Exhibit 10.62
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This AGREEMENT AND PLAN OF REORGANIZATION is dated as of December 11, 1998
by and among First Cash, Inc., a Delaware corporation ("Parent"), Cash & Go of
Illinois, Inc., an Illinois corporation and a wholly-owned subsidiary of Parent
("Subsidiary"), One Iron Ventures, Inc., an Illinois corporation (the "Target")
(Subsidiary and Target being hereinafter collectively referred to as the
"Constituent Corporations") and Xxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx, Xx.,
Xxxx Xxxxxxxxx and Xxxxxxx Bingo (individually, a "Shareholder" and
collectively, the "Shareholders").
RECITALS
--------
WHEREAS, the Boards of Directors of Parent, Subsidiary and Target have
approved the acquisition of Target by Parent; and
WHEREAS, the Boards of Directors of Parent, Subsidiary and Target have
approved the merger of Subsidiary into Target (the "Merger"), pursuant to the
Agreement of Merger set forth in Exhibit A hereto ("Merger Agreement") and the
transactions contemplated hereby, in accordance with the applicable provisions
of the statutes of the State of Illinois, which permit such Merger; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization with the meaning of section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions thereto.
AGREEMENT
---------
Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
----------
1.1 The Merger. (a) At the Effective Time (as defined in section 1.2)
and subject to the terms and conditions of this Agreement and the Merger
Agreement, Subsidiary shall be merged into Target and the separate existence of
Subsidiary shall thereupon cease, in accordance with the applicable provisions
of the Illinois Business Corporation Act of 1983, as amended (the "IBCA").
(b) Target will be the surviving corporation in the Merger (sometimes
referred to herein as the "Surviving Corporation") and will continue to be
governed by the laws of the State of Illinois, and the separate corporate
existence of Target and all of its rights, privileges, immunities and
franchises, public or private, and all its duties and liabilities as a
corporation organized under the IBCA, will continue unaffected by the Merger.
(c) The merger will have the effects specified by the IBCA.
1.2 Effective Time. As soon as practicable following fulfillment or waiver
of the conditions specified in Article VII hereof, and provided that this
Agreement has not been terminated or abandoned pursuant to Article IX hereof,
the Constituent Corporations will cause Articles of Merger (the "Articles of
Merger") to be filed with the office of the Secretary of State of the State of
Illinois. Subject to and in accordance with the laws of the State of Illinois,
the Merger will become effective at the date and time the Articles of Merger are
filed with the office of the Secretary of State of the State of Illinois or such
later time or date as may be specified in the Articles of Merger (the "Effective
Time"). Each of the parties will use its best efforts to cause the Merger to be
consummated as soon as practicable following the fulfillment or waiver of the
conditions specified in Article VII hereof.
ARTICLE II
THE SURVIVING CORPORATION
-------------------------
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Target as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time.
2.2 By-Laws. The By-Laws of Target as in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation after the
Effective Time.
2.3 Board of Directors. From and after the Effective Time, the Board of
Directors of Subsidiary shall be the Board of Directors of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
--------------------
3.1 Conversion of Target Shares in the Merger. Pursuant to the Merger
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of any holder of any capital stock of Target, all of the issued and
outstanding shares of common stock (no par value per share) of Target ("Target
Common Stock") shall be converted into, and become exchangeable for, four
hundred thirty thousand (430,000) shares of validly issued, fully paid and
nonassessable common stock ($.01 per value) of Parent ("Parent Common Stock").
3.2 Status of Target Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any capital stock of
Target, each issued and outstanding share of common stock of Target shall
continue unchanged and remain outstanding as a share of common stock of the
Surviving Corporation.
(a) From and after the Effective Time, the Shareholders shall be entitled
to receive from Parent in exchange for all outstanding shares of Target Common
Stock surrendered to Parent, a certificate or certificates representing the
number of shares of Parent Common Stock into which such holder's shares of
Target Common Stock were converted pursuant to Section 3.1. If any certificate
for shares of Parent Common Stock is to be issued in a name other than that in
which the certificate, which immediately prior to the Effective Time represented
shares of Target Common Stock, surrendered in exchange therefor is registered,
it shall be a condition of such exchange that the person requesting such
exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for such shares of Parent Common Stock in a name other
than that of the registered holder of any such certificate surrendered.
(b) Upon surrender of the certificate or certificates representing Target
Common Stock ("Target Certificate"), the holder of such Target Certificates
shall be entitled to receive in exchange therefor a certificate representing
that number of shares of Parent Common Stock into which the shares of Target
Common Stock represented by Target Certificates so surrendered shall have been
converted pursuant to the provisions of Section 3.1, and Target Certificates so
surrendered shall forthwith be canceled.
3.3 Closing of Transfer Books. From and after the Effective Time, the
stock transfer books of Target shall be closed and no transfer of shares of
Target Common Stock shall thereafter be made. If, after the Effective Time,
Target Certificates are presented to Parent, they shall be canceled and
exchanged for the Parent Common Stock in accordance with the procedures set
fforth in this Article III
3.4 Closing. The closing (the "Closing") of the transactions contemplated
by this Agreement shall take place at such time, place and date as Parent and
Target shall agree (the "Closing Date").
ARTICLE IV
FURTHER AGREEMENT
-----------------
4.1 On the Closing Date Target shall repay the loans from Xxxx X.
Xxxxxxxxx and Xxxxxx X. Xxxxxxxxx, Xx. in the aggregate principal amount of two
hundred eighty thousand dollars ($280,000). Promptly after the completion of
the Return of Target for 1998 but in no event later than April 1, 1999 there
shall be distributed to the Shareholders by Target in proportion to their
percentage ownership interests in Target immediately prior to the Effective Time
an aggregate amount equal to the total additional amount of Federal and state
income taxes paid or payable by the Shareholders for the calendar year 1998
attributable to the income of Target less the aggregate amount of distributions
by Target to each of the Shareholders between January 1, 1998 and the Effective
Time (other than loan repayments required pursuant to the terms of this
Section 4.1).
4.2 Investor Representation Letter. On the date hereof, the Shareholders
shall execute the Investor Representation Letter in the form of Exhibit C
attached hereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 General Statement. The parties make the representations and
warranties to each other which are set forth in this Article V. The survival of
all such representations and warranties shall be in accordance with section 10.1
hereof. All representations and warranties of Target are made subject to the
exceptions which are noted in the schedule delivered by Target to Parent
concurrently herewith and identified as the "Target Disclosure Schedule."
Copies of all documents referenced in the Target Disclosure Schedule shall be
attached thereto.
