EXHIBIT 10.2
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LOAN AGREEMENT
between
CHECK INTO CASH, INC.
and
NATIONSBANK OF TENNESSEE, N.A.
Dated as of June 2, 1997
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TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS................................................... 1
1.1 Defined Terms...................................................... 1
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1.2 Other Definitional Provisions...................................... 11
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SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENT............... 11
2.1 Revolving Credit Commitment........................................ 11
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2.2 Note............................................................... 11
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2.3 Procedure for Revolving Credit Borrowing........................... 11
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2.4 Credit Account..................................................... 12
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2.5 Letter of Credit Subfeature........................................ 12
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2.6 Usage Fee.......................................................... 13
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SECTION 3. GENERAL PROVISIONS APPLICABLE TO THE LOANS.................... 13
3.1 Optional Prepayments............................................... 13
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3.2 Interest Rates and Payment Dates................................... 13
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3.3 Computation of Interest and Fees................................... 14
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SECTION 4. REPRESENTATIONS AND WARRANTIES................................ 14
4.1 Financial Condition................................................ 14
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4.2 No Change.......................................................... 15
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4.3 Existence; Compliance with Law..................................... 15
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4.4 Power; Authorization; Enforceable Obligations...................... 15
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4.5 No Legal Bar....................................................... 16
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4.6 No Litigation...................................................... 16
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4.7 No Default......................................................... 16
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4.8 Ownership of Property; Liens....................................... 16
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4.9 Intellectual Property.............................................. 16
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4.10 No Burdensome Restrictions........................................ 17
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4.11 Taxes............................................................. 17
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4.12 Federal Regulations............................................... 17
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4.13 ERISA............................................................. 17
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4.14 Investment Company Act; Other Regulations......................... 18
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4.15 Subsidiaries...................................................... 18
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4.16 Purpose of Loans.................................................. 18
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4.17 Environmental Matters............................................. 19
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4.18 Security Agreement................................................ 19
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4.19 Capitalization.................................................... 20
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4.20 Solvency.......................................................... 20
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4.21 Fees; Commissions................................................. 20
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4.22 Truth of Representations.......................................... 20
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SECTION 5. CONDITIONS PRECEDENT.......................................... 21
5.1 Conditions to Initial Loans........................................ 21
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5.2 Conditions to All Loans............................................ 23
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SECTION 6. AFFIRMATIVE COVENANTS......................................... 24
6.1 Financial Statements............................................... 24
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6.2 Certificates; Other Information.................................... 25
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6.3 Payment of Obligations............................................. 26
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6.4 Conduct of Business, Maintenance of Existence............... 26
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6.5 Maintenance of Property; Insurance.......................... 26
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6.6 Inspection of Property; Books and Records;
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Discussions................................................. 27
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6.7 Notices..................................................... 27
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6.8 Environmental Laws.......................................... 28
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6.9 Accounts.................................................... 28
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6.10 ERISA....................................................... 28
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SECTION 7. NEGATIVE COVENANTS........................................ 29
7.1 Financial Condition Covenants............................... 29
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7.2 Limitation on Indebtedness.................................. 30
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7.3 Limitation on Liens......................................... 30
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7.4 Limitation on Guarantee Obligations......................... 31
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7.5 Limitation on Fundamental Changes........................... 31
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7.6 Limitation on Sale of Assets................................ 31
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7.7 Limitation on Dividends and Stock Redemption................ 32
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7.8 Intentionally omitted....................................... 32
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7.9 Limitation on Investments, Loans and Advances............... 32
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7.10 Transactions with Affiliates............................... 32
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7.11 Sale and Leaseback......................................... 33
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7.12 Fiscal Year................................................ 33
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7.13 Limitation on Negative Pledge Clauses...................... 33
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7.14 Remuneration............................................... 33
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SECTION 8. EVENTS OF DEFAULT......................................... 33
8.1 Events of Default........................................... 33
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SECTION 9. MISCELLANEOUS............................................. 37
9.1 Amendments and Waivers...................................... 37
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9.2 Notices..................................................... 38
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9.3 No Waiver; Cumulative Remedies.............................. 38
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9.4 Survival of Representations and Warranties................... 38
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9.5 Payment of Expenses and Taxes............................... 38
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9.6 Successors and Assigns; Participations...................... 39
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9.7 Adjustments; Set-off........................................ 40
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9.8 Counterparts................................................ 40
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9.9 Severability................................................ 40
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9.10 Integration................................................ 40
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9.11 GOVERNING LAW.............................................. 41
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9.12 Acknowledgements........................................... 41
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9.13 Further Assurances......................................... 41
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9.14 Release and Indemnification................................ 41
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9.15 Joint and Several Liability................................ 42
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9.16 Arbitration................................................ 42
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EXHIBIT 4.6...................................................... 46
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EXHIBIT 4.9...................................................... 47
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EXHIBIT 4.10..................................................... 48
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EXHIBIT 4.15..................................................... 49
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EXHIBIT 4.19..................................................... 50
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ii
LOAN AGREEMENT, dated as of June 2, 1997, among CHECK INTO CASH,
INC., a Delaware corporation (the "Company"), NATIONSBANK OF TENNESSEE, N.A., a
national banking association (the "Bank"), and the Subsidiary Guarantors
described below.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
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shall have the following meanings:
"Affiliate": as to any Person, (a) any other Person which, directly
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or indirectly, is in control of, is controlled by, or is under common
control with, such Person or (b) any Person who is a director, officer,
shareholder or partner (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in the preceding clause (a). For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (i) vote 50% or more of the securities
having ordinary voting power for the election of directors of such Person
or (ii) direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agreement": this Loan Agreement, as amended, supplemented or
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otherwise modified from time to time.
"Authorized Employee": as defined in subsection 2.3.
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"Available Credit Commitment": means from time to time, as determined
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as of the end of each month, the product determined by multiplying
Corporate EBITDA for the preceding twelve (12) months (on a trailing 12-
month basis) times two (2).
"Business Day": a day other than a Saturday, Sunday or other day on
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which commercial banks in Chattanooga, Tennessee, are authorized or
required by law to close.
"Capital Stock": any and all shares, interests, participations or
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other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) such as membership interests in limited liability companies
and partnership interests in partnerships, and any and all warrants,
options, rights or conversion privileges to purchase any of the foregoing.
"Cash Equivalents": any of the following: (i) direct obligations of
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the United States or any agency thereof with maturities of one year or less
from the date of acquisition;
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(ii) commerical paper of a domestic issuer rated at least "A-1" by Standard &
Poors Corporation or "P-1" by ▇▇▇▇▇'▇ Investors Service, Inc.; and (iii)
certificates of deposit with maturities of one year or less from the date of
acquisition issued by any commerical bank having capital and surplus in excess
of One Hundred Million Dollars ($100,000,000).
"Change in Control": shall mean at any time: (i) if the Individual
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Guarantor and ▇▇▇▇▇ ▇. ▇▇▇▇▇ do not own at least fifty-one percent (51%) of the
Capital stock of the Company unless otherwise consented to in writing by the
Bank (which consent will not be unreasonably withheld in connection with a
public offering of the Company's Capital Stock or in connection with Individual
Guarantor's estate planning); (ii) if the Individual Guarantor at any time
ceases to serve as chief executive officer of the Company; or (iii) if the
Company does not own at least fifty-one percent (51%) of the Capital Stock of
each Subsidiary Guarantor.
"Closing Date": the date on which the Bank makes the initial Loans.
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"Code": the Internal Revenue Code of 1986, as amended from time to time.
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"Collateral": all of the items and types of property on which the Bank is
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granted a Lien pursuant to the Security Documents.
"Commitment Period": the period from and including the date hereof to, but
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not including, the Termination Date or such earlier date on which the Revolving
Credit Commitment shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
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which is under common control with the Company within the meaning of Section
4001(b) of ERISA or is part of a group which includes the Company and which is
treated as a single employer under Sections 414(b) or (c) of the Code including,
without limitation, the Subsidiary Guarantors. In addition, for purposes of this
Agreement as it relates to Code Section 412(n), the term Commonly Controlled
Entity shall mean any entity aggregated with the Company under Code Section
414(b), (c), (m) or (o).
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"Contractual Obligation": as to any Person, any provision of any security
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issued by such Person or of any agreement, instrument or other undertaking
(written or oral) to which such Person is a party or by which it or any of its
property is bound.
"Corporate EBITDA": with respect to the applicable periods as set forth
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herein, the sum, without duplication, of (i) Corporate Net Income for such
period less gain on the sale of assets, dividends and other distributions,
withdrawals, and treasury stock purchases and similar transactions and (ii) to
the extent deducted in determining such Corporate Net Income: (A) all income
taxes, including but not limited to, Federal, foreign and state income taxes
(including any deferred taxes); (B) Corporate InterestExpense; and (C)
depreciation, amortization and similar non-cash charges, provided, that there
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shall be excluded therefrom non-operating gains and non-operating losses.
"Corporate Fixed Charges": for the applicable fiscal period of the Company
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and the Subsidiary Guarantors on a consolidated basis, the sum of (i) the
aggregate principal amount of Indebtedness scheduled to be paid during such
period (including, without limitation, amounts scheduled to be paid under
Finance Leases and with respect to other Indebtedness for Borrowed Money) plus
(ii) Corporate Interest Expense scheduled to be paid during such period.
"Corporate Interest Expense": for the applicable fiscal period of the
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Company and the Subsidiary Guarantors on a consolidated basis, the amount which,
in conformity with GAAP, would be set forth opposite the caption "interest
expense" or any like caption (excluding amortization of deferred finance
charges) on the consolidated income statement of the Company and Subsidiary
Guarantors for such period, provided, however, that in no event shall interest
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income be deducted therefrom in computing such amount.
"Corporate Lease Expense": for the applicable fiscal period, the aggregate
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rental expenses of the Company and the Subsidiary Guarantors on a consolidated
basis, determined in accordance with GAAP, payable in respect of such period
under leases (other than Financing Leases) for real and/or personal property.
"Corporate Net Income": for the applicable fiscal period, the amount
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which, in conformity with GAAP, will be set forth opposite the caption "net
income or loss" (after taxes) or any like caption on the income statement of the
Company and the Subsidiaries on a consolidated basis for such period.
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"Corporate Net Worth": at a particular date, all amounts which would be
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included under shareholders' equity on the consolidated balance sheet of the
Company determined in accordance with GAAP.
"Credit Account": as defined in subsection 2.4.
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"Current Assets": shall mean, as of the date of determination, all assets
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of the Company and the Subsidiary Guarantors which would, in accordance with
GAAP, be classified as current assets.
"Current Liabilities": shall mean, as of the date of determination, all
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liabilities (including tax and other proper accruals) of the Company and the
Subsidiary Guarantor which would, in accordance with GAAP, be classified as
current liabilities, but in any event including all Indebtedness, whether
secured or unsecured, payable on demand or maturing not more than one (1) year
after such date, including any fixed and (at such time as the amount thereof
shall be determined) any contingent payments required to be made by the Company
or any Subsidiary Guarantor not more than one (1) year after such date in
respect of the principal of any of its Indebtedness for Borrowed Money.
"Default": any of the events specified in Section 8, whether or not any
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requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
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America.
"Environmental Laws": any and all Federal, state, local or municipal laws,
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rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority regulating, relating to or imposing
liability or standards of conduct concerning environmental protection matters,
including without limitation, Hazardous Materials, as now or may at any time
hereafter be in effect.
"ERISA": the Employment Retirement Income Security Act of 1974, as amended
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from time to time, any successor statutes thereto, and any regulations or
guidance promulgated thereunder.
"Event of Default": any of the events specified in Section 8, provided that
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any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
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"Financing Lease": any lease of property, real or personal, the
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obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Fixed Charges Coverage": means for the appropriate period of Company and
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Subsidiary Guarantors on a consolidated basis the ratio of (i) Corporate EBITDA
to (ii) the sum of Corporate Fixed Charges plus one-third of the principal
amount of the Loan outstanding on the last day of that period provided that such
amounts are not already included as scheduled principal payments of Indebtedness
in the definition of Corporate Fixed Charges.
"GAAP": generally accepted accounting principles in the United States of
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America applied on a consistent basis with prior periods.
"Governmental Authority": any nation or government, any state or other
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political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee": the Continuing Guaranty executed by the Individual Guarantor
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in favor of the Bank on or about even date herewith, and the Continuing Guaranty
executed by Subsidiary Guarantors in favor of the Bank on or about even date
herewith, all as the same may be amended, supplemented or otherwise modified
from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"), any
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obligation of (i) the guaranteeing person or (ii) another Person (including
without limitation, any bank under any letter or credit) to induce the creation
of any Indebtedness for which the guaranteeing person has issued a
reimbursement, counter, indemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "primary obligations") of any other third Person (the
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"primary obligor") in any manner, whether directly or indirectly, including,
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without limitation, any obligation of the guaranteeing person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary
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obligation or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
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term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (i) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (ii) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Bank in good
faith.
"Hazardous Materials": friable asbestos and other asbestos contaminating
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material, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum byproducts, pesticides, herbicides, and any and all
substances and materials now or hereafter defined or designated as hazardous
materials, hazardous waste, hazardous constituents, or hazardous or toxic
substances as defined or regulated as such in or under any Environmental Law.
"Indebtedness": all liabilities, obligations and indebtedness of any Person
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at any date of any and every kind and nature, whether matured or not matured,
whether joint or several, and whether heretofore, now or hereafter owing,
arising, due or payable and howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise and
regardless of the class of such liabilities, obligations and indebtedness
including, without in any way limiting the generality of the foregoing, the
following: (i) all Indebtedness for Borrowed Money of such Person; (ii) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person; and (iii) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof. "Indebtedness" shall not
include any lease that is not a Financing Lease.
"Indebtedness for Borrowed Money": as applied to any Person, all
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Indebtedness of such Person evidenced by any note, bond, debenture or other
instrument or in respect of borrowed money, and any Financing Lease or any
portion of the purchase price of property or services that is deferred for
a period of one year or more from the date of purchase.
