired a food stamp distribution services
operation in Stockton, California for a note payable of $72,869.
In April 1994, the Company sold the non-cash assets of the check cashing money
center in Atlanta, Georgia, acquired in November 1993, plus $60,000 in cash to
an unrelated third party for a note receivable of $280,000.
In July 1994, the Company sold all the non-cash assets of a check cashing money
center in Portland, Oregon for $40,000 in cash.
In August 1994, the Company sold all the non-cash assets, except for land and a
building, of two check cashing money centers in Charleston, South Carolina to a
Check Express USA, Inc. franchisee for $50,000 in cash and a note receivable of
$100,000.
In October 1994, the Company sold all the non-cash assets of two check cashing
money centers in West Palm Beach, Florida, plus $120,000 in cash, to a former
employee for a note receivable of $650,000.
In January 1995, the Company sold substantially all the non-cash assets of five
check cashing money centers in Stockton and Modesto, California, to an unrelated
third party for $1,010,232. See note 3.
The accompanying Notes to Interim Unaudited Consolidated Financial Statements
are an integral part of these consolidated financial statements.
72
<PAGE> 82
CHECK EXPRESS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS
Check Express, Inc. (the "Company"),a publicly-held company (NASDAQ symbol
"CHXS"), is a financial services company which through its wholly-owned
subsidiaries owns, operates and franchises retail money centers and provides
small consumer loans and used vehicle loans to individuals who generally do not
qualify for traditional sources of financing. The Company owns and operates
stores in Florida, Washington, and Indiana and has franchise stores operating in
26 states.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The interim unaudited consolidated financial statements of the Company at
September 30, 1995, and for the periods then ended were prepared in accordance
with generally accepted accounting principles and in accordance with the
instructions of Form 10-QSB. It is the opinion of management that all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the financial position at September 30, 1995, and the results of
operations and cash flows for the periods then ended, have been included. The
September 30, 1994 financial position, results of operations and cash flows for
the periods then ended have been restated for the effects of adjustments made in
the fourth quarter 1994 which also affected the third quarter 1994. These
fourth quarter 1994 adjustments and their respective effects on the periods
ended September 30, 1994 are described further as follows.
The Company expensed a finders fee to an employee of $61,000 related to a 1994
acquisition which had previously been inadvertently capitalized in the period
ended September 30, 1994. The adjustment reduced net income in periods ended
September 30, 1994 by $30,500 ($0.01 per share).
The Company also reduced finance revenues for the periods ended September 30,
1994, by $59,000, as a result of the discovery of a system error in recording
early payoffs of certain auto loans. The adjustment reduced net income for the
periods ended September 30, 1994 by $29,500 ($0.01 per share).
Principles of Consolidation
The interim unaudited consolidated financial statements include the accounts of
the Company and its subsidiaries. All subsidiaries are wholly owned. All
significant intercompany transactions and balances have been eliminated in
consolidation. The Company has a fifty percent interest in a joint venture
which is accounted for under the equity method.
73
<PAGE> 83
Franchise Fees Receivable
Management continuously monitors the franchisee's performance and if the current
facts and circumstances indicate that there now exists a degree of uncertainty
about the franchisee's ability to open a future store(s) or to pay fees due the
Company, then an appropriate allowance is established to provide for possible
uncollectible amounts.
At September 30, 1995 and December 31, 1994, accounts receivable (net) from
franchisees and the related accrued commissions (not payable until the account
is collected) are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Accounts receivable $ 448,712 $ 478,617
Allowance for doubtful accounts 25,000 25,000
------------ ------------
$ 423,712 $ 453,617
============ ============
Current, net of allowance for
doubtful accounts of $0 and
$0, respectively $ 301,212 $ 331,117
Long-term, net of allowance for
doubtful accounts of $25,000
and $25,000, respectively 122,500 122,500
------------ ------------
$ 423,712 $ 453,617
============ ============
Unearned income:
Current $ 109,945 $ 36,500
Long term 193,500 193,500
------------ ------------
$ 303,445 $ 230,000
============ ============
Accrued Commissions (net) $ 26,125 $ 8,220
============ ============
</TABLE>
The long term accounts receivable are non-interest bearing. Any discount factor
is not considered material to the financial statements. The unearned income
balances represent cash payments received under franchise agreements prior to
the earnings process being completed and/or amounts recorded with a comparable
account receivable recorded to reflect the terms of existing contracts in the
balance sheet.
Also included in the Company's accounts receivable balances as of September 30,
1995 and December 31, 1994, are three receivables totaling $52,000 related to
and securitized by legal judements awarded to Check-X-Change Corporation. These
judgments were existing at the time of the acquisition of Check-X-Change
Corporation, and the Company believes these receivables are fully collectible.
74
<PAGE> 84
Installment Notes Receivable
Balances related to the Company's installment notes receivable as of September
30, 1995 and December 31, 1994 were as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- -------------
<S> <C> <C>
Gross balances:
Consumer loans $ 35,097 $ 122,739
Auto loans 3,930,314 2,211,581
------------- -------------
3,965,411 2,334,320
Unearned Discount (1,210,236) (734,298)
------------- -------------
Net before reserve for losses 2,755,175 1,600,022
Reserve for losses (63,218) (21,132)
------------- -------------
Installment notes receivable, net $ 2,691,957 $ 1,578,890
============= =============
</TABLE>
Reserve for losses on these contracts is currently being recorded at a level to
provide six percent of the balance outstanding for the consumer loans and one
percent of the net balance outstanding for the auto loans. These percentages
have been determined to be reasonable based on small finance company industry
levels as adjusted for the Company's historical experience to date (the finance
company operation began in the fourth quarter 1993). The Company has several
protective mechanisms in place with respect to each type of installment note
receivable, including non-file insurance relative to the consumer loans and
recourse arrangements with the dealers on the auto loans. Loan origination
costs, if any, are not significant and are expensed when incurred.
Approximately $20,000 of the increase in the provision for loan losses is due to
reserves established for losses anticipated related to installment notes
receivable purchased from a used automobile dealer, who has recently experienced
financial difficulties and, as a result, gone out of business. As of October
31, 1995, the Company has thirty eight active accounts purchased from this
dealer, with an aggregate balance due net of unearned discount of approximately
$65,000, approximately $56,000 of which is contractually current within 30 days
on their payments due. As of the same date, the Company has ten accounts from
this dealer currently in repossession, such accounts having a balance due net of
unearned discounts of approximately $18,000. One of the other two dealers with
which the Company does business is assisting in repossessing and either
retailing or selling at auction the automobiles underlying any of these
installment notes receivable which are or may become non-performing. The total
balance due net of unearned discount from the forty eight accounts purchased
from this dealer is approximately $83,000, or 3% of the Company's total
installment notes receivable as of September 30, 1995 of $2,692,000 and 132% of
the reserve for doubtful accounts of $63,000 established as of September 30,
1995.
Earnings per Share
Earnings per share (EPS) for the periods ended September 30, 1995 and 1994 are
based on the weighted average number of common shares outstanding during the
periods since the amounts calculated using the
75
<PAGE> 85
modified treasury stock method were anti-dilutive in the aggregate for both
the primary and fully diluted earnings per calculations.
The Company has warrants outstanding issued in connection with the Company's
public offering of Units in 1993. Each Unit consisted of four shares of Common
Stock and two Warrants. Each Warrant entitles the holder thereof to purchase
one share of Common Stock at the stated exercise price of $3.00 per share. The
terms of each Warrant are governed by a Warrant Agreement and a Warrant
Certificate. These Warrants had an original Expiration Date of June 24, 1995.
However, the Company's Board of Directors approved the extension of this
Expiration Date until December 31, 1996, but has not extended the Company's
registration obligation relating to the shares of common stock underlying the
Warrants except as to any period of time during which the Warrants are and have
been "in the money" for not less than thirty calendar days.
NOTE 3 - ACQUISITIONS AND DISPOSITIONS
In August 1994, the Company purchased three stores in Tacoma, Washington for a
total consideration of $600,000, $100,000 in cash and $500,000 in a twelve year
subordinated note at 12% interest with monthly principal and interest payments.
This transaction has been accounted for as a purchase in accordance with APB No.
16 "Business Combinations". Accordingly, the results of the acquired company's
operations have been included herein since the effective date of the
acquisition. The following are pro forma results of operations for the nine
months ended September 30, 1994 assuming the transaction was effective as of
January 1, 1994.
<TABLE>
<CAPTION>
Unaudited
-------------------------------------
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1994
------------- -------------
<S> <C> <C>
Revenues $ 2,011,566 $ 5,938,619
Income before income taxes (85,634) 227,320
Net income (39,359) 139,723
Earnings per share (.01) .03
</TABLE>
In May 1994, the Company purchased three stores in Stockton, California for a
total consideration of $475,000, $250,000 in cash and $225,000 in a five year
subordinated note at 8% interest per annum, with monthly principal and interest
payments.
In July 1994, the Company purchased two stores in Modesto, California from a
Check-X-Change franchisee for a total consideration of $150,000, $100,000 in
cash and $50,000 in an unsecured, non-interest bearing promissory note payable
in equal monthly installments.
In September 1994, the Company purchased a food stamp distribution operation in
Stockton, California for a total compensation of $82,500 in the form of a
forty-two month, non-interest bearing promissory note payable. Monthly payments
of $4,750 for the first six months commencing in September 1994 and $1,500
76
<PAGE> 86
for the thirty-six months thereafter are contingent upon the continuation
of an extension or renewal of the underlying Services Agreement assigned to and
assumed by the Company in this transaction.
The transactions described in the three preceding paragraphs were accounted for
as purchases under APB No. 16 "Business Combinations" and the results of their
operations subsequent to their acquisition have been included herein. Pro forma
information is not presented herein as such data is not considered material to
the financial statements.
During 1995 and 1994, no portion of excess purchase price has been allocated to
customer lists as management's estimate of the value of such assets related to
these particular operations is insignificant. In prior years, some amounts were
identified as allocable to customer lists in conjunction with recording certain
acquisitions.
In April 1994, the Company sold to an unrelated third party all the non-cash
assets, plus cash of approximately $60,000, of the Atlanta, Georgia. The
consideration received was a $280,000 note, principal and interest at 9% per
annum payable monthly, with the unpaid balance due March 31, 1997. The
consideration received was greater than the carrying value of the assets sold.
In July 1994, the Company sold all of the non-cash assets of a store in
Portland, Oregon for $40,000 cash. This store was previously acquired as part
of the acquisition of Check-X-Change.
In August 1994, the Company sold all of the non-cash assets, except for land and
a building, of two stores in Charleston, South Carolina to a Check Express
franchisee for a total consideration of $150,000, $50,000 in cash and $100,000
in a five year note at 9% with monthly principal and interest payments. The
building is being leased to the franchisee.
Effective October 1, 1994, the Company sold all of the non-cash assets, plus
cash of $120,000, of two stores in the West Palm Beach, Florida market to the
Galleon Corporation, the principal shareholder of which is a former employee of
the Company, under a Check Express USA, Inc. franchise agreement. The
consideration received was a $650,000 note, principal and interest at 8.75% per
annum payable monthly beginning in February 1995, with interest compounded
monthly from the date of the note, October 1, 1994. In connection with the sale
of these stores, the Company has unconditionally guaranteed to pay any and all
claims of Western Union Financial Services, Inc. in connection with the day to
day operation of these stores as it pertains to Western Union Money Transfer
Drafts until December 31, 1995. The amounts of such drafts outstanding and
guaranteed by the Company at September 30, 1995 and December 31, 1994 were
$46,280 and $18,917, respectively.
Effective January 31, 1995, the Company sold substantially all the non-cash
assets of five check cashing stores located in Stockton and Modesto, California
to California Check Cashing Stores, Inc., an unrelated California corporation,
for $1,010,232 in cash. These stores, which were acquired during 1994 in two
separate acquisition transactions, represented approximately nine percent
(unaudited) of the Company's revenues for 1994, and eight percent (unaudited)
of the Company's total assets. The sale of these five stores resulted in a gain
of approximately $290,000 (unaudited), before income taxes, recorded by the
Company in the first quarter 1995.
77
<PAGE> 87
NOTE 4 - INCOME TAXES
The Company has estimated its effective tax rate for 1995 at approximately 50%.
The significant differences between the statutory rate of 34% and this estimated
rate are state income taxes, net of federal income tax benefit, and the effects
of goodwill amortization related to acquisitions structured as non- taxable
reorganizations which is non-deductible for federal income taxes.
NOTE 5 - BORROWINGS
Effective August 31, 1995, the Company converted the two revolving lines of
credit totaling $750,000, provided by the Company's primary bank, into a
thirteen month term loan of $650,000. This term loan bears interest at 11.5%
per annum and requires a monthly principal and interest payment of $49,835.
This loan is collateralized specifically by certain installment notes receivable
of the Company's wholly owned subsidiary, Check Express Finance, Inc., is
cross-collateralized with all other debt provided by the Company's primary bank
by substantially all the assets of the Company, and is personally guaranteed by
the Company's President and CEO.
The cumulative amount remaining due as of September 30, 1995 under the three
term loans with the Company's primary bank was $1,560,000.
The Company has obtained a series of three year term notes payable to another
bank, $500,000 in December 1994, $400,000 in April 1995, $200,000 in June 1995,
and $114,000 in October 1995, collateralized by certain installment notes
receivable of the Company's wholly owned subsidiary, Check Express Finance, Inc.
and personally guaranteed the Company's President and CEO. The first three
notes payable bear interest at variable interest rates ranging from 10.625% per
annum to 11.125%, to be adjusted annually, with the October 1995 note bearing
interest at a fixed rate of 11.125% per annum. These four notes payable
require an aggregate minimum monthly principal and interest payment totaling
$47,027. The Company has made additional principal payments on these notes each
month to the extent that collections on the underlying installment notes
receivable collateralizing the notes payable have exceeded the aggregate minimum
monthly principal and interest payment on the then outstanding notes payable to
the bank. The cumulative amount remaining due under the three term notes
payable outstanding as of September 30, 1995 was $468,000.
Also effective August 31, 1995, the Company and its wholly owned subsidiary,
Check Express Finance, Inc., entered into a $500,000 revolving credit agreement
with another bank, and obtained an initial advance thereunder of $500,000 under
a two year term note payable collateralized by certain installment notes
receivable of Check Express Finance, Inc. This term note payable bears interest
at a fixed rate of 10.75% per annum and requires a minimum monthly interest and
principal payment of $23,246. Additional principal payments will be made
monthly, as a result of early pay-downs or payoffs of installment notes
receivable collateralizing the loan, to the extent the Borrowing Base calculated
under the terms of the credit agreement and based on the balances of the
installment notes receivable outstanding at each month end is less than the
principal balance of the term note payable. Check Express Finance, Inc. may
request subsequent advances, in minimum increments of $100,000, to the extent
that the revolving credit facility of $500,000 is not fully accessed. The
Company and the Company's President and CEO have provided guarantees to the bank
regarding this term note payable.
78
<PAGE> 88
The Company converted $82,000 of the $108,000 outstanding as of September 30,
1995, of its 11% per annum unsecured notes payable which had balloon payments
due November 1, 1995, to term notes with the same monthly payments of principal
and interest until the balances are liquidated, October 1, 1997.
NOTE 6 - COMMITMENTS
The Company is engaged from time to time as plaintiff in small claims court
litigation relating to collection of returned checks and other litigation to
protect its service marks; however, such litigation has not historically had any
material effect on the Company's financial condition and results of operations.
As the Company's franchise network expands, it is reasonably possible that the
Company will be engaged in litigation with one or more of its franchisees from
time to time.
The Company, through its wholly owned subsidiary, was previously involved in
litigation against a former employee of Check-X-Change. The former employee had
made five separate claims against Check-X-Change related to breach of contract
and untimely or non-payment of compensation, several of which overlapped and
were not independent actions for separate damages. Arbitration of these
claims was completed during July 1995 and damages for certain of the claims
awarded. The damages awarded had no material adverse impact on the Company's
financial position.
NOTE 7 - SUBSEQUENT EVENTS
On October 16, 1995, the Company and Ace Cash Express, Inc. (NASDAQ: AACE)
("Ace") announced they had signed a definitive agreement for the purchase by
Ace of all the outstanding stock of Check Express, Inc. for $1.20 per share in
cash ("the Merger Agreement"). Completion of the transaction ("the Merger") is
subject to due diligence by Ace and subject to approval by the shareholders of
Check Express. A date for the Check Express shareholders meeting will be
announced upon completion of due diligence and review of proxy materials by the
Securities and Exchange Commission ("the SEC"). The Company has capitalized
costs of $38,000 incurred during the quarterly period ended September 30, 1995,
in connection with reaching this definitive agreement.
79
<PAGE> 89
Report of Independent Certified Public Accountants
Board of Directors
Check Express, Inc.
We have audited the accompanying consolidated balance sheets of Check Express,
Inc. and Subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the two years in the period ended December 31, 1994. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Check
Express, Inc. and subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
GRANT THORNTON LLP
Tampa, Florida
April 7, 1995
80
<PAGE> 90
CHECK EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------------
ASSETS 1994 1993
- - ------ ------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,539,527 $ 2,630,521
Accounts receivable, net 634,945 559,805
Installment notes receivable, net 753,472 93,116
Notes receivable 73,977 -
Recoverable income taxes 41,334 75,960
Prepaid expenses and other current assets 389,287 170,732
------------ -----------
Total current assets 3,432,542 3,530,134
Notes receivable 953,099 -
Property and equipment, net 1,652,499 1,129,244
Accounts receivable, net 122,500 172,000
Installment notes receivable, net 825,418 -
Intangibles, net 2,906,695 1,734,394
Other assets, net 133,102 65,125
------------ -----------
$ 10,025,855 $ 6,630,897
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Notes payable to banks $ 1,280,000 $ -
Notes payable other 338,944 95,506
Current maturities of capital lease
obligations 35,118 33,165
Current maturities of senior long term debt 159,031 65,209
Current maturities of subordinated long term debt 298,880 55,651
Accounts payable 197,942 293,141
Unredeemed money orders 968,195 849,891
Unearned income 39,911 81,701
Franchisee conversion costs - 190,000
Other liabilities 296,898 139,025
------------ -----------
Total current liabilities 3,614,919 1,803,289
Capital lease obligations 65,880 37,635
Senior long term debt 1,078,874 368,973
Subordinated long term debt 799,342 191,387
Unearned income 193,500 118,000
Accrued franchise commissions 24,750 15,700
Deferred income taxes 173,708 94,536
------------ -----------
5,950,973 2,629,520
------------ -----------
COMMITMENTS & CONTINGENCY - -
STOCKHOLDERS' EQUITY
Common stock - authorized, 10,000,000
shares, $.004 par value; 4,973,503
and 4,788,503 shares issued and
outstanding at December 31, 1994
and 1993 19,894 19,154
Additional paid-in-capital 3,653,903 3,581,605
Retained earnings 401,085 400,618
------------ -----------
Total stockholders' equity 4,074,882 4,001,377
------------ -----------
$ 10,025,855 $ 6,630,897
============ ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
81
<PAGE> 91
CHECK EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1994 1993
----------- -----------
<S> <C> <C>
REVENUES:
Check cashing service fees $ 5,654,393 $ 3,239,750
Franchise fees 183,000 425,232
Franchise royalties 1,337,684 528,790
Finance revenues 322,776 11,268
Other revenues 34,766 62,525
----------- -----------
Total revenues 7,532,619 4,267,565
EXPENSES:
Store Expenses (includes $319,891 and $243,572,
respectively, of depreciation and amortization) 4,888,311 2,685,328
Franchise expenses (includes $65,693 and $27,028,
respectively, of depreciation and amortization) 1,240,589 772,453
Finance expenses (includes $2,315 and $255,
respectively, of depreciation and amortization) 168,174 25,947
Headquarters expenses (includes $60,505 and $33,566,
respectively, of depreciation and amortization) 887,902 521,902
Interest expense 281,001 131,241
----------- ----------
Total expenses 7,465,977 4,136,871
----------- ----------
Income before income taxes 66,642 130,694
Income taxes 66,175 65,114
----------- -----------
Net income $ 467 $ 65,580
=========== ===========
Earnings per share $ .00 $ .02
=========== ===========
Weighted average number of shares of common stock
outstanding 4,864,832 3,284,774
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
82
<PAGE> 92
CHECK EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common paid-in Retained
stock capital Earnings
----- ---------- --------
<S> <C> <C> <C>
Balance at December 31, 1992 $ 8,670 $ 713,194 $ 335,038
Issuance of units in secondary
public offering, net of expenses
of offering 8,004 2,206,572
Issuance of common stock
through exercise of
outstanding warrants 200 18,550
Issuance of common stock in
conjunction with acquisitions 2,280 643,289
Net income 65,580
-------- ----------- ---------
Balance at December 31, 1993 19,154 3,581,605 400,618
Issuance of common stock
through exercise of
outstanding warrants and
stock options 740 72,298
Net income 467
-------- ----------- ---------
Balance at December 31, 1994 $ 19,894 $ 3,653,903 $ 401,085
======== =========== =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
83
<PAGE> 93
CHECK EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------
1994 1993
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 467 $ 65,580
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 448,404 304,422
Provision for losses on receivables ( 11,629) 11,901
Deferred income taxes 75,426 50,570
(Gain) loss on sale of assets ( 51,997) -
Changes in assets and liabilities (exclusive of
net assets acquired and disposed)
(Increase) decrease in:
Accounts receivable ( 42,604) ( 242,841)
Recoverable income taxes 34,626 ( 75,960)
Prepaid expenses and other current assets ( 206,196) ( 40,499)
Other assets ( 67,256) ( 16,262)
Increase (decrease) in:
Accounts payable ( 230,150) ( 190,417)
Unredeemed money orders 118,304 99,850
Unearned income 33,710 120,701
Other liabilities 95,678 ( 129,437)
Income taxes payable - ( 30,547)
----------- ----------
Net cash provided by (used in)
operating activities 196,783 ( 72,939)
----------- ----------
Cash flows from investing activities:
Installment notes receivable, net ( 1,489,648) ( 98,017)
Notes receivable 17,247 -
Capital expenditures ( 763,051) ( 291,868)
Investment in joint venture limited partnership ( 1,000) -
Net cash paid for entities acquired and disposed ( 1,170,210) ( 375,703)
----------- ----------
Cash used in investing activities ( 3,406,662) ( 765,588)
----------- ----------
Cash flows from financing activities:
Borrowings under notes payable to banks 1,280,000 -
Borrowings under notes payable other 637,380 -
Repayment of notes payable other ( 483,668) ( 59,494)
Borrowings under long term debt 955,000 376,000
Repayment of borrowings under long term debt ( 299,285) ( 203,785)
Repayment of borrowings under capital
lease agreements ( 42,840) ( 43,256)
Repayment of borrowings from stockholders - ( 511,337)
Proceeds from public offering (net of offering costs) - 2,214,576
Proceeds from issuances of common stock for
exercise of stock options and warrants 72,298 18,750
----------- ----------
Net cash (used for) provided by financing
activities 2,118,885 1,791,454
----------- ----------
</TABLE>
84
<PAGE> 94
CHECK EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------
1994 1993
------------- ------------
<S> <C> <C>
Net increase (decrease) in cash ( 1,090,994) 952,927
Cash at beginning of period 2,630,521 1,677,594
----------- -----------
Cash at end of period $ 1,539,527 $ 2,630,521
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 11,819 $ 121,588
Interest $ 278,825 $ 132,890
</TABLE>
Non-cash financing and investing activities:
Equipment purchases of $73,038 and $7,337 were financed through capital
leases in 1994 and 1993, respectively.
In October 1993, the Company acquired Check-X-Change Corporation in a tax
free stock for stock transaction. Net liabilities of $183,000 were assumed.
See Note 3.
In November 1993, the Company acquired a check cashing money center in
Atlanta, Georgia from a Check-X-Change franchise owner for $125,000 cash and
a note payable of $65,000. See Note 3.
In December 1993, the Company acquired two companies, which owned and
operated two check cashing money centers under franchise agreements with
Check-X-Change, for a total of $536,833 comprised of $287,500 in cash and
$249,333 in stock. See Note 3.
In January 1994, the Company acquired two check cashing money centers in the
Tampa, Florida market from a Check Express USA, Inc. franchisee for a total
of $50,000 in cash and a note payable of $160,000. See Note 3.
In February 1994, the Company acquired all the outstanding common stock of
Peterlyn, Inc., a Washington corporation, which owned and operated four check
cashing money centers in the Seattle/Tacoma, Washington market under
franchise agreements with Check Express USA, Inc. The total consideration
given was $488,465 in cash and a note payable of $89,725 (subject to final
settlement of potential post closing adjustments in accordance with the
purchase agreement). See Note 3.
In May 1994, the Company purchased three check cashing money centers in
Stockton, California for $250,000 in cash and a note payable of $225,000.
See Note 3.
In July 1994, the Company purchased two check cashing money centers in
Modesto, California from a Check-X-Change franchisee for $100,000 in cash
and a note payable of $40,144. See Note 3.
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
85
<PAGE> 95
CHECK EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Non-cash financing and investing activities (continued):
In August 1994, the Company acquired three check cashing money centers in
Tacoma, Washington for $100,000 in cash and a note payable of $500,000. See
Note 3.
In September 1994, the Company acquired a food stamp distribution services
operation in Stockton, California for a note payable of $72,869. See Note 3.
In April 1994, the Company sold the non-cash assets of the check cashing
money center in Atlanta, Georgia, acquired in November 1993, plus $60,000 in
cash to an unrelated third party for a note receivable of $280,000. See Note
3.
In July 1994, the Company sold all the non-cash assets of a check cashing
money center in Portland, Oregon for $40,000 in cash. See Note 3.
In August 1994, the Company sold all the non-cash assets, except for land and
a building, of two check cashing money centers in Charleston, South Carolina
to a Check Express USA, Inc. franchisee for $50,000 in cash and a note
receivable of $100,000. See Note 3.
In October 1994, the Company sold all the non-cash assets of two check
cashing money centers in West Palm Beach, Florida, plus $120,000 in cash, to
a former employee for a note receivable of $650,000. See Note 3.
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
86
<PAGE> 96
CHECK EXPRESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS
Check Express, Inc. (the "Company"),a publicly-held company (NASDAQ symbol
"CHXS"), is a financial services company which through its wholly-owned
subsidiaries owns, operates and franchises retail money centers and provides
small consumer loans and used vehicle loans to individuals who generally do not
qualify for traditional sources of financing. The Company owns and operates
stores in Florida, Washington, and Indiana and has franchise stores operating
in 26 states.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All subsidiaries are wholly owned. All significant
intercompany transactions and balances have been eliminated in consolidation.
The Company has a fifty percent interest in a joint venture which is accounted
for under the equity method. See "Investment in Joint Venture" later in this
Note 2.
Revenue Recognition of Franchise Fees and Franchise Fees Receivable
Franchise fees include initial, territory, future optional store, continuing
(royalty) franchise fees, and research and development fees. The Company offers
both non-exclusive and exclusive franchise arrangements.
Non-Exclusive Arrangements:
The initial fees are recognized when the Company has met its obligations and
provided substantially all the initial services in accordance with the
franchise agreements. Generally, these obligations and services are met when
sites have been approved or identified and the franchisee has completed the
training required by the Company. Related direct costs, primarily sales
commissions, are deferred until revenue is recognized. Royalties are
recognized as revenues when the amount becomes due and payable to the Company.
87
<PAGE> 97
Exclusive Arrangements:
The Company has two types of agreements which provide franchisees the
exclusive right to establish multiple check cashing stores within a defined
territory. The Company's obligations under both of these exclusive agreements
are the same as those under the non-exclusive agreements. The Company is not
responsible for any support-personnel training beyond the first store, and must
pre-approve the multi-site locations.
Under the first exclusive arrangement, the franchisee pays one amount, which is
non-refundable, that covers the territory and initial franchise fee for all
stores under the agreement. This amount is due and payable upon execution of
the agreement and no initial franchise fees are due when the additional stores
open.
Under the second exclusive arrangement, a separate territory fee and initial
franchise fee for the first store, which are non-refundable, are due and
payable upon the execution of the agreement, at which time the territory is
also established. The initial franchise fees on the second and subsequent
stores are due and payable as the stores are opened. Under this arrangement,
the franchisee must open the additional stores within a specified time period
or forfeit their exclusive territorial rights. At December 31, 1994, nine (9)
stores are to be opened under this arrangement; a minimum of two (3) in 1994,
two (4) in 1995, and five (2) in 1996.
The Company's revenue and related direct expense recognition policies, in
regards to both territory agreements, are similar to those associated with the
non-exclusive arrangement. Accordingly, when the Company has performed
substantially all of its obligations under these agreements, the Company
recognizes the territory fees and the initial fees for all stores under the
agreements, including those stores to be opened after 1993 under the second
type of exclusive arrangement.
If an uncertainty exists as to a franchisee's ability to open future stores,
revenue is not recognized until either subsequent historical performance
supports recognition and/or the stores are subsequently opened and/or cash is
received. Management continuously monitors the franchisee's performance and if
the current facts and circumstances indicate that there now exists a degree of
uncertainty about the franchisee's ability to open a future store(s) then an
appropriate allowance is established to provide for possible uncollectible
amounts.
88
<PAGE> 98
At December 31, 1994 and 1993 accounts receivable (net) from franchisees and
the related accrued commissions (not payable until the account is collected)
are as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Accounts receivable $478,617 $458,946
Allowance for doubtful accounts 25,000 56,000
-------- --------
$453,617 $402,946
======== ========
Current, net of allowance for
doubtful accounts of $0 and
$28,000, respectively $331,117 $230,946
Long-term, net of allowance for
doubtful accounts of $25,000
and $28,000, respectively 122,500 172,000
-------- --------
$453,617 $402,946
======== ========
Unearned income:
Current $ 36,500 $ 81,701
Long term $193,500 $118,000
-------- --------
$230,000 $119,701
======== ========
Accrued Commissions (net) $ 8,220 $ 39,020
======== ========
</TABLE>
The long term accounts receivable are non-interest bearing. Any discount
factor is not considered material to the financial statements. The unearned
income balances represent cash payments received under franchise agreements
prior to the earnings process being completed and/or amounts recorded with a
comparable account receivable recorded to reflect the terms of existing
contracts in the balance sheet.
SUMMARY:
The components of franchise fee and royalty revenues are as follows:
<TABLE>
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Initial & Territory
Franchise Fees $ 183,000 $ 425,232
Continuing Franchise
Royalties 1,337,684 528,790
----------- ----------
$ 1,520,684 $ 954,022
=========== ==========
</TABLE>
At December 31, 1994 a total of 149 franchise locations were open and
operating. The term of a franchise agreement is fifteen years for Check
Express USA operating franchises. There is a minimum monthly royalty of
89
<PAGE> 99
$750 or 5% of gross revenues, whichever is greater. The average term of a
franchise agreement is ten years for Check-X-Change operating franchises. For
Check-X-Change operating franchises, the monthly royalty varies from a minimum
of $315 to a maximum of $815, plus a monthly research and development fee of
$100. All monthly royalties are recorded as franchise royalty by the Company.
Installment Notes Receivable and Finance Revenue Recognition
The Company, through its wholly owned small finance company subsidiary, Check
Express Finance, Inc., generates two types of installment notes receivable.
First, small unsecured loans ("consumer loans") are made directly to
individuals primarily through selected Company owned money center locations.
These loans are recorded at the gross stated amount of the loan made.
Principal reductions and related interest income are recognized based on
payments received using the interest method. The Company places non-file
insurance on each of these loans, against which claims may be made in order to
recover on non-performing loans. There were a total of 250 of these loans at
December 31, 1994 with an average balance outstanding of $490 and an average
remaining term of approximately twenty-five weeks.
Second, installment notes receivable originated by selected used automobile
dealers ("auto loans") are purchased by the Company at a discount. These auto
loans are secured by the automobile and the Company has recourse agreements in
place with each dealer such that management (repossession and resale) of the
collateral supporting non-performing loans is the responsibility of the
dealers. The Company currently purchases these auto loans primarily from two
used automobile dealers located in Central Florida.
Management does not feel this concentration of business with two dealers
represents a significant credit risk as the Central Florida used automobile
industry is very strong, primarily because of the significance of the
entertainment and recreation service industry in this geographic region, with a
significant number of dealers. The dealer becomes part of the credit risk
management structure only at the point at which the loan is non-performing and
can not be recovered through the Company's collection efforts. At this point
the dealer is responsible under the recourse agreement in place for
repossessing and selling the automobile at auction in order to recover proceeds
to the extent practically feasible. This assumes the dealer can not or does
not wish to recondition and resell the automobile again; the normal course is
for this resale to occur and the auto loan related to the repossession to be
settled by the dealer, typically at an amount representing break even on the
net investment in the auto loan at
90
<PAGE> 100
repossession. The new auto loan related to the resale may or may not be
purchased from the dealer, in accordance with the Company's normal purchase
criteria for such auto loans. In the event one of these dealers was unable to
fulfill his commitments with respect to the recourse agreement in place, the
Company would utilize the other dealer to manage non-performing auto loans in
that the other dealer would be asked to repossess, recondition and resell the
automobile, which would be both in his best interest, due to the profit motive
involved, and the best interest of the Company. The likelihood of both dealers
experiencing difficulty at the same time is considered very remote, and the
Company would still have the ability to approach other dealers in the market,
many of which are familiar to top operations management personnel of the
finance operation, to assist with management of non-performing auto loans
without experiencing significant additional costs.
These auto loans are recorded at a gross balance equal to the full remaining
balance of payments due under the auto loans, which includes the stated
interest on the instrument purchased. The Company also records unearned
discount as a contra asset equal to the difference between the gross amount
recorded and the proceeds to the dealer, the proceeds to the dealer in effect
being the Company's investment in the instrument. Cash payments received are
recorded as a reduction of the gross amount of the auto loan. In addition, the
portion of the cash payment representing earned discount, again determined
using the interest method, is recorded as a reduction of the unearned discount.
There were a total of 400 of these auto loans at December 31, 1994, with an
average balance outstanding, net of unearned discount of $734,297, of $3,693
and an average remaining term of approximately ninety-eight weeks.
Reserve for losses on these contracts is currently being recorded at a level to
provide six percent of the balance outstanding for the consumer loans and one
percent of the net balance outstanding for the auto loans. These percentages
have been determined to be reasonable based on small finance company industry
levels as adjusted for the Company's historical experience to date (the finance
company operation began in the fourth quarter 1993). The Company has several
protective mechanisms in place with respect to each type of installment note
receivable, including non-file insurance relative to the consumer loans and the
recourse arrangements with the dealers on the auto loans. Loan origination
costs, if any, are not significant and are expensed when incurred.
91
<PAGE> 101
Balances related to the installment notes receivable as of December 31, 1994
and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Gross balances:
Consumer loans $ 122,739 $ 15,952
Auto loans 2,211,581 121,398
----------- -----------
2,334,320 137,350
Unearned Discount ( 734,298) ( 39,333)
----------- -----------
Net before reserve for losses 1,600,022 98,017
Reserve for losses ( 21,132) ( 4,901)
----------- -----------
Installment notes receivable, net $ 1,578,890 $ 93,116
=========== ===========
</TABLE>
Depreciation
Depreciation is provided on equipment using straight-line and accelerated
methods over estimated useful lives ranging from five to eight years.
Buildings are depreciated over thirty-one years using the straight line method.
Leasehold improvements are amortized over the life of the lease or the useful
life of the asset if less. Amortization of leasehold improvements is included
in depreciation expense.
Investment in joint venture
The Company uses the equity method of accounting for its 50% interest in Check
Express Finance #1. At December 31, 1994 and for the year then ended, the
joint venture's assets, liabilities and results of operations are not
significant. The Company's investment in ($10,000) and share of the joint
venture's operations (operating income of approximately $2,500) are classified
in other assets and in finance expenses, respectively, in the accompanying
consolidated financial statements. The Company has not guaranteed any of the
joint venture's liabilities nor does the Company have any commitments to fund
its operations.
Pre-Opening Costs
Pre-opening costs, including site selection and lease negotiation, training,
and advertising, are expensed as incurred.
Intangibles
Intangibles consist principally of the excess of purchase price over the fair
value of net assets acquired (goodwill) and are generally being amortized using
the straight line method over a period of five to twenty years. Amortization
expense for 1994 and 1993 was $156,220 and $92,066,
92
<PAGE> 102
respectively. Accumulated amortization at December 31, 1994 and 1993 was
$139,795 and $153,229, respectively.
Management reviews on a quarterly basis the undiscounted cash flow of each
acquired business unit (defined as each Company owned money center location
which was acquired or the underlying franchise locations of acquired
franchisors) to determine whether the value of intangibles recorded in
conjunction with acquisitions may be impaired. No such impairment has been
identified.
Advertising Costs
During 1993, the Accounting Standards Executive Committee issued Statement of
Position 93-7 (SOP), Reporting on Advertising Costs, which the Company will
adopt prospectively as required in 1995. The SOP requires that advertising
costs be expensed when incurred, with the exception of the costs of
direct-response advertising, which are capitalized and amortized over the
period that benefits are received. The Company's current policies are
generally in compliance with the SOP, and therefore, its adoption is not
expected to have a significant effect on the Company's financial position or
results of operations.
Income Taxes
The Company implemented, effective January 1, 1993, Statement of Financial
Accounting Standards (SFAS) 109, "Accounting for Income Taxes". Under the
liability method specified by SFAS 109, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax
bases of assets and liabilities as measured by the enacted tax rates which will
be in effect when these differences reverse. Deferred tax expense is the
result of changes in deferred tax assets and liabilities. The principal types
of differences between assets and liabilities for financial statement and tax
return purposes are acquisition costs, allowance for bad debts, installment
type sales and accumulated depreciation.
Earnings per Share
Earnings per share (EPS) for 1994 and 1993 are based on the weighted average
number of common shares outstanding during the year since the amount calculated
using the modified treasury stock method was anti-dilutive in the aggregate for
both the primary and fully diluted earnings per calculations.
93
<PAGE> 103
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents. At December 31, 1994, the Company's cash balance includes
$25,000 of cash equivalents. At December 31, 1993 there were no cash
equivalents.
Under the Company's banking arrangements, substantially all of the Company's
cash is invested in overnight repurchase agreements of mortgage-backed or
government securities. The Company has a security interest in the specific
investment underlying the repurchase agreements.
The Company sells its own money orders in most of its company-owned stores
(those located in states where the related bonding requirements are not cost
prohibitive). The float generated by the timing differences between its sale
of money orders and the clearing of those money orders has increased the
Company's available cash for its check cashing operations. At December 31,
1994 and 1993, the unredeemed money orders totaled $968,195 and $849,891,
respectively.
The Company maintains its cash balances in several financial institutions
throughout the United States. These balances are insured by the Federal
Deposit Insurance Corporation up to $100,000. At December 31, 1994, uninsured
amounts held at these financial institutions totaled approximately $338,228.
Reclassifications
The 1993 statement of income presentation of costs and expenses has been
conformed to the 1994 format which segregates certain costs and expenses
principally associated with the Company's segments, check cashing (stores),
franchising operations, and the finance company implemented at the end of 1993.
The 1993 format included details of significant store expenses as this segment
was, in prior years, significant to the consolidated statement of income, and
comparability of store operations results to those of the Company's public
company competitors in the industry was, in management's opinion, tantamount to
a meaningful presentation of the statement of income. However, with the
acquisition of Check-X-Change Corporation in October 1993 and the significant
growth experienced in the finance company segment started in the fourth quarter
of 1993, the relative significance of the results of the franchising and
finance segments with respect to the Company's consolidated results of
operations has increased to the point whereby the importance of presenting
details of results of store operations, in order to provide comparability to
public company competitors in the industry, is less meaningful; no other public
company check cashers have significant
94
<PAGE> 104
franchising or finance company operations. As a result, the details of
expenses by segment have been eliminated from the face of the statement of
income and instead are presented in the Company's business segment footnote.
Included in the 1994 statement of income presentation of expenses is
parenthetical disclosure of comparative balances of depreciation and
amortization expense included in each. Management feels that the ability of
the financial statement user to arrive at income before interest, income taxes
and depreciation and amortization expenses on the face of the statement of
income has become important with the increasingly significant amounts of
amortization of excess purchase price over the fair value of assets acquired
which have resulted from the acquisition of Check-X-Change Corporation in 1993
in addition to that resulting from several acquisitions of store operations
during 1994.
NOTE 3 - ACQUISITIONS AND DISPOSITIONS
Effective October 7, 1993, the Company acquired Check-X-Change Corporation in a
tax-free stock for stock transaction. A total of 350,000 shares of the
Company's common stock were issued for all of the outstanding stock of
Check-X-Change. Net liabilities of Check-X-Change of approximately $183,000
were also assumed by the Company as part of this transaction. In addition,
acquisition costs of approximately $412,000 were incurred, resulting in excess
purchase price over the fair value of assets acquired of approximately $992,000
being recorded.
The excess purchase price represents the value of acquired franchisor rights
and conventional goodwill. As the value of these separate components of excess
purchase price can not be reasonably determined by management, the entire
amount is classified as goodwill. The amount of goodwill is being amortized
using the straight line method over a twenty year period. Management believes
this period is appropriate due to several factors including Check-X-Change's
history of renewal of franchise agreements, the length of remaining terms of
existing franchise contracts, and the fact that certain incentives are now in
place to further ensure renewal.
95
<PAGE> 105
This transaction has been accounted for as a purchase in accordance with APB
No. 16 "Business Combinations". Accordingly, the results of Check-X-Change's
operations have been included herein since the effective date of the
acquisition. The following are pro forma results of operations for 1993
assuming the transaction was effective as of January 1, 1993.
<TABLE>
<CAPTION>
Unaudited
-----------
1993
-----------
<S> <C>
Revenues $ 5,290,963
Income before income taxes 174,107
Net income 118,393
Earnings per share .04
</TABLE>
Associated with the Check-X-Change acquisition, the Company was obligated to
convert the franchisees' signage, logo's and other similar items from
Check-X-Change to the Check Express USA, Inc. identification and scheme. The
costs associated with the conversion was estimated at approximately $190,000 in
the aggregate. For financial statement purposes these costs were grouped with
goodwill with the corresponding obligation classified as a current liability.
These costs were being amortized using the straight line method over a period
of approximately seven years, which approximated the useful life which is used
by the Company to depreciate similar assets of Company owned stores.
During 1994, and based primarily on discussion with and feedback from
Check-X-Change franchise owners, especially those with a significant presence
in certain geographic markets, the Company determined that it was not in its
best interest, nor that of the franchise owners, to convert the Check-X-Change
franchisees to the Check Express USA trademarks. The investment in and value
of goodwill established by each Check-X-Change franchisee in their respective
markets was determined to be more valuable to the Company and its franchise
system than converting all Check-X-Change franchisees to Check Express USA,
despite the potential economies of scale and management efficiencies which
would be gained from such conversion. As a result, as of October 1, 1994, the
Company has adjusted its purchase accounting with respect to the conversion
costs accrued. This reduction of accrued costs also reduced goodwill recorded
with respect to the Check-X-Change acquisition. The impact on amortization
expense was not significant.
In November 1993, the Company purchased a store in Atlanta, Georgia from a
Check-X-Change franchise owner for $190,000 through a cash payment of $125,000
and a note payable of $65,000 with a three month term at 7% interest compounded
monthly. In December 1993, the Company acquired two companies, which owned and
operated two stores in West Palm Beach, Florida under Check-X-Change franchise
agreements, in exchange for 220,000 shares of the Company's common stock and
cash of $287,500.
96
<PAGE> 106
These transactions were accounted for as purchases under APB No. 16 "Business
Combinations" and the results of their operations subsequent to their
acquisition have been included herein. Pro forma information is not presented
herein as such data is not considered material to the financial statements.
On February 15, 1994, the Company completed its purchase, effective January 1,
1994, of four check cashing stores in the Seattle and Tacoma, Washington areas
in exchange for approximately $812,000 in cash and a $100,000 note payable.
The stores were obtained by purchasing all of the outstanding common stock of
Peterlyn, Inc. ("Peterlyn"), a Washington corporation, which owned and operated
the stores under franchise agreements with Check Express USA, Inc., a wholly
owned subsidiary of the Company. See Note 11.
This transaction has been accounted for as a purchase in accordance with APB
No. 16 "Business Combinations". Accordingly, the results of Peterlyn's
operations have been included herein since the effective date of the
acquisition. The following are pro forma results of operations for 1993
assuming the transaction was effective as of January 1, 1993.
<TABLE>
<CAPTION>
Unaudited
-----------
1993
-----------
<S> <C>
Revenues $ 4,938,281
Income before income taxes 259,145
Net income 143,532
Earnings per share .04
</TABLE>
In August 1994, the Company purchased three stores in Tacoma, Washington for a
total consideration of $600,000, $100,000 in cash and $500,000 in a twelve year
subordinated note at 12% interest with monthly principal and interest payments.
This transaction has been accounted for as a purchase in accordance with APB
No. 16 "Business Combinations". Accordingly, the results of the acquired
company's operations have been included herein since the effective date of the
acquisition.
97
<PAGE> 107
The following are pro forma results of operations for 1994 and 1993 assuming
the transaction was effective as of January 1, 1993.
<TABLE>
<CAPTION>
Unaudited
--------------------------------------
1994 1993
------------ ------------
<S> <C> <C>
Revenues $ 7,909,854 $ 4,914,253
Income before income taxes 131,977 242,696
Net income 45,578 140,631
Earnings per share .01 .04
</TABLE>
Effective January 1994, the Company acquired two stores in Tampa, Florida from
a Check Express franchise owner for a total consideration of $210,000, $50,000
in cash and $160,000 in a three year subordinated note at 6% interest per
annum, with monthly principal and interest payments.
In May 1994, the Company purchased three stores in Stockton, California for a
total consideration of $475,000, $250,000 in cash and $225,000 in a five year
subordinated note at 8% interest per annum, with monthly principal and interest
payments.
In July 1994, the Company purchased two stores in Modesto, California from a
Check-X-Change franchisee for a total consideration of $150,000, $100,000 in
cash and $50,000 in an unsecured, non-interest bearing promissory note payable
in equal monthly installments.
In September 1994, the Company purchased a food stamp distribution operation in
Stockton, California for a total compensation of $82,500 in the form of a
forty-two month, non-interest bearing promissory note payable. Monthly
payments of $4,750 for the first six months commencing in September 1994 and
$1,500 for the thirty-six months thereafter are contingent upon the
continuation of an extension or renewal of the underlying Services Agreement
assigned to and assumed by the Company in this transaction.
The transactions described in the four preceding paragraphs were accounted for
as purchases under APB No. 16 "Business Combinations" and the results of their
operations subsequent to their acquisition have been included herein. Pro
forma information is not presented herein as such data is not considered
material to the financial statements.
During 1994 and 1993, no portion of excess purchase price has been allocated to
customer lists as management's estimate of the value of such assets related to
these particular operations is insignificant. In prior years, some amounts
were identified as allocable to customer lists
98
<PAGE> 108
in conjunction with recording certain acquisitions.
In April 1994, the Company sold to an unrelated third party all the non-cash
assets, plus cash of approximately $60,000, of the Atlanta, Georgia store which
was acquired in November 1993 (see above). The consideration received was a
$280,000 note, principal and interest at 9% per annum payable monthly, with the
unpaid balance due March 31, 1997. The consideration received was greater than
the carrying value of the assets sold.
In July 1994, the Company sold all of the non-cash assets of a store in
Portland, Oregon for $40,000 cash. This store was previously acquired as part
of the acquisition of Check-X-Change.
In August 1994, the Company sold all of the non-cash assets, except for land
and a building, of two stores in Charleston, South Carolina to a Check Express
franchisee for a total consideration of $150,000, $50,000 in cash and $100,000
in a five year note at 9% with monthly principal and interest payments. The
building is being leased to the franchisee.
Effective October 1, 1994, the Company sold all of the non-cash assets, plus
cash of $120,000, of two stores in the West Palm Beach, Florida market to the
Galleon Corporation, the principal shareholder of which is a former employee of
the Company, under a Check Express USA, Inc. franchise agreement. The
consideration received was a $650,000 note, principal and interest at 8.75% per
annum payable monthly beginning in February 1995, with interest compounded
monthly from the date of the note, October 1, 1994. These stores were
previously acquired in December 1993 (see above). In connection with the sale
of these stores, the Company has unconditionally guaranteed to pay any and all
claims of Western Union Financial Services, Inc. in connection with the day to
day operation of these stores as it pertains to Western Union Money Transfer
Drafts. The amount of such drafts outstanding and guaranteed by the Company at
December 31, 1994 was $18,917.
99
<PAGE> 109
NOTE 4 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1994 1993
------------ ------------
<S> <C> <C>
Equipment $ 1,373,585 $ 1,160,166
Leasehold improvements 645,903 559,598
Furniture and fixtures 329,214 205,144
Buildings 371,915 254,874
Land 174,245 129,245
Purchased computer software 136,793 85,298
----------- -----------
3,031,655 2,394,325
Accumulated depreciation ( 1,379,156) ( 1,265,081)
----------- -----------
$ 1,652,499 $ 1,129,244
=========== ===========
</TABLE>
The Company finances a portion of its equipment and furniture and fixtures
acquisitions through long term capital leasing arrangements (Note 6).
Depreciation expense for December 31, 1994 and 1993 was $292,183 and $212,356,
respectively.
NOTE 5 - NOTES PAYABLE TO BANKS
In January 1993, the Company entered into a loan agreement with a Florida bank
which provided the Company with a $400,000 line of credit and a $270,000 term
loan. The line of credit is used to fund check cashing activity during peak
periods and bears interest at prime plus 1.25%. The term loan bears interest
at prime plus 1.25% with monthly payments of principal and interest. At
December 31, 1993, $400,000 was available under this line of credit.
In May 1993, the Company executed a term mortgage loan with the same bank which
provided $106,000 in funding to procure land and an existing building. The
loan bears interest at a fixed rate of 8.5% until May 1998 and is to be
adjusted at that time based on market indices, as defined, for the remaining
term. See Note 7.
Effective February 15, 1994, the line of credit was increased to $500,000. In
addition, the Company executed a seven year term loan of $880,000 bearing
interest at a fixed rate of 8.25%. In August 1994, the Company obtained an
additional $250,000 in revolving credit line from its primary bank. This
facility also bears interest at prime plus 1.25%. These lines of credit were
fully utilized at December 31, 1994. See Note 7.
100
<PAGE> 110
The line of credit, both term loans and the mortgage are cross-collateralized
and are secured by substantially all of the assets of the Company.
Additionally, the line of credit and all three loans are personally guaranteed
by the Company's President, a principal shareholder. The loan terms contain
covenants which require the Company to maintain tangible net worth, inclusive
of subordinated debt, of at least $1,000,000 and a ratio of total debt
(excluding subordinated or junior debt) to tangible net worth of not more than
2.0 to 1.0.
In May 1994, the Company obtained a revolving credit line in the amount of
$100,000 (subsequently increased to $200,000) from a bank in Washington State
to supplement cash required during peak check cashing periods at its Washington
stores (See Note 3 above). The assets of the seven check cashing stores in
that market, owned by the Company's wholly owned subsidiary, collateralize the
line facility. The Company's President also personally guarantees the
facility. The terms of this facility also include financial covenants measured
using the stand alone balances of the subsidiary and require compliance with
all covenants related to the debt provided by the Company's primary bank in
Florida. Amounts outstanding under this facility bear interest at prime plus
2%. At December 31, 1994, $120,000 of this line of credit facility remained
unused.
In December 1994, the Company obtained a $500,000 term note payable to a bank,
collateralized by certain installment notes receivable of its wholly owned
subsidiary, Check Express Finance, Inc. This note payable bears interest at a
variable interest rate, to be adjusted annually, currently at 10.625%, with a
three year term and monthly interest and principal payments of $16,317. The
Company pledged certain installment notes receivable as collateral for this
loan. The Company's President also personally guarantees the facility. See
Note 7.
In October 1993, in conjunction with the acquisition of Check-X-Change, the
Company assumed a term loan with a bank at a fixed interest rate of 10%. This
note was satisfied during 1994.
NOTE 6 - CAPITAL LEASE OBLIGATIONS
The Company leases certain computer and office equipment under capital lease
agreements maturing at various intervals through 1999. The
101
<PAGE> 111
following is a schedule of future minimum lease payments as of December 31,
1994:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1995 $ 41,302
1996 25,005
1997 22,186
1998 14,403
1999 7,198
---------
Total minimum lease payments 110,094
Less: Amounts representing interest ( 9,096)
---------
Present value of minimum lease payments 100,998
---------
Less: Current portion ( 35,118)
---------
$ 65,880
=========
</TABLE>
The equipment financed under these capital lease agreements, with a cost of
$180,530, is included in property and equipment at December 31, 1994.
NOTE 7 - LONG TERM DEBT
<TABLE>
<CAPTION>
December 31,
-------------------------------------
Senior Debt 1994 1993
- - ----------- ----------- -----------
<S> <C> <C>
Term note to bank, monthly principal
and interest payments of $13,826,
at 8.25% fixed, ten year
amortization with balloon due
February 10, 2001 $ 792,229 $ -
Mortgage note payable, monthly
installments of $675, fixed
interest at 9%, balloon payment
due June 1, 1999 of $66,705 (a) 74,313 -
Mortgage note payable, due in
1999, monthly installments of
$1,000, fixed interest at
9%, balloon payment due
February 1, 2000 (b) 59,675 65,992
</TABLE>
102
<PAGE> 112
<TABLE>
<S> <C> <C>
Term note to bank, monthly
principal and interest payments
of $4,500, at prime plus 1.25%
(9.75% at December 31, 1994) (c) 215,111 249,302
Mortgage note payable, due May 18,
2003, monthly installments of $1,300,
interest at 8.5% fixed through
May 18, 1998 and adjustable for
the remaining term based on market
indices as defined (d) 96,577 103,525
Term note to bank, monthly
principal and interest payments of
$2,273, at 10%, final payment due
July 20, 1994 - 15,363
---------- --------
1,237,905 434,182
Less: current maturities ( 159,031) ( 65,209)
---------- --------
$1,078,874 $368,973
========== ========
</TABLE>
(a) Secured by land and a building in Indianapolis, Indiana, acquired by
the Company for purposes of expansion of check cashing operations.
(b) Issued in connection with the 1990 acquisition of two stores in South
Carolina. The 9% mortgage is secured by the building in which one
store operates.
(c) Secured by substantially all of the assets of the Company; personally
guaranteed by the Company's president (also a principal stockholder).
Proceeds were used to satisfy a portion of the amount due a
stockholder in 1990.
(d) Secured by real property and personally guaranteed by the Company's
president (also a principal stockholder).
103
<PAGE> 113
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1994 1993
------------ -----------
<S> <C> <C>
Subordinated Debt
- - -----------------
6% promissory note payable, due
in equal monthly installments of
$4,867, final payment due
January 3, 1997 (a) $ 114,122 $ -
12% promissory note payable,
due in equal monthly
installments of $6,567, final
payment due August 3, 2006 (b) 493,637 -
8% promissory note payable,
due in equal monthly installments
of $4,652, final payment due
June 14, 1999 (c) 206,318 -
Non-interest bearing, unsecured
promissory note payable, due in
equal monthly installments of
$833, final payment due June 1,
1999, interest imputed at 9% (d) 36,894 -
Non-interest bearing, unsecured
promissory note payable, due in
installments of $4,750 monthly for
the first six months beginning
September 1994, then $1,500 monthly
for the final thirty six months, final
payment due February 23, 1998, interest
imputed at 9% (e) 55,865 -
11% unsecured notes payable, due
in equal monthly installments
of $4,894, final balloon payment
due November 1, 1995 (Note 11) 141,463 182,094
10% unsecured notes payable, due
in equal monthly installments of
$1,737, final payment due
September 8, 1997 (Note 11) 49,923 64.944
----------- ----------
1,098,222 247,038
Less: current maturities ( 298,880) ( 55,651)
----------- ----------
$ 799,342 $ 191,387
=========== ==========
</TABLE>
104
<PAGE> 114
(a) Secured by a subordinated interest in the assets of two check cashing
stores in Tampa, Florida (Note 3).
(b) Secured by a subordinated interest in the assets of three check cashing
stores in Tacoma, Washington (Note 3).
(c) Secured by a subordinated interest in the assets of three check cashing
stores in Stockton, California (Note 3).
(d) Part of the consideration given in the acquisition of two check cashing
stores in Modesto, California (Note 3)
(e) The consideration given in the acquisition of the food stamp distribution
operation in Stockton, California (Note 3).
Aggregate long term debt matures as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C>
1995 $ 457,911
1996 336,325
1997 393,022
1998 245,712
1999 315,669
thereafter 587,489
-----------
$ 2,336,128
===========
</TABLE>
NOTE 8 - INCOME TAXES
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Income tax expense (benefit) components:
Current ($ 9,250) $ 18,041
Deferred 75,425 47,073
-------- --------
$ 66,175 $ 65,114
======== ========
</TABLE>
105
<PAGE> 115
Income tax expense for 1994 and 1993 differs from that computed by applying the
U.S. federal income tax rate of 34% to pre-tax earnings as shown below:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Income taxes at statutory rate
of 34% $ 22,658 $ 44,436
State income taxes, net of
federal benefit 4,929 3,900
Surtax exemption ( 5,378) ( 6,536)
Amortization of book goodwill
related to non-taxable
acquisitions 33,032 3,420
Meals and entertainment limitation 8,748 1,880
Increase in effective rate applied
to cumulative temporary differences 2,186 -
Under accrual of prior year income
taxes (recorded fourth quarter) - 18,014
--------- --------
$ 66,175 $ 65,114
========= ========
</TABLE>
At January 1, 1993 and December 31, 1994 and 1993, deferred income tax asset
and liability components were as follows:
<TABLE>
<CAPTION>
December 31, December 31, January 1,
1994 1993 1993
------------ ------------ -----------
<S> <C> <C> <C>
Deferred tax assets:
Allowance for doubtful
accounts $ 16,100 $ 18,000 $ 15,000
Accrued compensation expense 3,700 - -
Accrued sales commissions 2,700 11,600 7,600
Non-compete agreement - 8,000 -
Other 2,800 5,500 2,400
--------- --------- ---------
25,300 43,100 25,000
Deferred tax liabilities:
Franchise fees (installment
sales) ( 17,700) ( 50,200) ( 64,000)
Depreciation ( 78,300) ( 45,400) ( 40,000)
Acquisition costs ( 66,400) ( 31,700) ( - )
Tax deferred gain on sale
of assets under installment
method ( 17,800) ( - ) ( - )
Other ( 18,808) ( 10,336) ( 12,039)
--------- --------- ---------
( 199,008) ( 137,636) ( 116,039)
-------- --------- ---------
Net deferred taxes ($ 173,708) ($ 94,536) ($ 91,039)
========= ========= =========
</TABLE>
There is no valuation allowance.
106
<PAGE> 116
As a result of the acquisition of Peterlyn, Inc. effective January 1, 1994 (see
Note 3), a net deferred tax liability of $3,747 (principally related to
depreciation expense and a reserve for bad debts) was recorded.
As a result of the Check-X-Change acquisition (see Note 3) a net deferred tax
asset of approximately $47,000 (principally related to allowance for doubtful
accounts and deferred compensation) was recorded which reversed by December 31,
1993 since all the items were recognized for income tax return purposes.
NOTE 9 - COMMITMENTS
The Company leases certain facilities and equipment for its store and
management operations under operating lease agreements. Certain lease
agreements contain escalation clauses tied to the Consumer Price Index in
addition to a base amount. Only the base amount is presented below.
Management expects that as leases expire they will be renewed or replaced by
similar leases on other properties. The future minimum commitments under
operating leases as of December 31, 1994 are as follows:
<TABLE>
<S> <C>
1995 $ 561,050
1996 480,313
1997 413,760
1998 351,190
1999 254,536
thereafter 236,515
-----------
$ 2,297,364
===========
</TABLE>
Rent expense for the year ended December 31 1994 and 1993 totaled $686,472 and
$328,816, respectively.
The Company has guaranteed future minimum lease payments totalling
approximately $75,000 as of December 31, 1994, related to store leases assigned
to buyers related to dispositions of stores during 1994.
The Company is engaged from time to time as plaintiff in small claims court
litigation relating to collection of returned checks and other litigation to
protect its service marks; however, such litigation has not historically had
any material effect on the Company's financial condition and results of
operations. As the Company's franchise network expands, it is reasonably
possible that the Company will be engaged in litigation with one or more of its
franchisees from time to time.
The Company, through its wholly owned subsidiary, is currently involved
107
<PAGE> 117
in litigation against a former employee of Check-X-Change. The former employee
has made five separate claims against Check-X-Change related to breach of
contract and untimely or non-payment of compensation, several of which overlap
and are not independent actions for separate damages. While the ultimate
outcome of these claims can not be determined at this time, management does not
believe that the ultimate outcome will have a material adverse impact on the
Company's financial position.
NOTE 10 - STOCKHOLDERS' EQUITY
Information as to shares subject to options is as follows (per share amounts
represent average option prices):
<TABLE>
<CAPTION>
Exercise price range per share
of options outstanding at year end
----------------------------------------------
December 31, 1994 1993
--------------------- --------------------- ------------------
1994 1993 From To From To
-------- -------- ------- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Outstanding - beginning of year.. 369,500 396,750 $ .375 $ 1.125 $ .375 $ 1.50
Granted.......................... 192,000 168,000 .6875 1.1875 .875 1.125
Exercised ....................... 32,500 - .375 .44 - -
Cancelled ....................... 62,000 195,250 .44 1.25 .62 1.50
------- -------
Outstanding - end of year ....... 467,000 369,500 .375 1.1875 .375 1.125
======= =======
Average price per share of options
outstanding at end of year ..... $ .78 $ .77
======= =======
</TABLE>
The above options expire beginning April 1995 through November 1999.
In 1992, in conjunction with securing a commitment from certain individuals to
loan the Company $405,000 (see Note 7), the Company granted these individuals
warrants to acquire 202,500 shares of common stock at an exercise price of
$.375 per share, expiring September 14, 1994. These warrants were deemed
detachable and, accordingly, their estimated fair value of $7,594 was credited
to paid-in-capital. During 1993, warrants to purchase 50,000 shares were
exercised and the remainder of these warrants were exercised in 1994.
As of December 31, 1994 and 1993, warrants to purchase 1,261,500 shares of the
Company's common stock were outstanding as a result of the Company's secondary
public offering completed in June 1993. These warrants are comprised of the
Underwriter's Warrants, which affords the Underwriter to right to purchase
43,500 Units (consisting of 174,000 shares of common stock and 87,000 warrants,
each such warrant entitling the Underwriter to purchase a share of common stock
at an exercise price of $3.00 per share) and a total of 1,000,500 warrants
included in Units sold to the public, each of which allows the holder to
purchase a share of common stock at an exercise price of $3.00 per share. The
Underwriter's Warrants are exercisable during the four year period commencing
June 24, 1994. The
108
<PAGE> 118
public warrants are exercisable until June 24, 1995.
At the 1994 annual meeting of shareholders, proposals were submitted for
shareholder vote to adopt an employee stock option plan and amend the Company's
Articles of Incorporation. The proposals did not pass.
NOTE 11 - EMPLOYEE BENEFIT PLANS
During 1994 the Company implemented an employee savings plan (the Savings Plan)
that qualifies as a deferred salary arrangement under section 401(k) of the
Internal Revenue Code. Employees of the Company may participate in the Savings
Plan after completing one year of service if they meet minimum age and annual
hours of service requirements. Participating employees may defer a portion of
their pre-tax earnings, up to the Internal Revenue Service annual contribution
limit ($9,240 for calendar year 1994). The Company matches 25% of the first 4%
of salary deferred by the employee. The Company's matching contributions
charged to expense were $5,629 for 1994.
NOTE 12 - RELATED PARTY TRANSACTIONS
In September 1992, the Company completed a private placement of a series of one
year term notes totaling $405,000. The notes provided for interest only
payments quarterly at 10% and were due September 14, 1993, or upon the
completion of an equity offering by the Company with net proceeds of at least
$1.5 million, whichever occurs first (see Note 7). The note holders also
received warrants to purchase a total of 202,500 shares of the Company's common
stock at an exercise price of $.375 per share, exercisable at any time prior to
September 14, 1994. The Company's president and two directors participated in
this private placement with loans in the amount of $20,000, $150,000 and
$25,000, respectively. The notes were prepaid in March 1993.
The Company's president personally guarantees certain indebtedness of the
Company and was paid $41,875 in guarantee fees for 1994. See Note 7.
In conjunction with the Company's acquisition of Check-X-Change, a consulting
fee of $25,000 was paid to a consulting firm, the principal of which was a
member of the Company's board of Directors. See Note 3.
The Company is indebted to Bay Area Investment, Inc. ("Bay Area") in the amount
of $49,923 as of December 31, 1994, which represents the remaining note payable
balance related to the acquisition of four stores in 1992. One of Bay Area's
stockholders is related to the Company's president. Interest expense related
to this debt for 1994 was $5,818. See Note 7.
109
<PAGE> 119
The Company has notes payable to various other shareholders of $141,463 as of
December 31, 1994. Total interest expense for 1994 related to these notes
payable was $18,093. See Note 7.
The Company entered into a 50%/50% joint venture agreement in 1994 with Borer
Enterprises, Inc., the principal shareholder of which is an employee of the
Company, whereby a partnership was formed to do business as Check Express
Finance #1. The purpose of the joint venture is to purchase additional
installment notes receivable originated by used automobile dealers. The
Company provides all management services related to the operation of the Joint
Venture, while Borer Enterprises, Inc. has contributed significantly all
working capital for the operation of the venture. The Company has not
guaranteed any of the joint venture's liabilities nor does the Company have any
commitments to fund its operations. Neither party has unilateral control over
the operation of the joint venture.
During 1994, the Company obtained various short-term working capital loans,
totalling $543,000, from an employee of the Company and the brother of the
President of the Company. Such loans in the amount of $180,000, payable to the
employee of the Company, remained outstanding at December 31, 1994. Interest
and loan origination fees paid related to these loans during 1994 totalled
$10,179, and represent amounts bargained for at arms length consistent with
market rates in effect at the time each loan was obtained.
On February 15, 1994, the Company completed its purchase, effective January 1,
1994, of four check cashing stores in the Seattle and Tacoma, Washington areas
in exchange for $812,000 in cash and a $100,000 note payable. The stores were
obtained by purchasing all of the outstanding common stock of Peterlyn, Inc.
("Peterlyn"), a Washington corporation, which owned and operated the stores
under franchise agreements with Check Express USA, Inc., a wholly owned
subsidiary of the Company.
The four stores were previously owned and operated by the Company for several
years through its then wholly owned subsidiary, Check Express Washington, Inc.
("CEW"). In June of 1992, the Company distributed to the then Company
president 100% of the stock of CEW in exchange for substantially all 492,500
shares of the Company's common stock owned by the former president.
Concurrently, the former president tendered his resignation to the Company.
Since the February 1994 acquisition, the former president has agreed to return
to Check Express's management team, in a non-officer capacity, where he will
focus on future acquisitions.
110
<PAGE> 120
NOTE 13 - FOURTH QUARTER ADJUSTMENTS
The Company expensed a finders fee to an employee of $84,000 related to two
1994 acquisitions which had previously been inadvertently capitalized in prior
quarters (principally the third quarter, $61,000). The adjustment reduced net
income in the fourth quarter by $55,000 ($0.01 per share).
The Company also reduced finance revenues by $135,000, of which a large portion
related to the third quarter ($59,000), as a result of the discovery of a
system error in recording early payoffs of certain auto loans. The adjustment
reduced net income in the fourth quarter by $89,000 ($0.02 per share).
Finally, the net result of the above entries plus a net loss before income
taxes for the fourth quarter resulted in the provision for income taxes
recorded through the end of the third quarter 1994 being overstated by $60,000
($0.01 per share).
NOTE 14 - SUBSEQUENT EVENTS
Effective January 31, 1995, the Company sold substantially all the non-cash
assets of five check cashing stores located in Stockton and Modesto, California
to California Check Cashing Stores, Inc., an unrelated California corporation,
for $1,000,000 in cash. These stores, which were acquired during 1994 in two
separate acquisition transactions, represented approximately nine percent
(unaudited) of the Company's revenues for 1994, and eight percent (unaudited)
of the Company's total assets. The sale of these five stores resulted in a
gain of approximately $290,000 (unaudited), before income taxes, which will be
recorded by the Company in the first quarter 1995.
111
<PAGE> 121
NOTE 15 - BUSINESS SEGMENT INFORMATION
The consolidated operations of the Company consist of three business segments,
Check Cashing Services, Franchising of check cashing stores and a Finance
Company implemented during the fourth quarter of 1993.
<TABLE>
<CAPTION>
December 31, 1994
---------------------------------------------------------------------
Check
Cashing Franchising Finance Consolidated
------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues $ 5,654,393 $ 1,520,684 $ 322,776 $ 7,497,853
Operating costs and expenses:
Store expenses:
Salaries and benefits ( 1,690,066)
Occupancy ( 769,264)
Returned checks ( 345,978)
Depreciation and amortization ( 319,890)
Area and regional expenses ( 491,624)
Other ( 1,271,489)
-----------
Total store expenses ( 4,888,311) ( 4,888,311)
Franchising Expenses:
Salaries and benefits ( 535,962)
Occupancy ( 56,859)
Depreciation and amortization ( 65,694)
Advertising ( 164,102)
T & E expenses ( 162,915)
Other ( 255,057)
-----------
Total franchising expenses ( 1,240,589) ( 1,240,589)
Finance Expenses:
Salaries and benefits ( 83,373)
Occupancy ( 11,326)
Provision for losses ( 31,621)
Other ( 41,854)
----------
Total finance expenses ( 168,174) ( 168,174)
----------- ----------- ---------- -----------
Operating income 766,082 280,095 154,602 1,200,779
-----------
Headquarters Expenses:
Salaries and benefits ( 498,201)
Occupancy ( 29,445)
Depreciation and amortization ( 60,505)
Other ( 299,751)
-----------
Total headquarters expenses ( 887,902)
-----------
Other revenues 34,766
Interest expense ( 281,001)
-----------
Income before income taxes $ 66,642
===========
Capital expenditures $ 560,890 $ 197,823 $ 4,338 $ 763,051
Total assets $ 5,628,141 $ 1,531,721 $ 1,598,822 $10,025,855
</TABLE>
The above presentation does not allocate interest expense incurred related to
the finance segment as a component of operating income of that segment; finance
companies typically present interest expense as an operating expense. The
amount allocable to the finance segment for 1994 would be approximately
$60,000.
112
<PAGE> 122
The segment information for 1993 has been reclassified to conform to the 1994
presentation. The segments' costs and expenses, previously shown in total by
segment, are presented in more detail by significant categories of expense for
each segment. In addition, the finance company which was previously included
in the check cashing segment because of it insignificance is now reported
separately as a segment because of its significance in 1994.
<TABLE>
<CAPTION>
December 31, 1993
---------------------------------------------------------------------
Check
Cashing Franchising Finance Consolidated
------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues $ 3,239,750 $ 954,022 $ 11,268 $ 4,205,040
Operating costs and expenses:
Store expenses:
Salaries and benefits ( 1,007,345)
Occupancy ( 408,992)
Returned checks ( 128,664)
Depreciation and amortization ( 243,572)
Area and regional expenses ( 204,646)
Other ( 692,108)
-----------
Total store expenses ( 2,685,328) ( 2,685,328)
Franchising Expenses:
Salaries and benefits ( 286,840)
Occupancy ( 27,332)
Depreciation and amortization ( 27,028)
Advertising ( 56,969)
T & E expenses ( 62,000)
Other ( 312,284)
-----------
Total franchising expenses ( 772,453) ( 772,453)
Finance Expenses:
Salaries and benefits ( 15,158)
Occupancy ( 401)
Provision for losses ( 4,901)
Other ( 5,487)
----------
Total finance expenses ( 25,947) ( 25,947)
----------- ----------- ---------- -----------
Operating income 554,422 181,569 ( 14,679) 721,312
-----------
Headquarters Expenses:
Salaries and benefits ( 284,468)
Occupancy ( 16,890)
Depreciation and amortization ( 33,566)
Other ( 186,978)
-----------
Total headquarters expenses ( 521,902)
-----------
Other revenues 62,525
Interest expense ( 131,241)
-----------
Income before income taxes $ 130,694
===========
Capital expenditures $ 267,807 $ 14,987 $ 9,074 $ 291,868
Total assets $ 3,257,723 $ 1,598,091 $ 125,766 $ 6,630,897
</TABLE>
113
<PAGE> 123
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AND
AMENDMENT THERETO
<PAGE> 124
AMENDMENT
Ace Cash Express, Inc., a Texas corporation ("Ace"), Ace Acquisition
Coproration, a Florida Corporation ("Acquisition") and Check Express, Inc., a
Florida corporation (the "Company"), entered into an Agreement and Plan of
Merger dated October 13, 1995 (the "Merger Agreement"). Section 10.1(ii) of
the Merger Agreement is hereby modified and amended so that in place the words
"Janurary 31" appears, the words "February 15" replaces them. Except as set
forth herein, the Merger Agreement shall remain in full force and effect as
originally executed.
Executed as of December 20, 1995.
ACE CASH EXPRESS, INC.
By: /s/ Don Neustadt
-----------------------
Don Neustadt, President
CHECK EXPRESS, INC.
By: /s/ Larry F. Lang
-----------------------
Larry F. Lang,President
<PAGE> 125
AGREEMENT AND PLAN OF MERGER
among
ACE CASH EXPRESS, INC.
(a Texas corporation)
ACE ACQUISITION CORPORATION
(a Florida corporation)
and
CHECK EXPRESS, INC.
(a Florida corporation)
Dated: October 13, 1995
<PAGE> 126
TABLE OF CONTENTS
ARTICLE I
PLAN OF ACQUISITION
<TABLE>
<S> <C> <C>
1.1. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Continuance of Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Corporate Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5. Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
ADDITIONAL AGREEMENTS
2.1. Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2. Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Organization and Good Standing of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3. Foreign Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4. Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6. Compliance with Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8. Financial Statements and Records of the Company . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11. Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.13. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14. Condition of Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16. Litigation and Government Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.17. Necessary Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.18. Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.20. Regulatory Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.21. Intellectual Property and Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.22. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.23. Labor and Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.24. Employee Benefit Plans and Arrangements; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.25. Corporate Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.26. Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.27. Employees and Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.28. Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.29. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.30. Accuracy of Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
ARTICLE IV
i
<PAGE> 127
REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND ACE
<TABLE>
<S> <C> <C>
4.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2. Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3. Authority and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5. Compliance with Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.6. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.7. Necessary Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.8. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
JOINT COVENANTS
5.1. Notice of any Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3. Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.4. SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.5. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI
COVENANTS OF THE COMPANY
6.1. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2. Conduct of Business Prior to Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.3.New Schedule 3.17 and 3.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4. Shareholder Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII
COVENANTS OF ACE
7.1. Release of Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.2. Ace's Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VIII
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE COMPANY
8.1. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3. Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.4. Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.5. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.6. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.7. Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF ACQUISITION AND ACE
9.1. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.2. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3. Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4. Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.5. Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
ii
<PAGE> 128
<TABLE>
<S> <C> <C>
9.6. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.7. Approvals of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.8. Consummation of the Merger; Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.9. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.11. Shareholder Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.12. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.13. Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X
MISCELLANEOUS
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.3. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.4. Non-Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.9. Waiver and Other Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.11. Securities Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
iii
<PAGE> 129
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of October 13, 1995 (this
"Agreement"), is by and among Ace Cash Express, Inc., a Texas corporation
("Ace"), Ace Acquisition Corporation, a Florida corporation and wholly-owned
subsidiary of Ace ("Acquisition"), and Check Express, Inc., a Florida
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Ace desires to acquire through Acquisition, its wholly-owned
subsidiary, all of the issued and outstanding shares of the Company's capital
stock, consisting of Common Stock, $0.004 par value (the "Common Stock"); and
WHEREAS, the parties hereto believe that the acquisition of all of the
Common Stock by Acquisition in the manner provided by, and subject to the terms
and conditions set forth in, this Agreement and all exhibits, schedules, and
supplements hereto is desirable and in the best interests of their respective
corporations and shareholders; and
WHEREAS, certain shareholders of the Company have executed or
simultaneously herewith are executing a Shareholder Agreement and Irrevocable
Proxy (each a "Shareholder Agreement") which, among other things, grants Ace
the irrevocable right to vote their shares of Common Stock in connection with
the Merger (as hereinafter defined); and
WHEREAS, the respective Boards of Directors of the Company,
Acquisition, and Ace have approved the Merger and the other transactions
contemplated hereby on the terms and subject to the conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, and covenants herein contained, and certain good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties to this Agreement hereby agree as follows:
ARTICLE I
PLAN OF ACQUISITION
1.1. Merger. In accordance with the provisions of the Florida
Business Corporation Act (the "Florida Act"), at the Effective Time (as
hereinafter defined), Acquisition shall be merged (the "Merger") into the
Company, with the Company being the surviving corporation and a wholly-owned
subsidiary of Ace (the Company as it exists after the Effective Time being
sometimes referred to herein as the "Surviving Corporation"). The Surviving
Corporation shall continue to be governed by the laws of the State of Florida.
<PAGE> 130
1.2. Effective Time. Upon filing on the Closing Date (as
hereinafter defined) of the Articles of Merger with the Secretary of State of
Florida pursuant to the Florida Act, the Merger shall become effective (the
"Effective Time") upon the issuance of a certificate of merger by the Secretary
of State of Florida.
1.3. Continuance of Corporate Existence. Except as may
otherwise be set forth herein, the corporate existence and identity of the
Company, with all its purposes, powers, franchises, privileges, rights, and
immunities, shall continue unaffected and unimpaired by the Merger, and the
corporate existence and identity of Acquisition, with all its purposes, powers,
franchises, privileges, rights, and immunities, at the Effective Time shall be
merged with and into that of the Company, and the Surviving Corporation shall
be vested fully therewith, and the separate corporate existence and identity of
Acquisition shall thereafter cease except to the extent continued by statute.
1.4. Corporate Government.
(a) The Articles of Incorporation of the Company, as
in effect on the Effective Time, shall continue in full force and
effect and shall be the Articles of Incorporation of the Surviving
Corporation.
(b) The Bylaws of the Company, as in effect as of the
Effective Time, shall continue in full force and effect and shall be
the Bylaws of the Surviving Corporation.
(c) The officers and directors of Acquisition, in
office at the Effective Time, shall continue as the officers and
directors of the Surviving Corporation unless otherwise elected or
appointed by the Surviving Corporation.
1.5. Conversion of Shares.
(a) Each share of Common Stock which is outstanding
immediately prior to the Effective Time shall at the Effective Time
(other than Dissenting Shares as defined in Section 1.6 hereof), by
virtue of the Merger and without any action on the part of the holder
thereof, be converted into and represent the right to receive cash
consideration in the amount of $1.20, without any interest thereon,
payable to the holder thereof (singly, a "Shareholder" and
collectively, the "Shareholders") upon surrender of the certificate
representing such share.
(b) Each option to acquire shares of Common Stock which is
outstanding immediately prior to the Effective Time (the "Option") and
listed on Schedule 3.7(c) as an "Option" shall at the Effective Time
be cancelled by agreement with the holder thereof, who shall thereupon
be entitled to receive cash consideration in the following amount: the
difference between (1) the product of (x) $1.20 and (y) the number of
shares of Common Stock into which the Option is, as of the
2
<PAGE> 131
Effective Time, immediately convertible or exercisable and (2) the
exercise price of the Option for all of the shares of Common Stock
subject to such Option as of the Effective Time. Such consideration,
without any interest thereon, shall be payable to the holder of the
Option (the "Option Holder") upon the surrender of the option
agreement or other instrument representing the Option. Prior to the
Closing Date, the Company shall use its best efforts to obtain, at its
sole cost and expense, such consents and agreements of all the Option
Holders as are necessary to effect the foregoing described
cancellations and shall provide copies of such consents and agreements
to Acquisition and Ace at Closing.
(c) Each right to acquire shares of Common Stock, other
than the Options, which is outstanding immediately prior to the
Effective Time (the " Warrants") shall at the Effective Time be
cancelled by agreement with the holder thereof (the "Warrant Holders"
and together with the Option Holders and Shareholders, the "Security
Holders"), exercised, or redeemed. To the extent required by any
Warrant Holder, a Warrant Holder shall, upon agreeing to the
cancellation of its or their Warrant, be paid at Closing an amount not
to exceed $12,500 in the aggregate for all Warrant Holders. Prior to
the Closing Date, the Company shall use its best efforts to obtain, at
its sole cost and expense, such consents and agreements of all the
holders of the Warrants as are necessary to effect the foregoing
described cancellations and shall provide copies of such consents and
agreements to Acquisition and Ace at Closing.
(d) Each share of common stock of Acquisition which is
outstanding immediately prior to the Effective Time shall, at the
Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and exchangeable for one
share of common stock of the Surviving Corporation.
1.6. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by a
Shareholder who has not voted such shares in favor of the Merger and who has
delivered a written demand for payment of the fair value of such shares within
the time and in the manner provided by the Florida Act (the "Dissenting
Shares") shall not be converted into or be exchangeable for the right to
receive the consideration provided in Section 1.5 of this Agreement, unless and
until such Shareholder shall have failed to perfect or shall have effectively
withdrawn or lost his right to obtain payment of the fair value of his shares
under the Florida Act. If any such holder shall have so failed to perfect or
shall have effectively withdrawn or lost such right, such holder's shares shall
solely represent, as of the Effective Time, the right to receive the
consideration provided in Section 1.5 without any interest thereon. The
Company hereby covenants and agrees to provide to Ace and Acquisition
3
<PAGE> 132
copies of all written objections to the Merger from the Shareholders as soon as
practicable, but in no event later than three days after the Company's receipt
of any such objection. In no circumstance shall the Company make any payments
with respect to, or in settlement of, any such objections from a Shareholder
without the prior written consent of Ace.
1.7. Closing. Consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Gardere &
Wynne, L.L.P., counsel for Ace, at the address stated in Section 10.6 hereof,
commencing at 10:00 a.m., local time, on the second business day immediately
following the Shareholders' Meeting (as hereinafter defined) and shall proceed
promptly to conclusion, or at such other place, time, and date as shall be
fixed by mutual agreement of the parties hereto. The day on which the Closing
shall occur is referred to herein as the "Closing Date." The Company and
Acquisition will cause to be prepared, executed, and delivered Articles of
Merger to be filed with the Secretary of State of Florida as of the Closing and
all other appropriate and customary documents as any party hereto or its
counsel may reasonably request for the purpose of consummating the transactions
contemplated by this Agreement. All actions taken at the Closing shall be
deemed to have been taken simultaneously at the time the last of any such
actions is taken or completed.
ARTICLE II
ADDITIONAL AGREEMENTS
2.1. Shareholders' Meeting.
(a) In accordance with the Florida Act, the Company
shall duly call, give notice of, convene, and hold a meeting of the
Shareholders (the "Shareholders' Meeting") as soon as practicable for
the purpose of approving and adopting this Agreement. In connection
with the Shareholders' Meeting, the Company shall (i) include in the
Proxy Statement (as hereinafter defined) the recommendation of its
Board of Directors that the Shareholders vote in favor of the approval
and adoption of this Agreement; (ii) obtain and furnish the
information required to be included by it in the Proxy Statement, and,
after consultation with Acquisition and Ace, respond promptly to any
comments made by the Securities and Exchange Commission ("SEC") with
respect to the Proxy Statement and any preliminary version thereof and
cause the Proxy Statement to be mailed to the Shareholders on the
earliest practicable time following the date of this Agreement; and
(iii) use its best efforts to obtain the approval and adoption of the
Merger by Shareholders holding at least a majority of the shares of
Common Stock entitled to vote at the Shareholders' Meeting.
(b) The letter to Shareholders, notice of meeting,
proxy statement, and form of proxy to be distributed to Shareholders
in connection with the Merger, and any schedules
4
<PAGE> 133
required to be filed with the SEC in connection therewith, shall be in
form and substance reasonably satisfactory to Acquisition, Ace, and
their legal counsel and are collectively referred to herein as the "
Proxy Statement."
2.2. Exchange of Shares.
(a) Acquisition or Ace shall deposit in trust with an
exchange agent reasonably acceptable to the Company to be selected by
Acquisition (the "Exchange Agent") prior to the Effective Time cash in
an aggregate amount necessary to make the payments provided for by
Section 1.5 to the Security Holders and $1.20 for each Dissenting
Share (such amounts being hereinafter referred to as the "Exchange
Fund"); and, prior to the Effective Time, Ace and Acquisition shall
cause to be prepared an agreement ("Exchange Agreement"), reasonably
satisfactory to the parties hereto, to be entered into prior to the
Effective Time among the Exchange Agent and the parties hereto,
providing for the payment and distribution of the Exchange Fund in
accordance with this Agreement. The Exchange Agent shall, pursuant to
instructions jointly given by the Company and Acquisition, promptly
make the payments provided for by Section 1.5 and payments to holders
of Dissenting Shares out of the Exchange Fund. The Exchange Fund
shall not be used for any other purposes.
(b) Promptly after the Effective Time, the Exchange Agent
shall mail to each Security Holder (or, if appropriate, the designee
of such Security Holder) a letter of transmittal which shall specify
(i) that delivery shall be effected, and risk of loss and title to the
certificates which represented shares of Common Stock and the
agreements, warrants or other documents representing the Options and
the Warrants (such certificates, agreements, and warrants are referred
to herein as the " Instruments") shall pass, only upon proper delivery
of the Instruments to the Exchange Agent and (ii) instructions for use
in effecting the surrender of the Instruments for payment therefor.
Upon surrender to the Exchange Agent of an Instrument, together with
such letter of transmittal duly executed, the holder of such
Instrument shall be entitled to receive in exchange therefor cash in
the amount provided in Section 1.5, and such Instrument shall
forthwith be cancelled. No interest will be paid or accrued on the
cash payable upon the surrender of the Instrument. If payment is to
be made to a person other than the person in whose name the Instrument
surrendered is registered, it shall be a condition of payment that the
Instrument so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment
shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Instrument
surrendered or established to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.2,
each Instrument (other than certificates representing Dissenting
5
<PAGE> 134
Shares) shall represent for all purposes only the right to receive the
amount of consideration provided by Section 1.5 without any interest
thereon.
(c) After the filing of the Articles of Merger with
the Secretary of State of Florida, the stock transfer ledger of the
Company shall be closed and there shall be no transfer on the stock
transfer books of the Company of the shares of Common Stock which were
outstanding immediately prior to such time of filing. If, after the
Effective Time, Instruments are presented to the Surviving
Corporation, they shall be promptly forwarded to the Exchange Agent
for exchange as provided herein.
(d) Any portion of the Exchange Fund and the proceeds
of any investments thereof that remain unclaimed by the Security
Holders for twelve months after the Effective Time shall be repaid to
the Surviving Corporation. The unclaimed portion of the Exchange Fund
shall thereafter be held by the Surviving Corporation for the benefit
of the Security Holders whose Instruments have not theretofore been
presented to the Exchange Agent, or as otherwise provided by law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Ace and Acquisition that the
following are true and correct as of this date (unless expressly stated to be
as of another time) and will be true and correct at and as of the Closing Date
(unless expressly stated to be true as of another time) as if made on that
date:
3.1. Organization and Good Standing of the Company. The Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Florida.
3.2. Subsidiaries and Investments. Set forth on Schedule 3.2
are the numbers of authorized and outstanding shares of capital stock of the
Company's wholly-owned subsidiaries (the "Subsidiaries"). The Company has no
equity, profit sharing, participation, or other ownership interest in any
corporation, partnership, or other entity other than in the Subsidiaries. Each
of the Subsidiaries is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation, which is
set forth on Schedule 3.2. The issued and outstanding shares of capital stock
of the Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable, and all of such shares are owned by the Company free
and clear of all liens, claims, and encumbrances of any kind. There is no
outstanding subscription, contract, convertible or exchangeable security,
option, warrant, call, or other right obligating any of the Subsidiaries to
issue, sell, exchange, or otherwise dispose of, or to purchase, redeem, or
otherwise acquire,
6
<PAGE> 135
shares of, or securities convertible into or exchangeable for, capital stock of
any of the Subsidiaries.