5.2 Representations and Warranties of Parent and Subsidiary. Parent and
Subsidiary jointly and severally represent and warrant to Target, as of the date
hereof and at the Effective Time, as follows:
(a) Organization. Each of the Parent and the Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation;
(b) Authorization of Transaction. Each of Parent and Subsidiary has the
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of each of
the Parent and the Subsidiary, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. To the knowledge of any director or officer of
Parent, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any government, governmental agency or court which
either Parent or Subsidiary is subject to or provision of the charter or by-laws
of either Parent or Subsidiary, or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration, create in any party the
right to accelerate, terminate, modify or cancel or require any notice, under
any agreement, contract, lease, license, instrument or other arrangement to
which either Parent or the Subsidiary is a party or by which it is bound or to
which any of its assets is subject, except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation or
failure to give notice would not have a material adverse effect on the ability
of the parties to consummate the transactions contemplated by the Agreement. To
the knowledge of any director or officer of Parent, other than in connection
with the provisions of the Illinois General Corporation Law, neither Parent nor
Subsidiary needs to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or obtain any
authorization, consent or approval would not have a material adverse effect on
the ability of the parties to consummate the transactions contemplated by this
Agreement.
(d) Parent Common Stock. The shares of Parent Common Stock to be issued
to the Shareholders as contemplated hereunder are (i) duly authorized, and (ii)
when issued and exchanged pursuant to the terms of this Agreement, will be
validly issued, fully paid, non-assessable and not subject to any preemptive
rights.
(e) Taxes.
(1) All tax returns, statements, reports and forms (including estimated
tax returns and reports and information returns and reports) required to be
filed with any tax authority with respect to any taxable period ending on or
before the consummation of the transactions set forth herein, by or on behalf of
Parent (collectively, the "Parent Returns"), have been or will be filed when due
(including any extensions of such due date), and all amounts shown to be due
thereon on or before the Closing have been or will be paid on or before such
date, except to the extent such failure to file or pay has not had and could not
reasonably be expected to have a Material Adverse Effect.
(2) The consolidated financial statements of Parent contained in Parent's
Annual Report to Stockholders for the year ended July 31, 1998, and in any
subsequent Parent Reports fully accrue all material actual and contingent
liabilities for taxes with respect to all periods through the date thereof in
accordance with GAAP.
(f) Governmental Authorizations and Licenses. Parent has all material
licenses, orders, authorizations, permits, concessions, certificates and other
franchises or analogous instruments of any governmental entity required by
applicable law to operate its business (collectively, the "Parent Government
Licenses") which Parent Government Licenses are in full force and effect, and is
in compliance with the terms, conditions, limitations, restrictions, standards,
prohibitions, requirements and obligations of such Parent Government Licenses
except to the extent failure to hold and maintain such Parent Government
Licenses or to so comply would not be reasonably likely to have a Material
Adverse Effect. There is not now pending, nor to the best knowledge of Parent
is there threatened, any action, suit, investigation or proceeding against
Parent before any governmental entity with respect to the Parent Government
Licenses, nor is there any issued or outstanding notice, order or complaint with
respect to the violation by Parent of the terms of any Parent Government License
or any rule or regulation applicable thereto, except to the extent that any such
action would not be reasonably likely to have a Material Adverse Effect.
Whenever used in this Article V, the phrase "Material Adverse Effect" shall mean
a material adverse effect on the business, properties, prospects, conditions
(financial or otherwise) or results of operations of Parent or its subsidiaries
on a consolidated basis.
5.3 Representations and Warranties of Target and Shareholders. Target and
each of the Shareholders jointly and severally represent and warrant to each of
Parent and Subsidiary as of the date hereof and at the Effective Time, as
follows:
(a) Organization, Qualification and Corporate Power. Target is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the state of Illinois. Target is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required. Target has full corporate power and authority to
carry on the business in which it is engaged and to own and use the properties
owned and used by it.
(b) Capitalization. The entire authorized capital stock of the Target
consists of 1,000 shares of common stock, of which one hundred (100) shares are
issued and outstanding. All of the issued and outstanding shares of Target have
been duly authorized and are validly issued, fully paid, and nonassessable.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Target to issue, sell or otherwise cause to
become outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Target.
(c) Authorization of Transaction. Target has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder; provided, however, that the
Target cannot consummate the Merger unless and until it receives the approval of
its shareholders. This Agreement constitutes the valid and legally binding
obligation of the Target, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) to the best of each Shareholder's knowledge, violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Target is subject or any provision of the charger or bylaws of Target or
(ii)conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Target is a party or by which
it is bound or to which any of its assets is subject (or result in the
imposition of any security interest upon any of its assets) other than in
connection with the provisions of the Illinois General Corporation Law, Target
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement.
(e) Financial Statements. The financial statements (including the related
notes and schedules) dated as of December 31, 1997 and October 31, 1998 have
been prepared in accordance with generally accepted accounting principles
(except for the accrual of accounts payable) applied on a consistent basis
throughout the periods covered thereby, present fairly the financial condition
of the Target as of the indicated dates and the results of operations of the
Target for the indicated periods, are correct and complete in all respects, and
are consistent with the books and records of the Target.
(f) Events Subsequent to October 31, 1998. Since October 31, 1998, there
has not been any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of Target.
(g) Undisclosed Liabilities. Target has no liability (whether known or
unknown, whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including any
liability for taxes, except for (i) liabilities set forth in the face of the
balance sheets dated October 31, 1998 and outstanding at the Effective Time,
(ii) liabilities which have arisen after October 31, 1998 in the ordinary course
of business, including indebtedness related to the expansion of the three (3)
new stores (none of which results from, arises out of, relates to, is in the
nature of, or was caused by breach of contract, breach of warranty, tort,
infringement, or violation of law), and (iii) unasserted claims.
(h) Brokers' Fees. The Shareholders shall be responsible for and pay any
fees or commissions to any broker, finder, or agent engaged by any of the
Shareholders or Target with respect to the transactions contemplated by this
Agreement.
(i) Taxes. With respect to Taxes (as defined below:)
(i) Target has filed, within the time and in the manner prescribed by
law, all returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed under federal, state, local or any
foreign laws by Target or such Target, and all such returns are true, correct
and complete in all material respects.
(ii) Except as set forth on Schedule 5.3(i)(ii) of Target Disclosure
Schedule, Target has within the time and in the manner prescribed by law, paid
(and until the Effective Time will, within the time and in the manner prescribed
by law, pay) all Taxes (as defined below) that are due and payable.
(iii) There are no liens for Taxes upon the assets of Target except
liens for Taxes not yet due.
(iv) Target and each of its predecessors by merger have had a valid
election in effect under section 1362(a) of the Code to be an S corporation for
the calendar year 1998 and all prior years since their organization.
