<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _______________
Commission File Number 1-9733
CASH AMERICA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2018239
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
(Address of principal executive offices) (Zip Code)
(817) 335-1100
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal
year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
24,413,171 common shares, $.10 par value, were outstanding as of October 31,
1997.
================================================================================
<PAGE> 2
CASH AMERICA INTERNATIONAL, INC.
INDEX TO 10-Q
PART I. FINANCIAL STATEMENTS Page
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 1997
and 1996 and December 31, 1996............................ 1
Consolidated Statements of Income - Three Months and
Nine Months Ended September 30, 1997 and 1996............. 2
Consolidated Statements of Stockholders' Equity -
Nine Months Ended September 30, 1997 and 1996............. 3
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997 and 1996............. 4
Notes to Consolidated Financial Statements................ 5
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition...... 8
PART II. OTHER INFORMATION...................................... 21
SIGNATURE......................................................... 22
<PAGE> 3
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30 December 31
1997 1996 1996
----------- --------- ---------
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,781 $ 1,368 $ 1,334
Loans 116,391 104,561 107,679
Merchandise held for disposition, net 54,488 51,310 48,777
Finance and service charges receivable 17,564 14,451 15,248
Prepaid expenses and other 8,506 4,826 5,293
Deferred tax asset 13,098 12,255 11,643
----------- --------- ---------
Total current assets 2,118,828 188,771 189,974
Property and equipment, net 64,140 60,797 62,818
Intangible assets, net 65,677 61,731 66,065
----------- --------- ---------
Other assets 7,130 10,497 6,225
Total assets $ 348,775 $ 321,796 $ 325,082
=========== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 15,295 $ 10,104 $ 13,959
Customer deposits 4,151 3,684 2,955
Income taxes currently payable 4,390 3,491 3,776
Current portion of long-term debt 4,286 4,286 4,286
----------- --------- ---------
Total current liabilities 28,122 21,565 24,976
Long-term debt:
Bank lines of credit 117,608 70,689 100,365
Notes payable, net of current portion 41,429 45,714 45,714
----------- --------- ---------
159,037 116,403 146,079
Stockholders' equity:
Common stock, $.10 par value per
share, 80,000,000 shares authorized 3,024 3,024 3,024
Paid in surplus 122,116 121,878 121,878
Retained earnings 85,306 70,092 75,973
Notes receivable - stockholders (1,337) (1,065) (1,065)
Foreign currency translation adjustment (2,958) (3,454) (386)
----------- --------- ---------
206,151 190,475 199,424
Less - shares held in treasury, at cost 44,535 (6,647) (45,397)
----------- --------- ---------
Total stockholders' equity 161,616 183,828 154,027
----------- --------- ---------
Total liabilities and stockholders' equity $ 348,775 $ 321,796 $ 325,082
=========== ========= =========
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements
Page 1
<PAGE> 4
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------- ---------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES
Finance and service charge revenues $27,025 $24,344 $ 77,463 $ 67,676
Proceeds from disposition of merchandise 42,773 40,330 136,912 131,465
Royalties and franchise fees 513 0 1,874 0
------- ------- -------- --------
TOTAL REVENUES 70,311 64,674 216,249 199,141
Cost of disposed merchandise 27,174 25,379 87,373 82,078
------- ------- -------- --------
NET REVENUES 43,137 39,295 128,876 117,063
------- ------- -------- --------
OPERATING EXPENSES
Operations 24,814 22,669 74,733 67,891
Administration 5,818 4,596 17,080 14,188
Amortization 812 871 2,466 2,658
Depreciation 3,101 3,114 9,490 9,324
------- ------- -------- --------
Total operating expenses 34,545 31,250 103,769 94,061
------- ------- -------- --------
INCOME FROM OPERATIONS 8,592 8,045 25,107 23,002
Interest expense, net 2,998 2,341 8,555 7,078
Other expense 105 184 256 671
------- ------- -------- --------
INCOME BEFORE INCOME TAXES 5,489 5,520 16,296 15,253
Provision for income taxes 2,047 2,057 6,053 5,810
------- ------- -------- --------
NET INCOME $ 3,442 $ 3,463 $ 10,243 $ 9,443
======= ======= ======== ========
- ---------------------------------------------------------------------------------------------------------
Earnings per share - Fully diluted $ 0.14 $ 0.12 $ 0.41 $ 0.33
Weighted average shares - Fully diluted 25,285 28,981 25,259 28,971
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements
Page 2
<PAGE> 5
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 1997 and 1996
(In thousands, except share data) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOTES
COMMON STOCK TREASURY STOCK RECEIVABLE
----------------------- PAID IN RETAINED -------------------- STOCK
SHARES AMOUNT SURPLUS EARNINGS SHARES AMOUNT HOLDERS
---------- --------- ---------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1996 30,235,164 $ 3,024 $ 121,878 $75,973 5,975,670 $(45,397) $(1,065)
Net income 10,243
Dividends declared (910)
Treasury shares acquired 144,294 (1,333)
Treasury shares reissued (75) (287,763) 2,195
Tax benefit from exercise
of option shares 313
Increase in stockholders
notes receivable (272)
Foreign currency
translation adjustment
Balance at ---------- --------- --------- ------- --------- -------- -------
September 30, 1997 30,235,164 $ 3,024 $ 122,116 $85,306 5,832,201 $(44,535) $(1,337)
========== ========= ========= ======= ========= ======== =======
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1995 30,235,164 $ 3,024 $ 121,840 $61,727 1,495,285 $ (6,734) $ (1,071)
Net income 9,443
Dividends declared (1,078)
Treasury shares reissued 27 (19,615) 87
Tax benefit from exercise
of option shares 11
Reduction in stockholders
notes receivable 6
Foreign currency
translation adjustment
Balance at ---------- --------- ---------- -------- --------- -------- -------
September 30, 1996 30,235,164 $ 3,024 $ 121,878 $70,092 1,475,670 $ (6,647) $(1,065)
========== ========= ========= ======= ========= ======== =======
<CAPTION>
FOREIGN
CURRENCY
TRANSLATION TOTAL
----------- ---------
<S> <C> <C>
Balance at
December 31, 1996 $ (386) $ 154,027
Net income 10,243
Dividends declared (910)
Treasury shares acquired (1,333)
Treasury shares reissued 2,120
Tax benefit from exercise
of option shares 313
Increase in stockholders
notes receivable (272)
Foreign currency
translation adjustment (2,572) (2,572)
-------- ---------
Balance at
September 30, 1997 $ (2,958) $ 161,616
======== =========
- -------------------------------------------------------------------
Balance at
December 31, 1995 21,840 $ (3,834) $ 174,952
Net income 9,443
Dividends declared (1,078)
Treasury shares reissued 114
Tax benefit from exercise
of option shares 11
Reduction in stockholders
notes receivable 6
Foreign currency
translation adjustment 380 380
-------- ---------
Balance at
September 30, 1996 $ (3,454) $ 183,828
======== =========
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 6
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
September 30
--------------------------
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Reconciliation of Net Income to Net Cash
Provided By Operating Activities:
Net income $10,243 $9,443
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization 2,466 2,658
Depreciation 9,490 9,324
Increase in finance and service charges receivable (2,720) (2,524)
(Increase) decrease in merchandise held for disposition (4,917) 5,456
Increase in prepaid expenses and other (1,151) (10)
Increase in accounts payable and accrued expenses
Increase in accounts payable and accrued expenses 1,170 506
Increase in layaway deposits, net 1,153 156
Increase in income taxes payable 1,045 904
Deferred taxes (1,923) 2
------- ------
Net cash provided by operating activities 14,856 25,915
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans forfeited and transferred to merchandise held for disposition 84,578 68,617
Loans repaid or renewed 198,706 185,671
Loans made, including loans renewed (294,142) (270,455)
------- ------
Net increase in loans (10,858) (16,167)
Acquisitions (5,324) (799)
Net (advances to) payments from affiliates (600) (2,100)
Purchases of property and equipment (11,006) (5,215)
Proceeds from sales of property and equipment 0 145
------- ------
Net cash used by investing activities (27,788) (24,136)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under bank lines of credit 20,108 (2,880)
Payment on notes payable (4,286) 0
Net payments on notes receivable stockholders 243 6
Proceeds from issuance of stock, net 1,605 114
Treasury shares acquired (1,333) 0
Dividends paid (910) (1,078)
------- ------
Other 0
Net cash provided (used) by financing activities 15,427 (3,838)
------- ------
Effect of exchange rate changes on cash (48) (8)
------- ------
Increase (decrease) in cash and cash equivalents 2,447 (2,067)
Cash and cash equivalents at beginning of period 1,334 3,435
------- ------
Cash and cash equivalents at end of period $3,781 $1,368
====== ======
</TABLE>
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
Page 4
<PAGE> 7
CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (UNAUDITED)
- ------------------------------------------------------------
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of Cash America International, Inc. and its wholly owned subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation. The Company has a 49% ownership interest in Express
Rent A Tire, Ltd. ("Express"). The investment is being accounted for using the
equity method of accounting, whereby the Company records its 49% share of
earnings or losses in its consolidated financial statements. Effective December
31, 1996, the Company acquired the remaining 51% interest in its affiliate, Mr.
Payroll Corporation ("Mr. Payroll") (see note 2).
The financial statements as of September 30, 1997 and 1996 and for the
three months and nine months then ended are unaudited but, in management's
opinion, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for such interim
periods. Operating results for the three months and nine months are not
necessarily indicative of the results that may be expected for the full fiscal
year.
Certain amounts in the consolidated statements of income for the three
months and nine months ended September 30, 1996, have been reclassified to
conform with the presentation format adopted in 1997. These reclassifications
have no effect on the net income previously reported.
These financial statements and related notes should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 1996 Annual Report to Stockholders.
NOTE 2 - INVESTMENTS IN AFFILIATES
Effective upon the close of business December 31, 1996, the Company
acquired, in a purchase transaction, the remaining 51% interest in its
affiliate, Mr. Payroll. The aggregate purchase price of the 51% interest is to
be paid in three annual installments in an amount equal to .9775 times the
defined after-tax net income of Mr. Payroll for the 1996, 1997 and 1998 fiscal
years, respectively. No consideration is payable based on Mr. Payroll's results
of operations in 1996.
The Company has a 49% interest in Express, a private entity which
offers automobile and truck tires and wheels on a rent-to-own basis. In
conjunction with its investment, the Company has entered into a revolving credit
agreement with Express which provides for maximum borrowings of $4 million from
the Company. Interest is payable quarterly at a rate reset monthly that is
equivalent to LIBOR
Page 5
<PAGE> 8
plus 4%. As of September 30, 1997, Express had borrowings outstanding of
$3,000,000. The entire unpaid principal is due and payable on December 31,
1998. The amounts are included in other assets.
NOTE 3 - LONG-TERM DEBT
The Company's long-term debt at September 30 consisted of:
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Debt Obligations:
U.S. Line of Credit up to $125 million
due June 30, 2001 $ 91,150 $ 41,400
U.K. Line of Credit up to(pound)5 million
due April 30, 1999 2,019 1,409
Swedish Line of Credit up to SEK 30 million
due June 30, 1998 -0- -0-
Swedish Kronor term loan
due September 30, 2002 24,439 27,880
8.33% senior unsecured notes due 2003 25,715 30,000
8.14% senior unsecured notes due 2007 20,000 20,000
-------- --------
163,323 120,689
Less current portion 4,286 4,286
-------- --------
Total Long-Term Debt $159,037 $116,403
======== ========
</TABLE>
Interest on the U.S. Line of Credit is paid quarterly at rates
determined, at the Company's option of either the base rate as specified by the
Agent Bank, or a margin over LIBOR, based on the Company's debt-to-total capital
ratio, measured quarterly. As of September 30, 1997, the Company has the option
of borrowing at LIBOR plus 1%. As of September 30, 1997, the Company has entered
into two interest rate cap agreements of $20,000,000 each, that limits the
maximum LIBOR interest rate to 6%, maturing on December 10, 1999 and September
18, 2000, respectively.
Interest on the U.K. Line of Credit is payable quarterly at an interest
rate equal to the Bank's sterling cost of funds plus 60 basis points for
borrowings less than 14 days and 55 basis points for borrowings of 14 days or
more.
Interest on the Swedish Line of Credit is payable quarterly at an
interest rate equal to the Bank's base funding rate plus 1%, and interest on the
Swedish Term Loan is payable periodically at the Stockholm InterBank Offered
Rate (STIBOR) plus 1%.