3.3. Foreign Qualification. Schedule 3.3 lists each
jurisdiction where the Company or any Subsidiary owns or leases property or has
employees and each jurisdiction where the Company or any Subsidiary is
qualified to do business. Each of the Company and the Subsidiaries is duly
qualified or licensed to do business and is in good standing as a foreign
corporation in every jurisdiction where the nature of its business and
operations requires it to be so qualified or licensed.
3.4. Corporate Power and Authority. Each of the Company and the
Subsidiaries has the corporate power and authority and all licenses and permits
required by governmental authorities to own, lease, and operate its properties
and assets, to carry on its business as currently being conducted, and, with
respect to the Company, to execute, deliver, and perform this Agreement and the
agreements, documents, and instruments contemplated hereby and to consummate
the transactions contemplated hereby and thereby. At a meeting duly called and
held in compliance with Florida Act, the Board of Directors of the Company has
adopted a resolution (i) approving the Merger, based on a determination that
the Merger is fair to the Shareholders and is in the best interests of the
Shareholders and (ii) approving and adopting this Agreement and the
transactions contemplated hereby and thereby and recommending approval and
adoption of this Agreement and the transactions contemplated hereby and thereby
by the Shareholders.
3.5. Binding Effect. This Agreement and the other agreements,
documents, and instruments contemplated hereby to be executed by the Company
have been or, when executed and delivered, will have been duly executed and
delivered by the Company and are or will be, when executed and delivered, the
legal, valid, and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms.
3.6. Compliance with Other Instruments. Neither the execution
and delivery by the Company of this Agreement and the agreements, documents,
and instruments contemplated hereby nor the consummation by it of the
transactions contemplated hereby or thereby will violate, breach, be in
conflict with, or constitute a default under, or permit the termination or the
acceleration of maturity of, or result in the imposition of any lien, claim, or
encumbrance upon any property or asset of the Company or any of the Subsidiary
pursuant to (i) its Articles of Incorporation or Bylaws or (ii) except as set
forth in Schedule 3.6, any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan or lease agreement, other agreement or
instrument, judgment, order, injunction, or decree by which the Company or any
Subsidiary is bound, to which it is a party, or to which its assets are
subject.
7
<PAGE> 136
3.7. Capitalization.
(a) The authorized capital stock of the Company
consists of 10,000,000 shares of Common Stock, of which 5,061,003
shares are issued and outstanding. All of the issued and outstanding
shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. There are no shares of Common
Stock held in treasury.
(b) No share of Common Stock has been issued or
disposed of in violation of any preemptive rights of any Shareholder.
To the Company's knowledge, there are no agreements among the
Shareholders limiting or restricting the free transferability of
shares of capital stock of the Company or granting to any person a
right of first refusal with respect to any such capital stock.
(c) There is no outstanding subscription, contract,
convertible or exchangeable security, option, warrant, call, or other
right obligating the Company to issue, sell, exchange, or otherwise
dispose of, or to purchase, redeem, or otherwise acquire, shares of,
or securities convertible into or exchangeable for, capital stock of
the Company, other than as reflected on Schedule 3.7(c).
3.8. Financial Statements and Records of the Company. The
Company has delivered to Acquisition and Ace true, correct, and complete copies
of the following financial statements (the "Company Financial Statements"):
(a) the audited consolidated balance sheets of the
Company as of years ended December 31, 1992, 1993, and 1994, and the
related consolidated statements of income, changes in shareholders'
equity, and changes in cash flow for the years then ended, together
with the notes thereto and the unqualified reports of the Company's
independent public accountants relating thereto; and
(b) the unaudited consolidated balance sheet of the
Company as of July 31, 1995 (the "Interim Balance Sheet," the date of
which is sometimes referred to herein as the "Balance Sheet Date") and
the related unaudited consolidated statements of income for the
seven-month period then ended (the "Interim Financial Statements"),
together with the notes thereto.
The Company Financial Statements present fairly the assets, liabilities, and
financial position of the Company as of the dates thereof and the results of
operations and changes in cash flow thereof for the periods then ended (subject
to year-end adjustments, consisting of normally recurring accruals and
adjustments, and the lack of notes thereto with respect to the Interim
Financial Statements) and have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis with
prior periods. Since the Balance Sheet
8
<PAGE> 137
Date, there has been no change in accounting principles applicable to, or
methods of accounting utilized by, the Company. The books and records of the
Company have been and are being maintained in accordance with good business
practice, reflect only valid transactions, are complete and correct in all
material respects, and present fairly in all material respects the basis for
the financial position and results of operations of the Company set forth in
the Company Financial Statements.
3.9. Absence of Certain Changes. Except as set forth on
Schedule 3.9, since the Balance Sheet Date, each of the Company and the
Subsidiaries has not (except as may result from the transactions contemplated
by this Agreement):
(a) suffered any change in its business, results of
operations, working capital, assets, liabilities, or condition
(financial or otherwise) or the manner of conducting its business,
other than changes in the ordinary course of business that have not,
individually or in the aggregate, had a material adverse effect on the
business, results of operations, assets, condition (financial or
otherwise), or prospects of the Company or any Subsidiary;
(b) suffered any damage or destruction to or loss of
its assets, whether or not covered by insurance, that has had or might
have a material adverse effect on the business, results of operations,
assets, condition (financial or otherwise), or prospects of the
Company or any Subsidiary;
(c) acquired or disposed of any asset, or incurred,
assumed, guaranteed, endorsed, paid or discharged any indebtedness,
liability or obligation, or subjected (or permitted to be subjected)
any material amount of assets to any lien, claim, or encumbrance of
any kind, except in the ordinary course of business, consistent with
past practices;
(d) forgiven, compromised, cancelled, released,
waived, or permitted to lapse any rights or claims that are material,
individual or in the aggregate;
(e) entered into or terminated any agreement,
commitment or transaction, or agreed or made any changes in any leases
or agreements that are material, individual or in the aggregate, other
than renewals or extensions thereof and leases, agreements,
transactions, and commitments entered into in the ordinary course of
business, consistent with past practices that involved payments not
exceeding $10,000 per year or $10,000 in the aggregate;
(f) written up, written down, or written off the book
value of any material amount of assets;
(g) declared, paid, or set aside for payment any
dividend or distribution with respect to its capital stock;
9
<PAGE> 138
(h) redeemed, purchased, or otherwise acquired, or
sold, granted, or otherwise disposed of, directly or indirectly, any
of its Common Stock, Warrants, or Options or any rights to acquire
such Common Stock, or agreed to changes in the terms and conditions of
any such rights outstanding as of the date of this Agreement;
(i) increased the compensation of or paid any bonuses
to any employees or contributed to any employee benefit plan, other
than in accordance with established policies, practices, or
requirements, consistent with past practices;
(j) entered into any employment, consulting,
compensation, or collective bargaining agreement with any person or
group;
(k) entered into, adopted, or amended any employee
benefit plan;
(l) incurred any indebtedness for borrowed money or
discharged any liabilities or obligations; or
(m) lost or terminated employees, customers, or
suppliers that could or does materially and adversely affect the
Company.
3.10. No Undisclosed Liabilities. There are no liabilities or
obligations of the Company or any of the Subsidiaries of any nature, whether
absolute, accrued, contingent, or otherwise, other than: (i) the liabilities
and obligations that are fully reflected, accrued, or reserved against on the
Interim Balance Sheet, for which the reserves are appropriate and reasonable;
(ii) liabilities and obligations that have been incurred since the Balance
Sheet Date and which either are not required to be disclosed pursuant to
Section 3.9 or are so disclosed; or (iii) liabilities or obligations not
required to be disclosed in financial statements prepared in accordance with
GAAP.
3.11. Tax Liabilities. Except as disclosed in Schedule 3.11, (i)
the Company and each of the Subsidiaries have filed or will file, within the
times and in the manner prescribed by law, all Tax (as hereinafter defined)
returns, statements, forms, and reports ("Returns") which are required to be
filed by or with respect to the Company or any of the Subsidiaries with respect
to any Taxable (as hereinafter defined) period ending on or before the Closing,
and such Returns accurately reflect all liability for Taxes for the periods
covered thereby; (ii) all Taxes payable by or due from or with respect to the
Company or any Subsidiaries for any Taxable period ending on or before the
Closing have been fully paid or adequately disclosed and fully provided for in
the books and records of the Company and the Subsidiaries and the Interim
Balance Sheet; (iii) all Taxes required to be withheld by the Company or the
Subsidiaries and the portion of any such Taxes to be paid by the Company or the
Subsidiaries to any federal, state, county, local, or foreign governmental or
public body or agency
10
<PAGE> 139
("Governmental Body") are set aside in accounts for such purpose or approved,
reserved against, and entered upon the books of the Company and the
Subsidiaries; (iv) neither the Company nor any of the Subsidiaries is
delinquent in the payment of any Tax and there is no Tax deficiency or
delinquency asserted against the Company or the Subsidiaries or any unpaid
assessment, proposal for additional Taxes, deficiency or delinquency in the
payment of any of the Taxes of the Company or the Subsidiaries that could be
asserted by any Government Body; (v) no request has been made for an extension
of time within which to file a return of, or with respect to, the Company or
the Subsidiaries which extension has expired without the appropriate return
being filed; (vi) neither the Company nor the Subsidiaries are, or ever has
been, a party to, or bound by, any tax-sharing, tax-allocation or similar
agreement involving an obligation to indemnify any other person or entity with
respect to Taxes; (vii) no examination of any Return of, or with respect to,
the Company or the Subsidiaries is currently in progress or pending; (viii)
there are no outstanding agreements or waivers extending the statutory period
of limitation applicable to the assessment or collection of any Tax of, or with
respect to, the Company or the Subsidiaries; (ix) neither the Company nor any
Subsidiary has violated any Tax laws applicable to the Company, any Subsidiary
or their assets or employees; (x) there is no lien, security interest, claim,
restriction, or encumbrance of any kind on or pending against any of the
Company's or any Subsidiary's assets that is the result of any unsatisfied Tax
liability of the Company, any Subsidiary, or any other person; and (xi) the
consummation of the transactions contemplated hereby will not result in the
imposition or creation of an obligation or liability to pay any Tax or other
governmental charge on the Company or its assets, except for Tax obligations or
liabilities that may result from any Tax election made by Ace or Acquisition on
or after the Closing Date.
For purposes of this Agreement, " Tax" (and, with correlative meaning,
"Taxes," "Taxing," and "Taxable") means (i) any tax or items referred to as a
tax of any kind whatsoever, together with any interest, penalty, or addition to
tax, by a Governmental Body responsible for the imposition of any such tax,
whether such tax is a direct result of the Company's or any of the Subsidiaries'
activities, or as a result of the Company's or Subsidiaries' being (or having
been) a member of an affiliated, consolidated, combined, or unitary group,
including, but not limited to, net income, gross income, alternative or add-on
minimum, profits, gross receipts, franchise, estimated, sales, use, occupancy,
excise, property, ad valorem, withholding, social security, disability,
employment, unemployment, withholding on amounts paid to or by a person,
payroll, premium, severance, stamp, occupation, capital stock, transfer,
registration, value added, environmental, or windfall profit taxes, and any
other similar or related levies, assessments, impost, duties, customs, import,
license fees, registration fees or other fees or charges; (ii) liability of the
Company or the Subsidiaries for the payment of any amounts of the type described
in (i) as a result of being a member of an affiliated, consolidated, combined,
or unitary group for any period ending on or
11
<PAGE> 140
before the Closing; and (iii) liability of the Company or the Subsidiaries for
the payment of any amounts of the type described in (i) as a result of any
express or implied tax-sharing, tax-allocation, or tax-indemnity agreement.
3.12. Solvency. The Company is not insolvent and the Company
will not be rendered insolvent by the occurrence of the transactions
contemplated by this Agreement. Except as caused by any intercompany liability
or intercompany receivable, no Subsidiary is insolvent. In addition, at the
Effective Time after giving effect to the consummation of the transactions
contemplated by this Agreement, (i) the Company will be able to pay its debts
as they become due, (ii) the property of the Company will not constitute
unreasonably small capital, and the Company will not have insufficient capital
with which to conduct its business, and (iii) taking into account pending and
threatened litigation, final judgments against the Company in actions for money
damages are not reasonably anticipated to be rendered at a time when, or in
amounts such that, the Company will be unable to satisfy any such judgments
promptly in accordance with their terms. As used in this Section 3.12,
"insolvent" means that the sum of the present fair salable value of a person's
assets does not exceed its debts and other probable liabilities, and "debts"
includes any legal liability, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed, or contingent, disputed or undisputed, or
secured or unsecured.
3.13. Title to Properties. Except as reflected on Schedule 3.13,
each of the Company and the Subsidiaries has good and indefeasible fee or
leasehold title to the assets reflected in its books and records as being owned
or leased, including the real and personal properties reflected in the Interim
Balance Sheets (except as have been disposed of since the Balance Sheet Date in
transactions in the ordinary course of business that either are not required to
be disclosed pursuant to Section 3.9 or are so disclosed). All of such assets
are free and clear of any lien, claim, or encumbrance, except as reflected in
the Company Financial Statements or notes thereto and except for (i) liens for
taxes, assessments, or other governmental charges not yet due and payable; (ii)
statutory liens incurred in the ordinary course of business that are not yet
due and payable; and (iii) landlord or lessor liens contained in or arising by
operation of law in connection with leases entered into in the ordinary course
of business. All properties and assets material to the present operations of
the Company and each of the Subsidiaries are owned or leased by the Company and
each such Subsidiary and, except for those assets acquired since the Balance
Sheet Date, are reflected on the Company Financial Statements and notes thereto
in the manner and to the extent required by GAAP.
3.14. Condition of Tangible Assets. The tangible assets of the
Company and each of the Subsidiaries as reflected in the Interim Balance Sheet
are in good operating condition and repair, subject only to ordinary wear and
tear, and are adequate for the uses to which they are presently being put by
the Company and
12
<PAGE> 141
conform with all applicable ordinances, regulations, and laws. No improvement
or structure on any of the real property leased or subleased by the Company or
any Subsidiary (i) is, or has been within the lesser of the last 12 months or
the length of time the Company or any Subsidiary has leased the real property,
damaged by any casualty or act of God (whether or not covered by insurance),
(ii) is, or has been within the lesser of the last 12 months or the length of
time the Company or any Subsidiary has leased the real property, subject to any
taking or condemnation proceeding, or (iii) to the knowledge of the Company
encroaches on any adjacent real property.
3.15. Contracts. Schedule 3.15 is a complete and accurate list
of all of the following categories of contracts and commitments (including
summaries of the principal terms of oral contracts) to which the Company or any
of the Subsidiaries is a party or bound or by which any of their assets are
subject (the "Commitments"), excluding (i) any contracts that are terminable by
either party without cause on 30 days' notice and (ii) contracts which involve
payments in the aggregate of $10,000 or less:
(a) contracts with any labor union; employee benefit
or bonus plans or contracts; employment, consulting, compensation or
similar contracts, including confidentiality agreements;
(b) leases, whether as lessor or lessee; loan
agreements, mortgages, indentures, instruments of indebtedness, or
commitments involving indebtedness for borrowed money or money loaned
to others; guaranty or suretyship, performance bond, indemnification,
or contribution agreements; license agreements, assignments or
arrangements relating to Proprietary Assets (as hereinafter defined);
(c) contracts which cannot be terminated without
penalty upon 30 or fewer days' prior notice;
(d) insurance policies;
(e) deeds or other documents evidencing an interest in
or contract to purchase or sell real property;
(f) deeds of trust, mortgages, indentures, or other
security agreements;
(g) distribution, marketing, dealership or sales
agreements or agreements with commission agents, public relations or
advertising agencies, accountants, or attorneys;
(h) powers of attorney, including with regard to tax
matters;
(i) partnership or joint venture agreements;
13
<PAGE> 142
(j) contracts containing a noncompetition covenant or
other restriction on conducting business;
(k) agreements relating to any matter or transaction
in which an interest is held by a person which is an "affiliate" of
the Company as that term is defined in Rule 144(a)(i) under the
Securities Act of 1933, as amended (the " Securities Act"), or any
"associate" of any such affiliate as that term is defined in
Regulation 14A of the general rules and regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(l) all franchise agreements, whether the Company or
any Subsidiary is the franchisee or the franchisor;
(m) other contracts which involve aggregate payments
to or by the Company or any of its Subsidiaries of $10,000 or more;
and
(n) contracts or commitments made by the Company or
any Subsidiary granting any person any right to develop, franchise,
license, own, manage, or operate the Company's stores or any other
comparable store.
The Company has furnished or made available to Acquisition or Ace accurate and
complete copies of the Commitments. All of the Commitments are valid, binding,
and enforceable. There is no existing breach, violation, default, event of
default or event, occurrence or act by the Company, the Subsidiaries, or, to
the Company's knowledge, by any other party thereto that, with or without the
giving of notice, lapse of time, or the occurrence of any other event, would
constitute a default on any Commitment, nor is there any valid basis for any
claim of default by any party against the Company or the Subsidiaries or, to
the Company's knowledge, by the Company or the Subsidiaries against any other
party relating to the Commitments. There is no material dispute among the
parties to any Commitment and no penalty has been incurred with respect
thereto. No defenses, offsets, or counterclaims have been asserted or, to the
knowledge of the Company, may be made by any party to, nor has the Company
waived any material rights thereunder, except as described in Schedule 3.15.
Except as set forth in Schedule 3.15, there is no material liability, whether
accrued, contingent, or otherwise (known or unknown and asserted or
unasserted), arising out of transactions effected or events relating to the
Company, any Subsidiary, or their assets. The Company is not a party to, and
none of its assets are subject to or otherwise affected by, any agreement or
instrument, or any charter or other restriction, or any judgment, order, writ,
injunction, decree, rule, or regulation, that could or does materially
adversely affect the Company, any Subsidiary, or their assets. The Company is
not aware of any plan or intention of any other party to any Commitment to
exercise any right to cancel or terminate any Commitment in advance of its
normal maturity or termination date or any facts presently existing that would
justify the exercise of such right. Neither the Company nor any of the
14
<PAGE> 143
Subsidiaries currently contemplate any amendment or change to any Commitment
except as indicated on Schedule 3.15. Except as indicated on Schedule 3.15,
neither the Company nor any of the Subsidiaries is in violation of or default
under, nor has any event occurred that, with the lapse of time or the giving of
notice or both, would constitute a violation of or default under or pursuant
to, the articles or certificate of incorporation or bylaws of the Company or
any of the Subsidiaries.
3.16. Litigation and Government Claims. Other than as set forth
on Schedule 3.16, there is no pending suit, claim, action, or litigation, or
governmental, administrative, arbitration, or other proceeding or governmental
investigation or inquiry, against the Company or any of the Subsidiaries or to
which any of their business or assets are subject. None of such pending
matters will, severally or in the aggregate, have a material adverse effect on
the results of operations, assets, or condition, financial, or otherwise, of
the Company, any Subsidiary or their assets. Except as described on Schedule
3.16, to the knowledge of the Company, there are no claims (whether or not the
potential claimant may be aware of the claim) of any nature that might be
asserted against the Company or a Subsidiary that would, severally or in the
aggregate, have an adverse effect on the results of operations, assets,
condition (financial or otherwise), or prospects of the Company, any
Subsidiary, or their assets. Neither the Company nor any Subsidiary is a party
to or subject to any judgment, order, injunction, or decree entered in any suit
or proceeding brought by any governmental authority or any other person.
3.17. Necessary Approvals and Consents. Except as set forth on
Schedule 3.17 and other than (i) the filing of the Articles of Merger with the
Secretary of State of Florida and (ii) filing the Proxy Statement with the SEC
and compliance with federal and applicable state securities laws, no
authorization, consent, permit, or license or approval of, or declaration,
registration, or filing with, any person or governmental or regulatory
authority or agency is necessary for the execution and delivery by the Company
of this Agreement, and the other agreements executed or to be executed by it in
connection with this Agreement and the consummation by the Company of the
transactions contemplated by this Agreement and the ownership and operation by
the Surviving Corporation of the Company's business and properties after the
Closing Date in substantially the same manner as now owned and operated.
3.18. Licenses and Permits. The Company and each Subsidiary
possess those licenses, authorizations, and permits in connection with or
relating to their business indicated on Schedule 3.18, correct and complete
copies of which have been delivered to Ace or Acquisition (collectively, the
"Permits"). The Permits constitute all of the licenses, authorizations, and
permits necessary under law or otherwise for the Company and the Subsidiaries
to conduct their business as now being conducted and to own, operate, maintain,
and use their assets in the manner in which they are now being operated,
maintained, and used. Each Permit and the
15
<PAGE> 144
Company's or the Subsidiary's rights with respect thereto is valid and
subsisting, in full force and effect, and enforceable by the Company or
Subsidiary, as the case may be. Each of the Company and the Subsidiary is in
compliance with the terms of its Permits. None the Permits has been, or to the
knowledge of the Company, are threatened to be, revoked, canceled, suspended,
or modified.
3.19. Compliance with Laws. Except as set forth in Schedule
3.19, the Company and each Subsidiary is in compliance with all applicable laws
and regulations, including the currency transaction reporting requirements of
the Bank Secrecy Act and the provisions of applicable laws, rules, and
regulations concerning check-cashing, money-order sales, and money-order
remittances. Assuming the filings, approvals and consents set forth in
Schedule 3.17 are obtained or filed before or at the Closing, neither the
execution, delivery, and performance by the Company of this Agreement or the
other agreements and documents to be executed by it in connection with this
Agreement nor the consummation by it of the transactions contemplated hereby or
thereby will violate any applicable law, rule, or regulation or any judgment,
decree, injunction, or order of any court or other governmental authority
having jurisdiction over the Company or any Subsidiary or any of their
respective assets.
3.20. Regulatory Reports. Except as indicated on Schedule 3.20:
(a) The Company and the Subsidiaries have filed all
reports, registrations, and statements, together with any amendments
required to be made thereto, that are required to be filed with any
state or federal regulatory agency or authority in connection with the
offering and sale of franchises by the Company or any Subsidiary. The
Company and the Subsidiaries have filed with the appropriate
regulatory agencies and authorities within the applicable filing
period all reports required to be filed by the Company and the
Subsidiaries relating to its check cashing business including, without
limitation all Currency Transaction Reports. All such reports,
registrations and statements filed by the Company and the Subsidiaries
are true, correct, and complete. No fine, penalty, or charge has been
assessed against the Company and the Subsidiaries in connection with
the filing of, or the failure to file, such reports, registrations and
statements.
(b) The Company is subject to the reporting provisions
of Section 12 of the Exchange Act, and the rules and regulations of
the SEC promulgated under Section 12 of the Exchange Act. Since the
Company first became subject to the reporting provisions of the
Exchange Act, the Company has filed all required forms, reports, and
documents with the SEC required to be filed by it pursuant to the
Exchange Act and the SEC rules and regulations thereunder, all of
which, as thereafter amended (collectively, the " Company SEC
Reports"), have, except as to timeliness of filings due prior to
January 1, 1994, complied in all material respects with all applicable
16
<PAGE> 145
requirements of the Exchange Act and the rules promulgated thereunder.
None of the Company SEC Reports, including, without limitation, any
financial statements or schedules included therein, at the time filed,
as thereafter amended, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No
amendment to any Company SEC Report, or the facts or circumstances
underlying the need for such amendment, have subjected or is expected
in the future to subject the Company or the Surviving Corporation to
any liability, fine, restriction, or other penalty.
(c) The Proxy Statement will, at the time it is filed
with the SEC, mailed to the Shareholders, and at any time prior to the
Shareholders' Meeting, (i) not contain any false or misleading
statement with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading
and (ii) comply in all respects with the federal securities laws, the
rules and regulations promulgated by the SEC, applicable state
securities laws, and the rules and regulations promulgated by any
applicable state securities commission.
3.21. Intellectual Property and Advertising.
(a) Set forth on Schedule 3.21 is a list of the
permits, licenses, and registrations to use the trade or service
marks, patents, copyrights, trade dress, trade designations,
processes, operational manuals, techniques, and similar property
(collectively, the "Proprietary Assets") owned or used by the Company
or any of the Subsidiaries. Each of the Company and the Subsidiaries
owns or has the unrestricted right to use all of the Proprietary
Assets necessary to operate its business. Each of the Company and the
Subsidiaries has the right to use the Proprietary Assets without
infringing or violating the rights of any other person. No claim has
been asserted by any person challenging the validity of the
Proprietary Assets or the use thereof by the Company or any of the
Subsidiaries. The Proprietary Assets used by the Company or any of
the Subsidiaries in its operations may continue to be so used without
the consent of, or payment of consideration to, any other person.
(b) The Company has used its best efforts to set forth
on Schedule 3.21 a list of all advertisements, marketing material, and
any other materials used in the media by any of the Company or the
Subsidiaries in advertising or describing the Company's or any of the
Subsidiaries' products or services, including, but not limited to,
scripts, jingles, and slogans.
17
<PAGE> 146
3.22. Insurance. Each of the Company and the Subsidiaries
maintains insurance coverage as set forth on Schedule 3.22, which coverage is
with duly licensed and reputable carriers, sufficient for compliance with all
requirements of law and all agreements to which the Company or any of the
Subsidiaries is a party and sufficiently insures its properties and assets.
All premiums due for such insurance coverage have been paid or accrued for in
the Interim Balance Sheet. The Company and the Subsidiaries have not received
any notices from any insurance company of any defects or inadequacies in the
property owned or leased by them or any part thereof which would adversely
affect the insurability of such property or the premiums for the insurance
thereof. In the last five years, no insurance policy of the Company or any
Subsidiary has been terminated by the insurer prior to the end of the term of
the policy and no insurance company, firm, or agency has refused or declined to
insure the Company or any Subsidiary.
3.23. Labor and Employee Relations. With respect to all
employees of the Company or any Subsidiary:
(a) the Company and the Subsidiaries are in compliance with all
applicable laws respecting employment and employment practices, terms, and
conditions of employment, and wages and hours;
(b) there is no collective bargaining agreement or other labor
union contract applicable to any employee of the Company or the Subsidiaries,
and no such agreement or contract has been requested;
(c) the Company has no knowledge of any union organization
activities or proceedings involving any employees of the Company or its
Subsidiaries;
(d) there is no unfair labor practice complaint against the
Company or its Subsidiaries pending before the National Labor Relations Board
or, to the knowledge of the Company, so threatened, and neither Company nor any
Subsidiary is engaged in any unfair labor practice or is aware of any problems
with employees that could have an adverse effect on the Company or any
Subsidiary;
(e) there is no strike, labor dispute, slowdown, stoppage, or
other material interference with, or impairment of, the Company or any
Subsidiary by labor actually pending or, to the knowledge of the Company,
threatened or contemplated; and
(f) except as set forth on Schedule 3.23, there exists (i) no
charge of discrimination, lawsuit or threatened lawsuit involving any violation
of any fair employment law, wage payment law, or occupational health and safety
law, and (ii) no pending or, to the knowledge of the Company, threatened
litigation arising out of any present or past employment relationship or
employment-related law.
18
<PAGE> 147
3.24. Employee Benefit Plans and Arrangements; ERISA.
(a) Schedule 3.24 contains a complete and correct list of each
pension, profit-sharing, thrift, or other retirement plan, employee stock
ownership plan, deferred compensation, stock option, stock purchase,
performance share, bonus, or other incentive plan, severance plan, health,
group insurance, or other welfare plan, or other similar plan, agreement,
policy, or understanding, including any "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), under which the Company or any other corporation or trade
or business under common control with the Company (an "ERISA Affiliate") as
determined under Sections 414(b), (c), or (m) of the Internal Revenue Code of
1986, as amended (the "Code"), has any current or future obligation or
liability or under which any present or former employee of the Company or an
ERISA Affiliate has any current or future right to benefits (each such plan,
agreement, policy, or understanding being hereinafter referred to individually
as a "Plan"). The Company has made available to Acquisition or Ace correct and
complete copies of (i) each Plan which covers any present or former employee of
the Company or an ERISA Affiliate, (ii) the latest actuarial report, if any,
prepared for each such Plan, (iii) the summary plan description, if any, for
each such Plan, (iv) the most recent Internal Revenue Service determination
letter with respect to each such Plan, if applicable, and (v) the latest annual
report (Form 5500 or 5500-C), if any, which has been filed with the Internal
Revenue Service for each such Plan. Except as set forth in Schedule 3.24, no
Plan which is subject to Part 3 of Subtitle B of Title I of ERISA or Section
412 of the Code has incurred an "accumulated funding deficiency" as defined in
Section 302 of ERISA or Section 412 of the Code (whether or not waived).
Neither the Company nor any ERISA Affiliate has ever sponsored, adopted,
maintained, or been obligated to contribute to a "multiemployer plan" as such
term is defined in Section 3(37) of ERISA. No liability under Title IV of
ERISA has been incurred by the Company or an ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company or an ERISA Affiliate of incurring liability under Title IV of ERISA,
other than for premiums due to the Pension Benefit Guaranty Corporation. The
Company has made or will make all contributions required to be made by Seller
under any Plan for all periods through and including the Closing Date.
(b) Each Plan that is intended to be qualified under Section
401(a) of the Code is and has been at all times so qualified, and any related
trust is and has been at all times exempt from federal income taxation under
Section 501 of the Code. Each trust described in Section 501(c)(9) of the Code
is and has been at all times exempt from federal income taxation under Section
501(a) of the Code. There are no actions, claims, lawsuits, or arbitrations
(other than routine claims for benefits) pending, or to the knowledge of the
Company, threatened with respect to any Plan or the assets of any of the trusts
under any of the Plans, and the Company has no knowledge of any facts or
circumstances which, in its or his reasonable judgment, could give rise to any
such
19
<PAGE> 148
actions, claims, lawsuits, or arbitrations (other than routine claims for
benefits).
(c) Neither the Company nor any ERISA Affiliate has engaged in
a transaction which would subject the Company or any ERISA Affiliate to tax,
penalty, or liability imposed by ERISA or the Code, including a tax under
Sections 4975, 4976 and 4980B of the Code. There are no contracts,
arrangements, or understandings pursuant to which the Company or an ERISA
Affiliate is obligated to provide medical or other welfare benefits to any
person following retirement or other termination of employment (except to the
extent required by Part 6 of Subtitle B of Title I of ERISA). No lien has been
filed by any person or entity on the assets of the Company or any ERISA
Affiliate relating to the operation or maintenance of the Plans, and no lien
exists by operation of law or otherwise on the assets of the Company as a
result of the operation or maintenance of the Plans or any other similar plan
or plans, and Company has no knowledge of the existence of facts or
circumstances which, in its or his reasonable judgment, could result in the
imposition of such a lien.
3.25. Corporate Name. Except as set forth on Schedule 3.16,
there are no actions, suits, or proceedings pending or, to the knowledge of the
Company, threatened or which may be asserted against or affecting the Company
or any Subsidiary which may result in any impairment of the right of the
Company or any Subsidiary to use their corporate name.
3.26. Compliance with Environmental Laws.
Except as set forth on Schedule 3.26, neither the Company, nor any
Subsidiary nor any real property or facility currently or formerly leased,
used, or operated by the Company or any Subsidiary, nor any of the other assets
of the Company or any Subsidiary is in violation of, or has violated, or is or
has been in noncompliance with any federal, state, or local laws, rules, or
regulations, including any judicial or administrative interpretations thereof
or any judicial or administrative orders or judgments, relating to health,
safety, pollution, waste, or other environmental matters (collectively,
"Environmental Laws"). Without limiting the generality of the preceding
sentence:
(a) except in accordance with applicable Environmental Laws
(including the obtaining of any necessary permits thereunder), no Materials of
Environmental Concern (as hereinafter defined) have been used, generated,
manufactured, stored, treated, or Released (as hereinafter defined) on, under,
or about any real property or facility currently or formerly leased, used, or
operated by the Company or any Subsidiary, and no Materials of Environmental
Concern are included in any of the assets of the Company or any Subsidiary;
(b) neither the Company nor any Subsidiary has been named as a
responsible or potentially responsible party under, and none of the real
property or facilities leased, used, or operated by the
20
<PAGE> 149
Company or any Subsidiary has been nominated or identified as a facility which
is subject to an existing or potential claim under, any Environmental Law, and
none of such real property or facilities is subject to any lien, claim, or
encumbrance arising under any Environmental Law;
(c) neither the Company nor any Subsidiary is now or will be in
the future, as a result of the operation of its business or assets before the
Closing, subject to any (i) contingent liability in connection with any Release
or threatened Release of any Materials of Environmental Concern, whether on or
off any real property or facility currently or formerly leased, used, or
operated by the Company or any Subsidiary, or (ii) reclamation or remediation
requirements under Environmental Laws, or any reporting requirements related
thereto;
(d) except as set forth on Schedule 3.26, there are no
underground storage tanks, pits, sumps, or impoundments (as defined under
Environmental Laws) located under any real property or facility currently or
formerly leased, used, or operated by the Company or any Subsidiary;
(e) neither the Company nor any Subsidiary has received any
notice of any Release or threatened Release of Materials of Environmental
Concern or of any violation of, noncompliance with, or remedial obligation
under Environmental Laws relating to the ownership, use, maintenance, operation
of, or conduct of business related to any real property or facility currently
or formerly leased, used, or operated by the Company or any Subsidiary, nor is
there any reasonable basis for any of the foregoing; and
(f) neither the Company nor any Subsidiary has agreed to,
assumed, or retained, by contract or otherwise, any obligation, undertaking, or
liability arising out of or relating to Environmental Laws relating to the
Company, any Subsidiary or their assets.
As used in this Section 3.26, (i) "Materials of Environmental Concern" means
any solid or hazardous waste, hazardous substance, pollutant, contaminate, or
other product or substance that is listed, regulated, or designated as toxic or
hazardous, or with respect to which remedial obligations may be imposed, under
any Environmental Laws, and (ii) "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the environment (including the abandonment
or discarding of barrels, containers, and other closed receptacles containing
any Materials of Environmental Concern.
3.27. Employees and Consultants. Set forth on Schedule 3.27 is a
complete and accurate list of all employees of the Company, together with their
positions and their current annual salaries and other compensation, including
accruals for vacations. Except as set forth on Schedule 3.27, (i) within the
last 12 months, the Company has not granted or become obligated to grant any
increases
21
<PAGE> 150
in the wages or salary of, or paid or become obligated to pay any bonus or made
or become obligated to make any similar payment to or grant any benefit to or
on behalf of, any employee or agent other than in the ordinary course of
business and to the extent any employees wages or salary was increased by less
than 20%, and (ii) neither the Company nor any Subsidiary has direct or
indirect, express or implied, obligation to pay severance or termination pay to
any employee of the Company or a Subsidiary, or to pay any amounts to any
consultant, agent, or similar person. Complete and accurate employee policy
manuals of the Company and the Subsidiaries have been delivered to Ace. If
such terms are not set forth in writing, Schedule 3.27 sets forth each of the
Company's and the Subsidiaries' practices with regard to conditions and terms
of employment and termination benefits with respect to such employees.
3.28. Pricing. Schedule 3.28 is a complete and accurate (i) list
of the Company's current standard fees and charges relating to the Company and
(ii) description of all changes or revisions thereto made or effected or
proposed in the last 12 months.
3.29. Brokers and Finders. Except as to the obtaining of an
opinion as to the fairness of the Merger to the Shareholders, as referred to
elsewhere in this Agreement, the fees and expenses of which will be paid by the
Company prior to the Closing, the Company has not engaged any person to act or
render services as a broker, finder, or similar capacity in connection with the
transactions contemplated hereby, and no person has, as a result of any
agreement or action by the Company, any right or valid claim against the
Company, Ace, Acquisition, or any of Ace's affiliates for any commission, fee,
or other compensation as a broker or finder, or in any similar capacity, in
connection with the transactions contemplated hereby.
3.30. Accuracy of Information Furnished. No representation or
warranty made by the Company in this Agreement (including all of the Exhibits
and Schedules), or in any document or instrument delivered by the Company
pursuant to this Agreement, contains or will on the Closing Date contain any
untrue statement of a material fact or omits or will on the Closing Date omit
to state a material fact necessary to make the statements contained herein or
therein not misleading under the circumstances under which such statements are
made. The Company has provided to Acquisition and Ace originals or true,
correct, and complete copies of all information and documents referred to in
the Schedules and otherwise requested in writing by counsel to Acquisition and
Ace.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND ACE
Ace and Acquisition, jointly and severally, represent and warrant to
the Company as follows:
22
<PAGE> 151
4.1. Organization and Good Standing. Ace is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Texas. Acquisition is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Florida.
4.2. Power and Authority. Acquisition has the corporate power
and authority and all licenses and permits required by governmental authorities
to own, lease, and operate its properties and assets and to carry on its
business as currently being conducted.
4.3. Authority and Validity. Each of Acquisition and Ace has
the corporate power and authority to execute, deliver, and perform its
obligations under this Agreement and the other documents executed or to be
executed by Acquisition and Ace, as appropriate, in connection with this
Agreement, and the execution, delivery, and performance by each of Acquisition
and Ace of this Agreement and the other documents executed or to be executed by
Acquisition and Ace, as appropriate, in connection with this Agreement have
been duly authorized by all necessary corporate action.
4.4. Binding Effect. This Agreement and the other documents
executed or to be executed by either Acquisition or Ace in connection with this
Agreement have been or will have been duly executed and delivered by
Acquisition or Ace, as appropriate, and are or will be, when executed and
delivered, the legal, valid, and binding obligations of Acquisition and Ace.
4.5. Compliance with Other Instruments. The execution and
delivery by Acquisition and Ace of this Agreement and the consummation by each
of them of the transactions contemplated hereby will not violate, breach, be in
conflict with, or constitute a default under, or permit the termination or the
acceleration of maturity of, or result in the imposition of any lien, claim, or
encumbrance upon any property or asset of Acquisition or Ace pursuant to, the
articles of incorporation or bylaws of either Acquisition or Ace, or any note,
bond, indenture, mortgage, deed of trust, evidence of indebtedness, loan or
lease agreement, other agreement or instrument, judgment, order, injunction, or
decree by which either Acquisition or Ace is bound, to which either of them is
a party, or to which either of their assets are subject.
4.6. Proxy Statement. None of the information supplied or to be
supplied by either of Acquisition or Ace for inclusion in the Proxy Statement
will be, at the time it is filed with the SEC or when it is first mailed to the
Shareholders, false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that the Company will deliver to Acquisition and Ace a
complete and accurate copy of the Proxy Statement for their review and comment
within a reasonable time prior to the filing of
23
<PAGE> 152
such Proxy Statement with the SEC and the mailing of such Proxy Statements to
the Shareholders.
4.7. Necessary Approvals and Consents. Other than filing the
Articles of Merger with the Secretary of State of Florida and the consents set
forth on Schedule 4.7, no authorization, consent, permit, or license or
approval of, or declaration, registration, or filing with, any person or
governmental or regulatory authority or agency is necessary for the execution
and delivery by each of Acquisition and Ace of this Agreement and the other
agreements executed or to be executed by them in connection with this Agreement
and the consummation by them of the transactions contemplated by this
Agreement.
4.8. Brokers and Finders. Ace and Acquisition have not engaged
any person to act or render services as a broker, finder, or similar capacity,
and no person has, as a result of any agreement or action by the Ace or
Acquisition, any right or valid claim against the Company, Ace, Acquisition, or
any of the Company's affiliates for any commission, fee, or other compensation
as a broker or finder, or in any similar capacity.
ARTICLE V
JOINT COVENANTS
The Company, Acquisition and Ace, jointly and severally, covenant with
each other as follows:
5.1. Notice of any Material Change. The Company, on the one
hand, and Acquisition and Ace, on the other hand, shall, promptly after the
first notice or occurrence thereof but not later than the Closing Date, advise
the other in writing of any event or the existence of any state of facts that:
(a) would make any of the notifying party's or
parties' representations and warranties in this Agreement untrue in
any material respect; or
(b) would otherwise constitute a material adverse
change in the business, results of operation, working capital, assets,
liabilities, or condition (financial or otherwise) of the notifying
parties taken as a whole.
Except as contemplated by Section 6.3, no supplement or amendment to any
Schedules shall have any effect for the purpose of determining the satisfaction
of or compliance with the conditions to the obligations of the parties set
forth in Article VIII of this Agreement.
5.2. Cooperation. Each of the parties hereto shall, and shall
cause each of its affiliates to, use its best efforts to:
(a) proceed promptly to make or give the necessary
applications, notices, requests, and filings at the earliest
24
<PAGE> 153
practicable date and, in any event, before the Closing Date, to obtain
the approvals, authorizations, and consents necessary to consummate
the transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in
connection with this Agreement; and
(c) take such actions as the other parties may
reasonably request to consummate the transactions contemplated by this
Agreement and use its and their best efforts and diligently attempt to
satisfy, to the extent within its and their control, all conditions
precedent to the obligations to close this Agreement.
5.3. Press Releases. The parties hereto agree that all press
releases and other announcements relating to this Agreement and the other
agreements, documents, and instruments executed and delivered in connection
herewith and the transactions contemplated hereby and thereby will be prepared
jointly by the Company and Ace; provided, however, the foregoing shall not
prevent any disclosure by the Company or Ace that may be necessary to comply
with the Exchange Act, regulations promulgated by SEC, any other Federal or
state law, or any listing agreement with the NASDAQ National Market after
written notice to the other parties hereto no later than three days prior to
such disclosure or, if three days' notice is not practicable, at the earliest
possible time. Notwithstanding the foregoing, no party hereto shall be liable
for any disclosure made by a third party beyond the reasonable control of such
party.
5.4. SEC Filings. Until the Effective Time, the Company and Ace
will promptly provide each other (or their respective counsel) copies of all
filings made by such party with the SEC or any other Governmental Body in
connection with this Agreement and the transactions contemplated hereby.
5.5. Confidentiality. Except to the extent required otherwise
by applicable law or any Government Body, subpoena, civil investigative demand
or other similar process, each of the parties hereto will treat confidentially,
and not use or disclose except as contemplated by Agreement, all information
provided to one party by the other and designated as confidential. No
information will be deemed confidential and subject to this Section 5.5 if it
is developed independently by a party, was available to a party prior to the
date August 21, 1995 or is or becomes generally available to the public other
than as a result of a breach by a party of its obligations under this Section
5.5. Neither Ace or Acquisition nor the Company shall publicly disclose any
information relating to discussions or negotiations between Ace and the Company
except (i) press releases pursuant to Section 5.3, (ii) Ace, Acquisition and
the Company may continue such communications with employees, customers,
suppliers, franchisees, lenders, lessors, shareholders, and other particular
groups as may be legally required or necessary or appropriate and not
inconsistent with the best interests of the other party or the prompt
consummation of the transactions contemplated by this Agreement and (iii) as
required by any law rule or regulation. The provisions of this Section 5.5
will survive the termination of this Agreement and any negotiations and
discussions between Ace, Acquisition and the Company for a period of one year
after such termination.
25
<PAGE> 154
ARTICLE VI
COVENANTS OF THE COMPANY
The Company covenants and agrees with Acquisition and Ace as follows:
6.1. Access. During the period pending the Closing Date, the
Company shall afford to Acquisition, Ace, and their officers, employees,
accountants, counsel, and other authorized representatives, full access to and
the right to inspect, review, and make copies, as appropriate of its and the
Subsidiaries' assets, properties, books, contracts, commitments, and records,
view the Company's physical properties and communicate with key employees and
customers and suppliers of the Company on a basis reasonably satisfactory to
Ace. The Company will furnish or use its best efforts to cause representatives
to furnish promptly to Acquisition and Ace such additional financial and
operating data and other documents and information (certified if requested and
reasonably susceptible to certification) relating to its and their business and
properties as Acquisition, Ace, or their duly authorized representatives may
from time to time reasonably request.
6.2. Conduct of Business Prior to Closing Date. During the
period pending the Closing Date,
(a) the Company shall conduct its and each of the
Subsidiaries' operations in the ordinary and usual course of business
consistent with past and current practices, and shall use its best
efforts to maintain and preserve intact its and each of the
Subsidiaries' business organization and goodwill, to retain the
services of its and each of the Subsidiaries' key officers and
employees, and to maintain satisfactory relationships with all persons
having business relationships with it and them;
(b) the Company shall in good faith advise one or more
representatives of Acquisition and Ace as reasonably requested of
material operational matters and the general status of ongoing
operations of the Company and the Subsidiaries to the extent known;
(c) the Company shall notify Acquisition and Ace of
any emergency or other change in the normal course of the Company's or
any of the Subsidiaries' business and of any governmental complaints,
investigations, or hearings (or communications indicating that the
same may be contemplated), if such emergency, change, complaint,
investigation, or
26
<PAGE> 155
hearing would be material to the Company's or any of the Subsidiaries'
business and properties, taken as a whole, including, without
limitation, complaints, investigations, or hearings relating to any
franchises, licenses, or permits held or granted by the Company or any
of the Subsidiaries;
(d) the Company will not initiate, solicit or
encourage (including by way of furnishing non-public information or
assistance), or take any other action intended or designed, directly
or indirectly, to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to,
any Competing Transaction (as hereinafter defined), or enter into
discussions or negotiate with any person or entity or otherwise
cooperate in any way in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize any of the officers, employees, agents,
representatives or directors of the Company to take any such action,
and the Company shall direct and instruct and use its best efforts to
cause the directors, officers, employees, agents, and representatives
of the Company (including, without limitation, any investment banker,
financial advisor, attorney, or accountant retained by the Company)
not to take any such action, and the Company shall promptly notify Ace
if any such inquiries or proposals are received by the Company or any
of its or their respective officers, directors, employees, agents,
investment bankers, financialadvisors, attorneys, accountants, or
other representatives, and the Company shall promptly inform Ace as to
the material terms of such inquiry or proposal and, if in writing,
promptly deliver or cause to be delivered to Ace a copy of such
inquiry or proposal, and the Company shall keep Ace informed, on a
current basis, of the nature of any such inquiries and the status and
terms of any such proposals; provided, however, that nothing contained
in this subsection (d) shall prohibit the Company or any of its
directors, officers, employees, or agents from (i) reviewing,
confirming, or responding to an unsolicited bona fide proposal, or
inquiry that could lead to such a proposal, to acquire the Company
pursuant to a merger, consolidation, share exchange, business
combination, or other similar transaction (a "Bona Fide Proposal"),
provided that the Company shall provide written notice to Ace of such
Bona Fide Proposal, (ii) furnishing information to, or discussing or
negotiating with, any person or entity that makes a Bona Fide
Proposal, if, and only to the extent that, (A) the Board of Directors
of the Company, after consultation with legal counsel, determines in
good faith that such action is required or may reasonably be required
for the Board of Directors of the Company to comply with its fiduciary
duties to Shareholders imposed by Florida Law, (B) prior to furnishing
such information to such person or entity, the Company provides
written notice to Ace to the effect that the Company is furnishing
information to, or entering into discussions or negotiations with,
such person or entity, (C) prior to furnishing such information to
such person or entity,
27
<PAGE> 156
the Company receives from such person or entity an executed
confidentiality agreement with similar terms to the Confidentiality
Agreement dated August 21, 1995, between the Company and Ace and (D)
the Company keeps Ace informed, on a current basis, of the status of
any such discussions or negotiations; or (iii) complying with Rule
14e-2 promulgated under the Exchange Act or with any other applicable
Federal or state law with regard to a Competing Transaction. For
purposes of this Agreement, " Competing Transaction" shall mean any of
the following (other than the transactions contemplated by this
Agreement): (1) any merger, consolidation, share exchange, business
combination, or other similar transaction; (2) any sale, lease,
exchange, mortgage, pledge, transfer, or other disposition of ten
percent or more of the assets of the Company or issuance of ten
percent or more of the outstanding voting securities of the Company in
a single transaction or series of transactions; (3) any tender offer
or exchange offer for ten percent or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement
under the Securities Act in connection therewith; (4) any solicitation
of proxies in opposition to approval by the Shareholders of the
Merger; (5) any person shall have acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under Section 13(d) of the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, ten percent or more of the then outstanding shares of
capital stock of the Company; (6) any person or group shall have
acquired "control" (as such term is defined in Rule 12b-2 promulgated
under the Exchange Act) of the Company; or (7) any agreement to, or
public announcement by the Company or any other person of a proposal,
plan or intention to, do any of the foregoing;
(e) the Company shall use its best efforts to take no
action that, and shall not fail to take any action the failure to take
which, would cause or permit its representations and warranties
contained in this Agreement to be untrue in any respect at the
Closing; and
(f) the Company shall not (i) declare, pay, or set aside
for payment any dividend or distribution with respect to its capital
stock; (ii) change the number of outstanding shares of Common Stock
into a different number of shares or a different class by reason of
any classification, recapitalization, split-up, combination, exchange
of shares, or readjustment or declare a stock dividend on the shares
of Common Stock with a record date within such period; (iii) issue
additional shares of Common Stock (except pursuant to the proper
exercise by Security Holders of Instruments already outstanding as of
the date of this Agreement), or options or warrants to purchase the
same, or securities convertible into the same; (iii) redeem, purchase,
or otherwise acquire any of the Common Stock, any Warrant, or any
Option, except for an amount not greater than the amount that
28
<PAGE> 157
would be paid under Section 1.5 with respect to such shares of Common
Stock, Warrants, or Options; (iv) make any material loan or advance to
any Shareholder, officer, director, or employee of the Company; or (v)
increase the compensation of or pay or accrue any bonus to any
employee of the Company other than in accordance with past established
practices.
6.3. New Schedule 3.17 and 3.6. The Company will furnish within
five business days after the date hereof, a new Schedule 3.17 which shall
specifically list matters requested in Section 3.17 and a new Schedule 3.6
which shall specifically list matters requested in Section 3.6. The new
Schedule 3.6 and Schedule 3.17 delivered pursuant to this Section 6.3 will be
in a form reasonably acceptable to Ace. The new Schedule 3.17 and Schedule 3.6
shall replace the Schedule 3.17 and Schedule 3.6 attached hereto on the date
hereof.
6.4. Shareholder Agreements. To the extent any Shareholder
Agreement has not been executed by the date hereof, the Company shall use its
best efforts to obtain an executed Shareholder Agreement from any shareholder
of the Company requested by Ace.
ARTICLE VII
COVENANTS OF ACE
Ace covenants and agrees with the Company as follows:
7.1. Release of Guaranties. Ace or the Surviving Corporation
shall promptly after the Closing Date use its best efforts to obtain the
release of the guarantees of Larry Lang ("Lang") listed on Schedule 7.1 of
indebtedness and other obligations of the Company described thereon; provided,
however, that Ace and the Surviving Corporation shall have no obligation
hereunder to provide any financial incentive to any third party for such
release.
7.2. Ace's Indemnity. Subject to the terms and conditions of
this Section 7.2, Ace hereby agrees to indemnify, defend, and hold Lang
harmless from and against any and all costs, loss, liability, damages,
lawsuits, claims, and expenses asserted against or incurred by him by reason of
or resulting from his performance of the guarantees listed on Schedule 7.1.
The obligations and liabilities of Ace to Lang under this Section 7.2 hereof
shall be subject to the following terms and conditions:
(a) Promptly after receipt of notice of commencement
of any action evidenced by service of process or other legal pleading,
and in any event within such period as may be necessary in order that
the rights of Ace will not be prejudiced after the assertion in
writing of any other claim by a third party, Lang shall give Ace
written notice thereof together with a copy of such claim, process, or
other legal pleading, and Ace shall have the right to undertake the
defense thereof by representatives of its own choosing and at
29
<PAGE> 158
its own expense; provided, however, that Lang may participate in the
defense with counsel of his own choice and at his own expense.
(b) In the event that Ace, by the 30th day after
notice of any such claim has been given to it by Lang (or, if earlier,
by the 5th day preceding the day on which an answer or other pleading
must be served in order to prevent judgment by default in favor of the
person asserting such claim), does not notify Lang that it has elected
to defend against such claim, Lang will have the right to undertake
the defense, compromise, or settlement of such claim on behalf of and
for the account and risk of Ace and at Ace's expense, subject to the
right of Ace to assume the defense of such claims at any time prior to
settlement, compromise, or final determination thereof. Lang will
notify Ace of any proposed settlement no later than three days before
such settlement is effected.
(c) Anything in this Section 7.2 to the contrary
notwithstanding, Ace shall not settle any claim without the consent of
Lang unless such settlement involves only the payment of money and the
claimant provides to Lang, in form and substance satisfactory to that
party, a release from all liability in respect of such claim. If the
settlement of the claim involves more than the payment of money, Ace
shall not settle the claim without the prior written consent of Lang,
which consent shall not be unreasonably withheld.
(d) Lang and Ace will each cooperate with all
reasonable requests of the other.
ARTICLE VIII
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or
before the Closing Date of each of the following conditions:
8.1. Compliance. Each of Acquisition and Ace shall have, or
shall have caused to be, satisfied or complied with and performed all terms,
covenants, and conditions of this Agreement to be complied with or performed by
Acquisition and Ace on or before the Closing Date.
8.2. Representations and Warranties. All of the representations
and warranties made by Acquisition and Ace in this Agreement and in all
certificates and other documents delivered by Acquisition and Ace to the
Company pursuant hereto or in connection with the transactions contemplated
hereby shall have been true and correct as of the date hereof, and shall be
true and correct at the Closing Date with the same force and effect as if such
representations and warranties had been made at and as of the Closing Date.
30
<PAGE> 159
8.3. Opinion. The Company shall have received the opinion of
counsel for Acquisition and Ace, dated the Closing Date, in form of Exhibit
"A".
8.4. Certificates. The Company shall have received a
certificate or certificates, executed on behalf of Acquisition and Ace by an
executive officer of Ace and Acquisition, to the effect that the condition
contained in Section 8.2 has been satisfied.
8.5. Proceedings. No action, proceeding, or order by any court
or governmental body or agency shall have been threatened in writing, asserted,
instituted, or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
8.6. Other Transactions. All of the agreements, documents, and
instruments contemplated hereby or attached as exhibits hereto shall be
executed and delivered, including, but not limited, those agreements,
documents, and instruments described in Section 1.5.
8.7. Fairness Opinion. The Company shall have received an
opinion from a financial adviser to be selected by the Company, in form and
substance reasonably satisfactory to the Company, to the effect that the Merger
is fair to the Shareholders from a financial point of view. All such fees and
expenses in connection with the fairness opinion shall be paid by the Company
prior to the Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF ACQUISITION AND ACE
Except as may be waived by Acquisition and Ace, the obligations of
Acquisition and Ace to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing Date,
of each of the following conditions:
9.1. Compliance. The Company shall have, or shall have caused
to be, satisfied or complied with and performed all terms, covenants, and
conditions of this Agreement to be complied with or performed by any of them on
or before the Closing Date, including without limitation the cancellation of
the Warrants and Options.
9.2. Representations and Warranties. All of the representations
and warranties made by the Company in this Agreement, the exhibits attached
hereto and in all certificates and other documents delivered by the Company
pursuant hereto or in connection with the transactions contemplated hereby,
shall have been true and correct as of the date hereof, and shall be true and
correct at the Closing Date with the same force and effect as if such
representations and warranties had been made at and as of the Closing Date,
except for changes permitted or contemplated by this Agreement.
31
<PAGE> 160
9.3. Opinions. Ace shall have received the opinion of counsel
for the Company, dated as of the Closing Date, in substantially the form of
Exhibit "B".
9.4. Material Adverse Changes. There shall have occurred no
material adverse change in the amount of $25,000 or more in the business,
properties, assets, liabilities, results of operations, prospects, or
condition, financial or otherwise, of the Company and the Subsidiaries taken as
a whole (whether or not the same is disclosed in financial statements or notes
thereto) from that reflected in the Company's consolidated balance sheet as of
June 30, 1995, and the related consolidated statements of income, changes in
shareholders' equity, and changes in cash flow for the year then ended, with
notes thereto.
9.5. Certificates. Acquisition and Ace shall have received a
certificate or certificates, executed by the Company, to the effect that the
conditions in Sections 9.2 and 9.4 have been satisfied.
9.6. Due Diligence. On or before the Closing Date, Acquisition
and Ace shall have completed their due diligence examination and investigation
of the Company and the Subsidiaries including, without limitation, the balance
sheet of the Company as of September 30, 1995 and the related consolidated
statements of income, changes in shareholder equity and changes in cash flow
for the nine months ending September 30, 1995 and shall be satisfied, such
satisfaction to be in Acquisition's and Ace's discretion, with the results of
such examination and investigation, including without limitation Ace's
satisfaction with the Company's financial condition and results of operation
and the terms and condition of any Commitment.
9.7. Approvals of Third Parties. The Company shall have obtained
all approvals and consents of third parties and any Government Body that are
necessary for the Company's consummation of the transactions contemplated by
this Agreement.
9.8. Consummation of the Merger; Dissenters' Rights. The Merger
shall have been approved by the Shareholders in accordance with the Florida
Act, and Shareholders owning in the aggregate more than five percentage of the
outstanding shares of the Common Stock shall not have properly demanded payment
for the fair value of their shares as dissenting Shareholders in the Merger.
In addition, all the Option Holders and the Warrant Holders shall have agreed
to surrender, either prior to or at the Closing, the Instruments owned by them
immediately prior to the Effective Time for the consideration provided in
Section 1.5 hereof.
9.9. Proceedings. No action, proceeding, or order by any court
or governmental body or agency shall have been threatened in writing, asserted,
instituted, or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
32
<PAGE> 161
9.10. Other Transactions. All of the agreements, documents, and
instruments contemplated hereby or attached as exhibits hereto shall be
executed and delivered, including, but not limited, those agreement, documents,
and instruments described in Section 1.5. Ace and the Exchange Agent shall
have entered into or at Closing will enter into an Exchange Agreement with
terms and conditions satisfactory to Ace.
9.11. Shareholder Agreement. Each Shareholder Agreement shall be
in full force and effect.
9.12. Financing. Ace shall have secured and closed a financing
arrangement acceptable to Ace in its sole discretion to fund the Exchange Fund
and have received the consent of its senior secured lender that is necessary
for Ace's consummation of the financing and transactions contemplated by this
Agreement.
9.13. Employment Agreements. All employment, severance and
change of control agreements to which the Company is a party (all of which are
listed on Schedule 3.15) shall have been terminated, settled, or resolved to
the satisfaction of Ace.
ARTICLE X
MISCELLANEOUS
10.1 Termination.
(a) This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this
Agreement and the Merger by the Shareholders:
(i) by mutual written consent of Ace and the Company;
(ii) by Ace or the Company at any time after January 31,
1996 (or such later date as shall have been agreed to in writing by
Ace and the Company) if any condition precedent to such party's
obligations to consummate the Merger has not by such date been
satisfied; provided, however that the party seeking to terminate this
Agreement pursuant to this Section 10.1(a)(ii) may do so only if such
terminating party shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have caused
the failure of such condition to be satisfied;
(iii) by Ace if there has been a breach by the Company of
any of its covenants or agreements contained in this Agreement, or if
any of the representations and warranties of the Company are not true
and correct as of the date hereof and as of the Closing (unless
expressly stated to be true as of another time).
(iv) by the Company if there has been a breach by either
of Ace or Acquisition of any of its covenants or agreements contained
in this Agreement, or if any of the
33
<PAGE> 162
representations and warranties of Ace are not true and correct as of
the date hereof and as of the Closing (unless expressly stated to be
true as of another time).
(v) by either Ace or the Company if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any Governmental Entity preventing or prohibiting
consummation of the Merger shall have become final and nonappealable;
(vi) by either Ace or the Company if the Agreement shall
fail to receive the requisite vote for approval and adoption by the
Shareholders of the Company;
(vii) by Ace if the Board of Directors of the Company
shall have recommended to the Shareholders any Bona Fide Proposal or
resolved to do so under the circumstances described in the proviso in
Section 6.2(d) or any other party consummates a Competing Transaction
which results in such third party gaining control over the Company; or
(viii) by the Company if the Board of Directors of the
Company shall have recommended to the Shareholders any Bona Fide
Proposal or resolved to do so under the circumstances described in the
proviso in Section 6.2(d) any other party consummates a Competing
Transaction which results in such third party gaining control over the
Company.
(b) In the event of termination of this Agreement by
either Ace or the Company as provided in Section 10.1(a), this
Agreement shall forthwith become void and there shall be no liability
or obligation on the part of Ace, Acquisition, or the Company or any
of their respective officers or directors except (i) nothing herein
shall relieve any party from liability for any breach thereof and (ii)
this Section 10.1 and Sections 5.3, 5.5, 10.2, and 10.8 shall remain
in full force and effect and survive any termination of this
Agreement.
(c) If the Company terminates this Agreement pursuant
to Section 10.1(a)(v) (if the decree, injunction, judgment, order or
other action arises from or relates to a Bona Fide Proposal or
Competing Transaction), 10.1(a)(vi), or 10.1(a)(viii), or Ace
terminates this Agreement pursuant to Sections 10.1(a)(iii) (if based
on a material breach of the Company's representations or warranties
that is within the knowledge of Larry Lang, Decker Todd, Mark Tune or
Roger Goertz or a material breach of the Company's covenants or
agreements), 10.1(a)(v) (if the decree, injunction, judgment, order or
other action arises from or relates to a Bona Fide Proposal or
Competing Transaction), 10.1(a)(vi), or 10.1(a)(vii), the Company
shall pay to Ace, promptly after termination of this Agreement,
liquidated damages of $300,000 in immediately available funds, subject
to subsection (e) below.
34
<PAGE> 163
(d) If this Agreement is terminated by the Company
pursuant to Section 10.1(a)(iv) (if based on a material breach of the
Ace's representations or warranties or covenants or agreements), then
Ace will pay the Company, promptly after termination of this
Agreement, liquidated damages of $200,000 in immediately available
funds, subject to subsection (e) below.
(e) Notwithstanding anything to the contrary contained
herein, if Ace terminates this Agreement pursuant to Section
10.1(a)(iii) or the Company terminates this Agreement pursuant to
Section 10.1(a)(iv), then the terminating party shall be entitled to
(i) make claims for and recover all monetary damages (including
consequential and punitive damages) to which it is entitled at law or
in equity, to the extent such damages exceed the payments required to
be paid and paid pursuant to Sections 10.1(c) or 10.1(d), as the case
may be, and (ii) any other remedies to which it is entitled at law or
in equity.
(f) Ace and Acquisition, on the one hand, and the
Company, on the other hand, agree to pay the cost and expenses,
including reasonable attorneys' fees, incurred by the other party or
parties in successfully (i) enforcing any of the terms of this
Agreement, or (ii) proving that the other party breached any of the
terms of the Agreement.
10.2. Expenses. Except as set forth in Section 10.1, each party
hereto shall pay its own expenses incurred in connection with this Agreement
and the transactions contemplated hereby.
10.3. Entire Agreement. This Agreement and the Exhibits and
Schedules contain the complete agreement among the parties with respect to the
transactions contemplated hereby and supersede all prior agreements and
understandings among the parties with respect to such transactions. Schedules
and Exhibits referred to herein shall mean Schedules or Exhibits attached
hereto, unless the content clearly requires otherwise. Section and other
headings are for reference purposes only and shall not affect the
interpretation or construction of this Agreement. The parties hereto have not
made any representation or warranty except as expressly set forth in this
Agreement or in any certificate or schedule delivered pursuant hereto. The
obligations of any party under any agreement executed pursuant to this
Agreement shall not be impaired by this Section 10.3.
10.4. Non-Survival of Representations and Warranties. The
representations and warranties of each party contained herein or in any
exhibit, certificate, document, or instrument delivered pursuant to this
Agreement shall not survive the Closing and thereafter such representations and
warranties, shall no longer be of any force or effect.
10.5. Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and
35
<PAGE> 164
delivered shall be deemed an original, and such counterparts together shall
constitute only one original.
10.6. Notices. Any notice or communication must be in
writing and given by (a) deposit in the United States mail, addressed to the
party to be notified, postage prepaid, and registered or certified with return
receipt requested, (b) delivery in person or by Federal Express or similar
courier service providing evidence of delivery, or (c) transmission by
telegram, telecopy, or telex. Each notice or communication that is mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent, and received, in the case of mailed notices,
on the third business day following the date on which it is mailed and, in the
case of notices delivered by hand, courier service, telegram, telecopy, or
telex, at such time as it is delivered to the addressee (with the delivery
receipt, the affidavit of messenger or, with respect to a telecopy or telex,
the confirmation of transmission or answerback being deemed conclusive evidence
of such delivery) or at such time as delivery is refused by the addressee upon
presentation. For purposes of notice, the addresses of the parties shall be:
(i) If to the Company prior to the Merger:
Check Express, Inc.
101 E. Kennedy Blvd., Suite 3800
Tampa, Florida 33602
Attention: Mr. Larry F. Lang
with a copy (which shall not
constitute notice) to:
Trenam, Kemker, Scharf, Barkin,
Frye, O'Neil & Mullis, P.A.
101 E. Kennedy Blvd., Suite 2700
Tampa, Florida 33602
Attention: J. Cary Ross, Jr., Esq.
(ii) If to Ace, Acquisition, and the Company
after the Merger:
Ace Cash Express, Inc.
1231 Greenway Drive, Suite 800
Irving, Texas 75038
Attention: Mr. Donald H. Neustadt
with a copy (which shall not
constitute notice) to:
Gardere & Wynne, L.L.P.
1601 Elm Street, Suite 3000
Dallas, Texas 75201
Attention: Larry Schoenbrun, Esq.
36
<PAGE> 165
Each party may designate by notice in writing a new address to which any
notice, demand, request, or communication may thereafter be so given, served,
or sent.
10.7. Successors and Assigns. This Agreement and the rights,
interests, and obligations hereunder shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
10.8. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Texas (without regard to
the choice of law rules thereof).
10.9. Waiver and Other Action. This Agreement may be amended,
modified, or supplemented only by a written instrument executed by the parties
against which enforcement of the amendment, modification, or supplement is
sought.
10.10. Severability. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof; the
remaining provisions hereof shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance; and in lieu of such illegal, invalid, or unenforceable provision,
there shall be added automatically as part of this Agreement, a provision as
similar in its terms to such illegal, invalid, or unenforceable provision as
may be possible and be legal, valid, and enforceable.
10.11. Securities Law. The parties hereto acknowledge and are
aware that applicable state and federal securities laws prohibit any person who
has material non-public information about a company from purchasing or selling
the securities of that company. The parties hereto further acknowledge that,
during the course of the transactions contemplated by this Agreement, the
parties hereto and their employees, agents and affiliates may become privy to
material non-public information regarding Ace, the Company or their affiliates.
The parties hereto agree and acknowledge that such material non-public
information will be the property of the entity which such information concerns.
The parties hereto covenant and agree that they will not, and will not suffer
or permit any of their employees, agents or affiliates to, disclose to any
third person or make use of any such material non-public information in
connection with the purchase or sale of any securities. The foregoing
covenants regarding material non-public information shall not apply to the
extent that such information is publicly disclosed by the Company, Ace or their
affiliates or otherwise known or publicly disclosed in accordance with law by a
person other than the other party hereto or their employees, agents or
affiliates.
[THE IMMEDIATELY FOLLOWING PAGE IS THE SIGNATURE PAGE.]
37
<PAGE> 166
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ACE CASH EXPRESS, INC.
By: /s/ Donald H. Neustadt
-----------------------------
Donald H. Neustadt, President
and Chief Executive Officer
ACE ACQUISITION CORPORATION
By: /s/ Donald H. Neustadt
-----------------------------
Donald H. Neustadt, President
and Chief Executive Officer
CHECK EXPRESS, INC.
By: /s/ Larry F. Lang
-----------------------------
Larry F. Lang, President and
Chief Executive Officer
<PAGE> 167
SCHEDULE 3.2
October 12, 1995
[ ] SUBSIDIARIES AND INVESTMENTS
<TABLE>
<CAPTION>
Number of
Shares
Authorized and State of
Subsidiary Name Outstanding Incorporation
<S> <C> <C>
Check-X-Change Corporation 1,000,000 auth California
and 995,000 o/s
Check Express USA, Inc. 300 Florida
Check Express Finance, Inc. 100 Florida
Check Express Florida, Inc. 100 Florida
Check Express South Carolina, Inc. 100 Florida
Peterlyn, Inc. 1000 Washington
Silver State, Inc. 100 Florida
</TABLE>
All subsidiaries listed above are wholly-owned subsidiaries of the Company.
Check Express Finance, Inc. is a partner in a joint venture (See Borer
Enterprises, Inc. agreement listed Schedule 3.15).
Check Express Georgia, Inc., Check Express Armored, Inc. and Check Express
Collections, Inc. are all former Florida corporations that have been dissolved.
<PAGE> 168
SCHEDULE 3.3
October 12, 1995
[ ] FOREIGN QUALIFICATION
<TABLE>
<CAPTION>
STATE OF FOREIGN DATE
COMPANY INCORPORATION QUALIFICATION QUALIFIED
<S> <C> <C> <C>
Check Express South Carolina, Inc. Florida Indiana 8/14/91
Check Express South Carolina, Inc. Florida South Carolina 10/11/91
Check Express Florida, Inc. Florida California 5/26/94
Check Express Florida, Inc. Florida Texas 3/15/94
Check Express Florida, Inc. Florida Georgia 11/8/93
Check Express Florida, Inc. Florida Ohio 11/8/93
Check-X-Change Corporation California Florida 11/22/94
Check Express, Inc. Florida Indiana 10/6/95
</TABLE>
<PAGE> 169
SCHEDULE 3.3
PAGE 2
October 12, 1995
CHECK EXPRESS USA, INC.
FRANCHISE REGISTRATION
<TABLE>
<CAPTION>
STATES CHECK EXPRESS CHECK EXPRESS RENEWAL FEE
REGISTRATION RENEWAL DUE 1996
EXPIRATION DATE
<S> <C> <C> <C>
California June 9, 1995 April 20, 1996 $450
Hawaii N.A. N.A. N.A.
Illinois October 27, 1995* September 27, 1996 $100
Indiana August 22, 1995 July 22, 1996 $250
Maryland August 1, 1995 July 7, 1996 $250
Minnesota July 24, 1995 April 30, 1996 $200
New York July 25, 1995 Financials due by $150
April 30, 1996;
Post-Effective
Amendments
June 25, 1996
North Dakota June 11, 1995 May 19, 1996 $100
Rhode Island June 30, 1995 April 30, 1996 $50
South Dakota July 24, 1995 April 30, 1996 $100
Virginia July 21, 1995 April 18, 1996 $250
Washington June 29, 1995 June 7, 1996 $100
Wisconsin April 30, 1995 ** April 10, 1996 $200
</TABLE>
* RENEWAL application has been filed
** By agreement--effectiveness period shortened
<PAGE> 170
SCHEDULE 3.3
PAGE 3
October 12, 1995
NOTICE OF OFFERING OR EXEMPTION
<TABLE>
<CAPTION>
STATES REQUIREMENT 1996 REQUIREMENT
<S> <C> <C>
Kentucky Affidavit of Exemption N.A.
Michigan Annual Letter Letter by May 8, 1996
$250 Fee
Nebraska Notice of Exemption N.A.
Oregon No Registration No
Requirement
Texas One Time Filing No
Utah Annual Filing Letter by July 12, 1996
$100 Fee
</TABLE>
<PAGE> 171
SCHEDULE 3.6
REVISED
OCTOBER 20, 1995
Page 1
[ ] COMPLIANCE WITH OTHER INSTRUMENTS
LICENSES AND PERMITS:
The following licenses and permits require written notification in the event of
a change in control of the Company in order to avoid a condition of
non-compliance:
CHECK EXPRESS, INC.
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- -------------------------- ------------
<S> <C> <C> <C>
FL Check Casher Judy Graham Within 15 Days
State of Florida and must apply
Division of Banking for a new license
The Capitol, Suite 1401 immediately.
Tallahassee, FL 32399-0350
(904) 487-1410
</TABLE>
*I spoke to Pam Henley on 10/19/95. The notice requirement for the check
cashing portion of the license is the same as the money transmitter portion.
Part I chapters (money transmitter) supercede Part III (check cashing) so the
fifteen day notification requirement applies to both check cashing and money
orders.
<TABLE>
<S> <C> <C> <C>
FL Money Transmitter Judy Graham Within 15 Days
State of Florida and must apply for
Division of Banking a new license immediately.
The Capitol, Suite 1401
Tallahassee, FL 32399-0350
(904) 487-1410
IN Check Casher Mark Tarpey *
State of Indiana
Dept. of Financial Inst.
402 W. Washington Street
Room W-066
Indianapolis, IN 46204
(317) 232-3955
</TABLE>
<PAGE> 172
SCHEDULE 3.6
REVISED
OCTOBER 20, 1995
Page 2
*The Act does not specifically address notification requirements. I spoke with
Kent Sager on 10/19/95. He states that the license is not transferable so
essentially the current license is void with a change of control. The new
owners must apply immediately for their own license.
<TABLE>
<S> <C> <C> <C>
IN Money Transmitter Mark Tarpey Within 15 Days
State of Indiana and apply for new
Dept. of Financial Inst. license immediately.
402 W. Washington Street
Room W-066
Indianapolis, IN 46204
(317) 232-3955
</TABLE>
CHECK EXPRESS FINANCE, INC.
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- -------------------------- ------------
<S> <C> <C> <C>
FL Sales Finance Gerald Lewis *
State of Florida
Office of the Comptroller
The Capitol
Tallahassee, FL 32399-0350
(904) 488-0370
or (904) 487-2583
</TABLE>
*The Florida Retail Installment Sales Act does not specifically address a
change of control. However, it is our opinion that notice of change of control
should be given.
<TABLE>
<S> <C> <C> <C>
FL Consumer Finance Gerald Lewis Immediate
State of Florida
Office of the Comptroller
The Capitol
Tallahassee, FL 32399-0350
(904) 488-0370
or (904) 487-2583
</TABLE>
<PAGE> 173
Schedule 3.6
Revised
October 20, 1995
Page 3
Licensed locations:
<TABLE>
<CAPTION>
License Number Effective Expiration
<S> <C> <C> <C>
Consumer Finance License, #203 CF 593206802 006 01/03/95 12/31/96
Consumer Finance License, #253 CF 593206802 005 01/03/95 12/31/96
Consumer Finance License, #207 CF 593206802 004 01/03/95 12/31/96
Consumer Finance License, #228 CF 593206802 007 01/03/95 12/31/96
Consumer Finance License, #218 CF 593206802 002 01/03/95 12/31/96
Consumer Finance License, #201 CF 593206802 003 01/03/95 12/31/96
Consumer Finance License, #210 CF 593206802 001 01/03/95 12/31/96
Consumer Finance License, #206 CF 593206802 008 01/31/95 12/31/96
</TABLE>
CHECK EXPRESS FINANCE #1
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- --------------------------- ------------
<S> <C> <C> <C>
FL Sales Finance Gerald Lewis *
State of Florida
Office of the Comptroller
The Capitol
Tallahassee, FL 32399-0350
(904) 488-0370
or (904) 487-2583
</TABLE>
*The Florida Retail Installment Sales Act does not specifically address a
change of control. However, it is our opinion that notice of change of control
should be given.
<PAGE> 174
Schedule 3.6
Revised
October 20, 1995
Page 4
PETERLYN, INC.
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- ------------------------------- ------------
<S> <C> <C> <C>
WA Check Cashing Ed Burgert Within 30 Days
with Small Loan State of Washington
Endorsement Department of Financial Inst.
Division of Consumer Services
P.O. Box 41202
Olympia, WA 98504-1202
(206) 664-8615
</TABLE>
Licensed locations:
<TABLE>
<CAPTION>
Store # Address City Zip Certificate #
<S> <C> <C> <C> <C>
101 14615 1st Ave. So. Burien 98168 94-002
102 2632 So. 38th Street Tacoma 98406 94-004
103 13754-A Aurora Ave. N. Seattle 98133 94-003
106 10519 Bridgeport Way SW Tacoma 98499 94-006
107 10707 Pacific Ave., Ste D Tacoma 98444 94-007
108 6302 6th Avenue Tacoma 98406 94-008
</TABLE>
CHECK EXPRESS SOUTH CAROLINA, INC.
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- ------------------------------- ------------
<S> <C> <C> <C>
IN Loan Mark B. Tarpey *
Dept. of Financial Institutions
402 W. Washington Street
Room W-066
Indianapolis, IN 46204
(317) 232-3955
</TABLE>
<PAGE> 175
SCHEDULE 3.6
REVISED
OCTOBER 20, 1995
Page 5
*The Act does not specifically address notification requirements. I spoke with
Kent Sager on 10/19/95. He states that the license is not transferable so
essentially the current license is void with a change of control. The new
owners must apply immediately for their own license.
<TABLE>
<CAPTION>
Store # Address City Zip License #
<S> <C> <C> <C> <C>
501 5061 E. 38th Street Indianapolis 46218 1317
503 2435 N. Sherman Drive Indianapolis 46218 1317
506 2620 S. Madison Avenue Indianapolis 46225 1317
</TABLE>
UNIFORM FRANCHISE OFFERING CIRCULARS
See attached Check Express USA, Inc. Change in Offering Materials Due to a
Change in Control of Franshiser.
INSTRUMENTS EVIDENCING INDEBTEDNESS
The following instruments evidencing indebtedness require prior written consent
upon a change in control of Check Express, Inc. in order to not create a
condition of default thereunder. Requests for consent should be addressed as
indicated for each respective lender.
SOUTHTRUST BANK OF WEST FLORIDA
Mr. David M. Vosen
SouthTrust Bank of West Florida
150 Second Avenue North
P.O. Box 15708
St. Petersburg, Florida 33733
1. Installment Note Payable to SouthTrust Bank of West Florida by Check
Express, Inc. in the amount of $650,000, dated August 31, 1995.
2. Term Promissory Note Payable to SouthTrust Bank of West Florida by
Check Express, Inc. and Check Express Florida, Inc. in the amount of
$880,000 dated February 10, 1994.
3. Term Mortgage Loan Payable to SouthTrust Bank of West Florida by Check
Express, Inc. and Check Express Florida, Inc. in the amount of
$106,000 dated May 18, 1993.
4. Term Promissory Note Payable to SouthTrust Bank of West Florida by
Check Express, Inc. and Check Express Florida, Inc. in the amount of
$270,000 as corrected effective January 4, 1993.
<PAGE> 176
SCHEDULE 3.6
REVISED
OCTOBER 20, 1995
Page 6
5. Clean Irrevocable Letter of Credit number 95-12 issued on May 10, 1995
by SouthTrust Bank of West Florida for $50,000 on behalf of Check
Express, Inc. in favor of Titan Indemnity Company.
6. Clean Irrevocable Letter of Credit number 94-07 issued on March 14,
1994 by SouthTrust Bank of West Florida for $50,000 on behalf of Check
Express, Inc. in favor of Titan Indemnity Company.
SEATTLE-FIRST NATIONAL BANK
Ms. Christine Bomgardner
Seafirst Bank
Bellevue Financial Center
10500 Northeast Eighth Street
Suite 500
Bellevue, Washington 98009
Line of Credit provided by Seattle-First National Bank to Peterlyn, Inc. dated
April 26, 1995 and expiring April 30, 1996 in the amount of $200,000.
SOUTHERN COMMERCE BANK
Mr. Tom Wilson
Southern Commerce Bank
P.O. Box 310107
Tampa, Florida 33680
1. Term Promissory Note Payable to Southern Commerce Bank by Check
Express, Inc. in the amount of $500,000 dated December 28, 1994.
2. Term Promissory Note Payable to Southern Commerce Bank by Check
Express, Inc. in the amount of $400,000 dated April 11, 1995.
3. Term Promissory Note Payable to Southern Commerce Bank by Check
Express, Inc. in the amount of $200,000 dated July 6, 1995.
REPUBLIC BANK
Republic Bank
Attention: President
111 2nd Avenue NE
St. Petersburg, Florida 33701
<PAGE> 177
SCHEDULE 3.6
REVISED
OCTOBER 20, 1995
Page 7
with a copy to:
Fisher & Sauls, P.A.
Attention: Kenneth E. Thornton
100 Second Avenue South
Suite 701
St. Petersburg, Florida 33701
Term Promissory Note Payable to Republic Bank by Check Express Finance, Inc. in
the amount of $500,000 dated August 31, 1995.
OTHER CONTRACTS
The following other contracts require written notification of a change in
control or ownership of the Company or the Subsidiaries:
The Retailer Contract by and between The Florida Department of the Lottery
("Lottery") and Check Express Florida, Inc. d/b/a Check Express whose business
address is 8207 N. Florida Ave., Tampa, FL 33604 ("Retailer") for the sale of
lottery tickets for instant games only and only at the location given above,
requires the Retailer to immediately notify the Lottery in writing of pending
changes in ownership, changes of partners, corporate officers or directors.
STORE LEASES:
See attached Landlord Contact List for store leases requiring consent.
The employment contract by the Company with Larry F. Lang includes provisions
requiring written consent, notification, or other conditions be met in order to
avoid a condition of default thereunder.
The consummation by the Company of the transaction contemplated by this
Agreement will require the approval of the shareholders of the Company.
<PAGE> 178
SCHEDULE 3.6
LANDLORD CONTRACT LIST
The following leases for real property require the Tenant to obtain written
consent of Landlord in the event of a change in ownership or control of the
Tenant in order to avoid a condition of default under the lease:
<TABLE>
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 101 Lessee: Peterlyn, Inc.
14615 1st Ave. So. Lessor: Steven J. Kipper and Resing M. Kipper,
Burien, WA 98168 Trust, Steven J. Kipper, Jr., Trustee
Send notice to: Steven J. Kipper, Trustee
1310 W. Beaver Lake Dr. S.E.
Issaquah, WA 98027
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 102 Lessee: Peterlyn, Inc.
2632 So. 38th Street Lessor: 38th and Pine Associates
Tacoma, WA 99406
Send notice to: 38th & Pine Associates c/o IPNW Corp.
Plaza 600 Bldg., Suite 1600
Seattle, WA 98101
ATTN: Stanley L. Siddell
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 103 Lessee: Peterlyn, Inc.
13754-A Aurora Ave. N. Lessor: Tae Won and Pun Im Kang, Husband and
Seattle, WA 98133 Wife
Send notice to: Tae Won & Pun Im Kang
13749 Midvale Ave. North
Seattle, WA 98133
Remit to: 13754 Aurora Ave. N. #R
Seattle, WA 98133
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 106 Lessee: Peterlyn, Inc.
10519 Bridgeport Way S.W. Lessor: Bank of California, N.A.
Tacoma, WA 98499
Send notice to: Bank of California
910 Fourth Avenue
Seattle, WA 98114
Remit to: Commercial Associates
P.O. Box 98012
Tacoma, WA 98499
- - -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 179
<TABLE>
<S> <C> <C> <C>
CHECK EXPRESS 107 Lessee: Peterlyn, Inc.
10707 Pacific Ave., Suite D Lessor: M.L.G. Inc., a Washington Corporation
Tacoma, WA 98444
Send notice to: M.L.G. Inc.
17608 15th Place W.
Lynnwood, WA 98037
Remit to: MLG, Inc.
8600 Lake City Way NE
Seattle, WA 98115
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 201 Lessee: Check Express, Inc.
8207 N. Florida Avenue Lessor: Tampa Plaza Associates
Tampa, FLorida 33604
Send notice to: Tampa Plaza Associates
161 North concord Exchange, Suite 310
South St. Paul, MN 55075
Remit to: Tampa Plaza Associates Ltd.
Vermillion State Bank
Mail Station #4000
P.O. Box 31
Vermillion, MN 55085-0031
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 206 Lessee: Check Express, Inc.
2509 E. Colonial Drive Lessor: Jamerson Investments
Orlando, FL 32803
Send notice to: Jamerson Investments
2517 E. Colonial Dr.
Orlando, FL 32803
Remit to: P.O. Box 11097
Orlando, FL 32803
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 207 Lessee: Check Express Florida, Inc.
2940 34th Street So. Lessor: CBL/34th Street St. Petersburg Limited
St. Petersburg, FL 33711 Partnership by CBL Management, Inc.,
General Partner
Send notice to: CBL Management
6148 Lee Hwy.
Chattanooga, TN 37421
Remit to: 6148 Lee Highway
One Park Place
Chattanooga, TN 37421
Attn: Ms. Mona James
- - ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 180
<TABLE>
<S> <C> <C> <C>
CHECK EXPRESS 223 Lessee: Check Express Florida, Inc.
2520 S. Semoran Blvd. Inc. Lessor: Stephen J. LaFreniere, As Receiver
Orlando, FL 32822
Send notice to: LAT Purser Florida, Ltd. Acting as agent for Landlord
P.O. Box 940098
Maitland, Florida 32794-0098
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 224 Lessee: Check Express Florida, Inc.
2532-B Bearss Ave. Lessor: University Commercial Center LTD.
Tampa, FL 33613
Send notice to: University Commercial Center
1717 E. Fowler Ave.
Tampa, FL 33612-5523
Notice to landlord required immediately. Landlord can terminate lease with 90
days notice.
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 226 Lessee: Check Express, Inc.
4712 S. Orange Blossom Trail Lessor: H. Ames Richards, Jr.
Orlando, FL 32795
Send notice to: H. Ames Richards, Jr.
41 Long Close Rd.
Stamford, CT 06902
Remit to: P.O. Box 1208
Winter Park, FL 32790
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 242 Lessee: Check Express Florida, Inc.
6851 Hwy. 17-92 So. Lessor: Developers Diversified Realty Corporation
Fern Park, FL 32730
Send notice to: Developers Diversified Realty Corporation
34555 Chagrin Blvd.
Moreland Hills, OH 44022-8022
Remit to: 34555 Chagrin Blvd.
P.O. Box 8022
Chagrin Falls, OH 44022
- - ----------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 253 Lessee: Check Express Florida, Inc.
3254 Central Avenue Lessor: Central Plaza Central, Ltd. Partnership
St. Petersburg, FL 33712
Send notice to: Central Plaza Central, Ltd. Partnership c/o Amned Properties
10549 N. Florida Ave., Suite K
Tampa, FL 33612
</TABLE>
<PAGE> 181
<TABLE>
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 501 Lessee: Check Express South Carolina, Inc.
5061 E. 38th Street Lessor: Bodner Properties 3
Indianapolis, IN 46218
Send notice to: The Bodner Companies
10455 North College Avenue
Indianapolis, IN 46280
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 503 Lessee: Check Express South Carolina, Inc.
2435 N. Sherman Drive Lessor: Simon Property Group L.P.
Indianapolis, IN 46218
Send notice to: Simon Property Group L.P.
115 West Washington St.
Indianapolis, IN 46204
Remit to: P.O. Box 2004
Indianapolis, IN 46255
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 508 Lessee: Check Express South Carolina, Inc.
3801 Lafayette Rd. Lessor: Howard F. Foltz, Jr.
Indianapolis, IN 46254
Send notice to: Howard F. Foltz, Jr. c/o Harding, Dahm & Company, Inc.
10293 North Meridian St., Suite 150
Indianapolis, IN 46290
- - -----------------------------------------------------------------------------------------------------
First Amendment to:
Check Express F1105 Lessee: Check-X-Change, Inc.
