As filed with the Securities and Exchange Commission on January 22, 1999
Registration No. 333-
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
FIRST CASH FINANCIAL SERVICES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 5932 75-2237318
-------- ---- ----------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
690 E. Lamar Blvd., Suite 400 Copy to: Phillip E. Powell
Arlington, Texas 76011 Thomas C. Pritchard, Esq. 690 E. Lamar Blvd.,
(817) 460-3947 Brewer & Pritchard, P.C. Suite 400
(Address, including zip 1111 Bagby, 24th Floor Arlington, Texas 76011
code, and telephone number, Houston, Texas 77002 (Name, address, including
including area code, Phone (713) 209-2950 zip code, phone number,
of registrant's Fax (713) 209-2921 including area code,
principal executive offices) of agent for service)
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.
---
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering.
---
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
---
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
---
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
---
<TABLE>
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities To Be Price Per Offering Registration
To Be Registered Registered Share (1) Price (1) Fee
<S> <C> <C> <C> <C>
Resale of Common
Stock Outstanding 1,780,000 $12.31 $21,911,800 $6,091
Common Stock Underlying
Acquisition Obligations 155,000 $12.31 $1,908,050 $530
Resale of Common Stock
Underlying Warrants 1,895,250 $12.31 $23,330,528 $6,486
--------- ------- ----------- ------
Total 3,830,250 $12.31 $47,150,378 $13,107
=============================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average of the high and low sales prices
for the common stock, as reported by the Nasdaq Stock Market on January 14,
1999, or $12.31 per share.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
PROSPECTUS
FIRST CASH FINANCIAL SERVICES, INC.
------------
COMMON STOCK
------------
This prospectus relates to the resale of common stock of First Cash
Financial Services, Inc. as follows: (i) 1,895,250 shares of common stock
underlying currently exercisable stock purchase warrants, (ii) 1,780,000 shares
of common stock currently outstanding, and (iii) 155,000 shares of common stock
to be issued pursuant to outstanding acquisition obligations. The Company will
receive up to $19,206,531 upon the exercise of the warrants. The company will
not receive any proceeds from the resale of currently outstanding shares of
common stock or the issuance of common stock in payment of outstanding
acquisition obligations.
The Selling Stockholders and any broker-dealers who act in connection with
the sale of shares hereunder may be deemed to be "underwriters" as that term is
defined under the Securities Act, and any commissions received by them and
profit on any resale of the shares as principal may be deemed to be underwriting
discounts and commissions under the Securities Act.
The common stock of the company is traded on the Nasdaq Stock Market under
the symbol "FCFS." On January 21, 1999, the last sale price of the common
stock, as reported by the Nasdaq Stock Market, was $13.00 per share.
This investment involves a high degree of risk. See "Risk Factors" beginning on
page 2.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary in a
criminal offense.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
securities and exchange commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
The date of this prospectus is January 22, 1999
<TABLE>
TABLE OF CONTENTS
<S> <C>
The Company...................................... 2
Risk Factors..................................... 2
Recent Developments; Risk of Leverage....... 2
Expansion of Business....................... 3
Dependence on Key Personnel................. 3
Governmental Regulation..................... 4
Competition................................. 4
Risks Related to Firearm Sales.............. 4
Risks Related to Rightful Owner Claims...... 4
Year 2000 Issue............................. 4
Forward-Looking Information................. 5
Use of Proceeds.................................. 5
Plan of Distribution and Selling Stockholders.... 5
Incorporation of Certain Documents By Reference.. 9
Available Information............................ 9
SEC's Position on Indemnification................ 10
Legal Matters.................................... 10
Experts.......................................... 10
</TABLE>
THE COMPANY
-----------
First Cash Financial Services, Inc. is the third largest publicly traded
pawnshop operator in the United States and currently has 106 pawn stores in
Texas, Oklahoma, South Carolina, Washington, D.C., Maryland, Missouri and
Virginia. The company's pawnshops engage in both consumer finance and retail
sales activities. The company's pawnshops provide a convenient source for
consumer loans, lending money against pledged tangible personal property such as
jewelry, electronic equipment, tools, firearms, sporting goods and musical
equipment. These pawn stores also function as retailers of previously-owned
merchandise acquired in forfeited pawn transactions and over-the-counter
purchases from customers.
The company also currently owns 27 check cashing stores in California,
Illinois and Washington. These check cashing stores provide a broad range of
consumer financial services, including check cashing, money order sales, wire
transfers and short-term unsecured payday advances. The company also owns a
software company in California which provides computer hardware and software to
third party check cashing operators, as well as ongoing technical support. For
the fiscal year ended July 31, 1998, the company's revenues were derived 64%
from retail activities, 34% from lending activities, and 2% from other sources,
including check-cashing fees.
Management believes the pawnshop industry is highly fragmented with
approximately 15,000 stores in the United States and is in the early stages of
achieving greater efficiencies through consolidation. The five publicly traded
pawnshop companies operate less than 6% of the total pawnshops in the United
States. Management believes significant economies of scale, increased operating
efficiencies, and revenue growth are achievable by increasing the number of
stores under operation and introducing modern merchandising techniques, point
of-sale systems, improved inventory management and store remodeling. The
company's objectives are to increase consumer loans and retail sales through
selected acquisitions and new store openings and to enhance operating
efficiencies and productivity. During fiscal 1998, 1997 and 1996, the company
added 29, 7 and 7 pawn stores to its network, respectively, net of stores
consolidated. The company made its initial entry into the check cashing
business during fiscal 1998, with the purchase of 11 stores in California and
Washington. Management estimates there are approximately 7,000 such check
cashing locations throughout the United States.
The company was formed as a Texas corporation in July 1988 and in April
1991 the company reincorporated as a Delaware corporation. Except as otherwise
indicated, the term "company" includes its wholly owned subsidiaries, American
Loan & Jewelry, Inc., Famous Pawn, Inc., JB Pawn, Inc., Miraglia, Inc., Capital
Pawnbrokers, Inc., Silver Hill Pawn, Inc., One Iron Ventures, Inc. and Elegant
Floors, Inc. The company's principal executive offices are located at 690 East
Lamar Blvd., Suite 400, Arlington, Texas 76011, and its telephone number is
(817) 460-3947.
RISK FACTORS
------------
Recent Developments; Risk of Leverage
- -------------------------------------
On November 14, 1998, the company purchased 12 pawn stores in South
Carolina for an aggregate purchase price of $4,558,000 consisting of $2,258,000
cash, a $600,000 note payable due in twelve equal monthly payments, and a
$1,700,000 obligation due November 16, 1999 in either cash or common stock of
the company, at the option of the company. On December 14, 1998, the company
acquired 100% of the outstanding common stock of One Iron Ventures, Inc., which
owns 11 check cashing stores in Illinois, in exchange for 430,000 shares of the
company's common stock.
As a result of recent acquisition related debt and increases in the
company's credit facility, the company's debt service requirements have been
substantially increased over historical levels. Although the company
anticipates that existing cash flows and additional cash flows from the
acquisitions partially funded by such indebtedness will be sufficient to support
current levels of company debt, debt service requirements will affect the
profitability of the company and may impair its ability to raise additional
capital for further acquisitions or for capital investment in existing
operations.
At October 31, 1998, the company had $39,605,000 of long-term liabilities,
of which $36,739,000 represented long-term debt. The company has incurred and
will continue to incur interest expense on such indebtedness. Although interest
rates have decreased over the last twelve months, interest rates may increase in
the future. As interest rates increase, management's strategy to fund
acquisitions through debt becomes more costly and may have an adverse impact on
the company's operations. Failure to make payments when due will result in
default under and possible acceleration of one or more of the company's debt
instruments. Management believes that the net cash flows generated from
operations will provide the company with sufficient resources to meet the
company's present and foreseeable liquidity and capital needs, including those
arising from debt obligations. However, in the event the company's cash flow so
generated is insufficient for these purposes, the company may be required to
raise additional capital and/or curtail acquisition activities.
Expansion of Business
- ---------------------
Since its inception, the company has engaged in a series of acquisitions
and, to a lesser degree, new store openings in order to expand its business.
The company's strategy for the near future is to emphasize expansion through
both acquisition of existing stores, which enables the company to realize
increases in revenues and economies of scale more quickly, and opening new
stores where demographics are favorable and competition is limited. The company
has not established definite plans to open a set number of stores or to acquire
a set number of stores during the next 12-month period. The company is
currently negotiating the purchase of 22 check cashing stores in Mississippi.
The purchase price of the Mississippi acquisition will consist of a combination
of cash and seller notes payable. While the company continually looks for, and
is presented with, potential acquisition candidates, the company has no
definitive plans or commitments for further acquisitions and is not currently
negotiating any acquisitions, other than the those listed above. The company
has no immediate plans to open any other new stores. To a significant extent,
the company's future success is dependent upon its ability to continue to engage
in successful acquisitions and new site selections. Potential risks associated
with such a strategy are as follows:
Management of Growth
- --------------------
The success of the company's growth strategy is dependent, in part, upon
the ability to maintain adequate financial controls and reporting systems, to
assimilate acquisition management into the company's management structure, to
manage a larger operation, and to obtain additional capital upon favorable
terms. On average, a new store becomes profitable approximately six to twelve
months after establishment. Typically, acquired stores are profitable upon
acquisition. There can be no assurance that the company will be able to
successfully finance acquisitions or manage a larger operation.
Availability of Attractive Acquisitions
- ---------------------------------------
The company competes for acquisitions with other publicly held pawnshop and
check cashing companies, some of which have greater financial resources than the
company. This competition could limit the availability of acquisition
candidates and increase the cost of acquisitions.
Statutory Requirements
- ----------------------
The company's ability to open new pawn stores in Texas counties having a
population of more than 250,000 may be adversely affected by a law which
requires a finding of public need and probable profitability by the Texas
Consumer Credit Commissioner as a condition to the issuance or activation of any
new pawnshop license. In addition, some counties in Maryland in which the
company currently operates have enacted moratoriums on new pawn licenses, which
may adversely affect the company's ability to expand its operations in those
counties. Also, the present statutory and regulatory environment of some states
for both pawnshops and check cashers renders expansion into those states
impractical. For example, certain states require public sale of forfeited
collateral or do not permit service charges sufficient to make pawnshop
operations profitable.
Access to Capital
- -----------------
The company's need for expansion capital and its ability to obtain secured
financing is complicated by the requirement in some states that it maintain a
minimum amount of certain unencumbered net assets (currently $150,000 in Texas,
$25,000 in Oklahoma, $50,000 in Missouri and $35,000 in South Carolina) for each
pawnshop location. The ability of the company to continue to expand through
acquisitions and new store openings is limited by access to capital.
Availability of Qualified Store Management Personnel
- ----------------------------------------------------
The company's ability to expand may also be limited by the availability of
qualified store management personnel. While the company seeks to train existing
qualified personnel for management positions and to create attractive
compensation packages to retain existing management personnel, there can be no
assurance that sufficient qualified personnel will be available to satisfy the
company's needs with respect to its planned expansion.
Dependence on Key Personnel
- ---------------------------
The success of the company is dependent upon, among other things, the
services of Phillip E. Powell, chief executive officer, and Rick L. Wessel,
president and chief financial officer. The company has entered into employment
agreements with Messrs. Powell and Wessel. The loss of the services of Mr.
Powell or Mr. Wessel could have a material adverse effect on the company. As of
the date of this prospectus, the company has not obtained "key-man" life
insurance on the lives of Messrs. Powell or Wessel.
Governmental Regulation
- -----------------------
The company's pawnshop and check cashing operations are subject to, and
must comply with, extensive regulation, supervision and licensing under various
federal, state and local statutes, ordinances and regulations. These statutes
may prescribe, among other things, service charges a pawnshop may charge for
lending money and the rules of conduct that govern an entity's ability to
maintain a pawnshop license, as well as the amount of fees which may be charged
for cashing checks or making payday advances. With respect to firearm and
ammunition sales, a pawnshop must comply with the regulations promulgated by the
Federal Bureau of Alcohol, Tobacco and Firearms, a division of the Department of
the Treasury ("ATF"). State regulatory agencies have broad, discretionary
authority to refuse to grant a license or to suspend or revoke any or all
existing licenses of licensees under common control if it is determined that any
such licensee has violated any law or regulation or that the management of any
such licensee is not suitable to operate pawnshops. In addition, there can be
no assurance that additional state or federal statutes or regulations will not
be enacted at some future date which could inhibit the ability of the company to
expand, significantly decrease the service charges for lending money, or
prohibit or more stringently regulate the sale of certain goods, such as
firearms, any of which could significantly adversely affect the company's
prospects.
Competition
- -----------
The company encounters significant competition in connection with the
operation of both its pawnshop and check cashing businesses. In connection with
lending operations, the company competes with other pawnshops (owned by
individuals and by large operators) and certain financial institutions, such as
consumer finance companies, which generally lend on an unsecured as well as on a
secured basis. The company's competitors in connection with its retail sales
include numerous retail and discount stores. In connection with its check
cashing operations, the company competes with banks, grocery stores, and other
check cashing companies. Many competitors have greater financial resources than
the company. These competitive conditions may adversely affect the company's
revenues, profitability and ability to expand.
Risks Related to Firearm Sales
- ------------------------------
The company regularly engages in sales of firearms, leaving it open to the
risk of lawsuits from persons who may claim injury as a result of an improper
sale. No such claims have been asserted against the company as of the date
hereof. The company does not maintain insurance covering potential risks
related to the sale of firearms.
Risks Related to Rightful Owner Claims
- --------------------------------------
In connection with pawnshops operated by the company, there is the risk
that acquired merchandise may be subject to claims of rightful owners.
Historically, the company has not found these claims to have a material adverse
effect on results of operations, and, accordingly, the company does not maintain
insurance to cover the costs of returning merchandise to its rightful owners.
The company requires each customer obtaining a loan to provide appropriate
identification.
Year 2000 Issue
- ---------------
The "Year 2000 Issue" is the result of computer programs that use two
digits instead of four to record the applicable year. Computer programs that
have date-sensitive software might recognize a date using "00" as the Year 1900
instead of the Year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including among other events,
a temporary inability to process transactions or engage in similar normal
business activities. The Year 2000 is a leap year, which may also lead to
incorrect calculations, functions or system failure. The Company has
established a committee to initiate the process of gathering, testing, and
producing information about the Company's operations systems impacted by the
Year 2000 transition. The Company intends to utilize both internal and external
resources to identify, correct or reprogram, and test systems for Year 2000
compliance. The Company intends to contact its significant suppliers to
determine the extent to which the Company may be vulnerable to those parties'
failure to remediate their own Year 2000 issues. There can be no guarantee that
the systems of other companies with which the Company's systems interface will
be timely converted, or that a failure to convert by another company, or a
conversion that is incompatible with the Company's systems would not require the
Company to spend more time or money than anticipated, or even have a material
adverse effect on the Company. Although the Year 2000 assessment has not been
completed, management currently believes, based on available information, that
resolving these matters will not have a material adverse impact on the Company's
financial position or it's results of operations.
Forward-Looking Information
- ---------------------------
This prospectus contains certain statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Forward-looking statements can be identified by the
use of forward-looking terminology such as "believes," "expects," "may,"
"estimates," "will," "should," "plans," or "anticipates" or the negative
thereof, or other variations thereon, or comparable terminology, or by
discussions of strategy. Such statements include, but are not limited to, the
discussions of the company's operations, liquidity, and capital resources.
Forward-looking statements are included in the "Risk Factors" section of this
prospectus, as well as in the company's filings with the Securities Exchange
Commission pursuant to the Exchange Act, some of which are incorporated by
reference herein. Although the company believes that the expectations reflected
in forward-looking statements are reasonable, there can be no assurances that
such expectations will prove to be accurate. Generally, these statements relate
to business plans, strategies, anticipated strategies, levels of capital
expenditures, liquidity and anticipated capital funding needed to effect the
business plan. All phases of the company's operations are subject to a number
of uncertainties, risks and other influences, many of which are outside the
control of the company and cannot be predicted with any degree of accuracy.
Factors such as changes in regional or national economic conditions, changes in
governmental regulations, unforeseen litigation, changes in interest rates or
tax rates, significant changes in the prevailing market price of gold, future
business decisions and other uncertainties may cause results to differ
materially from those anticipated by some of the statements made in this
prospectus. In light of the significant uncertainties inherent in forward
looking statements, the inclusion of such statements should not be regarded as a
representation by the company or any other person that the objectives and plans
of the company will be achieved. Security holders are cautioned that such
forward-looking statements involve risks and uncertainties. The forward-looking
statements contained this prospectus speak only as of the date of this
prospectus and the company expressly disclaims any obligation or undertaking to
release any updates or revisions to any such statement to reflect any change in
the company's expectations or any change in events, conditions or circumstance
on which any such statement is based.
USE OF PROCEEDS
---------------
In the event that shares of common stock, the resale of which are being
registered under the Securities Act hereunder, are issued upon exercise of all
of the warrants described herein, the company will receive as gross proceeds a
maximum of $19,206,531. The company will use any such proceeds for general
working capital. As there are no commitments from the holders of the warrants
to so exercise such securities and purchase common stock, there can be no
assurance that any such warrants will be exercised.
PLAN OF DISTRIBUTION AND SELLING STOCKHOLDERS
---------------------------------------------
This prospectus relates to the resale of common stock of First Cash
Financial Services, Inc. as follows: (i) 1,895,250 shares of common stock
underlying currently exercisable stock purchase warrants, (ii) 1,780,000 shares
of common stock currently outstanding, and (iii) 155,000 shares of common stock
to be issued pursuant to outstanding acquisition obligations. The following
table sets forth certain information with respect to the registration of shares
of common stock. The company will receive up to $19,206,531 upon exercise of
the warrants, and will not receive any proceeds from the resale of currently
outstanding shares of common stock.
<TABLE>
RESALE OF COMMON STOCK BY SELLING STOCKHOLDERS FOR SHARES THAT ARE CURRENTLY
OUTSTANDING OR WILL BE OUTSTANDING UPON EXERCISE OF WARRANTS
SHARES BENEFICIALLY AMOUNT OFFERED
OWNED BEFORE (ASSUMING ALL SHARES
STOCKHOLDER RESALE IMMEDIATELY SOLD)
----------- ------ -----------------
<S> <C> <C>
Alan Barron(6)(10) 100,000 100,000
Alan Barron(2)(10) 40,000 40,000
Alan Barron(3)(10) 25,000 25,000
Alan Barron(4)(10) 150,000 150,000
Bill Ratliff(2) 10,000 10,000
Blake Miraglia(3)(11) 25,000 25,000
Brian Baker(3) 2,000 2,000
CCDC, Inc.(1)(5) 25,000 25,000
CCDC, Inc.(1)(5) 100,000 100,000
CCDC, Inc.(2)(5) 100,000 100,000
CCDC, Inc.(3)(5) 25,000 25,000
Christopher J. Lee(1) 14,750 14,750
Christopher J. Lee(2) 15,000 15,000
Christopher J. Lee(3) 10,000 10,000
Cynthia White(1) 17,500 17,500
Cynthia White(2) 15,000 15,000
Cynthia White(3) 10,000 10,000
David W. Carr(1) 13,000 13,000
David W. Carr(2) 15,000 15,000
David W. Carr(3) 10,000 10,000
Dennis Norris(3) 2,000 2,000
James Don Dougan(3) 2,000 2,000
Jimmy Seale(3) 15,000 15,000
John Hamilton(3) 2,000 2,000
Jose A. Ramirez(3) 2,000 2,000
Michael McCollum(3) 2,000 2,000
Miguel J. Trevino(3) 2,000 2,000
Nancy Talley(3) 2,000 2,000
Peter McDonald(3) 2,000 2,000
R. Seth Trotman(2) 15,000 15,000
R. Seth Trotman(3) 10,000 10,000
Randy York(2) 15,000 15,000
Randy York(3) 10,000 10,000
Randy York(4) 25,000 25,000
Randy York(6) 15,000 15,000
Raul Ramos(1) 13,000 13,000
Raul Ramos(2) 15,000 15,000
Raul Ramos(3) 10,000 10,000
Richard T. Burke(2)(12) 100,000 100,000
Richard T. Burke(6)(12) 125,000 125,000
Rick Powell(1)(13) 225,000 225,000
Rick Powell(2)(13) 60,000 60,000
Rick Powell(3)(13) 100,000 100,000
Rick Powell(4)(13) 200,000 200,000
Rick Powell(6)(13) 50,000 50,000
Rick Wessel(6)(14) 105,000 105,000
Rick Wessel(2)(14) 50,000 50,000
Rick Wessel(3)(14) 40,000 40,000
Rick Wessel(4)(14) 150,000 150,000
Scott W. Merritt(3) 15,000 15,000
Scott Williamson(6)(15) 55,000 55,000
Scott Williamson(2)(15) 30,000 30,000
Scott Williamson(3)(15) 25,000 25,000
Scott Williamson(4)(15) 75,000 75,000
Stephanie Jordan(3) 2,000 2,000
Steve Walker(3) 2,000 2,000
Jon Burke(6) 50,000 50,000
Jon Burke(1) 5,000 5,000
Jon Burke(1) 50,000 50,000
Blake A. Miraglia, Trustee of the
Blake A. Miraglia Trust U/A
5/30/87(7)(8)(11) 334,305 334,305
Gary V. Vanier and Barbara D.
Vanier, Trustees of the Gary V.
