View:
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
August 22, 2006
---------------
(Date of Report - Date of Earliest Event Reported)
First Cash Financial Services, Inc.
-----------------------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
0-19133 75-2237318
------- ----------
(Commission File Number) (IRS Employer Identification No.)
690 East Lamar Blvd., Suite 400, Arlington, Texas 76011
-------------------------------------------------------
(Address of principal executive offices, including zip code)
(817) 460-3947
--------------
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Forward-Looking Information
This report and the included exhibits may contain forward-looking statements
about the business, financial condition and prospects of First Cash
Financial Services, Inc. ("First Cash" or the "Company"). Forward looking
statements, as that term is defined in the Private Securities Litigation
Reform Act of 1995, can be identified by the use of forward-looking
terminology such as "believes," "projects," "expects," "may," "estimates,"
"should," "plans," "intends," "could," or "anticipates," or the negative
thereof, or other variations thereon, or comparable terminology, or by
discussions of strategy. Forward-looking statements can also be identified
by the fact that these statements do not relate strictly to historical or
current matters. Rather, forward-looking statements relate to anticipated
or expected events, activities, trends or results. Because forward-looking
statements relate to matters that have not yet occurred, these statements
are inherently subject to risks and uncertainties. Forward-looking
statements in this report include, without limitation, the Company's
expectations of earnings per share, earnings growth, revenues, profit
margins, expansion strategies, industry growth, acquisition synergies, store
openings, future liquidity, and cash flows. These statements are made to
provide the public with management's current assessment of the Company's
business. Although the Company believes that the expectations reflected in
forward looking statements are reasonable, there can be no assurances that
such expectations will prove to be accurate. Security holders are cautioned
that such forward-looking statements involve risks and uncertainties. The
forward-looking statements contained in this report speak only as of the
date of this statement, and the Company expressly disclaims any obligation
or undertaking to report any updates or revisions to any such statement to
reflect any change in the Company's expectations or any change in events,
conditions or circumstances on which any such statement is based. Certain
factors may cause results to differ materially from those anticipated by
some of the statements made in this report. Such factors are difficult to
predict and many are beyond the control of the Company and may include
changes in regional, national or international economic conditions, changes
in consumer borrowing and repayment behaviors, credit losses, changes or
increases in competition, the ability to locate, open and staff new stores,
availability or access to sources of inventory, inclement weather, ability
to successfully integrate acquisitions, ability to retain key management
personnel, the ability to operate as a credit services organization in
Texas, new legislative initiatives or governmental regulations, or changes
to existing laws and regulations, affecting payday advance businesses,
credit services organizations, pawn businesses and Buy-Here/Pay-Here
automotive retailers in both the U.S. and Mexico, unforeseen litigation,
changes in interest rates, changes in tax rates or policies, changes in gold
prices, changes in energy prices, cost of funds, changes in foreign currency
exchange rates, future business decisions, and other uncertainties. These
and other risks and uncertainties are indicated in the Company's 2005 Annual
Report on Form 10-K (see "Item 1A. Risk Factors") and updated in subsequent
quarterly reports on Form 10-Q.
Item 1.01 Entry into a Material Definitive Agreement
On August 22, 2006, the Company entered into an agreement to amend its
existing long-term bank credit facility. The primary effect of the
amendment was to increase the amount available under the line of credit from
$25 million to $50 million and to extend the term of the facility until
April 2009. The line of credit will continue to bear interest at the
prevailing LIBOR rate plus a fixed margin of 1.375%. In addition, certain
existing financial covenants were eliminated, and the covenant restricting
the amount of share repurchases was modified to allow a maximum of $40
million annually, with a maximum of $75 million from August 2006 through
April 2009. The Third Amendment to the Credit Agreement, dated August 22,
2006, is filed as Exhibit 10.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
On August 25, 2006 the Company signed a definitive stock purchase agreement
(the "Purchase Agreement") to acquire all of the common stock of Guaranteed
Auto Finance, Inc. and SHAC, Inc., which are two privately held corporations
d/b/a collectively as "Auto Master." The Purchase Agreement is filed as
Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by
reference. The significant terms of the acquisition are reported in Item
2.01.
The press release announcing the Third Amendment to the Credit Agreement and
the execution of the Purchase Agreement is being furnished as Exhibit 99.1
to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
On August 25, 2006, the Company completed the purchase of Guaranteed Auto
Finance, Inc. and SHAC, Inc., two privately held corporations d/b/a
collectively as "Auto Master." The purchase price for all the common stock
of the two companies was $33.7 million. The terms of the transaction and
the consideration paid were the result of arm's length negotiations between
the Company and the sellers. Prior to the completion of the transaction,
neither the Company nor any of its affiliates or officers, directors, or
their associates had any material relationship with the sellers. The
purchase price was funded through a combination of cash, First Cash's credit
facility and notes payable to the selling shareholders of Guaranteed Auto
Finance, Inc. and SHAC, Inc. The notes payable to the sellers total $10
million in aggregate and bear interest at 7%, with repayment to be completed
over the next four years. One of the notes payable, in the principal amount
of $1 million, is convertible after one year into 55,555 shares of the
Company's common stock, at a conversion price of $18.00 per share.
No financial statements with respect to Auto Master will be filed pursuant
to this Form 8-K, as the acquisition doesn't represent a significant
subsidiary as defined in Rule 1-02(w) of Regulation S-X. Accordingly, none
of the financial data set forth in this Form 8-K relating to Auto Master has
been audited by the Company's independent auditor.
Auto Master, based in Northwest Arkansas, owns and operates eight Buy-
Here/Pay-Here automobile dealerships located in Arkansas, Missouri and
Oklahoma, which specialize in the sale of clean, moderately-priced used
vehicles. The customers of Auto Master, many of whom are under-banked or
otherwise credit-challenged, typically utilize the dealerships' in-house
financing programs, which feature affordable down payments and weekly or bi-
weekly payment plans.
Vehicle inventory purchases are typically processed through a central
reconditioning facility located in Northwest Arkansas, near Bentonville,
for necessary repairs and detailing before being delivered to the retail
locations. The consolidated purchasing and reconditioning functions, along
with centralized inventory and sales management, allow Auto Master to expect
retail margins of 50% or better on its vehicle sales. Most of the Company's
underwriting, legal collection and other administrative functions are based
at the same central facility. The Company expects to retain Auto Master's
current management team and the administrative operational support facility
located in Tontitown, Arkansas.
The revenues of Auto Master, which are comprised primarily of retail
automobile sales and finance charges on the financing of the retail sales,
totaled $44 million in its 2005 fiscal year and $34 million for the
seven months ended July 31, 2006. Auto Master sold approximately 4,600
automobiles from its retail dealerships in 2005 and approximately 3,400
automobiles for the seven months ended July 31, 2006. The average retail
price for Auto Master's vehicles is approximately $9,000. Auto Master
targets gross profit margins from the retail sale of vehicles, net of
allowances for uncollectible receivables, of approximately 30%.
Notes receivable from customers of Auto Master, net of allowances for
uncollectible accounts, totaled approximately $30 million at July 31, 2006,
while inventories totaled $3 million at that date. Auto Master expects that
the average effective interest income yield on net customer receivables will
typically range from 9% to 11%. At July 31, 2006, Auto Master had interest
bearing debt of approximately $15 million, which the Company retired on
the closing date, utilizing funds available under its own credit facility.
Goodwill and other identified intangible assets arising from the acquisition
are expected to total approximately $18 million.
Auto Master was founded in 1989 and its growth has been accomplished through
de novo Buy-Here/Pay-Here dealership openings. It expects new dealership
locations to become profitable within two to four months of their opening
date and the dealerships are expected to generate positive monthly cash flow
within approximately 24 months of opening.
This description of the Purchase Agreement is qualified in its entirety to
the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to
this Current Report on Form 8-K and is incorporated herein by reference.
The press release announcing the transaction is filed as Exhibit 99.1 to
this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition
On August 28, 2006, the Company announced that it expects diluted earnings
per share for 2006 will be in a range of $0.96 to $0.97, which exceeds its
previously released guidance. The Company has initiated diluted earnings
per share guidance for 2007 in a projected range of $1.25 to $1.30 per
share. The Company also announced that it expects to open a total of 70 to
75 new pawn and short-term advance stores in 2007. In addition, with
the acquisition of Auto Master, the Company plans to open 3 to 5 new
Buy-Here/Pay-Here dealerships during the remainder of 2006 and 2007.
A copy of the Company's news release containing these announcements is
furnished as Exhibit 99.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
The press release announcing the execution of the Purchase Agreement, the
Third Amendment to the Credit Agreement and expected results of operations
is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
2.1 Stock Purchase Agreement dated August 25, 2006 between Auto Master
and First Cash Financial Services, Inc.
10.1 Third Amendment to the Credit Agreement dated August 22, 2006.
99.1 Press Release dated August 28, 2006 announcing the Company's
acquisition of a Buy-Here/Pay-Here automotive retailer, Auto Master.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 28, 2006 FIRST CASH FINANCIAL SERVICES, INC.
(Registrant)
/s/ R. DOUGLAS ORR
------------------------
R. Douglas Orr
Chief Accounting Officer
EXHIBIT INDEX
Exhibit
Number Document
-------- --------
2.1 Stock Purchase Agreement dated August 25, 2006.
10.1 Third Amendment to the Credit Agreement dated August 22, 2006.
99.1 Press Release dated August 28, 2006.
Exhibit 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is executed as of
August 25, 2006 by First Cash Financial Services, Inc., a Delaware
corporation ("Purchaser"), Guaranteed Auto Finance, Inc., an Arkansas
corporation, and SHAC, Inc., an Arkansas corporation (individually a
"Company" and collectively, the "Companies"), and Daryl Hickman, Joe Fred
Starr, Roger McMennamy, and with respect only to SHAC, Inc., A. Kent Starr,
Joe F. Starr, Jr. David M. Starr, and Shannon Arcana,(individually, a
"Seller" and collectively, the "Sellers").
RECITALS:
WHEREAS, Sellers are the record and beneficial owners of all of the
issued and outstanding common stock of each Company and all of the
outstanding options and warrants to purchase capital stock of each Company
(collectively, the "Shares"); and
WHEREAS, Sellers desire to sell and Purchaser desires to purchase from
Sellers all of the Shares upon the terms and subject to the conditions
herein.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein and for other good and valuable consideration, the
adequacy, sufficiency and receipt of which are hereby acknowledged, the
parties do hereby agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
---------------------------
1.1 Sale and Purchase of Shares. Subject to the terms and conditions
herein, Sellers shall sell and deliver to the Purchaser, and the Purchaser
shall purchase from Sellers all of the Shares (the "Purchase"). The
Purchase shall be evidenced by delivery effective on the Closing Date to the
Purchaser of (1) assignments of the Shares executed by Sellers accompanied
by duly executed stock powers, and (2) all organizational corporate records,
including without limitation, articles of incorporation, bylaws, minute
books, resolutions, and corporate seal. On the Closing Date, Sellers shall
deliver to Purchaser resignations of (1) all directors of the Companies; and
(2) all officers of the Companies, except Roger McMennamy.
1.2 Closing. Subject to Article VII and the fulfillment of all
conditions precedent set forth herein, the Purchase shall be consummated
(the "Closing") effective as of August 25, 2006 or such other date as the
parties shall mutually agree in writing (the "Closing Date").
ARTICLE II
AGGREGATE CONSIDERATION
-----------------------
2.1 Purchase Price. The total consideration to be paid by the
Purchaser to the Sellers for the Shares (the "Purchase Price") shall be
forty-eight million one hundred and fifty thousand dollars ($48,150,000)
less the aggregate amount of interest bearing indebtedness of each Company
as of the Closing Date, which is reflected in Exhibit "A".
2.2 Payment of Purchase Price. The Purchase Price shall be payable as
follows: (a) seven promissory notes executed by Purchaser (collectively,
the "Note," the form and substance of which are attached as Exhibits "B-1"
through "B-7") in the aggregate amount of ten million ($10,000,000) payable
to Sellers; (b) the retirement of the indebtedness referred to in paragraph
2.1 and reflected in Exhibit "A; "and (c) the balance of the Purchase Price
to be paid in cash at the Closing to the Sellers, in the amounts specified
on Exhibit "C-1." The Note shall bear simple interest at the rate of seven
percent (7%) per annum. For the first two years (the first eight (8)
quarterly payments), principal in the total, aggregate amount of five
hundred sixty-two thousand five hundred dollars ($562,500) plus accrued
interest shall be payable quarterly. During this period, Roger McMennamy's
note shall pay interest only. Provided that Roger McMennamy does not timely
exercise the conversion option contained in his note, principal in the
total, aggregate amount of six hundred eighty-seven thousand five hundred
dollars ($687,500) plus accrued interest shall be payable quarterly during
the last two years (the final eight (8) quarterly payments) of the Note. If
and when Roger McMennamy exercises his conversion option, the aggregate
payment amount under the Note will no longer include amounts due under his
individual note. The entire unpaid balance of the Note shall be due four
(4) years from the date of the Note, except for the Roger McMennamy's
individual note in the event he timely exercises his conversion option.
2.3 Allocation of Purchase Price. The purchase price shall be
allocated among the Companies, the Sellers, the assets of the Companies, and
the cash and note as indicated on Exhibit "C-2"
ARTICLE III
CERTAIN TAX MATTERS
-------------------
3.1 Section 338(h)(10) Election. The parties shall jointly elect
and consent to treat the Purchase of the Shares as a purchase of assets for
Federal and state income tax purposes pursuant to section 338(h)(10) of the
Internal Revenue Code of 1986, as amended, and any similar provisions under
state and other income tax laws (collectively, the "Section 338 Election").
Such joint election and consent shall be evidenced by the execution of IRS
Form 8023 (Elections Under Section 338 for Corporations Making Qualified
Stock Purchases) by Purchaser and Sellers on the Closing Date. For purposes
of the Section 338 Election, the parties shall allocate the aggregate of the
Purchase Price and liabilities of the Companies to assets of the Companies
prior to August 25, 2006 which will be included in the final S-corporation
income tax returns for the period ended as of the Closing Date, based on
Exhibit H. Furthermore, the allocation of the Purchase Price will be
disclosed on IRS Form 8883 (Asset Allocation Statement) and attached to and
made part of the Federal income tax returns filed by the Companies and
Purchaser in which the effects of the Section 338(h)(10) will be reported.
Such allocation will be consistent for purposes of Form 8883 filed by the
Companies and Purchaser.
3.2 Apportionment of Taxable Income. The Closing Date shall be the
"acquisition date" as said term is defined in Section 338(h)(2) of the
Internal Revenue Code of 1986 and shall be as the last day of a taxable
period of each Company (a "Pre-Closing Tax Period"). For taxable periods
that end on the Closing Date, all items of income, gain, loss, deduction,
and credits other than any such items resulting from the Section 338
Election (which income, gains or losses there from will be reported on the
federal and state income tax returns ending on the Acquisition Date) shall
be allocated to the periods before and after the Closing Date by closing the
books of each Company as of the Closing Date. In the case of taxes that are
payable with respect to a taxable period that begins before the Closing Date
and ends after the Closing Date, the portion of any such tax that is
allocable to the portion of the period ending on the Closing Date shall be:
(i) in the case of taxes that are either (x) based upon or related
to income or receipts, or (y) imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible), deemed equal to the amount which would by payable if the
taxable year ended with the Closing Date; and
(ii) in the case of taxes imposed on a periodic basis with respect
to the assets of each Company, or otherwise measured by the level of any
item, deemed to be the amount of such taxes for the entire period (or, in
the case of such taxes determined on an arrears basis, the amount of such
taxes for the immediately preceding period) multiplied by a fraction, the
numerator of which is the number of calendar days in the period ending on
the Closing Date and the denominator of which is the number of calendar days
in the entire period.
Sellers shall be responsible for preparing and filing all income tax
reports and returns covering each Company for tax periods beginning before
the Closing Date, even if such reports and returns are not required to be
filed until after the Closing Date.
3.3 Preparation and Filing of Income Tax Returns. Sellers shall
prepare, or cause to be prepared, and file or cause to be filed, all income
tax reports and returns for any Pre-Closing Period, including the effects to
the Companies of the Section 338 Election. When preparing the income tax
reports and returns of each Company for any Pre-Closing Tax Period, Sellers
shall prepare such reports and returns in a manner consistent with prior
years and determine the income, gain, expenses, losses, deductions, and
credits of each Company consistently with prior practices. With respect to
any such income tax report or return, the Companies shall provide to Sellers
the information necessary to prepare such reports and returns no later than
60 days after the Closing Date. Sellers shall submit such reports and
returns to Purchaser at least 30 days before filing them with the respective
taxing authorities and Sellers shall permit Purchaser to inspect and comment
upon such reports and returns and shall make such revisions to such returns
as are reasonably requested by Purchaser.
3.4 Payment of Income and Franchise Taxes. Any taxable income or loss
of each Company for Federal and state income tax purposes for any Pre-
Closing Tax Period (including income, gain or loss recognized as a result of
the Section 338 Election) shall be included in all Federal and state income
tax reports and returns that Sellers file after the Closing Date. Sellers
shall pay all of the taxes owed with respect to such reports and returns
when due. Notwithstanding any provision of this Agreement to the contrary,
Sellers shall defend, indemnify and hold harmless, each Company and the
Purchaser from and against all Taxes (as hereinafter defined), associated
interest and/or penalties and all claims or assessments of Taxes, associated
interest and/or penalties, payable by each Company for all periods ending on
or before the Closing Date, along with all costs or expenses incurred by
Purchaser arising out of or relating to same, including without limitation
all professional fees and expenses.
3.5 Cooperation on Tax Matters. Purchaser, Company and Sellers shall
cooperate fully, as and to the extent reasonable requested by the other
party, in connection with the filing of tax returns and reports relating to
a Pre-Closing Tax Period and any audit, litigation of other proceeding with
respect to taxes. Such cooperation shall include (x) making employees
available on a mutually convenient basis to provide additional information
and explanation of any material provided hereunder, and (y) providing such
powers of attorney as are reasonable requested by the other party. During
the period beginning on the Closing Date and ending on the day immediately
preceding the seventh anniversary of the Closing Date, Sellers and Purchaser
shall provide each other with reasonable access during normal business hours
to the books and records of Sellers and each Company, respectively, to the
extent that such books and records relate to the condition or operation of
either Company prior to the Closing and Sellers or Purchaser requires such
books and records to prepare income tax reports or returns or respond to
third party claims, including any audits or proceedings with respect to such
reports or returns. Sellers and Purchaser shall have the right to make
copies of such books and records at its own expense.
ARTICLE IV
FURTHER AGREEMENTS
------------------
4.1 Leases. Prior to or at the Closing, each of Purchaser, Company
and the Sellers shall execute long term leases satisfactory to Purchaser at
fair market value.
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. All
representations and warranties of the parties are made subject to the
exceptions which are noted in the respective schedules delivered by the
parties to each other concurrently herewith and identified as, in the case
of section 5.2, the "Purchaser Disclosure Schedule" in the form of Exhibit
"D', and in the case of section 5.3, as the "Companies and Sellers
Disclosure Schedule" in the form of Exhibit "E". Copies of all documents
referenced in the Purchaser Disclosure Schedule (other than documents filed
by the Purchaser with the Securities and Exchange Commission pursuant to the
Securities Act of 1933 as amended (the "Securities Act") or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or Companies and
Sellers Disclosure Schedule shall be attached thereto.
5.2 Representations and Warranties of Purchaser. Purchaser represents
and warrants to each Company and Sellers, as of the date hereof, and at the
Closing Date, subject to the exceptions set forth in the Purchaser
Disclosure Schedule, which shall be deemed to qualify all applicable
representations and warranties under this Agreement regardless of whether
specifically cross-referenced as pertaining thereto:
(a) Organization and Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state
of its incorporation. Purchaser has all requisite corporate power and
authority to carry on its business as now conducted, and is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a Material
Adverse Effect. Whenever used in this section 5.2, "Material Adverse
Effect" shall mean a material adverse effect on the business, properties,
prospects, condition (financial or otherwise) or results of operations of
Purchaser.
(b) Authorization of Transaction. Purchaser has the full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder, and has
authorized the person signing in Purchaser's behalf to execute and tender
this Agreement. This Agreement constitutes a valid and legally binding
obligation of Purchaser, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. 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 Purchaser is subject to or provision of the charter or
by-laws of Purchaser, 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 Purchaser 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. Other than in connection with the provisions of the Arkansas
General Corporation Law, Purchaser 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, 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) Brokers' Fees. Purchaser has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Sellers could become
liable or obligated.
(e) Governmental Authorizations and Licenses. 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.
(f) Disclosure. Neither this Agreement, nor any of the schedules,
attachments, exhibits, written statements, documents, certificates or other
materials prepared or supplied by Purchaser with respect to the transactions
contemplated hereby contain any untrue statements of a material fact or omit
a material fact necessary to make the statements contained herein or therein
not misleading.
(g) Compliance with Laws. To the best of its 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.
5.3 Representations and Warranties of Companies and Sellers. Each
Company and Sellers represent and warrant to Purchaser as of the date hereof
and on the Closing Date as follows, subject to the exceptions set forth in
the Companies and Sellers Disclosure Schedule, which shall be deemed to
qualify all applicable representations and warranties under this Agreement
where specifically cross-referenced as pertaining thereto.
(a) Organization, Qualification and Corporate Power. Each Company is
a corporation duly incorporated, validly existing, and in good standing
under the laws of the state of Arkansas, properly registered to do business
in Oklahoma and Missouri. Each Company is duly authorized to conduct
business and is in good standing under the laws of each such jurisdiction
where the failure to so qualify would have a Material Adverse Effect.
Whenever used in this section 5.3, "Material Adverse Effect" shall mean a
material adverse effect on the business, properties, prospects, condition
(financial or otherwise) or results of operations of the Companies. Each
Company 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 Guaranteed
Auto Finance, Inc. consists of one hundred (100) shares of common stock, of
which one hundred (100) shares are issued and outstanding. All of the
issued and outstanding shares of Guaranteed Auto Finance, Inc. have been
duly authorized, are validly issued, fully paid, and nonassessable and are
owned by the Sellers. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Guaranteed Auto
Finance, Inc. to issue, sell or otherwise cause to become outstanding any
of its capital stock except as listed on Schedule 5.3. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Guaranteed Auto Finance,
Inc. The entire authorized capital stock of SHAC, Inc. consists of one
hundred (100) shares of common stock, of which one hundred shares are
issued and outstanding. All of the issued and outstanding shares of SHAC,
Inc. have been duly authorized, are validly issued, fully paid, and
nonassessable and are owned by the Sellers. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that
could require SHAC, Inc. to issue, sell or otherwise cause to become
outstanding any of its capital stock except as listed on Schedule 5.3.
There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to SHAC, Inc.
(c) Authorization of Transaction. Each Company and Sellers have full
power and authority to execute and deliver this Agreement and to perform
their respective obligations hereunder. This Agreement constitutes a valid
and legally binding obligation of each Company and Sellers, enforceable by
Purchaser 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) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which either Company and/or
Sellers are subject or any provision of the charter or bylaws of either
Company 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 either Companies and/or Sellers are a party or by which either is
bound or to which any of their assets is subject (or result in the
imposition of any security interest upon any of their assets). Other than
in connection with the provisions of the Arkansas General Corporation Law,
neither Companies nor Sellers are required 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 of each Company
(including the related schedules) for the years ended December 31, 2004 and
December 31, 2005 and for the seven months ended and as of July 31, 2006
have been prepared in accordance with generally accepted accounting
principles, applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of each Company as of the
indicated dates and the results of operations of each Company for the
indicated periods, are correct and complete in all material respects, and
are consistent with the books and records of each Company.
(f) Events Subsequent to July 31, 2006. Since July 31, 2006, there
has not been any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of either
Company.
(g) Undisclosed Liabilities. Neither Company has any liability
(whether known or unknown, whether asserted or unasserted, 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 July 31, 2006 and outstanding at the Closing Date, (ii) items
listed and disclosed on the Companies and Sellers Disclosure Schedule, (iii)
those incurred in the ordinary course of business between July 31, 2006 and
Closing, and (iv) those resulting from special accounting adjustments
mutually agreed in writing by the parties at Closing.
(h) Brokers' Fees. The Sellers shall be responsible for and pay any
fees or commissions to any broker, finder, or agent engaged by any of the
Sellers or either Company with respect to the transactions contemplated by
this Agreement. Sellers shall defend, indemnify and hold harmless Purchaser
from all claims and liability relating to brokers' fees, including all
expenses incurred by Purchaser arising out of or relating to same, including
without limitation, all professional fees.
(i) Taxes. With respect to Taxes (as defined below:)
(i) Each Company and each of its predecessors have 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 such Company or such predecessors, 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 Companies and
Sellers Disclosure Schedule, each Company and Sellers has within the
time and in the manner prescribed by law, paid (and up to and including
the Closing Date will, within the time and in the manner prescribed by
law, will pay) all Taxes (as defined below) that are due and payable.
(iii) There are no liens for Taxes upon the assets of either
Company or Sellers except liens for Taxes not yet due.
(iv) Each Company and each of its predecessors have made a valid
and proper election under section 1362(a) of the Internal Revenue Code
of 1986, as amended (the "Code") to be an S corporation for Federal and
state income tax purposes which is still in full force and effect.
(v) Except as set forth in Schedule 5.3(i)(v) of Companies and
Sellers Disclosure Schedule (which shall set forth the type of return,
date filed, and date of expiration of the statute of limitations), (i)
the statute of limitations for the assessment of federal income taxes
has expired for all federal income tax returns of each Company and each
of their predecessors or such Returns have been examined by the
Internal Revenue Service for all periods through December 31, 2002 (ii)
the statute of limitations for the assessment of state, local and
foreign income taxes has expired for all applicable Returns of each
Company and each of their predecessors or such Returns have been
examined by the appropriate tax authorities for all periods through
December 31, 2002; and (iii) no deficiency for any Taxes has been
proposed, asserted or assessed against either of the Companies or
Sellers 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 either Company, their
predecessors, or Sellers.
(vii) Except as set forth on Schedule 5.3(i)(vii) of Companies
and Sellers 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) Neither of the Companies nor Sellers are a party to any
tax-sharing or allocation agreement, nor does either of the Companies
or Sellers 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) Each of the Companies and Sellers have complied (and until
the Closing Date 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) Neither Company has 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 such Company was also a member of
such affiliated group.
(xii) The S corporation election for each Company under section
1362(a) of the Internal Revenue Code of 1986 was properly made and is
in full force and effect for Federal and state income tax purposes.
(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 either of the Companies, their predecessors, or Sellers.
(j) Agreements. Except as listed and disclosed on the Companies and
Sellers Disclosure Schedule attached to this Agreement, neither Company is
subject to any employment agreement, contract, lease or other agreement
which involve aggregate payment obligations of the Company in excess of
$10,000, excluding the leases relating to the locations listed in "F" and
liabilities as reflected in the July 31, 2006 balance sheet of each Company.
Neither Company is subject to any agreement restricting or limiting such
Company's competition or the disclosure of the Company's information by the
Company. Since July 31, 2006, the Company has not entered into any material
agreements.
(k) Employees. Each Company has furnished to Purchaser a list of each
compensation arrangement for the 10 highest compensated employees, and
furnished to Purchaser a copy of each employee pension plan, employee profit
sharing plan and employee welfare benefit plan.
(l) Litigation and Claims. Except as disclosed on the Companies and
Sellers Disclosure Schedule neither of the Companies nor Sellers is: (1) a
party to any litigation or other dispute resolution proceeding; (2) subject
to any decree, judgment, or arbitration award; and (3) the subject of other
asserted claims or unasserted potential claims. Except as disclosed on the
Companies and Sellers Disclosure Schedule, neither of the Companies, nor the
Sellers, is in possession of any facts which may give rise to any future
claim, litigation or other dispute resolution proceeding.
(m) Subsidiaries. Neither Company has any subsidiaries.
(n) Intangible Assets. To Seller's best knowledge, each Company is
the owner of or has the lawful right to use all Intangible Property Rights
and all other intangible assets used in connection with the business of such
Company, including, but not limited to, all software used or licensed by
Company in connection with the business of Company. Except as set forth in
the Disclosure Schedule, the Companies have the right to use the names "Auto
Master", "SHAC," and "Tulsa Auto Master". No other person or entity has any
ownership interest in or right to payment attributable to or arising out of
the use of such intangible assets. As used herein, the term "Intellectual
Property Rights" means all industrial and intellectual property rights,
including, without limitation, patents, patent applications, patent rights,
trademarks, trademark applications, trade names, service marks, service mark
applications, copyrights, copyright applications, know-how, trade secrets,
proprietary processes and formulae, confidential information, franchises,
licenses, inventions, instructions, marketing materials, trade dress, logos
and designs and all documentation and media constituting, describing or
relating to the foregoing, including, without limitation, manuals, memoranda
and records.
(o) Intellectual Property.
(i) Each Company has the right to use, sell, license and dispose
of, and has the right to bring actions for the infringement of, all
Intellectual Property Rights necessary or required for the conduct of
its business as currently conducted and such rights to use, sell,
license, dispose of and bring actions are sufficient for such conduct
of its business.
(ii) Except as set forth in the Companies and Sellers Disclosure
Schedule, there are no royalties, honoraria, fees or other payments
payable by either of the Companies or Sellers 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 Companies and Sellers
Disclosure Schedule, no activity, service or procedure currently
conducted by either of the Companies or Sellers violates or will
violate any contract of either Company with any third party or, to such
Company's and Seller's knowledge, infringe any Intellectual Property
Right of any other party or person.
(iv) Except as set forth in the Companies and Sellers Disclosure
Schedule, neither of the Companies or Sellers has received from any
third party in the past three years any notice, charge, claim or other
assertion that such Company or Seller is infringing any Intellectual
Property Rights of any third party or has committed any acts of unfair
competition.
(v) Except as set forth in the Companies and Sellers Disclosure
Schedule, neither of the Companies or Sellers has 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 Rights of such Company
or Seller by such other person or any acts of unfair competition by
such other person, nor is any such infringement, misappropriation or
unfair competition threatened or to the Company's and Seller's
knowledge, occurring.
(vi) The Companies and Sellers Disclosure Schedule contains a true
and complete list of all applications, filings and other formal actions
made or taken by each of the Companies or Sellers to perfect or protect
its interest in the Intellectual Property Rights, including, without
limitation, all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, copyrights and
copyright applications.
(p) Title to Assets, Properties and Rights and Related Matters. Each
Company has such rights and interests in the Intellectual Property Rights as
provided in Section 5.3(o) and except as set forth in the Companies and
Sellers Disclosure Schedule, good and marketable title to all other assets,
properties and interests in properties, real or personal, reflected on the
financial statement as of July 31, 2006 or acquired after July 31, 2006
(except (i) inventory sold since July 31, 2006 in the ordinary course of
business, and (ii) accounts receivable and notes receivable to the extent
paid subsequent to July 31, 2006), free and clear of all encumbrances of any
kind or character, except for those encumbrances set forth in the Companies
and Sellers Disclosure Schedule. Each Company has good and marketable title
to the assets and properties located at the locations listed on Exhibit "F".
(q) Compliance With Laws. Each of the Companies and Sellers is in
material compliance with all laws, regulations, rules and ordinances in any
manner relating to the ownership or operation of the business or businesses
of such Company which non-compliance would have a Material Adverse Effect on
the Company. Neither of the Companies or Sellers is a party to any
agreement or other arrangement which limits or restricts competition or the
disclosure of information.
(r) Distributions. Since July 12, 2006, there have been no
distributions to Sellers, except for the purpose of paying employment
obligations of Daryl Hickman and Roger McMennamy, and lease payments under
written leases to Joe Fred Starr and Daryl Hickman.
(s) Legislation / Regulations. To Sellers' best knowledge, there
exist no federal or state legislation or regulations which would adversely
impact the Companies' continued business operations, nor are there any
current initiatives for any such legislation or regulations.
(t) Markets. Sellers presently operate in Arkansas, Oklahoma and
Missouri. The Companies have considered the possibility of marketing and
business operations in the states of Arizona, Colorado, Florida, Georgia,
Kansas, Nevada, Tennessee, and Texas.
(u) Disclosure. Neither this Agreement, nor any of the schedules,
attachments, exhibits, written statements, documents, certificates or other
materials prepared or supplied by either of the Companies or Sellers
with respect to the transactions contemplated hereby contain any untrue
statements of a material fact or omit a material fact necessary to make the
statements contained herein or therein not misleading.
ARTICLE VI
COVENANTS
---------
6.1 Conduct of Business of Each Company Pending the Purchase. Each
Company agrees that from the date hereof and prior to the Closing Date or
earlier termination of this Agreement:
(a) Full access. Each Company shall permit representatives of
Purchaser to have full access to all premises, properties, personnel, books,
records, contracts and documents pertaining to such Company;
(b) Operation of Business. Neither Company will 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) Neither Company will authorize or effect any change in its
charter or bylaws;
(ii) Neither Company will 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) Neither Company will declare, set aside, nor 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) Neither Company will issue any new note, bond, or other debt
security or create, incur, assume, or guarantee any indebtedness for
borrowed money or capitalized lease obligation;
(v) Neither Company will grant or impose any security interest
upon any of its assets;
(vi) Neither Company will make any capital investment in, make any
loan to, or acquire the securities or assets of any other person or
entity outside the ordinary course of business;
(vii) Neither Company will make any change in employment terms
for any of its directors, officers, and employees outside the ordinary
course of business; and
(viii) Neither Company will commit to any of the foregoing.
(c) Exclusivity. Neither Company shall 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
such Company. Each Company shall notify the Purchaser immediately if any
person makes any proposal, offer, inquiry or contact with respect to any of
the foregoing.
6.2 Consents of Lessors. Each Company and Sellers agree to use their
reasonable commercial efforts to obtain the written approvals of all lessors
and other parties to all amendments to leases and other contracts required
by Purchaser.
6.3 Noncompetition. (a) The Companies are engaged in the pre-
owned, "buy-here, pay-here" automotive retail and finance business. The
Companies use a business model unique in the manner in which automobiles are
acquired, reconditioned, marketed, sold, and financed, and in the manner in
which payments are collected. The business requires the use of specialized
and confidential information, knowledge, systems, and procedures, which are
also unique to this business model. There exists substantial value in this
business model, the information, knowledge, systems and procedures, the
employee and customer relationships, trade secrets and other tangible and
intangible assets of the Company, all as reflected by the substantial
Purchase Price to be paid hereunder by Purchaser to Sellers. In addition,
Purchaser, its successor, or one or more of their subsidiaries may place
pawn and/or short term loan operations at or near the facilities of the pre-
owned "buy-here, pay-here" automotive retail and finance locations. The
parties recognize that there exists substantial value in the potential
synergy of these operations, and Sellers acknowledge that this potential is
one of the reasons that Purchaser is entering into this Agreement. The
value to the Purchaser of all of these assets could be seriously compromised
if Sellers were not reasonably restrained following the effective date of
this Agreement by restrictive covenants designed to reasonably protect the
Purchaser's substantial and legitimate business interests acquired herein.
For these reasons, in partial consideration for the Purchase Price, each of
the Sellers unconditionally agree that none of them will engage in the
Prohibited Activities in the Geographical Area for the Duration, as
specified below:
(1) Prohibited Activities. Prohibited Activities include:
(A) Recruitment. Recruitment includes entry into any agreement
with or directly or indirectly soliciting employees or representatives of
either Company (or its successor) or any of its subsidiaries for the purpose
of causing them to leave either Company (or its successor) or any of its
subsidiaries to take employment with any of the Sellers or any other person
or business entity. As used herein, the term "subsidiary" shall mean any
corporation for which fifty percent (50%) or more of its capital stock is
owned directly or indirectly by Purchaser or either Company or the parent of
Purchaser or any Subsidiary.
(B) Competition. Competition includes, directly or indirectly:
(i) competing in the pre-owned "buy-here, pay-here" automotive retail
or finance business, the pawn business and/or the short term loan
business (each a "Competitive Business") within the Geographical Area;
(ii) owning or applying for a license or permit in the Geographical Area for
use in a Competitive Business; (iii) acting as an officer, director,
consultant, independent contractor, shareholder, partner, lender, agent,
associate, owner or principal of any entity engaged in a Competitive
Business within the Geographical Area; (iv) participating directly or
indirectly in the ownership, management, operation or control of any
Competitive Business within the Geographical Area; (v) owning, managing,
operating or controlling a Competitive Business within the Geographical
Area; (vi) participating in the ownership, management, or control of a
Competitive Business within the Geographical Area; and (vii) loaning money
to a Competitive Business within the Geographical Area.
(C) Solicitation. Solicitation includes soliciting customers or
potential customers of Purchaser (or its successor) or either of the
Companies or any of their respective subsidiaries within the Geographical
Area in connection with a Competitive Business.
(D) Disclosure of Confidential Information. Confidential
Information shall include any information concerning the businesses and
affairs of the Companies that is not generally available to the public.
Disclosure of Confidential Information includes revealing the information to
any third party, or using any of the Confidential Information except in
connection with this Agreement.
(2) Geographical Area. Geographical Area includes the States of
Arizona, Arkansas, Colorado, Florida, Georgia, Kansas, Missouri, Nevada,
Oklahoma, Tennessee, and Texas. Sellers agree that the Geographical Area is
reasonable, for among other reasons, the Companies either have engaged in
business in the states of Arkansas, Oklahoma, and Missouri, and engaged in,
intend to engage in or considered the possibility of marketing and business
operations in the various states located in the Geographical Area.
(3) Duration. Duration shall be five years from the effective
date of this Agreement.
(b) To induce Purchaser to enter into this Agreement and to acquire
the Shares, Sellers jointly, severally and unconditionally represent and
warrant to Purchaser that the restrictions in the foregoing provision are
reasonable and that such provision is necessary to protect the good will and
business interests of Purchaser, each Company and their respective
subsidiaries. Each of Sellers acknowledge that Purchaser is entering into
this Agreement in reliance upon the foregoing representation and warranty of
the Sellers.
(c) In the event of the breach by any of Sellers of any of the
covenants contained in this Section 6.3, it is understood that damages may
be difficult or impossible to ascertain and Purchaser (or its successor) and
each Company may seek injunctive relief, in accordance with the provisions
below, in addition to any other relief which Purchaser (or its successor) or
each Company 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 (or its
successor) and each Company shall be entitled to recover, whether Purchaser
(or its successor) or each Company seeks equitable relief, and regardless of
what relief is afforded, such reasonable attorney's fees and expenses as
Purchaser (or its successor) may incur in prosecution of Purchaser's or each
Company's claim for breach hereof.
(d) Sellers shall deliver promptly to the Purchaser or destroy, at the
request and option of the Purchaser, all tangible embodiments (and all
copies) of the Confidential Information which are in his or its possession.
In the event that any of the Sellers is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigation demand, or similar process) to
disclose any Confidential Information, such Seller will notify the Purchaser
promptly of the request or requirement so that the Purchaser may seek an
appropriate protective order or waive compliance with the provisions of this
Section 6.6. If, in the absence of a protective order or the receipt of a
waiver hereunder, any of the Sellers is, on the advice of counsel, compelled
to disclose any Confidential Information to any tribunal or else stand
liable for contempt, that Seller may disclose the Confidential Information
to the tribunal; provided however, that the disclosing Seller shall use his
best efforts to obtain, at the request of the Purchaser, an order or other
assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Purchaser shall
designate.
(e) Any claim made for violation of the Prohibited Activities shall be
made and enforceable only against the "Seller Group" alleged to have made
such violation, for which the members of such group shall have joint and
several liability. For this purpose only, Sellers are divided into this
three groups, each a "Seller Group": the Hickman Group, comprised solely of
Daryl Hickman; the McMennamy group, comprised solely of Roger McMennamy; and
the Starr Group, comprised of Joe Fred Starr, A. Kent Starr, Joe F. Starr,
Jr., David M. Starr and Shannon Arcana.
(f) Should any provision of this Section 6.3 be determined by a court
or arbitration tribunal to be unreasonable and/or unenforceable, such
provision shall be reformed by said court or arbitration tribunal so as to
afford Purchaser the maximum protection deemed reasonable and enforceable
under the law.
6.4 Third Party Consents. Except as otherwise explicitly provided
hereunder, 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 transactions
contemplated hereby or thereby, including, without limitation, any permits,
authorizations, consents, waivers and approvals required in connection with
the Purchase.
6.5 Releases. Purchaser shall use reasonable efforts to have the
Sellers released from liability for all guaranty agreements related to the
indebtedness listed in Exhibit "A." If this Agreement is consummated,
Purchaser shall indemnify the Sellers for liability under said guaranty
agreements attributable to the period after the Closing Date or attributable
prior to the Closing Date to the extent disclosed in connection with or
under this Agreement.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
7.1 Conditions to Each Party's Obligation to Effect the Purchase. The
respective obligations of each party to effect the Purchase shall be subject
to the fulfillment of all of the following conditions precedent at or prior
to the Closing Date:
(a) No injunction, order or decree by any Federal, state or foreign
court which prevents the consummation of the Purchase shall have been
issued;
(b) No statute or regulation shall exist or be enacted which would
prevent consummation of the Purchase; and
(c) All governmental consents and approvals required for the Purchase
shall have been obtained.
7.2 Conditions to Obligations of Sellers to Consummate the Purchase.
The obligation of Sellers to consummate the Purchase is subject to
fulfillment of all of the following conditions precedent at or prior to the
Closing Date:
(a) All representations and warranties in Section 5.2 shall be true
and correct in all material respects;
(b) Purchaser shall have performed and complied with all obligations,
agreements and covenants under this Agreement; and
(c) All consents and approvals necessary for the consummation of the
Purchase shall have been obtained. (Seller has already obtained Shareholder
Approval for this agreement.)
7.3 Conditions to Obligations of Purchaser to Effect the Purchase.
The obligations of Purchaser to effect and consummate the Purchase are
subject to the fulfillment of all of the following conditions precedent at
or prior to the Closing Date.
(a) The representations and warranties in section 5.3 made by the
Sellers are true and correct in all material respects;
(b) The S corporation election under section 1362(a) of the Internal
Revenue Code made by each Company is valid and allows each Company to be
treated as an S corporation for Federal and state income tax purposes.
(c) The net working capital position of the Companies (defined as
current assets minus current liabilities, including interest bearing
indebtedness, as set forth on the balance sheets of Companies prepared as of
the Closing Date) is at least sixteen million dollars ($16,000,000) as of
the Closing Date.