The Company has entered into a floating-to-fixed interest rate exchange
agreement on SEK 118,750,000 (approximately $15,688,995 as of September 30,
1997) at 10.94% through August 17, 1998. The effective rate of interest under
the loan at September 30, 1997, was 8.93% after taking into account the interest
rate exchange agreement.
Page 6
<PAGE> 9
NOTE 4 - EARNINGS PER SHARE
Primary and fully diluted earnings per share are computed based on net
income. The weighted average number of common shares outstanding during each
period is adjusted to give effect to stock options considered to be dilutive
common stock equivalents.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("FAS128"), which is
required to be adopted on December 31, 1997. At that time the Company will be
required to change the method currently used to compute earnings per share
("EPS") and to restate EPS for all prior periods reported.
The Company, in recognition of requirements under FAS128 has determined
the impact of basic and dilutive earnings per share. Basic earnings per share is
computed using net income divided by the weighted average number of common
shares outstanding. Dilutive earnings per share is computed using net income
divided by the weighted average number of shares adjusted to give effect to the
dilution from unexercised stock options.
The following table discloses the impact of FAS128 on the Company's
earnings per share for the three and nine months ended September 30, 1997 and
1996, respectively.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------- --------------------------
(In thousands)
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Weighted average
common shares outstanding 24,279 28,759 24,238 28,750
Plus shares
applicable to options 943 171 788 7
------ ------ ------ ------
Adjusted weighted average
shares outstanding 25,222 28,930 25,026 28,757
====== ====== ====== ======
Net income $3,442 $3,463 $10,243 $9,443
Basic earnings per share $.14 $.12 $.42 $.33
Diluted earnings per share $.14 $.12 $.41 $.33
</TABLE>
NOTE 5 - LITIGATION
The Company is a defendant in certain lawsuits encountered in the
ordinary course of its business. In the opinion of management, the resolution of
these matters will not have a material adverse effect on the Company's financial
position or results of operations.
Page 7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
SUMMARY CONSOLIDATED FINANCIAL DATA
THIRD QUARTER ENDED SEPTEMBER 30, 1997 vs.
THIRD QUARTER ENDED SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
The following table sets forth selected unaudited, consolidated financial
data with respect to the Company for the three months ended September 30, 1997
and 1996.
<TABLE>
<CAPTION>
1997 1996 Change
------- ------- -------
($ in thousands)
<S> <C> <C> <C>
Finance and service charge revenues $27,025 $24,344 11%
Proceeds from disposition of merchandise 42,773 40,330 6%
Royalties and franchise fees 513 -- --
------- ------- -------
Total Revenues 70,311 64,674 9%
Cost of disposed merchandise 27,174 25,379 7%
------- ------- -------
Net Revenues $43,137 $39,295 10%
------- ------- -------
Other Data:
Annualized yield on loans 95% 96% (1)%
Average loan balance per
average location in operation $ 284 $ 266 7%
Average pawn loan amount at end of
period (not in thousands) $ 96 $ 94 2%
Margin on disposition of merchandise 36.5% 37.1% (2)%
Average annualized merchandise turnover 2.1X 2.1X 0%
Average merchandise held for disposition
balance per average location $ 128 $ 130 (2)%
Expenses as a percentage of net revenues:
Operations and administration 71.0% 69.4% 2%
Depreciation and amortization 9.1% 10.1% (10)%
Interest, net 6.9% 6.0% 15%
Pawn Locations in Operation:
Beginning of period 395 377
Acquired 4 1
Established 2 2
Combined -- --
------- ------- -------
End of period 401 380 6%
======= ======= =======
Average number of locations in
operation during the period (a) 398 378 5%
======= ======= =======
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
Page 8
<PAGE> 11
NINE MONTHS ENDED SEPTEMBER 30, 1997 vs
NINE MONTHS ENDED SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
The following table sets forth selected consolidated financial data with
respect to the Company for the nine months ended September 30, 1997 and 1996.
<TABLE>
<CAPTION>
1997 1996 Change
--------- --------- ---------
($ in thousands)
<S> <C> <C> <C>
Finance and service charge revenues $ 77,463 $ 67,676 14%
Proceeds from disposition of merchandise 136,912 131,465 4%
Royalties and franchise fees 1,874
--------- --------- ---------
Total Revenues 216,249 199,141 9%
Cost of disposed merchandise 87,373 82,078 6%
--------- --------- ---------
Net Revenues $ 128,876 $ 117,063 10%
--------- --------- ---------
Other Data:
Annualized yield on loans 96% 97% (1)%
Average loan balance per
average location in operation $ 277 $ 247 12%
Average pawn loan amount at end of
period (not in thousands) $ 96 $ 94 2%
Margin on disposition of merchandise 36.2% 37.6% (4)%
Average annualized merchandise turnover 2.4X 2.1X 14%
Average merchandise held for disposition
balance per average location $ 125 $ 138 (9)%
Expenses as a percentage of net revenues:
Operations and administration 71.2% 70.1% 2%
Depreciation and amortization 9.3% 10.2% (9)%
Interest, net 6.6% 6.0% 10%
Pawn Locations in Operation:
Beginning of period 382 373
Acquired 10 2
Established 12 7
Combined (3) (2)
--------- ---------
End of period 401 380 6%
========= ========= =========
Average number of locations in
operation during the period (a) 390 376 4%
========= ========= =========
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
Page 9
<PAGE> 12
GENERAL
The Company is a diversified provider of specialty financial services
to individuals in the United States, Great Britain, and Sweden. The Company
offers secured non-recourse loans to individuals, commonly referred to as pawn
loans. The revenue generated from pawn loan balances is finance and service
charge revenues. The revenue from the disposition of merchandise, primarily from
forfeited collateral on pawn loans, is a related but secondary activity of the
Company's lending function. In addition, the Company provides check cashing
services through its wholly owned subsidiary, Mr. Payroll Corporation ("Mr.
Payroll").
The Company expanded its pawn operations over the 21-month period
from December 31, 1995 through September 30, 1997 with the addition of 28
locations. Twenty locations were established, sixteen operating units were
acquired, and eight locations were combined for a net addition of twenty-eight
pawn operating units. At September 30, 1997, the Company operated 401 pawn
units--352 in 15 states in the United States, 38 jewelry-only and loan-only
units in the United Kingdom, and 11 loan-only and primarily jewelry-only units
in Sweden.
The Company expanded its check cashing operations on December 31, 1996,
when it acquired the remaining 51% interest in Mr. Payroll Corporation. Mr.
Payroll is a franchiser of check-cashing kiosks and service centers and a seller
of automated check cashing machines. The 1997 financial statement periods
include the revenues and expenses of Mr. Payroll. Previously, the Company
recorded its 49% share of Mr. Payroll's losses in its consolidated financial
statements under the equity method of accounting.
THIRD QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO THE
THIRD QUARTER ENDED SEPTEMBER 30, 1996
RESULTS OF OPERATIONS
Finance and service charge revenues are impacted by changes in the
average outstanding amount of pawn loans and the annualized yield on such loans.
Finance and service charge revenues increased $2.7 million, or 11%, in the third
quarter of 1997 over the third quarter of 1996 because of a same unit increase
in the average balance of pawn loans outstanding of 9%, combined with the impact
of units in operation for less than one year. While the consolidated average
pawn loan amount only increased 2% to $96, the domestic average pawn loan amount
increased 6% to $76. The domestic increase is primarily a reflection of the
increase in the number of loans in the portfolio that have been extended or
renewed which, historically, are larger loans. There was also a 9% increase in
the number of outstanding pawn loans as of September 30, 1997, compared to
September 30, 1996, reflecting a higher customer demand for pawn loans in both
domestic and foreign markets.
Page 10
<PAGE> 13
The consolidated annual loan yield, which represents a weighted average
of the distinctive yields realized in the three countries in which the Company
operates, decreased to 95% in the third quarter of 1997 from 96% in the third
quarter of 1996. In its domestic operations, the Company had a decrease in its
loan yield to 122% for the third quarter of 1997, compared to 124% for the third
quarter of 1996. The decrease in the domestic loan yield can be attributed to a
15% increase in pawn loans at September 30, 1997, from the same period in 1996
which can have the effect of reducing the loan yield until revenues from these
loans are fully realized. At September 30, 1997, same unit domestic pawn loan
balances had increased 12% since September 30, 1996, with the additional 3%
increase coming from new units. Internationally, the blended yield on average
pawn loans outstanding decreased to 51% for the third quarter of 1997 from 56%
for the same period in 1996. The decline was primarily the result of lower
returns on unredeemed collateral disposed of at auction.
Proceeds from the disposition of merchandise increased $2.4 million in
the third quarter of 1997 over the third quarter of 1996. A 4% gain from same
units (those in operation more than one year) combined with the impact of new
units helped to offset a $.8 million decrease in proceeds from the disposition
of scrap jewelry.
The Company's margin on disposition of merchandise decreased to 36.5%
in the third quarter of 1997, as compared to 37.1% for the third quarter of
1996. This decline in margin is due primarily to a lower margin on the
disposition of scrap jewelry during the third quarter of 1997, compared to the
same period of 1996, and the Company's continued emphasis on faster disposition
of merchandise. The lower margin on the disposition of scrap jewelry in 1997
reflects a decline in the price of gold. The merchandise turnover rate remained
constant at 2.1 times for both periods.
Royalties and franchise fees revenue is generated from the Company's
check cashing operations. The revenue consists of franchise fees for new check
cashing franchises and royalties based on a percentage of check cashing fees
from existing franchise operations.
Operations and administration expense, as a percentage of net revenues,
was 71.0% in the third quarter of 1997, compared to 69.4% for the same period in
1996. Total operations and administration expense increased $3.4 million in the
third quarter of 1997, representing a 12% increase over the third quarter of
1996. Domestic pawn operations contributed $2.4 million of the increase, due
primarily to higher personnel, occupancy costs and the development of a
franchise program, while foreign operations contributed $.1 million and the
consolidation of Mr. Payroll added $.9 million, to the increase.
Page 11
<PAGE> 14
Depreciation and amortization as a percentage of net revenues decreased
to 9.1% in the third quarter of 1997, from 10.1% in the third quarter of 1996,
due to a moderation in the Company's expansion during the past twenty-one
months.
Net interest expense, as a percentage of net revenues, increased to
6.9% in the third quarter of 1997 from 6.0% in the third quarter of 1996. The
dollar amount of interest expense increased by $.7 million, or 28%, due
primarily to additional debt incurred in the fourth quarter of 1996 to
repurchase 4.5 million shares of the Company's common stock. Average debt
outstanding increased 33% to $157.9 million for the third quarter of 1997 as
compared to $119.1 million for the third quarter of 1996. The Company's
effective rate of interest paid on its debt decreased to 7.4% for the third
quarter of 1997 from 7.8% for the third quarter of 1996.
Included in other expense for the third quarter of 1997, is a $148,000
loss from the Company's affiliate. In the third quarter of 1996, the Company
recorded a $236,000 loss from affiliates. The loss from affiliates in 1996
consisted of a loss from Express of $98,000 and a loss from Mr. Payroll of
$138,000. As stated in Note 2, the Company obtained 100% ownership of Mr.
Payroll on December 31, 1996, therefore the 1997 operations of Mr. Payroll are
included in the Consolidated Financial Statements.
The Company's consolidated effective income tax rate remained constant
at 37% in the third quarter of 1997. The domestic effective tax rate decreased
to 39%, in 1997, from 41% in 1996, primarily due to a lesser effect of
non-deductible items on the Company's taxable income. The effective tax rate for
the Company's foreign operations increased to 34% in the third quarter of 1997,
from 32% in the third quarter of 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE
NINE MONTHS ENDED SEPTEMBER 30, 1996
RESULTS OF OPERATIONS
Finance and service charge revenues increased $9.8 million, or 14%, in
1997 over 1996, primarily due to a same unit increase in the average outstanding
amount of pawn loans of 13%, the impact of units in operation for less than one
year, and a slight decrease in the annualized yield from 1996 to 1997.
The consolidated annual loan yield, which represents a weighted average
of the distinctive yields realized in the three countries in which the Company
operates, decreased to 96% for the nine month period in 1997, from 97% for the
same period in 1996. In its domestic operations, the annual loan yield for the
nine months ended September 30, 1997 decreased to 125% from 126% for the same
period in 1996, due primarily to increased average loan
Page 12
<PAGE> 15
balances for the period. Internationally, the blended yield on average pawn
loans outstanding decreased to 53% for the nine months ended September 30, 1997,
from 56% for the corresponding period in 1996. The decline in the international
yield resulted from a lower return on unredeemed collateral disposed of at
auction.
