As filed with the Securities and Exchange Commission on October 23, 2017.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CURO GROUP HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) |
6199 (Primary Standard Industrial Classification Code Number) |
90-0934597 (I.R.S. Employer Identification Number) |
3527 North Ridge Road
Wichita, Kansas 67205
(316) 425-1410
(Address, including Zip Code, and Telephone Number, including Area Code, of registrants principal executive offices)
Vin Thomas
Chief Legal Officer
3527 North Ridge Road
Wichita, Kansas 67205
(316) 425-1410
(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)
Copies to:
Cristopher Greer
Willkie Farr & Gallagher LLP
|
F. Holt Goddard Jonathan Michels White & Case LLP 1221 Avenue of the Americas New York, NY 10020
(212)
819-8200
|
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date hereof.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☒ (Do not check if a smaller reporting company) |
Smaller reporting company ☐ | Emerging growth company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period with any new or revised accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
|
||||
|
||||
Title of Each Class of Securities
|
Proposed Maximum
Aggregate Offering Price(1)(2) |
Amount of
Registration Fee |
||
Common Stock, $0.001 par value per share |
$100,000,000 | $12,450.00 | ||
|
||||
|
(1) | Includes offering price of shares that the underwriters have the option to purchase. |
(2) | Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until a registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 23, 2017
Shares
CURO Group Holdings Corp.
Common Stock
We are selling shares of our common stock.
This is the initial public offering of shares of common stock of CURO Group Holdings Corp. Prior to this offering, there has been no public market for our common stock. We anticipate that the initial public offering price will be between $ and $ per share. We have applied to list our common stock on The New York Stock Exchange under the symbol CURO.
The selling stockholders listed in this prospectus have granted the underwriters a 30-day option to purchase up to shares from the selling stockholders at the initial public offering price, less the underwriting discounts and commissions. We will not receive any proceeds from the sale of shares by the selling stockholders.
We are an emerging growth company as the term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements. See SummaryImplications of Being an Emerging Growth Company.
Investing in our common stock involves risks. See Risk Factors on page 18.
Price to
Public |
Underwriting
Discounts and Commissions |
Proceeds to
CURO Group Holdings Corp. (before expenses)(1) |
||||||||||
Per Share |
$ | $ | $ | |||||||||
Total |
$ | $ | $ |
(1) | See Underwriting for information relating to underwriting compensation, including certain expenses of the underwriters to be reimbursed by the Company. |
Neither the Securities and Exchange Commission, any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares on or about , 2017.
Credit Suisse | Jefferies | Stephens Inc. | ||
William Blair | ||||
Janney Montgomery Scott |
The date of this prospectus is , 2017.
Page | ||||
1 | ||||
18 | ||||
42 | ||||
44 | ||||
45 | ||||
46 | ||||
47 | ||||
49 | ||||
M ANAGEMENT S D ISCUSSION AND A NALYSIS OF F INANCIAL C ONDITION AND R ESULTS OF O PERATIONS |
51 | |||
98 | ||||
113 | ||||
128 | ||||
134 | ||||
151 | ||||
154 | ||||
156 | ||||
161 | ||||
163 | ||||
167 | ||||
172 | ||||
172 | ||||
172 | ||||
F-1 |
You should rely only on the information contained in this document or to which we have referred you. Neither we, nor the selling stockholders, nor the underwriters have authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities under applicable law. The information in this document may only be accurate on the date of this document regardless of the time of delivery of this prospectus or of any sale of shares of our common stock, and the information in any free writing prospectus that we may provide you in connection with this offering is accurate only as of the date of that free writing prospectus. Our business, financial condition, results of operations and future growth prospects may have changed since those dates. This prospectus is not an offer to sell or the solicitation of an offer to buy shares of our common stock in any circumstances under which such offer or solicitation is unlawful.
Dealer Prospectus Delivery Obligation
Until , (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.
i
This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See Risk Factors and Cautionary Note Regarding Forward-Looking Statements.
We do not intend our use or display of other companies tradenames, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other company. Each trademark, tradename or service mark of any other company appearing in this prospectus is the property of its respective holder.
We or one of our subsidiaries own or have applied for ownership of the marks CURO, CURO Financial Technologies Corp., Speedy Cash ® , RC Rapid Cash SM , OPT+ SM , Rapid Cash, Avio Credit, LendDirect and Wage Day Advance. All other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners.
In this prospectus, when we refer to
| CURO, we are referring to CURO Group Holdings Corp. and its subsidiaries, including CURO Financial Technologies Corp.; |
| CFTC, we are referring to CURO Financial Technologies Corp.; |
| CURO Intermediate, we are referring to CURO Intermediate Holdings Corp.; |
| the FFL Holders, we are referring to Friedman Fleischer & Lowe Capital Partners II, L.P., FFL Executive Partners II, L.P. and FFL Parallel Fund II, L.P.; and |
| the Founder Holders, we are referring to Doug Rippel, Chad Faulkner and Mike McKnight and certain of their family trusts and affiliated entities. |
Unless otherwise specified herein or the context otherwise requires, all references to $, U.S.$, USD or dollars in this prospectus refer to U.S. dollars, all references to C$ refer to Canadian dollars, and all references to £, pound sterling or GBP refer to British pounds sterling. The C$ and GBP are the functional currency of our Canadian and U.K. operations, respectively.
For investors outside the United States: neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States.
Industry and Market Data
This prospectus includes statistical data, market data and other industry data and forecasts, which we obtained from market research, publicly available information and independent industry publications and reports, including those by the Pew Research Center, CFI Group and FactorTrust. We have supplemented these data and forecasts where necessary with information from publicly available sources and our own internal estimates. We use these sources and estimates and believe them to be reliable, but they involve a number of assumptions and limitations.
The sources of certain industry and market data contained in this prospectus are listed below.
| ACORN Canada, Its Expensive to be Poor: How Canadian Banks are Failing Low Income Communities ; May 2016. |
| Board of Governors of the Federal Reserve System, Report on the Economic Well-Being of U.S. Households in 2015 , May 2016. |
ii
| Center for Financial Services Innovation, or CFSI, 2016 Financially Underserved Market Size Study ; November 2016. |
| CFI Group, Bank Satisfaction Barometer ; 2016. |
| FactorTrust, The FactorTrust Underbanked Index ; May 2017. |
| FICO, U S Average FICO Score Hits 700: A Milestone for Consumers ; July 2017. |
| Financial Credit Authority, High-cost credit ; July 2017. |
| J. P. Morgan Chase & Co., Weathering Volatility: Big Data on the Financial Ups and Downs of U.S. Individuals , 2015. |
| L.E.K. Consulting, Consumer Specialist Lending Newly Sustainable or Another Boom-and-Bust ; Volume XVIII, Issue 10. |
| Pew Research Center, Smartphone Ownership and Internet Usage Continues to Climb in Emerging Economies ; February 2016. |
| Pricewaterhouse Coopers LLP, or PWC, Banking the Under-Banked: The Growing Demand for Near Prime Credit , 2016. |
The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in Risk Factors and elsewhere in this prospectus. These and other factors could cause our and the industrys results to differ materially from those expressed in the estimates made by the independent parties and by us.
iii
The following summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus, including the sections entitled Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes to those statements before making an investment decision. The terms we, our, us, CURO and the Company, as used in this prospectus, refer to CURO Group Holdings Corp. and its consolidated subsidiaries, except where otherwise stated or where it is clear that the terms mean only CURO Group Holdings Corp. exclusive of its subsidiaries. Unless the context otherwise indicates or requires, the term Curo Platform and platform, as used in this prospectus, refer to our Companys proprietary IT systems and operating platform.
Company Overview
We are a growth-oriented, technology-enabled, highly-diversified consumer finance company serving a wide range of underbanked consumers in the United States, Canada and the United Kingdom and are a market leader in our industry based on revenues. We believe that we have the only true omni-channel customer acquisition, onboarding and servicing platform that is integrated across store, online, mobile and contact center touchpoints. Our IT platform, which we refer to as the Curo Platform, seamlessly integrates loan underwriting, scoring, servicing, collections, regulatory compliance and reporting activities into a single, centralized system. We use advanced risk analytics powered by proprietary algorithms and over 15 years of loan performance data to efficiently and effectively score our customers loan applications. Since 2010, we have extended $13.1 billion in total credit across approximately 34.8 million total loans, and our revenue of $828.6 million in 2016 represents a 26.3% compound annual growth rate, or CAGR, over the same time period.
We operate in the United States under two principal brands, Speedy Cash and Rapid Cash, and launched our new brand Avio Credit in the United States in the second quarter of 2017. In the United Kingdom, we operate online as Wage Day Advance and, prior to their closure in the third quarter of 2017, our stores were branded Speedy Cash. In Canada our stores are branded Cash Money and, beginning in 2016, we offer Installment Loans online under the brand LendDirect. As of June 30, 2017 our store network consisted of 419 locations across 14 U.S. states, seven Canadian provinces and the United Kingdom. As of June 30, 2017, we offered our online services in 25 U.S. states, five Canadian provinces and the United Kingdom.
We offer a broad range of consumer finance products including Unsecured Installment Loans, Secured Installment Loans, Open-End Loans and Single-Pay Loans. We have tailored our products to fit our customers particular needs as they access and build credit. Our product suite allows us to serve a broader group of potential borrowers than most of our competitors. The flexibility of our products, particularly our installment and open-end products, allows us to continue serving customers as their credit needs evolve and mature. Our broad product suite creates a diversified revenue stream and our omni-channel platform seamlessly delivers our products across all contact pointswe refer to it as Call, Click or Come In. We believe these complementary channels drive brand awareness, increase approval rates, lower our customer acquisition costs and improve customer satisfaction levels and customer retention.
We serve the large and growing market of individuals who have limited access to traditional sources of consumer credit and financial services. We define our addressable market as underbanked consumers in the United States, Canada and the United Kingdom. According to a study by CFSI, there are as many as 121 million Americans who are currently underserved by financial services companies. According to studies by ACORN Canada and PWC, the statistics in Canada and the United Kingdom are similar, with an estimated 15% of Canadian residents (approximately 5 million individuals) and an estimated 20% to 25% of United Kingdom
1
residents (approximately 10 to 14 million individuals) classified as underbanked. Given our international footprint, this translates into an addressable market of approximately 140 million individuals. We believe that with our scalable omni-channel platform and diverse product offerings, we are well positioned to gain market share as sub-scale players struggle to keep pace with the technological evolution taking place in the industry.
Our customers require essential financial services and value timely, transparent, affordable and convenient alternatives to banks, credit card companies and other traditional financial services companies. According to a recent study by FactorTrust, underbanked customers in the United States tend to have the following characteristics:
| average age of 39 for applicants and 41 for borrowers; |
| applicants are 47% male and 53% female; |
| 41% are homeowners; |
| 45% have a bachelors degree or higher; and |
| the top five employment segments are Retail, Food Service, Government, Banking/Finance and Business Services. |
In the United States, our customers generally earn between $25,000 and $75,000 annually. In Canada, our customers generally earn between C$25,000 and C$60,000 annually. In the United Kingdom, our customers generally earn between £18,000 and £31,000 annually.
Products and Services
We provide Unsecured Installment Loans, Secured Installment Loans, Open-End Loans, Single-Pay Loans and a number of ancillary financial products including check cashing, proprietary reloadable prepaid debit cards (Opt+), credit protection insurance in the Canadian market, gold buying, retail installment sales and money transfer services. We have designed our products and customer journey to be consumer-friendly, accessible and easy to understand. Our platform and product suite enable us to provide several key benefits that appeal to our customers:
| transparent approval process; |
| flexible loan structure, providing greater ability to manage monthly payments; |
| simple, clearly communicated pricing structure; and |
| full account management online and via mobile devices. |
Our centralized underwriting platform and its proprietary algorithms are used for every aspect of underwriting and scoring of our loan products. The customer application, approval, origination and funding processes differ by state, country and by channel. Our customers typically have an active phone number, open checking account, recurring income and a valid government-issued form of identification. For in-store loans, the customer presents required documentation, including a recent pay stub or support for underlying bank account activity for in-person verification. For online loans, application data is verified with third-party data vendors, our proprietary algorithms and/or tech-enabled account verification. Our proprietary, highly scalable, scoring system employs a champion/challenger process whereby models compete to produce the most successful customer outcomes and profitable cohorts. Our algorithms use data relevancy and machine learning techniques to identify approximately 60 variables from a universe of approximately 11,600 that are the most predictive in terms of credit outcomes. The algorithms are continuously reviewed and refreshed and are focused on a number of factors related to disposable income, expense trends and cash flows, among other factors, for a given loan applicant. The
2
predictability of our scoring models is driven by the combination of application data, purchased third-party data and our robust internal database of approximately 71 million records associated with loan information. These variables are then combined in a series of algorithms to create a score that allows us to scale lending decisions.
Geography and Channel Mix
For the six months ended June 30, 2017, our revenue distribution in the United States, Canada and United Kingdom was 77%, 19% and 4%, respectively.
Stores: As of June 30, 2017, we had 419 stores in 14 U.S. states, seven provinces in Canada and in the United Kingdom, which included the following:
| 215 United States locations: Texas (92), California (36), Nevada (18), Arizona (13), Tennessee (11), Kansas (10), Illinois (8), Alabama (7), Missouri (5), Louisiana (5), Colorado (3), Oregon (3), Washington (2) and Mississippi (2); |
| 191 Canadian locations: Ontario (121), Alberta (28), British Columbia (26), Saskatchewan (6), Nova Scotia (5), Manitoba (4) and New Brunswick (1); and |
| 13 United Kingdom locations: almost entirely in metropolitan London, which we closed in the third quarter of 2017 (see Note 21, Subsequent Events of our Notes to Interim Consolidated Financial Statements included elsewhere in this prospectus). |
Online: As of June 30, 2017, we offered online loans in 25 U.S. states, five provinces in Canada and in England, Wales, Scotland and Northern Ireland in the United Kingdom.
The following charts reflect the revenue contribution, including CSO fees, of the products and services that we currently offer in the regions in which we operate.
Year Ended December 31, 2016 | Six Months Ended June 30, 2017 | |
|
|
3
Overview of Loan Products
Below is an outline of the primary products we offered as of June 30, 2017.
Installment | ||||||||
Unsecured | Secured | Open-End | Single-Pay | |||||
Channel |
Online and in-store:
15 U.S. states, Canada and the United Kingdom |
Online and in-store:
7 U.S. states |
Online: KS, TN, ID, UT,
DE and RI In-store: KS and TN |
Online and
in-store:
12 U.S. states, Canada and the United Kingdom |
||||
Approximate Average Loan Size (1) |
$602 | $1,231 | $451 | $321 | ||||
Duration |
Up to 48 months | Up to 42 months | Revolving / Open-ended | Up to 62 days | ||||
Pricing |
14.9% average
monthly interest rate(2) |
11.3% average
monthly interest rate(2) |
Daily interest rates
ranging from 0.74% to 0.99% |
Fees ranging from $13
to $25 per $100 borrowed |
(1) | Includes CSO loans. |
(2) | Weighted average of the contractual interest rates for the portfolio as of June 30, 2017. Excludes CSO fees. |
Unsecured Installment Loans
Unsecured Installment Loans are fixed-term, fully-amortizing loans with a fixed payment amount due each period during the term of the loan. These loans are originated and owned by us or by third-party lenders pursuant to credit services organization and credit access business statutes, which we refer to as our CSO programs. For CSO programs, we arrange, service and guarantee the loans. Payments are due bi-weekly or monthly to match the customers pay cycle. Customers may prepay without penalty or fees. Unsecured Installment Loan terms are governed by enabling state legislation in the United States, provincial and federal legislation in Canada and national regulations in the United Kingdom. Unsecured Installment Loans comprised 48.6%, and 40.0% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively. We believe that the flexible terms and lower payments associated with Installment Loans significantly expands our addressable market by allowing us to serve a broader range of customers with a variety of credit needs.
Secured Installment Loans
Secured Installment Loans are similar to Unsecured Installment Loans but are also secured by a vehicle title. These loans are originated and owned by us or by third-party lenders through our CSO programs. For these loans the customer provides clear title or security interest in the vehicle as collateral. The customer receives the benefit of immediate cash but retains possession of the vehicle while the loan is outstanding. The loan requires periodic payments of principal and interest with a fixed payment amount due each period during the term of the loan. Payments are due bi-weekly or monthly to match the customers pay cycle. Customers may prepay without penalty or fees. Secured Installment Loan terms are governed by enabling state legislation in the United States. Secured Installment Loans comprised 10.6% and 9.8% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Open-End Loans
Open-End Loans are a line of credit for the customer without a specified maturity date. Customers may draw against their line of credit, repay with minimum, partial or full payments and redraw as needed. We report
% ancillary revenue 7% 5% 5% % ancillary revenue 5% 4% 4% % online revenue 28% 30% 33% % online revenue 30% 35% 39%
4
and earn interest on the outstanding loan balances drawn by the customer against their approved credit limit. Typically, customers do not draw the full amount of their credit limit. Customers may prepay without penalty or fees. Loan terms are governed by enabling state legislation in the United States. Unsecured Open-End Loans comprised 6.7% and 7.0% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively. Secured Open-End Loans are offered as part of our product mix in states with enabling legislation and accounted for approximately 1.0% of our consolidated revenue during both the six months ended June 30, 2017 and the year ended December 31, 2016.
Single-Pay Loans
Single-Pay Loans are generally unsecured short-term, small-denomination loans whereby a customer receives cash in exchange for a post-dated personal check or a pre-authorized debit from the customers bank account. These loans are originated and owned by us or by third-party lenders through our CSO programs. We agree to defer deposit of the check or debiting of the customers bank account until the loan due date which typically falls on the customers next pay date. Single-Pay Loans are governed by enabling state legislation in the United States, federal and provincial regulations in Canada and national regulation in the United Kingdom. Single-Pay Loans comprised 28.8% and 37.3% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Ancillary products
We also provide a number of ancillary financial products including check cashing, proprietary reloadable prepaid debit cards (Opt+), credit protection insurance in the Canadian market, gold buying, retail installment sales and money transfer services. We had 98,070 active Opt+ cards as of June 30, 2017, which includes any card with a positive balance or transaction in the past 90 days. Opt+ customers have loaded over $1.45 billion to their cards since we started offering this product.
CSO Programs
Through our CSO programs, we act as a credit services organization/credit access business on behalf of customers in accordance with applicable state laws. We currently offer loans through CSO programs in stores and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and Secured Installment Loans with a maximum term of 180 days. In Ohio we offer an Unsecured Installment Loan product with a maximum term of 18 months. As a CSO we earn revenue by charging the customer a fee (the CSO fee) for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customers obligation to repay the loan the customer receives from the third-party lender. For CSO loans, each lender is responsible for providing the criteria by which the customers application is underwritten and, if approved, determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans if they go into default.
As of June 30, 2017, the maximum amount payable under all such guarantees was $52.7 million, compared to $59.6 million at December 31, 2016. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover the amount we pay from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to
5
underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $15.6 million and $17.1 million at June 30, 2017 and December 31, 2016, respectively.
The majority of revenue generated through our CSO programs was for Unsecured Installment Loans, which comprised 95.9% and 91.6% of total CSO revenue for the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Total revenue generated through our CSO programs comprised 26.2% and 26.1% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Industry Overview
We operate in a segment of the financial services industry that provides lending products to underbanked consumers in need of convenient and flexible access to credit and other financial products. Up to 140 million individuals fall within the definition of our target market. In the United States alone, according to a study by CFSI, these underserved consumers spent an estimated $126.5 billion on fees and interest related to credit products similar to those we offer.
We believe our target consumers have a need for tailored financing products to cover essential expenses. According to a study by the Federal Reserve, 44% of American adults could not cover an emergency expense costing $400, or would cover it by selling an asset or borrowing money. Additionally, a study conducted by JPMorgan Chase & Co., which analyzed the transaction information of 2.5 million of its account holders, found that 41% of those sampled experienced month-to-month income swings of more than 30%.
We compete against a wide variety of consumer finance providers including online and branch-based consumer lenders, credit card companies, pawnshops, rent-to-own and other financial institutions that offer similar financial services. A study by CFSI has estimated that spending on credit products offered by our industry exhibited a 10.0% CAGR from 2010 to 2015. This growth has been accompanied by shrinking access to credit for our customer base as evidenced by an estimated $142 billion reduction in the availability of non-prime consumer credit from the 2008 to 2009 credit crisis to 2015 (based on analysis of master pool trust data of securitizations for major credit card issuers).
In addition to the beneficial secular trends broadly impacting the consumer finance landscape, we believe we are well positioned to grow our market share as a result of several changes we have observed related to consumer preferences within alternative financial services. Specifically, we believe that a combination of evolving consumer preferences, increasing use of mobile devices and overall adoption rates for technology are driving significant change in our industry.
| Shifting preference towards installment loan s We believe from our experience in offering installment loan products since 2008 that single-pay loans are becoming less popular or less suitable for a growing portion of our customers. Customers generally have shown a preference for our Installment Loan products, which typically have longer terms, lower periodic payments and a lower relative cost. Offering more flexible terms and lower payments also significantly expands our addressable market by broadening our products appeal to a larger proportion of consumers in the market. |
| Increasing adoption of online channels Our experience is that customers prefer service across multiple channels or touch points. Approximately 63% of respondents in a recent study by CFI Group said they conducted more than half of their banking activities electronically. That same group of respondents reported an overall level of satisfaction that met or exceeded the average. In 2016, our online revenue of $271 million represented 33% of our 2016 consolidated revenues. |
6
| Increasing adoption of mobile apps and devices With the proliferation of pay-as-you-go and other smartphone plans, many of our underbanked customers have moved directly to mobile devices for loan origination and servicing. According to a 2016 study by the Pew Research Center involving the United States, the United Kingdom and Canada, smartphone penetration is 72%, 68% and 67%, respectively. Additionally, 43% of respondents to a study by CFI Group said they conduct transactions using a mobile banking app. Five years ago, less than 30% of our U.S. customers reached us via a mobile device. In the second quarter of 2017, that percentage was over 80%. |
Our Strengths
We believe the following competitive strengths differentiate us and serve as barriers for others seeking to enter our market.
| Unique omni-channel platform / site-to-store capability We believe we have the only fully-integrated store, online, mobile and contact center platform to support omni-channel customer engagement. We offer a seamless Call, Click or Come In capability for customers to apply for loans, receive loan proceeds, make loan payments and otherwise manage their accounts in store, online or over the phone. Customers can utilize any of our three channels at any time and in any combination to obtain a loan, make a payment or manage their account. In addition, we have our Site-to-Store capability in which online customers that do not qualify for a loan online are referred to a store to complete a loan transaction with one of our associates. These aspects of our platform enable us to source a larger number of customers, serve a broader range of customers and continue serving these customers for longer periods of time while lowering cost per funded loan. |
| Industry leading product and geographic diversification In addition to channel diversification, we have increased our diversification by product and geography allowing us to serve a broader range of customers with a flexible product offering. As part of this effort, we have also developed and launched new brands and will continue to develop new brands with differentiated marketing messages. These initiatives have helped diversify our revenue streams, enabling us to appeal to a wider array of borrowers. |
| Leading analytics and information technology drives strong credit risk management We have developed a bespoke, proprietary IT platform, referred to as the Curo Platform, which is a unified, centralized platform that seamlessly integrates activities related to customer acquisition, underwriting, scoring, servicing, collections, compliance and reporting. Our IT platform is built upon over 15 years of continually updated customer data comprising over 71 million loan records used to formulate our robust, proprietary underwriting algorithms. This platform then automatically applies multi-algorithmic analysis to a customers loan application to produce a Curo Score, which drives our underwriting decision. Globally, as of June 30, 2017 we had 182 employees who write code and manage our networks and infrastructure for our IT platform. This fully-integrated IT platform enables us to make real-time, data-driven changes, to our acquisition and risk models, which yield significant benefits in terms of customer acquisition costs and credit performance. |
| Multi-faceted marketing strategy drives low customer acquisition costs Our marketing strategy includes a combination of strategic direct mail, television advertisements and online and mobile-based digital campaigns, as well as strategic partnerships. Our global Marketing, Risk and Credit Analytics team, consisting of 80 professionals as of June 30, 2017, uses our integrated IT platform to cross reference marketing spend, new customer account data and granular credit metrics to optimize our marketing budget across these channels in real time to produce higher quality new loans. In addition to these diversified marketing programs, our stores play a critical role in creating brand awareness and driving new customer acquisition. From January 2015 through the end of June 2017, we acquired nearly 1.7 million new customers in North America. For the first six months of 2017 compared to the first six months of 2015, our average first-pay defaults in the United States improved by 240 bps, while our average cost per funded loan decreased from $64 to $55. |
7
| Focus on customer experience We focus on customer service and experience and have designed our stores, website and mobile application interfaces to appeal to our customers needs. We continue to augment our web and mobile app interfaces to enhance our Call, Click or Come In strategy, with a focus on adding functionality across all our channels. Our stores are branded with distinctive and recognizable signage, conveniently located and typically open seven days a week. Furthermore, we have highly experienced managers in our stores, which we believe is a critical component to driving customer retention, lowering acquisition costs and driving store-level margins. For example, the average tenure for our U.S. store managers is over nine years and over 11 years for regional directors. |
| Strong compliance culture with centralized collections operations We seek to consistently engage in proactive and constructive dialogue with regulators in each of our jurisdictions and have made significant investments in best-practice automated tools for monitoring, training and compliance management. As of June 30, 2017, our compliance group consisted of 28 individuals based in all three countries in which we operate and our compliance management systems are integrated into our proprietary IT platform. Additionally, our in-house centralized collections strategy, supported by our proprietary back-end customer database and analytics team, drives an effective, compliant and highly-scalable model. |
| Demonstrated access to capital markets and diversified funding sources We have raised over $1.0 billion of debt financing in five separate offerings since 2008, most recently in February 2017. We also closed a $150 million nonrecourse installment loan financing facility in 2016 and have routinely accessed banks and other lenders for revolving credit capacity. We believe this is a significant differentiator from our peers who may have trouble accessing capital markets to fund their business models if credit markets tighten. For more information, see Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources. |
| Experienced and innovative management team and sponsor Our senior leadership team is among the most experienced in the industry with over a century of collective experience and an average tenure at CURO of over eight years. We also have deep bench strength across key functional areas including accounting, compliance, IT and legal. Our equity sponsor, FFL Partners, LLC, or FFL Partners, has been our partner since 2008 and has contributed significant resources to helping define our growth strategy. |
| History of growth and profitability Throughout our operating history we have maintained strong profitability and growth. Between 2010 and 2016 we grew revenue, Adjusted EBITDA and net income at a CAGR of 26.3%, 25.4% and 21.9%, respectively. At the same time, we have grown our product offerings to better serve our growing and expanding customer base. |
Growth Strategy
| Leverage our capabilities to continue growing installment and open-end products I nstallment and open-end products accounted for 58% of our consolidated revenue for the year ended December 31, 2016, up from 19% in 2010, and we believe that our customers greatly prefer these products. We believe that these products will continue to account for a greater share of our revenue and provide us a competitive advantage versus other consumer lenders with narrower product focus. We believe that our ability to continue to be successful in developing and managing new products is based upon our capabilities in three key areas. |
| Underwriting: Installment and open-end products generally have lower yields than single-pay products, which necessitates more stringent credit criteria supported by more sophisticated credit analytics. Our industry leading analytics platform combines data from approximately 71 million records associated with loan information from third-party reporting agencies and has helped to reduce average first-pay defaults in the United States by approximately 240 bps for the first six months of 2017 compared to the first six months of 2015. |
8
| Collections and Customer Service: Installment and open-end products have longer terms than single-pay loans, in some cases up to 48 months. These longer terms drive the need for a more comprehensive collection and default servicing strategy that emphasizes curing a default and putting the customer back on a track to repay the loan. We utilize a centralized collection model that prevents our store management personnel from ever having to contact customers to resolve a delinquency. We have also invested in building new contact centers in all three of the countries in which we operate, each of which utilizes sophisticated dialer technologies to help us contact our customers in a scalable, efficient manner. |
| Funding: The shift to larger balance installment loans with extended terms and open-end loans with revolving terms requires more substantial and more diversified funding sources. Given our deep and successful track record in accessing diverse sources of capital, we believe that we are well-positioned to support future new product transition. |
| Serve additional types of borrowers In addition to growing our existing suite of installment and open-end lending products, we are focused on expanding the total number of customers that we are able to serve through product, geographic and channel expansion. This includes expansion of our online channel, particularly in the United Kingdom, as well as continued targeted additions to our physical store footprint. We also continue to introduce additional products to address our customers preference for longer term products that allow for greater flexibility in managing their monthly payments. |
| In the second quarter of 2017, we launched Avio Credit, a new online product branded in the United States targeting individuals in the 600-675 FICO band. This product is structured as an Unsecured Installment Loan with varying principal amounts and loan terms up to 48 months. As of April 2017, 10% of U.S. consumers had FICO scores between 600 and 649. A further 13.2% of U.S. consumers had FICO scores between 650 and 699, a portion of whom would fall into the credit profile targeted by our Avio Credit product. |
| We expect to expand our LendDirect brand in Canada to include additional provinces and increase acquisition efforts in existing markets. We also plan to open LendDirect stores in Canada during the fourth quarter of 2017. Seven million Canadians have a FICO score below 700. We estimate that the consumer credit opportunity for this customer segment exceeds C$165 billion. We believe these customers represent a highly-fragmented market with low penetration. |
| In the United Kingdom, we expect to launch online longer-term loans, some supported by a guarantor. According to a study by the Financial Conduct Authority, in 2016, the U.K. guarantor market alone comprised approximately £300 million in loans outstanding and had annual originations of approximately £200 million in 2016. A report by L.E.K. Consulting found that this market experienced double digit percentage growth from 2008 to 2017. We believe it is currently dominated by one lender but otherwise largely made up of smaller participants with growth challenges. |
| Continue to bolster our core business through enhancement of our proprietary risk scoring models We continuously refine and update our credit models to drive additional improvements in our performance metrics. By regularly updating our credit underwriting algorithms we can continue to expand the value of each of our customer relationships through improved credit performance. By combining these underwriting improvements with data driven marketing spend, we believe our optimization efforts will produce margin expansion and earnings growth. |
| Expand credit for our borrowers Through extensive testing and our proprietary underwriting, we have successfully increased credit limits for customers, enabling us to offer the right loan to the right customer. The favorable take rates and successful credit performance have improved overall vintage and portfolio performance. For the first six months of 2017, our average loan amount for Unsecured and Secured Installment Loans rose by $115 (a 23.7% increase) and $258 (a 25.5% increase), respectively, versus the same period in 2016. |
9
| Continue to improve the customer journey and experience We have projects in our development pipeline to enhance our Call, Click or Come In customer experience and execution, ranging from redesign of web and app interfaces to enhanced service features to payments optimization. |
| Enhance our network of strategic partnerships Our strategic partnership network generates applicants that we then close through our diverse array of marketing channels. By further leveraging these existing networks and expanding the reach of our partnership platform to include new relationships, we can increase the number of overall leads we receive. |
Corporate and Other Information
The CURO business was founded in 1997. CURO Financial Technologies Corp., or CFTC (then known as Speedy Cash Holdings Corp.), was incorporated in Delaware on July 16, 2008. On September 10, 2008, our founders sold or otherwise contributed all of the outstanding equity of the various operating entities that composed the CURO business to a wholly-owned subsidiary of CFTC in connection with an investment in CFTC by Friedman Fleischer & Lowe Capital Partners II, L.P. and its affiliated funds, or FFL Partners. CURO Group Holdings Corp. (then known as Speedy Group Holdings Corp.) was incorporated in Delaware on February 7, 2013 as the parent company of CFTC. On May 11, 2016, we changed the name of Speedy Group Holdings Corp. to CURO Group Holdings Corp. We similarly changed the names of some of its subsidiaries.
Our directors, including the Founder Holders, executive officers and the FFL Holders, currently collectively own approximately 89.36% of our common stock. Following the completion of this offering, our directors, including the Founder Holders, executive officers and the FFL Holders will beneficially own approximately % of our outstanding common stock. For additional information on the beneficial ownership of our common stock prior to and immediately after the completion of this offering, see Principal and Selling Stockholders.
Our principal business office is located at 3527 North Ridge Road, Wichita, Kansas 67205. Our website address is www.curo.com . We do not incorporate the information contained on, or accessible through, our corporate website into this prospectus, and you should not consider it to be part of this prospectus.
Implications of Being an Emerging Growth Company
As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.
An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise generally applicable to public companies. As an emerging growth company:
| we are required to have only two years of audited financial statements, two years of selected financial data and only two years of related Managements Discussion and Analysis of Financial Condition and Results of Operations disclosure; |
| we are not required to engage an auditor to report on the effectiveness of our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act; |
| we are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding a supplement to the auditors report providing additional information about the audit and the financial statements ( i.e. , an auditor discussion and analysis); |
10
| we are not required to submit certain executive compensation matters to stockholder advisory votes, such as say-on-pay, say-on-frequency and say-on-golden parachutes; |
| we are not required to disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officers compensation to median employee compensation, or to include a compensation committee report, provided we comply with the scaled compensation disclosure rules applicable to smaller reporting companies; and |
| we may take advantage of an extended transition period for complying with new or revised accounting standards, allowing us to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. |
We have elected to take advantage of these reduced reporting and other requirements available to us as an emerging growth company. As a result of these elections, the information that we provide in this prospectus may be different from the information you may receive from other public companies. In addition, it is possible that certain investors will find our common stock less attractive as a result of our elections, which may result in a less active trading market for our shares and more volatility in our stock price.
We may take advantage of these provisions until we are no longer an emerging growth company. We could remain an emerging growth company until the last day of the fifth fiscal year after this offering, or until the earliest of the following: (i) the last day of the first fiscal year in which our total annual gross revenues are at least $1.07 billion; (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur as of the end of the fiscal year in which, among other things, the market value of our voting and non-voting common equity securities held by non-affiliates is at least $700 million as of the last business day of our most recently completed second fiscal quarter; or (iii) the date on which we have issued more than $1 billion in nonconvertible debt securities during the preceding three-year period.
Summary Risk Factors
Investing in our common stock involves substantial risk. The risks described under the heading Risk Factors immediately following this summary may cause us to not realize the full benefits of our strengths or may cause us to be unable to successfully execute all or part of our strategy. Some of the more significant challenges include the following:
| the recently adopted CFPB rule on payday, vehicle title, and certain high-cost installment loans could, if enacted, have a material adverse effect on our business and results of operations; |
| the extent to which federal, state, local and foreign governmental regulation of consumer lending and related financial products and services limits or prohibits the operation of our business; |
| our failure to comply with applicable laws and regulations, and resulting fines, penalties or other sanctions that could adversely affect our business and results of operations; |
| the impact of proposed rules and regulations that, if enacted, could have a material adverse effect on our business and results of operations; |
| future changes to regulations to which we are subject could restrict us in ways that adversely affect our business and results of operations; |
| the adverse impact of existing or new local regulation of our industry; |
| the impact of the complex regulatory environment in which we operate, which increase our costs of compliance and the risk that we may fail to comply; |
11
| the risk that our interpretation and application of laws and regulations related to consumer lending activities differs from the interpretations applied by federal, state, local and foreign regulatory bodies; |
| the effect of judicial decisions, agency rulemaking, or amendments to law on the legality or enforceability of our agreements; |
| current and future litigation and regulatory proceedings against us may impact our results of operations, cash flow and financial condition; |
| risks associated with negative public perception of our products and services; |
| the adverse impact of material modifications of U.S. laws and regulations and existing trade agreements by the new U.S. presidential administration on our business, financial condition, and results of operations; |
| our substantial indebtedness may expose us to material risks, and could adversely affect our business, results of operations and financial condition, as we currently depend in large part on debt financing to provide the cash needed to fund the loans we originate; |
| our business could be adversely affected by a lack of sufficient debt financing at acceptable prices or disruptions in the credit markets, which could reduce our access to credit and our ability to fund loans; |
| risks associated with our ability to refinance our substantial indebtedness; |
| risks associated with a lack of sufficient debt financing made to our business on acceptable terms; |
| our ability to protect our proprietary technology and analytics or keep up with that of our competitors; |
| risks associated with disruption in the availability of our information systems; |
| risks associated with information provided by customers or third parties being inaccurate, and causing us to misjudge a customers qualification to receive a loan; |
| because of the non-prime nature of our customers, our business has much higher rates of charge-offs than traditional lenders, and if we are unable to price our loan products to take into account the credit risks of our customers, our operating results and financial condition could be adversely affected. |
| risks associated with the failure of our proprietary credit and fraud scoring system to effectively price the credit risk of our prospective or existing customers; |
| risks associated with the handling of customer personal data and cyber-attacks that could result in liability or harm to our reputation; |
| risks associated with failure of third parties who provide us products, services or support, including our ability to maintain relationships with banks and other third-party electronic payment solutions providers; |
| our ability to maintain relationships with third-party service providers to offer credit services organizations, or CSO, loans in Texas and Ohio; |
| the adverse impact of employee and third-party theft and errors as well as liability resulting from crimes at our stores; |
| the adequacy of our allowance for loan losses, accrual for third-party loan losses and estimates of losses; |
| changes in demand for our products and services; |
| risks associated with effectively managing our growth; |
| our ability to integrate acquisitions into our existing business operations; |
| the sufficiency of indemnifications associated with assumed liabilities of acquired entities to cover our exposures to litigation and settlement costs; |
12
| our ability to attract and retain qualified management and employees; |
| the possible impairment of goodwill; |
| the seasonality of our lending business; |
| our ability to find suitable real estate to support future new store development; |
| our ability to keep up with rapid changes in e-commerce and the uses of the Internet; |
| the fragmentation of our industry and competition from various other sources providing similar financial products, or other alternative sources of credit, to consumers; |
| risks related to the international scope of our business and operations; |
| the adverse impact of natural disasters and other business disruptions on our future revenue and financial condition; and |
| the FFL Holders and the Founder Holders will together have a controlling interest following this offering, and their interests may conflict with ours or yours in the future. |
You should carefully consider all of the information included in this prospectus, including matters set forth under the headings Risk Factors and Special Note Regarding Forward-Looking Statements, before deciding to invest in our common stock.
13
Issuer |
CURO Group Holdings Corp. |
Offering price per share |
$ |
Common stock offered by us |
shares. |
Underwriters option to purchase additional shares from the selling stockholders |
up to shares. |
Common stock to be outstanding immediately after completion of this offering |
shares. |
Use of proceeds |
We estimate that we will receive net proceeds from our sale of shares in this offering of approximately $ million, based on an assumed price to the public in this offering of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses. We will not receive any proceeds from any sale of shares by the selling stockholders. We plan to use the net proceeds we receive from this offering for general corporate purposes, including to purchase, redeem, defease or otherwise repay portions of our outstanding indebtedness. See Use of Proceeds. |
Dividend policy |
See Dividend Policy for a discussion of our policy on paying dividends. |
Directed share program |
The underwriters have reserved for sale at the initial public offering price up to shares of our common stock for employees, directors and other persons associated with us who have expressed an interest in purchasing our common stock in the offering. If purchased by certain of these persons, these shares will be subject to a 180-day lock-up restriction. The number of shares available for sale to the general public in the offering will be reduced to the extent these persons purchase the reserved shares. Any reserved shares they do not purchase will be offered by the underwriters to the general public on the same terms as the other shares in this offering. See Underwriting. |
Proposed listing symbol |
We have applied to have our common stock listed on The New York Stock Exchange under the symbol CURO. |
Risk factors |
Investing in our common stock involves substantial risks. You should carefully read and consider the information set forth under the heading Risk Factors and all other information set forth in this prospectus before deciding to invest in our common stock. |
14
The number of shares of our common stock to be outstanding after this offering is based on shares outstanding as of June 30, 2017 and excludes:
| shares of our common stock issuable upon the exercise of options outstanding as of , 2017 at a weighted average price of $ per share; |
| shares of our common stock reserved, in the aggregate, for issuance pursuant to our 2017 Stock Incentive Plan and our 2010 Equity Incentive Plan as of , 2017, as well as any additional automatic increases in the number of shares of our common stock reserved for future issuance under this plan; and |
| shares of our common stock reserved for issuance pursuant to our 2017 Employee Stock Purchase Plan as of , , 2017, as well as additional automatic increases in the number of shares of our common stock reserved for future issuance under this plan. |
Unless we specifically state otherwise, the information in this prospectus assumes:
| that the price to the public of our common stock in this offering will be $ per share, the midpoint of the price range set forth on the cover page of this prospectus; |
| that holders will not exercise options issued under our equity incentive plans; |
| the application of a for split of our common stock to occur immediately prior to the completion of this offering; and |
| the filing of our amended and restated certificate of incorporation to occur immediately prior to the completion of this offering. |
15
Summary Consolidated Financial And Other Data
Set forth below is our summary consolidated financial and other data as of and for the periods indicated. We have derived the summary consolidated financial and other data as of and for the years ended December 31, 2016 and 2015 from our audited consolidated financial statements and the accompanying notes thereto included elsewhere in this prospectus. We have derived the summary consolidated financial and other data as of and for the six month periods ended June 30, 2017 and 2016 from our unaudited consolidated financial statements that are included elsewhere in this prospectus and that, in our opinion, include all adjustments, consisting of normal, recurring adjustments, necessary for the fair presentation of such information. Our historical results for any prior period are not necessarily indicative of results we may expect or achieve in any future period. Our results for any interim period are not necessarily indicative of results we may achieve during a full year.
The following information is only a summary and may not be complete. Accordingly, you should read these summary consolidated financial data in conjunction with the sections entitled Use of Proceeds, Capitalization, Selected Historical Consolidated Financial Data, Managements Discussion and Analysis of Financial Condition and Results of Operations and our audited and unaudited consolidated financial statements and the notes thereto contained elsewhere in this prospectus.