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"Individual Guarantor": W. ▇▇▇▇▇ ▇▇▇▇▇, Jr., an individual residing in
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▇▇▇▇▇▇▇ County, Tennessee.
"Insolvency": with respect to any Multiemployer Plan, the condition that
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such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
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"Intellectual Property": has the meaning given such term in Section 4.9.
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"Intercreditor Agreements": the subordination and intercreditor
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agreements between the Bank and: (i) Sirrom Capital Corporation; and (ii)
Individual Guarantor, relating to the Indebtedness of the Company and the
Subsidiary Guarantors all in form and substance satisfactory to Bank.
"Interest Payment Date": the first day of each calendar month to occur
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while the Loan is outstanding commencing July 1, 1997.
"Landlord's Waiver": that certain Landlord's Waiver executed by ▇. ▇▇▇▇▇
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▇▇▇▇▇, ▇▇. d/b/a ▇▇▇▇▇ Properties in favor of the Bank in form and substance
satisfactory to the Bank.
"Letter of Credit": as defined in subsection 2.5.
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"Leverage ratio": means for the applicable fiscal period of the Company
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and Subsidiary Guarantors on a consolidated basis, the ratio of Indebtedness
for Borrowed Money (including subordinated Indebtedness for Borrowed Money) of
the Company and Subsidiary Guarantors to Corporate EBITDA.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
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arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any Financing Lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the UCC or comparable law of any jurisdiction in respect of any of the
foregoing).
"Loan": the loan made by the Bank pursuant to this Agreement as further
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defined in Section 2.1.
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"Loan Documents": this Agreement, the Note, the Security Documents, the
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Intercreditor Agreements and any other document, instrument or agreement now or
hereafter existing, evidencing, securing or otherwise relating to any
Indebtedness of the Company, the Individual Guarantor, or any Subsidiary
Guarantor to the Bank.
"Material Adverse Effect": a material adverse effect on (i) the business,
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operations, assets, or position (financial or otherwise) of the Company and
Subsidiary Guarantors taken as a whole or the Individual Guarantor (ii) the
ability of the Company, Individual Guarantor, or any Subsidiary Guarantor
generally to perform its obligations under this Agreement, the Note or any of
the other Loan Documents, or (iii) the validity or enforceability of this
Agreement, the Note, any Guarantee, any Security Document, or any of the other
Loan Documents or the rights or remedies of the Bank hereunder or thereunder.
"Maximum Credit Amount": means the lesser of (i) Three Million One Hundred
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Thousand Dollars ($3,100,000) and (ii) the Available Credit Commitment.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
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Section 4001(a)(3) of ERISA.
"Note": the Promissory Note in the principal amount of Three Million One
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Hundred Thousand Dollars ($3,100,000) executed by the Company payable to Bank
dated on or about even date herewith, as the same may be amended, supplemented
or otherwise modified from time to time, together with all other promissory
notes now or hereafter payable by the Company or any Subsidiary Guarantor to the
Bank and all amendments, supplements and modifications thereof.
"Operating Account": means a checking account maintained by the Company
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with the Bank.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
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Subtitle A of Title IV of ERISA or any entity succeeding to any or all of its
functions.
"Participant": as defined in subsection 9.6.
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"Person": an individual, partnership, corporation, limited liability
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company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Permitted Liens": as defined in subsection 7.3.
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"Plan": at a particular time, any employee benefit plan which is covered
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by ERISA and in respect of which the Company or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prohibited Transaction": any transaction set forth in Section 406 of
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ERISA or Section 4975 of the Code, for which a statutory, regulatory or
individual exemption is not applicable.
"Regulation U": Regulation U of the Board of Governors of the Federal
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Reserve System.
"Reorganization": with respect to any Multiemployer Plan, the condition
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that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043 of ERISA
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(other than a Reportable Event as to which the provision of 30 days' notice has
been waived by the PBGC under applicable regulations or to which penalties for
failure to provide notice have been waived by applicable regulation or
administrative action by the PBGC).
"Requirement of Law": as to any Person, the charter (certificate of
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incorporation) and by-laws, articles of organization and operating agreements,
and other organizational or governing documents of such Person, and any law,
treaty, rule, order, regulation, statute, ordinance, code, decree or requirement
of any Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject, as may nor or at any time hereafter be in effect.
"Responsible Officer": the president of the Company or, with respect to
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financial matters, the chief financial officer of the Company.
"Revolving Credit Commitment": the obligation of the Bank to make the Loan
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to the Company hereunder in an aggregate principal amount at any one time
outstanding not to exceed the Maximum Credit Amount.
"Security Agreement": the Security Agreement entered into by the Company
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and the Bank on or about even date herewith, and the Security Agreement(s)
entered into by the Subsidiary Guarantors and the Bank on or about even date
herewith, all as the same may be amended, supplemented or otherwise modified
from time to time, and related UCC financing statements.
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"Security Documents": the Security Agreement and the financing statements
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relating thereto, the Guarantee, the Security Agreement and Collateral
Assignment of Membership Interests entered into between the Company and Bank on
or about even date herewith, the Pledge and Security Agreement entered into
between the Company and Bank on or about even date herewith, the Trademark
Security Agreement entered into between the Company and the Bank on or about
even date herewith, and all other documents, instruments and agreements now or
hereafter securing repayment of the Loan.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA, but
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which is not a Multiemployer Plan.
"Subsidiary": as to any Person, a corporation, partnership or other entity
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of which shares of stock or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. With respect to the Company,
the term "Subsidiary" shall include, without limitation, the Subsidiary
Guarantors.
"Subsidiary Guarantor(s)": Creditcorp of Tennessee, Inc., Check Into Cash
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of Iowa, Inc., Check into Cash of Kentucky, LLC, Check into Cash of Indiana,
LLC, Check into Cash of Illinois, LLC, Check into Cash of Wisconsin, LLC, Check
into Cash of Ohio, LLC, ▇▇▇▇▇ Management Services, LLC, Check into Cash
Holdings, Inc., Check into Cash of California, Inc., Check into Cash of
Missouri, Inc., and Check into Cash of Nebraska, Inc., together with all other
Persons now or hereafter party to the Guarantee executed by the Subsidiary
Guarantors.
"Tangible Net Worth": at any time, Corporate Net Worth less all amounts
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included in the calculation thereof attributable to (i) goodwill (including all
customer lists), (ii) intellectual property, (iii) non-competition agreements,
(iv) unamortized financing costs, (v) amounts due from Affiliates, Subsidiaries
and other inter-company debts (but not including bona fide amounts owing for
transactions permitted by Section 7.10) and (vi) all other intangibles which
appear on the consolidated balance sheet of the Company and the Subsidiary
Guarantors, all as determined in accordance with GAAP. The capitalized value of
the warrants issued in favor of Sirrom Capital Corporation and the
organizational expenses incurred by the Company and the Subsidiary Guarantors
shall not be deducted from Corporate Net Worth in determining Tangible Net
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Worth.
"Termination Date": June 2, 2000.
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"UCC": the Uniform Commercial Code as from time to time in effect in
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the State of Tennessee.
"Working Capital": at any time, the amount equal to the difference
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between Current Assets and Current Liabilities.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
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therein, all terms defined in this Agreement shall have the defined meanings
when used in the Note and other Loan Documents or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in the Note, and any certificate or other
document made or delivered pursuant hereto accounting terms relating to the
Company and the Subsidiary Guarantors not defined in subsection 1.1 and
accounting terms partly defined in subsection 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection and
Schedule references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENT
2.1 Revolving Credit Commitment. Subject to the terms and conditions
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hereof, the Bank agrees to make revolving credit loans (the "Loan") to the
Company from time to time during the Commitment Period in an aggregate principal
amount at any one time outstanding not to exceed the Maximum Credit Amount.
Notwithstanding anything to the contrary contained in any Loan Document, if the
aggregate principal amount of the Loan at any time outstanding exceeds the
Maximum Credit Amount, the Company shall immediately pay to the Bank such
amounts necessary to reduce the then outstanding principal amount of the Loan to
an amount not exceeding such Maximum Credit Amount.
2.2 Note. The Loan made by the Bank shall be evidenced by the Note.
----
2.3 Procedure for Revolving Credit Borrowing. The Company shall
----------------------------------------
designate to the Bank from time to time the officers and employees of the
Company who may request that the Bank make advances of the Loan (an "Authorized
Employee"). An Authorized Employee shall be deemed to be an Authorized Employee
for the purpose of requesting advances of the Revolving Credit
11
Loans until thirty (30) days after the Bank receives written notice from the
Company to the contrary. The Bank shall have no duty to verify the authenticity
of the signature of any Authorized Employee on a written request for an advance
of the Loan and, with respect to a verbal request for an advance of the Loan,
the Bank shall have no duty to verify the identity of any person who represents
himself or herself as an Authorized Employee. The Company shall make verbal
requests for advances which shall be promptly confirmed in writing (by facsimile
notice or other means) on such form reasonably required from time to time by the
Bank. Each such request shall be given to the Bank not later than 12:00 p.m.
E.S.T. on the Business Day during which the requested advance is to be made. All
advances of the Loan may be made by the Bank into the Operating Account. The
Bank shall not be required to make any advances into the Operating Account
unless such advances are in accordance with this Agreement. The failure of the
Bank to require any written requests for an advance or to follow any other
procedures set forth in this Agreement shall not in any way affect the treatment
of any advance into the Operating Account as an advance of the Loan under this
Agreement.
2.4 Credit Account. The Bank shall maintain on its books an account
--------------
(the "Credit Account") which shall be debited for advances of the Loan
(including all advances into the Operating Account) and other amounts chargeable
to the Company with respect thereto (including interest accruing thereon) and
credited for all payments received on the Loan. Each month the Bank shall render
to the Company a statement of the Company's Credit Account which shall be deemed
correct and accepted by and binding upon the Company unless the Bank receives a
written statement of the Company's specific exceptions thereto within thirty
(30) days from the date of mailing of the written statement to the Company. The
statements of the Credit Account and books of account of the Bank shall
constitute prima facie evidence of the balance in the Credit Account.
2.5 Letter of Credit Subfeature. As a subfeature under the Loan, Bank
---------------------------
may from time to time up to and including the Termination Date, issue letters of
credit for the account of Company (each a "Letter of Credit" and collectively,
"Letters of Credit"); provided, however, that the form and substance of each
Letter of Credit shall be subject to the approval by Bank in its sole discretion
and the Company shall pay the Bank a fee of one percent (1%) per annum due upon
issuance or renewal of a Letter of Credit; provided further that the aggregate
undrawn amount of all outstanding Letters of Credit shall not at any time exceed
Five Hundred Thousand Dollars ($500,000.00). Each Letter of Credit shall be
issued for a term not to exceed three hundred and sixty (360) days, as
designated by Company. The undrawn amount of all Letters of Credit plus any and
all amounts paid by Bank in connection with drawings under any Letter of Credit
for which the Bank has not been reimbursed shall be reserved under the
12
revolving credit facility established under this Agreement, shall be considered
an outstanding Loan under this Agreement for purposes of computing the Maximum
Credit Amount. Each draft paid by Bank under a Letter of Credit shall be deemed
an advance under the Loan and shall be repaid in accordance with the terms of
the Note; provided, however, that if at the time any draft is paid by the Bank,
advances are not available under the Loan due to any limitation of borrowing set
forth herein or in any other Loan Document or for any other reason (including,
without limitation, at any time the then outstanding Loans exceed the Maximum
Credit Amount or any time a draft is paid by the Bank after the Termination
Date), then the full amount of such draft shall be immediately due and payable,
together with interest thereon, from the date such amount is paid by Bank to
the date such amount is fully repaid by Borrower, at the Default Rate of
interest as set forth in the Note. In such event, Company agrees that Bank, in
Bank's sole discretion, may debit the Company's deposit accounts with Bank for
the amount of such draft. If the expiry date of any Letter of Credit is later
than the Termination Date, then at least fifteen (15) days prior to the
Termination Date the Company shall deposit with the Bank funds in the amount of
the face amount of such Letters of Credit or such other collateral as Bank may
reasonably request.
2.6 Usage Fee. Company will pay hereafter on the last day of each
---------
March, June, September and December, during the Commitment Period, commencing
September 30, 1997, and shall also pay on the Termination Date, an unused loan
fee at a rate of .125 percent per annum of the average daily unused portion of
the Loan (the aggregate undrawn amount of all outstanding Letters of Credit
shall be considered as used for purposes of calculating this fee) during the
prior period. The Company may at any time upon written notice to Bank
permanently reduce the amount of the Loan at which time the obligation of the
Company to pay an unused loan fee shall thereupon correspondingly be reduced.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO THE LOANS
3.1 Optional Prepayments. The Company may at any time and from time
--------------------
to time prepay the Loan, in whole or in part, on one Business Days' irrevocable
notice to the Bank, specifying the date and amount of prepayment. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein.
3.2 Interest Rates and Payment Dates. (a) The Loan shall bear
--------------------------------
interest at a rate per annum equal to the rate set forth in the Note.
(b) Upon the occurrence of an Event of Default and the acceleration of
the amounts due under the Note, to the extent permitted by applicable law, the
rate of interest on the
13
aggregate of the unpaid principal amount of the Note, accrued interest and all
other sums payable in connection therewith, shall (as well after as before
judgment), at the option of Bank, be increased to an amount equal to two percent
(2%) above the then applicable interest rate set forth in the Note, such amount
not to exceed the Maximum Rate (as defined in the Note). In addition to the
foregoing, to the extent permitted by applicable law, Bank may impose a
delinquency charge in an amount not to exceed five percent (5%) of any payment
not received within fifteen (15) days of its due date.
(c) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (b) of this
--------
subsection shall be payable on demand.
3.3 Computation of Interest and Fees. (a) Interest on the Loan shall
--------------------------------
be calculated on the basis of a 360-day year for the actual number of days
elapsed to the extent permitted by applicable law. To the extent applicable, any
change in the interest rate on the Loan resulting from a change in the LIBOR
Rate (as defined in the Note) shall become effective as of the opening of
business on the day on which such change is announced.