Proceeds from the disposition of merchandise increased $5.4 million, or
4%, during the first nine months of 1997, over the first nine months of 1996,
primarily due to a 4% increase in same unit dispositions that was partially
offset by a decrease in proceeds from the disposition of scrap jewelry, of $2.8
million.
The Company's margin on disposition of merchandise decreased to 36.2%
for the nine months ended September 30, 1997, from 37.6% for the same period in
1996. This decline in margin is due primarily to a lower margin on the
disposition of scrap jewelry compared to the same period in 1996, and the
Company's continued emphasis on faster disposition of merchandise. The lower
margin on the disposition of scrap jewelry in 1997 reflects lower prices
realized on the sale of pure gold in the open market. The merchandise turnover
rate increased to 2.4 times in 1997 as compared to 2.1 times for 1996.
Royalties and franchise fees revenue is generated from the Company's
check cashing operations. The revenue consists of franchise fees for new check
cashing franchises and royalties based on a percentage of check cashing fees
from existing franchise operations.
Operations and administration expense, as a percentage of net revenues,
was 71.2% for the first nine months of 1997, compared to 70.1% for the
corresponding period in 1996. Total operations and administration cost increased
$9.7 million in the nine months ended September 30, 1997, over the nine month
period ended September 30, 1996. Domestic pawn operations contributed $6.7
million of the increase, due primarily to higher personnel and occupancy costs,
with foreign operations contributing $.5 million, and the consolidation of Mr.
Payroll adding $2.5 million.
Depreciation and amortization as a percentage of net revenues decreased
to 9.3% of net revenues in the nine months ended September 30, 1997, from 10.2%
in the same period in 1996, due to a moderation in the Company's expansion
during the past twenty-one months.
Net interest expense, as a percentage of net revenues, increased to
6.6% in the first nine months of 1997 from 6.0% in the first nine months of
1996. The dollar amount of interest expense increased by $1.5 million, or 21%,
due primarily to additional debt incurred in the fourth quarter of 1996 to
repurchase 4.5 million shares of the Company's common stock. Average debt
outstanding increased 27% to $150.8 million in the nine month period ended
Page 13
<PAGE> 16
September 30, 1997 from $119.0 million for the same period in 1996. The
Company's effective rate of interest paid on its debt decreased to 7.6% for the
first nine months of 1997 from 8.0% for the first nine months of 1996.
Included in other expense for the nine months ended September 30, 1997,
is a $323,000 loss from the Company's affiliate, Express. In the nine months
ended September 30, 1996, the Company recorded $766,000 in losses from its two
affiliates (Express and Mr. Payroll). Of the $766,000 loss, Express had a loss
of $388,000 and Mr. Payroll had a loss of $378,000. Effective December 31, 1996,
the Company acquired 100% ownership in Mr. Payroll, therefore, its 1997
operations are included in the Consolidated Financial Statements.
The Company's consolidated effective income tax rate decreased to 37%
in the nine months ended September 30, 1997, from 38% in the comparable period
in 1996. The domestic effective tax rate decreased to 39%, in 1997, from 41% in
1996, due in part to a $114,000 foreign dividend tax credit received in the
second quarter of 1997. The Company's effective tax rate for the foreign
operations remained constant at 34% for 1997 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow and liquidity, in management's opinion, remains
strong. Cash and cash equivalents increased $2.5 million to $3.8 million at
September 30, 1997, from $1.3 million at December 31, 1996. The increase in cash
and cash equivalents in the first nine months of 1997, was due to cash flows
from operating activities of $14.9 million, and borrowings of $20.1 million in
the bank lines of credit, proceeds from issuance of stock of $1.6 million and
payments of $.2 million on notes receivable from stockholders. The funds
generated were used to fund $11.0 million of property and equipment purchases
(of which $3.5 million was expended for the development of Mr. Payroll's
automated check cashing system), to pay $4.3 million on current maturities of
long term debt, to acquire ten new pawn units for $5.3 million, to purchase $1.3
million of the Company's stock in open market transactions, to increase pawn
loans by $10.9 million, to extend advances to an affiliate of $.6 million and to
pay cash dividends of $.9 million.
The Company expects to continue its plan of adding approximately 2 to 4
new pawn units during the remainder of 1997, which would add approximately 25
units in 1997. These additions may occur through new openings or acquisitions of
existing locations. The Company also intends to invest in its check cashing
operations through its wholly owned subsidiary, Mr. Payroll.
On January 22, 1997, the Company announced that its Board of Directors
had authorized management to purchase up to one million shares of its common
stock in the open market. During the first nine months of 1997,
Page 14
<PAGE> 17
119,900 shares of the Company's common stock were repurchased and are now
held as treasury shares.
Management believes that borrowings available under its revolving
credit facilities, (described in note 3), cash generated from operations and
current working capital of $184 million should be sufficient to meet the
Company's anticipated future capital requirements.
IMPACT OF FOREIGN CURRENCY EXCHANGE RATES
The Company is subject to the risk of unexpected changes in foreign
currency rates by virtue of its operations in the United Kingdom and Sweden. The
Company's foreign assets, liabilities, and earnings are converted into U.S.
dollars in accordance with generally accepted accounting principles for
consolidation into the Company's financial statements. At September 30, 1997,
the Company had recorded a cumulative reduction to stockholder's equity of $2.96
million as a result of fluctuations in foreign currency exchange rates. Future
earnings and comparisons with prior periods reported by the Company may
fluctuate depending on applicable currency exchange rates in effect during the
periods.
Page 15
<PAGE> 18
DOMESTIC PAWN OPERATIONS
The following table sets forth selected financial data for the Company's
domestic pawn operations as of September 30, 1997 and 1996 and for the three
months then ended.
<TABLE>
<CAPTION>
1997 1996 Change
------- ------- -------
($ in thousands)
<S> <C> <C> <C>
Finance and service charge revenues $21,460 $18,654 15%
Proceeds from disposition of merchandise 42,110 39,975 5%
------- ------- -------
Total Revenues 63,570 58,629 8%
Cost of disposed merchandise 26,686 25,159 6%
------- ------- -------
Net Revenues $36,884 $33,470 10%
------- ------- -------
Other Data:
Annualized yield on loans 122% 124% (2)%
Average loan balance per
average location in operation $ 200 $ 181 10%
Average pawn loan amount at end of
period (not in thousands) $ 76 $ 72 6%
Margin on disposition of merchandise 36.6% 37.1% (1)%
Annualized merchandise turnover 2.1X 2.1X 0%
Average merchandise held for disposition
balance per average location $ 144 $ 148 (3)%
Expenses as a percentage of net revenues:
Operations and administration 73.5% 73.9% (1)%
Depreciation and amortization 9.3% 11.1% (16)%
Interest, net 6.5% 4.9% 33%
Domestic Pawn Locations in Operation:
Beginning of period 347 330
Acquired 3 1
Established 2 2
Combined -- --
------- ------ -------
End of period 352 333 6%
======= ======= =======
Average number of locations in
operation during the period (a) 349 331 5%
======= ======= =======
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
Page 16
<PAGE> 19
DOMESTIC PAWN OPERATIONS
The following table sets forth selected financial data for the Company's
domestic pawn operations as of September 30, 1997 and 1996 and for the nine
months then ended.
<TABLE>
<CAPTION>
1997 1996 Change
--------- --------- ---------
($ in thousands)
<S> <C> <C> <C>
Finance and service charge revenues $ 60,361 $ 51,630 17%
Proceeds from disposition of merchandise 135,457 130,439 4%
--------- --------- ---------
Total Revenues 195,818 182,069 8%
Cost of disposed merchandise 86,318 81,416 6%
--------- --------- ---------
Net Revenues $ 109,500 $ 100,653 9%
--------- --------- ---------
Other Data:
Annualized yield on loans 125% 126% (1)%
Average loan balance per
average location in operation $ 189 $ 166 14%
Average pawn loan amount at end of
period (not in thousands) $ 76 $ 72 6%
Margin on disposition of merchandise 36.3% 37.6% (3)%
Annualized merchandise turnover 2.4X 2.1X 14%
Average merchandise held for disposition
balance per average location $ 141 $ 156 (10)%
Expenses as a percentage of net revenues:
Operations and administration 74.3% 74.1% 0%
Depreciation and amortization 9.7% 11.1% (13)%
Interest, net 6.2% 4.9% 27%
Domestic Pawn Locations in Operation:
Beginning of period 334 327
Acquired 9 2
Established 12 5
Combined (3) (1)
--------- --------- ---------
End of period 352 333 6%
========= ========= =========
Average number of locations in
operation during the period (a) 342 330 4%
========= ========= =========
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
Page 17
<PAGE> 20
FOREIGN PAWN OPERATIONS
The following tables set forth selected consolidated financial data for
Harvey & Thompson and Svensk Pantbelaning as of September 30, 1997, and 1996 and
for the three and nine month periods then ended.
Balance sheet data for Harvey & Thompson has been translated from
pounds sterling into U.S. dollars using the end of the period currency exchange
rate of $1.6150 at September 30, 1997 and $1.565 at September 30, 1996, per
pounds sterling, respectively. Income statement data has been translated at an
average exchange rate of $1.623 and $1.555 per pounds sterling for the three
month periods ending September 30, 1997, and 1996, respectively.
Balance sheet data for Svensk Pantbelaning has been translated from Swedish
Kronor into U.S. dollars using the end of the period currency exchange rate of
7.569 SEK per U.S. dollar and 6.635 SEK per U.S. dollar at September 30, 1997
and 1996 respectively. Income statement data has been translated at an average
exchange rate of 7.80 SEK per U.S. dollar and 6.631 SEK per U.S. dollar for the
three months ended September 30, 1997, and 1996, respectively.
<TABLE>
<CAPTION>
Three Months Ended September 30,
1997 1996 Change
-------------- -------------- ------------
($ in thousands)
<S> <C> <C> <C>
Income Statement Data:
Total revenues $6,028 $6,045 0%
Net revenues 5,717 5,825 (2)%
Operating expenses 2,944 2,822 4%
Income from operations 2,773 3,003 (8)%
Other Data:
Annualized yield on loans 51% 56% (9)%
Average loan balance per
average location in operation $901 $863 4%
Average pawn loan amount at end of
period (not in thousands) $173 $178 (3)%
Ending loan balance $43,469 $41,420 5%
Expenses as a percentage of net revenues:
Operations and administration 45.8% 43.7% 5%
Depreciation and amortization 5.7% 4.7% 21%
Interest expense, net 10.2% 12.0% (15)%
Average number of locations in
operation during the period (a) 49 47 4%
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
Page 18
<PAGE> 21
Income statement data for Harvey & Thompson for the nine months ended
September 30 has been translated from British pounds sterling into U.S. dollars
at an average exchange rate of $1.6316 per pound sterling for 1997, compared to
$1.538 per pound sterling for 1996.
Income statement data for Svensk Pantbelaning has been translated from
Swedish Kronor into U.S. dollars at average exchange rates of 7.607 SEK per U.S.
dollar for 1997, compared to 6.699 SEK per U.S. dollar for 1996.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1997 1996 Change
--------- --------- ------
($ in thousands)
<S> <C> <C> <C>
Income Statement Data:
Total revenues $18,357 $17,072 8%
Net revenues 17,479 16,410 7%
Operating expenses 8,942 8,289 8%
Income from operations 8,537 8,121 5%
Other Data:
Annualized yield on loans 53% 56% (5)%
Average loan balance per
average location in operation $901 $829 9%
Expenses as a percentage of net revenues:
Operations and administration 45.7% 45.6% 0%
Depreciation and amortization 5.5% 5.0% 10%
Interest expense, net 9.9% 12.8% (23)%
Average number of locations in
operation during the period (a) 48 46 4%
</TABLE>
(a) Averages based on accumulation of month-end balances and dividing aggregate
total by total months in the period.
CHECK CASHING OPERATIONS
The following table sets forth selected financial data for the
Company's check cashing operations for the three and nine months ended September
30, 1997.
<TABLE>
<CAPTION>
Three Months Nine Months
------------ ----------
($ in thousands)
<S> <C> <C>
Total revenues $713 $2,074
Less cost of machines sold 177 177
--- ---
Net revenues 536 1,897
Operating expenses 1,034 2,865
----- -----
Loss from operations $(498) $(968)
====== ======
</TABLE>
The third quarter of 1997 loss is slightly higher than the loss for the
second quarter of 1997, due primarily to increased operating expenses.