2625 Piedmont Road Lessor: The Mutual Life Insurance
Atlanta, GA Company of New York
Send notice to: The Mutual Life Insurance Company of New York
c/o ARES Realty Capital, Inc.
5775-E Glenridge Drive, Suite 100
Atlanta, GA 30328
Attn: Vice President - Real Estate
With copy to: Withrow, McQuade & Olsen
3379 Peachtree Road, N.E.
Suite 970
Atlanta, GA 30326
Attn: Steven J. Olsen, Esq.
</TABLE>
Requires prompt written notification upon change in control, and Landlord may
terminate by giving Tenant thirty (30) days prior written notice of such
termination.
<PAGE> 182
SCHEDULE 3.6
CHECK EXPRESS USA, INC.
CHANGE IN OFFERING MATERIALS
DUE TO A CHANGE IN CONTROL OF FRANCHISER
<TABLE>
<CAPTION>
POST-EFFECTIVE
STATES AMENDMENT REQUIRED TIME FOR FILING FEE
<S> <C> <C> <C>
California Yes Promptly $ 50.00
Illinois Yes Upon Occurrence $100.00
Indiana Yes Promptly $ 50.00
Maryland Yes Promptly $100.00
Minnesota Yes Within 30 days $100.00
New York Yes Upon Occurrence $150.00
North Dakota Yes Promptly $ 50.00
Rhode Island Yes Promptly $ 50.00
South Dakota Yes Within 30 days $ 50.00
Virginia Yes Upon Occurrence $100.00
Washington Yes ASAP but before a sale $100.00
Wisconsin Yes Within 30 days $200.00
</TABLE>
For all states, provide a cover letter, facing page, verification,
sales agent disclosure (due to addition of a new sales agent), filing
fee check, and, unless otherwise noted, one clean copy and one
black-lined copy of the changed pages. See following sheets for
additional information.
<PAGE> 183
SCHEDULE 3.6
Indiana
Post-Effective Amendment Fee - $50.00
(payable to Indiana Securities Division)
File No. 94-0279RN
Contact: Indiana Securities Division
Franchise Section
302 W. Washington Street
Room E111
Indianapolis, Indiana 46204
(317) 232-6681
(317) 232-6697 Mary Ann Tippett
(317) 232-6685 Tiffany Hemmer
<PAGE> 184
SCHEDULE 3.6
Illinois
Post-Effective Amendment Fee - $100.00
(payable to State of Illinois)
(if repagination, provide entire document)
File No. 94F575
Contact: Christina M. Saunderson
Chief, Franchise Division
500 South Second Street
Springfield, Illinois 62706
(217) 782-2538
<PAGE> 185
SCHEDULE 3.6
California
Post-Effective Amendment Fee - $50.00
(payable to California Commissioner of Corporations)
(no unmarked copies, one black-lined copy)
File No. 998 1379
Contact: Raymond F. Burg
Senior Corporations Counsel
Department of Corporations
1350 Front Street
San Diego, California 92101-3697
(619) 525-4044 (direct line)
(619) 525-4045 (fax)
<PAGE> 186
SCHEDULE 3.6
Maryland
Post-Effective Amendment Fee - $100.00
(payable to Office of Attorney General of Maryland)
File No. FR910258
Contact: Office of the Attorney General
Maryland Division of Securities
Attn: Franchise Section
200 St. Paul Place, 20th Floor
Baltimore, Maryland 21202
(410) 576-6360
Peggy Jones, Franchise Examiner
<PAGE> 187
SCHEDULE 3.6
South Dakota
Post-Effective Amendment Fee - $50.00
(payable to South Dakota Securities Division)
(one black-lined copy only)
File No. 1135
Express Deliveries:
Contact: Mr. Joe Bjerke, Franchise Administrator
Division of Securities
500 West Capitol Avenue
Pierre, South Dakota 57501-5070
Regular Mail:
Director, Division of Securities
c/o 118 West Capitol Avenue
Pierre, South Dakota 57501-5070
(605) 773-4823
(605) 773-5953 (fax)
<PAGE> 188
SCHEDULE 3.6
Rhode Island
Post-Effective Amendment Fee - $50.00
(payable to General Treasurer of Rhode Island)
File No. 92-0245 RN
Contact: Rhode Island Division of Business Regulations
Division of Securities
100 North Main Street
Providence, Rhode Island 02903
(401) 277-3048
Ms. Martha Reynolds/Mr. Tom Corrigan
<PAGE> 189
SCHEDULE 3.6
Virginia - Renewal - Due 6/21/96
Post-Effective Amendment Fee - $100.00
(payable to Treasurer State of Virginia)
File No. 758
Contact: State Corporation Commission
Division of Securities and Retail Franchising
1300 East Main Street, 9th Floor
(Post Office Box 1197, Zip 23209)
Richmond, Virginia 23219
(804) 371-9051
<PAGE> 190
SCHEDULE 3.6
North Dakota
Post-Effective Amendment Fee - $50.00
(payable to North Dakota Securities Commissioner)
File No. - N.A.
Contact: Ms. Jocelyn Smith Whitley
Franchise Examiner
600 East Boulevard, 5th Floor
Bismarck, North Dakota 58505
(701) 328-4712
<PAGE> 191
SCHEDULE 3.6
Washington
Post-Effective Amendment Fee - $100.00
(payable to Treasurer, State of Washington)
Permit No. F-02197
Express deliveries:
Contact: Department of Licensing
General Administration Building
Securities Division - 3rd Floor West
210 11th Street, SW
Olympia, Washington 98504
Regular mail:
Department of Licensing
Securities Division
Post Office Box 9033
Olympia, Washington 98507-9033
(360) 902-8760
<PAGE> 192
SCHEDULE 3.6
Wisconsin
Post-Effective Amendment Fee - $200.00
(payable to State of Wisconsin)
File No. 288622-71
Contact: Office of the Commissioner of Securities
111 East Wilson Street, Fourth Floor
Post Office Box 1768
Madison, Wisconsin 53701
(608) 266-3364 (Marjorie Sandee)
(608) 266-1365 (Kathy Denton)
(608) 266-8559 (James R. Fischer)
(608) 256-1259 (fax)
<PAGE> 193
SCHEDULE 3.6
New York
Post-Effective Amendment Fee - $150.00
(payable to New York State Dept. of Law)
File No. F94-0119
Contact: New York State Department of Law
Bureau of Investor Protection and Securities
120 Broadway, 23rd Floor
New York, New York 10271
(212) 416-8211
(212) 416-8816 FAX
(212) 416-8233 - Eric Zanier
<PAGE> 194
SCHEDULE 3.6
Minnesota
Post-Effective Amendment Fee - $100.00
(payable to Minnesota Department of Commerce)
File No. F-1978
Contact: State of Minnesota
Department of Commerce
133 East Seventh Street
St. Paul, Minnesota 55101
(612) 296-6328
(612) 296-4328 (fax)
<PAGE> 195
SCHEDULE 3.7(c)
October 12, 1995
[ ] CAPITALIZATION
Attached is a listing of outstanding options and warrants obligating the
Company to issue shares of common stock upon the exercise of such options and
warrants. In addition, certain employment agreements to which the Company and
the Subsidiaries are a party include provisions obligating the Company to grant
additional options to purchase common stock of the Company. Refer to Schedule
3.15.
The number of shares of common stock outstanding as of December 31, 1993 and
December 31, 1994, as per confirmation letters obtained from our transfer agent
in connection with our annual audits for the periods then ended, reflected a
number of shares eleven (11) less than the number reported by us as outstanding
in those respective balance sheets. Our interim unaudited balance sheet
included in our Quarterly Report on From 10-QSB for the quarterly period ended
June 30, 1995 indicates 5,061,003 shares outstanding.
<PAGE> 196
SCHEDULE 3.7(c)
CHECK EXPRESS, INC.
SUMMARY OF STOCK OPTIONS AND WARRANTS ISSUED AND OUTSTANDING
AS OF SEPTEMBER 22, 1995
<TABLE>
<CAPTION>
GRANT EXERCISE PERIOD STRIKE NUMBER
LAST FIRST DATE FROM TO PRICE SHARES
OPTIONS:
<S> <C> <C> <C> <C> <C> <C>
Riordon Michael 6/15/93 6/15/93 4/1/96 0.43 25000
Schilit Keith 6/15/93 6/15/93 12/31/97 0.85 12500
Lang Larry 12/7/92 12/7/92 12/31/97 1 2500
McEnany Patrick 12/7/92 12/7/92 12/31/97 1 2500
Schilit Keith 12/7/92 12/7/92 12/31/97 1 2500
Wozniak Joseph 12/7/92 12/7/92 12/31/97 1 2500
Lang Larry 2/28/93 3/1/93 2/28/98 0.875 50000
Lang Larry 9/13/93 9/13/93 9/12/98 1.125 2500
McEnany Patrick 9/13/93 9/13/93 9/12/98 1.125 2500
Schilit Keith 9/13/93 9/13/93 9/12/98 1.125 2500
Wozniak Joseph 9/13/93 9/13/93 9/12/98 1.125 2500
Bacon Gregg 12/2/93 12/2/93 12/31/98 1.125 10000
Frederico Rudolph 12/2/93 12/2/93 12/31/98 1.125 10000
Goertz Roger 12/2/93 12/2/93 12/31/98 1.125 15000
McEnany Patrick 12/2/93 12/2/93 12/31/98 1.125 3000
Nelson Kenneth 12/2/93 12/2/93 12/31/98 1.125 7500
Riordon Michael 12/2/93 12/2/93 12/31/98 1.125 10000
Schilit Keith 12/2/93 12/2/93 12/31/98 1.125 1000
Seale Jimmy 12/2/93 12/2/93 12/31/98 1.125 5000
Todd Decker 12/2/93 12/2/93 12/31/98 1.125 10000
Wozniak Joseph 12/2/93 12/2/93 12/31/98 1.125 1000
Lang Larry 4/1/94 4/1/94 3/31/99 1.1875 50000
Lyon Linda 6/24/94 6/24/94 6/23/99 0.9375 5000
Peters Ronald 6/24/94 6/24/94 6/23/99 0.9375 5000
Reback Debra 6/24/94 6/24/94 6/23/99 0.9375 5000
McEnany Patrick 11/22/94 11/22/94 11/21/99 0.6875 9000
Schilit Keith 11/22/94 11/22/94 11/21/99 0.6875 9000
Wozniak Joe 11/22/94 11/22/94 11/21/99 0.6875 9000
Lang Larry 11/22/94 11/22/94 11/21/99 0.6875 5000
Todd Decker 11/22/94 11/22/94 11/21/99 0.6875 5000
Bacon Gregg 11/22/94 11/22/94 11/21/99 0.6875 15000
Goertz Roger 11/22/94 11/22/94 11/21/99 0.6875 15000
Todd Decker 11/22/94 11/22/94 11/21/99 0.6875 15000
Nelson Ken 11/22/94 11/22/94 11/21/99 0.6875 7500
Frederico Rudy 11/22/94 11/22/94 11/21/99 0.6875 7500
Seale Jimmy 11/22/94 11/22/94 11/21/99 0.6875 7500
Swift Ben 11/22/94 11/22/94 11/21/99 0.6875 5000
Murin Karen 11/22/94 11/22/94 11/21/99 0.6875 5000
Lang Larry 4/1/95 4/1/95 3/31/00 0.84 50000
Tune Mark 6/9/95 6/9/95 6/8/00 0.875 7500
TOTAL NUMBER OF SHARES UNDER OPTIONS 417000
WARRANTS:
Paradise Valley 6/24/93 6/24/94 6/23/97 2.1 261000 (a)
Public Units 6/24/93 6/24/94 12/31/96 3 1000500
TOTAL NUMBER OF SHARES UNDER OPTIONS AND WARRANTS 1678500
</TABLE>
(a) This represents the Underwriter's Warrant, which entitles the Underwriter
to purchase 43,500 Units (consisting of 174,000 shares of Common Stock
and 87,000 Warrants) at a price of $6.60 per Unit. The Warrants included
in the Units have terms consistent with public Units; i.e., exercise price
of $3.00 per share. The $2.10 per share represents exercise of both the
Underwriters warrant and then the Warrants included in the Units. All
shares underlying this Underwriter's Warrant are out-of-the-money, even if
only the Underwriter's Warrant is exercised (effective price per share of
$1.65 for the four shares received).
<PAGE> 197
SCHEDULE 3.9
October 12, 1995
Page 1
[ ] ABSENCE OF CERTAIN CHANGES
A significant reduction in accounts receivable resulted from remittance of
$200,000 in payment of amounts due the Company by The Galleon Corporation, a
franchisee. This remittance resulted from final accounting and settlement on
amounts due, in conjunction with the Company's sale of two check cashing
businesses located in South Florida (refer to Schedule 3.15 for contract
concerning the sale) related primarily to: 1) the use of the Company's
existing bank inventory operating accounts from October 1, 1994 through
February 28, 1995, at which time The Galleon Corporation was able to establish
its own banking relationship; 2) amounts due the Company related to the
Company's money orders sold by the franchisee through June 30, 1995; and 3)
other minor amounts for expenses paid on behalf of the franchisee and passed on
for reimbursement in the settlement process as agreed. An additional $44,000
has been received in September, representing the balance of the amount due the
Company as a result of this settlement process.
Effective as of August 31, 1995, the Company completed two financings. First,
the line of credit facility with SouthTrust Bank in the amount of $650,000 was
refinanced by closing on a term loan facility with the bank. In addition, a
$500,000 term loan was completed with Republic Bank on August 31, 1995. Loan
origination costs associated with both of these facilities have also been
capitalized as other assets and will be amortized over the life of the
respective loan facility.
One of the Company's franchisees, DANCAM, Inc., failed to exercise its right to
renew its existing lease (as assigned to DANCAM by the Company in conjunction
with the sale of the check cashing business in Atlanta, Georgia effective April
1, 1994). The Company has a note receivable from DANCAM as a result of the
sale of the check cashing business, with a balance due as of August 31, 1995 of
$265,000. The Company has concluded that no reserve for uncollectibility of
this note receivable is warranted at this time. However, facts and
circumstances could conceivably change in the future such that a reserve of
some amount may be necessary.
The Company has been informed by California Check Cashing Stores, Inc. ("CCC")
that it may make a claim to adjust the purchase price allocated to the food
stamp distribution business in conjunction with the Company's sale of such and
five check cashing locations to CCC. The effects of such a claim, if made, can
not be reasonably quantified at this time, nor can the likelihood of such a
claim being made and enforced against the Company be quantified.
The Company and the Subsidiaries have not performed physical inventory
observation procedures related to their fixed assets for several years. As a
result, the possibility exists that there may be differences between detailed
fixed asset records for each location underlying the
<PAGE> 198
SCHEDULE 3.9
October 12, 1995
Page 2
general ledger balances and the assets which actually exist. However, senior
management of the Company is not aware of any such differences, and further
believes that all such differences, if any, in the aggregate would not be
considered material to the financial position of the Company. Furthermore,
each business location of the Company and the Subsidiaries has all the fixed
assets necessary to carry on business in the ordinary course.
The Company will be recording an incremental amount of $10,000 of bad debt
expense on the general ledger of Check Express Finance, Inc. ("Finance
Express") in each of the months of August through December in order to
increase the reserve for doubtful accounts. This is related to a specific set
of installment note receivable contracts ("INC's") purchased from one used
automobile dealer who has recently experienced financial difficulty.
The Company anticipates completing in the month of October an agreement for a
lease financing facility in the amount of $150,000 to be utilized to finance
the build out of new store locations and other fixed asset additions as
necessary. This facility is being provided by American States Leasing.
The Company has committed to lending up to $25,000 to DANCAM, Inc., to be
reduced to the extent there is a balance remaining due to the Company on the
$15,000 Promissory Note due from DANCAM listed at Schedule 3.15, at such time
as funds are needed as assistance to finance the cost of relocating this Check
Express USA, Inc. franchisee's store.
<PAGE> 199
SCHEDULE 3.11
October 12, 1995
[ ] TAX LIABILITIES
Agreements for the purchase or sale of stock or assets to which the Company or
any of the Subsidiaries is a party include general indemnification language,
and the Company and the Subsidiaries continue to be contingently liable or have
rights under such indemnifications for a period of time covered by the
agreements. Refer to Schedule 3.15.
Check Express USA, Inc. has received notification dated October 3, 1995 from
the State of South Carolina Department of Revenue and Taxation that it will be
treated as a voluntary filer provided it files the last three years tax
returns and pay any tax which might be due. All penalties will be waived
relative to these prior year returns. The 1994 return was filed when due under
extension. The 1993 and 1992 returns will be prepared and filed as soon as is
practicable in response to this notification of being afforded voluntary filing
status.
The Company has received a notice from the Internal Revenue Service with
respect to an alleged discrepancy between the Form 941 filed for Check Express
USA, Inc. for the year ended December 31, 1992 and the Forms W-2 for the same
period. The notice indicates a balance due the IRS, inclusive of penalties and
interest, of $3,982.13. We have reviewed our records related to this notice
and find that no such discrepancy exists. We have requested copies of records
from the IRS in order to try to identify why the records they have lead to a
different conclusion. We are not as yet in receipt of the requested IRS
records. This matter will be resolved as soon as is practicable upon receipt
of the records requested from the IRS.
The Company has received a notice from the State of California Franchise Tax
Board which indicates an unpaid tax liability of $800.00 for the year ended
December 31, 1995 due with the 1994 return. Management believes this issue
will be resolved at no cost to the Company as the appropriate franchise tax was
already paid for 1995.
The payments for cancellation of stock options and of any severance pay or
other compensation in conjunction with or directly as a result of the
contemplated transactions will result in the need to withhold and remit
employment taxes related thereto including the Company and the Subsidiaries
portion of employment taxes related thereto.
<PAGE> 200
SCHEDULE 3.13
October 12, 1995
[ ] TITLE TO PROPERTIES
Real Properties Owned
Title to Real Estate, Book V183, Page 682, State of South Carolina, County of
Charleston, related to real property located at E. Meeting Street, North
Charleston, South Carolina, 29418 (vacant lot). There is a title defect
effecting this property as described in that certain letter of April 6, 1989
from David M. Swanson of the law firm of Sinkler & Boyd to Frances I. Cantwell,
Esquire, City Attorney for the City of Charleston, South Carolina (see copy
attached to title documents).
Title to Real Estate, Part of the North Half of Lot 13 in Hoefgen Heirs
Subdivision in Marion County, Indiana, related to real property located at 2620
S. Madison Avenue, Indianapolis, Indiana (store 506). This property was titled
erroneously in the name of Check Express Stores, Inc. which technically is not
a legal entity.
Substantially all assets of the Company and the Subsidiaries are encumbered as
collateral supporting the various debt agreements to which the Company and the
Subsidiaries are party as listed at Schedule 3.15.
<PAGE> 201
SCHEDULE 3.15
October 12, 1995
Page 1
[ ] CONTRACTS
EMPLOYMENT CONTRACTS:
<TABLE>
<CAPTION>
Employee Company
-------- ------------------
<S> <C>
Larry F. Lang Check Express, Inc.
Decker A. Todd Check Express, Inc.
Mark Tune Check Express, Inc.
Kenneth Nelsen Check Express, Inc.
H. Jeff Voss Check Express USA, Inc.
Roger D. Goertz Check-X-Change Corporation
S. Gregg Bacon Check Express Finance, Inc.
</TABLE>
The sample employment agreement attached and the Check Express, Inc. Operating
& Policy Manual are applicable to all other employees.
Commission structure for sales staff; Mike Riordon and Ben Swift, are attached.
See Schedule 3.24 for listing of contracts regarding employee benefits.
The Company has balances due from Bill Berger and David Hutton, former
franchise sales representatives of the Company's franchise subsidiaries, for
draws made against future franchise sales commissions. The Company has verbally
agreed to credit these individuals for commissions in the amount of 25% of
commissionable income (initial franchise fees less certain expenses) on sales
for which they were primarily responsible, with the after-tax proceeds of all
such commissions first being applied to the gross draw balances outstanding.
OTHER CONTRACTS:
<TABLE>
<CAPTION>
Vendor Description Date Termination
- - ------ ----------- ------- -----------
<S> <C> <C> <C>
Marchant Business Systems Agreement for Software 7/2/89
Marchant Business Systems Software Agreement 2/11/91 2/11/96
or pmt for 500
locations
Marchant Business Systems Software Agreement 4/8/94 12/31/95
Travelers Express Processing Agreement 6/24/92 6/24/96 or
with 90 days
written notice
</TABLE>
<PAGE> 202
SCHEDULE 3.15
October 12, 1995
Page 2
<TABLE>
<CAPTION>
Vendor Description Date Termination
- - ------ ----------- ------- -----------
<S> <C> <C> <C>
Travelers Express Company, Inc. Trust Agreement and 1/14/94 Upon written
Rider No. 6's thereto notification
for six company owned and return of
stores in Washington State all unissued
money orders,
records,
equipment and
supplies
Western Union Form of Guaranteed Growth 1991
Plan Amendment
Western Union Form of Agency Agreement various
Western Union Form of Addendum to various
Agency Agreement
<CAPTION>
NOTE: Refer to copy of letter dated October 10, 1995 addressed to
Stephanie McVay attached as part of this Schedule 3.15 for
further clarification of applicability and effectiveness of
the above referenced contracts with Western Union
<S> <C> <C> <C>
AT&T Uniplan Service Order 4/10/95
Executone Information Systems LCR Maintenance 7/31/95 7/31/96
Intermedia Communications of Service Agreement
Florida, Inc. and Addendum 3/31/94
New Financial Mortgage Corp. Application for Loan 12/7/94
Commitment
Borer Enterprises, Inc. Joint Venture Agreement 11/23/94
Addendum 08/23/95
</TABLE>
<PAGE> 203
SCHEDULE 3.15
October 12, 1995
Page 3
<TABLE>
<CAPTION>
Vendor Description Date Termination
- - ------ ----------- ------- -----------
<S> <C> <C> <C>
Brinks Incorporated Armored Car Service in 12/29/92 30 days
Tampa Bay and Orlando written notice
Florida markets prior to annual
anniversary
date
Loomis Armored Inc. Armored Car Service in 7/1/93 30 days
Indianapolis market written notice
Loomis Armored Inc. Armored Car Service in 2/1/95 30 days
Seattle and Tacoma written notice
Washington market
Hillsborough Transit Authority Consignment Agreement for 1/9/93 12/31/96, or
Sale of Bus Passes 120 days
written notice
and return of
inventory
Pinellas Suncoast Transit Consignment Agreement for 2/15/93 2/14/96, or
Authority Sale of Bus Passes 120 days
written notice
and return of
inventory
State of Washington, Dept. of Food Coupon Distribution 7/1/95 Only by DSHS
Social and Health Services with 14 days
("DSHS") written notice
The Florida Department of the Sale of lottery tickets for 7/12/95 7/12/99, or
Lottery instant games only, only upon written
at Check Express Florida, Inc. notice by
check cashing business located Retailer, or
at 8207 N. Florida, Ave., Tampa, upon 30 days
Florida, 33604 written notice
by Lottery
</TABLE>
<PAGE> 204
SCHEDULE 3.15
October 12, 1995
Page 4
<TABLE>
<CAPTION>
Vendor Description Term (if Applicable)
- - ------ ----------- --------------------
<S> <C>
Convenience Store Advertising for Franchise 1/95-1/96
Decisions Marketing
Convenience StoreNews Advertising for Franchise Marketing
Entrepreneur Advertisements for Franchise 2/95 - 1/96
Marketing
Fitzgerald Construction Tenant Buildout for Orlando
Company (A) Location
The Franchise Handbook Advertising for Franchise 4/95 - 1/96
Marketing
Frey Construction (A) Buildout for Indianapolis Location
GTE Mobilnet Cellular Phones 9/29/-94 - 9/29/95
(813)-310-4165
(813)-310-4164
(813)-310-4166
Mitchell Design Group Inc. Kiosk Design Development
Multi-Directory Services Inc. Advertising placed in Phone Directories
1995-96 Phone Book Releases
Nations Restaurant News Advertising for Franchise 1/95 - 1/96
Marketing
Paradise Construction(A) Tenant Buildout for Orlando Location
Shirley/Hutchinson Brochure Development and
Creative Works Printing
Thomas Sign & Awning New Signs for Store 238
Wall Street Journal Advertisements for Franchise 4/27/95-4/26/96
Marketing
</TABLE>
<PAGE> 205
SCHEDULE 3.15
October 12, 1995
Page 5
<TABLE>
<CAPTION>
Vendor Description Term (if Applicable)
- - ------ ----------- --------------------
<S> <C> <C>
Xerox Full Service Copier Maintenance
Agreement (see Capital Lease 3.15)
GECAL Automobile Lease 1/94-1/98
SouthTrust of Alabama NA Automobile Lease 2/94-1/98
</TABLE>
(A) As it relates to Construction Contracts for store build outs, ordinary
course of business necessitates periodic changes as it relates to the
completion of the work.
Check Cashing Software License/Purchase Agreement (License No. 022692) by and
between Answers, Etc. and Check-X-Corporation.
Surety Bond number 101100 issued by Titan Indemnity Company on behalf of Check
Express, Inc. in favor of Department of Financials, Indiana.
Corporate guarantee by Check Express, Inc. given on behalf of Hubert Rhoden
and/or The Galleon Corporation, for the benefit of Western Union Financial
Services, Inc., terminating December 31, 1995.
Engagement letter dated January 3, 1995 and supplement thereto dated February
20, 1995 by and between Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A.
and Check Express USA, Inc. with respect to professional services regarding the
preparation of the 1995 Check Express Uniform Franchise Offering Circular
("UFOC") and related compliance matters for the ensuing twelve month period,
including fee and payment terms. These letters also address preparation of a
1995 UFOC for Check-X-Change Corporation which the Company, based on advise of
counsel, has determined is not necessary under the existing circumstances in
order to affect sales to existing Check-X-Change franchisees.
The Company allows two of its franchisees, COMART and The Galleon Corporation
(a former employee), to sell the Company's money orders and to remit each
business day to the Company based on money orders paid. These arrangements are
both to expire effective December 31, 1995. These franchisees are also required
to reimburse the Company for per item charges, costs of printing money order
stock, and money order equipment rental costs.
Refer to the attached Check Express Finance, Inc. internal memorandum dated
September 27, 1995 from Gregg Bacon, Director of Finance, to Decker Todd, V.P.
of Finance, which provides a summary of the terms of verbal agreements between
Check Express Finance, Inc. and the used automobile dealers from whom it
currently purchases installment notes receivable contracts at a
<PAGE> 206
SCHEDULE 3.15
October 12, 1995
Page 6
discount.
TITLE DOCUMENTS:
Warranty Deed, O.R. Book 6982, Page 960, Hillsborough County Records, Florida,
related to real property located at 3921 N. Florida Avenue, Tampa, Florida,
33603 (Store 248).
Title to Real Estate, Book V183, Page 682, State of South Carolina, County of
Charleston, related to real property located at E. Meeting Street, North
Charleston, South Carolina, 29418 (vacant lot). There is a title defect
effecting this property as described in that certain letter of April 6, 1989
from David M. Swanson of the law firm of Sinkler & Boyd to Frances I. Cantwell,
Esquire, City Attorney for the City of Charleston, South Carolina (see copy
attached to title documents).
Title to Real Estate, Book K180, Page 769, State of South Carolina, County of
Charleston, related to real property located at 2122 Cosgrove Avenue, North
Charleston, South Carolina, 29405 (store F802 under month to month oral lease
to Check Express USA, Inc. franchisee at $750.00 per month).
Title to Real Estate, Part of the North Half of Lot 13 in Hoefgen Heirs
Subdivision in Marion County, Indiana, related to real property located at 2620
S. Madison Avenue, Indianapolis, Indiana (store 506). This property was titled
erroneously in the name of Check Express Stores, Inc. which technically is not
a legal entity.
INSTRUMENTS EVIDENCING INDEBTEDNESS:
Installment Note Payable to SouthTrust Bank of West Florida by Check Express,
Inc. in the amount of $650,000, dated August 31, 1995.
Term Promissory Note Payable to SouthTrust Bank of West Florida by Check
Express, Inc. and Check Express Florida, Inc. in the amount of $880,000 dated
February 10, 1994.
Term Mortgage Loan Payable to SouthTrust Bank of West Florida by Check Express,
Inc. and Check Express Florida, Inc. in the amount of $106,000 dated May 18,
1993.
Term Promissory Note Payable to SouthTrust Bank of West Florida by Check
Express, Inc. and Check Express Florida, Inc. in the amount of $270,000 as
corrected effective January 4, 1993.
Clean Irrevocable Letter of Credit number 95-12 issued on May 10, 1995 by
SouthTrust Bank of West Florida for $50,000 on behalf of Check Express, Inc. in
favor of Titan Indemnity Company.
<PAGE> 207
SCHEDULE 3.15
October 12, 1995
Page 7
Clean Irrevocable Letter of Credit number 94-07 issued on March 14, 1994 by
SouthTrust Bank of West Florida for $50,000 on behalf of Check Express, Inc. in
favor of Titan Indemnity Company.
Line of Credit provided by Seattle-First National Bank to Peterlyn, Inc. dated
April 26, 1995 and expiring April 30, 1996 in the amount of $200,000.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $500,000 dated December 28, 1994.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $400,000 dated April 11, 1995.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $200,000 dated July 6, 1995.
Term Promissory Note Payable to Republic Bank by Check Express Finance, Inc. in
the amount of $500,000 dated August 31, 1995.
Mortgage Note Payable to John Trinh and Cindy Trinh by Checkpoint Information
Services, Inc. in the amount of $90,000 dated December 16, 1988, assumed by
Check Express, Inc. in conjunction with the Stock Purchase Agreements by and
among Check Express, Inc., Checkpoint Information Services, Inc. and the
Stockholders of Checkpoint Information Services, Inc. dated December 17, 1990.
Mortgage Note Payable to 500 Liquors, Inc. by Check Express Stores, Inc. in the
amount of $75,000 dated May 31, 1994.
Promissory Note Payable to RW Enterprises, Inc. by Check Express, Inc. and
Peterlyn, Inc. in the amount of $500,000 dated August 15, 1994 made in
connection with the Asset Purchase Agreement by and among Check Express
Florida, Inc. and RW Enterprises, Inc., included as Exhibit 10.14 to the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994.
Subordinated Promissory Note payable to Linda M. Dunn by Check Express, Inc. in
the amount of $7,509.49 dated December 17, 1990, in conjunction with the Stock
Purchase Agreements by and among Check Express, Inc., Checkpoint Information
Services, Inc. and the Stockholders of Checkpoint Information Services, Inc.
dated December 17, 1990.
Subordinated Promissory Note payable to Freeman Investments by Check Express,
Inc. in the amount of $144,500.89 dated December 17, 1990, in conjunction with
the Stock Purchase
<PAGE> 208
SCHEDULE 3.15
October 12, 1995
Page 8
Agreements by and among Check Express, Inc., Checkpoint Information Services,
Inc. and the Stockholders of Checkpoint Information Services, Inc. dated
December 17, 1990. This note payable has been amended, by letter dated May 12,
1995, to eliminate the balloon payment due November 1, 1995 and providing for
liquidation of the then remaining balance at the same monthly payment and
interest rate for the term necessary to liquidate the balance to zero.
Subordinated Promissory Note payable to Mari S. Gillman by Check Express, Inc.
in the amount of $4,204.04 dated December 17, 1990, in conjunction with the
Stock Purchase Agreements by and among Check Express, Inc., Checkpoint
Information Services, Inc. and the Stockholders of Checkpoint Information
Services, Inc. dated December 17, 1990.
Subordinated Promissory Note payable to Gene F. Lang by Check Express, Inc. in
the amount of $54,686.85 dated December 17, 1990, in conjunction with the Stock
Purchase Agreements by and among Check Express, Inc., Checkpoint Information
Services, Inc. and the Stockholders of Checkpoint Information Services, Inc.
dated December 17, 1990.
Subordinated Promissory Note payable to Steven A. Nichols by Check Express,
Inc. in the amount of $8,408.08 dated December 17, 1990, in conjunction with
the Stock Purchase Agreements by and among Check Express, Inc., Checkpoint
Information Services, Inc. and the Stockholders of Checkpoint Information
Services, Inc. dated December 17, 1990.
Subordinated Promissory Note payable to Michael W. O'Shaughnessy by Check
Express, Inc. in the amount of $16,816.49 dated December 17, 1990, in
conjunction with the Stock Purchase Agreements by and among Check Express,
Inc., Checkpoint Information Services, Inc. and the Stockholders of Checkpoint
Information Services, Inc. dated December 17, 1990. This note payable has been
amended, by letter dated September 29, 1995, to eliminate the balloon payment
due November 1, 1995 and providing for liquidation of the then remaining
balance at the same monthly payment and interest rate for the term necessary to
liquidate the balance to zero.
Subordinated Promissory Note payable to Aldeena G. Osgood by Check Express,
Inc. in the amount of $8,408.08 dated December 17, 1990, in conjunction with
the Stock Purchase Agreements by and among Check Express, Inc., Checkpoint
Information Services, Inc. and the Stockholders of Checkpoint Information
Services, Inc. dated December 17, 1990.
Subordinated Promissory Note payable to Charles E. Osgood by Check Express,
Inc. in the amount of $8,408.08 dated December 17, 1990, in conjunction with
the Stock Purchase Agreements by and among Check Express, Inc., Checkpoint
Information Services, Inc. and the Stockholders of Checkpoint Information
Services, Inc. dated December 17, 1990.
Subordinated Promissory Note payable to Jim and Sandy Palazzi by Check Express,
Inc. in the amount of $4,204.04 dated December 17, 1990, in conjunction with
the Stock Purchase
<PAGE> 209
SCHEDULE 3.15
October 12, 1995
Page 9
Agreements by and among Check Express, Inc., Checkpoint Information Services,
Inc. and the Stockholders of Checkpoint Information Services, Inc. dated
December 17, 1990.
Subordinated Promissory Note payable to Pete F. Rich and Gail R. Rich by Check
Express, Inc. in the amount of $8,408.08 dated December 17, 1990, in
conjunction with the Stock Purchase Agreements by and among Check Express,
Inc., Checkpoint Information Services, Inc. and the Stockholders of Checkpoint
Information Services, Inc. dated December 17, 1990. This note payable has been
amended, by letter dated September 29, 1995, to eliminate the balloon payment
due November 1, 1995 and providing for liquidation of the then remaining
balance at the same monthly payment and interest rate for the term necessary to
liquidate the balance to zero.
Subordinated Promissory Note payable to Charles S. Sink by Check Express, Inc.
in the amount of $12,612.12 dated December 17, 1990, in conjunction with the
Stock Purchase Agreements by and among Check Express, Inc., Checkpoint
Information Services, Inc. and the Stockholders of Checkpoint Information
Services, Inc. dated December 17, 1990. This note payable has been amended, by
letter dated September 29, 1995, to eliminate the balloon payment due November
1, 1995 and providing for liquidation of the then remaining balance at the same
monthly payment and interest rate for the term necessary to liquidate the
balance to zero.
Subordinated Promissory Note payable to Holbrook Stapp by Check Express, Inc.
in the amount of $4,204.04 dated December 17, 1990, in conjunction with the
Stock Purchase Agreements by and among Check Express, Inc., Checkpoint
Information Services, Inc. and the Stockholders of Checkpoint Information
Services, Inc. dated December 17, 1990.
NOTE: An offer was extended by the Company to all Checkpoint
Information Services, Inc. note holders above to amend the
terms of their original notes as outlined for those indicated
as having been amended above. Mr. Gene F. Lang has declined
to accept the offer. All others are pending notification to
the Company of as to acceptance of the offer.
Promissory Note payable to American Check Cashing Company, Inc. and American
Express Travel Related Services Company by Check Express Florida, Inc. in the
amount of $225,000 dated June 14, 1994, made in connection with the Asset
Purchase Agreement by and among Check Express Florida, Inc. and American Check
Cashing Company, included as Exhibit 10.9 to the Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1994. Payments due to American Check
Cashing Company, Inc. under this note are subject to a garnishment action
against Mr. Charles Gibson, President of American Check Cashing Company, Inc.,
as filed April 29, 1994 by Fresno Count Clerk, case number 287152-3.
Promissory Note payable to American Check Cashing Company, Inc. by Check
Express Florida, Inc. in the amount of $82,500 dated August 11, 1994, made in
connection with the Assignment
<PAGE> 210
SCHEDULE 3.15
October 12, 1995
Page 10
and Assumption of Contract by and between American Check Cashing Company, Inc.
and Check Express Florida, Inc. included as Exhibit 10.13 to the Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1994.
Noncompetition Agreement payable to Kenneth L. Graham and Sandra J. Graham by
Check Express Florida, Inc. in the amount of $50,000 dated July 1, 1994, made
in connection with the Asset Purchase Agreement by and among Check Express
Florida, Inc. and Checkline Financial, Inc., included as Exhibit 10.10 to the
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994.
Promissory Note payable to Par Ventures, Inc. by Check Express Florida, Inc. in
the amount of $160,000 dated January 3, 1994, made in connection with the
Agreement for Purchase and Sale by and between Par Ventures, Inc. and Check
Express Florida, Inc., included as Exhibit 29.3 to the Annual Report on Form
10-KSB for the fiscal year ended December 31, 1993. Partial Assignment to Gene
F. Lang of Promissory Note Payable to Bay Area Investment Group, Inc. by Check
Express Florida, Inc. in the amount of $40,867.33 dated September 8, 1992, in
connection with the Agreement for Purchase and Sale by and between Bay Area
Investment Group, Inc., as Seller, and Check Express Florida, Inc., as Buyer,
dated September 8, 1992, for the purchase and sale of the assets of the
business described as the Fern Park Store, 6851 Highway 17-92 South, Fern Park,
Florida 32730.
Partial Assignment to Francis E. Lang Keogh Plan c/o American National Bank of
Promissory Note Payable to BAIG GROUP, INC., 1989-I by Check Express Florida,
Inc. in the amount of $40,867.33 dated September 8, 1992, in connection with
the Agreement for Purchase and Sale by and between BAIG Group, Inc., 1989-I, as
Seller, and Check Express Florida, Inc., as Buyer, dated September 8, 1992, for
the purchase and sale of the assets of the business described as the Chickasaw
Store Location, 8004 East Colonial Drive, Orlando, Florida 32812 and as the
Edgewater Store Location, 5701 Edgewater Drive, Orlando, Florida 32810.
Term Promissory Note in the amount of $650,000 by The Galleon Corporation as
"Maker" and Check Express Florida, Inc. as "Holder" in conjunction with the
Asset Purchase Agreement by and among Check Express Florida, Inc., The Galleon
Corporation, and Hubert N. Rhoden, included as Exhibit 10.15 to the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994.
Term Promissory Note in the amount of $280,000 by DANCAM, Inc. as "Maker" and
Check Express Florida, Inc. as "Holder" in conjunction with the Agreement for
Purchase and Sale by and between Check Express Florida, Inc. and DANCAM, Inc.,
included as Exhibit 10.8 to the Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1994.
Promissory Note in the amount of $15,000 by DANCAM, Inc. and Daniel J. Campbell
as "Maker"
<PAGE> 211
SCHEDULE 3.15
October 12, 1995
Page 11
and Check Express, Inc. as "Holder".
Term Promissory Note in the amount of $100,000 by Blue & Gold Check Cashing,
Inc. as "Maker" and Check Express South Carolina, Inc. as "Holder," in
conjunction with the Agreement for Purchase and Sale by and between Check
Express South Carolina, Inc. and Blue & Gold Check Cashing, Inc., included as
Exhibit 10.11 to the Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1994.
Promissory note receivable from Mike Riordon dated January 1, 1995 in the
amount of $45,903.50.
LEASES FOR REAL PROPERTY OTHER THAN STORE LOCATIONS:
Lease by and between PARA MET PLAZA ASSOCIATES and Check Express, Inc. for
corporate office space located at 101 E. Kennedy Blvd., Suite 3800, Tampa,
Florida, 33601.
Lease by and between Northgate SC Company, Ltd. and Check Express Florida, Inc.
for storage space located at 8943 N. Florida Avenue, Tampa, Florida, 33604.
First Amendment to Lease effective as of September 29, 1995 between The Mutual
Life Insurance Company of New York ("Landlord") and Check-X-Change, Inc.
("Tenant"), for month-to-month extension of lease term related to real property
located at 2625 Piedmont Road in Atlanta, Fulton County, Georgia (a check
cashing business sold to a franchisee of Check Express USA, Inc., DANCAM, Inc.,
effective April 1, 1994).
Check Express, Inc. remains as guarantor through April 1, 1999, on behalf of
The Galleon Corporation, on the assignment of lease for real property located
at 4050 Forest Hill Blvd., West Palm Beach, Florida, 33406, such assignment
having been given in connection with the sale of the check cashing business at
that location by Check Express Florida, Inc. to The Galleon Corporation
effective October 1, 1994.
Check Express Florida, Inc. remains as guarantor on behalf of California Check
Cashing Stores II, Inc., on the assignment of lease for real property located
at 5350 Pacific Avenue, Stockton, California, 95207, such assignment having
been given in connection with the sale of the check cashing business at that
location by Check Express Florida, Inc. to California Check Cashing Stores II,
Inc. effective January 31, 1995.
Check Express Florida, Inc. remains as guarantor on behalf of California Check
Cashing Stores II, Inc., on the assignment of lease for real property located
at 219 E. Weber Avenue, Stockton, California, 95202, such assignment having
been given in connection with the sale of the check cashing business at that
location by Check Express Florida, Inc. to California Check Cashing Stores II,
Inc. effective January 31, 1995.
<PAGE> 212
SCHEDULE 3.15
October 12, 1995
Page 12
Check Express Florida, Inc. remains as guarantor on behalf of California Check
Cashing Stores II, Inc., on the assignment of lease for real property located
at 711 Airport Way, Stockton, California, 95202, such assignment having been
given in connection with the sale of the check cashing business at that
location by Check Express Florida, Inc. to California Check Cashing Stores II,
Inc. effective January 31, 1995.
Check Express Florida, Inc. remains as guarantor through January 31, 1996, on
behalf of California Check Cashing Stores II, Inc., on the assignment of lease
for real property located at 1320 Standiford Ave., Space 8, Modesto,
California, 95359, such assignment having been given in connection with the
sale of the check cashing business at that location by Check Express Florida,
Inc. to California Check Cashing Stores II, Inc. effective January 31, 1995.
Check Express Florida, Inc. remains as guarantor on behalf of California Check
Cashing Stores II, Inc., on the assignment of lease for real property located
at 2508 Oakdale Rd., C-3, Modesto, California, 95355, such assignment having
been given in connection with the sale of the check cashing business at that
location by Check Express Florida, Inc. to California Check Cashing Stores II,
Inc. effective January 31, 1995.
<PAGE> 213
SCHEDULE 3.15
October 12, 1995
Page 13
The Company and the Subsidiaries sublet certain real property as follows:
1. Refer to Lease Agreement dated December 17, 1988 by and between
CHECKPOINT, INC. and Mr. Harold Holliday, Jr., attached hereto as part
of Schedule 3.15, which summarizes the terms of the month-to-month
verbal lease agreement in effect between Mr. Holliday and Check
Express South Carolina, Inc. which now owns the subject property (this
is a small section of the property described under "Title Documents"
above as located at 2122 Cosgrove, North Charleston, South Carolina,
29405);
2. Sublease Agreement between Check Express, Inc./Peterlyn Inc. and
Columbia Agencies, Inc. related to real property at 2632 South 38th
Street, Tacoma, Washington.
3. Check Express Florida, Inc. sublets a portion of the real property
located at 1335 Brandon Blvd., #F, Brandon, Florida, under a
month-to-month verbal lease agreement to PATIO SHACK at $300.00 per
month.
LEASES FOR PERSONAL PROPERTY:
Lease agreement related to assets of store 501 by and between Lawrence Weinberg
and Ambassador Financial Services, assigned by Lawrence Weinberg to Check
Express South Carolina, Inc., "Assignee", such assignment approved by Citizens
Banking Company, Successor in Interest, by Assignment from Ambassador Financial
Services, Inc., "Lessor," such assignment dated effective August 6, 1991.
Lease agreement related to certain computer equipment located at store 210 by
and between Check Express Florida, Inc. and IBM Credit Corporation.
Lease agreement related to Mita copier located at corporate by and between
Check Express, Inc. and GE Capital dated June 4, 1993.
Lease agreement related to Xerox copier located at corporate by and between
Check-X-Change Corporation and Xerox dated November 6, 1992.
Lease agreement number 993054-6 related to certain computer equipment located
at corporate by and between Check-X-Change Corporation and First Portland
Leasing Corp. dated October 30, 1992.
Lease agreement number 993054-7 related to certain computer equipment located
at corporate by and between Check-X-Change Corporation and First Portland
Leasing Corp. dated February 4, 1993.
Lease agreement number 6514520 related to Executone telephone system equipment
and software license agreement, located at corporate office, by and between
Check Express, Inc. and GE Capital as accepted by Check Express, Inc. on April
19, 1994.
<PAGE> 214
SCHEDULE 3.15
October 12, 1995
Page 14
Lease agreement related to certain computer equipment located at corporate by
and between Check Express, Inc. and Sanwa Leasing Corporation dated May 31,
1994.
Certain personal property of the Company, comprised of computer equipment, is
being leased to The Galleon Corporation under a verbal lease agreement. See a
summary of the equipment and the terms of the verbal lease agreement summarized
on the page attached hereto as part of Schedule 3.15 entitled "Equipment Lease
for Hubert Rhoden."
AGREEMENTS FOR PURCHASE OR SALE OF BUSINESSES:
Agreements for the purchase or sale of stock or assets to which the Company or
any of the Subsidiaries is a party typically include general indemnification
language, corporate and/or personal guaranties by the buyer to the seller, and
security agreements in favor of the seller, and the Company and the
Subsidiaries continue to be contingently liable under or have rights under such
provisions for the period of time covered by the respective agreement. A
listing of all such agreements for the purchase or sale of stock or assets to
which the Company or any of the Subsidiaries has been a party follows.
1. Stock Purchase Agreements by and among Check Express, Inc., Checkpoint
Information Services, Inc. and the Stockholders of Checkpoint
Information Services, Inc. dated December 17, 1990, whereby Check
Express, Inc. acquired the business of two check cashing businesses
in Charleston, South Carolina, including certain real property
described as follows:
- Title to Real Estate, Book V183, Page 682, State of South
Carolina, County of Charleston, related to real property
located at E. Meeting Street, North Charleston, South
Carolina, 29418 (vacant lot). There is a title defect
effecting this property as described in that certain letter of
April 6, 1989 from David M. Swanson of the law firm of Sinkler
& Boyd to Frances I. Cantwell, Esquire, City Attorney for the
City of Charleston, South Carolina; and
- Title to Real Estate, Book K180, Page 769, State of South
Carolina, County of Charleston, related to real property
located at 2122 Cosgrove Avenue, North Charleston, South
Carolina, 29405 (store F802 under month to month oral lease to
Check Express USA, Inc. franchisee at $750.00 per month).
2. Asset Purchase Agreement by and among Check Express Florida, Inc. and
RW Enterprises, Inc., included as Exhibit 10.14 to the Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1994, whereby
Check Express Florida, Inc. purchased three check cashing businesses
located as follows:
- 10519 Bridgeport Way SW, Tacoma, WA 98499;
- 10707 Pacific Ave., Suite D, Tacoma, WA 98444; and
<PAGE> 215
SCHEDULE 3.15
October 12, 1995
Page 15
- 6302 6th Avenue, Tacoma, WA 98406.
3. Asset Purchase Agreement by and among Check Express Florida, Inc. and
American Check Cashing Company, included as Exhibit 10.9 to the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994,
whereby Check Express Florida, Inc. purchased the assets of three
check cashing businesses located as follows:
- 219 E. Weber Ave., Stockton, CA 95202;
- 5350 Pacific Ave., Stockton, CA 95207; and
- 711 Airport Way, Stockton, CA 95207.
4. Assignment and Assumption of Contract by and between American Check
Cashing Company, Inc. and Check Express Florida, Inc. included as
Exhibit 10.13 to the Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1994, whereby Check Express Florida, Inc. acquired
the food stamp distribution business located at 223 E. Weber Avenue,
Stockton, CA 95202.
5. Asset Purchase Agreement by and among Check Express Florida, Inc. and
Checkline Financial, Inc., included as Exhibit 10.10 to the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994,
whereby Check Express Florida, Inc. acquired certain assets of the two
check cashing businesses located as follows:
- 1320 Standiford Ave., Suite E-8, Modesto, CA 95350; and
- 2508 Oakdale Road, Suite C-3, Modesto, CA 95353.
6. Agreement for Purchase and Sale by and between Par Ventures, Inc. and
Check Express Florida, Inc., included as Exhibit 29.3 to the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1993,
whereby Check Express Florida, Inc. acquired two check cashing
businesses located as follows:
- 2532-B Skipper Road, Tampa, Florida 33613; and
- 1335 Brandon Blvd., #F, Brandon, Florida 33511.
7. Agreement for Purchase and Sale by and between Check Express Florida,
Inc. and DANCAM, Inc., included as Exhibit 10.8 to the Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1994, whereby
Check Express Florida, Inc. sold the assets of the check cashing
business located at 2625 Piedmont Road, Atlanta, GA 30324.
8. Agreement for Purchase and Sale by and between Check Express South
Carolina, Inc. and Blue & Gold Check Cashing, Inc., included as
Exhibit 10.11 to the Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1994, whereby Check Express South
<PAGE> 216
SCHEDULE 3.15
October 12, 1995
Page 16
Carolina, Inc. sold the two check cashing businesses located as
follows:
- 5522 Rivers Avenue, N. Charleston, SC 29418; and
- 2122 Cosgrove Avenue, N. Charleston, SC 29418.
9. Agreement for Purchase and Sale by and between Bay Area Investment
Group, Inc., as Seller, and Check Express Florida, Inc., as Buyer,
dated September 8, 1992, for the purchase and sale of the assets of
the business described as the Fern Park Store, 6851 Highway 17-92
South, Fern Park, Florida 32730.
10. Agreement for Purchase and Sale by and between BAIG Group, Inc.,
1989-I, as Seller, and Check Express Florida, Inc., as Buyer, dated
September 8, 1992, for the purchase and sale of the assets of the
business described as the Chickasaw Store Location, 8004 East Colonial
Drive, Orlando, Florida 32812 and as the Edgewater Store Location,
5701 Edgewater Drive, Orlando, Florida 32810.
11. Agreement and Plan of Merger dated December 1, 1993, by and among
Check Express Florida, Inc., Selann, Inc., and Stephen L. Selka,
whereby Check Express Florida, Inc. acquired the check cashing
business located at 4050 Forest Hill Boulevard, West Palm Beach,
Florida, 33406.
12. Agreement and Plan of Merger dated December 1, 1993, by and among
Check Express Florida, Inc., Selann No. 2, Inc., and Stephen L. Selka,
whereby Check Express Florida, Inc. acquired the check cashing
business located at 3280 South Military Trail, Lake Worth, Florida,
33463.
13. Stock Purchase Agreement, effective as of January 1, 1994, by and
among Check Express, Inc., Peterlyn, Inc. and Peter F. Borer, whereby
Check Express, Inc. acquired the four check cashing businesses located
as follows:
- Check Express 101, 14615 1st Avenue South, Burien, WA 98166;
- Check Express 102, 2632 South 38th Street, Tacoma, WA 98409;
- Check Express 103, 13028 Aurora Avenue North, Seattle, WA
98133; and
- Check Express 104, 10515 Pacific Hwy. S.W., Tacoma, WA 98499.
14. Agreement and Plan of Reorganization dated September 11, 1993, by and
among Check Express, Inc., Check-X-Change Corporation, H. Jeffrey
Voss, Roger D. Goertz, Joseph E Budde, Robert E. Bunn, Daniel E. Bunn,
Bill Jameson, Joseph Jones, Holly Mulcahey, Gene Quigg, and Robert
Sutcliff, whereby Check Express, Inc. acquired all the outstanding
common stock of Check-X-Change Corporation.
<PAGE> 217
SCHEDULE 3.15
October 12, 1995
Page 17
15. Agreement for Sale of Business and Bill of Sale between Oakbrook
Financial Corporation as "Buyer" and Check Express, Inc. as "Seller"
dated July 25, 1994, included as Exhibit 10.12 to the Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1994, whereby Check
Express, Inc. disposed of the check cashing business located at 2929
SE Powell Blvd., Portland, OR 97202.
16. Asset Purchase Agreement by and among Check Express Florida, Inc., The
Galleon Corporation, and Hubert N. Rhoden, included as Exhibit 10.15
to the Annual Report on Form 10-KSB for the fiscal year ended December
31, 1994, whereby Check Express Florida, Inc. sold the two check
cashing businesses located as follows:
- 4050 Forest Hill Boulevard, West Palm Beach, Florida, 33406;
and
- 3280 South Military Trail, Lake Worth, Florida, 33463.
17. Agreement for Purchase and Sale of Assets dated January 6, 1995, by
Check Express Florida, Inc. as "Seller" and California Check Cashing
Stores, Inc. as "Buyer," included as Exhibit 10.16 to the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994. The
Company has been advised by California Check Cashing Stores, Inc. that
it may attempt to make a claim to reduce the purchase price assigned
to the food stamp distribution operation.
Reference is made to all commitments listed, included or referred to in other
schedules to this agreement including exhibits to Form 10-KSB.
<PAGE> 218
SCHEDULE 3.15
EMPLOYMENT AGREEMENT
This Agreement is made and entered into by and between _______________
___________________, a corporation organized under the laws of _____________
(hereinafter referred to as "Company"), and _______________ (hereinafter
referred to as "Employee"). Employee is being employed by company in the
following capacity: ___________________________________________.
(Job Title)
In consideration of the employment and/or continued employment of
Employee by Company and in consideration of the benefits and mutual covenants
herein contained and the further considerations passing between the parties
hereto, it is agreed by and between company and Employee as follows:
1. REASON FOR AGREEMENT. Company is engaged in the check cashing
business. The parties recognize and acknowledge that Company and its principals
have been engaged in this business for many years and over the course of time
have developed substantial good will, valuable relationships with customers,
trade secrets and particular means or methods of conducting its business, all
of which are worthy of protection. The parties further recognize the mutual
benefit of a clearer understanding of the obligations of Company and Employee.
2. COMPENSATION. Employee will be initially paid $____________
per _________. Managers are exempt salaried employees. Tellers are hourly
employees. Head Tellers are salary non-exempt (the base weekly pay is for up to
46 straight-time hours; overtime will be paid at a half-time rate for hours in
excess of 40 to 46 hours; overtime will be paid at time and a half for hours in
excess of 46 per week). Time sheets are required for all employees. Company
reserves the right to change the amount of compensation from time to time at
Company's discretion, upon notice by Company to Employee.
3. DOCUMENTS AND RECORDS. It is expressly understood and agreed that
all materials, lists, documents, and records made or received in the court of
company's business by Employee, including but not limited to those documents
referred to in paragraphs 6 and 7 of this Agreement, shall be and shall remain
the sole separate property of the Company, and shall be returned to Company upon
Employee's termination of employment for any reason or as directed by Company.
4. TERMINATION. It is agreed that this Agreement may be terminated by
either party without cause upon fourteen (14) days' prior written notice to the
other. It is further agreed that the services of Employee under this Agreement
may be terminated by
1
<PAGE> 219
Company at any time for good and sufficient cause, which includes; negligence,
inattention to duties, incompetence, shortage on accounts, immoral conduct, and
failure on the part of Employee to carry out the rules and regulations of
Company or any of his duties and obligations under this Agreement.
5. TRAINING, POLICIES. As a part of the consideration for the
execution of this Agreement and for the training and employment of Employee by
Company, Employee agrees that, during the term of this Agreement, he shall
devote his entire time and his best efforts during normal business hours to
providing satisfactory service to Company. Employee agrees to comply at all
times with the rules and regulations which may be established from time to time
by Company. Such rules and regulations may be amended from time to time at. the
sole discretion of Company.
6. REPRESENTATIONS. Neither Employee nor any affiliate of
Employee including without limitation, former employers, partners, or family
members, owns or is presently developing, or is contemplating developing, a
system for operating, advertising, promotion, and managing a check cashing
business.
7. TRADE SECRETS. It is expressly understood and acknowledged
by Employee that all books of accounts, orders, customer lists, prospect lists
or lists of potential or actual customers of company and any other document
reflecting the names and addresses of past, existing or potential customers,
Company's business methods and procedures, profits, and other such commercial
information concerning Company's business are the property of the Company and
contain confidential trade secrets and commercial information of Company. It is
further understood and acknowledged by Employee that such documents and
information have been acquired and prepared by Company over the years at the
expense and effort of Company, are of great value to Company in its business,
and the confidentiality of such information and restrictions on any use of such
information are essential to Company.
It is therefore understood and agreed by Employee that, as part of the
consideration for the execution of this Agreement information shall be
considered and maintained by Employee as trade secrets and commercial
information, and will not be revealed, directly or indirectly by Employee to
any person, firm, or corporation (other than Company or its agents and
employees) without the express written consent of Company, both during his
employment and after termination thereof.
8. INTELLECTUAL PROPERTY. As part of the consideration for the
execution of this Agreement and the employment of Employee by Company, Employee
hereby assigns and agrees to assign to Company, its successors, or designees
all his rights in and to all inventions, discoveries and improvements (whether
patentable or
2
<PAGE> 220
not) made or conceived by Employee, either solely or jointly with others,
provided such inventions, discoveries and improvements are a result directly or
indirectly, wholly or in part, of his employment or are related directly or
indirectly, wholly or in part, to any business conducted at any time prior to
any termination of his employment, by Company, It is understood that
inventions, discoveries and improvements made by Employee prior to his
employment by Company are not included in this Agreement.
Employee specifically agrees that, except as Company may direct or may
consent in writing, he will not disclose at any time knowledge, or other data,
possessed and kept confidential by Company which he may obtain during the
course and by virtue of his employment, including but not limited to research
and development data, reports, licenses, processes and methods, inventions and
discoveries.
9. PROTECTION COVENANTS. As a part of the consideration for
the execution of this Agreement and for the employment of Employee by company,
Employee agrees that, during his employment by Company and for two (2) years
after the termination of this Agreement for any reason whatsoever, whether with
or without cause and whether voluntary or involuntary, he will not directly or
indirectly, for himself or on behalf of or in conjunction with any other
person, persons, firm, joint venture, partnership, company, corporation,
organization, or association:
(A) Engage in a check cashing business within the State of Florida or any other
state in which Company has conducted business.
(B) Solicit, divert, take away, or serve any customer of Company with whom he
has either had dealings or contact or had personal knowledge of dealings or
contact by other Company employees during the Five years immediately preceding
the termination of the Agreement.
(C) Hire any employee of Employer. Employee also agrees that he will not call
upon, contact, or otherwise communicate with any such customer or employees of
Company for the purpose of soliciting, diverting, taking away or hiring any
such customers or employees, and/or disparaging Company in any way.
It is understood and intended by Employee and Company that the
foregoing restrictive covenants shall be construed as agreements independent of
any other provision of this Agreement or otherwise, shall not constitute a
defense to the enforcement by Company of such covenants.
Company and Employee agree that the foregoing covenants are
appropriate and reasonable when considered in light of the nature and extent of
the business conducted by Company and the nature and
3
<PAGE> 221
extent of Employee's obligations hereunder. It is agreed by Company and
Employee that, if any portion of the restrictive covenants set forth above are
held to be unreasonable, arbitrary or against public policy, then such portion
of such covenant shall be considered divisible both as to time and geographic
area. Company and Employee agree that; if any court of competent jurisdiction
determines the specified time period or the specified geographic area
encompassed by the foregoing restrictive covenants to be unreasonable,
arbitrary, or against public policy, then a lesser time period or geographical
area which is determined to be reasonable, non-arbitrary, and not against
public policy shall be enforced against Employee.
10. INJUNCTIVE RELIEF. Employee represents and acknowledges that
his skill and abilities in the check cashing business are significantly
enhanced or will largely or entirely be due to the training given him by
Company. Further, Employee represents and acknowledges that his experience and
capabilities are such that he can obtain employment within the area defined in
paragraph 8 pursuant to this Agreement in a business other than the check
cashing business, and that he is fully capable of earning a livelihood
independent of that business. As a consequence of such expertise and
capability, temporary or permanent injunctive relief of the period and type
defined in paragraph 8 would not cause Employee an undue burden or hardship.
11. RIGHT TO SET OFF. Company may establish procedures to account
for cash under the control of Employee. In the event Company determines in
accordance with such established procedures or otherwise that there is a
shortage of any amount which was under the control of Employee, Employee shall
indemnify and hold Company harmless from all such amounts, and Company, in
certain circumstances, shall have the right to set off any such amount against
any sums owed by Company to Employee.
12. DRUG AND POLYGRAPH TESTING POLICY. Employee acknowledges that
the rules and regulations which may be established by Company is a requirement
that , in certain circumstances, Employee submit to drug testing and polygraph
tests and that the failure to comply with such rules and regulations shall be,
pursuant to paragraph 4, grounds for termination.
13. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the state of __________________.
14. ENTIRE AGREEMENT. This Agreement supersedes any prior
employment agreement between the parties, and any agreement or agreements
concerning in any way the same subject matter.
15. ATTORNEYS' FEES. In the event that either party hereto shall
file an action to enforce any provision of this Agreement or seek damages for
breach hereof, the prevailing party shall be paid
4
<PAGE> 222
in addition to all sums which may be required to be paid a reasonable sum for
such prevailing party's attorney's fees.
16. READJUSTMENT OF CONTRACT ON INVALIDITY. Employee acknowledges
receipt of a copy of this Agreement and agrees that, if any provision of this
Agreement is held to be too broad to be enforced in its entirety, such
provision shall be construed to create an obligation to the full extent
permitted by law, and if any provision is declared void or unenforceable, such
a finding shall not impair the force and effectiveness of the remaining
provisions.
17. WAIVER REMEDIES. Any waiver or waivers by a party of any provision
or term of this Agreement shall not be deemed a waiver of any other provision
or term contained herein. All remedies provided under this Agreement shall be
taken and construed as cumulative and in addition to every other remedy
provided for herein or by law.
18. CHANGES TO AGREEMENT. This Agreement may be changed only by an
agreement in writing.
19. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this agreement.
I have carefully read this Agreement and have been given an
opportunity to ask questions of Company's representative. I have had an
opportunity to consult with an attorney of my choice (at my expense) prior to
signing this Agreement and understand that signing this Agreement is a
condition of my employment and/or continued employment.
DONE AND SIGNED at ___________________, this ____ day of __________,
19____.
WITNESSES:
- - -------------------------- -----------------------------
Employee
- - -------------------------- -----------------------------
5
<PAGE> 223
Check Express and Consolidated Subsidiaries
Summary of Insurance Policies
<TABLE>
<CAPTION>
Company GL Account Insured With Type of Policy Policy Number
- - ------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
MT 1710-00 MML Bay State Life Flexible Premium 7 836 907
Insurance Company Variable Whole Life
P.O. Box 75302 Larry F. Lang
Chicago, IL 60675-5302 $1,000,000
"Key Man"
MT 1741-00/5420-00 National Union Fire Co of Pittsburgh Directors & Officers Insurance 444-12-44
and Company Reimbursement
Policy
MT 1740-00/5420-00 Fidelity & Deposit Company of Maryland Fidelity Bond $500,000 CCP0009513
FL 1744-9900/5420-XXXX Associated Industries of Florida Worker's Comp 942302945
FL/MT/CF/CX/US Premium Accounting Dept. Corporate
P.O. Box 619001 Florida Stores
Pompano Beach, FL 33061-9001
(800) 866-1600
FL 1744-0911/5420-0911 Transamerica Premier Worker's Comp 80238020
1744-0912/5420-0912 Insurance Company California Stores
1744-0913/5420-0913
1744-0914/5420-0914
1744-0915/5420-0915
1744-916/5420-916 Transamerica Premier Worker's Comp 80238020
Insurance Company California Stores
FL 1740-9900/5420-XXXX Aetna Life & Casualty Commc'l Pkg 023 ACM 24433000
FL/MT/IN/WA/SC P.O. Box 1996 Auto/Fire/Liability/
Elmira, NY 14902-1996 Inland Marine
FL 1740-0916/5420-0916 Nat'l Union Fire Co. of Pittsburgh Commercial Crime Pkg. 443-5521
American International Companies Fidelity & Crime Coverage
P.O. Box 10642
Newark, NJ 07193-0642
(212) 770-1463
IN 1744-01/5420-01 ITT Hartford Worker's Comp 77 W2 202865
1744-03/5420-03 P.O. Box 2955 Indiana Stores
1744-04/5420-04 Hartford, CT 06104-2955
<CAPTION>
Company Effective Dates Agent Premium
- - ------- --------------- ----- --------
<S> <C> <C> <C>
MT 12/16/94 - 12/15/95 Lawrence J. Livingston $11,000 Paid 11/30/94 Check # 9576
101 Starcrest Drive
Clearwater, FL 34625
MT 12/2/94 - 12/2/95 Roger Bouchard Insurance Inc. $31,450 Paid
P.O. Box 6090
Clearwater, FL 34618
MT 7/25/95 - 11/1/95 Suncoast Insurance Associates $ 741 Paid
P.O. Box 22668
Tampa, FL 33622-2668
(813) 289-5200
Fax (813) 289-4561
Tracy Alessi
FL 11/9/94 - 11/9/95 Poe & Brown $15,114 Monthly Installments
P.O. Box 1348 Commencing 9/94
Tampa, FL 33601-1348
FL 6/24/94 - 6/24/95 Ray Ruscitti Insurance Agency Inc. $5,392.82 Paid 8/15/94 Check #7874 $4228.82
1725 Southeast 82nd Avenue Paid 9/1/94 Check #8047 $1164.00
P.O. Box 16188 (2,426.57) Refund per Audit 8/8/95
Portland, OR 97216 Refund Ck $1747.49
(503) 775-8641
6/24/95 - 6/24/96 Ray Ruscitti Insurance Agency Inc. $678.08 Above Refund Applied to Premium
1725 Southeast 82nd Avenue
P.O. Box 16188
Portland, OR 97216
(503) 775-8641
FL 11/1/94 - 11/1/95 Poe & Brown $21,090 Monthly Installments
P.O. Box 1348 Commencing 10/94
Tampa, FL 33601-1348
FL 8/12/94 - 8/12/95 Adrian LaPlante $19,932 Paid 8/25/94 Check # 7946
LaPlante Agency Inc.
301 Belcher Road
Clearwater, FL 34618
(813) 796-8566
8/12/94 - 9/12/94 $ 1,894 Paid
IN 1/21/95 - 1/21/96 Poe & Brown $ 761 Paid 1/23/95 Check # 1215
P.O. Box 1348
Tampa, FL 33601-1348
</TABLE>
<PAGE> 224
<TABLE>
<CAPTION>
Company GL Account Insured With Type of Policy Policy Number
- - ------- ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
PL 1730-0106/5420-0106 Transamerica Premier Commc'l Package including T73L338300
1730-0107/5420-0107 Insurance Company Crime Coverage
1730-0108/5420-0108
1730-0106/5420-0106 Transamerica Premier Commc'l Package including T73L338300
1730-0107/5420-0107 Insurance Company Crime Coverage
1730-0108/5420-0108
1730-0101/5420-0101 Transamerica Premier Crime & Fidelity T73L338300
1730-0102/5420-0102 Insurance Company
1730-0103/5420-0103
<CAPTION>
Company Effective Dates Agent Premium
- - ------- --------------- ----- --------
<S> <C> <C> <C>
PL 8/94 - 4/1/95 Ray Ruscitti Insurance Agency Inc. $ 4,300.00 Installment Payments
1725 Southeast 82nd Avenue 3,026.00
P.O. Box 16188 1,733.00
Portland, OR 97216 ----------
(503) 775-8641 $ 9,059.00 Annual Premium/Prorated w/previous owner
==========
4/1/95 - 4/1/96 Ray Ruscitti Insurance Agency Inc. $ 6,256.00 Installment Payments
1725 Southeast 82nd Avenue 4,004.00
P.O. Box 16188 3,751.00
Portland, OR 97216 ----------
(503) 775-8641 $14,011.00 Annual Premium
145.01 Interest Charges
----------
$14,156.01 Total Premium Expense
==========
4/17/95 - 4/1/96 Ray Ruscitti Insurance Agency Inc. $ 2,562.00 Installment Payments
1725 Southeast 82nd Avenue 5,959.00
P.O. Box 16188 1,788.00
Portland, OR 97216 ----------
(503) 775-8641 $10,309.00 Annual Premium
103.09 Interest Charges
----------
$10,412.09 Total Premium Expense
==========
</TABLE>
<PAGE> 225
SCHEDULE 3.15
STORE LEASES
CHECK EXPRESS USA, INC.
None
CHECK-X-CHANGE, INC.
None
PETERLYN, INC.
<TABLE>
<S> <C> <C>
- - ---------------------------------------------------------------------------------
Check Express 101 CURRENT RENT: $655
14615 1st Ave. So. EXPIRATION: 12/31/96
Burien, WA 98168 OPTION: no
- - ---------------------------------------------------------------------------------
Check Express 102 CURRENT RENT: $3162.50
2632 So. 38th Street EXPIRATION: 4/30/99
Tacoma, WA 99406 OPTION: no
- - ---------------------------------------------------------------------------------
Check Express 103 CURRENT RENT: $1042.72
13754-A Aurora Ave. N. EXPIRATION: 8/31/99
Seattle, WA 98133 OPTION: no
- - ---------------------------------------------------------------------------------
Check Express 106 CURRENT RENT: $1916.50
10519 Bridgeport Way S.W. EXPIRATION: 5/31/97
Tacoma, WA 98499 OPTION: no
- - ---------------------------------------------------------------------------------
Check Express 107 CURRENT RENT: $1504.06
10707 Pacific Ave. Suite D EXPIRATION: 7/31/97
Tacoma, WA 98444 OPTION: yes
- - ---------------------------------------------------------------------------------
Check Express 108 CURRENT RENT: $1100
6302 6th Avenue EXPIRATION: none - verbal lease
Tacoma, WA 98406 OPTION:
CHECK EXPRESS FLORIDA, INC.
- - ---------------------------------------------------------------------------------
Check Express 203 CURRENT RENT: $1030
1628 Gulf-to-Bay Blvd. EXPIRATION: 9/30/98
Clearwater, FL 34615 OPTION: no
- - ---------------------------------------------------------------------------------
Check Express 207 CURRENT RENT: $1102.50
2940 34th Street So. EXPIRATION: 12/14/98
St. Petersburg, FL 33711 OPTION: yes
</TABLE>
<PAGE> 226
SCHEDULE 3.15
CHECK EXPRESS FLORIDA, INC. CONTINUED
<TABLE>
<S> <C> <C>
- - ----------------------------------------------------------------------------------
Check Express 208 CURRENT RENT: $1675
1415 N. Armenia Avenue EXPIRATION: 7/31/00
Tampa, FL 33607 OPTION: yes
- - ----------------------------------------------------------------------------------
Check Express 210 CURRENT RENT: $950
4001 E. Hillsborough Avenue EXPIRATION: 10/31/97
Tampa, FL 33610 OPTION: no
- - ----------------------------------------------------------------------------------
Check Express 216 CURRENT RENT: $924.27
820 3rd Avenue So. EXPIRATION: 9/30/95
St. Petersburg, FL 33701 OPTION: new lease commencing
10/1/95
- - ----------------------------------------------------------------------------------
Check Express 218 CURRENT RENT: $831.25
5561 Park Blvd. EXPIRATION: 3/31/98
Pinellas Park, FL 34665 OPTION: no
- - ----------------------------------------------------------------------------------
Check Express 220 CURRENT RENT: $1100
2355-B W. Hillsborough Avenue EXPIRATION: 12/31/98
Tampa, FL 33603 OPTION: yes
- - ----------------------------------------------------------------------------------
Check Express 223 CURRENT RENT: -0- until 12/1/95
2520 S. Semoran Blvd. EXPIRATION: 11/30/00
Orlando, FL 32822 OPTION: yes
- - ----------------------------------------------------------------------------------
Check Express 224 CURRENT RENT: $1016.67
2532-B Bearss Ave. EXPIRATION: 8/31/97
Tampa, FL 33613 OPTION: yes
- - ----------------------------------------------------------------------------------
Check Express 228 CURRENT RENT: $2187.52
1335 Brandon Blvd., #F EXPIRATION: 1/31/97
Brandon, FL 33511 OPTION: yes
- - ----------------------------------------------------------------------------------
Check Express 229 CURRENT RENT: $1300
1711-B N. 50th Street EXPIRATION: 5/31/96
Tampa, FL 33619 OPTION: no
- - ----------------------------------------------------------------------------------
Check Express 238 CURRENT RENT: $900 less $50
discount if paid by 1st of month
5526 66th Street N. EXPIRATION: 9/30/95
St. Petersburg, FL 33709 OPTION: new lease commencing
10/1/95
- - ----------------------------------------------------------------------------------
Check Express 241 CURRENT RENT: $1300
5701 Edgewater Drive EXPIRATION: 9/30/99
Orlando, FL 32810 OPTION: no
</TABLE>
<PAGE> 227
SCHEDULE 3.15
CHECK EXPRESS FLORIDA, INC. CONTINUED
<TABLE>
<S> <C> <C>
- - ------------------------------------------------------------------------------------
Check Express 242 CURRENT RENT: $1480.38
6851 Hwy. 17-92 So. EXPIRATION: 2/28/99
Fern Park, FL 32730 OPTION: no
- - ------------------------------------------------------------------------------------
Check Express 253 CURRENT RENT: $1250
3254 Central Avenue EXPIRATION: 11/30/98
St. Petersburg, FL 33712 OPTION: yes
- - ------------------------------------------------------------------------------------
Check Express 916 CURRENT RENT: $1200
223 E. Weber EXPIRATION: 9/30/95
Stockton, CA 95202 OPTION: no - store closed
CHECK EXPRESS SOUTH CAROLINA, INC.
- - ------------------------------------------------------------------------------------
Check Express 501 CURRENT RENT: $1725
5061 E. 38th Street EXPIRATION: 12/1/99
Indianapolis, IN 46218 OPTION: no
- - ------------------------------------------------------------------------------------
Check Express 503 CURRENT RENT: $662
2435 Sherman Drive EXPIRATION: 1/31/96
Indianapolis, IN 46218 OPTION: yes - exercised 7/6/95
- - ------------------------------------------------------------------------------------
Check Express 508 CURRENT RENT: $850
3801 Lafayette Rd. EXPIRATION: 5/31/00
Indianapolis, IN 46254 OPTION: yes
CHECK EXPRESS INC.
- - ------------------------------------------------------------------------------------
Check Express 201 CURRENT RENT: $1400
8207 N. Florida Avenue EXPIRATION: 3/18/00
Tampa, FL 33604 OPTION: no
- - ------------------------------------------------------------------------------------
Check Express 206 CURRENT RENT: $1200
2509 E. Colonial Drive EXPIRATION: 10/31/99
Orlando, FL 32803 OPTION: yes
- - ------------------------------------------------------------------------------------
Check Express 226 CURRENT RENT: $1600
4712 S. Orange Blossom Trail EXPIRATION: 7/31/05
Orlando, FL 32795 OPTION: no
- - ------------------------------------------------------------------------------------
Check Express 504 CURRENT RENT: $900
1009 E. Washington EXPIRATION: 9/15/95
Indianapolis, IN 46202 OPTION: no - store closed
</TABLE>
<PAGE> 228
Check Express U.S.A., Inc. SCHEDULE 3.15
Franchisee List CONTRACTS
<TABLE>
<CAPTION>
Store Store Contract Royalty
Franchisee Number Street Address City State ZIP Expiration Structure
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Alvarado, Pablo F1012 601 E. Jefferson Dallas TX 75208 02/21/2005 A
Applefield, Bryan F258K 1698 Main Street Chipley FL 32428 07/17/2005 E
Applefield, Bryan F1205 TBA Dothan AL TBA 07/17/2005 A
Brand, Don F302 405 N Clippert Street Lansing MI 48912 06/26/93 F
Breeden, Donna F301 5220 So Cedar St Lansing MI 48910 06/07/93 A
Calkins, Ken F2101 4140 Taylor Blvd Louisville KY 40215 02/17/2009 A
Calkins, Ken F2102 TBA Louisville KY TBA 06/21/2005 A
Campbell, Danny F1105 2625 Piedmont Rd Atlanta GA 30324 03/31/2009 A
Campbell, Danny F249 2191 Tamiami Trail Pt Charlotte FL 33948 10/04/2005 A
Chambers, Richard F1602 1143 Gallitin Pike Nashville TN 37206 01/28/2008 A
Chambers, Richard F1601 5512 Charlotte Pike Nashville TN 37209 12/20/2008 A
Chambers, Richard F1604 367C Harding Place Nashville TN 37211 06/28/2010 A
Chambers, Richard F1603 3417 Nolensville Road Nashville TN 37211 07/13/2009 A
Coyne, Kevin F1014K TBA Arlington TX TBA 06/20/2005 E
Cramer, Russ F702 1301 W Lincoln Ave. Milwaukee WI 53215 04/18/2005 A
Cramer, Russ F701 6714 W Greenfield Ave West Allis WI 53214 04/18/2005 A
Cramer, Russ F704 1935 W. Silver Springs Rd Milwaukee WI 53209 NO FILE OR AG A
Cramer. Russ F703 6225 S 27th Greenfield WI 53216 NO SIGNED AG A
Crider, Don F1203 500 W Meighan Blvd Gadsden AL 35901 10/19/2008 A
Czarnik, Wally F805 2625-F Ashley Phosphate N Charleston SC 29418 01/29/2006 A
Czarnik, Wally F802 2122 Cosgrove Ave N Charleston SC 29418 07/27/2004 A
Czarnik, Wally F807 1414-B Savannah Hwy N Charleston SC 29407 02/27/2007 A
Czarnik, Wally F801 5522 Rivers Ave N Charleston SC 29418 07/27/2004 A
Dapont, Terry F244 6821 W Hillsborough Ave Tampa FL 33634 08/18/2007 A
Dapont, Terry F237 7737 Ulmerton Road Largo FL 34641 07/12/2005 A
Douglas, Steve F705 E. Washington Madison WI TBA 04/28/2005 A
Fenner/Winstead F1904K TBA Rocky Mount NC TBA 07/25/2005 A
Ford, Lydia F1007 3010 Garth Road Baytown TX 77521 09/31/2008 A
</TABLE>
<PAGE> 229
Check Express U.S.A., Inc. SCHEDULE 3.15
Franchisee List CONTRACTS
<TABLE>
<CAPTION>
Store Store Contract Royalty
Franchisee Number Street Address City State ZIP Expiration Structure
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Frost, Richard F601 9144 W Florissant Ferguson MO 63136 02/14/2005 A
Geller, Cary F1501 1532 W University #100 St. Paul MN 55104 05/28/2007 A
Geller, Cary F1502 6525 Nicolette Ave S Richfield MN 55423 07/24/2005 A
Harmon, Jim F1903K 108 N. Tradd Street Statesville NC 28677 01/29/2005 E
Hopp, David F1301 4712 N Southside Plaza Richmond VA 23224 09/17/2004 A
Jain, Paul F909 824 Harbor Blvd W Sacramento CA 95691 12/14/2008 B
Jain, Paul F910 964 Sacramento Ave W Sacramento CA 95691 12/14/2008 C
Johnson/Payne F1017 TBA Dallas TX TBA 07/13/2005 A
Karlsberg, Michael F2401 1433 S. Main Street Fall River MA 2724 05/01/2005 A
Kenyon, Jim F1401 TBD-Relocating Store TBD TBD TBD 01/13/2007 A
Kenyon, Jim F1402 11703 E Colfax Ave Aurora CO 80010 07/23/2007 A
Key, Bobby F507K 4887 Kentucky Avenue Indianapolis IN 46221 06/15/2005 E
Kuyenov, Albert F2203K 401 Euclid Ave., Suite 37 Cleveland OH 44114 09/07/2005 A
Leon, Tomas F1002 726 W Stassney, #736 Austin TX 78745 05/22/2006 A
Leon, Tomas F1004 10205 N Lamar, #109 Austin TX 78753 10/21/2006 A
Leon, Tomas F1001 5341-B Cameron Rd Austin TX 78723 05/20/2006 A
Mainini, Mary Alice F602 3655 S Grand Ave St. Louis MO 63118 03/19/2007 A
Marchant, Jim F236 10152 Atlantic Blvd Jacksonville FL 32211 07/30/2005 A
Marchant, Jim F235 5124 Blanding Blvd S Jacksonville FL 32210 07/30/2005 A
Marchant, Jim F234K 810 Golfair Blvd Jacksonville FL 32208 07/30/2005 D
Marchant, Jim F232 246 Blanding Blvd Orange Park FL 32073 05/23/2006 A
Marchant, Jim F221 1136 NE 8th Ave Gainesville FL 32601 07/16/2004 A
Marchant, Jim F252 3547 Kingston Street Jacksonville FL 32205 01/13/2009 A
May, Gabriele F1902 1481 New Walker Town Rd. Winston-Salem NC 27101 04/26/2005 A
May, Gabriele F1901 109 Wellons Village Durham NC 27703 09/13/2008 A
McDuffie, Jay F1201 64 Green Springs Hwy Birmingham AL 35209 09/03/2006 A
McDuffie, Jay F1202 9111 Roebuck Parkway E Birmingham AL 35206 04/27/2007 A
Mendoza, Rafael F905 989 Sebastopol Road Santa Rosa CA 95407 04/03/2005 A
Miller, Margaret F1015 9819 Bissonnet Houston TX TBA 07/25/2005 A
Miller, Margaret F1018K 11210 Hempstead Hwy. Houston TX 77092 09/10/2005 E
Morar/Patel, D. F227 25720 U.S. 19 No. Clearwater FL 34623 08/22/2009 A
Mull, Robert F1605 TBA Knoxville TN TBA 07/23/2005 A
Patel, Nick F233 4756 US Hwy 19 New Port Richey FL 34652 03/05/2005 A
Patel, Nick F211 4100 E Bay Dr, B-10 Clearwater FL 34624 NO FILE A
</TABLE>
<PAGE> 230
Check Express U.S.A., Inc. SCHEDULE 3.15
Franchisee List CONTRACTS
<TABLE>
<CAPTION>
Store Store Contract Royalty
Franchisee Number Street Address City State ZIP Expiration Structure
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Patel, Nick F217 2705 54th Ave N, #18 St. Petersburg FL 33714 12/14/2003 A
Patel, Nick F245 11522 US 19 N, #3 Port Richey FL 34668 09/01/2007 A
Patel, Nick F239 5169 14th Street W Bradenton FL 34207 NO FILE A
Patel, Nick F240* RELOCATING Oneco FL 34203 03/06/2006 A
Portadin, Jason F1703 TBA Allentown PA TBA 06/29/2005 A
Prieur/B. David F2301K 2401 S Carrollton Ave New Orleans LA 70118 11/28/2004 E
Rader, Mark F2201 7331 Montgomery Road Silverton OH 45236 03/05/2005 A
Rhoden, Hubert F250 3280 S Military Trail Lake Worth FL 33463 01/11/2005 A
Rhoden, Hubert F251 4050 Forest Hill Blvd W. Palm Beach FL 33406 01/11/2005 A
Ritsul, Greg F1009 8500 Dyer Street El Paso TX 79904 03/03/2009 A
Rodie, Richard F1106 TBA Atlanta GA TBA 02/11/2005 A
Ruszala, Anthony F1701 320 E Philadelphia Ave York PA 17401 06/07/2008 A
Ruszala, Anthony F1801 1312 Eastern Blvd. Baltimore MD 21221 08/12/2008 A
Ruszala, Anthony F1802 5617 Reisterstown Road Baltimore MD 21215 06/29/2005 A
Schaeffer/Marti F246 854 N Nova Road Daytona Beach FL 32117 10/18/2007 A
Schaeffer/Marti F247 5105 Silver Star Road Orlando FL 32808 04/26/2008 A
Scharr, Larry F402 1535 E Central Ave Wichita KS 67214 06/30/2005 A
Schultz, Randy F505 1017 E. Coliseum Ft. Wayne IN 46805 10/21/2008 A
Scott, Randy F907 822 S Alvarado Los Angeles CA 90057 09/16/2008 A
Stratton, Bobby F1011 4130 E. Lucas Street, #A Beaumont TX 77708 01/02/2009 A
Stratton, Bobby F1005 2814 Washington Blvd Beaumont TX 77705 10/20/2007 A
Suchoff, Dan F917 527 E Foothill Blvd Rialto CA 92376 NOT SIGNED! A
Suchoff, Dan F906 16920-E Foothill Blvd Fontana CA 92336 11/05/2008 A
Suchoff, Dan F904 804 W. Highland, #C San Bernardino CA 92405 07/31/2007 A
Suchoff, Dan F903 658-C W. Holt Blvd Ontario CA 91761 10/24/2006 A
Wall, Randy F1016 1904 N Navarro Victoria TX 77901 06/29/2005 A
Wall, Randy F1010K 5006 Houston Hwy Victoria TX 77901 05/26/2004 E
Wall, Randy F1013K TBA Laredo TX TBA 05/21/2005 E
Wykes, Neil F2202K 4263 Monticello Blvd. S. Euclid OH TBA 12/14/2004 E
ROYALTY SCHEDULE
A. $750 or 5%, whichever is greater
B. $915
C. 6%
</TABLE>
<PAGE> 231
Check Express U.S.A., Inc. SCHEDULE 3.15
Franchisee List CONTRACTS
<TABLE>
<CAPTION>
Store Store Contract Royalty
Franchisee Number Street Address City State ZIP Expiration Structure
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
D. $450 + $50
E. $600 + $50
F. $500
</TABLE>
NOTE: Certain Franchise Owners have arrangements for exclusive territories.