(b) All payments (including prepayments) to be made by the Company
hereunder and under the Note, whether on account of principal, interest, fees or
otherwise, shall be made without set off or counterclaim and shall be made prior
to 12:00 Noon, Chattanooga time, on the due date thereof to the Bank, at its
offices in Chattanooga, Tennessee, in Dollars and in immediately available
funds. If any payment hereunder becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business
Day, and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make the Loan,
the Company and each Subsidiary Guarantor hereby represents and warrants to the
Bank that:
4.1 Financial Condition. The combined balance sheet of the Company
-------------------
and Subsidiary Guarantors as at December 31, 1996, and the related combined
statements of income, of equity and of cash flows for the period ended on such
date, copies of which have heretofore been furnished to the Bank, are complete
and correct and present fairly the combined financial position of the Company
and Subsidiary Guarantors as at such date, and the combined results of its
operations and cash flows for the period then ended. The unaudited balance sheet
of the Individual Guarantor as of December 31, l996, and the related unaudited
statements of income and of cash flows for the period ending on
14
such date, copies of which have heretofore been furnished to the Bank, are
complete and correct and present fairly the financial position of the Individual
Guarantor as at such date. All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved.
4.2 No Change. Since the date of the financial statements referred to
---------
in subsection 4.1, there has been no development or event nor any prospective
development or event, which has had or could have a Material Adverse Effect and
there are no liabilities of the Company, any Subsidiary Guarantor or the
Individual Guarantor, fixed or contingent, which are material but are not
reflected in such financial statements other than liabilities arising in the
ordinary course of business since December 31, 1996. The Company, the Individual
Guarantor, and the Subsidiary Guarantors do not have any Indebtedness or
Guarantee Obligation other than those which have been disclosed to the Bank in
writing.
4.3 Existence; Compliance with Law. The Company and each Subsidiary
------------------------------
Guarantor (a) is duly organized, validly existing and in good standing under the
laws of the state of its organization, (b) has the power, authority, and legal
right to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law except any noncompliance which in the aggregate would not
have a Material Adverse Effect. The Company, each Subsidiary Guarantor, and the
Individual Guarantor have complied with all Requirements of Law in the operation
of their business and the ownership of their assets (including obtaining
licenses and permits necessary for the operation of their business) except any
noncompliance which in the aggregate would not have a Material Adverse Effect.
4.4 Power; Authorization; Enforceable Obligations. Company and each
---------------------------------------------
Subsidiary Guarantor has the power and authority, and the legal right, to make,
deliver and perform this Agreement, the Note, the Guarantee, and the other Loan
Documents to which it is a party, as applicable, and to borrow hereunder and has
taken all necessary action to authorize the borrowings on the terms and
conditions of this Agreement, the Note, the Guarantee, and the other Loan
Documents to which it is a party and to authorize the execution, delivery and
performance of this Agreement, the Note, the Guarantee, and the other Loan
Documents to which it is a party. No consent or authorization of, filing with
or other act by or in respect of, any Governmental Authority or any other Person
is required in connection with the borrowings hereunder or with respect to the
execution, delivery,
15
performance, validity or enforceability of this Agreement, the Note, the
Guarantee, or any of the other Loan Documents. This Agreement has been, and each
Note, the Guarantee, and other Loan Document will be, duly executed and
delivered on behalf of the Company and each Subsidiary Guarantor (as
applicable). This Agreement constitutes, and the Note, the Guarantee, and the
other Loan Documents when executed and delivered will constitute, legal, valid
and binding obligations of the Company, the Individual Guarantor, and the
Subsidiary Guarantors (as applicable), enforceable against the Company, the
Individual Guarantor, and the Subsidiary Guarantors (as applicable) in
accordance with its terms.
4.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement, the Note and the other Loan Documents, the borrowings hereunder and
the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of the Company, the Individual Guarantor, or any
Subsidiary Guarantor and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
4.6 No Litigation. No litigation, investigation or proceeding of or
-------------
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Company or any Subsidiary Guarantor, threatened by or against the
Company, the Individual Guarantor, or any Subsidiary Guarantor, or against any
of its or their respective properties or revenues except as set forth on Exhibit
4.6.
4.7 No Default. None of the Company, the Individual Guarantor, or any
----------
Subsidiary Guarantor is in default under or with respect to any of its
Contractual Obligations except such defaults which in the aggregate do not have
a Material Adverse Effect. No Default or Event of Default has occurred and is
Continuing.
4.8 Ownership of Property; Liens. The Company and each Subsidiary
----------------------------
Guarantor has good and marketable title to all its assets and none of such
assets is subject to any Lien other than a Permitted Lien.
4.9 Intellectual Property. The Company and each Subsidiary Guarantor
---------------------
owns, or is licensed to use, all trademarks, trade names, service names, service
marks, copyrights, patents, technology, know-how and processes necessary for the
conduct of its business as currently conducted (the "Intellectual Property").
No claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Company or any
Subsidiary know of any valid basis for any such claim. The use
16
of such Intellectual Property by the Company or any Subsidiary does not infringe
on the rights of any Person. Except as set forth on Exhibit 4.9, neither the
Company nor any Subsidiary Guarantor has registered any trademark, trade name,
service name, service ▇▇▇▇, copyright, or patent.
4.10 No Burdensome Restrictions. Except as set forth on Exhibit 4.10,
--------------------------
there is no Requirement of Law or Contractual Obligation of the Company or any
Subsidiary Guarantor with respect to which the Company or Subsidiary Guarantor
is not in compliance, the failure to be in compliance with which would have a
Material Adverse Effect.
4.11 Taxes. The Company, the Individual Guarantor, and each
-----
subsidiary Guarantor has filed or caused to be filed all tax returns which are
required to be filed and have paid all taxes shown to be due and payable on said
returns or on any assessments made against any of them or any of their property
and all other taxes, fees or other charges imposed on any of them or any of
their property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on its books); no tax Lien has been filed; and, no claim is being
asserted, with respect to any such tax, fee or other charge.
4.12 Federal Regulations. No part of the proceeds of the Loan will be
-------------------
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors. If requested by the Bank, the Company will furnish to
the Bank a statement to the foregoing effect in conformity with the requirements
of FR Form 0-1 referred to in said Regulation U.
4.13 ERISA. Each Plan which is intended to be qualified under Section
-----
401(a) of the Code as currently in effect has been determined by the Internal
Revenue Service to be so qualified, and each trust related to any such Plan is
exempt from federal income tax under Section 501(a) of the Code as currently in
effect. Neither a Reportable Event nor Prohibited Transaction which could
reasonably result in a Material Adverse Effect has occurred with respect to any
Plan. Each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code. No circumstances exist which constitute
reasonable grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, any Plan, nor has the PBGC instituted any such
proceeding. The present value of all benefit liabilities under each Single
Employer Plan maintained by the Company or any Commonly Controlled Entity (based
on those assumptions used to fund the Plans) did not, as of the last
17
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
benefit liabilities. Neither the Company nor any Commonly Controlled Entity has
had a complete or partial withdrawal from any Multiemployer Plan that could
reasonably result in a Material Adverse Effect. Neither the Company nor any
Commonly Controlled Entity would become subject to any liability under ERISA
that could reasonably result in a Material Adverse Effect if the Company or any
such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. To the knowledge of the
Company, no such Multiemployer Plan is in Reorganization or Insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Company and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits.
4.14 Investment Company Act; Other Regulations. Neither the Company
-----------------------------------------
nor any Subsidiary Guarantor is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended. Neither the Company nor any Subsidiary
Guarantor is subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
4.15 Subsidiaries. The Company has no Subsidiaries or Affiliates that
------------
are not natural Persons except for the Subsidiary Guarantors and the other
------
Affiliates and Subsidiaries identified on Exhibit 4.15 (as such Exhibit 4.15 may
be updated from time to time in connection with the formation of new Affiliates
and Subsidiaries). The Subsidiary Guarantors have no Subsidiaries and have no
Affiliates that are not natural Persons except the Company, the other Subsidiary
Guarantors and the other Affiliates identified on Exhibit 4.15 (as such Exhibit
4.15 may be updated from time to time in connection with the formation of new
Affiliates and Subsidiaries).
4.16 Purpose of Loans. The proceeds of the Loan shall be used by the
----------------
Company and the Subsidiary Guarantors for general working capital, to fund the
operations of the Company and the Subsidiary Guarantors (including but not
limited to, capitalizing new Subsidiary Guarantors, lending or contributing
funds to Subsidiary Guarantors to finance their respective operations, and
expanding the existing operations of the Company and the Subsidiary Guarantors
in existing and new markets), and to refinance existing senior debt facilities
(not including the
18
current debt facilities owing to Sirrom Capital Corporation) and for capital
expenditures. The proceeds of the Loan will not be used for any other purpose.
4.17 Environmental Matters. To the best of the Company's and each
---------------------
Subsidiary Guarantor's knowledge and except as to matters which individually or
in the aggregate are not reasonably expected to result in a Material Adverse
Effect, each of the representations and warranties set forth in paragraphs (a)
through (e) of this subsection is true and correct with respect to each parcel
of real property owned or leased by the Company or any Subsidiary Guarantor
(individually, a "Property" and collectively, the "Properties"):
(a) The Properties do not contain in, on, or under, including, without
limitation, the soil and groundwater thereunder, any Hazardous Materials.
(b) The Properties and all operations and facilities at the Properties
are in material compliance with all applicable Environmental Laws, and
there is no violation of any applicable Environmental Law which will
materially interfere with the continued operation of any of the Properties
or materially impair the fair saleable value of any thereof.
(c) Neither the Company nor any Subsidiary Guarantor has received any
notice of material violation or violation of any applicable Environmental
Law, the violation of which will have a Material Adverse Effect, with
regard to the Properties, nor is the Company or any Subsidiary Guarantor
aware that any Governmental Authority is contemplating delivering to the
Company any such notice.
(d) Hazardous Materials have not been generated, treated, stored,
disposed of by the Company or any Subsidiary Guarantor, at, on or under any
of the Properties, nor have any Hazardous Materials been transferred by the
Company or any Subsidiary Guarantor from the Properties to any other
location.
(e) There are no governmental, administrative actions or judicial
proceedings pending under any Environmental Laws to which the Company is
named as a party with respect to the Properties which if adversely
determined is likely to have a Material Adverse Effect, nor are there any
consent decrees, consent orders or administrative orders outstanding under
any applicable Environmental Law with respect to any of the Properties.
4.18 Security Agreement. The provisions of the Security Documents are
------------------
effective to create in favor of the Bank a legal, valid and enforceable security
interest in all right,
19
title and interest of the Company and the Subsidiary Guarantors in the
Collateral described therein, and upon the filing and recording of the financing
statements executed in connection with this Agreement, the Bank shall have a
fully perfected security interest in all right, title and interest of the
Company and Subsidiary Guarantors in such Collateral in which a security
interest may be perfected by the filing of a financing statement superior in
right to any Liens which any third Person may have against such Collateral or
interests therein (assuming the validity and enforceability of the Intercreditor
Agreement entered into between the Bank and Sirrom Capital Corporation) save and
except for Permitted Liens.
4.19 Capitalization. As of the date of this Agreement, the
--------------
Capital Stock of the Company and each of the Subsidiary Guarantors is owned as
set forth in Exhibit 4.19. Neither Company nor any Subsidiary Guarantor is a
party to any agreement, whether oral or written, or both, concerning the
issuance, repurchase or redemption of any of its Capital Stock except for the
Stock Purchase Warrants issued in favor of Sirrom Capital Corporation and the
potential forfeiture of restricted stock issued to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as described
on Exhibit 4.19. All of the Capital Stock of the Company and each Subsidiary
Guarantor has been validly and properly issued in accordance with all
Requirements of Law including, without limitation, the "blue sky" laws of all
applicable state and the federal securities laws.
4.20 Solvency. The Company and the Subsidiary Guarantors on a
--------
consolidated basis are and after the consummation of the transactions described
in this Agreement will be solvent, able to pay their debts as they become due,
and have and will have sufficient capital to carry on their businesses. The
Company and the Subsidiary Guarantors now own property having a value on a
consolidated basis both of fair valuation and at present fair salable value
greater than the amount required to pay the Company's and the Subsidiary
Guarantors' (as applicable) Indebtedness (including all Indebtedness
contemplated by this Agreement). The Company and the Subsidiary Guarantors on a
consolidated basis will not be rendered insolvent by the execution and delivery
of this Agreement or any of the other Loan Documents or by the transactions
contemplated hereby or thereby.
4.21 Fees; Commissions. The Company and Subsidiary Guarantors
-----------------
have not agreed to pay any finder's fee, commissions, origination fee or other
fee or charge to any Person or entity other than Bank with respect to the
transactions contemplated by this Agreement.
4.22 Truth of Representations. Neither this Agreement nor any
------------------------
of the other Loan Documents, nor any other agreements, instruments, reports,
schedules, certificates or documents heretofore simultaneously with the
execution of this Agreement
20
delivered to Bank in connection with the negotiation and the making of the Loans
contains any misrepresentation or untrue statement of a material fact or omits
to state any material fact necessary to make this Agreement, the other Loan
Documents, and such other agreements, instruments, reports, schedules,
certificates and documents not misleading.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Loans. The agreement of the Bank to
---------------------------
make the Loan is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Bank shall have received (i) this
--------------
Agreement, executed and delivered by a duly authorized officer of the
Company and each Subsidiary Guarantor (as applicable), (ii) the Note
executed by a duly authorized officer of the Company, (iii) the
Security Agreements and related UCC-l financing statements, executed
and delivered by a duly authorized officer of the Company and each
Subsidiary Guarantor (as applicable), (iv) the Guarantee, executed and
delivered by the Individual Guarantor and each Subsidiary Guarantor
(as applicable), and (v) all of the other Loan Documents executed by a
duly authorized officer of the Company or Subsidiary Guarantor (as
applicable) and by the Individual Guarantor where required.
(b) Corporate Proceedings. The Bank shall have received: (i)
---------------------
a copy of the resolutions, in form and substance satisfactory to the
Bank, of the Board of Directors of the Company and the Board of
Directors or Members, as applicable of each Subsidiary Guarantor
authorizing (a) the execution, delivery and performance of this
Agreement, the Note and the other Loan Documents, and (b) the
borrowings contemplated hereunder, certified by the Secretary of the
Company and appropriate officer of each Subsidiary Guarantor as of the
Closing Date, which certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or
rescinded and shall be in form and substance satisfactory to the Bank;
and (ii) an incumbency certificate concerning the Company's and each
Subsidiary Guarantor's officers certified by the Secretary of the
Company and appropriate officer of each Subsidiary Guarantor in form
and substance satisfactory to the Bank.
(c) Corporate Documents. The Bank shall have received true
-------------------
and complete copies of the certificate of incorporation of the Company
and certificate of incorporation/articles of organization, as amended,
of each Subsidiary Guarantor, certified as of the Closing Date by the
Secretary of State as a complete and correct copy thereof, a
certificate of
21
existence regarding the Company and each Subsidiary Guarantor from the
Secretary of State, and bylaws of the Company and bylaws/operating
agreement of each Subsidiary Guarantor, certified as of the Closing
Date as a complete and correct copy thereof by the Secretary of the
Company and appropriate officer of the Subsidiary Guarantor.
(d) No Violation. The consummation of the transactions
------------
contemplated hereby shall not contravene, violate or conflict with,
nor involve the Bank, Company, any Subsidiary Guarantor, or the
Individual Guarantor in any violation of, any Requirement of Law.
(e) Officer's Certificate. The Bank shall have received a
---------------------
certificate of a Responsible Officer of the Company and an appropriate
officer of each Subsidiary Guarantor stating that all of the
representations and warranties are true and correct in all material
respects as of the Closing Date.
(f) Legal Opinions. The Bank shall have received the executed
--------------
legal opinion of ▇▇▇▇▇▇ & Bird LLP, counsel to the Company and the
Subsidiary Guarantors in the form and substance satisfactory to Bank.
(g) Filings, Registrations and Recordings. Any documents,
-------------------------------------
including, without limitation, financing statements, required to be
filed, and any other actions required to be taken, under or in
connection with any of the Security Documents in order to create, in
favor of the Bank, a perfected first priority security interest in the
Collateral, shall have been properly filed and the Bank shall have
received evidence satisfactory to it of each such filing,
registration, recordation or other action and satisfactory evidence of
the payment of any necessary fee, tax or expense relating thereto.
(h) Lien Releases. The Bank shall have received evidence
-------------
satisfactory to it that UCC-3 termination statements and other Lien
release documentation shall have been duly executed and properly filed
or delivered to the Bank for filing on terms and conditions acceptable
to the Bank, and all other necessary actions shall have been taken, to
the extent necessary to effect the complete and irrevocable release of
all Liens on the assets of the Company or any Subsidiary Guarantor
except for Permitted Liens.
(i) Lien Searches. The Bank shall have received the results
-------------
of a recent search by a Person satisfactory to the Bank of the Uniform
Commercial Code filings and tax and judgment liens which may have been
filed with respect to the
22
personal or real property of the Company and each Subsidiary
Guarantor.
23
(j) Insurance. The Bank shall have received such
---------
certificates, endorsements and other evidence satisfactory to it that
the Company and each Subsidiary Guarantor has obtained the insurance
policies required by subsection 6.5 and by the Security Documents all
in form and substance satisfactory to the Bank.
(k) Financial Statements. The Bank shall have received
--------------------
consolidated financial statements of the Company and Subsidiary
Guarantors and financial statements of the Individual Guarantor which
must be satisfactory in form and substance to the Bank.
(1) Intercreditor Agreements. The Bank shall have received
------------------------
the Intercreditor Agreements which shall be in form and substance
satisfactory to the Bank.
(m) Landlord's Waiver. The Bank shall have received the
-----------------
Landlord's Waiver which shall be in form and substance satisfactory to
the Bank, and a certified copy of the leases relating to the
Landlord's Waiver.
(n) Miscellaneous. The Bank shall have received such other
-------------
approvals, opinions, documents and agreements as Bank shall reasonably
request all in form and substance satisfactory to Bank.
5.2 Conditions to All Loans. The agreement of the Bank to
-----------------------
make any advance of the Loan requested to be made by it on any date is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
------------------------------
representations and warranties made by the Company, any Subsidiary
Guarantor, or Individual Guarantor in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as
of such date as if made on and as of such date, except any and all
representations made as of a specified date, and by this subsection,
the Company and each Subsidiary Guarantor represents and warrants that
on the date of each Loan such representations and warranties shall be
true and correct in all material respects.
(b) No Default. No Default or Event of Default shall have
----------
occurred and be continuing on such date or after giving effect to the
advance requested to be made on such date.
(c) Additional Documents. The Bank shall have received each
--------------------
additional document, instrument, legal opinion or item of information
reasonably requested by it.
24
(d) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, and the other Loan Documents
shall be satisfactory in form and substance to the Bank, and the Bank shall
have received such other documents and legal opinions in respect of any
aspect or consequence of the transactions contemplated hereby or thereby as
it shall reasonably request.
Each borrowing by the Company hereunder shall constitute a representation and
warranty by the Company and each Subsidiary Guarantor as of the date of such
Loan that the conditions contained in this subsection 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Company and each Subsidiary Guarantor hereby agrees that, so long
as the Revolving Credit Commitment remains in effect, any Note (or Letter of
Credit) remains outstanding and unpaid or any other Indebtedness is owing to the
Bank hereunder or under any other Loan Document, the Company and each Subsidiary
Guarantor shall:
6.1 Financial Statements. Furnish to the Bank:
--------------------
(a) as soon as available, but in any event within one hundred twenty
(120) days after the end of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and the Subsidiary Guarantors as
at the end of such year and the related consolidated statements of income,
of equity and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, accompanied by an audit report
including an unqualified opinion on such statements acceptable to the Bank
by an independent certified public accountant selected by the Company and
acceptable to the Bank; and
(b) as soon as available, but in any event not later than forty-five
(45) days after the end of each month, the consolidated balance sheet of
the Company and the Subsidiary Guarantors as at the end of such month and
the related unaudited statements of income and retained earnings and of
cash flows of the Company and the Subsidiary Guarantors for such month and
the portion of the fiscal year through the end of such month and for the
twelve month period ending at the end of such month (i.e., rolling twelve
month), setting forth in each case in comparative form the figures for the
previous year, certified and signed by a Responsible Officer as being
fairly stated in all material respects.
25
(c) As soon as available, but in any event not later than fifteen (15)
days after the end of each month, a monthly volume and status report to
include the total amount of checks then held by the Company and Subsidiary
Guarantors, the bad debt reserve of the Company and the Subsidiary
Guarantors, the delinquencies, and aged recency and contractual basis
reports, all of which shall be certified and signed by a Responsible
Officer as being fairly stated in all material respects; and
(d) as soon as available, but in any event not later than one hundred
twenty (120) days after the end of each calendar year, the unaudited
balance sheet of the Individual Guarantor as at the end of such year and
related statements as reasonably requested by Bank certified and signed by
the Guarantor as being fairly stated in all material respects all in such
form as Bank may from time to time request;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in the case of items (a),
(b), and (d) of this Section 6.1, in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods.
6.2 Certificates; Other Information. Furnish to Bank:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and with delivery of the monthly
statements referred to in subsection 6.1(b), a certificate of a Responsible
Officer stating that the Company and Subsidiary Guarantors during such
period have observed or performed all of the covenants and other
agreements, and satisfied every condition, contained in this Agreement and
in the Note and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that no Default or Event of
Default has occurred except as specified in such certificate, which
certificates shall also include a computation of all quantitative covenants
(including, without limitation, the computation of the Leverage Ratio for
purposes of adjusting the interest rate under the Note);
(c) not later than thirty (30) days prior to the end of each fiscal
year of the Company and Subsidiary Guarantors, a copy of the projections by
the Company of the operating
26
budget and cash flow budget of the Company and Subsidiary Guarantors for
the succeeding fiscal year, such projections to be accompanied by a
certificate of a Responsible Officer to the effect that such officer has no
reason to believe they are incorrect or misleading in any material respect
and are based on reasonable assumptions;
(d) promptly, such additional financial and other information as Bank
may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
----------------------
before maturity or before they become delinquent, as the case may be, all its
obligations and Indebtedness of whatever nature (including, without limitation,
the obligations and Indebtedness under the Loan Documents and all taxes and
other charges levied by any Governmental Authority), except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Company.
6.4 Conduct of Business, Maintenance of Existence and Compliance with
-----------------------------------------------------------------
Law. Continue to engage in business of the same general type as now conducted by
---
it and preserve, renew and keep in full force and effect its corporate
(organizational) existence, good standing and qualification in all jurisdictions
where such qualification is required, and take all reasonable action to maintain
all rights, privileges, franchises and Intellectual Property necessary or
desirable in the normal conduct of its business; comply with all Contractual
Obligations and Requirements of Law except for noncompliances which in the
aggregate do not have a Material Adverse Effect. If Company or any Subsidiary
Guarantor begins using any new trademark, trade name, service name, service
▇▇▇▇, copyright or patent then Company and the Subsidiary Guarantor shall
provide Bank prompt notice of that use and execute all documents and take such
other actions as may be requested by Bank to perfect Bank's security interest
therein.
6.5 Maintenance of Property; Insurance. Keep all assets useful and
----------------------------------
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance in at least such
amounts and against at least such risks (but including in any event public
liability, product liability, fire and extended coverage, worker's compensation,
and business interruption) as are usually insured against in the same general
area by companies engaged in the same or a similar business and in accordance
with the Security Documents and as otherwise from time to time reasonably
requested by Bank; and furnish to the Bank, upon written request, full
information as to the insurance carried.
27
6.6 Inspection of Property; Books and Records; Discussions.
------------- ----------------------------------------
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities, and permit
representatives of the Bank to visit and inspect any of its properties and
Collateral (including all checks and other instruments then held by it) and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Company and
Subsidiary Guarantors with officers and employees of the Company and Subsidiary
Guarantors and with their independent certified public accountants.
6.7 Notices. Promptly give notice to the Bank of:
-------
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any Subsidiary Guarantor which may have a
Material Adverse Effect or (ii) litigation, investigation or proceeding
which may exist at any time between the Company or any Subsidiary Guarantor
and any Governmental Authority which may have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Company, the Individual
Guarantor, or any Subsidiary Guarantor in which the amount involved is
Fifty Thousand Dollars ($50,000) or more or in which injunctive or similar
relief is sought;
(d) the following events, as soon as possible and in any event within
thirty (30) days after the Company or any Subsidiary Guarantor knows or has
reason to know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or any withdrawal from, or the
termination, Reorganization or Insolvency of any Multiemployer Plan or (ii)
the institution of proceedings or the taking of any other action by the
PBGC or the Company or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan;
(e) a material adverse change in the business, operations, assets or
position (financial or otherwise) of the Company, Individual Guarantor or
any Subsidiary Guarantor; and
28
(f) any default by Company, Individual Guarantor or any Subsidiary
under any other Indebtedness including, without limitation, any
Indebtedness owing to any other party to the Intercreditor Agreements.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company, Individual Guarantor or Subsidiary
Guarantor proposes to take with respect thereto.
6.8 Environmental Laws.
------------------
(a) Comply with, and insure material compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply with and maintain, and insure that all tenants and subtenants obtain
and comply with and maintain, any and all licenses, registrations or
permits required by applicable Environmental Laws;
(b) conduct all investigations, studies, sampling and testing, and all
remedial, removal and other actions required of the Company or any
Subsidiary Guarantor under applicable Environmental Laws and comply with
all lawful orders against the Company or any Subsidiary Guarantor of all
Governmental Authorities respecting applicable Environmental Laws; and
(c) defend, indemnify and hold harmless the Bank and its employees,
agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to the material violation of or
noncompliance by the Company or any Subsidiary Guarantor with any
applicable Environmental Laws or the presence of any Hazardous Wastes on
any property owned or operated by Company or any Subsidiary Guarantor, or
any orders, requirements or demands of Governmental Authorities related
thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, court costs and
litigation expenses. The covenants contained in this Section shall survive
the repayment of the Indebtedness hereunder and the termination of this
Agreement.
6.9 Accounts. Maintain the Operating Account at Bank into which
--------
advances of the Loan may be made in accordance with Section 2.3.
6.10 ERISA. Fund all Plans in accordance with ERISA and not permit,
-----
with respect to a Single Employer Plan, any unfunded pension liability or
Reportable Event to occur that
29
could reasonably result in a Material Adverse Effect, and cause each Plan (other
than a Multiemployer Plan) to comply in all material respects with the
provisions of ERISA and the Code and all other Requirements of Law and the
respective requirements of the governing documents for such Plans. With respect
to any Plan (other than a Multiemployer Plan), neither Company, any Commonly
Controlled Entity, nor any such Plan shall engage in any Prohibited Transaction,
incur any "accumulated funding deficiency" (as defined in ERISA) whether or not
waived, under fund or terminate any Plan in an manner which could result in the
imposition of a Lien on any assets of the Company or any Commonly Controlled
Entity under ERISA, or take, or permit to be taken, any act which would
constitute a violation of Section 4.13 except for such actions, omissions or
failures that would not in the aggregate reasonably result in a Material Adverse
Effect.
