EXHIBIT 2.1
FIRST AMENDMENT TO LOAN AGREEMENT
AND OTHER LOAN DOCUMENTS
THIS FIRST AMENDMENT TO LOAN AGREEMENT AND OTHER LOAN DOCUMENTS (this
"Amendment") is entered into as of August 14, 2006 among DGSE COMPANIES, INC., a
Nevada corporation ("Borrower"), and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, a
national banking association ("Lender").
A. Borrower and Lender are party to that certain Loan Agreement dated
as of December 22, 2005 (as modified, amended, renewed, extended, and restated,
the "Loan Agreement").
B. Borrower and Lender have agreed, upon the following terms and
conditions, to amend the Loan Agreement and certain other Loan Documents.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. Terms and References. Unless otherwise stated in this Amendment (a)
terms defined in the Loan Agreement have the same meanings when used in this
Amendment, and (b) references to "Sections" are to the Loan Agreement's
sections.
2. Amendments to Loan Agreement.
(a) Section 1.1 is hereby amended by adding the following
definitions thereto in alphabetical order:
"Consent Letter" means that certain Consent Letter
dated July 14, 2006, executed by Lender whereby Lender
consented to the Merger on certain specific conditions as more
fully set forth therein.
"Debt Service" means, for any Person for any period,
the sum of (a) all regularly scheduled principal payments that
are paid during such period with respect of all Funded Debt of
such Person and (b) all regularly scheduled interest payments
that are paid in cash with respect of all Funded Debt of such
Person; provided however, "Debt Service" shall exclude any
mandatory prepayments pursuant to Section 3.2(b).
"Funded Debt" means Debt described in clauses (a),
(b), (c), (d), (g), (i), (j) and (k) of the definition of
"Debt."
"Merger" means that certain merger contemplated by
the Merger Agreement.
"Merger Agreement" means that certain Agreement and
Plan of Merger and Reorganization, made and entered into as of
July 12, 2006, by and among Borrower, DGSE Merger Corp., a
Delaware corporation and a direct wholly-owned subsidiary of
Borrower, Superior and Stanford International Bank, Ltd., as
stockholder agent, as amended or modified from time to time.
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"Merger Effective Date" means the date that the
Merger has been consummated in accordance with the Merger
Agreement and such Merger is effective under all applicable
Laws; provided that all of the conditions to the Merger set
forth in the Consent Letter have been satisfied on or before
Merger Effective Date as determined by Lender in its sole
discretion.
"Permitted Subordinated Payments" means permitted
scheduled interest payments on any Superior Loans as permitted
by the Superior Subordination Agreement.
"Restricted Subsidiaries" means each Subsidiary of
Borrower other than Superior and wholly-owned Subsidiaries of
Superior.
"Stanford" means Stanford Financial Group Company, a
Florida corporation.
"Stanford Intercreditor Agreement" means that certain
Intercreditor Agreement executed by Borrower, Stanford, and
Lender, in the form approved by Lender in the Consent Letter.
"Stanford Limited Guaranty" means the Limited
Guaranty executed by Borrower in favor of Stanford in the form
approved by Lender in the Consent Letter.
"Stanford Loan Documents" means the Stanford Notes,
the Stanford Limited Guaranty, and all other loan documents
executed in connection therewith, each in the form approved by
Lender in the Consent Letter.
"Stanford Notes" means the promissory notes executed
by Superior in favor of Stanford.
"Subsidiary Guarantors" means the Restricted
Subsidiaries, including any After-Acquired Subsidiary.
"Superior" means Superior Galleries, Inc., a Delaware
corporation.
"Superior Loans" means the intercompany loans made by
Superior to Borrower and permitted hereunder.
"Superior Subordination Agreement" means the
Subordination Agreement executed by Superior, Lender, and
Borrower, in the form approved by Lender in the Consent
Letter.