Vanier and Barbara A. Vanier 1992
Trust U/A 6/30/92(7) 258,145 258,145
Stephen R. Miraglia, Trustee of the
Stephen R. Miraglia Trust U/A
5/28/87(7) 169,065 169,065
Bruce and Paulette Myers(7) 77,095 77,095
Jimmy Seale(7) 11,390 11,390
Erik P. Gustafson(9) 198,875 198,875
Donald H. Gustafson(9) 198,875 198,875
Judy Redington(9) 21,500 21,500
William Bingo(9) 10,750 10,750
Unified Loans, Inc.(16) 20,000 20,000
Pawnshops of America, Inc.(17) 115,000 115,000
Action Loans, Inc.(18) 20,000 20,000
---------- ---------
3,830,250 3,830,250
========== =========
- --------------------
</TABLE>
(1) The shares referenced relate to the resale of common stock underlying
currently exercisable $4.625 per share stock purchase warrants.
(2) The shares referenced relate to the resale of common stock underlying
currently exercisable $8.00 per share stock purchase warrants.
(3) The shares referenced relate to the resale of common stock underlying
currently exercisable $12.00 per share stock purchase warrants.
(4) The shares referenced relate to the resale of common stock underlying
currently exercisable $15.00 per share stock purchase warrants.
(5) CCDC, Inc. is an affiliate of director Joe R. Love, who is also an affiliate
of the company.
(6) The shares referenced relate to currently outstanding common stock issued
under previously exercised stock purchase warrants.
(7) The referenced Selling Shareholders acquired their shares from the company
in connection with the acquisition by the company of Miraglia, Inc., a
California corporation, on June 4, 1998. These Selling Shareholders were
the shareholders of Miraglia, Inc. prior to the acquisition by the company,
and Miraglia, Inc. became a wholly owned subsidiary of the company as a
result of the acquisition. Blake Miraglia, Gary Vanier and Stephen Miraglia
have agreed to restrict public sale or transfer of the company's common
stock issued under the acquisition of Miraglia, Inc. to 20% per year
(cumulative) of such stock issued in the acquisition for the three years
immediately following the effective date of the acquisition.
(8) In connection with the Miraglia, Inc. acquisition, Blake Miraglia entered
into a three-year employment agreement with the company.
(9) The referenced Selling Shareholders acquired their shares from the company
in connection with the acquisition by the company of One Iron Ventures,
Inc., an Illinois corporation, on December 14, 1998. These Selling
Shareholders were the shareholders of One Iron Ventures, Inc. prior to the
acquisition by the company, and One Iron Ventures, Inc. became a wholly
owned subsidiary of the company as a result of the acquisition.
(10) Mr. Barron is currently employed as president of the company's pawnshop
division, and is an affiliate of the company.
(11) Mr. Miraglia is currently employed as president of the company's check
cashing division and is an affiliate of the company.
(12) Mr. Burke is a director of the company, and is an affiliate of the company.
(13) Mr. Powell is currently employed as chief executive officer of the company,
and is chairman of the board of directors, and is an affiliate of the
company.
(14) Mr. Wessel is currently employed as president and chief financial officer
of the company, and is a director, and is an affiliate of the company.
(15) Mr. Williamson is currently employed as executive vice president, and is an
affiliate of the company.
(16) The referenced selling shareholder has an outstanding receivable from the
company in the amount of $310,700 related to the October 20, 1998 purchase
by the company of the assets of two pawnshops in El Paso, Texas from the
selling shareholder. This amount is payable one year from the date of
purchase in either cash, or the issuance of the company's common stock
valued at the average of the closing price of the company's common stock for
the thirty days immediately preceding the October 20, 1999 due date, at the
option of the company.
(17) The referenced selling shareholder has an outstanding receivable from the
company in the amount of $1,700,000 related to the November 16, 1998
purchase by the company of the assets of twelve pawnshops in South Carolina
from the selling shareholder. This amount is payable one year from the date
of purchase in either cash, or the issuance of the company's common stock
valued at the average of the closing price of the company's common stock for
the thirty days immediately preceding the November 16, 1999 due date, at the
option of the company.
(18) The referenced selling shareholder has an outstanding receivable from the
company in the amount of $320,147 related to the October 20, 1998 purchase
by the company of the assets of three pawnshops in El Paso, Texas from the
selling shareholder. This amount is payable one year from the date of
purchase in either cash, or the issuance of the company's common stock
valued at the average of the closing price of the company's common stock for
the thirty days immediately preceding the October 20, 1999 due date, at the
option of the company.
Pursuant to this prospectus, the Selling Stockholders, or by certain
pledgees, donees, transferees or other successors in interest to the Selling
Stockholders, may sell shares from time to time in transactions on the Nasdaq
Stock Market from time to time, in privately-negotiated transactions or by a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling the shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders or the purchasers of
the shares for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be in
excess of customary commissions).
Other methods by which the shares may be sold include, without limitation:
(i) transactions which involve cross or block trades or any other transaction
permitted by the Nasdaq Stock Market, (ii) "at the market" to or through market
makers or into an existing market for the common stock, (iii) in other ways not
involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents, (iv) through transactions in
options or swaps or other derivatives (whether exchange-listed or otherwise),
(v) through short sales, or (vi) any combination of any other such methods of
sale. The Selling Stockholders may also enter into option or other transaction
with broker-dealers which require the delivery to such broker-dealers of the
shares offered hereby which shares such broker-dealer may resell pursuant to
this prospectus. The Selling Shareholders may pledge shares as collateral for
margin accounts and such shares could be resold pursuant to the terms of such
accounts.
The Selling Stockholders and any broker-dealers who act in connection with
the sale of shares hereunder may be deemed to be "underwriters" as that term is
defined under the Securities Act, and any commissions received by them and
profit on any resale of the shares as principal may be deemed to be underwriting
discounts and commissions under the Securities Act.
Pursuant to the registration rights agreements with the Selling
Stockholders, the company has agreed to indemnify the Selling Stockholders
against certain liabilities, including certain liabilities under the Securities
Act, or to contribute to payments such Selling Stockholders or underwriters are
required to make in respect of certain losses, claims, damages or liabilities.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
-----------------------------------------------
The following documents filed by the company with the Commission are
incorporated in this prospectus by reference:
a) The company's Annual Report on Form 10-K for the fiscal year ended
July 31, 1998.
b) The company's definitive proxy statement for the January 14, 1999
annual meeting.
c) The Current Report on Form 8-K filed by the company on September 22,
1998 to report the purchase of Miraglia, Inc., along with the
financial statements of Miraglia, Inc. for the ten months ended May
31, 1998.
d) The company's registration statement on Form S-1 dated November 4,
1994.
e) The company's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1998.
All financial statements included in the above-referenced filings should be
read in conjuction with the Risk Factors section of this prospectus.
All documents filed by the company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and before the
termination of the offering covered hereby will be deemed to be incorporated by
reference in this prospectus and to be a part hereof from the date of filing
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference in this prospectus shall be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or any subsequently filed document that also is or
is deemed to be incorporated by reference modifies or replaces such statement.
The company will provide, without charge upon oral or written request, to
each person to whom this prospectus is delivered, a copy of any or all of the
documents incorporated by reference, other than exhibits to such documents not
specifically incorporated by reference above. In addition, a copy of the
company's most recent annual report to stockholders will be promptly furnished,
without charge and on oral or written request, to such persons. Requests for
such documents should be directed to the company, 690 East Lamar, Suite 400,
Arlington, Texas 76011, attention: Rick Wessel.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
AVAILABLE INFORMATION
---------------------
The company is subject to the informational requirements of the Securities
Exchange Act of 1934 ("Exchange Act"), and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Such reports, proxy statements and other information
are available for inspection and copying at the Public Reference Room of the
SEC, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549; and at the
Regional Offices of the SEC located at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and at 7 World Trade Center, New York, New York 10048.
Copies of such material may be obtained from the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
common stock trades on the Nasdaq Stock Market under the symbol "FCFS".
Reports, proxy statements and other information concerning the company may be
inspected at the offices of the Nasdaq Stock Market located at 1735 K Street,
NW, Washington, DC 20006-1500.
The company has filed with the SEC in Washington, D.C. a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act
with respect to the securities offered by this prospectus. Certain of the
information contained in the Registration Statement is omitted from this
prospectus, and reference is hereby made to the Registration Statement and
exhibits and schedules relating thereto for further information with respect to
the company and the securities offered by this prospectus. Statements contained
herein concerning the provisions of any document are not necessarily complete
and in each instance reference is made to the copy of the document filed as an
exhibit or schedule to the Registration Statement. Each such statement is
qualified in its entirety by this reference. The Registration Statement and the
exhibits and schedules thereto are available for inspection at, and copies of
such materials may be obtained upon payment of the fees prescribed therefor by
the rules and regulations of the SEC, from the SEC, Public Reference Section,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC
maintains a Web Site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC
and the address of the site is http://www.sec.gov.
SEC'S POSITION ON INDEMNIFICATION
---------------------------------
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
LEGAL MATTERS
-------------
Certain matters in connection with the resale of the shares by the Selling
Shareholders will be passed upon by Brewer & Pritchard, P.C., Houston, Texas. A
shareholder of Brewer and Pritchard, P.C. owns 5,000 shares of common stock.
EXPERTS
-------
The financial statements as of July 31, 1997 and 1998 and for the years
then ended incorporated in this prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended July 31, 1998 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
The financial statements of the company for the year ended July 31, 1996
incorporated in this prospectus by reference to the Annual Report on Form 10-K
for the year ended July 31, 1998 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.
The financial statements of Miraglia, Inc. for the ten months ended May 31,
1998 incorporated in this prospectus by reference to the Current Report on Form
8-K filed by the Company on September 22, 1998 have been so incorporated in
reliance on the report of Tollefson & Clancey, independent accountants, given
upon their authority as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to be incurred in
connection with the distribution of the securities being registered. The
expenses shall be paid by the company.
<TABLE>
<S> <C>
Filing Fee for Registration Statement..... $ 13,107.00
NASD Filing Fee........................... -
Printing, Engraving and Mailing Fees...... 500.00
Legal Fees and Expenses................... 5,000.00
Accounting Fees and Expenses.............. 3,000.00
Blue Sky Fees and Expenses................ -
Transfer Agent Fees....................... -
Miscellaneous............................. -
-----------
Total..................................... $ 21,607.00
===========
</TABLE>
Item 15. Indemnification of Directors and Officers
Article X of the Certificate of Incorporation of the company provides for
indemnification of officers, directors, agents and employees of the company as
follows:
(a) Each person who was or is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a director,
officer, employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators: provided, however,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify and such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition: provided,
however, that, if the law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Article or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(b) If a claim under paragraph (a) of this Article is not paid in full by the
Corporation within thirty days after a written claim has been received by the
Corporation, the claimant may, at any time thereafter, bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required standards of
conduct which make it permissible under law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the law, nor an actual determination
by the Corporation (including its Boards of Directors, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
(d) The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under the
law.
The foregoing discussion of the company's Certificate of Incorporation, and
of the Delaware General Corporation Law is not intended to be exhaustive and is
qualified in its entirety by such Certificate of Incorporation and Statutes,
respectively.
Item 16. Exhibits
3.1(1) Amended and Restated Certificate of Incorporation
5.1(1) Opinion of Brewer and Pritchard, PC
10.61(1) Acquisition Agreement for twelve pawnshops in South Carolina
10.62(1) Acquisition Agreement for One Iron Ventures, Inc.
10.63(1) First Cash Financial Services, Inc. 1999 Stock Option Plan
23.1(1) Consents of Deloitte & Touche LLP, PricewaterhouseCoopers LLP, and
Tollefson & Clancey, independent public accountants.
23.2(1) Consent of Brewer and Pritchard PC (contained in Exhibit 5.1)
- ---------------
(1) Filed herein.
Item 17. Undertakings
a) The undersigned registrant hereby undertakes:
1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
iii) To include any material information with respect to the plan of
distribution nor previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; provided, however, that paragraphs (a) (1) (I) and (a)
(1) (II) do not apply if the registration statement is on Form S-3,
Form S-8 or Form F-3, and the information required in a post
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by the reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13 (a) or 15 (d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15 (d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act nay be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore,
unenforceable. In the event that a claim for indemnification against
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Arlington, Texas, on January 22, 1999.
FIRST CASH FINANCIAL SERVICES, INC.
-----------------------------------
/s/ PHILLIP E. POWELL
-------------------------------------------
Phillip E. Powell, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Capacity Date
--------- -------- ----
/s/ PHILLIP E. POWELL Chairman of the Board and January 22, 1999
------------------------ Chief Executive Officer
Phillip E. Powell
/s/ RICK L. WESSEL President, Chief Financial January 22, 1999
------------------------ Officer, Secretary,
Rick L. Wessel Treasurer and Principal
Accounting Officer
/s/ JOE R. LOVE Director January 22, 1999
------------------------
Joe R. Love
/s/ RICHARD T. BURKE Director January 22, 1999
------------------------
Richard T. Burke
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
FIRST CASH, INC.
-----------------------------------
First Cash, Inc., a Delaware corporation (the "Corporation") which was
originally incorporated under the name of First Cash Acquisition, Inc. on April
24, 1991, hereby adopts the following Amended and Restated Certificate of
Incorporation pursuant to Sections 242 and 245 of the Delaware General
Corporation Law:
ARTICLE I
---------
The name of the Corporation shall be amended to be First Cash Financial
Services, Inc.
ARTICLE II
----------
The original Restated Certificate of Incorporation was filed in the office
of the Secretary of State of Delaware on November 30, 1992.
ARTICLE III
-----------
The address of the Corporation's registered office in the State of Delaware
is 919 Market Street, Suite 1600, Wilmington, New Castle County, Delaware 19801,
and the name of its registered agent at such address is The Delaware Corporation
Agency, Inc.
ARTICLE IV
----------
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law.
ARTICLE V
---------
The period of duration of the Corporation is perpetual.
ARTICLE VI
----------
The total number of shares of stock which the Corporation shall have
authority to issue is 30,000,000 consisting of 20,000,000 shares of common
stock, par value $.01 per share (the "Common Stock"), and 10,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock").
Shares of Preferred Stock of the Corporation may be issued from time to
time in one or more classes or series, each of which class or series shall have
such voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated in such
resolution or resolutions providing for the issue of such class or series of
Preferred Stock as may be adopted from time to time by the Board of Directors
prior to the issuance of any shares thereof pursuant to the authority hereby
expressly vested in it, all in accordance with the laws of the State of
Delaware.
ARTICLE VII
-----------
The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors consisting of not less than one nor more
than 15 directors, the exact number of directors to be determined from time to
time by resolution adopted by the Board of Directors. The Directors of the
Corporation shall be divided into three classes, designated Class I, Class II
and Class III. Each class shall consist, as nearly as possible, of one-third of
the total number of directors constituting the entire Board of Directors. The
term of office of the Class III directors will expire at the annual meeting of
stockholders next ensuing; the term of the Class II directors will expire one
year thereafter; and the term of office of the Class I directors will expire two
years thereafter. Beginning with the next annual meeting of stockholders,
successors to the class of directors whose term expires at that annual meeting
shall be elected for a three-year term. If the number of directors is changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible, and
any additional directors of any class elected to fill a vacancy resulting from
an increase in such class shall hold office for a term that shall coincide with
the remaining term of that class, but in no case will a decrease in the number
of directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Any
vacancy on the Board of Directors howsoever resulting, may be filled by a
majority of the directors then in office, even if less than a quorum, or by the
sole remaining director. Any director elected to fill a vacancy shall hold
office for a term that shall coincide with the term of the class to which such
director shall have been elected.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling vacancies
and other features of such directorships shall be governed by the terms of this
Certificate of Incorporation or the resolution or resolutions adopted by the
Board of Directors pursuant to Article VI hereof, and such directors so elected
shall not be divided into classes pursuant to this Article VII, unless expressly
provided by such terms.
Subject to the rights, if any, of the holders of shares of Preferred Stock
then outstanding, any or all of the directors of the Corporation may be removed
from office at any time, but only for cause and only by the affirmative vote of
the holders of a majority of the outstanding shares of the Corporation then
entitled to vote generally in the election of directors, considered for purposes
of this Article VII as one class.
The foregoing Article may be amended, altered, repealed or rescinded by the
affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the
outstanding stock of the Corporation entitled to vote.
ARTICLE VIII
------------
Any action required or permitted to be taken at any annual or special
meeting of stockholders may be taken only upon the vote of the stockholders at
an annual or special meeting duly noticed and called, as provided in the Bylaws
of the Corporation, and may not be taken by a written consent of the
stockholders pursuant to the Delaware General Corporation Law.
ARTICLE IX
----------
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which such
director derived an improper personal benefit.
ARTICLE X
---------
(a) Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Law, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of his or her heirs, executors and administrators: provided,
however, that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition: provided,
however, that, if the Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified
under this Article or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(b) If a claim under paragraph (a) of this Article is not paid in full by
the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may, at any time thereafter, bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Law for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(c) The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
(d) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Law.
ARTICLE XI
----------
Whenever the Corporation shall be authorized to issue only one class of
stock, each outstanding share shall entitle the holder thereof to notice of, and
the right to vote at, any meeting of stockholders. Whenever the Corporation
shall be authorized to issue more than one class of stock, no outstanding share
of any class of stock which is denied voting power under the provisions of the
Certificate of Incorporation shall entitle the holder thereof to the right to
vote at any meeting of stockholders, except as the provisions of the Law shall
otherwise require.
ARTICLE XII
-----------
The appraisal rights afforded by Section 262 of the Law, subject to the
duties and limitations therein contained, shall attach to any proposed amendment
of this Certificate of Incorporation which shall attempt to impose, directly or
indirectly, personal liability for the debts of the Corporation on any
stockholder or stockholders.
ARTICLE XIII
------------
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under Section 291 of
Title 8 of the Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this Corporation under Section 279 of
Title 8 of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class or creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
ARTICLE XIV
-----------
In furtherance of, and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the Bylaws of the Corporation.
ARTICLE XV
----------
The Corporation reserves the right to repeal, alter, amend, or rescind any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
ARTICLE XVI
-----------
The foregoing Amended and Restated Certificate of Incorporation was
proposed by the Board of Directors and adopted by the stockholders in the manner
and by the vote prescribed by Section 242 of the Delaware General Corporation
Law.
IN WITNESS WHEREOF, the undersigned Delaware corporation has caused this
Amended and Restated Certificate of Amendment to be signed by its President and
Secretary this the 14th day of January 1999.
First Cash, Inc.
/S/ RICK L. WESSEL, PRESIDENT
Rick L. Wessel
President and Secretary
Exhibit 5.1
January 22, 1999
Mr. Philip E. Powell
First Cash, Inc.
690 E. Lamar Blvd.
Arlington, Texas 76011
Dear Mr. Powell:
As counsel for First Cash, Inc., a Delaware corporation ("Company"), you
have requested our firm to render this opinion in connection with the
Registration Statement of the Company on Form S-3 filed under the Securities Act
of 1933, as amended ("Act"), with the Securities and Exchange Commission
relating to the registration of the resale of (i) 1,895,250 shares of common
stock underlying currently exercisable stock purchase warrants ("Warrants"),
(ii) 1,780,000 shares of common stock currently outstanding, and (iii) 155,000
shares of common stock to be issued pursuant to outstanding acquisition
obligations.
We are familiar with the registration statement and the registration
contemplated thereby. In giving this opinion, we have reviewed the registration
statement and such other documents and certificates of public officials and of
officers of the Company with respect to the accuracy of the factual matters
contained therein as we have felt necessary or appropriate in order to render
the opinions expressed herein. In making our examination, we have assumed the
genuineness of all signatures, the authenticity of all documents presented to us
as originals, the conformity to original documents of all documents presented to
us as copies thereof, and the authenticity of the original documents from which
any such copies were made, which assumptions we have not independently verified.
Based upon all the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
2. The shares of common stock underlying the Warrants to be issued upon
exercise of such Warrants as well as the shares to be issued pursuant
to outstanding acquisition obligations are validly authorized and, upon
exercise of the Warrants in accordance with their terms, and upon
issuance pursuant to the acquisition obligations, will be validly
issued, fully paid and nonassessable.
3. The shares of common stock, the resale of which is being registered,
are validly issued, fully paid and nonassessable.
We consent to the use in the registration statement of the reference to
Brewer & Pritchard, P.C. under the heading "Legal Matters."
Very truly yours,
BREWER & PRITCHARD, P.C.
//s// Brewer & Pritchard, P.C.
Exhibit 10.61
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated effective as of
October 31, 1998 is made by and among Pawnshops of America, Inc., a South
Carolina corporation ("Seller"), Gerald Smith ("Shareholder") and First Cash,
Inc., a Delaware corporation ("Purchaser").
WITNESSETH:
-----------
WHEREAS, Seller desires to sell and Purchaser desires to purchase certain
of the assets of Seller used in connection with the pawn business of Seller
conducted at the locations in the State of South Carolina listed in Exhibit A
attached hereto; and
WHEREAS, Purchaser desires to purchase such assets on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained, and on the terms and subject to the conditions
herein set forth, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01. Sale and Purchase of Assets. Subject to and upon the terms and
conditions contained herein, at the Closing (as hereinafter defined), Seller
shall sell, transfer, assign, convey and deliver the Purchaser all of the
following assets of Seller used in connection with the pawn business of Seller,
free and clear of all liens, claims and encumbrances, and Purchaser shall
purchase, accept and acquire from Seller, the following:
(a) Equipment and Fixed Assets. All of Seller's furniture,
equipment, supplies, fixed assets and leasehold improvements located at or used
in connection with the pawnshops of Seller at the locations in the State of
South Carolina listed in Exhibit A;
(b) Layaways and Counterbuys. All of Seller's right, title and
interest in layaways and counterbuys used in connection with the pawnshops of
Seller at the locations in the State of South Carolina listed in Exhibit A;
(c) Intangible Assets. All of Seller's right, title and interest in
all of its operating licenses, permits, trade names, telephone numbers and other
intangible assets, together with all rights to, and applications, and franchises
for, any of the foregoing, relating to Seller's pawn businesses at the
locations in the State of South Carolina listed in Exhibit A;
(d) Pawn loans. All of Seller's outstanding pawn loans receivable
(including all accrued interest thereon) and all evidence of indebtedness
owed to Seller arising out of the pawn businesses conducted at the locations in
the State of South Carolina listed in Exhibit A, together with all pawn
merchandise securing same;
(e) Inventory. All of Seller's inventory and merchandise including,
but not limited to all of Seller's inventory and merchandise at the locations in
the State of South Carolina listed in Exhibit A; and
(f) Records. All of Seller's current and active records, files and
papers pertaining to the assets described in Subsections (a) through (e) above,
including literature, contract forms, graphic materials, pricing and information
manuals, fixtures, designs, sales literature or other sales aids, customer
files, customer credit histories and other data related to Seller's business.