<PAGE> 232
Check-X-Change Corporation SCHEDULE 3.15
Franchise List CONTRACTS
<TABLE>
<CAPTION>
Store Store Contract Royalty
Franchisee Number Street Address City State ZIP Expiration Structure
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Adcock, Lawrence WA21 20007 44th Ave., West #2 Lynnwood WA 98036 06/05/2001 A
Arambula, Felipe & Patricia TX04 424 Yarbrough #A El Paso TX 79915 06/05/99 A
Baker, Bill/Leland VA03 3844 George Washington Hwy. Portsmouth VA 23702 12/05/2001 C
Baker, Bill/Leland VA06 VA C
Bassford, Dennis ID02 815 Caldwell Blvd. Nampa ID 83651 10/05/2003 B
Bassford, Dennis ID01 6485 Fairview Boise ID 83704 07/05/97 B
Bassford, Dennis WA06 528 Rainier Ave. South Renton WA 98055 01/05/97 A
Bassford, Dennis WA07 209 East Casino Rd. #D Everett WA 98208 02/05/97 A
Bassford, Dennis WA13 4110 Wheaton Way Bremerton WA 98310 07/05/97 B
Bassford, Dennis WA31 10500 Greenwood Ave. North Seattle WA 98133 11/05/2003 A
Bassford, Dennis WA28 Territory Marysville WA 09/05/2004 B
Bassford, Dennis WA14 902 North Broadway, #E Everett WA 98201 02/05/98 B
Bassford, Dennis WA32 14921 NE 20th Ave. Bellevue WA 98007 11/05/2003 A
Solomon, David CA37 1304 S. Winchester Blvd. San Jose CA 95128 08/31/2004 A
Bell, Norma CA34 2325 El Camino Real #102 Santa Clara CA 95050 01/05/2003 C
Benton, Richard GA07 5072 Buford Hwy. Doraville GA 30340 08/05/99 A
Betts, James VA05 Territory VA C
Betts, James VA04 75 Colony Rd. Newport News VA 23602 05/05/2003 C
Bryant, Roy OH04 1015 East Hudson Columbus OH 43211 06/05/99 A
Bassford, Dennis WA02 East 3527 Sprague #6 Spokane WA 99202 09/05/05 A
Bassford, Dennis WA01 3401 North Division Spokane WA 99207 09/05/05 A
Rowan, Ken & Richard CA17 2041 Whitman Ave., #E-3 Chico CA 95928 12/05/2000 A
Culin, Gregory TN06 1614 Memorial Blvd. Nashville TN 37129 10/05/05 C
Culin, Gregory TN05 1104 A Murfreesboro Nashville TN 37217 07/05/2003 C
Echelson, Jack & Rita FL21 13376 Cleveland Ave. North Fort Myers FL 10/05/99 A
Edwards, Jack MA01 140 A Havard Ave. Allston MA 02134 06/05/99 A
Ellis, John CA01 2300 Market St. San Francisco CA 94114 09/05/2003 A
Flatt, Jane OR11 690 Lancaster Dr., NE Salem OR 97301 12/05/2002 C
Flatt, Jane OR12 Territory OR C
</TABLE>
<PAGE> 233
Check-X-Change Corporation SCHEDULE 3.15
Franchise List CONTRACTS
<TABLE>
<CAPTION>
Store Store Contract Royalty
Franchisee Number Street Address City State ZIP Expiration Structure
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Fraser, Bob CA12 1402 El Camino Real Redwood City CA 94063 10/05/98 A
Hill, Terri & Shannon GA13 4065-F Memorial Dr. Decatur GA 30032 01/05/2002 A
Vanier/Miraglia CA27 34383 Alvarado-Niles Rd. Union City CA 94587 01/05/2003 C
Jain, Paul CA18 1772 Piner Rd., Piner Plaza Santa Rosa CA 95403 02/05/2001 A
Jain/Bassi, Paul & Nisha CA20 5207 Madison Ave., Suite B Sacramento CA 95619 10/05/2001 C
Jeswani, Sunil CA31 297 El Camino Real San Bruno CA 94066 01/05/2004 C
Jeswani, Sunil CA32 Territory CA C
Jivraj, Alnasir FL12 15032 NE Sixth Ave. North Miami FL 33161 07/05/98 A
Kitay, Seymour FL18 706 Boynton Beach Blvd. Boynton Beach FL 33435 04/05/2000 A
Lambert, Ray MA02 427 Park Worcester MA 01610 03/05/2000 A
Lauricella, Joe RI01 455 Smith St. Providence RI 02908 07/05/2002 C
Lenhart/Frauenberg OH19 1634 E. Dublin - Columbus OH 43229 10/05/05 B
Granville Road
Lenhart/Frauenberg OH10 798 North High Columbus OH 43215 01/05/2000 A
Lenhart/Frauenberg OH11 3554 Soldano Blvd. Columbus OH 43228 01/05/2000 A
Lenhart/Frauenberg OH12 1255 Parsons Ave. Columbus OH 43206 01/05/2000 B
Lenhart/Frauenberg OH18 2000 S. Limestone Springfield OH 45505 01/05/2004 B
Lenhart/Frauenberg OH20 1947 S. Alex Dayton OH 45559 05/05/05 B
Lenhart/Frauenberg OH21 4214 Linden Ave. Dayton OH 45432 07/05/05 B
Lenhart/Frauenberg OH08 91 South Hamiton Rd. Whitehall OH 01/05/2000 B
Lenhart/Frauenberg OH22 Territory OH B
Lenhart/Frauenberg OH09 2496 Morse Rd. Columbus OH 43229 01/05/2000 B
Magri, James CA26 Territory CA A
Martin, Bob OR08 16502 SE Division Portland OR 97236 12/05/97 A
McCarthy, Kevin WA24 11064 Lake City Way Seattle WA 98125 10/05/2000 A
McCormick, Stephen & John OH13 1480 Brittain Rd. Akron OH 44310 02/05/2003 C
McCormick, Stephen & John OH16 Territory OH B
McCormick, Stephen & John OH14 4575 Northfield Road Warrensville Hts. OH 44128 07/05/05 C
McCormick, Stephen & John OH15 Territory OH B
McDonough, Rick CA25 255 A St. Hayward CA 94541 12/05/2001 A
McDonough, Rick OR03 2597 Commercial St. SE Salem OR 97302 C
</TABLE>
<PAGE> 234
Check-X-Change Corporation SCHEDULE 3.15
Franchise List CONTRACTS
<TABLE>
<CAPTION>
Store Store Contract Royalty
Franchisee Number Street Address City State ZIP Expiration Structure
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
McDonough, Rick CA07 887 East El Camino Real Sunnyvale CA 94087 05/05/98 B
Morrison, Dan IN07 813 W. McKinley Mishawaka IN 45645 08/05/2005 B
Morrison, Dan IN05 1331 Portage Ave. South Bend IN 46628 06/05/2001 C
Morrison, Dan IN06 1711 S. Michigan St. South Bend IN 46601 06/05/2003 C
Newman, Danny GA01 2614 Peach Orchard Rd. Augusta GA 30906 03/05/2004 B
Newman, Danny GA06 3215 Wrightsboro Rd. Augusta GA 30904 07/05/99 A
Newman, Danny SC01 105 Edgewood Ave. North Augusta SC 29841 05/05/2001 C
Otten, Frank GA15K 3245 S. Cobb Dr. Smyrna GA 30080 08/05/2003 C
Otten, Frank GA14 4600-E East Ponce De Leon Clarkston GA 30021 03/05/2002 A
Otten, Frank NC07 NC C
Otten, Frank NC08 NC C
Pandit, Jitendra CA40 1597B Meridan Ave. San Jose CA 95125 C
Perkins, Jim & Priscilla NC02 4421A Central Ave. Charlotte NC 28205 07/05/99 A
Petrie, Hoan VA01 9583 Shore Dr. Norfolk VA 23518 10/05/98 A
Polk, Marla TX14 4101A Buffalo Gap Abilene TX 79605 10/05/2002 C
Polk, Marla TX09 3517 North First Abilene TX 79603 09/05/2000 A
Rosario, Luis FL04 2973 West 12th Ave. Hialeah FL 33012 09/05/2003 R
Rowan, Ken & Richard CA30 935 S. Main St. Red Bluff CA 96080 08/05/2003 C
Rowan, Ken & Richard CA19 2555 Bechelli Ln. Redding CA 96002 04/05/99 A
Salzman, Howard FL11 10853 Caribbean Blvd. Miami FL 33157 04/05/98 A
Santer, Steve MA03 12 Union Square Somerville MA 02143 12/05/2002 A
Sause, Karen NC03 4402 Market St. Wilmington NC 28403 10/05/99 A
Sause, Karen NC06 1709 Dawson St. Wilmington NC 28403 02/05/2002 A
Schwartz, Frank CA23 1968 Fulton Ave. Sacramento CA 95825 10/05/2001 C
Seavy, Cliff FL23 1162 N. State Rd. 7 Lauderhill FL 33313 11/05/2000 A
Seil, Chuck WA04 10426 Kent Kangley Rd. Kent WA 98031 02/05/96 A
Seil, Chuck WA09 15001 Pacific Hwy. South Seattle WA 98188 11/05/99 A
Seil, Chuck WA30 Territory WA B
Seil, Chuck WA20 22848 Pacific Hwy. South Des Moines WA 98198 11/05/99 B
Seil, Chuck WA29 Territory WA B
</TABLE>
<PAGE> 235
Check-X-Change Corporation SCHEDULE 3.15
Franchise List CONTRACTS
<TABLE>
<CAPTION>
Store Store Contract Royalty
Franchisee Number Street Address City State ZIP Expiration Structure
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Selka, Steve FL37 2835 Cleveland Ave. Fort Myers FL 33901 01/05/2004 B
Selka, Steve FL32 1020B Del Prado Cape Coral FL 33990 06/05/2003 B
Selka, Steve FL31 3420 Cleveland Ft. Myers FL 33901 01/05/2003 A
Selka, Steve FL30 40251 Palm Beach Blvd. Ft. Myers FL 33905 12/05/2002 A
Selka, Steve FL33 Territory FL B
Selka, Steve FL36 Territory FL B
Selka, Steve FL26 San Carlos Plza, Ft. Myers FL 33912 04/05/2004 B
18911-4 Tamiami Tr. S.
Selka, Steve FL35 Territory FL B
Selka, Steve FL27K 27990 Tamiami Trail Bonita Springs FL 33923 07/05/2004 B
Stephan, Gerald H. TN04 Territory TN C
Stephan, Gerald H. TN03 3132A Magnolia Blvd. Knoxville TN 37914 01/05/2003 C
Stroupe, James & Linda NC09 5930 South Blvd. Charlotte NC 28217 12/05/2003 C
Vanier/Miraglia CA36 6154 Florin Rd. Sacremento CA 95823 01/05/2004 C
Vanier/Miraglia CA09 240 Tennessee St. Vallejo CA 94590 07/05/2000 A
Watkins, Mike GA03 John Ross Plaza, Rossville GA 30741 01/05/99 A
115F Chickamauga
Welchez, Manny CA41 CA C
Welch, Thomas MN01 7646 Brooklyn Blvd. Brooklyn Park MN 55443 12/05/2000 A
Zeidman, Ken OR13K 600 SW Fifth Ave. Portland OR 97204 10/05/2004 B
Zeidman, Ken OR14K 1420 Lloyd Center Portland OR 97232 04/05/05 B
Zeidman, Ken OR06 2722 North Lombard Portland OR 97217 02/05/2004 C
Zeidman, Ken OR05 9212 Beaverton Hillsdale Hwy. Beaverton OR 97005 02/05/2004 C
Zinn, Pete IN02 4001 East 10th Indianapolis IN 46201 09/05/99 A
Total # of Franchises Sold 111
Royalty Structure:
A. $915 Per Month
B. $415 Per Month
C. 6% Agreement
</TABLE>
Note: Certain Franchise Owners have the rights to exclusive territory rights.
<PAGE> 236
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
PROGRAM NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
======= ==================== === ========================== ====== ==================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2010024 MCCLOUD, BERNICE 201 1,058.77 158.15 12 101.41 101.41 04/24/95
2010032 CAUSEY, WILLIE 201 1,058.77 158.15 12 101.41 101.41 04/24/95
2010051 WASHINGTON, YOLANDA 201 332.55 25.30 5 71.57 71.57 02/17/95
2010064 SOSA, ROSEMARIE 201 1,077.11 159.97 12 103.09 103.09 09/12/95
2010069 BURROUGHS, TYRONE 201 1,079.63 160.21 12 103.32 103.32 05/01/95
2010071 VIALIZ, WILDA 201 880.64 114.36 10 99.50 99.50 06/30/95
2010072 ROBALDO, HEATHER 201 1,055.59 157.73 12 101.11 101.11 09/19/95
2010074 LEROY, JOHN 201 1,144.32 166.68 12 109.25 109.25 09/20/95
2010075 COLE, ULYSEES 201 540.10 54.48 7 84.94 84.94 05/31/95
2010076 WARREN, LULA 201 1,144.02 166.62 12 109.22 109.22 06/30/95
2010078 BENTLEY, VIRGINIA 201 1,044.83 156.73 12 100.13 100.13 09/14/95
2010079 TERRY, ZOTEAN H 201 546.43 55.01 7 85.92 85.92 08/04/95
2010087 SIMMONS, GENE 201 1,058.02 158.06 12 101.34 101.34 07/21/95
2010088 HALL, CLAUDE A 201 867.47 112.83 10 98.03 98.03 08/28/95
2010089 COX, AGNES J 201 540.10 54.48 7 84.94 84.94 09/18/95
2010091 MARTIN, ANDRA L 201 629.34 85.86 10 71.52 71.52 04/11/95
2010092 SIMMONS, JOE 201 841.58 130.90 12 81.04 81.04 09/06/95
2010098 CARRIDICE, OSWALD 201 967.76 147.88 12 92.97 92.97 09/14/95
2010103 DANIELS, WANDA L 201 890.14 137.42 12 85.63 85.63 05/26/95
2010104 MCMILLIAN, GWENDOLYN 201 860.30 133.42 12 82.81 82.81 08/15/95
2010106 HILL, ALVAELINDA 201 570.74 56.95 7 89.67 89.67 08/31/95
2010107 SCOTT, TERRY L 201 540.10 54.48 7 84.94 84.94 09/05/95
2010108 EDWARDS, ANNIE M 201 698.78 84.94 9 87.08 87.08 08/01/95
2010109 EVANS, SHARON J 201 540.10 54.48 7 84.94 84.94 09/21/95
2010110 MCQUUEN, JUANITA E 201 985.60 150.32 12 94.66 94.66 08/25/95
2010111 JACKSON, LAILA 201 649.02 70.88 8 89.05 89.05 09/19/95
2070017 BROWN, LATONJA M 207 911.59 139.31 12 86.95 86.95 08/23/95
2070021 SANDERLIN, RAYMOND 207 1,073.77 158.15 12 101.41 101.41 11/30/94
2070032 LEAKS, JAN 207 971.72 148.36 12 93.34 93.34 09/15/95
2070036 PETERSON, PATRICE 207 540.10 54.48 7 84.94 84.94 04/07/95
2070038 MOORE, THOMAS 207 564.64 56.47 7 88.73 88.73 08/25/95
2070044 BOLDEN, DAVID L 207 540.10 54.48 7 84.94 84.94 05/04/95
2070050 GRIMSLEY, MARY 207 610.92 75.87 9 76.31 76.31 07/19/95
2070051 BROWN, WILLIAM E 207 949.20 122.10 10 107.13 107.13 09/22/95
2070053 BRIJMOHAN, CARLOTA 207 520.74 87.66 12 50.70 50.70 09/15/95
2070055 HANNER, JAMES 207 956.91 122.99 10 107.99 107.99 09/12/95
2070058 BURNS, ANTHONY 207 722.89 87.38 9 90.03 90.03 09/21/95
2070061 THOMPSON, ESTON B 201 526.60 53.35 7 82.85 82.85 08/11/95
2070062 ANDERSON, LARRY 207 774.80 92.71 9 96.39 96.39 09/01/95
2070063 REYNOLDS, LUCILE 207 906.92 139.72 12 87.22 87.22 09/01/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
======= ==================== ==================================================
<S> <C> <C> <C> <C> <C> <C>
2010024 MCCLOUD, BERNICE 3 959.38 05/12/95 101.33 101.33
2010032 CAUSEY, WILLIE 3 492.89 12/25/94 608.46 608.46
2010051 WASHINGTON, YOLANDA 3 203.10 12/16/94 131.14 131.14
2010064 SOSA, ROSEMARIE 3 600.62 07/03/95 512.63 512.63
2010069 BURROUGHS, TYRONE 3 502.84 05/26/95 614.88 614.88
2010071 VIALIZ, WILDA 3 687.88 08/01/95 199.00 199.00
2010072 ROBALDO, HEATHER 3 716.62 08/03/95 351.10 349.40
2010074 LEROY, JOHN 3 932.23 10/08/95 218.50 216.68
2010075 COLE, ULYSEES 3 457.11 06/10/95 84.94 84.94
2010076 WARREN, LULA 3 629.96 07/10/95 546.10 544.28
2010078 BENTLEY, VIRGINIA 3 946.71 11/11/95 100.00 100.00
2010079 TERRY, ZOTEAN H 3 491.00 06/15/95 55.44 55.44
2010087 SIMMONS, GENE 3 581.97 08/11/95 496.32 491.20
2010088 HALL, CLAUDE A 3 677.57 09/11/95 192.12 192.12
2010089 COX, AGNES J 3 398.47 06/19/95 143.58 143.58
2010091 MARTIN, ANDRA L 3 113.38 04/03/95 571.20 570.09
2010092 SIMMONS, JOE 3 535.17 10/04/95 316.48 308.33
2010098 CARRIDICE, OSWALD 3 550.80 09/17/95 435.92 426.47
2010103 DANIELS, WANDA L 3 130.74 05/12/95 851.56 837.15
2010104 MCMILLIAN, GWENDOLYN 3 153.54 05/16/95 783.72 769.82
2010106 HILL, ALVAELINDA 3 404.09 08/22/95 168.68 168.68
2010107 SCOTT, TERRY L 3 457.11 09/23/95 84.82 84.82
2010108 EDWARDS, ANNIE M 3 520.72 09/29/95 183.72 179.72
2010109 EVANS, SHARON J 3 457.11 10/06/95 84.94 84.94
2010110 MCQUUEN, JUANITA E 3 376.94 09/26/95 662.28 628.54
2010111 JACKSON, LAILA 3 337.14 09/11/95 323.70 319.88
2070017 BROWN, LATONJA M 3 749.46 05/18/95 178.05 178.05
2070021 SANDERLIN, RAYMOND 3 241.37 11/06/94 911.51 911.51
2070032 LEAKS, JAN 3 820.93 08/13/95 152.70 152.70
2070036 PETERSON, PATRICE 3 393.87 04/09/95 148.18 148.18
2070038 MOORE, THOMAS 3 213.70 03/05/95 371.11 371.11
2070044 BOLDEN, DAVID L 3 296.96 05/15/95 253.82 253.82
2070050 GRIMSLEY, MARY 3 394.94 08/15/95 221.04 221.04
2070051 BROWN, WILLIAM E 3 741.60 10/15/95 214.26 212.49
2070053 BRIJMOHAN, CARLOTA 3 329.18 10/16/95 202.50 197.68
2070055 HANNER, JAMES 3 747.64 10/16/95 215.98 214.20
2070058 BURNS, ANTHONY 3 464.45 08/17/95 269.24 269.24
2070061 THOMPSON, ESTON B 3 366.61 08/19/95 165.55 165.55
2070062 ANDERSON, LARRY 3 588.21 10/26/95 192.38 190.88
2070063 REYNOLDS, LUCILE 3 421.22 10/06/95 523.32 501.26
</TABLE>
<PAGE> 237
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
PROGRAM NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
======= ==================== === ========================== ====== ==================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2070064 TUKES,RAYMONA S 207 229.99 14.53 4 61.13 61.13 07/26/95
2100020 WHITE,EMMA M 210 541.01 68.74 9 67.75 67.75 01/10/95
2100026 FREEMAN,FELICIA 210 435.28 38.84 6 79.02 79.02 12/07/94
2100032 REEVES,PAMELA 210 868.52 134.44 12 83.58 83.58 11/16/94
2100046 LEE,VERNELL 210 457.37 58.96 9 57.37 57.37 06/05/95
2100056 BIVENS,PHYLLIS L 210 510.96 52.12 7 80.44 80.44 06/05/95
2100057 JOHNSON,LUTHER 210 799.87 95.27 9 99.46 99.46 08/25/95
2100064 REDDIN,LAFRAN 210 612.61 68.19 8 85.10 85.10 09/06/95
2100065 JONES,MICHAEL F 210 939.23 120.97 10 106.02 106.02 09/20/95
2100067 PETERSON,RANDALL 210 950.91 121.49 10 106.49 106.49 08/28/95
2100068 WILDER,MARC 210 540.10 54.48 7 84.94 84.94 08/24/95
2100070 MOORE,BOB L 210 435.40 44.59 7 68.57 68.57 07/20/95
2100071 WEHRER,WESLEY R 210 1,037.77 155.99 12 99.48 99.48 09/25/95
2100072 DELATORRE,IRENE D 210 547.60 54.48 7 84.94 84.94 05/25/95
2100073 REED.OPHELIA 210 559.28 70.63 9 69.99 69.99 09/08/95
2150009 SMITH,MARGIE 215 1,058.77 158.15 12 101.41 101.41 10/27/94
2150013 MAYNOR,HAZEL L 215 541.01 68.74 9 67.75 67.75 11/11/94
2150024 MCGOWAN,THERI A 215 539.93 54.86 7 84.97 84.97 05/19/95
2150031 GONZALEZ,TELESFORO 215 437.46 74.22 12 42.64 42.64 09/13/95
2150033 JONES,MERITA 215 540.10 54.48 7 84.94 84.94 01/27/95
2150036 SMITH,ALYCE 215 542.42 90.58 12 52.75 52.75 08/10/95
2150042 GROSS,KASSANDRA 215 711.16 68.43 7 111.37 111.37 07/06/95
2150043 NGUYEN,DUC P 215 705.55 67.95 7 110.50 110.50 05/30/95
2150045 YOUNG,TIFFANY D 215 229.81 11.57 3 80.46 80.46 03/28/95
2150048 JONES,YVETTE L 215 626.90 61.55 7 98.35 98.35
2150049 CANARD,TAMMY M 215 540.10 54.48 7 84.94 84.94 03/06/95
2150050 DALLAS,SAMUEL K 215 849.33 100.35 9 105.52 105.52 09/22/95
2150051 JOHNSON,VALERIE 215 669.40 81.92 9 83.48 83.48 09/06/95
2150052 ABDULLAH,HALIMAH 215 609.22 60.12 7 95.62 95.62 08/09/95
2150053 THOMPSON,SYLVIA 215 528.99 53.55 7 83.22 83.22 08/11/95
2150054 RODRIGUEZ,VICTORIA 215 955.95 146.25 12 91.85 91.85 09/13/95
2150056 CONLEY,ANNIE R 215 608.72 60.06 7 95.54 95.54 08/01/95
2150059 LOESCH,REBECCA A 215 754.57 89.84 9 92.99 92.99 09/01/95
2150060 WILLARD,PATRINA Y 215 784.02 93.66 9 97.52 97.52 08/04/95
2150061 HOUSTON,DEDRA 215 332.31 21.01 4 88.33 88.33 07/11/95
2150062 MORGAN,LISA R 215 532.06 53.84 7 83.70 83.70
2180089 WILLIAM,DALE 218 1,073.77 158.15 12 101.41 101.41 06/29/95
2180100 SANTEK,ROBERT 218 1,058.77 158.15 12 101.41 101.41 12/19/94
2180129 ROBINSON,DOUGLAS JR 218 1,041.41 156.31 12 99.81 99.81 01/20/95
2180152 DODGE,CLIFTON 218 803.15 125.65 12 77.40 77.40 09/07/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
======= ==================== ==================================================
<S> <C> <C> <C> <C> <C> <C>
2070064 TUKES,RAYMONA S 3 170.31 08/06/95 61.13 61.13
2100020 WHITE,EMMA M 3 410.09 12/29/94 134.75 134.75
2100026 FREEMAN,FELICIA 3 361.16 11/18/94 74.11 74.11
2100032 REEVES,PAMELA 3 261.93 11/09/94 666.96 666.96
2100046 LEE,VERNELL 3 346.58 05/30/95 112.11 112.11
2100056 BIVENS,PHYLLIS L 3 152.47 03/08/95 377.10 377.10
2100057 JOHNSON,LUTHER 3 704.73 09/18/95 95.14 95.14
2100064 REDDIN,LAFRAN 3 532.45 10/18/95 80.16 80.16
2100065 JONES,MICHAEL F 3 747.77 10/19/95 193.64 191.90
2100067 PETERSON,RANDALL 3 452.93 08/25/95 539.91 534.65
2100068 WILDER,MARC 3 460.52 08/25/95 79.58 79.58
2100070 MOORE,BOB L 3 303.03 08/12/95 137.14 137.14
2100071 WEHRER,WESLEY R 3 844.80 01/15/96 198.73 197.05
2100072 DELATORRE,IRENE D 3 150.42 06/15/95 430.08 430.08
2100073 REED.OPHELIA 3 232.86 08/26/95 349.94 343.86
2150009 SMITH,MARGIE 3 492.89 12/03/94 601.92 601.92
2150013 MAYNOR,HAZEL L 3 205.22 11/09/94 359.25 359.25
2150024 MCGOWAN,THERI A 3 505.14 03/04/95 34.88 34.88
2150031 GONZALEZ,TELESFORO 3 395.77 09/27/95 42.64 42.64
2150033 JONES,MERITA 3 219.80 02/17/95 335.52 335.52
2150036 SMITH,ALYCE 3 150.23 03/07/95 434.00 433.16
2150042 GROSS,KASSANDRA 3 495.75 06/13/95 221.59 221.59
2150043 NGUYEN,DUC P 3 388.61 05/13/95 331.50 331.50
2150045 YOUNG,TIFFANY D 3 44.21 01/15/95 191.38 191.38
2150048 JONES,YVETTE L 3 0.00 02/04/95 688.45 688.45
2150049 CANARD,TAMMY M 3 139.65 03/26/95 429.64 429.64
2150050 DALLAS,SAMUEL K 3 644.98 09/18/95 210.56 210.56
2150051 JOHNSON,VALERIE 3 279.32 06/18/95 409.36 409.36
2150052 ABDULLAH,HALIMAH 3 515.75 08/19/95 95.24 95.24
2150053 THOMPSON,SYLVIA 3 448.23 08/19/95 80.75 80.75
2150054 RODRIGUEZ,VICTORIA 3 524.81 09/23/95 459.25 449.92
2150056 CONLEY,ANNIE R 3 424.06 08/29/95 191.08 191.08
2150059 LOESCH,REBECCA A 3 517.45 11/09/95 248.07 246.63
2150060 WILLARD,PATRINA Y 3 242.61 07/20/95 585.11 580.53
2150061 HOUSTON,DEDRA 3 110.30 06/11/95 228.32 228.32
2150062 MORGAN,LISA R 3 0.00 05/11/95 585.90 584.87
2180089 WILLIAM,DALE 3 709.45 02/25/95 398.60 398.60
2180100 SANTEK,ROBERT 3 492.89 12/18/94 596.51 596.51
2180129 ROBINSON,DOUGLAS JR 3 265.64 11/24/94 847.91 847.91
2180152 DODGE,CLIFTON 3 727.36 10/13/95 77.40 77.40
</TABLE>
<PAGE> 238
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
PROGRAM NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
======= ==================== === ========================== ====== ==================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2180154 WADE, BOBBY 218 1,037.76 156.00 12 99.48 99.48 09/14/95
2180155 BRINKLEY, MARY 218 1,058.77 158.15 12 101.41 101.41 09/01/95
2180157 FITZPATRICK, JAMES 218 814.35 96.81 9 101.24 101.24 05/03/95
2180164 DAY, DEBORAH 218 989.63 114.76 9 122.71 122.71 01/30/95
2180168 WALLACE, JOANNE F 218 710.91 86.13 9 88.56 88.56 09/08/95
2180169 ROUSE, WAYNE JR 218 540.10 54.48 7 84.94 84.94 04/03/95
2180173 HUTTER, BETTY 218 332.31 21.01 4 88.33 88.33 02/22/95
2180176 PRITTY, TIMOTHY M 218 800.11 95.30 9 99.49 99.49 08/21/95
2180177 EMERY, DENNIS 218 980.52 125.68 10 110.62 110.62 09/18/95
2180178 GARRIS, JANIS J 218 995.86 151.70 12 95.63 95.63 09/19/95
2180180 GENEVIE, BARBARA J 218 715.07 86.56 9 89.07 89.07 09/08/95
2180181 FEAZELL, TWYNETTA 218 813.86 95.98 9 100.26 100.26 09/06/95
2180183 CABRAL, TONY 218 1,079.57 160.15 12 103.31 103.31 06/13/95
2180184 SMITH, ELEANOR D 218 637.21 78.56 9 79.53 79.53 09/11/95
2180187 KING, PAUL J 218 1,075.29 159.75 12 102.92 102.92 08/28/95
2180189 BENTLEY, JOHN L 218 726.70 87.80 9 90.50 90.50 08/24/95
2180190 HUDSON, DOLORES M 218 609.02 60.11 7 95.59 95.59 09/05/95
2180192 GONZALES, GILBERT 218 428.22 32.63 5 92.17 92.17 09/11/95
2180194 PIERCE, LEROY M 218 1,035.92 155.02 12 98.62 98.62 08/10/95
2180195 O'BRIEN, MARK I 218 776.22 92.04 9 95.64 95.64 05/05/95
2180196 FIERING, DAVID B 218 985.59 126.21 10 111.18 111.18 08/04/95
2180198 MANCINI, DONALD J 218 540.10 54.48 7 84.94 84.94 09/14/95
2180199 WYNN, LAWRENCE 218 540.10 54.48 7 84.94 84.94 08/25/95
2180200 HANSEN, DAVID 218 910.62 106.65 9 113.03 113.03 08/04/95
2180201 THOMPSON, JUDY A 218 332.31 21.01 4 88.33 88.33 09/12/95
2180202 NOLAN, JACKLIN A 218 635.50 62.26 7 99.68 99.68 06/08/95
2180203 HENDRICKSON, SCOTT E 218 540.10 54.48 7 84.94 84.94 08/31/95
2180206 BRILLIANT, BRENDA A 218 638.51 61.85 7 98.98 98.98 09/14/95
2180207 HAYES, SUSAN M 218 578.73 57.64 7 90.91 90.91 09/06/95
----------
$80,572.45
==========
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
======= ==================== ==================================================
<S> <C> <C> <C> <C> <C> <C>
2180154 WADE, BOBBY 3 776.00 08/25/95 283.76 282.08
2180155 BRINKLEY, MARY 3 766.70 08/25/95 304.23 302.52
2180157 FITZPATRICK, JAMES 3 430.90 05/01/95 404.68 404.68
2180164 DAY, DEBORAH 3 202.07 02/28/95 858.39 858.39
2180168 WALLACE, JOANNE F 3 585.70 07/31/95 127.12 127.12
2180169 ROUSE, WAYNE JR 3 296.96 05/05/95 254.75 254.75
2180173 HUTTER, BETTY 3 161.96 03/11/95 175.99 175.99
2180176 PRITTY, TIMOTHY M 3 704.11 09/19/95 96.00 96.00
2180177 EMERY, DENNIS 3 872.17 10/19/95 110.24 110.24
2180178 GARRIS, JANIS J 3 632.80 09/20/95 382.01 377.14
2180180 GENEVIE, BARBARA J 3 627.93 10/04/95 89.07 89.07
2180181 FEAZELL, TWYNETTA 3 444.28 08/23/95 385.09 385.09
2180183 CABRAL, TONY 3 242.17 05/25/95 927.41 917.01
2180184 SMITH, ELEANOR D 3 340.51 08/08/95 307.18 305.99
2180187 KING, PAUL J 3 500.78 09/12/95 617.04 599.76
2180189 BENTLEY, JOHN L 3 486.05 09/15/95 246.50 245.10
2180190 HUDSON, DOLORES M 3 424.28 08/16/95 189.77 189.77
2180192 GONZALES, GILBERT 3 391.91 07/16/95 36.30 36.30
2180194 PIERCE, LEROY M 3 318.96 08/22/95 796.46 779.79
2180195 O'BRIEN, MARK I 3 81.32 06/22/95 771.82 770.33
2180196 FIERING, DAVID B 3 464.11 08/22/95 555.90 550.38
2180198 MANCINI, DONALD J 3 457.11 09/26/95 84.94 84.94
2180199 WYNN, LAWRENCE 3 457.11 09/29/95 84.58 84.58
2180200 HANSEN, DAVID 3 456.14 07/30/95 478.18 472.74
2180201 THOMPSON, JUDY A 3 307.00 06/30/95 25.32 25.32
2180202 NOLAN, JACKLIN A 3 259.01 07/06/95 397.76 397.76
2180203 HENDRICKSON, SCOTT E 3 457.11 10/12/95 84.94 84.94
2180206 BRILLIANT, BRENDA A 3 442.91 09/20/95 200.36 200.36
2180207 HAYES, SUSAN M 3 403.09 09/26/95 181.82 180.65
---------- ---------- ----------
$48,148.55 $34,515.12 $34,283.35
========== ========== ==========
</TABLE>
<PAGE> 239
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF010005 CLARK,MATTIE B 11 4,120.34 1,325.78 101 54.00 46.12 09/20/95 1
AF010006 SAPP,MAURICE L 11 3,748.00 1,072.69 45 108.00 68.69 06/06/95 2
AF010008 COOK,VIRGINIA 11 4,907.79 1,698.57 111 60.00 6.36 09/22/95 1
AF010011 MCCARTY,LUGENIA 11 4,309.75 1,311.91 48 117.00 92.66 09/15/95 2
AF010021 ESCOBEDO,MARIA 11 3,748.00 1,027.26 87 55.00 45.26 09/25/95 1
AF010024 DAVIS,JAMES 11 5,786.24 1,660.52 62 120.00 98.76 01/13/95 2
AF010025 POE,STEPHEN 11 4,087.99 1,245.26 97 55.00 25.24 06/15/94 1
AF010029 BUTLER,BRIAN 11 4,912.20 2,011.15 126 55.00 48.35 09/18/95 1
AF010032 BECK,ROBERT B 11 6,431.45 2,739.55 31 300.00 171.00 09/06/95 3
AF010034 HELLE,JENNIFER D 11 3,573.84 901.02 81 55.00 46.86 05/08/95 1
AF010035 TRUETT,GOLDMAN R 11 4,186.88 1,522.57 114 50.00 31.45 05/08/95 1
AF010036 ALSEPT,DAVID L 11 2,884.85 633.20 71 50.00 18.05 09/07/95 1
AF010037 FEDORA,ROGER L 11 2,684.15 486.27 29 110.00 90.42 09/25/95 2
AF010038 MATIAS,JOSE A 11 2,701.44 484.10 58 55.00 50.54 09/20/95 1
AF010039 FRAME,ROYE E 11 3,728.19 807.06 81 50.00 10.25 08/11/95 1
AF010040 MOSELEY,DONALD L 11 2,784.14 517.84 61 55.00 1.98 05/25/95 1
AF010042 DEASE,STEVEN P 11 2,717.11 539.54 65 50.00 28.65 06/28/95 1
AF010043 HENDERSON,AARON L 11 3,102.84 661.63 69 55.00 24.47 06/02/95 1
AF010044 SCHALES,JASON D 11 2,209.65 348.40 52 50.00 8.05 08/07/95 1
AF010045 CARTER,KATHELENE 11 3,929.26 1,150.32 93 55.00 19.58 07/27/95 1
AF010046 STREETER,BETTY 11 4,956.10 2,349.18 74 98.72 98.72 2
AF020003 HEYNE,VALARIE 22B 3,645.60 1,181.04 104 46.41 46.41 09/14/95 1
AF020005 HUDSON,MICHAEL 22 3,893.65 887.70 96 50.00 31.35 12/12/94 1
AF020007 BICE,JON K 22 5,376.80 1,679.60 104 67.85 67.85 09/22/95 1
AF020008 SALGADO,ALBERTO 22B 6,108.40 1,824.20 52 152.55 152.55 09/11/95 2
AF020010 ELSEBOUGH,BYRON D 22B 4,289.70 1,068.38 104 51.52 51.52 09/18/95 1
AF020013 CRAFT,HENRY SR 22B 4,861.80 1,480.44 24 264.26 264.26 09/05/95 3
AF020015 WORTH,SANDRA K 22B 3,552.25 918.40 90 50.00 20.65 09/20/95 1
AF020017 FERRENBACH,CHARLES F 22 3,888.30 1,114.60 51 100.00 2.90 08/28/95 2
AF020018 BAILEY,DONALD H 22 5,624.65 1,803.19 112 66.32 66.32 09/06/95 1
AF020023 TOLBERT,GEORGIA A 22 5,012.50 1,483.34 104 62.46 62.46 08/29/95 1
AF020027 CREW,WILLIAM 22 4,089.00 1,220.72 52 102.11 102.11 08/11/95 2
AF020028 MARKLAND,GARY S 22B 4,504.75 1,333.81 104 56.14 56.14 09/05/95 1
AF020029 PIERCE,SHIRLEY R 22B 4,136.70 1,112.34 24 218.71 218.71 09/25/95 3
AF020035 WALSH,MELISSA A 22B 3,766.95 1,226.61 52 96.03 96.03 09/25/95 4
AF020038 GLEESON,BONNIE 22B 4,607.60 1,376.04 52 115.07 115.07 09/11/95 2
AF020043 SABISCH,MARK 22B 4,867.85 1,440.79 104 60.66 60.66 09/26/95 1
AF020047 DAVIS,DALE W 22B 5,659.60 1,969.40 60 127.15 127.15 08/29/95 2
AF020048 RIVERA,JOSE 22B 4,360.05 1,301.71 52 108.88 108.88 09/25/95 2
AF020049 MALDONADO,LUIS SR 22 5,449.90 1,613.78 104 67.92 67.92 08/07/95 1
AF020052 COMPEAN,ESTEBAN 22B 5,955.70 1,763.18 104 74.22 74.22 09/26/95 1
AF020053 MARCUS,WAYNE T 22B 5,200.40 1,536.94 104 64.71 64.71 09/11/95 1
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
============================================================================================
<S> <C> <C> <C> <C> <C>
AF010005 CLARK,MATTIE B 3,552.37 10/04/95 582.12 568.23
AF010006 SAPP,MAURICE L 2,384.13 04/08/95 1,470.69 1,470.69
AF010008 COOK,VIRGINIA 2,843.89 09/23/95 2,266.36 2,077.09
AF010011 MCCARTY,LUGENIA 3,374.38 08/25/95 1,019.00 1,008.06
AF010021 ESCOBEDO,MARIA 2,443.94 08/01/95 1,415.26 1,383.84
AF010024 DAVIS,JAMES 1,864.94 07/16/94 5,405.83 5,111.89
AF010025 POE,STEPHEN 1,575.38 06/21/94 3,707.31 3,603.08
AF010029 BUTLER,BRIAN 1,693.49 08/25/95 3,843.35 3,327.02
AF010032 BECK,ROBERT B 1,536.32 10/08/95 6,171.00 5,021.69
AF010034 HELLE,JENNIFER D 261.79 04/08/95 4,044.86 3,734.65
AF010035 TRUETT,GOLDMAN R 220.05 05/06/95 5,259.45 4,463.03
AF010036 ALSEPT,DAVID L 884.60 09/08/95 2,268.05 2,053.18
AF010037 FEDORA,ROGER L 949.76 08/19/95 1,905.42 1,794.08
AF010038 MATIAS,JOSE A 1,181.02 09/02/95 1,651.99 1,557.81
AF010039 FRAME,ROYE E 424.68 04/15/95 4,052.25 3,702.55
AF010040 MOSELEY,DONALD L 194.22 05/20/95 3,026.98 2,853.40
AF010042 DEASE,STEVEN P 180.67 06/23/95 2,981.65 2,733.38
AF010043 HENDERSON,AARON L 296.44 07/05/95 3,324.47 3,014.46
AF010044 SCHALES,JASON D 186.79 07/22/95 2,308.05 2,151.75
AF010045 CARTER,KATHELENE 219.20 08/03/95 4,694.58 3,921.45
AF010046 STREETER,BETTY 0.00 07/19/95 7,305.28 5,340.41
AF020003 HEYNE,VALARIE 2,474.29 07/21/95 1,253.04 1,224.24
AF020005 HUDSON,MICHAEL 1,416.59 10/22/94 2,781.35 2,777.46
AF020007 BICE,JON K 3,147.49 06/02/95 2,430.75 2,378.93
AF020008 SALGADO,ALBERTO 4,957.02 10/11/95 1,188.45 1,151.89
AF020010 ELSEBOUGH,BYRON D 3,426.11 09/30/95 908.22 878.98
AF020013 CRAFT,HENRY SR 3,614.51 10/02/95 1,321.30 1,272.79
AF020015 WORTH,SANDRA K 2,927.01 08/05/95 645.65 642.38
AF020017 FERRENBACH,CHARLES F 1,758.57 02/24/95 2,402.90 2,373.32
AF020018 BAILEY,DONALD H 2,882.64 05/29/95 3,036.88 2,922.79
AF020023 TOLBERT,GEORGIA A 2,721.70 06/05/95 2,515.56 2,441.84
AF020027 CREW,WILLIAM 1,787.29 04/28/95 2,589.62 2,498.51
AF020028 MARKLAND,GARY S 2,999.50 09/04/95 1,604.44 1,526.53
AF020029 PIERCE,SHIRLEY R 2,572.13 08/25/95 1,668.39 1,614.02
AF020035 WALSH,MELISSA A 2,035.35 08/22/95 1,900.73 1,782.14
AF020038 GLEESON,BONNIE 2,902.29 09/11/95 1,841.12 1,738.17
AF020043 SABISCH,MARK 3,108.15 09/21/95 1,890.59 1,770.01
AF020047 DAVIS,DALE W 2,731.44 09/05/95 3,305.90 3,012.65
AF020048 RIVERA,JOSE 2,773.88 10/11/95 1,742.04 1,630.86
AF020049 MALDONADO,LUIS SR 2,273.48 05/19/95 3,580.76 3,427.12
AF020052 COMPEAN,ESTEBAN 3,540.26 09/16/95 2,618.88 2,440.29
AF020053 MARCUS,WAYNE T 2,526.53 07/04/95 2,967.34 2,811.99
</TABLE>
<PAGE> 240
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF020056 RODRIGUES,FERNANDO 22B 4,332.05 1,318.99 24 235.46 235.46 09/05/95 3
AF020057 HUDSON,MICHAEL 22B 5,393.60 1,862.80 120 60.47 60.47 09/18/95 1
AF020058 BENISH,MICHAEL C 22B 5,755.00 2,002.40 60 129.29 129.29 09/18/95 2
AF020059 HAMILTON,CHRIS 22B 5,223.25 1,546.11 104 65.09 65.09 09/18/95 1
AF020060 GAYHART,RICHARD 22B 3,897.30 1,163.86 52 97.33 97.33 09/18/95 2
AF020063 BADENDYCK,STEPHANIE 22B 4,397.05 1,475.45 58 101.25 101.25 08/31/95 2
AF020064 BICE,JON K 22 3,659.60 953.75 93 50.00 13.35 12/30/94 1
AF020066 ROBINS,CECELIA 22B 5,363.55 1,653.01 108 65.00 61.56 09/25/95 1
AF020067 PRUGGER,STEVEN J 22B 5,092.55 1,368.65 58 111.40 111.40 09/14/95 2
AF020068 WOOD,GERARD F 22B 6,989.20 2,069.20 104 87.10 87.10 09/26/95 1
AF020069 GARREAN,HAROLD E 22B 5,393.60 1,695.90 110 64.45 64.45 09/25/95 1
AF020073 MCFALL,GEORGE A 22B 5,382.81 1,673.37 54 130.67 130.67 09/13/95 2
AF020074 COLLINS,BELINDA 22B 5,423.95 1,685.69 54 131.66 131.66 09/20/95 2
AF020077 FRAZIER,DARLENE 22B 5,901.00 2,206.20 36 225.20 225.20 08/23/95 3
AF020078 BUCKLEY,SALLY N 22B 4,325.05 1,280.55 104 53.90 53.90 09/12/95 1
AF020079 JERNIGAN,TERESA 22B 8,023.05 2,670.99 116 92.19 92.19 09/25/95 1
AF020080 BYRER,CARRIE B 22B 4,375.05 1,333.05 53 107.70 107.70 09/26/95 2
AF020081 STENQUIST,STEVEN 22 7,880.35 2,623.45 116 90.55 90.55 09/25/95 1
AF020082 BRUNER,JON G 22B 5,742.30 2,164.30 130 60.82 60.82 07/14/95 1
AF020086 LANDERS,LISA 22B 8,448.45 2,476.35 30 364.16 364.16 08/28/95 3
AF020087 CHAPPELL,ALOUSA 22B 5,328.55 1,774.13 116 61.23 61.23 08/31/95 1
AF020088 RIVERA,ANGEL M 22B 2,915.15 564.75 70 50.00 29.90 09/25/95 1
AF020090 HAMILTON,PAULA 22B 7,308.60 1,652.04 104 86.16 86.16 08/30/95 1
AF020093 PALMER,ANITA 22B 4,998.20 1,722.91 27 248.93 248.93 09/05/95 3
AF020095 SCOTT,NANCIE 22 5,380.54 1,592.66 104 67.05 67.05 06/15/95 1
AF020097 GREEN,ROGER 22B 3,823.30 1,164.14 24 207.81 207.81 08/18/95 3
AF020100 FREEMAN,DARREN 22B 3,430.90 1,015.10 104 42.75 42.75 09/21/95 1
AF020101 HEISTER,KEN R 22B 4,861.80 1,439.56 104 60.59 60.59 09/25/95 1
AF020102 BASS,PAMELA D 22B 4,614.10 1,456.47 111 55.00 20.57 09/13/95 1
AF020104 SMITH,NORMAN B III 22B 5,895.35 1,962.49 116 67.74 67.74 08/28/95 1
AF020105 GRAY,GARY 22B 8,023.05 2,670.99 116 92.19 92.19 09/21/95 1
AF020107 RICHARDS,KENNETH 22B 6,321.10 2,105.14 116 72.64 72.64 08/22/95 1
AF020108 POUNDS,HARRY 22B 3,893.30 1,113.26 104 48.14 48.14 08/31/95 1
AF020110 HOGAN,GINA 22B 3,874.30 1,092.25 100 50.00 16.55 09/18/95 1
AF020111 TRASK,ELMER AUSTIN 22 5,423.95 1,605.41 104 67.59 67.59 07/18/95 1
AF020114 GONZALES,BALTAZAR 22B 5,985.70 1,787.26 52 149.48 149.48 09/19/95 2
AF020117 CANNIOTO,GARFIELD JR 22B 6,989.20 2,326.76 116 80.31 80.31 09/25/95 1
AF020118 RICE,JOE 22B 4,196.35 1,241.81 104 52.29 52.29 09/22/95 1
AF020119 DAVIS,LASCELLES 22 5,423.95 1,806.33 116 62.33 62.33 09/06/95 1
AF020121 SHAFER WALKER,CATHY 22B 6,563.10 2,431.46 128 70.27 70.27 09/18/95 1
AF020127 LEWIS,CLIFFORD 22 5,813.03 2,191.07 130 61.57 61.57 05/23/95 1
AF020128 STUPFELL,DOREEN 22B 4,082.00 1,205.83 104 50.94 50.94 09/06/95 1
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
===========================================================================================
<S> <C> <C> <C> <C> <C>
AF020056 RODRIGUES,FERNANDO 2,338.95 08/06/95 2,190.94 2,070.17
AF020057 HUDSON,MICHAEL 2,688.63 09/27/95 3,032.12 2,709.37
AF020058 BENISH,MICHAEL C 2,765.28 09/15/95 3,373.79 3,022.61
AF020059 HAMILTON,CHRIS 2,575.69 07/19/95 2,933.11 2,757.60
AF020060 GAYHART,RICHARD 2,309.36 09/28/95 1,717.16 1,590.71
AF020063 BADENDYCK,STEPHANIE 1,988.01 08/30/95 2,731.24 2,476.92
AF020064 BICE,JON K 703.97 12/02/94 3,513.35 3,433.03
AF020066 ROBINS,CECELIA 2,732.65 09/06/95 2,921.56 2,683.42
AF020067 PRUGGER,STEVEN J 2,402.21 09/08/95 3,007.80 2,791.06
AF020068 WOOD,GERARD F 4,106.00 10/12/95 3,135.60 2,899.73
AF020069 GARREAN,HAROLD E 2,832.79 09/30/95 2,835.80 2,576.89
AF020073 MCFALL,GEORGE A 2,633.94 09/06/95 3,059.88 2,803.47
AF020074 COLLINS,BELINDA 2,814.62 10/04/95 2,893.96 2,635.63
AF020077 FRAZIER,DARLENE 1,784.69 10/02/95 4,954.40 4,197.86
AF020078 BUCKLEY,SALLY N 2,107.69 08/23/95 2,460.10 2,271.54
AF020079 JERNIGAN,TERESA 3,566.33 09/15/95 5,041.21 4,503.90
AF020080 BYRER,CARRIE B 2,061.32 08/18/95 2,593.20 2,382.05
AF020081 STENQUIST,STEVEN 2,823.84 07/06/95 5,885.75 5,358.10
AF020082 BRUNER,JON G 1,744.64 07/08/95 4,780.78 4,225.29
AF020086 LANDERS,LISA 2,591.79 07/12/95 6,767.32 6,134.71
AF020087 CHAPPELL,ALOUSA 2,066.22 08/27/95 3,756.69 3,345.31
AF020088 RIVERA,ANGEL M 2,212.52 08/11/95 729.90 723.82
AF020090 HAMILTON,PAULA 3,675.91 09/08/95 3,860.64 3,565.63
AF020093 PALMER,ANITA 1,991.75 09/29/95 3,484.02 3,075.26
AF020095 SCOTT,NANCIE 988.10 01/30/95 5,314.20 5,017.03
AF020097 GREEN,ROGER 1,632.24 08/29/95 2,493.34 2,284.50
AF020100 FREEMAN,DARREN 1,568.78 09/27/95 2,080.75 1,867.50
AF020101 HEISTER,KEN R 2,316.76 09/28/95 2,830.05 2,549.99
AF020102 BASS,PAMELA D 1,497.29 06/29/95 3,650.57 3,321.03
AF020104 SMITH,NORMAN B III 2,210.75 09/04/95 4,263.64 3,758.28
AF020105 GRAY,GARY 3,280.51 09/28/95 5,434.52 4,767.37
AF020107 RICHARDS,KENNETH 2,271.99 08/23/95 4,694.37 4,151.80
AF020108 POUNDS,HARRY 1,595.97 08/11/95 2,600.12 2,375.29
AF020110 HOGAN,GINA 1,928.91 09/30/95 2,150.00 1,950.08
AF020111 TRASK,ELMER AUSTIN 1,509.39 05/06/95 4,604.36 4,277.86
AF020114 GONZALES,BALTAZAR 3,841.35 02/09/96 2,300.00 2,146.54
AF020117 CANNIOTO,GARFIELD JR 2,480.89 09/04/95 5,243.79 4,581.35
AF020118 RICE,JOE 1,758.60 09/14/95 2,751.16 2,467.01
AF020119 DAVIS,LASCELLES 1,361.09 06/12/95 4,882.97 4,353.77
AF020121 SHAFER WALKER,CATHY 1,935.83 08/30/95 5,557.92 4,727.20
AF020127 LEWIS,CLIFFORD 611.56 02/20/95 6,744.10 5,960.35
AF020128 STUPFELL,DOREEN 1,723.00 09/15/95 2,676.82 2,401.08
</TABLE>
<PAGE> 241
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF020131 HAMILTON,TIM 22B 5,816.35 1,931.21 116 66.66 66.66 09/25/95 1
AF020134 LUNSFORD,CATHERINE 22B 6,758.50 2,250.06 116 77.66 77.66 09/19/95 1
AF020136 CALDERON,RUBEN 22B 7,380.60 2,735.24 128 79.03 79.03 09/22/95 1
AF020137 HOPPS,LAWRENCE 22B 8,594.80 2,398.70 63 174.50 174.50 09/18/95 2
AF020138 HESS,JACK 22B 4,089.00 1,445.60 28 200.00 134.60 09/18/95 3
AF020139 JONES,ANGELA 22B 5,925.70 1,972.74 116 68.09 68.09 09/12/95 1
AF020140 RODRIGUEZ,JOSE 22B 4,754.45 1,582.63 116 54.63 54.63 09/22/95 1
AF020141 HAWKINS,LEROY 22B 3,860.30 1,095.50 50 100.00 55.80 09/21/95 2
AF020145 MCCORMACK,JOHN C 22 4,289.70 1,270.14 104 53.46 53.46 09/25/95 1
AF020146 NEELEY,RONALD 22B 7,551.30 3,539.58 36 308.08 308.08 07/25/95 3
AF020147 FERNANDEZ,OSCAR 22B 5,985.70 1,992.78 116 68.78 68.78 09/14/95 1
AF020148 STORY,JOHN 22 5,925.70 2,195.90 128 63.45 63.45 05/26/95 1
AF020149 BUCHANAN,WILLIAM JR 22 5,194.85 1,959.22 131 55.00 4.07 03/20/95 1
AF020151 CAVINEE,KEVIN 22B 4,934.15 1,736.91 61 110.00 71.06 09/25/95 2
AF020152 SUAREZ,JAIME 22B 8,727.50 3,455.38 136 89.58 89.58 09/18/95 1
AF020153 SAVACOOL,WAYNE 22 5,627.50 1,874.22 116 64.67 64.67 05/03/95 1
AF020154 RUF,WOLFGANG 22B 6,301.27 2,098.29 116 72.41 72.41 09/25/95 1
AF020157 SPENCER,DOROTHY 22 4,761.45 1,242.34 93 65.00 23.79 05/22/95 1
AF020158 ALLSPACH,GARY A 22B 6,964.50 2,580.46 128 74.57 74.57 09/20/95 1
AF020160 YATES,CARRIE 22B 5,099.50 1,760.90 120 57.17 57.17 09/25/95 1
AF020161 MURPHY,HENRY E 22B 7,581.30 2,808.46 128 81.17 81.17 08/31/95 1
AF020162 PHELPS,LOUIS J 22B 6,971.20 2,582.72 128 74.64 74.64 09/22/95 1
AF020166 CLARK,LYNN 22B 5,423.95 1,873.25 120 60.81 60.81 09/06/95 1
AF020167 HARPER,KATHERINE 22B 4,110.35 1,216.53 104 51.22 51.22 08/08/95 1
AF020168 GIFFORD,MICHAEL 22B 8,259.05 2,852.95 120 92.60 92.60 09/18/95 1
AF020169 EWING,PAIGE E 22B 4,861.80 1,480.44 24 264.26 264.26 09/06/95 3
AF020170 BETANCOURT,PRIMITIVO 22B 8,448.45 2,812.83 116 97.08 97.08 09/25/95 1
AF020171 EASON,ROBERT L 22B 7,752.00 2,295.44 104 96.61 96.61 08/30/95 1
AF020172 ELLIOTT,CINDY W 22B 5,062.50 1,685.22 116 58.17 58.17 09/22/95 1
AF020174 RAMOS,MOISES 22B 4,214.70 1,339.65 112 50.00 4.35 09/26/95 1
AF020175 TORRES,MILTON 22B 6,487.45 2,160.35 116 74.55 74.55 08/21/95 1
AF020176 HAWKINS,LEROY B 22B 5,393.60 1,792.78 58 125.00 61.38 09/22/95 2
AF020177 PALMER,EDWARD 22B 4,075.00 1,247.40 54 100.00 22.40 09/05/95 2
AF020178 WILSON,DANIEL T 22B 4,089.00 1,244.10 107 50.00 33.10 09/25/95 1
AF020181 MOSELEY,MELANIE M 22B 4,862.15 1,439.21 104 60.59 60.59 07/31/95 1
AF020182 SIBLAG,TIMOTEO A 22B 4,410.75 1,499.10 119 50.00 9.85 09/06/95 1
AF020184 ROBERTS,JAMES K JR 22B 3,666.60 958.05 93 50.00 24.65 09/26/95 1
AF020185 KRANICH,BERTHA 22B 3,444.90 827.70 86 50.00 22.60 09/18/95 1
AF020186 MEEKS,VICKI 22 1,941.65 353.58 66 35.00 20.23 12/27/94 1
AF020187 REESE,ARIANA 22B 4,096.50 964.44 84 60.16 60.16 09/01/95 1
AF020190 SMITH,JESSIE D 22 3,988.65 1,360.35 27 200.00 149.00 12/27/94 3
AF020191 MCKEETHEM,JIMMIE 22B 6,096.05 2,045.41 58 140.37 140.37 09/26/95 2
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
===========================================================================================
<S> <C> <C> <C> <C> <C>
AF020131 HAMILTON,TIM 1,658.88 07/31/95 4,937.96 4,335.42
AF020134 LUNSFORD,CATHERINE 2,282.29 09/16/95 5,231.54 4,528.22
AF020136 CALDERON,RUBEN 2,074.85 09/11/95 6,406.00 5,368.65
AF020137 HOPPS,LAWRENCE 2,511.49 08/25/95 7,059.00 6,231.27
AF020138 HESS,JACK 1,299.18 10/15/95 3,334.60 2,858.73
AF020139 JONES,ANGELA 1,881.81 09/11/95 4,766.30 4,112.46
AF020140 RODRIGUEZ,JOSE 1,743.23 10/25/95 3,496.22 3,033.48
AF020141 HAWKINS,LEROY 1,529.29 09/20/95 2,655.80 2,382.93
AF020145 MCCORMACK,JOHN C 1,057.46 06/11/95 3,826.84 3,475.65
AF020146 NEELEY,RONALD 1,406.67 09/23/95 8,010.08 6,426.94
AF020147 FERNANDEZ,OSCAR 1,805.28 09/06/95 4,952.16 4,271.88
AF020148 STORY,JOHN 784.66 04/22/95 6,565.60 5,713.65
AF020149 BUCHANAN,WILLIAM JR 549.33 03/27/95 6,054.07 5,255.42
AF020151 CAVINEE,KEVIN 1,473.71 10/09/95 4,141.06 3,504.64
AF020152 SUAREZ,JAIME 1,963.08 09/04/95 8,415.90 6,908.02
AF020153 SAVACOOL,WAYNE 629.63 03/20/95 6,314.37 5,637.19
AF020154 RUF,WOLFGANG 2,000.96 10/03/95 5,068.70 4,330.86
AF020157 SPENCER,DOROTHY 506.55 02/25/95 5,175.79 4,834.62
AF020158 ALLSPACH,GARY A 1,579.17 08/26/95 6,640.39 5,561.38
AF020160 YATES,CARRIE 1,199.91 08/14/95 4,740.32 4,040.70
AF020161 MURPHY,HENRY E 1,873.21 09/19/95 6,969.00 5,765.40
AF020162 PHELPS,LOUIS J 1,770.19 09/26/95 6,328.92 5,222.93
AF020166 CLARK,LYNN 1,121.21 08/23/95 5,288.76 4,443.30
AF020167 HARPER,KATHERINE 1,076.31 07/25/95 3,587.72 3,175.05
AF020168 GIFFORD,MICHAEL 2,185.43 09/22/95 7,308.00 6,138.26
AF020169 EWING,PAIGE E 1,304.76 08/29/95 4,224.20 3,714.80
AF020170 BETANCOURT,PRIMITIVO 2,348.80 09/22/95 7,281.00 6,171.37
AF020171 EASON,ROBERT L 2,270.10 08/29/95 6,411.43 5,599.31
AF020172 ELLIOTT,CINDY W 1,447.04 10/03/95 4,302.36 3,641.55
AF020174 RAMOS,MOISES 1,216.70 09/22/95 3,554.35 3,038.09
AF020175 TORRES,MILTON 1,638.48 09/01/95 5,829.80 4,956.59
AF020176 HAWKINS,LEROY B 1,544.87 10/06/95 4,586.38 3,860.05
AF020177 PALMER,EDWARD 1,181.80 09/20/95 3,422.40 2,960.60
AF020178 WILSON,DANIEL T 1,211.03 09/25/95 3,383.10 2,902.46
AF020181 MOSELEY,MELANIE M 1,340.73 08/02/95 4,195.16 3,672.99
AF020182 SIBLAG,TIMOTEO A 2,101.11 09/01/95 2,599.85 2,357.06
AF020184 ROBERTS,JAMES K JR 1,549.70 09/23/95 2,374.65 2,143.90
AF020185 KRANICH,BERTHA 1,572.06 09/12/95 2,072.60 1,905.24
AF020186 MEEKS,VICKI 277.69 12/30/94 1,910.23 1,892.40
AF020187 REESE,ARIANA 1,588.87 07/29/95 2,799.66 2,614.67
AF020190 SMITH,JESSIE D 209.26 12/30/94 4,949.00 4,525.08
AF020191 MCKEETHEM,JIMMIE 1,551.51 09/15/95 5,476.98 4,601.98
</TABLE>
<PAGE> 242
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF020192 RIVERA,ROBERTO P 22B 4,962.15 1,652.17 116 57.02 57.02 09/18/95 1
AF020193 VILLARI,ROXSILISE 22B 5,148.85 1,523.79 104 64.16 64.16 09/19/95 1
AF020195 VERGARA,ERIX LUIS 22B 3,486.90 851.40 87 50.00 38.30 09/20/95 1
AF020196 HUFF,ERNIE 22B 5,576.30 1,856.98 116 64.08 64.08 09/22/95 1
AF020197 LUNSFORD,GLENN 22B 5,183.85 1,726.27 116 59.57 59.57 09/19/95 1
AF020199 TYLER,WENDY 22B 4,103.35 1,214.17 104 51.13 51.13 09/19/95 1
AF020200 MCCARROLL,ROGER L JR 22B 5,895.35 1,854.15 110 70.45 70.45 09/21/95 1
AF020201 ESTRELLA,MARIA 22B 4,647.10 1,375.54 104 57.91 57.91 09/20/95 1
AF020202 BARNES,MARTIN 22B 3,787.95 1,035.00 97 50.00 22.95 06/12/95 1
AF020203 ABAR,MARK 22B 7,248.40 2,396.14 116 82.69 82.69 09/21/95 1
AF020204 NORTON,ADRIENNE 22B 5,104.55 1,700.01 116 58.66 58.66 09/19/95 1
AF020205 HERNANDEZ,MITCHELL M 22B 6,387.10 2,126.14 116 73.39 73.39 09/25/95 1
AF020206 OPFER,LAESSLE 22B 5,425.00 1,912.66 123 60.01 16.44 09/18/95 1
AF020207 LATORRE,MARIA 22B 3,904.05 1,634.98 145 38.00 23.03 09/19/95 1
AF020208 LINDLEY,CAROL B 22B 4,560.75 1,388.61 24 247.89 247.89 09/11/95 3
AF020209 CURRIER,CHESTER A 22B 3,129.85 761.52 87 45.00 21.37 09/25/95 1
AF020210 ROBIDA,ALBERT J 22B 5,453.95 1,721.99 111 65.00 25.94 09/26/95 1
AF020211 FRANCO,RAYMUNDO M 22B 4,124.35 1,221.25 104 51.40 51.40 09/25/95 1
AF020212 SHELDON,REGINALD J 22B 3,787.95 1,035.00 97 50.00 22.95 09/25/95 1
AF020213 COMPTON,CHARLOTTE 22B 4,089.00 1,210.84 104 50.96 50.96 09/26/95 1
AF020214 TATUM,ELLA J 22B 4,089.00 1,208.81 104 51.02 42.75 09/25/95 1
AF020215 PITTMAN,STACEY A 22B 4,733.45 1,401.51 104 58.99 58.98 09/25/95 1
AF020217 EVERETTE,VERDON 22B 7,019.55 1,886.93 58 153.56 153.56 09/25/95 2
AF020218 SHAW,SHERRY A 22B 6,499.45 2,164.59 116 74.69 74.69 09/25/95 1
AF020219 RINALDI,JOSEPHINE G 22B 5,307.55 1,767.29 116 60.99 60.99 09/26/95 1
AF020220 HECKERMAN,VIOLET E 22B 6,439.45 2,480.45 30 297.33 297.33 09/06/95 3
AF020221 GONZALEZ,LORETTA A 22B 5,622.60 1,872.16 116 64.61 64.61 06/14/95 1
AF020222 SCHWAMBERGER,MELISSA 22B 4,992.20 1,661.56 116 57.36 57.36 09/18/95 1
AF020223 SPENCER,CHARLES JR 22B 4,224.70 1,250.90 104 52.65 52.65 09/25/95 1
AF020224 UPCHURCH,ROGER 22B 2,915.15 564.75 70 50.00 29.90 09/25/95 1
AF020225 TORRES,ROBERTO 22B 4,641.10 1,605.24 121 52.00 6.34 09/19/95 1
AF020226 JOSEPH,MOISES 22B 5,287.25 1,760.91 116 60.76 60.76 09/11/95 1
AF020227 GAGNIER,LANCE F 22B 3,829.70 1,166.14 24 208.16 208.16 09/05/95 3
AF020228 GARCIA,DOUGLAS 22B 4,626.10 1,369.50 104 57.65 57.65 09/18/95 1
AF020229 SLATER,ERIC A 22B 6,086.05 1,623.31 116 66.46 66.46 09/12/95 1
AF020230 SEAL,ANTHONY F 22B 4,892.90 1,447.98 104 60.97 60.97 09/19/95 1
AF020231 TITTLE,KERI L 22B 5,288.20 1,565.40 104 65.90 65.90 09/19/95 1
AF020232 BARBER,DALINDA C 22B 7,527.30 2,506.70 116 86.50 86.50 09/15/95 1
AF020233 GAMACHE,MANCH 22B 5,895.30 1,871.37 111 69.97 69.97 07/31/95 1
AF020234 HARRINGTON,KEVIN 22B 6,989.20 1,969.52 129 69.57 69.57 09/08/95 1
AF020235 TETRAULT,CATHERINE M 22B 4,539.75 1,343.53 104 56.57 56.57 09/14/95 1
AF020236 TORRES,MARIA 22B 3,802.95 1,035.00 97 50.00 22.95 09/25/95 1
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
=============================================================================================
<S> <C> <C> <C> <C> <C>
AF020192 RIVERA,ROBERTO P 1,071.20 08/16/95 4,739.68 4,019.61
AF020193 VILLARI,ROXSILISE 1,132.23 07/26/95 4,797.83 4,209.02
AF020195 VERGARA,ERIX LUIS 1,321.05 09/29/95 2,438.30 2,184.42
AF020196 HUFF,ERNIE 1,239.45 08/25/95 5,268.08 4,457.38
AF020197 LUNSFORD,GLENN 1,242.46 09/15/95 4,765.17 4,012.31
AF020199 TYLER,WENDY 1,090.51 09/05/95 3,549.87 3,068.32
AF020200 MCCARROLL,ROGER L JR 1,099.63 08/04/95 5,854.45 5,000.55
AF020201 ESTRELLA,MARIA 1,259.72 09/23/95 3,992.97 3,429.50
AF020202 BARNES,MARTIN 553.12 06/12/95 3,922.95 3,494.56
AF020203 ABAR,MARK 1,576.28 09/14/95 6,905.85 5,773.74
AF020204 NORTON,ADRIENNE 926.14 08/22/95 5,151.06 4,331.33
AF020205 HERNANDEZ,MITCHELL M 1,538.59 10/10/95 5,871.20 4,917.23
AF020206 OPFER,LAESSLE 1,108.08 09/22/95 5,321.40 4,352.07
AF020207 LATORRE,MARIA 674.31 09/30/95 4,137.03 3,225.19
AF020208 LINDLEY,CAROL B 1,224.01 10/06/95 3,966.24 3,420.80
AF020209 CURRIER,CHESTER A 984.84 09/18/95 2,446.37 2,171.04
AF020210 ROBIDA,ALBERT J 1,541.03 10/20/95 4,640.94 3,943.14
AF020211 FRANCO,RAYMUNDO M 1,190.08 09/29/95 3,443.10 2,958.68
AF020212 SHELDON,REGINALD J 1,402.52 11/15/95 2,722.95 2,418.87
AF020213 COMPTON,CHARLOTTE 1,179.87 09/27/95 3,412.84 2,932.64
AF020214 TATUM,ELLA J 1,040.74 09/28/95 3,606.92 3,068.13
AF020215 PITTMAN,STACEY A 1,195.50 09/22/95 4,194.02 3,567.53
AF020217 EVERETTE,VERDON 1,890.91 10/06/95 5,967.80 5,161.44
AF020218 SHAW,SHERRY A 1,364.25 09/22/95 6,273.96 5,201.01
AF020219 RINALDI,JOSEPHINE G 1,114.12 09/29/95 5,117.84 4,222.82
AF020220 HECKERMAN,VIOLET E 1,073.13 10/10/95 6,838.55 5,502.57
AF020221 GONZALEZ,LORETTA A 572.47 06/13/95 6,415.76 5,444.00
AF020222 SCHWAMBERGER,MELISSA 983.98 09/19/95 4,903.15 4,042.18
AF020223 SPENCER,CHARLES JR 1,118.48 10/19/95 3,659.50 3,117.28
AF020224 UPCHURCH,ROGER 1,162.80 09/28/95 1,931.90 1,770.95
AF020225 TORRES,ROBERTO 865.12 09/21/95 4,686.34 3,828.89
AF020226 JOSEPH,MOISES 960.60 09/07/95 5,320.00 4,406.77
AF020227 GAGNIER,LANCE F 638.88 08/28/95 3,855.52 3,273.54
AF020228 GARCIA,DOUGLAS 978.61 09/19/95 4,381.40 3,698.07
AF020229 SLATER,ERIC A 995.09 08/22/95 6,111.78 5,230.66
AF020230 SEAL,ANTHONY F 1,037.83 09/14/95 4,610.88 3,906.95
AF020231 TITTLE,KERI L 1,017.48 08/28/95 5,154.05 4,371.15
AF020232 BARBER,DALINDA C 842.22 07/12/95 8,477.00 7,108.88
AF020233 GAMACHE,MANCH 736.55 07/14/95 6,446.67 5,460.22
AF020234 HARRINGTON,KEVIN 1,052.19 08/31/95 7,208.80 6,060.87
AF020235 TETRAULT,CATHERINE M 960.43 09/25/95 4,299.01 3,610.77
AF020236 TORRES,MARIA 891.33 09/22/95 3,437.95 2,953.88
</TABLE>
<PAGE> 243
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF020237 BONDURANT,PAMELA F 66 4,861.80 1,439.56 104 60.59 60.59 08/07/95 1
AF020238 FARBERMAN,LINDA M 66 6,305.10 2,099.10 116 72.45 72.45 09/25/95 1
AF020239 SULLIVAN,ROBIN 66 4,439.40 1,313.88 104 55.32 55.32 09/13/95 1
AF020240 DAVIS,NICHER 22B 9,371.60 3,951.28 144 92.52 92.52 09/15/95 1
AF020241 MANN,WILLIAM S JR 22B 3,787.95 1,035.00 97 50.00 22.95 09/18/95 1
AF020242 PIERCE,SHIRLEY (2) 66 8,934.20 2,139.08 128 86.51 86.51 09/26/95 1
AF020243 BYERS,TIMOTHY M 22B 7,701.15 2,850.99 128 82.38 82.38 09/25/95 1
AF020244 EDENFIELD,KATHERINE 66 5,157.85 1,717.47 116 59.27 59.27 09/19/95 1
AF020245 HUGHES,DON 22B 8,946.20 2,978.60 116 102.80 102.80 09/08/95 1
AF020246 LAY,BRYAN B SR 66 6,989.20 2,326.76 116 80.31 80.31 09/19/95 1
AF020247 SKOPP,MITCHELL A 22B 5,594.25 1,862.23 116 64.28 64.28 09/14/95 1
AF020248 GUNDERSON,PETER 66 5,234.05 1,551.23 128 53.01 53.01 09/18/95 1
AF020249 TSCHERWINSKI,ROY 66 6,351.10 2,352.90 128 68.00 68.00 09/25/95 1
AF020250 DIGILIO,ANDREW C 66 8,772.80 3,030.40 120 98.36 98.36 09/06/95 1
AF020251 MOTTER,JANE 66 5,743.00 1,911.84 116 65.99 65.99 09/25/95 1
AF020252 BRONSON,CATHRYNE M 22A 6,010.00 2,226.80 128 64.35 64.35 09/18/95 1
AF020254 SANTIAGO,WANDA I 22A 5,423.95 2,009.01 128 58.07 58.07 04/13/95 1
AF020255 CORTEZ,JOANN 22A 6,214.75 2,302.37 128 66.54 66.54 07/31/95 1
AF020256 ANGLE,ROSEMARY 22A 4,791.50 1,418.34 104 59.71 59.71 09/18/95 1
AF020257 GRAY,GARY D 22A 6,076.05 2,251.63 128 65.06 65.06 09/25/95 1
AF020258 FRAZIER,RAYMOND W 22A 6,836.85 2,276.11 116 78.56 78.56 09/01/95 1
AF020260 MOLINA,NESTOR R 22A 7,202.25 3,316.83 156 67.43 67.43 09/07/95 1
AF020261 VASQUEZ,HARRY 22A 4,024.00 1,191.60 104 50.15 50.15 09/26/95 1
AF020262 TURNER,DARNELL A 22A 5,606.65 1,659.83 104 69.87 69.87 06/30/95 1
AF020263 TORRES,RAFAEL 22A 6,367.05 1,698.43 116 69.53 69.53 09/25/95 1
AF020265 MATOS,ERIC G 22A 3,230.20 713.25 79 50.00 43.45 09/11/95 1
AF020266 ORTIZ,DAMARIS E 66 8,875.85 3,066.55 120 99.52 99.52 09/08/95 1
AF020267 ANDERSON,CHARLOTTE 22A 3,968.65 1,157.25 103 50.00 25.90 09/20/95 1
AF020268 KNOX,ALBERT 22A 7,752.00 1,856.96 128 75.07 75.07 09/26/95 1
AF020269 CRUZ,OTILIO 22A 4,089.00 1,408.47 27 203.61 203.61 09/12/95 3
AF020270 RIVERA,MELINDA 22A 5,624.65 2,083.51 128 60.22 60.22 08/31/95 1
AF020271 HOLLOWAY,BUFFY 22A 8,414.45 2,667.65 111 100.00 82.10 09/12/95 1
AF020272 MALDONADO,LOUIS JR 22A 5,694.60 1,915.67 118 65.00 5.27 08/14/95 1
AF020273 DUNFORD,FREDRICK 22A 4,160.35 1,465.56 28 204.00 117.91 09/14/95 3
AF020274 SEVERANCE,REGINA A 22A 5,895.35 2,089.12 123 65.00 54.47 09/26/95 1
AF020275 BAILEY,RONNIE 22A 6,487.45 1,950.15 106 80.00 37.60 09/14/95 1
AF020276 PRATHER,RONNIE L 22A 6,587.80 2,071.40 110 78.72 78.72 09/11/95 1
AF020277 ELLIS,LORIE A 22A 4,603.15 1,362.29 104 57.36 57.36 09/25/95 1
AF020278 ROSARIO,ANGEL L 22A 7,004.20 2,589.04 128 74.83 74.83 07/07/95 1
AF020279 MAINES,CHARLES J 22A 5,423.95 1,166.53 104 63.37 63.37 09/25/95 1
AF020283 GONZALEZ,HECTOR L 22A 6,126.40 2,270.40 128 65.60 65.60 09/19/95 1
AF020284 PARKER,KAVIN J 22A 7,551.30 2,024.38 128 74.81 74.81 09/15/95 1
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
==============================================================================================
<S> <C> <C> <C> <C> <C>
AF020237 BONDURANT,PAMELA F 916.32 09/20/95 4,757.80 3,979.79
AF020238 FARBERMAN,LINDA M 1,051.30 09/13/95 6,520.50 5,350.49
AF020239 SULLIVAN,ROBIN 865.85 09/14/95 4,299.28 3,626.51
AF020240 DAVIS,NICHER 832.31 08/03/95 11,449.61 8,941.15
AF020241 MANN,WILLIAM S JR 685.61 08/17/95 3,722.95 3,224.43
AF020242 PIERCE,SHIRLEY (2) 1,591.63 09/30/95 8,651.00 7,383.47
AF020243 BYERS,TIMOTHY M 1,082.08 09/18/95 8,425.71 6,697.12
AF020244 EDENFIELD,KATHERINE 808.82 09/01/95 5,408.46 4,453.73
AF020245 HUGHES,DON 1,270.94 08/15/95 9,608.60 7,904.16
AF020246 LAY,BRYAN B SR 1,165.39 09/23/95 7,223.25 5,894.97
AF020247 SKOPP,MITCHELL A 854.47 09/11/95 5,913.76 4,829.45
AF020248 GUNDERSON,PETER 847.88 10/02/95 5,353.02 4,419.46
AF020249 TSCHERWINSKI,ROY 1,047.65 10/14/95 6,686.00 5,318.19
AF020250 DIGILIO,ANDREW C 1,449.82 10/04/95 9,147.48 7,376.53
AF020251 MOTTER,JANE 957.59 09/29/95 5,938.84 4,825.25
AF020252 BRONSON,CATHRYNE M 826.54 09/22/95 6,612.00 5,238.28
AF020254 SANTIAGO,WANDA I 54.09 04/18/95 7,313.96 6,051.60
AF020255 CORTEZ,JOANN 491.94 07/17/95 7,518.72 6,069.71
AF020256 ANGLE,ROSEMARY 665.57 08/15/95 5,069.84 4,283.60
AF020257 GRAY,GARY D 847.00 09/20/95 6,661.68 5,272.46
AF020258 FRAZIER,RAYMOND W 1,038.78 09/16/95 7,232.96 5,874.53
AF020260 MOLINA,NESTOR R 679.02 09/22/95 8,900.76 6,611.85
AF020261 VASQUEZ,HARRY 751.79 09/30/95 3,961.85 3,303.55
AF020262 TURNER,DARNELL A 274.16 05/26/95 6,767.59 5,845.08
AF020263 TORRES,RAFAEL 1,087.50 10/04/95 6,315.48 5,305.65
AF020265 MATOS,ERIC G 671.26 08/21/95 2,958.45 2,635.02
AF020266 ORTIZ,DAMARIS E 1,171.90 09/12/95 9,742.40 7,832.00
AF020267 ANDERSON,CHARLOTTE 687.81 09/14/95 3,980.90 3,329.58
AF020268 KNOX,ALBERT 1,172.76 09/30/95 7,792.49 6,604.02
AF020269 CRUZ,OTILIO 537.84 09/11/95 4,493.86 3,648.41
AF020270 RIVERA,MELINDA 476.96 08/08/95 6,732.00 5,370.63
AF020271 HOLLOWAY,BUFFY 796.55 07/25/95 9,616.05 7,988.63
AF020272 MALDONADO,LOUIS JR 589.78 08/09/95 6,510.27 5,307.90
AF020273 DUNFORD,FREDRICK 550.75 10/11/95 4,605.91 3,708.22
AF020274 SEVERANCE,REGINA A 751.98 09/21/95 6,554.47 5,214.66
AF020275 BAILEY,RONNIE 1,037.51 09/25/95 6,677.60 5,494.20
AF020276 PRATHER,RONNIE L 691.28 08/07/95 7,411.48 6,128.33
AF020277 ELLIS,LORIE A 785.59 09/29/95 4,643.52 3,849.96
AF020278 ROSARIO,ANGEL L 249.41 06/10/95 9,069.43 7,373.73
AF020279 MAINES,CHARLES J 954.66 09/25/95 5,186.56 4,492.23
AF020283 GONZALEZ,HECTOR L 660.20 09/18/95 7,084.80 5,542.45
AF020284 PARKER,KAVIN J 677.12 08/14/95 8,453.53 7,080.17
</TABLE>
<PAGE> 244
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF020285 OSBORNE,SCOTT 22A 4,992.15 1,557.03 110 60.00 9.18 09/21/95 1
AF020286 CHANEY,JERRY H 22A 7,326.60 1,725.24 126 71.84 71.84 09/06/95 1
AF020289 SHRIVER,DONALD J 22A 5,375.60 1,591.36 104 66.99 66.99 09/20/95 1
AF020290 CAPELES,JOSE M 22A 4,110.35 1,216.53 104 51.22 51.22 09/18/95 1
AF020291 MARKHAM,LINDA J 22A 6,487.45 2,210.23 129 67.94 1.36 09/21/95 1
AF020294 GOODE,OREANE S 22A 7,900.70 2,630.94 116 90.79 90.79 09/18/95 1
AF020295 EDENFIELD,KATHERINE 22A 5,707.00 1,900.28 116 65.58 65.58 09/19/95 1
AF020296 WALTON,MATTIE M 22A 6,487.45 1,739.11 128 64.27 64.27 07/19/95 1
AF020297 PHELPS,LOUIS J 22A 7,270.25 2,191.63 36 262.83 262.83 09/22/95 3
AF020299 BARR,DALE A 22B 4,124.35 1,270.45 108 50.00 44.80 08/07/95 1
AF020300 MEDINA,SAMUEL 22B 6,497.40 2,464.80 65 137.88 137.88 09/14/95 2
AF020301 VICTORY,CHARLES H 66 5,321.55 1,629.17 116 59.92 59.92 09/21/95 1
AF020302 FOURNIER,CATHERINE 22B 4,038.00 1,195.28 104 50.32 50.32 08/31/95 1
AF020303 BEHRENS,RHONDA L 22B 7,872.30 2,681.30 128 82.45 82.45 09/21/95 1
AF020304 MALDONADO,DANNY 22B 6,238.75 2,077.29 116 71.69 71.69 09/18/95 1
AF020305 DETAMORE,JENNIFER M 22B 4,633.10 1,371.86 104 57.74 57.74 09/20/95 1
AF020306 COLON,ROSA I 22B 4,432.40 1,312.56 104 55.24 55.24 09/22/95 1
AF020307 CRUZ,DAISY M 22B 6,519.55 1,402.13 104 76.17 76.17 09/25/95 1
AF020308 JONES,FREDRICK L 22B 6,788.50 2,260.66 116 78.01 78.01 09/11/95 1
AF020309 LOCKWOOD,RANDY 22B 5,907.70 2,055.50 60 132.72 132.72 09/19/95 2
AF020310 FONTANEZ,FERNANDO 22B 4,437.75 1,537.45 60 100.00 75.20 09/13/95 2
AF020312 BRIGNER,DOUGLAS S 22B 4,360.05 1,396.45 24 250.00 6.50 08/28/95 3
AF020313 MEJIAS,ROBERT J 22B 4,141.30 1,223.24 104 51.51 51.51 08/28/95 1
AF020314 FINLEY,THOMAS 22B 4,891.85 1,447.99 104 60.96 60.96 09/22/95 1
AF020315 COATS,MALCOLM V 22B 4,082.00 1,208.48 104 50.87 50.87 09/26/95 1
AF020317 KUPFNER,LORRIE 22B 4,840.80 1,445.48 52 120.89 120.89 09/11/95 2
AF020318 JOHNSON,ELLEN H 22B 4,325.05 1,280.55 104 53.90 53.90 09/25/95 1
AF020319 HARDEN,VERNETTE E 22B 9,176.90 2,737.98 32 372.34 372.34 08/28/95 3
AF020320 ATKINSON,ROSE M 22B 4,325.05 1,442.55 58 100.00 67.60 09/21/95 2
AF020321 REID,RAYMOND 22B 5,162.85 1,968.51 30 240.00 171.36 09/21/95 3
AF020322 HOPKINS,PHYLISS J 22B 6,156.40 1,838.60 52 153.75 153.75 09/15/95 2
AF020323 LEWIS,FANNIE V 22B 4,861.80 1,439.56 104 60.59 60.59 09/15/95 1
AF020324 SAVERY,YVETTE M 22B 4,773.50 1,589.10 116 54.85 54.85 09/14/95 1
AF020325 HOLLAND,JANETT F 22B 7,189.90 1,927.54 128 71.23 71.23 09/25/95 1
AF020327 ADKINS,CHRISTOPHER P 22B 4,425.40 1,310.20 104 55.15 55.15 08/21/95 1
AF020329 ELLIOTT,BRANDY L 22B 7,197.85 2,504.75 60 161.71 161.71 09/25/95 2
AF020330 KRAUSE,BEVERLY J 22B 4,862.61 1,674.91 60 110.00 47.52 08/07/95 2
AF020331 ROMAN,JUAN L 22B 5,636.65 1,876.67 116 64.77 64.77 09/12/95 1
AF020332 DAYE,MARTHA 22B 5,393.60 1,610.28 52 134.69 134.69 08/30/95 2
AF020333 CURTIS,DAVID M 22B 4,224.70 1,250.90 104 52.65 52.65 09/18/95 1
AF020334 COMPTON,ROBERT 22B 6,939.20 2,054.72 104 86.48 86.48 09/25/95 1
AF020335 SIDUN,BARTHOLOMEW D 22B 2,864.80 551.80 35 100.00 16.60 09/26/95 2
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
==============================================================================================
<S> <C> <C> <C> <C> <C>
AF020285 OSBORNE,SCOTT 650.61 09/11/95 5,409.18 4,426.47
AF020286 CHANEY,JERRY H 983.37 09/28/95 7,543.20 6,382.93
AF020289 SHRIVER,DONALD J 925.96 10/19/95 5,393.96 4,464.47
AF020290 CAPELES,JOSE M 571.01 09/26/95 4,353.70 3,574.62
AF020291 MARKHAM,LINDA J 728.81 10/04/95 7,338.88 5,804.92
AF020294 GOODE,OREANE S 779.59 09/07/95 9,073.27 7,285.29
AF020295 EDENFIELD,KATHERINE 525.90 08/31/95 6,616.96 5,330.30
AF020296 WALTON,MATTIE M 1,299.50 01/01/96 6,148.51 5,201.76
AF020297 PHELPS,LOUIS J 597.19 10/20/95 8,410.05 6,796.46
AF020299 BARR,DALE A 247.97 08/02/95 4,944.80 4,078.32
AF020300 MEDINA,SAMUEL 402.24 09/14/95 8,130.20 6,314.85
AF020301 VICTORY,CHARLES H 569.19 09/26/95 5,940.72 4,770.57
AF020302 FOURNIER,CATHERINE 467.12 09/22/95 4,428.16 3,626.33
AF020303 BEHRENS,RHONDA L 561.26 09/06/95 9,439.90 7,439.95
AF020304 MALDONADO,DANNY 494.23 09/06/95 7,382.52 5,885.49
AF020305 DETAMORE,JENNIFER M 465.39 09/18/95 5,194.58 4,228.59
AF020306 COLON,ROSA I 478.80 09/26/95 4,916.34 3,992.88
AF020307 CRUZ,DAISY M 768.90 09/27/95 6,779.13 5,791.43
AF020308 JONES,FREDRICK L 354.26 08/10/95 8,359.11 6,695.38
AF020309 LOCKWOOD,RANDY 480.88 10/02/95 7,034.16 5,505.18
AF020310 FONTANEZ,FERNANDO 256.35 09/06/95 5,475.20 4,336.32
AF020312 BRIGNER,DOUGLAS S 281.22 09/30/95 5,256.50 4,200.48
AF020313 MEJIAS,ROBERT J 293.89 09/01/95 4,849.97 3,971.04
AF020314 FINLEY,THOMAS 418.06 09/20/95 5,608.32 4,541.08
AF020315 COATS,MALCOLM V 398.75 09/26/95 4,589.61 3,702.00
AF020317 KUPFNER,LORRIE 273.75 08/30/95 5,750.28 4,683.37
AF020318 JOHNSON,ELLEN H 432.16 09/28/95 4,853.30 3,911.64
AF020319 HARDEN,VERNETTE E 417.99 09/23/95 11,162.54 9,076.42
AF020320 ATKINSON,ROSE M 319.25 09/29/95 5,167.60 4,069.02
AF020321 REID,RAYMOND 351.70 10/23/95 6,411.36 4,944.32
AF020322 HOPKINS,PHYLISS J 515.73 09/15/95 7,083.00 5,720.83
AF020323 LEWIS,FANNIE V 379.37 09/21/95 5,634.87 4,550.37
AF020324 SAVERY,YVETTE M 317.43 09/04/95 5,757.60 4,570.35
AF020325 HOLLAND,JANETT F 600.09 10/06/95 8,120.22 6,635.93
AF020327 ADKINS,CHRISTOPHER P 216.37 08/25/95 5,349.55 4,364.23
AF020329 ELLIOTT,BRANDY L 498.05 10/11/95 8,730.60 6,791.52
AF020330 KRAUSE,BEVERLY J 111.08 08/12/95 6,317.52 5,027.34
AF020331 ROMAN,JUAN L 339.35 09/18/95 6,865.62 5,375.77
AF020332 DAYE,MARTHA 381.30 09/27/95 6,325.12 5,081.52
AF020333 CURTIS,DAVID M 262.96 09/12/95 5,006.45 4,025.06
AF020334 COMPTON,ROBERT 490.36 09/28/95 8,123.92 6,499.03
AF020335 SIDUN,BARTHOLOMEW D 282.63 09/19/95 3,016.60 2,652.86
</TABLE>
<PAGE> 245
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AF020336 LYON, VICKIE L 22B 8,203.75 2,771.93 36 304.88 304.88 09/20/95
AF020337 SEXTON, WILLIAM W JR 22B 4,840.80 1,444.62 105 60.00 45.42 09/13/95
AF020338 PINE, JAMES J 22B 4,861.80 1,439.56 104 60.59 60.59 09/15/95
AF020339 BANTON, NEDLEY 22B 4,773.50 1,413.46 104 59.49 59.49 09/18/95
AF020340 NELSON, WILLIE M 22B 7,224.25 1,743.71 116 77.31 77.31 09/20/95
AF020341 BROWN, DEBRA J 22B 5,701.00 1,688.20 104 71.05 71.05 09/25/95
AF020342 WILLIAMS, TERESA A 22B 6,788.50 2,302.22 118 77.04 77.04 09/18/95
AF020343 DIAZ, CARLOS M 22B 6,989.20 2,326.76 116 80.31 80.31 09/25/95
AF020344 SELBE, LARRY A 22B 3,874.30 1,092.25 100 50.00 16.55 08/28/95
AF020345 DUTTON, CHARLES F 22B 5,423.90 1,605.46 104 67.59 67.59 09/22/95
AF020346 BOEHM, ROBERT A 22B 4,369.05 1,464.05 117 50.00 33.10 09/15/95
AF020347 PAUL, MAURICE O'SHEA 22B 5,925.70 1,754.70 104 73.85 73.85 09/25/95
AF020348 HEMELRICK, BETTY J 22B 3,351.55 776.55 83 50.00 28.10 09/25/95
AF020349 BROWN, RANDY N 22B 4,861.80 1,439.56 104 60.59 60.59 09/22/95
AF020350 LANDEROS, ANTONIO 22B 5,423.95 1,605.41 104 67.59 67.59 09/25/95
AF020351 KELLEY, DIANAS, L 22 4,024.00 1,191.60 104 50.15 50.15 09/25/95
AF020352 RIVERA, ILEANA 22 7,290.25 2,701.43 128 78.06 78.06 09/15/95
AF020353 SAVINON, ENRIQUE 22 4,891.85 1,447.99 104 60.96 60.96 09/25/95
AF020354 DEWAIN, RICHARD A 22 4,726.45 1,399.15 104 58.90 58.90 09/18/95
AF020355 WING, ROCCO 22 5,877.33 1,739.63 104 73.24 73.24 09/20/95
AF020356 MCGOVERN, SANDRA A 22 4,325.05 1,280.55 104 53.90 53.90 09/19/95
AF020357 HALEY, THOMAS S 22 3,888.30 1,101.70 100 50.00 40.00 09/25/95
AF020358 ELLIS, LORIE A 22 8,615.15 2,309.65 128 85.35 85.35 09/25/95
AF020359 COLON, LUIS A 22 5,608.60 1,659.96 104 69.89 69.89 09/20/95
AF020360 MARQUEZ, PABLO 22 6,876.85 1,843.79 128 68.13 68.13 09/22/95
AF020361 MUNDLING, TERRY L 22 5,423.95 1,651.49 24 294.81 294.81
AF020362 BOONE, RYAN S 22 5,955.70 1,763.18 104 74.22 74.22 09/18/95
AF020363 PIERCE, SHIRLEY C 22 7,482.95 1,806.33 116 80.08 80.08 09/25/95
AF020364 PILOT, DALE 22 5,062.50 1,511.86 52 126.43 126.43
AF020365 JOHNSON, FREDERICK A 22 4,861.80 1,439.56 104 60.59 60.59
AF020366 ANGLE, ROSE M 22 4,861.80 1,439.56 104 60.59 60.59 09/26/95
AF020367 DHOBLE, TRACY 22 6,457.45 2,311.59 28 313.18 313.18
AF030001 JACKSON, EDWARD 33 6,121.35 2,252.74 60 140.00 114.09 09/28/94
AF030002 QUINONES, SARAH 33 8,069.00 2,316.29 65 160.00 145.29 09/19/95
AF030003 HUMMEL, JOSEPH 33 8,176.56 2,255.18 66 160.00 31.74 09/26/95
AF030006 KIERSTEIN, TIMOTHY 33 6,025.50 1,989.78 58 140.00 35.28 09/26/95
AF030008 MCNEIL, MICHAEL 33 6,508.75 2,370.42 60 150.00 29.17 09/18/95
AF030009 BEASLEY, RUFUS 33 6,393.55 2,374.04 61 145.00 60.09 09/18/95
AF030015 JOHNSON, ERNEST A 33 6,457.40 2,333.61 61 145.00 91.01 09/25/95