(b) Section 1.1 is hereby further amended by deleting the
definitions of "Commitment" and "Loan Documents" therefrom, and
substituting the following in lieu thereof:
"Commitment" means the obligation of Lender to make
Revolving Credit Advances pursuant to Section 2.1 in an
aggregate principal amount at any time outstanding up to but
not exceeding Three Million Dollars ($3,000,000) in the
aggregate, subject, however, to termination pursuant to
Section 10.2.
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"Loan Documents" means this Agreement, the Superior
Subordination Agreement, the Stanford Intercreditor Agreement
(to the extent such documents are executed by the applicable
parties), and all promissory notes, security agreements,
subordination agreements, deeds of trust, assignments, letters
of credit, guaranties, and other instruments, documents, and
agreements executed and delivered pursuant to or in connection
with this Agreement, as such instruments, documents, and
agreements may be amended, modified, renewed, restated,
extended, supplemented, replaced, consolidated, substituted,
or otherwise changed from time to time.
(c) Section 6.9 is hereby deleted, and the following Section
6.9 is substituted in lieu thereof:
Section 6.9 Debt. Borrower and its Restricted
Subsidiaries have no Debt, other than Debt permitted by
Section 8.1.
(d) Section 7.1(a) is hereby deleted, and the following
Section 7.1(a) is substituted in lieu thereof:
(a) Annual Financial Statements. As soon as
available, and in any event within ninety (90) days after the
end of each fiscal year of Borrower, beginning with the fiscal
year ending December 31, 2006, a copy of the annual audit
report of Borrower and the Subsidiaries for such fiscal year
containing, on a consolidated and consolidating basis, balance
sheets and statements of income, retained earnings, and cash
flow as at the end of such fiscal year and for the 12-month
period then ended, in each case setting forth in comparative
form the figures for the preceding fiscal year, all in
reasonable detail and audited and certified by an independent
certified public accountants of recognized standing acceptable
to Lender, to the effect that such report has been prepared in
accordance with GAAP and containing no material qualifications
or limitations on scope; provided that on and after the Merger
Effective Date, Borrower shall provide to Lender, in addition
to the foregoing, an annual report (concurrently with the
delivery of, and in substantially the same form as, the other
annual report required under this Section 7.1(a)) that
excludes Superior and its consolidated Subsidiaries as a
consolidated Subsidiary of Borrower.
(e) Section 7.1(b) is hereby deleted, and the following
Section 7.1(b) is substituted in lieu thereof:
(b) Quarterly Financial Statements. As soon as
available, and in any event within thirty (30) days after the
end of each of the quarters of each fiscal year of Borrower, a
copy of an unaudited financial report of Borrower and its
Subsidiaries as of the end of such fiscal quarter and for the
portion of the fiscal year then ended, containing, on a
consolidated and consolidating basis, balance sheets and
statements of income, retained earnings, and cash flow, in
each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in
reasonable detail certified by the chief financial officer of
Borrower to have been prepared in accordance with GAAP and to
fairly and accurately present (subject to year-end audit
adjustments) the financial condition and results of operations
of Borrower and its Subsidiaries, on a consolidated and
consolidating basis, at the date and for the periods indicated
therein, provided that on and after the Merger Effective Date,
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Borrower shall provide to Lender, in addition to the
foregoing, a quarterly financial report (concurrently with the
delivery of, and in substantially the same form as, the other
quarterly financial report required under this Section 7.1(b))
that excludes Superior and its consolidated Subsidiaries as a
consolidated Subsidiary of Borrower.
(f) Section 7.1(c) is hereby deleted, and the following
Section 7.1(c) is substituted in lieu thereof:
(c) Monthly Financial Statements. As soon as
available, and in any event within thirty (30) days after the
end of each month of each fiscal year of Borrower, a copy of
an unaudited financial report of Borrower and the Subsidiaries
as of the end of such month and for the portion of the fiscal
year then ended, containing, on a consolidated and
consolidating basis, balance sheets and statements of income,
retained earnings, and cash flow, all in reasonable detail
certified by the chief financial officer of Borrower to have
been prepared in accordance with GAAP and to fairly and
accurately present (subject to year-end audit adjustments) the
financial condition and results of operations of Borrower and
the Subsidiaries, on a consolidated and consolidating basis,
at the date and for the periods indicated therein, provided
that after the Merger Effective Date, Borrower shall provide
to Lender, in addition to the foregoing, a monthly financial
report (concurrently with the delivery of, and in
substantially the same form as, the other monthly financial
report required under this Section 7.1(c)) that excludes
Superior and its consolidated Subsidiaries as a consolidated
Subsidiary of Borrower.