All of the assets described in Subsections (a) through (f) above are
hereinafter collectively referred to as the "Assets".
Notwithstanding anything in this Section 1.01 to the contrary, Seller shall
retain all of its right, title and interest in, to and under all of the
following:
(a) all cash and cash equivalents;
(b) all accounts receivable except layaways and pawn loans;
(c) all federal, state, local and foreign tax deposits;
(d) any assets not relating to the business contained in a list to be
provided to Purchaser prior to Closing;
(e) all minute books and stock books of Seller;
(f) all insurance refunds;
(g) the items of property located in the accounting department and the
office of Abe Smith and the personal desk of Gerald Smith; and
(h) the post office box of Seller.
1.02. Purchase Price. The purchase price ("Purchase Price") to be paid
for the Assets shall be four million six hundred fifty-eight thousand dollars
($4,658,000.00), subject to adjustment as provided below. The Purchase Price
shall be payable as follows: (a) cash in the amount of $2,258,000 payable at
Closing, (b) the issuance of a promissory note in the amount of $600,000 in the
form of Exhibit B payable in 12 equal monthly installments of principal and
interest, and (c) $1,800,000 (adjusted as provided below) payable 365 days after
the Closing Date. At the option of Purchaser, said sum of $1,800,000 (adjusted
as provided below) may be paid in cash, by the issuance of shares of common
stock of Purchaser, or partly in cash and partly by the issuance of shares of
common stock of Purchaser. The number of shares of common stock of Purchaser to
be issued shall be determined by dividing the portion of the sum of $1,800,000
(adjusted as provided below) to be paid by the issuance of common stock of
Purchaser by the average of the closing sale price of the common stock of
Purchaser during the thirty (30) trading days immediately preceding five (5)
business days prior to the expiration of the 365 day period as reported by the
Nasdaq National Market System. If any portion of the sum of $1,800,000
(adjusted as provided below) is not received by Seller on or before 365 days
after the Closing Date, such unpaid portion shall immediately accelerate and
bear interest at the rate of 12.0% per annum from the due date thereof until
paid and the subordination of such obligation of Purchaser to the net asset
requirement of the Texas Pawnshop Act shall terminate. If no sale of common
stock of Purchaser occurred on a particular trading day, the closing ask price
shall be used in determining the closing sale price. If the common stock of
Purchaser is not listed on the Nasdaq National Market System 365 days after the
Closing Date, the closing sale price for each trading day shall be the last sale
price, or the closing ask price if no sale occurred, of the common stock of
Purchaser on the principal national securities exchange on which such common
stock is listed. Any common stock of Purchaser issued to Seller shall be
registered under the Securities Act of 1933, as amended (the "Act"), and subject
to the provisions of the Act and the rules and regulations promulgated
thereunder. As used herein, the term "trading day" shall mean any day with
respect to which actual transactions in the common stock of Purchaser are
reported or bid and asked quotations are reported but actual transactions are
not. Any shares of common stock delivered to Seller in order to satisfy all or
any portion of the $1,800,000 due 365 days after the Closing Date shall have
been registered under the Securities Act of 1933, as amended, and subject to the
rules and regulations of the Securities and Exchange Commission. The Purchase
Price (1) shall be reduced one dollar ($1.00) for each one dollar ($1.00) that
the face amount of current active pawn loans of Seller satisfactory to Purchaser
is less than nine hundred thousand dollars ($900,000) in the aggregate, (2)
shall be reduced by one dollar ($1.00) for each one dollar ($1.00) that the
inventory (at Seller's cost as shown on Seller's books), including layaway
inventory, of Seller is less than $1,350,000 in the aggregate and (3) shall be
reduced by one dollar ($1.00) for each one dollar ($1.00) that layaway deposits
are greater than $142,000. The Purchase Price (1) shall be increased one dollar
($1.00) for each one dollar ($1.00) that the face amount of current active pawn
loans of Seller satisfactory to Purchaser is greater than nine hundred thousand
dollars ($900,000) in the aggregate, (2) shall be increased by one dollar
($1.00) for each one dollar ($1.00) that the inventory (at Seller's cost as
shown on Seller's books), including layaway inventory, of Seller is greater than
$1,350,000 in the aggregate and (3) shall be increased by one dollar ($1.00) for
each one dollar ($1.00) that layaway deposits are less than $142,000. All of
the foregoing adjustments to the Purchase Price shall be made to the $1,800,000
(adjusted as provided above) due and payable 365 days after the Closing Date.
All calculations of pawn loans, inventory and layaways shall be made as of the
Closing Date. The obligation of Purchaser under this Section 1.02 to pay the
sum of $1,800,000 (adjusted as provided above) is and shall be subordinate and
inferior in payment to any and all indebtedness of Purchaser to Bank One, Texas,
N.A. and any other financial institution or syndication of financial
institutions which constitutes the principal lender(s) to Purchaser. The
obligation of Purchaser under this Section 1.02 to pay the sum of $1,800,000
(adjusted as provided above) is subordinate and inferior to the claims of
general creditors to the extent necessary to permit Purchaser to meet the net
asset requirement of the Texas Pawnshop Act of each pawnshop of Purchaser and
its subsidiaries in the State of Texas with the result that there shall be
available at all times to general creditors an amount equal to the sum of the
net asset requirement of each pawnshop of Purchaser and its subsidiaries in the
State of Texas.
There shall also be paid to Seller at Closing the sum of (1) the aggregate
amount of all unused security deposits listed in Exhibit C under the Leases to
be assumed by Purchaser, (2) all cash of Seller on hand, (3) rent payable for
November 1998 prorated to the Closing Date (as hereinafter defined), and (4) the
unamortized cost of the structural improvements relating to location number 7 on
Exhibit A less fifty percent (50%) of all current contractual obligations for
Yellow Pages advertising in the aggregate amount shown on Exhibit D.
1.03. Allocation of Purchase Price. The Purchase Price shall be allocated
at Closing as follows:
Furniture, fixture and equipment
Pawn Loans
Accrued interest
Inventory, including Layaways and Counterbuys
Less layaway deposits
Goodwill
1.04. No Assumption of Liabilities. Except for the lease agreements
relating to the locations in the State of South Carolina listed on Exhibit A
(the "Leases") and the obligations relating to layaway deposits and the
obligations under the layaway contracts and the amount of obligations for Yellow
Pages advertising listed on Exhibit D, Purchaser does not and shall not assume
or agree to pay, perform or discharge any liabilities or obligations of Seller,
whether accrued, absolute, contingent or otherwise, arising out of claims,
actions or events occurring prior to Closing (as hereinafter defined) or any
liability relating to the Assets transferred to Purchaser. Purchaser is not
assuming (a) any indebtedness of Seller, or (b) any expenses, liabilities, or
obligations of Seller arising out of the execution or delivery of this Agreement
and the consummation of the transactions contemplated hereby, or (c) any
liability or obligation of Seller relating to federal, state or local taxes or
any other taxes attributable to the transactions contemplated hereby or Seller
both prior to and subsequent to Closing, or (d) any obligation of Seller to pay
a fee to an agent, broker or finder, or (e) any liability arising out of the
conduct of Seller's business prior to Closing, including the violation of
federal or state laws and federal or state operating licenses, or (f) any
liability or obligation of Seller relating to pawn loan collateral missing on
the Closing Date which will be agreed upon prior to the Closing Date and listed
on Exhibit E, or (g) any customer claims attributable or in any manner relating
to events or omissions of Seller prior to the Closing Date or (h) any claims
made by or obligations to the Bureau of Alcohol, Tobacco and Firearms arising or
attributable to the period prior to the Closing Date.
1.05. Proration. All real property taxes, common area maintenance and
insurance payable by Seller or Shareholder under the Leases and all personal
property taxes relating to the Assets shall be prorated between Seller and
Purchaser as of the Closing Date.
ARTICLE II
CLOSING
The closing of the sale and purchase of the Assets ("Closing") shall occur
on a mutually agreeable date after the completion of the audit of the Assets of
Seller (the "Closing Date") at a location mutually agreeable to both parties.
At the Closing the Seller shall deliver to Purchaser the following:
(1) Assignment and Bill of Sale in form satisfactory to Purchaser of all
the Assets which has been executed by Seller; and
(2) Assignment to Purchaser of the licenses and permits of Seller and
Shareholder to operate a pawn shop at the locations in the State of South
Carolina listed in Exhibit A and all permits relating thereto executed by Seller
and Shareholder.
(3) Assignments to Purchaser of each of the Leases in form satisfactory to
Purchaser, together with the written consent of the owner of each of the
locations listed as location numbers 4-12 on Exhibit A.
(4) Lease agreements covering the locations listed as location numbers 1,2
and 3 on Exhibit A in form satisfactory to Purchaser and Seller.
At the Closing the Purchaser shall deliver to Seller the following:
(1) a check in the amount of the cash portion of the Purchase Price
payable at Closing,
(2) the promissory note in the form of Exhibit B, and
(3) a check in the aggregate amount equal to the sum of (a) the aggregate
amount of all unused security deposits listed in Exhibit C under the Leases to
be assumed by Purchaser, (b) all cash of Seller on hand, (c) rent payable for
November 1998 prorated to the Closing Date (as hereinafter defined), and (d) the
unamortized cost of the structural improvements relating to location number 7 on
Exhibit A less fifty percent (50%) of all current contractual obligations for
Yellow Pages advertising in the aggregate amount shown on Exhibit D.
At all times thereafter as may be necessary, Seller agrees to execute and
deliver to Purchaser such other instruments of transfer as shall be reasonably
necessary to appropriate to vest in Purchaser good and indefeasible title to the
Assets and to comply with the purposes and intent of this Agreement including
existing service contracts or any other contracts related to the Assets. Seller
and Shareholder further agree to cooperate with Purchaser in obtaining approval
of the issuance to Purchaser of all licenses and permits required to operate the
pawn shops of Seller at the locations in the State of South Carolina listed in
Exhibit A.
ARTICLE III
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants that the following are true and correct
as of the date hereof and will be true and correct through the Closing Date as
if made on that date:
3.01. Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite power and authority to carry on the business in
which it is engaged, to own the properties it owns and to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
3.02. Authorization and Validity. The execution, delivery and performance
of this Agreement and the other agreements to be executed by Purchaser, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by Purchaser. This Agreement, the Note and the Leases with respect
to locations numbers 1-3 on Exhibit A will be prior to or at Closing duly
executed and delivered by Purchaser and constitute or will constitute legal,
valid and binding obligations of Purchaser, enforceable against Purchaser in
accordance with their respective terms.
3.03. Finder's Fee. Purchaser will pay and be solely responsible for any
finder's, broker's or agent's fee incurred by Purchaser in connection with the
transactions contemplated hereby.
3.04. No Violation. To the best of Purchaser's knowledge, neither the
execution and performance of this Agreement or the agreements contemplated
hereby, nor the consummation of the transactions contemplated hereby or thereby
will (a) result in a violation or breach of any agreement or other instrument
under which Purchaser is bound or to which any of the assets of Purchaser are
subject, or (b) violate any applicable law or regulation or any judgment or
order of any court or governmental agency.
3.05 Financial Statements and Reports. Purchaser has filed all required
forms, reports, statements and documents with the Securities and Exchange
Commission (the "Commission") all of which have complied in all material
respects with all applicable requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Purchaser has
delivered or made available to the Seller and the Shareholder true and complete
copies of (i) Purchaser's annual Reports on Form 10-K for the fiscal year ended
July 31, 1998, (ii) its proxy statement relating to Purchaser's annual
stockholders meeting for the fiscal year ended July 31, 1997, (iii) reports
filed on Form 10-Q for the quarters ended October 31, 1997, January 31, 1998 and
April 30, 1998 by Purchaser with the Commission pursuant to the Exchange Act,
and (iv) all reports, statements and other information provided by Purchaser to
its stockholders since July 31, 1997 (collectively, the Purchaser Reports"). As
of their respective dates, the Purchaser Reports did not contain any untrue
statement of a material fact. The consolidated financial statements of
Purchaser included or incorporated by reference in the Purchaser Reports were
prepared in accordance with Generally Accepted Accounting Principals ("GAAP")
applied on a consistent basis (except as otherwise stated in such financial
statements or, in the case of audited statements, the related report thereon of
independent certified public accounts), and present fairly the financial
position and results of operations, cash flows and of changes in stockholders'
equity of Purchaser and its consolidated subsidiaries as of the dates and for
the periods indicated, subject in the case of unaudited interim financial
statements, to normal year-end audit adjustments, none of which either singly or
in the aggregate are or will be material, and except that the unaudited interim
financial statements do not contain all of the disclosures required by GAAP.
Purchaser is and has been subject to the reporting requirements of the Exchange
Act and has filed with the Commission all periodic reports required to be filed
by it pursuant thereto and all reports required to be filed under Sections 13,
14 or 15(d) of the Exchange Act since July 31, 1991.
3.06. Taxes. To the best of Purchaser's knowledge, all tax returns,
statements, reports and forms (including estimated tax returns and reports and
information returns and reports) required to be filed with any tax authority
with respect to any taxable period ending on or before the consummation of the
transactions set forth herein, by or on behalf of Purchaser (collectively, the
"Purchaser Returns"), have been or will be filed when due (including any
extensions of such due date), and all amounts shown to be due thereon on or
before the Closing have been or will be paid on or before such date, except to
the extent such failure to file or pay has not had and could not reasonably be
expected to have a Material Adverse Effect. Whenever used in this Agreement,
the phrase "Material Adverse Effect" shall mean a material adverse effect on the
business, properties, prospects, conditions (financial or otherwise) or results
of operations of Purchaser or its subsidiaries on a consolidated basis.
3.07. Compliance with Law. To the best of Purchaser's knowledge,
Purchaser has complied with all foreign, federal, state, local and county laws,
ordinances, regulations, judgments, orders, decrees or rules of any court,
arbitrator or governmental, regulatory or administrative agency or entity
applicable to its business, except where the failure to so comply would not have
a Material Adverse Effect. Purchaser has not received any governmental notice
of any violations by Purchaser of any such laws, ordinances, regulations or
orders, which violation has not been cured or remedied except where the failure
to cure or remedy the violation would not have a Material Adverse Effect.
3.08. Litigation. Except for litigation disclosed in the notes to the
financial statements included in the Purchaser Reports and reflected on
Purchaser's Disclosure Schedule, there is no suit, action, proceeding or
investigation pending or, to the best of knowledge of Purchaser, threatened
against or affecting Purchaser or any of its subsidiaries, the outcome of which,
in the reasonable judgment of Purchaser, is likely to have a material adverse
effect, nor is there any judgment, decree, injunction, ruling or order of any
court, governmental, regulatory or administrative department, commission, agency
or instrumentality, arbitrator or any other person outstanding against Purchaser
or any of its subsidiaries having, or which is reasonably likely to have, a
Material Adverse Effect.
3.09. Governmental Authorizations and Licenses. To Purchaser's knowledge,
Purchaser has all material licenses, orders, authorizations, permits,
concessions, certificates and other franchises or analogous instruments of any
governmental entity required by applicable law to operate its business
(collectively, the "Purchaser Government Licenses") which Purchaser Government
Licenses are in full force and effect, and is in compliance with the terms,
conditions, limitations, restrictions, standards, prohibitions, requirements and
obligations of such Purchaser Government Licenses except to the extent failure
to hold and maintain such Purchaser Government Licenses or to so comply would
not be reasonably likely to have a Material Adverse Effect. There is not now
pending, nor to the best knowledge of Purchaser is there threatened, any action,
suit, investigation or proceeding against Purchaser before any governmental
entity with respect to the Purchaser Government Licenses, nor is there any
issued or outstanding notice, order or complaint with respect to the violation
by Purchaser of the terms of any Purchaser Government License or any rule or
regulation applicable thereto, except to the extent that any such action would
not be reasonably likely to have a Material Adverse Effect.
3.10. Accuracy of Information Furnished. All information furnished to
Seller by Purchaser herein or in any exhibit hereto is true, correct and
complete in all material respects. Such information states all material facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made, true, correct
and complete.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser that the following are true and
correct as of the date hereof and will be true and correct through the Closing
Date as if made on that date:
4.01. Organization, Qualification and Power. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
South Carolina. Seller is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required. Seller has full power and authority to carry on the business in which
it is engaged and to own and use the properties owned and used by it.
4.02. Authorization and Validity. The execution, delivery and performance
of this Agreement and the other agreements to be executed by Seller, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by Seller. This Agreement and each other agreements to be executed by
Seller been or will be duly executed and delivered by Seller and constitute or
will constitute legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms.
4.03. Title; Leased Assets. Upon consummation of the transactions
contemplated hereby, Purchaser shall receive good, valid and marketable title to
the Assets, and will be entitled to use as lessee all leased assets used in
Seller's business, free and clear of all liens, encumbrances and adverse claims.
4.04. No Violation. To the best of Seller's knowledge, neither the
execution and performance of this Agreement or the agreements contemplated
hereby, nor the consummation of the transactions contemplated hereby or thereby
will (a) result in a violation or breach of any agreement or other instrument
under which Seller is bound or to which any of the assets of Seller are subject,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of such assets, or (b) violate any applicable law or regulation or any
judgment or order of any court or governmental agency. To the best of Seller's
knowledge, Seller has complied with all applicable laws, regulations and
licensing requirements, and has filed with the proper authorities all necessary
statements and reports. To the best of Seller's knowledge, Seller possesses all
necessary operating licenses, franchises, permits and governmental
authorizations, which rights are in full force and effect, and are being
transferred hereof free of any claim, encumbrance or detriment.
4.05. Taxes. Seller has duly and timely filed all property, sales tax and
all other returns and reports required to be filed by it as of the date hereof
by the State of South Carolina or any political subdivision thereof and has paid
all taxes (including penalties and interest) which have become due, except to
the extent that such failure to file or pay has not had or could not reasonably
be expected to have a material adverse effect on the business or financial
condition of Seller. There are no liens for Federal, state or local taxes upon
any of the assets of Seller.
4.06. Compliance with Law. To the best of Seller's knowledge, there are
no existing violations by Seller of any applicable federal, state or local law
or regulation that could have a material adverse effect on the property,
business, or licenses or permits of Seller.
4.07. Finder's Fee. Seller shall pay and be solely responsible for any
obligation for any finder's, broker's or agent's fee incurred by Seller in
connection with the transactions contemplated hereby.
4.08. Litigation. No legal action or administrative proceeding or
investigation has been instituted against Seller, or to the best of its
knowledge been threatened, that could have a material adverse effect on the
assets, business or financial condition of Seller. Seller is not (a) subject to
any continuing court or administrative order, writ, injunction or decree
applicable specifically to such Seller or to its business, assets, operation or
employees, or (b) in default with respect to any such order, writ, injunction or
decree. Seller knows of no basis for any such action, proceeding or
investigation.
4.09. Operating Licenses. To Seller's knowledge, Seller maintains in full
force and effect all operating licenses and permits necessary in order to
operate each of its pawnshop business locations in accordance with applicable
federal, state and local regulations. The operating licenses and permits are in
full force and effect and Seller has not received notice of cancellation
thereof, or a threatened cancellation thereof. Seller has complied in full with
all applicable federal and state operating licenses. Seller has delivered to
Purchaser true and correct copies of all licenses and permits of Seller.
4.10. Financial Statements. To Seller's knowledge, Seller has delivered
to Purchaser true and correct copies of the audited financial statements of
Seller for the years ended December 31, 1996 and December 31, 1997 and the
unaudited financial statement of Seller for the period ended September 30, 1998.
Such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby and present fairly the financial condition of Seller as of the
indicated dates, and the results of operations of the indicated periods are
correct and complete and are consistent with the books and records of Seller in
all material respects.
4.11. Tax Returns. Seller has delivered to Purchaser true and correct
copies of the Federal income tax returns of Seller for the years ended December
31, 1996 and December 31, 1997 which have been filed with the Internal Revenue
Service. Such Federal income tax returns are correct and complete in all
material respects.
4.12. Employees. Seller has furnished to Purchaser a list of all
employees and each compensation arrangement for each employee of Seller.
4.13. Ownership of Seller. Shareholder is the only shareholder of Seller.
4.14. Zoning. The zoning of each of the locations listed on Exhibit A
permits the operation of a pawnshop.
4.15. Accuracy of Information Furnished. All information furnished to
Purchaser by Seller herein or in any exhibit hereto is true, correct and
complete in all material respects. Such information states all material facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made, true, correct
and complete.
ARTICLE V
PURCHASER'S COVENANTS
5.01. Consummation of Agreement. Purchaser agrees to use its best efforts
to cause the consummation of the transactions contemplated by this Agreement in
accordance with their terms and conditions.
5.02. Retention of Records. Purchaser shall retain all books and records
of Seller required to be retained on the business premises by applicable laws.