(d) Each Company and the Sellers shall have performed and complied
with all of their respective obligations under this Agreement;
(e) 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 or ruling would (A) prevent
consummation of any of the transactions contemplated by this Agreement; (B)
cause the business operations of either Company or any of the transactions
contemplated by this Agreement to be in violation of such injunction,
judgment, order, decree or ruling or applicable law, (C) affect adversely
the right of Purchaser to own the capital stock of each Company or (D)
adversely affect the right of either Company to own its assets and to
operate its business (and no such injunction, judgment, order, decree,
ruling or charge shall be in effect);
(f) Purchaser shall have received from each of the Sellers executed
assignments of all of the Shares in form satisfactory to Purchaser and
original stock certificates evidencing the ownership of all of the Shares,
together with stock powers in form satisfactory to Purchaser executed by
each of the Sellers;
(g) All consents and approvals necessary for the consummation of the
Purchase shall have been obtained;
(h) Companies shall have delivered to Purchaser the written opinion of
counsel to each Company and Sellers, substantially in the form attached
hereto as Exhibit "G" dated as of the Closing Date;
(i) No material adverse change has occurred in the business,
operations or prospects of either Company;
(j) All lessors of real property and personal property shall have
executed all lease amendments required by Purchaser in form satisfactory to
Purchaser and new lease agreements in form satisfactory to Purchaser shall
have been executed by all persons and entities required by Purchaser;
(k) Financial statements of each Company for the periods indicated in
Section 5.3(e) satisfactory to Purchaser (prepared in accordance with
generally accepted accounting principles and on the basis as described in
Section 5.3(e)) shall have been received by Purchaser and are true and
correct.
(l) All licenses, permits and approvals necessary to own and operate
the business operated by each Company as a subsidiary of Purchaser shall
have been obtained by each Company.
(m) Purchaser shall have received a certificate executed by the
secretary of each Company which includes: (1) a copy of such Company's
Articles of Incorporation and copies of all merger agreements to which such
Company was a party, certified by the Arkansas Secretary of State; (2) a
copy of the bylaws of such Company; (3) a current certificate of existence
issued by the Arkansas Secretary of State; (4) a copy of the resolutions of
the Board of Directors of such Company which approved this Agreement; and
(5) an incumbency certificate setting forth the names, offices and
signatures of such Company's officers who execute any documents on behalf of
Company in connection with this Agreement; and
(n) Purchaser shall have received the resignation of: (1) each of the
directors of the Company; and (2) each of the officers of each Company,
except Roger McMennamy.
ARTICLE VIII
INDEMNIFICATION
---------------
General Indemnification Covenants. (a) Sellers shall defend, indemnify,
and hold harmless Purchaser, Companies and their respective affiliates,
successors and permitted assigns (the "Purchaser Indemnitees," whether one
or more), from all claims, causes of action, assessments and liabilities
sustained or incurred by any of the Purchaser 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 either Company or any of the Sellers, whether contained in this
Agreement or any exhibit or schedule hereto or in any closing document
delivered by either Company or any of the Sellers to Purchaser. Provided
however, (i) no claim for indemnification may be made hereunder for any
claims, causes of action, assessments and liabilities unless (X) such
claims, causes of action, assessments and liabilities are first asserted
against the Purchaser Indemnities within the applicable statute of
limitations for tax assessment and collection for all tax matters, and
within twenty-five (25) months of the Closing for all other matters, and (Y)
Purchaser Indemnitees shall furnish notice of such asserted claims, causes
of action, assessments and liabilities within said twenty_five (25) month
period, or within 45 days of Purchaser Indemnitees' receipt of such
assertion, whichever is longer, and (Z) the claim for indemnification is
initiated by formal demand for mediation as hereafter provided, delivered to
the Sellers from whom indemnification is claimed; (ii) indemnification shall
only be made upon a final determination of indemnification under the dispute
procedures herein; (iii) indemnification shall be recovered in the following
order: (X) first, by reducing the unpaid principal balance of the Note; (Y)
second, by offsetting all other amounts owed under the Note; and (Z) third,
from the other assets of an indemnitor; and (iv) the obligation of each
individual Seller for any and all cumulative claims for indemnification
hereunder, including attorneys fees, shall be limited to twenty-five percent
(25%) of the Equity Purchase Price received by that Seller, as reflected in
Exhibit C-1.
(b) In their sole discretion, if indemnification to Purchaser is legally
required, the Purchaser Indemnitees shall have the right to be represented
by counsel of their own choosing at Sellers' expense, either in addition to
or in lieu of counsel provided by Seller. Seller shall directly compensate
all counsel promptly upon receipt of their statements for services rendered.
This provision shall apply in all instances in this Agreement, where Sellers
are required to defend, indemnify and hold harmless the Purchaser or its
affiliates.
(c) In connection with any settlement by the Sellers, no Purchaser
Indemnitee shall be required to (1) enter into any settlement (A) that does
not include the delivery by the claimant or plaintiff to the Purchaser
Indemnitee of a release from all liability in respect of such claim or
litigation, (B) if the Purchaser Indemnitee shall, in writing to the Sellers
within the ten (10) day period prior to such proposed settlement disapprove
of such settlement proposal, or (C) that requires a Purchaser Indemnitee 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 Purchaser Indemnitee with
prejudice. This provision shall apply in all instances in this Agreement,
where Sellers are required to defend, indemnify and hold harmless the
Purchaser or its affiliates.
8.2 Tax Indemnity. (a) Subject to the time limitations on claims for
tax indemnification set forth above, the Sellers shall pay, indemnify,
defend and hold harmless Purchaser and each Company from and against any and
all Taxes of each Company with respect to any period (or any portion
thereof) up to and including Closing, except for (i) Taxes of each Company
which are reflected as current liabilities for Taxes on the balance sheet
dated July 31, 2006 ("Closing Balance Sheet"), (ii) Taxes incurred in the
ordinary course of business between July 31, 2006 and Closing; and (iii)
Taxes resulting from special accounting adjustments mutually agreed in
writing by the parties at Closing, together with all reasonable legal fees,
disbursements and expenses incurred by Purchaser and each Company in
connection therewith.
(b) Sellers shall prepare and file any Return of each Company which is
required to be filed after the Closing Date and which relates to any period
(or portion thereof) up to and including August 25, 2006, and Sellers shall,
at least thirty (30) days prior to the due date of any such Return, deliver
a draft copy to the Purchaser. Within fifteen (15) days of the receipt of
any such Return, the Purchaser may reasonably request changes, in which
event Purchaser and the Sellers shall attempt to agree on a mutually
acceptable resolution of the issues in dispute. If a resolution is reached,
such Return shall be filed in accordance therewith. If a resolution is not
reached, then at the expense of Purchaser and the Sellers (such expense to
be shared equally), such Return shall be submitted to a firm of independent
certified public accountants selected by Purchaser and reasonably acceptable
to the Sellers, which shall be directed to resolve the issues in dispute.
Such resolution shall be incorporated into the Return and filed by Sellers
with the respective taxing authority accordingly. As soon as is practicable
after notice from Purchaser to the Sellers at any time prior to the date any
payment for Taxes attributable to any such Return is due, provided such
Return is prepared for filing in accordance with the foregoing, 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 Closing Date, or Taxes that would
have been due with respect to a taxable period beginning before and ending
after the Closing Date if such period had ended on the Effective Time over
(ii) the amount of such Taxes of Company with respect to such taxable period
which are reflected as Current Tax Liabilities on the Closing Balance Sheet
shall be promptly paid by the Sellers to Purchaser or Companies.
8.3 If, in accordance with the foregoing provisions of this Article 8,
a Purchaser Indemnitee shall be entitled to defense against a claim, cause
of action, assessment or other asserted liability, and if the Sellers shall
fail provide such defense, the Purchaser Indemnitee shall have the right,
without prejudice to its right of indemnification hereunder, in its sole
discretion, to contest, defend, litigate and/or settle such claim, cause of
action, assessment or other asserted liability, at such time and upon such
terms as the Indemnified Party deems fair and reasonable, in which event the
Sellers shall be liable for the all of Purchaser Indemnitees' attorneys'
fees and other expenses of defense, plus all amounts, if any, paid in
settlement or pursuant to any judgment.
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 either Company for which the Sellers are required to
indemnify Purchaser pursuant to Section 8.2(a) hereof, Purchaser shall
notify the Sellers of such proposed adjustment within ten (10) days after
the receipt thereof. Upon notice to Purchaser within ten (10) days after
receipt of the notice of such proposed adjustment from Purchaser, the
Sellers may assume (at the Sellers' own cost and expense) control of and
contest such proposed adjustment.
(b) Alternatively, if the Sellers request within ten (10) days after
receipt of notice of such proposed adjustment from Purchaser, Purchaser
shall handle the defense of such proposed adjustment. In which event,
Seller shall be entitled (in its sole discretion) to contest, settle or
agree to pay in full such proposed adjustment. In either case, Sellers
shall be obligated to pay all reasonable out-of-pocket costs and expenses
(including legal fees and expenses) which Purchaser may incur, as well as
all amounts, if any, paid in settlement of or pursuant to a Final
Determination with respect to the proposed adjustment. The Sellers shall
pay to Purchaser all indemnity amounts in respect of any such proposed
adjustment within ten (10) days after written demand to the Sellers
therefore.
(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.
8.5 Certain Information. Purchaser, the Sellers and each Company
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 each Company and
assistance relating to each Company 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 Sellers being liable under
the indemnification provisions of this Section 8, provided, that access
shall be limited to items pertaining solely to each Company. The Sellers
shall grant to Purchaser access to all Tax Returns filed with respect to
each Company.
8.6 Release by The Sellers. Each of the Sellers hereby releases and
discharges Purchaser and each Company and each of its officers and directors
from all claims, whether in law or equity, known and unknown, now existing
or subsequently arising, relating to and/or arising out of or in any way
connected with his ownership or alleged ownership of capital stock of either
Company prior to the Closing Date, other than claims or demands arising out
of or related to the transactions contemplated by this Agreement. Sellers
also promise not to commence any litigation or other legal or administrative
proceeding against, Purchaser, either Company or any of their respective
officers or directors asserting such claims.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
9.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the boards of
directors of Purchaser or Companies:
(a) By mutual consent of Purchaser, each Company and the Sellers; or
(b) By Purchaser or a majority in interest of shareholders of each
Company if (i) the Purchase shall not have been consummated on or before
September 15, 2006 (the "Termination Date"), (ii) any governmental or
regulatory body, the consent of which is a condition to the obligations of
Purchaser or Companies to consummate the transactions contemplated hereby or
by this Agreement, shall have determined not to grant its consent and all
appeals of such determination shall have been taken and have been
unsuccessful, or (iii) 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 Purchase and such order, judgment or decree shall have
become final and nonappealable.
9.2 Effect of Termination. In the event of termination of this
Agreement by either Purchaser or Companies and shareholders of each Company,
as provided in Section 9.1, this Agreement shall forthwith become void and
there shall be no liability on the part of either Sellers, Company,
Purchaser or their respective officers or directors. Nothing in this
Section 9.2 shall relieve any party from liability for any breach of this
Agreement.
9.3 Amendments and Waivers. The parties may mutually amend any
provision of this Agreement at any time prior to the Closing Date with the
prior authorization of their respective boards of directors and a majority
in interest of the shareholders of each Company; provided, however, that any
amendment effected subsequent to stockholder approval will be subject to the
restrictions contained in the Arkansas General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by Companies, Purchaser and a majority in
interest of the shareholders of each Company. 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 Purchase.
10.2 Press Releases and Public Announcements. Sellers shall not issue
any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the
Purchaser. Purchaser may issue a press release or other public disclosure
in its sole discretion.
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 three (3) 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 the Companies: Guaranteed Auto Finance, Inc.
c/o Roger McMennamy
611 Jean Mary Street, P.O. Box 730
Tontitown, Arkansas 72770
SHAC, Inc.
c/o Roger McMennamy
P.O. Box 639
Tontitown, Arkansas 72770
If to the Sellers: Daryl Hickman
[ deleted for confidentiality ]
Roger McMennamy
[ deleted for confidentiality ]
Joe Fred Starr
[ deleted for confidentiality ]
A. Kent Starr
[ deleted for confidentiality ]
Joe F. Starr, Jr.
[ deleted for confidentiality ]
David M. Starr
[ deleted for confidentiality ]
Shannon Arcana
[ deleted for confidentiality ]
Copy to: William Jackson Butt, II
19 East Mountain Street,
P.O. Box 1688
Fayetteville, AR 72702
If to the Purchaser: First Cash Financial Services, Inc.
690 East Lamar, Suite 400
Arlington, Texas 76011
Attn: Rick L. Wessel
Copy to: William D. Ratliff, III
Haynes and Boone, L.L.P.
201 Main Street, Suite 2200
Fort Worth, Texas 76102
Patrick Gaas
Coats, Rose, Yale, Ryman & Lee
3 Greenway Plaza, Suite 2000
Houston, Texas 77046
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, all of which are merged herein.
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. Should any term or provision of this Agreement be
deemed invalid or unenforceable by a court or arbitration tribunal of
competent jurisdiction, such provision shall be severed from the remaining
terms of the Agreement, and the Agreement shall be enforced without such
provision, provided that such severance does not undermine the fundamental
purposes of this Agreement.
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. Sellers
hereby consent to general personal jurisdiction in the State of Texas for
all disputes, if any, with Purchaser, Purchaser Indemnitees, Purchaser
affiliates, the Companies and/or Companies' affiliates.
10.9 Mediation. All disputes or controversies any nature
whatsoever between any of the parties, arising out of or relating to this
Agreement, that cannot be settled by good faith negotiation will be
submitted to non-binding mediation through the American Arbitration
Association. If complete agreement cannot be reached within 15 days of
submission to mediation, all remaining issues will be submitted to binding
arbitration pursuant to paragraph 10.10 below.
10.10 Arbitration. THIS AGREEMENT IS SUBJECT TO BINDING
ARBITRATION. In the event the parties fail to come to a resolution through
mediation of any disputes or controversies of any nature whatsoever, arising
from or relating to this Agreement, such dispute or controversy shall be
decided by binding arbitration by the American Arbitration Association (AAA)
in accordance with its Commercial Rules, then obtaining, except as modified
herein. This agreement to arbitrate shall include claims for injunctive
relief.
(a) Procedure for Injunctive Relief. In the event a party seeks
injunctive relief, the claim shall be administratively expedited by the AAA,
which shall appoint a single, neutral arbitrator for the limited purpose of
deciding such claim. Such arbitrator shall be a qualified member of the
State Bar of Texas in good standing, and preferably shall be a retired state
or federal district judge. The single arbitrator shall decide the claim for
injunctive relief immediately on hearing or receiving the parties'
submissions (unless, in the interests of justice, he must rule ex parte);
provided, however, that the single arbitrator shall rule on such claims
within 24 hours of submission of the claim to the AAA. The single
arbitrator's ruling shall not extend beyond 14 calendar days and on
application by the claimant, up to an additional 14 days following which,
after a hearing on the claim for injunctive relief, a temporary injunction
may issue pending the award. Any relief granted under this procedure for
injunctive relief shall be specifically enforceable in Tarrant County
District Court on an expedited, ex parte basis and shall not be the subject
of any evidentiary hearing or further submission by either party, but the
court, on application to enforce a temporary order, shall issue such orders
as necessary to its enforcement.
(b) Procedure after a Claim for Injunctive Relief or where no
Claim for Injunctive Relief Is Made. The arbitrator shall be selected as
follows: in the event the parties to the arbitration agree on one
arbitrator, the arbitration shall be conducted by such arbitrator. In the
event the parties to the arbitration do not so agree, each party shall
select one independent, qualified arbitrator, and the two arbitrators so
selected shall select the third arbitrator. The arbitrator(s) are herein
referred to as the "Panel." Purchaser shall have the right to strike any
individual arbitrator who shall be employed by or affiliated with a
competing organization, and Sellers may strike any arbiter with any similar
or other demonstrated conflict.
(c) Location of Arbitration. Arbitration shall take place at
Arlington, Texas, or any other location mutually agreeable to the parties.
At the request of either party, arbitration proceedings will be conducted in
the utmost confidentiality; in such case all documents, testimony and
records shall be received, heard and maintained by the Panel in confidence,
available for inspection only by the parties and their respective attorneys
and their respective experts, who shall agree in advance and in writing to
receive all such information confidentially and to maintain such information
in confidence until such information shall become generally known. The Panel
shall be able to award any and all relief, including relief of an equitable
nature. The award rendered by the Panel may be enforceable in any court
having jurisdiction thereof, provided such court is located in the venue
prescribed by this Agreement.
(d) The parties to the arbitration will split all the fees and
out-of-pocket expenses of each arbitrator selected pursuant to this
paragraph and the AAA.
10.11 Venue. Venue for any controversy or claim arising out of this
Agreement shall lie exclusively in Tarrant County, Texas.
10.12 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.
10.13 Attorneys Fees. In the event of any legal proceedings
relating to this Agreement, the prevailing party shall be entitled to
recover from the opposing party or parties their reasonable attorney's fees.
10.14 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.
10.15 Expenses. The Sellers will bear all their own costs and
expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
In witness whereof, the parties have executed this Asset and Stock
Purchase Agreement on the date first above written.
PURCHASER:
FIRST CASH FINANCIAL SERVICES, INC.
a Delaware corporation
By:
------------------------------------
Rick L. Wessel, President
COMPANY:
GUARANTEED AUTO FINANCE, INC.
By:
------------------------------------
Roger McMennamy, President
SHAC, INC.
By:
------------------------------------
Roger McMennamy, President
SELLERS:
----------------------------------------
Daryl Hickman
----------------------------------------
Joe Fred Starr
----------------------------------------
A. Kent Starr
----------------------------------------
Joe F. Starr, Jr.
----------------------------------------
David M. Starr
----------------------------------------
Shannon Arcana
----------------------------------------
Roger McMennamy
Exhibit 10.1
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Third Amendment") is
dated to be effective as of August 22, 2006, among FIRST CASH FINANCIAL
SERVICES, INC. (the "Borrower") and JPMORGAN CHASE BANK, N.A. successor by
merger to Bank One, NA (Main Office Chicago) (the "Lender" and the "Agent")
and WELLS FARGO BANK, NATIONAL ASSOCIATION, successor by merger to Wells
Fargo Bank Texas, National Association (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lenders are parties to that certain
Credit Agreement dated as of August 9, 2002, and that certain First
Amendment to Loan Agreement dated March 1, 2004, and that certain Second
Amendment to Loan Agreement dated June 30, 2005, by and between the Borrower
and the Lenders (collectively the "Agreement"); and
WHEREAS, the Borrower and the Lenders desire to amend the Agreement by
this Third Amendment to reflect the agreements, modifications and amendments
as set forth below.
NOW, THEREFORE, for and in consideration of the above premises and for
other good and valuable consideration, the parties hereto agree as follows:
1. Definitions. All capitalized terms defined in the Agreement and not
otherwise defined in this Third Amendment shall have the same meanings as
assigned to them in the Agreement when used in this Third Amendment, unless
the context hereof shall otherwise require or provide.
2. Representations and Warranties. In order to induce the Lenders to
enter into this Third Amendment, the Borrower represents and warrants to the
Lenders that:
A. The Borrower has the requisite corporate authority to execute,
deliver and perform the terms and provisions of this Third Amendment, the
Agreement as amended by this Third Amendment, and the Loan Documents and the
Borrower has taken all corporate and other action necessary to authorize
such matters; and
B. Neither the execution and delivery of this Third Amendment, nor
any other documents executed by the Borrower in connection herewith, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or thereof, will contravene
or conflict with any provision of law, statute or regulation to which the
Borrower is subject or any judgment, license, order or permit applicable to
the Borrower or any indenture, agreement or other instrument to which the
Borrower may be subject; no consent, approval, authorization or order of any
court, governmental authority or third party is required in connection with
the execution and delivery of this Third Amendment or any of the other
documents executed and delivered in connection herewith or to consummate the
transactions contemplated herein or therein;
C. This Third Amendment, the Agreement, as amended hereby, and the
Loan Documents are the legal and binding obligations of the Borrower,
enforceable in accordance with their respective terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors' rights;
D. After the execution of this Third Amendment, no event has
occurred and is continuing which constitutes a Default;
E. All of the representations and warranties of the Borrower
contained in Article V of the Agreement are true and correct as of the date
hereof.
3. Amendments to Article I. The following definitions are amended
and/or added to the Agreement and shall read as follows:
"'Aggregate Commitment' means the aggregate of the Commitments
of all Lenders, as reduced from time to time pursuant to the terms
hereof, which as of August 22, 2006 shall be equal to Fifty Million
and no/100 Dollars ($50,000,000.00)."
"'Facility Termination Date' means April 15, 2009, or any
earlier date on which the Aggregate Commitment is reduced to zero
or otherwise terminated pursuant to the terms hereof."
"'Guarantors' means, collectively, Cash & Go, Inc., Famous
Pawn, Inc., First Cash, Inc., First Cash Corp., First Cash, Ltd.,
First Cash Management, L.L.C., One Iron Ventures, Inc., FCFS MO,
Inc., FCFS SC, Inc., FCFS OK, Inc., FCFS MI, Inc., First Cash
Credit, Ltd., First Cash Credit Management, L.L.C., First Cash,
S.A. de C.V., American Loan Employee Services, S.A de C.V., SHAC,
Inc., and Guaranteed Auto Finance, Inc., and their successors and
assigns, and 'Guarantor' means any of the Guarantors."