(g) Article VII is hereby amended by adding the following
Section 7.12:
Section 7.12 After-Acquired Subsidiaries Concurrently
upon the formation or acquisition of any Restricted Subsidiary
of Borrower after the date hereof (an "After-Acquired
Subsidiary"), Borrower shall cause the After-Acquired
Subsidiary to deliver all of its Constituent Documents and
execute a Guaranty in favor of Lender and such Loan Documents
as shall be required by Lender to create first priority Liens
(subject to Liens permitted under Section 8.2) in favor of
Lender in such After-Acquired Subsidiary's assets and such
other documents as Lender deems reasonably necessary in
connection with such actions and execute any other amendment
to this Agreement as deemed necessary by Lender.
(h) Section 8.1 is hereby deleted, and the following Section
8.1 is substituted in lieu thereof:
Section 8.1. Debt. Borrower will not incur, create,
assume, or permit to exist, and will not permit any Restricted
Subsidiary to incur, create, assume, or permit to exist, any
Debt, except:
(a) Debt to Lender;
(b) Existing Debt described on Schedule 8.1
hereto;
(c) Debt incurred pursuant to the Stanford
Limited Guaranty;
(d) On and after the Merger Effective Date,
Superior Loans; and
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(e) Additional Debt not to exceed One Hundred
Thousand Dollars ($100,000) in the
aggregate.
(i) Section 8.2 is hereby deleted, and the following Section
8.2 is substituted in lieu thereof: Section 8.2 Limitation on Liens.
Borrower will not incur, create, assume, or permit to exist, and will
not permit any Restricted Subsidiary to incur, create, assume, or
permit to exist, any Lien upon any of its property, assets, or
revenues, whether now owned or hereafter acquired, except:
(a) Liens disclosed on the Schedule 8.2 hereto;
(b) Liens in favor of Lender;
(c) Encumbrances consisting of minor easements,
zoning restrictions, or other restrictions on the use of real
property that do not (individually or in the aggregate)
materially affect the value of the assets encumbered thereby
or materially impair the ability of Borrower or the
Subsidiaries to use such assets in their respective
businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(d) Liens for taxes, assessments, or other
governmental charges which are not delinquent or which are
being contested in good faith and for which adequate reserves
have been established;
(e) Liens of mechanics, materialmen, warehousemen,
carriers, or other similar statutory Liens securing
obligations that are not yet due and are incurred in the
ordinary course of business;
(f) Liens resulting from good faith deposits to
secure payments of workmen's compensation or other social
security programs or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, or
contracts (other than for payment of Debt), or leases made in
the ordinary course of business;
(g) On and after the Merger Effective Date, Liens
pursuant to Stanford Loan Documents to secure the Stanford
Limited Guaranty (provided that at all times that any Liens
pursuant to this subsection (g) exist, the Stanford
Intercreditor Agreement is in full force and effect); and
(h) Purchase money Liens on specific property to
secure Debt used to acquire such property to the extent
permitted in Section 8.1(e).
(j) Section 8.3 is hereby deleted, and the following Section
8.3 is substituted in lieu thereof:
Section 8.3 Mergers, Etc. Borrower will not, and will
not permit any Subsidiary to, become a party to a merger or
consolidation, or purchase or otherwise acquire all or any
part of the assets of any Person or any shares or other
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evidence of beneficial ownership of any Person, or wind-up,
dissolve, or liquidate; provided that this Section 8.3 shall
not prohibit the Merger, unless a Default exists or any of the
conditions or requirements set forth in the Consent Letter are
not satisfied on or prior to the Merger Effective Date.