(v) Except as set forth in Schedule 5.3(i)(vi) of Target Disclosure
Schedule (which shall set forth the type of return, date filed, and date of
expiration of the statute of limitations), no deficiency for any Taxes has been
proposed, asserted or assessed against Target which has not been resolved and
paid in full.
(vi) There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Returns that have been given by Target.
(vii) Except as set forth on Schedule 5.3(i)(viii) of Target
Disclosure Schedule (which shall set forth the nature of the proceeding, the
type of return, the deficiencies proposed or assessed and the amount thereof,
and the taxable year in question), no federal, state, local or foreign audits or
other administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Returns.
(viii) Target is not a party to any tax-sharing or allocation
agreement, nor does Target owe any amount under any tax-sharing or allocation
agreement.
(ix) No amounts payable under any plan, agreement or arrangement will
fail to be deductible for federal income tax purposes by virtue of Section 280G
of the Code.
(x) Target has complied (and until the Effective Time will comply) in
all respect with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes (including, without limitation, withholding of
Taxes pursuant to Sections 1441 or 1442 of the Code or similar provisions under
any foreign laws) and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under all
applicable laws.
(xi) Target has not ever been (and does not have any liability for
unpaid Taxes because it once was) a member of an "affiliated group" within the
meaning of section 1502 of the Code during any part of any consolidated return
year within any part of which year any corporation other than Target was also a
member of such affiliated group.
(xii) There will be no Taxes owed by Target as a result of any "net
recognizable built-in gain" (as defined in section 1374 of the Code).
(xiii) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, estimated, severance, stamp, occupancy or property
taxes, customs duties, fees, assessments or charges of any kind whatsoever
(together with any interest and any penalties, additions to tax or additional
amounts) imposed by any taxing authority (domestic or foreign) upon or payable
by Target.
(j) Agreements. Except as listed and disclosed on the Target Disclosure
Statement and attached to this Agreement, Target is not subject to any
employment agreement, contract, lease or other agreement. Target is not subject
to any agreement with any software customer regarding restricting or limiting
competition or disclosure of information except for an agreement with Xxxxxxxx,
Inc., if any.
(k) Employees. Target has furnished to Parent payroll report for pay
period ending November 27, 1998 and the bonus report for the month of October
1998 listing the compensation arrangement for each employee and furnished to
Parent a copy of the employee health insurance plan.
(l) Litigation and Claims. Except as disclosed on the Target Disclosure
Statement, Target is not subject to any litigation or is a party to any decree
or judgment or, to any Shareholder's actual knowledge, any claims.
(m) Subsidiaries. Target has no subsidiaries.
(n) Intangible Assets. The Target Disclosure Schedule contains a complete
list of all Intellectual Property Rights and all other intangible assets used
in connection with the business of Target, including, but not limited to, all
software used or licensed by Target in connection with the business of Target.
Target has the absolute right to use the name "Instant Cash Advance" in
Illinois. No person or entity has any ownership interest in or right to payment
attributable to or arising out of the use of such intangible assets except as
listed in the Target Disclosure Schedule. As used herein, the term
"Intellectual Property Rights" means all industrial and intellectual property
rights, including, without limitation, patents, patent applications, patent
rights, trademarks, trademark applications, trade names, service marks, service
xxxx applications, copyrights, copyright applications, know-how, trade secrets,
proprietary processes and formulae, confidential information, franchises,
licenses, inventions, instructions, marketing materials, trade dress, logos and
designs and all documentation and media constituting, describing or relating to
the foregoing, including, without limitation, manuals, memoranda and records.
(o) Intellectual Property.
(i) Target has the right to use all Intellectual Property Rights
necessary or required for the conduct of its business as currently conducted and
such rights are sufficient for such conduct of its business.
(ii) Except as set forth in the Target Disclosure Statement, there
are no royalties, honoraria, fees or other payments payable by Target to any
person by reason of the ownership, use, license, sale or disposition of the
Intellectual Property Rights.
(iii) Except as set forth in the Target Disclosure Statement, no
activity, service or procedure currently conducted by Target violates or will
violate any contract of Target with any third party or infringe any Intellectual
Property Right of any other party or person.
(iv) Except as set forth in the Target Disclosure Statement, Target
has not received from any third party in the past three years any notice,
charge, claim or other assertion that Target is infringing any Intellectual
Property Right of any third party or committed any acts of unfair competition,
and no such claim is impliedly threatened by an offer to license from a third
party under a claim of use.
(v) Except as set forth in the Target Disclosure Statement, Target
has not sent to any third party in the past three years nor otherwise
communicated to another person any notice, charge, claim or other assertion of
infringement by or misappropriation of any Intellectual Property Right of Target
by such other person or any acts of unfair competition by such other person, nor
is any such infringement, misappropriation or unfair competition occurring or
threatened.
(vi) The Target Disclosure Statement contains a true and complete
list of all applications, filings and other formal actions made or taken by
Target to perfect or protect its interest in the Intellectual Property Rights,
including, without limitation, all patents, patent applications, trademarks,
trademark applications, service marks, service xxxx applications, copyrights and
copyright applications.
(p) Title to Assets, Properties and Rights and Related Matters. Target
has such rights and interests in the Intellectual Property Rights as provided in
Section 5.3(n) and except as set forth in the Target Disclosure Statement, good
and marketable title to all other assets, properties and interests in
properties, real or personal, reflected on the financial statement dated October
31, 1998 or acquired after October 31, 1998 (except accounts receivable and
notes receivable paid in full subsequent to October 31, 1998), free and clear of
all encumbrances of any kind or character, except for those encumbrances set
forth in the Target Disclosure Statement.
(q) Compliance With Laws. To each Shareholder's knowledge, Target is in
compliance with all laws, regulations, rules and ordinances in any manner
relating to the ownership or operation of the business or businesses of Target.
(r) Licenses. Target has been issued all licenses necessary to operate
the business of Target at each of the business locations of Target.
(s) Zoning. Each of the locations at which the business of Target is
conducted is zoned to permit the operation of such business of Target at such
location.
(t) Leases. The Target Disclosure Schedule contains a complete list of
all leases for which Target is subject. Excluding any default attributable to
the change in ownership or control resulting from the consummation of this
Agreement, no breach or default exists, or with the giving of notice or the
passage of time or both will exist, under the terms of any of such leases except
as reflected on the Target Disclosure Schedule.
(u) Indebtedness. The Target Disclosure Schedule contains a complete list
of all indebtedness and obligations of Target in excess of one thousand dollars
($1,000) as of the date of this Agreement.
(v) Distributions. Target has not made any distributions to any of the
Shareholders during 1998 except for the payments to be made on the Closing Date
required by Section 4.1.
ARTICLE VI
COVENANTS
---------
6.1 Conduct of Business of Target Pending the Merger. Target agrees that
from the date hereof and prior to the Effective Time or earlier termination of
this Agreement:
(a) Full access. Target shall permit representatives of Parent to have
full access to all premises, properties, personnel, books, records, contracts
and documents pertaining to Target with reasonable notice and without disruption
to ordinary business operations;
(b) Operation of Business. Target will not engage in any practice, take
any action, or enter into any transaction outside the ordinary course of
business. Without limiting the generality of the foregoing:
(i) Target will not authorize or effect any change in its charter or
bylaws;
(ii) Target will not grant any options, warrants, or other rights to
purchase or obtain any of its capital stock or issue, sell, or otherwise dispose
of any of its capital stock.
(iii) Target will not declare, set aside, or pay any dividend or
distribution with respect to its capital stock (whether in cash or in kind), or
redeem, repurchase, or otherwise acquire any of its capital stock;
(iv) Target will not issue any note, bond, or other debt security or
create, incur, assume, or guarantee any indebtedness for borrowed money or
capitalized lease obligation outside the ordinary course of business;
(v) Target will not impose any security interest upon any of its
assets;
(vi) Target will not make any capital investment in, make any loan
to, or acquire the securities or assets of any other person outside the ordinary
course of business;
(vii) Target will not make any change in employment terms for any of
its directors, officers, and employees outside the ordinary course of business;
and
(viii) Target will not commit to any of the foregoing.
(c) Exclusivity. Target shall not solicit, initiate or encourage the
submission of any proposal or offer from any person relating to the acquisition
of all or substantially all of the capital stock or assets of Target. Target
shall notify the Parent immediately if any person makes any proposal, offer,
inquiry or contact with respect to any of the foregoing.
(d) New Locations. Target shall use good faith efforts to complete the
finish out and obtain the licenses for the operation of the three locations
which have not opened for business as of the date of this Agreement.
6.2 Approval of Shareholders. Target shall (a) cause a meeting of its
shareholders to be duly called and held in accordance with the laws of the State
of Illinois, applicable federal and state securities laws and Target's Articles
of Incorporation and By-Laws as soon as reasonable practicable for the purpose
of voting on the adoption and approval of this Agreement, the Merger Agreement,
and the Merger (the "Proposal"), (b) recommend to its shareholders approval of
the Proposal (except to the extent that the board of directors of Target
determines, after receiving the written advice of counsel, that such act is not
permitted by such board of directors in the discharge of their fiduciary duties
to Target), and (c) use its best efforts to obtain the necessary approval of its
shareholders.
6.3 Noncompetition. Shareholders unconditionally agree that prior to
December 11, 2008 none of the Shareholders shall (1) enter into any agreement
with or directly or indirectly solicit employees or representatives of Parent
(or its corporate successor) or any of its Subsidiaries for the purpose of
causing them to leave Parent (or its corporate successor) or any of its
Subsidiaries to take employment with any of the Shareholders or any other person
or business entity, (2) compete, directly or indirectly, with Parent (or its
corporate successor) or any of its Subsidiaries or any person or entity for whom
Parent (or its corporate successor) or any of its Subsidiaries manages a
business in the State of Illinois or within twenty-five (25) miles of any
location listed on Exhibit D currently owned or managed by Parent or any of its
Subsidiaries (the "Noncompete Area"), (3) act as an officer, director,
consultant, shareholder, partner, lender, agent, associate or principal of any
entity engaged in any business of the same nature as, or in competition with,
Parent (or its corporate successor) or any of its Subsidiaries in the State of
Illinois or within twenty-five (25) miles of any location listed on Exhibit D
currently owned or managed by Parent or any of its Subsidiaries, (4) participate
in the ownership, management, operation or control of any business directly or
indirectly competitive with the business of Parent (or its corporate successor)
or any of its Subsidiaries in the State of Illinois or within twenty-five (25)
miles of any location listed on Exhibit D currently owned or managed by Parent
or any of its Subsidiaries, or (5) directly or indirectly interfere with or
agitate in any way any employee or representative of Parent (or its corporate
successor) or any of its Subsidiaries for the purpose of causing such employee
or representative to terminate employment or any contractual relationship with
Parent (or its corporate successor) or any of its Subsidiaries or to be
dissatisfied with their employment or contractual relationship, (6) solicit
customers or potential customers of Parent (or its corporate successor) or any
of its Subsidiaries in the State of Illinois or within twenty-five (25) miles of
any location listed on Exhibit D currently owned or managed by Parent or any of
its Subsidiaries, or (7) own or apply for a license or permit to operate in the
State of Illinois or within twenty-five (25) miles of any location listed on
Exhibit D currently owned or managed by Parent or any of its Subsidiaries of a
type similar to a license or permit owned or held by Parent (or its corporate
successor) or any of its Subsidiaries. To induce Parent to enter into this
Agreement and to acquire the stock of Target owned by Shareholders, Shareholders
unconditionally represent and warrant to Parent that the restrictions in the
foregoing provision are reasonable, and that such provision is necessary to
protect the business of Parent, Target and its Subsidiaries and that such
provision is enforceable in accordance with its terms. Each of Shareholders
acknowledge that Parent is entering into this Agreement in reliance upon the
foregoing representation and warranty of the Shareholders and that the Parent
and Target competes or will compete with other businesses that are or could be
located in any part of the United States. As used herein, the term "participate
in" shall mean that any Shareholder shall directly or indirectly, for his own
benefit or for, with or through any other person, firm or corporation, own,
manage, operate or control a business, loan money to, or participate in the
ownership, management, or control of a business, or be connected with a business
as a director, officer, employee, partner, consultant, agent, independent
contractor or otherwise. As used herein in this Section 6.3, the term
"Subsidiary" shall mean any corporation more than fifty percent (50%) of the
capital stock is owned directly or indirectly by Parent or Target or the
corporate parent of Parent or Target.
In the event of the breach by any of Shareholders of any of the covenants
contained in this Section 6.3, it is understood that damages will be difficult
to ascertain and Parent (or its corporate successor) may petition a court of law
or equity for injunctive relief in addition to any other relief which Parent (or
its corporate successor) may have under law, this Agreement or any other
agreement in connection therewith. In connection with the bringing of any legal
or equitable action for the enforcement of this Agreement, Parent (or its
corporate successor) and Target shall be entitled to recover, whether Parent (or
its corporate successor) seeks equitable relief, and regardless of what relief
is afforded, such reasonable attorney's fees and expenses as Parent (or its
corporate successor) may incur in prosecution of Parent's claim for breach
hereof. The existence of any claim or cause of action of Target or any of the
Shareholders against Parent, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Parent of the covenants and
agreements of Target and Shareholders contained in this Section 6.3.
Shareholders jointly, severally and unconditionally agree to indemnify and hold
harmless Parent (or its corporate successor) and Target of and from all losses,
damages, costs and expenses arising out of or attributable to the breach by any
of Shareholders of this Section 6.3.
6.4 Third Party Consents. Each party to this Agreement shall use its best
efforts to obtain, as soon as reasonably practicable, all permits,
authorizations, consents, waivers and approvals from third parties or
governmental authorities necessary to consummate this Agreement and the Merger
Agreement and the transactions contemplated hereby or thereby, including,
without limitation, any permits, authorizations, consents, waivers and approvals
required in connection with the Merger.
6.5 Releases. Parent shall use reasonable efforts to have the
Shareholders released from liability under guaranty agreements and lease
agreements relating to Target. If this Agreement is consummated, Parent shall
indemnify and hold harmless the Shareholders for obligations and liabilities
under guaranty agreements and lease agreements attributable to the period after
the Effective Time.
6.6 Audit. Each of the Shareholders shall provide Deloitte and Touche,
LLP with the assistance necessary to complete the audit of the books and records
of Target within thirty (30) days after the Effective Time. This covenant shall
survive the Closing.
6.7 Qualification of Reorganization. After the Effective Time Parent
shall cause the Surviving Corporation to continue Target's historic business or
use a significant portion of Target's historic assets in a business in a manner
that satisfies Section 1.368-1(d), Income Tax Regs., and Parent shall not take,
or permit the Surviving Corporation to take any action which could cause the
Merger to fail to qualify as a reorganization within the meaning of section
368(a) of the Internal Revenue Code of 1986, as amended.
6.8 Registration of Stock. Parent shall use reasonable efforts to cause
a registration statement to be filed with the Securities and Exchange Commission
on or before January 31, 1999 covering the common stock of Parent to be received
by the Shareholders pursuant to the terms of this Agreement. Parent shall use
its best efforts to cause the common stock of Parent to be received by the
Shareholders, pursuant to the terms of this Agreement, to be registered under
the Securities Act of 1933, as amended, on or before February 29, 1999.
6.9 Consents of Lessors. Target and Shareholders agree to use reasonable
efforts to obtain the consent of all lessors and other parties to leases and
other contracts to the transfer of such leases and contracts.
6.10 Licenses. Promptly after the Closing Date Parent shall notify the
Illinois Department of Financial Institutions that the Merger was occurred and
apply for the renewal of all consumer installment loan licenses issued to
Target.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment of all of the following conditions precedent at or prior to the
Effective Time:
(a) The Merger shall be approved by the shareholders of Target;
(b) No injunction, order or decree by any Federal, state or foreign court
which prevents the consummation of Merger shall have been issued;
(c) No statute or regulation shall exist or be enacted which would prevent
consummation of Merger;
(d) All governmental consents and approvals required for Merger shall have
been obtained;
7.2 Conditions to Obligations of Target to Effect the Merger. The
obligation of Target to effect the Merger is subject to fulfillment of all of
the following conditions precedent at or prior to the Effective Time:
(a) All representations and warranties in Section 5.2 shall be true and
correct in all material respects;
(b) Parent and Subsidiary shall have performed and complied with all
covenants under this Agreement;
(c) Target shall have received a certificate of the president of Parent
and the chief financial officer of Subsidiary certifying that the conditions in
Sections 7.2(a) and 7.2(b) have been fulfilled;
(d) Parent shall have delivered to Target and the Shareholders the written
opinion of Parent's legal counsel in the form attached hereto as Exhibit E dated
as of the Closing Date.
7.3 Conditions to Obligations of Parent and Subsidiary to Effect the
Merger. The obligations of Parent and Target to effect the Merger are subject
to the fulfillment of all of the following conditions precedent at or prior to
the Effective Time:
(a) The representations and warranties made by Target and the Shareholders
are true and correct;
(b) Target and the Shareholders shall have performed and complied with all
of their respective obligations under this Agreement;
(c) No action, suit or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling or change would (A) prevent
consummation of any of the transactions contemplated by this Agreement; (B)
cause any of the transactions contemplated by this Agreement, (C) affect
adversely the right of Parent to own the capital stock of the Surviving
Corporation or (D) adversely affect the right of the Surviving Corporation to
own its assets and to operate its business (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect);
(d) Parent shall have received a certificate of president of Target
certifying that the conditions contained in Section 7.3(a) and 7.3(b) have been
fulfilled;
(e) The Investment Representation Letter in substantially the form of
Exhibit C shall have been executed by each of the Shareholders;
(f) All consents and approvals necessary for the Merger shall have been
obtained;
(g) Target shall have delivered to Parent and Subsidiary the written
opinion of counsel to Target, substantially in the form attached hereto as
Exhibit F, dated as of the Closing Date;
(h) No material adverse change has occurred in the business, operations or
prospects of Target;
(i) Eight payday advance stores of Target are open and operating and
leases satisfactory to Parent covering three (3) additional locations have been
fully executed;
(j) All licenses necessary to operate the eight (8) existing business
locations of Target after the consummation of the Merger have been issued or
reissued;
(k) No distributions shall have been made by Target to any of the
Shareholders during the year 1998 except the distributions declared by the Board
of Directors on October 28, 1998;
(l) Resignation of the officers and directors of Target; and
(m) Each of the Shareholders of Target shall have delivered to Parent
executed assignments of all capital stock of Target owned by each of them.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 General Indemnification Covenants. (a) Subject to the provisions of
Sections 8.3 and 8.4, the Shareholders shall indemnify, save and keep Parent and
its affiliates, successors and permitted assigns (including Target and the
Surviving Corporation) (the "Parent Indemnitees"), harmless against and from all
liability, demands, claims, actions or causes of action, assessments, losses,
fines, penalties, costs, damages and expenses, including reasonable attorneys'
fees, disbursements and expenses (collectively, "Damages"), sustained or
incurred by any of the Parent Indemnitees as a result of, arising out of or by
virtue of any misrepresentation, breach of any warranty or representation, or
non-fulfillment of any agreement or covenant on the part of Target or any of the
Shareholders, whether contained in this Agreement or the Merger Agreement or any
exhibit or schedule hereto or in any closing document delivered by Target or any
of the Shareholders to Parent or Subsidiary in connection herewith.