Page 19
<PAGE> 22
During the first nine months of 1997, the Company invested $3.6 million in the
development of Mr. Payroll's new automated check cashing system. Management
anticipates that marketing, development and operating costs will result in
future losses from check cashing operations until Mr. Payroll generates
sufficient revenues from the sale and operation of the automated check cashing
system. During the third quarter of 1997, Mr. Payroll started marketing and
completed the sale of initial automated check cashing machines, which generated
a small amount of revenue.
CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES
THAT MAY AFFECT FUTURE RESULTS
Certain portions of this report contain forward-looking statements
about the business, financial condition and prospects of the Company. The actual
results of the Company could differ materially from those indicated by the
forward-looking statements because of various risks and uncertainties including,
without limitation, changes in demand for the Company's services, changes in
competition, the ability of the Company to open new operating units in
accordance with its plans, economic conditions, real estate market fluctuations,
interest rate fluctuations, changes in the capital markets, changes in tax and
other laws and governmental rules and regulations applicable to the Company's
business, and other risks indicated in the Company's filings with the Securities
and Exchange Commission. These risks and uncertainties are beyond the ability of
the Company to control, and, in many cases, the Company cannot predict all of
the risks and uncertainties that could cause its actual results to differ
materially from those indicated by the forward-looking statements. When used in
this report, the words "believes," "estimates," "plans," "expects,"
"anticipates" and similar expressions as they relate to the Company or its
management are intended to identify forward-looking statements.
Page 20
<PAGE> 23
PART II
Item 1. LEGAL PROCEEDINGS
See Note 5 of Notes to Consolidated Financial Statements
Item 2. CHANGES IN SECURITIES
On August 5, 1997, the Board of Directors announced a dividend of one
common share purchase right payable to the holder of record of each
share of the Company's common stock outstanding as of the close of
business on August 19, 1997, pursuant to a Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent. For a summary of the Rights, see the Company's Form 8-A for
the registration of the Rights, as filed with the Securities and
Exchange Commission on August 8, 1997.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Amendment to 1994 Long-Term Incentive Plan dated July
22, 1997
10.2 Amended and Restated Executive Employment Agreements
between the Company and Messrs. Jack R. Daugherty and
Daniel R. Feehan, each dated as of August 1, 1997
27 Financial Data Schedule
(b) Reports on Form 8-k
On August 8, 1997, the Company filed a Current Report on Form 8-K
reporting the planned issuance of common share purchase rights to
shareholders of record as of the close of business on August 19,
1997.
Page 21
<PAGE> 24
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASH AMERICA INTERNATIONAL, INC.
--------------------------------
(Registrant)
BY: /S/ Thomas A. Bessant, Jr.
------------------------------
Thomas A. Bessant, Jr.
Senior Vice President and
Chief Financial Officer
Date: November 13, 1997
Page 22
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
10.1 Amendment to 1994 Long-Term Incentive Plan dated July
22, 1997
10.2 Amended and Restated Executive Employment Agreements
between the Company and Messrs. Jack R. Daugherty and
Daniel R. Feehan, each dated as of August 1, 1997
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
AMENDMENT ONE
TO THE
CASH AMERICA INTERNATIONAL, INC.
1994 LONG-TERM INCENTIVE PLAN
By action of the Board of Directors of Cash America International,
Inc. this day, the Cash America International, Inc. 1994 Long-Term Incentive
Plan (the "Plan") is hereby amended as follows:
1. Section 2 of Plan is amended by revising the definition of the term
"Award" to read as follows:
"Award" shall mean a grant or award under Section 6 through 12,
inclusive, of the Plan, as evidenced in a written document delivered
to a recipient of an Award as provided in Section 13(b).
2. Section 2 of the Plan is amended by adding the following definitions:
"Outside Director" shall mean a member of the Board of Directors who
is not an Employee of the Company or of any affiliate.
"Stockholders Meeting" shall mean the annual meeting of stockholders
of the Company in each year.
3. Section 10, paragraph (a), is amended by revising the reference to
"Section 11(b)" to read: "Section 13(b)."
4. Section 11 of the Plan is amended so as to renumber it to "Section 13"
and to revise paragraph (b) of such Section to read as follows:
(b) Awards.
Each Award hereunder shall be evidenced in writing, delivered to the
Participant or Outside Director and shall specify the terms and
conditions thereof and any rules applicable thereto, including but not
limited to the effect on such Award of the death, retirement, or other
termination of employment of the Participant or Outside Director and
the effect thereon, if any, of a Change in Control of the Company.
5. A new Section 11 is added to the Plan to read as follows:
Section 11. Outside Directors' Options.
(a) Grant of Options.
Each Outside Director who joins the Board of Directors after 1994
shall automatically be granted an Option to purchase 5,000 shares of
the common stock of the Company, $.10 par value; and on the date of
each Stockholders Meeting after the 1997 Stockholders Meeting, each
Outside
<PAGE> 2
Director shall automatically be granted an Option to purchase 2,500
shares of the common stock of the Company. All such options shall be
Nonqualified Stock Options. The price at which each share of common
stock covered by such Options may be purchased shall be one hundred
percent (100%) of the Fair Market Value of the stock on the date the
Option is granted.
(b) Exercise of Options.
Except as set forth in this Section 11, an Option granted to an
Outside Director shall become exercisable one year after date the
option is granted. Any Option that has been outstanding for more than
six (6) months shall immediately become exercisable in the event of a
Change in Control. The Option may be exercised by the Outside
Director during the period that the Outside Director remains a member
of the Board of Directors and for a period of five (5) years following
retirement, provided that only those Options exercisable at the date
of the Outside Director's retirement may be exercised during the
period following retirement and, provided further, that in no event
shall the Option be exercisable more than ten (10) years after the
date of grant. Shares issued upon the exercise of Options granted
under this Section 11 will be issued from the Company's treasury
shares.
In the event of the death of an Outside Director, the Option shall be
exercisable only within the twelve (12) months next succeeding the
date of death, and then only (i) by the executor or administrator of
the Outside Director's estate, by the person or persons to whom the
Outside Director's rights under the Option shall pass by the Outside
Director's will or the laws of descent and distribution or, by the
Outside Director's designated beneficiary, and (ii) if and to the
extent that the Outside Director was entitled to exercise the Option
at the date of the Outside Director's death, provided that in no event
shall the Option be exercisable more than ten (10) years after the
date of grant.
(c) Payment.
An Option granted to an Outside Director shall be exercisable only
upon payment to the Company of the full exercise price of the shares
with respect to which the Option is being exercised. Payment for the
shares shall be in United States dollars, payable in cash or by check.
6. A new Section 12 is added to the Plan to read as follows:
Section 12. Outside Directors' Shares.
Outside Directors may elect, on an annual basis, to purchase shares of
common stock of the Company from the Company in lieu of receiving all
or part (in 10% increments) of their annual retainer, meeting fees and
committee meeting fees in cash. The purchase price of such shares
shall be the Fair Market Value of the stock for the last trading day
of the month in which the retainer, meeting fees, and committee
meeting fees are earned.
Commencing January 1, 1998, the annual retainer, meeting fees and
committee meeting fees payable to each Outside Director for service on
the Board of Directors may, at the election of the Outside Director
(the "Annual Election''), be payable to a trust in shares of common
stock of the Company. The Annual Election: (i) shall be irrevocable in
respect of the one-year period to which
2
<PAGE> 3
it pertains (the "Plan Year") and shall specify the applicable
percentage (in increments of 10%) of such annual retainer and meeting
fees that such Outside Director wishes to direct to the trust; (ii)
must be received in writing by the administrator of the Plan by the
established enrollment deadline of any year in which this Plan is in
effect in order to cause the next succeeding Plan Year's annual
retainer and fees to be subject to the provisions of this Plan; and
(iii) must specify whether the ultimate distribution of the shares of
common stock to the Outside Directors will be paid, following the
Outside Director's death or termination of Board service, in a lump
sum or in equal annual payments over a period of two to twenty years.
The shares shall be purchased from the Company at the Fair Market
Value of the stock for the last trading day of the month in which the
fees are earned and shall be credited by the trustee to the account of
the Outside Director. The certificates for common stock shall be
issued in the name of the trustee of the trust and shall be held by
such trustee in trust for the benefit of the Outside Directors;
provided, however, that each Outside Director shall be entitled to
vote the shares. The trustee shall retain all dividends (which shall
be reinvested in shares of common stock) and other distributions paid
or made with respect thereto in the trust. The shares credited to the
account of an Outside Director shall remain subject to the claims of
the Company's creditors, and the interests of the Outside Director in
the trust may not be sold, hypothecated or transferred (including,
without limitation, transferred by gift or donation) while such shares
are held in the trust.
If the Outside Director elects to receive a lump sum distribution, the
trustee of the trust shall distribute such shares of common stock free
of restrictions within 60 days after the Outside Director's
termination date or a later date elected by the Outside Director (no
later than the mandatory retirement age of the Outside Director). If
the Outside Director elects to receive a lump sum distribution, the
Outside Director may, by delivering notice in writing to the
administrator of the Plan no later than December 31 of the year prior
to the year in which the Outside Director terminates service as a
Director, elect to receive any portion or all of the common stock in
the form of cash determined by reference to the Fair Market Value of
the common stock as of the termination date. Any such notice to the
administrator must specify whether the distribution will be entirely
in cash or whether the distribution will be in a combination of common
stock and cash (in which case the applicable percentage must be
specified). In the case of termination of the Outside Director's
service as a result of his death, payment of the Outside Director's
account shall be in shares of common stock and not in cash. If an
Outside Director elects to receive payments in installments, the
distribution will commence within 60 days after the Outside Director's
termination date and will be made in shares of common stock and not in
cash. Notwithstanding anything to the contrary contained herein, any
fractional shares of common stock shall be distributed in cash to the
Outside Director.
CASH AMERICA INTERNATIONAL, INC.
By: /s/ HUGH A. SIMPSON
----------------------------
Hugh A. Simpson, Senior Vice President,
General Counsel and Secretary
July 22, 1997
3
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 1, 1997, is made and entered into
by and between CASH AMERICA INTERNATIONAL, INC., a Texas corporation, having an
office at 1600 W. Seventh Street, Fort Worth, Texas 76102 and JACK R.
DAUGHERTY, an executive employee of Employer (hereinafter referred to as
"Executive").
WHEREAS, Executive is employed by Cash America Management L.P.
(together with its parent corporation Cash America International, Inc.,
hereinafter referred to collectively as "Employer") in an executive capacity;
WHEREAS, Employer and Executive entered into that certain Executive
Employment Agreement dated as of April 25, 1990 (the "Original Agreement"); and
WHEREAS, the parties desire to amend and restate the Original
Agreement so as to provide for the terms and conditions set forth in this
Agreement, and Executive has agreed to continue as an employee of Employer
pursuant to the terms of this Agreement; and
WHEREAS, Employer desires that the Executive continue as an employee
of Employer to provide the necessary leadership and senior management skills
that are important to the success of Employer. Employer believes that retaining
the Executive's services as an employee of Employer and the benefits of his
business experience are of material importance to Employer and Employer's
shareholders.
NOW, THEREFORE, in consideration of Executive's continued employment
by Employer and the mutual promises and covenants contained herein, the receipt
and sufficiency of which consideration is hereby acknowledged, Employer and
Executive intend by this Agreement to specify the terms and conditions of
Executive's employment relationship with Employer and the post- employment
obligations of Executive.
1. General Duties of Employer and Employee:
1.1. Employer agrees to employ Executive and Executive agrees to accept
employment by Employer and to serve Employer in an executive capacity upon the
terms and conditions set forth herein. The duties and responsibilities of
Executive shall include those described for the particular position held by
Executive while employed hereunder in the By-laws of Employer or other
documents of Employer, and shall also include such other or additional duties
as may from time-to-time be assigned to Executive by the Board of Directors of
Employer or any duly authorized committee thereof or an authorized officer of
Employer. The executive capacity that Executive shall hold during the term
hereof shall be that position as determined by the Board of Directors, or any
duly authorized committee thereof, from time to time in its sole discretion.
While employed hereunder, the initial position that Executive shall hold (until
such time as such position may be changed as aforesaid) shall be the position
of Chairman of the Board of Directors and Chief Executive Officer.