(k) Section 8.10 is hereby deleted in its entity, and the
following new Section 8.10 is substituted in lieu thereof:
Section 8.10 Payment of Debt. Borrower (a) will not
prepay, and will not permit any Restricted Subsidiary to
prepay, any Debt, except the Obligations, and (b) will not
make, and will not permit any Restricted Subsidiary to make,
any payments on the Superior Loans other than Permitted
Subordinated Payments.
(l) The term "Subsidiary" in Sections 6.2, 6.4, 6.6, 6.7, 6.8,
6.11, 6.15, 6.21, 8.4, 8.5, 8.8, 8.9, 8.11, 8.13, 8.14, 9.1, 9.2, and
10.1(g) of the Loan Agreement is hereby deleted and replaced with the
terms "Restricted Subsidiary".
(m) Section 9.3 is hereby deleted in its entity, and the
following new Section 9.3 is substituted in lieu thereof:
Section 9.3 Fixed Charge Coverage Ratio. Borrower and
its Restricted Subsidiaries shall not, as of the last day of
any fiscal quarter during the following periods, beginning
with the fiscal quarter ending on June 30, 2006, permit the
ratio of (a) EBITDA, minus Cash Taxes, minus Capital
Expenditures not financed with Indebtedness permitted
hereunder (excluding (i) the one-time and non-recurring
Capital Expenditures related to (A) the opening of new payday
loan stores in an amount not to exceed $70,000, and (B) the
expenses related to the opening of Borrower's new store in
Charleston, South Carolina in an amount not to exceed
$262,000, and (ii) such other Capital Expenditures approved in
writing by Lender, in its sole discretion), to (b) Debt
Service, in each case for the four (4) fiscal quarters ending
on the date of determination, to be less than 1.25 to 1.0.
This Section 9.3 shall be based on the rolling four (4)
quarter cash flow and debt service obligations of Borrower and
its Restricted Subsidiaries.
(n) The following Section 10.1(o) is hereby added to Article X
of the Loan Agreement:
(o) Borrower or Superior shall fail to perform,
observe, or comply with any covenant, agreement, or term
contained in the Stanford Loan Documents, and such failure
continues beyond the applicable grace periods for such
failure, if any, in the applicable Stanford Loan Documents.
(o) Exhibit B (but not Schedule A to Exhibit B) attached to
the Loan Agreement is hereby deleted in its entirety and replaced with
Exhibit B attached hereto.
3. Amendments to Revolving Credit Note. The Revolving Credit Note is
hereby amended by deleting each reference to (a) "2,500,000" and replacing it
with "3,000,000," and (b) "Two Million Five Hundred Thousand Dollars" and
replacing it with "Three Million Dollars".
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4. Acknowledgment of Lender. Lender acknowledges that upon the
satisifaction of the conditions to this Amendment, (a) Paragraph 6 of the
Consent Letter dated July 14, 2006, executed by Lender (the "Consent Letter")
will be sastisfied, and (b) the $1,000,000 limititation set forth in Paragraph
6(g) of the Consent Letter will be waived by Lender. This acknowledgment does
not serve to limit the terms or conditions of any other paragraph or provision
of the Consent Letter, and Lender reserve the right to demand strict compliance
with other terms and conditions of the Consent Letter.
5. Amendments to Other Loan Documents.
(a) All references in the Loan Documents to the Loan Agreement shall
henceforth include references to the Loan Agreement, as modified and amended
hereby, and as may, from time to time, be further amended, modified, extended,
renewed, and/or increased. All references in the Loan Documents to the Notes
shall henceforth include references the other Notes as amended hereby, and as
may, from time to time, be further amended, modified, renewed, extended, and/or
restated.
(b) Any and all of the terms and provisions of the Loan Documents are
hereby amended and modified wherever necessary, even though not specifically
addressed herein, so as to conform to the amendments and modifications set forth
herein.