Notwithstanding anything contained in this Article VIII or this Agreement, no
claim, suit, demand suit or cause of action shall be brought against the
Shareholders nor shall any Shareholder be liable for any Damages under this
Article VIII or this Agreement unless and until the aggregate amount of Damages
under this Article VIII or this Agreement exceeds fifty thousand dollars
($50,000), in which event Parent shall be entitled to indemnification for all
Damages in excess of $50,000 in the aggregate. (b) Parent shall
indemnify, save and keep the Shareholders ("Target Indemnitees") harmless
against and from all liability, demands, claims, actions or causes of action,
assessments, losses, fines, penalties, costs, damages and expenses, including
reasonable attorneys fees, disbursements and expenses (collectively, "Damages")
sustained or incurred by any of the Target Indemnitees as a result of any
misrepresentations, breach of any warranty or representation or non-fulfillment
of any agreement or covenant on the part of Parent, whether contained in this
Agreement or the Merger Agreement or any exhibit or schedule hereto in any
closing document delivered by Parent to any of the Shareholders in connection
herewith. Notwithstanding anything contained in this Article VIII or this
Agreement, no claim, suit, demand suit or cause of action shall be brought
against Parent nor shall Parent be liable for any Damages under this Article
VIII or this Agreement unless and until the aggregate amount of Damages under
this Article VIII or this Agreement exceeds fifty thousand dollars ($50,000) in
the aggregate, in which event Shareholders shall be entitled to indemnification
for all Damages in excess of $50,000 in the aggregate (excluding Damages
attributable to any violation of Section 4.1, Section 6.7 or Section 6.8).
8.2 Tax Indemnity.
(a) The Shareholders hereby agree to pay, indemnify,
defend and hold Parent and Target harmless from and against any and all Taxes
(as defined in Section 5.3(i)) of Target with respect to any period (or any
portion thereof) up to and including the Effective Time, except for Taxes of
Target which are reflected as current liabilities for taxes that exist as of the
Effective Time ("Current Tax Liabilities") on the balance sheet dated October
31, 1998 ("Closing Balance Sheet"), together with all reasonable legal fees,
disbursements and expenses incurred by Parent or Target in connection therewith.
(b) Parent shall prepare and file any Return of Target which is required
to be filed after the Effective Time and which relates to any period (or portion
thereof) up to and including the Effective Time and Parent shall, within fifteen
(15) days prior to the due date of any such Return, deliver a draft copy to the
Shareholders. As soon as is practicable after notice from Parent to the
Shareholders at any time prior to the date any payment for Taxes attributable to
any such Return is due, an amount equal to the excess, if any, of (i) Taxes that
are due with respect to any taxable period pending on or before the Effective
Time, or Taxes that would have been due with respect to a taxable period
beginning before and ending after the Effective Time if such period had ended on
the Effective Time over (ii) the amount of such Taxes of Target with respect to
such taxable period which are reflected as Current Tax Liabilities on the
Closing Balance Sheet shall be promptly paid by the Shareholders to Parent.
(c) Parent shall indemnify Shareholders of and from any income tax
liability resulting from (i) any increase in the amount of ordinary income of
Target above the amount of ordinary income reflected on the original Return of
Target for 1997 and (ii) any increase in the amount of ordinary income of
Target for the portion of 1998 ending on the Effective Date above the amount of
ordinary income reflected on the original Return for 1998 prepared by Parent.
In the event that it is ultimately determined that the amount of ordinary income
of Target for 1997 was less than the amount of ordinary income reflected on the
original Return of Target for 1997, Shareholders shall reimburse Target for the
reduction in the amount of income taxes incurred by each of them for 1997
attributable to such reduction in the ordinary income of Target. In the event
that it is ultimately determined that the ordinary income of Target for 1998 was
less than reflected on the original Return for 1998 filed by Parent,
Shareholders shall reimburse Target for any excess amounts distributed to the
Shareholders pursuant to the last sentence of Section 4.1 of this Agreement.
(d) The indemnity provided for in this Section 8.2 shall be independent of
any other indemnity provision hereof and, anything in this Agreement to the
contrary notwithstanding, shall survive until the expiration of the applicable
statutes of limitation for the Taxes referred to herein, and any Taxes subject
to the indemnification for Taxes set forth in this Section 8.2 shall not be
subject to the provisions of Sections 8.1 or 8.4 hereof. Notwithstanding
anything in this Agreement to the contrary, the Shareholders will not be
obligated to indemnify Parent and Target under any provision of this Agreement
with respect to Taxes or other liabilities that arise as a direct result of a
failure of the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code, provided that such failure to qualify is not the
result of a breach by the Shareholders of any of their representations,
covenants or agreements.
8.3 Conditions of Indemnification of Parent Indemnitees Pursuant to
Section 8.1(a).
(a) Promptly following the receipt by a Parent Indemnitee of notice of a
demand, claim, action, assessment or proceeding made or brought by a third
party, including a governmental agency (a "Third Party Claim"), the Parent
Indemnitee receiving the notice of the Third Party Claim (i) shall notify the
Shareholders of its existence, setting forth the facts and circumstances of
which such Parent Indemnitee has received notice, and (ii) if the Parent
Indemnitee giving such notice is a person entitled to indemnification under this
Article VIII (an "Indemnified Party"), specifying the basis hereunder upon which
the Indemnified Party's claim for indemnification is asserted.
(b) The Indemnified Party shall, upon reasonable notice by the
Shareholders, tender the defense of a Third Party Claim to the Shareholders. If
the Shareholders accept responsibility for the defense of a Third Party Claim,
then the Shareholders shall have the exclusive right to contest, defend and
litigate the Third Party Claim and shall have the exclusive right, in their
discretion exercised in good faith and upon the advice of counsel, to settle any
such matter, either before or after the initiation of litigation, at such time
and upon such terms as they deem fair and reasonable, provided that at least ten
(10) days prior to any such settlement, they shall give written notice of their
intention to settle to the Indemnified Party. The Indemnified Party shall have
the right to be represented by counsel at its own expense in any defense
conducted by the Shareholders.
(c) Notwithstanding the foregoing, in connection with any settlement by
the Shareholders, no Indemnified Party shall be required to (1) enter into any
settlement (A) that does not include the delivery by the claimant or plaintiff
to the Indemnified Party of a release from all liability in respect of such
claim or litigation, (B) if the Indemnified Party shall, in writing to the
Shareholders within the ten (10) day period prior to such proposed settlement
disapprove of such settlement proposal and desire to have the Shareholders
tender the defense of such matter back to the Indemnified Party, or (C) that
requires an Indemnified Party to take any affirmative actions as a condition of
such settlement, or (2) consent to the entry of any judgment that does not
include a full dismissal of the litigation or proceeding against the Indemnified
Party with prejudice; provided, however, that should the Indemnified Party
disapprove of a settlement proposal pursuant to Clause (B) above, the
Indemnified Party shall thereafter have all of the responsibility for defending,
contesting and settling such Third Party Claim but shall not be entitled to
indemnification by the Shareholders to the extent that, upon final resolution of
such Third Party Claim, the Shareholders' liability to the Indemnified Party but
for this provision exceeds what the Shareholders' liability to the Indemnified
Party would have been if the Shareholders were permitted to settle such Third
Party Claim in the absence of the Indemnified Party exercising its right under
Clause (B) above.