AF030016 DYKES, PAUL F 33 4,403.55 1,352.11 50 115.00 113.16 09/18/95
AF030017 SANDS, WILLIAM L 33 6,171.35 2,311.55 63 135.00 112.90 09/21/95
AF030019 HOCHREITER, DONALD 33 5,520.25 1,952.18 58 130.00 62.43 09/19/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
=====================================================================================================
<S> <C> <C> <C> <C> <C> <C>
AF020336 LYON, VICKIE L 3 314.26 10/18/95 10,365.92 8,052.06
AF020337 SEXTON, WILLIAM W JR 1 166.30 09/01/95 5,985.42 4,822.17
AF020338 PINE, JAMES J 1 237.72 09/19/95 5,877.23 4,695.84
AF020339 BANTON, NEDLEY 1 267.78 09/27/95 5,706.96 4,547.37
AF020340 NELSON, WILLIE M 1 387.21 09/26/95 8,349.48 6,886.07
AF020341 BROWN, DEBRA J 1 299.67 10/02/95 6,840.93 5,422.64
AF020342 WILLIAMS, TERESA A 1 196.49 09/18/95 8,667.00 6,650.88
AF020343 DIAZ, CARLOS M 1 292.67 10/10/95 8,753.79 6,793.94
AF020344 SELBE, LARRY A 1 28.37 08/28/95 4,916.55 3,972.93
AF020345 DUTTON, CHARLES F 1 226.47 10/02/95 6,623.82 5,248.01
AF020346 BOEHM, ROBERT A 1 50.59 09/05/95 5,733.10 4,437.27
AF020347 PAUL, MAURICE O'SHEA 1 122.25 09/13/95 7,452.70 5,915.93
AF020348 HEMELRICK, BETTY J 1 192.40 09/29/95 3,828.10 3,197.28
AF020349 BROWN, RANDY N 1 66.01 09/05/95 6,180.77 4,898.34
AF020350 LANDEROS, ANTONIO 1 149.03 09/19/95 6,759.77 5,326.98
AF020351 KELLEY, DIANAS,L 1 111.12 09/27/95 5,015.00 3,957.37
AF020352 RIVERA, ILEANA 1 146.67 09/27/95 9,679.44 7,207.24
AF020353 SAVINON, ENRIQUE 1 135.10 09/28/95 6,093.84 4,803.77
AF020354 DEWAIN, RICHARD A 1 64.76 09/14/95 6,007.80 4,762.00
AF020355 WING, ROCCO 1 11.86 08/31/95 7,571.96 6,017.49
AF020356 MCGOVERN, SANDRA A 1 180.57 10/13/95 5,282.20 4,189.23
AF020357 HALEY, THOMAS S 1 114.04 09/30/95 4,790.00 3,817.77
AF020358 ELLIS, LORIE A 1 199.84 10/02/95 10,576.80 8,466.49
AF020359 COLON, LUIS A 1 154.91 10/03/95 6,988.56 5,506.32
AF020360 MARQUEZ, PABLO 1 79.31 09/26/95 8,584.38 6,849.52
AF020361 MUNDLING, TERRY L 3 0.00 10/07/95 7,075.44 5,579.07
AF020362 BOONE, RYAN S 1 40.64 09/21/95 7,644.66 6,004.85
AF020363 PIERCE, SHIRLEY C 1 49.20 09/29/95 9,209.20 7,488.51
AF020364 PILOT, DALE 2 0.00 10/02/95 6,574.36 5,143.61
AF020365 JOHNSON, FREDERICK A 1 0.00 09/27/95 6,301.36 4,913.74
AF020366 ANGLE, ROSE M 1 33.17 10/02/95 6,240.77 4,879.84
AF020367 DHOBLE, TRACY 3 0.00 10/20/95 8,769.04 6,640.15
AF030001 JACKSON, EDWARD 2 343.00 10/08/94 7,674.09 7,179.85
AF030002 QUINONES, SARAH 2 3,164.10 09/23/95 5,585.29 4,986.03
AF030003 HUMMEL, JOSEPH 2 3,401.68 09/16/95 5,381.74 4,815.87
AF030006 KIERSTEIN, TIMOTHY 2 2,789.81 10/07/95 3,675.28 3,272.22
AF030008 MCNEIL, MICHAEL 2 2,656.90 09/09/95 4,454.17 3,933.82
AF030009 BEASLEY, RUFUS 2 2,598.66 09/30/95 4,410.09 3,832.46
AF030015 JOHNSON, ERNEST A 2 2,628.49 10/07/95 4,441.01 3,873.32
AF030016 DYKES, PAUL F 2 2,354.40 09/30/95 2,250.66 2,052.89
AF030017 SANDS, WILLIAM L 2 2,285.68 09/30/95 4,567.90 3,931.61
AF030019 HOCHREITER, DONALD 2 2,218.37 09/30/95 3,832.43 3,342.47
</TABLE>
<PAGE> 246
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AF030020 COCHRAN, KENNETH S 33 5,835.30 1,772.81 51 130.00 68.11 09/18/95
AF030021 CAMACHO, LILLIAN 33 6,151.35 2,479.07 62 140.00 90.42 08/29/95
AF030023 DYKES, DUDLEY 33 5,835.30 2,424.72 32 265.00 45.02 09/11/95
AF030025 PARRISH, JAMES 33 6,171.35 2,296.93 61 140.00 68.28 07/31/95
AF030026 PRINGLE, MARVIN 33 6,708.45 2,332.07 63 145.00 50.52 09/13/95
AF030027 CAIN, ROSE 33 6,351.05 2,530.22 66 135.00 106.27 09/25/95
AF030028 ZAWODNIK, KEVIN 33 5,734.95 2,081.15 61 130.00 16.10 08/23/95
AF030030 WRIGHT, WALTER 33 5,706.95 2,369.36 65 125.00 76.31 09/19/95
AF030032 TORRES, ANTHONY 33 6,570.75 2,474.98 63 145.00 55.73 09/21/95
AF030034 TOWNSEND, DAVID 33 4,244.05 1,462.43 58 100.00 6.48 09/22/95
AF030035 SMITH, EDITH KATHY 33 5,620.60 2,094.60 62 125.00 90.20 09/07/95
AF030036 KNOX, ROBERT 33 6,176.35 2,241.45 61 140.00 17.80 09/14/95
AF030037 FLETCHER, MELISSA 33 5,348.41 1,766.75 55 130.00 95.16 09/12/95
AF030041 WALDON, HERALD 33 6,713.45 2,725.62 66 145.00 14.07 09/12/95
AF030043 CHILES, ROSE 33 3,698.60 883.44 40 115.00 97.04 09/14/95
AF030046 GOLDBERG, SANDRA 33 5,080.55 1,847.31 61 115.00 27.86 08/11/95
AF030049 MEO, EMELYNE 33 5,684.65 2,230.47 65 122.00 107.12 09/18/95
AF030051 SILLS, RICHARD 33 6,004.05 2,207.02 61 135.00 111.07 09/19/95
AF030053 GRANT, RUBY 33 7,925.70 2,947.50 71 155.00 23.20 09/26/95
AF030060 WRIGHT, HOWARD 33 6,638.15 2,440.74 65 140.00 118.89 09/19/95
AF030061 MARCANO, RUBEN 33 6,909.20 2,445.09 65 145.00 74.29 09/07/95
AF030063 WHITE, NATHAN 33 6,011.05 2,195.09 59 140.00 86.14 09/11/95
AF030064 SISOUPHANH, OI 33 6,236.75 2,185.66 59 145.00 12.41 09/25/95
AF030065 ROBILLARD, BRIAN 33 4,210.70 1,340.27 52 107.00 93.97 06/05/95
AF030069 CHAMPION, MARK 33 6,156.40 2,224.39 60 140.00 120.79 09/25/95
AF030070 BEHRENS, WILLIAM T JR 33 6,466.45 2,509.97 65 140.00 16.42 09/25/95
AF030071 CULLEN, JOHN C 33 5,790.00 1,953.15 60 130.00 73.15 08/07/95
AF030072 HUGGINS, NADINE 33 4,539.75 1,416.54 52 115.00 91.29 07/27/95
AF030074 SANTARSIERE, JOSEPH 33 6,983.20 2,809.76 66 150.00 42.96 09/22/95
AF030075 YOUNG, MARITA C 33 6,016.35 2,155.80 66 125.00 47.15 09/25/95
AF030076 MARIMON, KATRINA 33 6,357.10 2,536.01 66 135.00 118.11 05/10/95
AF030077 BYRON, PEREZ 33 6,705.50 2,607.14 65 145.00 32.64 09/26/95
AF040001 SANDHAM, BETH I 33 6,256.75 2,299.47 65 132.00 108.22 07/10/95
AF040003 COLLINS, CHRISTOPHER 33 6,638.15 2,440.74 65 140.00 118.89 09/13/95
AF040004 BANCROFT, WILLIAM C 33 7,107.90 2,611.25 65 150.00 119.15 09/20/95
AF040007 CALDERON, PETRONA 33 6,682.15 2,585.51 64 145.00 132.66 09/22/95
AF040009 KAUTTER, TINA A 33 6,577.45 2,500.18 67 135.00 27.63 09/06/95
AF040010 PENCE, MICHAEL W 33 6,788.50 2,456.20 64 145.00 109.70 08/28/95
AF040014 EDWARDS, MARY 33 6,626.15 2,542.39 66 140.00 68.54 09/12/95
AF040015 EBERWEIN, JULIE D 33 6,519.80 2,373.03 66 135.00 117.83 09/08/95
AF040018 BRADLEY, SANDRA J 33 6,425.45 2,467.64 64 140.00 73.09 09/20/95
AF050001 ANDERSON, VIRGINIA G 55 7,019.55 2,538.30 64 150.00 107.85 09/19/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF DATE
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
AF030020 COCHRAN, KENNETH S 2 2,537.95 09/30/95 3,578.11 3,327.67
AF030021 CAMACHO, LILLIAN 2 2,006.33 09/09/95 4,990.42 4,285.49
AF030023 DYKES, DUDLEY 3 1,719.66 10/05/95 5,080.02 4,216.48
AF030025 PARRISH, JAMES 2 1,823.13 08/05/95 5,248.28 4,574.27
AF030026 PRINGLE, MARVIN 2 2,333.34 09/09/95 5,145.52 4,464.61
AF030027 CAIN, ROSE 2 2,007.39 09/30/95 5,235.06 4,395.45
AF030028 ZAWODNIK, KEVIN 2 1,812.56 08/19/95 4,696.10 4,086.11
AF030030 WRIGHT, WALTER 2 1,742.23 09/30/95 4,826.31 4,016.44
AF030032 TORRES, ANTHONY 2 2,158.07 09/30/95 5,275.73 4,466.36
AF030034 TOWNSEND, DAVID 2 1,588.86 09/30/95 3,106.48 2,689.78
AF030035 SMITH, EDITH KATHY 2 1,784.34 09/16/95 4,590.20 3,922.59
AF030036 KNOX, ROBERT 2 2,444.41 11/14/95 4,357.80 3,776.44
AF030037 FLETCHER, MELISSA 2 2,112.30 09/23/95 3,735.16 3,307.64
AF030041 WALDON, HERALD 2 1,867.56 09/07/95 5,959.07 5,006.34
AF030043 CHILES, ROSE 2 2,090.84 09/02/95 1,737.04 1,641.77
AF030046 GOLDBERG, SANDRA 2 1,444.67 08/19/95 4,397.86 3,790.74
AF030049 MEO, EMELYNE 2 1,592.88 09/30/95 4,987.12 4,144.00
AF030051 SILLS, RICHARD 2 1,762.82 09/16/95 5,106.07 4,337.57
AF030053 GRANT, RUBY 2 2,073.27 10/06/95 7,153.20 5,917.20
AF030060 WRIGHT, HOWARD 2 1,615.76 08/18/95 6,148.89 5,179.22
AF030061 MARCANO, RUBEN 2 1,823.28 09/16/95 6,164.29 5,192.87
AF030063 WHITE, NATHAN 2 1,850.81 09/15/95 4,986.14 4,256.65
AF030064 SISOUPHANH, OI 2 1,971.73 10/07/95 5,087.41 4,318.36
AF030065 ROBILLARD, BRIAN 4 878.44 06/13/95 4,052.97 3,609.14
AF030069 CHAMPION, MARK 2 1,663.71 09/23/95 5,440.79 4,595.89
AF030070 BEHRENS, WILLIAM T JR 2 1,588.44 09/30/95 6,036.42 4,940.48
AF030071 CULLEN, JOHN C 2 1,020.60 06/24/95 5,893.15 5,112.41
AF030072 HUGGINS, NADINE 2 1,031.13 07/08/95 4,226.29 3,756.72
AF030074 SANTARSIERE, JOSEPH 4 1,473.72 10/02/95 6,942.96 5,581.44
AF030075 YOUNG, MARITA C 2 1,478.35 10/07/95 5,547.15 4,593.06
AF030076 MARIMON, KATRINA 2 715.37 05/19/95 7,408.11 6,283.78
AF030077 BYRON, PEREZ 2 1,641.15 10/07/95 6,267.64 5,128.85
AF040001 SANDHAM, BETH I 2 1,159.23 07/08/95 6,358.22 5,400.72
AF040003 COLLINS, CHRISTOPHER 2 1,625.76 09/16/95 6,138.89 5,121.91
AF040004 BANCROFT, WILLIAM C 2 1,714.09 09/02/95 6,599.00 5,510.24
AF040007 CALDERON, PETRONA 2 1,701.95 09/15/95 6,102.66 5,042.76
AF040009 KAUTTER, TINA A 2 4,269.24 07/21/95 3,677.58 2,601.89
AF040010 PENCE, MICHAEL W 2 1,576.86 08/17/95 6,380.70 5,374.32
AF040014 EDWARDS, MARY 2 1,500.70 09/02/95 6,338.54 5,261.45
AF040015 EBERWEIN, JULIE D 2 1,573.90 09/16/95 6,057.83 5,053.20
AF040018 BRADLEY, SANDRA J 2 1,506.86 09/16/95 6,093.09 5,032.66
AF050001 ANDERSON, VIRGINIA G 2 1,669.80 09/25/95 6,557.85 5,414.78
</TABLE>
<PAGE> 247
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AF050002 DUDLEY, NICHOLAS M 55 4,711.50 1,550.62 53 120.00 22.12 09/15/95
AF050003 KEATHLEY, DANNY J 55 7,103.35 1,628.43 59 150.00 9.28 09/15/95
AF050004 BALDWIN, SHIRLEY B 55 6,469.45 2,494.19 31 290.00 263.64 09/13/95
AF050006 SOTO, GLADYS 55 4,498.45 1,388.11 52 115.00 21.56 09/20/95
AF050007 FIGUEROA, JUAN L 55 6,437.45 2,421.74 62 145.00 14.19 09/25/95
AF050008 DAVIS, WAYNE T 55 6,688.15 2,372.36 65 140.00 100.51 09/14/95
AF050009 MCGRAW, SCOTT M 55 6,773.80 2,655.36 31 310.00 129.16 09/25/95
AF050010 GRAVES, KEITH A 55 6,623.15 2,427.71 65 140.00 90.86 09/18/95
AF050013 BENNETT, DONALD A 55 6,738.50 2,305.50 65 140.00 84.00 09/19/95
AF050014 PEREZ, AGUSTIN O 55 5,411.95 1,798.04 54 135.00 54.99 09/18/95
AF050015 BARATTA, JOSEPH E 55 3,888.30 1,093.37 50 100.00 81.67 09/18/95
AF050016 GEE, ANTHONY M 55 4,861.80 1,572.47 54 120.00 74.27 08/14/95
AF050018 MUNOZ, FRANCES A 55 5,895.35 2,154.54 65 125.00 49.89 06/29/95
AF050019 GAUNT, LEA M 55 6,838.85 2,721.21 64 150.00 110.06 09/06/95
AF050020 LOPEZ, ANGEL M 55 4,439.40 1,332.23 25 240.00 11.63 09/08/95
AF050021 WOODARD, JOANNIE 55 5,493.95 2,160.28 62 125.00 29.23 08/22/95
AF050024 SANDS, MARY L 55 6,256.75 2,440.08 65 135.00 56.83 09/15/95
AF050025 WATTS, BAXTER B 55 6,638.15 2,222.55 64 140.00 40.70 05/18/95
AF050027 OBORSKI, MEGAN J 55 5,672.65 1,963.39 62 125.00 11.04 09/25/95
AF050028 PELLETIER, ALAN M 55 4,826.80 1,503.24 56 115.00 5.04 09/25/95
AF050029 RAMOS, DAVID A 55 6,156.40 2,343.47 63 135.00 129.87 09/14/95
AF050030 NICHOLAS, ANGELA S 55 3,697.65 967.76 44 107.00 64.41 09/19/95
AF050031 LUZZI, ANN P 55 6,587.80 2,687.36 67 140.00 35.16 09/06/95
AF050032 GARRETT, MICHAEL 55 6,537.80 2,353.34 64 140.00 71.14 09/06/95
AF050033 WILLIAMS, VICTOR 55 6,688.15 2,372.36 65 140.00 100.51 09/25/95
AF050034 WASHINGTON, CARRIE 55 6,537.80 2,192.72 31 289.00 60.52 07/12/95
AF050036 KENNEDY, CAROLE 55 6,121.40 2,412.63 64 135.00 29.03 09/19/95
AF050037 CARTER, JOHN D 55 4,870.85 1,875.99 59 115.00 76.84 09/20/95
AF050038 CLARK, JENNIFER L 55 5,725.00 2,367.65 65 125.00 92.65 09/12/95
AF050039 TAYLOR, TACHIA L 55 5,562.30 2,169.65 65 120.00 51.95 09/13/95
AF050040 DENSON, JESSE 55 4,885.15 1,491.98 55 118.00 5.13 09/25/95
AF050041 CENTIMOLE, JANICE M 55 5,725.00 1,970.67 58 135.00 0.67 09/18/95
AF050042 SHOEMO, JUANITA 55 6,156.40 2,144.86 62 135.00 66.26 09/06/95
AF050043 MORELAND, AMY D 55 5,624.65 2,286.80 64 125.00 36.45 09/25/95
AF050044 SIMPSON, VINCENT G SR 55 7,619.65 2,633.29 66 157.00 47.94 09/26/95
AF050045 RAWLS, DINAH D 55 6,957.20 2,370.29 65 145.00 47.49 09/25/95
AF050046 GONZALEZ, JOSE R 55 5,550.30 2,231.05 65 120.00 101.35 09/25/95
AF050047 CEDRATI-BIFFI, MASSIM 55 5,493.95 1,860.94 64 115.00 109.89 09/26/95
AF050049 WOOD, RICHARD R 55 5,499.95 2,108.19 64 120.00 48.14 09/22/95
AF050050 TOMISLAV A MARICIC 55 3,415.90 825.65 39 110.00 61.55 09/11/95
AF050051 NELSON, AGNES E 55 3,036.50 609.71 34 110.00 16.21 09/22/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
===================================================================================================
<S> <C> <C> <C> <C> <C> <C>
AF050002 DUDLEY, NICHOLAS M 2 1,374.11 09/08/95 3,982.12 3,453.32
AF050003 KEATHLEY, DANNY J 2 1,976.92 09/15/95 5,868.78 5,197.51
AF050004 BALDWIN, SHIRLEY B 3 1,348.04 09/02/95 6,393.64 5,243.67
AF050006 SOTO, GLADYS 2 1,441.39 09/23/95 3,586.56 3,095.92
AF050007 FIGUEROA, JUAN L 4 1,415.88 10/01/95 6,249.19 5,088.25
AF050008 DAVIS, WAYNE T 2 1,483.22 09/23/95 6,400.51 5,317.11
AF050009 MCGRAW, SCOTT M 3 1,489.08 10/19/95 6,639.16 5,414.13
AF050010 GRAVES, KEITH A 2 1,455.76 09/30/95 6,390.86 5,231.51
AF050013 BENNETT, DONALD A 2 1,516.38 09/30/95 6,384.00 5,283.62
AF050014 PEREZ, AGUSTIN O 2 1,529.77 09/30/95 4,644.99 3,934.58
AF050015 BARATTA, JOSEPH E 2 1,231.98 09/30/95 3,081.67 2,692.03
AF050016 GEE, ANTHONY M 2 1,132.18 08/19/95 4,514.27 3,894.24
AF050018 MUNOZ, FRANCES A 2 712.07 06/10/95 6,624.89 5,597.35
AF050019 GAUNT, LEA M 2 1,482.85 10/07/95 6,710.06 5,426.77
AF050020 LOPEZ, ANGEL M 3 1,214.95 09/21/95 3,846.63 3,363.96
AF050021 WOODARD, JOANNIE 2 1,109.57 09/16/95 5,529.23 4,494.94
AF050024 SANDS, MARY L 2 1,192.70 09/23/95 6,401.83 5,184.72
AF050025 WATTS, BAXTER B 2 602.83 05/20/95 7,740.70 6,647.21
AF050026 DAILEY, ROBERT D 2 1,285.76 09/09/95 6,404.26 5,341.17
AF050027 OBORSKI, MEGAN J 2 1,281.88 10/06/95 5,386.04 4,447.12
AF050028 PELLETIER, ALAN M 2 1,343.90 10/21/95 4,145.04 3,528.18
AF050029 RAMOS, DAVID A 2 1,208.13 09/23/95 6,204.87 5,066.34
AF050030 NICHOLAS, ANGELA S 2 1,240.36 10/02/95 2,800.41 2,466.16
AF050031 LUZZI, ANN P 4 4,494.58 08/16/95 3,785.10 2,294.97
AF050032 GARRETT, MICHAEL 2 5,108.58 11/11/95 2,499.54 1,440.59
AF050033 WILLIAMS, VICTOR 2 1,182.48 09/01/95 6,860.51 5,626.09
AF050034 WASHINGTON, CARRIE 3 978.05 08/05/95 6,996.52 5,890.81
AF050036 KENNEDY, CAROLE 2 1,190.71 09/30/95 6,239.03 4,998.15
AF050037 CARTER,JOHN D 4 831.04 10/03/95 5,136.84 4,101.54
AF050038 CLARK, JENNIFER L 2 914.69 09/23/95 6,217.65 4,933.29
AF050039 TAYLOR, TACHIA L 2 919.99 09/23/95 5,931.95 4,756.14
AF050040 DENSON, JESSE 2 994.16 09/09/95 4,725.13 4,019.26
AF050041 CENTIMOLE,JANICE M 2 1,316.00 10/21/95 5,400.67 4,468.20
AF050042 SHOEMO, JUANITA 2 3,531.68 10/20/95 3,757.76 2,683.18
AF050043 MORELAND, AMY D 2 934.99 09/29/95 6,036.45 4,757.66
AF050044 SIMPSON, VINCENT G SR 2 1,397.24 10/06/95 7,740.94 6,295.82
AF050045 RAWLS, DINAH D 2 1,213.61 09/29/95 7,152.49 5,813.11
AF050046 GONZALEZ, JOSE R 2 762.19 09/23/95 6,221.35 4,910.06
AF050047 CEDRATI-BIFFI, MASSIM 2 820.40 09/30/95 5,859.89 4,734.49
AF050049 WOOD, RICHARD R 2 864.09 10/06/95 5,928.14 4,701.26
AF050050 TOMISLAV A MARICIC 2 1,058.37 09/28/95 2,701.55 2,393.61
AF050051 NELSON, AGNES E 2 1,234.99 10/05/95 1,996.21 1,828.17
</TABLE>
<PAGE> 248
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF050053 BLUNT,JIMMY B 55 7,119.90 2,702.21 68 145.00 107.11 09/12/95 2
AF050054 MARTINEZ,CARLOS 55 6,587.80 2,584.00 68 135.00 126.80 09/20/95 2
AF050055 STAFFORD,NECOLE L 55 5,343.60 1,802.10 60 120.00 65.70 09/05/95 2
AF050056 LITTLE,HENRY C 55 6,006.05 2,465.80 68 125.00 96.85 05/22/95 2
AF050058 CORTES,JOSE M 55 4,661.15 1,738.20 59 110.00 19.35 09/06/95 2
AF050059 SINGLETON,NECHELLE E 55 5,674.65 2,078.87 65 120.00 73.52 09/18/95 2
AF050060 SACCONE,JOHN S 55 7,181.90 2,656.41 68 145.00 123.31 09/20/95 2
AF050061 WELDON,WILLIAM A 55 5,114.90 1,911.49 33 215.00 146.39 09/06/95 3
AF060001 WOODHAM,JAMES B 66 7,937.70 2,706.47 71 150.00 144.17 07/14/95 2
AF060002 MONTES,ALBERTO 66 6,495.45 2,536.95 65 140.00 72.40 09/18/95 2
AF060003 ECHEGARAY,JEFF R SR. 66 6,056.05 2,375.45 65 130.00 111.50 08/25/95 2
AF060004 BARFIELD,TREVIS L 66 5,624.65 2,098.19 62 125.00 97.84 08/16/95 2
AF060005 MONTGOMERY,CHARLES J 66 5,562.30 1,874.08 60 125.00 61.38 06/30/95 2
AF060006 PARKER,JAMES E 66 7,300.60 2,924.26 71 145.00 74.86 09/19/95 2
AF060007 MCGILL,WANDA J 77A 7,581.30 2,627.43 71 145.00 58.73 06/27/95 2
AF060008 JOHNSON,BRUCE N 77A 6,156.40 2,636.04 66 135.00 17.44 4
AF060010 DEXTER,REGGIEO V 66 3,737.95 1,154.65 49 100.00 92.60 09/21/95 2
AF060011 COBLITZ,BRUCE A 77A 7,597.30 3,263.75 33 330.00 301.05 06/09/95 3
AF060012 BAGLEY,JEANNETTE 66 6,856.85 2,641.85 68 140.00 118.70 09/25/95 2
AF060013 THEURER,ROBERT W 66 6,969.20 2,732.86 67 145.00 132.06 08/15/95 2
AF060014 JONES,JESSE 66 6,688.15 2,679.27 63 150.00 67.42 09/12/95 2
AF060016 RACHEL,VIVIAN I 66 6,256.75 2,864.34 35 265.00 111.09 07/06/95 3
AF060017 COOPER,ROSA L 66 6,688.15 2,718.56 68 140.00 26.71 09/12/95 2
AF060018 SMITH,LONZO 66 5,612.65 1,954.82 61 125.00 67.47 08/28/95 2
AF060019 POOLE,WYATT M 66 6,086.05 2,276.17 62 135.00 127.22 09/21/95 2
AF060021 SMITH,TERRI L 66 5,624.65 2,098.19 62 125.00 97.84 09/18/95 2
AF060022 JENKINS,YVETTE R 66 6,236.75 2,494.45 68 130.00 21.20 09/19/95 2
AF060023 RIVERA,GILBERTO 66 5,481.95 2,193.27 62 125.00 50.22 09/12/95 2
AF060024 CARTER,HOWARD W 66 6,788.50 2,382.51 132 70.00 1.01 09/25/95 1
AF060025 MULLIS,CLIFTON D 66 6,256.75 1,837.89 65 125.00 94.64 09/18/95 2
AF060026 LAUREANO,RAMONA C 66 5,411.95 1,819.61 63 115.00 101.56 09/18/95 2
AF060027 BIGHAM,DONALD V 66 5,367.60 1,937.85 61 120.00 105.45 09/11/95 2
AF060028 PERCELL,TRINA R 66 5,949.70 2,478.67 65 130.00 108.37 09/18/95 2
AF060029 BROWN,DERONIA JR 7A 6,587.80 2,584.00 68 135.00 126.80 09/06/95 2
AF060030 HARRELL,WILLARD J 66 7,095.55 2,730.52 68 145.00 111.07 09/25/95 2
AF060031 HODGE,RICHARD L 7A 5,875.35 2,232.83 65 125.00 108.18 09/06/95 2
AF060032 WELLS,WILBERT L 66 4,548.80 1,423.08 52 115.00 106.88 09/25/95 2
AF060033 NICHOLAS,DUDLEY M 7A 6,106.40 2,562.61 70 125.00 44.01 09/15/95 2
AF060034 MACKEYROY,ALICE M 66 6,369.10 2,455.01 68 130.00 114.11 09/14/95 2
AF060035 ADAMS,MARY J 66 7,069.55 2,702.04 68 145.00 56.59 09/25/95 2
AF060036 SULLIVAN,STEPHEN M 66 4,611.15 1,439.14 51 120.00 50.29 09/11/95 2
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
==========================================================================================
<S> <C> <C> <C> <C> <C>
AF050053 BLUNT,JIMMY B 956.63 09/23/95 7,937.11 6,304.08
AF050054 MARTINEZ,CARLOS 867.23 09/29/95 7,416.80 5,796.97
AF050055 STAFFORD,NECOLE L 724.21 08/25/95 5,825.70 4,820.62
AF050056 LITTLE,HENRY C 220.42 05/20/95 7,971.85 6,483.02
AF050058 CORTES,JOSE M 3,296.54 08/19/95 2,547.60 1,545.81
AF050059 SINGLETON,NECHELLE E 816.64 09/23/95 6,193.52 4,972.69
AF050060 SACCONE,JOHN S 975.07 09/30/95 7,888.31 6,222.65
AF050061 WELDON,WILLIAM A 546.87 09/18/95 5,951.39 4,771.07
AF060001 WOODHAM,JAMES B 578.21 07/15/95 9,494.17 7,760.03
AF060002 MONTES,ALBERTO 912.85 10/14/95 7,212.40 5,659.56
AF060003 ECHEGARAY,JEFF R SR. 630.00 08/26/95 7,131.50 5,678.49
AF060004 BARFIELD,TREVIS L 632.26 08/26/95 6,472.84 5,224.47
AF060005 MONTGOMERY,CHARLES J 466.39 07/15/95 6,561.38 5,469.11
AF060006 PARKER,JAMES E 840.76 09/30/95 8,484.86 6,544.08
AF060007 MCGILL,WANDA J 370.36 06/24/95 9,473.73 7,731.65
AF060008 JOHNSON,BRUCE N 0.00 04/16/95 8,792.44 7,038.76
AF060010 DEXTER,REGGIEO V 707.97 09/30/95 3,692.60 3,078.44
AF060011 COBLITZ,BRUCE A 261.84 06/01/95 10,221.05 8,038.79
AF060012 BAGLEY,JEANNETTE 835.42 09/30/95 7,818.70 6,100.90
AF060013 THEURER,ROBERT W 624.78 08/26/95 8,397.06 6,631.84
AF060014 JONES,JESSE 802.09 09/18/95 7,717.42 6,038.75
AF060016 RACHEL,VIVIAN I 331.25 08/05/95 8,326.09 6,365.59
AF060017 COOPER,ROSA L 736.95 09/23/95 7,866.71 6,098.56
AF060018 SMITH,LONZO 665.94 09/09/95 6,317.47 5,117.33
AF060019 POOLE,WYATT M 754.25 09/23/95 6,877.22 5,465.20
AF060020 CODNER,GLENFORD E 709.31 08/21/95 9,141.61 7,304.49
AF060021 SMITH,TERRI L 701.39 09/30/95 6,347.84 4,994.37
AF060022 JENKINS,YVETTE R 693.15 09/23/95 7,300.55 5,679.51
AF060023 RIVERA,GILBERTO 679.85 10/14/95 6,300.22 4,940.19
AF060024 CARTER,HOWARD W 854.64 09/30/95 7,561.01 5,980.21
AF060025 MULLIS,CLIFTON D 731.62 09/15/95 6,844.64 5,635.20
AF060026 LAUREANO,RAMONA C 752.22 09/29/95 5,856.56 4,676.18
AF060027 BIGHAM,DONALD V 688.74 09/29/95 5,985.45 4,746.30
AF060028 PERCELL,TRINA R 600.89 09/13/95 7,128.37 5,491.45
AF060029 BROWN,DERONIA JR 4,251.93 08/11/95 4,351.52 2,610.61
AF060030 HARRELL,WILLARD J 754.06 09/16/95 8,265.42 6,424.84
AF060031 HODGE,RICHARD L 3,868.96 08/26/95 3,702.07 2,229.15
AF060032 WELLS,WILBERT L 731.09 10/07/95 4,706.88 3,874.93
AF060033 NICHOLAS,DUDLEY M 501.27 08/25/95 7,544.01 5,796.79
AF060034 MACKEYROY,ALICE M 635.50 09/22/95 7,524.11 5,870.96
AF060035 ADAMS,MARY J 796.83 10/07/95 8,176.59 6,355.38
AF060036 SULLIVAN,STEPHEN M 695.33 09/23/95 4,850.29 4,018.44
</TABLE>
<PAGE> 249
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF060037 COLON,JAVIER 66 6,206.75 2,615.33 68 130.00 112.08 08/15/95 2
AF060038 ADAMSON,DUDLEY J 66 6,106.40 2,534.99 67 130.00 61.39 07/07/95 2
AF060039 COLVIN,HATTIE L 66 7,300.60 2,623.62 71 140.00 124.22 09/25/95 2
AF060040 ORTEGA,MARCO R 66 7,300.60 2,412.35 65 150.00 112.95 09/19/95 2
AF060041 JACKSON,ROY JR 66 4,811.85 1,594.23 27 240.00 166.08 09/25/95 3
AF060042 SHAW,WADE L 66 6,768.50 2,733.61 66 145.00 77.11 09/25/95 4
AF060043 WATSON,ROSIE L 66 5,905.70 2,366.86 67 125.00 22.56 09/25/95 2
AF060044 MCALLISTER,ANNETTE L 66 6,218.75 2,532.53 68 130.00 41.28 09/12/95 2
AF060045 JOHNSON,CYNTHIA W 66 4,474.45 1,453.46 51 110.00 97.91 08/02/95 2
AF060046 HAWLEY,MARK D 66 7,450.95 2,923.53 70 150.00 24.48 09/18/95 2
AF060047 JONES,JASON E 66 6,537.80 2,475.66 67 135.00 103.46 09/25/95 2
AF060048 MCINTYRE,SAMUEL L 66 6,106.40 2,219.38 65 130.00 5.78 09/18/95 2
AF060049 CURREN,ALFRED J 66 7,019.55 2,656.77 67 145.00 106.32 08/21/95 2
AF060050 ERZENE,IBRAHIM 66 7,551.30 2,479.06 33 305.00 270.36 09/05/95 3
AF060051 FRITTON,DERRICK A 66 5,624.65 2,038.34 64 120.00 102.99 09/06/95 2
AF060052 SINGLETON,HELEN 66 5,949.70 2,276.04 64 130.00 35.74 09/11/95 2
AF060053 ALEXANDER,DEBRA A 66 4,185.40 1,600.93 29 200.00 186.33 08/31/95 3
AF060054 REMINGTON,ROBERT 66 6,437.45 2,280.42 65 135.00 77.87 09/12/95 2
AF060055 VANARSDALE,MICHAEL E 66 6,437.45 2,731.29 68 135.00 123.74 09/26/95 2
AF060056 RAMIREZ,SALVADOR M 77A 6,076.05 2,189.70 64 130.00 75.75 09/11/95 2
AF060057 BOOTHER,CHERYL F 77A 4,811.85 1,765.89 58 115.00 22.74 2
AF060060 RANDALL,JEFFREY B 77A 7,270.25 2,624.34 71 140.00 94.59 09/26/95 2
AF060059 POWELL,JEFFREY D 66 5,624.65 2,286.80 64 125.00 36.45 09/18/95 2
AF060061 MILLER,BARRY L 66 7,232.25 2,598.77 68 145.00 116.02 09/19/95 2
AF060062 FLOYD,SHIRLEY A 77A 6,156.40 2,171.13 67 125.00 77.53 09/18/95 2
AF060063 WILLIAMS,SHAWNE L 66 7,202.25 2,438.75 69 140.00 121.00 09/14/95 2
AF060064 MUNOZ,MANUEL V 66 6,369.10 2,339.09 67 130.00 128.19 09/18/95 2
AF060065 MERCADO,EFRAIN 66 6,638.15 2,115.02 65 135.00 113.17 09/25/95 2
AF060066 SIPLIN,BRENDA R 66 5,825.35 2,286.18 65 125.00 111.53 09/21/95 2
AF060068 THOMAS,DOREE R 77A 6,419.45 2,202.17 65 133.00 109.62 09/06/95 2
AF060069 BRYN,KATHLEEN M 66 6,587.80 2,507.48 65 140.00 135.28 09/25/95 2
AF060070 NUNE,PATRICIA A 66 6,457.45 2,294.45 65 135.00 111.90 09/22/95 2
AF060071 BORGES,DOUGLAS M 66 4,492.45 1,467.09 55 110.00 19.54 09/14/95 2
AF060072 MOORE,CHARLES C 66 6,525.80 2,702.12 69 135.00 47.92 09/26/95 2
AF060073 BRINSON,RAYMOND P 66 7,181.90 2,656.41 68 145.00 123.31 08/28/95 2
AF060074 BARRETT,ROBERT L 77A 7,332.60 2,491.91 68 145.00 109.51 09/25/95 2
AF060075 ADAMS,ALBERT 66 4,598.80 1,461.98 53 115.00 80.78 09/25/95 2
AF060076 GORDON,BARBARA A 66 3,723.95 1,075.33 48 100.00 99.28 09/19/95 2
AF060077 HUNTLEY,ROBBIE D 66 5,725.00 2,027.02 65 120.00 72.02 09/18/95 2
AF060078 SHULER,DARRYLE L 66 6,369.10 2,389.81 65 135.00 118.91 08/04/95 2
AF060079 PIERSON,ROSHYRA N 66 5,825.35 2,171.36 64 125.00 121.71 08/09/95 2
AF060080 FRANKLIN,MICHAEL A 66 4,811.85 1,662.68 54 120.00 114.53 09/13/95 2
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
===========================================================================================
<S> <C> <C> <C> <C> <C>
AF060037 COLON,JAVIER 464.76 08/26/95 7,782.08 6,019.86
AF060038 ADAMSON,DUDLEY J 288.33 07/15/95 7,991.39 6,294.56
AF060039 COLVIN,HATTIE L 754.79 09/22/95 8,424.22 6,624.71
AF060040 ORTEGA,MARCO R 819.60 09/30/95 8,212.95 6,560.17
AF060041 JACKSON,ROY JR 672.81 10/05/95 5,206.08 4,247.11
AF060042 SHAW,WADE L 615.11 09/30/95 8,192.11 6,236.91
AF060043 WATSON,ROSIE L 666.40 10/07/95 6,897.56 5,314.39
AF060044 MCALLISTER,ANNETTE L 614.50 09/23/95 7,451.28 5,745.39
AF060045 JOHNSON,CYNTHIA W 401.70 08/12/95 5,157.91 4,317.64
AF060046 HAWLEY,MARK D 729.42 09/30/95 8,874.48 6,809.93
AF060047 JONES,JASON E 743.82 10/07/95 7,528.46 5,871.74
AF060048 MCINTYRE,SAMUEL L 601.96 09/22/95 7,155.78 5,636.59
AF060049 CURREN,ALFRED J 492.51 08/26/95 8,661.32 6,817.46
AF060050 ERZENE,IBRAHIM 663.20 10/05/95 8,810.36 7,034.34
AF060051 FRITTON,DERRICK A 3,037.62 08/21/95 4,151.05 2,765.91
AF060052 SINGLETON,HELEN 579.10 09/23/95 7,050.74 5,502.07
AF060053 ALEXANDER,DEBRA A 395.16 09/30/95 4,986.33 3,899.48
AF060054 REMINGTON,ROBERT 706.81 10/07/95 7,337.87 5,776.43
AF060055 VANARSDALE,MICHAEL E 610.71 10/07/95 7,818.74 5,911.88
AF060056 RAMIREZ,SALVADOR M 746.77 10/21/95 6,805.75 5,371.64
AF060057 BOOTHER,CHERYL F 0.00 05/20/95 6,577.74 5,430.03
AF060059 POWELL,JEFFREY D 531.31 09/30/95 6,786.45 5,171.66
AF060060 RANDALL,JEFFREY B 635.89 09/16/95 8,639.59 6,716.53
AF060061 MILLER,BARRY L 588.40 09/20/95 8,671.02 6,793.90
AF060062 FLOYD,SHIRLEY A 515.83 09/23/95 7,327.53 5,770.22
AF060063 WILLIAMS,SHAWNE L 213.99 07/15/95 9,161.00 7,391.92
AF060064 MUNOZ,MANUEL V 587.79 09/30/95 7,538.19 5,859.00
AF060065 MERCADO,EFRAIN 668.67 09/23/95 7,543.17 6,042.64
AF060066 SIPLIN,BRENDA R 539.87 09/30/95 6,986.53 5,363.12
AF060068 THOMAS,DOREE R 3,247.45 07/29/95 5,079.40 3,516.30
AF060069 BRYN,KATHLEEN M 544.85 09/15/95 7,935.28 6,152.99
AF060070 NUNE,PATRICIA A 627.75 10/06/95 7,536.90 5,907.55
AF060071 BORGES,DOUGLAS M 686.04 10/07/95 4,749.54 3,863.68
AF060072 MOORE,CHARLES C 560.45 10/09/95 8,012.92 6,050.81
AF060073 BRINSON,RAYMOND P 499.79 09/11/95 8,823.31 6,837.98
AF060074 BARRETT,ROBERT L 695.30 10/28/95 8,509.51 6,771.32
AF060075 ADAMS,ALBERT 584.45 10/07/95 5,025.78 4,075.83
AF060076 GORDON,BARBARA A 424.48 09/16/95 4,049.28 3,352.63
AF060077 HUNTLEY,ROBBIE D 495.08 09/30/95 6,792.02 5,302.41
AF060078 SHULER,DARRYLE L 257.01 08/11/95 8,203.91 6,444.36
AF060079 PIERSON,ROSHYRA N 301.38 08/19/95 7,371.07 5,781.94
AF060080 FRANKLIN,MICHAEL A 440.30 09/23/95 5,634.53 4,493.12
</TABLE>
<PAGE> 250
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<Caption
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AF060081 MATHIS,SONJI P 66 4,811.85 1,649.55 54 120.00 101.40 09/13/95 2
AF060082 MOSELEY,REGINALD C 66 5,857.35 2,121.85 64 125.00 104.20 09/25/95 2
AF060083 MILES,STANLEY E 77A 4,705.50 1,564.47 53 120.00 29.97 09/05/95 2
AF060084 SCALLIONS,KENNETH M 77A 6,002.05 2,328.36 65 130.00 10.41 2
AF060085 BROUGHTON,ANTHONY J 66 7,261.25 2,886.59 70 145.00 142.84 09/18/95 2
AF060086 HEARD,ALONZO 66 7,169.90 2,795.51 69 145.00 105.41 08/02/95 2
AF060087 CAREY,JOANN J 66 7,565.30 2,756.58 69 150.00 121.88 09/06/95 2
AF060088 NAULINGS,GEORGE E 66 5,648.65 2,119.50 63 125.00 18.15 09/19/95 2
AF060089 GRANT,FRANK C 66 7,258.25 2,571.53 33 300.00 229.78 09/05/95 3
AF060090 JONES,PAMELA Y 77A 6,188.40 2,287.72 66 130.00 26.12 09/25/95 2
AF060091 COLEMAN,JAMES 66 6,307.10 2,394.29 67 130.00 121.39 09/14/95 2
AF060092 UPSON,RAYMON SR 66 6,176.40 2,491.24 67 130.00 87.64 09/19/95 2
AF060093 ALLEN,LINDA 66 5,506.30 2,254.68 65 120.00 80.98 09/19/95 2
AF060094 FRYER,KATHRYN 66 8,295.75 3,063.81 71 160.00 159.56 09/19/95 2
AF060095 MOSES,TESSINE J 77A 6,638.15 2,571.64 69 135.00 29.79 09/08/95 2
AF060096 SUTTON,ZARENA C 77A 7,332.60 2,491.91 68 145.00 109.51 2
AF060097 KURTS,TROY E 77A 4,811.85 1,535.22 53 120.00 107.07 09/12/95 2
AF060098 RIOS,JOSE 77A 7,169.90 2,671.15 68 145.00 126.05 09/19/95 2
AF060099 EATON,CAROL A 66 6,969.20 2,497.59 68 140.00 86.79 09/25/95 2
AF060100 HOWELL,EDWARD C 66 5,243.25 1,694.52 28 250.00 187.77 09/19/95 3
AF060101 STUMP,DONNA J 66 4,811.85 1,662.68 54 120.00 114.53 09/18/95 2
AF060102 GARVIN,ELIZABETH G 66 5,825.35 2,286.18 65 125.00 111.53 09/18/95 2
AF060103 KACHIK,SUSAN M 66 6,206.75 2,303.83 66 130.00 60.58 09/19/95 2
AF060104 CLARKE,DEREK E 66 5,385.60 2,249.59 64 120.00 75.19 09/06/95 4
AF070001 LEWIS,DANNY R 77A 5,775.00 2,119.47 61 130.00 94.47 09/18/95 2
AF070003 WARREN,DEBORA C 77A 7,107.90 2,613.47 70 140.00 61.37 09/11/95 2
AF070004 TATEM,DAVID S 77A 6,307.10 2,380.12 65 135.00 47.22 09/26/95 2
AF070005 BEDENBAUGH,AMBER L 77A 6,688.15 2,614.60 69 135.00 122.75 09/18/95 2
AF070006 NAVARRO,CESAR A 77A 5,293.25 1,762.70 59 120.00 95.95 09/25/95 2
AF070007 JERGER,LISA A 77A 7,220.25 2,777.11 69 145.00 137.36 09/26/95 2
AF070008 MEADORS,LISA S 77A 6,427.45 1,874.89 58 145.00 37.34 09/22/95 2
AF070009 HUMPHREYS,MARY K 66 6,376.60 2,547.51 67 135.00 6.61 08/15/95 2
AF070010 BROWN,CHRISTOPHER L 66 5,952.00 2,158.17 61 135.00 10.17 09/07/95 2
AF070011 FRAZIER,HOPE 66 5,343.60 1,703.24 57 125.00 46.84 09/25/95 2
AF070012 HOPKINS,JANICE M 66 4,160.35 1,327.85 50 110.00 98.20 09/26/95 2
AF070013 GANN,ARTHUR L 77A 5,999.70 1,936.96 62 130.00 6.66 09/25/95 2
AF070014 BROGDON,JANICE D 77A 7,119.90 2,752.93 69 145.00 12.83 08/30/95 2
AF070015 CROOKE,PAULA C 77A 6,433.45 2,606.01 67 135.00 129.46 09/21/95 2
AF070016 SHEPPARD,ALICE M 77A 5,455.95 1,953.83 60 125.00 34.78 09/05/95 2
AF070017 MILLER,ROBERT B 66 7,832.35 2,805.46 71 150.00 137.81 09/15/95 2
AF070018 INGRAM,MICHELLE A 77A 6,294.75 2,472.24 65 135.00 126.99 09/22/95 2
AF070019 MCMAHON,TERENCE J 77 5,313.60 1,834.94 58 125.00 23.54 09/26/95 2
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
================================================================================================
<S> <C> <C> <C> <C> <C>
AF060081 MATHIS,SONJI P 443.45 09/23/95 5,621.40 4,489.14
AF060082 MOSELEY,REGINALD C 506.24 09/30/95 6,979.20 5,426.72
AF060083 MILES,STANLEY E 388.74 09/09/95 5,549.97 4,484.93
AF060084 SCALLIONS,KENNETH M 0.00 06/16/95 8,330.41 6,616.58
AF060085 BROUGHTON,ANTHONY J 470.21 09/22/95 9,132.84 6,955.27
AF060086 HEARD,ALONZO 267.46 08/12/95 9,385.41 7,286.02
AF060087 CAREY,JOANN J 367.61 08/26/95 9,508.31 7,438.42
AF060088 NAULINGS,GEORGE E 413.44 09/09/95 6,913.15 5,370.33
AF060089 GRANT,FRANK C 302.05 09/05/95 9,229.78 7,255.20
AF060090 JONES,PAMELA Y 522.64 10/07/95 7,436.12 5,744.45
AF060091 COLEMAN,JAMES 373.23 09/14/95 7,921.39 6,080.46
AF060092 UPSON,RAYMON SR 420.07 09/29/95 7,757.64 5,841.38
AF060093 ALLEN,LINDA 383.81 09/29/95 6,920.98 5,202.72
AF060094 FRYER,KATHRYN 549.43 09/29/95 10,239.56 7,842.75
AF060095 MOSES,TESSINE J 385.11 09/15/95 8,399.79 6,405.71
AF060096 SUTTON,ZARENA C 0.00 06/17/95 9,824.51 7,963.29
AF060097 KURTS,TROY E 394.93 09/16/95 5,627.07 4,534.77
AF060098 RIOS,JOSE 496.94 09/30/95 8,826.05 6,761.92
AF060099 EATON,CAROL A 495.60 10/06/95 8,486.79 6,558.04
AF060100 HOWELL,EDWARD C 411.93 10/15/95 6,187.77 4,954.13
AF060101 STUMP,DONNA J 440.30 09/29/95 5,634.53 4,442.39
AF060102 GARVIN,ELIZABETH G 412.44 09/29/95 7,236.53 5,494.00
AF060103 KACHIK,SUSAN M 450.48 09/29/95 7,600.58 5,837.09
AF060104 CLARKE,DEREK E 320.91 10/05/95 6,915.19 5,147.28
AF070001 LEWIS,DANNY R 454.93 09/30/95 6,984.47 5,399.50
AF070003 WARREN,DEBORA C 414.06 09/23/95 8,881.37 6,847.05
AF070004 TATEM,DAVID S 463.41 10/07/95 7,742.22 5,927.30
AF070005 BEDENBAUGH,AMBER L 378.03 09/23/95 8,492.75 6,465.03
AF070006 NAVARRO,CESAR A 449.62 10/07/95 6,215.95 4,914.15
AF070007 JERGER,LISA A 483.70 10/07/95 8,982.36 6,827.40
AF070008 MEADORS,LISA S 593.12 10/07/95 7,287.34 5,908.84
AF070009 HUMPHREYS,MARY K 251.48 09/09/95 8,376.61 6,416.63
AF070010 BROWN,CHRISTOPHER L 338.32 09/09/95 7,435.17 5,820.91
AF070011 FRAZIER,HOPE 485.52 10/07/95 6,171.84 4,928.14
AF070012 HOPKINS,JANICE M 1,867.94 07/06/96 2,579.85 2,297.82
AF070013 GANN,ARTHUR L 500.39 10/07/95 7,026.66 5,572.87
AF070014 BROGDON,JANICE D 343.10 09/11/95 9,147.83 6,941.76
AF070015 CROOKE,PAULA C 367.27 09/23/95 8,229.46 6,224.02
AF070016 SHEPPARD,ALICE M 381.66 09/23/95 6,659.78 5,207.36
AF070017 MILLER,ROBERT B 371.33 09/15/95 9,887.81 7,625.15
AF070018 INGRAM,MICHELLE A 377.79 10/06/95 7,956.99 6,004.90
AF070019 MCMAHON,TERENCE J 392.88 10/07/95 6,398.54 4,995.86
</TABLE>
<PAGE> 251
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AF070020 CARIAS,DAMARIS S 77 7,282.25 2,517.77 66 150.00 50.02 09/15/95
AF070021 KNIGHT,TABITHA M 77 6,738.50 2,423.81 68 135.00 117.31 09/18/95
AF070022 HINES,WILLIAM J 77 6,788.50 2,466.50 69 135.00 75.00 09/25/95
AF070023 WATTS,RODNEY L 77 3,748.00 1,091.30 49 100.00 39.30 09/06/95
AF070024 MILLER,BARRY J 77 7,119.90 2,752.93 69 145.00 12.83 09/19/95
AF070025 LINDAMOOD,TINA F 77 5,745.00 2,214.63 64 125.00 84.63 09/25/95
AF070026 WAGNER,MICKEY A 77 3,609.60 1,000.46 47 100.00 10.06 09/26/95
AF070027 DIXON,ROBERT L 77 6,688.15 2,614.60 69 135.00 122.75 09/25/95
AF070028 ZAWODNIK,RANDY 77 7,551.30 2,401.70 69 145.00 93.00 08/31/95
AF070029 SMITH,MARVIN C 77 6,688.15 2,439.37 68 135.00 82.52 09/18/95
AF070030 JONES,PARNELL 77 6,307.10 2,462.28 65 135.00 129.38 09/18/95
AF070031 YOUNG,BERNICE B 77 6,688.15 2,550.97 33 280.00 279.12 09/19/95
AF070032 POLLARD,EMMETT L 77 5,343.60 2,088.56 65 115.00 72.16 09/20/95
AF070033 CORLISS,JAN K 77 6,738.50 2,137.57 66 135.00 101.07 09/25/95
AF070034 MALDONADO,CARMEN 77 6,788.50 2,118.54 66 135.00 132.04 09/18/95
AF070035 DUNNING,EDWARD J 77 5,825.35 2,286.18 65 125.00 111.53 09/19/95
AF070036 HOLT,THOMAS C 77 5,713.00 2,181.34 64 125.00 19.34 09/19/95
AF070037 CORLISS,JAN K 77 7,195.90 2,324.16 66 145.00 95.06 09/25/95
AF070038 STARKS,ANTHONY 77 5,895.35 1,557.37 28 270.00 162.72 09/20/95
AF070039 REMINGTON,ROBERT 77 7,069.55 2,672.97 33 300.00 142.52
AF070040 ALLEN,LOUIS A 77 5,366.60 1,876.04 58 125.00 117.64 08/28/95
AF070041 WOODWARD,LISONDA M 77 5,825.35 2,286.18 65 125.00 111.53 09/26/95
AF070042 WEBBER,NAOMI J 77 4,229.75 1,274.26 51 110.00 4.01 09/13/95
AF070043 LOWERY,DARRELL C 77 6,419.45 2,526.24 34 270.00 35.69 08/21/95
AF070044 RUCKER,LORNA Y 77 6,200.75 2,048.72 31 270.00 149.47 09/05/95
AF070045 PEREZ,RAFAEL O 77 6,688.15 2,462.80 68 135.00 105.95 08/21/95
AF070046 NORRIS,ALFREDA 77 6,156.40 2,544.88 32 280.00 21.28 09/11/95
AF070047 RUCKER,LORNA Y 77 7,220.25 2,130.88 33 290.00 71.13
AF070048 LONGWORTH,JAMES L 77 6,688.15 2,614.60 69 135.00 122.75 09/07/95
AF070049 LATHROP,THOMAS F 77 6,206.75 1,902.60 65 125.00 109.35 09/18/95
AF070050 HAMILTON,LAWRENCE E 77 6,307.10 2,225.68 67 128.00 84.78 09/14/95
AF070051 RICHARDSON,KEVIN W 77 6,375.10 2,395.16 65 135.00 130.26 09/12/95
AF070052 ALVAREZ,MILAGROS 77 5,725.00 2,387.50 65 125.00 112.50 09/25/95
AF070053 ROCKER,ANGIE L 77 6,431.45 2,315.37 65 135.00 106.82 09/26/95
AF070054 SANCHEZ,LAZARO L 77 6,688.15 2,614.60 69 135.00 122.75 08/31/95
AF070055 MONTGOMERY,LISA A 77 6,469.45 2,304.51 65 135.00 133.96 09/13/95
AF070056 SMITT,SHEENA M 77 6,266.05 2,385.29 65 135.00 11.34 09/19/95
AF070057 DOTSON,JULIE D 77 6,032.05 2,428.33 63 135.00 90.38 09/19/95
AF070058 POLOZOLA,MARK A 77 6,638.15 2,136.52 65 135.00 134.67 09/18/95
AF070059 FICK,CHARLES R 77 4,489.40 1,464.78 55 110.00 14.18
AF070060 MARCHANT,LARRY B 77 5,281.25 1,910.32 60 120.00 111.57 09/21/95
AF070061 GORDON,BILLY D 77 6,638.15 2,634.08 64 145.00 137.23 09/25/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
===================================================================================================
<S> <C> <C> <C> <C> <C> <C>
AF070020 CARIAS,DAMARIS S 2 466.14 10/06/95 8,900.02 6,904.45
AF070021 KNIGHT,TABITHA M 2 334.05 09/30/95 8,487.31 6,490.35
AF070022 HINES,WILLIAM J 2 332.85 10/03/95 8,580.00 6,541.88
AF070023 WATTS,RODNEY L 2 230.74 09/16/95 4,439.30 3,615.86
AF070024 MILLER,BARRY J 2 280.18 10/07/95 9,292.83 7,015.60
AF070025 LINDAMOOD,TINA F 2 294.94 10/07/95 7,334.63 5,533.45
AF070026 WAGNER,MICKEY A 2 238.57 09/23/95 4,210.06 3,465.49
AF070027 DIXON,ROBERT L 2 312.32 10/06/95 8,627.75 6,466.00
AF070028 ZAWODNIK,RANDY 2 232.12 09/08/95 9,518.00 7,533.97
AF070029 SMITH,MARVIN C 2 326.85 09/22/95 8,457.52 6,447.60
AF070030 JONES,PARNELL 2 248.43 09/30/95 8,229.38 6,150.02
AF070031 YOUNG,BERNICE B 3 264.43 10/15/95 8,679.12 6,585.40
AF070032 POLLARD,EMMETT L 2 104.39 09/02/95 7,144.66 5,384.14
AF070033 CORLISS,JAN K 2 365.63 10/21/95 8,161.07 6,412.54
AF070034 MALDONADO,CARMEN 2 292.79 09/30/95 8,367.04 6,576.50
AF070035 DUNNING,EDWARD J 2 229.28 09/30/95 7,611.53 5,682.41
AF070036 HOLT,THOMAS C 2 237.82 09/30/95 7,394.34 5,559.38
AF070037 CORLISS,JAN K 2 230.01 09/23/95 9,075.06 7,108.66
AF070038 STARKS,ANTHONY 3 329.03 10/25/95 6,912.72 5,686.07
AF070039 REMINGTON,ROBERT 3 0.00 08/20/95 9,742.52 7,547.68
AF070040 ALLEN,LOUIS A 2 123.91 09/09/95 6,992.64 5,444.52
AF070041 WOODWARD,LISONDA M 2 229.28 10/06/95 7,611.53 5,682.41
AF070042 WEBBER,NAOMI J 2 185.85 09/26/95 5,174.01 4,111.29
AF070043 LOWERY,DARRELL C 3 125.64 09/18/95 8,675.69 6,590.62
AF070044 RUCKER,LORNA Y 3 141.95 09/30/95 7,959.47 6,184.63
AF070045 PEREZ,RAFAEL O 2 63.61 09/08/95 9,015.95 6,854.56
AF070046 NORRIS,ALFREDA 3 125.76 10/08/95 8,421.28 6,202.07
AF070047 RUCKER,LORNA Y 3 0.00 09/02/95 9,351.13 7,489.25
AF070048 LONGWORTH,JAMES L 2 184.14 10/06/95 8,882.75 6,582.67
AF070049 LATHROP,THOMAS F 2 204.70 09/30/95 7,734.35 6,079.09
AF070050 HAMILTON,LAWRENCE E 2 126.06 09/23/95 8,275.78 6,328.21
AF070051 RICHARDSON,KEVIN W 2 125.96 09/23/95 8,500.26 6,410.76
AF070052 ALVAREZ,MILAGROS 2 161.29 10/06/95 7,737.50 5,654.76
AF070053 ROCKER,ANGIE L 2 197.76 10/07/95 8,341.82 6,322.66
AF070054 SANCHEZ,LAZARO L 2 60.30 09/15/95 9,167.75 6,796.90
AF070055 MONTGOMERY,LISA A 2 65.17 09/16/95 8,638.96 6,563.49
AF070056 SMITT,SHEENA M 2 126.55 09/30/95 8,381.34 6,232.32
AF070057 DOTSON,JULIE D 2 119.43 09/30/95 8,190.38 6,008.79
AF070058 POLOZOLA,MARK A 2 141.51 09/30/95 8,504.67 6,582.15
AF070059 FICK,CHARLES R 2 0.00 09/08/95 5,954.18 4,665.86
AF070060 MARCHANT,LARRY B 2 115.78 10/07/95 6,951.57 5,248.60
AF070061 GORDON,BILLY D 2 129.17 10/07/95 8,982.23 6,610.23
</TABLE>
<PAGE> 252
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AF070062 CHRISTIAN,RUFUS JR 77 6,369.10 2,328.74 65 135.00 57.84 09/25/95
AF070063 DUNNING,EDWARD J 77 6,525.80 2,356.01 66 135.00 106.81
AF070064 KEMPER,MICHAEL S 77 6,788.50 2,287.28 65 140.00 115.78
AF070065 PERRY,DARRELL 77 6,333.10 2,421.78 65 135.00 114.88 09/25/95
AF070066 SMALL,THEODORE 77 4,652.45 1,416.73 51 120.00 69.18 09/22/95
AF070067 LINGARD,LORENZO (2) 77 3,587.25 871.73 41 110.00 58.98 09/13/95
AF070068 SMITH,WILLIE L 77 4,110.35 1,288.94 50 110.00 9.29 09/25/95
AF070069 EHRENREICH,PHYLLIS A 77 6,256.75 2,241.82 66 130.00 48.57 09/25/95
AF070070 REDOUTEY,ERNEST J 77 5,562.30 2,046.15 61 125.00 108.45
AF070071 SLAYTON,LORENZO 77 6,307.10 2,462.28 65 135.00 129.38
AF070072 WALDO,VALERIE M 77 6,788.50 2,309.57 65 140.00 138.07
AF070073 GARDNER,TIMOTHY W 77 6,788.50 2,309.57 65 140.00 138.07
AF070074 PITTMAN,JUAN C 77 5,556.30 2,040.92 61 125.00 97.22
AF070075 STOTT,JAMES E II 77 6,738.50 2,130.93 32 280.00 189.43
BP010019 BALDREE,W 11 3,246.25 1,667.89 36 140.00 14.14 09/05/95
BP010022 HOLT,GUY R 11 4,040.50 1,136.80 92 55.00 41.80 06/05/95
BP010028 DAY,ANGELA J 11 2,068.29 308.31 24 100.00 76.60 08/25/95
BP010029 TINDEL,SAM R 11 2,943.90 574.57 64 55.00 25.47 05/01/95
BP010030 SCOTT,MARY G 11 3,417.30 826.50 78 55.00 8.80 09/26/95
BP010031 SHELDON,RICHARD F 11 3,166.60 662.03 68 57.00 9.63 09/11/95
BP010032 MYATT,ROBERT 11 3,599.05 967.91 77 60.00 6.96 08/21/95
BP010033 BICKFORD,SANDRA L 11 2,679.65 531.90 65 50.00 4.05 09/22/95
BP010034 GOLUBIC,LINDA E 11 2,713.20 537.80 65 50.00 23.00 06/13/95
BP010035 NATHAN,EUGENE D 11 2,785.20 584.30 68 50.00 19.50 09/20/95
BP010036 POLLOCK,RICKY LEE 11 2,813.20 584.30 68 50.00 19.50 04/05/95
BP010037 ZELAYA,JAVIER A 11 2,915.90 515.80 58 60.00 11.70 09/25/95
BP010038 WILLIAMS,JANICE M 11 2,902.84 596.01 67 53.00 0.85 09/25/95
BP010039 WHARTON,STEVE 11 2,784.50 542.47 63 53.00 40.97 09/25/95
BP010040 WEBSTER,WILLIAM R 11 2,571.15 390.81 50 60.00 21.96 08/24/95
BP010041 WATERS,EMMA R 11 3,634.59 850.05 75 60.00 44.64 09/25/95
BP010043 TURNER,TERRY M 11 3,448.00 843.93 79 55.00 1.93 05/12/95
BP010044 SIMS,SEAN A 11 2,804.60 625.15 63 55.00 19.74 07/28/95
BP010045 MYRES,JACK K 11 3,523.00 887.45 81 55.00 10.45 09/20/95
BP010046 JONES,JOHN E 11 2,353.10 400.25 56 50.00 3.35 09/25/95
BP010047 MANNUZZA,AMY A 11 2,795.44 547.27 64 53.00 3.71 07/28/95
BP010048 COLE,ILA M 11 3,115.90 880.70 20 200.00 196.60 09/20/95
BP010049 BRIDGES,JACQUELINE B 11 3,116.25 756.80 78 50.00 23.05 09/25/95
BP010050 BOOTH,DONNIE 11 2,734.85 560.55 66 50.00 45.40 09/20/95
BP010051 SWAGGERTY,JOANN J 11 2,584.15 575.45 16 200.00 159.60 09/11/95
BP010053 JONES,WILLIE A 11 4,255.05 619.65 33 150.00 74.70 09/22/95
BP010054 GRAY,STACEY R 11 3,493.95 983.33 20 225.00 202.28 07/06/95
BP010055 GRAY,HARRIS 11 2,812.50 573.04 15 230.00 137.54 06/05/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
==================================================================================================
<S> <C> <C> <C> <C> <C> <C>
AF070062 CHRISTIAN,RUFUS JR 2 129.95 10/07/95 8,392.84 6,295.31
AF070063 DUNNING,EDWARD J 2 0.00 09/23/95 8,881.81 6,688.91
AF070064 KEMPER,MICHAEL S 2 0.00 09/16/95 9,075.78 6,949.55
AF070065 PERRY,DARRELL 2 61.61 10/07/95 8,619.88 6,367.24
AF070066 SMALL,THEODORE 2 481.01 12/25/95 5,229.18 4,236.29
AF070067 LINGARD,LORENZO (2) 2 68.49 09/30/95 4,348.98 3,581.91
AF070068 SMITH,WILLIE L 2 59.45 10/07/95 5,289.29 4,123.49
AF070069 EHRENREICH,PHYLLIS A 2 63.08 10/07/95 8,368.57 6,283.09
AF070070 REDOUTEY,ERNEST J 2 0.00 09/30/95 7,608.45 5,652.50
AF070071 SLAYTON,LORENZO 2 0.00 09/30/95 8,769.38 6,405.96
AF070072 WALDO,VALERIE M 2 0.00 10/07/95 9,098.07 6,882.73
AF070073 GARDNER,TIMOTHY W 2 0.00 10/07/95 9,098.07 6,882.73
AF070074 PITTMAN,JUAN C 2 0.00 10/06/95 7,597.22 5,646.33
AF070075 STOTT,JAMES E II 3 0.00 10/15/95 8,869.43 6,891.13
BP010019 BALDREE,W 3 1,997.39 10/05/95 1,414.14 1,278.47
BP010022 HOLT,GUY R 1 1,941.09 04/22/95 2,317.30 2,281.96
BP010028 DAY,ANGELA J 2 1,059.52 08/11/95 1,076.60 1,056.77
BP010029 TINDEL,SAM R 1 446.08 04/29/95 2,878.47 2,755.61
BP010030 SCOTT,MARY G 1 1,980.19 09/01/95 1,553.80 1,469.25
BP010031 SHELDON,RICHARD F 1 2,087.23 08/12/95 1,138.63 1,113.92
BP010032 MYATT,ROBERT 1 1,423.14 06/30/95 2,456.96 2,329.48
BP010033 BICKFORD,SANDRA L 1 1,389.95 08/05/95 1,391.55 1,346.65
BP010034 GOLUBIC,LINDA E 1 760.42 06/09/95 2,191.00 2,100.63
BP010035 NATHAN,EUGENE D 1 1,295.42 09/15/95 1,629.50 1,511.25
BP010036 POLLOCK,RICKY LEE 1 341.85 04/08/95 2,897.50 2,771.62
BP010037 ZELAYA,JAVIER A 1 2,437.77 10/28/95 491.70 481.37
BP010038 WILLIAMS,JANICE M 1 1,156.19 09/22/95 1,930.58 1,763.64
BP010039 WHARTON,STEVE 1 1,936.70 09/23/95 885.97 855.17
BP010040 WEBSTER,WILLIAM R 1 2,324.21 08/25/95 250.00 250.00
BP010041 WATERS,EMMA R 1 1,494.53 09/30/95 2,384.64 2,158.84
BP010043 TURNER,TERRY M 1 689.80 05/05/95 3,246.93 3,054.90
BP010044 SIMS,SEAN A 1 1,379.79 07/29/95 1,559.75 1,503.19
BP010045 MYRES,JACK K 1 2,231.33 10/21/95 1,385.45 1,301.05
BP010046 JONES,JOHN E 1 1,363.20 09/22/95 1,053.35 1,003.98
BP010047 MANNUZZA,AMY A 1 940.48 07/29/95 2,069.71 1,952.95
BP010048 COLE,ILA M 3 1,349.96 10/26/95 1,996.60 1,813.24
BP010049 BRIDGES,JACQUELINE B 1 1,186.39 09/29/95 2,173.05 1,948.36
BP010050 BOOTH,DONNIE 1 1,190.30 09/15/95 1,695.40 1,575.26
BP010051 SWAGGERTY,JOANN J 3 1,078.42 05/01/96 1,759.60 1,747.46
BP010053 JONES,WILLIE A 3 1,234.80 10/25/95 3,299.70 3,031.52
BP010054 GRAY,STACEY R 3 1,524.20 08/03/95 2,227.28 2,099.50
BP010055 GRAY,HARRIS 3 1,208.88 07/04/95 1,755.54 1,709.87
</TABLE>
<PAGE> 253
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP010056 CARTER,JEARLDINE 11 2,784.50 573.04 15 230.00 137.54 09/07/95
BP010057 DANIEL,LINDA S 11 1,871.35 286.85 11 200.00 158.20 06/05/95
BP010058 CORNELLE,JONATHAN W 11 2,884.85 643.25 36 100.00 28.10 06/15/95
BP010060 POLLARD,DEREK D 11 2,884.85 643.25 36 100.00 28.10 04/05/95
BP010061 SANCHEZ,FELIX 11 2,801.79 602.01 35 100.00 3.80 09/08/95
BP010062 SMITH,WILLIAM G 11 2,684.15 537.30 65 50.00 21.45 09/25/95
BP010063 STUBBS,CAL H 11 3,251.95 748.20 37 110.00 40.15 04/06/95
BP010064 WASHINGTON,SHEILA J 11 3,698.00 1,042.00 46 100.00 90.00 08/04/95
BP020041 HUKILL,DARREN 22 3,688.30 787.20 90 50.00 25.50 12/19/94
BP020043 LEATH,CANDY 22B 4,654.10 1,591.86 139 45.00 35.95 09/26/95
BP020060 HENDERSON,SCOTT 22B 3,787.95 1,138.61 62 80.00 46.56 09/26/95
BP020062 MEDINA,ENRIQUE JR 22B 3,466.25 680.55 83 50.00 46.80 08/21/95
BP020063 IRVING,JOHN 22 6,621.83 969.50 50 100.00 94.20 04/18/95
BP020065 BROOKS,MICHELLE 22B 6,427.45 2,358.21 34 260.00 205.66 08/18/95
BP020068 KERSEY,PATRICIA 22B 4,420.45 1,199.85 113 50.00 20.30 08/23/95
BP020075 ROWELL,DEBORAH 22 8,959.54 2,108.18 51 220.00 27.72 09/19/95
BP020081 ASHLEY,WILLIE 22 4,511.75 1,449.25 30 200.00 161.00 09/05/95
BP020090 EDENS,NANCY 22 6,108.80 1,255.30 74 100.00 64.10 03/13/95
BP020096 HATTON,DEBBIE 22 3,787.95 1,047.35 49 100.00 35.30 09/18/95
BP020101 MYLES,TRAYCEE 22 3,695.10 1,137.66 54 90.00 55.26 09/25/95
BP020104 REESE,BRENDA 22 3,087.20 525.00 73 50.00 12.20 07/12/95
BP020107 EVELYN,ROMAN 22 4,661.10 1,739.00 65 100.00 0.10 07/26/95
BP020109 STEVENS,SHERRY 22 4,257.70 1,093.65 108 50.00 1.35 09/13/95
BP020111 KENNEDY,TIM 22 3,321.55 760.60 82 50.00 32.15 09/21/95
BP020112 ROBINSON,SHELLY M 22 4,929.70 1,498.76 24 267.54 267.54 09/25/95
BP020116 KELLEY,LADYNE 22 2,263.70 422.54 68 40.00 6.24 09/20/95
BP020118 SCHWAMBERGER,STEVE 22 2,605.10 733.60 23 150.00 38.70 09/25/95
BP020122 TRYPUS,MARTIN 22 3,015.50 818.34 96 40.00 33.84 09/25/95
BP020124 WITTEN,MARTHA 22 2,378.05 547.87 19 160.00 45.92 09/06/95
BP020125 ALLEN,GEOFFREY 22 2,915.15 564.75 70 50.00 29.90 09/19/95
BP020128 CULLEN,BETTY 22 3,859.30 1,255.90 26 200.00 115.20 09/19/95
BP020133 KENNEDY,HARRY 22 4,332.05 1,281.87 104 53.98 53.98 09/26/95
BP020138 MROZ,RICHARD 22 4,289.70 1,333.32 54 104.13 104.13 03/24/95
BP020139 OSTERING,ALBERT 22 3,502.25 938.25 45 100.00 40.50 09/22/95
BP020140 POWELL,GRACE 22 3,787.95 1,035.00 97 50.00 22.95 09/25/95
BP020143 RIVERA,ELIZABETH 22 3,465.90 839.50 87 50.00 5.40 09/19/95
BP020149 COUTURE,PAUL 22 2,478.40 601.44 20 160.00 39.84 09/18/95
BP020151 GOWETTE,GERALDINE 22 3,409.25 866.37 45 95.78 61.30 09/22/95
BP020152 HARTLEY,DONNIE 22 4,962.15 1,469.21 104 61.84 61.84 07/24/95
BP020153 HOPKINS,HARRIS 22 5,895.35 1,911.17 114 69.00 9.52 05/17/95
BP020154 MORIN,RICHARD A 22 3,015.50 609.65 73 50.00 25.15 09/06/95
BP020155 MARTIN,TAMMY 22 4,127.85 1,113.38 96 55.00 16.23 09/18/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
BP010056 CARTER,JEARLDINE 3 1,798.60 10/07/95 1,057.54 1,011.87
BP010057 DANIEL,LINDA S 3 828.34 06/07/95 1,108.20 1,104.23
BP010058 CORNELLE,JONATHAN W 2 1,029.86 06/02/95 2,078.10 2,005.69
BP010060 POLLARD,DEREK D 2 476.89 04/06/95 2,828.10 2,716.70
BP010061 SANCHEZ,FELIX 2 861.73 09/02/95 2,203.80 2,011.46
BP010062 SMITH,WILLIAM G 1 2,179.22 09/30/95 521.45 508.31
BP010063 STUBBS,CAL H 2 363.75 04/22/95 3,450.15 3,254.69
BP010064 WASHINGTON,SHEILA J 2 731.53 07/27/95 3,540.00 3,158.04
BP020041 HUKILL,DARREN 1 1,518.86 11/12/94 2,395.50 2,394.94
BP020043 LEATH,CANDY 1 2,845.10 09/23/95 1,965.96 1,820.55
BP020060 HENDERSON,SCOTT 2 2,691.34 09/23/95 1,166.55 1,114.66
BP020062 MEDINA,ENRIQUE JR 1 3,222.38 06/05/95 246.80 246.80
BP020063 IRVING,JOHN 2 5,404.38 02/04/95 1,377.13 1,372.69
BP020065 BROOKS,MICHELLE 3 3,462.48 08/29/95 3,325.66 3,066.85
BP020068 KERSEY,PATRICIA 1 3,960.40 10/01/95 469.93 461.72
BP020075 ROWELL,DEBORAH 2 6,954.21 06/24/95 2,092.72 2,083.29
BP020081 ASHLEY,WILLIE 3 3,416.20 10/08/95 1,161.00 1,115.06
BP020090 EDENS,NANCY 1 3,555.69 02/04/95 2,724.10 2,724.10
BP020096 HATTON,DEBBIE 2 2,991.20 10/14/95 835.30 805.26
BP020101 MYLES,TRAYCEE 2 2,009.31 07/04/95 1,862.76 1,784.09
BP020104 REESE,BRENDA 1 2,165.83 02/03/95 962.20 962.20
BP020107 EVELYN,ROMAN 2 1,793.37 06/01/95 3,350.10 3,090.40
BP020109 STEVENS,SHERRY 1 4,108.20 09/20/95 151.35 150.81
BP020111 KENNEDY,TIM 1 2,278.10 10/04/95 1,100.00 1,045.31
BP020112 ROBINSON,SHELLY M 3 2,011.32 08/17/95 3,308.06 3,037.87
BP020116 KELLEY,LADYNE 1 2,100.19 09/05/95 166.24 166.07
BP020118 SCHWAMBERGER,STEVE 3 2,006.26 10/26/95 638.70 613.03
BP020122 TRYPUS,MARTIN 1 1,858.84 09/09/95 1,243.84 1,174.66
BP020124 WITTEN,MARTHA 3 2,029.43 10/05/95 365.92 357.66
BP020125 ALLEN,GEOFFREY 1 2,352.98 09/04/95 579.90 572.08
BP020128 CULLEN,BETTY 3 2,472.91 10/24/95 1,515.20 1,417.01
BP020133 KENNEDY,HARRY 1 2,321.02 09/29/95 2,212.60 2,023.84
BP020138 MROZ,RICHARD 2 835.89 01/23/95 4,190.05 3,967.15
BP020139 OSTERING,ALBERT 4 2,197.44 08/07/95 1,400.00 1,351.47
BP020140 POWELL,GRACE 1 1,993.56 07/27/95 1,972.95 1,874.14
BP020143 RIVERA,ELIZABETH 1 2,648.88 09/26/95 855.40 810.72
BP020149 COUTURE,PAUL 3 1,421.66 09/27/95 1,159.84 1,082.98
BP020151 GOWETTE,GERALDINE 2 541.12 08/28/95 3,425.62 2,941.93
BP020152 HARTLEY,DONNIE 1 498.45 07/12/95 5,564.48 4,749.53
BP020153 HOPKINS,HARRIS 1 527.20 05/18/95 6,839.57 5,907.28
BP020154 MORIN,RICHARD A 1 939.95 09/18/95 2,330.15 2,096.16
BP020155 MARTIN,TAMMY 1 613.36 08/17/95 4,240.08 3,642.59
</TABLE>
<PAGE> 254
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO/BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP020156 SIMMONS,BOBBIE 22 3,251.20 842.99 46 90.00 44.19 09/11/95
BP020157 WAGNER,MICHAEL N 22 4,003.00 1,181.60 104 50.00 34.60 08/14/95
BP020158 ALLPHIN,BELINDA K 22 4,224.70 1,250.90 104 52.65 52.65 07/27/95
BP020159 BERRIOS,DORA B 22 4,661.10 1,551.86 116 53.56 53.56 09/18/95
BP020160 BLUME,SHERRY M 22 4,892.90 1,447.98 104 60.97 60.97 09/21/95
BP020161 BROWN,DEBRA J 22 3,486.90 851.40 87 50.00 38.30 09/25/95
BP020162 BROWN,FRANK 22 3,989.00 1,171.65 104 50.00 10.65 09/19/95
BP020163 BURGESS,ESSIE H 22 4,747.45 1,580.35 116 54.55 54.55 09/18/95
BP020164 CALDERON,AUYLDA 22 4,304.05 1,274.51 104 53.64 53.64 09/25/95
BP020165 DIAZ,MARIA 22 5,293.60 1,961.44 128 56.68 56.68 09/25/95
BP020166 FRANKLIN,JOHN C 22 4,224.70 1,250.90 104 52.65 52.65 09/19/95
BP020167 HUGHES,JOSEPH 22 4,446.40 1,480.04 116 51.09 51.09 09/19/95
BP020168 MILLER,EVELYN 22 2,142.35 214.10 48 50.00 6.45 09/25/95
BP020169 MOLINA,NESTOR R 22 5,041.50 1,678.38 116 57.93 57.93 09/07/95
BP020171 NELSON,ROBERT E 22 3,787.95 1,035.00 97 50.00 22.95 05/30/95
BP020172 NORTON,FREDERICK M 22 4,375.05 1,295.03 104 54.52 54.52 09/19/95
BP020173 PRICE,REGINA R 22 4,611.10 1,364.74 104 57.46 57.46 09/20/95
BP020174 RODRIGUEZ,FELIX 22 4,325.05 1,280.55 104 53.90 53.90 09/12/95
BP020175 ROMAN,JUAN L 22 4,541.50 1,343.86 104 56.59 56.59 09/12/95
BP020176 SMITH,DONNIE C 22 6,274.75 2,088.85 116 72.10 72.10 09/25/95
BP020177 TSCHERWINSKI,ROY 22B 3,680.60 966.75 93 50.00 47.35 09/25/95
BP020178 WOJCIK,TAMMY JO 22B 4,891.85 1,628.51 116 56.21 56.21 09/25/95
BP020180 BELTRAN,JOEL 22B 3,988.65 1,171.40 104 50.00 10.05 09/19/95
BP020181 BROWN,MIYOSHI N 22B 3,787.95 1,035.00 97 50.00 22.95 08/18/95
BP020182 CAVALCANTE,RICHARD 22B 3,351.55 776.55 83 50.00 28.10 09/11/95
BP020183 DOWNS,WILLIAM 22B 3,015.50 609.65 73 50.00 25.15 09/15/95
BP020184 GABRIEL,OSVALDO 22B 4,425.40 1,310.20 104 55.15 55.15 09/25/95
BP020185 HARGRAVE,JAMES R JR 22B 2,414.10 371.45 56 50.00 35.55 09/25/95
BP020186 HERNANDEZ,JEANETTE 22B 6,439.45 2,144.55 116 74.00 74.00 09/25/95
BP020187 HERNANDEZ,JESSY B 22B 3,766.95 1,021.35 96 50.00 38.30 08/18/95
BP020188 HUNT,CAROL J 22B 4,562.50 981.74 104 53.31 53.31 09/26/95
BP020189 JAMES,DEBORAH D 22B 3,787.95 1,035.00 97 50.00 22.95 09/05/95
BP020190 JIMENEZ,EDWIN 22B 4,661.10 1,380.26 104 58.09 58.09 09/08/95
BP020191 JOHNSON,GARY A 22B 4,325.05 1,280.55 104 53.90 53.90 09/26/95
BP020192 KILGORE,AIDA MARIA 22B 3,787.95 1,035.00 97 50.00 22.95 09/20/95
BP020193 LOPEZ,DOMINGOS J 22B 3,552.25 889.20 89 50.00 41.45 09/25/95
BP020194 MERCED,ROLANDO 22B 6,222.65 2,039.91 116 70.41 70.41
BP020195 RIVERA,ELIZABETH 22B 3,451.90 831.65 86 50.00 33.55 09/19/95
BP020196 RODRIGUEZ,DAVID 22B 3,652.95 949.65 93 50.00 2.60 09/20/95
BP020197 ROGERS,CHARLA D 22B 3,351.55 776.55 83 50.00 28.10 09/19/95
BP020198 ROMAN,HARRY O 22 4,125.40 1,221.24 104 51.41 51.41 08/28/95
BP020199 SAYRE,MARY 22 4,457.90 1,479.46 104 57.09 57.09 08/29/95
<CAPTION>
CUST. CUST. ACCT PRINC. NEXT DUE BALANCE
NO. NAME TYPE. TO DATE DATE DUE PAYOFF
==============================================================================================
<S> <C> <C> <C> <C> <C> <C>
BP020156 SIMMONS,BOBBIE 2 1,514.34 09/12/95 1,920.19 1,761.28
BP020157 WAGNER,MICHAEL N 1 465.86 07/10/95 4,384.60 3,764.78
BP020158 ALLPHIN,BELINDA K 1 754.99 08/21/95 4,212.00 3,588.95
BP020159 BERRIOS,DORA B 1 615.71 09/25/95 5,088.20 4,083.57
BP020160 BLUME,SHERRY M 1 950.50 09/01/95 4,759.48 4,036.26
BP020161 BROWN,DEBRA J 1 942.27 09/20/95 2,938.30 2,581.45
BP020162 BROWN,FRANK 1 698.61 08/04/95 3,985.65 3,433.75
BP020163 BURGESS,ESSIE H 1 961.89 09/30/95 4,624.60 3,806.36
BP020164 CALDERON,AUYLDA 1 800.19 09/28/95 4,241.49 3,518.33
BP020165 DIAZ,MARIA 1 696.06 09/22/95 5,894.72 4,662.63
BP020166 FRANKLIN,JOHN C 1 939.06 09/09/95 3,921.40 3,347.52
BP020167 HUGHES,JOSEPH 1 617.76 09/18/95 4,802.45 3,885.17
BP020168 MILLER,EVELYN 1 1,152.95 09/15/95 1,031.45 1,000.90
BP020169 MOLINA,NESTOR R 1 770.02 09/22/95 5,329.56 4,331.83
BP020171 NELSON,ROBERT E 1 488.18 06/06/95 4,022.95 3,580.96
BP020172 NORTON,FREDERICK M 1 898.35 08/17/95 4,170.70 3,592.67
BP020173 PRICE,REGINA R 1 822.00 09/12/95 4,598.84 3,842.84
BP020174 RODRIGUEZ,FELIX 1 914.89 09/23/95 4,092.00 3,453.88
BP020175 ROMAN,JUAN L 1 674.50 10/02/95 4,729.92 3,927.73
BP020176 SMITH,DONNIE C 1 1,135.36 09/23/95 6,344.80 5,207.04
BP020177 TSCHERWINSKI,ROY 1 802.12 09/30/95 3,397.35 2,906.55
BP020178 WOJCIK,TAMMY JO 1 920.17 09/22/95 4,886.48 4,022.82
BP020180 BELTRAN,JOEL 1 437.84 10/06/95 4,410.05 3,587.83
BP020181 BROWN,MIYOSHI N 1 298.58 08/24/95 4,308.30 3,602.60
BP020182 CAVALCANTE,RICHARD 1 127.38 09/08/95 3,928.10 3,313.67
BP020183 DOWNS,WILLIAM 1 274.50 09/22/95 3,225.15 2,788.77
BP020184 GABRIEL,OSVALDO 1 411.19 10/19/95 5,018.65 4,054.75
BP020185 HARGRAVE,JAMES R JR 1 380.14 10/03/95 2,285.55 2,060.88
BP020186 HERNANDEZ,JEANETTE 1 387.64 10/14/95 7,844.00 6,105.82
BP020187 HERNANDEZ,JESSY B 1 330.43 08/21/95 4,238.30 3,562.08
BP020188 HUNT,CAROL J 1 678.51 10/07/95 4,541.21 3,900.75
BP020189 JAMES,DEBORAH D 1 176.54 09/09/95 4,522.95 3,709.51
BP020190 JIMENEZ,EDWIN 1 539.12 09/09/95 5,111.92 4,225.79
BP020191 JOHNSON,GARY A 1 467.25 09/30/95 4,797.10 3,896.60
BP020192 KILGORE,AIDA MARIA 1 456.04 10/03/95 4,072.95 3,367.25
BP020193 LOPEZ,DOMINGOS J 1 706.56 09/28/95 3,351.45 2,859.90
BP020194 MERCED,ROLANDO 1 0.00 08/25/95 8,262.56 6,449.85
BP020195 RIVERA,ELIZABETH 1 589.88 09/26/95 3,383.55 2,892.36
BP020196 RODRIGUEZ,DAVID 1 436.89 10/04/95 3,900.60 3,248.84
BP020197 ROGERS,CHARLA D 1 225.25 09/11/95 3,778.10 3,195.79
BP020198 ROMAN,HARRY O 1 626.80 09/28/95 4,278.31 3,514.56
BP020199 SAYRE,MARY 1 561.83 09/02/95 4,909.74 4,025.08
</TABLE>
<PAGE> 255
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO / BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BP020200 SCHRIEFER,JOHN F 22 4,861.80 1,439.56 104 60.59 60.59 09/14/95 1
BP020201 SCHMITZ,JAMES K 22 5,125.60 1,530.40 52 128.00 128.00 09/18/95 2
BP020202 PLAIN,ROSA L 22 4,325.75 1,490.05 27 215.40 215.40 08/18/95 3
BP020203 PINELLAS,CHRISTOPHER 22 4,539.75 1,343.53 104 56.57 56.57 09/11/95 1
BP020204 ROSELL,EDWIN J 22 5,192.90 1,116.78 104 60.67 60.67 09/20/95 1
BP020205 WRIGHT,RONALD P 22 3,874.00 1,092.05 100 50.00 16.05 09/18/95 1
BP030001 JONES,DONALD 33 2,517.75 435.39 29 105.00 13.14 02/13/95 2
BP030006 HOOKS,LEROY C 33 6,235.70 2,143.08 112 75.00 53.78 09/25/95 1
BP030007 COFFIE,DEBRA J 33 5,398.55 1,954.03 59 125.00 102.58 09/05/95 2
BP030008 VELEZ-MOLINARY,DELIA 33 5,471.90 1,754.64 112 65.00 11.54 09/12/95 1
BP030009 FOYE,BRADLEY A 33 4,536.75 1,240.31 89 65.00 57.06 09/25/95 1
BP030015 VEAL,RHONDA G 33 5,684.60 2,208.87 64 125.00 18.47 09/11/95 2
BP030017 JIMENEZ,ISVAN 33 6,708.45 2,332.07 61 150.00 40.52 01/24/95 2
BP030019 ALFORD,GEORGE E 33 6,472.40 2,369.66 66 135.00 67.06 09/18/95 2
BP030022 STAFFORD,SHIRLEY 33 3,623.60 849.77 41 110.00 73.37 09/18/95 2
BP030026 DESAUSSURE,MICHAEL 33 5,739.45 2,461.73 66 125.00 76.18 09/25/95 2
BP030027 FORT,JUANITA 33 6,994.15 2,814.28 66 150.00 58.43 09/25/95 2
BP030029 PERRY,DARRELL 33 6,383.55 2,489.57 64 140.00 53.12 09/21/95 2
BP030031 SANCHEZ,FORTUNATO 33 6,479.40 2,345.69 59 150.00 125.09 09/20/95 2
BP030032 SMITH,MARVIN C 33 5,784.95 2,181.35 62 130.00 36.30 09/18/95 2
BP030033 ST. REMY,JACKY 33 4,645.10 1,573.61 52 120.00 98.71 09/18/95 2
BP030038 LINGARD,LORENZO 33 6,171.35 2,237.17 61 140.00 8.52 09/11/95 2
BP050001 WISSINGER,TROY E 55 6,402.30 2,432.94 31 290.00 135.24 09/18/95 3
BP050002 HALL,JOYCE M 55 5,405.95 1,689.62 60 120.00 15.57 09/13/95 2
BP050003 TAYLOR,JUANITA 55 5,562.30 2,222.01 63 125.00 34.31 09/13/95 2
BP050004 MAZE,RICHARD K 55 4,498.45 1,828.20 64 100.00 26.65 09/25/95 2
BP050007 DONALDSON,TAMARA T 55 6,206.75 2,303.83 66 130.00 60.58 06/27/95 2
BP050010 GRANT,KIMBERLY A 55 6,724.50 2,402.85 66 140.00 27.35 09/25/95 2
BP050013 RAMSAY,ROSE M 55 5,674.65 2,000.45 62 125.00 50.10 09/25/95 2
BP050015 DETREVILLE,KIMBERLY 55 4,546.75 1,448.41 52 117.00 28.16 08/21/95 2
BP050016 HALL,WILLIE J 55 5,993.70 2,217.22 64 130.00 20.92 09/12/95 2
BP050017 ALVARADO,RAFAEL 55 7,240.25 2,731.62 65 155.00 51.87 09/26/95 2
BP050018 PHILLIPS,VIOLET D 55 6,782.50 2,451.07 64 145.00 98.57 09/18/95 2
BP050019 COLON,ROSALIA 55 4,671.15 1,432.22 51 120.00 103.37 09/06/95 2
BP050020 REVELL,KEVIN G 55 6,437.45 2,372.63 63 140.00 130.08 09/18/95 2
BP050021 SCOTT,ALLEN M JR 55 6,206.75 2,393.78 64 135.00 95.53 09/22/95 2
BP050022 BETANCOURT,YVONNE 55 6,525.80 2,434.96 62 145.00 115.76 09/25/95 2
BP050024 LOPEZ,RUTH M 55 5,421.95 2,089.22 61 125.00 11.17 09/18/95 2
BP050025 SANTIAGO,MARIA S 55 4,374.10 1,708.48 61 100.00 82.58 09/18/95 2
BP050026 CAMPBELL,CURTIS M 55 7,019.55 2,371.48 65 145.00 111.03 09/18/95 2
BP050027 CAPO,FELIX R 55 5,192.90 2,049.48 29 250.00 242.38 08/07/95 3
BP050028 HILL,CHARLES W 55 4,598.80 1,522.86 54 115.00 26.66 09/18/95 2
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
========================================================================================
<S> <C> <C> <C> <C> <C>
BP020200 SCHRIEFER,JOHN F 1,103.44 09/26/95 4,490.00 3,771.06
BP020201 SCHMITZ,JAMES K 349.35 10/06/95 6,029.00 4,796.71
BP020202 PLAIN,ROSA L 221.88 08/25/95 5,290.00 4,309.42
BP020203 PINELLAS,CHRISTOPHER 420.79 09/22/95 5,149.01 4,160.11
BP020204 ROSELL,EDWIN J 570.19 09/26/95 5,460.22 4,659.38
BP020205 WRIGHT,RONALD P 293.49 10/02/95 4,466.05 3,619.81
BP030001 JONES,DONALD 1,709.65 12/10/94 853.14 853.14
BP030006 HOOKS,LEROY C 4,164.40 09/22/95 2,228.78 2,092.89
BP030007 COFFIE,DEBRA J 3,255.73 09/19/95 2,346.70 2,179.95
BP030008 VELEZ-MOLINARY,DELIA 3,647.89 09/16/95 1,961.54 1,850.57
BP030009 FOYE,BRADLEY A 4,291.45 10/07/95 257.06 255.24
BP030015 VEAL,RHONDA G 2,534.94 09/23/95 3,643.47 3,217.20
BP030017 JIMENEZ,ISVAN 1,109.02 12/10/94 6,990.52 6,562.29
BP030019 ALFORD,GEORGE E 2,394.12 09/09/95 4,792.06 4,197.15
BP030022 STAFFORD,SHIRLEY 2,815.76 09/30/95 843.00 816.18
BP030026 DESAUSSURE,MICHAEL 1,781.73 09/16/95 4,826.18 4,051.41
BP030027 FORT,JUANITA 2,430.53 10/06/95 5,458.43 4,618.24
BP030029 PERRY,DARRELL 2,227.57 09/23/95 4,953.12 4,248.11
BP030031 SANCHEZ,FORTUNATO 2,620.56 09/30/95 4,475.09 3,904.75
BP030032 SMITH,MARVIN C 2,032.31 09/16/95 4,456.30 3,836.89
BP030033 ST. REMY,JACKY 2,128.98 09/26/95 2,858.71 2,548.54
BP030038 LINGARD,LORENZO 2,148.16 09/22/95 4,748.52 4,092.24
BP050001 WISSINGER,TROY E 1,273.30 09/19/95 6,370.00 5,248.56
BP050002 HALL,JOYCE M 1,084.45 09/09/95 5,235.57 4,414.18
BP050003 TAYLOR,JUANITA 1,021.25 09/23/95 5,784.31 4,656.38
BP050004 MAZE,RICHARD K 863.24 10/07/95 4,626.65 3,689.51
BP050007 DONALDSON,TAMARA T 659.17 07/01/95 7,210.58 5,998.50
BP050010 GRANT,KIMBERLY A 1,308.43 10/07/95 6,747.35 5,482.60
BP050013 RAMSAY,ROSE M 1,159.70 09/23/95 5,575.10 4,573.72
BP050015 DETREVILLE,KIMBERLY 743.58 07/22/95 4,668.16 4,017.40
BP050016 HALL,WILLIE J 1,116.37 09/27/95 6,130.92 4,942.06
BP050017 ALVARADO,RAFAEL 1,400.99 10/06/95 7,336.87 5,913.53
BP050018 PHILLIPS,VIOLET D 1,254.72 09/22/95 6,913.57 5,652.71
BP050019 COLON,ROSALIA 2,839.11 07/08/95 2,757.02 2,125.58
BP050020 REVELL,KEVIN G 1,194.92 10/06/95 6,570.08 5,311.26
BP050021 SCOTT,ALLEN M JR 1,119.64 10/02/95 6,440.53 5,155.92
BP050022 BETANCOURT,YVONNE 1,232.80 10/07/95 6,640.76 5,363.59
BP050024 LOPEZ,RUTH M 1,054.27 09/29/95 5,511.17 4,430.48
BP050025 SANTIAGO,MARIA S 768.19 09/30/95 4,582.58 3,661.16
BP050026 CAMPBELL,CURTIS M 1,213.14 09/30/95 7,216.03 5,875.97
BP050027 CAPO,FELIX R 750.88 09/05/95 5,742.38 4,667.31
BP050028 HILL,CHARLES W 1,002.02 09/30/95 4,396.66 3,649.24
</TABLE>
<PAGE> 256
SCHEDULE 3.15
CHECK EXPRESS FINANCE, INC.