6. Conditions Precedent. This Amendment shall not be effective until
(a) all representations and warranties set forth in this Amendment are true and
correct, (b) Lender receives executed copies of the following: (i) this
Amendment, including the ratification attached hereto; (c) Lender receives an
amendment fee in the amount of Twenty Thousand Dollars ($20,000) together with
payment of the estimated reasonable fees and expenses of Lender's counsel
incurred in connection with this Amendment in immediately available funds, (d)
Lender receives a certificate of incumbency for Borrower certified by its
Secretary or an Assistant Secretary of such Borrower certifying (i) the name of
each of its officers who is authorized to sign this Amendment and the other
documents executed in connection therewith, (ii) a true and correct copy of the
resolutions of the directors of such Borrower which authorize its execution and
delivery of this Amendment and the other documents executed in connection
therewith, and the performance of the Loan Documents as amended hereby, and
(iii) that the charter and bylaws of such Borrower have not been amended since
December 22, 2005, and that the same are still in effect, and (e) Lender
receives satisfactory certificates of existence and good standing for Borrower.
7. Ratifications. Borrower (a) ratifies and confirms all provisions of
the Loan Documents as amended by this Amendment, (b) ratifies and confirms that
all Liens granted, conveyed, or assigned to Lender under the Loan Documents are
not released, reduced, or otherwise adversely affected by this Amendment and
continue to guarantee, assure, and secure full payment and performance of the
present and future Obligations, and (c) agrees to perform such acts and duly
authorize, execute, acknowledge, deliver, file, and record such additional
documents, and certificates as Lender may request in order to create, perfect,
preserve, and protect those guaranties, assurances, and Liens.
8. Representations. Borrower represents and warrants to Lender that as
of the date of this Amendment: (a) this Amendment and the other Loan Documents
to be delivered under this Amendment have been duly authorized, executed, and
delivered by Borrower; (b) other than the filing of the Loan Agreement and this
Amendment with the Securities and Exchange Commission, no action of, or filing
with, any governmental authority is required to authorize, or is otherwise
required in connection with, the execution, delivery, and performance by
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Borrower of this Amendment; (c) the Loan Documents, as amended by this
Amendment, are valid and binding upon Borrower and are enforceable against
Borrower in accordance with their respective terms, except as may be limited by
Debtor Relief Laws; (d) the execution, delivery, and performance by Borrower of
this Amendment do not require the consent of any other Person and do not and
will not constitute a violation of any laws, agreements, or understandings to
which Borrower is a party or by which Borrower is bound; (e) all representations
and warranties in the Loan Documents are true and correct in all material
respects; and (f) after giving effect to this Amendment, no Default or Event of
Default exists.
9. Miscellaneous. Unless stated otherwise (a) the singular number
includes the plural and vice versa and words of any gender include each other
gender, in each case, as appropriate, (b) headings and captions may not be
construed in interpreting provisions, (c) this Amendment must be construed --
and its performance enforced -- under Texas law, (d) if any part of this
Amendment is for any reason found to be unenforceable, all other portions of it
nevertheless remain enforceable, and (e) this Amendment may be executed in any
number of counterparts with the same effect as if all signatories had signed the
same document, and all of those counterparts must be construed together to
constitute the same document.
10. Maximum Interest Rate. Regardless of any provision contained in any
of the Loan Documents, Lender shall never be entitled to receive, collect, or
apply as interest (whether termed interest herein or deemed to be interest by
operation of law or judicial determination) on the Note any amount in excess of
interest calculated at the Maximum Lawful Rate, and, in the event that any
Lender ever receives, collects, or applies as interest any such excess, then the
amount which would be excessive interest shall be deemed to be a partial
prepayment of principal and treated hereunder as such; and, if the principal
amount of the Obligation is paid in full, then any remaining excess shall
forthwith be paid to the applicable Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds interest
calculated at the Maximum Lawful Rate, Borrower and Lender shall, to the maximum
extent permitted under applicable law: (a) characterize any non-principal
payment as an expense, fee, or premium rather than as interest; (b) exclude
voluntary prepayments and the effects thereof; and (c) amortize, prorate,
allocate, and spread, in equal parts, the total amount of interest throughout
the entire contemplated term of the Notes; provided that, if the Notes are paid
and performed in full prior to the end of the full contemplated term thereof,
and if the interest received for the actual period of existence thereof exceeds
interest calculated at the Maximum Lawful Rate, then Lender shall refund to the
applicable Borrower the amount of such excess or credit the amount of such
excess against the principal amount of the Notes and, in such event, Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging, taking, reserving, or receiving interest in excess of interest
calculated at the Maximum Lawful Rate.