<PAGE> 2
1.2. While employed hereunder, Executive shall obey the lawful directions
of the Board of Directors of Employer, or any duly authorized committee
thereof, or authorized officers of Employer and shall use his best efforts to
promote the interests of Employer and to maintain and to promote the reputation
thereof. While employed hereunder, Executive shall devote his time, efforts,
skills and attention to the affairs of Employer in order that he shall
faithfully perform his duties and obligations hereunder and such as may be
assigned to or vested in him by the Board of Directors of Employer, or any duly
authorized committee thereof, or any duly authorized officer of Employer. The
parties agree that during the term of this Agreement, Executive shall be based
in Fort Worth, Texas and may only be reassigned to another location that is
mutually acceptable to Employer and Executive.
1.3. During the term of this Agreement, Executive may from time to time
engage in any businesses or activities that do not compete directly and
materially with Employer and any of its subsidiaries, provided that such
businesses or activities do not materially interfere with his performance of
the duties assigned to him in compliance with this Agreement by the Board of
Directors of Employer or any duly authorized committee thereof or an authorized
officer of Employer. In any event, Executive is permitted to (i) invest his
personal assets as a passive investor in such form or manner as will not
contravene the best interests of Employer and (ii) participate in various
charitable efforts.
2. Compensation and Benefits:
2.1. As Compensation for services to Employer, Employer shall pay to
Executive during the term of this Agreement a salary at an annual rate to be
fixed from time-to-time by the Board of Directors of Employer or any duly
authorized committee thereof, which annual rate shall in no event be less than
$386,000 per annum while Executive is employed hereunder. The salary shall be
payable in equal bi-weekly installments, subject only to such payroll and
withholding deductions as may be required by law and other deductions applied
generally to employees of Employer for insurance and other employee benefit
plans. The Board of Directors or any authorized committee or officer of
Employer shall review Executive's overall annual Compensation at least
annually, with a view to ascertaining the adequacy thereof and such
Compensation may be increased by the Board of Directors from time to time by an
amount that in the opinion of the Board of Directors is justified by
Executive's performance.
2.2. Upon Executive's furnishing to Employer customary and reasonable
documentary support (such as receipts or paid bills) evidencing costs and
expenses incurred by him in the performance of his services and duties
hereunder (including, without limitation, travel and entertainment expenses)
and containing sufficient information to establish the amount, date, place and
essential character of the expenditure, Executive shall be reimbursed for such
costs and expenses in accordance with Employer's normal expense reimbursement
policy. Executive shall be entitled to participate in all insurance, stock
option and other stock programs and compensation plans and such other benefits
plans or programs as may be from time-to-time specifically adopted and approved
by Employer for Executive.
2.3. As long as this Agreement is in effect, Employer shall maintain
hospitalization and medical insurance coverage on Executive as may from time to
time be specifically approved and adopted by Employer for its executive
officers generally. In addition, Employer agrees to provide and maintain life
insurance coverage on the life of Executive in the face amount of $2,000,000,
with proceeds thereunder
2
<PAGE> 3
payable one-half to such beneficiaries as Executive may designate and one-half
to Employer, and Employer agrees to pay all premiums on such policy. Coverage
shall continue throughout the employment term hereof. Such coverage may consist
of term, group term, whole life, or any other form of coverage, and with such
insurers as Employer may select.
2.4. While Executive is employed hereunder, Employer agrees to provide an
allowance to Executive of $5,000 per annum for costs and expenses incurred by
Executive for professional legal and/or accounting services rendered personally
to Executive, which amount shall be paid to Executive on December 1 of each
year (or such earlier time that Executive and Employer may otherwise agree).
2.5. Executive shall be eligible to receive cash bonuses or other
incentive compensation as may be determined by the Board of Directors of
Employer from time to time. As long as this Agreement is in effect, Employer
shall maintain an Executive Compensation Program, and Executive shall be
eligible to participate therein, all in accordance with Employer's regular
practices with its senior officers.
2.6. In order to promote the interests of Employer, Executive shall be
entitled to reimbursement from Employer for, or an allowance in respect of, the
initiation fees and all annual dues incurred by him in connection with his
membership in such luncheon clubs as may be agreed upon by Employer.
2.7. Executive shall have the right to participate in any additional
compensation, benefit, life insurance, hospitalization, medical services or
other plan or arrangement of Employer now or hereafter existing for the benefit
of executives of Employer.
2.8. Executive shall be entitled to such vacation (in no event less than
four weeks per year), holiday, and (subject to the provisions of Section 6.3
hereof) other paid or unpaid leave of absence as consistent with Employer's
normal policies or as otherwise approved by the Board of Directors.
3. Preservation of Business: Fiduciary Responsibility:
Executive shall use his best efforts to preserve the business and
organization of Employer, to keep available to Employer the services of present
employees and to preserve the business relations of Employer with suppliers,
distributors, customers and others. The Executive shall not commit any act, or
in any way assist others to commit any act, that would injure Employer. So long
as the Executive is employed by Employer, Executive shall observe and fulfill
proper standards of fiduciary responsibility attendant upon his service and
office.
4. Executive's Obligation to Refrain From Using or Disclosing Information:
4.1. As part of Executive's fiduciary duties to Employer, Executive
agrees, both during the term of this Agreement and thereafter, to protect,
preserve the confidentiality of and safeguard Employer's secret or confidential
information, knowledge, ideas, concepts, improvements, discoveries and
inventions, and, except as may be expressly required by Employer or by court
order or other legal process, Executive shall not, either during his employment
by Employer or thereafter, directly or
3
<PAGE> 4
indirectly, use for his own benefit or for the benefit of another, or disclose
to another, any of such information, ideas, concepts, improvements, discoveries
or inventions.
4.2. Upon termination of his employment with Employer, or at any other
time upon request, Executive shall immediately deliver to Employer all
documents embodying any of Employer's secret or confidential information,
ideas, concepts, improvements, discoveries and inventions.
5. Initial Term: Extensions of the Term:
5.1. The initial term of this Agreement shall commence on the effective
date hereof and shall end on July 31, 2002.
5.2. The Executive Compensation Committee of Employer's Board of Directors
may extend the term of this Agreement for additional successive one-year
renewal terms commencing August 1, 2002 by notifying Executive in writing, at
least sixty (60) days prior to the expiration of the then current term, of its
intention to extend this Agreement.
6. Termination other than by Expiration of the Term:
Employer or Executive may terminate Executive's employment under this
Agreement at any time, but only on the following terms:
6.1. Executive may terminate his employment under this Agreement at any
time upon at least sixty (60) days' prior written notice to Employer.
6.2. Employer may terminate Executive's employment under this Agreement at
any time, without prior notice, for "due cause" upon the good faith
determination by the Board of Directors of Employer that "due cause" exists for
the termination of the employment relationship. As used herein, the term "due
cause" shall mean any of the following events:
(i) any intentional and material misapplication by Executive of
Employer's funds, or any other material act of dishonesty committed by
Executive; or
(ii) Executive's conviction of a felony involving moral turpitude; or
(iii) Executive's unlawful use or possession of any controlled
substance or abuse of alcoholic beverages; or
(iv) Executive's material breach, nonperformance or nonobservance of
any of the terms of this Agreement if such breach, nonperformance or
nonobservance shall continue beyond a period of thirty (30) days
immediately after notice thereof by Employer to Executive; or
(v) any other action by the Executive involving willful and material
malfeasance or gross negligence in the performance of Executive's duties.
4
<PAGE> 5
6.3. In the event Executive is incapacitated by accident, sickness or
otherwise so as to render Executive mentally or physically incapable of
performing the services required under Section 1 of this Agreement for a period
of one hundred eighty (180) consecutive business days, and such incapacity is
confirmed by the written opinion of two (2) practicing medical doctors licensed
by and in good standing in the state in which they maintain offices for the
practice of medicine, upon the expiration of such period or at any time
reasonably thereafter, or in the event of Executive's death, Employer may
terminate Executive's employment under this Agreement upon giving Executive or
his legal representative written notice at least thirty (30) days' prior to the
termination date. Executive agrees, after written notice by the Board of
Directors of Employer or a duly authorized committee or officer of Employer, to
submit to examinations by such practicing medical doctors selected by the Board
of Directors of Employer or a duly authorized committee or officer of Employer.
6.4. Employer may terminate Executive's employment under this Agreement at
any time for any reason whatsoever, even without "due cause," by giving a
written notice of termination to Executive, in which case the employment
relationship shall terminate immediately upon the giving of such notice.
7. Effect of Termination:
7.1. In the event the employment relationship is terminated (a) by
Executive upon sixty (60) days' written notice pursuant to Section 6.1 hereof,
(b) by Employer for "due cause" pursuant to Section 6.2 hereof, or (c) by
Executive breaching this Agreement by refusing to continue his employment and
failing to give the requisite sixty (60) days' written notice, all Compensation
and benefits shall cease as of the date of termination other than: (i) those
benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for Executive that are earned and
vested by the date of termination, and (ii) Executive's pro rata annual salary
plus all earned and vested bonuses through the date of termination. Executive's
right to exercise stock options and Executive's rights in other stock plans, if
any, shall remain governed by the terms and conditions of the appropriate stock
plan.
7.2. If Executive's employment relationship is terminated pursuant to
Section 6.3 hereof due to Executive's incapacity or death, Executive (or, in
the event of Executive's death, Executive's legal representative) will be
entitled to those benefits that are provided by retirement and benefits plans
and programs specifically adopted and approved by Employer for Executive that
are earned and vested at the date of termination and, even though no longer
employed by Employer, shall continue to receive the salary Compensation
(payable in the manner as prescribed in the second sentence of Section 2.1) for
one (1) year following the date of termination. Executive (or, in the event of
Executive's death, Executive's legal representative) shall not, however, be
entitled to any bonuses not yet paid at the date of the termination of
employment. Executive's right to exercise stock options and Executive's rights
in other stock plans, if any, shall remain governed by the terms and conditions
of the appropriate stock plan.
7.3. If Employer (i) allows the initial term or any renewal term of this
Agreement to expire without further extending this Agreement pursuant to
Section 5.2, (ii) terminates the employment of Executive other than pursuant to
Section 6.2 hereof for "due cause" or other than for a disability or death
5
<PAGE> 6
pursuant to Section 6.3 hereof, (iii) demotes the Executive to a nonexecutive
position, or (iv) decreases the Executive's salary below the level or reduces
the employee benefits and perquisites below the level provided for by the terms
of Section 2 hereof, other than as a result of any amendment or termination of
any employee and/or executive benefit plan or arrangement, which amendment or
termination is applicable to all executives of Employer, then such action by
Employer, unless consented to in writing by Executive, shall be deemed to be a
constructive termination by Employer of Executive's employment (a "Constructive
Termination"). In the event of a Constructive Termination, Executive shall be
entitled to receive, in a lump sum within thirty (30) days after the date of
the Constructive Termination, an amount equal to the remainder of Executive's
current year's salary. In such event, Executive shall also be entitled to
receive an amount equal to Executive's salary, at the rate in effect
immediately prior to the event giving rise to the Constructive Termination, for
a period equal to the greater of three (3) years or the remainder of the
initial term under Section 5.1, with such amount payable in thirty-six (36)
equal monthly installments on the first day of each month beginning with the
month after the Constructive Termination; provided, however, that Employer's
obligation to pay such monthly installments shall be expressly conditioned on
Executive's continuing compliance with the non-competition requirements of
Section 9.1. For purposes of this Section 7.3, the term "salary" shall mean
the sum of (i) the annual rate of Compensation provided to Executive under
Section 2.1 hereof immediately prior to the event giving rise to the
Constructive Termination, plus (ii) the average annual cash bonuses or other
cash incentive Compensation paid to Executive by Employer under Section 2.5
hereof for the three years in the three year period immediately preceding the
year in which there shall occur a Constructive Termination. In the event of
such Constructive Termination, all other rights and benefits Executive may have
under the employee and/or executive benefit plans and arrangements of Employer
generally shall be determined in accordance with the terms and conditions of
such plans and arrangements.