AUTO / BULK FINANCING NOTES
OUTSTANDING BALANCES AS OF SEPTEMBER 26, 1995
<TABLE>
<CAPTION>
CUST. CUST. TOTAL FINANCE NO. PMT. FINAL LAST ACCT
NO. NAME LOC FINANCE CHG. PMT. AMT. AMT. DATE TYPE.
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BP050029 SIPPIO,ARTHUR II 55 4,611.15 1,505.58 51 120.00 116.73 06/13/95 2
BP050030 SNYDER,FRED JR 55 4,224.70 1,378.46 51 110.00 103.16 09/18/95 2
BP050031 NEWTON,SAMMIE 55 5,965.70 2,018.03 64 125.00 108.73 09/18/95 2
BP050032 SCOTT,ALTHEA 55 5,512.30 2,177.59 62 125.00 64.89 09/05/95 2
BP050034 KRATOSKA,JEANE L 66 6,969.20 2,723.54 65 150.00 92.74 09/18/95 2
BP050036 MOSLER,MONICA G 66 5,524.30 2,134.42 64 120.00 98.72 08/21/95 2
BP050037 GRAHAM,THOMAS A 66 4,179.40 1,262.75 48 115.00 37.15 08/10/95 2
BP050038 TOLBERT,ALEXANDER 66 7,019.55 2,883.22 71 140.00 102.77 09/08/95 2
BP050039 CLAYTON,CLIFTON C 66 5,893.35 2,152.81 65 125.00 46.16 09/15/95 2
BP050040 MILLER,SCOTT J 66 7,732.00 2,903.75 71 150.00 135.75 09/05/95 2
BP050041 BASSETT,JONATHON W 66 5,373.60 2,047.91 60 125.00 46.51 09/18/95 2
BP050042 FITZGIBBON,MATTHEW E 77 5,624.65 2,038.34 64 120.00 102.99 06/22/95 2
BP050045 HORNE,BERNADETTE W 66 6,638.15 2,440.74 65 140.00 118.89 09/13/95 2
BP050046 SOTO,JOEL 66 6,537.80 2,573.13 66 140.00 10.93 09/25/95 2
BP050047 SAMMONS,LEI L 66 6,056.05 2,347.07 63 135.00 33.12 09/05/95 2
BP050049 HARRISON,MARIE 66 5,574.30 1,833.83 65 115.00 48.13 09/20/95 2
BP050051 MATOS,CARLOS D 66 6,907.20 2,589.74 68 140.00 116.94 09/19/95 2
BP050052 SIMMONS,MARK A 77 5,905.70 2,580.73 68 125.00 111.43 05/03/95 2
-------------
$3,967,171.64
=============
<CAPTION>
CUST. CUST. PRINC. NEXT DUE BALANCE
NO. NAME TO DATE DATE DUE PAYOFF
===========================================================================================
<S> <C> <C> <C> <C> <C>
BP050029 SIPPIO,ARTHUR II 528.53 06/24/95 5,156.73 4,453.29
BP050030 SNYDER,FRED JR 963.90 09/30/95 3,953.16 3,310.11
BP050031 NEWTON,SAMMIE 1,045.50 09/30/95 6,108.73 4,981.90
BP050032 SCOTT,ALTHEA 813.31 09/02/95 6,064.89 4,873.42
BP050034 KRATOSKA,JEANE L 1,145.38 09/30/95 7,442.74 5,901.62
BP050036 MOSLER,MONICA G 719.63 08/26/95 6,218.72 5,026.09
BP050037 GRAHAM,THOMAS A 1,389.34 12/01/95 3,257.15 2,829.83
BP050038 TOLBERT,ALEXANDER 941.39 09/23/95 7,942.77 6,220.68
BP050039 CLAYTON,CLIFTON C 928.02 09/26/95 6,296.16 5,031.38
BP050040 MILLER,SCOTT J 1,074.14 09/23/95 8,535.75 6,801.29
BP050041 BASSETT,JONATHON W 911.81 09/23/95 5,671.51 4,577.15
BP050042 FITZGIBBON,MATTHEW E 485.68 07/01/95 6,697.99 5,559.68
BP050045 HORNE,BERNADETTE W 1,028.08 09/23/95 7,118.89 5,739.27
BP050046 SOTO,JOEL 990.57 09/29/95 7,150.93 5,622.74
BP050047 SAMMONS,LEI L 892.31 09/15/95 6,648.12 5,293.58
BP050049 HARRISON,MARIE 909.79 09/30/95 5,798.13 4,722.95
BP050051 MATOS,CARLOS D 1,009.55 09/30/95 7,536.94 5,972.51
BP050052 SIMMONS,MARK A 207.40 05/13/95 7,986.43 6,427.50
----------- ------------- -------------
$836,333.86 $3,941,408.16 $3,224,665.36
=========== ============= =============
</TABLE>
<PAGE> 257
SCHEDULE 3.15
COMMISSION STRUCTURE: BEN SWIFT
Commissionable Revenue:
Up to $200,000 10%
Over $200,001 25%
1. Commissionable Revenue = Initial Franchise Fees - MBS Computer Fees
<PAGE> 258
SCHEDULE 3.15
Proposed 1995 Compensation Structure Mike Riordon
<TABLE>
<CAPTION>
Current Proposed
<S> <C> <C> <C>
Salary 0 4000
Draw 2500 0
Health Insurance -275 -275
Taxes -1069
Gross Takehome Pay 2225 2656
Paydown on Draw 0 -500
Net Takehome Pay 2225 2156 Total Annual Compensation @ Top Amount:
Commiss.
*Commissionable Revenue: Revenue Current Proposed
Up to $200,000 30% 10% 200000 60000 68000
$200,001 - $250,000 30% 30% 250000 75000 83000
$250,001 - $300,000 30% 31% 300000 90000 98500
$300,001 - $350,000 30% 32% 350000 105000 114500
$350,001 - $400,000 30% 33% 400000 120000 131000
$400,001 - $450,000 30% 34% 450000 135000 148000
$450,001 & Over 30% 35% 500000 150000 165500
</TABLE>
1. Commissionable Revenue = Initial Franchise Fees - MBS Computer Fees
2. Draw is reduced by $500 per month.
3. 50% of all after-tax commissions are credited against the draw.
4. IRS guidelines require us to add a reasonable interest rate on note. We
propose 6%.
5. Commissions to remain the same on stores yet to open unders existing
contracts. 50% of after-tax commissions to reduce draw.
6. Receive 5% on sales made by other salesmen.
<PAGE> 259
SCHEDULE 3.15
September 27, 1995
To: Decker Todd/V.P. Finance
DEALER INFORMATION
1.) Terms of notes financed/purchased:
(a) Car Sales & Service/Skipper's Automotive
(1.) Bulk Purchase; 65% of remaining balance.
(2.) Point of sale financing; amount financed less $750.00
discount,less $200.00 reserve for losses. (Longer term
larger discount). 80% acceptance
rate.
(b) Credit King Used Cars, Inc.
(1.) Point of sale financing only; 62% of total note (includes
interest) less $300.00 reserve for losses. 80% acceptance
rate.
(c) Both dealers have verbally agreed to split losses 50/50 on
unlocated vehicles.
2.) Dealers remit payments each week, usually a one week lag time. Payment
sheets are faxed to our offices on a daily basis and posted immediately.
3.) Both dealers are on a full recourse program on all repossessed autos. The
cash payback is our remaining net investment (cash in deal) plus a $100.00
administrative fee. Should we finance a repossessed vehicle the fee is
greater depending on the amount financed of the new deal. Car Sales/
Skipper's will liquidate all repossessions within 90 days. Credit King is
allowed to retail or as last resort sell at auction.
4.) Both dealers are responsible for tag and title work. We expect a
registration showing Check Express Finance, Inc. as lien holder within 60
days, as the dealers have to wait on some titles from local auctions and
are permitted by State law to issue 2 20day temporary tags. There are some
exceptions on clouded titles (rejected by Department of Motor Vehicles.)
5.) The only limits of exposure I have enforced is in the number of units
financed in a given month. Typically 25 deals per month for each dealer.
Gregg Bacon
Director of Finance
<PAGE> 260
SCHEDULE 3.15
STATE OF SOUTH CAROLINA )
) LEASE AGREEMENT
COUNTY OF CHARLESTON )
This Lease Agreement made and entered into this 17th day of December 1988, by
and between CHECKPOINT, INC. (hereinafter referred to as the "Tenant").
W I T N E S S E T H
That the said Landlord hereby lease unto the tenant and the said Tenant
does hereby lease from the said Landlord the premises (hereinafter referred to
as the "Premises" or the "Leased Premises") known as 2117 Captain Avenue, North
Charleston, south Carolina 29405, together with six parking spaces.
TO HAVE AND TO HOLD the Premises above described on the following terms and
conditions:
1. TERM: The term of this Agreement shall be as follows: Said term to
commence on the first (1st) day of January 1989, and to end on the 31st day of
December, 1991.
2. RENT: The tenant shall pay the Landlord a rental of Two Hundred
Seventy and No/100 Dollars ($270.00) per month; such rent to be paid in advance
on the first (1st) day of each month and not later than the fifth (5th) of each
month during the life of this Lease Agreement by the Tenant to the Landlord at
5522 Rivers Avenue.
3. REPAIR: It is agreed, that the Tenant shall on demand fix any
breakage of glass and other injuries done during the Tenant's tenancy to the
said premises, or to any fixture or appurtenances, excepting such as are
produced by accidental fire or natural decay and that the Tenant shall not make
any alterations, additional or improvements on said premises shall be the
property of the Landlord and it is agreed that the Tenant shall be responsible
for all water, sewer, gas and electrical fees.
Further, it is agreed that the Landlord shall, at the Landlords expense,
keep in repair all gas, electric and heating fixtures, including water pipes
and PVC pipes, exterior of Building and roof.
4. DEFAULT: It is agreed, if default be made in the payment of rent at
the time above specified, or if default shall be made in the performance of any
of the provisions or agreements herein set forth, or if the Tenant shall become
insolvent or vacate the said premises; that then the entire amount of rent that
would accrue for the unexpired term shall become due and payable to the
Landlord.
4A. The Tenant shall also pay to the Landlord, in addition to foregoing
rent, a deposit of $250.00 payable upon the execution of this Lease Agreement
<PAGE> 261
SCHEDULE 3.15
and it shall be lawful for the Landlord to terminate this Lease, and re-enter
and forthwith repossess all his right to distrain for all rent that may be due;
but the collection by the Landlord of rent for the unexpired term shall entitle
the Tenant to all the Tenant's rights under this agreement during the period
for which the rent may have been collected.
5. INSPECTION: It is agreed that the Landlord shall have the right at
the Landlord's pleasure at reasonable hours, to enter said property either in
person or by the Landlord's Agent, and also that the destruction of said
property by fire shall terminate this Agreement.
6. TERMINATION: The Tenant may terminate this Lease Agreement at any
time upon giving the Landlord thirty (30) days written notice of Tenant's
intention to surrender the Premises and terminate this Agreement. If property
is sold, specifically Checkpoint, Inc. shall have the right to terminate this
Lease Agreement upon thirty days written notice.
7. WAIVER: It is agreed that the terms of the foregoing Lease Agreement
shall not be varied or modified without the consent of the parties hereto in
writing.
IN WITNESS WHEREOF; the said parties have hereunto set their hands and
seals this 17th day of December 1988.
<TABLE>
<S> <C>
/s/ Julie Miller /s/
------------------------------- ----------------------------------
WITNESS Checkpoint, Inc. (Landlord)
/s/ Julie Miller /s/ Harold Holliday, Jr.
------------------------------- -----------------------------------
WITNESS Harold Holliday, Jr. (Tenant)
</TABLE>
<PAGE> 262
SCHEDULE 3.15
[LOGO] CHECK EXPRESS(R) INC.
101 East Kennedy Boulevard
Suite 3800
Tampa, Florida 33602
VIA FACSIMILE
October 10, 1995
Stephanie McVay
Fax Number: (214) 999-4667
Dear Stephanie:
I have spoken with our Western Union account rep, Paul Cole, to try to get
clarification on our existing contracts with them. Paul explained that all
company owned locations opened between 1984 and 1991 will have an Agency
Agreement, all of which are exactly the same except of course, they have
various contract dates.
Each of these Agency Agreements will have two amendments and an addendum dated
June 1991. The first amends paragraphs 9b and 9d to eighteen percent and three
dollars and fifty cents, respectively. The second amendment outlines the
Guaranteed Growth Plan that is currently in effect. The addendum relates to
this second amendment and extends the commissions set forth in the first
amendment to all Check Express locations whether company owned or franchised.
All stores that have opened since June 1991 have been included by amendment
under the original Agency Agreement dated October 15, 1984. This was the
agreement for our N. Florida avenue location.
Paul verified that the Agency Agreement (or contract) we have with them has not
changed, except by the mentioned amendments, since the signing of the original
Agency Agreement in 1984.
If you have any questions or would like additional information please call me
at (813) 223-3338.
Sincerely,
/s/ Karen K. Murin
- - ------------------
Karen K. Murin
<PAGE> 263
SCHEDULE 3.15
Equipment Lease for Hubert Rhoden
<TABLE>
<CAPTION>
Estimated
Equipment Original Price Current Value Lease Price/Month
- - --------- -------------- ------------- -----------------
<S> <C> <C> <C>
Datarace Mux $1100 $720 $30
Datarace Mux $1100 $720 $30
UDS Modem $ 650 $400 $20
UDS Modem $ 650 $400 $20
Card Printer $ 425 $250 $10
Report Printer $ 500 $150 $10
Backup Battery $ 150 $100 $ 5
Total Lease Cost Per Month $125
</TABLE>
After three month lease period, January - March 1995, each individual piece of
equipment may be purchased for its estimated current value less the lease
payment received, continued to be leased at the lease price, or returned to
Check Express.
<PAGE> 264
SCHEDULE 3.16
October 12, 1995
Page 1
[ ] LITIGATION AND GOVERNMENT CLAIMS
CHECK EXPRESS, INC.:
Mechanics lien associated with construction of store 506; Belton Enterprises,
Inc. v. Mahrdt Properties, Inc.
INTELLECTUAL PROPERTY CLAIMS
Bruce E. O'Connor at Christensen, O'Connor, Johnson, Kindness
Company as Plaintiff:
<TABLE>
<S> <C> <C>
Check Express, Inc. v. Check Express of Waco, Texas
v. Check Express USA, Inc. and Hanan
Hassan Hosni Ali
v. Island Check Express, Inc./Manny
Levy
v. Soto Enterprises
Check 'N' Cash Express and Edward
Soto
v. Union Federal Savings Bank of
Indianapolis
Check-X-Change v. Pawn X-Change, Inc.
</TABLE>
Claim by Mr. Magorien, a Check-X-Change Corporation franchisee, that
Check-X-Change Corporation breached the franchisee agreement by and between
these parties, primarily failing to properly support Check-X-Change franchises
in the Tampa, Florida area. The parties have reached a settlement, under which
Mr. Magorien will pay $17,000 to be released from his obligations under the
franchise agreement, return all Check-X-Change documentation, cease using the
Check-X-Change name, but remain in business as an independent competitor.
Claim by Zinnvest, a Check-X-Change Corporation franchisee, that Check-X-Change
has not properly supported the Check-X- Change franchises in its area whereby
Zinnvest has threatened to sue and stop paying monthly franchise royalties to
Check-X-Change. On or about August 15, 1995, Check-X-Change requested that
Zinnvest explain in detail its complaints, and in particular,
<PAGE> 265
SCHEDULE 3.16
October 12, 1995
Page 2
identify any alleged defaults by Check-X-Change. The request also asked that
Zinnvest propose a buy/sell price that it would either sell its business to
Check-X-Change, or buy a release from its franchise obligations from
Check-X-Change. Zinnvest is preparing a response to these inquiries. We can
not predict whether this dispute will be settled or litigation may follow.
Notice of Court-Ordered Mediation Conference for resolution of pending small
claims action concerning Tampa Bay Telephone Company, Plaintiff, vs. Check
Express, Inc., Defendant, in the County Court for Hillsborough County, Florida,
Civil Division, court case number: 95 010636 SC, Division: H. The Order
Referring Parties to Mediation of Small Claims Action as issued by the County
Court for Hillsborough County, Florida, Civil Division on August 24, 1995
indicates, "It appearing on the pleadings that the above-captioned case is a
contested civil action where the amount in controversy does not exceed $2,500,
exclusive of costs, interest, and attorney's fees;..."
The Company and the Subsidiaries are engaged from time to time as plaintiff in
small claims court litigation relating to collection of returned checks.
Claim by Mary Alice Mainini, a Check Express USA, Inc. franchisee, that the
Company has materially breached the Franchise Agreement
Litigation was threatened against the Company by William A. Dudley-Cash and
Edna F. Cash-Dudley, a former Check-X-Change Corporation franchisee located in
Stockton, California. The former franchisee asserted a demand for contract
damages and a return of all franchise fees paid to Check-X-Change Corporation
because of an alleged encroachment of their exclusive territory by Check
Express Florida, Inc. To the best of our knowledge, no lawsuit has been filed
or is pending in connection with this matter.
The Company currently holds in its possession judgements in favor of
Check-X-Change Corporation for damages and other amounts due to be recovered
from three former franchisees. The Company has recorded these judgements as
receivables pending collection of amounts due thereunder. Each judgement
includes a stipulation of confidentiality.
Check Express Florida, Inc. ("CEF"), one of the Subsidiaries, acquired Selann,
Inc. and Selann #2, Inc. ("Selann") by way of two mergers in December 1993. It
was subsequently discovered that Selann allegedly had owed a third party
("Tracey") up to $100,000, and that Tracey in turn owed a fourth party
("Echelson") a sum of money. Echelson brought an action to garnish any payment
from CEF, as successor to Selann, to Tracey. Certain affiliates of Selann, not
affiliated with the Company, also were named as garnishees in that action.
Such affiliates of Selann have acknowledged that they are the parties properly
liable to Tracey. Accordingly the court hearing the matter determined, among
other things, that CEF is not liable in the matter. Portions of that order are
being appealed by plaintiffs, but as of yet there has been no challenge of the
court's determination that CEF is not liable in the matter. The former sole
stockholder of Selann
<PAGE> 266
SCHEDULE 3.16
October 12, 1995
Page 3
("Selka") is obligated to indemnify the Company for any loss, including
attorney's fees, that the Company may incur in this matter.
A franchisee of Check-X-Change Corporation, Joe Lauricella, unilaterally
stopped paying monthly royalty payments during 1995. The Company has not yet
determined whether or not it will be necessary to take legal action to enforce
this franchisee's performance under the franchise contract. However, the
Company will take legal action if necessary.
One of the Subsidiaries, Peterlyn, Inc., has been notified of the findings of
an examination performed by the State of Washington Department of Financial
Institutions with respect to the six company owned check cashing locations
licensed thereby. Included in the findings reported is an apparent violation
of RCW 31.45.050(2) which states in part "If a licensee intends to close an
existing place of business, or to relocate an existing place of business, the
licensee shall provide written notification to the director no less than thirty
days before the proposed establishing, closing, or moving of a place of
business." The finding indicates that the Licensee (Peterlyn, Inc.) violated
this provision with respect to the closing of the 13028 Aurora Avenue N.
location and moving of this business to a new location, 13754- A Aurora Ave. N.
The findings indicate that the Licensee may be required to pay a penalty of
$19,100.00, and to apply for a license for the new location. A written
response to all the findings was sent to the Director of Financial Institutions
dated September 28, 1995, and included a request to waive the proposed penalty.
<PAGE> 267
SCHEDULE 3.17
REVISED
OCTOBER 20, 1995
Page 1
[ ] NECESSARY APPROVALS AND CONSENTS
LICENSES AND PERMITS:
The following licenses and permits require written notification in the event of
a change in control of the Company in order to avoid a condition of
non-compliance:
CHECK EXPRESS, INC.
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- ------------------------------- ------------
<S> <C> <C> <C>
FL Check Casher Judy Graham Within 15 Days
State of Florida and must apply
Division of Banking for a new license
The Capitol, Suite 1401 immediately.*
Tallahassee, FL 32399-0350
(904) 487-1410
</TABLE>
* I spoke to Pam Henley on 10/19/95. The notice requirement for the
check cashing portion of the license is the same as the money transmitter
portion. Part I chapters (money transmitter) supercede Part III (check
cashing) so the fifteen day notification requirement applies to both check
cashing and money orders.
<TABLE>
<S> <C> <C> <C>
FL Money Transmitter Judy Graham Within 15 Days
State of Florida and must apply for
Division of Banking a new license immediately.
The Capitol, Suite 1401
Tallahassee, FL 32399-0350
(904) 487-1410
IN Check Casher Mark Tarpey *
State of Indiana
Dept. of Financial Inst.
402 W. Washington Street
Room W-066
Indianapolis, IN 46204
(317) 232-3955
</TABLE>
<PAGE> 268
SCHEDULE 3.17
REVISED
OCTOBER 20, 1995
Page 2
* The Act does not specifically address notification requirements. I spoke with
Kent Sager on 10/19/95. He states that the license is not transferable so
essentially the current license is void with a change of control. The new
owners must apply immediately for their own license.
<TABLE>
<S> <C> <C> <C>
IN Money Transmitter Mark Tarpey Within 15 Days
State of Indiana and apply for new
Dept. of Financial Inst. license immediately.
402 W. Washington Street
Room W-066
Indianapolis, IN 46204
(317) 232-3955
</TABLE>
CHECK EXPRESS FINANCE, INC.
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- -------------------------- ------------
<S> <C> <C> <C>
FL Sales Finance Gerald Lewis *
State of Florida
Office of the Comptroller
The Capitol
Tallahassee, FL 32399-0350
(904) 488-0370
or (904) 487-2583
</TABLE>
* The Florida Retail Installment Sales Act does not specifically address a
change of control. However, it is our opinion that notice of change of
control should be given.
<TABLE>
<S> <C> <C> <C>
FL Consumer Finance Gerald Lewis Immediate
State of Florida
Office of the Comptroller
The Capitol
Tallahassee, FL 32399-0350
(904) 488-0370
or (904) 487-2583
</TABLE>
<PAGE> 269
SCHEDULE 3.17
REVISED
OCTOBER 20, 1995
Page 3
Licensed locations:
<TABLE>
<CAPTION>
License Number Effective Expiration
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Finance License, #203 CF 593206802 006 01/03/95 12/31/96
--------------------------------------------------------------------------------------------------------
Consumer Finance License, #253 CF 593206802 005 01/03/95 12/31/96
--------------------------------------------------------------------------------------------------------
Consumer Finance License, #207 CF 593206802 004 01/03/95 12/31/96
--------------------------------------------------------------------------------------------------------
Consumer Finance License, #228 CF 593206802 007 01/03/95 12/31/96
--------------------------------------------------------------------------------------------------------
Consumer Finance License, #218 CF 593206802 002 01/03/95 12/31/96
--------------------------------------------------------------------------------------------------------
Consumer Finance License, #201 CF 593206802 003 01/03/95 12/31/96
--------------------------------------------------------------------------------------------------------
Consumer Finance License, #210 CF 593206802 001 01/03/95 12/31/96
--------------------------------------------------------------------------------------------------------
Consumer Finance License, #206 CF 593206802 008 01/31/95 12/31/96
--------------------------------------------------------------------------------------------------------
</TABLE>
CHECK EXPRESS FINANCE #1
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- -------------------------- ------------
<S> <C> <C> <C>
FL Sales Finance Gerald Lewis *
State of Florida
Office of the Comptroller
The Capitol
Tallahassee, FL 32399-0350
(904) 488-0370
or (904) 487-2583
</TABLE>
* The Florida Retail Installment Sales Act does not specifically address a
change of control. However, it is our opinion that notice of change of control
should be given.
<PAGE> 270
SCHEDULE 3.17
REVISED
OCTOBER 20, 1995
Page 4
PETERLYN, INC.
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- ----------------------------- ------------
<S> <C> <C> <C>
WA Check Cashing Ed Burgert Within 30 Days
with Small Loan State of Washington
Endorsement Department of Financial Inst.
</TABLE>
Division of Consumer Services
P.O. Box 41202
Olympia, WA 98504-1202
(206) 664-8615
Licensed locations:
<TABLE>
<CAPTION>
Store # Address City Zip Certificate #
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
101 14615 1st Ave. So. Burien 98168 94-002
----------------------------------------------------------------------------------------------------------
102 2632 So. 38th Street Tacoma 98406 94-004
----------------------------------------------------------------------------------------------------------
103 13754-A Aurora Ave. N. Seattle 98133 94-003
----------------------------------------------------------------------------------------------------------
106 10519 Bridgeport Way SW Tacoma 98499 94-006
----------------------------------------------------------------------------------------------------------
107 10707 Pacific Ave., Ste D Tacoma 98444 94-007
----------------------------------------------------------------------------------------------------------
108 6302 6th Avenue Tacoma 98406 94-008
----------------------------------------------------------------------------------------------------------
</TABLE>
CHECK EXPRESS SOUTH CAROLINA, INC.
<TABLE>
<CAPTION>
Time for
State License Contact Notification
----- ------- ------------------------------- ------------
<S> <C> <C> <C>
IN Loan Mark B. Tarpey *
Dept. of Financial Institutions
402 W. Washington Street
Room W-066
Indianapolis, IN 46204
(317) 232-3955
</TABLE>
<PAGE> 271
SCHEDULE 3.17
REVISED
OCTOBER 20, 1995
Page 5
* The Act does not specifically address notification requirements. I spoke with
Kent Sager on 10/19/95. He states that the license is not transferable so
essentially the current license is void with a change of control. The new
owners must apply immediately for their own license.
<TABLE>
<CAPTION>
Store # Address City Zip License #
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
501 5061 E. 38th Street Indianapolis 46218 1317
------------------------------------------------------------------------------------------------------
503 2435 N. Sherman Drive Indianapolis 46218 1317
------------------------------------------------------------------------------------------------------
506 2620 S. Madison Avenue Indianapolis 46225 1317
------------------------------------------------------------------------------------------------------
</TABLE>
UNIFORM FRANCHISE OFFERING CIRCULARS
See attached Check Express USA, Inc. Change in Offering Materials Due to a
Change in Control of Franshiser.
INSTRUMENTS EVIDENCING INDEBTEDNESS
The following instruments evidencing indebtedness require prior written consent
upon a change in control of Check Express, Inc. in order to not create a
condition of default thereunder. Requests for consent should be addressed as
indicated for each respective lender.
SOUTHTRUST BANK OF WEST FLORIDA
Mr. David M. Vosen
SouthTrust Bank of West Florida
150 Second Avenue North
P.O. Box 15708
St. Petersburg, Florida 33733
1. Installment Note Payable to SouthTrust Bank of West Florida by Check
Express, Inc. in the amount of $650,000, dated August 31, 1995.
2. Term Promissory Note Payable to SouthTrust Bank of West Florida by
Check Express, Inc. and Check Express Florida, Inc. in the amount of
$880,000 dated February 10, 1994.
3. Term Mortgage Loan Payable to SouthTrust Bank of West Florida by Check
Express, Inc. and Check Express Florida, Inc. in the amount of
$106,000 dated May 18, 1993.
4. Term Promissory Note Payable to SouthTrust Bank of West Florida by
Check Express, Inc. and Check Express Florida, Inc. in the amount of
$270,000 as corrected effective January 4, 1993.
<PAGE> 272
SCHEDULE 3.17
REVISED
OCTOBER 20, 1995
Page 6
5. Clean Irrevocable Letter of Credit number 95-12 issued on May 10, 1995
by SouthTrust Bank of West Florida for $50,000 on behalf of Check
Express, Inc. in favor of Titan Indemnity Company.
6. Clean Irrevocable Letter of Credit number 94-07 issued on March 14,
1994 by SouthTrust Bank of West Florida for $50,000 on behalf of Check
Express, Inc. in favor of Titan Indemnity Company.
SEATTLE-FIRST NATIONAL BANK
Ms. Christine Bomgardner
Seafirst Bank
Bellevue Financial Center
10500 Northeast Eighth Street
Suite 500
Bellevue, Washington 98009
Line of Credit provided by Seattle-First National Bank to Peterlyn, Inc. dated
April 26, 1995 and expiring April 30, 1996 in the amount of $200,000.
SOUTHERN COMMERCE BANK
Mr. Tom Wilson
Southern Commerce Bank
P.O. Box 310107
Tampa, Florida 33680
1. Term Promissory Note Payable to Southern Commerce Bank by Check
Express, Inc. in the amount of $500,000 dated December 28, 1994.
2. Term Promissory Note Payable to Southern Commerce Bank by Check
Express, Inc. in the amount of $400,000 dated April 11, 1995.
3. Term Promissory Note Payable to Southern Commerce Bank by Check
Express, Inc. in the amount of $200,000 dated July 6, 1995.
REPUBLIC BANK
Republic Bank
Attention: President
111 2nd Avenue NE
St. Petersburg, Florida 33701
<PAGE> 273
SCHEDULE 3.17
REVISED
OCTOBER 20, 1995
Page 7
with a copy to:
Fisher & Sauls, P.A.
Attention: Kenneth E. Thornton
100 Second Avenue South
Suite 701
St. Petersburg, Florida 33701
Term Promissory Note Payable to Republic Bank by Check Express Finance, Inc. in
the amount of $500,000 dated August 31, 1995.
OTHER CONTRACTS
The following other contracts require written notification of a change in
control or ownership of the Company or the Subsidiaries:
The Retailer Contract by and between The Florida Department of the Lottery
("Lottery") and Check Express Florida, Inc. d/b/a Check Express whose business
address is 8207 N. Florida Ave., Tampa, FL 33604 ("Retailer") for the sale of
lottery tickets for instant games only and only at the location given above,
requires the Retailer to immediately notify the Lottery in writing of pending
changes in ownership, changes of partners, corporate officers or directors.
STORE LEASES:
See attached Landlord Contact List for store leases requiring consent.
The employment contract by the Company with Larry F. Lang includes provisions
requiring written consent, notification, or other conditions be met in order to
avoid a condition of default thereunder.
The consummation by the Company of the transaction contemplated by this
Agreement will require the approval of the shareholders of the Company.
<PAGE> 274
SCHEDULE 3.17
LANDLORD CONTRACT LIST
The following leases for real property require the Tenant to obtain written
consent of Landlord in the event of a change in ownership or control of the
Tenant in order to avoid a condition of default under the lease:
<TABLE>
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 101 Lessee: Peterlyn, Inc.
14615 1st Ave. So. Lessor: Steven J. Kipper and Resing M. Kipper,
Burien, WA 98168 Trust, Steven J. Kipper, Jr., Trustee
Send notice to: Steven J. Kipper, Trustee
1310 W. Beaver Lake Dr. S.E.
Issaquah, WA 98027
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 102 Lessee: Peterlyn, Inc.
2632 So. 38th Street Lessor: 38th and Pine Associates
Tacoma, WA 99406
Send notice to: 38th & Pine Associates c/o IPNW Corp.
Plaza 600 Bldg., Suite 1600
Seattle, WA 98101
ATTN: Stanley L. Siddell
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 103 Lessee: Peterlyn, Inc.
13754-A Aurora Ave. N. Lessor: Tae Won and Pun Im Kang, Husband and
Seattle, WA 98133 Wife
Send notice to: Tae Won & Pun Im Kang
13749 Midvale Ave. North
Seattle, WA 98133
Remit to: 13754 Aurora Ave. N. #R
Seattle, WA 98133
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 106 Lessee: Peterlyn, Inc.
10519 Bridgeport Way S.W. Lessor: Bank of California, N.A.
Tacoma, WA 98499
Send notice to: Bank of California
910 Fourth Avenue
Seattle, WA 98114
Remit to: Commercial Associates
P.O. Box 98012
Tacoma, WA 98499
</TABLE>
<PAGE> 275
<TABLE>
<S> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 107 Lessee: Peterlyn, Inc.
10707 Pacific Ave., Suite D Lessor: M.L.G. Inc., a Washington Corporation
Tacoma, WA 98444
Send notice to: M.L.G. Inc.
17608 15th Place W.
Lynnwood, WA 98037
Remit to: MLG, Inc.
8600 Lake City Way NE
Seattle, WA 98115
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 201 Lessee: Check Express, Inc.
8207 N. Florida Avenue Lessor: Tampa Plaza Associates
Tampa, FL 33604
Send notice to: Tampa Plaza Associates
161 North concord Exchange, Suite 310
South St. Paul, MN 55075
Remit to: Tampa Plaza Associates Ltd.
Vermillion State Bank
Mail Station #4000
P.O. Box 31
Vermillion, MN 55085-0031
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 206 Lessee: Check Express, Inc.
2509 E. Colonial Drive Lessor: Jamerson Investments
Orlando, FL 32803
Send notice to: Jamerson Investments
2517 E. Colonial Dr.
Orlando, FL 32803
Remit to: P.O. Box 11097
Orlando, FL 32803
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 207 Lessee: Check Express Florida, Inc.
2940 34th Street So. Lessor: CBL/34th Street St. Petersburg Limited
St. Petersburg, FL 33711 Partnership by CBL Management, Inc.,
General Partner
Send notice to: CBL Management
6148 Lee Hwy.
Chattanooga, TN 37421
Remit to: 6148 Lee Highway
One Park Place
Chattanooga, TN 37421
Attn: Ms. Mona James
</TABLE>
<PAGE> 276
<TABLE>
<S> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 223 Lessee: Check Express Florida, Inc.
2520 S. Semoran Blvd. Lessor: Stephen J. LaFreniere, As Receiver
Orlando, FL 32822
Send notice to: LAT Purser Florida, Ltd. Acting as agent for Landlord
P.O. Box 940098
Maitland, Florida 32794-0098
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 224 Lessee: Check Express Florida, Inc.
2532-B Bearss Ave. Lessor: University Commercial Center LTD.
Tampa, FL 33613
Send notice to: University Commercial Center
1717 E. Fowler Ave.
Tampa, FL 33612-5523
Notice to landlord required immediately. Landlord can terminate lease with 90
days notice.
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 226 Lessee: Check Express, Inc.
4712 S. Orange Blossom Trail Lessor: H. Ames Richards, Jr.
Orlando, FL 32795
Send notice to: H. Ames Richards, Jr.
41 Long Close Rd.
Stamford, CT 06902
Remit to: P.O. Box 1208
Winter Park, FL 32790
- - ---------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 242 Lessee: Check Express Florida, Inc.
6851 Hwy. 17-92 So. Lessor: Developers Diversified Realty Corporation
Fern Park, FL 32730
Send notice to: Developers Diversified Realty Corporation
34555 Chagrin Blvd.
Moreland Hills, OH 44022-8022
Remit to: 34555 Chagrin Blvd.
P.O. Box 8022
Chagrin Falls, OH 44022
- - ----------------------------------------------------------------------------------------------------------------
CHECK EXPRESS 253 Lessee: Check Express Florida, Inc.
3254 Central Avenue Inc. Lessor: Central Plaza Central, Ltd. Partnership
St. Petersburg, FL 33712
Send notice to: Central Plaza Central, Ltd. Partnership c/o Amned Properties
10549 N. Florida Ave., Suite K
Tampa, FL 33612
</TABLE>
<PAGE> 277
<TABLE>
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 501 Lessee: Check Express South Carolina, Inc.
5061 E. 38th Street Lessor: Bodner Properties 3
Indianapolis, IN 46218
Send notice to: The Bodner Companies
10455 North College Avenue
Indianapolis, IN 46280
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 503 Lessee: Check Express South Carolina, Inc.
2435 N. Sherman Drive Lessor: Simon Property Group L.P.
Indianapolis, IN 46218
Send notice to: Simon Property Group L.P.
115 West Washington St.
Indianapolis, IN 46204
Remit to: P.O. Box 2004
Indianapolis, IN 46255
- - -----------------------------------------------------------------------------------------------------
CHECK EXPRESS 508 Lessee: Check Express South Carolina, Inc.
3801 Lafayette Rd. Lessor: Howard F. Foltz, Jr.
Indianapolis, IN 46254
Send notice to: Howard F. Foltz, Jr. c/o Harding, Dahm & Company, Inc.
10293 North Meridian St., Suite 150
Indianapolis, IN 46290
- - -----------------------------------------------------------------------------------------------------
First Amendment to:
Check Express F1105 Lessee: Check-X-Change, Inc.
2625 Piedmont Road Lessor: The Mutual Life Insurance
Atlanta, GA Company of New York
Send notice to: The Mutual Life Insurance Company of New York
c/o ARES Realty Capital, Inc.
5775-E Glenridge Drive, Suite 100
Atlanta, GA 30328
Attn: Vice President - Real Estate
With copy to: Withrow, McQuade & Olsen
3379 Peachtree Road, N.E.
Suite 970
Atlanta, GA 30326
Attn: Steven J. Olsen, Esq.
</TABLE>
Requires prompt written notification upon change in control, and Landlord may
terminate by giving Tenant thirty (30) days prior written notice of such
termination.
<PAGE> 278
SCHEDULE 3.17
CHECK EXPRESS USA, INC.
CHANGE IN OFFERING MATERIALS
DUE TO A CHANGE IN CONTROL OF FRANCHISER
<TABLE>
<CAPTION>
======================================================================================================
POST-EFFECTIVE
AMENDMENT
STATES REQUIRED TIME FOR FILING FEE
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
California Yes Promptly $ 50.00
- - ------------------------------------------------------------------------------------------------------
Illinois Yes Upon Occurrence $100.00
- - ------------------------------------------------------------------------------------------------------
Indiana Yes Promptly $ 50.00
- - ------------------------------------------------------------------------------------------------------
Maryland Yes Promptly $100.00
- - ------------------------------------------------------------------------------------------------------
Minnesota Yes Within 30 days $100.00
- - ------------------------------------------------------------------------------------------------------
New York Yes Upon Occurrence $150.00
- - ------------------------------------------------------------------------------------------------------
North Dakota Yes Promptly $ 50.00
- - ------------------------------------------------------------------------------------------------------
Rhode Island Yes Promptly $ 50.00
- - ------------------------------------------------------------------------------------------------------
South Dakota Yes Within 30 days $ 50.00
- - ------------------------------------------------------------------------------------------------------
Virginia Yes Upon Occurrence $100.00
- - ------------------------------------------------------------------------------------------------------
Washington Yes ASAP but before a sale $100.00
- - ------------------------------------------------------------------------------------------------------
Wisconsin Yes Within 30 days $200.00
======================================================================================================
</TABLE>
For all states, provide a cover letter, facing page, verification,
sales agent disclosure (due to addition of a new sales agent), filing
fee check, and, unless otherwise noted, one clean copy and one
black-lined copy of the changed pages. See following sheets for
additional information.
<PAGE> 279
SCHEDULE 3.17
Indiana
Post-Effective Amendment Fee - $50.00
(payable to Indiana Securities Division)
File No. 94-0279RN
Contact: Indiana Securities Division
Franchise Section
302 W. Washington Street
Room E111
Indianapolis, Indiana 46204
(317) 232-6681
(317) 232-6697 Mary Ann Tippett
(317) 232-6685 Tiffany Hemmer
<PAGE> 280
SCHEDULE 3.17
Illinois
Post-Effective Amendment Fee - $100.00
(payable to State of Illinois)
(if repagination, provide entire document)
File No. 94F575
Contact: Christina M. Saunderson
Chief, Franchise Division
500 South Second Street
Springfield, Illinois 62706
(217) 782-2538
<PAGE> 281
SCHEDULE 3.17
California
Post-Effective Amendment Fee - $50.00
(payable to California Commissioner of Corporations)
(no unmarked copies, one black-lined copy)
File No. 998 1379
Contact: Raymond F. Burg
Senior Corporations Counsel
Department of Corporations
1350 Front Street
San Diego, California 92101-3697
(619) 525-4044 (direct line)
(619) 525-4045 (fax)
<PAGE> 282
SCHEDULE 3.17
Maryland
Post-Effective Amendment Fee - $100.00
(payable to Office of Attorney General of Maryland)
File No. FR910258
Contact: Office of the Attorney General
Maryland Division of Securities
Attn: Franchise Section
200 St. Paul Place, 20th Floor
Baltimore, Maryland 21202
(410) 576-6360
Peggy Jones, Franchise Examiner
<PAGE> 283
SCHEDULE 3.17
South Dakota
Post-Effective Amendment Fee - $50.00
(payable to South Dakota Securities Division)
(one black-lined copy only)
File No. 1135
Express Deliveries:
Contact: Mr. Joe Bjerke, Franchise Administrator
Division of Securities
500 West Capitol Avenue
Pierre, South Dakota 57501-5070
Regular Mail:
Director, Division of Securities
c/o 118 West Capitol Avenue
Pierre, South Dakota 57501-5070
(605) 773-4823
(605) 773-5953 (fax)
<PAGE> 284
SCHEDULE 3.17
Rhode Island
Post-Effective Amendment Fee - $50.00
(payable to General Treasurer of Rhode Island)
File No. 92-0245 RN
Contact: Rhode Island Division of Business Regulations
Division of Securities
100 North Main Street
Providence, Rhode Island 02903
(401) 277-3048
Ms. Martha Reynolds/Mr. Tom Corrigan
<PAGE> 285
SCHEDULE 3.17
Virginia - Renewal - Due 6/21/96
Post-Effective Amendment Fee - $100.00
(payable to Treasurer State of Virginia)
File No. 758
Contact: State Corporation Commission
Division of Securities and Retail Franchising
1300 East Main Street, 9th Floor
(Post Office Box 1197, Zip 23209)
Richmond, Virginia 23219
(804) 371-9051
<PAGE> 286
SCHEDULE 3.17
North Dakota
Post-Effective Amendment Fee - $50.00
(payable to North Dakota Securities Commissioner)
File No. - N.A.
Contact: Ms. Jocelyn Smith Whitley
Franchise Examiner
600 East Boulevard, 5th Floor
Bismarck, North Dakota 58505
(701) 328-4712
<PAGE> 287
SCHEDULE 3.17
Washington
Post-Effective Amendment Fee - $100.00
(payable to Treasurer, State of Washington)
Permit No. F-02197
Express deliveries:
Contact: Department of Licensing
General Administration Building
Securities Division - 3rd Floor West
210 11th Street, SW
Olympia, Washington 98504
Regular mail:
Department of Licensing
Securities Division
Post Office Box 9033
Olympia, Washington 98507-9033
(360) 902-8760
<PAGE> 288
SCHEDULE 3.17
Wisconsin
Post-Effective Amendment Fee - $200.00
(payable to State of Wisconsin)
File No. 288622-71
Contact: Office of the Commissioner of Securities
111 East Wilson Street, Fourth Floor
Post Office Box 1768
Madison, Wisconsin 53701
(608) 266-3364 (Marjorie Sandee)
(608) 266-1365 (Kathy Denton)
(608) 266-8559 (James R. Fischer)
(608) 256-1259 (fax)
<PAGE> 289
SCHEDULE 3.17
New York
Post-Effective Amendment Fee - $150.00
(payable to New York State Dept. of Law)
File No. F94-0119
Contact: New York State Department of Law
Bureau of Investor Protection and Securities
120 Broadway, 23rd Floor
New York, New York 10271
(212) 416-8211
(212) 416-8816 FAX
(212) 416-8233 - Eric Zanier
<PAGE> 290
SCHEDULE 3.17
Minnesota
Post-Effective Amendment Fee - $100.00
(payable to Minnesota Department of Commerce)
File No. F-1978
Contact: State of Minnesota
Department of Commerce
133 East Seventh Street
St. Paul, Minnesota 55101
(612) 296-6328
(612) 296-4328 (fax)
<PAGE> 291
SCHEDULE 3.18
October 12, 1995
[ ] LICENSES AND PERMITS
CHECK EXPRESS, INC.
<TABLE>
<CAPTION>
License Number Effective Expiration
<S> <C> <C> <C>
Money Transmitter - Indiana 0222 4/14/94 Annual Renewal
Check Casher - Indiana 0024 4/14/94 Annual Renewal
Check Casher - Florida Applied For*
Money Transmitter - Florida Applied For*
</TABLE>
*The Florida Comptrollers Office has informed the Company that it has extended
the date for a decision on the Company's application until November 20, 1995,
due to its concern with certain issues relating to one of the Company's
directors and due to the pending transaction contemplated herein.
CHECK EXPRESS #1, INC.
<TABLE>
<CAPTION>
License Number Effective Expiration
<S> <C> <C> <C>
City of Tampa - Occupational 95013486 09/01/94 09/30/95
</TABLE>
CHECK EXPRESS FINANCE, INC.
<TABLE>
<CAPTION>
License Number Effective Expiration
<S> <C> <C> <C>
Sales Finance Company SF 593275691 000 12/31/94 12/31/95
Sales Finance Company SF 593206802 000 01/13/94 12/31/95
Consumer Finance License, #203 CF 593206802 006 01/03/95 12/31/96
Consumer Finance License, #253 CF 593206802 005 01/03/95 12/31/96
Consumer Finance License, #207 CF 593206802 004 01/03/95 12/31/96
Consumer Finance License, #228 CF 593206802 007 01/03/95 12/31/96
Consumer Finance License, #218 CF 593206802 002 01/03/95 12/31/96
Consumer Finance License, #201 CF 593206802 003 01/03/95 12/31/96
Consumer Finance License, #210 CF 593206802 001 01/03/95 12/31/96
Consumer Finance License, #206 CF 593206802 008 01/31/95 12/31/96
</TABLE>
<PAGE> 292
LICENSES AND PERMITS
PETERLYN, INC.
<TABLE>
<CAPTION>
STATE OF WASHINGTON SMALL CITY
DEPT. OF FINANCE LOAN BUSINESS
STORE # ADDRESS CERTIFICATE # EXPIRATION ENDORSEMENT CITY LICENSE # EXPIRATION
<S> <C> <C> <C> <C> <C> <C> <C>
101 14615 1st Avenue So 94-002 05/12/99 10/2/95 Burien Not required
102 2632 So 38th Street 94-004 05/12/99 10/2/95 Tacoma T-74005 01/01/96
103 13754-A Aurora Ave N 94-003 05/12/99 10/2/95 Seattle 156566 12/31/95
106 10519 Bridgeport Way SW 94-006 08/08/99 10/2/95 Tacoma Not required - outside city limits
107 10707 Pacific Ave, Suite D 94-007 08/08/99 10/2/95 Tacoma Not required - outside city limits
108 6302 6th Avenue 94-008 08/08/99 10/2/95 Tacoma T-74005 01/01/96
</TABLE>
CHECK EXPRESS FLORIDA, INC.
<TABLE>
<CAPTION>
STATE OF FLORIDA COUNTY
DEPT. OF REVENUE OCCUPATIONAL
STORE # ADDRESS CERTIFICATE # COUNTY LICENSE # YEARLY FEE EXPIRATION
<S> <C> <C> <C> <C> <C> <C>
201 8207 N Florida Ave 39-22-155660-61 Hillsborough 10544.0001(5) $22 09/30/95
203 1628 Gulf-to-Bay Blvd. 62-02-167240-61 Pinellas 028286-3 $11 09/30/95
206 2509 E Colonial Dr 58-12-127621-14 Orange 3400-005-1835 $75 09/30/95
207 2940 34th Street S 62-15-167241-61 Pinellas 028290-5 $11 09/30/95
208 1415 N Armenia Ave 39-22-155661-61 Hillsborough 11764.0000(8) $22 09/30/95
210 4001 E Hillsborough 39-22-155662-61 Hillsborough 17091.0000(0) $22 09/30/95
216 820 3rd Avenue So 62-15-167244-61 Pinellas 028289-7 $11 09/30/95
218 5561 Park Blvd 62-13-167245-61 Pinellas 028288-9 $11 09/30/95
220 2355-B W Hillsborough 39-22-155664-61 Hillsborough 11764.0000(8) $22 09/30/95
223 2520 S. Semoran Blvd. Store not open yet
224 2532-B Bearss Ave. 39-22-170009-66 Hillsborough 11916.0000(4) $22 09/30/95
226 4712 S. Orange Blossom Tr. Store not open yet
228 1335 Brandon Blvd, #F 39-00-170012-66 Hillsborough 12282.0000(0) $22 09/30/95
229 1711-B N 50th Street 39-22-155665-61 Hillsborough 12022.0000(0) $22 09/30/95
238 5526 66th Street N 62-15-167249-61 Pinellas 028282-2 $11 09/30/95
241 5701 Edgewater Dr 58-12-127619-14 Orange 3400-0105304 $75 09/30/95
242 6851 Hwy 17-92 S 69-00-049264-14 Seminole 047114 $16.50 09/30/95
248 3921 N Florida Ave Hillsborough 34867.0000(2) $22 09/30/95
253 3254 Central Ave 62-15-181820-66 Pinellas 074998-6 $11 09/30/95
<CAPTION>
CITY
OCCUPATIONAL
STORE # CITY LICENSE # YEARLY FEE EXPIRATION
<S> <C> <C> <C> <C>
201 Tampa 030497 $153.75 + $15 each worker 09/30/95
203 Clearwater 07564 $100 09/30/95
206 Orlando 95-002321 $92.50 09/30/95
207 St. Petersburg 11886 $89 09/30/95
208 Tampa 015045 $110 + $15 each worker 09/30/95
210 Tampa 020685 $110 + $15 each worker 09/30/95
216 St. Petersburg 4253 $89 09/30/95
218 Pinellas Park 95-00069252 $200 09/30/95
220 Tampa 013788 $260 + $15 each worker 09/30/95
223
224 Tampa Not required - outside city limits
226
228 Brandon Not required
229 Tampa 003189 $110 + $15 each worker 09/30/95
238 St. Petersburg Not required - outside city limits
241 Orlando Not required - outside city limits
242 Fern Park Not required
248 Tampa 026739 $110 + $15 each worker 09/30/95
253 St. Petersburg 29441 License Pending
</TABLE>
CHECK EXPRESS SOUTH CAROLINA, INC.
<TABLE>
<CAPTION>
STATE OF INDIANA INDIANA
DEPT. OF REVENUE LOAN
STORE # ADDRESS CERTIFICATE # LICENSE EFFECTIVE
<S> <C> <C> <C> <C>
501 5061 E 38th Street 4855701 003 9 1317 9/7/95
503 2435 N Sherman Dr 4855701 003 9 1317 9/7/95
506 2620 S. Madison Ave. 4855701 003 9 1317 9/7/95
508 Store not open yet
</TABLE>
<PAGE> 293
SCHEDULE 3.19
October 12, 1995
[ ] COMPLIANCE WITH LAWS
One of the Subsidiaries, Peterlyn, Inc., has been notified of the findings of
an examination performed by the State of Washington Department of Financial
Institutions with respect to the six company owned check cashing locations
licensed thereby. Included in the findings reported is an apparent violation
of RCW 31.45.050(2) which states in part "If a licensee intends to close an
existing place of business, or to relocate an existing place of business, the
licensee shall provide written notification to the director no less than thirty
days before the proposed establishing, closing, or moving of a place of
business." The finding indicates that the Licensee (Peterlyn, Inc.) violated
this provision with respect to the closing of the 13028 Aurora Avenue N.
location and moving of this business to a new location, 13754-A Aurora Ave. N.
The findings indicate that the Licensee may be required to pay a penalty of
$19,100.00, and to apply for a license for the new location. A written
response to all the findings was sent to the Director of Financial Institutions
dated September 28, 1995, and included a request to waive the proposed penalty.
<PAGE> 294
SCHEDULE 3.20
October 12, 1995
[ ] REGULATORY REPORTS
In May 1993 the Company paid the Department of the Treasury $20,000 as
settlement of alleged violations of currency transaction reporting
requirements.
In connection with certain prior transactions that required the Company to file
current reports on forms 8-K, the Company was unable to timely file certain
historical or proforma financial information that may have been required to be
filed. However, as to each such case, audited financial statements for the
period including such transaction were filed with the Annual Report on Form
10-KSB for the applicable period.
<PAGE> 295
SCHEDULE 3.21
October 12, 1995
Page 1
INTELLECTUAL PROPERTY AND ADVERTISING
<TABLE>
<CAPTION>
Mark Country Reg. No. Issued Status
<S> <C> <C> <C> <C>
CHECK U.S. 1,793,853 9/21/93 8 & 15 due
09/21/99
CHECK EXPRESS U.S. 1,370,520 11/12/85 Renewal 11/12/05
CHECK EXPRESS (Stylized) U.S. 1,476,206 2/9/88 Renewal 02/09/08
CHECK-X-CHANGE & Design Oregon 15,726 3/19/84 Renewal 03/19/99
CHECK-X-CHANGE & Design Washington 14,919 3/19/84 Renewal 03/19/04
REFUND-X-CHANGE U.S. 1,705,961 08/04/92 8 & 15 due
08/04/98
Stylized EXPRESS & CHECK Design U.S. 1,489,647 05/04/88 Renewal 05/04/08
X-CHANGE U.S. 1,374,191 12/03/85 Renewal 12/03/05
CHECK-X-CHANGE & Design
</TABLE>
US Trademark Application Number 74/617,795 was filed on January 4, 1995; Int'l
Classes 35 and 36 to register the trademark CHECK EXPRESS MONEY CENTERS and
Design. The trademark will be published in the Official Gazette on October 10,
1995. If no opposition is filed within thirty days following publication the
registration will be issued within a few months.
<PAGE> 296
SCHEDULE 3.21
October 12, 1995
Page 2
INTELLECTUAL PROPERTY AND ADVERTISING
CHECK-X-CHANGE CORPORATION
Slogan: America's Fastest Cash
Slogan: Refund-X-Change
Slogan: Tax Cash Now!
Types of Advertisements: Newspaper Ads, Yellow Page Ads,
Inserts/Fliers, Radio and Television
Commercials ...... all used by any and
all Franchise Owners for the support of their
store's operations.
There are no Marketing materials for the sale of Check-X-Change
franchises.
CHECK EXPRESS USA, INC.
Types of Advertisements: Newspaper Ads, Yellow Page Ads,
Inserts/Fliers, Radio and Television
Commercials ...... all used by any and
all Franchise Owners and Company Store
Operations.
Marketing Materials: Newspaper Ads (used in newspaper publications
i.e. WALL STREET JOURNAL, etc.), Industry
Publications for the Kiosk (i.e. CONVENIENT
STORE NEWS, CONVENIENT STORE DECISIONS and
CONVENIENT STORE PEOPLE), and other Ads in
ENTREPRENEUR, FRANCHISE HANDBOOK, INC.,
RESTAURANT NEWS, IFA OPPORTUNITIES GUIDE and
the FRANCHISE BUYERS GUIDE, Video Tapes for
the Kiosk and Full Service operation,
marketing brochure with inserts, business
cards and presentation materials for
Corporate visits by prospective buyers of a
franchise as well as an "exhibitor's booth"
used at trade shows and applicable
conventions.
<PAGE> 297
SCHEDULE 3.21
October 12, 1995
Page 3
INTELLECTUAL PROPERTY AND ADVERTISING
CHECK EXPRESS FLORIDA, INC.
CHECK EXPRESS SOUTH CAROLINA, INC.
PETERLYN, INC.
Types of Advertisements: Newspaper Ads, Direct Mail Ads,
Inserts/Fliers, Scratch Pads and Pens for
Commercial Accounts, Yellow Page Ads, and
Television Commercials ...... all used in
the support of advertising the operation of
Check Express stores.
<PAGE> 298
SCHEDULE 3.22
October 12, 1995
[ ] INSURANCE
See schedule 3.15 and 3.24.
<PAGE> 299
SCHEDULE 3.23
October 12, 1995
[ ] LABOR AND EMPLOYEE RELATIONS
The following list of unemployment claims filed through June 30, 1995, by
terminated employees of the Company and the Subsidiaries are pending; there
are no other claims of which senior management is aware:
<TABLE>
<CAPTION>
Company Employee Reason for Discharge
- - --------- -------- --------------------
<S> <C> <C>
Check Express Florida, Inc. Barbosa, M. Violated company policy
" Branin, W.W. Jr. Probationary/title period
" Merritt, E. Disciplinary suspension/pending
criminal investigation
" Shaw, J.L. Falsification of records
" Smith, J.M. Violated company policy
Check Express South Carolina, Inc. Nesbitt, B.J. Violated cash drawer policy
Peterlyn, Inc. Estrada, T. Failure to follow company policy
" Wardell, K. Job performance
" Delorio, L. Voluntary termination
</TABLE>
<PAGE> 300
SCHEDULE 3.24
October 12, 1995
[ ] EMPLOYEE BENEFIT PLANS
Check Express, Inc. 401(k) Profit Sharing Plan and Trust
Plan Year January 1 to December 31
Form 5500-C/R with Attachment
Schedule A
Schedule P
The Company's contribution to this plan is made annually, after the processing
of the final payroll for the current fiscal year. This contribution is accrued
for during the plan year and the payment is remitted after the agent, HCH
Companies, Inc., has prepared the required documentation.
Group Insurance
Principal Health Care Group #41749
Medical Coverage
Principal Mutual Life Insurance Company Group #N86249
Dental Coverage
Business Men's Assurance Company of America BGGR0925600001
AD&D/Life for employee's enrolled in the Medical Plan
Form 5500 for Premium-Only Plan for Period July 1, 1993 and ending June 30,
1994.
<PAGE> 301
SCHEDULE 3.26
October 12, 1995
[ ] COMPLIANCE WITH ENVIRONMENTAL LAWS
Check Express store number 248 located at 3921 N. Florida Avenue (SE corner of
Florida and Buffalo Avenues) in Tampa, Florida possibly has a grease trap or
other underground tank.
Check Express store number 506 located at 2620 S. Madison Avenue in
Indianapolis, Indiana has four underground storage tanks.
Meeting Street Property between Sheppard & Lee Streets, Charleston, South
Carolina. Potential for existing or future environmental impairment of the
subject property resulting from on-site and off-site underground storage tanks.
Other than described, we have no knowledge of any matter referred to in section
3.26 resulting from any action or inaction of any person other than the Company
and its subsidiaries.
The Company and its subsidiaries may be subject to indemnification obligations
in connection with prior sales of various operating assets.
<PAGE> 302
SCHEDULE 3.27
October 12, 1995
[ ] EMPLOYEES AND CONSULTANTS
Check Express has no established policy as it pertains to severance or
termination pay and its employees, with the exception of those employees with
employment contracts (see Schedule 3.15) which specifically detail the
severance pay as it relates to that specific employee. However, the standard
Employment Agreement, which is required to be signed by all employees, states
the following:
"4. Termination. It is agreed that this Agreement may be terminated
by either party without cause upon fourteen (14) days prior written notice to
the other. It is further agreed that the services of the Employee under this
Agreement may be terminated by Company at any time for good and sufficient
cause, which includes; negligence, inattention to duties, incompetence,
shortage on accounts, immoral conduct, and failure on the part of Employee to
carry out the rules and regulations of Company or any of his duties and
obligations under this Agreement."
It has been the practice of Check Express in certain circumstances to pay an
employee two (2) weeks "severance" in lieu of notice when terminating
employment without good and sufficient cause.
In the ordinary course of business and as has been the Company's and the
Subsidiaries' general practice, employees are granted increases in their wages
or salaries no less frequently than annually, generally effective on the
respective employee's anniversary date.
Senior management of the Company has been developing, with the input of store
operations personnel, a store employee incentive bonus plan which the Company
intends to implement effective January 1, 1996. The working version of the
plan includes a two part bonus structure available to tenured store managers
(Manager II positions), the Training Manager, and Area Managers. The bonuses
will be tied to increases in revenues (defined as total revenues less net bad
debt less cash shortages in excess of .5% of check cashing fees) over the prior
year of greater than 8% and an increase in net operating profit. The Training
Manager position will potentially earn an additional two step bonus tied to the
success of trainees and the seniority they achieve with the Company.
<PAGE> 303
Check Express Inc. and Consolidated Subsidiaries
Employee Listing
As of 9/12/95
<TABLE>
<CAPTION>
Location of S. S. Date of Date of
Employee Title Employment Number Birth Hire
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Employment Contracts
Bacon S. Gregg Director of Finance Corp. ###-##-#### 09/14/45 09/07/93
Goertz (D) Roger Pres. CE-USA and Exec V.P. Ops Corp. ###-##-#### 01/03/48 08/01/89
Lang Larry President, CEO Corp. ###-##-#### 11/12/48 06/01/85
Todd Decker V.P Finance and CFO Corp. ###-##-#### 09/28/61 10/18/93
Tune Mark Controller Corp. ###-##-#### 12/10/58 08/14/94
Voss (D) H. Jeff Corp. ###-##-#### 06/06/50 01/01/94
Employment Agreements
Adkins Vicky Area Manager 501 ###-##-#### 11/10/50 03/30/91
Alamo Juan Jr. Teller 106 ###-##-#### 01/02/70 02/13/95
Allen Plakisia Teller 210 ###-##-#### 03/06/74 03/20/95
Allum Lee Mktg Administrator Corp. ###-##-#### 10/28/68 04/25/94
Ally Sara Admin Asst-Director of Finance Corp. ###-##-#### 07/09/75 05/09/94
Alvarez Marcela Training Manager 203 ###-##-#### 12/14/62 12/14/92
Arnold Michelle Teller 107 ###-##-#### 06/25/70 08/11/95
Arthur Sherman Manager Trainee 201 ###-##-#### 09/19/58 05/30/95
Au Vaeluaina Teller 101 ###-##-#### 11/07/55 08/04/95
Baker Heather Teller 106 ###-##-#### 07/18/74 09/10/94
Ball Jodi Teller 106 ###-##-#### 11/11/66 12/19/94
Barcia Alexander Technical Support Mgr Corp. ###-##-#### 11/12/68 04/24/95
Barnes Diane Payroll Assistant Corp. ###-##-#### 04/15/44 06/01/94
Baumberger Susie Manager 253 ###-##-#### 11/07/62 08/16/93
Bechdoldt Stacey Business Development Mgr. Corp. ###-##-#### 03/12/69 11/28/94
Bodiford Gloria Teller 253 ###-##-#### 05/30/58 08/11/95
Bolling Michelle Teller 102 ###-##-#### 03/06/72 08/14/95
Borer Peter Mgr-Mergers and Acquisitions Corp. ###-##-#### 02/14/41 10/01/82
Brown Dana Senior Teller 501 ###-##-#### 11/04/76 09/09/94
Burrows Guenther Teller 203 ###-##-#### 01/20/65 08/07/95
Burton Evelyn Manager 220 ###-##-#### 02/10/72 06/23/93
Byrd Ryan Asst. Manager 206 ###-##-#### 10/13/71 08/15/94
Carlson Richard Manager Trainee 206 ###-##-#### 12/26/68 04/24/95
Caruso John Asst. Manager 253 ###-##-#### 07/12/63 06/17/94
Cazares Maria Manager 916 ###-##-#### 11/04/65 08/12/94
Cazares Veronica Teller 916 ###-##-#### 08/27/74 08/12/94
Chapman Mary Senior Teller 102 ###-##-#### 11/06/70 11/03/94
Cornwall Donet Teller 501 ###-##-#### 01/06/75 05/08/95
Corona Rose Teller 916 ###-##-#### 01/15/68 03/20/95
Creason Nella Asst. Manager 241 ###-##-#### 12/11/46 11/02/94
Crumity Maureen Teller 238 ###-##-#### 06/30/73 07/24/95
Curry Rhonnette Teller 501 ###-##-#### 02/18/72 06/12/95
Dehoyos Narciso Area Manager 238 ###-##-#### 02/16/65 07/14/86
Dodge Clifton Asst. Finance Director Corp. ###-##-#### 06/18/64 07/18/94
Duncan Tracy Asst. Manager 107 ###-##-#### 12/18/70 03/18/94
Estrada Tina Senior Teller 102 ###-##-#### 09/13/66 12/26/94
Faulkner Cindy Co. Manager 203 ###-##-#### 07/08/71 10/22/92
Fent Cindy Senior Teller 108 ###-##-#### 02/16/61 05/23/94
Fischer Virginia Administrative Assistant Corp. ###-##-#### 08/25/48 02/28/94
Frederico Rudolph Dir of Franchise Operations Corp. ###-##-#### 06/01/63 09/04/90
Gilbert Andre' Teller 501 ###-##-#### 11/22/75 03/06/95
Gonzalez Jacob Manager 208 ###-##-#### 11/02/66 01/13/93
Halbert William Teller 238 ###-##-#### 03/12/70 09/01/95
Hanna Florence Teller 248 ###-##-#### 07/29/63 08/30/95
Hanna-Stout Barbara Teller 210 ###-##-#### 09/01/51 07/31/95
Harper Patricia Manager 253 ###-##-#### 07/11/68 07/27/95
Harrington Trejina Teller 501 ###-##-#### 01/24/72 08/03/95
Hartman Marlene Senior Teller 203 ###-##-#### 11/12/70 10/30/92
Hawley Amy Teller 101 ###-##-#### 08/19/74 05/12/94
Haywood Thomas Manager Trainee 253 ###-##-#### 04/24/63 05/30/95
Higgins Stefanie Manager 242 ###-##-#### 04/19/73 08/08/93
Hofman Daniela Teller 210 ###-##-#### 07/10/73 07/31/95
Homer Linda Accounting Assistant Corp. 265-59-9864 09/09/62 08/03/94
Hweih Nagida Teller 242 ###-##-#### 03/01/69 02/06/95
Jenkins Susan Area Manager 242 ###-##-#### 10/27/51 02/19/92
Jensen Becky Manager 107 ###-##-#### 11/18/70 10/28/91
Jensen Tanya Manager 206 ###-##-#### 10/18/73 12/01/93
Johnson Anthony Teller 501 ###-##-#### 10/30/61 04/21/95
Joyce, T. Tracy Adm. Asst.-Company Stores Corp. ###-##-#### 05/10/68 10/10/94
Jusino Belky Teller 206 ###-##-#### 10/26/71 02/13/95
Kimmich Lorraine Manager 108 ###-##-#### 06/25/56 09/09/91
Kingery Ralph Manager 238 ###-##-#### 12/19/65 11/08/93
Knight Shauntina Part-time Teller 101 ###-##-#### 11/28/74 11/08/94
Lessard Jennifer Teller 228 ###-##-#### 11/19/73 04/28/95
</TABLE>
<TABLE>
<CAPTION>
Vacation
#of weeks
as of 8/31/95
Date of Compensation Bonus -------------
Employee Termination Mode Rate of Pay Eligibility (B) Medical Plan
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Employment Contracts
Bacon S. Gregg S 45,000.00 See Contract (A) HMO
Goertz (D) Roger S 68,500.00 See Contract (A) POS
Lang Larry S 130,000.00 See Contract (A) HMO
Todd Decker S 70,000.00 See Contract (A) HMO
Tune Mark S 61,000.00 See Contract (A) HMO
Voss (D) H. Jeff S 75,250.00 See Contract (A) HMO
Employment Agreements
Adkins Vicky S 26,520.00 1 HMO
Alamo Juan Jr. H 6.75 0 No
Allen Plakisia H 5.75 0 Not Eligible
Allum Lee S 22,470.00 1 HMO
Ally Sara S 18,000.00 0 HMO
Alvarez Marcela S 26,000.00 0 HMO
Arnold Michelle H 6.50 0 Not Eligible
Arthur Sherman H 22,000.00 0 Not Eligible
Au Vaeluaina H 6.75 0 Not Eligible
Baker Heather H 7.25 0 POS
Ball Jodi H 7.25 0 POS
Barcia Alexander S 30,000.00 0 Not Eligible
Barnes Diane H 9.45 0 HMO
Baumberger Susie S 18,500.00 2 Declined
Bechdoldt Stacey S 26,000.00 0 HMO
Bodiford Gloria H 6.50 0 Not Eligible
Bolling Michelle H 6.75 0 Not Eligible
Borer Peter 08/01/95 S 0 Cobra
Brown Dana H 6.50 0 HMO
Burrows Guenther H 5.75 0 Not Eligible
Burton Evelyn 08/22/95 S 18,000.00 0
Byrd Ryan H 6.75 0 Declined
Carlson Richard H 8.29 0 Not Eligible
Caruso John 08/13/95 H 6.50 0
Cazares Maria S 21,720.00 0 POS
Cazares Veronica H 6.30 0 Declined
Chapman Mary H 7.25 0 Declined
Cornwall Donet 07/30/95 H 5.75 0 Not Eligible
Corona Rose H 6.00 0 Declined
Creason Nella H 6.75 0 Declined
Crumity Maureen H 5.50 0 Not Eligible
Curry Rhonnette 07/28/95 H 5.75 0 Not Eligible
Dehoyos Narciso S 25,000.00 5 (C) Declined
Dodge Clifton S 23,500.00 1 Declined
Duncan Tracy H 8.25 0 Declined
Estrada Tina 07/18/95 H 6.50 0
Faulkner Cindy S 18,500.00 0 HMO
Fent Cindy H 7.00 1 POS
Fischer Virginia S 25,800.00 1 Declined
Frederico Rudolph S 42,000.00 3 days Declined
Gilbert Andre' 09/09/95 H 5.50 0
Gonzalez Jacob S 16,500.00 0 HMO
Halbert William H 6.90 0 Not Eligible
Hanna Florence H 5.25 0 Not Eligible
Hanna-Stout Barbara H 6.75 0 Not Eligible
Harper Patricia 07/15/95 S 15,600.00 0
Harrington Trejina H 6.25 0 Not Eligible
Hartman Marlene H 7.50 0 HMO
Hawley Amy H 7.25 0 Declined
Haywood Thomas H 7.96 0 Not Eligible
Higgins Stefanie S 17,500.00 0 HMO
Hofman Daniela H 6.00 0 Not Eligible
Homer Linda H 8.72 1 day HMO
Hweih Nagida H 6.00 0 HMO
Jenkins Susan 07/26/95 S 23,500.00 0
Jensen Becky S 21,500.00 0 Declined
Jensen Tanya S 17,500.00 0 HMO
Johnson Anthony 08/26/95 H 5.75 0
Joyce, T. Tracy S 19,000.00 0 Declined
Jusino Belky H 6.00 0 HMO
Kimmich Lorraine S 20,100.00 0 Declined
Kingery Ralph S 19,000.00 1 Declined
Knight Shauntina H 7.00 0 Declined
Lessard Jennifer H 6.50 0 Not Eligible
<CAPTION>
Health Insurance
401k % of Salary
Employee Coverage Life Dental Coverage Participation Deferral
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Employment Contracts
Bacon S. Gregg Employee Yes Employee Yes 4%
Goertz (D) Roger Employee Yes Employee Yes 4%
Lang Larry Employee/Family Yes Employee/Family Yes 5%
Todd Decker Employee Yes Employee Yes 4%
Tune Mark Employee Yes Employee Not Eligible
Voss (D) H. Jeff Employee Yes Employee Declined
Employment Agreements
Adkins Vicky Employee Yes Employee Yes 6%
Alamo Juan Jr. No No Not Eligible
Allen Plakisia Not Eligible
Allum Lee Employee Yes Yes Yes 5%
Ally Sara Employee Yes Employee Declined
Alvarez Marcela Employee Yes Employee Yes 5%
Arnold Michelle Not Eligible
Arthur Sherman Not Eligible
Au Vaeluaina Not Eligible
Baker Heather Employee Yes Employee Not Eligible
Ball Jodi Employee Yes Employee/Child Not Eligible
Barcia Alexander Not Eligible
Barnes Diane Employee Yes Declined Yes 4%
Baumberger Susie None No Declined Yes 4%
Bechdoldt Stacey Employee Yes Employee Not Eligible
Bodiford Gloria None No Not Eligible Not Eligible
Bolling Michelle None No Not Eligible Not Eligible
Borer Peter Employee/Spouse No Employee/Spouse
Brown Dana Employee Yes Employee Not Eligible
Burrows Guenther None No Not Eligible Not Eligible
Burton Evelyn
Byrd Ryan None No Employee Declined
Carlson Richard Not Eligible
Caruso John
Cazares Maria Employee Yes Employee Not Eligible
Cazares Veronica None No Declined Not Eligible
Chapman Mary None No Employee Not Eligible
Cornwall Donet
Corona Rose None No Declined Not Eligible
Creason Nella None No Declined Not Eligible
Crumity Maureen Not Eligible
Curry Rhonnette
Dehoyos Narciso None No Declined Yes 4%
Dodge Clifton None No Declined Not Eligible
Duncan Tracy None No Declined Declined
Estrada Tina
Faulkner Cindy Employee Yes Employee Yes 1%
Fent Cindy Employee Yes Employee Declined
Fischer Virginia None No Declined Yes 4%
Frederico Rudolph None No Declined 4%
Gilbert Andre'
Gonzalez Jacob Employee/Spouse Yes Employee/Spouse Yes 5%
Halbert William Not Eligible
Hanna Florence Not Eligible
Hanna-Stout Barbara Not Eligible
Harper Patricia
Harrington Trejina Not Eligible
Hartman Marlene Employee Yes Employee Declined
Hawley Amy None No Employee/Spouse Yes 4%
Haywood Thomas Not Eligible
Higgins Stefanie Employee Yes Employee Yes 3%
Hofman Daniela Not Eligible
Homer Linda Employee/Family Yes Employee/Family Not Eligible
Hweih Nagida Employee Yes Employee Not Eligible
Jenkins Susan
Jensen Becky None No No Declined
Jensen Tanya Employee Yes Employee Declined
Johnson Anthony
Joyce, T. Tracy None No No Not Eligible
Jusino Belky Employee Yes Employee Not Eligible
Kimmich Lorraine None No No Declined
Kingery Ralph None No No Yes 2%
Knight Shauntina None No No Not Eligible
Lessard Jennifer Not Eligible
</TABLE>
<PAGE> 304
Check Express Inc. and Consolidated Subsidiaries
Employee Listing
As of 9/12/95
<TABLE>
<CAPTION>
Location of S. S. Date of Date of
Employee Title Employment Number Birth Hire
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Linxwiler Leigh Area Manager 228 ###-##-#### 08/31/67 03/25/91
Longoria Lucy Teller 916 ###-##-#### 11/05/72 08/12/94
Lorenzen Robert Asst. Manager 207 ###-##-#### 07/16/69 01/12/94
Lovett Terrie Asst. Manager 216 ###-##-#### 06/09/62 09/11/89
Luise Joseph Manager Trainee 203 ###-##-#### 09/26/41 08/21/95
Lyon Linda Accounting Supervisor Corp. 262-53-4238 11/24/59 11/06/89
Mangroo Babita Manager Trainee 201 ###-##-#### 01/11/69 10/31/94
Mason Willie Teller 224 ###-##-#### 03/16/77 08/31/95
Matney Sherry Part-time Teller 106 ###-##-#### 06/11/69 06/16/94
McDonald Michelle Teller 218 ###-##-#### 06/25/70 08/14/95
McQueen Michelle Teller 216 ###-##-#### 08/09/65 07/17/95
McQuery Michael Area Manager 101 ###-##-#### 07/06/67 07/07/87
Miller David Manager Trainee 220 ###-##-#### 10/11/63 05/30/95
Mills Donna Teller 106 ###-##-#### 10/08/64 08/28/95
Mitchell Yolanda Manager 248 ###-##-#### 06/20/71 02/24/94
Montgomery Elizabeth Teller 102 ###-##-#### 12/21/67 03/07/95
Morrison Jennie Manager 241 ###-##-#### 10/10/70 01/28/94
Murin Karen Administrative Assistant Corp. ###-##-#### 03/23/65 04/11/91
Myers Matt Senior Teller 242 ###-##-#### 01/11/73 10/11/93
Naylor Faith Senior Teller 103 ###-##-#### 09/17/72 09/06/94
Negron Georgina Teller 207 ###-##-#### 08/11/76 08/23/95
Nelsen Ken MIS Director Corp. ###-##-#### 09/23/58 07/05/93
Oldham Christine Senior Teller 501 ###-##-#### 04/19/67 11/21/94
Peraza Adriel Senior Teller 208 ###-##-#### 09/23/66 02/21/94
Peters Ron Acctg. Mgr Franchise/Operations Corp. ###-##-#### 12/03/59 12/06/93
Peters Donna Manager 207 ###-##-#### 10/07/48 06/14/93
Peters Judy Teller 107 ###-##-#### 02/13/44 01/20/95
Petersen Candance Teller 220 ###-##-#### 06/10/54 05/01/95
Podurgiel Leon Teller 210 ###-##-#### 09/11/63 11/30/94
Poole Edwina Teller 228 ###-##-#### 01/06/71 12/19/94
Portelli Kimberly Teller 224 ###-##-#### 02/26/70 08/28/95
Prodo Maria Teller 916 ###-##-#### 03/02/71 10/17/94
Real Laura Teller 210 ###-##-#### 09/10/57 07/26/95
Reback Debra Accounting Manager/Corporate Corp. 055-56-1448 02/13/59 12/01/93
Relford Richard Senior Teller 229 ###-##-#### 09/25/69 07/25/94
Riordon Michael Director of Franchise Development Corp. ###-##-#### 02/12/51 09/25/90
Roberson Pernell Teller 218 ###-##-#### 04/11/67 08/30/95
Rockwell Karen Training Manager 201 ###-##-#### 12/20/68 09/06/94
Sanchez Patricia Asst. Manager 916 ###-##-#### 01/24/67 08/12/94
Sanjuan Jorlley Teller 201 ###-##-#### 10/21/76 08/18/95
Sartor Robin Teller 203 ###-##-#### 06/28/57 05/01/95
Sawyers Karlene Manager 210 ###-##-#### 09/08/66 04/12/93
Seale (D) Jimmy Director of Franchise Operations Corp. ###-##-#### 08/18/60 01/03/94
Smith Brad Manager Trainee 218 ###-##-#### 10/20/60 01/09/95
Snead April Manager 228 ###-##-#### 01/27/74 09/20/93
Spurlin Tiffany Teller 203 ###-##-#### 08/14/71 06/12/95
Stallings Stacey Teller 210 ###-##-#### 11/25/69 05/03/95
Stern Christopher Manager 216 ###-##-#### 11/15/66 09/07/93
Stern Kimberly Manager 218 ###-##-#### 12/20/65 09/28/93
Swift Ben Franchise Develpment Manager Corp. ###-##-#### 06/09/63 11/03/93
Thirkill Cindy Teller 503 ###-##-#### 11/01/72 07/19/95
Thornton Kevin Senior Teller 228 ###-##-#### 12/01/72 06/30/94
Toole Brenda Manager 224 ###-##-#### 04/09/64 01/01/94
Trout Patricia Receptionist Corp. ###-##-#### 06/01/74 01/09/95
Truax Michelle Senior Teller 224 ###-##-#### 08/12/69 01/03/94
Trudel William Manager Trainee 238 ###-##-#### 06/21/60 04/24/95
Turk Kimberly Teller 506 ###-##-#### 09/27/73 01/24/95
Vera Myra Teller 208 ###-##-#### 03/01/67 08/07/95
Villarin Kristie Teller 248 ###-##-#### 01/04/77 08/30/95
Wardell Kathy Manager 106 ###-##-#### 01/29/49 01/06/92
Wells Kim Manager 106 ###-##-#### 05/25/66 07/26/91
White Latonya Senior Teller 201 ###-##-#### 07/25/72 05/09/94
Wilburn Donna Manager 503 ###-##-#### 03/18/57 09/15/94
Williams Charlotte Manager 102 ###-##-#### 05/20/55 04/04/90
Williams Denise Teller 241 ###-##-#### 10/22/67 02/06/95
Williams Mary Teller 102 ###-##-#### 03/21/71 11/29/94
Williams Robert Manager 103 ###-##-#### 10/08/69 08/31/94
Wilson Crystal Teller 218 ###-##-#### 12/14/69 01/03/95
Wilson Eric Teller 501 ###-##-#### 05/05/77 07/05/95
Wong Shannon Asst. Manager 102 ###-##-#### 10/01/73 03/16/93
Wright Bonita Manager 501 ###-##-#### 10/15/66 08/07/91
Wylie Roger Manager Trainee 242 ###-##-#### 05/31/54 04/24/95
Wynn Reginald Teller 229 ###-##-#### 04/16/69 08/22/95
Yarbro Rebecca Asst. Manager 501 ###-##-#### 10/30/66 03/16/92
Zapata Bridget Teller 916 ###-##-#### 10/08/55 08/12/94
<CAPTION>
Vacation
#of weeks
as of 8/31/95
Date of Compensation Bonus -------------
Employee Termination Mode Rate of Pay Eligibility (B) Medical Plan
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Linxwiler Leigh S 26,500.00 0 HMO
Longoria Lucy H 6.20 0 Declined
Lorenzen Robert 08/06/95 H 6.75 0
Lovett Terrie H 7.50 1 Declined
Luise Joseph H 7.29 0 Not Eligible
Lyon Linda S 28,875.00 1 HMO
Mangroo Babita H 5.97 0 HMO
Mason Willie H 5.50 0 Not Eligible
Matney Sherry H 7.25 0 POS
McDonald Michelle H 7.00 0 Not Eligible
McQueen Michelle H 5.75 0 Not Eligible
McQuery Michael S 27,482.00 14 days Declined
Miller David H 5.97 0 Not Eligible
Mills Donna H 6.75 0 Not Eligible
Mitchell Yolanda S 16,000.00 4 days Declined
Montgomery Elizabeth 08/15/95 H 6.50 0
Morrison Jennie H 18,500.00 0 HMO
Murin Karen S 27,300.00 2 HMO
Myers Matt H 7.00 0 HMO
Naylor Faith H 7.00 0 Declined
Negron Georgina H 7.00 0 Not Eligible
Nelsen Ken S 50,000.00 See Attached 2 POS
Oldham Christine H 6.75 0 Declined
Peraza Adriel H 6.50 0 HMO
Peters Ron S 35,350.00 0 Declined
Peters Donna S 16,000.00 2 Declined
Peters Judy H 6.75 0 Declined
Petersen Candance H 5.75 0 Not Eligible
Podurgiel Leon H 6.00 0 HMO
Poole Edwina H 6.50 0 HMO
Portelli Kimberly H 6.00 0 Not Eligible
Prodo Maria H 6.25 0 Declined
Real Laura H 6.00 0 Not Eligible
Reback Debra S 37,250.00 (A) POS
Relford Richard H 6.50 1 Declined
Riordon Michael S 48,000.00 Commissions (A) HMO
Roberson Pernell H 6.25 0 Not Eligible
Rockwell Karen S 25,750.00 0 HMO
Sanchez Patricia H 8.50 0 Declined
Sanjuan Jorlley H 6.50 0 Not Eligible
Sartor Robin 07/13/95 H 5.50 0
Sawyers Karlene S 18,000.00 1 HMO
Seale (D) Jimmy S 42,000.00 4 (C) HMO
Smith Brad 07/28/95 H 8.65 0
Snead April S 19,000.00 0 Declined
Spurlin Tiffany H 6.25 0 Not Eligible
Stallings Stacey 07/21/95 H 5.75 0
Stern Christopher S 18,000.00 1 HMO
Stern Kimberly S 16,000.00 0 HMO
Swift Ben S 30,240.00 Commissions 0 HMO
Thirkill Cindy H 5.75 0 Not Eligible
Thornton Kevin H 6.50 1 Declined
Toole Brenda S 17,500.00 1 HMO
Trout Patricia H 7.50 0 HMO
Truax Michelle H 8.00 0 HMO
Trudel William 08/11/95 H 24,000.00 0
Turk Kimberly 07/30/95 H 6.25 0
Vera Myra H 6.00 0 Not Eligible
Villarin Kristie H 5.00 0 Not Eligible
Wardell Kathy 08/31/95 S 20,700.00 0
Wells Kim S 21,300.00 0 Declined
White Latonya H 6.15 0 Declined
Wilburn Donna S 18,500.00 0 Declined
Williams Charlotte S 21,000.00 2 Declined
Williams Denise H 6.00 0 Declined
Williams Mary 08/12/95 H 6.25 0
Williams Robert S 16,600.00 1 Declined
Wilson Crystal H 6.25 0 HMO
Wilson Eric H 5.75 0 Not Eligible
Wong Shannon H 8.58 2 Declined
Wright Bonita S 22,500.00 0 HMO
Wylie Roger H 7.96 0 Not Eligible
Wynn Reginald H 5.50 0 Not Eligible
Yarbro Rebecca H 8.00 2 Declined
Zapata Bridget H 7.00 0 Declined
<CAPTION>
Health Insurance
401k % of Salary
Employee Coverage Life Dental Coverage Participation Deferral
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Linxwiler Leigh Employee Yes Employee Yes 10%
Longoria Lucy None No No Not Eligible
Lorenzen Robert
Lovett Terrie None No No Yes 4%
Luise Joseph Not Eligible
Lyon Linda Employee Yes Yes Yes 2%
Mangroo Babita Employee YES Employee Not Eligible
Mason Willie Not Eligible
Matney Sherry Employee Yes Employee Not Eligible
McDonald Michelle Not Eligible
McQueen Michelle Not Eligible
McQuery Michael None No Employee/Family Yes 4%
Miller David Not Eligible
Mills Donna Not Eligible
Mitchell Yolanda None No No Yes 3%
Montgomery Elizabeth
Morrison Jennie Employee/Dep Yes Employee Declined
Murin Karen Employee Yes Yes Yes 2%
Myers Matt Employee Yes Employee Yes 2%
Naylor Faith None No Employee Not Eligible
Negron Georgina Not Eligible
Nelsen Ken Employee Yes Employee/Children Yes 4%
Oldham Christine None No No Not Eligible
Peraza Adriel Employee Yes Employee Declined
Peters Ron None No No Yes 4%
Peters Donna None No No Yes 10%
Peters Judy None No No Not Eligible
Petersen Candance Not Eligible
Podurgiel Leon Employee Yes Employee Not Eligible
Poole Edwina Employee Yes Employee Not Eligible
Portelli Kimberly Not Eligible
Prodo Maria None No No Not Eligible
Real Laura Not Eligible
Reback Debra Employee/spouse Yes Employee/spouse Yes 4%
Relford Richard None No No Not Eligible
Riordon Michael Employee/family Yes Employee/family Yes 10%
Roberson Pernell Not Eligible
Rockwell Karen Employee Yes Employee Not Eligible
Sanchez Patricia None No No Not Eligible
Sanjuan Jorlley Not Eligible
Sartor Robin
Sawyers Karlene Employee Yes Employee Declined
Seale (D) Jimmy Employee Yes Employee Declined
Smith Brad
Snead April None No No Yes 4%
Spurlin Tiffany Not Eligible
Stallings Stacey
Stern Christopher Employee Yes Employee Yes 4%
Stern Kimberly Employee Yes Employee Yes 4%
Swift Ben Employee/spouse Yes Employee/spouse Yes 7%
Thirkill Cindy Not Eligible
Thornton Kevin None No Employee/Spouse Declined
Toole Brenda Employee Yes Employee Declined
Trout Patricia Employee Yes Yes Not Eligible
Truax Michelle Employee Yes Employee Yes 3%
Trudel William
Turk Kimberly
Vera Myra Not Eligible
Villarin Kristie Not Eligible
Wardell Kathy Cobra
Wells Kim None No Employee Declined
White Latonya None No No Yes 2%
Wilburn Donna None No No Not Eligible
Williams Charlotte None No No Declined
Williams Denise None No No Not Eligible
Williams Mary
Williams Robert None No Yes Not Eligible
Wilson Crystal Employee Yes Employee Not Eligible
Wilson Eric Not Eligible
Wong Shannon None No No Declined
Wright Bonita Employee Yes Employee/child Declined
Wylie Roger Not Eligible
Wynn Reginald Not Eligible
Yarbro Rebecca None No No Declined
Zapata Bridget None No No Not Eligible
</TABLE>
(A) Vacation and Days Off: These employees are entitled to vacation time
during each fiscal year as they may qualify for in accordance with the
vacation policy establised by the Board of Directors or as may otherwise
be agreed upon between Employer and Employee.