11. ENTIRETIES. THE LOAN AGREEMENT AS AMENDED BY THIS AMENDMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES ABOUT THE SUBJECT MATTER OF
THE LOAN AGREEMENT AS AMENDED BY THIS AMENDMENT AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
12. Parties. This Amendment binds and inures to Borrower, Lender, and
their respective successors and assigns.
[Remainder of Page Intentionally Left Blank;
Signature Pages to Follow]
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Signature Page to First Amendment to Loan Agreement and Other Loan
Documents EXECUTED as of the date first stated above.
BORROWER:
DGSE COMPANIES, INC., a Nevada corporation
By: s/ ▇▇▇▇▇▇▇ ▇. Oyster
---------------------
▇▇▇▇▇▇▇ ▇. Oyster, President
LENDER:
TEXAS CAPITAL BANK, NATIONAL ASSOCIATION,
a national banking association
By: s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President
To induce Lender to enter into this Amendment, the undersigned jointly and
severally (a) consent and agree to the execution and delivery of the Amendment,
(b) ratify and confirm that all guaranties, assurances, and Liens granted,
conveyed, or assigned to Lender under the Loan Documents are not released,
diminished, impaired, reduced, or otherwise adversely affected by this Amendment
and continue to guarantee, assure, and secure the full payment and performance
of all present and future Obligations including the Revolving Credit Note, as
amended hereby, and (c) waive notice of acceptance of this consent and
agreement, which consent and agreement binds the undersigned and their
successors and permitted assigns and inures to Lender and its respective
successors and permitted assigns.
GUARANTORS:
By: /s/ ▇.▇. ▇▇▇▇▇
-------------------------------------
▇.▇. ▇▇▇▇▇, as an individual
DGSE CORPORATION
By:
-------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. Oyster
-------------------------------------
▇▇▇▇▇▇▇ ▇. Oyster, President
NATIONAL JEWELRY EXCHANGE, INC.
By:
-------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. Oyster
-------------------------------------
▇▇▇▇▇▇▇ ▇. Oyster, President
CHARLESTON GOLD & DIAMOND
EXCHANGE, INC.
By:
-------------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. Oyster
-------------------------------------
▇▇▇▇▇▇▇ ▇. Oyster, President
AMERICAN PAY DAY CENTERS, INC.
By:
-------------------------------------
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Secretary
EXHIBIT B
---------
COMPLIANCE CERTIFICATE
----------------------
FOR QUARTER/PERIOD ENDED ________________________ (THE "SUBJECT PERIOD")
LENDER: TEXAS CAPITAL BANK, National Association
BORROWER: DGSE COMPANIES, INC., a Nevada corporation
This certificate is delivered under the Loan Agreement (as amended and
modified from time to time, the "Agreement") dated as of December 22, 2005,
between Parent, Borrower and Lender. Capitalized terms when used in this
certificate shall, unless otherwise indicated, have the meanings set forth in
the Agreement. On behalf of Parent and Borrower, the undersigned certifies to
Lender that, on the date of this certificate, (a) the financial Statements of
Parent and Borrower attached to this certificate were prepared in accordance
with GAAP, and present fairly the financial condition and results of operations
of Parent and Borrower, with Superior and its consolidated Subsidiaries and
without Superior and its consolidated Subsidiaries, as applicable, as of the end
of and for the Subject Period, (b) no Default or Event of Default currently
exists or has occurred which has not been cured or waived by Lender, and (c) the
status of compliance by Parent and Borrower with certain covenants of the
Agreement at the end of the Subject Period is as set forth below:
In Compliance as of
End of Subject Period
(Please Indicate)
1. Financial Statements and Reports
(a) Provide annual audited FYE financial statements Yes No
within 90 days after the last day of each year.