(in thousands, except per share data) |
Six Months Ended
June 30, (unaudited) |
Year Ended
December 31, |
||||||||||||||
2017 | 2016 | 2016 | 2015 | |||||||||||||
Consolidated Statements of Income Data: |
||||||||||||||||
Revenue |
$ | 441,524 | $ | 396,768 | $ | 828,596 | $ | 813,131 | ||||||||
Provision for losses |
127,182 | 100,278 | 258,289 | 281,210 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net revenue |
314,342 | 296,490 | 570,307 | 531,921 | ||||||||||||
Cost of providing services |
||||||||||||||||
Salaries and benefits |
52,733 | 53,086 | 104,541 | 107,059 | ||||||||||||
Occupancy |
27,606 | 27,023 | 54,509 | 53,288 | ||||||||||||
Office |
9,804 | 9,478 | 20,463 | 19,929 | ||||||||||||
Other costs of providing services |
27,963 | 26,785 | 53,617 | 47,380 | ||||||||||||
Advertising |
19,329 | 17,094 | 43,921 | 65,664 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of providing services |
137,435 | 133,466 | 277,051 | 293,320 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin |
176,907 | 163,024 | 293,256 | 238,601 | ||||||||||||
Operating (income) expense |
||||||||||||||||
Corporate and district |
69,351 | 64,756 | 125,119 | 129,046 | ||||||||||||
Interest expense |
41,850 | 32,192 | 64,334 | 65,020 | ||||||||||||
(Gain) loss on extinguishment of debt |
12,458 | | (6,991 | ) | | |||||||||||
Restructuring |
| 1,481 | 3,618 | 4,291 | ||||||||||||
Goodwill and intangible asset impairment charges |
| | | 2,882 | ||||||||||||
Other (income) expense |
199 | (445 | ) | (845 | ) | 1,488 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expense |
123,858 | 97,984 | 185,235 | 202,727 | ||||||||||||
Net income before taxes |
53,049 | 65,040 | 108,021 | 35,874 | ||||||||||||
Provision for income tax expense |
20,068 | 24,958 | 42,577 | 18,105 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 32,981 | $ | 40,082 | $ | 65,444 | $ | 17,769 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per share |
$ | 31.32 | $ | 38.06 | $ | 62.15 | $ | 16.87 | ||||||||
Diluted earnings per share |
$ | 30.46 | $ | 37.32 | $ | 60.71 | $ | 16.45 |
16
(in thousands, except per share data) |
Six Months Ended
June 30, (unaudited) |
Year Ended
December 31, |
||||||||||||||
2017 | 2016 | 2016 | 2015 | |||||||||||||
Non-GAAP Statement of Operations Data and Other Operating Data (unaudited): |
||||||||||||||||
Adjusted Earnings(1) |
$ | 44,976 | $ | 42,668 | $ | 66,411 | $ | 24,656 | ||||||||
EBITDA(2) |
$ | 104,229 | $ | 107,560 | $ | 191,260 | $ | 120,006 | ||||||||
Adjusted EBITDA(3) |
$ | 121,828 | $ | 109,512 | $ | 189,361 | $ | 130,876 | ||||||||
Adjusted EBITDA Margin(4) |
27.6 | % | 27.6 | % | 22.9 | % | 16.1 | % | ||||||||
Gross Margin Percentage(5) |
40.1 | % | 41.1 | % | 35.4 | % | 29.3 | % | ||||||||
Number of stores (at period end) |
419 | 419 | 420 | 420 | ||||||||||||
Selected Balance Sheet Data (at period end): |
||||||||||||||||
Cash |
$ | 113,780 | $ | 167,795 | $ | 193,525 | $ | 100,561 | ||||||||
Gross loans receivable |
$ | 350,362 | $ | 233,152 | $ | 286,196 | $ | 252,180 | ||||||||
Less: allowance for loan losses |
(70,438 | ) | (30,559 | ) | (39,192 | ) | (32,948 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Loans receivable, net |
$ | 279,924 | $ | 202,593 | $ | 247,004 | $ | 219,232 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
$ | 735,938 | $ | 697,164 | $ | 780,798 | $ | 666,017 | ||||||||
Total liabilities (including debt) |
$ | 679,799 | $ | 672,136 | $ | 739,943 | $ | 685,399 | ||||||||
Total stockholders equity (deficit) |
$ | 56,139 | $ | 25,028 | $ | 40,855 | $ | (19,382 | ) |
(1) | We define Adjusted Earnings as net income plus or minus certain non-cash or other adjusting items. We provide Adjusted Earnings in this prospectus because our management finds its useful in evaluating the performance and underlying operations of our business. We provide a detailed description of Adjusted Earnings and how we use it, including a reconciliation of Adjusted Earnings to net income, under Managements Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Non-GAAP Financial Information. |
(2) | We define EBITDA as earnings before interest, income taxes, depreciation and amortization. We provide EBITDA in this prospectus because our management finds it useful in evaluating the performance and underlying operations of our business. We provide a detailed description of EBITDA and how we use it, along with a reconciliation of EBITDA to net income, under Managements Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Non-GAAP Financial Information. |
(3) | We define Adjusted EBITDA as earnings before interest, income taxes, depreciation and amortization, plus or minus certain non-cash or other adjusting items. We provide Adjusted EBITDA in this prospectus because our management finds it useful in evaluating the performance and underlying operations of our business. We provide a detailed description of Adjusted EBITDA and how we use it, along with a reconciliation of Adjusted EBITDA to net income, under Managements Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Non-GAAP Financial Information. |
(4) | Calculated as Adjusted EBITDA as a percentage of revenue. |
(5) | Calculated as Gross Margin as a percentage of revenue. |
17
Investing in our common stock involves a high degree of risk. You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this prospectus, including our consolidated financial statements and related notes appearing at the end of this prospectus, before making an investment decision. The risks described below are not the only ones we face. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition or results of operations. In such case, the trading price of our common stock could decline, and you may lose all or part of your original investment. This prospectus also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below.
Risks Relating to the Regulation of Our Industry
The CFPB promulgated new rules applicable to our loans that could have a material adverse effect on our business and results of operations.
The CFPB adopted a new rule applicable to payday vehicle title, and certain high-cost installment loans in October 2017, which we refer to as the CFPB Rule, with most provisions becoming effective 21 months after this CFPB Rule is published in the Federal Register (no earlier than July 2019, if the publication occurs in October 2017). See Regulatory Environment and ComplianceU.S. RegulationsU.S. Federal RegulationsCFPB Rule. This CFPB Rule establishes ability-to-repay, or ATR, requirements for covered short-term loans, such as our single-payment loans, and for covered longer-term balloon-payment loans, such as our revolving lines of credit, as currently structured. It establishes penalty fee prevention provisions that will apply to all of our loans, including our covered short-term loans, covered longer-term balloon-payment loans and our installment loans, which are covered longer-term loans under the CFPB Rule.
Covered short-term loans are consumer loans with a term of 45 days or less. Covered longer-term balloon payment loans include consumer loans with a term of more than 45 days where (i) the loan is payable in a single payment, (ii) any payment is more than twice any other payment, or (iii) the loan is a multiple advance loan that may not fully amortize by a specified date and the final payment could be more than twice the amount of other minimum payments. Covered longer-term loans are consumer loans with a term of more than 45 days where (i) the total cost of credit exceeds an annual rate of 36%, and (ii) the lender obtains a form of leveraged payment mechanism giving the lender a right to initiate transfers from the consumers account. Post-dated checks, authorizations to initiate ACH payments and authorizations to initiate prepaid or debit card payments are all leveraged payment mechanisms under the CFPB Rule. While there are certain coverage exceptionsfor example, an exception for typical pawn loansthey do not apply to our loans.
The ATR provisions of the CFPB Rule apply to covered short-term loans and covered longer-term balloon-payment loans but not to covered longer term loans. Under these provisions, to make a covered short-term loan or a covered longer-term balloon-payment loan, a lender has two options.
| A full payment test, under which the lender must make a reasonable determination of the consumers ability to repay the loan in full and cover major financial obligations and living expenses over the term of the loan and the succeeding 30 days. Under this test, the lender must take account of the consumers basic living expenses and obtain and generally verify evidence of the consumers income and major financial obligations. |
|
A principal-payoff option, under which the lender may make up to three sequential loans, without engaging in an ATR analysis. The first of these so-called Section 1041.6 Loans in any sequence of Section 1041.6 Loans without a 30-day cooling off period between them is limited to $500, the second is limited to two-thirds of the first and the third is limited to one-third of the first. A lender may not use this |
18
option if (1) the consumer had in the past 30 days an outstanding covered short-term loan or an outstanding longer-term balloon-payment loan that is not a Section 1041.6 Loan, or (2) the new Section 1041.6 Loan would result in the consumer having more than six covered short-term loans (including Section 1041.6 Loans) during a consecutive 12-month period or being in debt for more than 90 days on such loans during a consecutive 12-month period. For Section 1041.6 Loans, the lender cannot take vehicle security or structure the loan as open-end credit. |
We believe that conducting a comprehensive ATR analysis will be costly and that many of our short-term borrowers will not be able to pass a full payment test. Accordingly, we expect that the full payment test option will have little if any utility for us. The option to make Section 1041.6 Loans using the principal-payoff option may be more viable but the restrictions on these loans under the CFPB Rule will significantly reduce the permitted borrowings by individual consumers. Although we hope that the CFPB Rule will produce offsetting industry consolidation to our benefit, there can be no assurance that any positive effects from such a consolidation will be sufficient to compensate for the adverse impact the ATR provisions will have on individual borrowings.
The CFPB Rules penalty fee prevention provisions, which will apply to all covered loans, may have a greater impact on our operations than the ATR provisions of the CFPB Rule. Under these provisions, if two consecutive attempts to collect money from a particular account of the borrower are unsuccessful due to insufficient funds, the lender cannot make any further attempts to collect from such account unless and until it provides notice of the unsuccessful attempts to the borrower and obtains from the borrower a new and specific authorization for additional payment transfers. Obtaining such authorization will be costly and in many cases not possible.
Additionally, the penalty fee prevention provisions will require the lender generally to give the consumer at least three business days advance notice before attempting to collect payment by accessing a consumers checking, savings, or prepaid account. These requirements will necessitate revisions to our payment, customer notification, and compliance systems and create delays in initiating automated collection attempts where payments we initiate are initially unsuccessful.
In short, if and when the CFPB Rule goes into effect, the penalty fee prevention provisions will require substantial modifications in our current practices. These modifications would increase costs and reduce revenues. Accordingly, this aspect of the CFPB Rule could have a substantial adverse impact on our results of operations. However, as of the date hereof, these provisions will not become effective before July 2019, at the earliest, and the CFPB Rule remains subject to potential override by disapproval under the Congressional Review Act. Moreover, after the current CFPB Director leaves office, his successor could suspend, delay, modify or withdraw the CFPB Rule. Further, we expect that important elements of the CFPB Rule will be subject to legal attack, including application of the penalty fee provisions to card payments (where issuing banks do not charge penalty fees on declined transactions). Thus, it is impossible to predict whether and when the CFPB Rule (and the penalty fee provisions) will go into effect and, if so, whether and how it (and they) might be modified. While we will make every effort to be in compliance with the new CFPB Rule by July 2019, we make no assurances that we will be fully compliant by the time the rule becomes effective. See Regulatory Environment and ComplianceU.S. RegulationsU.S. Federal RegulationsCFPB Rule.
Our industry is strictly regulated everywhere we operate, and these regulations could have an adverse effect on our business and results of operations.
We are subject to substantial regulation everywhere we operate. In the United States and Canada, our business is subject to a variety of statutes and regulations enacted by government entities at the federal, state or provincial, and municipal levels. In the United Kingdom, we are subject to statutes and regulations enacted by the U.K. government, as well as directly applicable European Union legislation. These regulations affect our business in many ways, and include regulations relating to:
| the amount we may charge in interest rates and fees; |
19
| the terms of our loans (such as maximum and minimum durations), repayment requirements and limitations, number and frequency of loans, maximum loan amounts, renewals and extensions, required repayment plans and reporting and use of state-wide databases; |
| underwriting requirements; |
| collection and servicing activity, including initiation of payments from consumer accounts; |
| the establishment and operation of credit services organizations or credit access businesses, which we refer to as CSOs and CABs in this prospectus; |
| licensing, reporting and document retention; |
| unfair, deceptive and abusive acts and practices; |
| non-discrimination requirements; |
| disclosures, notices, advertising and marketing; |
| loans to members of the military and their dependents; |
| requirements governing electronic payments, transactions, signatures and disclosures; |
| check cashing; |
| money transmission; |
| currency and suspicious activity recording and reporting; |
| privacy and use of personally identifiable information and consumer data, including credit reports; |
| anti-money laundering and counter-terrorist financing requirements, including currency and suspicious transaction recording and reporting; |
| posting of fees and charges; and |
| repossession practices in certain jurisdictions where we operate as a title lender, including requirements regarding notices and prompt remittance of excess proceeds for the sale of repossessed automobiles. |
We provide a more detailed description of the regulations to which we are subject and the regulatory environment in the jurisdictions in which we operate under Regulatory Environment and Compliance elsewhere in this prospectus.
These regulations affect our business in many ways, including affecting the loans and other products we can offer, the prices we can charge, the other terms of our loans and other products, the customers to whom we are allowed to lend, how we obtain our customers, how we communicate with our customers, how we pursue repayment of our loans, and many others. Consequently, these restrictions adversely affect our loan volume, revenues, delinquencies and other aspects of our business, including our results of operations.
If we fail to adhere to applicable laws and regulations, we could be subject to fines, civil penalties and other relief that could adversely affect our business and results of operations.
The governmental entities that regulate our business have the ability to sanction us and obtain redress for violations of these regulations, either directly or through civil actions, in a variety of different ways, including:
| ordering remedial or corrective actions, including changes to compliance systems, product terms, and other business operations; |
| imposing fines or other monetary penalties, including for substantial amounts; |
| ordering the payment of restitution, damages or other amounts to customers, including multiples of the amounts charged; |
20
| disgorgement of revenue or profit from certain activities; |
| imposing cease and desist orders, including orders requiring affirmative relief, targeting specific business activities; |
| subjecting our operations to additional regulatory examinations during a remediation period; |
| changes to our U.K. business practices in response to the requirements of the Financial Conduct Authority; |
| revocation of licenses to operate in a particular jurisdiction; |
| ordering the closure of one or more stores; and |
| other consequences. |
We provide a more detailed description of the potential consequences we face for non-compliance with laws and regulations under Regulatory Environment and Compliance elsewhere in this prospectus.
Many of the government entities that regulate us have the authority to examine us on a regular basis to determine whether we are complying with applicable laws and regulations and to identify and sanction non-compliance. In the United States, the Consumer Financial Protection Bureau, or CFPB, conducts examinations of our business, which include inspecting our books and records and inquiring about our business practices and policies, such as our marketing practices, loan application and origination practices, electronic payment practices, collection practices, and our supervision of our third-party service providers. The CFPB commenced its first examination of us in 2014 and issued its final report of examination in September 2015. The 2014 examination had no material impact on our financial condition or results of operations. The CFPB commenced its second examination of us in February 2017, and completed the related field work in June 2017. The scope of the 2017 examination included a review of our Compliance Management System, our customer account agreements and disclosures, our substantive compliance with applicable federal laws and certain select matters requiring attention. The CFPB completed the field work for this examination in June 2017 but has not yet provided us with its final report of examination. We cannot predict any potential impact until the CFPB provides us with its final report of examination, although we do not currently have any reason to expect any material impact of the examination on our results of operations or financial condition.
During 2017, it was determined that a limited universe of borrowers may have incurred bank overdraft or non-sufficient funds fees because of possible borrower confusion about certain electronic payments we initiated on their loans. As a result, we have decided to reimburse those fees through payments or credits against outstanding loan balances, subject to per-customer dollar limitations, upon receipt of (i) claims from potentially affected borrowers stating that they were in fact confused by our practices and (ii) bank statements from such borrowers showing they incurred these fees at a time that they might reasonably have been confused about our practices. Based on the terms of the reimbursement offer we are currently considering, we do not expect our financial cost under the offer to exceed $4 million. However, if we decide or are forced to modify the terms of the offerfor example, to eliminate or modify caps on per-borrower refunds or to make refunds to a larger universe of borrowersthe refund offer could have a greater impact than we currently anticipate.
We are subject to these types of examinations and audits on an ongoing basis from federal, state and provincial regulators. These examinations and audits increase the likelihood that any failure to comply (or perceived failure to comply) with applicable laws and regulations will be identified and sanctioned.
If we fail to comply with federal, state, provincial or local laws and regulations, or if supervisory or enforcement authorities believe we have failed to comply, we could suffer any of the actions listed above, including fines, penalties, consumer redress, disgorgement of profits, adverse changes to our business and being forced to cease operations in applicable jurisdictions. Any of these could have a material adverse effect on our
21
business and results of operations. Our compliance with applicable laws and regulations could also be challenged in class action lawsuits that could adversely affect our business and results of operations.
In addition to the anticipated refund offer, at least in part to meet CFPB expectations, we have made in recent years, and are continuing to make, certain enhancements to our compliance procedures and consumer disclosures. For example, we are in the process of evaluating our payment practices. Even in advance of the effective date of the CFPB Rule (and even if the CFPB Rule does not become effective), it is possible that we will make changes to these practices in a manner that will increase costs and/or reduce revenues.
The regulations to which we are subject change from time to time, and future changes, including some that have been proposed, could restrict us in ways that adversely affect our business and results of operations.
The laws and regulations to which we are subject change from time to time, and there has been a general increase in the volume and burden of laws and regulations that apply to us in the jurisdictions in which we operate, at the federal, state, provincial and municipal levels. We describe certain proposed laws and regulations that could apply to our business in greater detail under Regulatory Environment and Compliance elsewhere in this prospectus.
At the U.S. federal level for example, in 2017 the CFPB adopted the CFPB Rule and a final rule prohibiting the use of mandatory arbitration clauses with class action waivers in consumer financial services contracts, or the CFPB Anti-Arbitration Rule. Additionally, it has announced tentative plans to propose rules affecting debt collection, debt accuracy and verification. Also, during the past few years, legislation, ballot initiatives and regulations have been proposed or adopted in various states that would prohibit or severely restrict our short-term consumer lending. We, along with others in the short-term consumer loan industry, intend to continue to inform and educate federal, state and local legislators and regulators and to oppose legislative or regulatory actions and ballot initiatives that would prohibit or severely restrict short-term consumer loans. Nevertheless, if changes in law with that effect were taken nationwide or in states in which we have a significant number of stores, such changes could have a material adverse effect on our loan-related activities and revenues.
In Canada, most of the provinces have proposed or enacted legislation or regulations that limit the amount that lenders offering single-pay loans may charge or that limit certain business practices of single-pay lenders. Some provinces have also proposed or enacted legislation or regulations that impose a higher regulatory burden on installment loans or open-end loans that are determined to be high cost. In the United Kingdom, Parliament and the applicable regulatory bodies have been expanding laws and regulations applicable to our industry, including proposals that would expand rules of conduct and similar duties of responsibility to certain senior managers and other employees of our businesses and that could change the price cap applicable to certain consumer loans, including the scope of loans subject to the cap. There are also forthcoming regulatory changes due to come into force in 2017 and 2018 relating to the implementation of new EU data protection and anti-money laundering laws in the United Kingdom, to replace or supplement U.K. legislation in these areas. Compliance with the new regulations is expected to be more onerous than the existing regime.
We expect that the interest in increasing the regulation of our industry will continue. It is possible that the laws and regulations currently proposed, or other future laws and regulations, will be enacted and will adversely affect our pricing, product mix, compliance costs, or other business activities in a way that is detrimental to our results of operations.
Existing or new local regulation of our industry could adversely affect our business and results of operations.
In recent years, a number of local laws have been passed by municipalities that regulate aspects of our business. For example, a number of municipalities have sought to use zoning and occupancy regulations to limit consumer lending storefronts. If additional local laws are passed that affect our business, this could materially
22
restrict our business operations, increase our compliance costs or exacerbate the risks associated with the complexity of our regulatory environment.
Approximately 45 different Texas municipalities have enacted ordinances that regulate aspects of products offered under our credit access business or CAB programs, including loan sizes and repayment terms. The Texas ordinances have forced us to make substantial changes to the loan products we offer and have resulted in litigation initiated by the City of Austin challenging the terms of our modified loan products. We believe that: (i) the Austin ordinance (like its counterparts elsewhere in the state) conflicts with Texas state law and (ii) our product in any event complies with the ordinance, when it is properly construed. An Austin trial court agreed with our position that the ordinance conflicts with Texas law and, accordingly, did not address our second argument. In August 2017, an Austin appellate court reversed this decision and remanded the case to the trial court for further proceedings consistent with its opinion (including, presumably, a decision on our second argument). However, in October 2017 we appealed this appellate decision. Accordingly, we will not have a final determination of the lawfulness of our CAB program under the Austin ordinance (and similar ordinances in other Texas cities) for some time. A final adverse decision could potentially result in material monetary liability in Austin and elsewhere and would force us to restructure the loans we arrange in Texas.
The regulatory environment in which we operate is very complex, which increases our costs of compliance and the risk that we may fail to comply in ways that adversely affect our business.
The regulatory environment in which we operate is very complex, with applicable regulations being enacted by multiple agencies at each level of government. Accordingly, our regulatory requirements, and consequently, the actions we must take to comply with regulations, vary considerably among the many jurisdictions where we operate. Managing this complex regulatory environment is difficult and requires considerable compliance efforts. It is costly to operate in this environment, and it is possible that our costs of compliance will increase materially over time. This complexity also increases the risks that we will fail to comply with regulations in a way that could have a material adverse effect on our business and results of operations.
A new CFPB rule may prevent us from continuing to use arbitration provisions with class action waivers in loan documents executed on or after March 19, 2018. Even if it does not, judicial decisions or amendments to the Federal Arbitration Act could render our arbitration agreements unenforceable.
We include pre-dispute arbitration provisions in our loan agreements. These provisions are designed to allow us to resolve any customer disputes through individual arbitration rather than in court. Our arbitration provisions explicitly provide that all arbitrations will be conducted on an individual and not on a class basis. Thus, our arbitration agreements, if enforced, have the effect of shielding us from class action liability.
In July 2017, the CFPB issued the CFPB Anti-Arbitration Rule, which prohibits the use of mandatory arbitration clauses with class action waivers in agreements for consumer financial services products. The rule applies on a prospective basis to agreements entered into on or after March 19, 2018 and will have no effect on agreements in force prior to that date. The Anti-Arbitration Rule remains subject to possible Congressional override by disapproval pursuant to the Congressional Review Act, passage of the pending Financial CHOICE Act of 2017 and possible invalidation in legal challenges by trade groups or other private parties. We do not know whether Congress will allow this rule to stand or whether any private legal challenges will be successful. If and when the rule becomes fully effective, it will, among other things, subject us to the risk of class actions in the United States.
Even if the CFPB Anti-Arbitration Rule does not become effective, our use of pre-dispute arbitration provisions will remain dependent on whether courts continue to enforce these provisions. We take the position that the Federal Arbitration Act, or the FAA, requires that arbitration agreements containing class action waivers of the type we use be enforced in accordance with their terms. In the past, a number of courts, including the
23
California and Nevada Supreme Courts, have concluded that arbitration agreements with class action waivers are unconscionable and hence unenforceable, particularly where a small dollar amount is in controversy on an individual basis. However, in April 2011, the U.S. Supreme Court in a 5-4 decision in AT&T Mobility v. Concepcion held that the FAA preempts state laws that would otherwise invalidate consumer arbitration agreements with class action waivers. Our arbitration agreements differ in some respects from the agreement at issue in Concepcion , and some courts have continued since Concepcion to find reasons to find arbitration agreements unenforceable. Thus, it is possible that one or more courts could use the differences between our arbitration agreements and the agreement at issue in Concepcion as a basis for a refusal to enforce our arbitration agreements, particularly if such courts are hostile to our kind of lending or to pre-dispute mandatory consumer arbitration agreements. Further, it is possible that a change in composition at the U.S. Supreme Court, including the replacement of Justice Scalia by Justice Gorsuch, could result in a change in the U.S. Supreme Courts treatment of arbitration agreements under the FAA.
Additionally, Congress has considered legislation that would amend the FAA to generally limit or prohibit mandatory pre-dispute arbitration in consumer contracts, and it has adopted such prohibitions with respect to certain mortgage loans and certain consumer loans to members of the military on active duty and their dependents. We cannot predict whether Congress will pass legislation at any time to amend the FAA.
The occurrence of any above stated eventsthe CFPB final rule becoming effective, courts finding arbitration agreements with class action waivers to be unenforceable, the Supreme Court changing its treatment of arbitration agreements under the FAA and/or Congress amending the FAA to limit or prohibit the use of pre-dispute arbitration provisionscould lead to our arbitration clauses being unavailable or unenforceable. This, in turn could increase our costs to litigate and settle customer disputes and leave us exposed to potentially damaging class action lawsuits, each of which could have a material adverse effect on our business and results of operations.
Current and future legal, class action and administrative proceedings directed towards our industry or us may have a material adverse impact on our results of operations, cash flows and financial condition.
We have been the subject of administrative proceedings and lawsuits in the past, and may be involved in future proceedings, lawsuits or other claims. Other companies in our industry have also been subject to regulatory proceedings, class action lawsuits and other litigation regarding the offering of consumer loans. We could be adversely affected by interpretations of state, federal, foreign and provincial laws in those legal and regulatory proceedings, even if we are not a party to those proceedings. We anticipate that lawsuits and enforcement proceedings involving our industry, and potentially involving us, will continue to be brought in the future.
We may incur significant expenses associated with the defense or settlement of current or future lawsuits, the potential exposure for which is uncertain. The adverse resolution of legal or regulatory proceedings, whether by judgment or settlement, could force us to refund fees and interest collected, refund the principal amount of advances, pay damages or other monetary penalties or modify or terminate our operations in particular local, state, provincial or federal jurisdictions. The defense of such legal proceedings, even if successful, requires significant time and attention from our senior officers and other management personnel that would otherwise be spent on other aspects of our business, and requires the expenditure of substantial amounts for legal fees and other related costs. Settlement of proceedings may also result in significant cash payouts, foregoing future revenues and modifications to our operations. Additionally, an adverse judgment or settlement in a lawsuit or regulatory proceeding could in certain circumstances provide a basis for the termination, non-renewal, suspension or denial of a license required for us to do business in a particular jurisdiction (or multiple jurisdictions). A sufficiently serious violation of law in one jurisdiction or with respect to one product could have adverse licensing consequences in other jurisdictions and/or with respect to other products. Thus, legal and enforcement proceedings could have a material adverse effect on our business, future results of operations, financial condition and our ability to service our debt obligations.
24
Public perception of our business and products as being predatory or abusive could negatively affect our business, results of operations and financial condition.
Certain consumer advocacy groups, politicians, government officials and media organizations promote the view that short-term single-payment loans and other alternative financial services like those we offer are predatory or abusive toward consumers. Widespread adoption of this opinion could potentially have negative consequences for our business, including lawsuits, adverse legislative or regulatory changes, difficulty attracting and retaining qualified employees, decreased demand for our products and services and reluctance or refusal of other parties, such as banks or other electronic payment processors, to transact business with us. These consequences could have a material adverse impact on our business and results of operations.
Material modifications of U.S. laws and regulations and existing trade agreements by the new U.S. presidential administration could adversely affect our business, financial condition and results of operations.
The new U.S. presidential administration may initiate significant changes in U.S. laws and regulations and existing international trade agreements, including the North American Free Trade Agreement, and these changes could affect a wide variety of industries and businesses, including those businesses we own and operate. It remains unclear what the new U.S. presidential administration will do, if anything, with respect to existing laws, regulations or trade agreements. If the new presidential administration materially modifies U.S. laws and regulations and international trade agreements this could adversely affect our business and results of operations.
Risks Relating to Our Business
Our substantial indebtedness could adversely affect our business, results of operations and financial condition.
As of June 30, 2017, we had approximately $551.8 million of total debt outstanding. Our high level of indebtedness could have significant effects on our business, including the following:
| it may be more difficult for us to satisfy our financial obligations; |
| our ability to obtain additional financing for working capital, capital expenditures, strategic acquisitions or general corporate purposes may be impaired; |
| we must use a substantial portion of our cash flow from operations to pay interest on our debt, which reduces funds available to use for operations, invest in our business, pay dividends to our shareholders and use for other purposes; |
| we could be at a competitive disadvantage compared to those of our competitors that may have proportionately less debt; |
| the terms of our debt restricts our ability to pay dividends; and |
| our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited. |
For instance, as described above, if future changes in regulations affecting our products or services are enacted, they could adversely impact current product offerings or alter the economic performance of our existing products and services. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives.
If our cash flows and capital resources are insufficient to fund our debt service obligations, or if we confront regulatory uncertainty in our industry or challenges in debt capital markets, we may not be able to refinance our indebtedness prior to maturity on favorable terms, or at all. In addition, prevailing interest rates or other factors at
25
the time of refinancing could increase our interest or other debt capital expense. A refinancing of our indebtedness could also require us to comply with more onerous covenants and restrictions on our business operations. If we are unable to refinance our indebtedness prior to maturity we will be required to pursue alternative measures that could include restructuring our current indebtedness, selling all or a portion of our business or assets, seeking additional capital, reducing or delaying capital expenditures or taking other steps to address obligations under the terms of our indebtedness.
Because we depend in large part on third-party lenders to provide the cash needed to fund our loans, an inability to affordably access third-party financing could adversely affect our business.
Our principal sources of liquidity to fund the loans we make to our customers are cash provided by operations, funds from third-party lenders under our CSO programs and our Non-Recourse U.S. SPV Facility, which finances the origination of eligible U.S. Unsecured and Secured Installment Loans. However, we cannot guarantee we will be able to secure additional operating capital from third-party lenders or refinance our existing revolving credit facilities on reasonable terms or at all. As the volume of loans that we make to customers increases, or if provision for losses or expenses rise due to various factors, we may have to expand our borrowing capacity on our existing Non-Recourse U.S. SPV Facility (as discussed below) or add new sources of capital. The availability of these financing sources depends on many factors, some of which lie outside of our control. In the event of a sudden or unexpected shortage of funds in the banking system or capital markets, we may not be able to maintain necessary levels of funding without incurring high funding costs, suffering a reduction in the term of funding instruments or having to liquidate certain assets. If our cost of borrowing increases or we are unable to arrange new or alternative methods of financing on favorable terms, we may have to curtail our origination of loans, which could adversely affect our business and results of operations.
We may be unable to protect our proprietary technology and analytics or keep up with that of our competitors.
The success of our business depends to a significant degree upon the protection of our proprietary technology, including our proprietary credit and fraud scoring models, which we use for pricing loans. We seek to protect our intellectual property with non-disclosure agreements we sign with third parties and employees and through standard measures to protect trade secrets. We also implement cybersecurity policies and procedures to prevent unauthorized access to our systems and technology. However, we may be unable to deter misappropriation of our proprietary information, detect unauthorized use or take appropriate steps to enforce our intellectual property rights. Our employees, including those working on our Curo Platform, have not been required to execute agreements assigning us proprietary rights to technology developed in the scope of their employment, although we intend to have employees sign such agreements in the future. Additionally, while we currently have a number of registered trademarks and pending applications for trademark registration, we do not own any patents or copyrights with respect to our intellectual property.
If competitors learn our trade secrets (especially with regard to our marketing and risk management capabilities), others attempt to acquire patent protection of algorithms similar to ours, or our employees attempt to make commercial use of the technology they develop for us, it could be difficult to successfully prosecute to recover damages. Additionally, a third-party may attempt to reverse engineer or otherwise obtain and use our proprietary technology without our consent. The pursuit of a claim against a third-party or employee for infringement of our intellectual property could be costly, and there can be no guarantee that any such efforts would be successful. If we are unable to protect our software and other proprietary intellectual property rights, or to develop technologies that are as adaptive to changing consumer trends or appealing to consumers as the technologies of our competitors, we could face a disadvantage relative to our competitors.
26
Any disruption in the availability of our information technology systems could adversely affect our business operations.
We rely heavily upon our Curo Platform in almost every aspect of our business, including to process customer transactions, provide customer service, determine loan amounts, manage collections, account for our business activities, support regulatory compliance and to generate the reporting used by management for analytical, loss management and decision-making purposes. Our store and online platform is part of an integrated data network designed to manage cash levels, facilitate underwriting decisions, reconcile cash balances and report revenue and expense transaction data. Our Curo Platform could be disrupted and become unavailable due to a number of factors, including power outages, a failure of one or more of our information technology, telecommunications or other systems, and cyber-attacks on or sustained disruptions of these systems. Our back-up systems and security measures could fail to prevent a disruption in the availability of our information technology systems. A disruption in our Curo platform could prevent us from performing fundamental aspects of our business, including loan underwriting, customer service, payments and collections, internal reporting, and regulatory compliance.
If we do not effectively price the credit risk of our prospective or existing customers, our operating results and financial condition could be materially and adversely impacted.
Our business has much higher rates of charge-offs than traditional lenders. Accordingly, we must price our loan products to take into account the credit risks of our customers. In deciding whether to extend credit to prospective customers and the terms on which to provide that credit, including the price, we rely heavily on the credit models in our proprietary Curo Platform. These models take into account, among other things, information from customers, third parties and an internal database of loan records gathered through monitoring the performance of our customers over time. Any failure of our Curo Platform to effectively price credit risk could lead to higher-than-anticipated customer defaults, which could lead to higher charge-offs and losses for us, or overpricing, which could lead us to lose customers. Our models could become less effective over time, receive inaccurate information or otherwise fail to accurately estimate customer losses in certain circumstances. If we are unable to maintain and improve the credit models in our proprietary Curo Platform, or if they do not perform up to target standards, they may fail to adequately predict the creditworthiness of customers or to assess prospective customers financial ability to repay their loans. This could further hinder our growth and have an adverse effect on our business and results of operations.
If the information provided by customers or third parties to us is inaccurate, we may misjudge a customers qualification to receive a loan, and our operating results may be harmed.
Our lending decisions are based partly on information provided to us by loan applicants. To the extent that these applicants provide information to us in a manner that we are unable to verify, our scoring may not accurately reflect the associated risk. In addition, data provided by third-party sources is a significant component of our scoring of loan applications and this data may contain inaccuracies. Inaccurate analysis of credit data that could result from false loan application information could harm our reputation, business and operating results.
In addition, we use identity and fraud check analyzing data provided by external databases to authenticate each customers identity. There is a risk, however, that these checks could fail, and fraud may occur. We may not be able to recoup funds underlying loans made in connection with inaccurate statements, omissions of fact or fraud, in which case our revenue, operating results and profitability will be harmed. Fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negatively impact our operating results, brand and reputation and require us to take steps to reduce fraud risk, which could increase our costs.
27
Improper disclosure of customer personal data, including by means of a cyber-attack, could result in liability and harm our reputation. Cybersecurity risks and security breaches, in general, could result in increasing costs in an effort to minimize those risks and to respond to cyber incidents.
We store and process large amounts of personally identifiable information, consisting primarily of sensitive customer information. We believe that we maintain adequate policies and procedures, including anti-virus and malware software and access controls, and use appropriate safeguards to protect against attacks. It is possible that our security controls over personal data, our training of employees and other practices we follow may not prevent the improper disclosure of personally identifiable information. Such disclosure could harm our reputation and subject us to liability under laws that protect personal data, resulting in increased costs or loss of revenue.
In addition, we are subject to cybersecurity risks and security breaches, which could result in the unauthorized disclosure or appropriation of customer data. To date none of these actual or attempted cyber-attacks has had a material effect on our operations or financial condition. However, we may not be able to anticipate or implement effective preventive measures against these types of security breaches, especially because the techniques change frequently or are not recognized until launched. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. Actual or anticipated attacks and risks may cause us to incur increasing expenses, including costs to deploy additional personnel and protection technologies, train employees, and engage third-party experts and consultants. It is also possible that our protective measures would fail prevent a cyber-attack and the resulting disclosure or appropriation of customer data. A significant data breach could harm our reputation, diminish our customer confidence and subject us to significant legal claims, any of which may contribute to a loss of customers and have a material adverse effect on us.
In addition, federal and some state regulators are considering promulgating rules and standards to address cybersecurity risks and many U.S. states have already enacted laws requiring companies to notify individuals of data security breaches involving their personal data. In the United Kingdom, U.K. businesses are presently subject to the Data Protection Act, which requires that appropriate technical and organizational measures shall be taken against unauthorized or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data. As a result of its membership of the EU, U.K. businesses are subject to directly applicable European Regulation in respect of personal data, U.K. businesses will be required to comply with new obligations from May 25, 2018, which will impose greater responsibility in respect of personal data, and the U.K. government have indicated that they are to enact direct U.K. laws applicable after Brexit to similar effect, which will require companies to notify individuals of most data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and may lead to widespread negative publicity, which may cause customers to lose confidence in the effectiveness of our data security measures.
The failure of third parties who provide products, services or support to us could disrupt our operations or result in a loss of revenue.
Some of our lending activity depends in part on support we receive from unaffiliated third parties. This includes third-party lenders who make loans to our customers under our CSO programs as well as other third-parties that provide services to facilitate lending, loan underwriting and payment processing in our online lending consumer loan channels. The loss of our relationship with any of these third-parties and an inability to replace them or the failure of these third parties to maintain quality and consistency in their programs or services or to have the ability to provide their products and services, could cause us to lose customers and substantially decrease the revenue and earnings of our business. Our revenue and earnings could also be adversely affected if any of those third-party providers make material changes to the products or services that we rely on. We also use third parties to support and maintain certain of our communication systems and information systems. If a third-party provider fails to provide its products or services, makes material changes to such products and services, does not maintain its quality and consistency or fails to have the ability to provide its products and services, our operations could be disrupted.
28
In Texas and Ohio, we rely on third-party lenders to conduct business.
In Texas and Ohio we operate as a CSO, also known as a credit services organization, or a credit access business, also known as a CAB, arranging for unrelated third-parties to make loans to our customers. During 2016, our CSO programs in Texas and Ohio generated revenues of $205.7 million and $9.2 million, respectively. During the six months ended June 30, 2017, our CSO programs in Texas and Ohio generated revenues of $107.5 million and $7.0 million, respectively. There are a limited number of third-party lenders that make these types of loans and there is significant demand and competition for the business of these companies. These third parties rely on borrowed funds in order to make consumer loans. If these third-parties lose their ability to make loans or become unwilling to make loans to us and we are unable to find another third-party lender, we would be unable to continue offering loans in Texas and Ohio as a CSO, which would prevent us from receiving revenue from these activities. This would adversely affect our revenue and results of operations.
Our core operations are dependent upon maintaining relationships with banks and other third-party electronic payment solutions providers. Any inability to manage cash movements through the banking system or the Automated Clearing House, or ACH, system would materially impact our business.
We maintain relationships with commercial banks and third-party payment processors. These entities provide a variety of treasury management services including providing depository accounts, transaction processing, merchant card processing, cash management, and ACH processing. We rely on commercial banks to receive and clear deposits, provide cash for our store locations, perform wire transfers and ACH transactions and process debit card transactions. We rely on the ACH system to deposit loan proceeds into customer bank accounts and to electronically withdraw authorized payments from those accounts. It has been reported that the U.S. Department of Justice and the Federal Deposit Insurance Corporation, as well as other federal regulators, have taken or threatened actions, commonly referred to as Operation Choke Point, intended to discourage banks and other financial services providers from providing access to banking and third-party payment processing services to lenders in our industry. We can give no assurances that actions akin to Operation Choke Point will not intensify or resume, or that the effect of such actions against banks and/or third-party payment processors will not pose a future threat to our ability to maintain relationships with commercial banks and third-party payment processors. The failure or inability of retail banks and/or third-party payment providers to continue to provide services to us could adversely affect our operations if we are unable or unsuccessful in replacing those providers with comparable service providers.
Because we maintain a significant supply of cash in our stores, we may be subject to cash shortages due to employee and third-party theft and errors. We also may be subject to liability as a result of crimes at our stores.
Our business requires us to maintain a significant supply of cash in each of our stores. As a result, we are subject to the risk of cash shortages resulting from theft and errors by employees and third-parties. Although we have implemented various programs in an effort to reduce these risks, maintain insurance coverage for theft and utilize various security measures at our facilities, it is possible that employee and third-party theft and errors will occur in material amounts. Cash shortages from employee and third-party theft and errors were $0.2 million (0.04% of consolidated revenue) and $0.2 million (0.04% of consolidated revenue) in the six months ended June 30, 2017 and 2016, respectively. The extent of our cash shortages could increase as we expand the nature and scope of our products and services. Although we have experienced break-ins by third parties at our stores in the past, none of these has had, either individually or in the aggregate, a material adverse impact on our operations. Going forward, theft and errors could lead to cash shortages and could adversely affect our business, prospects, results of operations and financial condition. It is also possible that violent crimes such as armed robberies may be committed at our stores. We could experience liability or adverse publicity arising from such crimes. For example, we may be liable if an employee, customer or bystander suffers bodily injury or other harm. Any such event may have a material adverse effect on our business, prospects, results of operations and financial condition.
29
If our allowance for loan losses is not adequate to absorb our actual losses, our results of operations and financial condition may be adversely affected.
We face the risk that our customers will fail to repay their loans in full. We maintain an allowance for loan losses for estimated probable losses on company-funded loans and loans in default. See Note 1 Summary of Significant Accounting Policies and Nature of Operations of our Notes to Consolidated Financial Statements included elsewhere in this prospectus for factors considered by management in estimating the allowance for loan losses. We also maintain a credit services guarantee liability for estimated probable losses on loans funded by unrelated third-party lenders under our CSO programs, but for which we are responsible. As of June 30, 2017, the sum of our aggregate reserve and allowance for losses on loans not in default (including loans funded by unrelated third-party lenders under our CSO programs) was $86.0 million. This reserve, however, is an estimate. Actual losses are difficult to forecast, especially if such losses stem from factors beyond our historical experience, and unlike traditional banks, we are not subject to periodic review by bank regulatory agencies of our allowance for loan losses. As a result, our allowance for loan losses may not be comparable to that of traditional banks subject to regulatory oversight or sufficient to cover actual losses. If actual losses are greater than our reserve and allowance, our results of operations and financial condition could be adversely affected.
Adverse economic conditions could cause demand for our loan products to decline or make it more difficult for our customers to make payments on our loans and increase our default rates.
We derive the majority of our revenue from consumer lending. Factors that may influence demand for our products and services include macroeconomic conditions, such as employment, personal income and consumer sentiment. Our underwriting standards require, among other things, our customers to have a steady source of income as a prerequisite for making a loan. Therefore, if unemployment increases among our customer base, the number of loans we originate will likely decline and the number of loan defaults could increase. Additionally, if consumers become more pessimistic regarding the outlook for the economy and therefore spend less and save more, demand for consumer loans in general may decline. Accordingly, poor economic conditions could adversely affect our business and results of operations.
If negative assertions regarding businesses like ours become widespread, they could reduce demand for our loan products.
Negative press coverage and efforts of special interest groups to persuade customers that the consumer loans and other alternative financial services provided by us are predatory and abusive could also negatively affect demand for our products and services. If consumers accept this negative characterization of our business or our products on a widespread basis, demand for our loans could significantly decline, which would negatively affect our revenues and results of operations. Should we fail to adapt to significant changes in our customers demand for our products or services, our revenues could decrease significantly and our results of operations could be harmed. Even if we do make changes to existing products or services or introduce new products or services to fulfill changing customer demands, our customers may resist or reject such products or services.
Our business and results of operations may be adversely affected if we are unable to manage our growth effectively.
There can be no assurance that we will be able to successfully grow our business or that our current business, results of operations and financial condition will not suffer if we fail to prudently manage our growth. Failure to grow the business and generate estimated future levels of cash flow could inhibit our ability to service our debt obligations. Our expansion strategy, which contemplates disciplined growth in Canada, the United States and the United Kingdom, increasing the market share of our online operations, selectively expanding our offering of installment loans and potential expansion in other international markets, is subject to significant risks. The profitability of our current operations and any future growth is dependent upon a number of factors, including the ability to obtain and maintain financing to support these opportunities, the ability to hire, train and
30
retain an adequate number of qualified employees, the ability to obtain and maintain any required regulatory permits and licenses and other factors, some of which are beyond our control, such as the continuation of favorable regulatory and legislative environments. Imprudent or poor investments could drain our capital resources and negatively impact our liquidity. As a result, the profitability of our current operations could suffer if our growth strategy is not successfully implemented.
The failure to successfully integrate newly acquired businesses into our operations could negatively impact our profitability.
From time to time, we may consider opportunities to acquire other products or technologies that may enhance our product platform or technology, expand the breadth of our markets or customer base, or advance our business strategies. The success of the acquisitions we have completed, as well as future acquisitions is, and will continue to be, dependent upon our ability to effectively integrate the management, operations and technology of acquired businesses into our existing management, operations and technology platforms. Integration can be complex, expensive and time-consuming. The failure to successfully integrate acquired businesses into our organization in a timely and cost-effective manner could materially adversely affect our business, prospects, results of operations and financial condition. It is also possible that the integration process could result in the loss of key employees, the disruption of ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third-parties or our ability to achieve the anticipated benefits of such acquisitions and could harm our financial performance. We do not know if we will be able to identify acquisitions we deem suitable, whether we will be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquired products or technologies. Additionally, an additional risk inherent in any acquisition is that we fail to realize a positive return on our investment.