SECTION 7. NEGATIVE COVENANTS
The Company and each Subsidiary Guarantor hereby agrees that, so long
as the Revolving Credit Commitment remains in effect, any Note (or Letter of
Credit) remains outstanding and unpaid or any other Indebtedness is owing to the
Bank hereunder or under any other Loan Document, the Company and each Subsidiary
Guarantor shall not:
7.1 Financial Condition Covenants
-----------------------------
(a) Maintenance of Tangible Net Worth. Permit Tangible Net Worth
---------------------------------
(measured at the end of each fiscal quarter beginning with the quarter
ended December 31, 1996) of Company and Subsidiary Guarantors on a
consolidated basis to be less than the sum of: $1,750,000 (giving effect to
the 1996 tax allowance) plus seventy-five percent (75%) of cumulative
----
Corporate Net Income (after allowance for shareholders tax liability if S
corporation election is made and after allowance for member tax liability
with respect to limited liability companies including allowance for such
shareholder and member tax liabilities for the period ending December 31,
1996) for each fiscal quarter beginning with the quarter ending March 31,
1997, plus any amounts received in connection with the issuance of any
----
Capital Stock.
(b) Leverage Ratio. Permit the Leverage Ratio to be greater than the
--------------
amount set opposite such period below:
30
Period Ratio
------ -----
Closing Date through
Fiscal Year Ending
December 31, 1997 2.8 to 1
January 1, 1998 through
June 30, 1998 2.5 to 1
For each period after
June 30, 1998 2.0 to 1
The Leverage Ratio shall be measured at the end of each fiscal quarter on a
rolling four-quarter basis.
(c) Fixed Charges Coverage Ratio. Permit Fixed Charges Coverage of
----------------------------
Company and Subsidiary Guarantors on a consolidated basis to be less than or
equal to the ratio set forth opposite such period below:
Period Ratio
------ -----
Closing Date through
Fiscal Year Ending
December 31, 1997 1.25 to 1
Fiscal Year Ending
December 31, 1998 1.35 to 1
For each period after
December 31, 1998 1.4 to 1
The Fixed Charges Coverage ratio shall be measured at the end of each fiscal
quarter on a rolling four-quarter basis.
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness, except: (i) Indebtedness in respect of the Loan, the
Note and other obligations of the Company under this Agreement and the other
Loan Documents; (ii) accounts payable for goods or services which are incurred
in the ordinary course of business; (iii) Indebtedness permitted under the
Intercreditor Agreements to the extent such Indebtedness is subordinated to the
Indebtedness owing to the Bank pursuant to the Intercreditor Agreements; (iv)
Indebtedness relating to purchase money security interests to the extent
permitted under Subsection 7.3 below; and (v) Indebtedness from a Subsidiary
Guarantor to the Company or between or among Subsidiary Guarantors.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist any
-------------------
Lien upon any of its property, assets or revenues (including, without
limitation, the Collateral), whether now owned or hereafter acquired, except for
(i) Liens for taxes
31
not yet due or which are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are maintained
--------
on the books of the Company or Subsidiary Guarantor (as applicable) in
conformity with GAAP, (ii) Liens in favor of the Bank under the Loan Documents,
(iii) Liens in favor of Sirrom Capital Corporation to the extent such Liens are
subordinated to the Liens in favor of the Bank pursuant to the provisions of the
Intercreditor Agreements, (iv) Liens for purchase money security interests on
the assets financed with such purchase money loans so long as the aggregate
amount of such purchase money loans does not exceed $150,000 per calendar year,
and (v) mechanics' and materialmens' Liens for amounts payable by the Company or
a Subsidiary Guarantor which are not yet due or which are being contested in
good faith by appropriate proceedings, provided that adequate reserves with
--------
respect thereto are maintained on the books of the Company or Subsidiary
Guarantor (as applicable) in conformity with GAAP ("Permitted Liens").
7.4 Limitation on Guarantee Obligations. Create, incur, assume or
-----------------------------------
suffer to exist any Guarantee Obligation other than the Guarantee Obligations of
the Subsidiary Guarantors in favor of the Bank and in favor of Sirrom Capital
Corporation so long as such Guarantee Obligations are subordinated to the
Indebtedness owing to the Bank in accordance with the provisions of the
Intercreditor Agreements.
7.5 Limitations on Fundamental Changes. Enter into any merger,
----------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business. Neither Company nor any Subsidiary Guarantor shall have any
Affiliates (other than Creditors' Adjustment Bureau, Inc.) or subsidiaries which
are engaged in the check cashing or deferred deposit business or operate with
the trade style "Check into Cash" or any similar trade style other than Company
and the Subsidiary Guarantors (provided that Company may form such Subsidiaries
after the date of this Agreement if such Subsidiaries become Subsidiary
Guarantors before commencing active operation of their respective businesses).
All new Subsidiary Guarantors shall join in the Guarantee and shall execute an
appropriate Security Agreement and other Security Documents, and the Company
shall execute appropriate stock/membership pledge agreements relating to the
Capital Stock of all new Subsidiary Guarantors. Neither Company nor any
Subsidiary Guarantor shall begin operations in any new market or other territory
without providing Bank prior written notice of the intended operations and
providing Bank all UCC-l Financing Statements and other documents necessary to
perfect Bank's interest in the Collateral in or with respect to the new market
or territory.
32
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests and
including, without limitation, the Collateral), whether now owned or hereafter
acquired, except that any Subsidiary Guarantor may enter into any such
transaction with the Company or any other Subsidiary Guarantor.
7.7 Limitation on Dividends and Stock Redemption. Declare or pay any
--------------------------------------------
dividend (other than dividends payable solely in common stock) on, make any
other distribution in respect of, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock of
the Company or any Subsidiary Guarantor or any warrants or options to purchase
any such Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Company or any Subsidiary Guarantor except
that (i) any Subsidiary Guarantor which is a limited liability company may make
distributions to its members in the amount necessary for those members to pay
income taxes on amounts attributable to the operations of the Subsidiary
Guarantor; (ii) any Subsidiary Guarantor may make distributions to any other
Subsidiary Guarantor or the Company, as the case may be; and (iii) the Company,
as appropriate and required, may redeem the shares of restricted stock issued to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in accordance with the terms described on Exhibit 4.19.
7.8 Intentionally omitted.
---------------------
7.9 Limitation on Investments, Loans and Advances. Make any advance,
---------------------------------------------
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except:
(a) advances of cash in the ordinary course of business; and
(b) investments in and loans to (i) the Subsidiary Guarantors by the
Company or any other Subsidiary Guarantor or (ii) the Company by any
Subsidiary Guarantor (provided that the Company or the Subsidiary Guarantor
(as the case may be) making such loan or advance shall, if such loan or
advance is evidenced by an instrument or other document, deliver such
document or instrument to the Bank with all necessary endorsements as
additional Collateral); and
(c) investments in Cash Equivalents.
33
7.10 Transactions with Affiliates. Enter into any transaction,
----------------------------
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate or Subsidiary unless such
transaction is otherwise not prohibited under this Agreement, is in the ordinary
course of the Company's or Subsidiary Guarantor's business and is upon fair and
reasonable terms no less favorable to the Company or the Subsidiary Guarantor,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate or Subsidiary. Without limiting the
generality of the foregoing, neither the Company nor any Subsidiary Guarantor
will transfer any funds to any other Affiliate or Subsidiary except that the
Company and the Subsidiary Guarantors may, in the ordinary course of business,
transfer funds among each other and the Company and Subsidiary Guarantors may
enter into transactions with other Affiliates and Subsidiaries if such
transactions are not prohibited by the preceding sentence, Section 7.2, or any
other provision of this Agreement or any other Loan Document.
7.11 Sale and Leaseback. Enter into any arrangement with any Person
------------------
providing for the leasing by the Company or the Subsidiary Guarantor of real or
personal property which has been or is to be sold or transferred by the Company
or the Subsidiary Guarantor to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Company or the Subsidiary Guarantor.
7.12 Fiscal Year. Permit the fiscal year of the Company or any
-----------
Subsidiary Guarantor to be any period other than January 1 through December 31.
7.13 Limitation on Negative Pledge Clauses. Enter into any agreement
-------------------------------------
with any Person other than the Bank and the parties to the Intercreditor
Agreements which prohibits or limits the ability of the Company or any
Subsidiary Guarantor to create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired.
7.14 Remuneration. Pay compensation, directly or indirectly, whether
------------
by way of salaries, bonuses, participations in pension or profit sharing plans,
fees under management contracts or professional services, to any of its
officers, directors, stockholders, members or owners, or other management and
key employees, or to any of their family members or relatives in amounts which
are in excess of the aggregate amount agreed to by Bank from time to time
provided, however, that Bank agrees that performance bonuses and similar
payments to management and key employees in an amount not exceeding $400,000 per
year on an aggregate basis (i.e., from all Subsidiary Guarantors and the
Company) may be made.
34
SECTION 8. EVENTS OF DEFAULT
8.1 Events of Default. If any of the following events shall occur:
-----------------
(a) The Company, the Individual Guarantor or any Subsidiary Guarantor
shall fail to pay any principal, interest or other sum when due under any
Note or any of the other Loan Documents (provided, however, that the
Company will be given the opportunity to cure the nonpayment of interest
under the Note within fifteen (15) days of Default two (2) times during any
twelve (12) month period); or
(b) Any representation or warranty made or deemed made by the Company,
the Individual Guarantor, or any Subsidiary Guarantor herein or in any
other Loan Document or which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection
with this Agreement shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Company, the Individual Guarantor, or any Subsidiary Guarantor
shall default in the observance or performance of any covenant, term or
agreement contained in this Agreement or any of the other Loan Documents
(provided that the Company shall have forty-five (45) days after it knows
or through the exercise of reasonable diligence should have known of a
violation of a financial covenant in Section 7.1 to cure that Default if
curable and the Company shall have thirty (30) days after it knows or
through the exercise of reasonable diligence should have known of a
violation of any other term or agreement to cure that Default if curable,
if the violation was not intentionally caused by the Company or a
Subsidiary Guarantor, and if any delay resulting from the application of
the cure period will not have a Material Adverse Effect);
(d) The Company, the Individual Guarantor, or any Subsidiary Guarantor
shall (i) default in any payment of principal of or interest on any
Indebtedness (including, without limitation, any Indebtedness owing to
Bank, any of the parties to the Intercreditor Agreements, or any other
Person) or in the payment of any Guarantee Obligation, beyond the period of
grace (not to exceed 45 days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was
created; or (ii) default in the observance or performance of any other
covenant, term or agreement relating to any such Indebtedness or Guarantee
Obligation or contained in any instrument or agreement evidencing, securing
or relating thereto (subject to any applicable cure periods contained
therein), or any other event shall occur or condition exist,
35
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable unless
the default caused by the failure to observe or perform that covenant, term
or agreement or such other event or condition has been unconditionally
waived in writing by the holders of such of Indebtedness; or
(e) (i) The Company, the Individual Guarantor, or any Subsidiary
Guarantor shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its assets, or the Company, the Individual
Guarantor, or any Subsidiary Guarantor shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against the
Company, the Individual Guarantor, or any Subsidiary Guarantor any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 30 days; or (iii) there shall be commenced against
the Company, the Individual Guarantor, or any Subsidiary Guarantor any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 30 days from the entry thereof; or (iv) the
Company, the Individual Guarantor, or any Subsidiary Guarantor shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the Company, the Individual Guarantor, or any Subsidiary
Guarantor shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(f) (i) The Company or any of its Affiliates or Subsidiaries shall
engage in any "prohibited transaction"
36
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any "accumulated funding deficiency" (as defined in Section
302 of ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Bank, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Company or any
Commonly Controlled Entity or Subsidiary shall, or in the reasonable
opinion of the Bank is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other adverse event or condition shall occur or exist,
with respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or conditions,
if any, could subject the Company or any Subsidiary Guarantor to any tax,
penalty or other liabilities that could reasonably result in a Material
Adverse Effect; or
(g) One or more final judgments or decrees shall be entered against
the Company, the Individual Guarantor, or any Subsidiary Guarantor
involving in the aggregate a liability (not paid or fully covered by
insurance) of Fifty Thousand Dollars ($50,000.00) or more and all such
judgments and decrees shall remain unsatisfied for 30 days from the entry
thereof or if any execution or similar process is issued with respect to
any such judgment or decree; or
(h) A Change in Control shall occur; or
(i) The Security Documents shall at any time cease to create a valid
and perfected first priority Lien on the Collateral subject only to
Permitted Liens; or
(j) The Guarantee (or any of them) shall at any time cease to be in
full force and affect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Individual Guarantor or any
Subsidiary Guarantor, or the Individual Guarantor or any Subsidiary Guarantor
shall deny it has any further liability or obligation thereunder or shall fail
to perform its obligations thereunder or if the Individual Guarantor shall die
or become incompetent; or
(k) Any default or event of default occurs under any of the other Loan
Documents (including, without limitation
37
any default under the Intercreditor Agreements by any party thereto);
(l) If in the reasonable judgement of Bank a materially adverse change
in the business, operations, assets, or position (financial or otherwise)
of the Company and the Subsidiary Guarantors taken as a whole, or of the
Individual Guarantor, has occurred or the occurrence of any other condition
which, in Bank's reasonable determination, constitutes an impairment of the
Company's and the Subsidiary Guarantor's ability (taken as a whole) or the
Individual Guarantor's ability to perform its obligations under the Loan
Documents, the foregoing including, without limitation, any materially
adverse decision in the litigation described in Exhibit 4.6.
then, and in any such event (after the expiration of any applicable cure period)
(A) if such event is an Event of Default specified in paragraph (e) above
automatically the Revolving Credit Commitment shall immediately terminate and
the Loan hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement, the Note and all other Loan Documents shall immediately
become due and payable, and (B) if such event is any other Event of Default, the
following actions (or any of them) may be taken: (i) the Bank may in its sole
discretion and without notice to the Company or any other Person declare the
Revolving Credit Commitment to be terminated forthwith, whereupon the Revolving
Credit Commitment shall immediately terminate; (ii) the Bank may in its sole
discretion and without notice to the Company or any other Person declare the
Loan hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement, the Note and the other Loan Documents to be immediately due and
payable, whereupon the same shall immediately become due and payable. Except as
expressly provided in this Agreement, presentment, demand, protest and all
notices of any kind are hereby expressly waived. In addition to the remedies set
forth above, upon the occurrence of any Event of Default the Bank may
immediately exercise any and all rights and remedies possessed by it pursuant to
the terms of the Security Documents and the other Loan Documents, all of the
rights and remedies of secured party under the UCC, and all other rights and
remedies which the Bank may now or hereafter possess at law, in equity or by
statute. In addition to all other remedies, upon the occurrence of any Event of
Default, the Company and each Subsidiary Guarantor shall immediately deliver to
the Bank all checks, drafts and other instruments and Collateral then in
possession of the Company or any Subsidiary Guarantor with all endorsements
requested by Bank.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement, any Note, any
----------------------
other Loan Document, nor any terms hereof of
38
thereof may be amended, supplemented, modified or waived except in writing
signed by the party sought to be bound thereby. No such waiver shall extend to
any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
9.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
telecopy, telegraph or telex), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, three
days after being deposited in the mail, postage prepaid, when deposited with a
national overnight carrier service, or, in the case of telecopy notice, when
received, addressed as follows, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Note:
The Company and
Subsidiary Guarantors: Check Into Cash, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: 423/476-9200
The Bank: NationsBank of Tennessee, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇ Centre
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President
Facsimile: 423/755-0689
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided herein and in the other Loan Documents are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law, in equity or by statute.
9.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, under any other Loan Document, and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement, the Note
and the other Loan Documents.
9.5 Payment of Expenses and Taxes. The Company and each Subsidiary
-----------------------------
Guarantor jointly and severally agrees (a) to pay or reimburse the Bank for all
its reasonable out-of-pocket costs
39
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the Note and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Bank, (b) to pay or reimburse the Bank
for all its reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the Note, the
other Loan Documents and any such other documents, including, without
limitation, the reasonable fees and disbursements of counsel to the Bank, and
(c) to pay, indemnify, and hold the Bank harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, which may be payable
or determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the Note, the other Loan Documents and any such other documents,
and (d) to pay, indemnify, and hold the Bank harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the Note, the other Loan Documents and any
such other documents.
9.6 Successors and Assigns; Participations. This Agreement, the Note
--------------------------------------
and all the other Loan Documents may be endorsed, assigned and/or transferred in
whole or in part by Bank, and any such holder and/or assignee of the same shall
succeed to and be possessed of the rights and powers of the Bank under all of
the same to the extent transferred and assigned. Bank may grant participations
in all or any portion of its interest in this Agreement and the other Loan
Documents to any other Person ("Participants"). In the event of any sale or
other transfer or assignment by the Bank of any interest in this Agreement or
the other Loan Documents or the participation of this Agreement or any of the
other Loan Documents to any Participant, the Bank shall remain responsible for
the Revolving Credit Commitment in accordance with the terms of this Agreement.
The Company and each Subsidiary Guarantor authorizes Bank to disclose to any
prospective Participant and any prospective successor or assignee of Bank any
and all financial information in the Bank's possession concerning the Company,
the Individual Guarantor and the Subsidiary Guarantors which has been delivered
to the Bank by or on behalf of the Company pursuant to this Agreement or which
has been delivered to the Bank by or on behalf of the Company in connection with
such Bank's credit evaluation of the Company, Individual Guarantor, or any
Subsidiary Guarantor prior to becoming a party to this Agreement. Neither
Company nor
40
any Subsidiary Guarantor may assign any of its rights or delegate any of its
duties under this Agreement or any of the other Loan Documents without the prior
written consent of the Bank.
9.7 Adjustments; Set-off. In addition to any rights and remedies of
--------------------
the Bank provided by law, the Bank, its successors and assigns, and each
Participant shall have the right, without prior notice to the Company or any
Subsidiary Guarantor, any such notice being expressly waived by the Company and
Subsidiary Guarantors to the extent permitted by applicable law, upon the
occurrence of any Event of Default to set-off and appropriate and apply against
such amount then owing any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Bank to or
for the credit or the account of the Company or any Subsidiary Guarantor.
9.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
9.9 Severability. Any provision of this Agreement or any other Loan
------------
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. In any action or
proceeding involving bankruptcy, insolvency, reorganization or other law
affecting the rights of creditors generally, if the indebtedness, obligations or
liabilities of Company or any Subsidiary Guarantor to Bank would otherwise be
held or determined to be void, invalid or unenforceable on account of the amount
of its liability hereunder or under any other Loan Document, notwithstanding any
other provision to the contrary, the amount of the liability of the affected
Company or Subsidiary Guarantor, without, further action by any party or any
other Person, shall be automatically limited and reduced to the highest amount
which is valid and enforceable as determined in such action or proceeding, it
being the intention of the parties that the indebtedness, obligations and
liabilities of the Company and the Subsidiary Guarantors hereunder and under the
other Loan Documents be valid and enforceable to the maximum extent permitted by
applicable law.
9.10 Integration. This Agreement represents the agreement of the
-----------
Company and the Bank with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Bank relative to
subject
41
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
9.11 GOVERNING LAW. THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
-------------
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TENNESSEE WITHOUT
REFERENCE TO ANY CONFLICTS OF LAW PRINCIPLES.
9.12 Acknowledgements. The Company and each Subsidiary Guarantor
----------------
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Note and the other Loan Documents;
(b) the Bank has no fiduciary relationship to the Company or any
Subsidiary Guarantor, and the relationship between the Bank, on one hand,
and the Company and Subsidiary Guarantors, on the other hand, is solely
that of debtor and creditor; and
(c) no joint venture exists between the Bank and the Company or
Subsidiary Guarantors.
9.13 Further Assurances. The Company and each Subsidiary Guarantor
------------------
agrees from time to time to execute and deliver such additional documents,
instruments and agreements, and to take all actions necessary or required in
Bank's judgment, to more fully carry out the intent of this Agreement.
9.14 Release and Indemnification. Company and each Subsidiary
---------------------------
Guarantor releases Bank (and each director, officer, employee and agent of Bank)
from, and will jointly and severally indemnify and hold Bank (and each director,
officer, employee and agent of Bank) harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever, whether now
existing or hereafter arising, and regardless by whom asserted or imposed, which
arise out of, result from, or are otherwise connected with the transactions
contemplated by this Agreement, the other Loan Documents, and any of the rights
or remedies of Bank hereunder or thereunder unless and only to the extent that
it shall be finally judicially determined that such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements resulted primarily from the negligence or willful misconduct of
the Bank. Company and each Subsidiary Guarantor will jointly or severally pay or
reimburse all legal or other expenses reasonably incurred by Bank (and each
director, officer, employee and agent of Bank) in connection with the
investigation or defense of any action or proceeding (whether or not resulting
42
in liability) with respect to any such liabilities, obligations, losses,
damages, penalties, costs, expenses or disbursements in respect of which
indemnity may be sought pursuant to this subsection. The covenants of Company
and Subsidiary Guarantors contained in this subsection shall survive the
execution of this Agreement and the other Loan Documents and the repayment of
the Indebtedness hereunder and thereunder.
9.15 Joint and Several Liability. The liability of the Company and
---------------------------
each Subsidiary Guarantor hereunder is joint and several.
9.16 Arbitration. ANY CONTROVERSY OR CLAIM BETWEEN OR
-----------
AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, INCLUDING ANY CLAIM BASED
ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION
IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC.
(J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(a) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN ▇▇▇▇▇▇▇▇
-------------
COUNTY, TENNESSEE AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING
THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN
ADDITIONAL 60 DAYS.
(b) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE
---------------------
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES
OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR
(II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C.
SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT
OF THE BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT
LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL
PROPERTY COLLATERAL, OR (C) TO OBTAIN PROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION
OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP
RIGHTS, FORECLOSE UPON
43
SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
DURING AND AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT
PURSUANT TO THIS AGREEMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR
THE INSTITUTION OR MAINTENANCE OF ANY ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OF CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in Chattanooga, Tennessee by their proper and
duly authorized officers as of the day and year first above written.
COMPANY:
CHECK INTO CASH, INC.
By: [SIGNATURE APPEARS HERE]
------------------------------
Title: EXECUTIVE V.P.
BANK: [SIGNATURE APPEARS HERE]
----------------------------
NATIONSBANK OF TENNESSEE, N.A.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: Senior Vice President
The undersigned Subsidiary Guarantors join in executing this Agreement for the
purpose of making the representations and warranties and agreeing to be bound by
the covenants and other agreements applicable to the Subsidiary Guarantors
hereunder.
CREDITCORP OF TENNESSEE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Title: V.P.
CHECK INTO CASH OF IOWA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Title: V.P.
45
CHECK INTO CASH OF KENTUCKY, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Title: VP
CHECK INTO CASH OF INDIANA, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Title: VP
CHECK INTO CASH OF ILLINOIS, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Title: VP
CHECK INTO CASH OF WISCONSIN, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Title: ▇▇
▇▇▇▇▇ MANAGEMENT SERVICES, LLC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Title: VP
46
CHECK INTO CASH HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President
CHECK INTO CASH OF CALIFORNIA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Treasurer
CHECK INTO CASH OF NEBRASKA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President
CHECK INTO CASH OF MISSOURI, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President
CHECK INTO CASH OF OHIO, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President
47
STATE OF TENNESSEE :
: S.S. ###-##-####
COUNTY OF ▇▇▇▇▇▇▇ :
Before me, a Notary Public of the state and county aforesaid, personally
appeared ▇▇▇▇ ▇▇▇▇▇▇▇, with whom I am personally acquainted (or proved to me on
the basis of satisfactory evidence), and who, upon oath, acknowledged himself to
be Vice-President of Check into Cash, Inc., the within named bargainor, a
corporation, and that he as such ▇▇▇▇ ▇▇▇▇▇▇▇ executed the foregoing instrument
for the purposes therein contained, by signing the name of the corporation by
himself as Vice-President.
WITNESS my hand and seal, at office in ▇▇▇▇▇▇▇ County, Tennessee, this
3rd day of June, 1997.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Notary Public
My Commission Expires: 11-5-2000
---------
48
STATE OF TENNESSEE :
: S.S. ###-##-####
COUNTY OF ▇▇▇▇▇▇▇ :
Before me, a Notary Public of the state and county aforesaid, personally
appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, with whom I am personally acquainted (or proved to me
on the basis of satisfactory evidence), and who, upon oath, acknowledged himself
to be Executive Vice-President of Check into Cash of Iowa, Inc., the within
named bargainor, a corporation, and that he as such ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by himself as Executive Vice-Pres.
WITNESS my hand and seal, at office in ▇▇▇▇▇▇▇ County, Tennessee, this
3rd day of June, 1997.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Notary Public
My Commission Expires: 11-5-2000
---------
49
EXHIBIT 4.6
-----------
LITIGATION
----------
CASE NAME COURT CASE NUMBER DATE FILED
--------------------------------------------------------------------------------
▇▇▇▇▇, et al v. Creditcorp ▇▇▇▇▇▇▇ County, TN V-96-175 ▇/▇/▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, et al v. W. ▇▇▇▇▇ ▇▇▇▇▇▇▇ County, TN V-96-245 3/20/96
▇▇▇▇▇, ▇▇. d/b/a Check Into Circuit Court
Cash
▇▇▇▇▇▇▇, et ▇▇ ▇. Creditcorp ▇▇▇▇▇▇▇ County, TN V-96-249 3/20/96
d/b/a Check Into Cash Circuit Court
The two ▇▇▇▇▇▇▇ cases, along with several other similar lawsuits filed against
other defendants in the ▇▇▇▇▇▇▇ County Circuit Court, have all been consolidated
with the ▇▇▇▇▇ case and are currently being treated as one lawsuit.
Claims. All three cases make the same allegations, that the check cashing
------
business in Tennessee violates the Tennessee usury statute, the federal Truth-
In-Lending Act, the Tennessee Consumer Protection Act, the Tennessee
Constitution, and other laws and regulations. The plaintiffs in all of the
consolidated cases, including the three cases specifically listed above, have
filed a motion for certification of a plaintiffs class. The defendants are
opposed to class action certification and have filed papers objecting to the
certification. A hearing was held on May 21, 1997, on the Plaintiffs' Motion for
Class Certification, and the court took the motion under advisement.
Amount Involved. The plaintiffs seek to recover prejudgment interest, three
---------------
times actual damages (although they do not specify the amount of their actual
damages), refund of fees, and twice the amount of all other charges, and
attorneys' fees and costs of litigation. No specific dollar amount is claimed.
Status. A Special Judge has been appointed to hear all of the consolidated cases
------
in ▇▇▇▇▇▇▇ County. An Answer has been filed on behalf of Creditcorp and W. ▇▇▇▇▇
▇▇▇▇▇, Jr. in the ▇▇▇▇▇ case denying all material allegations. Prior to the
-----
consolidation, Motions to Dismiss were filed on behalf of W. ▇▇▇▇▇ ▇▇▇▇▇, Jr.
and Creditcorp in the two ▇▇▇▇▇▇▇ cases. These motions are still pending. Much
-------
discovery has already been accomplished, and the current discovery deadline is
July 24, 1997. The case is scheduled to go to trial on September 9, 1997, before
a jury.
EEOC Claim
----------
On or about February 25, 1997, a former employee of Creditcorp of
Tennessee, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇, who was employed in Tennessee, filed a complaint
with the EEOC against the Check into Cash, Inc. She alleges that she was denied
hospitalization coverage in connection with her colitis. Additionally, she
indicates she was discharged on September 10, 1996, because of poor performance
and because she was found under the influence of alcohol at work.
A response to the Charge of Discrimination was sent out on or about March
21, 1997. We believe the Check into Cash, Inc. has meritorious defenses and we
will assist them in vigorously defending the action, but at this point in time
it is difficult to assess potential for liability.