(b) Provide quarterly financial statements within 30 Yes No
days after the last day of each quarter.
(c) Provide monthly financial statements within 30 Yes No
days after the last day of each month.
(d) Provide a monthly Compliance Certificate, Yes No
Borrowing Base Report, inventory Yes No report,
Pawn Loan report, and summary accounts receivable
aging, within 30 days after the last day of each
month.
(e) Provide Long Term Inventory Report within 30 days Yes No
after June 30 and December 31.
(f) Provide other required reporting timely. Yes No
2. Subsidiaries Yes No
None except as listed on Schedule 2
3. Additional Indebtedness Yes No
None, except Indebtedness permitted by Section 8.1 of
the Agreement.
4. Liens and Encumbrances; Negative Pledge Agreements Yes No
None at any time, except Liens permitted by Section 8.2
of the agreement
Yes No
5. Limitation of Acquisitions and Mergers.
None except those permitted by Section 8.3 of the
Agreement.
6. Dividends and Stock Repurchase. Yes No
None, except as permitted by Section 8.4 of the
Agreement.
7. Loans and Investments Yes No
None, except those permitted by Section 8.5 of the
Agreement.
8. Issuance of Equity Yes No
None, except issuances permitted by Section 8.6 of the
Agreement.
9. Affiliate Transactions Yes No
None, except issuances permitted by Section 8.7 of the
Agreement.
10. Disposal of Assets other than in the Ordinary Course of Yes No
Business
(Section 8.8 of the Agreement). None at any time without
prior written consent of Lender.
11. Sale and Leaseback Transactions (Section 8.9 of the Yes No
Agreement).
None at any time without prior written consent of Lender.
12. Prepayment of Debt (Section 8.10 of the Agreement). Yes No
None at any time without prior written consent of Lender.
13. Changes in Nature of Business (Section 8.11 of the Yes No
Agreement).
None at any time without prior written consent of Lender.
14. Environmental Laws (Section 8.12 of the Agreement). Yes No
No activity likely to cause violations.
15. Changes in Fiscal Year; Accounting Practices Yes No
(Section 8.13 of the Agreement).
None at any time without prior written consent of Lender.
16. No Negative Pledge (Section 8.14 of the Agreement). Yes No
None.
18. Fixed Charge Coverage Ratio Yes No
Minimum of 1:25 to 1.00. (Defined as current assets
divided by current liabilities).
FCCR =($__________ - $_________ - $ _______) / Debt Service ($_____)
EBITDA Cash Taxes Capital Expenditures
not financed with Indebtedness
permitted under the Credit Agreement
(excluding (i) the one-time and
non-recurring Capital Expenditures
related to (A) the opening of new
payday loan stores in an amount not to
exceed $70,000, and (B) the expenses
related to the opening of Borrower's
new store in Charleston, South
Carolina in an amount not to exceed
$262,000, and (ii) such other Capital
Expenditures approved in writing by
Lender, in its sole discretion)
(INCLUDE SCHEDULE A HERETO FOR ITEM 18)
19. Tangible Net Worth (TNW)
Minimum of $4,750,000 at all times. (TNW is defined Yes No
as consolidated total stockholders' equity plus
Subordinated Debt less intangible assets).
20. Leverage Ratio. Maximum of 1.50 to 1.00 Yes No
_______________ - _________________/
Liabilities Subordinated Debt
_______________ = _________________
Tangible
Net Worth
DGSE COMPANIES, INC., a Nevada
corporation
By:
---------------------------
Name:
Title: