Exhibit 10.61
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated effective as of
October 31, 1998 is made by and among Pawnshops of America, Inc., a South
Carolina corporation ("Seller"), Xxxxxx Xxxxx ("Shareholder") and First Cash,
Inc., a Delaware corporation ("Purchaser").
WITNESSETH:
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WHEREAS, Seller desires to sell and Purchaser desires to purchase certain
of the assets of Seller used in connection with the pawn business of Seller
conducted at the locations in the State of South Carolina listed in Exhibit A
attached hereto; and
WHEREAS, Purchaser desires to purchase such assets on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained, and on the terms and subject to the conditions
herein set forth, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01. Sale and Purchase of Assets. Subject to and upon the terms and
conditions contained herein, at the Closing (as hereinafter defined), Seller
shall sell, transfer, assign, convey and deliver the Purchaser all of the
following assets of Seller used in connection with the pawn business of Seller,
free and clear of all liens, claims and encumbrances, and Purchaser shall
purchase, accept and acquire from Seller, the following:
(a) Equipment and Fixed Assets. All of Seller's furniture,
equipment, supplies, fixed assets and leasehold improvements located at or used
in connection with the pawnshops of Seller at the locations in the State of
South Carolina listed in Exhibit A;
(b) Layaways and Counterbuys. All of Seller's right, title and
interest in layaways and counterbuys used in connection with the pawnshops of
Seller at the locations in the State of South Carolina listed in Exhibit A;
(c) Intangible Assets. All of Seller's right, title and interest in
all of its operating licenses, permits, trade names, telephone numbers and other
intangible assets, together with all rights to, and applications, and franchises
for, any of the foregoing, relating to Seller's pawn businesses at the
locations in the State of South Carolina listed in Exhibit A;
(d) Pawn loans. All of Seller's outstanding pawn loans receivable
(including all accrued interest thereon) and all evidence of indebtedness
owed to Seller arising out of the pawn businesses conducted at the locations in
the State of South Carolina listed in Exhibit A, together with all pawn
merchandise securing same;
(e) Inventory. All of Seller's inventory and merchandise including,
but not limited to all of Seller's inventory and merchandise at the locations in
the State of South Carolina listed in Exhibit A; and
(f) Records. All of Seller's current and active records, files and
papers pertaining to the assets described in Subsections (a) through (e) above,
including literature, contract forms, graphic materials, pricing and information
manuals, fixtures, designs, sales literature or other sales aids, customer
files, customer credit histories and other data related to Seller's business.
All of the assets described in Subsections (a) through (f) above are
hereinafter collectively referred to as the "Assets".
Notwithstanding anything in this Section 1.01 to the contrary, Seller shall
retain all of its right, title and interest in, to and under all of the
following:
(a) all cash and cash equivalents;
(b) all accounts receivable except layaways and pawn loans;
(c) all federal, state, local and foreign tax deposits;
(d) any assets not relating to the business contained in a list to be
provided to Purchaser prior to Closing;
(e) all minute books and stock books of Seller;
(f) all insurance refunds;
(g) the items of property located in the accounting department and the
office of Xxx Xxxxx and the personal desk of Xxxxxx Xxxxx; and
(h) the post office box of Seller.
1.02. Purchase Price. The purchase price ("Purchase Price") to be paid
for the Assets shall be four million six hundred fifty-eight thousand dollars
($4,658,000.00), subject to adjustment as provided below. The Purchase Price
shall be payable as follows: (a) cash in the amount of $2,258,000 payable at
Closing, (b) the issuance of a promissory note in the amount of $600,000 in the
form of Exhibit B payable in 12 equal monthly installments of principal and
interest, and (c) $1,800,000 (adjusted as provided below) payable 365 days after
the Closing Date. At the option of Purchaser, said sum of $1,800,000 (adjusted
as provided below) may be paid in cash, by the issuance of shares of common
stock of Purchaser, or partly in cash and partly by the issuance of shares of
common stock of Purchaser. The number of shares of common stock of Purchaser to
be issued shall be determined by dividing the portion of the sum of $1,800,000
(adjusted as provided below) to be paid by the issuance of common stock of
Purchaser by the average of the closing sale price of the common stock of
Purchaser during the thirty (30) trading days immediately preceding five (5)
business days prior to the expiration of the 365 day period as reported by the
Nasdaq National Market System. If any portion of the sum of $1,800,000
(adjusted as provided below) is not received by Seller on or before 365 days
after the Closing Date, such unpaid portion shall immediately accelerate and
bear interest at the rate of 12.0% per annum from the due date thereof until
paid and the subordination of such obligation of Purchaser to the net asset
requirement of the Texas Pawnshop Act shall terminate. If no sale of common
stock of Purchaser occurred on a particular trading day, the closing ask price
shall be used in determining the closing sale price. If the common stock of
Purchaser is not listed on the Nasdaq National Market System 365 days after the
Closing Date, the closing sale price for each trading day shall be the last sale
price, or the closing ask price if no sale occurred, of the common stock of
Purchaser on the principal national securities exchange on which such common
stock is listed. Any common stock of Purchaser issued to Seller shall be
registered under the Securities Act of 1933, as amended (the "Act"), and subject
to the provisions of the Act and the rules and regulations promulgated
thereunder. As used herein, the term "trading day" shall mean any day with
respect to which actual transactions in the common stock of Purchaser are
reported or bid and asked quotations are reported but actual transactions are
not. Any shares of common stock delivered to Seller in order to satisfy all or
any portion of the $1,800,000 due 365 days after the Closing Date shall have
been registered under the Securities Act of 1933, as amended, and subject to the
rules and regulations of the Securities and Exchange Commission. The Purchase
Price (1) shall be reduced one dollar ($1.00) for each one dollar ($1.00) that
the face amount of current active pawn loans of Seller satisfactory to Purchaser
is less than nine hundred thousand dollars ($900,000) in the aggregate, (2)
shall be reduced by one dollar ($1.00) for each one dollar ($1.00) that the
inventory (at Seller's cost as shown on Seller's books), including layaway
inventory, of Seller is less than $1,350,000 in the aggregate and (3) shall be
reduced by one dollar ($1.00) for each one dollar ($1.00) that layaway deposits
are greater than $142,000. The Purchase Price (1) shall be increased one dollar
($1.00) for each one dollar ($1.00) that the face amount of current active pawn
loans of Seller satisfactory to Purchaser is greater than nine hundred thousand
dollars ($900,000) in the aggregate, (2) shall be increased by one dollar
($1.00) for each one dollar ($1.00) that the inventory (at Seller's cost as
shown on Seller's books), including layaway inventory, of Seller is greater than
$1,350,000 in the aggregate and (3) shall be increased by one dollar ($1.00) for
each one dollar ($1.00) that layaway deposits are less than $142,000. All of
the foregoing adjustments to the Purchase Price shall be made to the $1,800,000
(adjusted as provided above) due and payable 365 days after the Closing Date.
All calculations of pawn loans, inventory and layaways shall be made as of the
Closing Date. The obligation of Purchaser under this Section 1.02 to pay the
sum of $1,800,000 (adjusted as provided above) is and shall be subordinate and
inferior in payment to any and all indebtedness of Purchaser to Bank One, Texas,
N.A. and any other financial institution or syndication of financial
institutions which constitutes the principal lender(s) to Purchaser. The
obligation of Purchaser under this Section 1.02 to pay the sum of $1,800,000
(adjusted as provided above) is subordinate and inferior to the claims of
general creditors to the extent necessary to permit Purchaser to meet the net
asset requirement of the Texas Pawnshop Act of each pawnshop of Purchaser and
its subsidiaries in the State of Texas with the result that there shall be
available at all times to general creditors an amount equal to the sum of the
net asset requirement of each pawnshop of Purchaser and its subsidiaries in the
State of Texas.
There shall also be paid to Seller at Closing the sum of (1) the aggregate
amount of all unused security deposits listed in Exhibit C under the Leases to
be assumed by Purchaser, (2) all cash of Seller on hand, (3) rent payable for
November 1998 prorated to the Closing Date (as hereinafter defined), and (4) the
unamortized cost of the structural improvements relating to location number 7 on
Exhibit A less fifty percent (50%) of all current contractual obligations for
Yellow Pages advertising in the aggregate amount shown on Exhibit D.
1.03. Allocation of Purchase Price. The Purchase Price shall be allocated
at Closing as follows:
Furniture, fixture and equipment
Pawn Loans
Accrued interest
Inventory, including Layaways and Counterbuys
Less layaway deposits
Goodwill
1.04. No Assumption of Liabilities. Except for the lease agreements
relating to the locations in the State of South Carolina listed on Exhibit A
(the "Leases") and the obligations relating to layaway deposits and the
obligations under the layaway contracts and the amount of obligations for Yellow
Pages advertising listed on Exhibit D, Purchaser does not and shall not assume
or agree to pay, perform or discharge any liabilities or obligations of Seller,
whether accrued, absolute, contingent or otherwise, arising out of claims,
actions or events occurring prior to Closing (as hereinafter defined) or any
liability relating to the Assets transferred to Purchaser. Purchaser is not
assuming (a) any indebtedness of Seller, or (b) any expenses, liabilities, or
obligations of Seller arising out of the execution or delivery of this Agreement
and the consummation of the transactions contemplated hereby, or (c) any
liability or obligation of Seller relating to federal, state or local taxes or
any other taxes attributable to the transactions contemplated hereby or Seller
both prior to and subsequent to Closing, or (d) any obligation of Seller to pay
a fee to an agent, broker or finder, or (e) any liability arising out of the
conduct of Seller's business prior to Closing, including the violation of
federal or state laws and federal or state operating licenses, or (f) any
liability or obligation of Seller relating to pawn loan collateral missing on
the Closing Date which will be agreed upon prior to the Closing Date and listed
on Exhibit E, or (g) any customer claims attributable or in any manner relating
to events or omissions of Seller prior to the Closing Date or (h) any claims
made by or obligations to the Bureau of Alcohol, Tobacco and Firearms arising or
attributable to the period prior to the Closing Date.
1.05. Proration. All real property taxes, common area maintenance and
insurance payable by Seller or Shareholder under the Leases and all personal
property taxes relating to the Assets shall be prorated between Seller and
Purchaser as of the Closing Date.
ARTICLE II
CLOSING
The closing of the sale and purchase of the Assets ("Closing") shall occur
on a mutually agreeable date after the completion of the audit of the Assets of
Seller (the "Closing Date") at a location mutually agreeable to both parties.
At the Closing the Seller shall deliver to Purchaser the following:
(1) Assignment and Xxxx of Sale in form satisfactory to Purchaser of all
the Assets which has been executed by Seller; and
(2) Assignment to Purchaser of the licenses and permits of Seller and
Shareholder to operate a pawn shop at the locations in the State of South
Carolina listed in Exhibit A and all permits relating thereto executed by Seller
and Shareholder.
(3) Assignments to Purchaser of each of the Leases in form satisfactory to
Purchaser, together with the written consent of the owner of each of the
locations listed as location numbers 4-12 on Exhibit A.
(4) Lease agreements covering the locations listed as location numbers 1,2
and 3 on Exhibit A in form satisfactory to Purchaser and Seller.
At the Closing the Purchaser shall deliver to Seller the following:
(1) a check in the amount of the cash portion of the Purchase Price
payable at Closing,
(2) the promissory note in the form of Exhibit B, and
(3) a check in the aggregate amount equal to the sum of (a) the aggregate
amount of all unused security deposits listed in Exhibit C under the Leases to
be assumed by Purchaser, (b) all cash of Seller on hand, (c) rent payable for
November 1998 prorated to the Closing Date (as hereinafter defined), and (d) the
unamortized cost of the structural improvements relating to location number 7 on
Exhibit A less fifty percent (50%) of all current contractual obligations for
Yellow Pages advertising in the aggregate amount shown on Exhibit D.
At all times thereafter as may be necessary, Seller agrees to execute and
deliver to Purchaser such other instruments of transfer as shall be reasonably
necessary to appropriate to vest in Purchaser good and indefeasible title to the
Assets and to comply with the purposes and intent of this Agreement including
existing service contracts or any other contracts related to the Assets. Seller
and Shareholder further agree to cooperate with Purchaser in obtaining approval
of the issuance to Purchaser of all licenses and permits required to operate the
pawn shops of Seller at the locations in the State of South Carolina listed in
Exhibit A.
ARTICLE III
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants that the following are true and correct
as of the date hereof and will be true and correct through the Closing Date as
if made on that date:
3.01. Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite power and authority to carry on the business in
which it is engaged, to own the properties it owns and to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
3.02. Authorization and Validity. The execution, delivery and performance
of this Agreement and the other agreements to be executed by Purchaser, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by Purchaser. This Agreement, the Note and the Leases with respect
to locations numbers 1-3 on Exhibit A will be prior to or at Closing duly
executed and delivered by Purchaser and constitute or will constitute legal,
valid and binding obligations of Purchaser, enforceable against Purchaser in
accordance with their respective terms.
3.03. Finder's Fee. Purchaser will pay and be solely responsible for any
finder's, broker's or agent's fee incurred by Purchaser in connection with the
transactions contemplated hereby.
3.04. No Violation. To the best of Purchaser's knowledge, neither the
execution and performance of this Agreement or the agreements contemplated
hereby, nor the consummation of the transactions contemplated hereby or thereby
will (a) result in a violation or breach of any agreement or other instrument
under which Purchaser is bound or to which any of the assets of Purchaser are
subject, or (b) violate any applicable law or regulation or any judgment or
order of any court or governmental agency.
3.05 Financial Statements and Reports. Purchaser has filed all required
forms, reports, statements and documents with the Securities and Exchange
Commission (the "Commission") all of which have complied in all material
respects with all applicable requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Purchaser has
delivered or made available to the Seller and the Shareholder true and complete
copies of (i) Purchaser's annual Reports on Form 10-K for the fiscal year ended
July 31, 1998, (ii) its proxy statement relating to Purchaser's annual
stockholders meeting for the fiscal year ended July 31, 1997, (iii) reports
filed on Form 10-Q for the quarters ended October 31, 1997, January 31, 1998 and
April 30, 1998 by Purchaser with the Commission pursuant to the Exchange Act,
and (iv) all reports, statements and other information provided by Purchaser to
its stockholders since July 31, 1997 (collectively, the Purchaser Reports"). As
of their respective dates, the Purchaser Reports did not contain any untrue
statement of a material fact. The consolidated financial statements of
Purchaser included or incorporated by reference in the Purchaser Reports were
prepared in accordance with Generally Accepted Accounting Principals ("GAAP")
applied on a consistent basis (except as otherwise stated in such financial
statements or, in the case of audited statements, the related report thereon of
independent certified public accounts), and present fairly the financial
position and results of operations, cash flows and of changes in stockholders'
equity of Purchaser and its consolidated subsidiaries as of the dates and for
the periods indicated, subject in the case of unaudited interim financial
statements, to normal year-end audit adjustments, none of which either singly or
in the aggregate are or will be material, and except that the unaudited interim
financial statements do not contain all of the disclosures required by GAAP.
Purchaser is and has been subject to the reporting requirements of the Exchange
Act and has filed with the Commission all periodic reports required to be filed
by it pursuant thereto and all reports required to be filed under Sections 13,
14 or 15(d) of the Exchange Act since July 31, 1991.
3.06. Taxes. To the best of Purchaser's knowledge, all tax returns,
statements, reports and forms (including estimated tax returns and reports and
information returns and reports) required to be filed with any tax authority
with respect to any taxable period ending on or before the consummation of the
transactions set forth herein, by or on behalf of Purchaser (collectively, the
"Purchaser Returns"), have been or will be filed when due (including any
extensions of such due date), and all amounts shown to be due thereon on or
before the Closing have been or will be paid on or before such date, except to
the extent such failure to file or pay has not had and could not reasonably be
expected to have a Material Adverse Effect. Whenever used in this Agreement,
the phrase "Material Adverse Effect" shall mean a material adverse effect on the
business, properties, prospects, conditions (financial or otherwise) or results
of operations of Purchaser or its subsidiaries on a consolidated basis.
3.07. Compliance with Law. To the best of Purchaser's knowledge,
Purchaser has complied with all foreign, federal, state, local and county laws,
ordinances, regulations, judgments, orders, decrees or rules of any court,
arbitrator or governmental, regulatory or administrative agency or entity
applicable to its business, except where the failure to so comply would not have
a Material Adverse Effect. Purchaser has not received any governmental notice
of any violations by Purchaser of any such laws, ordinances, regulations or
orders, which violation has not been cured or remedied except where the failure
to cure or remedy the violation would not have a Material Adverse Effect.
3.08. Litigation. Except for litigation disclosed in the notes to the
financial statements included in the Purchaser Reports and reflected on
Purchaser's Disclosure Schedule, there is no suit, action, proceeding or
investigation pending or, to the best of knowledge of Purchaser, threatened
against or affecting Purchaser or any of its subsidiaries, the outcome of which,
in the reasonable judgment of Purchaser, is likely to have a material adverse
effect, nor is there any judgment, decree, injunction, ruling or order of any
court, governmental, regulatory or administrative department, commission, agency
or instrumentality, arbitrator or any other person outstanding against Purchaser
or any of its subsidiaries having, or which is reasonably likely to have, a
Material Adverse Effect.
3.09. Governmental Authorizations and Licenses. To Purchaser's knowledge,
Purchaser has all material licenses, orders, authorizations, permits,
concessions, certificates and other franchises or analogous instruments of any
governmental entity required by applicable law to operate its business
(collectively, the "Purchaser Government Licenses") which Purchaser Government
Licenses are in full force and effect, and is in compliance with the terms,
conditions, limitations, restrictions, standards, prohibitions, requirements and
obligations of such Purchaser Government Licenses except to the extent failure
to hold and maintain such Purchaser Government Licenses or to so comply would
not be reasonably likely to have a Material Adverse Effect. There is not now
pending, nor to the best knowledge of Purchaser is there threatened, any action,
suit, investigation or proceeding against Purchaser before any governmental
entity with respect to the Purchaser Government Licenses, nor is there any
issued or outstanding notice, order or complaint with respect to the violation
by Purchaser of the terms of any Purchaser Government License or any rule or
regulation applicable thereto, except to the extent that any such action would
not be reasonably likely to have a Material Adverse Effect.
3.10. Accuracy of Information Furnished. All information furnished to
Seller by Purchaser herein or in any exhibit hereto is true, correct and
complete in all material respects. Such information states all material facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made, true, correct
and complete.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser that the following are true and
correct as of the date hereof and will be true and correct through the Closing
Date as if made on that date:
4.01. Organization, Qualification and Power. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
South Carolina. Seller is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required. Seller has full power and authority to carry on the business in which
it is engaged and to own and use the properties owned and used by it.
4.02. Authorization and Validity. The execution, delivery and performance
of this Agreement and the other agreements to be executed by Seller, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by Seller. This Agreement and each other agreements to be executed by
Seller been or will be duly executed and delivered by Seller and constitute or
will constitute legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms.
4.03. Title; Leased Assets. Upon consummation of the transactions
contemplated hereby, Purchaser shall receive good, valid and marketable title to
the Assets, and will be entitled to use as lessee all leased assets used in
Seller's business, free and clear of all liens, encumbrances and adverse claims.
4.04. No Violation. To the best of Seller's knowledge, neither the
execution and performance of this Agreement or the agreements contemplated
hereby, nor the consummation of the transactions contemplated hereby or thereby
will (a) result in a violation or breach of any agreement or other instrument
under which Seller is bound or to which any of the assets of Seller are subject,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of such assets, or (b) violate any applicable law or regulation or any
judgment or order of any court or governmental agency. To the best of Seller's
knowledge, Seller has complied with all applicable laws, regulations and
licensing requirements, and has filed with the proper authorities all necessary
statements and reports. To the best of Seller's knowledge, Seller possesses all
necessary operating licenses, franchises, permits and governmental
authorizations, which rights are in full force and effect, and are being
transferred hereof free of any claim, encumbrance or detriment.
4.05. Taxes. Seller has duly and timely filed all property, sales tax and
all other returns and reports required to be filed by it as of the date hereof
by the State of South Carolina or any political subdivision thereof and has paid
all taxes (including penalties and interest) which have become due, except to
the extent that such failure to file or pay has not had or could not reasonably
be expected to have a material adverse effect on the business or financial
condition of Seller. There are no liens for Federal, state or local taxes upon
any of the assets of Seller.
4.06. Compliance with Law. To the best of Seller's knowledge, there are
no existing violations by Seller of any applicable federal, state or local law
or regulation that could have a material adverse effect on the property,
business, or licenses or permits of Seller.
4.07. Finder's Fee. Seller shall pay and be solely responsible for any
obligation for any finder's, broker's or agent's fee incurred by Seller in
connection with the transactions contemplated hereby.
4.08. Litigation. No legal action or administrative proceeding or
investigation has been instituted against Seller, or to the best of its
knowledge been threatened, that could have a material adverse effect on the
assets, business or financial condition of Seller. Seller is not (a) subject to
any continuing court or administrative order, writ, injunction or decree
applicable specifically to such Seller or to its business, assets, operation or
employees, or (b) in default with respect to any such order, writ, injunction or
decree. Seller knows of no basis for any such action, proceeding or
investigation.
4.09. Operating Licenses. To Seller's knowledge, Seller maintains in full
force and effect all operating licenses and permits necessary in order to
operate each of its pawnshop business locations in accordance with applicable
federal, state and local regulations. The operating licenses and permits are in
full force and effect and Seller has not received notice of cancellation
thereof, or a threatened cancellation thereof. Seller has complied in full with
all applicable federal and state operating licenses. Seller has delivered to
Purchaser true and correct copies of all licenses and permits of Seller.
4.10. Financial Statements. To Seller's knowledge, Seller has delivered
to Purchaser true and correct copies of the audited financial statements of
Seller for the years ended December 31, 1996 and December 31, 1997 and the
unaudited financial statement of Seller for the period ended September 30, 1998.
Such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby and present fairly the financial condition of Seller as of the
indicated dates, and the results of operations of the indicated periods are
correct and complete and are consistent with the books and records of Seller in
all material respects.
4.11. Tax Returns. Seller has delivered to Purchaser true and correct
copies of the Federal income tax returns of Seller for the years ended December
31, 1996 and December 31, 1997 which have been filed with the Internal Revenue
Service. Such Federal income tax returns are correct and complete in all
material respects.
4.12. Employees. Seller has furnished to Purchaser a list of all
employees and each compensation arrangement for each employee of Seller.
4.13. Ownership of Seller. Shareholder is the only shareholder of Seller.
4.14. Zoning. The zoning of each of the locations listed on Exhibit A
permits the operation of a pawnshop.
4.15. Accuracy of Information Furnished. All information furnished to
Purchaser by Seller herein or in any exhibit hereto is true, correct and
complete in all material respects. Such information states all material facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made, true, correct
and complete.
ARTICLE V
PURCHASER'S COVENANTS
5.01. Consummation of Agreement. Purchaser agrees to use its best efforts
to cause the consummation of the transactions contemplated by this Agreement in
accordance with their terms and conditions.
5.02. Retention of Records. Purchaser shall retain all books and records
of Seller required to be retained on the business premises by applicable laws.
Purchaser shall provide Seller and Shareholder access to such records in the
event of a tax or other audit of Seller. Seller shall be entitled to retain all
other books and records.
5.03 Approvals of Third Parties. As soon as practicable after the
execution of this Agreement, Purchaser will use its best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated by this Agreement.
ARTICLE VI
SELLER'S COVENANTS
Seller agrees that on or prior to the Closing:
6.01. Approvals of Third Parties. As soon as practicable after the
execution of this Agreement, Seller will use its best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated by this Agreement.
6.02. Contracts. Except with Purchaser's prior written consent, Seller
shall not waive any material right under or cancel any material contract, debt
or claim nor will Seller assume or enter into any contract, lease, license,
obligation, indebtedness, commitment, purchase or sale except for the making of
pawn loans and sales of inventory in the ordinary course of business.
6.03. Licenses. Seller shall assist Purchaser in causing all pawn
licenses owned or held by Seller relating to the pawn businesses of Seller at
the locations in the State of South Carolina listed in Exhibit A to be assigned
and reissued to Purchaser.
6.04. Release of Financing Statements. Seller shall cause all financing
statements covering any portion of the Assets to be released within 30 days
after the Closing Date.
ARTICLE VII
PURCHASER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing of
each of the following conditions:
7.01. Representations and Warranties. The representations and warranties
of Seller contained herein shall be true and correct as of the Closing, and
Purchaser shall not have discovered any material error, misstatement or omission
therein.
7.02. Covenants. Seller shall have performed and complied with all
covenants or conditions required by this Agreement to be performed and complied
with by them prior to the Closing.
7.03. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
7.04. No Material Adverse Change. No material, adverse change in the
assets, business operations or financial condition of Seller shall have occurred
prior to the Closing except for normal business cycles.
7.05. Lease Assignments. Assignments to Purchaser of each of the lease
agreements covering the properties at the locations in the State of South
Carolina listed in Exhibit A in form reasonably satisfactory to Purchaser, and
the written consent of the owner of each of the locations listed in Exhibit A to
such assignment if necessary.
7.07. Lease Agreements. Lease agreements covering each of the locations
listed on Exhibit A satisfactory to Purchaser.
7.08. Pawn Loans. Seller shall have at Closing not less than eight
hundred fifty thousand dollars ($850,000 in the aggregate in face amount of
current active pawn loans satisfactory to Purchaser at the locations listed in
Exhibit A.
7.09. Inventory. Seller shall have at Closing not less than $1,300,000 in
the aggregate in inventory (at Setter's cost as shown on Seller's books),
including layaway inventory, at the locations listed on Exhibit A.
7.10. Audit. Purchaser shall have conducted an audit of the Assets which
is satisfactory to Purchaser and Seller.
7.11. Corporate Resolutions. Purchaser shall have received corporate
resolutions of Seller authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein.
7.12. Closing Documents. All items and documents required to be delivered
to Purchaser pursuant to Article II at Closing shall have been delivered to
Purchaser.
ARTICLE VIII
SELLER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Seller the obligations of Seller
hereunder are subject to fulfillment at or prior to the Closing of each of the
following conditions:
8.01. Representations and Warranties. The representations and warranties
of Purchaser contained herein shall be true and correct as of the Closing,
subject to any changes contemplated by this Agreement, and Seller shall not have
discovered any material error, misstatement or omission therein.
8.02. Covenants. Purchaser shall have performed and complied in all
material respects with all covenants or conditions required by this Agreement to
be performed and complied with by Purchaser prior to the Closing.
8.03. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
8.04. Closing Documents. All items and documents required to be
delivered to Seller pursuant to Article II at Closing shall have been delivered
to Seller.
8.05 Corporate Resolutions. Seller shall have received corporate
resolutions of Purchaser authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein.
8.06 No Material Adverse Change. No material, adverse change in the
assets, business operations or financial condition of Purchaser shall have
occurred prior to the Closing except for normal business cycles.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS OR WARRANTIES; REMEDIES
9.01. Survival of Representations. Except for the representations,
warranties, covenants, agreements and restrictions contained in Article XI and
in Article XII, the representations, warranties, covenants, agreements and
restrictions contained in this Agreement shall survive the Closing Date for a
period of two (2) years and all statements contained in any certificate,
schedule or other instrument delivered pursuant to this Agreement shall be
deemed to have been representations and warranties. Except for claims, actions
or claims arising under Article XI or Article XII, any action or claim for
breach of any warranty, representation or covenant by Seller may occur or be
effected at any time within two (2) years after the Closing Date.
9.02. Remedies Upon Breach of Representations. In the event that
Purchaser or Seller determines that a material breach or violation of any
warranty, representation or covenant in this Agreement has occurred and such
breach or violation is not cured to the satisfaction of such party within
fifteen (15) days after the date of the written notice thereof by such party to
the other party, Purchaser or Seller, as the case may be, and shall have any and
all rights and remedies available at law or in equity.
ARTICLE X
INDEMNIFICATION
10.01. Seller Indemnity. Subject to the terms and conditions of this
Article X, Seller hereby unconditionally agrees to indemnify, defend and hold
Purchaser and its officers, directors, stockholders, agents, attorneys and
affiliates harmless from and against all losses, claims, obligations, demands,
assessments, penalties, liabilities, costs, damages, reasonable attorneys' fees
and expenses (collectively, "Damages"), asserted against or incurred by
Purchaser by reason of or in any manner resulting from:
(a) A breach by Seller of any representation, warranty or covenant
contained herein or in any agreement executed pursuant hereto;
(b) Any and all general liability claims arising out of or relating
to occurrences of any nature relating to Seller's business prior to the Closing,
whether any such claims are asserted prior to or after the Closing;
(c) Any obligation or liability under or related to any employee
compensation or any employee benefit plans or the termination thereof;
(d) Any tax filing or return or payment made, or position taken in
the payment or non-payment of any tax, by Seller which any governmental
authority challenges and which results in an assertion of Damages against
Purchaser;
(e) Any failure to comply with all applicable bulk transfer laws or
fraudulent or preferential laws of the United States of America or the State of
South Carolina;
(f) Claims arising from liabilities or obligations not expressly
assumed by Purchaser in this Agreement;
(g) Claims and liabilities arising from or in any manner relating to
pawn loans missing as of the Closing Date which are listed on Exhibit E;
(h) Customer claims attributable or relating to events or omissions
of Seller prior to the Closing Date, whether any such claims are asserted prior
to or after the Closing Date;
(i) Claims made by the Bureau of Alcohol, Tobacco and Firearms
arising out of the conduct of the business of Seller prior to the Closing Date;
or
(j) Claims relating to federal, state or local taxes.
10.02. Purchaser's Indemnity. Subject to the terms and conditions of this
Article X, Purchaser hereby unconditionally agrees to indemnify, defend and hold
Seller and its respective officers, directors, stockholders, agents, attorneys
and affiliates harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (collectively, "Damages"), asserted against or
incurred by Seller by reason of or in any manner resulting from:
(a) A breach by Purchaser of any representation, warranty or covenant
contained herein or in any agreement executed pursuant hereto;
(b) Any and all general liability claims arising out of or relating
to occurrences of any nature relating to Purchaser's business after the Closing,
whether any such claims are asserted prior to or after the Closing;
(c) The use by Purchaser of the licenses and permits of Seller after
the Closing Date; and
(d) Claims arising from liabilities or obligations expressly assumed
by Purchaser.
10.03. Remedies. Seller and Purchaser shall have all remedies specified
in this Agreement or available at law or in equity. The remedies provided in
this Article X shall not be exclusive of any other rights or remedies available
by one party against the other, either at law or in equity. Notwithstanding
anything contained in this Agreement, Purchaser waives the right of offset
against the Note and the $1,800,000 payable 365 days after the Closing Date.
ARTICLE XI
USE OF LICENSES; EMPLOYMENT OF SHAREHOLDER
Until all licenses and permits to operate pawn shops at the locations in
the State of Carolina listed in Exhibit A are issued to Purchaser (but not to
exceed one year after the Closing Date), Seller and Shareholder shall permit, to
the extent permitted by law, Purchaser to use the licenses issued to Seller to
operate the pawn shops at the locations in the State of South Carolina listed in
Exhibit A. Seller further agrees to cooperate with Purchaser in obtaining
approval of the issuance to Purchaser of all licenses and permits required to
operate the pawn shops of Seller at the locations in the State of South Carolina
listed in Exhibit A. At the request of Seller or Shareholder, Purchaser shall
permit Shareholder to inspect the records of Purchaser required to be maintained
under the laws of the State of South Carolina attributable to the period during
which the licenses and permits of Seller are used by Purchaser.
ARTICLE XII
NONCOMPETITION
Seller and Shareholder unconditionally agree that prior to November 30,
2008, neither Seller nor Shareholder shall (1) enter into any agreement with or
directly or indirectly solicit employees or representatives of Purchaser for the
purpose of causing them to leave Purchaser (or its corporate successor) to take
employment with Seller or Shareholder or any other person or business entity,
(2) compete, directly or indirectly, with Purchaser (or its corporate successor)
or any of its subsidiaries within a twenty (20) mile radius of any pawn store or
business now or hereafter owned, operated or managed by Purchaser (or its
corporate successor) or any of its subsidiaries; (3) act as an officer,
director, employee, consultant, shareholder, partner, lender, agent, associate
or principal of any entity engaged in any pawn business of the same nature as,
or in competition with Purchaser (or its corporate successor) or any of its
subsidiaries within a twenty (20) mile radius of any pawn store or business now
or hereafter owned, operated or managed by Purchaser (or its corporate
successor) or any of its subsidiaries; (4) participate in the ownership,
management, operation or control of any business directly or indirectly
competitive with the pawn business of Purchaser (or its corporate successor) or
any of its subsidiaries within a twenty (20) mile radius of the location of any
pawn store or business now or hereafter owned, operated or managed by Purchaser
(or its corporate successor) or any of its subsidiaries; (5) solicit customers
or potential customers of Purchaser (or its corporate successor) or any of its
subsidiaries within a twenty (20) mile radius of any pawn store or business now
or hereafter owned, operated or managed by Purchaser (or its corporate
successor) or any of its subsidiaries; (6) own or apply for a pawn license with
respect to a location within a twenty (20) mile radius of the location of any
pawn store or business now or hereafter owned, operated or managed by Purchaser
(or its corporate successor) or any of its subsidiaries; or (7) directly or
indirectly interfere with or agitate in any way any employee or representative
of Purchaser (or its corporate successor) or any of its subsidiaries for the
purpose of causing such employee or representative to terminate employment or
any contractual relationship with Purchaser (or its corporate successor) or any
of its subsidiaries or to be dissatisfied with their employment or contractual
relationship. The terms "participate in" and "participation" shall mean that
Shareholder shall directly or indirectly, for his own benefit or for, with or
through any other person, firm or corporation, own, manage, operate or control a
pawn business, loan money to or participate in the ownership, management, or
control of a pawn business, or be connected or associated with a pawn business
as a director, shareholder, officer, employee, partner, consultant, agent,
independent contractor, lender or otherwise. To induce Purchaser to enter into
this Agreement, Seller and Shareholder unconditionally represent and warrant to
Purchaser and agree that the restrictions in the foregoing provisions are
reasonable and that such provisions are enforceable in accordance with their
terms. Subparagraphs (2), (3), (4) and (6) shall not apply to any location
listed on Exhibit A with respect to which Seller or Shareholder has taken
possession as a result of a monetary default by Purchaser under the lease
agreement relating to such location and with respect to which no dispute or
controversy with Purchaser exists.
In the event of the breach by Seller or Shareholder of any of the covenants
contained in this Article XII, it is understood that damages will be difficult
to ascertain and Purchaser may petition a court of law or equity for injunctive
relief in addition to any other relief which Purchaser may have under law, this
Agreement or any other agreement in connection therewith. In connection with
the bringing of any legal or equitable action for the enforcement of this
Agreement, Purchaser shall be entitled to recover, whether Purchaser seeks
equitable relief, and regardless of what relief is afforded, such reasonable
attorney's fees and expenses as Purchaser may incur in prosecution of
Purchaser's claim for breach hereof if Purchaser is the prevailing party. The
existence of any claim or cause of action of Seller against Purchaser, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Purchaser of the covenants and agreements of Seller and
Shareholder contained in this Article XII. Seller and Shareholder
unconditionally agree to indemnify and hold harmless Purchaser of and from all
losses, damages, costs and expenses arising out of or attributable to the breach
by Seller or Shareholder of this Article XII.
ARTICLE XIII
MISCELLANEOUS
13.01. Amendment. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by the party against which enforcement
of the amendment, modification or supplement is sought.
13.02. Assignment. Neither this Agreement nor any right created hereby
shall be assignable by either party hereto.
13.03. Notice. Any notice or communication must be in writing and given
by depositing the same in the United States mail, postage prepaid and registered
or certified with return receipt requested, or by delivering the same in person,
addressed to the party to be notified at the following address (or at such other
address as may have been designated by written notice):
Seller: Pawnshops of America, Inc.
x/x Xxxxxx Xxxxx
X. X. Xxx 0000
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Shareholder: Xxxxxx Xxxxx
X. X. Xxx 0000
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Purchaser: First Cash, Inc.
000 Xxxx Xxxxx, Xxxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx
Such notice shall be deemed received on the date on which it is hand
delivered or on the third business day following the date on which it is so
mailed.
13.04. Confidentiality. The parties shall keep this Agreement and its
terms confidential. In the event that the transactions contemplated by this
Agreement are not consummated for any reason whatsoever, the parties hereto
agree not to disclose or use any confidential information they may have
concerning the affairs of the other parties, except for information which is
required by law to be disclosed or press releases which are customary for a
publicly traded company. Confidential information includes, but is not limited
to, customer lists and files, prices and costs, business and financial records,
surveys, reports, plans, proposals, financial information, information relating
to personnel contracts, stock ownership, liabilities and litigation. Should the
transactions contemplated hereby not be consummated, nothing contained in this
Section shall be construed to prohibit the parties hereto from operating a
business in competition with each other.
13.05. Entire Agreement. This Agreement and the exhibits hereto supersede
all prior agreements and understandings relating to the subject matter hereof,
except that the obligations of any party under any agreement executed pursuant
to this Agreement shall not be affected by this Section.
13.06. Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorney fees), and each party hereto agrees to pay the
costs and expenses, including reasonable attorney fees, incurred by the other
parties in successfully (a) enforcing any of the terms of this Agreement, or (b)
proving that the other parties breached any of the terms of the Agreement in any
material respect.
13.07. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof such provision shall be fully severable and this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
never comprised a part hereof; and the remaining provisions hereof shall remain
in full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance here from. Furthermore, in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
13.08. Survival of Representations, Warranties and Covenants. Except for
the representations, warranties, covenants and agreements contained in Article
XI and in Article XII, the representations, warranties and covenants contained
herein shall survive the Closing for a period of two (2) years and all
statements contained in any certificate, exhibit or other instrument delivered
by or on behalf of Seller or Purchaser pursuant to this Agreement shall be
deemed to have been representations and warranties by Seller or Purchaser, as
the case may be, and shall survive the Closing and any investigation made by any
party hereto or on its behalf.
13.09. Governing Law. All rights of Seller relating to payment by
Purchaser of the Purchase Price shall be governed, construed and enforced under
the laws of the State of South Carolina. All other rights and obligations of
the parties hereto shall be governed, construed and enforced in accordance with
the laws of the State of Texas.
13.10 Venue. The parties agree that any controversy or litigation
relating solely to the payment by Purchaser of the Purchase Price shall lie in
Spartanburg County, South Carolina. Except as provided in the immediately
preceding sentence of this Section 13.10, the parties agree that any controversy
or litigation relating directly or indirectly to this Agreement must be brought
before and determined by a court of competent jurisdiction in Tarrant County,
Texas.
13.11. Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise effect any of the terms or
provisions hereof.
13.12. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
13.13. Taxes. Seller shall be liable for all sales, use or other taxes
resulting from the transactions contemplated hereby. Seller shall indemnify and
hold harmless Purchaser of and from all of Seller's sales, use or other taxes
resulting from the transactions contemplated hereby.
13.14. Bulk Transfer Laws. The parties hereto waive compliance in all
respect with any applicable bulk transfer laws. As set forth in Section X
hereof, Seller hereby agrees to indemnify and hold Purchaser harmless of and
from any loss, cost, and expense of whatsoever type or nature whenever or
however incurred as a result of Seller not paying Seller's creditors.
13.15. Shareholder Obligations. The obligations and agreements of
Shareholder under this Agreement are limited to those obligations and agreements
contained in Article XI relating to the use of licenses and permits and in
Article XII restricting the competition and other activities of Seller and
Shareholder.
SELLER:
PAWNSHOPS OF AMERICA, INC., a
South Carolina corporation
By:
Xxxxxx Xxxxx, President
SHAREHOLDER:
Xxxxxx Xxxxx
PURCHASER:
FIRST CASH, INC.,
a Delaware corporation
By:
Xxxx X. Xxxxxx, President