Indemnifications associated with assumed liabilities of acquired entities may be insufficient to cover our exposures to litigation and settlement costs.
In 2011, we completed the acquisition of Cash Money Group, Inc., or Cash Money. While the agreement governing our Cash Money acquisition provides us with limited indemnification for litigation and settlement costs for activities related to Cash Moneys operations prior to the acquisition of Cash Money, our recourse with respect to those matters is limited to set-off against a C$7.5 million escrow note. Through June 30, 2017, we have set off approximately C$0.3 million of class action settlement costs and related expenses, and C$4.2 million of tax indemnification amounts against the escrow note. The balance of this escrow note is included in the Consolidated Balance Sheets as Subordinated Shareholder Debt.
In August 2012, we completed the acquisition of The Money Store, L.P., which operated under the name The Money Box ® Check Cashing, or The Money Box. The Money Box acquisition agreement provides us with limited indemnification for certain matters related to The Money Boxs operations prior to the date of the acquisition of The Money Box; however, our recovery is limited in most cases to an aggregate amount of $2.4 million and our ability to make claims is subject to certain time limitations. To date, no indemnification payments have been made or claimed under The Money Box acquisition agreement.
In 2013, we completed the acquisition of Wage Day Advance Limited, or Wage Day. The Wage Day acquisition agreement provides us with limited indemnification for certain matters related to Wage Days operations prior to the date of the Wage Day acquisition. To date, no indemnification payments or claims have been made under this provision.
These indemnifications provide us with only limited recourse against the sellers of these businesses in the event we incur substantial costs in connection with actions occurring prior to our acquisition of the businesses. The agreements limit the amount we can recover, limit the causes of action for which we can pursue recovery,
31
and place other restrictions on our ability to recover for such losses. Accordingly, if we incur substantial costs for issues arising prior to our acquisitions of these businesses, our financial position and results of operations may be adversely affected.
If we lose key management or are unable to attract and retain the talent required to operate and grow our business or if we are required to substantially increase our labor costs to attract and retain qualified employees, our business and results of operations could be adversely affected.
Our continued growth and future success will depend on our ability to retain the members of our senior management team, who possess valuable knowledge of, and experience with, the legal and regulatory environment of our industry, who have experience operating in our international markets and who have been instrumental in developing our strategic plans and procuring capital to enable the pursuit of those plans. The loss of the services of one or more members of senior management and our inability to attract new skilled management could harm our business and future development. We do not maintain any key man insurance policies with respect to any senior management or employees.
Labor costs represent a significant portion of our total expenses. If we are required to substantially increase our labor costs in order to attract or retain a sufficient number of qualified employees for our current operations, we may not be able to operate our business in a cost-effective manner. We also believe having experienced employees and staff continuity in our stores is an important contributor to the success of our business. If we were unable to retain our experienced managers and staff, it could adversely affect our customer service and our loan volume could suffer.
Goodwill comprises a significant portion of our total assets. We assess goodwill for impairment at least annually, which could result in a material, non-cash write-down, which would have a material adverse effect on our results of operations and financial condition.
The carrying value of our goodwill was $143.8 million, or approximately 19.5% of our total assets, as of June 30, 2017. We assess goodwill for impairment on an annual basis at a reporting unit level. Goodwill is assessed between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. During the third quarter of 2015, due to the decline in our overall financial performance in the United Kingdom, we determined that a triggering event had occurred requiring an impairment evaluation of our goodwill and other intangible assets in the United Kingdom. As a result, during the third quarter of 2015, we recorded non-cash impairment charges of $2.9 million, which comprised a $1.8 million charge related to the Wage Day trade name, a $0.2 million charge related to the customer relationships acquired as part of the Wage Day acquisition, and a $0.9 million non-cash goodwill impairment charge in our United Kingdom reporting segment.
Our impairment reviews require extensive use of accounting judgment and financial estimates. Application of alternative assumptions and definitions, such as reviewing goodwill for impairment at a different organizational level, could produce significantly different results. We may be required to recognize impairment of goodwill based on future events or circumstances which could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit, or future economic factors such as unfavorable changes in the estimated future discounted cash flows of our reporting units. Impairment of goodwill could result in material charges that could, in the future, result in a material, non-cash write-down of goodwill, which could have an adverse effect on our results of operations and financial condition.
Due to the current economic environment and the uncertainties regarding the impact that future economic consequences will have on our reporting units, there can be no assurance that our estimates and assumptions made for purposes of our annual goodwill impairment test will prove to be accurate predictions of the future. If our assumptions regarding forecasted revenues or margins for certain of our reporting units are not achieved, we
32
may be required to record goodwill impairment losses in future periods. It is not possible at this time to determine if any such future impairment will occur, and if it does occur, whether such charge would be material.
Our lending business is somewhat seasonal, which causes our revenues to fluctuate and may adversely affect our ability to service our debt obligations.
Our U.S. lending business typically experiences reduced demand in the first quarter as a result of our customers receipt of tax refund checks. Demand for our U.S. lending services is generally greatest during the fourth quarter. This seasonality requires us to manage our cash flows over the course of the year. If a governmental authority were to pursue economic stimulus actions or issue additional tax refunds or tax credits at other times during the year, such actions could have a material adverse effect on our business, prospects, results of operations and financial condition during those periods.
Our lending businesses in Canada and the United Kingdom are somewhat seasonal, although to a lesser extent than our U.S. lending business. We typically experience our highest demand in Canada in the third and fourth calendar quarters with lower demand in the first quarter; however, the reduction in volume relating to tax refunds is not as prevalent as in the United States. If our consolidated revenues were to fall substantially below what we would normally expect during certain periods, our annual financial results and our ability to service our debt obligations could be adversely affected.
Adverse real estate market conditions or zoning restrictions may result in increased operating costs or a reduction in new store development, which could impact our profitability and growth plans.
We lease all of our store locations. An increase in lease costs, property taxes or maintenance costs for lease renewals or new store locations could result in increased operating costs for these locations, thereby negatively impacting the stores operating margins.
A recent trend among some municipalities in the United States and in Canada has been to enact zoning restrictions in certain markets. These zoning restrictions may limit the number of payday lending stores that can operate in an area or require certain distance requirements between competitors, residential areas or highways. These restrictions may make it more difficult to find suitable location for future expansion, thereby negatively impacting our growth plans.
Failure to keep up with the rapid changes in e-commerce and the uses and regulation of the Internet could harm our business.
The business of providing products and services such as ours over the Internet is dynamic and relatively new. We must keep pace with rapid technological change, consumer use habits, Internet security risks, risks of system failure or inadequacy and governmental regulation and taxation, and each of these factors could adversely impact our business. In addition, concerns about fraud, computer security and privacy and/or other problems may discourage additional consumers from adopting or continuing to use the Internet as a medium of commerce. In countries such as the United States and the United Kingdom, where e-commerce generally has been available for some time and the level of market penetration of our online financial services is relatively high, acquiring new customers for our services may be more difficult and costly than it has been in the past. In order to expand our customer base, we must appeal to and acquire consumers who historically have used traditional means of commerce to conduct their financial services transactions. If these consumers prove to be less profitable than our previous customers, and we are unable to gain efficiencies in our operating costs, including our cost of acquiring new customers, our business could be adversely impacted.
Competition in the financial services industry could cause us to lose market share and revenues.
The industry in which we operate is highly fragmented. While we believe the market for U.S. storefronts is mature, it is likely that competition for market share will intensify. We believe the Canadian market is less
33
saturated, but still experiences significant competition by both large, well-financed operators as well as significant numbers of smaller competitors. We believe that online lending in the United Kingdom is more widely accepted among consumers than in either the United States or in Canada, and that customers are more likely to transact business via the internet and using mobile phones. Across all geographies, we see a growing number of sophisticated online-based lenders. Increased competition in any of the geographies in which we operate could lead to consolidation in our industry. If our competitors get stronger through consolidation, and we are unable to identify attractive consolidation opportunities, we could be at a competitive disadvantage and could experience declining market share and revenue. If these events materialize, they could negatively affect our ability to generate sufficient cash flow to fund our operations and service our debt obligations.
In addition to increasing competition among companies that offer traditional consumer loan products, there is a risk of losing market share to new market entrants. Increased competition from secured title loan lenders, pawn lenders and unsecured installment loan lenders could also adversely affect our revenues.
Our growth strategy calls for opening additional stores in the United States and Canada, and to expand our online presence in each of those geographies. If our competitors aggressively pursue store expansion, competition for store sites could result in our failing to open our planned number of stores, or increase our costs to secure additional sites, both of which could result in slower growth and diminished operating performance. Increased competition in our online business could result in higher advertising and marketing costs to attract and retain customers, leading to lower margins.
The international scope of our operations leads to increased cost and complexity, which could negatively impact our operations.
The international nature of our operations has increased the complexity of managing our business. This has led to enhanced administrative burdens related to regulatory compliance, tax compliance, labor controls and other federal, state, provincial and local requirements. Additional resources, both internal and external, have been added to comply with these increasing requirements, resulting in an increase in our corporate costs. In addition, it remains to be seen what impact the recent vote by the United Kingdom to leave the European Union will have on the U.K. economy and our U.K. operations. Future changes to laws or regulations may result in further cost increases, thereby negatively impacting our profitability.
Our operations could be subject to natural disasters and other business disruptions, which could adversely impact our future revenue and financial condition and increase our costs and expenses.
Our services and operations are vulnerable to damage or interruption from tornadoes, hurricanes, earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors and similar events. A significant natural disaster, such as a tornado, hurricane, earthquake, fire or flood, could have a material adverse impact on our ability to conduct business, and our insurance coverage may be insufficient to compensate for losses that may occur. Acts of terrorism, war, civil unrest, violence or human error could cause disruptions to our business or the economy as a whole. Any of these events could cause consumer confidence to decrease, which could result in a decreased number of loans being made to customers.
We rely on trademark protection to distinguish our products from the products of our competitors.
We rely on trademark protection to distinguish our products from the products of our competitors. We have registered various trademarks, including The Money Box, Speedy Cash ® , OPT+ SM and Rapid Cash, in the United States and/or Canada, and are in the process of registering other trademarks in those jurisdictions. We have not registered any trademarks in the United Kingdom. For trademarks we use that are not registered, and as permitted by applicable local law, we rely on common law trademark protection. Third parties may oppose our trademark applications, or otherwise challenge our use of the trademarks, and may be able to use our trademarks in jurisdictions where they are not registered or otherwise protected by law. If our trademarks are successfully
34
challenged or if a third party is using confusingly similar or identical trademarks in particular jurisdictions before we do, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote additional resources to marketing new brands. If others are able to use our trademarks, our ability to distinguish our products may be impaired, which could adversely affect our business.
We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers.
Many of our employees were previously employed at other financial technology companies, including our competitors or potential competitors, and we may hire employees in the future that are so employed. We could in the future be subject to claims that these employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. If we fail in defending against such claims, a court could order us to pay substantial damages and prohibit us from using technologies or features that are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. If any of these technologies or features that are important to our products, this could prevent us from selling those products and could have a material adverse effect on our business. Even if we are successful in defending against these claims, such litigation could result in substantial costs and divert the attention of management.
Risks Relating to this Offering and Owning Our Common Stock
An active trading market for our common stock may not develop and the market price for our common stock may decline below the initial public offering price.
Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market, or how liquid that market may become. An active trading market for our common stock may never develop or be sustained, which could adversely impact your ability to sell your shares and could depress the market price of your shares. In addition, the public offering price for our common stock has been determined through negotiations among us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market upon the completion of this offering. Consequently, you may be unable to sell your shares of our common stock at prices equal to or greater than the price you paid for them. We cannot predict the prices at which our common stock will trade. The initial public offering price may not bear any relationship to the market price at which our common stock will trade after this offering or to any other established criteria of the value of our business.
The market price of our common stock is likely to be volatile and could decline following this offering, resulting in a substantial loss of your investment.
The stock market in general has been highly volatile. As a result, the market price and trading volume for our common stock may also be highly volatile, and investors in our common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. Factors that could cause the market price of our common stock to fluctuate significantly include:
| our operating and financial performance and prospects and the performance of other similar companies; |
| our quarterly or annual earnings or those of other companies in our industry; |
| conditions that impact demand for our products and services; |
| the publics reaction to our press releases, financial guidance and other public announcements, and filings with the SEC; |
| changes in earnings estimates or recommendations by securities or research analysts who track our common stock; |
35
| market and industry perception of our level of success in pursuing our growth strategy; |
| strategic actions by us or our competitors, such as acquisitions or restructurings; |
| changes in government and other regulations; |
| changes in accounting standards, policies, guidance, interpretations or principles; |
| arrival or departure of members of senior management or other key personnel; |
| the number of shares to be publicly traded after this offering; |
| sales of common stock by us, our investors or members of our management team; |
| factors affecting the industry in which we operate, including competition, innovation, regulation, the economy and other factors; and |
| changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, telecommunications failures, cyber-attacks, civil unrest in various parts of the world, acts of war, terrorist attacks or other catastrophic events. |
Any of these factors may result in large and sudden changes in the trading volume and market price of our common stock and may prevent you from being able to sell your shares at or above the price you paid for them.
Following periods of volatility in the market price of a companys securities, stockholders often file securities class action lawsuits against such company. Our involvement in a class action lawsuit could be costly to defend and divert our senior managements attention and, if adversely determined, could involve substantial damages.
If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Our common stock does not currently have and may never obtain research coverage by securities and industry analysts. If there is no coverage of us by securities or industry analysts, the trading price for our shares could be negatively impacted. In the event we obtain securities or industry analyst coverage and one or more of these analysts downgrades our shares or publishes misleading or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our shares could decrease, which could cause our stock price or trading volume to decline.
We are an emerging growth company, and any decision on our part to comply with certain reduced disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
We are an emerging growth company, as defined in the JOBS Act, enacted in April 2012, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies, including, but not limited to, reduced disclosure obligations regarding executive compensation (including Chief Executive Officer pay ratio disclosure) in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Additionally, until we cease to be an emerging growth company, we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. As an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our
36
consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies.
We may take advantage of these exemptions until such time that we are no longer an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues are at least $1.07 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if, among other things, the market value of our common equity securities held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in nonconvertible debt securities during the preceding three-year period.
We cannot predict whether investors will find our common stock less attractive if we choose to rely on one or more of the exemptions described above. If investors find our common stock less attractive as a result of any decisions to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile.
The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an emerging growth company.
We have historically operated as a private company and have not been subject to the same financial and other reporting and corporate governance requirements as a public company. After this offering, we will be required to file annual, quarterly and other reports with the SEC. We will need to prepare and timely file financial statements that comply with SEC reporting requirements. We will also be subject to other reporting and corporate governance requirements under the listing standards of The New York Stock Exchange, or NYSE, and the Sarbanes-Oxley Act, which will impose significant compliance costs and obligations upon us. The changes necessitated by becoming a public company will require a significant commitment of additional resources and management oversight, which will increase our operating costs. These changes will also place significant additional demands on our finance and accounting staff, which may not have prior public company experience or experience working for a newly public company, and on our financial accounting and information systems, and we may need to, in the future, hire additional accounting and financial staff with appropriate public company reporting experience and technical accounting knowledge. Other expenses associated with being a public company include increases in auditing, accounting and legal fees and expenses, investor relations expenses, increased directors fees and director and officer liability insurance costs, registrar and transfer agent fees and listing fees, as well as other expenses. As a public company, we will be required, among other things, to:
| prepare and file periodic reports, and distribute other stockholder communications, in compliance with the federal securities laws and the NYSE rules; |
| define and expand the roles and the duties of our board of directors and its committees and adopt a set of corporate governance guidelines; |
| maintain a majority independent board of directors and fully independent audit, compensation and nominating and corporate governance committees, in compliance with the federal securities laws and the NYSE rules; |
| institute more comprehensive compliance, investor relations and internal audit functions; and |
| evaluate and maintain our system of internal control over financial reporting, and report on managements assessment thereof, in compliance with rules and regulations of the SEC and PCAOB. |
In particular, upon the completion of this offering, the Sarbanes-Oxley Act will require us to maintain disclosure controls and procedures and report on their effectiveness, and to maintain and document our internal
37
control over financial reporting document and test their effectiveness in accordance with an established internal control framework, and, after our first annual report, to report on our conclusions as to the effectiveness of our internal controls. Likewise, once we are no longer an emerging growth company, our independent registered public accounting firm will be required to provide an attestation report on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. As described in the previous risk factor, we expect to qualify as an emerging growth company upon the completion of this offering and could potentially qualify as an emerging growth company until December 31, 2022. Any failure to implement required new or improved controls, or difficulties encountered in their implementation or in remediating any weaknesses discovered in the internal controls, could harm our operating results, cause us to fail to meet our reporting obligations, or require us to restate our financial statements from prior periods. Any of these could lead investors to lose confidence in the reliability of our financial statements. This could result in a decrease in the value of our common stock. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.
We have broad discretion to use the proceeds from the offering and our investment of those proceeds may not yield favorable returns.
We currently intend to use the net proceeds from this offering for general corporate purposes, including to repurchase, redeem, defease or otherwise repay portions of our outstanding indebtedness. Our management has broad discretion to spend the proceeds from this offering, and you may not agree with the way the proceeds are spent. The failure of our management to apply these proceeds effectively could result in unfavorable returns. This could adversely affect our business, causing the price of our common stock to decline.
We may not pay regular cash dividends on our common stock and, consequently, your ability to achieve a return on your investment may depend on appreciation in the price of our common stock.
Any decision to declare and pay dividends will be dependent on a variety of factors, including earnings, cash flow generation, financial position, results of operations, the terms of our indebtedness and other contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. The terms of our indebtedness limit the ability of CFTC to pay dividends to CURO Group Holdings Corp., which would be necessary for us to pay dividends on our common stock. For more information, see Dividend Policy. As a result, you should not rely on an investment in our common stock to provide dividend income and the success of an investment in our common stock may depend upon an appreciation in its value.
Future offerings of debt or equity securities may rank senior to our common stock and may result in dilution of your investment.
If we decide to issue debt securities in the future, which would rank senior to shares of our common stock, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities. We may also issue preferred equity, which will have superior rights relative to our common stock, including with respect to voting and liquidation.
Furthermore, if we raise additional capital by issuing new convertible or equity securities at a lower price than the initial public offering price, your interest will be diluted. This may result in the loss of all or a portion of your investment. If our future access to public markets is limited or our performance decreases, we may need to carry out a private placement or public offering of our common stock at a lower price than the initial public offering price.
Because our decision to issue debt, preferred or other equity or equity-linked securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common stock will bear the risk of our
38
future offerings reducing the market price of our common stock and diluting the value of their shareholdings in us.
The market price of our common stock could be negatively affected by future sales of our common stock.
If we or our existing stockholders, our directors, their affiliates, or our executive officers, sell, or are perceived as intending to sell, a substantial number of our common stock in the public market, the market price of our common stock could decrease significantly.
We, our executive officers and directors and certain of our significant stockholders have agreed with the underwriters not to dispose of or hedge any of the shares of our common stock or securities convertible into or exchangeable for shares of our common stock during the period from the date of this prospectus continuing through the date that is 180 days after the date of this prospectus, except with the prior written consent of Credit Suisse Securities (USA) LLC and Jefferies LLC.
These shares of common stock will be freely tradable (subject to certain current public information requirements) after the expiration date of the lock-up agreements, excluding any acquired or held by persons who may be deemed to be our affiliates as defined in Rule 144 under the Securities Act, which will continue to be subject to the volume and other restrictions of Rule 144 under the Securities Act. At any time following the closing of this offering, subject, however, to the 180-day lock-up agreement entered into with the underwriters, the holders of shares of our common stock are entitled to require that we register their shares under the Securities Act for resale into the public markets. All shares sold pursuant to an offering covered by such registration statement would be freely transferable.
In addition, on or as soon as practicable after, the effective date of this prospectus, we intend to file a registration statement on Form S-8 under the Securities Act registering shares of our common stock reserved for future issuance under our equity incentive plans. See the information under the heading Shares Eligible for Future Sale for a more detailed description of the shares that will be available for future sales upon completion of this offering.
Purchasing our common stock through this offering will result in an immediate and substantial dilution of your investment.
The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock. Therefore, if you purchase our common stock in this offering, your interest will be diluted immediately to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock after this offering. See Dilution.
Provisions in our charter documents could discourage a takeover that stockholders may consider favorable.
Certain provisions in our governing documents could make a merger, tender offer or proxy contest involving us difficult, even if such events would be beneficial to the interests of our stockholders. Among other things, these provisions:
| permit our board of directors to establish the number of directors and fill any vacancies and newly created directorships; |
| authorize the issuance of blank check preferred stock that our board of directors could use to implement a stockholder rights plan; |
| provide that our board of directors is expressly authorized to amend or repeal any provision of our bylaws; |
39
| restrict the forum for certain litigation against us to Delaware; |
| establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; |
| establish a classified board of directors with three staggered classes of directors, where directors may only be removed for cause (unless we de-classify our board of directors); |
| require that actions to be taken by our stockholders be taken only at an annual or special meeting of our stockholders, and not by written consent; and |
| establish certain limitations on convening special stockholder meetings. |
These provisions may delay or prevent attempts by our stockholders to replace members of our management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our stockholders receiving a premium over the market price for their common stock. We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers or investors aiming to effect changes in management to negotiate with our board of directors and by providing our board of directors with more time to assess any proposal. However, such anti-takeover provisions could also depress the price of our common stock by acting to delay or prevent a change in control of us.
For information regarding these and other provisions, see Description of Capital Stock.
Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the General Corporation Law of the State of Delaware, our amended and restated certificate of incorporation or our amended and restated bylaws or any action asserting a claim against us that is governed by the internal affairs doctrine. This choice of forum provision may limit a stockholders ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits.
The FFL Holders and Founder Holders will together own more than 50% of our common stock, and their interests may conflict with ours or yours in the future.
Immediately following this offering, investment funds associated with the FFL Holders and the Founder Holders will beneficially own approximately % and % of our common stock, respectively, or approximately % and %, respectively, if the underwriters exercise in full their option to purchase additional shares. As a result, the FFL Holders and the Founder Holders will collectively have the ability to elect all of the members of our board of directors and thereby control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payment of dividends, if any, on our common stock, the incurrence or modification of debt by us, certain amendments to our amended and restated certificate of incorporation and amended and restated bylaws, and the entering into of extraordinary transactions, and their interests may not in all cases be aligned with your interests. In addition, the FFL Holders together with Founder Holders may have an interest in pursuing acquisitions, divestitures and other transactions that, in their respective judgment, could enhance their investment, even though such transactions might involve risks to you. For example, the FFL Holders together with the Founder Holders could cause us to make acquisitions that increase our indebtedness or cause us to sell revenue-generating assets.
40
Prior to the completion of this offering, we, the FFL Holders and the Founder Holders expect to enter into the Amended and Restated Investor Rights Agreement. See Certain Relationships and Related-Party TransactionsAmended and Restated Investor Rights Agreement.
The FFL Holders and their affiliated funds are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.
41
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements in addition to historical information. These forward-looking statements are included throughout this prospectus, including in the sections entitled Summary, Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations and Business and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. Words such as anticipate, assume, believe, budget, continue, could, estimate, expect, future, intend, may, objective, outlook, plan, potential, predict, project, should, will and variations of these words and the negative of these or similar words or expressions generally indicate a forward-looking statement in this prospectus.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Some of these expectations may be based upon assumptions or judgments that prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our financial condition, results of operations and cash flows.
Our forward-looking statements are not guarantees of future performance, and actual events, results and outcomes may differ materially from our expectations suggested in any forward-looking statements due to a variety of factors, including, among others, those set forth in the section entitled Risk Factors. Although it is not possible to identify all of these factors, they include, among others, the following:
| the extent to which federal, state, local and foreign governmental regulation of consumer lending and related financial products and services limits or prohibits the operation of our business; |
| our failure to comply with applicable laws and regulations, and resulting fines penalties or other sanctions; |
| the impact of proposed rules and regulations on our business and results of operations; |
| future changes to regulations and the increase in local regulation of our industry; |
| the impact of the complex regulatory environment in which we operate; |
| the risk that our interpretation and application of laws and regulations related to consumer lending activities differs from the interpretations applied by federal, state, provincial and local regulatory bodies; |
| the effect of judicial decisions, agency rulemaking, or amendments to law on the legality or enforceability of our agreements and the adverse effect of current and future litigation and regulatory proceedings against us; |
| risks associated with the negative public perception of our products and services; |
| the adverse impact of potential material modifications of U.S. laws and regulations and existing trade agreements by the new U.S. presidential administration on our business, financial condition, and results of operations; |
| our ability to protect our proprietary technology and analytics or keep up with that of our competitors; |
| risks associated with disruption in the availability of our information systems; |
| risks associated with the failure of our proprietary credit and fraud scoring system to effectively price the credit risk of our prospective or existing customers; |
| risks associated with information provided by customers being incorrect or fraudulent, and causing us to misjudge a customers qualification to receive a loan; |
| risks associated with the handling of customer personal data and cyber-attacks that could result in liability or harm to our reputation; |
42
| risks associated with our level of indebtedness, and our ability to refinance our indebtedness; |
| risks associated with a lack of sufficient debt financing made to our business on acceptable terms; |
| risks associated with failure of third parties who provide us products, services or support, including our ability to maintain relationships with banks and other third-party electronic payment solutions providers; |
| our ability to maintain relationships with third-party service providers to offer CSO loans in Texas and Ohio; |
| the adverse impact of employee and third-party theft and errors as well as liability resulting from crimes at our stores; |
| the adequacy of our allowance for loan losses, accrual for third-party loan losses and estimates of losses; |
| changes in demand for our products and services; |
| risks associated with effectively managing our growth; |
| our ability to integrate acquisitions into our existing business operations; |
| the sufficiency of indemnifications associated with assumed liabilities of acquired entities to cover our exposures to litigation and settlement costs; |
| our ability to attract and retain qualified management and employees; |
| the possible impairment of goodwill; |
| the seasonality of our lending business; |
| our ability to find suitable real estate to support future new store development; |
| our ability to keep up with rapid changes in e-commerce and the uses of the Internet; |
| the fragmentation of our industry and competition from various other sources providing similar financial products, or other alternative sources of credit, to consumers; |
| risks related to the international scope of our business and operations; |
| the adverse impact of natural disasters and other business disruptions on our future revenue and financial condition; |
| risks associated with our reliance on trademark protection to distinguish our products; and |
| the risk of claims by former employers of our employees that we or our employees have wrongfully used or disclosed alleged trade secrets. |
Any one of these factors or a combination of these factors could materially affect our future results of operations and could influence whether any forward-looking statements ultimately prove to be accurate. Our forward-looking statements speak only as of the date hereof and are not guarantees of future performance. Actual results and future performance may differ materially from those suggested in any forward-looking statements. We undertake no obligation to update these statements unless we are required to do so under applicable laws.
43
We estimate that the net proceeds from the sale of the common stock that we are offering will be approximately $ million, at an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting estimated underwriting discounts and offering expenses.
A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) the net proceeds to us from this offering by $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.
We intend to use the net proceeds of this offering for general corporate purposes, including to purchase, repurchase, redeem, defease or otherwise repay portions of our outstanding indebtedness.
Pending the use of proceeds from this offering as described above, we plan to invest the net proceeds we receive in this offering in short-term and intermediate term interest-bearing obligations, investment grade investments, certificates of deposit or direct or guaranteed U.S. government obligations.
We will not receive any proceeds resulting from any sale of our common stock by the selling stockholders identified in this prospectus.
44
On May 12, 2017, we declared a dividend of $28.0 million, which was paid to our stockholders on May 15, 2017, on August 2, 2017, we declared a dividend of $8.5 million, which was paid to our stockholders on August 11, 2017 and on October 16, 2017, we declared a dividend of $5.5 million, which was paid to our stockholders on October 16, 2017. We have otherwise not paid regular or special dividends since our inception in 2013. The terms of our indebtedness limit the ability of CFTC to pay dividends to CURO Group Holdings Corp., which would be necessary for us to pay dividends on our common stock.
Any future determinations relating to our dividends and earning retention policies will be made at the discretion of our board of directors, who will review such policies from time to time in light of the Companys earnings, cash flow generation, financial position, results of operations, the terms of our indebtedness and other contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.
45
The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2017:
| on an actual basis; and |
| on a pro forma basis to give effect to the issuance and sale by us of shares of common stock in this offering and at an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus) and our receipt and application of the net proceeds therefrom as described in Use of Proceeds. |
The information below is illustrative only, and our cash and cash equivalents, additional paid-in capital, total stockholders equity and total capitalization following the completion of this offering will be adjusted based on the actual initial public offering price and other terms of the offering determined at the pricing of this offering. You should read this table together with Summary, Selected Consolidated Financial Data, Managements Discussion and Analysis of Financial Condition and Results of Operations, Underwriting and our unaudited interim and audited annual consolidated financial statements and the related notes included elsewhere in this prospectus.
As of June 30, 2017 | ||||||||
(in thousands, except share data) |
Actual |
Pro
Forma(1) |
||||||
Cash and cash equivalents |
$ | 113,780 | $ | |||||
|
|
|
|
|||||
Debt |
||||||||
Non-Recourse U.S. SPV Facility |
$ | 102,984 | $ | |||||
12.00% Senior Secured Notes due 2022 |
448,789 | |||||||
Subordinated shareholder debt |
2,373 | |||||||
|
|
|
|
|||||
Total debt |
$ | 554,146 | $ | |||||
Equity |
||||||||
Common Stock, $0.001 par value; 2,000,000 shares authorized and 1,052,632 shares issued and outstanding, actual; and shares authorized and shares issued and outstanding, pro forma(2) |
$ | 1 | $ | |||||
Dividends in excess of paid-in capital |
(35,777 | ) | ||||||
Retained earnings |
141,816 | |||||||
Accumulated other comprehensive loss |
(49,901 | ) | ||||||
|
|
|
|
|||||
Total stockholders equity |
$ | 56,139 | $ | |||||
|
|
|
|
|||||
Total capitalization |
$ | 610,285 | $ | |||||
|
|
|
|
(1) | Each $1.00 of increase (decrease) in the public offering price per share would increase (decrease) our total stockholders equity and total capitalization by $ million. |
(2) | The pro forma information regarding our common stock takes into account a for split of our common stock and the filing of our amended and restated certificate of incorporation, each to occur immediately prior to the closing of this offering. |
46
If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share and the net tangible book value per share of our common stock immediately after this offering. Net tangible book value per share is determined by dividing our total tangible assets less total liabilities by the total number of shares of common stock outstanding as of June 30, 2017.
Our net tangible book value as of June 30, 2017 was a deficit of $119.0 million, or $ per share of common stock. After giving effect to the sale by us of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and estimated offering expenses, our net tangible book value as of June 30, 2017 would have been approximately $ million, or approximately $ per share. This amount represents an immediate increase in net tangible book value of $ per share to our existing stockholders and an immediate dilution in net tangible book value of approximately $ per share to new investors purchasing shares of common stock in this offering at the assumed initial public offering price.
The following table illustrates this per share dilution:
Assumed initial public offering price per share |
$ | |||||||
Net tangible book value per share as of June 30, 2017 |
$ | |||||||
Increase in net tangible book value per share attributable to new investors in this offering |
$ | |||||||
Net tangible book value per share after this offering |
$ | |||||||
|
|
|||||||
Dilution per share to new investors |
$ | |||||||
|
|
Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease our net tangible book value after the offering by approximately $ million, or approximately $ per share, and the dilution per share to investors participating in this offering by approximately $ per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.
The following table sets forth as of June 30, 2017 the number of shares of common stock purchased from us, the total consideration paid by or received from existing stockholders and the weighted-average price per share paid by existing stockholders and by investors purchasing shares of our common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page on this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses.
Shares Purchased |
Total
Consideration |
Average
Price |
||||||||||||||||||
Number | Percent | Amount | Percent | Per Share | ||||||||||||||||
Existing stockholders |
% | $ | % | $ | ||||||||||||||||
New investors |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
100 | % | $ | 100 | % | $ | ||||||||||||||
|
|
|
|
|
|
|
|
A $1.00 increase or decrease in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease total consideration paid to us by new investors and total consideration paid to us by all stockholders by $ million, assuming the number of shares in this offering, as shown on the cover page of this prospectus, remains the same.
47
If the underwriters fully exercise their option to purchase additional shares, the percentage of shares of common stock held by existing shareholders would decrease to % of our total shares outstanding after this offering, and the number of shares held by new investors would increase to % of the total number of our shares outstanding after this offering.
The above discussion and tables are based on shares of common stock outstanding as of June 30, 2017 after giving effect to a for split of our common stock to occur immediately prior to the completion of this offering, and exclude:
| shares of our common stock issuable upon the exercise of options outstanding as of , 2017 at a weighted average price of $ per share; |
| shares of our common stock reserved, in the aggregate, for issuance pursuant to our 2017 Stock Incentive Plan and our 2010 Equity Incentive Plan as of , 2017, as well as any additional automatic increases in the number of shares of our common stock reserved for future issuance under these plans; and |
| shares of our common stock reserved for issuance pursuant to our 2017 Employee Stock Purchase Plan as of , 2017, as well as any additional automatic increases in the number of shares of our common stock reserved for future issuance under this plan. |
48
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below is our selected consolidated financial data as of and for the periods indicated. We have derived the selected consolidated financial data as of and for the years ended December 31, 2016 and 2015 from our audited consolidated financial statements and the accompanying notes thereto included elsewhere in this prospectus. We have derived the selected consolidated financial data as of and for the six month periods ended June 30, 2017 and 2016 from our unaudited consolidated financial statements that are included elsewhere in this prospectus and that, in our opinion, include all adjustments, consisting of normal, recurring adjustments, necessary for the fair presentation of such information. Our historical operating results are not necessarily indicative of results we may expect or achieve in any future period. Our results for the six months ended June 30, 2017 are not necessarily indicative of results we may achieve during a full year.
The following information is only a summary and may not be complete. Accordingly, you should read these selected consolidated financial data in conjunction with the sections entitled Use of Proceeds, Capitalization, Managements Discussion and Analysis of Financial Condition and Results of Operations and our audited and unaudited consolidated financial statements and the notes thereto contained elsewhere in this prospectus.
(in thousands, except per share data) |
Six Months Ended
June 30, (unaudited) |
Year Ended
December 31, |
||||||||||||||
2017 | 2016 | 2016 | 2015 | |||||||||||||
Consolidated Statements of Income Data: |
||||||||||||||||
Revenue |
$ | 441,524 | $ | 396,768 | $ | 828,596 | $ | 813,131 | ||||||||
Provision for losses |
127,182 | 100,278 | 258,289 | 281,210 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net revenue |
314,342 | 296,490 | 570,307 | 531,921 | ||||||||||||
Cost of providing services |
||||||||||||||||
Salaries and benefits |
52,733 | 53,086 | 104,541 | 107,059 | ||||||||||||
Occupancy |
27,606 | 27,023 | 54,509 | 53,288 | ||||||||||||
Office |
9,804 | 9,478 | 20,463 | 19,929 | ||||||||||||
Other costs of providing services |
27,963 | 26,785 | 53,617 | 47,380 | ||||||||||||
Advertising |
19,329 | 17,094 | 43,921 | 65,664 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of providing services |
137,435 | 133,466 | 277,051 | 293,320 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin |
176,907 | 163,024 | 293,256 | 238,601 | ||||||||||||
Operating (income) expense |
||||||||||||||||
Corporate and district |
69,351 | 64,756 | 125,119 | 129,046 | ||||||||||||
Interest expense |
41,850 | 32,192 | 64,334 | 65,020 | ||||||||||||
Loss (gain) on extinguishment of debt |
12,458 | | (6,991 | ) | | |||||||||||
Restructuring costs |
| 1,481 | 3,618 | 4,291 | ||||||||||||
Goodwill and intangible asset impairment charges |
| | | 2,882 | ||||||||||||
Other (income)/expense |
199 | (445 | ) | (845 | ) | 1,488 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expense |
123,858 | 97,984 | 185,235 | 202,727 | ||||||||||||
Net income before taxes |
53,049 | 65,040 | 108,021 | 35,874 | ||||||||||||
Provision for income tax expense |
20,068 | 24,958 | 42,577 | 18,105 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 32,981 | $ | 40,082 | $ | 65,444 | $ | 17,769 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per share |
$ | 31.32 | $ | 38.06 | $ | 62.15 | $ | 16.87 | ||||||||
Diluted earnings per share |
$ | 30.46 | $ | 37.32 | $ | 60.71 | $ | 16.45 | ||||||||
Non-GAAP Statement of Operations Data and Other Operating Data (unaudited): |
||||||||||||||||
Adjusted Earnings(1) |
$ | 44,976 | $ | 42,668 | $ | 66,411 | $ | 24,656 | ||||||||
EBITDA(2) |
$ | 104,229 | $ | 107,560 | $ | 191,260 | $ | 120,006 |
49
(in thousands, except per share data) |
Six Months Ended
June 30, (unaudited) |
Year Ended
December 31, |
||||||||||||||
2017 | 2016 | 2016 | 2015 | |||||||||||||
Adjusted EBITDA(3) |
$ | 121,828 | $ | 109,512 | $ | 189,361 | $ | 130,876 | ||||||||
Adjusted EBITDA Margin(4) |
27.6 | % | 27.6 | % | 22.9 | % | 16.1 | % | ||||||||
Gross Margin Percentage(5) |
40.1 | % | 41.1 | % | 35.4 | % | 29.3 | % | ||||||||
Number of stores (at period end) |
419 | 419 | 420 | 420 | ||||||||||||
Selected Balance Sheet Data (at period end) |
||||||||||||||||
Cash |
$ | 113,780 | $ | 167,795 | $ | 193,525 | $ | 100,561 | ||||||||
Gross loans receivable |
$ | 350,362 | $ | 233,152 | $ | 286,196 | $ | 252,180 | ||||||||
Less: allowance for loan losses |
(70,438 | ) | (30,559 | ) | (39,192 | ) | (32,948 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Loans receivable, net |
$ | 279,924 | $ | 202,593 | $ | 247,004 | $ | 219,232 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
$ | 735,938 | $ | 697,164 | $ | 780,798 | $ | 666,017 | ||||||||
Total liabilities (including debt) |
$ | 679,799 | $ | 672,136 | $ | 739,943 | $ | 685,399 | ||||||||
Total stockholders equity |
$ | 56,139 | $ | 25,028 | $ | 40,855 | $ | (19,382 | ) |
(1) | We define Adjusted Earnings as net income plus or minus certain non-cash or other adjusting items. We provide Adjusted Earnings in this prospectus because our management finds its useful in evaluating the performance and underlying operations of our business. We provide a detailed description of Adjusted Earnings and how we use it, including a reconciliation of Adjusted Earnings to net income, under Managements Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Non-GAAP Financial Information. |
(2) | We define EBITDA as earnings before interest, income taxes, depreciation and amortization. We provide EBITDA in this prospectus because our management finds it useful in evaluating the performance and underlying operations of our business. We provide a detailed description of EBITDA and how we use it, along with a reconciliation of EBITDA to net income, under Managements Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Non-GAAP Financial Information. |
(3) | We define Adjusted EBITDA as earnings before interest, income taxes, depreciation and amortization, plus or minus certain non-cash or other adjusting items. We provide Adjusted EBITDA in this prospectus because our management finds it useful in evaluating the performance and underlying operations of our business. We provide a detailed description of Adjusted EBITDA and how we use it, along with a reconciliation of Adjusted EBITDA to net income, under Managements Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Non-GAAP Financial Information. |
(4) | Calculated as Adjusted EBITDA as a percentage of revenue. |
(5) | Calculated as Gross Margin as a percentage of revenue. |
50
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with the Selected Consolidated Financial Data and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from managements expectations. Factors that could cause such differences are discussed in the sections entitled Special Note Regarding Forward-Looking Statements and Risk Factors. We undertake no obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. Therefore, no reader of this document should rely on these statements being current as of any time other than the date of this prospectus. See Special Note Regarding Forward Looking Statements.
Overview
We are a growth-oriented, technology-enabled, highly-diversified consumer finance company serving a wide range of underbanked consumers in the United States, Canada and the United Kingdom and are a market leader in our industry based on revenues. We believe that we have the only true omni-channel customer acquisition, onboarding and servicing platform in our industry that is integrated across store, online, mobile and contact center touchpoints. Our IT platform, which we refer to as the Curo Platform, seamlessly integrates loan underwriting, scoring, servicing, collections, regulatory compliance and reporting activities into a single, centralized system. We use advanced risk analytics powered by proprietary algorithms and over 15 years of loan performance data to efficiently and effectively score our customers loan applications. Since 2010, we have extended $13.1 billion in total credit across approximately 34.8 million total loans, and our revenue of $828.6 million in 2016 represents a 26.3% compound annual growth rate, or CAGR, over the same time period.
We operate in the United States under two principal brands, Speedy Cash and Rapid Cash, and launched our new brand Avio Credit in the United States in the second quarter of 2017. In the United Kingdom we operate online as Wage Day Advance and, prior to their closure in the third quarter of 2017, our stores were branded Speedy Cash. In Canada our stores are branded Cash Money and, beginning in 2016, we offer Installment Loans online under the brand LendDirect. As of June 30, 2017, our store network consisted of 419 locations across 14 U.S. states, seven Canadian provinces and the United Kingdom. As of June 30, 2017, we offered our online services in 25 U.S. states, five Canadian provinces, and the United Kingdom.
Company History
The CURO business was founded in 1997 to meet the growing needs of consumers looking for access to credit. The Company set out to offer a variety of convenient, easily-accessible financial and loan services and over its 20 years of operations, expanded across the United States, Canada and the United Kingdom.
CURO Financial Technologies Corp., or CFTC (then known as Speedy Cash Holdings Corp.), was incorporated in Delaware on July 16, 2008. On September 10, 2008, our founders sold or otherwise contributed all of the outstanding equity of the various operating entities that comprised the CURO business to a wholly-owned subsidiary of CFTC in connection with an investment in CFTC by Friedman Fleischer & Lowe Capital Partners II, L.P. and its affiliated funds, or FFL Partners. CURO Group Holdings Corp. (then known as Speedy Group Holdings Corp.) was incorporated in Delaware on February 7, 2013 as the parent company of CFTC. On May 11, 2016, we changed the name of Speedy Group Holdings Corp. to CURO Group Holdings Corp. We similarly changed the names of some of its subsidiaries.
In May 2011, we completed the acquisition of Cash Money Group, Inc., a Canadian entity, for approximately $104.5 million.
51
In August 2012, we completed the acquisition of The Money Store, L.P., a Texas limited partnership which operated as The Money Box ® Check Cashing for approximately $26.1 million.
In February 2013, we completed the acquisition of Wage Day Advance Limited, a United Kingdom entity, for approximately $80.9 million. We subsequently effected a corporate name change of Wage Day Advance Limited to CURO Transatlantic Limited, although we still operate online in the United Kingdom as Wage Day Advance.
In October 2015, we opened a state-of-the-art fintech office in Chicago to continue to attract and retain talented IT development and data science professionals. As of June 30, 2017, this office was staffed with 22 professionals.
In March 2016, we launched LendDirect, an online Installment Loan brand in Alberta, Canada. These loans are now offered in four provinces.
In June 2017, we launched Avio Credit, an online Installment Loan brand in the U.S. market. These loans are currently available in California, Missouri, South Carolina and Wisconsin.
Products and Services
We designed our products and customer journey to be consumer-friendly, accessible and easy to understand. Below is an outline of our loan products as of June 30, 2017.
Installment | ||||||||
Unsecured | Secured | Open-End | Single-Pay | |||||
Channel |
Online and in-store: 15
U.S. states, Canada and the United Kingdom |
Online and
in-store:
7
U.S. states |
Online: KS, TN, ID,
UT, DE and
RI.
|
Online and in-store: 12
U.S. states, Canada and the United Kingdom |
||||
Approximate Average Loan Size(1) |
$602 | $1,231 | $451 | $321 | ||||
Duration |
Up to 48 months | Up to 42 months | Revolving/Open-ended | Up to 62 days | ||||
Pricing |
14.9% average
monthly interest rate(2) |
11.3% average
monthly interest rate(2) |
Daily interest rates
ranging from 0.74% to 0.99% |
Fees ranging from $13
to $25 per $100 borrowed. |
(1) | Includes CSO loans. |
(2) | Weighted average of the contractual interest rates for the portfolio as of June 30, 2017. Excludes CSO fees. |
Unsecured Installment Loans
Unsecured Installment Loans are fixed-term, fully-amortizing loans with a fixed payment amount due each period during the term of the loan. Loans are originated and owned by us or third-party lenders pursuant to credit services organization and credit access business statutes, which we refer to as our CSO programs. For CSO programs, we arrange and guarantee the loans. Payments are due bi-weekly or monthly to match the customers pay cycle. Customers may prepay without penalty or fees. Unsecured Installment Loan terms are governed by enabling state legislation in the United States, provincial and federal legislation in Canada and national regulation in the United Kingdom. Unsecured Installment Loans comprised 48.6% and 40.0% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively. We believe that the flexible terms and lower payments associated with Installment Loans significantly expand our addressable market by allowing us to serve a broader range of customers with a variety of credit needs.
52
Secured Installment Loans
Secured Installment Loans are similar to Unsecured Installment Loans but are also secured by a vehicle title. These loans are originated and owned by us or by third-party lenders through our CSO programs. For these loans the customer provides clear title or security interest in the vehicle as collateral. The customer receives the benefit of immediate cash but retains possession of the vehicle while the loan is outstanding. The loan requires periodic payments of principal and interest with a fixed payment amount due each period during the term of the loan. Payments are due bi-weekly or monthly to match the customers pay cycle. Customers may prepay without penalty or fees. Secured Installment Loan terms are governed by enabling state legislation in the United States. Secured Installment Loans comprised 10.6% and 9.8% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Open-End Loans
Open-End Loans are a line of credit for the customer without a specified maturity date. Customers may draw against their line of credit, repay with minimum, partial or full payment and redraw as needed. We report and earn interest on the outstanding loan balances drawn by the customer against their approved credit limit. Customers may prepay without penalty or fees. Typically, customers do not draw the full amount of their credit limit. Loan terms are governed by enabling state legislation in the United States. Unsecured Open-End Loans comprised 6.7% and 7.0% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively. Secured Open-End Loans are offered as part of our product mix in states with enabling legislation and accounted for approximately 1.0% of our consolidated revenue during both the six months ended June 30, 2017 and the year ended December 31, 2016.
Single-Pay Loans
Single-Pay Loans are generally unsecured short-term, small-denomination loans whereby a customer receives cash in exchange for a post-dated personal check or a pre-authorized debit from the customers bank account. These loans are originated and owned by us or by third-party lenders through our CSO programs. We agree to defer deposit of the check or debiting of the customers bank account until the loan due date which typically falls on the customers next pay date. Single-Pay Loans are governed by enabling state legislation in the United States, federal and provincial regulations in Canada and national regulation in the United Kingdom Single-Pay Loans comprised 28.8% and 37.3% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Ancillary Products
We also provide a number of ancillary financial products including check cashing, proprietary reloadable prepaid debit cards (Opt+), money transfer services, gold buying, credit protection insurance in the Canadian market and retail installment sales. Ancillary products comprised 4.4% and 4.8% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
CSO Programs
Through our CSO programs, we act as a credit services organization/credit access business on behalf of customers in accordance with applicable state laws. We currently offer loans through CSO programs in stores and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and Secured Installment Loans with a maximum term of 180 days. In Ohio we offer an Unsecured Installment Loan product with a maximum term of 18 months. As a CSO we earn revenue by charging the customer a fee (the CSO fee) for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customers obligation to repay the
53
loan the customer receives from the third-party lender. For CSO loans, each lender is responsible for providing the criteria by which the customers application is underwritten and, if approved, determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans if they go into default.
As of June 30, 2017, the maximum amount payable under all such guarantees was $52.7 million, compared to $59.6 million at December 31, 2016. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover the amount we pay from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $15.6 million and $17.1 million at June 30, 2017 and December 31, 2016, respectively.
The majority of revenue generated through our CSO programs was for Unsecured Installment Loans, which comprised 95.9% and 91.6% of total CSO revenue for the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Total revenue generated through our CSO programs comprised 26.2% and 26.1% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Our revenue diversification, including CSO fees, by product for the periods indicated, with percentages rounded up to the nearest whole digit:
Year Ended December 31, 2016 | Six Months Ended June 30, 2017 | |||
|
|
Components of Our Results of Operations
Revenue
We offer a variety of loan products including Installment, Open-End and Single-Pay Loans. Revenue in our consolidated statements of income includes: interest income, finance charges, CSO fees, late fees and non-sufficient funds fees as permitted by applicable laws and pursuant to the agreement with the customer. Product offerings differ by jurisdiction and are governed by the laws in each separate jurisdiction.
54
Installment Loans are fully amortizing loans with a fixed payment amount due each period during the term of the loan. We record revenue from Installment Loans on a simple-interest basis. Accrued interest and fees are included in gross loans receivable in the Consolidated Balance Sheets.
Open-End Loans are a revolving line-of-credit with no defined loan term. We record revenue from Open-End Loans on a simple-interest basis. Accrued interest and fees are included in gross loans receivable in the Consolidated Balance Sheets.
Single-Pay Loans are primarily payday loans. Revenues from Single-Pay loan products are recognized each period on a constant-yield basis ratably over the term of each loan. We defer recognition of unearned fees based on the remaining term of the loan at the end of each reporting period.
We also provide a number of ancillary financial products including check cashing, proprietary reloadable prepaid debit cards (Opt+), credit protection insurance in the Canadian market, gold buying, retail installment sales and money transfer services.
Provision for Losses
We calculate provision for losses based on evaluation of the historical and expected cumulative net losses inherent in the underlying loan portfolios, by vintage, and several other quantitative and qualitative factors. We apply the resulting loss provision rate to our loan originations to determine the provision for losses. Accordingly, at the time we originate a loan, we recognize a loss on a portion of the loan balance based upon the applicable loss provision rate. We would then recognize any revenue in connection with that loan over the life of the loan, as described above. We may also record additional provision for losses for owned loans in connection with the periodic assessment of the adequacy of the Allowance for loan losses.
Q1 Loss Recognition Change
Effective January 1, 2017, we modified the timeframe in which Installment Loans are charged-off and made related refinements to our loss provisioning methodology. Prior to January 1, 2017, we deemed all loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past-due. Because of the Companys continuing shift from Single-Pay to Installment Loan products and our analysis of payment patterns on early-stage versus late-stage delinquencies, we revised our estimates and now consider Installment Loans uncollectible when the loan has been contractually past-due for 90 consecutive days. Consequently, past-due Installment Loans and related accrued interest remain in loans receivable, with disclosure of past-due balances, for 90 days before being charged off against the allowance for loan losses. All recoveries on charged-off loans are credited to the allowance for loan losses. We evaluate the adequacy of the allowance for loan losses compared to the related gross loans receivable balances that include accrued interest.
In the income statement, the provision for losses for Installment Loans is based on assessment of the cumulative net losses inherent in the underlying loan portfolios, by vintage, and several other quantitative and qualitative factors. The resulting loss provision rate is applied to loan originations to determine the provision for losses. In addition to improving estimated collectability and loss recognition for Installment Loans, we also believe these refinements result in a loss provisioning methodology that is better aligned with industry comparisons and practices.
The aforementioned change was treated as a change in accounting estimate for accounting purposes and applied prospectively beginning January 1, 2017, which we refer to throughout this prospectus as the Q1 Loss Recognition Change.
The change affects comparability to prior periods as follows:
| Gross Combined Loans Receivablebalances in 2017 include Installment Loans that are up to 90 days past-due with related accrued interest, while balances in prior periods do not include these loans. |
55
| Revenuesfor the six months ended June 30, 2017, revenues include accrued interest on past-due loan balances, while revenues in prior periods do not include these amounts. |
| Provision for Lossesprospectively, loans charged off on day 91 include accrued interest. Thus, provision rates in 2017 have been adjusted to account for both principal and accrued interest. Additionally, because loss provision rates are applied to originations while charge-offs and recoveries are applied to the allowance for loan losses, provisioning is less affected by seasonality for the first quarter income tax refunds in the United States, which increases recoveries of delinquent balances. |
For a full discussion of the change, refer to Note 1, Summary of Significant Accounting Policies and Nature of Operations in our Notes to Consolidated Interim Financial Statements included elsewhere in this prospectus.
Cost of Providing Services
Salaries and Benefits
Salaries and benefits include personnel-related costs for our store operations, including salaries, benefits and bonuses and are driven by the number of employees.
Occupancy
Occupancy and equipment includes rent expense for our leased facilities, as well as depreciation, maintenance, insurance, and utility expense.
Office
Office includes expenses related to software, computer hardware, bank service charges, credit scoring charges and other office supplies.
Other Costs of Providing Services
Our other costs of providing services includes expenses related to operations such as processing fees, collections expense, security expense, taxes, repairs and professional fees.
Advertising
Advertising includes costs associated with attracting, retaining and/or reactivating customers as well as creating awareness for the brands we promote. Creative, web and print design capabilities exist within the Company and are rarely outsourced. The use of third-party agencies is limited to mass-media production and placement. Advertising expense also includes costs for all marketing activities including paid search, advertising on social networking sites, affiliate programs, direct response television, radio air time and direct mail.
All advertising costs are expensed as incurred. Cost-per-funded loan, or CPF, is a key metric for measuring the effectiveness and efficiency of our advertising spend. CPF is the amount of direct advertising and promotional costs during a period divided by the number of new customer loans originated during the period. New loans to existing or returning customers are not included in the denominator of CPF because we believe little or no incremental cost is incurred to make loans to existing customers or returning customers
Operating Expense
Corporate, District and Other Expenses
Corporate, district and other expenses include costs such as salaries and benefits associated with our corporate and district-level employees, as well as other corporate-related costs such as rent, insurance, professional fees, utilities, travel and entertainment expenses and depreciation expense.
56
Interest Expense
Interest expense primarily includes interest related to our Notes and our SPV Facility.
Other Expenses
Other (income) and expense includes the foreign currency impact to our intercompany balances, gains or losses on foreign currency exchanges and disposals of fixed assets and other miscellaneous income and expense amounts.
Discussion of Revenue by Product and Segment and Related Loan Portfolio Performance
Revenue by Product
Unsecured and Secured Installment revenue includes interest income, CSO fees, and non-sufficient-funds or returned-items fees on late or defaulted payments on past-due loans (to which we refer collectively in this prospectus as late fees). Late fees comprise less than one-half of one percent of Installment revenues.
Open-End revenues include interest income on outstanding revolving balances and other usage or maintenance fees as permitted by underlying statutes.
Single-Pay revenues represent deferred presentment or other fees as defined by the underlying state, provincial or national regulations.
The following table summarizes revenue by product, including CSO fees, for the periods indicated:
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | |||||||||||||||||||||||||||||||
(in thousands) |
United
States |
Canada |
United
Kingdom |
Total |
United
States |
Canada |
United
Kingdom |
Total | ||||||||||||||||||||||||
Unsecured Installment |
$ | 195,651 | $ | 7,643 | $ | 11,286 | $ | 214,580 | $ | 147,801 | $ | 204 | $ | 3,017 | $ | 151,022 | ||||||||||||||||
Secured Installment |
46,842 | | | 46,842 | 40,426 | | | 40,426 | ||||||||||||||||||||||||
Open-End |
33,712 | | | 33,712 | 33,211 | | 2 | 33,213 | ||||||||||||||||||||||||
Single-Pay |
51,208 | 69,126 | 6,697 | 127,031 | 55,058 | 84,826 | 13,739 | 153,623 | ||||||||||||||||||||||||
Ancillary |
10,673 | 8,392 | 294 | 19,359 | 11,931 | 6,191 | 362 | 18,484 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total revenue |
$ | 338,086 | $ | 85,161 | $ | 18,277 | $ | 441,524 | $ | 288,427 | $ | 91,221 | $ | 17,120 | $ | 396,768 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
During the six months ended June 30, 2017, total lending revenue (excluding revenues from ancillary products) grew $43.8 million, or 11.6%, to $422.2 million, compared to the prior year period, predominantly driven by growth in Secured and Unsecured Installment loan revenue. Unsecured Installment Loan revenues rose 42.1% on related average gross combined loan receivables (excluding past due loans) growth of 43.0%. Secured Installment revenues rose $6.4 million, or 15.9%, on related gross combined loan receivables (excluding past due loans) growth of 21.0%. Single-Pay revenues were affected primarily by regulatory changes in Canada (rate changes in Ontario and British Columbia and product changes in Alberta), but U.S. and U.K. Single-Pay revenues also decreased 7.0% and 51.3%, respectively, because of continued mix shift from Single-Pay to other loan products. Ancillary revenues increased 4.7% versus the same period a year ago primarily due to insurance revenue related to our Canadian installment product, partially offset by a decrease in check cashing fees. U.K. revenue comparisons are also affected meaningfully by a weaker pound. On a constant currency basis revenue rose $3.7 million, or 21.5%.
Year Ended December 31, 2016 | Year Ended December 31, 2015 | |||||||||||||||||||||||||||||||
(in thousands) |
United
States |
Canada |
United
Kingdom |
Total |
United
States |
Canada |
United
Kingdom |
Total | ||||||||||||||||||||||||
Unsecured Installment |
$ | 318,460 | $ | 1,143 | $ | 11,110 | $ | 330,713 | $ | 295,007 | $ | 322 | $ | 19,054 | $ | 314,383 | ||||||||||||||||
Secured Installment |
81,453 | | | 81,453 | 86,307 | | 18 | 86,325 | ||||||||||||||||||||||||
Open-End |
66,945 | | 3 | 66,948 | 51,304 | | 7 | 51,311 | ||||||||||||||||||||||||
Single-Pay |
117,609 | 173,779 | 21,888 | 313,276 | 116,714 | 170,852 | 34,031 | 321,597 | ||||||||||||||||||||||||
Ancillary |
22,332 | 13,155 | 719 | 36,206 | 24,331 | 13,686 | 1,498 | 39,515 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total revenue |
$ | 606,799 | $ | 188,077 | $ | 33,720 | $ | 828,596 | $ | 573,663 | $ | 184,860 | $ | 54,608 | $ | 813,131 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total lending revenue (excluding revenues from ancillary products) increased $18.8 million, or 2.4%, compared to the prior year, driven by growth in Installment and Open-End Loans. Unsecured Installment revenues rose 5.2% on related gross combined loan receivables growth of 29.0%, led by 7.9% growth in the United States (primarily in Texas, California and Missouri). U.K. Unsecured Installment revenues declined 41.7% because we discontinued a longer-term Installment Loan product in late 2015 due to regulatory changes. Secured Installment revenues decreased 5.6% mostly driven by competitive pressures in Nevada and Arizona. Open-End revenues grew 30.5% year-over-year primarily because in Kansas and Tennessee we replaced Single-pay products with Open-End products. Single-Pay revenues declined 2.6%. In the United States, the decline was primarily driven by the aforementioned changes in Kansas and in Tennessee. Ancillary revenues were down 8.4% year-over-year primarily because secular declines in check usage continue to affect check-cashing revenues and we experienced tighter margins on foreign currency exchange. U.K. revenue comparisons are also affected meaningfully by a weaker pound. On a constant-currency basis, U.K. revenue declined $16.5 million, or 30.2%, compared to the prior year.
Loan Volume and Portfolio Performance Analysis
We consider first-pay defaults (the number of customers that default on their first payment, or FPD) to be an early leading indicator of customer credit performance. FPD levels are dependent upon underwriting and scoring effectiveness, strategic or tactical management decisions to tighten or expand customer credit availability within scoring bands, seasonality, product terms and structure, origination channel and geography. Following is a recap by channel of origination for the United States and Canada:
|
U.S. Online FPD has ranged from 20.1% in the second quarter of 2015 to 13.2% in the first quarter of 2017. FPD for the six months ended June 30, 2017, 2016 and 2015 has averaged 14.2%, 16.6% and 18.0%, respectively. During 2015, FPD was affected by elevated levels of new customer investment. New customers have higher FPD rates than returning or existing customers. In periods such as the second and third quarters of 2015 when we increased new customer acquisition spend to take advantage of online market disruptions, the percentage of new-customer volume to total-customer volume increases as does FPD. U.S. Online FPD rates were lower in 2016 because the percentage of new customers to total volume decreased year-over-year and the data from the high volume of new customers acquired in 2015 allowed |
58
us to improve our scoring models. Through the six months ended June 30, 2017, we have increased customer acquisition spend versus the same periods in 2016 and have acquired more online customers period-over-period, but FPD has improved primarily because of improved underwriting and scoring. |
| U.S. Store FPD averaged 13.4%, 14.5% and 15.2% for the six months ended June 30, 2017, 2016, 2015, respectively. New customers as a percentage of total customers has been more stable than U.S. online mix so the improving trends are primarily due to improved underwriting and scoring and product and geographical mix shifts. |
| For Canada, online volume is relatively low and FPD rates are sensitive to product changes and the launch of our LendDirect online Installment product in early-2016. Canadian online FPD rates have trended from an average of 14.4% for the six months ended June 30, 2015 to 15.1% for the six months ended June 30, 2016 to 12.9% for the six months ended June 30, 2017. |
| Canada Store FPD has remained relatively stable, averaging 7.9%, 8.8% and 9.0%, in the six months ended June 30, 2017, 2016 and 2015 respectively. Other than Alberta, Canada, store volume is almost entirely Single-Pay Loans for which FPD rates are very stable. |
Cost-per-funded loan, or CPF, is dependent primarily upon marketing channel, seasonality, strategic and tactical objectives for targeted vintage performance, online versus store customer acquisition mix, underwriting and scoring effectiveness and application-to-funded loan conversion rates. Following is a recap of CPF (rounded to the nearest tenth) by country:
| U.S. CPF ranged from $82.40 in the third quarter of 2015 to $33.50 in the first quarter of 2016. CPF for the six months ended June 30, 2017, 2016 and 2015 has averaged $55.60, $44.10 and $66.20, respectively. CPF for 2015 was affected by the aforementioned high levels of new customer investment, primarily in the online channel. CPF tends to be higher in the online channel because of the relative cost of the marketing channels and lower application-to-funded conversion rates. CPF for 2016 was lower than 2015 because of more stable mix between online and store customer acquisition and improving scoring that resulted in better relative approval rates. CPF in the six months ended June 30, 2017 has been slightly higher to the same period in 2016 because a higher percentage of new customer volume is online. |
| Canada CPF ranged from $87.90 in the second quarter of 2015 to $52.80 in the first quarter of 2016. CPF for the six months ended June 30, 2017, 2016 and 2015 has averaged $65.20, $61.40 and $81.40, respectively. Canada CPF change is due primarily to the same reasons as the U.S. trends described above, but historically has been less sensitive to online versus store mix because online has been a relatively low percentage of total new customer acquisition. |
| U.K. CPF ranged from $125.00 in the third quarter of 2015 to $71.40 in the first quarter of 2017. U.K. CPF for the six months ended June 30, 2017, 2016 and 2015 has averaged $72.90, $98.30 and $101.40, respectively. U.K. CPF is affected primarily by reformulation of all of our U.K. loan products after 2014 regulatory changes, changes in product terms and mix and rebuilding of the overall executive and marketing and analytics leadership teams and organization. |
We currently have relationships with four unaffliated third-party lenders. We periodically evaluate the competitive terms of our unaffiliated third-party lender contracts and such evaluation may result transfer of volume and loan balances between lenders. The process does not require significant effort or resources outside the normal course of business and we believe the incremental cost of changing or acquiring new unaffiliated third-party lender relationships to be immaterial.
59
Unsecured Installment Loans
Unsecured Installment revenue and gross combined loans receivable increased from the prior year quarter due to growth in the United States, primarily in Texas (CSO), California and Ohio (CSO); growth in Canada, primarily in Alberta; and growth in the United Kingdom. Gross combined Unsecured Installment Loan balances (excluding past due loans) grew $67.7 million, or 64.5%, compared to June 30, 2016, on $72.1 million (62.2%) and $126.9 million (59.1%) higher originations during the three and six months, respectively.
2017 | 2016 | |||||||||||||||||||
(dollars in thousands, except average loan amount, unaudited) |
Second
Quarter |
First
Quarter |
Fourth
Quarter |
Third
Quarter |
2nd
Quarter |
|||||||||||||||
Unsecured Installment loans: |
||||||||||||||||||||
Revenue-Company Owned |
$ | 52,550 | $ | 51,206 | $ | 39,080 | $ | 34,057 | $ | 29,298 | ||||||||||
Provision for losses - Company Owned |
17,845 | 19,309 | 24,557 | 12,523 | 8,878 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net revenue - Company Owned |
$ | 34,705 | $ | 31,897 | $ | 14,523 | $ | 21,534 | $ | 20,420 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net charge-offs-Company Owned |
$ | 18,858 | $ | (4,918 | ) | $ | 18,836 | $ | 10,741 | $ | 8,548 | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Revenue-Guaranteed by the Company |
$ | 52,599 | $ | 58,225 | $ | 55,234 | $ | 51,320 | $ | 42,890 | ||||||||||
Provision for losses - Guaranteed by the Company |
23,575 | 19,940 | 22,364 | 26,626 | 18,440 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net revenue - Guaranteed by the Company |
$ | 29,024 | $ | 38,285 | $ | 32,870 | $ | 24,694 | $ | 24,450 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net charge-offs-Guaranteed by the Company |
$ | 27,309 | $ | 17,088 | $ | 21,144 | $ | 25,103 | $ | 17,695 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unsecured Installment gross combined loans receivable: |
||||||||||||||||||||
Company owned |
$ | 156,075 | $ | 131,386 | $ | 102,090 | $ | 65,746 | $ | 58,356 | ||||||||||
Guaranteed by the Company(1) |
58,289 | 53,978 | 62,360 | 52,079 | 46,567 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross combined Unsecured Installment loans receivable(1) |
$ | 214,364 | $ | 185,364 | $ | 164,450 | $ | 117,825 | $ | 104,923 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Unsecured Installment Allowance for loan losses(2) |
$ | 41,406 | $ | 42,040 | $ | 17,775 | $ | 12,122 | $ | 10,294 | ||||||||||
Unsecured Installment CSO guarantee liability(2) |
$ | 14,748 | $ | 18,482 | $ | 15,630 | $ | 14,410 | $ | 12,887 | ||||||||||
Unsecured Installment Allowance for loan losses as a percentage of Unsecured Installment gross loans receivable |
26.5 | % | 32.0 | % | 17.4 | % | 18.4 | % | 17.6 | % | ||||||||||
Unsecured Installment CSO guarantee liability as a percentage of Unsecured Installment gross loans guaranteed by the Company |
25.3 | % | 34.2 | % | 25.1 | % | 27.7 | % | 27.7 | % | ||||||||||
Unsecured Installment past-due balances: |
||||||||||||||||||||
Unsecured Installment gross loans receivable(3) |
$ | 33,534 | $ | 28,913 | ||||||||||||||||
Unsecured Installment gross loans guaranteed by the Company(3) |
$ | 8,204 | $ | 11,196 | ||||||||||||||||
Past-due Unsecured Installment gross loans receivablepercentage(1)(3) |
21.5 | % | 22.0 | % | ||||||||||||||||
Past-due Unsecured Installment gross loans guaranteed by the Companypercentage(1)(3) |
14.1 | % | 20.7 | % | ||||||||||||||||
Unsecured Installment other information: |
||||||||||||||||||||
Originations-Company owned(4) |
$ | 119,636 | $ | 98,691 | $ | 111,412 | $ | 71,801 | $ | 60,506 | ||||||||||
Average loan amount-Company owned |
$ | 697 | $ | 687 | $ | 646 | $ | 512 | $ | 512 | ||||||||||
Originations-Guaranteed by the Company(4) |
$ | 68,338 | $ | 55,112 | $ | 71,858 | $ | 63,472 | $ | 55,405 | ||||||||||
Average loan amount-Guaranteed by the Company |
$ | 485 | $ | 482 | $ | 478 | $ | 463 | $ | 448 |
60
2017 | 2016 | |||||||||||||||||||
(dollars in thousands, except average loan amount, unaudited) |
Second
Quarter |
First
Quarter |
Fourth
Quarter |
Third
Quarter |
2nd
Quarter |
|||||||||||||||
Unsecured Installment ratios: |
||||||||||||||||||||
Provision as a percentage of originations-Company Owned |
14.9 | % | 19.6 | % | 22.0 | % | 17.4 | % | 14.7 | % | ||||||||||
Provision as a percentage of gross loans receivable-Company Owned |
11.4 | % | 14.7 | % | 24.1 | % | 19.0 | % | 15.2 | % | ||||||||||
Provision as a percentage of originations-Guaranteed by the Company |
34.5 | % | 36.2 | % | 31.1 | % | 41.9 | % | 33.3 | % | ||||||||||
Provision as a percentage of gross loans receivable-Guaranteed by the Company |
40.4 | % | 36.9 | % | 35.9 | % | 51.1 | % | 39.6 | % |
(1) | Non-GAAP measure. |
(2) | Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Consolidated Balance Sheets. |
(3) | As part of the Q1 Loan Loss Recognition Change past-due receivables remain on our balance sheet until charged off. In all prior periods loans were written-off when a customer missed a scheduled payment. |
(4) | We have revised previously-reported origination statistics to conform to current year methodology. |
61
Secured Installment Loans
Secured Installment Loan revenue and gross combined loans receivable increased from the prior year quarter due primarily to growth in California and Arizona. Gross combined Secured Installment Loan balances (excluding past due loans) grew $11.7 million, or 21.0%, compared to June 30, 2016, driven by $14.6 million (47.2%) higher originations during the second quarter of 2017 as compared to the second quarter of 2016. The provision for losses was flat with the prior year quarter.
2017 | 2016 | |||||||||||||||||||
(dollars in thousands, except average loan amount, unaudited) |
Second
Quarter |
First
Quarter |
Fourth
Quarter |
Third
Quarter |
Second
Quarter |
|||||||||||||||
Secured Installment Loans: |
||||||||||||||||||||
Revenue |
$ | 23,173 | $ | 23,669 | $ | 21,107 | $ | 19,920 | $ | 19,003 | ||||||||||
Provision for losses |
4,955 | 7,436 | 7,159 | 6,897 | 4,916 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net revenue |
$ | 18,218 | $ | 16,233 | $ | 13,948 | $ | 13,023 | $ | 14,087 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net charge-offs |
$ | 6,481 | $ | (2,235 | ) | $ | 6,588 | $ | 5,503 | $ | 5,043 | |||||||||
Secured Installment gross combined loan balances: |
||||||||||||||||||||
Company owned |
$ | 76,286 | $ | 67,455 | $ | 63,157 | $ | 56,305 | $ | 51,743 | ||||||||||
Guaranteed by the Company(1)(2) |
3,791 | 3,758 | 4,581 | 4,259 | 3,986 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Secured Installment gross combined loans receivable(1)(2) |
$ | 80,077 | $ | 71,213 | $ | 67,738 | $ | 60,564 | $ | 55,729 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Secured Installment Allowance for loan losses(3)(4) |
$ | 19,196 | $ | 20,270 | $ | 10,737 | $ | 10,135 | $ | 8,817 | ||||||||||
Secured Installment CSO guarantee liability(3)(4) |
$ | 834 | $ | 1,287 | $ | 1,148 | $ | 1,179 | $ | 1,103 | ||||||||||
Secured Installment Allowance for loan losses as a percentage of Secured Installment gross loans receivable |
25.2 | % | 30.0 | % | 17.0 | % | 18.0 | % | 17.0 | % | ||||||||||
Secured Installment CSO guarantee liability as a percentage of Secured Installment gross loans guaranteed by the Company |
22.0 | % | 34.2 | % | 25.1 | % | 27.7 | % | 27.7 | % | ||||||||||
Secured Installment past-due balances: |
||||||||||||||||||||
Secured Installment past-due gross loans receivable(4) |
$ | 12,091 | $ | 9,539 | | | | |||||||||||||
Secured Installment past-due gross loans receivable guaranteed by the Company(4) |
$ | 539 | $ | 647 | | | | |||||||||||||
Past-due gross Secured Installment gross loans receivablepercentage(2)(4) |
15.8 | % | 14.1 | % | | | | |||||||||||||
Past-due gross Secured Installment gross loans receivable guaranteed by the Companypercentage(2)(4) |
14.2 | % | 17.2 | % | | | | |||||||||||||
Secured Installment other information: |
||||||||||||||||||||
Originations(1)(5) |
$ | 45,596 | $ | 37,641 | $ | 43,803 | $ | 37,266 | $ | 30,981 | ||||||||||
Average loan amount(1)(5) |
$ | 1,231 | $ | 1,326 | $ | 1,197 | $ | 1,070 | $ | 1,006 | ||||||||||
Secured Installment ratios: |
||||||||||||||||||||
Provision as a percentage of originations |
10.9 | % | 19.8 | % | 16.3 | % | 18.5 | % | 15.9 | % | ||||||||||
Provision as a percentage of gross combined loans receivable |
6.2 | % | 10.4 | % | 10.6 | % | 11.4 | % | 8.8 | % |
(1) | Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements. |
(2) | Non-GAAP measure. |
(3) | Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability on our Consolidated Balance Sheets. |
62
(4) | As part of the Q1 Loan Loss Recognition Change past-due receivables remain on our balance sheet until charged off. In all prior periods loans were written-off when a customer missed a scheduled payment. |
(5) | We have revised previously-reported origination statistics to conform to current year methodology. |
Open-End Loans
Open-End revenue and loans receivable remained flat compared to the prior year quarter.
Net revenue and loss rates improved compared to the second quarter of 2016. Net revenue was lower but loss rates were higher sequentially from the first quarter of 2017 primarily due to seasonality in the first quarter.
2017 | 2016 | |||||||||||||||||||
(dollars in thousands, except average loan amount, unaudited) |
Second
Quarter |
First
Quarter |
Fourth
Quarter |
Third
Quarter |
Second
Quarter |
|||||||||||||||
Open-End Loans: |
||||||||||||||||||||
Revenue |
$ | 15,805 | $ | 17,907 | $ | 17,085 | $ | 16,652 | $ | 15,817 | ||||||||||
Provision for losses |
4,298 | 3,265 | 6,283 | 7,295 | 5,736 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net revenue |
$ | 11,507 | $ | 14,642 | $ | 10,802 | $ | 9,357 | $ | 10,081 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net charge-offs |
$ | 4,343 | $ | 3,876 | $ | 6,085 | $ | 7,133 | $ | 5,438 | ||||||||||
Open-End gross combined loan balances: |
||||||||||||||||||||
Company owned |
$ | 26,771 | $ | 25,626 | $ | 30,462 | $ | 27,678 | $ | 26,981 | ||||||||||
Allowance for loan losses |
$ | 4,523 | $ | 4,572 | $ | 5,179 | $ | 4,981 | $ | 4,819 | ||||||||||
Originations(1) |
$ | 6,646 | $ | 5,463 | $ | 9,880 | $ | 8,621 | $ | 7,814 | ||||||||||
Average loan amount(1) |
$ | 451 | $ | 454 | $ | 459 | $ | 448 | $ | 453 | ||||||||||
Open-End Allowance for loan losses as a percentage of Open-End gross loans receivable |
16.9 | % | 17.8 | % | 17.0 | % | 18.0 | % | 17.9 | % | ||||||||||
Ratios: |
||||||||||||||||||||
Provision as a percentage of originations |
64.7 | % | 59.8 | % | 63.6 | % | 84.6 | % | 73.4 | % | ||||||||||
Provision as a percentage of gross combined loans receivable |
16.1 | % | 12.7 | % | 20.6 | % | 26.4 | % | 21.3 | % |
(1) | We have revised previously-reported origination statistics to conform to current year methodology. |
63
Single-Pay
Single-Pay revenue, provision and combined loans receivable during the three and six months ended June 30, 2017 were affected by regulatory changes in Canada (rate changes in Ontario and British Columbia and product shift from Single-Pay to Installment in Alberta). Single-Pay revenue in the United States also declined compared to the prior year due to the continued shift toward Installment and Open-End products. The improvement in the provision for losses in the second quarter of 2017 as compared to the second quarter of 2016 was primarily due to a lower proportion of Single-Pay Loans in the United Kingdom where loan loss rates are higher than in the United States and Canada.
2017 | 2016 | |||||||||||||||||||
(dollars in thousands, unaudited) |
Second
Quarter |
First
Quarter |
Fourth
Quarter |
Third
Quarter |
Second
Quarter |
|||||||||||||||
Single-Pay Loans: |
||||||||||||||||||||
Revenue |
$ | 63,241 | $ | 63,790 | $ | 77,617 | $ | 82,020 | $ | 78,237 | ||||||||||
Provision for losses |
14,289 | 11,399 | 19,655 | 23,113 | 19,560 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net revenue |
$ | 48,952 | $ | 52,391 | $ | 57,962 | $ | 58,907 | $ | 58,677 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net charge-offs |
$ | 13,849 | $ | 12,499 | $ | 20,468 | $ | 22,914 | $ | 19,917 | ||||||||||
Single-Pay gross combined loan balances: |
||||||||||||||||||||
Company owned |
$ | 91,230 | $ | 80,375 | $ | 90,487 | $ | 94,873 | $ | 96,072 | ||||||||||
Guaranteed by the Company (1)(2) |
| 48 | 1,092 | 2,326 | 2,027 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gross combined Single-Pay Loans receivable(1)(2) |
$ | 91,230 | $ | 80,423 | $ | 91,579 | $ | 97,199 | $ | 98,099 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Allowance for loan losses(3) |
$ | 5,313 | $ | 4,720 | $ | 5,501 | $ | 6,064 | $ | 6,629 | ||||||||||
CSO guarantee liability(3) |
| 16 | 274 | 644 | 561 | |||||||||||||||
Single-Pay Allowance for loan losses as a percentage of Single-pay gross loans receivable |
5.8 | % | 5.9 | % | 6.1 | % | 6.4 | % | 6.9 | % | ||||||||||
Single-Pay CSO guarantee liability as a percentage of Single-Pay gross loans guaranteed by the Company |
| 33.3 | % | 25.1 | % | 27.7 | % | 27.7 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Includes loans originated by third-party lenders through CSO programs, which are not included in our consolidated financial statements. |
(2) | Non-GAAP measure. |
(3) | Allowance for loan losses is reported as a contra-asset reducing gross loans receivable while the CSO guarantee liability is reported as a liability in our Consolidated Balance Sheets. |
Supplemental Non-GAAP Financial Information
Non-GAAP Financial Measures
In addition to the financial information prepared in conformity with U.S. GAAP, we provide certain non-GAAP financial measures as defined under SEC rules, including:
| EBITDA (earnings before interest, income taxes, depreciation and amortization); |
| Adjusted EBITDA (EBITDA plus or minus certain non-cash and other adjusting items); |
| Adjusted Earnings and Adjusted Earnings Per Share, or the Adjusted Earnings Measures (net income plus or minus gain (loss) on extinguishment of debt, restructuring and other costs, goodwill and intangible asset impairments, transaction-related costs, share-based compensation, intangible asset amortization and cumulative tax effect of adjustments, on a total and per share basis); and |
| Gross Combined Loans Receivable (includes loans originated by third-party lenders through CSO programs which are not included in our consolidated financial statements). |
We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. We believe that these non-GAAP financial measures reflect
64
an additional way of viewing aspects of our business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting our business.
We believe that investors regularly rely on non-GAAP financial measures, such as the Adjusted Earnings Measures, to assess operating performance and that such measures may highlight trends in our business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, we believe that the adjustments shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items. In addition, we believe that EBITDA, Adjusted EBITDA and Adjusted Earnings are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in our industry, many of which present EBITDA, Adjusted EBITDA and/or Adjusted Earnings when reporting their results.
We provide non-GAAP financial information for informational purposes and to enhance understanding of our GAAP consolidated financial statements. EBITDA, Adjusted EBITDA, Adjusted Earnings and Gross Combined Loans Receivable should not be considered as alternatives to income from continuing operations or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with U.S. GAAP. Rather, these measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. Readers should consider the information in addition to, but not instead of or superior to, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.
Description and Reconciliations of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA and the Adjusted Earnings Measures
EBITDA, Adjusted EBITDA and the Adjusted Earnings Measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our income or cash flows as reported under U.S. GAAP. Some of these limitations are:
| they do not include our cash expenditures or future requirements for capital expenditures or contractual commitments; |
| they do not include changes in, or cash requirements for our working capital needs; |
| they do not include the interest expense, or the cash requirements necessary to service interest or principal payments on our debt; |
| depreciation and amortization are non-cash expense items reported in our statements of cash flows; and |
| other companies in our industry may calculate these measures differently, limiting their usefulness as comparative measures. |
We evaluate our stores based on revenue per store, net charge-offs at each store and EBITDA per store, with consideration given to the length of time a store has been open and its geographic location. We monitor newer stores for their progress to profitability and their rate of revenue growth.
We believe EBITDA and Adjusted EBITDA are used by investors to analyze operating performance and evaluate our ability to incur and service debt and our capacity for making capital expenditures. Adjusted EBITDA is also useful to investors to help assess our estimated enterprise value. The computation of Adjusted EBITDA as presented below may differ from the computation of similarly-titled measures provided by other companies.
65
The following table sets forth a reconciliation of our net income to EBITDA and EBITDA to Adjusted EBITDA for the periods indicated:
Six Months Ended
June 30, (unaudited) |
Year Ended
December 31, |
|||||||||||||||
(dollars in thousands) |
2017 | 2016 | 2016 | 2015 | ||||||||||||
Net income |
$ | 32,981 | $ | 40,082 | $ | 65,444 | $ | 17,769 | ||||||||
Provision for income taxes |
20,068 | 24,958 | 42,577 | 18,105 | ||||||||||||
Interest expense |
41,850 | 32,192 | 64,334 | 65,020 | ||||||||||||
Depreciation and amortization |
9,330 | 10,328 | 18,905 | 19,112 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
EBITDA |
104,229 | 107,560 | 191,260 | 120,006 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
(Gain) loss on extinguishment of debt(1) |
12,458 | | (6,991 | ) | | |||||||||||
Restructuring and other costs(2) |
| 1,481 | 3,618 | 4,291 | ||||||||||||
Legal settlement cost(3) |
1,950 | | | | ||||||||||||
Goodwill and intangible asset impairment(4) |
| | | 2,882 | ||||||||||||
Other adjustments(5) |
(515 | ) | (48 | ) | (3 | ) | 1,602 | |||||||||
Share-based cash and non-cash compensation(6) |
1,306 | 519 | 1,148 | 1,271 | ||||||||||||
Transaction-related costs(7) |
2,400 | | 329 | 824 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | 121,828 | $ | 109,512 | $ | 189,361 | $ | 130,876 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA Margin |
27.6 | % | 27.6 | % | 22.9 | % | 16.1 | % |
(1) | For the six months ended June 30, 2017, the $12.5 million loss from the extinguishment of debt was due to the redemption of CURO Intermediates 10.75% Senior Secured Notes due 2018 and our 12.00% Senior Cash Pay Notes due 2017. For year ended December 31, 2016, the $7.0 million gain resulted from the Companys purchase of CURO Intermediates 10.75% Senior Secured Notes in September 2016. |
(2) | Restructuring costs of $4.3 million for the year ended December 31, 2015 represented the expected costs to be incurred related to the closure of ten underperforming stores in the United Kingdom, restructuring costs of $3.6 million for the year ended December 31, 2016 represented the elimination of certain corporate positions in our Canadian headquarters and the costs incurred related to the closure of seven underperforming stores in Texas. Restructuring costs of $1.5 million for the six months ended June 30, 2016 primarily represented the expected costs to be incurred related to the closure of six underperforming stores in Texas. |
(3) | Legal settlement cost relates to the accrual for the settlement of Harrison, et al v. Principal Investments, Inc. et al . See litigation discussion in Note 18 Litigation in the Notes to our Interim Consolidated Financial Statements for further detail. |
(4) | Goodwill and intangible asset impairment charges in 2015 include a non-cash goodwill impairment charge of $0.9 million, and non-cash impairment charges related to the Wage Day trade name intangible asset and customer relationship intangible asset of $1.8 million and $0.2 million, respectively. |
(5) | Other adjustments include deferred rent and the intercompany foreign exchange impact. Deferred rent represents the non-cash component of rent expense. Rent expense is recognized ratably on a straight-line basis over the lease term. |
(6) | The Company approved the adoption of a share-based compensation plan during 2010 for key members of its senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. During the second quarter of 2017, option holders were paid a bonus in conjunction with the dividend paid during the quarter. The expense recognized during the quarter related to the payment of the dividend on vested options. The remaining bonus will be paid over the vesting period of the unvested stock options. |
(7) | Transaction-related costs include professional fees paid in connection with potential transactions. |
In addition to reporting financial results in accordance with GAAP, we have provided the Adjusted Earnings Measures. We believe that the presentation of these measures provides investors with greater transparency and
66
facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of our financial performance, competitive position and prospects for the future.
The following table provides reconciliations between net income and diluted earnings per share calculated in accordance with GAAP to the Adjusted Earnings Measure, which are shown net of tax (in thousands, except per share data):
Six Months Ended
June 30, (unaudited) |
Year Ended
December 31, |
|||||||||||||||
(in thousands, except per share data) |
2017 | 2016 | 2016 | 2015 | ||||||||||||
Net income |
$ | 32,981 | $ | 40,082 | $ | 65,444 | $ | 17,769 | ||||||||
Adjustments: |
||||||||||||||||
Loss (gain) on extinguishment of debt(1) |
12,458 | | (6,991 | ) | | |||||||||||
Restructuring costs(2) |
| 1,481 | 3,618 | 4,291 | ||||||||||||
Legal settlement cost(3) |
1,950 | | | | ||||||||||||
Goodwill and intangible asset impairment(4) |
| | | 2,882 | ||||||||||||
Transaction-related costs(5) |
2,400 | | 329 | 824 | ||||||||||||
Share-based cash and non-cash compensation(6) |
1,306 | 519 | 1,148 | 1,271 | ||||||||||||
Intangible asset amortization |
1,173 | 2,198 | 3,492 | 4,645 | ||||||||||||
Cumulative tax effect of adjustments |
(7,292 | ) | (1,612 | ) | (629 | ) | (7,026 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted Earnings |
$ | 44,976 | $ | 42,668 | $ | 66,411 | $ | 24,656 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share |
$ | 30.45 | $ | 37.32 | $ | 60.71 | $ | 16.45 | ||||||||
Adjustments: |
||||||||||||||||
Loss (gain) on extinguishment of debt(1) |
11.50 | | (6.49 | ) | | |||||||||||
Restructuring costs(2) |
| 1.38 | 3.36 | 3.97 | ||||||||||||
Legal settlement cost(3) |
1.80 | | | | ||||||||||||
Goodwill and intangible asset impairment(4) |
| | | 2.67 | ||||||||||||
Transaction-related costs(5) |
2.22 | | 0.31 | 0.76 | ||||||||||||
Share-based cash and non-cash compensation(6) |
1.21 | 0.48 | 1.06 | 1.18 | ||||||||||||
Intangible asset amortization |
1.08 | 2.05 | 3.24 | 4.30 | ||||||||||||
Cumulative tax effect of adjustments |
(6.73 | ) | (1.50 | ) | (0.58 | ) | (6.51 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted Earnings per share |
$ | 41.53 | $ | 39.73 | $ | 61.61 | $ | 22.82 | ||||||||
|
|
|
|
|
|
|
|
(1) | For the six months ended June 30, 2017, the $12.5 million loss from the extinguishment of debt was due to the redemption of CURO Intermediates 10.75% Senior Secured Notes due 2018 and our 12.00% Senior Cash Pay Notes due 2017. For year ended December 31, 2016, the $7.0 million gain resulted from the Companys purchase of CURO Intermediates 10.75% Senior Secured Notes in September 2016. |
(2) | Restructuring costs of $4.3 million for the year ended December 31, 2015 represented the expected costs to be incurred related to the closure of ten underperforming stores in the United Kingdom, restructuring costs of $3.6 million for the year ended December 31, 2016 represented the elimination of certain corporate positions in our Canadian headquarters and the costs incurred related to the closure of seven underperforming stores in Texas. Restructuring costs of $1.5 million for the six months ended June 30, 2016 primarily represented the expected costs to be incurred related to the closure of six underperforming stores in Texas. |
(3) | Legal settlement cost relates to the accrual for the settlement of Harrison, et al v. Principal Investments, Inc. et al . See litigation discussion in Note 18, Litigation in the Notes to our Interim Consolidated Financial Statements for further detail. |
(4) | Goodwill and intangible asset impairment charges in 2015 include a non-cash goodwill impairment charge of $0.9 million, and non-cash impairment charges related to the Wage Day trade name intangible asset and customer relationship intangible asset of $1.8 million and $0.2 million, respectively. |
(5) | Transaction-related costs include professional fees paid in connection with potential transactions. |
67
(6) | The Company approved the adoption of a share-based compensation plan during 2010 for key members of its senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. During the second quarter of 2017, option holders were paid a bonus in conjunction with the dividend paid during the quarter. The expense recognized during the quarter related to the payment of the dividend on vested options. The remaining bonus will be paid over the vesting period of the unvested stock options. |
Gross Combined Loans Receivable
In addition to reporting loans receivable information in accordance with U.S. GAAP (see Note 7, Loans Receivable and Revenue in the Notes to Interim Consolidated Financial Statements included elsewhere in this prospectus), we provide below gross combined loans receivable consisting of owned loans receivable plus loans funded by third-party lenders through the CSO programs, which we guarantee but do not include in our Consolidated Financial Statements. Management believes this analysis provides investors with important information needed to evaluate overall lending performance.
The following table reconciles our Company-owned gross loans receivable to gross combined loans receivable.
Three Months Ended | ||||||||||||||||||||||||||||
(in millions) |
June 30,
2017 |
March 31,
2017 |
December 31,
2016 |
September 30,
2016 |
June 30,
2016 |
March 31,
2016 |
December 31,
2015 |
|||||||||||||||||||||
Company-owned gross loans receivable |
$ | 350.3 | $ | 304.8 | $ | 286.2 | $ | 244.6 | $ | 233.1 | $ | 220.7 | $ | 252.2 | ||||||||||||||
Gross loans receivable guaranteed by the Company |
62.1 | 57.8 | 68.0 | 58.7 | 52.6 | 45.4 | 60.2 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Gross combined loans receivable |
$ | 412.4 | $ | 362.6 | $ | 354.2 | $ | 303.3 | $ | 285.7 | $ | 266.1 | $ | 312.4 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68
Gross combined loans receivable by product are presented below:
Gross Combined Loans Receivable
Gross combined loans receivable were $412.4 million and $285.7 million at June 30, 2017 and 2016, respectively, and $354.2 million, and $312.4 million, at December 31, 2016 and 2015, respectively. The increase for both periods was a result of Installment Loan growth and the increase in the first quarter of 2017 was also impacted by the Q1 Loss Recognition Change. Installment Loans that are up to 90 days past due are included in gross combined loans receivable in amounts disclosed in the following table beginning January 1, 2017. Excluding the year-over-year effect of including past-due loans at June 30, 2017, gross combined loans receivable grew $72.4 million, or 25.3%, compared to June 30, 2016.
69
Results of Operations
Six Months Ended June 30, 2017 Compared with Six Months Ended June 30, 2016
The following table sets forth our results of operations for the six months ended June 30, 2017 compared to the six months ended June 30, 2016:
Six Months Ended
June 30, |
Change | |||||||||||||||
(dollars in thousands, unaudited) |
2017 | 2016 | $ | % | ||||||||||||
Consolidated Statements of Income Data: |
||||||||||||||||
Revenue |
$ | 441,524 | $ | 396,768 | $ | 44,756 | 11.3 | % | ||||||||
Provision for losses |
127,182 | 100,278 | 26,904 | 26.8 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Net revenue |
314,342 | 296,490 | 17,852 | 6.0 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Advertising costs |
19,329 | 17,094 | 2,235 | 13.1 | % | |||||||||||
Non-advertising costs of providing services |
118,106 | 116,372 | 1,734 | 1.5 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total cost of providing services |
137,435 | 133,466 | 3,969 | 3.0 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Gross margin |
176,907 | 163,024 | 13,883 | 8.5 | % | |||||||||||
Operating expense |
||||||||||||||||
Corporate, district and other |
69,550 | 64,311 | 5,239 | 8.1 | % | |||||||||||
Interest expense |
41,850 | 32,192 | 9,658 | 30.0 | % | |||||||||||
Loss on extinguishment of debt |
12,458 | | 12,458 | # | ||||||||||||
Restructuring costs |
| 1,481 | (1,481 | ) | # | |||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expense |
123,858 | 97,984 | 25,874 | 26.4 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Net income before taxes |
53,049 | 65,040 | (11,991 | ) | (18.4 | )% | ||||||||||
Provision for income taxes |
20,068 | 24,958 | (4,890 | ) | (19.6 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Net income |
$ | 32,981 | $ | 40,082 | $ | (7,101 | ) | (17.7 | )% | |||||||
|
|
|
|
|
|
|||||||||||
Net income |
$ | 32,981 | $ | 40,082 | $ | (7,101 | ) | (17.7 | )% | |||||||
Adjustments: |
||||||||||||||||
Loss on extinguishment of debt(1) |
12,458 | | 12,458 | # | ||||||||||||
Restructuring cost(2) |
| 1,481 | (1,481 | ) | # | |||||||||||
Legal settlement costs(3) |
1,950 | | 1,950 | # | ||||||||||||
Transaction-related costs(4) |
2,400 | | 2,400 | # | ||||||||||||
Share-based cash and non-cash compensation(5) |
1,306 | 519 | 787 | # | ||||||||||||
Intangible asset amortization |
1,173 | 2,198 | (1,025 | ) | (46.6 | )% | ||||||||||
Cumulative tax effect of adjustments |
(7,292 | ) | (1,612 | ) | (5,680 | ) | # | |||||||||
|
|
|
|
|
|
|||||||||||
Adjusted earnings |
$ | 44,976 | $ | 42,668 | $ | 2,308 | 5.4 | % | ||||||||
|
|
|
|
|
|
# | Variance greater than 100% or not meaningful. |
(1) | For the six months ended June 30, 2017, the $12.5 million loss from the extinguishment of debt was due to the redemption of CURO Intermediates 10.75% Senior Secured Notes due 2018 and our 12.00% Senior Cash Pay Notes due 2017. For year ended December 31, 2016, the $7.0 million gain resulted from the Companys purchase of CURO Intermediates 10.75% Senior Secured Notes in September 2016. |
(2) | Restructuring costs of $1.5 million for the six months ended June 30, 2016 primarily represented costs related to the closure of six underperforming stores in Texas. |
(3) | Legal settlement cost relates to the accrual for the settlement of the Harrison, et al v. Principal Investment, Inc. et al . See litigation discussion in Note 18 Litigation in the Notes to our Interim Consolidated Financial Statements for further detail. |
(4) | Transaction-related costs include professional fees paid in connection with potential transactions. |
70
(5) | The Company approved the adoption of a share-based compensation plan during 2010 for key members of its senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. During the second quarter of 2017, option holders were paid a bonus in conjunction with the dividend paid during the quarter. The expense recognized during the quarter related to the payment of the dividend on vested options. The remaining bonus will be paid over the vesting period of the unvested stock options. |
Revenue and Net Revenue
Revenue increased $44.8 million, or 11.3%, to $441.5 million for the six months ended June 30, 2017 from $396.8 million for the six months ended June 30, 2016. U.S. revenue increased $49.7 million on volume growth, U.K. revenue increased $1.2 million (21.5% increase on a constant currency basis), and Canada declined $6.1 million (6.2% on a constant currency basis) because of regulatory impacts on rates and product mix.
Provision for losses increased $26.9 million, or 26.8%, to $127.2 million for the six months ended June 30, 2017 from $100.3 million for the prior year period because of higher origination volumes and higher loan balances. This is explained more fully in the segment analysis that follows.
Cost of Providing Services
The total cost of providing services increased $4.0 million, or 3.0%, to $137.4 million for the six months ended June 30, 2017, compared to $133.5 million for the six months ended June 30, 2016 due primarily to growth in occupancy costs and 13.1% higher marketing spend.
Operating Expenses
Corporate, district and other expenses increased $5.2 million due to $2.4 million of transaction-related costs, a $2.0 million legal accrual during the second quarter of 2017 and higher payroll costs. These increases were partially offset by cost savings from Canadian back-office consolidation during the third quarter of 2016.
Other changes in operating expenses were affected by a pretax loss of $12.5 million on the extinguishment of our 12.00% Senior Cash Pay Notes due 2017 and CURO Intermediate Holdings Corp.s 10.75% Senior Secured Notes due 2018, as well as additional interest expense of approximately $4.5 million for accrued interest on the retired notes through the redemption notice period, and increased debt outstanding.
Provision for Income Taxes
Our effective tax rate for the six months ended June 30, 2017 was 37.8% compared to 38.4% for the prior year.
71
Six Months Ended June 30, 2017 Compared with Six Months Ended June 30, 2016 - Segment Analysis
We report financial results for three reportable segments: the United States, Canada and the United Kingdom. Following are a recap of results of operations for the segment and period indicated:
U.S. Segment Results |
||||||||||||||||
Six months ended June 30, | Change | |||||||||||||||
(dollars in thousands) |
2017 | 2016 | $ | % | ||||||||||||
Revenue |
$ | 338,086 | $ | 288,427 | $ | 49,659 | 17.2 | % | ||||||||
Provision for losses |
101,152 | 78,034 | 23,118 | 29.6 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
NET REVENUE |
236,934 | 210,393 | 26,541 | 12.6 | % | |||||||||||
Advertising costs |
12,591 | 10,337 | 2,254 | 21.8 | % | |||||||||||
Non-advertising costs of providing services |
84,091 | 81,746 | 2,345 | 2.9 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total cost of providing services |
96,682 | 92,083 | 4,599 | 5.0 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
GROSS MARGIN |
140,252 | 118,310 | 21,942 | 18.5 | % | |||||||||||
Corporate, district and other |
53,042 | 43,420 | 9,622 | 22.2 | % | |||||||||||
Interest expense |
41,768 | 32,140 | 9,628 | 30.0 | % | |||||||||||
Loss on extinguishment of debt |
12,458 | | 12,458 | # | ||||||||||||
Intercompany interest income |
(2,521 | ) | (2,622 | ) | 101 | (3.9 | )% | |||||||||
Restructuring and other costs |
| 1,102 | (1,102 | ) | # | |||||||||||
|
|
|
|
|
|
|||||||||||
TOTAL OPERATING EXPENSES |
104,747 | 74,040 | 30,707 | 41.5 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
NET INCOME BEFORE TAXES |
35,505 | 44,270 | (8,765 | ) | (19.8 | )% | ||||||||||
Provision for income taxes |
15,635 | 18,986 | (3,351 | ) | (17.6 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
NET INCOME |
19,870 | 25,284 | (5,414 | ) | (21.4 | )% | ||||||||||
Provision for income taxes |
15,635 | 18,986 | (3,351 | ) | (17.6 | )% | ||||||||||
Interest expense |
39,247 | 29,518 | 9,729 | 33.0 | % | |||||||||||
Depreciation and amortization |
6,753 | 6,939 | (186 | ) | (2.7 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
EBITDA |
81,505 | 80,727 | 778 | 1.0 | % | |||||||||||
Loss on extinguishment of debt |
12,458 | | 12,458 | # | ||||||||||||
Restructuring and other costs |
2,400 | 1,103 | 1,297 | # | ||||||||||||
Legal settlement cost |
1,950 | | 1,950 | # | ||||||||||||
Other adjustments |
(20 | ) | 76 | (96 | ) | # | ||||||||||
Share-based cash and non-cash compensation |
1,302 | 519 | 783 | # | ||||||||||||
|
|
|
|
|
|
|||||||||||
ADJUSTED EBITDA |
$ | 99,595 | $ | 82,425 | $ | 17,170 | 20.8 | % | ||||||||
|
|
|
|
|
|
#Variance greater than 100% or not meaningful
U.S revenue growth was driven by a $34.7 million, or 15.5%, increase in gross combined loans receivable (excluding past due loans) to $258.6 million at June 30, 2017 compared to $223.9 million in the prior year period. Strong volume growth in our Unsecured Installment product was driven by year-over-year increases of $58.2 million, or 28.3%, in originations. Secured Installment originations grew $25.9 million compared to the same period a year ago.
The increase of $23.1 million or 29.6% in the provision for losses was primarily driven by volume growth but was also affected by the Q1 Loss Recognition Change as follows:
|
Volume impact. Unsecured and Secured Installment Loan origination dollar volume increased $58.2 million and $25.9 million, respectively year-over-year. Applying last years provision rates for the six months ended June 30, 2017 as a percentage of originations, Unsecured and Secured Installment volume |
72
added $13.3 million and $2.9 million, respectively to the provision for losses versus the same period a year ago. |
| Rate impact. The provision rate as a percentage of originations for Unsecured Installment Loans for the six months ended June 30, 2017 was 26.4% versus 22.8% the same period in the prior year, and the provision rate as a percentage of originations for Secured Installment Loans for the six months ended June 30, 2017 was 14.9% versus 11.1% in the same period in the prior year. The increase is due to two factors. First, historically the first quarter provision rates for all products have been lower seasonally because of higher recoveries from tax refunds and related seasonal decline in loan balances. Prospectively, we would expect less seasonal effect in first quarters. Second, provision rates for the six months ended June 30, 2017 were adjusted to include accrued interest on past-due loans. The change in provision rate for the Unsecured and Secured Installment Loans origination volume for the six months ended June 30, 2017 added approximately $7.5 million and $2.1 million, respectively, to the provision for losses. |
| Past-due loan impact. The Q1 Loss Recognition Change added an average of $21.1 million and $8.2 million of Unsecured and Secured Installment past-due principal balances, respectively, that would not have been recognized prior to January 1, 2017 since loans were previously charged off when a scheduled payment was missed. Using current Unsecured and Secured loss provision rates as a percentage of gross combined loans receivable, this change added approximately $3.3 million to the provision for losses. |
The result of this change in estimate resulted in an approximately $36.2 million of Installment Loans at June 30, 2017 that remained on our balance sheet that were between 1 and 90 days delinquent, as compared to none in the prior year period. Additionally, the installment allowance for loan losses as of June 30, 2017 of $46.3 million includes an estimated allowance of $22.3 million for the Installment Loans between 1 and 90 days delinquent, as compared to none in the prior year period.
The result of this change in estimate resulted in an approximately $8.7 million of Installment Loans guaranteed by the company at June 30, 2017 that were between 1 and 90 days delinquent, as compared to none in the prior year period. Additionally, the installment CSO guarantee liability as of June 30, 2017 of $15.6 million includes an estimated liability of $3.8 million for the Installment Loans guaranteed by the company that were between 1 and 90 days delinquent, as compared to none in the prior year period.
Recap of year-over-year change in U.S. provision for losses:
Six Months Ended June 30, 2017 compared to
Six Months Ended June 30, 2016 |
||||||||||||
(in millions) |
Unsecured
Installment |
Secured
Installment |
Consolidated | |||||||||
Installment Loans impact: |
||||||||||||
Volume impact |
$ | 13.3 | $ | 2.9 | $ | 16.2 | ||||||
Rate impact |
7.5 | 2.1 | 9.6 | |||||||||
Past-due loan impact |
2.9 | 0.4 | 3.3 | |||||||||
|
|
|
|
|
|
|||||||
Total Installment Loan impact |
23.7 | 5.4 | 29.1 | |||||||||
Single-Pay Loans impact (volume and rate) |
| | (2.8 | ) | ||||||||
Open-End Loans impact (volume and rate) |
| | (3.2 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 23.7 | $ | 5.4 | $ | 23.1 | ||||||
|
|
|
|
|
|
U.S. cost of providing services for the six months ended June 30, 2017 were $96.7 million, an increase of $4.6 million, or 5.0%, compared to $92.1 million for the six months ended June 30, 2016. This increase was due to $2.3 million (21.8%) higher marketing spend, modest increases in volume-driven expenses and increases in store security, maintenance and payroll costs.
73
Operating expenses increased $30.7 million, or 49.7%, to $104.7 million compared to $74.0 million in the prior year period due to the impact of the February 2017 debt offering and redemption which resulted in higher interest expense of $3.9 million related to the 30-day redemption period for redeemed bonds, additional $10.3 million of additional interest expense due to increased debt outstanding, a $12.5 million loss on the extinguishment of debt from prepayment costs, a $2.0 million legal accrual and higher payroll and information technology-related costs.
Canada Segment Results |
||||||||||||||||
Six months ended June 30, | Change | |||||||||||||||
(dollars in thousands) |
2017 | 2016 | $ | % | ||||||||||||
Revenue |
$ | 85,161 | $ | 91,221 | $ | (6,060 | ) | (6.6 | )% | |||||||
Provision for losses |
20,528 | 17,770 | 2,758 | 15.5 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
NET REVENUE |
64,633 | 73,451 | (8,818 | ) | (12.0 | )% | ||||||||||
Advertising costs |
4,045 | 4,154 | (109 | ) | (2.6 | )% | ||||||||||
Other costs of providing services |
30,326 | 30,621 | (295 | ) | (1.0 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Total cost of providing services |
34,371 | 34,775 | (404 | ) | (1.2 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
GROSS MARGIN |
30,262 | 38,676 | (8,414 | ) | (21.8 | )% | ||||||||||
Corporate, district and other |
7,747 | 9,330 | (1,583 | ) | (17.0 | )% | ||||||||||
Interest expense |
82 | 64 | 18 | 28.1 | % | |||||||||||
Intercompany interest |
2,208 | 2,036 | 172 | 8.4 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
TOTAL OPERATING EXPENSES |
10,037 | 11,430 | (1,393 | ) | (12.2 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
NET INCOME BEFORE TAXES |
20,225 | 27,246 | (7,021 | ) | (25.8 | )% | ||||||||||
Provision for income taxes |
4,433 | 6,050 | 1,617 | 26.7 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
NET INCOME |
15,792 | 21,196 | (8,638 | ) | (40.8 | )% | ||||||||||
Provision for income taxes |
4,433 | 6,050 | 1,617 | 26.7 | % | |||||||||||
Interest expense |
2,290 | 2,100 | (190 | ) | (9.0 | )% | ||||||||||
Depreciation and amortization |
2,219 | 2,922 | 703 | 24.1 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
EBITDA |
24,734 | 32,268 | (6,508 | ) | (20.2 | )% | ||||||||||
Other adjustments |
(472 | ) | (334 | ) | 138 | (41.3 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
ADJUSTED EBITDA |
$ | 24,262 | $ | 31,934 | $ | (6,370 | ) | (19.9 | )% | |||||||
|
|
|
|
|
|
Revenue in Canada was affected by product transition in Alberta from Single-Pay to Unsecured Installment Loans and the impact of regulatory rate changes in Ontario and British Columbia.
Non-Alberta Single-Pay revenue decreased $2.4 million, or 3.3%, to $70.0 million for the six months ended June 30, 2017 from $72.3 in the prior year period, because of lower rates from provincial regulatory changes effective January 1, 2017. The impact of the rate changes was mitigated partially by higher origination volume. The year-over-year effect of regulatory rate changes in Ontario and British Columbia would have implied a decline in revenue of $9.1 million. However, higher origination volumes offset the effect of rate changes by approximately $6.7 million. Single-Pay origination dollar volumes in Canada (excluding Alberta) increased $38.4 million, or 11.7%, to $366.7 million from $328.3 million in the prior year, and Single-Pay ending receivables (excluding Alberta) were up $7.1 million, or 17.9%, compared to the prior year quarter.
In Alberta Single-Pay receivables in the six months ended June 30, 2016 averaged $7.0 million and related Single-Pay revenue was $14.7 million. In the six months ended June 30, 2017, Alberta had $27.9 million in average Unsecured Installment receivables and $7.5 million of related revenue. As of June 30, 2017, $36.8 million of Unsecured Installment receivables were outstanding in Alberta.
74
The provision for losses rose $2.8 million or 15.5% to $20.5 million in the six months ended June 30, 2017 from $17.8 million in the prior year period. As in the U.S., the increase is due to higher loan volume.
The cost of providing services in Canada slightly decreased from the prior year due primarily to decline in salaries and benefits and advertising, partially offset by an increase in occupancy expense, due to more stores during the six months ended June 30, 2017 as compared to the prior year, as well as an increase in store maintenance costs.
Operating expenses were down $1.4 million, or 12.2%, to $10.0 million in the six months ended June 30, 2017 from $11.4 million in the prior year period due to the consolidation of certain back-office functions during the third quarter of 2016.
U.K. Segment Results |
||||||||||||||||
Six months ended June 30, | Change | |||||||||||||||
(dollars in thousands) |
2017 | 2016 | $ | % | ||||||||||||
Revenue |
$ | 18,277 | $ | 17,120 | $ | 1,157 | 6.8 | % | ||||||||
Provision for losses |
5,502 | 4,474 | 1,028 | 23.0 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
NET REVENUE |
12,775 | 12,646 | 129 | 1.0 | % | |||||||||||
Advertising costs |
2,692 | 2,604 | 88 | 3.4 | % | |||||||||||
Non-advertising costs of providing services |
3,690 | 4,004 | (314 | ) | (7.8 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Total cost of providing services |
6,382 | 6,608 | (226 | ) | (3.4 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
GROSS MARGIN |
6,393 | 6,038 | 355 | 5.9 | % | |||||||||||
Corporate, district and other |
8,761 | 11,561 | (2,800 | ) | (24.2 | )% | ||||||||||
Interest expense (income) |
1 | (12 | ) | (13 | ) | # | ||||||||||
Intercompany interest |
312 | 586 | (274 | ) | (46.8 | )% | ||||||||||
Restructuring and other costs |
| 379 | (379 | ) | # | |||||||||||
|
|
|
|
|
|
|||||||||||
TOTAL OPERATING EXPENSES |
9,074 | 12,514 | (3,440 | ) | (27.5 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
NET LOSS BEFORE TAXES |
(2,681 | ) | (6,476 | ) | 3,795 | 58.6 | % | |||||||||
Provision (benefit) for income taxes |
| (78 | ) | (78 | ) | # | ||||||||||
|
|
|
|
|
|
|||||||||||
NET LOSS |
(2,681 | ) | (6,398 | ) | 3,717 | 58.1 | % | |||||||||
Provision (benefit) for income taxes |
| (78 | ) | (78 | ) | # | ||||||||||
Interest expense |
313 | 574 | 261 | 45.5 | % | |||||||||||
Depreciation and amortization |
357 | 467 | 110 | 23.6 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
EBITDA |
(2,011 | ) | (5,435 | ) | 3,424 | 63.0 | % | |||||||||
Restructuring and other costs |
| 378 | 378 | # | ||||||||||||
Other adjustments |
(18 | ) | 210 | 228 | # | |||||||||||
|
|
|
|
|
|
|||||||||||
ADJUSTED EBITDA |
$ | (2,029 | ) | $ | (4,847 | ) | $ | 2,818 | 58.1 | % | ||||||
|
|
|
|
|
|
#Variance greater than 100% or not meaningful
U.K. revenue improved $1.2 million, or 6.8%, to $18.3 million for the six months ended June 30, 2017 from $17.1 million in the prior year period. On a constant currency basis, revenue was up $3.7 million, or 21.5%. Provision for losses increased $1.0 million, or 23.0%, and $1.8 million, or 39.5%, on a constant currency basis, due to growth in Installment Loans receivable.
The cost of providing services in the United Kingdom declined $0.2 million, or 3.4%, from the prior year six months to $6.4 million for the six months ended June 30, 2017 from $6.6 million in the prior year period. On a constant currency basis the cost of providing services increased $0.6 million, or 9.8%.
75
Operating expenses were down $3.4 million, or 27.5%, to $9.1 million in the six months ended June 30, 2017 from $12.5 million in the prior year period, and on a constant currency basis were down $1.4 million, or 11.8%, due primarily to a decline in payroll expense at our U.K. corporate office, and the prior year restructuring charges related to store closures.
Year Ended December 31, 2016 Compared with Year Ended December 31, 2015
The following table sets forth our results of operations for the year ended December 31, 2016 compared with the year ended December 31, 2015:
Year Ended December 31, | Change | |||||||||||||||
(dollars in thousands) |
2016 | 2015 | $ | % | ||||||||||||
Consolidated Statements of Income Data: |
||||||||||||||||
Revenue |
$ | 828,596 | $ | 813,131 | $ | 15,465 | 1.9 | % | ||||||||
Provision for losses |
258,289 | 281,210 | (22,921 | ) | (8.2 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Net revenue |
570,307 | 531,921 | 38,386 | 7.2 | % | |||||||||||
Cost of Providing Services |
277,051 | 293,320 | (16,269 | ) | (5.5 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Gross Margin |
293,256 | 238,601 | 54,655 | 22.9 | % | |||||||||||
Operating Expense |
||||||||||||||||
Corporate, district and other |
124,274 | 130,534 | (6,260 | ) | (4.8 | )% | ||||||||||
Interest expense |
64,334 | 65,020 | (686 | ) | (1.1 | )% | ||||||||||
Goodwill and intangible asset impairment charges |
| 2,882 | 2,882 | # | ||||||||||||
Gain on extinguishment of debt |
(6,991 | ) | | (6,991 | ) | # | ||||||||||
Restructuring costs |
3,618 | 4,291 | (673 | ) | (15.7 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expense |
185,235 | 202,727 | (17,492 | ) | (8.6 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Net Income Before Taxes |
108,021 | 35,874 | 72,147 | # | ||||||||||||
Provision for income taxes |
42,577 | 18,105 | 24,472 | # | ||||||||||||
|
|
|
|
|
|
|||||||||||
Net Income |
$ | 65,444 | $ | 17,769 | $ | 47,675 | # | % | ||||||||
|
|
|
|
|
|
|||||||||||
Net Income |
$ | 65,444 | $ | 17,769 | $ | 47,675 | # | % | ||||||||
Adjustments: |
||||||||||||||||
Gain on extinguishment of debt(1) |
(6,991 | ) | | (6,991 | ) | # | ||||||||||
Restructuring costs(2) |
3,618 | 4,291 | (673 | ) | (15.7 | )% | ||||||||||
Goodwill and intangible asset impairment(3) |
| 2,882 | (2,882 | ) | # | |||||||||||
Transaction-related costs(3) |
329 | 824 | (495 | ) | (60.1 | )% | ||||||||||
Share-based compensation(4) |
1,148 | 1,271 | (123 | ) | (9.7 | )% | ||||||||||
Intangible asset amortization |
3,492 | 4,645 | (1,153 | ) | (24.8 | )% | ||||||||||
Cumulative tax effect of adjustments |
(629 | ) | (7,026 | ) | 6,397 | 91.0 | % | |||||||||
|
|
|
|
|
|
|||||||||||
Adjusted Earnings |
$ | 66,411 | $ | 24,656 | $ | 41,755 | # | % | ||||||||
|
|
|
|
|
|
#Variance greater than 100% or not meaningful
(1) | For the year ended December 31, 2016, the $7.0 million gain on extinguishment of debt resulted from the Companys purchase of CURO Intermediates 10.75% Senior Secured Notes in September 2016. |
(2) | Restructuring costs of $4.3 million for the year ended December 31, 2015 represented the expected costs to be incurred related to the closure of ten underperforming stores in the United Kingdom. Restructuring costs of $3.6 million for the year ended December 31, 2016 represented the elimination of certain corporate positions in our Canadian headquarters and the costs incurred related to the closure of seven under-performing stores in Texas. |
(3) | Transaction-related costs include professional fees paid in connection with potential transactions. |
(4) | The Company approved the adoption of a share-based compensation plan during 2010 for key members of its senior management team. The estimated fair value of share-based awards is recognized as non-cash compensation expense on a straight-line basis over the vesting period. |
76
Revenue and Net Revenue
Revenue increased $15.5 million, or 1.9%, to $828.6 million for the year ended December 31, 2016 from $813.1 million for the prior year. Volume growth in the United States and revenue growth in Canada driven by de novo store expansion and modest same-store volume growth, were partially offset by a decline in U.K. revenue due to currency translation impact, product mix and volume changes, as well as the closure of nearly half of the U.K. stores in December 2015. A detailed discussion of results by segment is included in the Segment Analysis below.
Provision for losses decreased by $22.9 million, or 8.2%, to $258.3 million in the year ended December 31, 2016 from $281.2 million in the prior year. Improved performance in the United States resulted from continuous refinements and improvements to scoring models, portfolio seasoning, and improved collection efforts. Lower relative customer acquisition spend in 2016 reduced the volume mix attributable to new customers compared to the same period a year ago. In the United Kingdom, loss provisions have improved because of tightened underwriting and seasoning. The increase in the provision for losses in Canada was due to the growth of newer bankline loan products, which have a higher provision rate as a percent of revenue than traditional Canadian single-pay products.
Cost of Providing Services
The total cost of providing services decreased $16.3 million, or 5.5%, to $277.1 million in 2016, compared to $293.3 million in the prior year primarily due to a decline in advertising expense of $21.7 million, or 33.1%, compared to the prior year, as we normalized customer acquisition in 2016 to maintain earning-asset levels but without the elevated levels of new customer investment of 2015. In addition, cost-per-funded loan improved significantly year-over-year so less total spend was necessary to drive similar customer volumes. Salaries and benefits also declined compared to the prior year driven by the closure of ten stores in the United Kingdom in December 2015. These declines were partially offset by an increase in other store operating expense which was attributable to higher collections costs, partially offset by a decline in store maintenance costs associated with store refurbishments that took place in the prior year.
Operating Expense
Corporate, district and other expenses declined 4.8% in the year ended December 31, 2016 primarily because of U.K. store closures in 2015, a decrease in payroll costs at our U.K. corporate office, and declines in U.K. collections and office expense, as well as the impact of Canadian back-office consolidation during 2016, and the impact of certain intangible assets related to the 2011 Cash Money acquisition which became fully amortized. These declines were partially offset by an increase in U.S. corporate expense from higher payroll costs for additional headcount (primarily analytics and technology) and an increase in variable, performance-based compensation, as well as an increase in professional fees and office expense.
Other changes in operating expenses were affected by a pretax gain of $7.0 million related to the discount on the repurchase of $25.1 million of CFTCs outstanding May 2011 10.75% Senior Secured Notes, as well as $3.6 million of restructuring costs related to the elimination of certain positions, primarily Finance and IT, at our Canadian headquarters, and the closure of seven underperforming The Money Box stores in Texas, and one store in Missouri that we were unable to reopen after it was damaged by a fire, and costs related to the 2015 closure of ten U.K. stores.
Results in 2015 were also impacted by a $2.9 million non-cash goodwill and intangible asset impairment charges, and $4.3 million of costs related to the closure of ten U.K. stores mentioned above. These costs primarily consisted of adjustments to lease obligations associated with these locations.
77
Provision for Income Taxes
Our effective tax rate for the year ended December 31, 2016 was 39.4% compared to 50.5% for the year ended December 31, 2015. Our recorded income tax expense is affected by our mix of domestic and foreign earnings.
2016 Compared to 2015Segment Analysis
Following is the detail of the results of operations for the each segment for the years ended December 31, 2016 and 2015:
United States
U.S. Segment Results |
||||||||||||||||
Year Ended December 31, | Change | |||||||||||||||
(dollars in thousands) |
2016 | 2015 | $ | % | ||||||||||||
Revenue |
$ | 606,798 | $ | 573,664 | $ | 33,134 | 5.8 | % | ||||||||
Provision for losses |
207,748 | 222,867 | (15,119 | ) | (6.8 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Net revenue |
399,050 | 350,797 | 48,253 | 13.8 | % | |||||||||||
Cost of providing services |
194,722 | 199,169 | (4,447 | ) | (2.2 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Gross Margin |
204,328 | 151,628 | 52,700 | 34.8 | % | |||||||||||
Operating Expenses |
||||||||||||||||
Corporate, district and other |
75,907 | 69,455 | 6,452 | 9.3 | % | |||||||||||
Interest expense |
64,276 | 64,910 | (634 | ) | (1.0 | )% | ||||||||||
(Gain) Loss on extinguishment of debt |
(6,991 | ) | | (6,991 | ) | # | ||||||||||
Intercompany interest income |
(5,741 | ) | (5,848 | ) | 107 | (1.8 | )% | |||||||||
Restructuring costs |
1,726 | | 1,726 | # | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expense |
129,177 | 128,517 | 660 | 0.5 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Net Income before Taxes |
75,151 | 23,111 | 52,040 | # | ||||||||||||
Provision for income taxes |
30,055 | 7,814 | 22,241 | # | ||||||||||||
|
|
|
|
|
|
|||||||||||
Net Income |
$ | 45,096 | $ | 15,297 | $ | 29,799 | # | |||||||||
|
|
|
|
|
|
|||||||||||
Net Income |
$ | 45,096 | $ | 15,297 | $ | 29,799 | # | |||||||||
Adjustments: |
||||||||||||||||
Gain on extinguishment of debt |
(6,991 | ) | | (6,991 | ) | # | ||||||||||
Restructuring costs |
1,726 | | 1,726 | # | ||||||||||||
Transaction-related costs |
329 | 824 | (495 | ) | 60.1 | % | ||||||||||
Share-based compensation |
1,148 | 1,271 | (123 | ) | (9.7 | )% | ||||||||||
Intangible asset amortization |
2,680 | 2,330 | 350 | 15.0 | % | |||||||||||
Cumulative tax effect of adjustments |
437 | (2,235 | ) | 2,672 | # | |||||||||||
|
|
|
|
|
|
|||||||||||
Adjusted Earnings |
$ | 44,425 | $ | 17,487 | $ | 26,938 | # | |||||||||
|
|
|
|
|
|
#Variance greater than 100% or not meaningful
Total revenue for our U.S. operations was $606.8 million for 2016, an increase of $33.1 million, or 5.8%, compared to the prior year. Revenue growth was driven by our online channel.
Gross margin for our U.S. operations for 2016 was $204.3 million, an increase of $52.7 million, or 34.8%, compared to the prior year. Gross margin as a percent of revenue improved to 33.7%, compared to 26.4% in the
78
prior year from improvement in the provision for losses due to relative new customer mix and growth, related portfolio seasoning, and improved credit scoring and collection trends; as well as a $21.7 million decrease in advertising expense.
Operating expenses in the United States were flat with the prior year. An increase in corporate expense from higher payroll costs for additional headcount (primarily analytics and technology), an increase in variable, performance-based compensation, as well as an increase in professional fees and office expense, was more than offset by a $7.0 million gain on the extinguishment of $25.1 million of CURO Financial Technologies May 2011 10.75% Senior Secured Notes.
Canada
Canada Segment Results |
||||||||||||||||
Year Ended December 31, | Change | |||||||||||||||
(dollars in thousands) |
2016 | 2015 | $ | % | ||||||||||||
Revenue |
$ | 188,078 | $ | 184,859 | $ | 3,219 | 1.7 | % | ||||||||
Provision for losses |
39,917 | 37,317 | 2,600 | 7.0 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Net revenue |
148,161 | 147,542 | 619 | 0.4 | % | |||||||||||
Cost of providing services |
69,522 | 70,073 | (551 | ) | (0.8 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Gross Margin |
78,639 | 77,469 | 1,170 | 1.5 | % | |||||||||||
Operating Expenses |
||||||||||||||||
Corporate, district and other |
28,001 | 31,121 | (3,120 | ) | (10.0 | )% | ||||||||||
Interest expense |
85 | 149 | (64 | ) | (43.0 | )% | ||||||||||
Intercompany interest expense |
4,602 | 4,761 | (159 | ) | (3.3 | )% | ||||||||||
Restructuring costs |
898 | | 898 | # | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expense |
33,586 | 36,031 | (2,445 | ) | (6.8 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Net Income Before Taxes |
45,053 | 41,438 | 3,615 | 8.7 | % | |||||||||||
Provision for income taxes |
12,662 | 11,266 | 1,396 | 12.4 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Net Income |
$ | 32,391 | $ | 30,172 | $ | 2,219 | 7.4 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Net Income |
$ | 32,391 | $ | 30,172 | $ | 2,219 | 7.4 | % | ||||||||
Adjustments: |
||||||||||||||||
Restructuring costs |
898 | | 898 | # | ||||||||||||
Intangible asset amortization |
806 | 1,989 | (1,183 | ) | (59.5 | )% | ||||||||||
Cumulative tax effect of adjustments |
(671 | ) | (1,004 | ) | 333 | 33.2 | % | |||||||||
|
|
|
|
|
|
|||||||||||
Adjusted Earnings |
$ | 33,424 | $ | 31,157 | $ | 2,267 | 7.3 | % | ||||||||
|
|
|
|
|
|
#Variance greater than 100% or not meaningful
Total revenue for our Canadian operations was $188.1 million for 2016, an increase of $3.2 million, or 1.7%, compared to the prior year. Growth in Canada was driven by our de novo store expansion and modest same-store volume growth in Ontario, Nova Scotia, British Columbia and Saskatchewan, which offset a $3.8 million, or 11.8%, decline in Alberta due to the statutory rate change.
The gross margin for our Canadian operations for 2016 was $78.6 million, an increase of $1.2 million, or 1.5%, compared to the prior year. Gross margin as a percent of revenue declined slightly in the current year to 41.8% from 41.9% for the prior year.
Operating expenses in Canada decreased $2.4 million, or 6.8%, from the prior year due primarily to the net impact of the elimination of 35 corporate positions in our Canadian headquarters (primarily finance and
79
technology). Amortization expense also declined as certain intangible assets related to the 2011 Cash Money acquisition became fully amortized.
United Kingdom
U.K. Segment Results |
||||||||||||||||
Year Ended December 31, | Change | |||||||||||||||
(dollars in thousands) |
2016 | 2015 | $ | % | ||||||||||||
Revenue |
$ | 33,720 | $ | 54,608 | $ | (20,888 | ) | (38.3 | )% | |||||||
Provision for losses |
10,624 | 21,026 | (10,402 | ) | (49.5 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Net revenue |
23,096 | 33,582 | (10,486 | ) | (31.2 | )% | ||||||||||
Cost of providing services |
12,807 | 24,078 | (11,271 | ) | (46.8 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Gross Margin |
10,289 | 9,504 | 785 | 8.3 | % | |||||||||||
Operating Expenses |
||||||||||||||||
Corporate, district and other |
20,366 | 29,958 | (9,592 | ) | (32.0 | )% | ||||||||||
Interest income |
(27 | ) | (39 | ) | 12 | (30.8 | )% | |||||||||
Goodwill and impairment charges |
| 2,882 | (2,882 | ) | # | |||||||||||
Intercompany interest expense |
1,139 | 1,087 | 52 | 4.8 | % | |||||||||||
Restructuring costs |
994 | 4,291 | (3,297 | ) | (76.8 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expense |
22,472 | 38,179 | (15,707 | ) | (41.1 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Net Loss Before Taxes |
(12,183 | ) | (28,675 | ) | 16,492 | (57.5 | )% | |||||||||
Income tax benefit |
(140 | ) | (975 | ) | 835 | (85.6 | )% | |||||||||
|
|
|
|
|
|
|||||||||||
Net Loss |
$ | (12,043 | ) | $ | (27,700 | ) | $ | 15,657 | (56.5 | )% | ||||||
|
|
|
|
|
|
|||||||||||
Net Loss |
$ | (12,043 | ) | $ | (27,700 | ) | $ | 15,657 | (56.5 | )% | ||||||
Adjustments: |
||||||||||||||||
Goodwill and impairment charges |
| 2,882 | (2,882 | ) | # | |||||||||||
Restructuring costs |
994 | 4,291 | (3,297 | ) | (76.8 | )% | ||||||||||
Intangible asset amortization |
6 | 326 | (320 | ) | (98.2 | )% | ||||||||||
Cumulative tax effect of adjustments |
(394 | ) | (3,787 | ) | 3,393 | 89.6 | % | |||||||||
|
|
|
|
|
|
|||||||||||
Adjusted Earnings |
$ | (11,437 | ) | $ | (23,988 | ) | $ | 12,551 | (52.3 | )% | ||||||
|
|
|
|
|
|
#Variance greater than 100% or not meaningful
Total revenue in the United Kingdom was $33.7 million for 2016, a decrease of $20.9 million, or 38.3%. The decline in the British Pound Sterling from an average exchange rate of $1.5282 for the year ended December 31, 2015 to an average exchange rate of $1.3552 for the year ended December 31, 2016, had a negative impact on our consolidated results. On a constant currency basis, revenue in the United Kingdom decreased $16.5 million, or 30.2%, compared to the prior year. Revenue declined in the United Kingdom because of product mix and volume changes, as well as the closure of nearly half of the U.K. stores in December 2015.
The gross margin for our U.K. operations for 2016 was $10.3 million, an increase of $0.8 million, or 8.3%, compared to the prior year. Gross margin as a percent of revenue improved to 30.5% compared to 17.4% in the prior year. Improvement in the provision for losses, lower advertising expense, and the impact of the closure of the ten stores to occupancy and salaries and benefits expense all contributed to gross margin improvement.
80
Unaudited Quarterly Results of Operations
The following table contains our unaudited consolidated quarterly statement of income data for each of the eight quarters preceding and including the quarter ended June 30, 2017. We derived this information from our unaudited consolidated financial statements, which, in the opinion of management have been prepared on the same basis as our audited consolidated financial statements and include all adjustments necessary for the fair presentation of the financial information for the quarters presented. You should read this information in conjunction with the consolidated financial statements and related notes included elsewhere in this prospectus.