"'Guaranty' means the identical Unlimited Guaranties dated as
of August 22, 2006, executed by the Guarantors in favor of each
Lender, for the ratable benefit of the Lenders, as such may be
amended or modified and in effect from time to time. The term
'Guaranty' also includes the identical Unlimited Guaranties dated
subsequent to August 22, 2006 and executed by SHAC, Inc. and
Guaranteed Auto Finance, Inc. in favor of each Lender for the
ratable benefit of the Lenders, in the event such Guarantors are
not yet Subsidiaries on August 22, 2006, but subsequently become
Subsidiaries."
4. Amendments to Article VI.
(a) Section 6.12 is amended to read in its entirety as follows:
"6.12. Indebtedness. The Borrower will not, nor will it
permit any Subsidiary to, create, incur or suffer to exist any
Indebtedness, except for (i) the Loans, (ii) trade debt incurred in
the ordinary course of business, (iii) intercompany Indebtedness,
(iv) endorsements of negotiable instruments in the ordinary course
of business, (v) Indebtedness described in Schedule 2, (vi)
Subordinated Indebtedness permitted by all of the Lenders, (vii)
Indebtedness in the amount of $10,000,000.00, with a term of four
(4) years, owing by Borrower to former shareholders of SHAC, Inc.
and Guaranteed Auto Finance, Inc., (viii) contingent liabilities
and indebtedness to third Persons of up to $2,000,000.00 in the
aggregate during any 12-month period; provided, however, the
Borrower shall notify Agent of any contingent liability which
exceeds $1,000,000.00, (ix) contingent liabilities (in addition to
contingent liabilities covered in Subsection [viii]) incurred in
the ordinary course of business of SHAC, Inc. and Guaranteed Auto
Finance, Inc., including, but not limited to, limited warranty
claims and credit life and disability insurance claims, (x) any
obligation of the Borrower to a Person which is generated by a
permitted Financial Hedge, and (xi) letters of credit (as such
instruments are called in Borrower's credit services product)
issued by Borrower for the benefit of an independent lender."
(b) Section 6.15 is amended to read in its entirety as follows:
"6.15 Investment and Acquisitions. The Borrower will not,
nor will it permit any Subsidiary to, make or suffer to exist any
Investments (including, without limitation, loans and advances to,
and other Investments in, Subsidiaries), or commitments therefore,
or to create any Subsidiary (except SHAC, Inc. and Guaranteed Auto
Finance, Inc.) or to become or remain a partner in any partnership
or joint venture, or to make any Acquisition of any Person, except
for (i) Cash Equivalent Investments, (ii) existing investments in
Subsidiaries and other Investments in existence on August 22, 2006;
provided, however, if the Acquisition has not become effective as
of August 22, 2006, it is anticipated that not later than October
31, 2006, SHAC, Inc. and Guaranteed Auto Finance, Inc. will each
become a Domestic Subsidiary and, in turn, a Guarantor, and (iii)
investment in one additional Subsidiary with its principal place of
business in the country of Mexico (the 'New Mexican Subsidiary') as
long as (A) the New Mexican Subsidiary's primary business is the
same as the Borrower's, and (B) the New Mexican Subsidiary becomes
a Guarantor promptly after it becomes a Subsidiary."
(c) Section 6.17 is amended to read in its entirety as follows:
"6.17 Loans. The Borrower will not, nor will it permit
any Subsidiary to, directly or indirectly, make any loans or
advances to any Person except (i) in the ordinary course of the
Borrower's and Subsidiaries' businesses as they exist on August 22,
2006, and (ii) in an amount up to $10,000,000.00 in the aggregate
outstanding at any one time."
(d) Sections 6.1(vii), 6.22.4, 6.22.5, and 6.22.6 are hereby
deleted and replaced with the verbiage "Intentionally Omitted."
(e) Section 6.24 is amended to read in its entirety as
follows:
"6.24 Stock Repurchases. Borrower shall not permit the
aggregate amount of Stock Repurchases to exceed $40,000,000.00
during any fiscal year or $75,000,000.00 in the aggregate period of
time commencing August 22, 2006, and ending on the Facility
Termination Date; provided, however, no Stock Repurchase is
permitted during any period of time the Borrower's Fixed Charge
Coverage Ratio is less than 1.50 to 1.00."
5. Amendments to Article IX. A new Section 9.14 is added and
shall read in its entirety as follows:
"9.14 USA PATRIOT ACT NOTIFICATION. The following notification
is provided to Borrower pursuant to Section 326 of the USA Patriot
Act of 2001, 31, U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW
ACCOUNT. To help the government fight the funding of terrorism and
money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that
identifies each person or entity that opens an account, including
any deposit account, treasury management account, loan, other
extension of credit, or other financial services product. What
this means for Borrower: When Borrower opens an account, if
Borrower is an individual Bank will ask for Borrower's name,
taxpayer identification number, residential address, date of birth,
and other information that will allow Bank to identify Borrower,
and if Borrower is not an individual Bank will ask for Borrower's
name, taxpayer identification number, business address, and other
information that will allow Bank to identify Borrower. Bank may
also ask, if Borrower is an individual to see Borrower's driver's
license or other identifying documents, and if Borrower is not an
individual to see Borrower's legal organizational documents or
other identifying documents."
6. Amendments to Exhibits, Schedules, and Addendum I.
(a) Schedule 1 to Exhibit B (Compliance Certificate) is amended
as set forth in the attachment to this Third Amendment.
(b) Schedule 3 (Commitments and Pro Rata Shares) is amended as
set forth in the attachment to this Third Amendment.
(c) The cover page to the Agreement is amended as set forth in
Addendum I attached.
7. Conditions Precedent. This Third Amendment and the obligations of
the Lenders hereunder are subject to the conditions precedent that the
Borrower shall have (a) duly executed and delivered to the Lenders this
Third Amendment, and (b) paid to the Agent an amount to reimburse the Agent
for its reasonable attorneys' fees incurred in the preparation of this Third
Amendment and related Loan Documents, and (c) paid to the Agent a closing
fee in the amount of $12,500.00 divided ratably by the Lenders.
8. Scope of Amendments. Any and all other provisions of the Agreement
and any other Loan Documents are hereby amended and modified wherever
necessary and even through not specifically addressed herein, so as to
conform to the amendments and modifications set forth in this Third
Amendment.
9. Limitation on Agreements. The amendments set forth herein are
limited in scope as described herein and shall not be deemed (a) to be a
consent under, or waiver of, any other term or condition of the Agreement or
any of the Loan Documents, or (b) to prejudice any right or rights which the
Lenders now have or may have in the future under, or in connection with the
Agreement as amended by this Third Amendment, the Loan Documents or any of
the documents referred to herein or therein.
10. Multiple Counterparts. This Third Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same agreement, and any of the parties hereto may execute this Third
Amendment by signing any such counterpart.
THE CREDIT AGREEMENT, AS AMENDED BY THIS THIRD AMENDMENT, AND THE LOAN
-----------------------------------------------------------------------
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
----------------------------------------------------------------------------
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
----------------------------------------------------------------------------
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
----------------------------------------------------------------------------
THE PARTIES.
------------
Executed to be effective as of August 22, 2006.
LENDER AND AGENT: JPMORGAN CHASE BANK, N.A., successor by
merger to Bank One, NA (Main Office Chicago)
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
LENDER: WELLS FARGO BANK, N. A., successor by
merger to Wells Fargo Bank Texas,
National Association
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
BORROWER: FIRST CASH FINANCIAL SERVICES, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
GUARANTORS: REVIEWED AND AGREED:
CASH & GO, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FAMOUS PAWN, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FCFS MO, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FCFS OK, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FCFS SC, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FCFS MI, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FIRST CASH, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FIRST CASH CORP.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FIRST CASH, LTD.
By: FIRST CASH MANAGEMENT, L.L.C., its
General Partner
By:
------------------------------
Name: Rick Wessel
------------------------------
Title: Manager
------------------------------
FIRST CASH MANAGEMENT, L.L.C.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: Manager
--------------------------------------
ONE IRON VENTURES, INC.
By:
--------------------------------------
Name: Rick Wessel
--------------------------------------
Title: President
--------------------------------------
FIRST CASH CREDIT, LTD.
By: FIRST CASH CREDIT MANAGEMENT,
L.L.C., its General Partner
By:
------------------------------
Name: R. Douglas Orr
------------------------------
Title: Manager
------------------------------
FIRST CASH CREDIT MANAGEMENT, L.L.C.
By:
--------------------------------------
Name: R. Douglas Orr
--------------------------------------
Title: Manager
--------------------------------------
FIRST CASH, S.A. DE C.V.
By:
--------------------------------------
Name: R. Douglas Orr
--------------------------------------
Title: Legal Representative
--------------------------------------
AMERICAN LOAN EMPLOYEE SERVICES, S.A. DE C.V.
By:
--------------------------------------
Name: R. Douglas Orr
--------------------------------------
Title: Legal Representative
--------------------------------------
EXECUTION BY THE FOLLOWING CORPORATIONS
REQUIRED ONLY IF SUCH CORPORATIONS ARE
SUBSIDIARIES AS OF OCTOBER 31, 2006
SHAC, INC.
By:
--------------------------------------
Name: R. Douglas Orr
--------------------------------------
Title: Secretary
--------------------------------------
GUARANTEED AUTO FINANCE, INC.
By:
--------------------------------------
Name: R. Douglas Orr
--------------------------------------
Title: Secretary
--------------------------------------
SCHEDULE 1 TO COMPLIANCE CERTIFICATE
Compliance as of _________, ____ with
Provisions of Sections 6.22 and 6.24
of the Agreement
Description of Covenant Calculation as of _____________, 20__
(i) Fixed Charge Coverage Ratio of _______________ to 1.00 ______________
not less than 1.25 to 1.00
(Section 6.22.2) of Agreement)
(ii) Leverage Ratio of not greater _______________ to 1.00 ______________
than 2.50 to 1.00
(Section 6.22.3 of Agreement)
(iii) Stock Repurchase of not more _________$____________________________
than $40,000,000.00 per fiscal Fiscal year
year and $75,000,000.00 in the
aggregate _________$____________________________
(Section 6.24 of Agreement) Aggregate
FIRST CASH FINANCIAL SERVICES, INC.