Purchaser shall provide Seller and Shareholder access to such records in the
event of a tax or other audit of Seller. Seller shall be entitled to retain all
other books and records.
5.03 Approvals of Third Parties. As soon as practicable after the
execution of this Agreement, Purchaser will use its best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated by this Agreement.
ARTICLE VI
SELLER'S COVENANTS
Seller agrees that on or prior to the Closing:
6.01. Approvals of Third Parties. As soon as practicable after the
execution of this Agreement, Seller will use its best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated by this Agreement.
6.02. Contracts. Except with Purchaser's prior written consent, Seller
shall not waive any material right under or cancel any material contract, debt
or claim nor will Seller assume or enter into any contract, lease, license,
obligation, indebtedness, commitment, purchase or sale except for the making of
pawn loans and sales of inventory in the ordinary course of business.
6.03. Licenses. Seller shall assist Purchaser in causing all pawn
licenses owned or held by Seller relating to the pawn businesses of Seller at
the locations in the State of South Carolina listed in Exhibit A to be assigned
and reissued to Purchaser.
6.04. Release of Financing Statements. Seller shall cause all financing
statements covering any portion of the Assets to be released within 30 days
after the Closing Date.
ARTICLE VII
PURCHASER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing of
each of the following conditions:
7.01. Representations and Warranties. The representations and warranties
of Seller contained herein shall be true and correct as of the Closing, and
Purchaser shall not have discovered any material error, misstatement or omission
therein.
7.02. Covenants. Seller shall have performed and complied with all
covenants or conditions required by this Agreement to be performed and complied
with by them prior to the Closing.
7.03. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
7.04. No Material Adverse Change. No material, adverse change in the
assets, business operations or financial condition of Seller shall have occurred
prior to the Closing except for normal business cycles.
7.05. Lease Assignments. Assignments to Purchaser of each of the lease
agreements covering the properties at the locations in the State of South
Carolina listed in Exhibit A in form reasonably satisfactory to Purchaser, and
the written consent of the owner of each of the locations listed in Exhibit A to
such assignment if necessary.
7.07. Lease Agreements. Lease agreements covering each of the locations
listed on Exhibit A satisfactory to Purchaser.
7.08. Pawn Loans. Seller shall have at Closing not less than eight
hundred fifty thousand dollars ($850,000 in the aggregate in face amount of
current active pawn loans satisfactory to Purchaser at the locations listed in
Exhibit A.
7.09. Inventory. Seller shall have at Closing not less than $1,300,000 in
the aggregate in inventory (at Setter's cost as shown on Seller's books),
including layaway inventory, at the locations listed on Exhibit A.
7.10. Audit. Purchaser shall have conducted an audit of the Assets which
is satisfactory to Purchaser and Seller.
7.11. Corporate Resolutions. Purchaser shall have received corporate
resolutions of Seller authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein.
7.12. Closing Documents. All items and documents required to be delivered
to Purchaser pursuant to Article II at Closing shall have been delivered to
Purchaser.
ARTICLE VIII
SELLER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Seller the obligations of Seller
hereunder are subject to fulfillment at or prior to the Closing of each of the
following conditions:
8.01. Representations and Warranties. The representations and warranties
of Purchaser contained herein shall be true and correct as of the Closing,
subject to any changes contemplated by this Agreement, and Seller shall not have
discovered any material error, misstatement or omission therein.
8.02. Covenants. Purchaser shall have performed and complied in all
material respects with all covenants or conditions required by this Agreement to
be performed and complied with by Purchaser prior to the Closing.
8.03. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
8.04. Closing Documents. All items and documents required to be
delivered to Seller pursuant to Article II at Closing shall have been delivered
to Seller.
8.05 Corporate Resolutions. Seller shall have received corporate
resolutions of Purchaser authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein.
8.06 No Material Adverse Change. No material, adverse change in the
assets, business operations or financial condition of Purchaser shall have
occurred prior to the Closing except for normal business cycles.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS OR WARRANTIES; REMEDIES
9.01. Survival of Representations. Except for the representations,
warranties, covenants, agreements and restrictions contained in Article XI and
in Article XII, the representations, warranties, covenants, agreements and
restrictions contained in this Agreement shall survive the Closing Date for a
period of two (2) years and all statements contained in any certificate,
schedule or other instrument delivered pursuant to this Agreement shall be
deemed to have been representations and warranties. Except for claims, actions
or claims arising under Article XI or Article XII, any action or claim for
breach of any warranty, representation or covenant by Seller may occur or be
effected at any time within two (2) years after the Closing Date.
9.02. Remedies Upon Breach of Representations. In the event that
Purchaser or Seller determines that a material breach or violation of any
warranty, representation or covenant in this Agreement has occurred and such
breach or violation is not cured to the satisfaction of such party within
fifteen (15) days after the date of the written notice thereof by such party to
the other party, Purchaser or Seller, as the case may be, and shall have any and
all rights and remedies available at law or in equity.
ARTICLE X
INDEMNIFICATION
10.01. Seller Indemnity. Subject to the terms and conditions of this
Article X, Seller hereby unconditionally agrees to indemnify, defend and hold
Purchaser and its officers, directors, stockholders, agents, attorneys and
affiliates harmless from and against all losses, claims, obligations, demands,
assessments, penalties, liabilities, costs, damages, reasonable attorneys' fees
and expenses (collectively, "Damages"), asserted against or incurred by
Purchaser by reason of or in any manner resulting from:
(a) A breach by Seller of any representation, warranty or covenant
contained herein or in any agreement executed pursuant hereto;
(b) Any and all general liability claims arising out of or relating
to occurrences of any nature relating to Seller's business prior to the Closing,
whether any such claims are asserted prior to or after the Closing;
(c) Any obligation or liability under or related to any employee
compensation or any employee benefit plans or the termination thereof;
(d) Any tax filing or return or payment made, or position taken in
the payment or non-payment of any tax, by Seller which any governmental
authority challenges and which results in an assertion of Damages against
Purchaser;
(e) Any failure to comply with all applicable bulk transfer laws or
fraudulent or preferential laws of the United States of America or the State of
South Carolina;
(f) Claims arising from liabilities or obligations not expressly
assumed by Purchaser in this Agreement;
(g) Claims and liabilities arising from or in any manner relating to
pawn loans missing as of the Closing Date which are listed on Exhibit E;
(h) Customer claims attributable or relating to events or omissions
of Seller prior to the Closing Date, whether any such claims are asserted prior
to or after the Closing Date;
(i) Claims made by the Bureau of Alcohol, Tobacco and Firearms
arising out of the conduct of the business of Seller prior to the Closing Date;
or
(j) Claims relating to federal, state or local taxes.
10.02. Purchaser's Indemnity. Subject to the terms and conditions of this
Article X, Purchaser hereby unconditionally agrees to indemnify, defend and hold
Seller and its respective officers, directors, stockholders, agents, attorneys
and affiliates harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (collectively, "Damages"), asserted against or
incurred by Seller by reason of or in any manner resulting from:
(a) A breach by Purchaser of any representation, warranty or covenant
contained herein or in any agreement executed pursuant hereto;
(b) Any and all general liability claims arising out of or relating
to occurrences of any nature relating to Purchaser's business after the Closing,
whether any such claims are asserted prior to or after the Closing;
(c) The use by Purchaser of the licenses and permits of Seller after
the Closing Date; and
(d) Claims arising from liabilities or obligations expressly assumed
by Purchaser.
10.03. Remedies. Seller and Purchaser shall have all remedies specified
in this Agreement or available at law or in equity. The remedies provided in
this Article X shall not be exclusive of any other rights or remedies available
by one party against the other, either at law or in equity. Notwithstanding
anything contained in this Agreement, Purchaser waives the right of offset
against the Note and the $1,800,000 payable 365 days after the Closing Date.
ARTICLE XI
USE OF LICENSES; EMPLOYMENT OF SHAREHOLDER
Until all licenses and permits to operate pawn shops at the locations in
the State of Carolina listed in Exhibit A are issued to Purchaser (but not to
exceed one year after the Closing Date), Seller and Shareholder shall permit, to
the extent permitted by law, Purchaser to use the licenses issued to Seller to
operate the pawn shops at the locations in the State of South Carolina listed in
Exhibit A. Seller further agrees to cooperate with Purchaser in obtaining
approval of the issuance to Purchaser of all licenses and permits required to
operate the pawn shops of Seller at the locations in the State of South Carolina
listed in Exhibit A. At the request of Seller or Shareholder, Purchaser shall
permit Shareholder to inspect the records of Purchaser required to be maintained
under the laws of the State of South Carolina attributable to the period during
which the licenses and permits of Seller are used by Purchaser.
ARTICLE XII
NONCOMPETITION
Seller and Shareholder unconditionally agree that prior to November 30,
2008, neither Seller nor Shareholder shall (1) enter into any agreement with or
directly or indirectly solicit employees or representatives of Purchaser for the
purpose of causing them to leave Purchaser (or its corporate successor) to take
employment with Seller or Shareholder or any other person or business entity,
(2) compete, directly or indirectly, with Purchaser (or its corporate successor)
or any of its subsidiaries within a twenty (20) mile radius of any pawn store or
business now or hereafter owned, operated or managed by Purchaser (or its
corporate successor) or any of its subsidiaries; (3) act as an officer,
director, employee, consultant, shareholder, partner, lender, agent, associate
or principal of any entity engaged in any pawn business of the same nature as,
or in competition with Purchaser (or its corporate successor) or any of its
subsidiaries within a twenty (20) mile radius of any pawn store or business now
or hereafter owned, operated or managed by Purchaser (or its corporate
successor) or any of its subsidiaries; (4) participate in the ownership,
management, operation or control of any business directly or indirectly
competitive with the pawn business of Purchaser (or its corporate successor) or
any of its subsidiaries within a twenty (20) mile radius of the location of any
pawn store or business now or hereafter owned, operated or managed by Purchaser
(or its corporate successor) or any of its subsidiaries; (5) solicit customers
or potential customers of Purchaser (or its corporate successor) or any of its
subsidiaries within a twenty (20) mile radius of any pawn store or business now
or hereafter owned, operated or managed by Purchaser (or its corporate
successor) or any of its subsidiaries; (6) own or apply for a pawn license with
respect to a location within a twenty (20) mile radius of the location of any
pawn store or business now or hereafter owned, operated or managed by Purchaser
(or its corporate successor) or any of its subsidiaries; or (7) directly or
indirectly interfere with or agitate in any way any employee or representative
of Purchaser (or its corporate successor) or any of its subsidiaries for the
purpose of causing such employee or representative to terminate employment or
any contractual relationship with Purchaser (or its corporate successor) or any
of its subsidiaries or to be dissatisfied with their employment or contractual
relationship. The terms "participate in" and "participation" shall mean that
Shareholder shall directly or indirectly, for his own benefit or for, with or
through any other person, firm or corporation, own, manage, operate or control a
pawn business, loan money to or participate in the ownership, management, or
control of a pawn business, or be connected or associated with a pawn business
as a director, shareholder, officer, employee, partner, consultant, agent,
independent contractor, lender or otherwise. To induce Purchaser to enter into
this Agreement, Seller and Shareholder unconditionally represent and warrant to
Purchaser and agree that the restrictions in the foregoing provisions are
reasonable and that such provisions are enforceable in accordance with their
terms. Subparagraphs (2), (3), (4) and (6) shall not apply to any location
listed on Exhibit A with respect to which Seller or Shareholder has taken
possession as a result of a monetary default by Purchaser under the lease
agreement relating to such location and with respect to which no dispute or
controversy with Purchaser exists.
In the event of the breach by Seller or Shareholder of any of the covenants
contained in this Article XII, it is understood that damages will be difficult
to ascertain and Purchaser may petition a court of law or equity for injunctive
relief in addition to any other relief which Purchaser may have under law, this
Agreement or any other agreement in connection therewith. In connection with
the bringing of any legal or equitable action for the enforcement of this
Agreement, Purchaser shall be entitled to recover, whether Purchaser seeks
equitable relief, and regardless of what relief is afforded, such reasonable
attorney's fees and expenses as Purchaser may incur in prosecution of
Purchaser's claim for breach hereof if Purchaser is the prevailing party. The
existence of any claim or cause of action of Seller against Purchaser, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Purchaser of the covenants and agreements of Seller and
Shareholder contained in this Article XII. Seller and Shareholder
unconditionally agree to indemnify and hold harmless Purchaser of and from all
losses, damages, costs and expenses arising out of or attributable to the breach
by Seller or Shareholder of this Article XII.
ARTICLE XIII
MISCELLANEOUS
13.01. Amendment. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by the party against which enforcement
of the amendment, modification or supplement is sought.
13.02. Assignment. Neither this Agreement nor any right created hereby
shall be assignable by either party hereto.
13.03. Notice. Any notice or communication must be in writing and given
by depositing the same in the United States mail, postage prepaid and registered
or certified with return receipt requested, or by delivering the same in person,
addressed to the party to be notified at the following address (or at such other
address as may have been designated by written notice):
Seller: Pawnshops of America, Inc.
c/o Gerald Smith
P. O. Box 1924
Spartanburg, South Carolina 29304
Shareholder: Gerald Smith
P. O. Box 1924
Spartanburg, South Carolina 29304
Purchaser: First Cash, Inc.
690 East Lamar, Street 400
Arlington, Texas 76011
Attn: Rick L. Wessel
Such notice shall be deemed received on the date on which it is hand
delivered or on the third business day following the date on which it is so
mailed.
13.04. Confidentiality. The parties shall keep this Agreement and its
terms confidential. In the event that the transactions contemplated by this
Agreement are not consummated for any reason whatsoever, the parties hereto
agree not to disclose or use any confidential information they may have
concerning the affairs of the other parties, except for information which is
required by law to be disclosed or press releases which are customary for a
publicly traded company. Confidential information includes, but is not limited
to, customer lists and files, prices and costs, business and financial records,
surveys, reports, plans, proposals, financial information, information relating
to personnel contracts, stock ownership, liabilities and litigation. Should the
transactions contemplated hereby not be consummated, nothing contained in this
Section shall be construed to prohibit the parties hereto from operating a
business in competition with each other.
13.05. Entire Agreement. This Agreement and the exhibits hereto supersede
all prior agreements and understandings relating to the subject matter hereof,
except that the obligations of any party under any agreement executed pursuant
to this Agreement shall not be affected by this Section.
13.06. Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorney fees), and each party hereto agrees to pay the
costs and expenses, including reasonable attorney fees, incurred by the other
parties in successfully (a) enforcing any of the terms of this Agreement, or (b)
proving that the other parties breached any of the terms of the Agreement in any
material respect.
13.07. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof such provision shall be fully severable and this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof shall remain
in full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance here from. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
13.08. Survival of Representations, Warranties and Covenants. Except for
the representations, warranties, covenants and agreements contained in Article
XI and in Article XII, the representations, warranties and covenants contained
herein shall survive the Closing for a period of two (2) years and all
statements contained in any certificate, exhibit or other instrument delivered
by or on behalf of Seller or Purchaser pursuant to this Agreement shall be
deemed to have been representations and warranties by Seller or Purchaser, as
the case may be, and shall survive the Closing and any investigation made by any
party hereto or on its behalf.
13.09. Governing Law. All rights of Seller relating to payment by
Purchaser of the Purchase Price shall be governed, construed and enforced under
the laws of the State of South Carolina. All other rights and obligations of
the parties hereto shall be governed, construed and enforced in accordance with
the laws of the State of Texas.
13.10 Venue. The parties agree that any controversy or litigation
relating solely to the payment by Purchaser of the Purchase Price shall lie in
Spartanburg County, South Carolina. Except as provided in the immediately
preceding sentence of this Section 13.10, the parties agree that any controversy
or litigation relating directly or indirectly to this Agreement must be brought
before and determined by a court of competent jurisdiction in Tarrant County,
Texas.
13.11. Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise effect any of the terms or
provisions hereof.
13.12. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
13.13. Taxes. Seller shall be liable for all sales, use or other taxes
resulting from the transactions contemplated hereby. Seller shall indemnify and
hold harmless Purchaser of and from all of Seller's sales, use or other taxes
resulting from the transactions contemplated hereby.
13.14. Bulk Transfer Laws. The parties hereto waive compliance in all
respect with any applicable bulk transfer laws. As set forth in Section X
hereof, Seller hereby agrees to indemnify and hold Purchaser harmless of and
from any loss, cost, and expense of whatsoever type or nature whenever or
however incurred as a result of Seller not paying Seller's creditors.
13.15. Shareholder Obligations. The obligations and agreements of
Shareholder under this Agreement are limited to those obligations and agreements
contained in Article XI relating to the use of licenses and permits and in
Article XII restricting the competition and other activities of Seller and
Shareholder.
SELLER:
PAWNSHOPS OF AMERICA, INC., a
South Carolina corporation
By:
Gerald Smith, President
SHAREHOLDER:
Gerald Smith
PURCHASER:
FIRST CASH, INC.,
a Delaware corporation
By:
Rick L. Wessel, President
Exhibit 10.62
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This AGREEMENT AND PLAN OF REORGANIZATION is dated as of December 11, 1998
by and among First Cash, Inc., a Delaware corporation ("Parent"), Cash & Go of
Illinois, Inc., an Illinois corporation and a wholly-owned subsidiary of Parent
("Subsidiary"), One Iron Ventures, Inc., an Illinois corporation (the "Target")
(Subsidiary and Target being hereinafter collectively referred to as the
"Constituent Corporations") and Erik P. Gustafson, Donald H. Gustafson, Jr.,
Judy Redington and William Bingo (individually, a "Shareholder" and
collectively, the "Shareholders").
RECITALS
--------
WHEREAS, the Boards of Directors of Parent, Subsidiary and Target have
approved the acquisition of Target by Parent; and
WHEREAS, the Boards of Directors of Parent, Subsidiary and Target have
approved the merger of Subsidiary into Target (the "Merger"), pursuant to the
Agreement of Merger set forth in Exhibit A hereto ("Merger Agreement") and the
transactions contemplated hereby, in accordance with the applicable provisions
of the statutes of the State of Illinois, which permit such Merger; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization with the meaning of section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions thereto.
AGREEMENT
---------
Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
----------
1.1 The Merger. (a) At the Effective Time (as defined in section 1.2)
and subject to the terms and conditions of this Agreement and the Merger
Agreement, Subsidiary shall be merged into Target and the separate existence of
Subsidiary shall thereupon cease, in accordance with the applicable provisions
of the Illinois Business Corporation Act of 1983, as amended (the "IBCA").
(b) Target will be the surviving corporation in the Merger (sometimes
referred to herein as the "Surviving Corporation") and will continue to be
governed by the laws of the State of Illinois, and the separate corporate
existence of Target and all of its rights, privileges, immunities and
franchises, public or private, and all its duties and liabilities as a
corporation organized under the IBCA, will continue unaffected by the Merger.
(c) The merger will have the effects specified by the IBCA.
1.2 Effective Time. As soon as practicable following fulfillment or waiver
of the conditions specified in Article VII hereof, and provided that this
Agreement has not been terminated or abandoned pursuant to Article IX hereof,
the Constituent Corporations will cause Articles of Merger (the "Articles of
Merger") to be filed with the office of the Secretary of State of the State of
Illinois. Subject to and in accordance with the laws of the State of Illinois,
the Merger will become effective at the date and time the Articles of Merger are
filed with the office of the Secretary of State of the State of Illinois or such
later time or date as may be specified in the Articles of Merger (the "Effective
Time"). Each of the parties will use its best efforts to cause the Merger to be
consummated as soon as practicable following the fulfillment or waiver of the
conditions specified in Article VII hereof.
ARTICLE II
THE SURVIVING CORPORATION
-------------------------
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Target as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time.
2.2 By-Laws. The By-Laws of Target as in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation after the
Effective Time.
2.3 Board of Directors. From and after the Effective Time, the Board of
Directors of Subsidiary shall be the Board of Directors of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
--------------------
3.1 Conversion of Target Shares in the Merger. Pursuant to the Merger
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of any holder of any capital stock of Target, all of the issued and
outstanding shares of common stock (no par value per share) of Target ("Target
Common Stock") shall be converted into, and become exchangeable for, four
hundred thirty thousand (430,000) shares of validly issued, fully paid and
nonassessable common stock ($.01 per value) of Parent ("Parent Common Stock").
3.2 Status of Target Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any capital stock of
Target, each issued and outstanding share of common stock of Target shall
continue unchanged and remain outstanding as a share of common stock of the
Surviving Corporation.
(a) From and after the Effective Time, the Shareholders shall be entitled
to receive from Parent in exchange for all outstanding shares of Target Common
Stock surrendered to Parent, a certificate or certificates representing the
number of shares of Parent Common Stock into which such holder's shares of
Target Common Stock were converted pursuant to Section 3.1. If any certificate
for shares of Parent Common Stock is to be issued in a name other than that in
which the certificate, which immediately prior to the Effective Time represented
shares of Target Common Stock, surrendered in exchange therefor is registered,
it shall be a condition of such exchange that the person requesting such
exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for such shares of Parent Common Stock in a name other
than that of the registered holder of any such certificate surrendered.
(b) Upon surrender of the certificate or certificates representing Target
Common Stock ("Target Certificate"), the holder of such Target Certificates
shall be entitled to receive in exchange therefor a certificate representing
that number of shares of Parent Common Stock into which the shares of Target
Common Stock represented by Target Certificates so surrendered shall have been
converted pursuant to the provisions of Section 3.1, and Target Certificates so
surrendered shall forthwith be canceled.