8. Change of Control:
8.1. Notwithstanding anything to the contrary otherwise provided in this
Agreement, if a "change of control" (as defined below) of Employer occurs and
within twelve (12) months from the date of such "change of control", Executive
voluntarily terminates the employment relationship under this Agreement by
giving sixty (60) days' written notice to Employer under Section 6.1 hereof, or
Employer allows the initial term or any renewal term of this Agreement to
expire within such twelve (12) month period by not extending this Agreement
pursuant to Section 5.2 or terminates Employee's employment relationship
without "due cause" pursuant to Section 6.4, then Executive, even though no
longer employed by Employer, shall be entitled to earned and vested bonuses at
the date of termination plus a payment in the amount of the remainder of
Executive's current year's salary (undiscounted) plus the present value
(employing an interest rate of 8%) of five additional years'salary, based on
the salary in effect immediately prior to the "change of control", payable at
the option of the Executive either in a lump sum within 30 days after the date
of termination or in four payments as follows: one-fourth of the total amount
payable within 30 days after the date of termination and one-third of the
remainder payable together with interest at the rate of 8% per annum on each of
the first three anniversary dates of the date of termination. For purposes of
this Section 8.1, the term "salary" shall mean the sum of (i) the annual rate
of Compensation provided to Executive under Section 2.1 hereof immediately
prior to the "change of control," plus (ii) the average annual cash bonuses or
other
6
<PAGE> 7
cash incentive Compensation paid to Executive by Employer under Section 2.5
hereof for the three years in the three year period immediately preceding the
year in which there shall occur a "change of control" (or, if the "change of
control" shall occur in 1991 or prior thereto, for the two years in the two
year period immediately preceding the year in which there shall occur a "change
of control"). Executive's right to exercise stock options and Employee's rights
in other stock plans, if any, shall remain governed by the terms and conditions
of the appropriate stock plan. "Change of control" shall be deemed to have
occurred if (i) any "person" (as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934), becomes the beneficial owner,
directly or indirectly, of securities of Employer representing 30% or more of
the combined voting power of Employer's then outstanding securities, (ii)
during any period of 12 months, individuals who at the beginning of such period
constitute the Board of Directors of Employer cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by Employer's stockholders of each new director was approved by a vote
of at least a majority of the directors then still in office who were directors
at the beginning of the period or (iii) a person (as defined in clause (i)
above) acquires (or, during the 12-month period ending on the date of the most
recent acquisition by such person or group of persons, has acquired) gross
assets of Employer that have an aggregate fair market value greater than or
equal to over 50% of the fair market value of all of the gross assets of
Employer immediately prior to such acquisition or acquisitions.
8.2. Notwithstanding any other provision of this Agreement, if (a) there
is a change in the ownership or effective control of Employer or in the
ownership of a substantial portion of the assets of Employer [within the
meaning of Section 280G(b)(2)(A) of the Internal Revenue Code (the "Code")],
and (b) the payments otherwise to be made pursuant to Section 8.1 and any other
payments or benefits otherwise to be paid to Executive in the nature of
Compensation to be received by or for the benefit of Employee and contingent
upon such event (the "Termination Payments") would create an "excess parachute
payment" within the meaning of Section 280G of the Code, then Employer shall
make the Termination Payments in substantially equal installments, the first
installment being due within thirty days after the date of termination and each
subsequent installment being due on January 31 of each year, such that the
aggregate present value of all Termination Payments, whether pursuant to this
Agreement or otherwise, will be as close as possible to, but not exceed, 299%
of the Executive's base amount, within the meaning of Section 280G.
9. Executive's Non-Competition Obligation:
9.1. Executive acknowledges and agrees that he serves in a special
capacity for Employer pursuant to which he has acquired unique knowledge of the
operations and business of Employer and, as such, is not engaged in a common
calling. During the existence of Executive's employment by Employer hereunder
and, if the employment of Executive is terminated by Employer for any reason
pursuant to Section 6.2 or Executive voluntarily terminates his employment
pursuant to Section 6.1 (unless such voluntary termination occurs within twelve
months after a "change of control," as defined in Section 8.1), for a period of
three (3) years from the date on which he shall cease to be employed by
Employer, Executive shall not, acting alone or in conjunction with others,
directly or indirectly, and whether as principal, agent, officer, director,
partner, employee, consultant, broker, dealer or otherwise, in any of the
Business Territories (as defined below), engage in any business in competition
with the business
7
<PAGE> 8
conducted by Employer or any subsidiary of Employer, whether for his own
account or otherwise, or solicit, canvass or accept any business or transaction
for or from any other company or business in competition with such business of
Employer in any of the Business Territories. For purposes hereof, the term
"Business Territories" means the geographical regions within the geographic
borders of each State in which Employer is doing business during the term of
this Agreement and (and, in the case of post-employment non-competition
obligations) at the date of the termination of Executive's employment with
Employer and any State in which Employer had reasonable prospects of engaging
in business during the three-year noncompetition period following termination
of employment.
9.2. It is the desire and intent of the parties that the provisions of
Section 9.1 shall be enforced to the fullest extent permissible under the laws
and public policies of the State of Texas. Accordingly, if any particular
portion of Section 9.1 shall be adjudicated to be invalid or unenforceable,
Section 9.1 shall be deemed amended to (i) reform the particular portion to
provide for such maximum restrictions as will be valid and enforceable, or if
that is not possible, then (ii) delete therefrom the portion thus adjudicated
to be invalid or unenforceable. The parties acknowledge and agree that if
Executive shall enter into any license or franchise agreement or comparable
arrangement with Employer or any subsidiary or affiliate of Employer for the
operation of a business also conducted by Employer or such subsidiary or
affiliate, Executive shall not be deemed to be "engage[d] in any business in
competition with the business conducted by Employer or any subsidiary of
Employer" for purposes of Section 9.1., provided Executive has first obtained
the approval of the Executive Compensation Committee of Employer's Board of
Directors.
10. Obligations to Refrain From Competing Unfairly:
10.1. In addition to the other obligations agreed to by Executive in this
Agreement, Executive agrees that during his employment with Employer and
following the termination of his employment by Employer he shall not at any
time, directly or indirectly, (a) induce, entice, or solicit any employee of
Employer to leave his employment, or (b) contact, communicate or solicit any
customer of Employer derived from any customer list, customer lead, mail,
printed matter or other information secured from Employer or its present or
past employees, or (c) in any other manner use any customer lists or customer
leads, mail, telephone numbers, printed material or material of Employer
relating thereto. Notwithstanding the above, the parties acknowledge and agree
that if Executive shall enter into any license or franchise agreement or
comparable arrangement with Employer or any subsidiary or affiliate of Employer
for the operation of a business also conducted by Employer or such subsidiary
or affiliate, then Executive's operation of such business in the ordinary
course shall not be deemed to be a violation of the restrictions in clauses (b)
and (c) of the preceding sentence, provided Executive has first obtained the
approval of the Executive Compensation Committee of Employer's Board of
Directors.
11. Miscellaneous:
11.1. All notices and other communications required or permitted hereunder
or necessary or convenient in connection herewith shall be in writing and shall
be deemed to have been given when mailed by registered mail or certified mail,
return receipt requested, as follows (provided that notice of change of address
shall be deemed given only when received):
8
<PAGE> 9
If to Employer, to:
Cash America International, Inc.
1600 West 7th Street
Fort Worth, Texas 76102
Attention: President
If to Executive, to:
Jack R. Daugherty
1600 West 7th Street
Fort Worth, Texas 76102
or to such other names or addresses as Employer or Executive, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section 11.1.
11.2. This Agreement shall be binding upon and inure to the benefit of
Employer, its successors, legal representatives and assigns, and upon
Executive, his heirs, executors, administrators, representatives and assigns.
It is specifically agreed that upon the occurrence of any of the events
specified in Section 8.1, the provisions of this Employment Agreement shall be
binding upon and inure to the benefit of and be assumed by the surviving or
resulting corporation or the corporation to which such assets shall be
transferred. Executive agrees that his rights and obligations hereunder are
personal to him and may not be assigned without the express written consent of
Employer.
11.3. This Agreement replaces and merges all previous agreements and
discussions relating to the same or similar subject matters between Executive
and Employer with respect to the subject matter of this Agreement. Without
limiting the generality of the foregoing, this Agreement replaces and merges
all provisions of the 1989 Key Employee Stock Option Plan of Employer contained
in the second paragraph of Section 7(a), the last sentence of Section 7(d) and
Section 7(e) regarding the payment of amounts upon the termination of
Executive's employment or upon the occurrence of a "change in control" of
Employer, and the comparable provisions of any Option Agreements issued
thereunder, it being intended that this Agreement shall govern in all respects
with respect to the subject matter thereof. This Agreement may not be modified
in any respect by any verbal statement, representation or agreement made by any
employee, officer, or representative of Employer or by any written agreement
unless signed by an officer of Employer who is expressly authorized by Employer
to execute such document.
11.4. (a) If any provision of this Agreement or application thereof to
anyone or under any circumstances shall be determined to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
(b) Without intending to limit the remedies available to Employer,
it is mutually understood and agreed that Executive's services are of a
special, unique, unusual, extraordinary and intellectual character giving them
a peculiar value, the loss of which cannot be reasonably or adequately
9
<PAGE> 10
compensated in damages in an action at law, and, therefore, in the event of a
breach by Executive, Employer shall be entitled to equitable relief by way of
injunction or otherwise.
(c) Executive acknowledges that Sections 4, 9 and 10 are expressly
for the benefit of Employer, that Employer would be irreparably injured by a
violation of Sections 4, 9 and/or 10 and that Employer would have no adequate
remedy at law in the event of such violation. Therefore, Executive acknowledges
and agrees that injunctive relief, specific performance or any other
appropriate equitable remedy (without any bond or other security being
required) are appropriate remedies to enforce compliance by Employer with
Section 4, Section 9 and Section 10.
11.5. Executive acknowledges that, from time to time, Employer may
establish, maintain and distribute employee manuals or handbooks or personnel
policy manuals, and officers or other representatives of Employer may make
written or oral statements relating to personnel policies and procedures. Such
manuals, handbooks and statements are intended only for general guidance. No
policies, procedures or statements of any nature by or on behalf of Employer
(whether written or oral, and whether or not contained in any employee manual
or handbook or personnel policy manual), and no acts or practices of any nature
shall be construed to modify this Agreement or to create express or implied
obligations of any nature to Executive.
11.6. The laws of the State of Texas will govern the interpretation,
validity and effect of this Agreement without regard to the place of execution
or the place for performance thereof, and Employer and Executive agree that the
state and federal courts situated in Tarrant County, Texas shall have personal
jurisdiction over Employer and Executive to hear all disputes arising under
this Agreement. This Agreement is to be at least partially performed in Tarrant
County, Texas, and, as such, Employer and Executive agree that venue shall be
proper with the state or federal courts in Tarrant County, Texas to hear such
disputes. In the event either Employer or Executive is not able to effect
service of process upon the other with respect to such disputes, Employer and
Executive expressly agree that the Secretary of State for the State of Texas
shall be an agent of Employer and/or the Executive to receive service of
process on behalf of Employer and/or the Executive with respect to such
disputes.
12. Additional Instruments:
Executive and Employer shall execute and deliver any and all additional
instruments and agreements that may be necessary or proper to carry out the
purposes of this Agreement.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first written above.
CASH AMERICA INTERNATIONAL, INC. EXECUTIVE
By: /s/ DANIEL R. FEEHAN, President /S/ JACK R. DAUGHERTY
------------------------------- ------------------------------
Signature and Title Jack R. Daugherty
10
<PAGE> 11
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 1, 1997, is made and entered into
by and between CASH AMERICA INTERNATIONAL, INC., a Texas corporation, having an
office at 1600 W. Seventh Street, Fort Worth, Texas 76102 and DANIEL R.
FEEHAN, an executive employee of Employer (hereinafter referred to as
"Executive").
WHEREAS, Executive is employed by Cash America Management L.P.
(together with its parent corporation Cash America International, Inc.,
hereinafter referred to collectively as "Employer") in an executive capacity;
WHEREAS, Employer and Executive entered into that certain Executive
Employment Agreement dated as of April 25, 1990 (the "Original Agreement"); and
WHEREAS, the parties desire to amend and restate the Original
Agreement so as to provide for the terms and conditions set forth in this
Agreement, and Executive has agreed to continue as an employee of Employer
pursuant to the terms of this Agreement; and
WHEREAS, Employer desires that the Executive continue as an employee
of Employer to provide the necessary leadership and senior management skills
that are important to the success of Employer. Employer believes that retaining
the Executive's services as an employee of Employer and the benefits of his
business experience are of material importance to Employer and Employer's
shareholders.
NOW, THEREFORE, in consideration of Executive's continued employment
by Employer and the mutual promises and covenants contained herein, the receipt
and sufficiency of which consideration is hereby acknowledged, Employer and
Executive intend by this Agreement to specify the terms and conditions of
Executive's employment relationship with Employer and the post- employment
obligations of Executive.
1. General Duties of Employer and Employee:
1.1. Employer agrees to employ Executive and Executive agrees to accept
employment by Employer and to serve Employer in an executive capacity upon the
terms and conditions set forth herein. The duties and responsibilities of
Executive shall include those described for the particular position held by
Executive while employed hereunder in the By-laws of Employer or other
documents of Employer, and shall also include such other or additional duties
as may from time-to-time be assigned to Executive by the Board of Directors of
Employer or any duly authorized committee thereof or an authorized officer of
Employer. The executive capacity that Executive shall hold during the term
hereof shall be that position as determined by the Board of Directors, or any
duly authorized committee thereof, from time to time in its sole discretion.