Three Months Ended | ||||||||||||||||||||||||||||||||
Jun 30,
2017 |
Mar 31,
2017 |
Dec 31,
2016 |
Sep 30,
2016 |
Jun 30,
2016 |
Mar 31,
2016 |
Dec 31,
2015 |
Sep 30,
2015 |
|||||||||||||||||||||||||
Revenue |
$ | 216,944 | $ | 224,580 | $ | 218,904 | $ | 212,924 | $ | 194,307 | $ | 202,461 | $ | 216,843 | $ | 212,804 | ||||||||||||||||
Provision for losses |
65,446 | 61,736 | 80,987 | 77,024 | 58,029 | 42,249 | 83,996 | 93,069 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net revenue |
151,498 | 162,844 | 137,917 | 135,900 | 136,278 | 160,212 | 132,847 | 119,735 | ||||||||||||||||||||||||
Cost of providing services |
||||||||||||||||||||||||||||||||
Salaries and benefits |
26,300 | 26,433 | 25,182 | 26,273 | 26,108 | 26,978 | 25,834 | 27,213 | ||||||||||||||||||||||||
Occupancy |
13,511 | 14,095 | 14,141 | 13,345 | 13,864 | 13,159 | 13,780 | 13,507 | ||||||||||||||||||||||||
Office |
4,936 | 4,868 | 6,169 | 4,816 | 4,729 | 4,749 | 6,152 | 5,547 | ||||||||||||||||||||||||
Other costs of providing services |
13,108 | 14,855 | 14,232 | 12,600 | 12,430 | 14,355 | 13,331 | 12,082 | ||||||||||||||||||||||||
Advertising |
11,641 | 7,688 | 14,996 | 11,831 | 10,296 | 6,798 | 14,351 | 22,203 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total cost of providing services |
69,496 | 67,939 | 74,720 | 68,865 | 67,427 | 66,039 | 73,448 | 80,552 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Gross margin |
82,002 | 94,905 | 63,197 | 67,035 | 68,851 | 94,173 | 59,399 | 39,183 | ||||||||||||||||||||||||
Operating (income) expense |
||||||||||||||||||||||||||||||||
Corporate and district |
36,085 | 33,266 | 29,556 | 30,807 | 32,056 | 32,700 | 35,417 | 30,357 | ||||||||||||||||||||||||
Interest expense |
18,484 | 23,366 | 16,155 | 15,987 | 16,039 | 16,153 | 16,415 | 16,192 | ||||||||||||||||||||||||
Loss (gain) on extinguishment of debt |
| 12,458 | | (6,991 | ) | | | | | |||||||||||||||||||||||
Restructuring costs |
| | 651 | 1,486 | 186 | 1,295 | 4,257 | | ||||||||||||||||||||||||
Goodwill and intangible asset impairment charges |
| | | | | | | 2,882 | ||||||||||||||||||||||||
Other (income)/ expense |
472 | (273 | ) | (286 | ) | (114 | ) | (464 | ) | 19 | 2,229 | (316 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total other expense |
55,041 | 68,817 | 46,076 | 41,175 | 47,817 | 50,167 | 58,318 | 49,115 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net income (loss) before taxes |
26,961 | 26,088 | 17,121 | 25,860 | 21,034 | 44,006 | 1,081 | (9,932 | ) | |||||||||||||||||||||||
Provision for income tax expense (benefit) |
10,619 | 9,450 | 7,536 | 10,083 | 7,862 | 17,096 | (7,242 | ) | 2,628 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net income (loss) |
$ | 16,342 | $ | 16,638 | $ | 9,585 | $ | 15,777 | $ | 13,172 | $ | 26,910 | $ | 8,323 | $ | (12,560 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjustments to arrive at Adjusted Earnings: |
||||||||||||||||||||||||||||||||
Net income (loss) |
$ | 16,342 | $ | 16,638 | $ | 9,585 | $ | 15,777 | $ | 13,172 | $ | 26,910 | $ | 8,323 | $ | (12,560 | ) | |||||||||||||||
Loss (gain) on extinguishment of debt |
| 12,458 | | (6,991 | ) | | | | | |||||||||||||||||||||||
Restructuring costs |
| | 651 | 1,486 | 186 | 1,295 | 4,257 | | ||||||||||||||||||||||||
Legal settlement cost |
1,950 | | | | | | | | ||||||||||||||||||||||||
Goodwill and intangible asset impairment |
| | | | | | | 2,882 | ||||||||||||||||||||||||
Transaction-related costs |
146 | 2,254 | 183 | 146 | | | (46 | ) | 449 | |||||||||||||||||||||||
Share-based cash and non-cash compensation |
1,180 | 126 | 311 | 318 | 213 | 306 | 318 | 318 | ||||||||||||||||||||||||
Intangible asset amortization |
590 | 583 | 784 | 509 | 1,121 | 1,078 | 1,093 | 1,194 | ||||||||||||||||||||||||
Cumulative effect of tax adjustments |
(1,523 | ) | (5,582 | ) | (791 | ) | 1,824 | (623 | ) | (1,039 | ) | (2,839 | ) | (2,446 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted Earnings (Loss) |
$ | 18,685 | $ | 26,477 | $ | 10,723 | $ | 13,069 | $ | 14,069 | $ | 28,550 | $ | 11,106 | $ | (10,163 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjustments to arrive at Adjusted EBITDA: |
||||||||||||||||||||||||||||||||
Net income (loss) |
$ | 16,342 | $ | 16,638 | $ | 9,585 | $ | 15,777 | $ | 13,172 | $ | 26,910 | $ | 8,323 | $ | (12,560 | ) | |||||||||||||||
Provision for income taxes |
10,619 | 9,450 | 7,536 | 10,083 | 7,862 | 17,096 | (7,242 | ) | 2,628 | |||||||||||||||||||||||
Interest expense |
18,484 | 23,366 | 16,155 | 15,987 | 16,039 | 16,153 | 16,415 | 16,192 | ||||||||||||||||||||||||
Depreciation and amortization |
4,676 | 4,654 | 4,661 | 3,916 | 5,547 | 4,781 | 4,815 | 4,883 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
EBITDA |
50,121 | 54,108 | 37,937 | 45,763 | 42,620 | 64,940 | 22,311 | 11,143 | ||||||||||||||||||||||||
Loss (gain) on extinguishment of debt |
| 12,458 | | (6,991 | ) | | | | | |||||||||||||||||||||||
Restructuring costs |
| | 651 | 1,486 | 186 | 1,295 | 4,257 | | ||||||||||||||||||||||||
Legal settlement cost |
1,950 | | | | | | | | ||||||||||||||||||||||||
Goodwill and intangible asset impairment |
| | | | | | | 2,882 | ||||||||||||||||||||||||
Other adjustments |
(201 | ) | (314 | ) | 19 | 26 | (282 | ) | 234 | 2,268 | (273 | ) | ||||||||||||||||||||
Share-based cash and non-cash compensation |
1,180 | 126 | 311 | 318 | 213 | 306 | 318 | 318 | ||||||||||||||||||||||||
Transaction-related costs |
146 | 2,254 | 183 | 146 | | | (46 | ) | 449 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted EBITDA |
$ | 53,196 | $ | 68,632 | $ | 39,101 | $ | 40,748 | $ | 42,737 | $ | 66,775 | $ | 29,108 | $ | 14,519 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
Store Count
From January 1, 2015 through June 30, 2017 we opened 50 stores: 20 in the United States and 30 in Canada. During the same period we closed 24 stores: 13 stores in Texas that were primarily underperforming former Money Box stores, one store in Missouri that we were unable to reopen due to fire damage and ten underperforming stores in the United Kingdom.
United States | Canada | United Kingdom | Total | |||||||||||||
January 1, 2015 store count |
209 | 161 | 23 | 393 | ||||||||||||
De novo store openings |
19 | 23 | | 42 | ||||||||||||
Closed stores |
(5 | ) | | (10 | ) | (15 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
December 31, 2015 store count |
223 | 184 | 13 | 420 | ||||||||||||
De novo store openings |
1 | 7 | | 8 | ||||||||||||
Closed stores |
(8 | ) | | | (8 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
December 31, 2016 store count |
216 | 191 | 13 | 420 | ||||||||||||
De novo store openings |
| | | | ||||||||||||
Closed stores |
(1 | ) | | | (1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
June 30, 2017 store count |
215 | 191 | 13 | 419 | ||||||||||||
|
|
|
|
|
|
|
|
Currency Information
We operate in the United States, Canada and the United Kingdom and report our consolidated results in U.S. dollars.
Changes in our reported revenues and net income include the effect of changes in currency exchange rates. All balance sheet accounts are translated into U.S. dollars at the currency exchange rate in effect at the end of each period. The income statement is translated at the average rates of exchange for the period. Currency translation adjustments are recorded as a component of Accumulated Other Comprehensive Income in stockholders equity.
Constant Currency Analysis
We have operations in the United States, Canada and the United Kingdom. In the six months ended June 30, 2017 and 2016, approximately 23.4% and 27.3%, respectively, of our revenues were originated in currencies other than the U.S. Dollar. For the years ended December 31, 2016 and 2015, approximately 28.1% and 29.5%, respectively, of our revenues were originated in currencies other than the U.S. Dollar. As a result, changes in our reported results include the impacts of changes in foreign currency exchange rates for the Canadian Dollar and the British Pound Sterling.
Six Months Ended June 30, 2017 and 2016
Average Exchange Rates | ||||||||||||||||
Six Months Ended June 30, | Change | |||||||||||||||
2017 | 2016 | $ | % | |||||||||||||
Canadian Dollar |
$ | 0.7495 | $ | 0.7524 | $ | (0.0029 | ) | (0.4 | )% | |||||||
British Pound Sterling |
$ | 1.2587 | $ | 1.4329 | $ | (0.1742 | ) | (12.2 | )% |
82
Year Ended December 31, 2016 and 2015
Average Exchange Rates | ||||||||||||||||
Year Ended December 31, | Change | |||||||||||||||
2016 | 2015 | $ | % | |||||||||||||
Canadian Dollar |
$ | 0.7551 | $ | 0.7832 | $ | (0.0281 | ) | (3.6 | )% | |||||||
British Pound Sterling |
1.3552 | 1.5282 | (0.1730 | ) | (11.3 | ) |
As additional information, we have provided a constant currency analysis below to remove the impact of the fluctuation in foreign exchange rates and utilize constant currency results in our analysis of segment performance. All conversion rates below are based on the U.S. Dollar equivalent to one of the applicable foreign currencies. We believe that the constant currency assessment below is a useful measure in assessing the comparable growth and profitability of our operations.
The revenues and gross margin below for the six months ended June 30, 2017 were calculated using the actual average exchange rate for the six months ended June 30, 2016:
Six Months Ended
June 30, |
Change | |||||||||||||||
(dollars in thousands, unaudited) |
2017 | 2016 | $ | % | ||||||||||||
Revenuesconstant currency basis: |
||||||||||||||||
Canada |
$ | 85,524 | $ | 98,106 | $ | (12,582 | ) | (12.8 | )% | |||||||
United Kingdom |
20,796 | 18,204 | 2,592 | 14.2 | % | |||||||||||
Gross marginconstant currency basis: |
||||||||||||||||
Canada |
$ | 30,380 | $ | 41,566 | $ | (11,186 | ) | (26.9 | )% | |||||||
United Kingdom |
7,295 | 6,425 | 870 | 13.5 | % |
The revenues and gross margin below for the year ended December 31, 2016 were calculated using the actual average exchange rate for the year ended December 31, 2015.
Year Ended
December 31, |
Change | |||||||||||||||
(dollars in thousands) |
2016 | 2015 | $ | % | ||||||||||||
Revenuesconstant currency basis: |
||||||||||||||||
Canada |
$ | 194,974 | $ | 184,859 | $ | 10,115 | 5.5 | % | ||||||||
United Kingdom |
38,110 | 54,608 | (16,498 | ) | (30.2 | )% | ||||||||||
Gross marginconstant currency basis: |
||||||||||||||||
Canada |
$ | 81,447 | $ | 77,469 | $ | 3,978 | 5.1 | % | ||||||||
United Kingdom |
11,518 | 9,504 | 2,014 | 21.2 | % |
Liquidity and Capital Resources
Our principal sources of liquidity to fund the loans we make to our customers are cash provided by operations, funds from third-party lenders under our CSO programs and our Non-Recourse U.S. SPV Facility, which finances the origination of eligible U.S. Unsecured and Secured Installment Loans at an advance rate of 80%. In February 2017, we issued our 12.00% Senior Secured Notes due 2022 to refinance similar notes that were nearing maturity and whose proceeds had been used primarily for acquisitions and general corporate purposes. As of June 30, 2017, we were in compliance with all financial ratios, covenants and other requirements set forth in our debt agreements. We anticipate that our primary use of cash will be to fund growth in our working capital, finance capital expenditures and meet our debt obligations. Our level of cash flow provided by operating activities typically experiences some seasonal fluctuation related to our levels of net income and changes in working capital levels, particularly loan receivables.
83
Unexpected changes in our financial condition or other unforeseen factors may result in our inability to obtain third-party financing or could increase our borrowing costs in the future. We have the ability to adjust our volume of lending to consumers which would reduce cash outflow requirements while increasing cash inflows through loan repayments to the extent we experience any short-term or long-term funding shortfalls. We may also sell or securitize our assets, draw on our available line of credit, enter into additional refinancing agreements and reduce our capital spending in order to generate additional liquidity. We believe our cash on hand and available borrowings provide us with sufficient liquidity for at least the next twelve months.
Borrowings
Our long-term debt consisted of the following as of June 30, 2017, December 31, 2016 and December 31, 2015 (net of deferred financing costs):
(in thousands) |
June 30,
2017 (unaudited) |
December 31,
2016 |
December 31,
2015 |
|||||||||
12.00% Senior Secured Notes |
$ | 448,789 | $ | | $ | | ||||||
May 2011 10.75% Senior Secured Notes due 2018 |
| 223,164 | 246,692 | |||||||||
May 2012 10.75% Senior Secured Notes due 2018 |
| 89,734 | 89,406 | |||||||||
February 2013 10.75% Senior Secured Notes due 2018 |
| 101,184 | 101,937 | |||||||||
Senior Cash Pay Notes |
| 124,365 | 123,640 | |||||||||
Non-Recourse U.S. SPV Facility |
102,984 | 63,054 | | |||||||||
ABL Facility |
| 23,406 | | |||||||||
Revolving credit facility |
| | 8,050 | |||||||||
|
|
|
|
|
|
|||||||
Total long-term debt, including current portion |
551,773 | 624,907 | 569,725 | |||||||||
Less: current maturities of long-term debt |
| 147,771 | 8,050 | |||||||||
|
|
|
|
|
|
|||||||
Long-term debt |
$ | 551,773 | $ | 477,136 | $ | 561,675 | ||||||
|
|
|
|
|
|
Available Credit Facilities and Other Resources
12.00% Senior Secured Notes
On February 15, 2017, CFTC issued $470.0 million aggregate principal amount of 12.00% Senior Secured Notes due March 1, 2022, or the 12.00% Senior Secured Notes. Interest on the 12.00% Senior Secured Notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The proceeds from the 12.00% Senior Secured Notes were used, together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of our wholly-owned subsidiary, CURO Intermediate, (ii) redeem our outstanding 12.00% Senior Cash Pay Notes due 2017, or the Senior Cash Pay Notes and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. The extinguishment of all of the 10.75% Senior Secured Notes due 2018 and the Senior Cash Pay Notes resulted in a pretax loss of $12.5 million in the six months ended June 30, 2017.
In connection with this debt issuance we capitalized financing costs of approximately $14.0 million, the balance of which are included in the Interim Consolidated Balance Sheets as a component of Long-Term Debt, and are being amortized over the term of the Senior Secured Notes and included as a component of interest expense.
The 12.00% Senior Secured Notes rank senior in right of payment to all of our and our guarantor entities existing and future subordinated indebtedness and equal in right of payment with all our and our guarantor entities existing and future senior indebtedness of the Company, including borrowings under our revolving credit facilities. The 12.00% Senior Secured Notes and the guarantees are effectively subordinated to our credit facilities and certain other indebtedness to the extent of the value of the assets securing such indebtedness and to liabilities of our subsidiaries that are not guarantors.
84
The 12.00% Senior Secured Notes are secured by liens on substantially all of our and the guarantors assets, subject to certain exceptions. On or after March 1, 2019, we may redeem some or all of the Notes at a premium that will decrease over time, plus accrued and unpaid interest, if any to the applicable date of redemption. Prior to March 1, 2019, we will be able to redeem up to 40% of the Notes at a redemption price of 112% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the redemption date with the net cash proceeds of certain equity offerings. Prior to March 1, 2019, subject to certain terms and conditions, we may redeem the Notes, in whole or in part, by paying a make-whole premium plus accrued and unpaid interest to the redemption date.
Non-Recourse U.S. SPV Facility
On November 17, 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company, and our wholly-owned subsidiary, which we refer to in this prospectus as the SPV Borrower, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders, or our Non-Recourse U.S. SPV Facility. This facility provides for an $80.0 million term loan and $45.0 million of initial revolving borrowing capacity, with the ability to expand the revolving borrowing capacity over time and an automatic expansion to $70.0 million on the six-month anniversary of the closing date, May 17, 2017. On November 17, 2016, CURO Intermediate entered into a six-month recourse credit facility with Victory Park Management, LLC and certain other lenders, or the ABL Facility, which provided for $25.0 million of borrowing capacity. The ABL Facility matured in May 2017 and was fully converted to the SPV facility. See Note II Long-Term Debt of the Notes to Interim Consolidated Financial Statements for further detail.
Senior Revolver
On September 1, 2017, we closed a $25 million Senior Secured Revolving Loan Facility, or the Senior Revolver. The negative covenants of the Senior Revolver generally conform to the related provisions in the Indenture for our 12.00% Senior Secured Notes due 2022. We believe this facility complements our other financing sources, while providing seasonal short-term liquidity. Under the Senior Revolver, there is $25 million maximum availability, including up to $5 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The Senior Revolver accrues interest at the one-month LIBOR (which may not be negative) plus 5.00% per annum and is repayable on demand. The terms of the Senior Revolver require that the outstanding balance be reduced to $0 for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all subsidiaries of CURO that guarantee our 12% Senior Secured Notes due 2022 and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that is senior to the lien securing our 12% Senior Secured Notes due 2022.
Cash Money Revolving Credit Facility
On November 4, 2011, one of our Canadian subsidiaries, Cash Money, entered into a CAD 7.5 million revolving credit facility, or the Cash Money Revolving Credit Facility, which will afford us an additional element of liquidity to meet the short-term working capital needs of our Canadian operations. Aggregate draws on the Cash Money Revolving Credit Facility are limited to the lesser of: (i) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and (ii) CAD 7.5 million.
The Cash Money Revolving Credit Facility is collateralized by substantially all of Cash Moneys assets and contains various covenants that include, among other things, that the aggregate borrowings outstanding under the facility not exceed the borrowing base, restrictions on the encumbrance of assets and the creation of indebtedness. Borrowings under the Cash Money Revolving Credit Facility are subject to compliance with these covenants. Borrowings under the Cash Money Revolving Credit Facility bear interest (per annum) at the prime rate of a Canadian chartered bank plus 1.95%.
The Cash Money Revolving Credit Facility was undrawn at June 30, 2017 and December 31, 2016. On September 30, 2016, the CAD 7.5 million borrowing capacity under our revolving credit facility was reduced by $0.2 million in stand-by letters of credit.
85
Balance Sheet Changes June 30, 2017 compared to December 31, 2016
Cash Cash decreased from 2016 year-end primarily because of the redemption of the Companys 10.75% Senior Secured Notes due 2017 and CURO Intermediates 10.75% Senior Secured Notes due 2018, or the Former Senior Secured Notes. On February 15, 2017, the Company issued $470 million of 12.00% Senior Secured Notes due March 1, 2022. The proceeds were used to redeem the $539.9 million outstanding of Former Senior Secured Notes. In total, the redemption of the Former Senior Secured Notes required $122.5 million of our cash after including accrued interest, prepayment penalties, transaction costs and original-issue discount. The decrease in cash from the refinancing was offset partially by cash generated by operations in the first six months of 2017.
Restricted Cash Restricted cash rose from 2016 year-end because of increased cash in our consolidated wholly-owned, bankruptcy-remote special purpose subsidiaries, or VIEs, from underlying Installment Loan volume growth.
Gross Loans Receivable and Allowance for Loan Losses Changes in Gross Loans Receivable and related Allowance for Loan Losses are due to high customer demand and loan origination volumes during the first six months of 2017, concentrated in Installment Loans. The Company originated $341.8 million and $83.2 million of Unsecured and Secured Installment Loans, respectively, in the first six months of 2017.
Other Assets Other assets increased primarily because of our $4.9 million investment in Cognical Holdings, Inc. preferred stock. For additional information, see Note 14, Financial Instruments and Concentrations of our Notes to Interim Consolidated Financial Statements included elsewhere in this prospectus.
Long-term debt (including current maturities) and Accrued Interest Changes from year-end 2016 are due to the refinancing of the Former Senior Secured Notes and the conversion of the ABL Facility to the Non-Recourse U.S. SPV Facility. See Note 11, Long-Term Debt of our Notes to Interim Consolidated Financial Statements included elsewhere in this prospectus for detailed discussion of changes in debt balances.
Cash Flows
The following highlights our cash flow activity and the sources and uses of funding during the periods indicated:
Six Months Ended | Year Ended | |||||||||||||||
(in thousands) |
June 30,
2017 (unaudited) |
June 30,
2016 (unaudited) |
December 31,
2016 |
December 31,
2015 |
||||||||||||
Net cash provided by operating activities |
$ | 49,774 | $ | 72,548 | $ | 47,712 | $ | 17,114 | ||||||||
Net cash (used in) provided by investing activities |
(16,240 | ) | 1,145 | (12,922 | ) | (26,255 | ) | |||||||||
Net cash (used in) provided by financing activities |
(115,719 | ) | (8,050 | ) | 59,382 | (12,321 | ) |
Six Months Ended June 30, 2017 and 2016
Cash flows provided by (used in) operating activities
During the six months ended June 30, 2017 our operating activities provided net cash of $49.8 million. Contributing to current year net cash provided by operating activities were net income of $33.0 million, and non-cash expenses, such as depreciation and amortization, the provision for loan losses, and a loss on debt extinguishment for a total of $150.2 million, partially offset by changes in our operating assets and liabilities of $133.4 million. The most significant change within operating assets and liabilities was a $150.5 million increase in loans receivable.
86
Cash flows from investing activities
During the six months ended June 30, 2017, we used cash of $16.2 million to increase our restricted cash balances by approximately $4.4 million to purchase approximately $6.8 million of property and equipment, including software licenses and to purchase $5.0 of Cognical Holdings preferred shares. The increase in restricted cash was primarily attributable to our U.S. SPV Facility.
Cash flows from financing activities
Net cash used for the six months ended June 30, 2017 was $115.7 million. During this period we extinguished our 10.75% Senior Secured Notes for $426.0 million (which included $8.9 million of call premium) and extinguished our Senior Cash Pay Notes for $130.1 million. These payments were partially financed by proceeds of $447.6 million (net of $14.0 million of debt issuance costs and $8.5 million of discount on notes issued) from the issuance of 12.00% Senior Secured Notes due 2022. We also had net borrowings of $16.0 million from our U.S. SPV Facility and our ABL Facility. We also paid a dividend of $28.0 million to our stockholders on May 15, 2017.
Years Ended December 31, 2016 and 2015
Cash flows provided by (used in) operating activities
During the year ended December 31, 2016 our operating activities provided net cash of $47.7 million, compared to $17.1 million in net cash used in operating activities during the year ended December 31, 2015. Contributing to net cash provided by operating activities in 2016 were net income of $65.4 million, and non-cash expenses, such as depreciation and amortization, the provision for loan losses, and a benefit related to deferred income taxes, of $278.7 million; non-cash restructuring costs of $0.5 million, partially offset by a $7.0 million non-cash benefit from a gain on debt extinguishment and a $290.0 million net decrease in cash resulting from changes in operating assets and liabilities. The most significant change within operating assets and liabilities was a $287.8 million increase in loans receivable, net of provision for losses.
Loans receivable will fluctuate from period to period depending on the timing of loan issuances and collections. A seasonal decline in consumer loans receivable typically takes place during the first quarter of the year and is driven by income tax refunds in the United States. Customers receiving income tax refunds will use the proceeds to pay outstanding loan balances, resulting in an increase of our net cash balances and a decrease of our consumer loans receivable balances. Consumer loans receivable balances typically reflect growth during the remainder of the year.
Cash flows used in investing activities
During the year ended December 31, 2016 we used net cash of $16.0 million for the purchase of property and equipment, including software licenses, partially offset by a $3.1 million decrease in our restricted cash balance. This compared to $26.3 million in net cash used in investing activities during the year ended December 31, 2015. The growth in property and equipment was driven primarily by capital expenditures associated with new store openings in Canada, store refreshes in the United States, and expenditures for software licenses. For the year ended December 31, 2016 we also received £1.4 million ($1.9 million) of funds previously placed in a collateral account with a U.K. banking institution, and received $4.0 million of funds previously placed in a collateral account with a U.S. banking institution. As a result of the borrowings from the Non-Recourse U.S. SPV Facility, approximately $2.8 million of cash was restricted.
Cash flows provided by (used in) financing activities
During the year ended December 31, 2016, net cash provided by financing activities was $59.4 million, compared to $12.3 million in net cash used in financing activities during the year ended December 31, 2015. The
87
change was primarily due to $91.7 million of proceeds received from new borrowings from our newly created Non-Recourse U.S. SPV Facility and ABL Facility. In addition, we incurred additional deferred financing costs associated with this debt. During the year ended December 31, 2016, CURO Intermediate used cash of $18.9 million to purchase $25.1 million of outstanding May 2011 10.75% Senior Secured Notes at 71.25% of the principal, plus accrued and unpaid interest of $1.0 million via an open-market purchase. During the year, we also received proceeds from draws on our credit facilities of $30.0 million, and repaid $38.1 million of the outstanding balance of borrowings on our credit facilities. Borrowings under our credit facilities provided us with short-term liquidity and were used for working capital requirements and to fund capital expenditures.
Contractual Obligations
As discussed in Liquidity and Capital ResourcesBorrowings, on February 15, 2017, CFTC issued $470.0 million of 12.00% Senior Secured Notes. Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The proceeds from the notes and available cash were used to (i) redeem 10.75% Senior Secured Notes due 2018 of our subsidiary, CURO Intermediate Holdings, (ii) redeem our 12.00% Senior Cash Pay Notes due 2017, and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering.
Historical
The following table sets forth a summary of our principal future legal obligations and commitments, as well as the interest payable on our senior secured notes and cash pay notes, as of December 31, 2016, prior to the issuance and redemption discussed above:
Payments Due by Period | ||||||||||||||||||||
(in thousands) |
Total |
Less Than
One Year |
One to
Three Years |
Three to
Five Years |
More
Than Five Years |
|||||||||||||||
Long-term obligations(1) |
$ | 633,826 | $ | 148,406 | $ | 417,109 | $ | 68,311 | $ | | ||||||||||
Interest on long-term obligations |
135,914 | 70,738 | 44,401 | 20,775 | | |||||||||||||||
Operating leases |
116,135 | 26,296 | 39,357 | 24,628 | 25,854 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 885,875 | $ | 245,440 | $ | 500,867 | $ | 113,714 | $ | 25,854 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Includes principal payment on our Senior Cash Pay Notes, which we redeemed in 2017; our ABL Facility, which matured in 2017; our 10.75% Senior Secured Notes due 2018, which we redeemed in 2017; and the present value of the escrow note related to the Cash Money acquisition, which matures in 2019; and our Non-Recourse U.S. SPV Facility, which matures in 2021. |
88
Pro Forma
In February 2017, CFTC issued $470.0 million of 12.00% Senior Secured Notes and we redeemed two other series of outstanding notes. Additionally, in May 2017 our ABL Facility matured, and our Non-Recourse U.S. SPV Facility expanded by $70.0 million to a total capacity of $150.0 million. The following table presents our principal future legal obligations and commitments, as of December 31, 2016, after giving pro forma impact to the above mentioned items.
Pro FormaPayments Due by Period | ||||||||||||||||||||
(in thousands) |
Total |
Less
Than One Year |
One to
Three Years |
Three to
Five Years |
More
Than Five Years |
|||||||||||||||
Long term obligations(1) |
$ | 563,944 | $ | 23,406 | $ | 2,227 | $ | 68,311 | $ | 470,000 | ||||||||||
Interest on long-term obligations |
336,014 | 39,338 | 134,901 | 133,575 | 28,200 | |||||||||||||||
Operating leases |
116,135 | 26,296 | 39,357 | 24,628 | 25,854 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 1,016,093 | $ | 89,040 | $ | 176,485 | $ | 226,514 | $ | 524,054 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Includes the present value of the Escrow Note related to the Cash Money acquisition, which matures in 2019; our Non-Recourse U.S. SPV Facility, which matures in 2021; and principal payments on CFTCs Senior Secured Notes, which mature in 2022. |
Operating Leases
We have entered into operating lease agreements for the buildings in which we operate that expire at various times through 2030. The majority of the leases have an original term of five years with two, five-year renewal options. Most of the leases have escalation clauses and several also require payment of certain period costs including maintenance, insurance and property taxes.
Some of the leases are with related parties and have terms similar to the non-related party leases previously described. Rent expense on unrelated third-party leases for the years ended December 31, 2016, 2015 and 2014 was $23.1 million, $23.3 million, and $22.3 million, respectively; and for related-party leases was $3.3 million, $3.2 million, and $3.2 million, respectively.
Future minimum lease payments that we are contractually obligated to make under operating leases are as follows at December 31, 2016.
(in thousands) |
Third Party | Related-Party | Total | |||||||||
2017 |
$ | 22,933 | $ | 3,363 | $ | 26,296 | ||||||
2018 |
20,382 | 1,115 | 21,497 | |||||||||
2019 |
17,030 | 830 | 17,860 | |||||||||
2020 |
13,307 | 725 | 14,032 | |||||||||
2021 |
9,921 | 675 | 10,596 | |||||||||
Thereafter |
24,330 | 1,524 | 25,854 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 107,903 | $ | 8,232 | $ | 116,135 | ||||||
|
|
|
|
|
|
Off-Balance Sheet Arrangements
We originate loans in all of our store locations and online, except for our operations in Texas and Ohio. In these states, we operate as a Credit Services Organization, or CSO, through three of our operating subsidiaries. Our CSO program in Texas is licensed as a Credit Access Business, or CAB, under Texas Finance Code Chapter
89
393 and regulated by the Texas Office of the Consumer Credit Commissioner. Our CSO program in Ohio is registered under the Credit Services Organization Act, Ohio Revised Code Sections 4712.01 to 4712.99, and regulated by the Ohio Department of Commerce Division of Financial Institutions. As a CAB, we charge our customers a fee (the CSO Fee) for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customers obligation to repay the loan the customer receives from the third-party lender. For CSO loans, each lender is responsible for providing the criteria by which the customers application is underwritten and, if approved, determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans if they go into default. Since the loans are made by a third-party lender, they are not included in our Consolidated Balance Sheets as loans receivable.
As of June 30, 2017, the maximum amount payable under all such guarantees was $52.7 million, compared to $59.6 million at December 31, 2016. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover the amount we pay from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $15.6 million and $17.1 million at June 30, 2017 and December 31, 2016, respectively.
Additionally, we enter into operating leases in the normal course of business. Our operating lease obligations are discussed in Note 18, Operating Leases of our Notes to Consolidated Financial Statements included elsewhere in this prospectus, and are also included in the table under Contractual Obligations above.
Critical Accounting Policies
We consider our accounting policies related to revenue recognition, provision for loan losses, allowance for loan losses and CSO guarantee liability, share-based compensation, goodwill, business combination accounting, identifiable intangible assets, and income taxes to be critical policies in understanding our historical and future performance.
Revenue Recognition
We offer a variety of loan products including Installment, Open-End and Single-Pay Loans. Product offerings differ by jurisdiction and are governed by the laws in each separate jurisdiction.
Installment Loans, which include secured auto title installment loans and Unsecured Installment Loans, require periodic payments of principal and interest. Installment Loans are fully amortized loans with a fixed payment amount, which includes principal and accrued interest, due each period during the term of the loan. The loan terms for Installment Loans can range up to 48 months depending on state regulations. We record revenue from Installment loans on a simple-interest basis. Unpaid and accrued interest and fees are included in gross loans receivable in the Consolidated Balance Sheets.
Open-End Loans function much like a revolving line-of-credit, whereby the periodic payment is a set percentage of the customers outstanding loan balance, and there is no defined loan term. We record revenue from Open-End Loans on a simple interest basis. Unpaid and accrued interest and fees are included in gross loans receivable in the Consolidated Balance Sheets.
90
Single-Pay Loans are primarily payday loans and auto title loans. A Single-Pay auto title loan allows a customer to obtain a loan using their car as collateral for the loan with a typical loan term of 30 days. Revenues from Single-Pay Loan products are recognized each period on a constant-yield basis ratably over the term of each loan. We defer recognition of the unearned fees we expect to collect based on the remaining term of the loan at the end of each reporting period.
Check cashing fees, money order fees and other fees from ancillary products and services are generally recognized at the point-of-sale when the transaction is completed. We also earn revenue from the sale of credit protection insurance in the Canadian market. Insurance revenues are recognized ratably over the term of the loan.
Current and Past-Due Loans Receivable
We classify our loans receivable as either current or past-due. Single-Pay and Open-End Loans are considered past-due when a customer misses a scheduled payment and charged-off to the allowance for loan losses. The charge-off of Unsecured Installment and Secured Installment Loans was impacted by a change in accounting estimate in the six months ended June 30, 2017.
Effective January 1, 2017, we modified the timeframe in which Installment Loans are charged-off and made related refinements to our loss provisioning methodology. Prior to January 1, 2017, we deemed all loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past-due. Because of the Companys continuing shift from Single-Pay to Installment Loan products and analysis of the timing and quantity of payments on early-stage versus late-stage delinquencies, we have revised our estimates and now consider Installment Loans uncollectible when the loan has been past-due for 90 consecutive days. Consequently, past-due Installment Loans remain in loans receivable, with disclosure of past-due balances, for 90 days before being charged-off against the allowance for loan losses. Subsequently, all recoveries on charged-off loans are credited to the allowance for loan losses.
In the income statement, the provision for losses for Installment Loans is based on an assessment of the cumulative net losses inherent in the underlying loan portfolios, by vintage, and other quantitative and qualitative factors. The resulting loss provision rate is applied to loan originations to determine the provision for losses. In addition to improving estimated collectability and loss recognition for Installment Loans, we also believe these refinements are better aligned with industry comparisons and practices.
The aforementioned change was treated as a change in accounting estimate. In accordance with Accounting Standards Codification 250 which addresses a change in accounting estimate, the change is being applied prospectively and is effective January 1, 2017. As a result, some credit quality metrics for the six months ended June 30, 2017 may not be comparable to historical periods. Throughout the remainder of this report, we refer to the change in as the Q1 Loss Recognition Change.
Installment Loans generally are considered past-due when a customer misses a scheduled payment. Loans zero to 90 days past-due included in gross loans receivable. The Company accrues interest on past-due loans until charged off. The amount of the resulting charge-off includes unpaid principal, accrued interest and any uncollected fees, if applicable. Consequently, net loss rates that include accrued interest will be higher than under the methodology applied prior to January 1, 2017.
In addition to the revised loss provision rates to accommodate the change in estimate, $45.6 million of past-due Installment Loans were included in gross loans receivable as of June 30, 2017. Before the Q1 Loss Recognition Change, no past-due loans were included in gross loans receivable.
Allowance for Loan Losses
The allowance for loan losses is primarily based on back-testing of subsequent collections history by product and cumulative aggregate net losses by product and by vintage. We do not specifically reserve for any
91
individual loan but rather segregate loans into separate pools based upon loan portfolios containing similar risk characteristics. Additional quantitative factors, such as current default trends, past-due account roll rates (expected future cash collections by past-due aging category based on current trends) and changes to underwriting and portfolio mix are also considered in evaluating the adequacy of the allowance and current provision rates. Qualitative factors such as the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions impact managements judgment on the overall adequacy of the allowance for loan losses.
In addition to the effect on Installment provision rates and loan balances, the Q1 Loss Recognition Change affected comparability of activity in the related allowance for loan losses. Specifically, no Unsecured Installment or Secured Installment Loans were charged-off to the allowance for loan losses in the three months ended March 31, 2017 because charge-off effectively occurs on day 91 under the revised methodology and no affected loans originated during the period reached day 91 until April 2017. Actual charge-offs and recoveries on defaulted/charged-off loans from the three months ended March 31, 2017 will affect the allowance for loan losses in prospective periods. But, as discussed previously, the related net losses were recognized in the Interim Consolidated Statement of Income during the six months ended June 30, 2017 by applying expected net loss provision rates to the related loan originations .
Credit Services Organization
Through our CSO programs, we act as a credit services organization/credit access business on behalf of customers in accordance with applicable state laws. We currently offer loans through CSO programs in stores and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and Secured Installment Loans with a maximum term of 180 days. In Ohio we offer an Unsecured Installment Loan product with a maximum term of 18 months. As a CSO we earn revenue by charging the customer a fee (the CSO fee) for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customers obligation to repay the loan the customer receives from the third-party lender. CSO fees are calculated based on the amount of the customers loan. For CSO loans, each lender is responsible for providing the criteria by which the customers application is underwritten and, if approved, determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans if they go into default.
As of June 30, 2017, the maximum amount payable under all such guarantees was $52.7 million, compared to $59.6 million at December 31, 2016. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover the amount we pay from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $15.6 million and $17.1 million at June 30, 2017 and December 31, 2016, respectively. Changes in the fair value of the guarantee liability are recognized through the provision for losses.
CSO fees are calculated based on the amount of the customers loan. We comply with the applicable jurisdictions Credit Services Organization Act or a similar statue. These laws generally define the services that we can provide to consumers and require us to provide a contract to the customer outlining our services and the
92
cost of those services to the customer. For services we provide under our CSO programs we receive cash from customers on their scheduled loan repayment due dates. The CSO fee is earned ratably over the term of the loan as the customers make payments. If a loan is paid off early, no additional CSO fees are due or collected. The maximum CSO loan term is six months and 18 months in Texas and Ohio, respectively. During the year ended December 31, 2016 and the six months ended June 30, 2017, approximately 53.2% and 58.4%, respectively, of Unsecured Installment Loans, and 62.5% and 58.8%, respectively, of Secured Installment Loans originated under CSO programs were paid off prior to the original maturity date.
Since CSO loans are made by a third-party lender, we do not include them in our Consolidated Balance Sheets as loans receivable. CSO fees receivable are included in Prepaid expense and other in our Consolidated Balance Sheets. We receive cash from customers for these fees on their scheduled loan repayment due dates.
Share-Based Compensation
In accordance with applicable accounting standards, we account for share-based compensation expense for awards to our employees and directors at the estimated fair value on the grant date. The fair value of stock option grants is determined using the Black-Scholes option pricing model, which requires us to make several highly subjective and complex assumptions including, but not limited to, risk-free interest rate and expected life, changes to which can materially affect the fair value estimate. Since our common stock is not publicly traded, the performance of the common stock of public traded companies from our industry sector, which we determined to include the alternative financial sector, were used to estimate the expected volatility of our stock. Our expected option term is calculated using the average of the vesting period and the original contractual term. The estimated fair value of share-based awards is recognized as compensation expense on a straight-line basis over the vesting period. Additionally, the recognition of share-based compensation expense requires an estimation of the number of awards that will ultimately vest and the number of awards that will ultimately be forfeited.
Goodwill
Goodwill is initially valued based on the excess of the purchase price of a business combination over the fair value of the acquired net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Intangible assets other than goodwill are initially valued at fair value. When appropriate, we utilize independent valuation experts to advise and assist us in determining the fair value of the identified intangible assets acquired in connection with a business acquisition and in determining appropriate amortization methods and periods for those intangible assets. Any contingent consideration included as part of the purchase is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. Changes in the fair value of contingent consideration are recognized in earnings.
Our annual impairment review for goodwill consists of performing a qualitative assessment to determine whether it is more likely than not that a reporting units fair value is less than its carrying amount as a basis for determining whether or not further testing is required. We may elect to bypass the qualitative assessment and proceed directly to the two-step process, for any reporting unit, in any period. We can resume the qualitative assessment for any reporting unit in any subsequent period. If we determine, on the basis of qualitative factors, that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, we will then apply a two-step process of determining the fair value of the reporting unit and comparing it to the carrying value of the net assets allocated to the reporting unit. When performing the two-step process, if the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required. In the event the estimated fair value of a reporting unit is less than the carrying value, additional analysis is required. The additional analysis compares the carrying amount of the reporting units goodwill with the implied fair value of the goodwill. The use of external independent valuation experts may be required to assist management in determining the fair value of the reporting unit. The implied fair value of the goodwill is the excess of the fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of that unit as if
93
the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its implied fair value, an impairment loss equal to such excess is recognized, which could significantly and adversely impact reported results of operations and stockholders equity. During the fourth quarter of 2016, we performed the first step of the two-step process and determined that the implied fair value of our reporting units exceed their carrying values, and therefore, the second step was not performed and no further analysis or write-down of goodwill is required.
During the third quarter of 2015, due to the declines in our overall financial performance in the United Kingdom, we determined that a triggering event had occurred requiring an impairment evaluation of our goodwill and other intangible assets in the United Kingdom. As a result, during the third quarter of 2015, we recorded non-cash impairment charges of $2.9 million which were comprised of a $1.8 million charge related to the Wage Day trade name, a $0.2 million charge related to the customer relationships acquired as part of the acquisition of Wage Day, and a $0.9 million non-cash goodwill impairment charge in our U.K. reporting segment.
For the U.K. reporting unit, the estimated fair value as determined by the Discounted Cash Flow, or DCF, model was lower than the associated carrying value. As a result, management performed the second step of the impairment analysis in order to determine the implied fair value of the U.K.s goodwill. The results of the second-step analysis indicated that the implied fair value of goodwill was £17.7 million. Therefore, in 2015, we recorded a non-cash goodwill impairment charge of £0.6 million ($0.9 million). The key assumptions used to determine the fair value of the U.K. reporting unit included the following: (i) the discount rate was 11%; (ii) terminal period growth rate of 2.0%; and (iii) effective combined tax rate of 20%.
During the 2015 annual review of goodwill, we performed the qualitative assessment for our U.S. and Canada reporting units. Management concluded that it was not more likely than not that the estimated fair values of these two reporting units were less than their carrying values. As such, no further analysis was required for these reporting units. As part of this annual impairment test in the fourth quarter, we reviewed our analysis done in the third quarter for the United Kingdom and updated projections as appropriate. Management concluded as a result of this analysis that it was not more likely than not that the estimated fair values of the reporting units were less than their carrying values.
The impairment of the goodwill on our U.K. reporting unit resulted primarily from changes to the regulatory environment in the United Kingdom that resulted in managements downward revision of its cash flow projections for the U.K. reporting unit. The primary driver of decreased volumes in the United Kingdom was the direct result of recent regulatory changes, primarily the new Financial Conduct Authority, or FCA, rules that took effect on July 1, 2014, which reduced loan refinancing transactions from three to two and reduced the number of continuous payment authority attempts from three to two. Additionally, the FCA implemented a rate cap on high-cost short-term credit products that took effect on January 2, 2015. This price cap includes three components: (i) an initial cap of 0.8% of the outstanding principal per day; (ii) a default fee fixed rate of £15; and (iii) a total cost of credit cap of 100% of the total amount borrowed applying to all interest, fees and charges. With the imposition of the new rate cap, we ceased offering any new Installment Loan products in the United Kingdom in favor of a new rate capped single pay loan product. Additionally, the increase in compliance requirements has driven up the administrative costs necessary to operate in the United Kingdom. We modeled the impact of all of these regulatory changes in the projections used in our second-step analysis.
Business combination accounting
We have acquired businesses in the past, and we may acquire additional businesses in the future. Business combination accounting requires us to determine the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed, and contingent consideration issued in a business combination. The cost of the acquisition is allocated to these assets and liabilities in amounts equal to the estimated fair value of each asset and liability, and any remaining acquisition cost is classified as goodwill. This allocation process requires
94
extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. We engage third-party appraisal firms to assist in fair value determination when appropriate. Our acquisitions may also include contingent consideration, or earn-out provisions, which provide for additional consideration to be paid to the seller if certain future conditions are met. These earn-out provisions are estimated and recognized at fair value at the acquisition date based on projected earnings or other financial metrics over specified periods after the acquisition date. These estimates are reviewed during each reporting period and adjusted based upon actual results. Acquisition-related costs for potential and completed acquisitions are expensed as incurred, and are included in corporate expense in the Consolidated Statements of Income.
Income Taxes
A deferred tax asset or liability is recognized for the anticipated future tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements and for operating loss and tax credit carryforwards. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Realization of the deferred tax assets is dependent on our ability to generate sufficient future taxable income and, if necessary, execution of our tax planning strategies. In the event we determine that sufficient future taxable income, taking into consideration tax planning strategies, may not generate sufficient taxable income to fully realize net deferred tax assets, we may be required to establish or increase valuation allowances by a charge to income tax expense in the period such a determination is made. This charge may have a material impact on recognized income tax expense on our Consolidated Statements of Income. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The recognition of a change in enacted tax rates may have a material impact on recognized income tax expense and on our Consolidated Statements of Income.
We follow accounting guidance which prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under this guidance, tax positions are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application of this guidance requires numerous estimates based on available information. We consider many factors when evaluating and estimating our tax positions and tax benefits, and our recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As we obtain additional information, we may need to periodically adjust our recognized tax positions and tax benefits. These periodic adjustments may have a material impact on our Consolidated Statements of Income. For additional information related to uncertain tax positions, see Note 13 Income Taxes of our Notes to Consolidated Financial Statements included elsewhere in this prospectus.
Recent Accounting Pronouncements
See Note 1, Summary of Significant Accounting Policies and Nature of Operations of our Notes to Consolidated Financial Statements included elsewhere in this prospectus for a discussion of recent accounting pronouncements.
95
Quantitative and Qualitative Disclosures About Market Risk
Concentration Risk
Revenues originated in Texas, Ontario, and California represented approximately 26.1%, 14.4%, and 15.1%, respectively, of our consolidated total revenues for the year ended December 31, 2016. Revenues originated in Texas, Ontario, and California represented approximately 26.1%, 15.1% and 13.7%, respectively, of our consolidated total revenues for the year ended December 31, 2015. Revenues originated in Texas, Ontario, and California represented approximately 25.7%, 13.1% and 17.7%, respectively, of our consolidated total revenues for the six months ended June 30, 2017. Revenues originated in Texas, Ontario, and California represented approximately 25.5%, 14.9% and 15.2%, respectively, of our consolidated total revenues for the six months ended June 30, 2016.
We hold cash at major financial institutions that often exceed FDIC insured limits. We manage our concentration risk by placing our cash deposits in high quality financial institutions and by periodically evaluating the credit quality of the financial institutions holding such deposits. Historically, we have not experienced any losses due to such cash concentration.
Financial instruments that potentially subject us to concentrations of credit risk primarily consist of our consumer loans receivable. Concentrations of credit risk with respect to consumer loans receivable are limited due to the large number of customers comprising our customer base.
Regulatory Risk
We are subject to regulation by federal, state and provincial governmental authorities that affect the products and services that we provide, particularly payday advance loans. The level and type of regulation for payday advance loans varies greatly by jurisdiction, ranging from jurisdictions with moderate regulations or legislation, to other jurisdictions having very strict guidelines and requirements.
To the extent that laws and regulations are passed that affect the manner in which we conduct business in any one of those markets, our financial position, results of operations and cash flows could be adversely affected. Additionally, our ability to meet the financial covenants included in our credit agreement could be negatively impacted.
Interest Rate Risk
We are exposed to interest rate risk on our Cash Money Revolving credit facility and our Non-Recourse U.S. SPV Facility and ABL Facility. Our variable interest expense is sensitive to changes in the general level of interest rates. We may from time to time enter into interest rate swaps, collars or similar instruments with the objective of reducing our volatility in borrowing costs. We do not use derivative financial instruments for speculative or trading purposes. We had no derivative financial instruments related to interest rate risk outstanding as of December 31, 2016 or December 31, 2015.
All of our customer loan portfolios have fixed interest rates and fees that do not fluctuate over the life of the loan. Notwithstanding that, we support fixed rate lending in part with variable rate borrowing. We do not believe there is any material interest rate sensitivity associated with our customer loan portfolio. This is because of both the very high rates of return on our loans and their short duration.
The weighted average interest rate on the $91.7 million of variable debt outstanding on the Non-Recourse U.S. SPV Facility and ABL Facility as of December 31, 2016 was approximately 11.5%. The weighted average interest rate on the $8.1 million of variable debt outstanding on the Cash Money Revolving Credit Facility as of December 31, 2015 was approximately 7.0%. There was no debt outstanding under the Cash Money Revolving Credit Facility as of December 31, 2016.
96
Foreign Currency Exchange Rate Risk
As foreign currency exchange rates change, translation of the financial results of the United Kingdom and Canadian operations into U.S. Dollars will be impacted. Our operations in Canada and the United Kingdom represent a significant portion of our total operations, and as a result, a material change in foreign currency exchange rates in either country could have a significant impact on our consolidated financial position, results of operations or cash flows. From time to time, we may elect to purchase financial instruments as hedges against foreign exchange rate risks with the objective of protecting our results of operations in the United Kingdom and/or Canada against foreign currency fluctuations. We typically hedge anticipated cash flows between our foreign subsidiaries and domestic subsidiaries. As of December 31, 2016 we had entered into a cash flow hedge in which the hedging instrument is a forward extra ( which is a common zero cost strategy that allows the client to be fully protected at a predetermined budget rate while allowing for some profit participation if the spot rate moves in favor of the client) to sell GBP 4,800,000. This contract completed in April 2017.
We have performed an assessment that determined that all critical terms of the hedging instrument and the hedged transaction match and as such have qualitatively concluded that changes in the options intrinsic value will completely offset the change in the expected cash flows based on changes in the spot rate. In making that determination, the guidance in ASC 815-20-25-84 was used. Future assessment will be performed utilizing the guidance in ASC 815-20-35-9 through 35-13, Relative Ease of Assessing Effectiveness . Additionally, in accordance with ASC 815-20-25-82, since the effectiveness of this hedge is assessed based on changes in the options intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness.
We record derivative instruments at fair value on the balance sheet as either an asset or liability on the balance sheet. Changes in the options intrinsic value, to the extent that they are effective as a hedge, are recorded in other comprehensive income (loss). For derivatives that qualify and have been designated as cash flow or fair value hedges for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value or cash flows attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the hedge accounting method). The contract completed in April 2017 and in the second quarter of 2017 we have recorded a transaction loss of $0.3 million associated with this hedge. At December 31, 2015 we did not hold any financial instruments as hedges against foreign exchange rate risks.
97
Company Overview
We are a growth-oriented, technology-enabled, highly-diversified consumer finance company serving a wide range of underbanked consumers in the United States, Canada and the United Kingdom and are a market leader in our industry based on revenues. We believe that we have the only true omni-channel customer acquisition, onboarding and servicing platform that is integrated across store, online, mobile and contact center touchpoints. Our IT platform, which we refer to as the Curo Platform, seamlessly integrates loan underwriting, scoring, servicing, collections, regulatory compliance and reporting activities into a single, centralized system. We use advanced risk analytics powered by proprietary algorithms and over 15 years of loan performance data to efficiently and effectively score our customers loan applications. Since 2010, we have extended $13.1 billion in total credit across approximately 34.8 million total loans, and our revenue of $828.6 million in 2016 represents a 26.3% compound annual growth rate, or CAGR, over the same time period.
We operate in the United States under two principal brands, Speedy Cash and Rapid Cash, and launched our new brand Avio Credit in the United States in the second quarter of 2017. In the United Kingdom we operate online as Wage Day Advance and our stores are branded Speedy Cash. In Canada our stores are branded Cash Money and, we offer LendDirect installment loans online. As of June 30, 2017, our store network consisted of 419 locations across 14 U.S. states, seven Canadian provinces and the United Kingdom. As of June 30, 2017, we offered our online services in 25 U.S. states, five Canadian provinces and the United Kingdom.
We offer a broad range of consumer finance products, including Unsecured Installment Loans, Secured Installment Loans, Open-End Loans and Single-Pay Loans. We have tailored our products to fit our customers particular needs as they access and build credit. Our product suite allows us to serve a broader group of potential borrowers than most of our competitors. The flexibility of our products, particularly our installment and open-end products, allows us to continue serving customers as their credit needs evolve and mature. Our broad product suite creates a diversified revenue stream and our omni-channel platform seamlessly delivers our products across all contact pointswe refer to it as Call, Click or Come In. We believe these complementary channels drive brand awareness, increase approval rates, lower our customer acquisition costs and improve customer satisfaction levels and customer retention.
We serve the large and growing market of individuals who have limited access to traditional sources of consumer credit and financial services. We define our addressable market as underbanked consumers in the United States, Canada and the United Kingdom. According to a study by CFSI, there are as many as 121 million Americans who are currently underserved by financial services companies. According to studies by ACORN Canada and PWC, the statistics in Canada and the United Kingdom are similar, with an estimated 15% of Canadian residents (approximately 5 million individuals) and an estimated 20 to 25% of United Kingdom residents (approximately 10 to 14 million individuals) classified as underbanked. Given our international footprint, this translates into an addressable market of approximately 140 million individuals. We believe that with our scalable omni-channel platform and diverse product offerings, we are well positioned to gain market share as sub-scale players struggle to keep pace with the technological evolution taking place in the industry.
Industry Overview
We operate in a segment of the financial services industry that provides lending products to underbanked consumers in need of convenient and flexible access to credit and other financial products. Up to 140 million individuals fall within the definition of our target market. In the United States alone, according to a study by CFSI, these underserved consumers spent an estimated $126.5 billion on fees and interest related to credit products similar to those we offer.
We believe our target consumers have a need for tailored financing products to cover essential expenses. According to a study by the Federal Reserve, 44% of American adults could not cover an emergency expense
98
costing $400 or would cover it by selling an asset or borrowing money. Additionally, a study conducted by JPMorgan Chase & Co., which analyzed the transaction information of 2.5 million of its account holders, found that 41% of those sampled experienced month-to-month income swings of more than 30%.
We compete against a wide variety of consumer finance providers including online and branch-based consumer lenders, credit card companies, pawnshops, rent-to-own and other financial institutions that offer similar financial services. A study by CFSI has estimated that spending on credit products offered by our industry exhibited a 10.0% CAGR from 2010 to 2015. This growth has been accompanied by shrinking access to credit for our customer base as evidenced by an estimated $142 billion reduction in the availability of non-prime consumer credit from the 2008 to 2009 credit crisis to 2015 (based on analysis of master pool trust data of securitizations for major credit card issuers).
In addition to the beneficial secular trends broadly impacting the consumer finance landscape, we believe we are well positioned to grow our market share as a result of several changes we have observed related to consumer preferences within alternative financial services. Specifically, we believe that a combination of evolving consumer preferences, increasing use of mobile devices and overall adoption rates for technology are driving significant change in our industry.
| Shifting preference towards installment loans We believe from our experience in offering installment loan products since 2008 that single-pay loans are becoming less popular or less suitable for a growing portion of our customers. Customers generally have shown a preference for our Installment Loan products, which typically have longer terms, lower periodic payments and a lower relative cost. Offering more flexible terms and lower payments also significantly expands our addressable market by broadening our products appeal to a larger proportion of consumers in the market. |
| Increasing adoption of online channels Our experience is that customers prefer service across multiple channels or touch points. Approximately 63% of respondents in a recent study by CFI Group said they conducted more than half of their banking activities electronically. That same group of respondents reported an overall level of satisfaction that met or exceeded the average. In 2016, our online revenue of $271 million represented 33% of our total 2016 revenues. |
| Increasing adoption of mobile apps and devices With the proliferation of pay-as-you-go and other smartphone plans, many of our underbanked customers have moved directly to mobile devices for loan origination and servicing. According to a study by the Pew Research Center involving the United States, the United Kingdom and Canada, smartphone penetration is 72%, 68% and 67%, respectively. Additionally, 43% of respondents to a 2016 study by CFI Group said they conduct transactions using a mobile banking app. Five years ago, less than 30% of our U.S. customers reached us with via a mobile device. In the second quarter of 2017, that percentage was over 80%. |
Our Strengths
We believe the following competitive strengths differentiate us and serve as barriers for others seeking to enter our market.
| Unique omni-channel platform / site-to-store capability We believe we have the only fully-integrated store, online, mobile and contact center platform to support omni-channel customer engagement. We offer a seamless Call, Click or Come In capability for customers to apply for loans, receive loan proceeds, make loan payments and otherwise manage their accounts in store, online or over the phone. Customers can utilize any of our three channels at any time and in any combination to obtain a loan, make a payment or manage their account. In addition, we have our Site-to-Store capability in which online customers that do not qualify for a loan online are referred to a store to complete a loan transaction with one of our associates. These aspects of our platform enable us to source a larger number of customers, serve a broader range of customers and continue serving these customers for longer periods of time while lowering cost-per-funded loan. |
99
| Industry leading product and geographic diversification In addition to channel diversification, we have increased our diversification by product and geography allowing us to serve a broader range of customers with a flexible product offering. As part of this effort, we have also developed and launched new brands and will continue to develop new brands with differentiated marketing messages. These initiatives have helped diversify our revenue streams, enabling us to appeal to a wider array of borrowers. |
| Leading analytics and information technology drives strong credit risk management We have developed a bespoke, proprietary IT platform, referred to as the Curo Platform, which is a unified, centralized platform that seamlessly integrates activities related to customer acquisition, underwriting, scoring, servicing, collections, compliance and reporting. Our IT platform is underpinned by over 15 years of continually updated customer data comprising over 71 million loan records used to formulate our robust, proprietary underwriting algorithms. This platform then automatically applies multi-algorithmic analysis to a customers loan application to produce a Curo Score which drives our underwriting decision. Globally, as of June 30, 2017 we had 182 employees who write code and manage our networks and infrastructure for our IT platform. This fully-integrated IT platform enables us to make real-time, data-driven changes to our acquisition and risk models which yield significant benefits in terms of customer acquisition costs and credit performance. |
| Multi-faceted marketing strategy drives low customer acquisition costs Our marketing strategy includes a combination of strategic direct mail, television advertisements and online and mobile-based digital campaigns, as well as strategic partnerships. Our global Marketing, Risk and Credit Analytics team, consisting of 80 professionals as of June 30, 2017, uses our integrated IT platform to cross reference marketing spend, new customer account data and granular credit metrics to optimize our marketing budget across these channels in real time to produce higher quality new loans. Besides these diversified marketing programs, our stores play a critical role in creating brand awareness and driving new customer acquisition. From January 2015 through the end of June 2017, we acquired nearly 1.7 million new customers in North America. For the first six months of 2017 compared to the first six months of 2015, our average first-pay defaults in the United States improved by 240 bps, while our average cost per funded loan decreased from $64 to $55. |
| Focus on customer experience We focus on customer service and experience and have designed our stores, website and mobile application interfaces to appeal to our customers needs. We continue to augment our web and mobile app interfaces to enhance our Call, Click or Come In strategy, with a focus on adding functionality across all our channels. Our stores are branded with distinctive and recognizable signage, conveniently located and typically open seven days a week. Furthermore, we have highly experienced managers in our stores, which we believe is a critical component to driving customer retention, lowering acquisition costs and driving store-level margins. For example, the average tenure for our U.S. store managers is over nine years and over 11 years for regional directors. |
| Strong compliance culture with centralized collections operations We seek to consistently engage in proactive and constructive dialogue with regulators in each of our jurisdictions and have made significant investments in best-practice automated tools for monitoring, training and compliance management. As of June 30, 2017 our compliance group consisted of 28 individuals based in all of the countries in which we operate, and our compliance management systems are integrated into our proprietary IT platform. Additionally, our in-house centralized collections strategy, supported by our proprietary back-end customer database and analytics team, drives an effective, compliant and highly-scalable model. |
| Demonstrated access to capital markets and diversified funding sources We have raised over $1.0 billion of debt financing in five separate offerings since 2008, most recently in February 2017. We also closed a $150 million nonrecourse installment loan financing facility in 2016 and have routinely accessed banks and other lenders for revolving credit capacity. We believe this is a significant differentiator from our peers who may have trouble accessing capital markets to fund their business models if credit markets tighten. For more information, see Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources. |
100
| Experienced and innovative management team and sponsor Our senior leadership team is among the most experienced in the industry with over a century of collective experience and an average tenure at CURO of over eight years. We also have deep bench strength across key functional areas including accounting, compliance, IT and legal. Our equity sponsor, FFL Partners, has been our partner since 2008 and has contributed significant resources to helping define the growth strategy of the Company. |
| History of growth and profitability Throughout our operating history we have maintained strong profitability and growth. Between 2010 and 2016 we grew revenue, adjusted EBITDA and net income at a CAGR of 26.3%, 25.4% and 21.9%, respectively. At the same time, we have grown our product offerings to better serve our growing and expanding customer base. |
Growth Strategy
| Leverage our capabilities to continue growing installment and open-end products Installment and open-end products accounted for 58% of our consolidated revenue for the year ending December 31, 2016, up from 19% in 2010, and we believe that our customers greatly prefer these products. We believe that these products will continue to account for a greater share of our revenue and provide us a competitive advantage versus other consumer lenders with narrower product focus. We believe that our ability to continue to be successful in developing and managing new products is based upon our capabilities in three key areas. |
| Underwriting: Installment and open-end products generally have lower yields than single-pay products, which necessitates more stringent credit criteria supported by more sophisticated credit analytics. Our industry leading analytics platform combines data from approximately 71 million loan records associated with loan information from third-party reporting agencies and has helped to reduce average first-pay defaults in the United States by approximately 240 bps for the first six months of 2017 compared to the first six months of 2015. |
| Collections and Customer Service: Installment and open-end products have longer terms than single-pay loans, in some cases up to 48 months. These longer terms drive the need for a more comprehensive collection and default servicing strategy that emphasizes curing a default and putting the customer back on a track to repay the loan. We utilize a centralized collection model that prevents our branch management personnel from ever having to contact customers to resolve a delinquency. We have also invested in building new contact centers in all of the countries in which we operate, each of which utilize sophisticated dialer technologies to help us contact our customers in a scalable, efficient manner. |
| Funding: The shift to larger balance installment loans with extended terms and open-end loans with revolving terms requires more substantial and more diversified funding sources. Given our deep and successful track record in accessing diverse sources of capital, we believe that we are well-positioned to support future new product transition. |
| Serve additional types of borrowers In addition to growing our existing suite of installment and open-end lending products, we are focused on expanding the total number of customers that we are able to serve through product, geographic and channel expansion. This includes expansion of our online channel, particularly in the United Kingdom, as well as continued targeted additions to our physical store footprint. We also continue to introduce additional products to address our customers preference for longer term products that allow for greater flexibility in managing their monthly payments. |
| In the second quarter of 2017, we launched Avio Credit, a new online product branded in the United States targeting individuals in the 600-675 FICO band. This product is structured as an Unsecured Installment Loan with varying principal amounts and loan terms up to 48 months. As of April 2017, 10% of U.S. consumers had FICO scores between 600 and 649. A further 13.2% of U.S. consumers had FICO scores between 650 and 699, a portion of whom would fall into the credit profile targeted by our Avio Credit product. |
101
| We expect to expand our LendDirect brand in Canada to include additional provinces and increase acquisition efforts in existing markets. We also plan to open LendDirect stores in Canada during the fourth quarter of 2017. Seven million Canadians have a FICO score below 700. We estimate that the consumer credit opportunity for this customer segment exceeds C$165 billion. We believe these customers represent a highly-fragmented market with low penetration. |
| In the United Kingdom, we expect to launch online longer-term loans, some supported by a guarantor. According to a study by the Financial Conduct Authority, in 2016 the U.K. guarantor market alone comprised £300 million in loans outstanding and had annual originations of approximately £200 million in 2016. A report by L.E.K. Consulting found that this market experienced double digit percentage growth from 2008-2017. We believe it is currently dominated by one lender but otherwise largely made up of smaller participants with growth challenges. |
| Continue to bolster our core business through enhancement of our proprietary risk scoring models We continuously refine and update our credit models to drive additional improvements in our performance metrics. By regularly updating our credit underwriting algorithms we can continue to expand the value of each of our customer relationships through improved credit performance. By combining these underwriting improvements with data driven marketing spend, we believe our optimization efforts will produce margin expansion and earnings growth. |
| Expand credit for our borrowers Through extensive testing and our proprietary underwriting, we have successfully increased credit limits for customers, enabling us to offer the right loan to the right customer. The favorable take rates and successful credit performance have improved overall vintage and portfolio performance. For the first six months of 2017, our average loan amount for Unsecured and Secured Installment Loans rose by $115 (a 23.7% increase) and $258 (a 25.5% increase), respectively, versus the same period in 2016. |
| Continue to improve the customer journey and experience We have projects in our development pipeline to enhance our Call, Click or Come In customer experience and execution, ranging from redesign of web and app interfaces to enhanced service features to payments optimization. |
| Enhance our network of strategic partnerships Our strategic partnership network generates applicants that we then close through our diverse array of marketing channels. By further leveraging these existing networks and expanding the reach of our partnership platform to include new relationships, we can increase the number of overall leads we receive. |
Customers
Our customers require essential financial services and value timely, transparent, affordable and convenient alternatives to banks, credit card companies and other traditional financial services companies. According to a recent study by FactorTrust, underbanked customers in the United States tend to have the following characteristics:
| average age of 39 for applicants and 41 for borrowers; |
| applicants are 47% male and 53% female; |
| 41% are homeowners; |
| 45% have a bachelors degree or higher; and |
| the top five employment segments are Retail, Food Service, Government, Banking/Finance and Business Services. |
In the United States, our customers generally earn between $25,000 and $75,000 annually. In Canada, our customers generally earn between C$25,000 and C$60,000 annually. In the United Kingdom our customers generally earn between £18,000 and £31,000 annually.
102
Our customers utilize the services provided by our industry for a variety of reasons, including that they often:
| have immediate need for cash between paychecks; |
| have been rejected for traditional banking services; |
| maintain sufficient account balances to make a bank account economically efficient; |
| prefer and trust the simplicity, transparency and convenience of our products; |
| need access to financial services outside of normal banking hours; and |
| reject complicated fee structures in bank products (e.g., credit cards and overdrafts). |
Products and Services
We provide Unsecured Installment Loans, Secured Installment Loans, Open-End Loans, Single-Pay Loans and a number of ancillary financial products, including check cashing, proprietary reloadable prepaid debit cards (Opt+), credit protection insurance in the Canadian, market gold buying, retail installment sales and money transfer services. We have designed our products and customer journey to be consumer-friendly, accessible and easy to understand. Our platform and product suite enable us to provide several key benefits that appeal to our customers:
| transparent approval process; |
| flexible loan structure, providing greater ability to manage monthly payments; |
| simple, clearly communicated pricing structure; and |
| full account management online and via mobile devices. |
Our centralized underwriting platform and its proprietary algorithms are used for every aspect of underwriting and scoring of our loan products. The customer application, approval, origination and funding processes differ by state, country and by channel. Our customers typically have an active phone number, open checking account, recurring income and a valid government-issued form of identification. For in-store loans, the customer presents required documentation, including a recent pay stub or support for underlying bank account activity for in-person verification. For online loans, application data is verified with third-party data vendors, our proprietary algorithms and/or tech-enabled account verification. Our proprietary, highly scalable, scoring system employs a champion/challenger process whereby models compete to produce the most successful customer outcomes and profitable cohorts. Our algorithms use data relevancy and machine learning techniques to identify approximately 60 variables from a universe of approximately 11,600 that are the most predictive in terms of credit outcomes. The algorithms are continuously reviewed and refreshed and are focused on a number of factors related to disposable income, expense trends and cash flows, among other factors, for a given loan applicant. The predictability of our scoring models is driven by the combination of application data, purchased third-party data and our robust internal database of nearly approximately 71 million records associated with loan information. These variables are then combined in a series of algorithms to create a score that allows us to scale lending decisions.
Geography and Channel Mix
For the six months ending June 30, 2017, our revenue distribution in the United States, Canada and United Kingdom was 77%, 19% and 4%, respectively.
Stores: As of June 30, 2017, we had 419 stores in 14 U.S. states, seven provinces in Canada and in the United Kingdom, which included the following:
| 215 United States locations: Texas (92), California (36), Nevada (18), Arizona (13), Tennessee (11), Kansas (10), Illinois (8), Alabama (7), Missouri (5), Louisiana (5), Colorado (3), Oregon (3), Washington (2) and Mississippi (2); |
103
| 191 Canadian locations: Ontario (121), Alberta (28), British Columbia (26), Saskatchewan (6), Nova Scotia (5), Manitoba (4) and New Brunswick (1); and |
| 13 United Kingdom locations: almost entirely in metropolitan London, which we closed in the third quarter of 2017 (see Note 21, Subsequent Events of our Notes to Interim Consolidated Financial Statements included elsewhere in this prospectus). |
Online: We lend online in 25 states in the United States, five provinces in Canada and in England, Wales, Scotland and Northern Ireland in the United Kingdom.
The following charts reflect the revenue contribution, including CSO fees, of the products and services that we currently offer and the revenues from these services in each of the regions in which we operate.
Year Ended December 31, 2016 | Six Months Ended June 30, 2017 | |
|
|
Overview of Loan Products
Below is an outline of the primary products we offered as of June 30, 2017.
Installment |
||||||||
Unsecured |
Secured |
Open-End |
Single-Pay |
|||||
Channel |
Online and in-store: 15 U.S. states, Canada and the United Kingdom | Online and in-store: 7 U.S. states |
Online: KS, TN, ID, UT, DE and RI. In-store: KS and TN |
Online and in-store: 12 U.S. states, Canada and the United Kingdom | ||||
Approximate Average Loan Size |
$602 | $1,231 | $451 | $321 | ||||
Duration |
Up to 48 months | Up to 42 months | Revolving/Open-ended | Up to 62 days | ||||
Pricing |
14.9% average monthly interest rate(1) | 11.3% average monthly interest rate(1) | Daily interest rates ranging from 0.74% to 0.99% | Fees ranging from $13 to $25 per $100 borrowed |
(1) | Weighted average of the contractual interest rates for the portfolio as of June 30, 2017 |
Unsecured Installment Loans
Unsecured Installment Loans are fixed-term, fully-amortizing loans with a fixed payment amount due each period during the term of the loan. Customers may prepay without penalty or fees. Unsecured Installment Loan
104
terms are governed by enabling state legislation in the United States, provincial and federal legislation in Canada and national regulation in the United Kingdom. Unsecured Installment Loans comprised 48.6% and 40.0% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively. We believe that the flexible terms and lower payments associated with Installment Loans significantly expands our addressable market by allowing us to serve a broader range of customers with a variety of credit needs.
Secured Installment Loans
Secured Installment Loans are similar to Unsecured Installment Loans but are also secured by a vehicle title. For these loans the customer provides clear title or security interest in the vehicle as collateral. The customer receives the benefit of immediate cash but retains possession of the vehicle while the loan is outstanding. The loan requires periodic payments of principal and interest with a fixed payment amount due each period during the term of the loan. Customers may prepay without penalty or fees. Secured Installment Loan terms are governed by enabling state legislation in the United States. Secured Installment Loans composed 10.6% and 9.8% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Open-End Loans
Open-End Loans are a line of credit for the customer without a specified maturity date. Customers may draw against their line of credit, repay with minimum, partial or full payments and redraw as needed. We report and earn interest on the outstanding loan balances drawn by the customer against their approved credit limit. Customers may prepay without penalty or fees. Typically, customers do not draw the full amount of their credit limit. Loan terms are governed by enabling state legislation in the United States. Unsecured Open-End Loans comprised 6.7% and 7.0% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively. Secured Open-End Loans are offered as part of our product mix in states with enabling legislation and accounted for approximately 1.0% of our consolidated revenue during both the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Single-Pay Loans
Single-Pay Loans are generally unsecured short-term, small-denomination loans whereby a customer receives cash in exchange for a post-dated personal check or a pre-authorized debit from the customers bank account. We agree to defer deposit of the check or debiting of the customers bank account until the loan due date which typically falls on the customers next pay date. Single-Pay Loans are governed by enabling state legislation in the United States, federal and provincial regulations in Canada and national regulation in the United Kingdom. Single-Pay Loans composed 28.8% and 37.3% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Ancillary products
We also provide a number of ancillary financial products including check cashing, proprietary reloadable prepaid debit cards (Opt+), credit protection insurance in the Canadian market, gold buying, retail installment sales and money transfer services. We had 98,070 active Opt+ cards as of June 30, 2017, which includes any card with a positive balance or transaction in the past 90 days. Opt+ customers have loaded over $1.45 billion to their cards since we started offering this product.
CSO Programs
Through our CSO programs, we act as a credit services organization/credit access business on behalf of customers in accordance with applicable state laws. We currently offer loans through CSO programs in stores
105
and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and Secured Installment Loans with a maximum term of 180 days. In Ohio we offer an Unsecured Installment Loan product with a maximum term of 18 months. As a CSO we earn revenue by charging the customer a fee (the CSO fee) for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customers obligation to repay the loan the customer receives from the third-party lender. For CSO loans, each lender is responsible for providing the criteria by which the customers application is underwritten and, if approved, determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans if they go into default.
As of June 30, 2017, the maximum amount payable under all such guarantees was $52.7 million, compared to $59.6 million at December 31, 2016. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover the amount we pay from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $15.6 million and $17.1 million at June 30, 2017 and December 31, 2016, respectively.
The majority of revenue generated through our CSO programs was for Unsecured Installment Loans, which comprised 95.9% and 91.6% of total CSO revenue for the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Total revenue generated through our CSO programs comprised 26.2% and 26.1% of our consolidated revenue during the six months ended June 30, 2017 and the year ended December 31, 2016, respectively.
Sales and Marketing
We are focused on capturing new accounts as demonstrated by the nearly 1.7 million new customers we acquired between January 2015 and the end of June 2017 in our U.S. market. For the first six months of 2017 compared to the first six months of 2015, our average first-pay defaults improved by 240 bps, while our average cost per funded loan decreased from $64 to $55. In 2015, we experienced an increase in advertising expense as a result of a strategy to gain market share during a period of time when we believed the online market was disrupted. We returned to more normalized spend levels in 2016 and first quarter of 2017 following the surge in advertising expense in 2015, but with better efficiency because of improved analytics and an accelerating shift to mobile and online.
United States
Our marketing efforts focus on a variety of targeted, direct response strategies. We use various forms of media to build brand awareness and drive customer traffic in stores, online and to our contact centers. These strategies include direct response spot television in each operating market, radio campaigns, point-of-purchase materials, a multi-listing and directory program for print and online yellow pages, local store marketing activities, prescreen direct mail campaigns, robust online marketing strategies and send a friend and word-of-mouth referrals from satisfied customers. We also utilize our unique capability to drive customers originated online to our store locationsa program we call Site-to-Store.
106
Canada
The Cash Money platform has built strong brand awareness as a leading provider of alternative financial solutions in Canada. Cash Moneys marketing efforts have historically included high frequency television buys, print media and targeted publications, as well as local advertising in the communities we serve.
The charts below set forth the trends in advertising spending and new customers acquired, cost-per-funded loan, or CPF, and first-pay defaults, or FPD, for North America for the periods indicated. These trends are primarily attributable to our continually-improving analytics and channel-management capabilities that enable us to balance and manage dynamically the relationships between total marketing spend, application-to-funded conversion rates, new customers acquired and credit performance (expressed here as FPD). The tables also highlight the seasonality of customer acquisition strategies, especially in the United States where acquisition and performance in the first quarter of the year is affected by federal income tax refunds. Finally, we believe these metrics support our proven capability of maintaining strong new customer counts while improving credit quality and CPF.
Direct Advertising Spend and New Customers AcquiredNorth America
Cost-per-Funded Loan
% ancillary revenue 7% 5% 5% % ancillary revenue 5% 4% 4% % online revenue 28% 30% 33% % online revenue 30% 35% 39%
107
First-Pay Defaults
United Kingdom
Wage Day has built a strong brand name as a leading on-line provider of short-term consumer loans to individuals in the United Kingdom. Wage Days marketing efforts include direct marketing of its existing customer base through a variety of channels, including email and text messaging, and new customer acquisition through leads purchased through its affiliates.
Over the past several years, we have redesigned and reformulated our loan products, including the introduction of a new installment product in 2016, and enhanced our customer acquisition, underwriting and collection capabilities.
The table below sets forth CPF information in the United Kingdom for the periods indicated:
United Kingdom: Cost-per-Funded Loan
108
Information Systems
The Curo Platform is our proprietary IT platform, which is a unified, centralized platform that seamlessly integrates activities related to customer acquisition, underwriting, scoring, servicing, collections, compliance and reporting. The Curo Platform is also designed to enable us to support and monitor compliance with regulatory and other legal requirements applicable to the financial products we offer. Our platform captures transactional history by store and by customer, which allows us to track loan originations, payments, defaults and payoffs, as well as historical collection activities on past-due accounts. In addition, our stores perform automated daily cash reconciliation at each store and every bank account in the system. This fully-integrated IT platform enables us to make real-time, data-driven changes to our acquisition and risk models, which yield significant benefits in terms of customer acquisition costs and credit performance. Each of our stores has secure, real-time access to corporate servers and the most up to date information to maintain consistent underwriting standards. All loan applications are scanned and electronic copies are centrally stored for convenient access and retrieval. Our IT platform is built upon by over 15 years of continually updated customer data comprising approximately 71 million records associated with loan information to formulate our robust, proprietary underwriting algorithms. This platform then automatically applies multi-algorithmic analysis to a customers loan application to produce a Curo Score, which drives our underwriting decision. Globally, we have 182 employees who write code and manage our networks and infrastructure for our IT platform.
The Curo Platform is scalable and has been successfully implemented in Canada and the United Kingdom. We modified the Curo Platform to calculate foreign exchange rates and interest rate calculations in the methodology commonly used in Canada and the United Kingdom, and to meet Canadian and U.K. standards for electronic card capture and approval.
Collections
To enable store-level employees to focus on customer service and to improve effectiveness and compliance management, we operate centralized collection facilities in the United States, Canada and the United Kingdom. Our collections personnel are trained to optimize regulatory-compliant loan repayment while treating our customers fairly. Our collections personnel contact customers after a missed payment, primarily via phone calls, letters and emails and help the customer understand available payment arrangements or alternatives to satisfy the deficiency. We use a variety of collections strategies, including payment plans, settlements and adjustments to due dates. Collections teams are trained to apply different strategies and tools for the various stages of delinquency and also vary methodologies by product type.
Our collections centers in Wichita, Kansas, Toronto, Ontario and Nottingham, United Kingdom employ 108, 79 and 65 collection professionals as of June 30, 2017, respectively.
We assign all our delinquent loan accounts in the United States to an affiliated third-party collection agency once they are 91 to 121 days past due. Under our policy, the precise number of days past due to trigger a referral varies by state and product and requires, among other things, that proper notice be delivered to the customer. Once a loan meets the criteria set forth in the policy, it is automatically referred for collection. We make changes to our policy periodically in response to various factors, including regulatory developments and market conditions. Our policy is established and implemented by our chief operating officer, senior vice president in charge of collections and our chief executive officer. As delinquent accounts are paid, the Curo Platform updates these accounts in real time. This ensures that collection activity will cease the moment a customers account is brought current or paid in full and considered in good standing. See Certain Relationships and Related-Party Transactions for a description of our relationship with our third-party collection agency.
One of the primary metrics we use to measure collections effectiveness is Return on Collections, or ROC. ROC is total delinquent payments collected divided by total delinquent payments entering collections during a period. Through continuous enhancements in technology, processes and talent, we improved U.S. ROC from 65.8% for 2015 to 70.8% for 2016. For the same periods, ROC in Canada was stable in the range of 61.3% to 61.0%.
109
Competition
We believe that the primary factors upon which we compete are:
| range of services; |
| flexibility of product offering; |
| convenience; |
| reliability; |
| fees; and |
| speed. |
Our underbanked customers tend to value service that is quick and convenient, lenders that can provide the most appropriate structure and terms and payments that are affordable. We face competition in all of our markets from other alternative financial services providers, banks, savings and loan institutions, short-term consumer lenders and other financial services entities. Generally, the landscape is characterized by a small number of large, national participants with a significant presence in markets across the country and a significant number of smaller localized operators. Our competitors in the alternative financial services industry include monoline operators (both public and private) specializing in short-term cash advances, multiline providers offering cash advance services in addition to check cashing and other services and subprime specialty finance and consumer finance companies, as well as businesses conducting operations online and by phone.
Employees
We are committed to building and nurturing a distinctive corporate culture. Our core company values are:
| Winning with integrity. We compete hard and do what is right. |
| Thriving on change. We embrace change from a proactive stance with flexibility and responsiveness. |
| Building relationships based on trust, honesty and respect. We approach all people with openness and candor. |
| Executing with urgency and passion. We move fast with a sense of excitement and an entrepreneurial spirit. |
| Keeping our commitments. We walk our talk and do what we say we will do. |
| Leading with humility . Check your ego; best idea wins. Ours is a shared success. |
As of June 30, 2017, we had a total of approximately 4,200 employees worldwide, approximately 3,000 of whom work in our stores. None of our employees is unionized or covered by a collective bargaining agreement, and we consider our current employee relations to be good.
110
We believe that customer service is critical to our continued success and growth. As such, we have staffed each of our stores with a full-time Store Manager or Branch Manager, or SM, that runs the day-to-day operations of the store. The SM is typically supported by a Senior Assistant Manager, or SAM, and/or an Assistant Manager, or AM, and nine to 12 full-time Customer Advocates. A newer store will typically ramp up with a SM, a SAM, two AMs and two Customer Advocates. Customer Advocates conduct the point-of-sale activities and greet and interact with customers from a secured area behind expansive windows. We believe staff continuity is critical to our business. We believe that our pay rates are equal to or better than all of our major competitors and we constantly evaluate our benefit plans to maintain their competitiveness.
STORE LEVEL ORGANIZATION |
||||||||||
POSITION |
DESCRIPTION/RESPONSIBILITY |
JUNE 30, 2017
HEADCOUNT |
AVERAGE
TENURE |
|||||||
Regional Director |
Oversee operations and supervise District Managers Responsible for compliance and overall performance |
9 | 11.5 | |||||||
District Manager |
Supervise up to nine stores Responsible for hiring, training and compliance |
61 | 10.5 | |||||||
Store Manager |
Responsible for day-to-day store operations Supervise store-level employees |
417 | 7.5 | |||||||
Senior Assistant Manager/Assistant Manager/Shift Lead |
Assist in supervising operations Monitor customer service and a resource for Advocates |
|
901
|
|
|
3.6
|
|
|||
Customer Advocate |
Conduct point-of-sale activities Responsible for individual transactions |
1,528 | 1.8 |
Property
As of June 30, 2017, the Company leased 215 stores in the United States, 191 stores in Canada and 13 stores in the United Kingdom. Our operating lease agreements for the buildings in which we operate expire at various times through 2030, and the majority of the leases have an original term of five years with two, five-year renewal options. Most of the leases have escalation clauses and several also require payment of certain period costs including maintenance, insurance and property taxes. We lease our principal executive offices, which are located in Wichita, Kansas. The leases cover approximately 52,000 square feet of office space. See Certain Relationships and Related Party Transactions for additional information regarding operating lease agreements with real estate entities that are related to the Company through common ownership.
Legal Proceedings
Harrison, et al v. Principal Investments, Inc. et al
During the period relevant to this class action litigation, the Company pursued in excess of 16,000 claims in the limited actions and jurisdiction court in Clark County, Nevada, seeking repayment of loans on which customers had defaulted. The Company utilized outside counsel to file these debt collection lawsuits. On Scene Mediations, a process serving company, was employed to serve the summons and petitions in the majority of these cases. In an unrelated matter, the principal of On Scene Mediations was convicted of multiple accounts of perjury and filing false affidavits to obtain judgments on behalf of a Las Vegas collection agency. In September 2010, we were sued by four former customers in a proposed class action suit filed in the District Court in Clark
111
County, Nevada. The plaintiffs in this case claimed that they, and others in the proposed class, were not properly served notice of the debt collection lawsuits by the Company.
On June 7, 2017, the parties reached a settlement in this matter. The Company accrued approximately $2.0 million as a result of this settlement during the second quarter of 2017. At a hearing before the District Court in Clark County, Nevada, on July 24, 2017 the court granted preliminary approval of the settlement. The final fairness hearing is scheduled for October 30, 2017.
City of Austin
We were cited on July 5, 2016 by the City of Austin, Texas for alleged violations of the Austin, Texas ordinance addressing products offered by CSOs. The Texas ordinances regulate aspects of products offered under our CAB programs, including loan sizes and repayment terms. We believe that: (1) the Austin ordinance (like its counterparts elsewhere in the state) conflicts with Texas state law and (2) our product in any event complies with the ordinance, when it is properly construed. An Austin trial court agreed with our position that the ordinance conflicts with Texas law and, accordingly, did not address our second argument. In August 2017, an Austin appellate court reversed a trial courts decision and remanded the case to trial court for further proceedings. We appealed the appellate decision in October 2017, and the appeal is currently pending. We will not have a final determination of the lawfulness of our CAB program under the Austin ordinance (and similar ordinances in other Texas cities) for some time. A final adverse decision could potentially result in material monetary liability in Austin and elsewhere and would force us to restructure the loans we arrange in Texas.
Other
We are also a defendant in certain routine litigation matters encountered in the ordinary course of our business. Certain of these matters may be covered to an extent by insurance. In the opinion of management, based upon the advice of legal counsel, the likelihood is remote that the impact of any pending legal proceedings and claims, either individually or in the aggregate, would have a material adverse effect on our consolidated financial condition, results of operations or cash flows. For more information, see Note 18, Legal Proceedings of our Notes to Interim Consolidated Financial Statements included elsewhere in this prospectus. The resolution of these matters is not expected to have a material adverse effect on our financial position, results of operations or liquidity.
112
REGULATORY ENVIRONMENT AND COMPLIANCE
Regulations
The alternative financial services industry is regulated at the federal, state and local levels in the United States; at the federal and provincial levels in Canada; and at the central government level in the United Kingdom. In general, these regulations are designed to protect consumers and the public, while providing standard guidelines for business operations. Laws and regulations typically impose restrictions and requirements, such as governing interest rates and fees, maximum loan amounts, the number of simultaneous or consecutive loans, required waiting periods between loans, loan extensions and refinancings, payment schedules (including maximum and minimum loan durations), required repayment plans for borrowers claiming inability to repay loans, disclosures, security for loans and payment mechanisms, licensing, and in certain jurisdictions database reporting and loan utilization information. We are also subject to federal, state, provincial and local laws and regulations relating to our other financial products, including laws and regulations governing recording and reporting certain financial transactions, identifying and reporting suspicious activities and safeguarding the privacy of customers non-public personal information. For more information regarding the regulations applicable to our business and the risks to which they subject us, see the section entitled Risk Factors.