-2-
EXHIBIT 4.9
-----------
INTELLECTUAL PROPERTY
---------------------
United States Registration
--------------------------------------------------------------------------------
| ▇▇▇▇ | REG. NO. | REG. DATE | OWNER |
--------------------------------------------------------------------------------
| CHECK INTO CASH & Design | 1,987,021 | July 16, 1996 | Check Into Cash, |
| | | | Inc. |
--------------------------------------------------------------------------------
Tennessee State Registrations
--------------------------------------------------------------------------------
| ▇▇▇▇ | REG. NO. | REG. DATE | OWNER |
--------------------------------------------------------------------------------
| CASH IN A FLASH | N/A | March 9, 1994 | Creditcorp |
| | | | |
--------------------------------------------------------------------------------
| CHECK INTO CASH CHECK | N/A | March 9, 1994 | Creditcorp |
| SERVICES & Design | | | |
| | | | |
--------------------------------------------------------------------------------
| IF YOU HAVE AN ACTIVE | N/A | June 28, 1994 | Creditcorp |
| CHECKING ACCOUNT AND | | | |
| NEED CASH TODAY, WE WILL | | | |
| CASH YOUR PERSONAL | | | |
| CHECK AND WAIT EITHER | | | |
| DAYS OR YOUR NEXT PAY | | | |
| DAY TO DEPOSIT | | | |
| | | | |
--------------------------------------------------------------------------------
| OVERDRAFT CHECK | N/A | March 9, 1994 | Creditcorp |
| CASHING SERVICES | | | |
| | | | |
--------------------------------------------------------------------------------
| QUICK, EASY, CONFIDENTIAL | N/A | March 9, 1994 | Creditcorp |
| | | | |
--------------------------------------------------------------------------------
Wisconsin State Registration
--------------------------------------------------------------------------------
| ▇▇▇▇ | REG. NO. | REG. DATE | OWNER |
--------------------------------------------------------------------------------
| CHECK INTO CASH | N/A | March 27, 1996| Creditcorp of |
| | | | Wisconsin, LLC |
--------------------------------------------------------------------------------
EXHIBIT 4.10
------------
NON-COMPLIANCE WITH LAWS OR CONTRACTS
-------------------------------------
During the course of the litigation described in Exhibit 4.6,
Creditcorp of Tennessee, Inc. has been accused of violating laws relating to the
provision of consumer credit services. See Exhibit 4.6 for a more complete
description of these allegations.
In connection with the EEOC claim described in Exhibit 4.6, Check into
Cash, Inc. has been accused of violating laws relating to employment and the
provision of employee benefits. See Exhibit 4.6 for a more complete description
of these allegations.
EXHIBIT 4.15
------------
NON-GUARANTOR AFFILIATES
------------------------
Credit Bureau Services, Inc., a Tennessee corporation.
▇▇▇▇▇ Airways, LLC, a Tennessee limited liability company.
Creditors' Adjustment Bureau, Inc., a Tennessee corporation.
Preferred One, LLC, a Tennessee limited liability company.
EXHIBIT 4.19
------------
CAPITAL STOCK
-------------
Entity Shares Authorized Total Shares Owners
Issued &
Outstanding
Check into Cash, 5,000,000 Common 1,212,000 Common W. ▇▇▇▇▇ ▇▇▇▇▇, Jr.
Inc. 720,000 shares;
1,000,000 Preferred -0- Preferred ▇▇▇▇▇ ▇▇▇▇▇ 480,000
shares;
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
36,000 shares.
Check into Cash 1,000 Common 1,000 Common Check into Cash,
Holdings, Inc. Inc. 1,000 shares.
Creditcorp of 10,000 Common 1,000 Common Check into Cash,
Tennessee, Inc. Inc. 1,500 shares.
Check into Cash of 1,000 Common 1,000 Common Check into Cash,
Iowa, Inc. Inc. 1,000 shares.
Check into Cash of n/a n/a Check into Cash,
Kentucky, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Check into Cash of n/a n/a Check into Cash,
Indiana, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Check into Cash of n/a n/a Check into Cash,
Illinois, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Check into Cash of n/a n/a Check into Cash,
Wisconsin, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Entity Shares Authorized Total Shares Owners
Issued &
Outstanding
Check into Cash of n/a n/a Check into Cash,
Ohio, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Check into Cash of 1,000 Common 1,000 Common Check into Cash,
California, Inc. Inc. 1,000 shares.
Check into Cash of 1,000 Common 1,000 Common Check into Cash,
Nebraska, Inc. Inc. 1,000 shares.
Check into Cash of 1,000 Common 1,000 Common Check into Cash,
Missouri, Inc. Inc. 1,000 shares.
▇▇▇▇▇ Management n/a n/a Check into Cash,
Services, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
In addition to the above, Check into Cash, Inc. is party to the following
agreements relating to the purchase of its capital stock:
1. Stock Purchase Warrant, dated February 28, 1997, issued by Check into Cash,
Inc. to Sirrom Capital Corporation.
2. Check into Cash, Inc. 1997 Long Term Incentive Plan, dated January 10, 1997.
3. Restricted Stock Award Agreement, dated May 2, 1997, between Check into
Cash, Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
-2-
EXHIBIT 2(f)
------------
PREVIOUS NAMES OF DEBTORS AND GUARANTORS
----------------------------------------
Current Name of Entity Previous Name(s) of Entity
Check into Cash, Inc. None.
Check into Cash Holdings, Inc. None.
Creditcorp of Tennessee, Inc. Creditcorp.
Check into Cash of Iowa, Inc. None.
Check into Cash of Kentucky, LLC. Creditcorp of Kentucky, LLC; COK, LLC;
Creditcorp of Kentucky, Inc.
Check into Cash of Indiana, LLC. Creditcorp of Indiana, LLC; Creditcorp
of Indiana, Inc.
Check into Cash of Illinois, LLC. Creditcorp of Illinois, LLC; Creditcorp
of Illinois, Inc.
Check into Cash of Wisconsin, LLC. Creditcorp of Wisconsin, LLC.
Check into Cash of Ohio, LLC. Creditcorp of Ohio, LLC; Creditcorp of
Ohio, Ltd.
Check into Cash of California, Inc. None.
Check into Cash of Nebraska, Inc. None.
Check into Cash of Missouri, Inc. None.
▇▇▇▇▇ Management Services, LLC. None.
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment"), dated as of
September 1, 1997, is made and entered into by and between CHECK INTO CASH,
INC., a Delaware corporation (the "Company"), and NATIONSBANK OF TENNESSEE,
N.A., a Tennessee corporation (the "Bank").
WITNESSETH
----------
WHEREAS, the Bank and the Company entered into a Loan Agreement, dated as
of June 2, 1997; and
WHEREAS, the Company is an "S" corporation under the Internal Revenue Code
of 1986, as amended; and
WHEREAS, the Bank and the Company agree that the covenants of the Company
in the Loan Agreement should not prevent the Company from making distributions
to its shareholders for the purpose of paying federal income taxes on the income
of Borrower that is attributed to Borrower's shareholders; and
WHEREAS, the Bank and the Company agree that the covenants of the Company
in the Loan Agreement should not prevent the Company from extending a loan to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for the payment of income taxes incurred by ▇▇▇▇▇▇▇▇ in
connection with the lapse of restrictions on shares of the Company's common
stock held by ▇▇▇▇▇▇▇▇ and the grant of additional unrestricted shares of the
Company's common stock to ▇▇▇▇▇▇▇▇; and
WHEREAS, this Amendment shall amend the Loan Agreement.
AGREEMENT
---------
1. The Loan Agreement is hereby amended such that the following language
is added at the end of Section 7.7;
"(iv) the Company may, so long as it retains "S" corporation status under
the Internal Revenue Code, make distributions to its shareholders for the
payment of federal income taxes on Company income that is attributed to such
shareholders."
2. The parties agree that any distributions made prior to the date of this
Amendment that would have been permissible had this Amendment been in effect are
hereby approved by the Bank.
3. Bank hereby waives the Company's covenant not to extend credit or make
loans contained in Section 7.9 of the Loan Agreement, to the extent such
covenant prevents the Company from lending money to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇"), pursuant to Section 6(c) of that certain Employment Agreement,
dated as of July 31, 1997 by and between ▇▇▇▇▇▇▇▇ and the Company (the
"▇▇▇▇▇▇▇▇ Employment Agreement"), for the payment of taxes incurred by ▇▇▇▇▇▇▇▇
in connection with the lapse of restrictions on shares of the Company's common
stock held by ▇▇▇▇▇▇▇▇ and the grant of additional unrestricted shares of the
Company's common stock to ▇▇▇▇▇▇▇▇, pursuant to Sections 6(a) and 6(b) of the
▇▇▇▇▇▇▇▇ Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the date first written above.
NATIONSBANK OF TENNESSEE, N.A.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Senior Vice President
-------------------------------
CHECK INTO CASH, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Title: VP
-------------------------------
-2-
SECOND AMENDMENT TO LOAN AGREEMENT AND LOAN DOCUMENTS
-----------------------------------------------------
THIS SECOND AMENDMENT TO LOAN AGREEMENT AND LOAN DOCUMENTS ("Second
Amendment") is entered into on October 23, 1997, among CHECK INTO CASH, INC., a
Delaware corporation (the "Company"), NATIONSBANK OF TENNESSEE, N.A., a national
banking association (the "Bank"), W. ▇▇▇▇▇ ▇▇▇▇▇, Jr. ("Individual Guarantor"),
and Creditcorp of Tennessee, Inc., Check Into Cash of Iowa, Inc., Check into
Cash of Kentucky, LLC, Check into Cash of Indiana, LLC, Check Into Cash of
Illinois, LLC, Check Into Cash of Wisconsin, LLC, Check Into Cash of Ohio, LLC,
▇▇▇▇▇ Management Services, LLC, Check into Cash Holdings, Inc., Check into Cash
of California, Inc., Check into Cash of Nebraska, Inc., Check into Cash of
Missouri, Inc. (collectively "Subsidiary Guarantors").
WITNESSETH:
----------
WHEREAS, on June 2, 1997, the Company, the Bank, and the Subsidiary
Guarantors entered into a certain Loan Agreement (the "Original Agreement")
pursuant to which the Bank made a certain credit facility available to the
Company; and
WHEREAS, on September 1, 1997, the Company and the Bank entered into a
certain First Amendment to Loan Agreement (the "First Amendment"; the Original
Agreement as amended by the First Amendment and as amended hereby is referred to
as the "Agreement") in order to amend certain covenants contained in the
Original Agreement; and
WHEREAS, the parties have agreed to increase the Maximum Credit Amount
available under the Agreement and make certain other modifications to the
Agreement and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. The definition of "Available Credit Commitment" as set forth in
Section 1.1 of the Agreement is amended to read as follows:
"Available Credit Commitment": means from time to time, as determined
----------------------------
as of the end of each month, the product determined by multiplying
Corporate EBITDA for the preceding twelve (12) months (on a trailing
12-month basis) times two (2); provided, however, that through and
including December 31, 1997, "Available Credit Commitment" shall mean
the product determined by multiplying Corporate EBITDA for the
preceding twelve
(12) months (on a trailing-12 month basis) times two and one-half
(2.5).
2. The definition of the term "Corporate EBITDA" as set forth in
Section 1.1 of the Agreement is amended to read as follows:
"Corporate EBITDA" with respect to the applicable periods as set forth
----------------
herein, the sum, without duplication, of (i) Corporate Net Income for
such period less gain on the sale of assets, dividends and other
distributions, withdrawals, and treasury stock purchases and similar
transactions and (ii) to the extent deducted in determining such
Corporate Net Income: (A) all income taxes, including but not limited
to, Federal, foreign and state income taxes (including any deferred
taxes); (B) Corporate Interest Expense; and (C) depreciation,
amortization and similar non-cash charges, provided, that there shall
--------
be excluded therefrom non-operating gains and non-operating losses,
and provided further that with respect to the fiscal year ending
----------------
December 31, 1996, there shall be added to the amount calculated in
accordance with the foregoing the 1996 tax distributions of
$297,733.00 made by the Company in December, 1996, and that with
respect to the fiscal year ending December 31, 1997, there shall be
added to the amount calculated in accordance with the foregoing the
compensation in the amount of $266,400.00 paid to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ by
the Company in August, 1997, in connection with the issuance of
Capital Stock in the Company to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
3. The definition of the term "Maximum Credit Amount" as set forth in
Section 1.1 of the Agreement is amended to read as follows:
"Maximum Credit Amount": means the lesser of (i) Eleven Million
---------------------
Five Hundred Thousand Dollars ($11,500,000.00) and (ii) the
Available Credit Commitment.
4. The definition of the term "Note" as set forth in Section 1.1 of
the Agreement is amended to read as follows:
"Note": the Amended and Restated Promissory Note dated October 23,
1997, in the principal amount of Eleven Million Five Hundred Thousand
Dollars ($l1,500,000.00) executed by the Company payable to Bank, as
the same may be amended, supplemented or otherwise modified from time
to time, together with all other promissory notes now or hereafter
payable by the Company or any
Subsidiary Guarantor to the Bank and all amendments, supplements, and
modifications thereof.
The Agreement, the Security Documents (including, without limitation, the
Guarantee, the Security Agreement, the Security Agreement and Collateral
Assignment of Membership Interests described below, the Pledge and Security
Agreement described below, and the Trademark Security Agreement described
below), and the other Loan Documents are amended so that: (i) all references to
the "Note" therein shall include, without limitation, the Amended and Restated
Promissory Note dated October 23, 1997, in the principal amount of Eleven
Million Five Hundred Thousand Dollars ($11,500,000.00) executed by the Company
payable to the Bank, as the same may be amended, supplemented or otherwise
modified from time to time; and (ii) all references to the "Loan Agreement"
shall include the Original Agreement as amended by the First Amendment and as
amended hereby, and as further amended, supplemented or otherwise modified from
time to time.
5. The definition of the term "Termination Date" as set forth in
Section 1.1 of the Agreement is amended to read as follows:
"Termination Date": October 23, 2000.
-----------------
6. The date "December 31, 1996" contained in Section 4.1 is deleted
and in place thereof the date "August 31, 1997" is inserted, the Company hereby
making all of the representations and warranties contained in Section 4.1 with
respect to the financial statements for the period ending August 31, 1997.
7. Section 7.1(b) of the Agreement is amended to read as follows:
(b) Leverage Ratio. Permit the Leverage Ratio to be greater than the
--------------
amount set opposite such period below:
Period Ratio
------ -----
Closing Date through Fiscal 2.8 to 1
Year ending December 31,
1997
January 1, 1998 through 2.5 to 1
December 31, 1998
For each period after 2.0 to 1
December 31, 1988
The Leverage Ratio shall be measured at the end of each fiscal quarter
on a rolling four-quarter basis.
8. Section 7.1(c) of the Agreement is amended to read as follows:
(c) Held Check Ratio. At any time permit the aggregate amount of (A)
----------------
all checks then being held by the Company and the Subsidiary
Guarantors plus (B) $3,000.00 for each store (location) then being
----
operated by Company and Subsidiary Guarantors to be greater than
Indebtedness for Borrowed Money (including subordinated Indebtedness
for Borrowed Money) after deducting the notes payable discount (if
any) permitted in accordance with GAAP with respect to the
Indebtedness for Borrowed Money owing to Sirrom Capital Corporation
and reflected on the consolidated balance sheet of the Company and the
Subsidiary Guarantors.
9. The following Section 7.15 is inserted in the Agreement:
7.15 Limitation on Acquisitions. Acquire any other Person (whether
--------------------------
through the acquisition of Capital Stock or acquisition of assets) if
the cash portion of the acquisition price paid by the Company or the
Subsidiary Guarantor is greater than $500,000.00.
10. Exhibit 4.6, Exhibit 4.9, and Exhibit 4.19 to the Agreement are
amended to read as attached to this Second Amendment.
11. The Company, the Individual Guarantor and the Subsidiary
Guarantors hereby reaffirm all of the representations and warranties contained
in Agreement, the Guarantee and the other Loan Documents and represent to the
Bank that such representations and warranties are true and correct as of the
date of this Second Amendment.
12. The Agreement and the other Loan Documents are hereby amended
where appropriate to reflect: (i) the increase in the Maximum Credit Amount;
(ii) the extension of the Termination Date until October 23, 2000; and (iii) the
other amendments set forth in this Second Amendment. The parties specifically
agree that the Security Agreement, the Guarantee, the Security Agreement and
Collateral Assignment of Membership Interest between the Company and the Bank
dated June 2, 1997, the Pledge and Security Agreement between the Company and
the Bank dated June 2, 1997, the Trademark Security Agreement between the
Company and the Bank dated June 2, 1997, and all of the other Security Documents
continue to secure all indebtedness, obligations and liabilities now or
hereafter owing by the Company, the Subsidiary Guarantors or the Individual
Guarantor (as applicable and as more specifically set forth in the Security
Documents) including the indebtedness, obligations and liabilities under the
Agreement and other Loan Documents as
amended hereby, it being the intention of the parties that the increase in the
amount of the Revolving Credit Commitment be entitled to all of the rights and
benefits of all of the Loan Documents. The parties to the Security Agreement and
Collateral Assignment of Membership Interest and the Pledge and Security
Agreement hereby acknowledge and consent to the continuing security interests
and assignments thereunder and to the extent permitted by applicable law waive
any requirements or conditions contained in any certificate of incorporation,
charter, bylaws, articles or certificate of organization, operating agreement,
shareholder or member agreement, or any other agreement or instrument of any
kind that would restrict the assignments and security interests created
thereunder (including, without limitation, any rights of first refusal, any
requirement that a opinion of counsel be obtained to the effect that no
registration under federal or state securities laws is required, and any other
prohibition or restriction on transfer).
13. The parties agree that the Agreement, the Guarantee, the Security
Documents, and all of the other Loan Documents remain in full force and effect
as amended hereby. Nothing in this Second Amendment shall constitute a novation
of the Agreement, the Guarantee, the Security Documents or any other Loan
Document. All capitalized terms used in this Second Amendment shall have the
meanings given such terms in the Agreement unless otherwise defined herein. The
Agreement and the other Loan Documents are incorporated herein by reference.
IN WITNESS WHEREOF, the parties executed this Second Amendment
effective as of the date first above written.
[COUNTERPART SIGNATURE PAGES ATTACHED]
COMPANY:
CHECK INTO CASH, INC.
By: [SIGNATURE APPEARS HERE]
------------------------------------
Title: PRESIDENT
------------------------------
BANK:
NATIONSBANK OF TENNESSEE, N.A.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
SUBSIDIARY GUARANTORS:
CREDITCORP OF TENNESSEE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Title: VP
CHECK INTO CASH OF IOWA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Title: VP
CHECK INTO CASH OF KENTUCKY, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Title: VP
CHECK INTO CASH OF INDIANA, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Title: VP
[COUNTERPART SIGNATURE PAGE]
CHECK INTO CASH OF ILLINOIS, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: VP
CHECK INTO CASH OF WISCONSIN, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: ▇▇
▇▇▇▇▇ MANAGEMENT SERVICES, LLC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: VP
CHECK INTO CASH HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: VP
CHECK INTO CASH OF CALIFORNIA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: VP
CHECK INTO CASH OF NEBRASKA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: VP
CHECK INTO CASH OF MISSOURI, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: VP
[COUNTERPART SIGNATURE PAGE]
CHECK INTO CASH OF OHIO, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: VP
[COUNTERPART SIGNATURE PAGE]
INDIVIDUAL GUARANTOR:
/s/ W. ▇▇▇▇▇ ▇▇▇▇▇, Jr.
------------------------------------
W. ▇▇▇▇▇ ▇▇▇▇▇, JR. Personally
STATE OF TENNESSEE
COUNTY OF ▇▇▇▇▇▇▇
Before me, a Notary Public of the state and county aforesaid, personally
appeared W. ▇▇▇▇▇ ▇▇▇▇▇, to me known (or proved to me on the basis of
satisfactory evidence) to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free act
and deed.
WITNESS my hand and seal, at office in Cleveland, Tennessee, this 23rd day
of October, 1997.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Notary Public
My Commission Expires: 11-5-2000
---------
[COUNTERPART SIGNATURE PAGE]
EXHIBIT 4.6
-----------
LITIGATION
----------
CASE NAME COURT CASE NUMBER DATE FILED
--------------------------------------------------------------------------------
▇▇▇▇▇, et al v. Creditcorp ▇▇▇▇▇▇▇ County, TN V-96-I75 ▇/▇/▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, et al v. W. ▇▇▇▇▇ ▇▇▇▇▇▇▇ County, TN V-96-245 3/20/96
▇▇▇▇▇, ▇▇. d/b/a Check Into Circuit Court
Cash
▇▇▇▇▇▇▇, et ▇▇ ▇. Creditcorp ▇▇▇▇▇▇▇ County, TN V-96-249 3/20/96
d/b/a Check Into Cash Circuit Court
The two ▇▇▇▇▇▇▇ cases, along with several other similar lawsuits filed against
other defendants in the ▇▇▇▇▇▇▇ County Circuit Court, have all been consolidated
with the ▇▇▇▇▇ case and are currently being treated as one lawsuit.
Claims. All three cases make the same allegations, that the check cashing
------
business in Tennessee violates the Tennessee usury statute, the federal Truth-
In-Lending Act, the Tennessee Consumer Protection Act, the Tennessee
Constitution, and other laws and regulations. The plaintiffs in all of the
consolidated cases, including the three cases specifically listed above, have
filed a motion for certification of a plaintiffs class. The defendants are
opposed to class action certification and have filed papers objecting to the
certification. A hearing was held on May 21, 1997, on the Plaintiffs' Motion
for Class Certification, and the court took the motion under advisement.
Amount Involved. The plaintiffs seek to recover prejudgment interest, three
---------------
times actual damages (although they do not specify the amount of their actual
damages), refund of fees, and twice the amount of all other charges, and
attorneys' fees and costs of litigation. No specific dollar amount is claimed.
Status. A Special Judge has been appointed to hear all of the consolidated cases
------
in ▇▇▇▇▇▇▇ County. An Answer has been filed on behalf of Creditcorp and W. ▇▇▇▇▇
▇▇▇▇▇, Jr. in the ▇▇▇▇▇ case denying all material allegations. Prior to the
consolidation, Motions to Dismiss were filed on behalf of W. ▇▇▇▇▇ ▇▇▇▇▇, Jr.
and Creditcorp in the two ▇▇▇▇▇▇▇ cases. These motions are still pending. Much
discovery has already been accomplished, and the current discovery deadline is
July 24, 1997. As of October 9, 1997, the parties are engaged in settlement
negotiations, subject to a definitive settlement agreement and approval of such
agreement by the Special Judge appointed to hear this case.
EEOC Claim
----------
On or about February 25, 1997, a former employee of Creditcorp of
Tennessee, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇, who was employed in Tennessee, filed a complaint
with the EEOC against the Check into Cash, Inc. She alleges that she was denied
hospitalization coverage in connection with her colitis. Additionally, she
indicates she was discharged on September 10, 1996, because of poor performance
and because she was found under the influence of alcohol at work.
A response to the Charge of Discrimination was sent out on or about
March 21, 1997. We believe the Check into Cash, Inc. has meritorious defenses
and we will assist them in vigorously defending the action, but at this point in
time it is difficult to assess potential for liability.
-2-
EXHIBIT 4.9
-----------
INTELLECTUAL PROPERTY
---------------------
United States Registration
-------------------------------------------------------------------------------
|▇▇▇▇ | REG. NO./ | REG. DATE/ | OWNER |
| | APP. NO. | FILING DATE | |
|---------------------------|-------------|-----------------|-----------------|
|CHECK INTO CASH & Design | 1,987,021 | July 16, 1996 | Check Into Cash,|
| | | | Inc. |
| | | | |
|---------------------------|-------------|-----------------|-----------------|
|BOB CA$H CHECK INTO CA$H | 75/308009 | June 12, 1997 | Check Into Cash,|
|CASH ADVANCE IT'S QUICK, | | | Inc. |
|EASY & CONFIDENTIAL and | | | |
|Design | | | |
-------------------------------------------------------------------------------
Tennessee State Registrations
-------------------------------------------------------------------------------
|▇▇▇▇ | REG. NO. | REG. DATE | OWNER |
|---------------------------|-------------|-----------------|-----------------|
|CASH IN A FLASH | N/A | March 9, 1994 | Creditcorp |
| | | | |
|---------------------------|-------------|-----------------|-----------------|
|CHECK INTO CASH CHECK | N/A | March 9, 1994 | Creditcorp |
|SERVICES & Design | | | |
| | | | |
|---------------------------|-------------|-----------------|-----------------|
|IF YOU HAVE AN ACTIVE | N/A | June 28, 1994 | Creditcorp |
|CHECKING ACCOUNT AND | | | |
|NEED CASH TODAY, WE WILL | | | |
|CASH YOUR PERSONAL | | | |
|CHECK AND WAIT EITHER... | | | |
|DAYS OR YOUR NEXT PAY | | | |
|DAY TO DEPOSIT | | | |
| | | | |
|---------------------------|-------------|-----------------|-----------------|
|OVERDRAFT CHECK | N/A | March 9, 1994 | Creditcorp |
|CASHING SERVICES | | | |
| | | | |
|---------------------------|-------------|-----------------|-----------------|
|QUICK, EASY, CONFIDENTIAL | N/A | March 9, 1994 | Creditcorp |
| | | | |
-------------------------------------------------------------------------------
Wisconsin State Registration
-------------------------------------------------------------------------------
|▇▇▇▇ | REG. NO. | REG. DATE | OWNER |
-------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CHECK INTO CASH N/A March 27, 1996 Creditcorp of
Wisconsin, LLC
--------------------------------------------------------------------------------
-4-
EXHIBIT 4.19
------------
CAPITAL STOCK
-------------
Entity Shares Authorized Total Shares Owners
Issued &
Outstanding
Check into Cash, 5,000,000 Common 1,212,000 Common W. ▇▇▇▇▇ ▇▇▇▇▇, Jr.
Inc. 720,000 shares;
1,000,000 Preferred -0- Preferred ▇▇▇▇▇ ▇▇▇▇▇ 480,000
shares;
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
36,000 shares.
Check into Cash 1,000 Common 1,000 Common Check into Cash,
Holdings, Inc. Inc. 1,000 shares.
Creditcorp of 10,000 Common 1,000 Common Check into Cash,
Tennessee, Inc. Inc. 1,500 shares.
Check into Cash of 1,000 Common 1,000 Common Check into Cash,
Iowa, Inc. Inc. 1,000 shares.
Check into Cash of n/a n/a Check into Cash,
Kentucky, LLC Inc. 99%;
Check into Cash,
Holdings, Inc. 1%
Check into Cash of n/a n/a Check into Cash,
Indiana, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Check into Cash of n/a n/a Check into Cash,
Illinois, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Check into Cash of n/a n/a Check into Cash,
Wisconsin, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Entity Shares Authorized Total Shares Owners
Issued &
Outstanding
Check into Cash of n/a n/a Check into Cash,
Ohio, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
Check into Cash of 1,000 Common 1,000 Common Check into Cash,
California, Inc. Inc. 1,000 shares.
Check into Cash of 1,000 Common 1,000 Common Check into Cash,
Nebraska, Inc. Inc. 1,000 shares.
Check into Cash of 1,000 Common 1,000 Common Check into Cash,
Missouri, Inc. Inc. 1,000 shares.
▇▇▇▇▇ Management n/a n/a Check into Cash,
Services, LLC Inc. 99%;
Check into Cash
Holdings, Inc. 1%
In addition to the above, Check into Cash, Inc. is party to the
following agreements relating to the purchase of its capital stock:
1. Stock Purchase Warrant, dated February 28, 1997, issued by Check into
Cash, Inc. to Sirrom Capital Corporation.
2. Check into Cash, Inc. 1997 Long Term Incentive Plan, dated January 10,
1997.
-2-