By:
-------------------------------
Name: R. Douglas Orr
-------------------------------
Title: Chief Financial Officer
-------------------------------
SCHEDULE 3
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Lender Commitments Share
----------------------------------------------------------
JPMorgan Chase Bank, N.A. $33,500,000.00 67%
Wells Fargo Bank, N.A. $16,500,000.00 33%
______________ _____________
Total $50,000,000.00 100.00%
ADDENDUM I
COVER PAGE
AMENDED AND RESTATED
CREDIT AGREEMENT
among
FIRST CASH FINANCIAL SERVICES, INC.
as Borrower,
JPMORGAN CHASE BANK, N.A.
as Agent and Lender,
and
THE OTHER LENDERS PARTY HERETO
JPMORGAN CHASE BANK, NA.
as Lead Arranger and Sole Bookrunner
Exhibit 99.1
For Immediate Release:
First Cash Announces Acquisition of Buy-Here/Pay-Here Automotive Retailer
______________________________________________________________
Earnings Forecast Increased for 2006;
Fiscal 2007 Earnings Guidance Initiated at $1.25 to $1.30 per Share
ARLINGTON, Texas (August 28, 2006) -- First Cash Financial Services, Inc.
today announced the acquisition of Auto Master, an automotive retailer and
related finance company focused exclusively on the "Buy-Here/Pay-Here"
segment of the used vehicle market. The definitive stock purchase agreement
for the privately-held Auto Master group was signed and closed on August 25,
2006. The purchase price, in the amount of $33.7 million, was funded
through a combination of cash, First Cash's credit facility and notes
payable to the sellers. The Company also announced that it has increased
its earnings estimate for 2006 and initiated guidance for 2007 earnings.
Auto Master, based in Northwest Arkansas, owns and operates eight Buy-
Here/Pay-Here automobile dealerships located in Arkansas, Missouri and
Oklahoma, which specialize in the sale of clean, moderately-priced used
vehicles. The customers of Auto Master, many of whom are "under-banked" or
otherwise credit-challenged, typically utilize the dealerships' in-house
financing programs, which feature affordable down payments and weekly or bi-
weekly payment plans. Total revenues of Auto Master were $44 million in its
2005 fiscal year and unaudited revenues are projected to be in a range of
$53 million to $55 million for its 2006 fiscal year.
"This acquisition represents an exciting and important strategic initiative
for First Cash," stated Rick Wessel, Vice Chairman of the Board. "We
believe that Auto Master has a demonstrated track record of growth and
profitability, and an excellent business model on which we can build and
expand. We intend to accelerate this business through our financial,
strategic and technology resources. The Auto Master management team shares
our corporate values and vision; we fully expect that this will be an
excellent fit within the First Cash organization and a significant new
growth opportunity for the future. In addition, the acquisition of Auto
Master expands and diversifies the First Cash product suite within the
growing specialty consumer finance industry. We continue to broaden the
range of products and financial services available to our customers."
The Auto Master dealerships are modern, high-volume facilities located on
major streets in well-populated markets. In addition to their strategic
locations, the dealerships rely on a coordinated advertising program, repeat
customers and referrals to generate sales volume. Auto Master utilizes
full-time, in-house buyers to source used vehicle inventories from a ten-
state area. All vehicle inventory acquisitions are processed through
a central reconditioning facility located in Northwest Arkansas, near
Bentonville, for necessary repairs and detailing before being delivered
to the retail locations. The consolidated purchasing and reconditioning
functions, along with centralized inventory and sales management, allow Auto
Master to maintain consistently strong retail margins on its vehicle sales.
Most of the Company's underwriting, collection and other administrative
functions are based at the same central facility.
Historically, Buy-Here/Pay-Here automobile retailing has been a highly
fragmented and under-capitalized industry. Recent trends indicate that
larger, professionally-managed operators, such as Auto Master, have been
able to capture market share through advertising, better inventory
selection, quality control and greater resources for customer financing.
According to Mr. Wessel, "We are impressed with Auto Master's growth
opportunities and the positive short- and long-term potential for the Buy-
Here/Pay-Here industry as a whole. Auto Master is well positioned to expand
within the six-state region surrounding its Northwest Arkansas hub. In
addition, we believe that projected population growth trends in the south
and southwest, especially among "un-banked" or "under-banked" consumers,
should continue to create long-term demand for affordable used vehicles and
financing, as well as opportunities for expansion into other markets where
First Cash operates."
In anticipation of this transaction, the Company has amended its existing
long-term bank credit facility to increase the amount available under the
line of credit from $25 million to $50 million and to extend the term of the
facility until April 2009. The line of credit will continue to bear
interest at the prevailing LIBOR rate plus a fixed margin of 1.375%. The
Company is utilizing funds drawn on the line of credit to fund a portion of
the acquisition purchase, but expects to have significant additional
borrowing capacity under the facility to support working capital needs as
they arise. Internally generated cash flow should result in a near term
pay-off of the debt portion of the Auto Master transaction.
Stephens Inc. represented Auto Master and its shareholders in the
transaction.
Earnings Forecast
-----------------
The Company expects the acquisition to be accretive to earnings beginning in
the fourth quarter of 2006. The previous guidance for 2006 forecast diluted
earnings per share was a range of $0.94 to $0.95. Based both on this
acquisition and positive current-year trends in the Company's core
businesses, management now believes that 2006 diluted earnings per share
will be in a range of $0.96 to $0.97 per share.
Looking ahead to 2007, the Company expects continued earnings growth from
its core pawn and short-term advance businesses, primarily driven through
its well-established store expansion strategy. Including the projected
accretive earnings from Auto Master, the Company is initiating earnings per
share guidance for 2007 in a range of $1.25 to $1.30 per share. This
represents an increase of 29% to 34% over the upper end of the revised 2006
guidance.
First Cash intends to continue with its significant store opening program,
with a total of 70 to 75 new pawn and short-term advance stores anticipated
for 2007. In addition, with the acquisition of Auto Master, the Company
plans to open at least 3 to 5 new Buy-Here/Pay-Here dealerships during the
remainder of 2006 and 2007.
In discussing the updated guidance, Doug Orr, CFO, noted, "The Company's
existing growth models, which include the opening of new short-term advance
stores in the U.S. and new pawn stores in Mexico, will remain unaffected by
the acquisition. We expect Auto Master to be accretive to our earnings, to
become an integral part of our future expansion strategy, and to add a third
significant platform for future growth."
Summary
-------
In summary, Alan Barron, CEO, commented, "This combination is an ideal
strategic fit for both First Cash and Auto Master in terms of similarity of
operating styles, corporate cultures, customer synergy and geographic
overlap. Additionally, Buy-Here/Pay-Here automotive retailing and related
financing activities will provide additional revenue diversification for
First Cash. The funding of this acquisition and investments in Auto
Master's future growth represent an excellent utilization of a portion of
anticipated excess cash flows currently generated by First Cash. Most
importantly, Auto Master's strong profit margins and growth potential will
complement and further improve First Cash's successful operating model. We
are confident that this strategic acquisition will add significant accretive
long-term value for our shareholders."
Forward-Looking Information
---------------------------
This release may contain forward-looking statements about the business,
financial condition and prospects of First Cash Financial Services, Inc.
("First Cash" or the "Company"). Forward looking statements, as that term
is defined in the Private Securities Litigation Reform Act of 1995, can be
identified by the use of forward-looking terminology such as "believes,"
"projects," "expects," "may," "estimates," "should," "plans," "intends,"
"could," or "anticipates," or the negative thereof, or other variations
thereon, or comparable terminology, or by discussions of strategy. Forward-
looking statements can also be identified by the fact that these statements
do not relate strictly to historical or current matters. Rather, forward-
looking statements relate to anticipated or expected events, activities,
trends or results. Because forward-looking statements relate to matters
that have not yet occurred, these statements are inherently subject to risks
and uncertainties. Forward-looking statements in this release include,
without limitation, the Company's expectations of earnings per share,
earnings growth, revenues, profit margins, expansion strategies, industry
growth, acquisition synergies, store openings, future liquidity, and cash
flows. These statements are made to provide the public with management's
current assessment of the Company's business. Although the Company believes
that the expectations reflected in forward looking statements are
reasonable, there can be no assurances that such expectations will prove to
be accurate. Security holders are cautioned that such forward-looking
statements involve risks and uncertainties. The forward-looking statements
contained in this release speak only as of the date of this statement, and
the Company expressly disclaims any obligation or undertaking to report any
updates or revisions to any such statement to reflect any change in the
Company's expectations or any change in events, conditions or circumstances
on which any such statement is based. Certain factors may cause results to
differ materially from those anticipated by some of the statements made in
this release. Such factors are difficult to predict and many are beyond the
control of the Company and may include changes in regional, national or
international economic conditions, changes in consumer borrowing and
repayment behaviors, credit losses, changes or increases in competition, the
ability to locate, open and staff new stores, availability or access to
sources of inventory, inclement weather, ability to successfully integrate
acquisitions, ability to retain key management personnel, the ability to
operate as a credit services organization in Texas, new legislative
initiatives or governmental regulations, or changes to existing laws
and regulations, affecting payday advance businesses, credit services
organizations, pawn businesses and Buy-Here/Pay-Here automotive retailers in
both the U.S. and Mexico, unforeseen litigation, changes in interest rates,
changes in tax rates or policies, changes in gold prices, changes in energy
prices, cost of funds, changes in foreign currency exchange rates, future
business decisions, and other uncertainties. These and other risks and
uncertainties are indicated in the Company's 2005 Annual Report on Form 10-K
(see "Item 1A. Risk Factors") and updated in subsequent quarterly reports on
Form 10-Q.
About First Cash
----------------
First Cash Financial Services, Inc. is a leading provider of specialty
consumer financial services and related retail products. Its pawn stores
lend money based on the collateral of pledged personal property, retail
previously-owned merchandise acquired through loan forfeitures and in
certain locations provide payday advances and credit services products. The
Company's short-term advance locations provide various combinations of
short-term advance products, check-cashing, credit services and other
financial services products. With this acquisition, First Cash also
operates automobile dealerships and related financing operations focused
exclusively on the "Buy-Here/Pay-Here" segment of the used vehicle market.
The Company now owns and operates a total of 383 stores and Buy-Here/Pay-
Here dealerships in thirteen U.S. states and eight states in Mexico. First
Cash is also an equal partner in Cash & Go, Ltd., a joint venture, which
owns and operates 40 check-cashing and financial services kiosks located
inside convenience stores.
First Cash has been recognized for four consecutive years by Forbes magazine
as one of its "200 Best Small Companies." This annual ranking is based on a
combination of profitability and growth performance measures over the most
current one and five-year periods. First Cash was also recently ranked for
the second consecutive year by Fortune Small Business magazine on the "FSB
100: America's Fastest-Growing Small Public Companies." First Cash's common
stock is traded on the Nasdaq Global Select Market, under the ticker symbol
"FCFS," which has the highest initial listing standards of any exchange in
the world based on financial and liquidity requirements. First Cash is also
a component company in the Russell 2000 Index.
For further information, please contact:
Rick Wessel, Vice Chairman & President
Doug Orr, Executive Vice President & Chief Financial Officer
Phone: (817) 505-3199
Email: investorrelations@firstcash.com
Website: www.firstcash.com