(B) The vacation policy of the Company is as follows:
"All full-time employees are eligible for vacation. Annual vacations
are determined by length of service and are accrued as follows:
<TABLE>
<CAPTION>
Length of Service Vacation Accrued Annually
<S> <C>
One Year One Week
Two Years Two Weeks
Five Years Three Weeks
Ten Years Four Weeks
</TABLE>
Vacation days are not carried over to the next year, nor will they be
reimbursed."
The practice of Check Express is to accrue vacation based on hire dates.
Therefore, if an employee has not taken his/her accrued vacation by the
following anniversary date, they lose the vacation. If the employee
receives approval from the President, Executive Vice President of
Operations, or the Vice President of Finance the vacation days can then
be carried over to subsequent years.
The vacation accrued as of 8/31/95 has been compiled to the best of our
knowledge. Certain salaried employees are not required to submit time
sheets and therefore their accruals may not be accurately reflected.
(C) N. Dehoyos and J. Seale have accrued vacation which has been carried over
to 1995.
(D) R. Goertz, J. Seale and J. Voss were origanally employees of
Check-X-Change and their original hire dates with Check-X-Change are as
follows:
<TABLE>
<S> <C>
Goertz August 1988
Seale August 1990
</TABLE>
<PAGE> 305
SCHEDULE 3.28
October 12, 1995
Page 1
[ ] PRICING
i. Current Standard Fees
CHECK EXPRESS USA, INC.
Average Fee: 3.08% Range: 2-10%
Transaction Fee: $1.25
CHECK-X-CHANGE, INC.
Average Fee: 3.11% Range: 1-10%
CHECK EXPRESS FLORIDA, INC.
<TABLE>
<CAPTION>
Type of Check Rate Type of Service Fee
------------- ---- --------------- ---
<S> <C> <C> <C>
Govt. Assistance 4-2% I.D. $ 5-10
Payroll - Handsigned 6-3% Stamps $ .40
Payroll - Computerized 6-3% Book of Stamps $ 7
Tax Refunds 6-3% Envelopes $ .10
Two Party for Work 10-6% Stamped Envelope $ .50
Two Party 10% Copies $ .05
Personal 10% Faxes (per page) $ 1-2
Drafts 6-3% Notary $ 3-5
Money Orders 10-3% Bus Passes $1.25-40
Other 6-3% Money Orders $.39-.49*
Transaction Fee $1.25
Surcharge $ 20
</TABLE>
CHECK EXPRESS SOUTH CAROLINA, INC.
<TABLE>
<CAPTION>
Type of Check Rate Type of Service Fee
------------- ---- --------------- ---
<S> <C> <C> <C>
Govt. Assistance 6-1.75% Check Cashing Card $ 5
Payroll - Handsigned 6-2% Certified I.D. $ 10
Payroll - Computerized 6-2% Stamps $ .38
Tax Refunds 3% Book of stamps $7.40
Two Party for Work 6-2% Envelope $ .10
Two Party 10% Stamped Envelope $ .50
</TABLE>
<PAGE> 306
SCHEDULE 3.28
October 12, 1995
Page 2
CHECK EXPRESS SOUTH CAROLINA, INC., CONTINUED
<TABLE>
<CAPTION>
Type of Check Rate Type of Service Fee
------------- ---- --------------- ---
<S> <C> <C> <C>
Personal 10% Copy $.10
Drafts 6-3% Faxes (per page) $ 3
Money Orders 6-3% Notary $ 2
Other 6-3%
Transaction Fee $1.25
Surcharge $ 20
</TABLE>
PETERLYN, INC.
<TABLE>
<CAPTION>
Type of Check Rate Type of Service Fee
------------- ---- --------------- ---
<S> <C> <C> <C>
Govt. Assistance 6.9-2.9% Regular I.D. $ 10
Payroll - Handsigned 8-4% Certified I.D. $ 15
Payroll - Computerized 6.9-2.9% Stamps $.39
Tax Refunds 6.9-2.9% Book of stamps $ 7
Two Party for Work 8-3% Stamped envelope $.49
Two Party 10-6% Faxes (per page) $1-2
Personal 10% Notary $ 3
Drafts 6-3% Money Orders $.29*
Money Orders 10-6%
Other 10-2.9%
Transaction Fee $ 1.25
Surcharge $ 40
</TABLE>
* Free to check cashing customers.
<PAGE> 307
SCHEDULE 3.28
October 12, 1995
Page 3
ii. Changes in the Last Twelve Months
CHECK EXPRESS USA, INC.
None
CHECK-X-CHANGE
None
CHECK EXPRESS FLORIDA, INC.
The following stores are currently not charging for the purchase of
money orders:
Check Express 201
8207 N. Florida Ave.
Tampa, FL 33604
Check Express 207
2940 34th St. S.
St. Petersburg, FL 33711
Check Express 253
3254 Central Ave.
St. Petersburg, FL 33705
The following check cashing fees have changed:
Aid for Dependent Children checks: Increased from 1% to
present rate
under "Govt.
Assistance"
Computerized Payroll checks: Increased from 1.75%
to present rate
CHECK EXPRESS SOUTH CAROLINA, INC.
None of the stores in this company are currently charging for money
orders.
The following check cashing fees have changed:
Aid for Dependent Children checks: Increased from 1% to
present rate
<PAGE> 308
SCHEDULE 3.28
October 12, 1995
Page 4
Computerized Payroll checks: Increased from 1.75%
to present rate
PETERLYN, INC.
The following check cashing fees have changed:
Aid for Dependent Children checks: Increased from 1% to
present rate
under "Govt.
Assistance"
Computerized Payroll checks: Increased from 1.75%
to present rate
COST TO PURCHASE FRANCHISE:
FULL SERVICE:
<TABLE>
<CAPTION>
1 Store
Only Contract Option Contract Multi-Store Contract*
------------- --------------- ---------------------
<S> <C> <C> <C>
1st. Store $24,500 $24,500 $24,500
2nd. Store $14,500 $ 7,500 $ 7,500
3rd. Store $10,500 $ 7,500 $ 7,500
4th and after $ 7,500 $ 7,500 $ 7,500
</TABLE>
* Exclusivity is negotiable at the time of the inital purchase.
KIOSK:
1 Store $12,500
2nd and after $7,500
<PAGE> 309
SCHEDULE 4.7
NECESSARY CONSENTS AND APPROVALS
Written consent of American Express Travel Related Services Company, Inc.
("AMEX") is required pursuant to the 1992 Master Agreement between Ace and
AMEX, dated December 1, 1992, as amended.
<PAGE> 310
SCHEDULE 7.1
OCTOBER 12, 1995
SUMMARY OF INDEBTEDNESS OF THE COMPANY AND THE SUBSIDIARIES PERSONALLY
GUARANTEED BY LARRY F. LANG, CEO AND PRESIDENT
Installment Note Payable to SouthTrust Bank of West Florida by Check Express,
Inc. in the amount of $650,000, dated August 31, 1995.
Term Promissory Note Payable to SouthTrust Bank of West Florida by Check
Express, Inc. and Check Express Florida, Inc. in the amount of $880,000 dated
February 10, 1994.
Term Mortgage Loan Payable to SouthTrust Bank of West Florida by Check Express,
Inc. and Check Express Florida, Inc. in the amount of $106,000 dated May 18,
1993.
Term Promissory Note Payable to SouthTrust Bank of West Florida by Check
Express, Inc. and Check Express Florida, Inc. in the amount of $270,000 as
corrected effective January 4, 1993.
Clean Irrevocable Letter of Credit number 95-12 issued on May 10, 1995 by
SouthTrust Bank of West Florida for $50,000 on behalf of Check Express, Inc. in
favor of Titan Indemnity Company.
Clean Irrevocable Letter of Credit number 94-07 issued on March 14, 1994 by
SouthTrust Bank of West Florida for $50,000 on behalf of Check Express, Inc. in
favor of Titan Indemnity Company.
All indebtedness of the Company and the Subsidiaries to SouthTrust Bank is
cross-collateralized and personally guaranteed by Mr. Larry F. Lang, CEO and
President.
Line of Credit provided by Seattle-First National Bank to Peterlyn, Inc. dated
April 26, 1995 and expiring April 30, 1996 in the amount of $200,000.
All indebtedness of the Company and the Subsidiaries to Seattle-First National
Bank is cross-collateralized and personally guaranteed by Mr. Larry F. Lang,
CEO and President.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $500,000 dated December 28, 1994.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $400,000 dated April 11, 1995.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $200,000 dated July 6, 1995.
Term Promissory Note Payable to Republic Bank by Check Express Finance, Inc. in
the amount of $500,000 dated August 31, 1995.
<PAGE> 311
APPENDIX B
OPINION OF FINANCIAL ADVISOR
<PAGE> 312
FIRST EQUITY CORPORATION OF FLORIDA
-----------------------------------
INVESTMENT BANKERS
November 15, 1995
Board of Directors and Shareholders
of Check Express, Inc.
101 East Kennedy Boulevard
Suite 3800
Tampa, FL 33602
Members of the Board and Shareholders:
You have requested our opinion as to the fairness, from a financial point
of view, of the consideration to be received by the shareholders of Check
Express, Inc. (the "Company") in connection with the proposed acquisition of
the Company by Ace Cash Express, Inc. ("Ace"). Pursuant to the Agreement and
Plan of Merger dated October 13, 1995, each share of the Company's Common
Stock shall be converted into and represent the right to receive cash
consideration in the amount of $1.20.
In preparing our opinion, we have relied on the business and financial
information relating to the Company which is publicly available or which has
been furnished to us for the purposes of this opinion. In all cases, we have
assumed that the written and oral information which was furnished to us is
complete and accurate in all respects and we have not attempted to perform any
independent verifications or appraisals with respect to specific assets or
properties.
In arriving at our opinion, we have considered the businesses, financial
condition and prospects of the Company and have had discussions with the senior
management of the Company in respect thereto. Our analysis and evaluation also
included, among other things, a review and evaluation of the following: (i)
information relating to the merger contained in the Agreement and Plan of
Merger; (ii) publicly available information on the Company, including Annual
Reports on Form 10-K or Form 10-KSB for the year ended December 31, 1994 and
Form 10-QSB for the nine months ended September 30, 1995; (iii) historical
market prices and trading
<PAGE> 313
Board of Directors and Shareholders
Check Express, Inc.
November 15, 1995
Page 2
activity for the common stock of the Company; (iv) projected financial and
operating information furnished by the Company; (v) publicly available
financial and stock market information for various publicly traded companies
which were considered to be reasonably similar to the Company. Our analysis
also considered certain industry valuation criteria with respect to certain of
the Company's business components. In addition, we reviewed certain written
indications of interest or offers received by the Company from third parties
other than Ace concerning their interest in pursuing a transaction with the
Company. However, were not asked by the Board of Directors to solicit any
offers for the Company from any other party nor did we seek to obtain any such
offers.
It is understood that this letter is solely for the benefit and use of
the Board of Directors and Shareholders of the Company in their consideration
of the acquisition of the Company by Ace and does not constitute a
recommendation to any holder of the common stock as to whether to vote in favor
of the Agreement and the Plan of the Merger.
On the basis of the foregoing and such other factors as we deemed
relevant, including our assessment of general, economic, market and monetary
trends, we are of the opinion that the consideration to be received by the
holders of the common stock pursuant to the Agreement and Plan of Merger is
fair to such holders from a financial point of view.
Very truly yours,
FIRST EQUITY CORPORATION OF FLORIDA
By: /s/ William R. Fusselmann
-------------------------
William R. Fusselmann
Senior Vice President
<PAGE> 314
APPENDIX C
PROVISIONS OF FLORIDA BUSINESS CORPORATION ACT REGARDING DISSENTERS' RIGHTS
<PAGE> 315
607.1301 DISSENTERS' RIGHTS; DEFINITIONS.--The following definitions apply
to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of the
merger pursuant to s. 607.1104, the day prior to the date on which a copy of
the plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
<PAGE> 316
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.--
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent under
s. 607.1104, and the shareholders would have been entitled to vote on action
taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including a
sale pursuant to a court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be distributed to
the shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of his
shares;
2. Altering or abolishing the voting rights pertaining to any of his
shares, except as such rights may be affected by the voting rights of new
shares then being authorized of any existing or new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of his
shares, when such exchange, cancellation, or reclassification would alter or
abolish his voting rights or alter his percentage of equity in the corporation,
or effecting a reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his redeemable shares,
altering or abolishing any provision relating to any sinking fund for the
redemption or purchase of any of his shares, or making any of his shares
subject to redemption when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of his
preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of his preferred shares;
or
7. Reducing any stated preferential amount payable on any of his preferred
shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of incorporation
provide that a voting or nonvoting shareholder is entitled to dissent and
obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his shares which are
adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered in
his name. In that event, his rights shall be determined as if the shares to
which he has dissented and his other shares were registered in the names of
different shareholders.
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a proposed
sale or exchange of property, to the holders of shares of any class or series
which, on the record date fixed to determine the shareholders entitled to
vote at the meeting of shareholders at which such action is to be acted upon or
to consent to any such action without a meeting, were either registered on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.
<PAGE> 317
(5) A shareholder entitled to dissent and obtain payment for his shares
under this section may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
<PAGE> 318
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.--
(1)(a) If a proposed corporate action creating dissenters' rights under
s. 607.1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of ss. 607.1301, 607.1302, and
607.1320. A shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice
of his intent to demand payment for his shares if the proposed action if
effectuated, and
2. Not vote his shares in favor of the proposed action. A proxy or
vote against the proposed action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each
shareholder simultaneously with any request for his written consent or, if such
a request is not made, within 10 days after the date the corporation received
written consents without a meeting from the requisite number of shareholders
necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to paragraph
(1)(a) or, in the case of action authorized by written consent, to each
shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder
who elects to dissent shall file with the corporation a notice of such
election, stating his name and address, the number, classes, and series of
shares as to which he dissents, and a demand for payment of the fair value of
his shares. Any shareholder failing to file such election to dissent within
the period set forth shall be bound by the terms of the proposed corporate
action. Any shareholder filing an election to dissent shall deposit his
certificates for certificated shares with the corporation simultaneously with
the filing of the election to dissent. The corporation may restrict the
transfer of uncertificated shares from the date the shareholder's election to
dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall
not be entitled to vote or to exercise any other rights of a shareholder. A
notice of election may be withdrawn in writing by the shareholder at any time
before an offer is made by the corporation, as provided in subsection (5), to
pay for his shares. After such offer, no such notice of election may be
withdrawn unless the corporation consents thereto. However, the right of such
shareholder to be paid the fair value of his shares shall cease, and he shall
be reinstated to have all his rights as a shareholder as of the filing of his
notice of election, including any intervening preemptive rights and the right
to payment of any intervening dividend or other distribution or, if any such
rights have expired or any such dividend or distribution other than in cash has
been completed, in lieu thereof at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice oth-
<PAGE> 319
erwise to any corporate proceedings that may have been taken in the interim,
if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is
not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value
for such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such
notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which
it was in existence.
(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his shares shall be made within 90 days after the
making of such offer or the consummation of the proposed action, whichever is
later. Upon payment of the agreed value, the dissenting shareholder shall
cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30
days thereafter, then the corporation, within 30 days after receipt of
written demand from any dissenting shareholder given within 60 days after the
date on which such corporate action was effected, shall, or at its election at
any time within such period of 60 days may, file an action in any court of
competent jurisdiction in the county in this state where the registered office
of the corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting
shareholder, as to whom the corporation requests the court to make such
determination, is entitled to receive payment for his shares. If the
corporation fails to institute the proceeding as herein provided, any
dissenting shareholder may do so in the name of the corporation. All
dissenting shareholders (whether or not residents of this state), other than
shareholders who have agreed with the corporation as to the value of their
shares, shall be made parties to the proceeding as an action against their
shares. The corporation shall serve a copy of the initial pleading in such
proceeding upon each dissenting shareholder who is a resident of this state in
the manner provided by law for the service of a summons and complaint and upon
each nonresident dissenting shareholder either by registered or certified mail
and publication or in such other manner as is permitted by law. The
jurisdiction of the court is plenary and exclusive. All shareholders who are
proper parties to the proceeding are entitled to judgment against the
corporation for the amount of the fair value of their shares. The court may,
if it so elects, appoint one or more persons as appraisers to receive evidence
and recommend a decision on the question of fair value. The appraisers shall
have such power and authority as is specified in the order of their appointment
or an amendment thereof. The corporation shall pay each dissenting shareholder
the amount found to be due him within 10 days after final determination of the
proceedings. Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the
shares, if the court finds that the action of such shareholders in failing to
accept such offer was arbitrary, vexatious, or not in good faith. Such
expenses shall include reasonable compensation for, and reasonable expenses of,
the appraisers, but shall exclude the fees and expenses of counsel for, and
experts employed by, any party. If the fair value of the shares, as
determined, materially exceeds the amount which the corporation offered to pay
therefor or if no offer was made, the court in its discretion may award to any
shareholder who is a party to the proceeding such sum as the court determines
to be reasonable compensation to any attorney or expert employed by the
shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of
a merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of
such dissenting shareholders would have been converted had they assented to
the merger shall have the status of authorized but unissued shares of the
surviving corporation.
<PAGE> 320
APPENDIX D
AGREEMENT AND RELEASE ("LANG SEVERANCE AGREEMENT")
<PAGE> 321
AGREEMENT AND RELEASE
This Agreement and Release ("Agreement"), dated as of October 13, 1995
and effective as of the Effective Date (as hereinafter defined), is by and
among Ace Cash Express, Inc., a Texas corporation ("Ace"), Check Express, Inc.,
a Florida corporation (the "Company"), and Larry Lang ("Lang").
WHEREAS, Lang is employed by the Company and currently serves as its
Chairman of the Board, President and Chief Executive Officer; and
WHEREAS, a wholly-owned subsidiary of Ace is merging (the "Merger")
with and into the Company, and the Company will survive the merger as a
wholly-owned subsidiary of Ace; and
WHEREAS, the Company and Lang are parties to that certain Employment
Agreement, dated as of April 1, 1995 (the "Employment Agreement"); and
WHEREAS, Lang's execution and delivery of this Agreement is a
condition to the obligations of Ace to consummate the Merger; and
WHEREAS, the Company and Lang desire to enter into this Agreement to
set forth, among other things, all of the terms of the conclusion of Lang's
employment by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration the
receipt of which are hereby acknowledged, the parties hereto agree as follows:
1. EFFECTIVE DATE. This Agreement shall be effective on the date
the Merger is filed and effective with the Department of State of the State of
Florida (the "Effective Date").
2. EMPLOYMENT AGREEMENT. The Company and Lang each has a true and
complete counterpart original of the Employment Agreement and acknowledges and
represents that before entering into this Agreement each understands the
rights, obligations and benefits under the Employment Agreement.
3. RESIGNATION. In view of various provisions of the Employment
Agreement, including but not limited to Lang's obligation to serve as a
full-time employee of the Company until March 31, 2000, the Company desires to
terminate the Employment Agreement subject, however, to Lang's agreement to the
termination and to his resignation. It is mutually agreed that Lang's
resignation shall be accepted on, and effective as of, the Effective Date.
Lang agrees to execute a letter of resignation to the Company's Board of
Directors, simultaneously with his execution and delivery of this Agreement.
<PAGE> 322
4. TERMINATION OF EMPLOYMENT AGREEMENT AND SETTLEMENT OF RELATED
MATTERS. The Company and Lang hereby agree as follows:
(a) The Employment Agreement is hereby terminated, in all respects
and for all purposes, by mutual consent and agreement of the Company and Lang,
effective as of the Effective Date, provided that Section 10 thereof shall, to
the fullest extent permitted by applicable law, survive and remain in force and
effect in accordance with the terms of such Section 10.
(b) Lang hereby fully and forever releases the Company, and any
affiliate, representative, officer, assignee, or delegatee of the Company, and
waives (i) any and all rights arising under the Employment Agreement, (ii) any
and all breaches and violations, if any, that have ever existed or now exist,
whether known or unknown, of the Employment Agreement, and (iii) all rights
relating to his employment by the Company or any affiliate of the Company,
including but not limited to any right, obligation or benefit under or by
virtue of the Employment Agreement and any right or benefit in any bonuses,
pension or profit sharing plan, insurance benefits and other fringe benefits or
perquisites; provided, however, that Lang does not release the Company or any
affiliate to extent of any rights to indemnification to which Lang is entitled
pursuant to the Company's Articles of Incorporation or By-Laws or Section
607.0850 of the Florida Business Corporation Act of 1989, as amended. As used
in this Agreement, the term "affiliate" means, unless otherwise provided, any
person or entity controlling, controlled by, or under common control with the
Company.
(c) The Company agrees to pay Lang severance payments totaling
$287,000, which payments shall be made in monthly installments of $11,958, of
which $10,833 shall be paid in cash in accordance with the Company's normal
payroll procedures during the period and $1,125 shall be paid as a credit to
Lang's indebtedness to the Company, commencing on the Effective Date and ending
on the second anniversary thereof. In addition, for 18 months after the
Effective Date, the Company shall reimburse Lang for premium payments paid by
Lang to continue his Company health insurance under the Consolidated Omnibus
Budget Reconciliation Act of 1986, as amended; provided, however, that the
Company shall not be obligated to reimburse Lang to the extent such premium
payments exceed $120 per month. Notwithstanding anything to the contrary
contained herein, all payments to be paid by the Company to Lang shall be
subject to any applicable withholding requirements.
(d) The Company hereby accepts the written resignation of Lang
submitted to the Company, effective on the Effective Date.
(e) Lang hereby acknowledges, represents and agrees with the
Company that as of the date of this Agreement, he has received, in full, all
amounts of salary, bonuses, compensation, reimbursements, vacations, holidays,
leaves of absences, allowances, and other
2
<PAGE> 323
moneys, payments, properties and benefits of any kind or nature to which he at
any time has been or might have been or now is or may be entitled, from the
Company or any affiliate of the Company.
(f) Lang hereby agrees with the Company that nothing in this
Agreement is intended to affect, impair, modify or terminate any contractual or
other legal rights that Lang may have with any insurance company or companies
under or with respect to benefits that have been provided by the Company to its
employees generally and in which Lang has or may have had an employee benefit
or coverage, provided that the Company shall have no obligation to provide or
maintain any benefits except as provided herein; and Lang, at his option and at
his sole cost and expense (except for amounts reimbursed by the Company
pursuant to Section 4(c)) may, within the time permitted by or applicable to
such plan or plans or the policy or policies issued under such plan or plans,
elect to continue coverage for up to eighteen (18) months following the
Effective Date to the extent and on the terms permitted by such plan or plans,
subject to the Employee Retirement Income Security Act of 1974 ("ERISA") and
the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended
("COBRA"), and to the regulations under each of such Acts. Notwithstanding any
other provision of this Agreement to the contrary, all provisions of this
Section 4(f) are subject to ERISA and COBRA and to the regulations under each
of such acts, and nothing in this Agreement is intended to waive, modify or
release any duties or rights of the Company or of any trustee or insurance
company under any of such acts or regulations or under any regulations issued
by the U.S. Department of Labor or the Internal Revenue Service relating or
applicable to any of the plans or insurance policies mentioned in this Section
4(f).
(g) Except as herein expressly provided to the contrary, in
consideration of the Company's agreement herein and in exchange for the
payments to be made by the Company hereunder, Lang (on his behalf and on behalf
of his heirs, executors, legal administrators, successors and assigns) hereby
knowingly and voluntarily releases and waives any and all of his rights and
claims, if any, against the Company or any affiliate of the Company, or any
shareholder, director, officer, employee or agent of any of such entities,
existing or arising or which may exist or arise, at any time prior to and
including the date of the execution of this Agreement by the Company and the
Effective Date: (i) from any and all claims and causes of action of any
nature which have accrued or which may ever accrue under the Civil Rights Act
of 1964, as amended, Title VII, 42 U.S.C. Section 2000e et seq.; the Texas
Human Rights Commission Act, Texas Labor Code Chapter 21; the Equal Pay Act, 29
U.S.C. Section 206(b); the Age Discrimination in Employment Act, 29 U.S.C.
Section 261 et seq., as amended; the Employee Retirement Income Security Act of
1974, as amended, 28 U.S.C. Section Section 1001-1461 (1982); the Americans
with Disabilities Act of 1990, 42 U.S.C. Section 12101 et seq.; the Florida
Civil Human Rights Act of 1992, Section 7601.1 to 760.11 and
3
<PAGE> 324
509.092 of the Florida Annotated Statutes, as amended (ii) under any offer of
employment letter, employee manual or handbook, or written employment
agreement, and (iii) from any claims for unpaid wages, bonuses, salary, or
expenses; as well as any claims (A) of defamation, (B) for infliction of
emotional distress, including any mental pain and suffering, and (C) in tort or
contract for wrongful discharge, or breach of contract under any state laws or
decisions (except that this Agreement does not affect any claims or rights that
may arise in Lang's behalf under the Age Discrimination in Employment Act, 29
U.S.C. Section 261, et seq., as amended after the date of the execution of
this Agreement), during or by reason of Lang's employment and separation from
that employment with the Company.
(h) Except as herein expressly provided to the contrary, Lang, on
behalf of himself, his heirs, executors, administrators, personal
representatives, successors and assigns, fully and forever releases, acquits
and discharges the Company, and any affiliates of the Company, and any
shareholders, directors, officers, employees and agents, and the respective
heirs, executors, administrators, personal representatives, successors and
assigns of each and all of such entities and persons, jointly and severally,
from and of any and all claims, demands, causes of actions, duties,
liabilities, obligations, damages, suits, and judgments, whether known or
unknown, liquidated or unliquidated, fixed or contingent, direct or indirect,
in tort or in contract, and whether now existing or hereafter arising, which
Lang at time ever had, has or ever can, shall, or may have or claim to have,
arising or to arise under, out of, or in relation to his employment or
separation from employment, the Employment Agreement, and any other agreement,
arrangement or understanding, or any thereof, from the beginning of time to and
including the date of this Agreement and the Effective Date.
(i) Each of the agreements, covenants, representations,
warranties, consents, acknowledgments, receipts, releases, and waivers by Lang
contained in this Agreement constitutes a material inducement to the Company to
enter into and to perform this Agreement, and the Company would not enter into
this Agreement but for all of such inducements by Lang. Each of the
agreements, covenants, representations, warranties, consents, acknowledgments
and receipts by the Company contained in this Agreement constitutes a material
inducement to Lang to enter into and to perform this Agreement, and Lang would
not enter into this Agreement but for all of such inducements by the Company.
5. CONSULTING SERVICES. The Company hereby engages Lang to
render consulting services to the Company upon the terms and conditions set
forth in this Section 5. From the Effective Date until one year from the
anniversary date of the Effective Date, Lang hereby agrees to perform services
to or for the benefit of the Company by completing such tasks and projects as
may be requested from time to time by the Company, provided, however, that Lang
is not required to provide consulting services to the Company
4
<PAGE> 325
hereunder to the extent it would unreasonably interfere with Lang's full time
employment or vacations of reasonable duration and at reasonable intervals or
if Lang is disabled by illness. All services rendered by Lang on behalf of the
Company shall be performed to the best of his abilities and in furtherance of
the welfare and objectives of the Company, provided, further, that the Company
shall give Lang reasonable advance notice of any consulting services requested
hereunder that require more than telephone consultation with officers or
employees of the Company. The Company shall reimburse Lang for reasonable
out-of-pocket expenses incurred by Lang in performing his obligations under
this Section 5.
6. AGREEMENT NOT TO COMPETE.
(a) To induce the Company to enter into this Agreement, Lang
agrees, for a period of three years after the Effective Date, not to, directly
or indirectly, for his own account or for the account of others, as an officer,
director, stockholder (other than investments in publicly-owned corporations
which constitute not more than 1% of the voting securities of any such
corporations), owner, partner, employee, promoter, consultant, manager, or
otherwise, participate in the solicitation, promotion, financing, ownership,
operation, or management of, or assist in or carry on through a proprietorship,
corporation (other than investments in publicly-owned corporations which
constitute not more than 1% of the voting securities of any such corporations),
partnership, or other form of business entity or otherwise, compete with any
check cashing business within any metropolitan area in which the Company, Ace
or any of their subsidiaries operates check cashing stores as of the Effective
Date.
(b) Lang additionally acknowledges that during the term of Lang's
covenant not to compete, Lang will not, directly or indirectly, induce or
attempt to induce any of the Company's or its affiliates' employees (other than
Gregg Bacon, Cliff Dodge, and Sara Ally) to leave their employment or commit or
perform any of the acts prohibited to Lang, nor will Lang in any other way
interfere with the employee relations of the Company or affiliates of the
Company.
(c) Lang acknowledges that the provisions of this Section 6 are
reasonable and necessary for the protection of the Company and that the Company
will be irrevocably damaged if such provisions are not specifically enforced.
Accordingly, in the event of breach or threatened breach of the provisions of
this Section 6, it is understood and agreed that the Company shall be entitled
to injunctive relief (without bond or other security being required) as well as
any and all other applicable remedies at law and in equity. Should a court of
competent jurisdiction declare any of these provisions unenforceable due to an
unreasonable restriction of duration or geographical area, or for any other
reason, such
5
<PAGE> 326
court shall have the express authority of the parties to this Agreement to
reform such provisions or to grant the Company any and all other relief, at law
or in equity, reasonably necessary to protect the interests of the Company and
give effect to the agreement of the parties set forth herein.
7. FRANCHISE. The Company agrees to sell Lang, at his option,
franchises for Company check cashing stores pursuant to an Agreement to Grant
Franchise to be entered into by Lang, the Company and Check Express USA, Inc.,
substantially in the form attached as Exhibit "C" hereto.
8. ASSISTANCE IN DISPOSING OF CHECK EXPRESS FINANCE, INC. If (a)
Lang provides the initial introduction to Ace of a purchaser of Check Express
Finance, Inc. ("CEF"), a wholly-owned subsidiary of the Company, (b) such
introduction is evidenced by a written, dated notice to Ace, and (c) Ace or the
Company thereafter sells the capital stock or substantially all of the assets
and business of CEF to such purchaser within one year of the date of such
introduction, then Ace or the Company shall pay Lang a sales commission in an
amount equal to 10% of the gain on the sale of CEF, which gain shall be
determined in accordance with generally accepted accounting principles.
9. RELEASE OF GUARANTEES. The Company shall use its reasonable
best efforts to obtain the release of Lang's personal guarantees of the
liabilities of the Company set forth on Schedule B hereto (each a "Lang
Guarantee"); provided, however, that the Company shall have no obligation
hereunder to provide any financial incentive to, or institute or threaten to
institute any legal proceeding against, any third party as a means of obtaining
such release. Ace or the Company shall repay any liability that is subject to
a Lang Guarantee if such Lang Guarantee has not been released within 60 days
after the Effective Date.
10. CONTINUED RELATIONS. Lang agrees not to serve as a voluntary
expert witness in any lawsuit or legal proceeding against the Company or its
affiliates, assigns, successors, agents, attorneys, directors, officers, or
employees. Lang shall make himself available, upon the request of the Company,
to testify or otherwise assist the Company or its affiliates in any litigation,
arbitration or dispute involving any such parties. The Company shall reimburse
Lang for all reasonable costs and expenses incurred in compliance with this
Section 10.
11. BREACH OF PROVISIONS. If Lang fails or refuses to abide by
the provisions of this Agreement other than Section 5 hereof, the Company shall
have no further obligations to Lang under this Agreement or the Employment
Agreement, but Lang shall remain bound by all provisions of this Agreement,
including but not limited to his waiver of any rights of any kind released
herein. Nothing in this Section 11 waives any rights to indemnification to
which Lang
6
<PAGE> 327
is entitled pursuant to the Company's Articles of Incorporation or By-Laws or
Section 607.0850 of the Florida Business Corporation Act of 1989, as amended.
If Lang has received any payments under this Agreement, and breaches the
provisions of this Agreement other than Section 5, then Lang shall be obligated
to repay the Company for all such sums received. Lang shall have the right to
cure any First Default (as hereinafter defined), other than a default of his
obligations pursuant to Section 5 hereof, within ten days from the date the
Company gives Lang notice of such default. A "First Default" shall mean a
default of Lang's obligations hereunder if the Company has not previously given
Lang a notice of default for a similar obligation pursuant hereto.
12. PRIOR RIGHTS AND OBLIGATIONS. This Agreement extinguishes all
rights, if any, which Lang may have, and obligations, if any, which the Company
or its subsidiary may have, contractual or otherwise, relating to the
employment or termination of employment of Lang with the Company or affiliates
of the Company.
13. PROPRIETARY AND CONFIDENTIAL INFORMATION. In accordance with
Lang's existing and continuing obligations, Lang agrees and acknowledges that
the Company and its subsidiary have developed and own unique and valuable
proprietary and confidential information, including, without limitation,
concepts, ideas, plans, strategies, analyses, surveys, and proprietary
information relating to the past, present or anticipated business of the
Company and its subsidiary ("Proprietary and Confidential Information").
Except as may be required by law, Lang agrees that he will not at any time
disclose to others, permit to be disclosed, use, permit to be used, copy or
permit to be copied, any Proprietary and Confidential Information (whether or
not developed by him) without the Company's prior written consent, which
consent may be withheld in the Company's sole discretion. Except as may be
required by law, Lang further agrees to maintain in confidence all Proprietary
and Confidential Information received or of which he has knowledge as a result
of his employment or involvement with the Company or its subsidiary.
14. DOCUMENTS. Lang agrees to leave at the Company's headquarters
or deliver to the Company on or before the Effective Date all analyses,
correspondence, data and information, memoranda, notes, records, and other
documents, including charts, drawings and maps and all copies thereof, made,
composed or received by Lang, solely or jointly with others, and which are in
Lang's possession, custody or control and which are related in any manner to
the past, present or anticipated business of the Company or its subsidiary. In
this regard, Lang hereby grants and conveys to the Company all right, title and
interest in and to, including without limitation, the right to possess, print,
copy, and sell or otherwise dispose of, any data, drawings, information,
papers, photographs, records, reports, summaries, or other documents in
writing, and copies,
7
<PAGE> 328
abstracts or summaries thereof, which may have been prepared by Lang or under
his direction or which may have come into his possession in any way during the
term of his employment with the Company or its subsidiary and which relate in
any manner to past, present or anticipated business of the Company or its
subsidiary.
15. COOPERATION. Lang shall cooperate with the Company to the
extent reasonably required in all matters relating to the winding up of his
pending work on behalf of the Company or its subsidiary and the orderly
transfer of any such pending work as designated by the Company. Lang shall
take such further action and execute documents as may be reasonably necessary
or appropriate in order to carry out the provisions and purposes of this
Agreement.
16. NON-ADMISSION OF LIABILITY. The payment of the consideration
by the Company pursuant hereto is not to be taken or understood as an admission
of liability by the Company or any person, firm or entity released herein.
17. INDEMNITY. Subject to the terms and conditions of this
Section 17, Ace hereby agrees to indemnify, defend, and hold Lang harmless from
and against any and all costs, loss, liability, damages, lawsuits, claims and
expenses (collectively, "Damages") asserted against or incurred by him by
reason of or resulting from his performance of the Lang Guarantees. Subject to
the terms and conditions of this Section 17, Lang hereby agrees to indemnify,
defend, and hold the Company, Ace and their respective subsidiaries, officers,
directors, shareholders, employees, consultants or agents, harmless from and
against any and all Damages asserted against or incurred by any of them by
reason of or resulting from all claims and causes of action of any nature,
which may be asserted by any person, firm, or entity for any relief claimed to
be due Lang and released by this Agreement. Lang further agrees to indemnify
and hold harmless the Company, and all such other parties, from and against all
Damages asserted against or incurred by any such parties by reason of or
resulting from Lang's failure to make payments of any income tax or for
employee federal and/or state tax contributions (or for penalties or interest
thereon) that were or are personal obligations of Lang and were or are required
to be paid or collected by Lang. Such indemnification shall be for such
amounts as may be required to be paid, if any, by the Company or any such other
party to such appropriate governmental agency, including but not limited to the
Internal Revenue Service. The obligations and liabilities under this Section
17 shall be subject to the following terms and conditions:
(a) Promptly after receipt of notice of commencement of any action
evidenced by service of process or other legal pleading, and in any event
within such period as may be necessary in order that the rights of any
indemnifying party shall not be prejudiced after the assertion in writing of
any other claim by a third party, the
8
<PAGE> 329
indemnified parties shall give the indemnifying parties written notice thereof
together with a copy of such claim, process or other legal pleading, and any
indemnifying party shall have the right to undertake the defense thereof by
representatives of his or its own choosing and at his or its own expense;
provided, however, that any indemnified party may participate in the defense
with counsel of his or its own choice and at his or its own expense.
(b) If no indemnifying party, by the 30th day after notice of any
such claim has been given to him or it by any indemnified parties (or, if
earlier, by the 5th day preceding the day on which an answer or other pleading
must be served in order to prevent judgment by default in favor of the person
asserting such claim), does not notify the indemnified parties that it or he
has elected to defend against such claim, then the indemnified parties shall
have the right to undertake the defense, compromise, or settlement of such
claim on behalf of and for the account and risk of the indemnifying parties and
at the indemnifying parties' expense, subject to the right of indemnifying
parties to assume the defense of such claims at any time prior to settlement,
compromise or final determination thereof. The indemnified parties shall
notify indemnifying parties of any proposed settlement no later than three days
before such settlement is effected.
(c) Notwithstanding anything to the contrary contained herein, an
indemnifying party shall not settle any claim without the consent of each
indemnified party, unless such settlement involves only the payment of money
and the claimant provides to each indemnified party, in form and substance
satisfactory to that party, a release from all liability in respect of such
claim. If the settlement of the claim involves more than the payment of money,
the indemnifying parties shall not settle the claim without the prior written
consent of each indemnified party, which consent shall not be unreasonably
withheld.
(d) The parties hereto shall each cooperate with all reasonable
requests of the other.
18. CONSULTATION WITH AN ATTORNEY. Lang acknowledges that he has
consulted with his personal attorney regarding the contents of this Agreement
and its meaning. Prior to the execution of this Agreement, Lang has had a
reasonable period of time, which is not less than 21 days, within which to
consider this Agreement, and he understands the terms and conditions of this
Agreement and agrees to abide by this document, and he knowingly and
voluntarily executes it without hidden reservations. Lang acknowledges that he
had a period of at least seven days following his execution of this Agreement
to revoke this Agreement, and he delivered this Agreement and his executed
Non-Revocation Statement (the form of which is set forth on Exhibit B hereto)
to the Company after the expiration of such seven-day period.
9
<PAGE> 330
19. RESPONSIBILITY FOR ATTORNEY'S FEES. The Company shall
reimburse Lang for his reasonable attorneys' fees and expenses in connection
with the negotiation and execution of this Agreement; provided, however, that
the Company shall not be obligated to reimburse Lang for fees and expenses in
excess of $1,000. Lang further agrees that he is fully responsible for any
attorneys' fees incurred by him and will indemnify and hold harmless the
Company and the other persons and entities released in this Agreement from and
against any other claims or fees asserted by any attorney claiming attorneys'
fees or costs (other than the fees and expenses to be reimbursed by the Company
pursuant to this Section 19) in connection with his employment or separation
from employment with the Company or its affiliates, or any rights or claims
released by this Agreement.
20. NON-ASSIGNMENT. Lang affirms that he has not assigned,
pledged, sold, transferred, or otherwise conveyed any right, claim, or interest
that he has or may have in any matters released herein.
21. TAXES. Lang specifically agrees to pay all federal income
taxes for which he is liable as a result of the payments provided for in
Section 4 of this Agreement.
22. WAIVER. The failure at any time of any party to this Agreement
to require performance by another party of any provision of this Agreement
shall in no way affect the right to require full performance at any time
thereafter, nor shall the waiver by any party of a breach of or default under
any provision of this Agreement be taken or held to be or operate as a waiver
of any succeeding breach or default, whether similar to or different from the
breach or default waived, or as a waiver of the provision itself. No provision
of this Agreement, or breach of or default under any provision of this
Agreement, may be waived except in a writing, signed by the party charged with
such waiver.
23. NOTICE. Any and all notices and other communications required
or permitted to be given under this Agreement shall be given in writing and
shall be sent by (i) United States mail, postage prepaid, registered or
certified mail, return receipt requested, or (ii) personal delivery, or (iii)
expedited delivery service with proof of delivery, or (iv) prepaid telegram or
telex or fax (provided that such telegram or telex or fax is confirmed by
expedited delivery service or by mail in the manner previously described),
addressed as follows:
If to the Company or Ace:
Check Express, Inc.
101 E. Kennedy Blvd., Suite 2700
Tampa, Florida 33602
Attention: President
10
<PAGE> 331
and
Ace Cash Express, Inc.
1231 Greenway Drive, Suite 800
Irving, Texas 75038
Attention: Donald H. Neustadt, President
With a copy (which shall not
constitute notice) to:
Gardere & Wynne, L.L.P.
1601 Elm, Suite 3000
Dallas, TX 75201
Attention: Larry Schoenbrun
If to Lang:
Larry F. Lang
1002 South Harbour Island Blvd.
Unit 1501
Tampa, Florida 33602
With a copy (which shall not
constitute notice) to:
Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
One Tampa City Center
Suite 2100
Tampa, Florida 33601
Attention: Joseph W. N. Rugg, Esq.
Change of any such address shall be valid if and when notice of such change is
given to the other party in accordance with this Agreement. Any such notice or
other communication shall be deemed to have been given either at the time of
personal delivery or, in the case of delivery service or mail, as of the date
of first attempted delivery at the address and in the manner provided herein,
or in the case of telegram or telex or fax, upon receipt.
24. NO DEROGATORY COMMENTS. Lang shall refrain from making
public or private comments relating to Ace, the Company or their affiliates
that are derogatory or that may intend to injure any such party in its or their
business, public or private affairs other than comments made as part of a legal
proceeding between the parties hereto.
25. RESOLUTION OF CLAIMS AND DISPUTES. To the extent permitted
under applicable law, the parties hereto agree as follows:
11
<PAGE> 332
(a) Binding Arbitration. Any legal proceeding, action, dispute,
claim or controversy of any kind (whether in contract or in tort, statutory or
common law, legal or equitable) now existing or hereafter arising
(collectively, the "Disputes") between Lang, the Company or Ace that in any way
arises out of, pertains to or is connected with this Agreement shall, to the
extent not prohibited by law, be determined by arbitration in accordance with
the Employment Arbitration Rules of the American Arbitration Association. Such
arbitration shall take place within a reasonably prompt period of time, but in
no event later than 180 days after a request for arbitration is made to the
American Arbitration Association by Lang, the Company or Ace. If for any
reason such arbitration does not take place within said time, it shall commence
as soon thereafter as reasonably practicable. Judgment upon the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof.
All statutes of limitations that would otherwise be applicable shall apply to
any Disputes asserted in any arbitration proceeding hereof.
(b) No Waiver; Preservation of Remedies. To the extent permitted
by applicable law, no provision of, or the exercise of any rights under Section
25(a) shall limit the right of Lang, the Company or Ace to provisional or
ancillary remedies, including, but not limited to, injunctive relief, writ of
attachment, or protective order from a court of competent jurisdiction before,
after, or during the pendency of any arbitration. To the extent permitted by
applicable law, provisional or ancillary remedies shall not be deemed
inconsistent with, and shall not constitute a waiver of, the right of any party
to submit any controversy or claim to arbitration as provided in Section 25(a).
(c) Scope of Awards. The arbitrators shall resolve all Disputes
in accordance with the applicable substantive law. A single arbitrator shall
be chosen and shall decide the Dispute.
(d) Miscellaneous. To the extent permitted by applicable law, the
arbitrator shall have the power to award recovery of all costs and fees
(including attorneys' fees, administrative fees and arbitrators' fees) to the
prevailing party. Each party agrees to keep all Disputes and arbitration
proceedings strictly confidential, except for disclosures of information
required in the ordinary course of business of the parties or by applicable law
or regulation. If the provisions of this Section 25 are inconsistent with the
Employment Arbitration Rules of the American Arbitration Association, then the
provisions of this Section 25 shall control.
26. MISCELLANEOUS PROVISIONS.
(a) The parties agree that the existence, terms and conditions of
this Agreement shall be kept confidential, except as may be required by law.
12
<PAGE> 333
(b) If any provision of this Agreement is held to be void,
illegal, or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable and this Agreement shall
be construed and enforced as if such void, illegal, or unenforceable provision
never comprised a part hereof, and the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected in any way by
the void, illegal, or unenforceable provision or by its severance.
Furthermore, in lieu of such severed provision, there shall be added
automatically as part of this Agreement a provision as similar in its terms to
such severed provision as may be possible and be valid, legal, and enforceable.
(c) If legal action is ever necessary to enforce any provision of
this Agreement, the prevailing party shall be entitled to payment of its
attorneys' fees and court costs incurred in instituting and sustaining such
legal action.
(d) This Agreement sets forth the entire agreement between the
parties, and supersedes any and all earlier agreements or understandings
between the parties pertaining to the subject matter of this Agreement.
(e) This Agreement shall be construed and enforced in accordance
with the laws of the State of Texas (without regard to the choice of law rules
thereof).
(f) This Agreement shall inure to the benefit of and be binding
upon the Company, Ace, their successors and assigns, and Lang, his heirs,
executors, administrators, personal representatives, successors and assigns.
(g) This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original, and
such counterparts together shall constitute only one original.
[THE IMMEDIATELY FOLLOWING PAGE IS THE SIGNATURE PAGE.]
13
<PAGE> 334
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
/s/ Larry F. Lang
--------------------------------------
Larry F. Lang
Ace Cash Express, Inc.
By: /s/ Donald H. Neustadt
-----------------------------------
Its: President
-------------------------------
Check Express, Inc.
By: /s/ Decker A. Todd
-----------------------------------
Its: Vice President of Finance, CFO
-------------------------------
14
<PAGE> 335
SCHEDULE B
SUMMARY OF INDEBTEDNESS OF THE COMPANY AND THE SUBSIDIARIES PERSONALLY
GUARANTEED BY LARRY F. LANG, CEO AND PRESIDENT
Installment Note Payable to SouthTrust Bank of West Florida by Check Express,
Inc. in the amount of $650,000, dated August 31, 1995.
Term Promissory Note Payable to SouthTrust Bank of West Florida by Check
Express, Inc. and Check Express Florida, Inc. in the amount of $880,000 dated
February 10, 1994.
Term Mortgage Loan Payable to SouthTrust Bank of West Florida by Check Express,
Inc. and Check Express Florida, Inc. in the amount of $106,000 dated May 18,
1993.
Term Promissory Note Payable to SouthTrust Bank of West Florida by Check
Express, Inc. and Check Express Florida, Inc. in the amount of $270,000 as
corrected effective January 4, 1993.
Clean Irrevocable Letter of Credit number 95-12 issued on May 10, 1995 by
SouthTrust Bank of West Florida for $50,000 on behalf of Check Express, Inc. in
favor of Titan Indemnity Company.
Clean Irrevocable Letter of Credit number 94-07 issued on March 14, 1994 by
SouthTrust Bank of West Florida for $50,000 on behalf of Check Express, Inc. in
favor of Titan Indemnity Company.
All indebtedness of the Company and the Subsidiaries to SouthTrust Bank is
cross-collateralized and personally guaranteed by Mr. Larry F. Lang, CEO and
President.
Line of Credit provided by Seattle-First National Bank to Peterlyn, Inc. dated
April 26, 1995 and expiring April 30, 1996 in the amount of $200,000.
All indebtedness of the Company and the Subsidiaries to Seattle-First National
Bank is cross-collateralized and personally guaranteed by Mr. Larry F. Lang,
CEO and President.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $500,000 dated December 28, 1994.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $400,000 dated April 11, 1995.
Term Promissory Note Payable to Southern Commerce Bank by Check Express, Inc.
in the amount of $200,000 dated July 6, 1995.
Term Promissory Note Payable to Republic Bank by Check Express Finance, Inc. in
the amount of $500,000 dated August 31, 1995.
<PAGE> 336
EXHIBIT C
AGREEMENT TO GRANT FRANCHISES
This Agreement is entered into as of this 13th day of October, 1995,
by and between ACE CASH EXPRESS, INC. ("Ace"), a Texas corporation, CHECK
EXPRESS, INC. (the "Company"), a Florida corporation, CHECK EXPRESS USA, INC.
("CEUSA"), a Florida corporation, and LARRY F. LANG ("Lang").
WHEREAS, Ace, the Company and Lang are parties to that certain
Agreement and Release dated October 13, 1995, wherein Lang has terminated his
employment with the Company, and
WHEREAS, the parties have agreed that Lang shall have the limited
right to open check cashing stores under franchise agreements with Ace,
Company, CEUSA, or an affiliate of any of them in accordance herewith, and
WHEREAS, Ace, the Company, CEUSA and Lang desire to enter into this
Agreement to set forth, among other things, all of the terms under which
franchises will be granted to Lang.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, to induce Lang to enter into the Agreement and Release and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. GRANT OF RIGHTS. For a period of ten (10) years from the date of this
Agreement, Lang shall have the right to open up to ten (10) franchised check
cashing stores under franchise agreements with (i) CEUSA, and (ii) so long as
the Company, Ace or any affiliate of any of them is offering to franchise check
cashing stores to third parties, such of the Company, Ace or such of their
affiliates as is then offering to franchise check cashing stores to third
parties. The right to open franchised stores under this Agreement shall
terminate three (3) years from the date hereof if Lang has failed to open at
least one store pursuant to this Agreement by such date.
2. FRANCHISE AGREEMENT. Each franchise agreement executed pursuant hereto
between Lang and the franchising party ("Franchisor") shall be substantially in
the form of the franchise agreement attached hereto as Exhibit A and shall
license Lang in any event to use all of the proprietary marks of Franchisor
which are used in connection with Franchisor's check cashing business.
3. ADDENDUM TO FRANCHISE AGREEMENT. The Addendum attached hereto as
Exhibit B shall be an addendum to, and become a part of, each franchise
agreement executed between Lang and Franchisor evidencing franchises granted
pursuant to this Agreement.
<PAGE> 337
4. INITIAL ROYALTY PAYMENT. Notwithstanding the terms set forth in Exhibit
A and Exhibit B, no royalty payments shall be due and payable on the initial
store franchised pursuant to this Agreement until the thirteenth month
following the opening to the public of such initial store.
5. TERMS NO LESS FAVORABLE. In the event Franchisor grants franchises to
others under terms which are more favorable to the franchisee than the terms
contained in the form of franchise agreement attached hereto as Exhibit A or in
the addendum attached hereto as Exhibit B, Lang shall have the option to amend
the terms of any franchise agreement entered into by Lang (or such other party
as provided in Section 6 below, who shall be deemed an intended third party
beneficiary hereof) pursuant to this Agreement to incorporate those terms which
Lang deems to be more favorable, but only so long as the franchisee under such
Franchise Agreement is Lang or a corporation, partnership, trust or other
business entity in which Lang, his spouse, his children, or a trust of which
Lang, his spouse and/or his children are the sole beneficiaries owns no less
than a majority of all equity interests.
6. RIGHTS OF LANG. The rights of Lang to open franchise stores pursuant to
this Agreement may be assigned from time to time by Lang to any corporation,
partnership, trust or other business entity in which Lang, his spouse, his
children, or a trust of which Lang, his spouse and/or his children are the sole
beneficiaries owns no less than a majority of all equity interests.
7. ATTORNEYS' FEES. In the event that any party hereto shall file an
action to enforce any provision of this Agreement or seek damages for breach
hereof, the prevailing party shall be paid, in addition to all other sums which
may be required to be paid, a reasonable sum for such prevailing party's
attorneys' fees.
IN WITNESS WHEREOF, the parties intending to be legally bound, hereby
have duly executed and delivered this Agreement as of the day and year first
above written.
ACE CASH EXPRESS, INC.
By: /s/ Donald H. Neustadt
--------------------------------------
Donald H. Neustadt, President
CHECK EXPRESS, INC.
By: /s/ Roger D. Goertz
--------------------------------------
Roger D. Goertz, Executive Vice President
CHECK EXPRESS USA, INC.
By: /s/ Roger D. Goertz
--------------------------------------
Roger D. Goertz, President
/s/ Larry F. Lang
-----------------------------------------
LARRY F. LANG
-2-
<PAGE> 338
CHECK EXPRESS USA, INC.
FRANCHISE AGREEMENT
<TABLE>
<CAPTION>
Section Description Page
- - ------- ----------- ----
<S> <C> <C>
1. Appointment and Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Initial Franchise Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Royalty Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. Franchisee Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Nature and Value of Franchise Name, Trademarks, Service Marks, Trade Secrets and Goodwill . . . . . . . . . . 6
8. Proprietary Marks and Copyrighted Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9. Duties and Obligations of Franchisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. Duties and Obligations of Franchisee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Hold-Harmless . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12. Trade Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13. Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
15. Procedures and Obligations on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
16. Assignment and Transfer of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17. Late Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
18. Taxes, Permits and Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19. Records of Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
20. Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
21. Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
i
<PAGE> 339
<TABLE>
<S> <C> <C>
22. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
23. Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
24. Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
25. Covenants and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
26. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
27. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
28. Authority and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
29. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
30. Exclusive Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
31. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
32. Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
33. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
34. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
35. Equity Owners of Franchisee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
36. Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Agreement Addenda for Certain Registration States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Exhibit A - Franchise Location Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Exhibit B - Telephone Listing Authorization/Assignment . . . . . . . . . . . . . . . . . . . . . . . . 37
Exhibit C - Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
ii
<PAGE> 340
FRANCHISE AGREEMENT
This Agreement made this _____ day of _____________________, 19___, by
and between CHECK EXPRESS USA, INC., a Florida corporation (hereinafter
"Franchisor"), and ___________________________________________ (hereinafter
"Franchisee").
RECITALS
A. Franchisor owns and has developed a system (hereinafter referred to as
the "System") for operating, advertising, promoting and managing a
check cashing and financial services business.
B. The System is designed to enable such a business to develop, to
compete effectively and to benefit from identification with
Franchisor's proprietary marks. The distinguishing characteristics
include, but are not limited to, the following:
1. Common use and promotion of the name "Check Express" and a
logo/color scheme associated with the service, trade names,
trademarks, service marks, signs, and emblems (hereinafter
collectively referred to as "Proprietary Marks"), all of which
may be changed, modified, improved, and further developed from
time to time at the sole discretion of Franchisor,
2. Copyrighted software for operations and accounting,
3. Centralized advertising programs,
4. A recommended standardized system for operation of the
business in accordance with procedures, materials and forms,
and
5. Periodic informational updates.
C. Franchisor has developed, used and promoted the System and uses
certain trade names, trademarks, and service marks, including the
service mark "Check Express" and intends to control the use of these
and other Proprietary Marks for the benefit and exclusive use of
itself and its franchisees in order to identify the Check Express
franchise to the public as a franchise which represents the highest
standards of quality and service.
D. Franchisee desires to be assisted by Franchisor, to use the System in
Franchisee's business and to be franchised by, and become a franchisee
of, Franchisor in a network of such businesses under the terms and
conditions contained in this Agreement.
E. Franchisee understands and acknowledges the importance of the Check
Express standards of quality and appearance in order to maintain the
value and continuing goodwill of the Proprietary Marks.
NOW THEREFORE, the parties hereto agree as follows:
1. APPOINTMENT AND GRANT
A. Franchisor hereby grants to Franchisee a franchise to operate
one Check Express franchised store within the area described
in Section 1 of the General Addendum to this
Page 1 of 39
<PAGE> 341
Agreement (the "Selection Area") at the specific location to
be selected by Franchisee and approved by Franchisor as
provided below upon the terms and conditions contained herein,
and at only such approved location (except as otherwise
provided herein), and a license to use in connection therewith
the System and the Proprietary Marks associated with the
System.
B. The specific business location for which a Check Express
franchise is hereby granted shall be determined as follows:
(i) Franchisee shall submit to Franchisor in writing,
within one hundred twenty (120) days of the date
on which this Agreement was accepted by Franchisor
as stated on the signature page hereof (the
"Commencement Date"), a proposed specific business
location owned by Franchisee or for which
Franchisee has received an offer to lease or
purchase within the Selection Area using the form
of Franchise Location Agreement attached hereto as
Exhibit A, together with a copy of any proposed
lease for such location. In accordance with
Section 9.A below, Franchisor shall provide
assistance to Franchisee in identifying potential
business locations in the Selection Area.
(ii) If Franchisor approves such proposed location and
the lease therefor, if any, which approval shall
be granted or denied within ten (10) business days
after receipt by Franchisor of the proposed
Franchise Location Agreement and a copy of any
proposed lease, or such longer time as may be
reasonably necessary for Franchisor to conduct a
physical inspection of the proposed location and
its surrounding area, Franchisor shall execute the
submitted Franchise Location Agreement and return
it to Franchisee.
(iii) If Franchisor disapproves such proposed location
or the lease therefor, Franchisor shall
immediately inform Franchisee specifying the
reason for such disapproval, and Franchisee shall
submit another proposed location and/or lease.
(iv) If Franchisee shall fail to submit a proposed
business location and lease, if any, within one
hundred twenty (120) days after the Commencement
Date which is subsequently approved by Franchisor,
Franchisor may, in its sole discretion, grant an
extension of time for Franchisee to submit one or
more additional proposed business locations for
approval or this Agreement may be terminated at
Franchisor's option. In the event of termination
pursuant to this Section, Franchisor shall have no
obligation to return the initial franchise fee
required to be paid pursuant to Section 2 or any
royalty fees paid pursuant to Section 5.
(v) Franchisor's approval of any such proposed
location and any lease therefor (and any
relocation thereof) does not constitute a guaranty
by Franchisor that such location will prove
profitable and Franchisee hereby waives and
releases any right or claim against Franchisor
arising in connection with the selection or
approval of Franchisee's business location,
including, without limitation, the failure of the
approved location to fulfill Franchisee's
expectations.
C. Franchisee shall have the right to relocate the franchised
business to a new location (i) within the Selection Area upon
the prior written approval of Franchisor, which
Page 2 of 39
<PAGE> 342
approval shall not be unreasonably withheld, or (ii) within
any other territory, which is not subject to any other party's
specific option, rights or claims, upon the prior written
approval of Franchisor, which approval may be granted or
withheld in the sole and absolute discretion of Franchisor,
provided in any case that notice of intent to relocate
specifying the exact location is given to Franchisor at least
sixty (60) days prior to such proposed relocation. Without
limiting what does or does not constitute the unreasonable
withholding of consent, Franchisor's withholding of consent to
a proposed relocation by Franchisee shall not be deemed to be
unreasonable if such relocation would result in a violation of
Franchisee's territorial rights hereunder or a violation of
the territorial rights of any other Check Express franchisee.
D. Franchisee understands and agrees that Franchisee's franchise
and license under this Agreement is nonexclusive and that
Franchisor in its sole discretion has the right to grant
franchises and licenses to others. However, Franchisor shall
not grant hereafter a Check Express franchise nor will it open
a company-owned store within the Exclusive Territory described
in the Franchise Location Agreement. Franchisee shall advise
Franchisor at the earliest possible time when Franchisee
becomes aware that a planned Check Express store may be in
violation of Franchisee's territorial rights.
E. It is understood that Franchisor is constantly working to
improve upon its franchise system. Franchisor reserves the
right to change the System or any part of the System at any
time upon reasonable notice to Franchisee, and as changed, it
shall remain the System referred to in this Agreement. Any
improvements in the System developed by Franchisee shall
become the sole and exclusive property of Franchisor who shall
have the right to adopt and perfect them, without compensation
to Franchisee.
2. INITIAL FRANCHISE FEE
A. In consideration of the Check Express franchise and license
granted to Franchisee herein, and the assistance, training,
System, Proprietary Marks, trade secrets, and other materials
and services to be received by Franchisee, Franchisee shall
pay to Franchisor an initial franchise fee of Twenty Four
Thousand Five Hundred Dollars ($24,500), which is fully earned
by Franchisor upon execution of this Agreement. The full
amount of the initial franchise fee shall be due and payable
upon the execution of this Agreement. The initial franchise
fee payment shall become the sole property of Franchisor and
shall not be refunded in any event. No rights or privileges
under this Agreement shall exist until the initial franchise
fee is paid.
B. The parties expressly agree that the grant and initial
franchise fee provided for in Section 2.A hereof afford
Franchisee no rights regarding such other franchises, if any,
as Franchisor in its sole discretion may elect to make
available to Franchisee in the future.
C. The initial franchise fee payable by Franchisee in accordance
with the provisions of Section 2.A hereof shall be payable in
immediately available funds.
3. TERM
Except as otherwise provided in this Agreement, the term of this
Agreement shall be for a period of ten (10) years from the
Commencement Date, subject to the rights of renewal as provided in
Section 4.
Page 3 of 39
<PAGE> 343
4. RENEWAL
Upon the expiration of the initial term hereof and any renewal term
hereof, Franchisee may, at its option, renew this Agreement and the
franchise granted hereby for successive additional periods of ten (10)
years, provided that:
A. Franchisee gives Franchisor written notice of its intention to
exercise the option to renew (the "Renewal Notice") within
ninety (90) days after Franchisor has given Franchisee written
notice stating the date that the current term is to expire
(the "Expiration Notice"), which Expiration Notice shall be
given no sooner than one hundred eighty (180) days before the
date on which the current term is to expire; and
B. Franchisee pays to Franchisor prior to five (5) days before
the beginning of the renewal term, a renewal fee equal to
$500.00; and
C. Franchisee executes the then current standard Franchise
Agreement, which act shall in no way obligate Franchisee to
pay a royalty fee greater than the amount prescribed in
Section 5 hereof, or to again pay the initial franchise fee
provided for in Section 2.A hereof, except as provided in
Section 4.B, or equivalents, and executes a general release of
Franchisor for all obligations arising from or created under
the preceding Franchise Agreement and term; and
D. At the time of renewal and the giving of the Renewal Notice
under Section 4.A hereof, Franchisee is not in default of any
provision of this Agreement, any amendment hereof, or any
other agreement between Franchisee and Franchisor or between
any affiliates of either Franchisor or Franchisee; and
E. If local law requires that Franchisor give notice to
Franchisee prior to the expiration of the term of this
Agreement in addition to the Expiration Notice, this Agreement
shall remain in effect on a month- to-month basis until
Franchisor has given Franchisee the notice required by law;
and
F. If Franchisee continues to operate after the end of the term
hereof, without exercising its option to renew, Franchisee
shall be deemed to be operating on a month-to-month basis
under the terms and conditions of the Franchise Agreement then
being offered by Franchisor to new franchisees. However, in
such event, Franchisor may terminate Franchisee at any time by
giving Franchisee ten (10) days written notice of termination,
or such longer notice as is required by applicable law; and
G. At the time of renewal, the terms and conditions hereof shall
be deemed amended to conform to the terms and conditions of
the then current standard Check Express franchise agreement,
except as otherwise provided in a written agreement executed
by the parties at the time of renewal.
5. ROYALTY FEE
A. Franchisee shall pay to Franchisor a monthly royalty fee equal
to the greater of $750 per month, as adjusted as provided
herein (such amount referred to herein as the "Minimum Monthly
Royalty Fee"), or 5% of Franchisee's adjusted gross monthly
receipts. At the option of Franchisor, the Minimum Monthly
Royalty Fee may be adjusted each year in proportion to the
change in the Consumer Price Index -- All Urban Consumers
(herein called the "CPI", which is determined and published by
the Bureau
Page 4 of 39
<PAGE> 344
of Statistics, the United States Department of Labor) for the
previous calendar year beginning with the first payment due
thirty (30) days after Franchisor has given written notice to
Franchisee of such adjustment, or such later date as may be
specified in such written notice. If the CPI is no longer
published, then another index generally recognized as
authoritative shall be substituted by agreement of the
parties.
B. The royalty fee shall be payable initially on the fifth day of
the first calendar month immediately following the earlier of
(i) the first full calendar month of public operation of the
franchised store or (ii) one hundred twenty (120) days after
the Commencement Date. Commencing on the fifth day of the
first month after the royalty fee becomes payable, and
thereafter on the fifth day of every succeeding month during
the term (and every renewal term) of this Agreement and on the
fifth day of the first month immediately following the
expiration or termination of this Agreement, at Franchisor's
option the Minimum Monthly Royalty Fee and the Monthly
Computer Maintenance Fee payable pursuant to Section 10.D
shall be automatically disbursed from Franchisee's bank
account by electronic fund transfers or other form of
pre-authorized check or withdrawal order transfers initiated
by Franchisor to its own order. To the extent that the
royalty fee exceeds the Minimum Monthly Royalty Fee, such
amount shall be payable on the fifteenth day of the calendar
month in which the applicable Minimum Monthly Royalty Fee was
payable.
C. Franchisee shall authorize its depository to pay and charge to
Franchisee's account electronic fund transfers (or other form
of pre-authorized check or withdrawal order transfers)
initiated by Franchisor to its own order in the amount of the
Minimum Monthly Royalty Fee and the Monthly Computer
Maintenance Fee. Franchisee shall execute any form and
provide any information requested by its depository or by
Franchisor that is necessary to secure authorization of the
monthly automatic disbursements set forth in Section 5.B
hereof. Franchisee shall coordinate with Franchisor any
changes in its depository account so that no interruptions in
the automatic disbursement of the Minimum Monthly Royalty Fee
and Monthly Computer Maintenance Fee occur.
D. The royalty fee shall be based upon the adjusted gross
receipts for the month immediately preceding the month in
which payment is made. Gross receipts shall include all
receipts from the following sources: fees from cashing checks,
fees from selling money orders, fees from money transfer
agencies, fees from selling check cashing and identification
cards, fees from selling lottery tickets, receipts from sales
of merchandise, and any other source of fees, receipts, or
revenue. In calculating adjusted gross receipts there shall
be a reduction for the actual cost of merchandise and goods
sold, but there shall be no reduction or credit made for
returned checks. Except as expressly provided otherwise
herein, Franchisee shall not deduct or set off any amount
claimed to be owed to Franchisee from or against the royalty
fee payable to Franchisor.
E. If Franchisee shall fail to pay a monthly royalty fee in an
amount equal to at least the Minimum Monthly Royalty Fee which
is due hereunder within ten (10) days after written demand
therefor is delivered to Franchisee, then Franchisor may, at
its election, declare all future Minimum Monthly Royalty Fees
payable hereunder to the end of the current term to be
immediately due and payable, without discount.
Page 5 of 39
<PAGE> 345
6. FRANCHISEE NAME
A. Franchisee shall operate under the trade name "Check Express"
and shall use no other name in conducting the business
franchised under this Agreement without the consent of
Franchisor. Franchisee shall comply with all applicable
fictitious name statutes, with evidence of such compliance to
be furnished to Franchisor.
B. If Franchisee is a corporation or partnership, it shall not
legally or otherwise incorporate the name "Check Express" in
its corporate or partnership name.
7. NATURE AND VALUE OF FRANCHISE NAME, TRADEMARKS, SERVICE MARKS, TRADE
SECRETS AND GOODWILL
A. The franchise granted hereby authorizes Franchisee to use the
System, name, trade names, trademarks, service marks,
copyrighted materials, trade secrets and goodwill, and any
improvements and modifications of these items in the operation
of Franchisee's business at the location set forth above. It
is expressly agreed that the ownership of all right, title and
interest in and to said System, name, trade names, trademarks,
service marks, copyrighted materials, trade secrets and
goodwill, and any improvements and modifications of these
items shall remain solely in Franchisor and that the materials
and information now and hereafter provided or revealed to
Franchisee under and pursuant to this Agreement are revealed
in confidence.
B. So long as this Franchise Agreement shall remain in effect,
Franchisee agrees to maintain a clean and attractive store
which meets the specifications provided by Franchisor, to
preserve, maintain and enhance the reputation and goodwill
built up by Franchisor and its franchisees and the value of
the Proprietary Marks.
C. Franchisee agrees neither to infringe upon nor use or imitate
the System or any part of the System, except under a written
franchise agreement and license from Franchisor.
8. PROPRIETARY MARKS AND COPYRIGHTED MATERIALS
A. It is understood that the license hereby granted to use
Franchisor's Proprietary Marks in connection with the
franchised business includes the service mark "Check Express"
and such other trade names, trademarks and service marks of
Franchisor as Franchisor may expressly designate in writing
from time to time, but includes no other marks now existing or
to be developed by Franchisor.
B. Franchisee recognizes and acknowledges Franchisor's exclusive
copyrights in the software provided by Franchisor, the
Franchise Offering Circular and in any operating manuals or
directives and any advertising and promotional material
provided by Franchisor. Franchisee agrees to treat as
confidential such material and shall not make such material
available to unauthorized persons.
C. Franchisee acknowledges Franchisor's claim to the exclusive
right to use the mark "Check Express" and such other trade
names, trademarks and service marks of Franchisor as may from
time to time be designated, and expressly covenants that
during the term of this Agreement and after the expiration or
termination thereof, Franchisee shall not directly or
indirectly contest or aid in contesting the validity or
ownership of said Proprietary Marks or copyrighted materials,
or take any action whatsoever which might affect or prejudice
Franchisor's claimed rights therein.
Page 6 of 39
<PAGE> 346
D. Franchisee shall promptly notify Franchisor of any claim,
demand, or suit based upon, or arising out of, any attempt by
any other person, firm, partnership, or corporation to use the
Proprietary Marks licensed hereunder, the copyrighted
materials, or any colorable variation thereof. Franchisee
agrees also to promptly notify Franchisor of any litigation
instituted by any person, firm, partnership, corporation, or
government agency against the Franchisee involving
Franchisor's Proprietary Marks or copyrighted materials.
Franchisor shall, at its discretion, and at its own expense,
defend the trade name, trademarks, service marks, Proprietary
Marks, and the System against imitations and infringements.
Franchisor shall have no liability to Franchisee if a valid
claim to prior use is asserted. In the event Franchisor
undertakes the defense or prosecution of any litigation
relating to the Proprietary Marks licensed hereunder,
Franchisee agrees to execute any and all documents and do such
acts and things as may, in the opinion of legal counsel for
Franchisor, be necessary to carry out such defense or
prosecution.
E. Franchisee understands and agrees that its franchise and
license to use the System, said Proprietary Marks and
copyrighted materials is non-exclusive, that the Franchisor in
its sole discretion, has the right to grant franchises to
others and to license others to use the System, Proprietary
Marks, and copyrighted materials in addition to those
franchises and licenses already granted to other franchisees,
and that Franchisor may develop and license other marks in
conjunction with systems other than the System, on any terms
and conditions Franchisor deems advisable.
F. It is expressly recognized that any and all goodwill
associated with, and identified by, said Proprietary Marks and
copyrighted materials inures directly and exclusively to the
benefit of Franchisor and is the property of Franchisor, and
that, on the expiration or termination of this Agreement, no
monetary amount shall be assigned as attributable to any
goodwill associated with Franchisee's activities as a
franchisee under said Proprietary Marks or copyrighted
materials.
G. Franchisee shall prominently display a notice or certificate
in its store, and shall include a statement on Franchisee's
letterhead and on all forms, documents and other printed
matter to be used in connection with the franchised business,
setting forth that Franchisee is "An Independent Franchise of
the Check Express System," or other similar statement approved
in writing by Franchisor.
H. In order to develop and maintain high and uniform standards of
quality and service and hence protect the reputation and
goodwill of Franchisor, Franchisee covenants:
(i) To adopt and use the Proprietary Marks licensed
hereunder solely in the manner prescribed by
Franchisor.
(ii) To obtain advance approval in writing from
Franchisor of the appearance of the trade name and
logo incorporating Franchisor's name or other
identifying words or marks.
I. In order to preserve the validity and integrity of the
Proprietary Marks licensed herein and to assure that
Franchisee is properly employing the same in the operation of
Franchisee's business, Franchisor may inspect Franchisee's
operations from time to time and will advise Franchisee of any
deficiencies therein. Franchisee shall cooperate with
Franchisor's representative in such inspection and render such
assistance as may be reasonably requested.
Page 7 of 39
<PAGE> 347
J. All Check Express signs and emblems used by Franchisee in
conducting its business shall conform to the specifications of
Franchisor as to art work, lettering, colors, size,
construction and overall appearance and shall be approved in
advance in writing by Franchisor. Franchisor's failure to
give notice of its disapproval or to request additional
information within ten (10) business days after receipt by
Franchisor of a written request for approval of a proposed
sign or emblem shall be deemed an approval in writing by
Franchisor of the proposed sign or emblem.
K. Franchisee shall not advertise, publish or circulate any
documents or other matter using the Check Express name or the
Proprietary Marks, except in compliance with the latest
edition of Franchisor's Operating Manuals or Advertising
Manual, if any, or with Franchisor's prior written consent.
L. Franchisee shall not use the Proprietary Marks in connection
with the offer or sale of any items or services except
pursuant to the express prior written permission of
Franchisor. All amounts received by Franchisee in connection
with the unauthorized use of the Proprietary Marks shall be
held in trust for, and paid to, Franchisor.
9. DUTIES AND OBLIGATIONS OF FRANCHISOR
Franchisor shall provide the following services:
A. Franchisor shall provide advice and assistance to Franchisee
in Franchisee's selection of Franchisee's business location.
B. Franchisor shall make available to two (2) persons designated
by Franchisee at no fee to Franchisee or Franchisee's
designated attendees, the Check Express Franchise Training
Course which lasts approximately two (2) weeks at such place
as Franchisor shall designate. The instruction of said course
shall include, but not be limited to, a review of the
Operating Manuals, use of Franchisor's copyrighted software
and compatible hardware, supplies and equipment purchases and
control, store operation and management, staffing, maintenance
and suggested advertising and promotional techniques.
Franchisor is responsible only for the expenses of such course
and requisite materials the first time it is given.