3.3 Closing of Transfer Books. From and after the Effective Time, the
stock transfer books of Target shall be closed and no transfer of shares of
Target Common Stock shall thereafter be made. If, after the Effective Time,
Target Certificates are presented to Parent, they shall be canceled and
exchanged for the Parent Common Stock in accordance with the procedures set
fforth in this Article III
3.4 Closing. The closing (the "Closing") of the transactions contemplated
by this Agreement shall take place at such time, place and date as Parent and
Target shall agree (the "Closing Date").
ARTICLE IV
FURTHER AGREEMENT
-----------------
4.1 On the Closing Date Target shall repay the loans from Erik P.
Gustafson and Donald H. Gustafson, Jr. in the aggregate principal amount of two
hundred eighty thousand dollars ($280,000). Promptly after the completion of
the Return of Target for 1998 but in no event later than April 1, 1999 there
shall be distributed to the Shareholders by Target in proportion to their
percentage ownership interests in Target immediately prior to the Effective Time
an aggregate amount equal to the total additional amount of Federal and state
income taxes paid or payable by the Shareholders for the calendar year 1998
attributable to the income of Target less the aggregate amount of distributions
by Target to each of the Shareholders between January 1, 1998 and the Effective
Time (other than loan repayments required pursuant to the terms of this
Section 4.1).
4.2 Investor Representation Letter. On the date hereof, the Shareholders
shall execute the Investor Representation Letter in the form of Exhibit C
attached hereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 General Statement. The parties make the representations and
warranties to each other which are set forth in this Article V. The survival of
all such representations and warranties shall be in accordance with section 10.1
hereof. All representations and warranties of Target are made subject to the
exceptions which are noted in the schedule delivered by Target to Parent
concurrently herewith and identified as the "Target Disclosure Schedule."
Copies of all documents referenced in the Target Disclosure Schedule shall be
attached thereto.
5.2 Representations and Warranties of Parent and Subsidiary. Parent and
Subsidiary jointly and severally represent and warrant to Target, as of the date
hereof and at the Effective Time, as follows:
(a) Organization. Each of the Parent and the Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation;
(b) Authorization of Transaction. Each of Parent and Subsidiary has the
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of each of
the Parent and the Subsidiary, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. To the knowledge of any director or officer of
Parent, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any government, governmental agency or court which
either Parent or Subsidiary is subject to or provision of the charter or by-laws
of either Parent or Subsidiary, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration, create in any party the
right to accelerate, terminate, modify or cancel or require any notice, under
any agreement, contract, lease, license, instrument or other arrangement to
which either Parent or the Subsidiary is a party or by which it is bound or to
which any of its assets is subject, except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation or
failure to give notice would not have a material adverse effect on the ability
of the parties to consummate the transactions contemplated by the Agreement. To
the knowledge of any director or officer of Parent, other than in connection
with the provisions of the Illinois General Corporation Law, neither Parent nor
Subsidiary needs to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or obtain any
authorization, consent or approval would not have a material adverse effect on
the ability of the parties to consummate the transactions contemplated by this
Agreement.
(d) Parent Common Stock. The shares of Parent Common Stock to be issued
to the Shareholders as contemplated hereunder are (i) duly authorized, and (ii)
when issued and exchanged pursuant to the terms of this Agreement, will be
validly issued, fully paid, non-assessable and not subject to any preemptive
rights.
(e) Taxes.
(1) All tax returns, statements, reports and forms (including estimated
tax returns and reports and information returns and reports) required to be
filed with any tax authority with respect to any taxable period ending on or
before the consummation of the transactions set forth herein, by or on behalf of
Parent (collectively, the "Parent Returns"), have been or will be filed when due
(including any extensions of such due date), and all amounts shown to be due
thereon on or before the Closing have been or will be paid on or before such
date, except to the extent such failure to file or pay has not had and could not
reasonably be expected to have a Material Adverse Effect.
(2) The consolidated financial statements of Parent contained in Parent's
Annual Report to Stockholders for the year ended July 31, 1998, and in any
subsequent Parent Reports fully accrue all material actual and contingent
liabilities for taxes with respect to all periods through the date thereof in
accordance with GAAP.
(f) Governmental Authorizations and Licenses. Parent has all material
licenses, orders, authorizations, permits, concessions, certificates and other
franchises or analogous instruments of any governmental entity required by
applicable law to operate its business (collectively, the "Parent Government
Licenses") which Parent Government Licenses are in full force and effect, and is
in compliance with the terms, conditions, limitations, restrictions, standards,
prohibitions, requirements and obligations of such Parent Government Licenses
except to the extent failure to hold and maintain such Parent Government
Licenses or to so comply would not be reasonably likely to have a Material
Adverse Effect. There is not now pending, nor to the best knowledge of Parent
is there threatened, any action, suit, investigation or proceeding against
Parent before any governmental entity with respect to the Parent Government
Licenses, nor is there any issued or outstanding notice, order or complaint with
respect to the violation by Parent of the terms of any Parent Government License
or any rule or regulation applicable thereto, except to the extent that any such
action would not be reasonably likely to have a Material Adverse Effect.
Whenever used in this Article V, the phrase "Material Adverse Effect" shall mean
a material adverse effect on the business, properties, prospects, conditions
(financial or otherwise) or results of operations of Parent or its subsidiaries
on a consolidated basis.
5.3 Representations and Warranties of Target and Shareholders. Target and
each of the Shareholders jointly and severally represent and warrant to each of
Parent and Subsidiary as of the date hereof and at the Effective Time, as
follows:
(a) Organization, Qualification and Corporate Power. Target is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the state of Illinois. Target is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required. Target has full corporate power and authority to
carry on the business in which it is engaged and to own and use the properties
owned and used by it.
(b) Capitalization. The entire authorized capital stock of the Target
consists of 1,000 shares of common stock, of which one hundred (100) shares are
issued and outstanding. All of the issued and outstanding shares of Target have
been duly authorized and are validly issued, fully paid, and nonassessable.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Target to issue, sell or otherwise cause to
become outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Target.
(c) Authorization of Transaction. Target has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder; provided, however, that the
Target cannot consummate the Merger unless and until it receives the approval of
its shareholders. This Agreement constitutes the valid and legally binding
obligation of the Target, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) to the best of each Shareholder's knowledge, violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Target is subject or any provision of the charger or bylaws of Target or
(ii)conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Target is a party or by which
it is bound or to which any of its assets is subject (or result in the
imposition of any security interest upon any of its assets) other than in
connection with the provisions of the Illinois General Corporation Law, Target
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement.
(e) Financial Statements. The financial statements (including the related
notes and schedules) dated as of December 31, 1997 and October 31, 1998 have
been prepared in accordance with generally accepted accounting principles
(except for the accrual of accounts payable) applied on a consistent basis
throughout the periods covered thereby, present fairly the financial condition
of the Target as of the indicated dates and the results of operations of the
Target for the indicated periods, are correct and complete in all respects, and
are consistent with the books and records of the Target.
(f) Events Subsequent to October 31, 1998. Since October 31, 1998, there
has not been any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of Target.
(g) Undisclosed Liabilities. Target has no liability (whether known or
unknown, whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including any
liability for taxes, except for (i) liabilities set forth in the face of the
balance sheets dated October 31, 1998 and outstanding at the Effective Time,
(ii) liabilities which have arisen after October 31, 1998 in the ordinary course
of business, including indebtedness related to the expansion of the three (3)
new stores (none of which results from, arises out of, relates to, is in the
nature of, or was caused by breach of contract, breach of warranty, tort,
infringement, or violation of law), and (iii) unasserted claims.
(h) Brokers' Fees. The Shareholders shall be responsible for and pay any
fees or commissions to any broker, finder, or agent engaged by any of the
Shareholders or Target with respect to the transactions contemplated by this
Agreement.
(i) Taxes. With respect to Taxes (as defined below:)
(i) Target has filed, within the time and in the manner prescribed by
law, all returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed under federal, state, local or any
foreign laws by Target or such Target, and all such returns are true, correct
and complete in all material respects.
(ii) Except as set forth on Schedule 5.3(i)(ii) of Target Disclosure
Schedule, Target has within the time and in the manner prescribed by law, paid
(and until the Effective Time will, within the time and in the manner prescribed
by law, pay) all Taxes (as defined below) that are due and payable.
(iii) There are no liens for Taxes upon the assets of Target except
liens for Taxes not yet due.
(iv) Target and each of its predecessors by merger have had a valid
election in effect under section 1362(a) of the Code to be an S corporation for
the calendar year 1998 and all prior years since their organization.
(v) Except as set forth in Schedule 5.3(i)(vi) of Target Disclosure
Schedule (which shall set forth the type of return, date filed, and date of
expiration of the statute of limitations), no deficiency for any Taxes has been
proposed, asserted or assessed against Target which has not been resolved and
paid in full.
(vi) There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Returns that have been given by Target.
(vii) Except as set forth on Schedule 5.3(i)(viii) of Target
Disclosure Schedule (which shall set forth the nature of the proceeding, the
type of return, the deficiencies proposed or assessed and the amount thereof,
and the taxable year in question), no federal, state, local or foreign audits or
other administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Returns.
(viii) Target is not a party to any tax-sharing or allocation
agreement, nor does Target owe any amount under any tax-sharing or allocation
agreement.
(ix) No amounts payable under any plan, agreement or arrangement will
fail to be deductible for federal income tax purposes by virtue of Section 280G
of the Code.
(x) Target has complied (and until the Effective Time will comply) in
all respect with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes (including, without limitation, withholding of
Taxes pursuant to Sections 1441 or 1442 of the Code or similar provisions under
any foreign laws) and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under all
applicable laws.
(xi) Target has not ever been (and does not have any liability for
unpaid Taxes because it once was) a member of an "affiliated group" within the
meaning of section 1502 of the Code during any part of any consolidated return
year within any part of which year any corporation other than Target was also a
member of such affiliated group.
(xii) There will be no Taxes owed by Target as a result of any "net
recognizable built-in gain" (as defined in section 1374 of the Code).
(xiii) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, estimated, severance, stamp, occupancy or property
taxes, customs duties, fees, assessments or charges of any kind whatsoever
(together with any interest and any penalties, additions to tax or additional
amounts) imposed by any taxing authority (domestic or foreign) upon or payable
by Target.
(j) Agreements. Except as listed and disclosed on the Target Disclosure
Statement and attached to this Agreement, Target is not subject to any
employment agreement, contract, lease or other agreement. Target is not subject
to any agreement with any software customer regarding restricting or limiting
competition or disclosure of information except for an agreement with Miraglia,
Inc., if any.
(k) Employees. Target has furnished to Parent payroll report for pay
period ending November 27, 1998 and the bonus report for the month of October
1998 listing the compensation arrangement for each employee and furnished to
Parent a copy of the employee health insurance plan.
(l) Litigation and Claims. Except as disclosed on the Target Disclosure
Statement, Target is not subject to any litigation or is a party to any decree
or judgment or, to any Shareholder's actual knowledge, any claims.
(m) Subsidiaries. Target has no subsidiaries.
(n) Intangible Assets. The Target Disclosure Schedule contains a complete
list of all Intellectual Property Rights and all other intangible assets used
in connection with the business of Target, including, but not limited to, all
software used or licensed by Target in connection with the business of Target.
Target has the absolute right to use the name "Instant Cash Advance" in
Illinois. No person or entity has any ownership interest in or right to payment
attributable to or arising out of the use of such intangible assets except as
listed in the Target Disclosure Schedule. As used herein, the term
"Intellectual Property Rights" means all industrial and intellectual property
rights, including, without limitation, patents, patent applications, patent
rights, trademarks, trademark applications, trade names, service marks, service
mark applications, copyrights, copyright applications, know-how, trade secrets,
proprietary processes and formulae, confidential information, franchises,
licenses, inventions, instructions, marketing materials, trade dress, logos and
designs and all documentation and media constituting, describing or relating to
the foregoing, including, without limitation, manuals, memoranda and records.
(o) Intellectual Property.
(i) Target has the right to use all Intellectual Property Rights
necessary or required for the conduct of its business as currently conducted and
such rights are sufficient for such conduct of its business.
(ii) Except as set forth in the Target Disclosure Statement, there
are no royalties, honoraria, fees or other payments payable by Target to any
person by reason of the ownership, use, license, sale or disposition of the
Intellectual Property Rights.
(iii) Except as set forth in the Target Disclosure Statement, no
activity, service or procedure currently conducted by Target violates or will
violate any contract of Target with any third party or infringe any Intellectual
Property Right of any other party or person.
(iv) Except as set forth in the Target Disclosure Statement, Target
has not received from any third party in the past three years any notice,
charge, claim or other assertion that Target is infringing any Intellectual
Property Right of any third party or committed any acts of unfair competition,
and no such claim is impliedly threatened by an offer to license from a third
party under a claim of use.
(v) Except as set forth in the Target Disclosure Statement, Target
has not sent to any third party in the past three years nor otherwise
communicated to another person any notice, charge, claim or other assertion of
infringement by or misappropriation of any Intellectual Property Right of Target
by such other person or any acts of unfair competition by such other person, nor
is any such infringement, misappropriation or unfair competition occurring or
threatened.
(vi) The Target Disclosure Statement contains a true and complete
list of all applications, filings and other formal actions made or taken by
Target to perfect or protect its interest in the Intellectual Property Rights,
including, without limitation, all patents, patent applications, trademarks,
trademark applications, service marks, service mark applications, copyrights and
copyright applications.
(p) Title to Assets, Properties and Rights and Related Matters. Target
has such rights and interests in the Intellectual Property Rights as provided in
Section 5.3(n) and except as set forth in the Target Disclosure Statement, good
and marketable title to all other assets, properties and interests in
properties, real or personal, reflected on the financial statement dated October
31, 1998 or acquired after October 31, 1998 (except accounts receivable and
notes receivable paid in full subsequent to October 31, 1998), free and clear of
all encumbrances of any kind or character, except for those encumbrances set
forth in the Target Disclosure Statement.
(q) Compliance With Laws. To each Shareholder's knowledge, Target is in
compliance with all laws, regulations, rules and ordinances in any manner
relating to the ownership or operation of the business or businesses of Target.
(r) Licenses. Target has been issued all licenses necessary to operate
the business of Target at each of the business locations of Target.
(s) Zoning. Each of the locations at which the business of Target is
conducted is zoned to permit the operation of such business of Target at such
location.
(t) Leases. The Target Disclosure Schedule contains a complete list of
all leases for which Target is subject. Excluding any default attributable to
the change in ownership or control resulting from the consummation of this
Agreement, no breach or default exists, or with the giving of notice or the
passage of time or both will exist, under the terms of any of such leases except
as reflected on the Target Disclosure Schedule.
(u) Indebtedness. The Target Disclosure Schedule contains a complete list
of all indebtedness and obligations of Target in excess of one thousand dollars
($1,000) as of the date of this Agreement.
(v) Distributions. Target has not made any distributions to any of the
Shareholders during 1998 except for the payments to be made on the Closing Date
required by Section 4.1.
ARTICLE VI
COVENANTS
---------
6.1 Conduct of Business of Target Pending the Merger. Target agrees that
from the date hereof and prior to the Effective Time or earlier termination of
this Agreement:
(a) Full access. Target shall permit representatives of Parent to have
full access to all premises, properties, personnel, books, records, contracts
and documents pertaining to Target with reasonable notice and without disruption
to ordinary business operations;
(b) Operation of Business. Target will not engage in any practice, take
any action, or enter into any transaction outside the ordinary course of
business. Without limiting the generality of the foregoing:
(i) Target will not authorize or effect any change in its charter or
bylaws;
(ii) Target will not grant any options, warrants, or other rights to
purchase or obtain any of its capital stock or issue, sell, or otherwise dispose
of any of its capital stock.
(iii) Target will not declare, set aside, or pay any dividend or
distribution with respect to its capital stock (whether in cash or in kind), or
redeem, repurchase, or otherwise acquire any of its capital stock;
(iv) Target will not issue any note, bond, or other debt security or
create, incur, assume, or guarantee any indebtedness for borrowed money or
capitalized lease obligation outside the ordinary course of business;
(v) Target will not impose any security interest upon any of its
assets;
(vi) Target will not make any capital investment in, make any loan
to, or acquire the securities or assets of any other person outside the ordinary
course of business;
(vii) Target will not make any change in employment terms for any of
its directors, officers, and employees outside the ordinary course of business;
and
(viii) Target will not commit to any of the foregoing.
(c) Exclusivity. Target shall not solicit, initiate or encourage the
submission of any proposal or offer from any person relating to the acquisition
of all or substantially all of the capital stock or assets of Target. Target
shall notify the Parent immediately if any person makes any proposal, offer,
inquiry or contact with respect to any of the foregoing.
(d) New Locations. Target shall use good faith efforts to complete the
finish out and obtain the licenses for the operation of the three locations
which have not opened for business as of the date of this Agreement.
6.2 Approval of Shareholders. Target shall (a) cause a meeting of its
shareholders to be duly called and held in accordance with the laws of the State
of Illinois, applicable federal and state securities laws and Target's Articles
of Incorporation and By-Laws as soon as reasonable practicable for the purpose
of voting on the adoption and approval of this Agreement, the Merger Agreement,
and the Merger (the "Proposal"), (b) recommend to its shareholders approval of
the Proposal (except to the extent that the board of directors of Target
determines, after receiving the written advice of counsel, that such act is not
permitted by such board of directors in the discharge of their fiduciary duties
to Target), and (c) use its best efforts to obtain the necessary approval of its
shareholders.
6.3 Noncompetition. Shareholders unconditionally agree that prior to
December 11, 2008 none of the Shareholders shall (1) enter into any agreement
with or directly or indirectly solicit employees or representatives of Parent
(or its corporate successor) or any of its Subsidiaries for the purpose of
causing them to leave Parent (or its corporate successor) or any of its
Subsidiaries to take employment with any of the Shareholders or any other person
or business entity, (2) compete, directly or indirectly, with Parent (or its
corporate successor) or any of its Subsidiaries or any person or entity for whom
Parent (or its corporate successor) or any of its Subsidiaries manages a
business in the State of Illinois or within twenty-five (25) miles of any
location listed on Exhibit D currently owned or managed by Parent or any of its
Subsidiaries (the "Noncompete Area"), (3) act as an officer, director,
consultant, shareholder, partner, lender, agent, associate or principal of any
entity engaged in any business of the same nature as, or in competition with,
Parent (or its corporate successor) or any of its Subsidiaries in the State of
Illinois or within twenty-five (25) miles of any location listed on Exhibit D
currently owned or managed by Parent or any of its Subsidiaries, (4) participate
in the ownership, management, operation or control of any business directly or
indirectly competitive with the business of Parent (or its corporate successor)
or any of its Subsidiaries in the State of Illinois or within twenty-five (25)
miles of any location listed on Exhibit D currently owned or managed by Parent
or any of its Subsidiaries, or (5) directly or indirectly interfere with or
agitate in any way any employee or representative of Parent (or its corporate
successor) or any of its Subsidiaries for the purpose of causing such employee
or representative to terminate employment or any contractual relationship with
Parent (or its corporate successor) or any of its Subsidiaries or to be
dissatisfied with their employment or contractual relationship, (6) solicit
customers or potential customers of Parent (or its corporate successor) or any
of its Subsidiaries in the State of Illinois or within twenty-five (25) miles of
any location listed on Exhibit D currently owned or managed by Parent or any of
its Subsidiaries, or (7) own or apply for a license or permit to operate in the
State of Illinois or within twenty-five (25) miles of any location listed on
Exhibit D currently owned or managed by Parent or any of its Subsidiaries of a
type similar to a license or permit owned or held by Parent (or its corporate
successor) or any of its Subsidiaries. To induce Parent to enter into this
Agreement and to acquire the stock of Target owned by Shareholders, Shareholders
unconditionally represent and warrant to Parent that the restrictions in the
foregoing provision are reasonable, and that such provision is necessary to
protect the business of Parent, Target and its Subsidiaries and that such
provision is enforceable in accordance with its terms. Each of Shareholders
acknowledge that Parent is entering into this Agreement in reliance upon the
foregoing representation and warranty of the Shareholders and that the Parent
and Target competes or will compete with other businesses that are or could be
located in any part of the United States. As used herein, the term "participate
in" shall mean that any Shareholder shall directly or indirectly, for his own
benefit or for, with or through any other person, firm or corporation, own,
manage, operate or control a business, loan money to, or participate in the
ownership, management, or control of a business, or be connected with a business
as a director, officer, employee, partner, consultant, agent, independent
contractor or otherwise. As used herein in this Section 6.3, the term
"Subsidiary" shall mean any corporation more than fifty percent (50%) of the
capital stock is owned directly or indirectly by Parent or Target or the
corporate parent of Parent or Target.
In the event of the breach by any of Shareholders of any of the covenants
contained in this Section 6.3, it is understood that damages will be difficult
to ascertain and Parent (or its corporate successor) may petition a court of law
or equity for injunctive relief in addition to any other relief which Parent (or
its corporate successor) may have under law, this Agreement or any other
agreement in connection therewith. In connection with the bringing of any legal
or equitable action for the enforcement of this Agreement, Parent (or its
corporate successor) and Target shall be entitled to recover, whether Parent (or
its corporate successor) seeks equitable relief, and regardless of what relief
is afforded, such reasonable attorney's fees and expenses as Parent (or its
corporate successor) may incur in prosecution of Parent's claim for breach
hereof. The existence of any claim or cause of action of Target or any of the
Shareholders against Parent, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Parent of the covenants and
agreements of Target and Shareholders contained in this Section 6.3.
Shareholders jointly, severally and unconditionally agree to indemnify and hold
harmless Parent (or its corporate successor) and Target of and from all losses,
damages, costs and expenses arising out of or attributable to the breach by any
of Shareholders of this Section 6.3.
6.4 Third Party Consents. Each party to this Agreement shall use its best
efforts to obtain, as soon as reasonably practicable, all permits,
authorizations, consents, waivers and approvals from third parties or
governmental authorities necessary to consummate this Agreement and the Merger
Agreement and the transactions contemplated hereby or thereby, including,
without limitation, any permits, authorizations, consents, waivers and approvals
required in connection with the Merger.
6.5 Releases. Parent shall use reasonable efforts to have the
Shareholders released from liability under guaranty agreements and lease
agreements relating to Target. If this Agreement is consummated, Parent shall
indemnify and hold harmless the Shareholders for obligations and liabilities
under guaranty agreements and lease agreements attributable to the period after
the Effective Time.
6.6 Audit. Each of the Shareholders shall provide Deloitte and Touche,
LLP with the assistance necessary to complete the audit of the books and records
of Target within thirty (30) days after the Effective Time. This covenant shall
survive the Closing.
6.7 Qualification of Reorganization. After the Effective Time Parent
shall cause the Surviving Corporation to continue Target's historic business or
use a significant portion of Target's historic assets in a business in a manner
that satisfies Section 1.368-1(d), Income Tax Regs., and Parent shall not take,
or permit the Surviving Corporation to take any action which could cause the
Merger to fail to qualify as a reorganization within the meaning of section
368(a) of the Internal Revenue Code of 1986, as amended.
6.8 Registration of Stock. Parent shall use reasonable efforts to cause
a registration statement to be filed with the Securities and Exchange Commission
on or before January 31, 1999 covering the common stock of Parent to be received
by the Shareholders pursuant to the terms of this Agreement. Parent shall use
its best efforts to cause the common stock of Parent to be received by the
Shareholders, pursuant to the terms of this Agreement, to be registered under
the Securities Act of 1933, as amended, on or before February 29, 1999.
6.9 Consents of Lessors. Target and Shareholders agree to use reasonable
efforts to obtain the consent of all lessors and other parties to leases and
other contracts to the transfer of such leases and contracts.
6.10 Licenses. Promptly after the Closing Date Parent shall notify the
Illinois Department of Financial Institutions that the Merger was occurred and
apply for the renewal of all consumer installment loan licenses issued to
Target.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment of all of the following conditions precedent at or prior to the
Effective Time:
(a) The Merger shall be approved by the shareholders of Target;
(b) No injunction, order or decree by any Federal, state or foreign court
which prevents the consummation of Merger shall have been issued;
(c) No statute or regulation shall exist or be enacted which would prevent
consummation of Merger;
(d) All governmental consents and approvals required for Merger shall have
been obtained;
7.2 Conditions to Obligations of Target to Effect the Merger. The
obligation of Target to effect the Merger is subject to fulfillment of all of
the following conditions precedent at or prior to the Effective Time:
(a) All representations and warranties in Section 5.2 shall be true and
correct in all material respects;
(b) Parent and Subsidiary shall have performed and complied with all
covenants under this Agreement;
(c) Target shall have received a certificate of the president of Parent
and the chief financial officer of Subsidiary certifying that the conditions in
Sections 7.2(a) and 7.2(b) have been fulfilled;
(d) Parent shall have delivered to Target and the Shareholders the written
opinion of Parent's legal counsel in the form attached hereto as Exhibit E dated
as of the Closing Date.
7.3 Conditions to Obligations of Parent and Subsidiary to Effect the
Merger. The obligations of Parent and Target to effect the Merger are subject
to the fulfillment of all of the following conditions precedent at or prior to
the Effective Time:
(a) The representations and warranties made by Target and the Shareholders
are true and correct;
(b) Target and the Shareholders shall have performed and complied with all
of their respective obligations under this Agreement;
(c) No action, suit or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling or change would (A) prevent
consummation of any of the transactions contemplated by this Agreement; (B)
cause any of the transactions contemplated by this Agreement, (C) affect
adversely the right of Parent to own the capital stock of the Surviving
Corporation or (D) adversely affect the right of the Surviving Corporation to
own its assets and to operate its business (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect);
(d) Parent shall have received a certificate of president of Target
certifying that the conditions contained in Section 7.3(a) and 7.3(b) have been
fulfilled;
(e) The Investment Representation Letter in substantially the form of
Exhibit C shall have been executed by each of the Shareholders;
(f) All consents and approvals necessary for the Merger shall have been
obtained;
(g) Target shall have delivered to Parent and Subsidiary the written
opinion of counsel to Target, substantially in the form attached hereto as
Exhibit F, dated as of the Closing Date;
(h) No material adverse change has occurred in the business, operations or
prospects of Target;
(i) Eight payday advance stores of Target are open and operating and
leases satisfactory to Parent covering three (3) additional locations have been
fully executed;
(j) All licenses necessary to operate the eight (8) existing business
locations of Target after the consummation of the Merger have been issued or
reissued;
(k) No distributions shall have been made by Target to any of the
Shareholders during the year 1998 except the distributions declared by the Board
of Directors on October 28, 1998;
(l) Resignation of the officers and directors of Target; and
(m) Each of the Shareholders of Target shall have delivered to Parent
executed assignments of all capital stock of Target owned by each of them.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 General Indemnification Covenants. (a) Subject to the provisions of
Sections 8.3 and 8.4, the Shareholders shall indemnify, save and keep Parent and
its affiliates, successors and permitted assigns (including Target and the
Surviving Corporation) (the "Parent Indemnitees"), harmless against and from all
liability, demands, claims, actions or causes of action, assessments, losses,
fines, penalties, costs, damages and expenses, including reasonable attorneys'
fees, disbursements and expenses (collectively, "Damages"), sustained or
incurred by any of the Parent Indemnitees as a result of, arising out of or by
virtue of any misrepresentation, breach of any warranty or representation, or
non-fulfillment of any agreement or covenant on the part of Target or any of the
Shareholders, whether contained in this Agreement or the Merger Agreement or any
exhibit or schedule hereto or in any closing document delivered by Target or any
of the Shareholders to Parent or Subsidiary in connection herewith.
Notwithstanding anything contained in this Article VIII or this Agreement, no
claim, suit, demand suit or cause of action shall be brought against the
Shareholders nor shall any Shareholder be liable for any Damages under this
Article VIII or this Agreement unless and until the aggregate amount of Damages
under this Article VIII or this Agreement exceeds fifty thousand dollars
($50,000), in which event Parent shall be entitled to indemnification for all
Damages in excess of $50,000 in the aggregate. (b) Parent shall
indemnify, save and keep the Shareholders ("Target Indemnitees") harmless
against and from all liability, demands, claims, actions or causes of action,
assessments, losses, fines, penalties, costs, damages and expenses, including
reasonable attorneys fees, disbursements and expenses (collectively, "Damages")
sustained or incurred by any of the Target Indemnitees as a result of any
misrepresentations, breach of any warranty or representation or non-fulfillment
of any agreement or covenant on the part of Parent, whether contained in this
Agreement or the Merger Agreement or any exhibit or schedule hereto in any
closing document delivered by Parent to any of the Shareholders in connection
herewith. Notwithstanding anything contained in this Article VIII or this
Agreement, no claim, suit, demand suit or cause of action shall be brought
against Parent nor shall Parent be liable for any Damages under this Article
VIII or this Agreement unless and until the aggregate amount of Damages under
this Article VIII or this Agreement exceeds fifty thousand dollars ($50,000) in
the aggregate, in which event Shareholders shall be entitled to indemnification
for all Damages in excess of $50,000 in the aggregate (excluding Damages
attributable to any violation of Section 4.1, Section 6.7 or Section 6.8).
8.2 Tax Indemnity.
(a) The Shareholders hereby agree to pay, indemnify,
defend and hold Parent and Target harmless from and against any and all Taxes
(as defined in Section 5.3(i)) of Target with respect to any period (or any
portion thereof) up to and including the Effective Time, except for Taxes of
Target which are reflected as current liabilities for taxes that exist as of the
Effective Time ("Current Tax Liabilities") on the balance sheet dated October
31, 1998 ("Closing Balance Sheet"), together with all reasonable legal fees,
disbursements and expenses incurred by Parent or Target in connection therewith.
(b) Parent shall prepare and file any Return of Target which is required
to be filed after the Effective Time and which relates to any period (or portion
thereof) up to and including the Effective Time and Parent shall, within fifteen
(15) days prior to the due date of any such Return, deliver a draft copy to the
Shareholders. As soon as is practicable after notice from Parent to the
Shareholders at any time prior to the date any payment for Taxes attributable to
any such Return is due, an amount equal to the excess, if any, of (i) Taxes that
are due with respect to any taxable period pending on or before the Effective
Time, or Taxes that would have been due with respect to a taxable period
beginning before and ending after the Effective Time if such period had ended on
the Effective Time over (ii) the amount of such Taxes of Target with respect to
such taxable period which are reflected as Current Tax Liabilities on the
Closing Balance Sheet shall be promptly paid by the Shareholders to Parent.
(c) Parent shall indemnify Shareholders of and from any income tax
liability resulting from (i) any increase in the amount of ordinary income of
Target above the amount of ordinary income reflected on the original Return of
Target for 1997 and (ii) any increase in the amount of ordinary income of
Target for the portion of 1998 ending on the Effective Date above the amount of
ordinary income reflected on the original Return for 1998 prepared by Parent.
In the event that it is ultimately determined that the amount of ordinary income
of Target for 1997 was less than the amount of ordinary income reflected on the
original Return of Target for 1997, Shareholders shall reimburse Target for the
reduction in the amount of income taxes incurred by each of them for 1997
attributable to such reduction in the ordinary income of Target. In the event
that it is ultimately determined that the ordinary income of Target for 1998 was
less than reflected on the original Return for 1998 filed by Parent,
Shareholders shall reimburse Target for any excess amounts distributed to the
Shareholders pursuant to the last sentence of Section 4.1 of this Agreement.
(d) The indemnity provided for in this Section 8.2 shall be independent of
any other indemnity provision hereof and, anything in this Agreement to the
contrary notwithstanding, shall survive until the expiration of the applicable
statutes of limitation for the Taxes referred to herein, and any Taxes subject
to the indemnification for Taxes set forth in this Section 8.2 shall not be
subject to the provisions of Sections 8.1 or 8.4 hereof. Notwithstanding
anything in this Agreement to the contrary, the Shareholders will not be
obligated to indemnify Parent and Target under any provision of this Agreement
with respect to Taxes or other liabilities that arise as a direct result of a
failure of the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code, provided that such failure to qualify is not the
result of a breach by the Shareholders of any of their representations,
covenants or agreements.
8.3 Conditions of Indemnification of Parent Indemnitees Pursuant to
Section 8.1(a).
(a) Promptly following the receipt by a Parent Indemnitee of notice of a
demand, claim, action, assessment or proceeding made or brought by a third
party, including a governmental agency (a "Third Party Claim"), the Parent
Indemnitee receiving the notice of the Third Party Claim (i) shall notify the
Shareholders of its existence, setting forth the facts and circumstances of
which such Parent Indemnitee has received notice, and (ii) if the Parent
Indemnitee giving such notice is a person entitled to indemnification under this
Article VIII (an "Indemnified Party"), specifying the basis hereunder upon which
the Indemnified Party's claim for indemnification is asserted.
(b) The Indemnified Party shall, upon reasonable notice by the
Shareholders, tender the defense of a Third Party Claim to the Shareholders. If
the Shareholders accept responsibility for the defense of a Third Party Claim,
then the Shareholders shall have the exclusive right to contest, defend and
litigate the Third Party Claim and shall have the exclusive right, in their
discretion exercised in good faith and upon the advice of counsel, to settle any
such matter, either before or after the initiation of litigation, at such time
and upon such terms as they deem fair and reasonable, provided that at least ten
(10) days prior to any such settlement, they shall give written notice of their
intention to settle to the Indemnified Party. The Indemnified Party shall have
the right to be represented by counsel at its own expense in any defense
conducted by the Shareholders.
(c) Notwithstanding the foregoing, in connection with any settlement by
the Shareholders, no Indemnified Party shall be required to (1) enter into any
settlement (A) that does not include the delivery by the claimant or plaintiff
to the Indemnified Party of a release from all liability in respect of such
claim or litigation, (B) if the Indemnified Party shall, in writing to the
Shareholders within the ten (10) day period prior to such proposed settlement
disapprove of such settlement proposal and desire to have the Shareholders
tender the defense of such matter back to the Indemnified Party, or (C) that
requires an Indemnified Party to take any affirmative actions as a condition of
such settlement, or (2) consent to the entry of any judgment that does not
include a full dismissal of the litigation or proceeding against the Indemnified
Party with prejudice; provided, however, that should the Indemnified Party
disapprove of a settlement proposal pursuant to Clause (B) above, the
Indemnified Party shall thereafter have all of the responsibility for defending,
contesting and settling such Third Party Claim but shall not be entitled to
indemnification by the Shareholders to the extent that, upon final resolution of
such Third Party Claim, the Shareholders' liability to the Indemnified Party but
for this provision exceeds what the Shareholders' liability to the Indemnified
Party would have been if the Shareholders were permitted to settle such Third
Party Claim in the absence of the Indemnified Party exercising its right under
Clause (B) above.
(d) If, in accordance with the foregoing provisions of this Section 8.3,
an Indemnified Party shall be entitled to indemnification against a Third Party
Claim, and if the Shareholders shall fail to accept the defense of a Third Party
Claim which has been tendered in accordance with this Section 8.3, the
Indemnified Party shall have the right, without prejudice to its right of
indemnification hereunder, in its discretion exercised in good faith and upon
the advice of counsel, to contest, defend and litigate such Third Party Claim,
and may settle such Third Party Claim, either before or after the initiation of
litigation, at such time and upon such terms as the Indemnified Party deems fair
and reasonable, provided that at least ten (10) days prior to any such
settlement, written notice of its intention to settle is given to the
Shareholders. If, pursuant to this Section 8.3, the Indemnified Party so
defends or settles a Third Party Claim for which it is entitled to
indemnification hereunder, as hereinabove provided, the Indemnified Party shall
be reimbursed by the Shareholders for the reasonable attorneys' fees and other
expenses of defending the Third Party Claim which are incurred from time to
time, forthwith following the presentation to the Shareholders of itemized bills
for said attorneys' fees and other expenses. No failure by the Shareholders to
acknowledge in writing their indemnification obligations under this Article VIII
shall relieve them of such obligations to the extent they exist.
8.4 Certain Tax and Other Matters.
(a) If, in connection with the audit of any Return, a proposed adjustment
is asserted in writing with respect to any Taxes of Target for which the
Shareholders are required to indemnify Parent or Target pursuant to Section
8.2(a) hereof, Parent shall notify the Shareholders of such proposed adjustment
within twenty (20) days after the receipt thereof. Upon notice to Parent within
twenty (20) days after receipt of the notice of such proposed adjustment from
Parent, the Shareholders may assume (at the Shareholders' own cost and expense)
control of and contest such proposed adjustment.
(b) Alternatively, if the Shareholders request within twenty (20) days
after receipt of notice of such proposed adjustment from Parent, Parent or
Target, as the case may be, shall contest such proposed adjustment. The
Shareholders shall be obligated to pay all reasonable out-of-pocket costs and
expenses (including legal fees and expenses) which Parent or Target may incur in
so contesting such proposed adjustment as such costs and expenses are incurred,
and Parent shall have the full right to contest such proposed adjustment and
shall be entitled to settle or agree to pay in full such proposed adjustment (in
its sole discretion) and thereafter pursue its rights under this Agreement. The
Shareholders shall pay to Parent all indemnity amounts in respect of any such
proposed adjustment within thirty (30) days after written demand to the
Shareholders therefor, or, if the Shareholders have assumed control of the
contest of such proposed adjustment as provided above (or has requested Parent
or Target to contest such proposed adjustment within the time provided above),
within thirty (30) days after such proposed adjustment is settled or a Final
Determination has been made with respect to such proposed adjustment.
(c) For purposes of this Section 8.4, a "Final Determination" shall mean
(i) the entry of a decision of a court of competent jurisdiction at such time as
an appeal may no longer be taken from such decision or (ii) the execution of a
closing agreement or its equivalent between the particular taxpayer and the
Internal Revenue Service, as provided in Section 7121 and Section 7122,
respectively, of the Code, or a corresponding agreement between the particular
taxpayer and the particular state or local taxing authority. The obligation of
the Shareholders to make any indemnity payment pursuant to Section 8.2(a) shall
be premised on the receipt by the Shareholders from Parent or Target of a
written notice setting forth the relevant portion of any Final Determination,
and in cases where the amount of the indemnity payment exceeds $1,000, a
certified statements by a nationally recognized accounting firm setting forth
the amount of the indemnity payment (and in all other cases, a similar statement
certified by the chief financial officer of Parent) and describing in reasonable
detail the calculation thereof.
8.5 Certain Information. Parent, the Shareholders and Target agree to
furnish or cause to be furnished to each other (at reasonable times and at no
charge) upon request as promptly as practicable such information (including
access to books and records) pertinent to Target and assistance relating to
Target as is reasonably necessary for the preparation, review and audit of
financial statements, the preparation, review, audit and filing of any Tax
Return, the preparation for any audit or the prosecution or defense of any
claim, suit or proceeding relating to any proposed adjustment or which may
result in the Shareholders being liable under the indemnification provisions of
this Section 8.5, provided, that access shall be limited to items pertaining
solely to Target. The Shareholders shall grant to Parent access to all Tax
Returns filed with respect to Target.
8.6 Release by The Shareholders. Each of the Shareholders hereby releases
and discharges Parent and Target and each of its officers and directors from and
agrees and covenants that in no event will any of the Shareholders commence any
litigation or other legal or administrative proceeding against, Parent, Target
or any of their officers or directors, whether in law or equity, relating to any
and all claims and demands, known and unknown, suspected and unsuspected,
disclosed and undisclosed, for damages, actual or consequential, past, present
and future, arising out of or in any way connected with his ownership or alleged
ownership of Target Common Stock prior to the Effective Time, other than claims
or demands arising out of the transactions contemplated by this Agreement and
the Merger Agreement.
8.7 Condition of Indemnification of Target Indemnitees Pursuant to Section
8.1(b).
(a) Promptly following the receipt by a Target Indemnitee of notice of
a demand, claim, action, assessment or proceeding made or brought by a third
party, including a governmental agency (a "Third Party Claim"), the Target
Indemnitee receiving the notice of the Third Party Claim (i) shall notify Parent
of its existence, setting forth the facts and circumstances of which such Target
Indemnitee has received notice, and (ii) if the Target Indemnitee giving such
notice is a person entitled to indemnification under this Article VIII (an
"Indemnified Party"), specifying the basis hereunder upon which the Indemnified
Party's claim for indemnification is asserted.
(b) The Indemnified Party shall, upon reasonable notice by Parent, tender
the defense of a Third Party Claim to Parent. If the Parent accepts
responsibility for the defense of a Third Party Claim, then the Parent shall
have the exclusive right to contest, defend and litigate the Third Party Claim
and shall have the exclusive right, in its discretion exercised in good faith
and upon the advice of counsel, to settle any such matter, either before or
after the initiation of litigation, at such time and upon such terms as it deems
fair and reasonable, provided that at least ten (10) days prior to any such
settlement, it shall give written notice of its intention to settle to the
Indemnified Party. The Indemnified Party shall have the right to be represented
by counsel at its own expense in any defense conducted by the Parent.
(c) Notwithstanding the foregoing, in connection with any settlement by
Parent, no Indemnified Party shall be required to (1) enter into any settlement
(A) that does not include the delivery by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect of such claim or
litigation, (B) if the Indemnified Party shall, in writing to Parent within the
ten (10) day period prior to such proposed settlement disapprove of such
settlement proposal and desire to have Parent tender the defense of such matter
back to the Indemnified Party, or (C) that requires an Indemnified Party to take
any affirmative actions as a condition of such settlement, or (2) consent to the
entry of any judgment that does not include a full dismissal of the litigation
or proceeding against the Indemnified Party with prejudice; provided, however,
that should the Indemnified Party disapprove of a settlement proposal pursuant
to Clause (B) above, the Indemnified Party shall thereafter have all of the
responsibility for defending, contesting and settling such Third Party Claim but
shall not be entitled to indemnification by Parent to the extent that, upon
final resolution of such Third Party Claim, Parent's liability to the
Indemnified Party but for this provision exceeds what Parent's liability to the
Indemnified Party would have been if Parent were permitted to settle such Third
Party Claim in the absence of the Indemnified Party exercising its right under
Clause (B) above.
(d) If, in accordance with the foregoing provisions of this Section 8.7,
an Indemnified Party shall be entitled to indemnification against a Third Party
Claim, and if Parent shall fail to accept the defense of a Third Party Claim
which has been tendered in accordance with this Section 8.7, the Indemnified
Party shall have the right, without prejudice to its right of indemnification
hereunder, in its discretion exercised in good faith and upon the advice of
counsel, to contest, defend and litigate such Third Party Claim, and may settle
such Third Party Claim, either before or after the initiation of litigation, at
such time and upon such terms as the Indemnified Party deems fair and
reasonable, provided that at least ten (10) days prior to any such settlement,
written notice of its intention to settle is given to Parent. If, pursuant to
this Section 8.7, the Indemnified Party so defends or settles a Third Party
Claim for which it is entitled to indemnification hereunder, as hereinabove
provided, the Indemnified Party shall be reimbursed by Parent for the reasonable
attorneys' fees and other expenses of defending the Third Party Claim which are
incurred from time to time, forthwith following the presentation to Parent of
itemized bills for said attorneys' fees and other expenses. No failure by the
Parent to acknowledge in writing its indemnification obligations under this
Article VIII shall relieve it of such obligations to the extent they exist.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
9.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the shareholders of
Target:
(a) By mutual consent of Parent and Target; or
(b) By Parent if (i) the Merger shall not have been consummated on or
before December 15, 1998 (the "Termination Date"), (ii) the requisite vote of
the shareholders of Target to approve this Agreement, the Merger Agreement and
the transactions contemplated hereby and thereby shall not be obtained at the
meetings, or any adjournments thereof, called therefor, (iii) any governmental
or regulatory body, the consent of which is a condition to the obligations of
Parent, Target and Target to consummate the transactions contemplated hereby or
by the Merger Agreement, shall have determined not to grant its consent and all
appeals of such determination shall have been taken and have been unsuccessful,
or (iv) any court of competent jurisdiction in the United States or any State
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the Merger
and such order, judgment or decree shall have become final and nonappealable.