While employed hereunder, the initial position that Executive shall hold (until
such time as such position may be changed as aforesaid) shall be the position
of President and Chief Operating Officer.
<PAGE> 12
1.2. While employed hereunder, Executive shall obey the lawful directions
of the Board of Directors of Employer, or any duly authorized committee
thereof, or authorized officers of Employer and shall use his best efforts to
promote the interests of Employer and to maintain and to promote the reputation
thereof. While employed hereunder, Executive shall devote his time, efforts,
skills and attention to the affairs of Employer in order that he shall
faithfully perform his duties and obligations hereunder and such as may be
assigned to or vested in him by the Board of Directors of Employer, or any duly
authorized committee thereof, or any duly authorized officer of Employer. The
parties agree that during the term of this Agreement, Executive shall be based
in Fort Worth, Texas and may only be reassigned to another location that is
mutually acceptable to Employer and Executive.
1.3. During the term of this Agreement, Executive may from time to time
engage in any businesses or activities that do not compete directly and
materially with Employer and any of its subsidiaries, provided that such
businesses or activities do not materially interfere with his performance of
the duties assigned to him in compliance with this Agreement by the Board of
Directors of Employer or any duly authorized committee thereof or an authorized
officer of Employer. In any event, Executive is permitted to (i) invest his
personal assets as a passive investor in such form or manner as will not
contravene the best interests of Employer and (ii) participate in various
charitable efforts.
2. Compensation and Benefits:
2.1. As Compensation for services to Employer, Employer shall pay to
Executive during the term of this Agreement a salary at an annual rate to be
fixed from time-to-time by the Board of Directors of Employer or any duly
authorized committee thereof, which annual rate shall in no event be less than
$386,000 per annum while Executive is employed hereunder. The salary shall be
payable in equal bi-weekly installments, subject only to such payroll and
withholding deductions as may be required by law and other deductions applied
generally to employees of Employer for insurance and other employee benefit
plans. The Board of Directors or any authorized committee or officer of
Employer shall review Executive's overall annual Compensation at least
annually, with a view to ascertaining the adequacy thereof and such
Compensation may be increased by the Board of Directors from time to time by an
amount that in the opinion of the Board of Directors is justified by
Executive's performance.
2.2. Upon Executive's furnishing to Employer customary and reasonable
documentary support (such as receipts or paid bills) evidencing costs and
expenses incurred by him in the performance of his services and duties
hereunder (including, without limitation, travel and entertainment expenses)
and containing sufficient information to establish the amount, date, place and
essential character of the expenditure, Executive shall be reimbursed for such
costs and expenses in accordance with Employer's normal expense reimbursement
policy. Executive shall be entitled to participate in all insurance, stock
option and other stock programs and compensation plans and such other benefits
plans or programs as may be from time-to-time specifically adopted and approved
by Employer for Executive.
2.3. As long as this Agreement is in effect, Employer shall maintain
hospitalization and medical insurance coverage on Executive as may from time to
time be specifically approved and adopted by Employer for its executive
officers generally. In addition, Employer agrees to provide and maintain life
insurance coverage on the life of Executive in the face amount of $2,000,000,
with proceeds thereunder
2
<PAGE> 13
payable one-half to such beneficiaries as Executive may designate and one-half
to Employer, and Employer agrees to pay all premiums on such policy. Coverage
shall continue throughout the employment term hereof. Such coverage may consist
of term, group term, whole life, or any other form of coverage, and with such
insurers as Employer may select.
2.4. While Executive is employed hereunder, Employer agrees to provide an
allowance to Executive of $5,000 per annum for costs and expenses incurred by
Executive for professional legal and/or accounting services rendered personally
to Executive, which amount shall be paid to Executive on December 1 of each
year (or such earlier time that Executive and Employer may otherwise agree).
2.5. Executive shall be eligible to receive cash bonuses or other
incentive compensation as may be determined by the Board of Directors of
Employer from time to time. As long as this Agreement is in effect, Employer
shall maintain an Executive Compensation Program, and Executive shall be
eligible to participate therein, all in accordance with Employer's regular
practices with its senior officers.
2.6. In order to promote the interests of Employer, Executive shall be
entitled to reimbursement from Employer for, or an allowance in respect of, the
initiation fees and all annual dues incurred by him in connection with his
membership in such luncheon clubs as may be agreed upon by Employer.
2.7. Executive shall have the right to participate in any additional
compensation, benefit, life insurance, hospitalization, medical services or
other plan or arrangement of Employer now or hereafter existing for the benefit
of executives of Employer.
2.8. Executive shall be entitled to such vacation (in no event less than
four weeks per year), holiday, and (subject to the provisions of Section 6.3
hereof) other paid or unpaid leave of absence as consistent with Employer's
normal policies or as otherwise approved by the Board of Directors.
3. Preservation of Business: Fiduciary Responsibility:
Executive shall use his best efforts to preserve the business and
organization of Employer, to keep available to Employer the services of present
employees and to preserve the business relations of Employer with suppliers,
distributors, customers and others. The Executive shall not commit any act, or
in any way assist others to commit any act, that would injure Employer. So long
as the Executive is employed by Employer, Executive shall observe and fulfill
proper standards of fiduciary responsibility attendant upon his service and
office.
4. Executive's Obligation to Refrain From Using or Disclosing Information:
4.1. As part of Executive's fiduciary duties to Employer, Executive
agrees, both during the term of this Agreement and thereafter, to protect,
preserve the confidentiality of and safeguard Employer's secret or confidential
information, knowledge, ideas, concepts, improvements, discoveries and
inventions, and, except as may be expressly required by Employer or by court
order or other legal process, Executive shall not, either during his employment
by Employer or thereafter, directly or
3
<PAGE> 14
indirectly, use for his own benefit or for the benefit of another, or disclose
to another, any of such information, ideas, concepts, improvements, discoveries
or inventions.
4.2. Upon termination of his employment with Employer, or at any other
time upon request, Executive shall immediately deliver to Employer all
documents embodying any of Employer's secret or confidential information,
ideas, concepts, improvements, discoveries and inventions.
5. Initial Term: Extensions of the Term:
5.1. The initial term of this Agreement shall commence on the effective
date hereof and shall end on July 31, 2002.
5.2. The Executive Compensation Committee of Employer's Board of Directors
may extend the term of this Agreement for additional successive one-year
renewal terms commencing August 1, 2002 by notifying Executive in writing, at
least sixty (60) days prior to the expiration of the then current term, of its
intention to extend this Agreement.
6. Termination other than by Expiration of the Term:
Employer or Executive may terminate Executive's employment under this
Agreement at any time, but only on the following terms:
6.1. Executive may terminate his employment under this Agreement at any
time upon at least sixty (60) days' prior written notice to Employer.
6.2. Employer may terminate Executive's employment under this Agreement at
any time, without prior notice, for "due cause" upon the good faith
determination by the Board of Directors of Employer that "due cause" exists for
the termination of the employment relationship. As used herein, the term "due
cause" shall mean any of the following events:
(i) any intentional and material misapplication by Executive of
Employer's funds, or any other material act of dishonesty committed by
Executive; or
(ii) Executive's conviction of a felony involving moral turpitude; or
(iii) Executive's unlawful use or possession of any controlled
substance or abuse of alcoholic beverages; or
(iv) Executive's material breach, nonperformance or nonobservance of
any of the terms of this Agreement if such breach, nonperformance or
nonobservance shall continue beyond a period of thirty (30) days
immediately after notice thereof by Employer to Executive; or
(v) any other action by the Executive involving willful and material
malfeasance or gross negligence in the performance of Executive's duties.
4
<PAGE> 15
6.3. In the event Executive is incapacitated by accident, sickness or
otherwise so as to render Executive mentally or physically incapable of
performing the services required under Section 1 of this Agreement for a period
of one hundred eighty (180) consecutive business days, and such incapacity is
confirmed by the written opinion of two (2) practicing medical doctors licensed
by and in good standing in the state in which they maintain offices for the
practice of medicine, upon the expiration of such period or at any time
reasonably thereafter, or in the event of Executive's death, Employer may
terminate Executive's employment under this Agreement upon giving Executive or
his legal representative written notice at least thirty (30) days' prior to the
termination date. Executive agrees, after written notice by the Board of
Directors of Employer or a duly authorized committee or officer of Employer, to
submit to examinations by such practicing medical doctors selected by the Board
of Directors of Employer or a duly authorized committee or officer of Employer.
6.4. Employer may terminate Executive's employment under this Agreement at
any time for any reason whatsoever, even without "due cause," by giving a
written notice of termination to Executive, in which case the employment
relationship shall terminate immediately upon the giving of such notice.
7. Effect of Termination:
7.1. In the event the employment relationship is terminated (a) by
Executive upon sixty (60) days' written notice pursuant to Section 6.1 hereof,
(b) by Employer for "due cause" pursuant to Section 6.2 hereof, or (c) by
Executive breaching this Agreement by refusing to continue his employment and
failing to give the requisite sixty (60) days' written notice, all Compensation
and benefits shall cease as of the date of termination, other than: (i) those
benefits that are provided by retirement and benefit plans and programs
specifically adopted and approved by Employer for Executive that are earned and
vested by the date of termination, and (ii) Executive's pro rata annual salary
plus all earned and vested bonuses through the date of termination. Executive's
right to exercise stock options and Executive's rights in other stock plans, if
any, shall remain governed by the terms and conditions of the appropriate stock
plan.
7.2. If Executive's employment relationship is terminated pursuant to
Section 6.3 hereof due to Executive's incapacity or death, Executive (or, in
the event of Executive's death, Executive's legal representative) will be
entitled to those benefits that are provided by retirement and benefits plans
and programs specifically adopted and approved by Employer for Executive that
are earned and vested at the date of termination and, even though no longer
employed by Employer, shall continue to receive the salary Compensation
(payable in the manner as prescribed in the second sentence of Section 2.1) for
one (1) year following the date of termination. Executive (or, in the event of
Executive's death, Executive's legal representative) shall not, however, be
entitled to any bonuses not yet paid at the date of the termination of
employment. Executive's right to exercise stock options and Executive's rights
in other stock plans, if any, shall remain governed by the terms and conditions
of the appropriate stock plan.
7.3. If Employer (i) allows the initial term or any renewal term of this
Agreement to expire without further extending this Agreement pursuant to
Section 5.2, (ii) terminates the employment of Executive other than pursuant to
Section 6.2 hereof for "due cause" or other than for a disability or death
5
<PAGE> 16
pursuant to Section 6.3 hereof, (iii) demotes the Executive to a nonexecutive
position, or (iv) decreases the Executive's salary below the level or reduces
the employee benefits and perquisites below the level provided for by the terms
of Section 2 hereof,of any amendment or termination of any employee and/or
executive benefit plan or arrangement, which amendment or termination is
applicable to all executives of Employer, then such action by Employer, unless
consented to in writing by Executive, shall be deemed to be a constructive
termination by Employer of Executive's employment (a "Constructive
Termination"). In the event of a Constructive Termination, the Executive shall
be entitled to receive, in a lump sum within 30 days after the date of the
Constructive Termination, an amount equal to the remainder of Executive's
current year's salary. In such event, Executive shall also be entitled to
receive an amount equal to Executive's salary, at the rate in effect
immediately prior to the event giving rise to the Constructive Termination, for
a period equal to the greater of three (3) years or the remainder of the
initial term under Section 5.1, with such amount payable in thirty-six (36)
equal monthly installments on the first day of each month beginning with the
month after the Constructive Termination; provided, however, that Employer's
obligation to pay such monthly installments shall be expressly conditioned on
Executive's continuing compliance with the non-competition requirements of
Section 9.1. For purposes of this Section 7.3, the term "salary" shall mean
the sum of (i) the annual rate of Compensation provided to Executive under
Section 2.1 hereof immediately prior to the event giving rise to the
Constructive Termination, plus (ii) the average annual cash bonuses or other
cash incentive Compensation paid to Executive by Employer under Section 2.5
hereof for the three years in the three year period immediately preceding the
year in which there shall occur a Constructive Termination. In the event of
such Constructive Termination, all other rights and benefits Executive may have
under the employee and/or executive benefit plans and arrangements of Employer
generally shall be determined in accordance with the terms and conditions of
such plans and arrangements.
8. Change of Control:
8.1. Notwithstanding anything to the contrary otherwise provided in this
Agreement, if a "change of control" (as defined below) of Employer occurs and
within twelve (12) months from the date of such "change of control", Executive
voluntarily terminates the employment relationship under this Agreement by
giving sixty (60) days' written notice to Employer under Section 6.1 hereof or
if Employer allows the initial term or any renewal term of this Agreement to
expire within such twelve (12) month period by not extending this Agreement
pursuant to Section 5.2 or terminates Employee's employment relationship
without "due cause" pursuant to Section 6.4, then Executive, even though no
longer employed by Employer, shall be entitled to earned and vested bonuses at
the date of termination plus a payment in the amount of the remainder of
Executive's current year's salary (undiscounted) plus the present value
(employing an interest rate of 8%) of five additional years' salary, based on
the salary in effect immediately prior to the "change of control", payable at
the option of the Executive either in a lump sum within 30 days after the date
of termination or in four payments as follows: one-fourth of the total amount
payable within 30 days after the date of termination and one-third of the
remainder payable together with interest at the rate of 8% per annum on each of
the first three anniversary dates of the date of termination. For purposes of
this Section 8.1, the term "salary" shall mean the sum of (i) the annual rate
of Compensation provided to Executive under Section 2.1 hereof immediately
prior to the "change of control," plus (ii) the average annual cash bonuses or
other
6
<PAGE> 17
cash incentive Compensation paid to Executive by Employer under Section 2.5
hereof for the three years in the three year period immediately preceding the
year in which there shall occur a "change of control" (or, if the "change of
control" shall occur in 1991 or prior thereto, for the two years in the two
year period immediately preceding the year in which there shall occur a "change
of control"). Executive's right to exercise stock options and Employee's rights
in other stock plans, if any, shall remain governed by the terms and conditions
of the appropriate stock plan. "Change of control" shall be deemed to have
occurred if (i) any "person" (as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934), becomes the beneficial owner,
directly or indirectly, of securities of Employer representing 30% or more of
the combined voting power of Employer's then outstanding securities, (ii)
during any period of 12 months, individuals who at the beginning of such period
constitute the Board of Directors of Employer cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by Employer's stockholders of each new director was approved by a vote
of at least a majority of the directors then still in office who were directors
at the beginning of the period or (iii) a person (as defined in clause (i)
above) acquires (or, during the 12-month period ending on the date of the most
recent acquisition by such person or group of persons, has acquired) gross
assets of Employer that have an aggregate fair market value greater than or
equal to over 50% of the fair market value of all of the gross assets of
Employer immediately prior to such acquisition or acquisitions.
8.2 Notwithstanding any other provision of this Agreement, if (a) there
is a change in the ownership or effective control of Employer or in the
ownership of a substantial portion of the assets of Employer [within the
meaning of Section 280G(b)(2)(A) of the Internal Revenue Code (the "Code")],
and (b) the payments otherwise to be made pursuant to Section 8.1 and any other
payments or benefits otherwise to be paid to Executive in the nature of
Compensation to be received by or for the benefit of Employee and contingent
upon such event (the "Termination Payments") would create an "excess parachute
payment" within the meaning of Section 280G of the Code, then Employer shall
make the Termination Payments in substantially equal installments, the first
installment being due within thirty days after the date of termination and each
subsequent installment being due on January 31 of each year, such that the
aggregate present value of all Termination Payments, whether pursuant to this
Agreement or otherwise, will be as close as possible to, but not exceed, 299%
of the Executive's base amount, within the meaning of Section 280G.
9. Executive's Non-Competition Obligation:
9.1. Executive acknowledges and agrees that he serves in a special
capacity for Employer pursuant to which he has acquired unique knowledge of the
operations and business of Employer and, as such, is not engaged in a common
calling. During the existence of Executive's employment by Employer hereunder
and, if the employment of Executive is terminated by Employer for any reason
pursuant to Section 6.2 or Executive voluntarily terminates his employment
pursuant to Section 6.1 (unless such voluntary termination occurs within twelve
months after a "change of control," as defined in Section 8.1), for a period of
three (3) years from the date on which he shall cease to be employed by
Employer, Executive shall not, acting alone or in conjunction with others,
directly or indirectly, and whether as principal, agent, officer, director,
partner, employee, consultant, broker, dealer or otherwise, in any of the
Business Territories (as defined below), engage in any business in competition
with the business
7
<PAGE> 18
conducted by Employer or any subsidiary of Employer, whether for his own
account or otherwise, or solicit, canvass or accept any business or transaction
for or from any other company or business in competition with such business of
Employer in any of the Business Territories. For purposes hereof, the term
"Business Territories" means the geographical regions within the geographic
borders of each State in which Employer is doing business during the term of
this Agreement and (and, in the case of post-employment non-competition
obligations) at the date of the termination of Executive's employment with
Employer and any State in which Employer had reasonable prospects of engaging
in business during the three-year noncompetition period following termination
of employment.
9.2. It is the desire and intent of the parties that the provisions of
Section 9.1 shall be enforced to the fullest extent permissible under the laws
and public policies of the State of Texas. Accordingly, if any particular
portion of Section 9.1 shall be adjudicated to be invalid or unenforceable,
Section 9.1 shall be deemed amended to (i) reform the particular portion to
provide for such maximum restrictions as will be valid and enforceable, or if
that is not possible, then (ii) delete therefrom the portion thus adjudicated
to be invalid or unenforceable. The parties acknowledge and agree that if
Executive shall enter into any license or franchise agreement or comparable
arrangement with Employer or any subsidiary or affiliate of Employer for the
operation of a business also conducted by Employer or such subsidiary or
affiliate, Executive shall not be deemed to be "engage[d] in any business in
competition with the business conducted by Employer or any subsidiary of
Employer" for purposes of Section 9.1, provided Executive has first obtained
the approval of the Executive Compensation Committee of Employer's Board of
Directors.
10. Obligations to Refrain From Competing Unfairly:
10.1. In addition to the other obligations agreed to by Executive in this
Agreement, Executive agrees that during his employment with Employer and
following the termination of his employment by Employer he shall not at any
time, directly or indirectly, (a) induce, entice, or solicit any employee of
Employer to leave his employment, or (b) contact, communicate or solicit any
customer of Employer derived from any customer list, customer lead, mail,
printed matter or other information secured from Employer or its present or
past employees, or (c) in any other manner use any customer lists or customer
leads, mail, telephone numbers, printed material or material of Employer
relating thereto. Notwithstanding the above, the parties acknowledge and agree
that if Executive shall enter into any license or franchise agreement or
comparable arrangement with Employer or any subsidiary or affiliate of Employer
for the operation of a business also conducted by Employer or such subsidiary
or affiliate, then Executive's operation of such business in the ordinary
course shall not be deemed to be a violation of the restrictions in clauses (b)
and (c) of the preceding sentence, provided Executive has first obtained the
approval of the Executive Compensation Committee of Employer's Board of
Directors.
11. Miscellaneous:
11.1. All notices and other communications required or permitted hereunder
or necessary or convenient in connection herewith shall be in writing and shall
be deemed to have been given when mailed by registered mail or certified mail,
return receipt requested, as follows (provided that notice of change of address
shall be deemed given only when received):
8
<PAGE> 19
If to Employer, to:
Cash America International, Inc.
1600 West 7th Street
Fort Worth, Texas 76102
Attention: Chief Executive Officer
If to Executive, to:
Daniel R. Feehan
1600 West 7th Street
Fort Worth, Texas 76102
or to such other names or addresses as Employer or Executive, as the case may
be, shall designate by notice to the other party hereto in the manner specified
in this Section 11.1.
11.2. This Agreement shall be binding upon and inure to the benefit of
Employer, its successors, legal representatives and assigns, and upon
Executive, his heirs, executors, administrators, representatives and assigns.
It is specifically agreed that upon the occurrence of any of the events
specified in Section 8.1, the provisions of this Employment Agreement shall be
binding upon and inure to the benefit of and be assumed by the surviving or
resulting corporation or the corporation to which such assets shall be
transferred. Executive agrees that his rights and obligations hereunder are
personal to him and may not be assigned without the express written consent of
Employer.
11.3. This Agreement replaces and merges all previous agreements and
discussions relating to the same or similar subject matters between Executive
and Employer with respect to the subject matter of this Agreement. Without
limiting the generality of the foregoing, this Agreement replaces and merges
all provisions of the 1989 Key Employee Stock Option Plan of Employer contained
in the second paragraph of Section 7(a), the last sentence of Section 7(d) and
Section 7(e) regarding the payment of amounts upon the termination of
Executive's employment or upon the occurrence of a "change in control" of
Employer, and the comparable provisions of any Option Agreements issued
thereunder, it being intended that this Agreement shall govern in all respects
with respect to the subject matter thereof. This Agreement may not be modified
in any respect by any verbal statement, representation or agreement made by any
employee, officer, or representative of Employer or by any written agreement
unless signed by an officer of Employer who is expressly authorized by Employer
to execute such document.
11.4. (a) If any provision of this Agreement or application thereof to
anyone or under any circumstances shall be determined to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
(b) Without intending to limit the remedies available to Employer,
it is mutually understood and agreed that Executive's services are of a
special, unique, unusual, extraordinary and intellectual character giving them
a peculiar value, the loss of which cannot be reasonably or adequately
9
<PAGE> 20
compensated in damages in an action at law, and, therefore, in the event of a
breach by Executive, Employer shall be entitled to equitable relief by way of
injunction or otherwise.
(c) Executive acknowledges that Sections 4, 9 and 10 are expressly
for the benefit of Employer, that Employer would be irreparably injured by a
violation of Sections 4, 9 and/or 10 and that Employer would have no adequate
remedy at law in the event of such violation. Therefore, Executive acknowledges
and agrees that injunctive relief, specific performance or any other
appropriate equitable remedy (without any bond or other security being
required) are appropriate remedies to enforce compliance by Employer with
Section 4, Section 9 and Section 10.
11.5. Executive acknowledges that, from time to time, Employer may
establish, maintain and distribute employee manuals or handbooks or personnel
policy manuals, and officers or other representatives of Employer may make
written or oral statements relating to personnel policies and procedures. Such
manuals, handbooks and statements are intended only for general guidance. No
policies, procedures or statements of any nature by or on behalf of Employer
(whether written or oral, and whether or not contained in any employee manual
or handbook or personnel policy manual), and no acts or practices of any nature
shall be construed to modify this Agreement or to create express or implied
obligations of any nature to Executive.
11.6. The laws of the State of Texas will govern the interpretation,
validity and effect of this Agreement without regard to the place of execution
or the place for performance thereof, and Employer and Executive agree that the
state and federal courts situated in Tarrant County, Texas shall have personal
jurisdiction over Employer and Executive to hear all disputes arising under
this Agreement. This Agreement is to be at least partially performed in Tarrant
County, Texas, and, as such, Employer and Executive agree that venue shall be
proper with the state or federal courts in Tarrant County, Texas to hear such
disputes. In the event either Employer or Executive is not able to effect
service of process upon the other with respect to such disputes, Employer and
Executive expressly agree that the Secretary of State for the State of Texas
shall be an agent of Employer and/or the Executive to receive service of
process on behalf of Employer and/or the Executive with respect to such
disputes.
12. Additional Instruments:
Executive and Employer shall execute and deliver any and all additional
instruments and agreements that may be necessary or proper to carry out the
purposes of this Agreement.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first written above.
CASH AMERICA INTERNATIONAL, INC. EXECUTIVE
By: /s/ JACK R. DAUGHERTY, CEO /s/ DANIEL R. FEEHAN
------------------------------ ------------------------------
Signature and Title Daniel R. Feehan
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,781
<SECURITIES> 0
<RECEIVABLES> 133,955
<ALLOWANCES> 0
<INVENTORY> 54,488
<CURRENT-ASSETS> 211,828
<PP&E> 117,450
<DEPRECIATION> 53,310
<TOTAL-ASSETS> 348,775
<CURRENT-LIABILITIES> 28,122
<BONDS> 159,037
0
0
<COMMON> 3,024
<OTHER-SE> 158,592
<TOTAL-LIABILITY-AND-EQUITY> 348,775
<SALES> 136,912
<TOTAL-REVENUES> 216,249
<CGS> 87,373
<TOTAL-COSTS> 162,106
<OTHER-EXPENSES> 29,036
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,555
<INCOME-PRETAX> 16,296
<INCOME-TAX> 6,053
<INCOME-CONTINUING> 10,243
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,243
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