Franchisee shall be responsible for the travel, food and
lodging expenses of its designees. Franchisor shall also,
from time to time, make available such Training Course to
additional designees of Franchisee including any person who
has previously completed the Training Course, provided that
Franchisee shall pay a Training Fee for each additional
designee attending such subsequent offerings of the Training
Course, unless space is available for such additional designee
in an otherwise scheduled Training Course. The Training Fee
shall be equal to $500 initially and at the option of
Franchisor may be adjusted each year in proportion to the
change in the CPI for the previous calendar year effective
thirty (30) days after Franchisor has given written notice to
Franchisee of such adjustment, or such later date as may be
specified in such written notice. If the CPI is no longer
published, then another index generally recognized as
authoritative will be substituted by agreement of the parties.
The Training Course is normally conducted at Tampa, Florida.
The Training Course will be scheduled by mutual agreement
between Franchisor and Franchisee, but the training must be
completed not later than seven (7) days prior to the date
Franchisee opens the franchised store for business (the
"Opening Date").
Page 8 of 39
<PAGE> 348
C. Franchisor shall maintain a reasonable continuing advisory
relationship with Franchisee in all phases of operation,
including education and training, store location, design and
layout, and advertising and promotion. Franchisor shall send
one representative at its expense to Franchisee's business
location within a reasonable time after the Opening Date for a
period of not less than three (3) days and not more than ten
(10) days to advise Franchisee in store operations. The
foregoing obligation shall only apply to the opening of
Franchisee's first Check Express store, and shall not apply to
subsequent store openings in the event Franchisee is a party
to a Multiple Location Agreement or otherwise opens more than
one Check Express store either pursuant to this Agreement or
any other agreement with Franchisor. Thereafter, in the event
Franchisee requests special assistance requiring a
representative of Franchisor to travel to Franchisee's
business location and provided that Franchisor has qualified
personnel available therefor, Franchisee shall reimburse
Franchisor for the reasonable travel, lodging, meals and
related out-of-pocket expenses incurred by Franchisor's
representative by reason of any visit to Franchisee's business
location, and shall pay Franchisor a Daily Assistance Fee for
each day or part thereof that Franchisor's representative
spends at Franchisee's business location. The Daily
Assistance Fee shall be equal to $150 initially and at the
option of Franchisor may be adjusted each year in proportion
to the change in the CPI for the previous calendar year
effective thirty (30) days after Franchisor has given written
notice to Franchisee of such adjustment, or such later date as
may be specified in such written notice. If the CPI is no
longer published, then another index generally recognized as
authoritative will be substituted by agreement of the parties.
D. Franchisor shall provide Franchisee its copyrighted software
which maintains data concerning Franchisee's customers, which
provides a record of all of Franchisee's customer
transactions, and which creates a daily summary of all such
transactions and a day-end balancing. Franchisor shall
provide, from time to time, software updates and enhancements,
and shall provide technical support via telephonic
communications.
E. Franchisor shall arrange for its designated programmer to load
its copyrighted software into Franchisee's hardware.
F. Franchisor may, from time to time, develop and/or make
available to Franchisee newsletters, bulletins and other
materials or information on new marketing, management and
operational techniques.
G. So long as Franchisee complies with the terms and conditions
of this Agreement, Franchisor shall loan to Franchisee one or
more copies of the Check Express Operating Manuals (including,
but not limited to, the Check Express Teller, Manager and
Policy and Procedures Manuals) which contain the Check Express
standards, specifications, procedures, and techniques. Such
Manuals and all contents thereof shall at all times remain the
sole property of Franchisor.
H. Franchisor may provide Franchisee, from time to time, with
advertising and promotion plans, layouts and advice.
I. Franchisor will provide building specifications for stores
which contain important safety, security, operational flow and
marketing features.
J. Franchisor will maintain reasonable supervision over
Franchisee to ensure compliance with the System and the Check
Express standards as established in the Operating
Page 9 of 39
<PAGE> 349
Manuals and policy directives issued from time to time, and to
provide guidance in the management and operations of
Franchisee's business.
K. Franchisor, at its sole discretion, will, from time to time,
adopt, issue, and make available to Franchisee, "Policy
Statements" regarding the System, Proprietary Marks, policies,
procedures, standards, specifications, and other similar
subjects.
L. Franchisor will provide assistance in the selection and
purchase of equipment, fixtures and supplies for Franchisee's
business. Nothing herein, however, shall obligate Franchisor
to finance any such purchases.
10. DUTIES AND OBLIGATIONS OF FRANCHISEE
Franchisee understands and acknowledges that every detail of the
franchised business is important to Franchisor in order to develop and
maintain high and uniform standards of quality, service, facilities,
and techniques, to increase the demand for the Check Express System,
and to protect the reputation and goodwill of Franchisor. Therefore,
in addition to the covenants of Franchisee contained elsewhere in this
Agreement, Franchisee agrees:
A. To maintain a high ethical standard in the conduct of its
business and service and provide prompt, efficient, courteous
and high quality service to the public, of the same high
quality and distinguishing characteristics as provided at
other Check Express franchises and company-owned stores.
B. To maintain, at Franchisee's expense, at all times,
Franchisee's business location and all fixtures, furnishings,
equipment and signs in the highest degree of cleanliness,
orderliness, and repair, as reasonably determined by
Franchisor.
C. To use in the operation of the franchise business and in all
materials and advertising the distinguishing characteristics
of the System as directed by Franchisor in the Operating
Manuals or Advertising Manual, if any, or in specific policy
statements issued from time to time, including, without
limitation, using Franchisor's copyrighted software.
D. To use hardware that is compatible with Franchisor's
copyrighted software, and to use the programmer designated by
Franchisor to maintain and update the software. Commencing on
the fifth day of the first calendar month in which royalty
payments become payable in accordance with Section 5.B, and on
the fifth day of every succeeding month during the term (and
every renewal term) of this Agreement and on the fifth day of
the first month immediately following the expiration or
termination of this Agreement, Franchisee shall pay Franchisor
a Monthly Computer Maintenance Fee in an amount initially
equal to $50.00. At the option of Franchisor, the Monthly
Computer Maintenance Fee may be adjusted each year in
proportion to the change in the CPI for the previous calendar
year beginning with the payment due thirty (30) days after
Franchisor has given written notice to Franchisee of such
adjustment, or such later date as may be specified in such
written notice. If the CPI is no longer published, then
another index generally recognized as authoritative shall be
substituted by agreement of the parties.
E. To reimburse Franchisor for any computer system setup costs
incurred by Franchisor as provided for in Section 9.D,
including, without limitation, the cost of computer discs and
any programmer's charge, including, without limitation, a
reasonable charge to be
Page 10 of 39
<PAGE> 350
paid to Franchisor in the event Franchisor provides a
programmer employed or contracted by Franchisor.
F. To maintain adequate cash liquidity necessary to operate the
franchised business in conformance with the Check Express
Operating Manuals.
G. That Franchisee's principal owner or principal office manager,
and any successor principal owner or replacement manager
employed by Franchisee, shall complete the Check Express
Training Course offered by Franchisor in accordance with
Section 9.B.
H. To send one or more of its employees to Franchisor's Training
Course or field training seminar conducted by Franchisor's
representative should Franchisor determine that Franchisee's
employees require training or retraining.
I. To keep the store open for business for a minimum of 66 hours
per week, unless Franchisee receives the prior written consent
of Franchisor to keep the store open for fewer than 66 hours
per week. Opening and closing times shall be subject to the
requirements, if any, set forth in the Operating Manuals.
J. To not engage in any activity or practice which results, or
may be anticipated to result, in litigation or public
criticism of Franchisor or the System.
K. To refrain from using the Check Express name to petition any
agency, department, branch or subdivision of the government,
federal, state or local, with respect to the regulation of the
industry unless the prior written consent of Franchisor is
obtained first.
L. That Franchisee will use all reasonable means to promote the
use of the Check Express System by the general public, and
will not permit the advertising of any other business within
Franchisee's business location except that of the Check
Express System without the prior written consent of
Franchisor.
M. That all products, materials, supplies, fixtures and
furnishings shall substantially conform with Franchisor's
standards and specifications and that the physical layout of
Franchisee's store shall be designed and maintained in
conformity with the specifications provided by Franchisor, as
such standards and specifications may be specified from time
to time. Franchisee shall bear the cost of implementing any
changes in such standards or specifications required by
Franchisor, and Franchisor shall have no obligation to
reimburse or compensate Franchisee for any such costs incurred
by Franchisee.
N. To permit the agents or representatives of Franchisor to enter
Franchisee's business location at reasonable times for regular
inspections of all procedures, services, operations and use of
Proprietary Marks by Franchisee in order to determine
compliance with this Agreement. Franchisee agrees to
cooperate with such inspection and render such assistance as
is reasonably requested.
O. To pay promptly to Franchisor all fees due hereunder or under
any other agreement between Franchisee and Franchisor and pay
promptly for supplies or equipment which Franchisee may
purchase from Franchisor.
P. To keep and preserve full, complete and accurate financial
statements, books, records, accounts, and data which shall
accurately reflect all particulars of the affairs and
Page 11 of 39
<PAGE> 351
condition of the franchised business. Franchisee shall
maintain its financial records in accordance with generally
accepted accounting principles. Franchisor may require that
Franchisee's financial statements be prepared by an
independent certified public accountant or other qualified
person, although certified financial statements shall not be
required.
Q. To submit its financial statements (including an income
statement and a balance sheet) to Franchisor on a monthly and
annual basis within twenty-five (25) days after the end of
each month or year, respectively, and shall submit such
additional financial statements, forms, reports, and records
as, and at the times, specified in Franchisor's Operating
Manuals or as otherwise reasonably requested by Franchisor,
including, without limitation, a report on the sales of
Franchisee upon which the royalty fee is based and the amount
spent for promotion as required by Section 20.A. If
Franchisee fails to submit any such financial statements,
forms, reports, or records within thirty (30) days after the
time specified, Franchisee shall pay to Franchisor upon demand
a late report charge of $25.00 per report per month, which
payment shall not limit in any way Franchisor's rights or
remedies arising as a result of such failure by Franchisee.
R. To not conduct or allow to be conducted any business other
than the Check Express franchised business from the location
set forth in Section 1.A without the prior written consent of
Franchisor. In granting its consent, Franchisor may impose
reasonable conditions designed to ensure that the public does
not get the impression that the non-franchised business is in
any way endorsed by, supervised by, or affiliated with
Franchisor. Nothing in this Agreement shall be construed to
permit Franchisee to use Franchisor's name, logo, marks or
symbols in any business other than the franchised business.
S. To employ only those persons who are suitable in
qualification, skill, health, appearance, manner, and
character to be appropriate to represent the good name and
reputation of the Check Express System and Proprietary Marks,
and who conform to such standards that Franchisor may
establish from time to time.
T. Except as may be otherwise approved by Franchisor in writing,
to conform Franchisee's business operation to the procedures
and requirements of the Operating Manuals, as they may be
amended and updated from time to time, and to all policy
directives issued by Franchisor from time to time.
Franchisor's failure to give notice of its disapproval or to
request additional information within ten (10) business days
after receipt by Franchisor of a written request for approval
of a deviation from such procedures, requirements or policy
directives shall be deemed a written approval.
U. To obtain and maintain at all times liability and property
damage insurance covering the activity of Franchisee in an
amount not less than $1 Million and to obtain and maintain at
all times workmen's compensation insurance as may be required
by law from insurers who are satisfactory to Franchisor.
Franchisee shall provide Franchisor with proof of such
insurance from time to time as requested by Franchisor, and
such policies of insurance required herein shall name
Franchisor as an additional insured and shall provide that the
insurers will give thirty (30) days prior written notice to
Franchisor before any expiration or termination of such
policies of insurance. In the event Franchisee fails to
obtain or maintain the insurance described herein, Franchisor
shall have the right but not the obligation to procure such
insurance, and in such event Franchisee shall immediately
reimburse Franchisor for the costs of such insurance.
Page 12 of 39
<PAGE> 352
V. To erect at Franchisee's business location an exterior sign,
subject to local codes, as directed by Franchisor in the
Operating Manuals, Advertising Manual, if any, or specific
policy statements issued from time to time.
W. To, and to cause its responsible partner, officer or
designated manager to, work diligently, fairly and in good
faith to perform all of Franchisee's duties and obligations
under this Agreement. In addition, Franchisee agrees that any
manager who is not the Franchisee is required to execute an
agreement with Franchisee in a form approved by Franchisor
prior to commencing employment, covenanting that the manager
will devote manager's entire time, attention, and energies to
the franchise business; that manager will maintain all Check
Express trade secrets and will not disclose or allow any
unauthorized person to copy any Check Express copyrighted
materials; and that manager will not engage in a check cashing
business in competition with any Check Express franchise or
company-owned store during the term of manager's employment
and for one (1) year thereafter. Such agreement shall contain
an express provision specifying that Franchisor is a third
party beneficiary and has a direct right of enforcement
thereof.
X. To take possession of suitable store space at the location
specified in the Franchise Location Agreement pursuant to a
lease, purchase agreement or otherwise within a period of one
hundred twenty (120) calendar days from the Commencement Date.
Y. To cause its business to be opened and operating at the
location specified in the Franchise Location Agreement within
a period of sixty (60) calendar days from the date of
execution of Franchisee's lease or purchase agreement.
Franchisee shall use an approved licensed architect and/or
licensed designer to design the buildout of the franchise
location. Franchisee understands and agrees that Franchisee's
business location, size, design and layout is subject to final
approval by Franchisor.
Z. To make every effort to protect, maintain, and advance the
Proprietary Marks and the System and to prevent imitations and
infringements thereof.
AA. To not advertise, publish or circulate any documents or other
matter relating to the business to be transacted under this
Agreement, except in compliance with the latest edition of the
Operating Manuals, Advertising Manual, if any, or specific
policy statements. Any exception therefrom must be approved
in writing by Franchisor.
BB. To obtain Franchisor's written approval prior to using the
name or likeness of a public figure in its promotional efforts
or advertising.
CC. To execute and deliver to Franchisor upon execution of this
Agreement the Telephone Listing Authorization/Assignment in
the form attached hereto as Exhibit B.
DD. To cause such of its equity owners, as Franchisor may require
at the time of execution of this Agreement, to execute and
deliver to Franchisor upon execution of this Agreement a
personal guaranty in the form attached hereto as Exhibit C.
11. HOLD-HARMLESS
Franchisee agrees to hold harmless and indemnify Franchisor and its
respective officers, directors and employees from and against any
claim, loss, damages, theft and liability pertaining to bodily injury,
property damage, personal injury, professional liability, fire or
otherwise, arising
Page 13 of 39
<PAGE> 353
out of or occurring upon or in connection with the franchised
business, but not resulting from the negligent or intentional acts of
Franchisor, including, but not limited to, attorneys' fees incurred in
defending such claims.
12. TRADE SECRETS
Franchisee shall not during the term of this Agreement and any
extension or renewal hereof or thereafter, regardless of the cause of
termination, communicate or divulge to, or use for the benefit of
Franchisee or any other person, partnership, association, or
corporation any confidential information or knowledge concerning the
methods of operating the business franchised hereunder which may be
communicated to Franchisee, or of which Franchisee may be apprised, by
virtue of Franchisee's ownership or operation of a check cashing
business under the terms of this Agreement.
13. COVENANT NOT TO COMPETE
A. Franchisee agrees on behalf of itself and its shareholders, if
a corporation, and its partners, if a partnership, that during
the term of this Agreement and any renewal hereof and for one
(1) year following termination of this Agreement or any
renewal hereof, whether voluntary or involuntary and with or
without cause, they will not, (i) within the Selection Area
described in Section 1 of the General Addendum to this
Agreement or within a radius of five (5) miles of any Check
Express store operated by Franchisor, a franchisee of
Franchisor or any other affiliate of Franchisor, directly or
indirectly engage in the business of cashing checks, (ii)
induce or attempt to induce any of Franchisor's franchisees to
terminate their relationship with Franchisor, (iii) induce or
attempt to induce any employees of Franchisor or of any of its
franchisees to terminate their employment, or (iv) divert or
attempt to divert any customers of Franchisor or any of its
franchisees or any company-owned stores to any competitor,
either as an owner, an independent contractor, partner, joint
venturer, or as a stockholder, officer, director, employee,
agent, licensor, licensee, Franchisor, subfranchisor or
franchisee, for any person, firm, partnership, corporation, or
other entity.
B. The period of time during which Franchisee and the above
persons are prohibited from engaging in such business
practices pursuant to this Section shall be extended by any
length of time during which they are in breach of such
covenants.
C. It is understood and intended by and between the parties
hereto that the foregoing restrictive covenants set forth in
this Section shall be construed as agreements independent of
any other provision in this Agreement. The existence of any
claim or cause of action of Franchisee against Franchisor,
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Franchisor of such
covenants.
D. It is agreed by Franchisor and Franchisee that if any portion
of the covenants set forth in this Section are held to be
unreasonable, arbitrary or against public policy, then such
portion of such covenant shall be considered divisible both as
to time (months) and geographical area (counties and/or
portions thereof). Franchisor and Franchisee agree that, if
any court of competent jurisdiction determines the specified
time period or the specified geographical area applicable to
this Section to be unreasonable, arbitrary or against public
policy, then a lesser time period or geographical area which
is determined to be reasonable, non-arbitrary and not against
public policy may be enforced against
Page 14 of 39
<PAGE> 354
Franchisee. Franchisor and Franchisee agree that the
foregoing covenants are appropriate and reasonable when
considered in light of the nature and extent of the business
conducted by Franchisor and reasonably anticipated to be
conducted by Franchisor.
E. Franchisee hereby agrees to indemnify and hold Franchisor
harmless from and against any and all losses, claims, damages
or expenses, including, without limiting the generality of the
foregoing, attorneys' fees (except as otherwise provided in
Section 34), arising from or growing out of Franchisee's
breach or threatened breach of Franchisee's covenant herein
contained.
F. Franchisee agrees that any person which it shall employ in
connection with the franchised business will agree, as a
condition of such employment to a non-competition covenant
with terms similar to this Section, for a period of one (1)
year following termination of such employment naming
Franchisor as a third party beneficiary thereunder. All costs
of enforcing such non-competition covenants and seeking
damages for breach thereof, including, but not limited to,
attorneys' fees, shall be borne by the party seeking
enforcement thereof.
G. Franchisee agrees that damages at law will be an insufficient
remedy to Franchisor in the event that Franchisee violates the
terms of this Section and that Franchisor shall be entitled,
upon application to a court of competent jurisdiction, to
obtain injunctive relief to enforce the provisions of this
Section, which injunctive relief shall be in addition to any
other rights or remedies available to Franchisor.
14. TERMINATION
This Agreement may only be terminated as provided herein. Termination
shall not relieve Franchisee of any monetary or other unfulfilled
obligations created hereunder unless agreed to in writing by
Franchisor.
A. This Agreement may be terminated upon written mutual consent
of the parties hereto.
B. If Franchisee is in compliance with the terms and conditions
of this Agreement and Franchisor is in default under the terms
of this Agreement and such default shall not be cured within
thirty (30) days after receipt by Franchisor of written notice
from Franchisee specifying the default and requesting that it
be cured, then, in addition to all other remedies at law or in
equity, Franchisee may immediately terminate this Agreement.
C. In the event that Franchisee becomes bankrupt or insolvent, or
if a receiver is appointed to take possession of Franchisee's
business or property or any part thereof, or if Franchisee
shall make a general assignment for the benefit of
Franchisee's creditors, or if a judgment is obtained against
Franchisee which after all rights of appeal have been
exhausted, is not satisfied or released within thirty (30)
days, Franchisee shall be deemed to be in default under this
Agreement and all rights granted to Franchisee hereunder shall
thereupon terminate without notice to Franchisee.
D. If Franchisee shall have its license to do business revoked or
suspended, or if Franchisee or any affiliate of Franchisee
shall be in default under any term of this Agreement
(including, without limitation, failing to pay any amounts due
under this Agreement) or any other agreement to which
Franchisee or any of its affiliates is a party
Page 15 of 39
<PAGE> 355
on the one hand and Franchisor or any of its affiliates is a
party on the other hand and such license revocation or
suspension or such default shall not be cured within thirty
(30) days after receipt of written notice to cure thereof from
Franchisor or its agents, then in addition to all other
remedies at law or in equity, Franchisor may at its option
terminate this Agreement. Termination of the franchise under
such circumstances shall become effective immediately upon the
date of receipt by Franchisee of a written Notice of
Termination. For purposes of this Agreement, "affiliate" or
"affiliates" means (i) a party which, directly or indirectly,
owns or controls a party hereto, (ii) any party, directly or
indirectly, owned or controlled by a party hereto or (iii) any
party, directly or indirectly, owned or controlled by a party
which, directly or indirectly, owns or controls a party
hereto.
E. If Franchisee's store is closed to the public for a period
exceeding seven (7) days, unless such closing is through no
fault of Franchisee, Franchisee shall be deemed to be in
default under this Agreement and all rights granted to
Franchisee hereunder shall thereupon terminate without notice
to Franchisee.
15. PROCEDURES AND OBLIGATIONS ON TERMINATION
Upon termination of this Agreement, Franchisee shall immediately cease
to be a franchised franchisee, and shall:
A. Within three (3) days after termination, pay Franchisor all
sums owing from Franchisee to Franchisor.
B. Immediately cease to use, by advertising or in any manner
whatsoever, the System or any part thereof, and the name
"Check Express" and all of the other Proprietary Marks.
C. Immediately discontinue all advertising as a Check Express
franchisee, including the removal of any signs from
Franchisee's store or office using the name, logo or colors,
and thereafter refrain from doing anything that would indicate
that Franchisee is, or ever was, a Check Express franchisee.
D. Relinquish all claims to the telephone number or numbers used
in connection with the franchise, and to take such steps as
shall be necessary to transfer Franchisee's Check Express
listings in the telephone white and/or yellow pages or any
other directories to Franchisor. Upon the termination of this
Agreement, Franchisor shall be authorized to deliver the
Telephone Listing Authorization/Assignment in the form
attached hereto as Exhibit B to such third parties as
Franchisor deems necessary to effect the transfer of such
listings.
E. Immediately surrender and return to Franchisor all customer
lists, manuals, policy directives, forms and written
instructions and all materials copyrighted by Franchisor.
F. Immediately discontinue use of and erase Franchisor's
copyrighted software.
16. ASSIGNMENT AND TRANSFER OF INTEREST
A. This Agreement is binding upon and shall inure to the benefit
of the parties hereto, their heirs, successors and assigns.
Franchisor shall have the right to assign this Agreement or
any interest therein to any person, persons, partnership,
association, or corporation, without Franchisee's consent or
approval.
Page 16 of 39
<PAGE> 356
B. Except as hereinafter provided, neither Franchisee nor any
partner, if Franchisee is a partnership, nor any shareholder,
if Franchisee is a corporation, without Franchisor's prior
written consent, shall by operation of law or otherwise, sell,
assign, transfer, convey, give away, pledge, mortgage,
encumber or otherwise dispose of any interest in this
Agreement, the franchise hereby granted or any equity interest
in Franchisee, or offer, permit or suffer the same to any
person, partnership, association or corporation. Any
purported sale, assignment, transfer, conveyance, gift,
pledge, mortgage, encumbrance or other disposition not having
the prior written consent of Franchisor shall be null and void
and shall constitute a default hereunder on the part of
Franchisee.
C. Franchisee shall give Franchisor thirty (30) days advance
written notice setting forth all of the terms and conditions
of any proposed sale or transfer prohibited above and such
other information as Franchisor shall reasonably request.
Upon receiving Franchisee's request to transfer, Franchisor
shall have the right to acquire such items at the same price
offered by the prospective purchaser, except that Franchisor
shall not have a right of first refusal if Franchisee
transfers such items to a member of Franchisee's immediate
family. For purposes of this Agreement the members of
Franchisee's immediate family are Franchisee's spouse and
children (including adopted children). If Franchisor elects
not to exercise this right of first refusal, then Franchisor's
consent to the proposed transfer shall not be unreasonably
withheld. No sale, assignment, transfer, conveyance, gift,
pledge, mortgage, encumbrance or other disposition to a party
other than Franchisor shall take place until such time as (i)
in the case of a purchaser or transferee who is not a member
of Franchisee's immediate family and who is not then currently
a Check Express franchisee in good standing, the purchaser or
transferee executes the then current Check Express Franchise
Agreement and any related documents required to be executed at
the time by Franchisor and Franchisee pays a $5,000 transfer
fee to Franchisor, or (ii) in the case of a purchaser or
transferee who is not a member of Franchisee's immediate
family but who is then currently a Check Express franchisee in
good standing, the purchaser or transferee executes the then
current Check Express Franchise Agreement and any related
documents required to be executed at the time by Franchisor
and Franchisee pays a $2,500 transfer fee to Franchisor, or
(iii) in the case of a purchaser or transferee who is a member
of Franchisee's immediate family, the purchaser or transferee
executes an agreement in form and substance acceptable to
Franchisor agreeing to assume all of Franchisee's obligations
under this Agreement and any related documents required to be
executed at the time by Franchisor and Franchisee pays a
$1,000 transfer fee to Franchisor. In any event, Franchisor
may require as an additional condition to any sale,
assignment, transfer, conveyance, gift or other disposition
restricted by this Agreement, that the principal owner or
principal office manager of the purchaser or transferee
complete the Check Express Training Course.
D. Upon the death or incompetency of Franchisee, if Franchisee is
an individual, or upon the death or incompetency of the
majority shareholder or partner of Franchisee, if Franchisee
is a corporation or a partnership, the spouse, adult children,
or estate of the decedent shall have the right to participate
in the ownership of the franchised business under the terms of
this Agreement for a period of six (6) months from the date of
death or incompetency. During this time, the spouse, adult
children, or estate of the decedent must either:
(i) Satisfy all of the qualifications for a transferee
or purchaser of a Check Express franchise, except
that no transfer fee or initial franchise fee
shall be charged; or
Page 17 of 39
<PAGE> 357
(ii) Sell, transfer, or assign the franchise to a
person who satisfies all of the qualifications for
a transferee or purchaser of a Check Express
franchise.
During the period between the death or mental incompetency of
any person described in this subsection and the ultimate
disposition of the interest in Franchisee, the day-to-day
operation of the franchised business shall be conducted under
the supervision of an individual satisfactory to Franchisor.
17. LATE FEES
A. Franchisee shall be assessed a late charge of ten percent
(10%) of the amount of any fee which is received more than ten
(10) days late. Any amount due Franchisor under this
Agreement which is not paid within thirty (30) days of the due
date thereof shall accrue interest at the highest permitted
rate. Nothing herein contained shall be construed or so
operate as to require Franchisee to pay interest at a greater
rate than is now lawful to contract for, or to make any
payment, or to do any act contrary to applicable law. Should
any interest and other charges paid by Franchisee in
connection with this Agreement result in the computation or
earning of interest in excess of the maximum rate of interest
which is legally permitted under applicable law, then any and
all such excess shall be and the same is hereby waived by
Franchisor, and any and all such excess shall be automatically
credited against and in reduction of any indebtedness owed by
Franchisee, and the portion of said excess which exceeds the
amount of indebtedness owed by Franchisee shall be paid by
Franchisor to Franchisee. Late payments shall be applied as
determined by Franchisor.
B. Franchisor may offset against any amount it may owe to
Franchisee, whether arising out of this Agreement or
otherwise, any amount, including late fees, which Franchisee
may owe to Franchisor.
18. TAXES, PERMITS AND INDEBTEDNESS
A. Franchisee shall promptly pay when due all taxes and all
accounts and other indebtedness of every kind incurred by
Franchisee in the conduct of the franchised business.
B. Franchisee shall timely comply with all federal, state and
local laws and regulations and shall timely obtain any and all
permits, certificates, or licenses necessary for the full
power and proper conduct of the franchised business.
19. RECORDS OF OPERATION
Franchisee shall maintain at Franchisee's business location described
in Section 1.A adequate records of Franchisee's business operations in
accordance with the requirements of Section 10.P. All such records
shall be subject to examination by Franchisor's authorized
representatives, at such times as Franchisor may select. Said records
shall include, but shall not be limited to, Franchisee's purchase
records, sales records, employment records, promotional expense
records, profit and loss statements, balance sheets, tax returns
pertaining to the franchised business and other records normally
maintained by such a business. Franchisee shall use such accounting
forms and reporting procedures as may be reasonably requested by
Franchisor for the purposes of this Agreement. Should any controversy
develop with respect to the accuracy and truthfulness of Franchisee's
records, Franchisor shall have the right to require an audit by a
certified public accountant of Franchisee's operation. In the event
Page 18 of 39
<PAGE> 358
of such an audit, should there be found to be due to Franchisor an
amount greater than 105% of the amount which was claimed by Franchisee
under its previously submitted accountings, then the entire reasonable
expense of the audit shall be paid by Franchisee to Franchisor within
ten (10) days of the submission of the bill therefor; otherwise such
expense shall be assumed by Franchisor. Franchisee agrees to
cooperate with any such certified public accountant engaged for the
purposes of such audit and execute any and all documents reasonably
required by the auditor in connection with such audit and further to
disclose to the auditor all such information requested by the auditor
which Franchisee has in its possession or to which it has reasonable
access.
20. ADVERTISING
A. Franchisee shall expend at least the greater of (i) 3% of its
adjusted gross monthly receipts or (ii) $1,000.00 per month in
the promotion of its business in accordance with Franchisor's
Operating Manuals and Advertising Manual, if any, and policy
directives which may be issued from time to time.
B. Once Franchisor formally announces that there are at least two
(2) franchisees located in the same area of dominant influence
("ADI") in which Franchisee is located, and upon the
determination of a majority of the franchisees located in such
ADI (without reference to the number of franchised stores
operated by such franchisees), Franchisor may, at its option,
require each such franchisee, including Franchisee, and each
company-owned store to contribute monthly to a Cooperative
Advertising Fund for that ADI an amount equal to no less than
1% and no greater than 3% of each franchisee's (or company-
owned store's) adjusted gross monthly receipts arising from
the operations of the stores located in the ADI, which amount
shall be determined from time to time thereafter by the
Cooperative Advertising Fund Committee for such ADI (the
"Committee") in accordance with Section 20.E.
C. Said Cooperative Advertising Fund assessments shall be paid
monthly to the Committee for deposit in the Fund on or before
the fifth day of each month. All amounts paid to the
Cooperative Advertising Fund shall be in addition to the
expenditure requirement of Section 20.A and shall be expended
only for advertising in the ADI or otherwise for in-store
promotions of all franchised and company-owned stores in the
ADI.
D. Franchisor and each franchisee in such ADI shall appoint one
(1) member to the Committee for such ADI. The Committee shall
elect from time to time a president, one or more vice
presidents, a secretary and a treasurer by a vote of a
majority of the members of the Committee. Such officers shall
have the duties and responsibilities as may be determined by
the Committee bylaws adopted by a majority of the members of
the Committee and shall serve without compensation. Except as
otherwise provided herein, Robert's Rules of Order and the
Committee's bylaws shall govern all meetings of the Committee,
which meetings shall be conducted no fewer than once every
calendar quarter.
E. Any Cooperative Advertising Fund assessment in excess of the
minimum 1% of each franchisee's adjusted gross monthly
receipts shall only be made upon the vote of a majority of the
Committee members. Any expenditure or disbursement from the
Cooperative Advertising Fund shall only be made upon the vote
of Committee members representing a majority of the Check
Express stores in good standing in the ADI. For purposes of
this Section 20, the Committee member appointed by Franchisor
shall be deemed to represent one Check Express store, unless
there are more than one
Page 19 of 39
<PAGE> 359
company-owned store in the ADI, in which case such Committee
member shall be deemed to represent that number of stores
equal to the number of company-owned stores in the ADI.
F. Franchisee shall receive a report from the secretary of the
Committee at least quarterly regarding deposits into, and
disbursements from, the Cooperative Advertising Fund and
regarding the current Cooperative Advertising Fund balance.
Franchisor shall be entitled at all times to inspect the books
and records of the Committee and may require an accounting of
all amounts paid to the Fund. Neither Franchisor nor any
Committee member shall be liable to Franchisee for any act or
omission with respect to the Fund which is consistent with
this Agreement and done in good faith. All advertising
conducted by the Committee shall be in strict compliance with
the requirements of this Agreement which apply to advertising
conducted by Franchisee.
G. The Cooperative Advertising Fund assessments contemplated by
this Section shall be discontinued at any time upon the
determination of Franchisor or upon the vote of the members of
the Committee representing no less than 75% of the Check
Express stores in the ADI. Upon the discontinuation of the
Cooperative Advertising Fund assessments, Franchisor shall
have the right to supervise or direct the final liquidation of
any remaining balance in the Fund, the disbursement of which
had not been authorized as provided herein.
H. Ninety (90) days after Franchisee receives written notice from
Franchisor that Franchisor has determined national advertising
or marketing to be economically advantageous, Franchisee shall
pay to Franchisor's National Marketing Fund 1 1/4% of its
adjusted gross monthly receipts each month. This 1 1/4% of
adjusted gross monthly receipts shall be paid to Franchisor on
the 25th day of each calendar month, based upon the adjusted
gross monthly receipts of the prior calendar month, and is to
be used by Franchisor, as Franchisor in its sole and absolute
discretion determines best, for national advertising and/or
marketing, after consultation with a National Council of
Franchisees appointed by Franchisor.
I. Franchisee shall receive a report at least semi-annually
regarding deposits into and disbursements from the National
Marketing Fund. Franchisor may reimburse itself for
reasonable accounting, bookkeeping, reporting and legal
expenses incurred by it with respect to the National Marketing
Fund, which reimbursed expenses shall not exceed 20% of the
amounts contributed to the Fund. Franchisor shall not be
liable for any act or omission with respect to the Fund which
is consistent with this Agreement and done in good faith.
21. RELATIONSHIP OF PARTIES
A. Except as otherwise provided in this Agreement and in the
Check Express Operating Manuals, the conduct of Franchisee's
business (including, without limitation, the nature and
amounts of fees charged by Franchisee and fee or commission
splits between Franchisee and other franchisees or between
Franchisee and Franchisee's employees or affiliated persons)
shall be determined by Franchisee in its sole discretion.
B. This Agreement does not constitute Franchisee an agent, legal
representative, joint venturer, partner, employee, or servant
of Franchisor for any purpose whatsoever; and it is understood
between the parties hereto that Franchisee shall be an
independent contractor and is in no way authorized to make any
contract, agreement, warranty, or
Page 20 of 39
<PAGE> 360
representation on behalf of Franchisor, or to create any
obligation express or implied on behalf of Franchisor. The
parties agree that this Agreement does not create a fiduciary
relationship between them.
C. Under no circumstances shall Franchisor be liable for any act,
omission, contract, debt, or any other obligation of
Franchisee. Franchisee acknowledges that since the franchised
business involves the handling of large amounts of cash, there
are certain inherent dangers in the operation of the
franchised business including theft, embezzlement, and
personal injury resulting from attempted theft or otherwise.
Franchisee specifically acknowledges that Franchisor shall in
no way be responsible for any injuries to person or property
resulting from the operation of the franchised business.
Franchisee shall indemnify and save Franchisor harmless
against any claim and the cost of defending against such claim
arising directly or indirectly from, or as a result of, or in
connection with, Franchisee's operation of the franchised
business or the use of the Proprietary Marks.
22. REMEDIES
No right or remedy herein conferred upon or reserved to Franchisor is
exclusive of any other right or remedy herein or by law or equity
provided or permitted; but each shall be cumulative of every right or
remedy.
23. NON-WAIVER
Failure of any party at any time to require strict performance by any
other party of any provision hereof shall not be deemed a continuing
waiver of that provision or a waiver of any other provision of this
Agreement whether or not of the same or similar nature.
24. REPRESENTATIONS
No representations, promises, guarantees or warranties of any kind are
made by Franchisor to induce Franchisee to execute this Agreement
except as specifically set forth in the Franchise Offering Circular
which has been delivered to Franchisee. Franchisee acknowledges that
the success of the business to be established pursuant to this
Agreement depends upon the personal efforts of Franchisee, its
designated manager, or Franchisee's partners or officers, if
Franchisee is a partnership or corporation. Franchisee acknowledges
that neither Franchisor, nor any other person has guaranteed or
warranted that Franchisee will succeed in the operation of a business
or guaranteed that Franchisee will derive income from the franchise or
represented that Franchisor will refund all or part of the fees paid
for the franchise or repurchase any of the products, equipment,
supplies or chattels, supplied by Franchisor, if any, if Franchisee is
unsatisfied with the franchise.
25. COVENANTS AND WARRANTIES
A. Where Franchisee has delegated the overall management of the
franchised business to an employee other than the principal
owner of Franchisee, the designated manager shall devote full
time, energy, and effort to the management and operation of
the franchised business. The full time, energy, and effort of
the principal owner of Franchisee or the principal shareholder
of a corporate Franchisee is encouraged but not required.
B. Franchisee hereby warrants the accuracy of all financial and
other information regarding business qualifications which has
been provided to Franchisor as an inducement to
Page 21 of 39
<PAGE> 361
entering into this Agreement and which is to be provided
pursuant to this Agreement or any renewal hereof.
C. Franchisee represents and warrants that it is obtaining the
franchise granted for the purposes of the operation of the
franchised business and that it has no present intention to
attempt to sell or transfer its business.
D. Franchisee acknowledges that the success of the business
venture contemplated by this Agreement depends primarily upon
the ability of Franchisee or its principal owner as an
independent businessman. Franchisee acknowledges that neither
Franchisor nor any other person has guaranteed or warranted
that Franchisee will succeed in the operation of the
franchised business or has provided any sales or income
projections of any kind to Franchisee.
E. Franchisee further acknowledges that there have been no
representations, promises, guarantees, or warranties of any
kind made by Franchisor to induce Franchisee to execute this
Agreement except as specifically set forth in the Franchise
Offering Circular that has been delivered to Franchisee.
F. Franchisee further acknowledges that it has received a
complete and final copy of this Agreement and applicable
exhibits not less than five (5) business days prior to the
date on which this Agreement was executed by Franchisee.
Franchisee further acknowledges that it has received a Uniform
Franchise Offering Circular not less than ten (10) business
days prior to the date of execution of this Agreement by
Franchisee.
26. ENTIRE AGREEMENT
This Agreement, the documents referred to herein, and any exhibits and
addenda attached hereto constitute the entire, full, and complete
agreement between the parties concerning the subject matter hereof and
supersede all prior agreements, no other representation having induced
Franchisee to execute this Agreement, and there are no
representations, inducements, promises, or agreements, oral or
otherwise between the parties not embodied herein, which are of any
force or effect with reference to this Agreement or otherwise. No
amendment, change, or variance from this Agreement shall be binding on
any party unless executed in writing by Franchisor and Franchisee. NO
FIELD REPRESENTATIVE OF FRANCHISOR HAS THE RIGHT OR AUTHORITY TO MAKE
ORAL OR WRITTEN AMENDMENT OR MODIFICATION TO THIS AGREEMENT, AND ANY
PURPORTED AMENDMENT OR MODIFICATION MADE BY SUCH FIELD REPRESENTATIVE
SHALL NOT BE BINDING UPON ANY OF THE PARTIES HERETO.
27. SEVERABILITY
Each section, part, term, and provision of this Agreement shall be
considered severable; and if, for any reason, any section, part, term,
or provision herein is determined to be invalid and contrary to, or in
conflict with, any existing or future law or regulation of a court or
agency having valid jurisdiction, such shall not impair the operation
or affect the remaining portions, sections, parts, terms, or
provisions of this Agreement, and the latter will continue to be given
full force and effect and bind the parties hereto; and said invalid
sections, parts, terms, or provisions shall be deemed not to be a part
of this Agreement.
Page 22 of 39
<PAGE> 362
28. AUTHORITY AND ACCEPTANCE
Each of the undersigned parties warrants that it has full authority to
sign and execute this Agreement. If Franchisee is a corporation or
partnership, the individuals executing this Agreement on behalf of
such corporation or partnership warrant to Franchisor both
individually and in their capacities as officers or partners that all
of the shareholders of the corporation or all of the partners in that
partnership have read and approved this Agreement including any
restrictions which this Agreement places upon their right to transfer
their interests in the corporation or partnership. The Agreement
shall become valid on the date it is accepted by Franchisor and
Franchisee. Franchisor will notify Franchisee of such acceptance by
sending Franchisee a copy of the Agreement executed as hereinabove
provided. If this Agreement is not accepted by Franchisor within
thirty (30) days of receipt, then this Agreement shall be null and
void.
29. MISCELLANEOUS
A. Except as is otherwise specifically provided, Franchisor may
withhold any consent or approval provided for herein at its
discretion.
B. In the event of any conflict between this Agreement and the
Check Express literature, this Agreement shall control.
30. EXCLUSIVE PROPERTY
The form and content of this Agreement are the exclusive property of
Franchisor and may not be reproduced in part or in whole by Franchisee
or others except as may be necessary in the ordinary course of
Franchisee's business.
31. CONSTRUCTION
A. This Agreement, after review by Franchisor, was accepted in
the State of Florida and shall be interpreted, construed and
governed according to the internal laws, and not the laws
pertaining to choice or conflict of laws, thereof, except
that:
(i) The laws of the state in which the franchised
business is to be located which govern the offer,
sale and registration of franchises, including,
without limitation, any so-called "Little FTC Act"
of such state, shall apply to the offer, sale, and
registration of the Check Express franchise
granted by this Agreement and not such laws of the
State of Florida (unless the franchised business
is to be located in Florida), and
(ii) The laws of the jurisdiction in which any action
to enforce any covenants not to compete provided
or referenced herein shall govern such covenants
not to compete, without giving effect to the
principles pertaining to choice or conflict of
laws thereof.
B. Article or section headings are for reference purposes only
and shall not in any way modify or limit the statements
contained in any article or section. All words in this
Agreement shall be deemed to include any number or gender as
the context or sense of this Agreement requires.
Page 23 of 39
<PAGE> 363
C. Notwithstanding any provision herein contained providing for
the termination of this Agreement, all obligations of the
parties hereto which expressly arise upon or after the
termination of this Agreement shall survive such termination.
32. VENUE
The parties hereby consent to the jurisdiction of any court, state or
federal, located in Hillsborough County, Florida, and Franchisee
agrees to and hereby does designate the Secretary of State of the
State of Florida as its agent for receipt of service of process,
provided that a copy of such service of process is mailed, return
receipt requested, to Franchisee's last known mailing address.
33. NOTICE
A. Any and all notices and other communications that may be
required or permitted hereunder shall be in writing and,
unless otherwise expressly provided herein to the contrary,
either (i) delivered in person, (ii) sent by registered or
certified mail, return receipt requested, postage prepaid,
(iii) sent by reputable overnight courier, or (iv) sent by
telecopy transmission (with hard copy promptly sent by
registered or certified mail, return receipt requested,
postage prepaid, or by reputable overnight courier) to the
parties hereto at their respective addresses or telecopy
numbers set forth below, or to such other addresses or
telecopy number as may be specified by written notice
delivered to the other party in accordance herewith:
If to Franchisor,
if delivered in person or by overnight courier:
Check Express USA, Inc.
101 East Kennedy Boulevard
Suite 3800
Tampa, Florida 33602
Attention: President
(813) 223-3338 (Telephone)
if delivered by registered or certified mail:
Check Express USA, Inc.
Post Office Box 270622
Tampa, Florida 33618
Attention: President
if delivered by telecopy:
(813) 223-4308
Attention: President
If to Franchisee, at the addresses and telecopy number
specified in Section 3 of the General Addendum.
B. Notices and other communications given as provided herein
shall be deemed received (i) if personally delivered, then on
the date of delivery; (ii) if mailed, then on the date
Page 24 of 39
<PAGE> 364
of delivery indicated on the return receipt; (iii) if sent by
overnight courier, then on the date of delivery as indicated
on the signed airbill; and (iv) if sent by telecopy, then on
the date such notice or communication is telecopied.
34. ATTORNEYS' FEES
In the event that either party hereto shall file an action to enforce
any provision of this Agreement or seek damages for breach hereof, the
prevailing party shall be paid in addition to all other sums which may
be required to be paid a reasonable sum for such prevailing party's
attorneys' fees.
35. EQUITY OWNERS OF FRANCHISEE
Franchisee represents and warrants that set forth in Section 2 of the
General Addendum to this Agreement are the names, addresses and
percentage ownership of all equity owners of Franchisee (e.g. partners
if Franchisee is a partnership or shareholders if Franchisee is a
corporation).
36. MEDIATION
Franchisee agrees that as a condition precedent to the bringing of any
legal action to enforce any rights hereunder or to assert a claim for
damages in connection herewith, that Franchisee will give Franchisor
ten (10) days prior written notice of its intent to bring such legal
action and, upon Franchisor's election to require mediation as
provided herein (which election shall be made by written notice given
within ten (10) days of receipt of Franchisee's written notice),
agrees to submit to non-binding mediation in accordance with the CPR
Procedure for Resolution of Franchise Disputes established by CPR
Legal Program, Inc. Franchisee's failure to give the notice required
by this Section shall be grounds for the staying of any such legal
action pending submission to such non-binding mediation.
IN WITNESS WHEREOF, the parties hereto intending to be legally
bound, hereby have duly executed, sealed and delivered this Agreement in
duplicate as of the day and year first above written.
FRANCHISEE:
-----------------------------------------------
(Print Name of Business)
BY:
-------------------------------------------
-----------------------------------------------
-----------------------------------------------
Page 25 of 39
<PAGE> 365
Accepted on this ______ day of _______________________, 19_____.
FRANCHISOR:
CHECK EXPRESS USA, INC.
BY:
-----------------------------------
Roger D. Goertz, Its President
Page 26 of 39
<PAGE> 366
GENERAL ADDENDUM
The terms of this General Addendum are incorporated by reference into
the Franchise Agreement made this _____ day of __________________, 19___, by
and between CHECK EXPRESS USA, INC., a Florida corporation (hereinafter
"Franchisor"), and _________________________________________
___________________________________________ (hereinafter "Franchisee").
1. In accordance with Section 1.A and Section 1.B of the
Franchise Agreement, the Selection Area in which the specific business location
of the Check Express franchise granted by the Franchise Agreement is to be
selected and approved is described as follows:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
2. Following are the names, addresses and percentage ownership of
all equity owners of Franchisee (e.g. partners if Franchisee is a partnership
or shareholders if Franchisee is a corporation):
<TABLE>
<CAPTION>
Percentage
Name Address Ownership
---- ------- ---------
<S> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
</TABLE>
3. Following are the addresses and telecopy number to which
notice is to be sent to Franchisee in accordance with Section 33 of the
Franchise Agreement until changed in accordance with such Section:
if delivered in person or by overnight courier:
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Attention:
----------------------------------------
( ) (Telephone)
-------- ----------------------------
Page 27 of 39
<PAGE> 367
if delivered by registered or certified mail (if different
than above):
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Attention:
----------------------------------------
if delivered by telecopy:
( )
-------- ----------------------------------------
Attention:
----------------------------------------
This General Addendum to the Franchise Agreement is agreed to as of
the date of the Franchise Agreement.
FRANCHISEE:
----------------------------------------------------
By:
------------------------------------------------
FRANCHISOR:
CHECK EXPRESS USA, INC.
By:
------------------------------------------------
Roger D. Goertz, Its President
Page 28 of 39
<PAGE> 368
AGREEMENT ADDENDA FOR
CERTAIN REGISTRATION STATES
THIS AGREEMENT ADDENDA FOR CERTAIN REGISTRATION STATES (this
"Addendum") is made and entered into this _____ day of ________________, 19___,
by and between CHECK EXPRESS USA, INC., a Florida corporation (hereinafter,
"Franchisor") and _______________________________________________ (hereinafter,
"Franchisee").
WHEREAS, Franchisor and Franchisee have entered into a franchise
agreement dated of even date herewith whereby Franchisee has been granted the
right to own and operate a franchised store in either Illinois, Indiana,
Maryland, Minnesota, North Dakota, South Dakota, Washington, or Wisconsin (the
"Franchise Agreement");
WHEREAS, the above-referenced states require that any franchise
agreement include or exclude certain provisions which are standard to the Check
Express franchise agreement.
NOW, THEREFORE, in order to ensure compliance with such states' laws,
the Franchise Agreement is hereby amended as indicated below:
1. STATE SPECIFIC CHANGES. The Franchise Agreement is amended as
provided below for the state in which Franchisee's franchised store is located:
A. ILLINOIS.
(i) Paragraphs 25.D. E., and F. are hereby deleted in their
entirety.
(ii) Paragraph 32. is hereby deleted in its entirety and the
following paragraph is substituted in its stead:
STATE LAW. The Illinois Franchise Disclosure Act supersedes
any provision of this Agreement that conflicts therewith.
B. INDIANA.
(i) Paragraph 1.B.(v) of the Franchise Agreement is deleted
and the following paragraph is substituted in its stead:
Franchisor's approval of any such proposed location and any
lease therefor (and any relocation thereof) does not
constitute a guaranty by Franchisor that such location will
prove profitable and, to the extent permitted under Indiana
Code Section 23-2-2.7-1(5), Franchisee hereby waives and
releases any right or claim against Franchisor arising in
connection with the selection or approval of Franchisee's
business location, including, without limitation, the failure
of the approved location to fulfill Franchisee's expectations.
(ii) Paragraph 4.C. of the Franchise Agreement is amended by the addition
of the following language to the original language that appears therein:
Page 29 of 39
<PAGE> 369
Provided, however, that any such release executed by
Franchisee shall not relieve Franchisor from any liability
imposed by Indiana franchise law;
(iii) Paragraph 10.W. of the Franchise Agreement is deleted
and the following paragraph is substituted in its stead:
To, and to cause its responsible partner, officer or
designated manager to, work diligently, fairly and in good
faith to perform all of Franchisee's duties and obligations
under this Agreement. In addition, Franchisee agrees that any
manager who is not the Franchisee is required to execute an
agreement with Franchisee in a form approved by Franchisor
prior to commencing employment, covenanting that the manager
will devote manager's entire time, attention, and energies to
the franchise business; that the manager will maintain all
Check Express trade secrets and will not disclose or allow any
unauthorized person to copy any Check Express copyrighted
materials; and that the manager will not engage in a check
cashing business in competition with any Check Express
franchise or company-owned store within the exclusive
territory, if any, described in the Franchise Location
Agreement, or if none, then in a 50 mile radius from
Franchisee's store location(s), during the term of the
manager's employment and for one (1) year thereafter. Such
agreement shall contain an express provision specifying that
Franchisor is a third party beneficiary and has a direct right
of enforcement thereof.
(iv) Paragraph 13.A. of the Franchise Agreement is deleted
and the following paragraph is substituted in its stead:
Franchisee agrees on behalf of itself and its shareholders, if
a corporation, and its partners, if a partnership, that during
the term of this Agreement and any renewal hereof and for one
(1) year following termination of this Agreement or any
renewal hereof, whether voluntary or involuntary and with or
without cause, they will not, (i) within the Exclusive
Territory described in Section (ii) of the Franchise Location
Agreement, or if none, then in a 50 mile radius from
Franchisee's store location(s), directly or indirectly engage
in the business of cashing checks, induce or attempt to induce
any of Franchisor's franchisees to terminate their
relationship with Franchisor, induce or attempt to induce any
employees of Franchisor or of any of its franchisees to
terminate their employment, or divert or attempt to divert any
customers of Franchisor or any of its franchisees to any
competitor, either as an owner, an independent contractor,
partner, joint venturer, or as a stockholder, officer,
director, employee, agent, licensor, licensee, Franchisor,
subfranchisor or franchisee, for any person, firm,
partnership, corporation, or other entity.
(v) Paragraph 13.B. of the Franchise Agreement is deleted
in its entirety.
(vi) Paragraph 13.G. of the Franchise Agreement is deleted
and the following paragraph is substituted in its stead:
In the event that Franchisee violates any term of this
Section, Franchisor may seek from a court of competent
jurisdiction ex parte injunctive relief to enforce the
provisions of this Section. Any injunctive relief that
Franchisor may be granted shall be in addition to any other
rights or remedies available to Franchisor.
(vii) The introductory Paragraph 14. of the Franchise
Agreement is amended by the addition of the following language to the original
language that appears therein:
Page 30 of 39
<PAGE> 370
Franchisor shall not unilaterally terminate this Agreement in
bad faith or without good cause.
(viii) Paragraph 31.A. of the Franchise Agreement is deleted
and the following paragraph is substituted in its stead:
This Agreement shall be interpreted, construed and governed
according to the Indiana Franchise Disclosure Law and the
Indiana Deceptive Franchise Practices Law, as either law may
be amended.
(ix) Paragraph 32. of the Franchise Agreement is deleted and
the following paragraph is substituted in its stead:
Franchisee is entitled to the jurisdiction and venue of the
courts of Indiana. In the event that Franchisee does not
invoke the jurisdiction and venue of the courts of Indiana,
the parties hereby consent to the jurisdiction of any court,
state or federal, located in Hillsborough County, Florida, and
Franchisee agrees to and hereby does designate the Secretary
of State of the State of Florida as its agent for receipt of
service of process, provided that a copy of such service of
process is mailed, return receipt requested, to Franchisee's
last known mailing address.
(x) Paragraph 1 of the Guaranty which is annexed as Exhibit
C to the Franchise Agreement is deleted in its entirety and the following is
substituted in its stead:
The undersigned hereby agree that no extension, compromise,
arrangement, alternative in time or method of performance or
release or partial release of any party or security, and no
other act or omission by Franchisor shall release or relieve
the undersigned.
C. MARYLAND. Paragraph 4.C. is amended by the addition of
the following language to the original language that appears therein:
which release does not apply to any liability under the
Maryland Franchise Registration and disclosure law; and
D. MINNESOTA.
(i) Paragraph 3. is amended by the addition of the
following language to the original language that appears therein:
Minnesota law provides franchisees with certain termination
and non-renewal rights. With respect to franchises governed
by Minnesota law, the Franchisor will comply with Minn. Stat.
Sec. 80C.14, Subd. 3, 4, and 5 which require, except in
certain specified cases, that a franchisee be given ninety
(90) days notice of termination (with sixty (60) days to cure)
and one hundred eighty (180) days notice for non-renewal of
the franchise agreement.
(ii) A new paragraph 4.H. is created to read as follows:
If Franchisor determines not to renew the Franchise Agreement,
Franchisor shall give Franchisee one hundred eighty (180) days
notice of non-renewal, except in certain specified cases.
Page 31 of 39
<PAGE> 371
(iii) Paragraph 8.D. is deleted in its entirety and the
following language is substituted in its stead:
Franchisee shall promptly notify Franchisor of any claim,
demand, or suit based upon, or arising out of, any attempt by
any other person, firm, partnership, or corporation to use the
Proprietary Marks licensed hereunder, the copyrighted
materials, or any colorable variation thereof. Franchisee
agrees also to promptly notify Franchisor of any litigation
instituted by any person, firm, partnership, corporation, or
government agency against the Franchisee involving
Franchisor's Proprietary Marks or copyrighted materials.
Franchisor shall, at its discretion, and at its own expense,
defend the trade name, trademarks, service marks, Proprietary
Marks, and the System against imitations and infringements.
Franchisor shall indemnify Franchisee if a valid claim of
imitation or infringement is asserted arising out of
Franchisee's use of the trade name, trademarks, service marks,
Proprietary Marks or the System. In the event Franchisor
undertakes the defense or prosecution of any litigation
relating to the Proprietary Marks licensed hereunder,
Franchisee agrees to execute any and all documents and do such
acts and things as may, in the opinion of legal counsel for
Franchisor, be necessary to carry out such defense or
prosecution.
(iv) Paragraph 14.C. is deleted in its entirety and the
following language is substituted in its stead:
In the event that Franchisee becomes bankrupt or insolvent, or
if a receiver is appointed to take possession of Franchisee's
business or property or any part thereof, or if Franchisee
shall make a general assignment for the benefit of
Franchisee's creditors, or if a judgment is obtained against
Franchisee which after all rights of appeal have been
exhausted, is not satisfied or released within thirty (30)
days, Franchisee shall be deemed to be in default under this
Agreement and the Franchisor may terminate the franchise in
accordance with Minnesota law.
(v) Paragraph 14.D. is deleted in its entirety and the
following language is substituted in its stead:
If Franchisee shall have its license to do business revoked or
suspended, or if Franchisee or any affiliate of Franchisee
shall be in default under any term of this Agreement
(including, without limitation, failing to pay any amounts due
under this Agreement) or any other agreement to which
Franchisee or any of its affiliates is a party on the one hand
and Franchisor or any of its affiliates is a party on the
other hand and such license revocation or suspension or such
default shall not be cured within sixty (60) days after
receipt of written notice to cure thereof from Franchisor or
its agents, then in addition to all other remedies at law or
in equity, Franchisor may at its option terminate this
Agreement. Termination of the franchise under such
circumstances shall become effective in accordance with
Minnesota law. For purposes of this Agreement, "affiliate" or
"affiliates" means (i) a party which, directly or indirectly,
owns or controls a party hereto, (ii) any party, directly or
indirectly, owned or controlled by a party hereto or (iii) any
party, directly or indirectly, owned or controlled by a party
which, directly or indirectly, owns or controls a party
hereto.
(vi) Paragraph 14.E. is deleted in its entirety and the
following language is substituted in its stead:
Page 32 of 39
<PAGE> 372
If Franchisee's store is closed to the public for a period
exceeding seven (7) days, unless such closing is through no
fault of Franchisee, Franchisee shall be deemed to be in
default under this Agreement and the Franchisor may terminate
the franchise in accordance with Minnesota law.
(vii) A new Paragraph 14.F. is created to read as follows:
Pursuant to Minnesota law, Franchisor shall give Franchisee
ninety (90) days notice of termination, with sixty (60) days
to cure the default giving rise to termination, except in
certain specified cases.
(viii) Paragraph 31.A. is amended by the addition of the
following language to the original language that appears therein:
Pursuant to Minn. Stat. Sec. 80C.21, this section shall not in
any way abrogate or reduce any rights of the Franchisee as
provided for in Minnesota Statutes Chapter 80C, including, but
not limited to, the right to submit matters to the
jurisdiction of the courts of Minnesota.
E. NORTH DAKOTA.
(i) Paragraph 13.A. is amended by the addition of the
following language to the original language that appears therein.
This covenant not to compete is subject to Section 9-08-06 of
the North Dakota Century Code.
(ii) Paragraph 31.A. is deleted in its entirety, Paragraph
31.B. is renumbered to be Paragraph 31.A., and Paragraph 31.C. is renumbered to
be Paragraph 31.B.
(iii) Paragraph 32 is deleted in its entirety and the
remaining paragraphs are renumbered accordingly.
F. SOUTH DAKOTA.
(i) Paragraph 13 of the Franchise Agreement is amended by
the addition of the following language to the original language that appears
therein:
Covenants not to compete upon termination or expiration of a
franchise agreement are generally unenforceable in South
Dakota, except in certain instances as provided by law.
(ii) Paragraph 14 of the Franchise Agreement is hereby
amended by adding the following language to the original language which appears
therein:
The Franchisor's right to terminate the Franchise Agreement
and franchise upon the bankruptcy of the Franchisee may not be
enforceable under federal bankruptcy law (11 U.S.C. Section
101 et seq.).
(iii) Paragraph 26 of the Franchise Agreement is hereby
amended by adding the following language to the original language which appears
therein:
Page 33 of 39
<PAGE> 373
Pursuant to SDCL 37-5A-86, any acknowledgement provision,
disclaimer or integration clause or a provision having a
similar effect in a franchise agreement does not negate or act
to remove from judicial review any statement,
misrepresentation or action that would violate this chapter or
a rule or order under this chapter.
(iv) Paragraph 31.A. of the Franchise Agreement is amended
by the addition of the following language to the original language that appears
therein:
The law regarding franchise registration, employment,
covenants not to compete, and other matters of local law will
be governed by the laws of the State of South Dakota; but,
except as otherwise provided herein, as to contractual and all
other matters, the Franchise Agreement and all provisions of
this instrument will be and remain subject to the application,
construction, enforcement, and interpretation under the
governing law of the State of Florida.
(v) Paragraph 32 of the Franchise Agreement is hereby
amended by addition of the following language to the original language that
appears therein:
Notwithstanding anything to the contrary contained herein, any
provision of the Franchise Agreement which designates
jurisdiction or venue or requires the Franchisee to agree to
jurisdiction or venue in a forum outside of South Dakota is
void with respect to any cause of action which is otherwise
enforceable in South Dakota.
G. WASHINGTON.
(i) Paragraph 4.C. of the Franchise Agreement is hereby
amended by addition of the following language to the original language that
appears therein:
Provided, however, that any such release executed by
Franchisee shall not relieve Franchisor from any liability
imposed by the Washington Franchise Investment Protection Act;
(ii) A new Paragraph 4.H. is hereby created to read as
follows:
The Washington Franchise Investment Protection Act provides
franchisees with certain rights with regard to the non-renewal
of franchises. RCW 19.100.180(2)(i) provides that if the
Franchisor refuses to renew a franchise, the Franchisor must
repurchase from the Franchisee, at fair market value, any
supplies or equipment which the Franchisee purchased from the
Franchisor. The Franchisor should compensate the Franchisee
for goodwill acquired during the operation of the franchise,
except that compensation for goodwill is not required if the
Franchisee has been given one year's notice of non-renewal,
and the Franchisor agrees in writing not to enforce any
non-compete covenant against the Franchisee. Amounts required
to be paid to the Franchisee may be offset against amounts
owed by the Franchisee to the Franchisor.
(iii) A new Paragraph 14.F. is hereby created to read as
follows:
The Washington Franchise Investment Protection Act provides
Franchisees with certain rights with regard to the termination
of franchises. RCW 19.100.180(2)(j) provides that the
Franchisor may not terminate a franchise prior to the
expiration of its term without good cause. Good cause
includes, without limitation, the failure of the Franchisee to
comply with material provisions in agreements with the
Franchisor if the Franchisee fails
Page 34 of 39
<PAGE> 374
to cure such default after receiving written notice thereof
and a reasonable opportunity, which need not exceed thirty
(30) days, to cure such default. If the Franchisee commits
three willful breaches of the same provision within a
twelve-month period, and has been given notice and an
opportunity to cure each default, then the Franchisor may
terminate the franchise upon any subsequent willful breach of
the same term without providing notice or an opportunity to
cure. Under the Washington Franchise Investment Protection
Act the Franchisor may terminate a franchise without giving
notice or an opportunity to cure a default where the
Franchisee (i) is adjudicated bankrupt or insolvent; (ii)
makes an assignment for the benefit of creditors or similar
disposition of the assets of the franchise business; (iii)
voluntarily abandons the franchise business; or (iv) is
convicted of or pleads guilty or no contest to a charge of
violating any law relating to the franchise business.
(iv) A new Paragraph 15.G. is hereby created to read as
follows:
The Washington Franchise Investment Protection Act requires
that if the Franchisor terminates the franchise for good
cause, the Franchisor shall purchase from the Franchisee, at
fair market value, any supplies or inventory which the
Franchisee purchased from the Franchisor, or on the
Franchisor's express requirement. Amounts required to be paid
to the Franchisee may be offset against amounts owed to the
Franchisor by the Franchisee.
(v) Paragraph 31.A. of the Franchise Agreement is deleted
in its entirety and the following is substituted in its stead:
This Agreement, after review by Franchisor, was accepted in
the State of Washington and shall be interpreted, construed
and governed according to the laws thereof.
(vi) Paragraph 32. is hereby deleted in its entirety and the
following is substituted in its stead:
The parties hereby consent to the jurisdiction of any court,
state or federal, located in the State of Washington or in
Hillsborough County, Florida, and Franchisee agrees to and
hereby does designate the Secretary of State of the State of
Florida as its agent for receipt of service of process,
provided that a copy of such service of process is mailed,
return receipt requested, to Franchisee's last known mailing
address.
(vii) New Paragraph 37. is created to read as follows:
If any of the provisions in the franchise offering circular or
franchise agreement are inconsistent with the relationship
provisions of RCW 19.100.180 or other requirements of the
Washington Franchise Investment Protection Act, the provisions
of the Act will prevail over the inconsistent provisions of
the franchise offering circular and franchise agreement with
regard to any franchise sold in Washington.
In any arbitration involving a franchise purchased in
Washington, the arbitration site shall be either in Washington
or in a place as mutually agreed upon at the time of the
arbitration, or as determined by the arbitrator.
(viii) The state of Washington has a statute, RCW 19.100.180
which may supersede the franchisor including the areas of termination and
renewal of your franchise. There may also be
Page 35 of 39
<PAGE> 375
court decisions which may supersede the franchise agreement in your
relationship with the franchisor including the areas of termination and renewal
of your franchise.
In any arbitration involving a franchise purchased in
Washington, the arbitration site shall be either in the state of washington, or
in a place mutually agreed upon at the time of the arbitration, or as
determined by the arbitrator.
In the event of conflict of laws, the provisions of the
Washington Franchise Investment Protection Act, Chapter 19.100 RCW shall
prevail.
A release or waiver of rights executed by a franchisee shall
not include rights under the Washington Franchise Investment Protection Act,
except when executed pursuant to a negotiated settlement after the agreement is
in effect and where the parties are represented by independent counsel.
Provisions such as those which unreasonably restrict or limit the statute of
limitations period for claims under the Act, rights or remedies under the Act
such as a right to jury trial may not be enforceable.
Transfer fees are collectable to the extent that they reflect
the franchisor's reasonable estimated or actual costs in effecting a transfer.
The undersigned does hereby acknowledge receipt of this
addendum.
H. WISCONSIN. A new Paragraph 14.F. is hereby created to
read as follows:
The Wisconsin Fair Dealership Law, Chapter 135, Wis. Stats.,
supersedes any provision of this Agreement that conflicts
therewith.
2. ALL STATES. To the extent this Addendum is inconsistent with
any terms or conditions of the Franchise Agreement or Exhibits or Attachments
thereto, the terms of this Addendum shall govern. Furthermore, the provisions
of this Addendum will be terminated if the Check Express franchise location is
moved from one of the states listed herein to a different state.
IN WITNESS WHEREOF, each of the undersigned has caused this Addendum
to be executed by its duly authorized officer on the date first above written.
FRANCHISEE:
------------------------------------------
By:
------------------------------------
------------------------------------
FRANCHISOR:
CHECK EXPRESS USA, INC.
By:
------------------------------------
Roger D. Goertz, Its President
Page 36 of 39
<PAGE> 376
EXHIBIT A
FRANCHISE LOCATION AGREEMENT
This Agreement is made by and between CHECK EXPRESS USA, INC., a
Florida corporation (hereinafter "Franchisor"), and __________________________
______________________ (hereinafter "Franchisee").
WHEREAS, Franchisor and Franchisee have previously entered into a
Franchise Agreement, dated __________________________ (the "Franchise
Agreement"), for a Check Express Franchise to be located within the Selection
Area described in Section 1 of the General Addendum to the Franchise Agreement;
and
WHEREAS, Franchisee is required under 1.B of the Franchise Agreement
to submit to Franchisor in writing for its approval a proposed specific
business location.
NOW, THEREFORE, the parties hereto agree as follows:
(i) Specific Business Location. Franchisee's specific business
location under the Franchise Agreement shall be located at:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
(ii) Exclusive Territory. So long as Franchisee's business is
located at the location described in Section (i) above, the exclusive
territory, if any, for purposes of Section 1.D of the Franchise Agreement is
described as follows:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
This Agreement is submitted to Franchisor this _____ day of
___________________, 19___.
FRANCHISEE:
------------------------------------------
By:
------------------------------------
Agreed to this _____ day of _____________________, 19___.
FRANCHISOR:
CHECK EXPRESS USA, INC.
By:
------------------------------------
Roger D. Goertz, Its President
Page 37 of 39
<PAGE> 377
EXHIBIT B
TELEPHONE LISTING AUTHORIZATION/ASSIGNMENT
THIS AGREEMENT (the "Agreement"), is made by and between CHECK EXPRESS
USA, INC., a Florida corporation ("Franchisor"), and __________________________
_______________________________ ("Franchisee") as of____________, 19___.
In consideration of the granting of a franchise to Franchisee pursuant
to a Franchise Agreement contemporaneously herewith and other valuable
consideration, the parties hereto agree as follows:
(iii) Franchisee is authorized and agrees to obtain telephone
service for Franchisee's Check Express store located at________________________
________________. Such Franchisee is authorized and agrees to secure white
pages, yellow pages and information listings only in the name of Check Express.
Franchisee shall submit to Franchisor for its written approval all telephone
listings, yellow page display advertising, layout and copy prior to their
placements, with the telephone company. The approval of Franchisor shall not
be unreasonably withheld. Franchisee shall be responsible for the payment of
any and all service charges and fees in connection with obtaining telephone
services, advertising and listings.
(iv) Franchisee hereby assigns to Franchisor all telephone numbers
and telephone listings utilized by Franchisee in operation of Franchisee's
Check Express store located at the above-stated address, which assignment shall
become effective immediately upon the termination of Franchisee's association
with Franchisor. This assignment is irrevocable and this Agreement shall
constitute conclusive evidence of such assignment. Franchisor will deliver
this Agreement to the telephone company or any other relevant party to
effectuate such assignment. Franchisee agrees to indemnify and hold Franchisor
harmless against losses, liabilities, damages, costs, or expenses, including
reasonable attorney fees, incurred by Franchisor that arise out of or result
from any claims of the telephone company arising prior to the delivery of this
assignment to the telephone company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
FRANCHISOR: FRANCHISEE:
CHECK EXPRESS USA, INC.
------------------------------------
By: By:
-------------------------------- ---------------------------------
Roger D. Goertz, Its President
Page 38 of 39
<PAGE> 378
EXHIBIT C
GUARANTY
In order to induce Check Express USA, Inc. (hereinafter "Franchisor")
to either enter into or continue the Franchise Agreement dated ________________
(the "Agreement") between Franchisor and ______________________________________
the undersigned hereby, jointly and severally, unconditionally and irrevocably
guarantee to Franchisor, and its successors and assigns, the performance of all
of Franchisee's obligations, arising from or created under the Agreement,
including, without limitation, the obligation to pay all amounts due under the
Agreement.
The undersigned hereby waive notice of acceptance of this guaranty,
notice of default and all other notices required or customarily given under
like circumstances and agree that no extension, compromise, arrangement,
alternative in time or method of performance or release or partial release of
any party or security, and no other act or omission by Franchisor shall release
or relieve the undersigned.
The undersigned also hereby, jointly and severally, agree to reimburse
Franchisor, and its successors and assigns, for all expenses, collection
charges, court costs and attorneys' fees incurred in endeavoring to collect,
enforce or defend any of the foregoing against the undersigned.
Signed this _____ day of _________________________, 19___.
- - --------------------------------------- -----------------------------------
- - --------------------------------------- -----------------------------------
- - --------------------------------------- -----------------------------------
Page 39 of 39
<PAGE> 379
EXHIBIT B
ADDENDUM TO FRANCHISE AGREEMENT
This Addendum is entered into this _____ day of ____________ , ______,
and amends that certain franchise agreement of even date herewith (the
"Franchise Agreement") between ________________ ("Franchisee") and
__________________ ("Franchisor").
The Franchise Agreement shall be amended as follows:
A. INITIAL FRANCHISE FEE. The initial franchise fee is hereby
waived in its entirety.
B. ROYALTY FEE. Franchisee shall pay to Franchisor a fixed monthly
royalty fee of $415 per month. The royalty fee may be adjusted each
year in proportion to the change in the CPI as provided for in Section
5(A) of the Franchise Agreement, provided said CPI adjustment is
applied uniformly to all franchisees of Franchisor. Monthly royalty
fees shall be waived for any month during which the store franchised
under the Franchise Agreement (the "Franchised Store") is not open to
the public for business. Monthly royalty fees accruing during the
first six (6) months after the Franchised Store has first opened to
the public for business shall be deferred and shall not become due and
payable until after the Franchised Store has been opened for six (6)
full months.
C. HOURS. The Franchised Store shall be open for business a
minimum of 60 hours per week.
D. TERMINATION. The Franchised Store and all assets used in
connection therewith, other than Franchisor's proprietary marks
licensed to Franchisee, (the "Store Assets") shall be transferrable to
any third party for the purpose of converting the store to a store
which is not licensed or franchised by Franchisor or any affiliate of
Franchisor after December 1, 1997. Franchisor shall have the right of
first refusal with respect to any transfer of Franchisee's rights to
the Franchised Store, the Store Assets or a majority of the ownership
interests (in a single transaction or a series of transactions) of the
entity holding such Franchised Store or Store Assets, and any such
transfer shall also be subject further to a termination fee payable to
Franchisor in an amount equal to the greater of (i) 50% of the
remaining unpaid royalty fees and (ii) 36 monthly royalty fees,
provided, however, in no event shall the termination fee be greater
than 10% of the sales price.
E. ASSIGNMENT AND TRANSFER OF INTEREST. The transfer of equity
interests in Franchisee shall not constitute a "transfer" under the
Franchise Agreement so long as Larry F. Lang, his spouse, his
children, or any trust of which the only beneficiaries are Lang, his
spouse and/or his children retains no less than a majority of all
equity interests in Franchisee.
<PAGE> 380
F. ADVERTISING. Franchisee shall spend no less than the greater of
(i) 3% of its adjusted gross monthly receipts from the Franchised
Store and (ii) $750 per month in the promotion of its business.
G. MEDIATION. Franchisee or Franchisor may elect non-binding
mediation as provided for in Section 36 of the Franchise Agreement,
and the asserting party's failure to give the notice required by that
section shall be grounds for the staying of any legal action pending
submission to such non-binding mediation.
H. SELECTION AREA. Franchisee may locate and relocate the
Franchised Store at or to any location, provided that such location
does not cause Franchisor to be in violation of any applicable state
or federal franchise law or regulation and does not conflict with the
rights of any other franchisee of Franchisor, and provided further
that such location is not within (i) one-half mile of any check
cashing store owned by Ace Cash Express, Inc. ("Ace") or any of its
subsidiaries or (ii) the city limits of any city in which Ace or any
of its subsidiaries operated a company-owned check cashing store on
October 13, 1995.
I. EXCLUSIVE TERRITORY. Neither Franchisor, Ace nor any of their
affiliates shall open or franchise a store within one-half mile of the
Franchised Store.
IN WITNESS WHEREOF, the parties intending to be legally bound, hereby
have duly executed and delivered this Addendum as of the day and year first
above written.
[FRANCHISOR]
--------------------------------
By:
-----------------------------------------
[FRANCHISEE]
--------------------------------
By:
-----------------------------------------
<PAGE> 381
APPENDIX E
FORM OF SHAREHOLDER AGREEMENT AND IRREVOCABLE PROXY
<PAGE> 382
SHAREHOLDER AGREEMENT AND IRREVOCABLE PROXY
This Shareholder Agreement and Irrevocable Proxy (the "Agreement") is
entered into this ____ day of October, 1995 by and between ___________________
("Shareholder") and Ace Cash Express, Inc., a Texas corporation ("Ace").
W I T N E S S E T H:
WHEREAS, Ace and Express Acquisition Corporation, a Florida
corporation and a wholly-owned subsidiary of Ace ("Ace Sub"), contemporaneously
or in connection with this Agreement are entering into that certain Agreement
and Plan of Merger (the "Merger Agreement") with Check Express, Inc., a Florida
corporation (the "Company"), pursuant to which Ace Sub will merge (the
"Merger") with and into the Company; and
WHEREAS, Shareholder is the owner of record of __________ shares of
Common Stock (the "Common Stock"), $0.004 par value, of the Company (the
"Shares"); and
WHEREAS, as a part of the Merger each outstanding share of Common
Stock will be converted into the right to receive $1.20 cash; and
WHEREAS, it is a condition to Ace's obligations under the Merger
Agreement, that Shareholder enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, and agreements herein contained, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. DISPOSITION OF THE SHARES. Until the Termination Date (as
hereinafter defined), Shareholder agrees not to:
(i) sell, transfer, pledge, encumber, assign, or
otherwise dispose of, or enter into any contract,
option, or other arrangement with respect to the
sale, transfer, pledge, encumbrance, assignment, or
other disposition of, any of the Shares to any person
other than to Ace or Ace Sub or any designee of Ace;
or
(ii) deposit or subject any Shares into or to an escrow, a
voting trust, or a voting agreement or grant a proxy
with respect to any Shares that is in any manner
inconsistent with this Agreement.
2. PROXY. Until the Termination Date, the Shareholder does
hereby constitute and appoint Ace, or such other person as Ace
<PAGE> 383
shall designate from time to time (the "Proxy"), the true and lawful attorney
and proxy of Shareholder for it and in its name, place and stead, with full
power of substitution, to attend and to vote as the proxy of Shareholder, all
of the Shares which are held of record or beneficially by Shareholder, at any
special or other meeting of shareholders of the Company or any adjournments
thereof (or any written consent by shareholders in lieu of a meeting), with
respect to the approval of the Merger or the transactions contemplated by the
Merger Agreement. Shareholder hereby revokes all proxies heretofore made by it
with respect to any such special or other meeting. Shareholder hereby ratifies
all that the Proxy may or shall lawfully do in voting the Shares in accordance
herewith at any such special or other meeting or adjournment thereof. THE
PROXY GRANTED BY SHAREHOLDER HEREUNDER TO ACE SHALL BE DEEMED COUPLED WITH AN
INTEREST PURSUANT TO SECTION 607.0722 OF THE FLORIDA BUSINESS CORPORATION ACT
AND SHALL BE VALID UNTIL THE TERMINATION DATE. THE PROXY GRANTED BY THIS
SECTION 2 IS IRREVOCABLE EXCEPT UPON TERMINATION OF THIS AGREEMENT.
3. ADDITIONAL SECURITIES. If, on or after the date of this
Agreement, (i) there shall occur any stock dividend, stock split,
recapitalization, combination, or exchange of shares, merger, consolidation,
reorganization, or other change or transaction of or by the Company as a result
of which shares of any class of stock or other securities shall be issued in
respect of Shares, or if any Shares shall be changed into the same or a
different number of shares of the same or another class of stock or other
securities, or (ii) Shareholder shall acquire any additional shares of Common
Stock in any manner, whether in compliance with the provisions of this
Agreement or otherwise, any such shares or other securities shall, from and
after their receipt or acquisition by Shareholder, constitute additional
"Shares" of Shareholder, as applicable.
4. DISSENTERS' RIGHTS. Shareholder shall not take any action or
actions to perfect any dissenters' rights Shareholder may have as a result of
the Merger under Section 607.1320 of the Florida Business Corporation Act or
otherwise.
5. DIRECTORS. Upon any vote of the board of directors of the
Company (the "Board") concerning a recommendation to the shareholders of the
Company with respect to the Merger, Shareholder shall cause any representatives
or employees of Shareholder who are members of the Board to vote to recommend
adoption of the Merger Agreement by the shareholders of the Company, subject to
any contrary fiduciary duties of such members of the Board.
6. LEGEND. Immediately upon Ace's request, Shareholder shall
deliver the certificate or certificates representing the Shares to the Company
for the purpose of placing on such certificate or certificates the following
restrictive legend:
The shares represented by this certificate are subject to the
provisions of a Shareholder Agreement and Irrevocable Proxy dated as
of October __, 1995 between Ace Cash
<PAGE> 384
Express, Inc. and the holder of this certificate, pursuant to which
the holder of this certificate has granted an irrevocable proxy for
the voting of the shares represented hereby (the "Agreement"). A copy
of the Agreement is on file in the principal place of business of the
Company and is subject to examination by the holder hereof. A copy of
the Agreement will be furnished to the record holder of this
certificate, without charge, upon written request to the Company at
its principal place of business or registered office.
A copy of this Agreement and of every amendment or supplement hereto (if any)
shall be filed in the principal place of business of the Company and shall be
open to inspection by any holder of shares of Stock, in person or by agent or
attorney, daily during normal business hours, to the same extent any such
holder would be entitled to examine the books and records of the Company.
Shareholder hereby authorizes Ace or the Company on Ace's behalf to
issue stop transfer instructions for the term of this Agreement to the
Company's stock transfer agent with respect to the Shares. The Shareholder
further agrees that the Company's stock transfer agent may rely on a copy of
this Agreement as its instructions for such stop transfer instructions with
respect to the Shares.
7. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.
Shareholder hereby represents and warrants to Ace as follows:
(a) AUTHORITY. Shareholder has all requisite power and authority
to enter into this Agreement. The execution and delivery of this Agreement by
Shareholder has been duly authorized by all necessary action on the part of
Shareholder and this Agreement constitutes the valid and binding obligation of
Shareholder and is enforceable against Shareholder in accordance with its
terms. The execution and delivery of this Agreement do not, and compliance
with the terms hereof will not, conflict with or result in any violation of, or
default (with or without notice or lapse of time, or both) under any provision
of any trust agreement, loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule, or regulation
applicable to Shareholder or to Shareholder's property or assets. No consent,
approval, order, or authorization of, or registration, declaration, or filing
with, any person or public authority is required by or with respect to
Shareholder in connection with the execution and delivery of this Agreement.
(b) THE SHARES. Shareholder is the record and beneficial owner of
the Shares free and clear of any claims, liens, encumbrances, equity, charges,
or security interests whatsoever. Except as set forth on Schedule 7(b) hereto,
Shareholder does not beneficially own, or have any existing right to acquire,
any securities of the Company other than the Shares.
<PAGE> 385
(c) SHARES HELD. Shareholder is the owner, of record and
beneficially, of the Shares.
8. REPRESENTATIONS AND WARRANTIES OF ACE. Ace hereby represents
and warrants to Shareholder as follows: Ace has all requisite corporate power
and authority to enter into this Agreement; the execution and delivery of this
Agreement by Ace have been duly authorized by all necessary corporate action on
the part of Ace, and this Agreement constitutes the valid and binding
obligation of Ace and is enforceable against Ace in accordance with its terms;
the execution and delivery of this Agreement do not, and compliance with the
terms hereof will not, conflict with or result in any violation of, or default
(with or without notice or lapse of time, or both) under any provision or any
trust agreement, loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule, or regulation
applicable to Ace or to Ace's property or assets; and no consent, approval,
order of authorization of, or registration, declaration or filing with, any
person or public authority is required by or with respect to Ace in connection
with the execution and delivery of this Agreement, except as may be required
pursuant to the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
9. GENERAL PROVISIONS.
(a) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by either of the parties
without the prior written consent of the other party, except that Ace may
assign, in its sole discretion, any or all of its rights, interests, and
obligations hereunder to Ace Sub or any direct or indirect wholly-owned
subsidiary of Ace. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(b) SPECIFIC PERFORMANCE. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions of this
Agreement and agree that the obligations of the Shareholder hereunder shall be
specifically enforceable.
(c) EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
(d) AMENDMENTS. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(e) NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed, or transmitted, and shall be
effective upon actual receipt, if delivered personally or by courier, mailed by
registered or
<PAGE> 386
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to the
telecopier number specified below:
(i) If to Ace:
Ace Cash Express, Inc.
1231 Greenway Drive, Suite 800
Irving, Texas 75038
Attention: Mr. Donald H. Neustadt
With copies (which shall not
constitute notice) to:
Gardere & Wynne, L.L.P.
1601 Elm Street, Suite 3000
Dallas, Texas 75201
Attention: Larry Schoenbrun, Esq.
(ii) If to Shareholder:
-----------------------------------
-----------------------------------
-----------------------------------
Telecopier:
------------------------
Attention:
------------------------
With copies (which shall not
constitute notice) to:
Trenam, Kemker, Scharf, Barkin,
Frye, O'Neil & Mullis, P.A.
101 E. Kennedy Blvd., Suite 2700
Tampa, Florida 33602
Attention: J. Cary Ross, Jr., Esq.
Check Express, Inc.
101 E. Kennedy Blvd., Suite 3800
Tampa, Florida 33601
Attention: Mr. Larry F. Lang
(f) DESCRIPTIVE HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed and delivered in
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
<PAGE> 387
(h) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) is not intended to and shall not be deemed to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(i) SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal, or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
(j) FURTHER ASSURANCES. Shareholder shall take all such further
action and execute and deliver all such additional documents and instruments as
Ace may reasonably deem necessary or desirable to more fully effect the
purposes of this Agreement.
(k) GOVERNING LAW. Except for matters stated herein as being
controlled by Florida Business Corporation Act, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of Texas,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
(l) TERM. This Agreement shall commence and become effective
automatically upon the execution of the Merger Agreement and shall continue in
full force and effect until the earlier to occur of the (i) the Effective Time
(as defined in the Merger Agreement), or (ii) the termination of the Merger
Agreement pursuant to the terms thereof (the "Termination Date").
[THE IMMEDIATELY FOLLOWING PAGE IS THE SIGNATURE PAGE.]
<PAGE> 388
IN WITNESS WHEREOF the Ace and the Shareholder have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
------------------------------------------
By:
---------------------------------------
Its:
-----------------------------------
ACE CASH EXPRESS, INC.
By:
---------------------------------------
Its:
-----------------------------------
<PAGE> 389
IN WITNESS WHEREOF the Ace and the Shareholder have caused this
Agreement to be signed as of the date first written above.
-----------------------------------------
------------------------------------------
ACE CASH EXPRESS, INC.
By:
--------------------------------------
Its:
-----------------------------------
<PAGE> 390
ATTACHMENT
CHECK EXPRESS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD FEBRUARY 1, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mr. Larry F. Lang and Mr. Decker A. Todd,
or either or both of them, as proxy for the undersigned, to vote all shares of
Common Stock of Check Express, Inc. the undersigned would be entitled to vote
if personally present at the Special Meeting of Shareholders of Check Express,
Inc. (the "Company") to be held on February 1, 1996 at the Hyatt Regency Tampa
at Tampa City Center, Two Tampa City Center, 211 North Tampa Street, Tampa,
Florida at 10:00 a.m., Tampa, Florida time, and at any and all adjournments
thereof, with right of substitution and with all right, power and authority as
the undersigned would have if personally present at such meeting, as further
described in the Company's Proxy Statement dated January 8, 1996 (the
"Proxy Statement"):
1. MERGER OF THE COMPANY
To vote FOR the approval and adoption of the Agreement and Plan of
Merger dated October 13, 1995, as amended by the Amendment dated December
20, 1995 (as amended, the "Merger Agreement"), by and among the Company,
Ace Acquisition Corporation, a Florida corporation, and Ace Cash Express,
Inc., a Texas corporation, and the approval of the merger (the "Merger")
of Acquisition with and into the Company, pursuant to which (a) the
Company will be the surviving corporation and a wholly owned subsidiary
of Ace, and (b) each share of the Company's $.004 par value common stock
("Common Stock") (other than shares held by shareholders who properly
exercise dissenters' rights under Florida law) will be converted into the
right to receive $1.20 in cash, without interest (the "Merger
Consideration"), to be paid to holders of shares entitled to receive such
payment following the consummation of the Merger, all as more fully
described in the accompanying Proxy Statement to which a copy of the
Merger Agreement is attached as Appendix A.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To vote FOR a proposal to adjourn the Special Meeting if necessary to
permit further solicitation of Proxies in the event there are not
sufficient votes at the time of the Special Meeting to approve and adopt
the Merger Agreement and approve the Merger.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote on any other
matters which may properly come before the meeting or any adjournment or
adjournments thereof, including matters incidental to the conduct of the
meeting.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO CONTRARY DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE PROPOSALS SPECIFICALLY REFERRED TO ABOVE.
Please sign exactly as name(s) When shares are held by joint tenants,
appear(s) below. both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer.
If a partnership, please sign in
[ADDRESS LABEL] partnership name by authorized person.
Date Signature
Date Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