(c) By the Shareholders if (i) the Merger shall not have been consummated
on or before the Termination Date or (ii) the occurrence of an event which will
have a Material Adverse Effect.
9.2 Effect of Termination. In the event of termination of this Agreement
by either Parent or Target, as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no liability on the part of either
Target, Parent, Target or their respective officers or directors. Nothing in
this Section 9.2 shall relieve any party from liability for any beach of this
Agreement.
9.3 Amendments and Waivers. The parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time with the prior
authorization of their respect boards of directors; provided, however, that any
amendment effected subsequent to stockholder approval will be subject to the
restrictions contained in the Illinois General Corporation Law. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the parties. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
ARTICLE X
MISCELLANEOUS
-------------
10.1 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements made by any party in this Agreement or
pursuant hereto shall survive the Merger until December 11, 2003, except for the
representations, warranties, covenants and agreements contained in Sections
5.3(i), 5.3(k), 6.4, 6.6, 6.7, 6.8 and 8.2 of this Agreement which shall survive
the Merger until the expiration of the applicable statutes of limitations with
respect to such matters. All claims made by Parent by virtue of any such
representations, warranties, covenants and agreements shall be made under, and
subject to the limitations set forth in, Article VIII hereof.
10.2 Press Releases and Public Announcements. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other parties;
provided, however, that any party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing party
will use its reasonable best efforts to advise the other party prior to making
the disclosure.
10.3 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Erik P. Gustafson: c/o Stein Roe - Farnham
1 South Wacker Drive, 31st Floor
Chicago, Illinois 60606
If to Donald H. Gustafson, Jr.: 4 Country Road
Village of Golf, Florida 3436
If to Judy Redington: c/o Instant Cash Advance
1238 North Ashland Avenue
Chicago, Illinois 60622
If to William Bingo: 16 Holly Drive
Boynton Beach, Florida 33436
Copy to: Robert S. Wynne
Baker & Daniels
300 North Meridian, Suite 2700
Indianapolis, Indiana 46204
If to the Parent: First Cash, Inc.
690 East Lamar, Suite 400
Arlington, Texas 76011
Attn: Rick L. Wessel
Copy to: William D. Ratliff, III
Haynes and Boone, LLP
201 Main Street, Suite 2200
Fort Worth, Texas 76102
If to Surviving Corporation: One Iron Ventures, Inc.
690 East Lamar, Suite 400
Arlington, Texas 76011
Attn: Rick L. Wessel
Copy to: William D. Ratliff, III
Haynes and Boone, LLP
201 Main Street, Suite 2200
Fort Worth, Texas 76102
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
10.4 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
10.5 Non-Waiver. The failure of any party to insist upon performance of
any terms, covenants or conditions shall not be construed as a subsequent waiver
of any such terms, covenants, or conditions.
10.6 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original.
10.7 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the State of Texas
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas.
10.9 Venue. Venue for any controversy or claim arising out of this
Agreement or Merger Agreement shall lie in Tarrant County, Texas.
10.10 Succession and Assignment. Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties.
10.11 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.12 Expenses. Shareholders shall personally pay all expenses in excess
of $15,000 in the aggregate incurred by them in connection with this Agreement
and the transactions contemplated thereby. Parent shall pay the attorneys fees
and other costs incurred by the Shareholders in connection with this Agreement
(including attorneys fees incurred to transfer licenses) up to $15,000 in the
aggregate.
10.13 Tradename. The Shareholders shall be entitled to use the tradename
"Instant Cash Advance" outside the Noncompete Area.
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Reorganization on the date first above written.
PARENT:
FIRST CASH, INC.
By:
Rick L. Wessel, President
SUBSIDIARY:
CASH & GO OF ILLINOIS, INC., an
Illinois corporation
By:
Rick L. Wessel, President
TARGET:
ONE IRON VENTURES, INC., an
Illinois corporation
By:
Erik P. Gustafson, President
SHAREHOLDERS:
Donald H. Gustafson, Jr.
Erik P. Gustafson
Judy Redington
William Bingo
Exhibit 10.63
FIRST CASH FINANCIAL SERVICES, INC.
1999 STOCK OPTION PLAN
----------------------
ARTICLE I - PLAN
- ----------------
1.1 Purpose. This Plan is a plan for key employees, officers, directors, and
consultants of the Company and its Affiliates and is intended to advance the
best interests of the Company, its Affiliates, and its stockholders by providing
those persons who have substantial responsibility for the management and growth
of the Company and its Affiliates with additional incentives and an opportunity
to obtain or increase their proprietary interest in the Company, thereby
encouraging them to continue in the employ of the Company or any of its
Affiliates.
1.2 Rule 16b-3 Plan. The Company is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and therefore
the Plan is intended to comply with all applicable conditions of Rule 16b-3 (and
all subsequent revisions thereof) promulgated under the 1934 Act. To the extent
any provision of the Plan or action by the Board of Directors or Committee fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee. In addition, the Board of Directors may
amend the Plan from time to time, as it deems necessary in order to meet the
requirements of any amendments to Rule 16b-3 without the consent of the
shareholders of the Company.
1.3 Effective Date of Plan. The Plan shall be effective November 3, 1998 (the
"Effective Date"), provided that within one year of the Effective Date, the Plan
shall have been approved by at least a majority vote of stockholders voting in
person or by proxy at a duly held stockholders' meeting, or if the provisions of
the corporate charter, by-laws or applicable state law prescribes a greater
degree of stockholder approval for this action, the approval by the holders of
that percentage, at a duly held meeting of stockholders. No Incentive Option,
Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award shall be granted pursuant to the Plan ten years after
the Effective Date.
ARTICLE II - DEFINITIONS
- ------------------------
The words and phrases defined in this Article shall have the meaning set out in
these definitions throughout this Plan, unless the context in which any such
word or phrase appears reasonably requires a broader, narrower, or different
meaning.
2.1 "Affiliate" means any parent corporation and any subsidiary corporation.
The term "parent corporation" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if, at the time of the
action or transaction, each of the corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain. The term "subsidiary
corporation" means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if, at the time of the action or
transaction, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
2.2 "Award" means each of the following granted under this Plan: Incentive
Option, Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award.
2.3 "Board of Directors" means the board of directors of the Company.
2.4 "Change in Control" shall mean and include the following transactions or
situations:
(a) A sale, transfer, or other disposition by the Company through a single
transaction or a series of transactions of securities of the Company
representing thirty (30%) percent or more of the combined voting power of the
Company's then outstanding securities to any "Unrelated Person" or "Unrelated
Persons" acting in concert with one another. For purposes of this definition,
the term "Person" shall mean and include any individual, partnership, joint
venture, association, trust corporation, or other entity (including a "group" as
referred to in Section 13(d)(3) of the 1934 Act). For purposes of this
definition, the term "Unrelated Person" shall mean and include any Person other
than the Company, a wholly-owned subsidiary of the Company, or an employee
benefit plan of the Company; provided however, a sale to underwriters in
connection with a public offering of the Company's securities pursuant to a firm
commitment shall not be a Change of Control.
(b) A sale, transfer, or other disposition through a single transaction or
a series of transactions of all or substantially all of the assets of the
Company to an Unrelated Person or Unrelated Persons acting in concert with one
another.
(c) A change in the ownership of the Company through a single transaction
or a series of transactions such that any Unrelated Person or Unrelated Persons
acting in concert with one another become the "Beneficial Owner," directly or
indirectly, of securities of the Company representing at least thirty (30%)
percent of the combined voting power of the Company's then outstanding
securities. For purposes of this definition, the term "Beneficial Owner" shall
have the same meaning as given to that term in Rule 13d-3 promulgated under the
1934 Act, provided that any pledge of voting securities is not deemed to be the
Beneficial Owner thereof prior to its acquisition of voting rights with respect
to such securities.
(d) Any consolidation or merger of the Company with or into an Unrelated
Person, unless immediately after the consolidation or merger the holders of the
common stock of the Company immediately prior to the consolidation or merger are
the beneficial owners of securities of the surviving corporation representing at
least fifty (50%) percent of the combined voting power of the surviving
corporation's then outstanding securities.
(e) During any period of two years, individuals who, at the beginning of
such period, constituted the Board of Directors of the Company cease, for any
reason, to constitute at least a majority thereof, unless the election or
nomination for election of each new director was approved by the vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of such period.
(f) A change in control of the Company of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the 1934 Act, or any successor regulation of similar
importance, regardless of whether the Company is subject to such reporting
requirement.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Committee" means the Compensation Committee of the Board of Directors or
such other committee designated by the Board of Directors. The Committee shall
be comprised solely of at least two members who are both Disinterested Persons
and Outside Directors.
2.7 "Company" means First Cash Financial Services, Inc.
2.8 "Consultant" means any person, including an advisor, engaged by the Company
or Affiliate to render services and who is compensated for such services.
2.9 "Disinterested Person" means a "disinterested person" as that term is
defined in Rule 16b-3 under the 1934 Act.
2.10 "Eligible Persons" shall mean, with respect to the Plan, those persons
who, at the time that an Award is granted, are (i) key personnel, including
officers and directors, of the Company or Affiliate, or (ii) Consultants or
independent contractors who provide valuable services to the Company or
Affiliate as determined by the Committee.
2.11 "Employee" means a person employed by the Company or any Affiliate to whom
an Award is granted.
2.12 "Fair Market Value" of the Stock as of any date means (a) the average of
the high and low sale prices of the Stock on that date on the principal
securities exchange on which the Stock is listed; or (b) if the Stock is not
listed on a securities exchange, the average of the high and low sale prices of
the Stock on that date as reported on the Nasdaq National Market System; or (c)
if the Stock is not listed on the Nasdaq National Market System, the average of
the high and low bid quotations for the Stock on that date as reported by the
National Quotation Bureau Incorporated; or (d) if none of the foregoing is
applicable, an amount at the election of the Committee equal to (x), the average
between the closing bid and ask prices per share of Stock on the last preceding
date on which those prices were reported or (y) that amount as determined by the
Committee in good faith.
2.13 "Incentive Option" means an option to purchase Stock granted under this
Plan which is designated as an "Incentive Option" and satisfies the requirements
of Section 422 of the Code.
2.14 "Nonqualified Option" means an option to purchase Stock granted under this
Plan other than an Incentive Option.
2.15 "Option" means both an Incentive Option and a Nonqualified Option granted
under this Plan to purchase shares of Stock.
2.16 "Option Agreement" means the written agreement by and between the Company
and an Eligible Person, which sets out the terms of an Option.
2.17 "Outside Director" shall mean a member of the Board of Directors serving
on the Committee who satisfies Section 162(m) of the Code.
2.18 "Plan" means the First Cash Financial Services, Inc. 1999 Stock Option
Plan, as set out in this document and as it may be amended from time to time.
2.19 "Plan Year" means the Company's fiscal year.
2.20 "Performance Stock Award" means an award of shares of Stock to be issued
to an Eligible Person if specified predetermined performance goals are satisfied
as described in Article VI.
2.21 "Restricted Stock" means Stock awarded or purchased under a Restricted
Stock Agreement entered into pursuant to this Plan, together with (i) all
rights, warranties or similar items attached or accruing thereto or represented
by the certificate representing the stock and (ii) any stock or securities into
which or for which the stock is thereafter converted or exchanged. The terms
and conditions of the Restricted Stock Agreement shall be determined by the
Committee consistent with the terms of the Plan.
2.22 "Restricted Stock Agreement" means an agreement between the Company or any
Affiliate and the Eligible Person pursuant to which the Eligible Person receives
a Restricted Stock Award subject to Article VI.
2.23 "Restricted Stock Award" means an Award of Restricted Stock.
2.24 "Restricted Stock Purchase Price" means the purchase price, if any, per
share of Restricted Stock subject to an Award. The Committee shall determine
the Restricted Stock Purchase Price. It may be greater than or less than the
Fair Market Value of the Stock on the date of the Stock Award.
2.25 "Stock" means the common stock of the Company, $.01 par value or, in the
event that the outstanding shares of common stock are later changed into or
exchanged for a different class of stock or securities of the Company or another
corporation, that other stock or security.
2.26 "Stock Appreciation Right" and "SAR" means the right to receive the
difference between the Fair Market Value of a share of Stock on the grant date
and the Fair Market Value of the share of Stock on the exercise date.
2.27 "10% Stockholder" means an individual who, at the time the Option is
granted, owns Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any Affiliate. An individual shall
be considered as owning the Stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants; and Stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust, shall be considered as being owned
proportionately by or for its stockholders, partners, or beneficiaries.
ARTICLE III - ELIGIBILITY
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The individuals who shall be eligible to receive Awards shall be those Eligible
Persons of the Company or any of its Affiliates as the Committee shall determine
from time to time. However, no member of the Committee shall be eligible to
receive any Award or to receive Stock, Options, Stock Appreciation Rights or any
Performance Stock Award under any other plan of the Company or any of its
Affiliates, if to do so would cause the individual not to be a Disinterested
Person or Outside Director. The Board of Directors of Directors may designate
one or more individuals who shall not be eligible to receive any Award under
this Plan or under other similar plans of the Company.
ARTICLE IV - GENERAL PROVISIONS RELATING TO AWARDS
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4.1 Authority to Grant Awards. The Committee may grant to those Eligible
Persons of the Company or any of its Affiliates, as it shall from time to time
determine, Awards under the terms and conditions of this Plan. The Committee
shall determine subject only to any applicable limitations set out in this Plan,
the number of shares of Stock to be covered by any Award to be granted to an
Eligible Person.
4.2 Dedicated Shares. The total number of shares of Stock with respect to
which Awards may be granted under the Plan shall be 1,200,000 shares. The shares
may be treasury shares or authorized but unissued shares. The number of shares
stated in this Section 4.2 shall be subject to adjustment in accordance with the
provisions of Section 4.5. In the event that any outstanding Award shall expire
or terminate for any reason or any Award is surrendered, the shares of Stock
allocable to the unexercised portion of that Award may again be subject to an
Award under the Plan.
4.3 Non-transferability. Awards shall not be transferable by the Eligible
Person otherwise than by will or under the laws of descent and distribution, and
shall be exercisable, during the Eligible Person's lifetime, only by him.
Restricted Stock shall be purchased by and/or become vested under a Restricted
Stock Agreement during the Eligible Person's lifetime, only by him. Any attempt
to transfer an Award other than under the terms of the Plan and the Agreement
shall terminate the Award and all rights of the Eligible Person to that Award.
4.4 Requirements of Law. The Company shall not be required to sell or issue
any Stock under any Award if issuing that Stock would constitute or result in a
violation by the Eligible Person or the Company of any provision of any law,
statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
Award, the Company shall not be required to issue any Stock unless the Committee
has received evidence satisfactory to it to the effect that the holder of that
Option or Award will not transfer the Stock except in accordance with applicable
law, including receipt of an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer complies with applicable law. The
determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by this Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the Stock issuable on exercise of an
Option or pursuant to an Award is not registered, the Company may imprint on the
certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.
4.5 Changes in the Company's Capital Structure.
(a) The existence of outstanding Options or Awards shall not affect in any
way the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or its rights, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise. If the Company shall effect a subdivision or
consolidation of shares or other capital readjustment, the payment of a Stock
dividend, or other increase or reduction of the number of shares of the Stock
outstanding, without receiving compensation for it in money, services or
property, then (a) the number, class, and per share price of shares of Stock
subject to outstanding Options under this Plan shall be appropriately adjusted
in such a manner as to entitle an Eligible Person to receive upon exercise of an
Option, for the same aggregate cash consideration, the equivalent total number
and class of shares he would have received had he exercised his Option in full
immediately prior to the event requiring the adjustment; and (b) the number and
class of shares of Stock then reserved to be issued under the Plan shall be
adjusted by substituting for the total number and class of shares of Stock then
reserved, that number and class of shares of Stock that would have been received
by the owner of an equal number of outstanding shares of each class of Stock as
the result of the event requiring the adjustment.
(b) If the Company is merged or consolidated with another corporation and
the Company is not the surviving corporation, or if the Company is liquidated or
sells or otherwise disposes of substantially all its assets while unexercised
Options remain outstanding under this Plan:
(i) Subject to the provisions of clause (c) below, after the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, each holder of an outstanding Option shall be
entitled, upon exercise of the Option, to receive, in lieu of shares of Stock,
the number and class or classes of shares of stock or other securities or
property to which the holder would have been entitled if, immediately prior to
the merger, consolidation, liquidation, sale or other disposition, the holder
had been the holder of record of a number of shares of Stock equal to the number
of shares as to which the Option shall be so exercised;
(ii) The Board of Directors may waive any limitations set out in or
imposed under this Plan so that all Options, from and after a date prior to the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, specified by the Board of Directors, shall be
exercisable in full; and
(iii) All outstanding Options may be canceled by the Board of
Directors as of the effective date of any merger, consolidation, liquidation,
sale or other disposition, if (i) notice of cancellation shall be given to each
holder of an Option and (ii) each holder of an Option shall have the right to
exercise that Option in full (without regard to any limitations set out in or
imposed under this Plan or the Option Agreement granting that Option) during a
period set by the Board of Directors preceding the effective date of the merger,
consolidation, liquidation, sale or other disposition and, if in the event all
outstanding Options may not be exercised in full under applicable securities
laws without registration of the shares of Stock issuable on exercise of the
Options, the Board of Directors may limit the exercise of the Options to the
number of shares of Stock, if any, as may be issued without registration. The
method of choosing which Options may be exercised, and the number of shares of
Stock for which Options may be exercised, shall be solely within the discretion
of the Board of Directors.
(c) After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each Eligible Person shall be entitled to
have his Restricted Stock and shares earned under a Performance Stock Award
appropriately adjusted based on the manner the Stock was adjusted under the
terms of the agreement of merger or consolidation.
(d) In each situation described in this Section 4.5, the Committee will
make similar adjustments, as appropriate, in outstanding Stock Appreciation
Rights.
(e) The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Awards.
4.6 Election under Section 83(b) of the Code. No Employee shall exercise the
election permitted under Section 83(b) of the Code without written approval of
the Committee. Any Employee doing so shall forfeit all Awards issued to him
under this Plan.
ARTICLE V - OPTIONS AND STOCK APPRECIATION RIGHTS
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5.1 Type of Option. The Committee shall specify at the time of grant whether a
given Option shall constitute an Incentive Option or a Nonqualified Option.
Incentive Stock Options may only be granted to Employees.
5.2 Option Price. The price at which Stock may be purchased under an Incentive
Option shall not be less than the greater of: (a) 100% of the Fair Market Value
of the shares of Stock on the date the Option is granted or (b) the aggregate
par value of the shares of Stock on the date the Option is granted. The
Committee in its discretion may provide that the price at which shares of Stock
may be purchased under an Incentive Option shall be more than 100% of Fair
Market Value. In the case of any 10% Stockholder, the price at which shares of
Stock may be purchased under an Incentive Option shall not be less than 110% of
the Fair Market Value of the Stock on the date the Incentive Option is granted.
The price at which shares of Stock may be purchased under a Nonqualified Option
shall be such price as shall be determined by the Committee in its sole
discretion but in no event lower than the par value of the shares of Stock on
the date the Option is granted.
5.3 Duration of Options and SARS. No Option or SAR shall be exercisable after
the expiration of ten (10) years from the date the Option or SAR is granted. In
the case of a 10% Stockholder, no Incentive Option shall be exercisable after
the expiration of five years from the date the Incentive Option is granted.
5.4 Amount Exercisable -- Incentive Options. Each Option may be exercised from
time to time, in whole or in part, in the manner and subject to the conditions
the Committee, in its sole discretion, may provide in the Option Agreement, as
long as the Option is valid and outstanding, and further provided that no Option
may be exercisable within six (6) months of the date of grant. To the extent
that the aggregate Fair Market Value (determined as of the time an Incentive
Option is granted) of the Stock with respect to which Incentive Options first
become exercisable by the optionee during any calendar year (under this Plan and
any other incentive stock option plan(s) of the Company or any Affiliate)
exceeds $100,000, the portion in excess of $100,000 of the Incentive Option
shall be treated as a Nonqualified Option. In making this determination,
Incentive Options shall be taken into account in the order in which they were
granted.
5.5 Exercise of Options. Each Option shall be exercised by the delivery of
written notice to the Committee setting forth the number of shares of Stock with
respect to which the Option is to be exercised, together with:
(a) cash, certified check, bank draft, or postal or express money order
payable to the order of the Company for an amount equal to the option price of
the shares,
(b) stock at its Fair Market Value on the date of exercise,
(c) an election to make a cashless exercise through a registered broker
dealer (if approved in advance by the Committee),
(d) an election to have shares of Stock, which otherwise would be issued
on exercise, withheld in payment of the exercise price (if approved in advance
by the Committee), and/or
(e) any other form of payment which is acceptable to the Committee,
including without limitation, payment in the form of a promissory note, and
specifying the address to which the certificates for the shares are to be
mailed.