(d) If, in accordance with the foregoing provisions of this Section 8.3,
an Indemnified Party shall be entitled to indemnification against a Third Party
Claim, and if the Shareholders shall fail to accept the defense of a Third Party
Claim which has been tendered in accordance with this Section 8.3, the
Indemnified Party shall have the right, without prejudice to its right of
indemnification hereunder, in its discretion exercised in good faith and upon
the advice of counsel, to contest, defend and litigate such Third Party Claim,
and may settle such Third Party Claim, either before or after the initiation of
litigation, at such time and upon such terms as the Indemnified Party deems fair
and reasonable, provided that at least ten (10) days prior to any such
settlement, written notice of its intention to settle is given to the
Shareholders. If, pursuant to this Section 8.3, the Indemnified Party so
defends or settles a Third Party Claim for which it is entitled to
indemnification hereunder, as hereinabove provided, the Indemnified Party shall
be reimbursed by the Shareholders for the reasonable attorneys' fees and other
expenses of defending the Third Party Claim which are incurred from time to
time, forthwith following the presentation to the Shareholders of itemized bills
for said attorneys' fees and other expenses. No failure by the Shareholders to
acknowledge in writing their indemnification obligations under this Article VIII
shall relieve them of such obligations to the extent they exist.
8.4 Certain Tax and Other Matters.
(a) If, in connection with the audit of any Return, a proposed adjustment
is asserted in writing with respect to any Taxes of Target for which the
Shareholders are required to indemnify Parent or Target pursuant to Section
8.2(a) hereof, Parent shall notify the Shareholders of such proposed adjustment
within twenty (20) days after the receipt thereof. Upon notice to Parent within
twenty (20) days after receipt of the notice of such proposed adjustment from
Parent, the Shareholders may assume (at the Shareholders' own cost and expense)
control of and contest such proposed adjustment.
(b) Alternatively, if the Shareholders request within twenty (20) days
after receipt of notice of such proposed adjustment from Parent, Parent or
Target, as the case may be, shall contest such proposed adjustment. The
Shareholders shall be obligated to pay all reasonable out-of-pocket costs and
expenses (including legal fees and expenses) which Parent or Target may incur in
so contesting such proposed adjustment as such costs and expenses are incurred,
and Parent shall have the full right to contest such proposed adjustment and
shall be entitled to settle or agree to pay in full such proposed adjustment (in
its sole discretion) and thereafter pursue its rights under this Agreement. The
Shareholders shall pay to Parent all indemnity amounts in respect of any such
proposed adjustment within thirty (30) days after written demand to the
Shareholders therefor, or, if the Shareholders have assumed control of the
contest of such proposed adjustment as provided above (or has requested Parent
or Target to contest such proposed adjustment within the time provided above),
within thirty (30) days after such proposed adjustment is settled or a Final
Determination has been made with respect to such proposed adjustment.
(c) For purposes of this Section 8.4, a "Final Determination" shall mean
(i) the entry of a decision of a court of competent jurisdiction at such time as
an appeal may no longer be taken from such decision or (ii) the execution of a
closing agreement or its equivalent between the particular taxpayer and the
Internal Revenue Service, as provided in Section 7121 and Section 7122,
respectively, of the Code, or a corresponding agreement between the particular
taxpayer and the particular state or local taxing authority. The obligation of
the Shareholders to make any indemnity payment pursuant to Section 8.2(a) shall
be premised on the receipt by the Shareholders from Parent or Target of a
written notice setting forth the relevant portion of any Final Determination,
and in cases where the amount of the indemnity payment exceeds $1,000, a
certified statements by a nationally recognized accounting firm setting forth
the amount of the indemnity payment (and in all other cases, a similar statement
certified by the chief financial officer of Parent) and describing in reasonable
detail the calculation thereof.
8.5 Certain Information. Parent, the Shareholders and Target agree to
furnish or cause to be furnished to each other (at reasonable times and at no
charge) upon request as promptly as practicable such information (including
access to books and records) pertinent to Target and assistance relating to
Target as is reasonably necessary for the preparation, review and audit of
financial statements, the preparation, review, audit and filing of any Tax
Return, the preparation for any audit or the prosecution or defense of any
claim, suit or proceeding relating to any proposed adjustment or which may
result in the Shareholders being liable under the indemnification provisions of
this Section 8.5, provided, that access shall be limited to items pertaining
solely to Target. The Shareholders shall grant to Parent access to all Tax
Returns filed with respect to Target.
8.6 Release by The Shareholders. Each of the Shareholders hereby releases
and discharges Parent and Target and each of its officers and directors from and
agrees and covenants that in no event will any of the Shareholders commence any
litigation or other legal or administrative proceeding against, Parent, Target
or any of their officers or directors, whether in law or equity, relating to any
and all claims and demands, known and unknown, suspected and unsuspected,
disclosed and undisclosed, for damages, actual or consequential, past, present
and future, arising out of or in any way connected with his ownership or alleged
ownership of Target Common Stock prior to the Effective Time, other than claims
or demands arising out of the transactions contemplated by this Agreement and
the Merger Agreement.
8.7 Condition of Indemnification of Target Indemnitees Pursuant to Section
8.1(b).
(a) Promptly following the receipt by a Target Indemnitee of notice of
a demand, claim, action, assessment or proceeding made or brought by a third
party, including a governmental agency (a "Third Party Claim"), the Target
Indemnitee receiving the notice of the Third Party Claim (i) shall notify Parent
of its existence, setting forth the facts and circumstances of which such Target
Indemnitee has received notice, and (ii) if the Target Indemnitee giving such
notice is a person entitled to indemnification under this Article VIII (an
"Indemnified Party"), specifying the basis hereunder upon which the Indemnified
Party's claim for indemnification is asserted.
(b) The Indemnified Party shall, upon reasonable notice by Parent, tender
the defense of a Third Party Claim to Parent. If the Parent accepts
responsibility for the defense of a Third Party Claim, then the Parent shall
have the exclusive right to contest, defend and litigate the Third Party Claim
and shall have the exclusive right, in its discretion exercised in good faith
and upon the advice of counsel, to settle any such matter, either before or
after the initiation of litigation, at such time and upon such terms as it deems
fair and reasonable, provided that at least ten (10) days prior to any such
settlement, it shall give written notice of its intention to settle to the
Indemnified Party. The Indemnified Party shall have the right to be represented
by counsel at its own expense in any defense conducted by the Parent.
(c) Notwithstanding the foregoing, in connection with any settlement by
Parent, no Indemnified Party shall be required to (1) enter into any settlement
(A) that does not include the delivery by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect of such claim or
litigation, (B) if the Indemnified Party shall, in writing to Parent within the
ten (10) day period prior to such proposed settlement disapprove of such
settlement proposal and desire to have Parent tender the defense of such matter
back to the Indemnified Party, or (C) that requires an Indemnified Party to take
any affirmative actions as a condition of such settlement, or (2) consent to the
entry of any judgment that does not include a full dismissal of the litigation
or proceeding against the Indemnified Party with prejudice; provided, however,
that should the Indemnified Party disapprove of a settlement proposal pursuant
to Clause (B) above, the Indemnified Party shall thereafter have all of the
responsibility for defending, contesting and settling such Third Party Claim but
shall not be entitled to indemnification by Parent to the extent that, upon
final resolution of such Third Party Claim, Parent's liability to the
Indemnified Party but for this provision exceeds what Parent's liability to the
Indemnified Party would have been if Parent were permitted to settle such Third
Party Claim in the absence of the Indemnified Party exercising its right under
Clause (B) above.
(d) If, in accordance with the foregoing provisions of this Section 8.7,
an Indemnified Party shall be entitled to indemnification against a Third Party
Claim, and if Parent shall fail to accept the defense of a Third Party Claim
which has been tendered in accordance with this Section 8.7, the Indemnified
Party shall have the right, without prejudice to its right of indemnification
hereunder, in its discretion exercised in good faith and upon the advice of
counsel, to contest, defend and litigate such Third Party Claim, and may settle
such Third Party Claim, either before or after the initiation of litigation, at
such time and upon such terms as the Indemnified Party deems fair and
reasonable, provided that at least ten (10) days prior to any such settlement,
written notice of its intention to settle is given to Parent. If, pursuant to
this Section 8.7, the Indemnified Party so defends or settles a Third Party
Claim for which it is entitled to indemnification hereunder, as hereinabove
provided, the Indemnified Party shall be reimbursed by Parent for the reasonable
attorneys' fees and other expenses of defending the Third Party Claim which are
incurred from time to time, forthwith following the presentation to Parent of
itemized bills for said attorneys' fees and other expenses. No failure by the
Parent to acknowledge in writing its indemnification obligations under this
Article VIII shall relieve it of such obligations to the extent they exist.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
9.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the shareholders of
Target:
(a) By mutual consent of Parent and Target; or
(b) By Parent if (i) the Merger shall not have been consummated on or
before December 15, 1998 (the "Termination Date"), (ii) the requisite vote of
the shareholders of Target to approve this Agreement, the Merger Agreement and
the transactions contemplated hereby and thereby shall not be obtained at the
meetings, or any adjournments thereof, called therefor, (iii) any governmental
or regulatory body, the consent of which is a condition to the obligations of
Parent, Target and Target to consummate the transactions contemplated hereby or
by the Merger Agreement, shall have determined not to grant its consent and all
appeals of such determination shall have been taken and have been unsuccessful,
or (iv) any court of competent jurisdiction in the United States or any State
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the Merger
and such order, judgment or decree shall have become final and nonappealable.
(c) By the Shareholders if (i) the Merger shall not have been consummated
on or before the Termination Date or (ii) the occurrence of an event which will
have a Material Adverse Effect.
9.2 Effect of Termination. In the event of termination of this Agreement
by either Parent or Target, as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no liability on the part of either
Target, Parent, Target or their respective officers or directors. Nothing in
this Section 9.2 shall relieve any party from liability for any beach of this
Agreement.
9.3 Amendments and Waivers. The parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time with the prior
authorization of their respect boards of directors; provided, however, that any
amendment effected subsequent to stockholder approval will be subject to the
restrictions contained in the Illinois General Corporation Law. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the parties. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
ARTICLE X
MISCELLANEOUS
-------------
10.1 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements made by any party in this Agreement or
pursuant hereto shall survive the Merger until December 11, 2003, except for the
representations, warranties, covenants and agreements contained in Sections
5.3(i), 5.3(k), 6.4, 6.6, 6.7, 6.8 and 8.2 of this Agreement which shall survive
the Merger until the expiration of the applicable statutes of limitations with
respect to such matters. All claims made by Parent by virtue of any such
representations, warranties, covenants and agreements shall be made under, and
subject to the limitations set forth in, Article VIII hereof.
10.2 Press Releases and Public Announcements. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other parties;
provided, however, that any party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing party
will use its reasonable best efforts to advise the other party prior to making
the disclosure.
10.3 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Xxxx X. Xxxxxxxxx: c/o Stein Xxx - Xxxxxxx
0 Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
If to Xxxxxx X. Xxxxxxxxx, Xx.: 0 Xxxxxxx Xxxx
Xxxxxxx xx Xxxx, Xxxxxxx 0000
If to Xxxx Xxxxxxxxx: c/o Instant Cash Advance
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
If to Xxxxxxx Bingo: 00 Xxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Copy to: Xxxxxx X. Xxxxx
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
If to the Parent: First Cash, Inc.
000 Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx
Copy to: Xxxxxxx X. Xxxxxxx, III
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
If to Surviving Corporation: One Iron Ventures, Inc.
000 Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx
Copy to: Xxxxxxx X. Xxxxxxx, III
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
10.4 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
10.5 Non-Waiver. The failure of any party to insist upon performance of
any terms, covenants or conditions shall not be construed as a subsequent waiver
of any such terms, covenants, or conditions.
10.6 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original.
10.7 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the State of Texas
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas.
10.9 Venue. Venue for any controversy or claim arising out of this
Agreement or Merger Agreement shall lie in Tarrant County, Texas.
10.10 Succession and Assignment. Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties.
10.11 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.12 Expenses. Shareholders shall personally pay all expenses in excess
of $15,000 in the aggregate incurred by them in connection with this Agreement
and the transactions contemplated thereby. Parent shall pay the attorneys fees
and other costs incurred by the Shareholders in connection with this Agreement
(including attorneys fees incurred to transfer licenses) up to $15,000 in the
aggregate.
10.13 Tradename. The Shareholders shall be entitled to use the tradename
"Instant Cash Advance" outside the Noncompete Area.
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Reorganization on the date first above written.
PARENT:
FIRST CASH, INC.
By:
Xxxx X. Xxxxxx, President
SUBSIDIARY:
CASH & GO OF ILLINOIS, INC., an
Illinois corporation
By:
Xxxx X. Xxxxxx, President
TARGET:
ONE IRON VENTURES, INC., an
Illinois corporation
By:
Xxxx X. Xxxxxxxxx, President
SHAREHOLDERS:
Xxxxxx X. Xxxxxxxxx, Xx.
Xxxx X. Xxxxxxxxx
Xxxx Xxxxxxxxx
Xxxxxxx Bingo