As promptly as practicable after receipt of written notification and payment,
the Company shall deliver to the Eligible Person certificates for the number of
shares with respect to which the Option has been exercised, issued in the
Eligible Person's name. If shares of Stock are used in payment, the aggregate
Fair Market Value of the shares of Stock tendered must be equal to or less than
the aggregate exercise price of the shares being purchased upon exercise of the
Option, and any difference must be paid by cash, certified check, bank draft, or
postal or express money order payable to the order of the Company. Delivery of
the shares shall be deemed effected for all purposes when a stock transfer agent
of the Company shall have deposited the certificates in the United States mail,
addressed to the Eligible Person, at the address specified by the Eligible
Person.
Whenever an Option is exercised by exchanging shares of Stock owned by the
Eligible Person, the Eligible Person shall deliver to the Company certificates
registered in the name of the Eligible Person representing a number of shares of
Stock legally and beneficially owned by the Eligible Person, free of all liens,
claims, and encumbrances of every kind, accompanied by stock powers duly
endorsed in blank by the record holder of the shares represented by the
certificates (with signature guaranteed by a commercial bank or trust company or
by a brokerage firm having a membership on a registered national stock
exchange). The delivery of certificates upon the exercise of Options is subject
to the condition that the person exercising the Option provides the Company with
the information the Company might reasonably request pertaining to exercise,
sale or other disposition.
5.6 Stock Appreciation Rights. All Eligible Persons shall be eligible to
receive Stock Appreciation Rights. The Committee shall determine the SAR to be
awarded from time to time to any Eligible Person. The grant of a SAR to be
awarded from time to time shall neither entitle such person to, nor disqualify
such person from, participation in any other grant of awards by the Company,
whether under this Plan or any other plan of the Company. If granted as a
stand-alone SAR Award, the terms of the Award shall be provided in a Stock
Appreciation Rights Agreement.
5.7 Stock Appreciation Rights in Tandem with Options. Stock Appreciation
Rights may, at the discretion of the Committee, be included in each Option
granted under the Plan to permit the holder of an Option to surrender that
Option, or a portion of the part which is then exercisable, and receive in
exchange, upon the conditions and limitations set by the Committee, an amount
equal to the excess of the Fair Market Value of the Stock covered by the Option,
or the portion of it that was surrendered, determined as of the date of
surrender, over the aggregate exercise price of the Stock. The payment may be
made in shares of Stock valued at Fair Market Value, in cash, or partly in cash
and partly in shares of Stock, as the Committee shall decide in its sole
discretion. Stock Appreciation Rights may be exercised only when the Fair
Market Value of the Stock covered by the Option surrendered exceeds the exercise
price of the Stock. In the event of the surrender of an Option, or a portion of
it, to exercise the Stock Appreciation Rights, the shares represented by the
Option or that part of it which is surrendered, shall not be available for
reissuance under the Plan. Each Stock Appreciation Right issued in tandem with
an Option (a) will expire not later than the expiration of the underlying
Option, (b) may be for no more than 100% of the difference between the exercise
price of the underlying Option and the Fair Market Value of a share of Stock at
the time the Stock Appreciation Right is exercised, (c) is transferable only
when the underlying Option is transferable, and under the same conditions, and
(d) may be exercised only when the underlying Option is eligible to be
exercised.
5.8 Conditions of Stock Appreciation Rights. All Stock Appreciation Rights
shall be subject to such terms, conditions, restrictions or limitations as the
Committee deems appropriate, including by way of illustration but not by way of
limitation, restrictions on transferability, requirement of continued
employment, individual performance, financial performance of the Company or
payment of any applicable employment or withholding taxes.
5.9 Payment of Stock Appreciation Rights. The amount of payment to which the
Eligible Person who reserves an SAR shall be entitled upon the exercise of each
SAR shall be equal to the amount, if any by which the Fair Market Value of the
specified shares of Stock on the exercise date exceeds the Fair Market Value of
the specified shares of Stock on the date of grant of the SAR. The SAR shall be
paid in either cash or Stock, as determined in the discretion of the Committee
as set forth in the SAR agreement. If the payment is in Stock, the number of
shares to be paid shall be determined by dividing the amount of such payment by
the Fair Market Value of Stock on the exercise date of such SAR.
5.10 Exercise on Termination of Employment. Unless it is expressly provided
otherwise in the Option or SAR agreement, Options and SAR's granted to Employees
shall terminate one day less than three months after severance of employment of
the Employee from the Company and all Affiliates for any reason, with or without
cause, other than death, retirement under the then established rules of the
Company, or severance for disability. The Committee shall determine whether
authorized leave of absence or absence on military or government service shall
constitute severance of the employment of the Employee at that time.
5.11 Death. If, before the expiration of an Option or SAR, the Eligible
Person, whether in the employ of the Company or after he has retired or was
severed for disability, or otherwise dies, the Option or SAR shall continue
until the earlier of the Option's or SAR's expiration date or one year following
the date of his death, unless it is expressly provided otherwise in the Option
or SAR agreement. After the death of the Eligible Person, his executors,
administrators or any persons to whom his Option or SAR may be transferred by
will or by the laws of descent and distribution shall have the right, at any
time prior to the Option's or SAR's expiration or termination, whichever is
earlier, to exercise it, to the extent to which he was entitled to exercise it
immediately prior to his death, unless it is expressly provided otherwise in the
Option or SAR's agreement.
5.12 Retirement. Unless it is expressly provided otherwise in the Option
Agreement, before the expiration of an Incentive Option, the Employee shall be
retired in good standing from the employ of the Company under the then
established rules of the Company, the Incentive Option shall terminate on the
earlier of the Option's expiration date or one day less than one year after his
retirement; provided, if an Incentive Option is not exercised within specified
time limits prescribed by the Code, it will become a Nonqualified Option by
operation of law. Unless it is expressly provided otherwise in the Option
Agreement, if before the expiration of a Nonqualified Option, the Employee shall
be retired in good standing from the employ of the Company under the then
established rules of the Company, the Nonqualified Option shall terminate on the
earlier of the Nonqualified Option's expiration date or one day less than one
year after his retirement. In the event of retirement, the Employee shall have
the right prior to the termination of the Nonqualified Option to exercise the
Nonqualified Option, to the extent to which he was entitled to exercise it
immediately prior to his retirement, unless it is expressly provided otherwise
in the Option Agreement. Upon retirement, a SAR shall continue to be
exercisable for the remainder of the term of the SAR agreement.
5.13 Disability. If, before the expiration of an Option or SAR, the Employee
shall be severed from the employ of the Company for disability, the Option or
SAR shall terminate on the earlier of the Option's or SAR's expiration date or
one day less than one year after the date he was severed because of disability,
unless it is expressly provided otherwise in the Option or SAR agreement. In
the event that the Employee shall be severed from the employ of the Company for
disability, the Employee shall have the right prior to the termination of the
Option or SAR to exercise the Option, to the extent to which he was entitled to
exercise it immediately prior to his retirement or severance of employment for
disability, unless it is expressly provided otherwise in the Option Agreement.
5.14 Substitution Options. Options may be granted under this Plan from time to
time in substitution for stock options held by employees of other corporations
who are about to become employees of or affiliated with the Company or any
Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and
conditions of the substitute Options granted may vary from the terms and
conditions set out in this Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.
5.15 Reload Options. Without in any way limiting the authority of the Board of
Directors or Committee to make or not to make grants of Options hereunder, the
Board of Directors or Committee shall have the authority (but not an obligation)
to include as part of any Option Agreement a provision entitling the Eligible
Person to a further Option (a "Reload Option") in the event the Eligible Person
exercises the Option evidenced by the Option Agreement, in whole or in part, by
surrendering other shares of Stock in accordance with this Plan and the terms
and conditions of the Option Agreement. Any such Reload Option (a) shall be for
a number of shares equal to the number of shares surrendered as part or all of
the exercise price of such Option; (b) shall have an expiration date which is
the greater of (i) the same expiration date of the Option the exercise of which
gave rise to such Reload Option or (ii) one year from the date of grant of the
Reload Option; and (c) shall have an exercise price which is equal to one
hundred percent (100%) of the Fair Market Value of the Stock subject to the
Reload Option on the date of exercise of the original Option. Notwithstanding
the foregoing, a Reload Option which is an Incentive Option and which is granted
to a 10% Stockholder, shall have an exercise price which is equal to one hundred
ten percent (110%) of the Fair Market Value of the Stock subject to the Reload
Option on the date of exercise of the original Option and shall have a term
which is no longer than five (5) years.
Any such Reload Option may be an Incentive Option or a Nonqualified Option, as
the Board of Directors or Committee may designate at the time of the grant of
the original Option; provided, however, that the designation of any Reload
Option as an Incentive Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on exercisability of Incentive Stock Options
described in the Plan and in Section 422(d) of the Code. There shall be no
Reload Options on a Reload Option. Any such Reload Option shall be subject to
the availability of sufficient shares under Section 4.2 herein and shall be
subject to such other terms and conditions as the Board of Directors or
Committee may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
5.16 No Rights as Stockholder. No Eligible Person shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.
ARTICLE VI - RESTRICTED STOCK AWARDS
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6.1 Restricted Stock Awards. The Committee may issue shares of Stock to an
Eligible Person subject to the terms of a Restricted Stock Agreement. The
Restricted Stock may be issued for no payment by the Eligible Person or for a
payment below the Fair Market Value on the date of grant. Restricted Stock
shall be subject to restrictions as to sale, transfer, alienation, pledge or
other encumbrance and generally will be subject to vesting over a period of time
specified in the Restricted Stock Agreement. The Committee shall determine the
period of vesting, the number of shares, the price, if any, of Stock included in
a Restricted Stock Award, and the other terms and provisions which are included
in a Restricted Stock Agreement.
6.2 Restrictions. Restricted Stock shall be subject to the terms and
conditions as determined by the Committee, including without limitation, any or
all of the following:
(a) a prohibition against the sale, transfer, alienation, pledge or other
encumbrance of the shares of Restricted Stock, such prohibition to lapse (i) at
such time or times as the Committee shall determine (whether in annual or more
frequent installments, at the time of the death, disability or retirement of the
holder of such shares, or otherwise);
(b) a requirement that the holder of shares of Restricted Stock forfeit,
or in the case of shares sold to an Eligible Person, resell back to the Company
at his cost, all or a part of such shares in the event of termination of the
Eligible Person's employment during any period in which the shares remain
subject to restrictions;
(c) a prohibition against employment of the holder of Restricted Stock by
any competitor of the Company or its Affiliates, or against such holder's
dissemination of any secret or confidential information belonging to the Company
or an Affiliate;
(d) unless stated otherwise in the Restricted Stock Agreement,
(i) if restrictions remain at the time of severance of employment
with the Company and all Affiliates, other than for reason of disability or
death, the Restricted Stock shall be forfeited; and
(ii) if severance of employment is by reason of disability or death,
the restrictions on the shares shall lapse and the Eligible Person or his heirs
or estate shall be 100% vested in the shares subject to the Restricted Stock
Agreement.
6.3 Stock Certificate. Shares of Restricted Stock shall be registered in the
name of the Eligible Person receiving the Restricted Stock Award and deposited,
together with a stock power endorsed in blank, with the Company. Each such
certificate shall bear a legend in substantially the following form:
The transferability of this certificate and the shares of Stock represented by
it is restricted by and subject to the terms and conditions (including
conditions of forfeiture) contained in the First Cash Financial Services, Inc.
1999 Stock Option Plan, and an agreement entered into between the registered
owner and the Company. A copy of the Plan and agreement is on file in the
office of the Secretary of the Company.
6.4 Rights as Stockholder. Subject to the terms and conditions of the Plan,
each Eligible Person receiving a certificate for Restricted Stock shall have all
the rights of a stockholder with respect to the shares of Stock included in the
Restricted Stock Award during any period in which such shares are subject to\
forfeiture and restrictions on transfer, including without limitation, the right
to vote such shares. Dividends paid with respect to shares of Restricted Stock
in cash or property other than Stock in the Company or rights to acquire stock
in the Company shall be paid to the Eligible Person currently. Dividends paid
in Stock in the Company or rights to acquire Stock in the Company shall be added
to and become a part of the Restricted Stock.
6.5 Lapse of Restrictions. At the end of the time period during which any
shares of Restricted Stock are subject to forfeiture and restrictions on sale,
transfer, alienation, pledge, or other encumbrance, such shares shall vest and
will be delivered in a certificate, free of all restrictions, to the Eligible
Person or to the Eligible Person's legal representative, beneficiary or heir;
provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Eligible Person agrees to remit
when due any federal and state income and employment taxes required to be
withheld.
6.6 Restriction Period. No Restricted Stock Award may provide for restrictions
continuing beyond ten (10) years from the date of grant.
ARTICLE VII - PERFORMANCE STOCK AWARDS
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7.1 Award of Performance Stock. The Committee may award shares of Stock,
without any payment for such shares, to designated Eligible Persons if specified
performance goals established by the Committee are satisfied. The terms and
provisions herein relating to these performance-based awards are intended to
satisfy Section 162(m) of the Code and regulations issued thereunder. The
designation of an employee eligible for a specific Performance Stock Award shall
be made by the Committee in writing prior to the beginning of the period for
which the performance is measured (or within such period as permitted by IRS
regulations). The Committee shall establish the maximum number of shares of
Stock to be issued to a designated Employee if the performance goal or goals are
met. The Committee reserves the right to make downward adjustments in the
maximum amount of an Award if in its discretion unforeseen events make such
adjustment appropriate.
7.2 Performance Goals. Performance goals determined by the Committee may be
based on specified increases in cash flow, net profits, Stock price, Company,
segment or Affiliate sales, market share, earnings per share, return on assets,
and/or return on stockholders' equity.
7.3 Eligibility. The employees eligible for Performance Stock Awards are the
senior officers (i.e., chief executive officer, president, vice presidents,
secretary, treasurer, and similar positions) of the Company and its Affiliates,
and such other employees of the Company and its Affiliates as may be designated
by the Committee.
7.4 Certificate of Performance. The Committee must certify in writing that a
performance goal has been attained prior to issuance of any certificate for a
Performance Stock Award to any Employee. If the Committee certifies the
entitlement of an Employee to the Performance Stock Award, the certificate will
be issued to the Employee as soon as administratively practicable, and subject
to other applicable provisions of the Plan, including but not limited to, all
legal requirements and tax withholding. However, payment may be made in shares
of Stock, in cash, or partly in cash and partly in shares of Stock, as the
Committee shall decide in its sole discretion. If a cash payment is made in
lieu of shares of Stock, the number of shares represented by such payment shall
not be available for subsequent issuance under this Plan.
ARTICLE VIII - ADMINISTRATION
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The Committee shall administer the Plan. All questions of interpretation and
application of the Plan and Awards shall be subject to the determination of the
Committee. A majority of the members of the Committee shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by a
majority of the members shall be as effective as if it had been made by a
majority vote at a meeting properly called and held. This Plan shall be
administered in such a manner as to permit the Options, which are designated to
be Incentive Options to qualify as Incentive Options. In carrying out its
authority under this Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:
(a) determine the Eligible Persons to whom and the time or times, at which
Options or Awards will be made,
(b) determine the number of shares and the purchase price of Stock covered
in each Option or Award, subject to the terms of the Plan,
(c) determine the terms, provisions and conditions of each Option and
Award, which need not be identical,
(d) accelerate the time at which any outstanding Option or SAR may be
exercised, or Restricted Stock Award will vest,
(e) define the effect, if any, on an Option or Award of the death,
disability, retirement, or termination of employment of the Employee,
(f) prescribe, amend and rescind rules and regulations relating to
administration of the Plan, and
(g) make all other determinations and take all other actions deemed
necessary, appropriate, or advisable for the proper administration of this Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.
ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN
- ---------------------------------------------
The Board of Directors of the Company may amend, terminate or suspend this Plan
at any time, in its sole and absolute discretion; provided, however, that to the
extent required to qualify this Plan under Rule 16b-3 promulgated under Section
16 of the Securities Exchange Act of 1934, as amended, no amendment that would
(a) materially increase the number of shares of Stock that may be issued under
this Plan, (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) otherwise materially increase the benefits
accruing to participants under this Plan, shall be made without the approval of
the Company's stockholders; provided further, however, that to the extent
required to maintain the status of any Incentive Option under the Code, no
amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board of Directors shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under this Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.
ARTICLE X - MISCELLANEOUS
- -------------------------
10.1 No Establishment of a Trust Fund. No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any
Eligible Person under this Plan. All Eligible Persons shall at all times rely
solely upon the general credit of the Company for the payment of any benefit
which becomes payable under this Plan.
10.2 No Employment Obligation. The granting of any Option or Award shall not
constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ any
Eligible Person. The right of the Company or any Affiliate to terminate the
employment of any person shall not be diminished or affected by reason of the
fact that an Option or Award has been granted to him.
10.3 Forfeiture. Notwithstanding any other provisions of this Plan, if the
Committee finds by a majority vote after full consideration of the facts that an
Eligible Person, before or after termination of his employment with the Company
or an Affiliate for any reason (a) committed or engaged in fraud, embezzlement,
theft, commission of a felony, or proven dishonesty in the course of his
employment by the Company or an Affiliate, which conduct damaged the Company or
Affiliate, or disclosed trade secrets of the Company or an Affiliate, or (b)
participated, engaged in or had a material, financial or other interest, whether
as an employee, officer, director, consultant, contractor, stockholder, owner,
or otherwise, in any commercial endeavor in the United States which is
competitive with the business of the Company or an Affiliate without the written
consent of the Company or Affiliate, the Eligible Person shall forfeit all
outstanding Options and all outstanding Awards, and including all exercised
Options and other situations pursuant to which the Company has not yet delivered
a stock certificate. Clause (b) shall not be deemed to have been violated
solely by reason of the Eligible Person's ownership of stock or securities of
any publicly owned corporation, if that ownership does not result in effective
control of the corporation.
The decision of the Committee as to the cause of an Employee's discharge, the
damage done to the Company or an Affiliate, and the extent of an Eligible
Person's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Employee by the
Company or an Affiliate in any manner.
10.4 Tax Withholding. The Company or any Affiliate shall be entitled to deduct
from other compensation payable to each Eligible Person any sums required by
federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option or SAR, lapse of restrictions on Restricted Stock, or
award of Performance Stock. In the alternative, the Company may require the
Eligible Person (or other person exercising the Option, SAR or receiving the
Stock) to pay the sum directly to the employer corporation. If the Eligible
Person (or other person exercising the Option or SAR or receiving the Stock) is
required to pay the sum directly, payment in cash or by check of such sums for
taxes shall be delivered within 10 days after the date of exercise or lapse of
restrictions. The Company shall have no obligation upon exercise of any Option
or lapse of restrictions on Stock until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise or lapse of restrictions is sufficient to cover all sums due with
respect to that exercise. The Company and its Affiliates shall not be obligated
to advise an Eligible Person of the existence of the tax or the amount which the
employer corporation will be required to withhold.
10.5 Written Agreement. Each Option and Award shall be embodied in a written
agreement which shall be subject to the terms and conditions of this Plan and
shall be signed by the Eligible Person and by a member of the Committee on
behalf of the Committee and the Company or an executive officer of the Company,
other than the Eligible Person, on behalf of the Company. The agreement may
contain any other provisions that the Committee in its discretion shall deem
advisable which are not inconsistent with the terms of this Plan.
10.6 Indemnification of the Committee and the Board of Directors. With respect
to administration of this Plan, the Company shall indemnify each present and
future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of the
Committee and/or the Board of Directors at the time of incurring the expenses,
including, without limitation, matters as to which he shall be finally adjudged
in any action, suit or proceeding to have been found to have been negligent in
the performance of his duty as a member of the Committee or the Board of
Directors. However, this indemnity shall not include any expenses incurred by
any member of the Committee and/or the Board of Directors in respect of matters
as to which he shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of
his duty as a member of the Committee and the Board of Directors. In addition,
no right of indemnification under this Plan shall be available to or enforceable
by any member of the Committee and the Board of Directors unless, within 60 days
after institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board of
Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.
10.7 Gender. If the context requires, words of one gender when used in this
Plan shall include the others and words used in the singular or plural shall
include the other.
10.8 Headings. Headings of Articles and Sections are included for convenience
of reference only and do not constitute part of the Plan and shall not be used
in construing the terms of the Plan.
10.9 Other Compensation Plans. The adoption of this Plan shall not affect any
other stock option, incentive or other compensation or benefit plans in effect
for the Company or any Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees of
the Company or any Affiliate.
10.10 Other Options or Awards. The grant of an Option or Award shall not
confer upon the Eligible Person the right to receive any future or other Options
or Awards under this Plan, whether or not Options or Awards may be granted to
similarly situated Eligible Persons, or the right to receive future Options or
Awards upon the same terms or conditions as previously granted.
10.11 Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Delaware.
Adopted by the shareholders of First Cash Financial Services, Inc. on January
14, 1999.
First Cash Financial Services, Inc.
Rick L. Wessel
President and Director
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of First Cash Financial Services, Inc. on Form S-3 of our report dated August
31, 1998, appearing in the Annual Report on Form 10-K of First Cash Financial
Services, Inc. for the year ended July 31, 1998 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
January 22, 1999
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
October 22, 1996, appearing on page F-2 of the company's Annual Report on Form
10-K for the year ended July 31, 1998. We also consent to the reference to us
under the heading "Experts" in such prospectus.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Fort Worth, Texas
January 22, 1999
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
September 17, 1998, appearing on page 9 of Amendment No. 1 to the company's
Current Report on Form 8-K dated September 22, 1998. We also consent to the
reference to us under the heading "Experts" in such prospectus.
TOLLEFSON & CLANCEY
Tollefson & Clancey
Certified Public Accountants
San Leandro, California
January 18, 1999