The legal environment is constantly changing as new laws and regulations are introduced and adopted, and existing laws and regulations are repealed, amended, modified and reinterpreted. We regularly work with authorities, both directly and through our active memberships in industry trade associations, to support our industry and to promote the development of laws and regulations that are equitable to businesses and consumers alike.
Regulatory authorities at various levels of government and voters have enacted, and will likely continue to propose, new rules and regulations impacting our industry. Due to the evolving nature of laws and regulations, further rulemaking could result in new or expanded regulations that may adversely impact current product offerings or alter the economic performance of our existing products and services. For example, a rule recently adopted by the CFPB threatens to do just that if and when it becomes effective. In addition, the CFPB is expected to propose a rule that will restrict debt collector communications with consumers. Although the rule is not expected to apply directly to the Companys activities, such a rule might impact third party debt collection on behalf of the Company and the CFPB might use its supervisory authority to impose similar restrictions on the Company. We cannot provide any assurances that additional federal, state, provincial or local statutes or regulations will not be enacted in the future in any of the jurisdictions in which we operate. It is possible that future changes to statutes or regulations will have a material adverse effect on our results of operations and financial condition.
U.S. Regulations
U.S. Federal Regulations
The U.S. federal government and its respective agencies possess significant regulatory authority over consumer financial services. The body of laws to which we are subject has a significant impact on our operations. Recently, the CFPB adopted two new rules that are likely to have such an impact if and when they become effective(i) a rule designed to preclude arbitration agreements from interfering with class actions against providers of consumer financial products and services, or the CFPB Anti-Arbitration Rule, and (ii) a rule specifically targeted at payday, vehicle title and certain high-cost installment loans, or the CFPB Rule.
Dodd-Frank: In 2010, the U.S. Congress passed the Dodd-Frank Act. Title X of this legislation created the CFPB, which became operational in July 2011. Title X provides the CFPB with broad rule-making, supervisory and enforcement powers with regard to consumer financial services. Title X of Dodd-Frank also contains so-called UDAAP provisions declaring unlawful unfair, deceptive and abusive acts and practices in connection with the delivery of consumer financial services and giving the CFPB the power to enforce UDAAP
113
prohibitions and to adopt UDAAP rules defining unlawful acts and practices. Additionally, the FTC Act prohibits unfair and deceptive acts and practices and gives the FTC enforcement authority to prevent and redress violations of this prohibition.
CFPB Rule: Pursuant to its authority to adopt UDAAP rules, the CFPB adopted a new rule applicable to payday, title and certain high-cost installment loans in October 2017. The provisions of this CFPB Rule directly applicable to us are scheduled to become effective 21 months after the CFPB Rule is published in the Federal Register (no earlier than July 2019, and later if the publication occurs after October 2017) . However, the CFPB Rule remains subject to potential override by congressional disapproval pursuant to the Congressional Review Act. Moreover, after the current CFPB Director leaves office, either at the end of his scheduled term in July 2018 or sooner, his successor could suspend, delay, modify or withdraw the CFPB Rule. Further, we expect that important elements of the CFPB Rule will be subject to legal challenge by trade groups or other private parties. Thus, it is impossible to predict whether and when the CFPB Rule will go into effect and, if so, whether and how it might be modified.
In its current form, the CFPB Rule establishes ability-to-repay, or ATR, requirements for covered short-term loans and covered longer-term balloon-payment loans, as well as payment limitations on these loans and covered longer-term loans. Covered short-term loans are consumer loans with a term of 45 days or less. Covered longer-term balloon payment loans include consumer loans with a term of more than 45 days where (i) the loan is payable in a single payment, (ii) any payment is more than twice any other payment, or (iii) the loan is a multiple advance loan that may not fully amortize by a specified date and the final payment could be more than twice the amount of other minimum payments. Covered longer-term loans are consumer loans with a term of more than 45 days where (i) the total cost of credit exceeds an annual rate of 36%, and (ii) the lender obtains a form of leveraged payment mechanism giving the lender a right to initiate transfers from the consumers account. Post-dated checks, authorizations to initiate ACH payments and authorizations to initiate prepaid or debit card payments are all leveraged payment mechanisms under the CFPB Rule.
The CFPB Rule excludes from coverage, among other loans: (1) purchase-money credit secured by the vehicle or other goods financed (but not unsecured purchase-money credit or credit that finances services as opposed to goods); (2) real property or dwelling-secured credit if the lien is recorded or perfected; (3) credit cards; (4) student loans; (5) non-recourse pawn loans; and (6) overdraft services and overdraft lines of credit. These exclusions do not apply to our loans.
Under the provisions of the CFPB Rule applicable to covered short-term loans and covered longer-term balloon-payment loans, to make a conforming loan a lender will need to choose between the following two options.
| A full payment test, under which the lender must make a reasonable determination of the consumers ability to repay the loan in full and cover major financial obligations and living expenses over the term of the loan and the succeeding 30 days. Under this test, the lender must take account of the consumers basic living expenses and obtain and generally verify evidence of the consumers income and major financial obligations. However, in circumstances where a lender determines that a reliable income record is not reasonably available, such as when a consumer receives and spends income in cash, the lender may reasonably rely on the consumers statements alone as evidence of income. Further, unless a housing debt obligation appears on a national consumer report, the lender may reasonably rely on the consumers written statement regarding his or her housing expense. As part of the ATR determination, the CFPB Rule permits lenders and consumers in certain circumstances to rely on income from third parties, such as spouses, to which the consumer has a reasonable expectation of access, and to consider whether another person is regularly contributing to the payment of major financial obligations or basic living expenses. A 30-day cooling off period applies after a sequence of three covered short-term or longer-term balloon payment loans. |
|
A principal-payoff option, under which the lender may make up to three sequential loans, or so-called Section 1041.6 Loans, without engaging in an ATR analysis. The first Section 1041.6 Loan in any |
114
sequence of Section 1041.6 Loans without a 30-day cooling off period between loans is limited to $500, the second is limited to a principal amount that is at least one-third smaller than the principal amount of the first, and the third is limited to a principal amount that is at least two-thirds smaller than the principal amount of the first. A lender may not use this option if (i) the consumer had in the past 30 days an outstanding covered short-term loan or an outstanding longer-term balloon payment loan that is not a Section 1041.6 Loan, or (ii) the new Section 1041.6 Loan would result in the consumer having more than six covered short-term loans (including Section 1041.6 Loans) during a consecutive 12-month period or being in debt for more than 90 days on such loans during a consecutive 12-month period. For Section 1041.6 Loans, the lender cannot take vehicle security or structure the loan as open-end credit. |
Covered longer-term loans that are not balloon loans will not be subject to the foregoing requirements. However, these loans will be subject to the CFPB Rules penalty fee prevention provisions, which will apply to all covered loans. Under these provisions:
| If two consecutive attempts to collect money from a particular account of the borrower, made through any channel ( e.g., paper check, ACH, prepaid card) are unsuccessful due to insufficient funds, the lender cannot make any further attempts to collect from such account unless and until the lender has provided a new notice to the borrower and the borrower has provided a new and specific authorization for additional payment transfers. The CFPB Rule contains specific requirements and conditions for the authorization. While the CFPB has explained that these provisions are designed to limit bank penalty fees to which consumers may be subject, and while banks do not charge penalty fees on card authorization requests, the CFPB Rule nevertheless treats card authorization requests as payment attempts subject to these limitations. |
| A lender generally must give the consumer at least three business days advance notice before attempting to collect payment by accessing a consumers checking, savings, or prepaid account. The notice must include information such as the date of the payment request, payment channel and payment amount (broken down by principal, interest, fees, and other charges), as well as additional information for unusual attempts, such as when the payment is for a different amount than the regular payment, initiated on a date other than the date of a regularly scheduled payment or initiated in a different channel that the immediately preceding payment attempt. |
The CFPB Rule also requires the CFPBs registration of consumer reporting agencies as registered information systems to whom lenders must furnish information about covered short-term and longer-term balloon loans and from whom lenders must obtain consumer reports for use in extending such credit. If there is no registered information system or if no registered information system has been registered for at least 180 days, lenders will be unable to make Section 1041.6 Loans. The CFPB expects that there will be at least one registered information system in time for lenders to avail themselves of the option to make Section 1041.6 Loan by the effective date of the CFPB Rule.
The CFPB Rule remains subject to possible Congressional override by disapproval pursuant to the Congressional Review Act and possible invalidation in legal challenges by trade groups or other private parties. We cannot predict at this time whether Congress will allow the rule to stand or whether private legal challenges will be successful.
For a discussion of the potential impact of the CFPB Rule on the Company, see Risk FactorsRisks Relating to the Regulation of Our IndustryThe CFPB promulgated new rules applicable to our loans that could have a material adverse effect on our business and results of operations.
CFPB Enforcement: In addition to the Dodd-Frank Acts grant of rule-making authority, the Dodd-Frank Act gives the CFPB authority to pursue administrative proceedings or litigation for violations of federal consumer financial laws (including Dodd-Franks UDAAP provisions and the CFPBs own rules). In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission
115
of contracts, as well as other kinds of affirmative relief) and monetary penalties ranging from $5,000 per day for ordinary violations of federal consumer financial laws to $25,000 per day for reckless violations and $1 million per day for knowing violations. Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations promulgated thereunder (such as the CFPB Rule), the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions for the kind of cease and desist orders available to the CFPB (and possibly also for the civil penalties available to the CFPB). Potentially, if the CFPB, the FTC or one or more state officials believe we have violated the foregoing laws, they could exercise their enforcement powers in ways that would have a material adverse effect on us.
CFPB Supervision and Examination: Additionally, the CFPB has supervisory powers over many providers of consumer financial products and services, including explicit authority to examine (and require registration) of payday lenders. The CFPB released its Supervision and Examination Manual, which includes a section on Short-Term, Small-Dollar Lending Procedures, and began field examinations of industry participants in 2012. The CFPB commenced its first supervisory examination of us in October 2014. The scope of the CFPBs examination included a review of our Compliance Management System, our Short-Term Small Dollar lending procedures, and our compliance with Federal consumer financial protection laws. The 2014 examination had no material impact on our financial condition or results of operations, and we received the final CFPB Examination Report in September 2015.
The CFPB commenced its second examination of us in February 2017 and completed the related field work in June 2017. The scope of the 2017 examination included a review of our Consumer Compliance Management System, our substantive compliance with applicable federal laws and certain select matters requiring attention. The CFPB has not yet provided us with its final report of examination. However, we have received and responded to preliminary findings.
Reimbursement Offer; Possible Changes in Payment Practices: During the course of the 2017 CFPB examination, we determined that a limited universe of borrowers may have incurred bank overdraft or non-sufficient funds fees because of possible borrower confusion about certain electronic payments we initiated on their loans. As a result, we have decided to reimburse those fees through payments or credits against outstanding loan balances, subject to per-customer dollar limitations, upon receipt of (i) claims from potentially affected borrowers stating that they were in fact confused by our practices and (ii) bank statements from such borrowers showing that they incurred these fees at a time that they might reasonably have been confused about our practices. Based on the terms of the reimbursement offer we are currently considering, we do not expect the net financial cost of this offer to exceed $4 million.
While we do not expect that matters arising from the CFPB examinations will have a material impact on the Company, at least in part to meet CFPB expectations, the Company has made in recent years, and is continuing to make, certain enhancements to its compliance procedures and consumer disclosures. For example, we are in the process of evaluating our payment practices. Even in advance of the effective date of the CFPB Rule (and even if the CFPB Rule does not become effective), we may make changes to these practices in a manner that will increase costs and/or reduce revenues.
Anti-Arbitration Rule. Under its authority to regulate pre-dispute arbitration provisions pursuant to Section 1028 of Dodd-Frank, in July 2017 the CFPB issued a final rule prohibiting the use of mandatory arbitration clauses with class action waivers in agreements for consumer financial products and services. Compliance is required for all covered agreements entered into on or after March 19, 2018. The Anti-Arbitration Rule also requires covered providers who are involved in arbitration pursuant to a pre-dispute arbitration agreement to submit certain arbitral and court records to the CFPB.
Several trade groups have initiated a legal challenge to the Anti-Arbitration Rule in court. In addition, the rule remains subject to possible Congressional override by disapproval pursuant to the Congressional Review Act, passage of the pending Financial CHOICE Act of 2017, or otherwise.
116
We currently include pre-dispute arbitration provisions in our loan agreements. However, unless the Anti-Arbitration Rule is overturned by Congress or the courts we will likely discontinue or limit their use to individual lawsuits, effective as to loan agreements entered into on or after March 19, 2018. We do not know whether and when Congress will act regarding the rule and whether there will be any successful private legal challenges to the rule.
We can give no assurance that the Anti-Arbitration Rule will not have a material impact on our U.S. operations.
MLA: The Military Lending Act, or MLA, enacted in 2006 and implemented by the Department of Defense, or DoD, imposes a 36% cap on the all-in annual percentage rates charged on certain loans to active-duty members of the U.S. military, reserves and National Guard and their respective dependents. As initially adopted, the MLA and related DoD rules applied to our loans with terms up to 90 days. However, in 2016, the DoD expanded its MLA regulations, effective in October 2016, to encompass some of our longer-term Installment Loans that were not previously covered. As a result, we ceased offering short-term consumer loans to these applicants in 2007 and all loans to these applicants in 2016.
Enumerated Consumer Financial Services Laws, TCPA and CAN-SPAM: Federal law imposes additional requirements on us with respect to our consumer lending. These requirements include disclosure requirements under the Truth in Lending Act, or TILA, and Regulation Z. TILA and Regulation Z require creditors to deliver disclosures to borrowers prior to consummation of both closed-end and open-end loans and, additionally for open-end credit products, periodic statements and change in terms notices. For closed-end loans, the annual percentage rate, the finance charge, the amount financed, the total of payments, the number and amount of payments and payment due dates, late fees and security interests must all be disclosed. For open end credit, the borrower must be provided with key information that includes annual percentage rates and balance computation methods, various fees and charges, and security interests.
Under the Equal Credit Opportunity Act, or ECOA, and Regulation B, we may not discriminate on various prohibited bases, including race, gender, national origin, marital status and the receipt of government benefits, retirement or part-time income, and we must also deliver notices specifying the basis for credit denials, as well as certain other notices. The Fair Credit Reporting Act, or FCRA, regulates the use of consumer reports and reporting of information to credit reporting agencies. These laws limit the permissible uses of credit reports and require us to provide notices to customers when we take adverse action or increase interest rates based on information obtained from third parties, including credit bureaus. We are also subject to additional federal requirements with respect to electronic signatures and disclosures under the Electronic Signatures In Global And National Commerce Act, or ESIGN; and requirements with respect to electronic payments under the Electronic Funds Transfer Act, or EFTA, and Regulation E. EFTA and Regulation E requirements also have an important impact on our prepaid debit card services business. These rules and regulations protect consumers engaging in electronic fund transfers and contain restrictions, require disclosures and provide consumers certain rights relating to electronic fund transfers, including requiring a written authorization, signed or similarly authenticated, in connection with certain credit transactions payable through payments that recur at substantially equal intervals. Additionally we are subject to compliance with the Telephone Consumer Protection Act, or the TCPA, and CAN-SPAM Act, and the regulations of the FCC, which include limitations on telemarketing calls, auto-dialed calls, pre-recorded calls, text messages and unsolicited faxes. While the Company believes that its practices comply with the TCPA, the TCPA has given rise to a spate of litigation nationwide.
The Company applies the rules under the Fair Debt Collection Practices Act, or FDCPA, as a guide to conducting its collections activities for delinquent loan accounts, as well as complying with applicable state collections laws.
Bank Secrecy Act and Anti-Money Laundering Laws: Under regulations of the U.S. Department of the Treasury, or the Treasury Department, adopted under the Bank Secrecy Act of 1970, or BSA, we must report
117
currency transactions in an amount greater than $10,000 by filing a Currency Transaction Report, or CTR, and we must retain records for five years for purchases of monetary instruments for cash in amounts from $3,000 to $10,000. Multiple currency transactions must be treated as a single transaction if we have knowledge that the transactions are by, or on behalf of, the same person and result in either cash in or cash out totaling more than $10,000 during any one business day. We will file a CTR for any transaction which appears to be structured to avoid the required filing and the individual transaction or the aggregate of multiple transactions would otherwise meet the threshold and require the filing of a CTR.
The BSA also requires us to register as a money services business with the Financial Crimes Enforcement Network of the Treasury Department, or FinCEN. This registration is intended to enable governmental authorities to better enforce laws prohibiting money laundering and other illegal activities. We are registered as a money services business with FinCEN and must re-register with FinCEN by December 31 every other year. We must also maintain a list of names and addresses of, and other information about, our stores and must make that list available to FinCEN and any requesting law enforcement or supervisory agency. That store list must be updated at least annually.
Federal anti-money-laundering laws make it a criminal offense to own or operate a money transmittal business without the appropriate state licenses, which we maintain. In addition, the USA PATRIOT Act of 2001 and its corresponding federal regulations require us, as a financial institution, to establish and maintain an anti-money-laundering program. Such a program must include: (1) internal policies, procedures and controls designed to identify and report money laundering; (2) a designated compliance officer; (3) an ongoing employee-training program; and (4) an independent audit function to test the program. Because our compliance with other federal regulations has essentially a similar purpose, we do not believe compliance with these requirements has had or will have any material impact on our operations. In addition, federal regulations require us to report suspicious transactions involving at least $2,000 to FinCEN. The regulations generally describe four classes of reportable suspicious transactions-one or more related transactions that the money services business knows, suspects, or has reason to suspect (1) involve funds derived from illegal activity or are intended to hide or disguise such funds, (2) are designed to evade the requirements of the BSA (3) appear to serve no business or lawful purpose or (4) involve the use of the money service business to facilitate criminal activity.
The Office of Foreign Assets Control, or OFAC, publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted or sanctioned countries. It also lists individuals, groups and entities, such as terrorists and narcotics traffickers, designated under programs that are not country-specific. Collectively, such individuals and companies are called Specially Designated Nationals. Their assets are blocked and we are generally prohibited from dealing with them.
Privacy Laws: The Gramm-Leach-Bliley Act of 1999 and its implementing federal regulations require us generally to protect the confidentiality of our customers nonpublic personal information and to disclose to our customers our privacy policy and practices, including those regarding sharing the customers nonpublic personal information with third-parties. That disclosure must be made to customers at the time the customer relationship is established and, subject to an exception, at least annually thereafter.
State and Local Regulation in the United States
Short-term consumer loans must comply with extensive laws of the states where our stores are located or, in the case of our online loans, where the borrower resides. These laws impose, among other matters, restrictions and requirements governing interest rates and fees; maximum loan amounts; the number of simultaneous or consecutive loans, and required waiting periods between loans; loan extensions and refinancings; payment schedules (including maximum and minimum loan durations); required repayment plans for borrowers claiming inability to repay loans; collections; disclosures; security for loans and payment mechanisms; licensing; and (in certain jurisdictions) database reporting and loan utilization information. While the federal FDCPA does not typically apply to our activities, comparable, and in some cases more rigorous, state laws do apply.
118
In the event of serious or systemic violations of state law by us or, in certain instances, our third-party service providers when acting on our behalf, we would be subject to a variety of regulatory and private sanctions. These could include license suspension or revocation (not necessarily limited to the state or product to which the violation relates); orders or injunctive relief, including orders providing for rescission of transactions or other affirmative relief; and monetary relief. Depending upon the nature and scope of any violation and/or the state in question, monetary relief could include restitution, damages, fines for each violation and/or payments to borrowers equal to a multiple of the fees we charge and, in some cases, principal as well. Thus, violations of these laws could potentially have a material adverse effect on our results of operations and financial condition.
The California Finance Lenders Law caps rates on loans under $2,500 but imposes no limit on loans valued $2,500 or higher. The DBO is currently evaluating whethercontrary to both our practice and general industry practicethe interest rate cap applies to loans in an original principal amount of $2,500 or more that are partially prepaid shortly after origination to reduce the principal balance to $2,500 or less. We provided the DBO with a detailed submission on this issue in September 2016, but the DBOs response remains pending.
During the past few years, legislation, ballot initiatives and regulations have been proposed or adopted in various states that would prohibit or severely restrict our short-term consumer lending. We, along with others in the short-term consumer loan industry, intend to continue to inform and educate legislators and regulators and to oppose legislative or regulatory action that would prohibit or severely restrict short-term consumer loans. Nevertheless, if legislative or regulatory action with that effect were taken in states in which we have a significant number of stores (or at the federal level), that action could have a material adverse effect on our loan-related activities and revenues.
In some states, check cashing companies or money transmission agents are required to meet minimum bonding or capital requirements and are subject to record-keeping requirements and/or fee limits.
Currently, approximately 30 states in the United States have enabling legislation that specifically allows direct loans of the type that we make. In Texas and Ohio, we operate under a CSO model. In Texas this model is expressly authorized under Section 393 of the Texas Finance Code. As a CSO, we serve as arranger for consumers to obtain credit from independent, non-bank consumer lending companies and we guaranty the lender against loss. As required by Texas law, we are registered as a CSO and also licensed as a CAB. Texas law subjects us to audit by the States Office of Consumer Credit Commissioner and requires us to provide expanded disclosures to customers regarding credit service products.
The Texas cities of Austin, Dallas, San Antonio, Houston and several others (nearly 45 cities in total as of June 30, 2017) have passed substantially similar local ordinances addressing products offered by credit access businesses or CABs. These local ordinances place restrictions on the amounts that can be loaned to customers and the terms under which the loans can be repaid. As of June 30, 2017, the Company operated 70 stores in cities with local ordinances. We have been cited by the City of Austin for alleged violations of the Austin ordinance but believe that: (i) the ordinance conflicts with Texas state law and (ii) our product in any event complies with the ordinance, when it is properly construed. An Austin trial court agreed with our position that the ordinance conflicts with Texas law and, accordingly, did not address our second argument. In August 2017, an Austin appellate court reversed this decision and remanded the case to the trial court for further proceedings consistent with its opinion (including, presumably, a decision on our second argument). However, in October 2017 we appealed this appellate decision. Accordingly, we will not have a final determination of the lawfulness of our CAB program under the Austin ordinance (and similar ordinances in other Texas cities) for some time. A final adverse decision could potentially result in material monetary liability in Austin and elsewhere and would force us to restructure the loans we arrange in Texas.
Our credit services organization or CSO company in Ohio is registered under the Ohio Credit Services Organization Act and regulated by the Ohio Department of Commerce Division of Financial Institutions. As a CSO, we provide credit services to our customers in accordance with the Credit Services Organization Act.
119
Unlike Texas law, however, the Ohio Credit Services Organization Act does not expressly authorize the loan program we offer. Operating as a CSO allows us to charge a fee for arranging loans to our customers from unaffiliated third-party lenders, for assisting customers in preparing and completing the information and documents that the unaffiliated third-party lenders require the customers to submit in order to obtain loans and for providing guarantees of customer obligations to the unaffiliated third-party lenders. We determine whether we are prepared to guarantee the loans, using our own underwriting guidelines, and the lender applies its own underwriting guidelines in determining whether to make the loan. We obtain assurances from lenders that they comply with applicable federal and Ohio laws when setting loan terms. We offer loans online in Ohio.
Our businesses are regulated by state authorities in each state where we operate, whether through storefronts or online. We are subject to regular state examinations and audits and must address with the appropriate state agency any findings or criticisms resulting from these examinations and audits.
In addition to state laws governing our lending activities, most states have laws and regulations governing check cashing and money transmission, including licensing and bonding requirements and laws regarding maximum fees, recordkeeping and/or posting of fees, and our business is subject to various local rules, such as local zoning and occupancy regulations. These local rules and regulations are subject to change and vary widely from state to state and city to city.
We cannot provide any assurances that additional state or local statutes or regulations will not be enacted in the future in any of the jurisdictions in which we operate. Additionally, we cannot provide any assurances that any future changes to statutes or regulations will not have a material adverse effect on our results of operations and financial condition.
Canadian Regulations
In May 2007, Canadian federal legislation was enacted that exempts from the criminal rate of interest provisions of the Criminal Code (which prohibit receiving (or entering into an agreement to receive) interest at an effective annual rate that exceeds 60% on the credit advanced under the loan agreement) cash advance loans of $1,500 or less if the term of the loan is 62 days or less (payday loans) and the person is licensed under provincial legislation as a short-term cash advance lender and the province has been designated under the Criminal Code . Currently, Ontario, Alberta, British Columbia, Manitoba, Nova Scotia, Prince Edward Island and Saskatchewan have provincial enabling legislation allowing for payday loans and have also been designated under the Criminal Code. New Brunswicks enabling legislation will come into force on January 1, 2018, at which time it will become a designated province under the Criminal Code. Newfoundland has proposed enabling legislation, but such legislation is not yet in force. Under the provincial payday lender legislation there are generally cost of borrowing disclosure requirements, collection activity requirements, caps on the cost of borrowing that may be recovered from borrowers and restrictions on certain types of lending practices, such as extending more than one payday loan to a borrower at any one time.
Canadian provinces periodically review the regulations for payday loan products. Some provinces specify a time period within the Act while other provinces are silent or simply note that reviews will be periodic.
Nova Scotia
On March 30, 2015, Nova Scotia completed its review process and reduced the maximum cost of borrowing from C$25 per C$100 to C$22 per C$100 effective in May of 2015. The remaining recommendations of the review Board, mainly an extended payment plan offering, are still with the respective minister for consideration. Cash Money operated five retail store locations as of June 30, 2017 and has an internet presence in Nova Scotia. We do not expect that any of the proposed changes will materially impact our operating results in Nova Scotia.
120
British Columbia
On September 21, 2016, the British Columbia Ministry of Public Safety and Solicitor General (the Ministry) announced a reduction in the total cost of borrowing from C$23 per C$100 lent to C$17 per C$100 lent effective January 1, 2017. At the same time, the Ministry also announced a consultation titled Consumer Protection for British Columbians who use high-cost alternative financial services, seeking input on whether, and what additional, regulation may be warranted. The consultation concluded October 20, 2016 and the process and timing following this consultation are unknown.
As of June 30, 2017, the Company operated 26 stores and conducted online lending in British Columbia. Revenues in British Columbia were approximately 10.2% of Canadian revenues and 2.0% of total consolidated revenues for the six months ended June 30, 2017.
Ontario
On April 20, 2016, the Ontario Ministry of Government and Consumer Services, or the Ministry, published a 30-day consultation to consider the total cost of borrowing for payday lending in Ontario, which was C$21 per C$100 lent. The consideration is whether the rate should remain at C$21 or be lowered to C$19, C$17 or C$15 per C$100 lent. On August 30, 2016, the Ministry published another 30-day consultation seeking public input on a two stage reduction in the total cost of borrowing, proposing a maximum rate of C$18 per C$100 lent effective January 1, 2017 and a further reduction to C$15 per C$100 lent effective January 1, 2018.
On November 3, 2016, the Ministry held a press conference and issued a press release announcing the introduction of new legislation and also announcing a reduction in the total cost of borrowing to C$18 per C$100 lent effective January 1, 2017. While the proposed further reduction to C$15 per C$100 lent was updated in the posted regulations, it is our understanding that the Ministrys decisions on further reductions to the total cost of borrowing beyond January 1, 2017 are still under review and consideration.
In December 2015, Bill 156 titled the Alternative Financial Services Statute Law Amendment Act was introduced. This legislation proposed additional consumer protections such as a cooling-off period and extended repayment plan. This legislation also provided the Ministry with the authority, subject to a regulatory process, to impose additional requirements such as establishing a maximum loan amount. The Alternative Financial Services Statute Law Amendment Act passed second reading before the Parliament recessed in June of 2016.
Upon the Ontario Parliament returning from summer recess in September of 2016, the Premier of Ontario prorogued the legislature therefore all prior bills died and new legislation would need to be introduced. On November 3, 2016, the Ministry introduced Bill 59 titled Putting Consumers First Act (the Act). The Act encompassed many of the provisions of the previous legislation (the Alternative Financial Services Statute Law Amendment Act). The Ministry also incorporated the provisions of three other previous, unrelated pieces of legislation in the Act. Bill 59 officially received Royal Assent on April 13, 2017. A majority of the Single-Pay-loan-related provisions in the Act, including but not limited to installment repayment plans, advertising requirements, prohibitions on number of loans in a year and disclosure requirements are subject to a further regulatory process.
With respect to the regulatory process for the authorities granted to the Ministry in Bill 59, the Ministry of Government and Consumer Services issued a consultation document on July 7, 2017 requesting feedback on whether and how regulations should change regarding most notably extended payment plans, maximum loan amounts, a cooling off period between loans, and limits on fees charged to cash government checks. Responses to the July 7, 2017 consultation document were due by August 21, 2017. The Ministry summary accompanying the consultation document stated that it intends to enact regulations based on the outcome of the consultation in early 2018. A further consultation document that will address required disclosures for payday loans, among other things, is planned for fall 2017. The Ministry currently plans to enact regulations based on the outcome of this second consultation in early 2019. While we expect the various steps of the regulatory process to occur over the next few months, the specific timeline is unknown.
121
We currently conduct online lending and operate 121 of our 191 Canadian stores in Ontario. Revenues originated in Ontario represented approximately 65.7% of revenue generated in Canada and 14.9% of our total consolidated revenues for the year ended December 31, 2016. Revenues originated in Ontario represented approximately 67.9% of revenue generated in Canada and 13.1% of our total consolidated revenues for the six months ended June 30, 2017. Until these procedures have concluded, we cannot speculate on the potential changes to regulations. Depending on the magnitude of the changes adopted, they could have a material adverse effect on our Ontario operations.
Alberta
On May 12, 2016, the Alberta Government introduced Bill 15 titled An Act to End Predatory Lending. The most notable provisions of this Bill included for loans in scope a reduction in the maximum cost of borrowing from C$23 to C$15 per C$100 lent and a requirement that all loans are repaid in installments. For customers paid semi-monthly, bi-weekly or on a more frequent basis, at least three installment payments would be required. For customers paid on a monthly basis, at least two installment payments would be required. All covered loan terms must be no less than 42 days and no greater than 62 days with no penalty for early repayment. Additionally, the Bill included a provision for a reduction in the cost of borrowing to 60% APR when alternative options for credit exist and are being utilized by a sufficient number of individuals.
On May 27, 2016, Bill 15 received Royal Assent. The maximum cost of borrowing of C$15 per C$100 lent became effective on August 1, 2016. On November 25, 2016, the Alberta Government issued the regulations for the installment payments, effective November 30, 2016. The Company currently operates 28 stores and conducts online lending in Alberta. Revenues in Alberta were approximately 15.1% of Canadian revenues and 3.4% of total consolidated revenues for the year ended December 31, 2016, and were approximately 12.0% of Canadian revenues and 2.3% of total consolidated revenues for the six months ended June 30, 2017. If we are unable to replace a significant portion of the affected revenues with other product offerings, this change could have a material adverse effect on our results for our Canadian operations.
Manitoba
On January 12, 2016, the province of Manitoba announced a Public Utilities Board, or PUB, hearing from April 12, 2016 through April 19, 2016 to specifically review and consider a reduction in the rate from C$17 per C$100 lent to C$15 per C$100 lent and a reduction in the maximum amount borrowers can loan from 30% of net pay to 25% of net pay. On June 17, 2016, the PUB issued its report to the government recommending that these proposed changes not be made. It is unknown if and when the government may adopt the recommendations of the PUB. As of June 30, 2017, the Company operated four stores in Manitoba.
Saskatchewan
Saskatchewan has amended its Payday Loan Regulations such that as of February 15, 2018, the maximum rate that may be charged to a borrower will be reduced from C$23 per C$100 lent to C$17 and the maximum fee for a dishonoured check will be reduced from C$50 to C$25. As of June 30, 2017, the Company operated six stores in Saskatchewan.
Installment loans are subject to the Criminal Code interest rate cap of 60%. Providers of these types of loans are also subject to provincial legislation that requires lenders to provide certain disclosures, prohibits the charging of certain default fees and extends certain rights to borrowers, such as prepayment rights. These laws are harmonized in many Canadian provinces. However, in Ontario, Bill 59 titled Putting Consumers First Act, which received Royal Assent on April 13, 2017, provides the Ontario Ministry with the authority to impose additional restrictions on lenders who offer installment loans, subject to a regulatory process, including: (i) requiring a lender to take into account certain factors with respect to the borrower before entering into a credit agreement with that borrower; (ii) capping the amount of credit that may be extended; (iii) prohibiting a lender from initiating contact with a
122
borrower for the purpose of offering to refinance a loan; and (iv) capping the amount of certain fees that do not form part of the cost of borrowing. On July 7, 2017, the Ministry of Government and Consumer Services issued a consultation document requesting feedback on questions regarding a new regime for high-cost credit and limits on optional services, such as optional insurance. The proposed high-cost credit regime would apply to loans with an annual interest rate that exceeds 35%. The Ministry summary accompanying the consultation document stated that a further consultation paper would be issued this fall on those matters. The Ministry expects that regulation would be enacted in early 2019.
In Canada, the federal government generally does not regulate check cashing businesses, except in respect of federally regulated financial institutions (and other than the Criminal Code of Canada provisions noted above in respect of charging or receiving in excess of 60% interest on the credit advanced in respect of the fee for a check cashing transaction) nor do most provincial governments generally impose any regulations specific to the check cashing industry. The exceptions are the provinces of Quebec, where check cashing stores are not permitted to charge a fee to cash a government check; Manitoba, where the province imposes a maximum fee to be charged to cash a government check; and British Columbia and Ontario, where there is proposed legislation which will either restrict or impose a maximum fee that can be charged to cash a government check or any other check that may be designated by regulation. The province of Saskatchewan also regulates the check cashing business but only in respect of provincially regulated loan, trust and financing corporations. Cash Money does not operate in the province of Quebec.
The Financial Transaction and Reports Analysis Centre of Canada is responsible for ensuring that money services businesses comply with the legislative requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, or the PCMLTFA. The PCMLTFA requires the reporting of large cash transactions involving amounts of $10,000 or more received in cash and international electronic funds transfer requests or receipts of $10,000 or more. The PCMLTFA also requires submitting suspicious transactions reports when there are reasonable grounds to suspect that a transaction or attempted transaction is related to the commission of a money laundering offense or to the financing of a terrorist activity, and the submission of terrorist financing reports where a person has possession or control of property that they know or believe to be owned or controlled by or on behalf of a terrorist or terrorist group. The PCMLTFA also imposes obligations on money services businesses in respect of record keeping, identity verification, and implementing a compliance policy.
U.K. Regulation
In the United Kingdom, consumer lending is governed by The Consumer Credit Act 1974, which was amended by the Consumer Credit Act 2006, or the CCA, and related rules and regulations supplemented by guidance. On April 1, 2014, the Financial Conduct Authority, or FCA, assumed responsibility for regulating consumer credit from the Office of Fair Trading, or OFT, as enacted under the Financial Services Act 2012. The FCA is the regulatory body in the United Kingdom that is responsible for the regulation and oversight of the consumer credit industry. Firms operating with consumer credit licenses originally issued by the OFT were required to register with the FCA in the fall of 2013 to obtain interim permission to conduct consumer credit activities from April 1, 2014 until they had applied for and obtained full authorization from the FCA. In February 2016, the Company was notified that its two lending businesses in the United Kingdom, SRC Transatlantic Limited and Wage Day Advance Limited, had received full authorization from the FCA to undertake certain categories of regulated consumer credit business under the Financial Services and Markets Act 2000.
While U.K. consumer credit businesses are principally regulated by the FCA, there is additional legislation and regulation that governs consumer credit, including the CCA. The CCA imposes various obligations on lenders, and any person who exercises the rights and duties of lenders to correctly document credit agreements and guarantees and indemnities, give borrowers rights to withdraw, provide post contract information such as statements of account, notices of sums in arrears and default notices, protect consumers who purchase a good or service from a linked supplier and not to take certain recovery or enforcement action until prescribed forms of post-contractual notices have been served and prescribed time periods have elapsed. Any failure to comply with
123
such legislation or regulation may have serious consequences for our U.K. operations, as well as a risk that the FCA may revoke or suspend our authorization.
The FCA and its predecessor, the OFT, have already taken action against, and have imposed requirements on, a number of well-known U.K. financial institutions. In addition, our U.K. operations are subject to various regulations concerning consumer protection and data protection, among others. We are also subject to the powers of the U.K. Information Commissioners Office, or the ICO, to take enforcement action in relation to data protection.
Financial Conduct Authority Regulation
The FCAs strategic objective is to ensure that its relevant markets function well. The FCA also has three operational objectives:
| to secure an appropriate degree of protection for consumers; |
| to protect and enhance the integrity of the U.K. financial system; and |
| to promote effective competition in the interests of consumers for regulated financial services or services carried out by regulated investment exchanges. |
Its supervisory approach is risk based and directly linked to customer outcomes; in particular, it will focus on factors that influence the delivery of its statutory objectives.
The FCA Handbook sets out the FCA rules and other provisions, which have been made under powers given to the FCA under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (as amended). Firms wishing to carry on regulated consumer credit activities must comply with all applicable sections of the FCA Handbook, as well as the applicable consumer credit laws and regulations.
The FCA Handbook provides both general sourcebooks (that all authorized firms must comply with) and specialist sourcebooks (that apply to firms carrying out a specific regulated activity). The FCA Handbook has a specialist consumer credit sourcebook, or CONC, for the consumer credit sector, which includes rules and guidance in relation to, inter alia, financial promotions, pre-contract responsibilities and disclosure, affordability and creditworthiness assessments, the handling of vulnerable customers, communications with customers, arrears, default and recovery of debt, debt advice and statute barred debt.
By virtue of doing business with financial institutions and other FCA regulated companies in the United Kingdom, subsidiaries of the Group are typically contractually obligated to comply with certain other requirements, such as the U.K. Lending Standards Boards Standards of Lending Practice (which financial institutions usually comply with on a voluntary basis), the Finance and Leasing Associations Lending Code and the Credit Services Associations Code of Practice.
The FCA has applied its rules to consumer credit firms in a number of areas, including its high level principles and conduct of business standards. The FCA has substantially greater powers than the OFT and given the FCA has only been responsible for regulating consumer credit since April 2014, it is likely that the regulatory requirements applicable to our industry will continue to increase, as the FCA deepens its understanding of the industry through the authorization process. In addition, it is likely that the compliance framework that will be needed to continue to satisfy the FCA requirements will demand incremental investment and resources in our compliance governance framework. For example, it is currently expected that as of 2018, the U.K. Senior Managers and Certification Regime, or SMCR, will be extended to all sectors of the financial services industry (including consumer credit firms, such as SRC Transatlantic Limited and Wage Day Advance Limited), at which point the majority of the senior management team below the executive committee is expected to become certified persons. One result of this may be that we incur additional costs from putting in place systems to ensure all
124
employees are appropriately notified of, and receive suitable training in, the rules of conduct which will apply to them. We have commenced planning for this, with the details to be finalized once the FCA issues its final rules, expected to be published during the second half of 2017. There is also a risk that we could become subject to additional or new regulatory obligations (such as FCA approval of senior managers and anti-money laundering and fraud prevention), or that those requirements to which we are currently subject could become more stringent.
Pursuant to statutory requirements, all authorized entities must be able to demonstrate that they meet the threshold conditions for authorization and comply on an ongoing basis with the FCAs high level standards for authorized firms, such as its Principles for Business (including the requirements to treat customers fairly); Threshold Conditions; Senior Management Arrangements, Systems and Controls; Statements of Principle and Code of Practice for Approved Persons; and Training and Competence and General Provisions, as well as CONC. In addition, certain individuals within an FCA authorized firm who exercise a significant influence over the business of the firm must be approved by the FCA and these individuals have to demonstrate that they are fit and proper and competent to hold the position of an approved person.
The FCA regards lending and collections of loans as a high risk activity and therefore dedicates special resources to more intensive monitoring of businesses in this sector. CONC provides that firms that undertake consumer credit regulated activities should, for example, be required to treat a customer in default or arrears difficulties with forbearance and consideration and may consider suspending, reducing or waiving any further interest payments or charges from that customer or accepting token payments from the customer for a reasonable period. Regarding statute barred debt, a firm which undertakes consumer credit regulated activities must not mislead a customer by suggesting that said customer could be subject to court action for the sum of the statute barred debt, when that firm knows, or reasonably ought to know, that the relevant limitation period has expired.
The Money Laundering Regulations 2017 implement the European Union 4th Money Laundering Directive (2015/849/EU) and apply to lenders and specify that all lenders must be supervised for money laundering compliance. Both our U.K. lending businesses are currently supervised by the FCA for these purposes.
In the United Kingdom, a bank that clears a fraudulent check must refund the drawer. For this reason, banks have invoked more stringent credit inspection and indemnity criteria for businesses such as ours.
In 2009, the European Union Payment Services Directive, or the PSD1, was implemented in the United Kingdom, requiring money transfer and foreign currency exchange providers (among others) to be authorized by or registered with the FCA; SRC Transatlantic Limited duly registered with effect from December 8, 2010. PSD1 will be replaced by Directive 2015/2366/EU, or PSD2, beginning in January 2018. PSD2 will be implemented via the U.K. Payment Services Regulations 2017. Under the new regime, SRC Transatlantic Limited will be required to re-register with the FCA in order to continue providing payment services.
In June 2013, the U.K. Competition & Markets Authority (CMA) commenced a market investigation into payday lending to investigate whether certain features of the industry prevented, restricted or distorted competition and if so to recommend suitable remedies.
The Equality Act 2010 protects nine characteristics from direct or indirect discrimination and harassment of applicants and customers when conducting lending services. These characteristics are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.
We are required to self-report suspicious activities and to appoint a designated anti-money laundering officer with the overall responsibility for the compliance of the business and employees under the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2017.
125
The CMA published its final report in February 2015; its recommendations were implemented under the Payday Lending Market Investigation Order 2015, under which:
| online lenders must provide details of their products on at least one FCA authorized price comparison website, or PCW, and include a hyperlink from their website to the relevant PCW; and |
| payday lenders must provide existing customers with a summary of their cost of borrowing. |
These changes, which are reflected in FCA rules, came into effect on December 1, 2016.
Failure to comply with any rules or guidance issued by the FCA is likely to have serious consequences; for example:
| The FCA may take enforcement action against a firm which could result in fines and/or remediation action for consumers. Any such enforcement action would be publicly known and would involve severe reputational damage, with vendors of debt portfolios and creditors outsourcing collection activity likely to remove their business from a debt collector that is the subject of such enforcement action. |
| Firms can be subject to a section 166 notice by the FCA, which may ensue where the FCA has identified issues within the firm regarding compliance with the FCA rules and guidance and commissions a skilled persons report. A skilled persons report is performed by an independent firm, usually one of the five large accountancy firms or a law firm that is deemed by the FCA to have the necessary skills and expertise to review the areas of concern. The report is shared with the firm being reviewed and the FCA. Remedial action highlighted is tracked by the FCA through close liaison with the firm. Failure to remedy points raised and/or do so in sufficient time can lead to further enforcement action, including fines. The cost of such a review is borne by the firm. Any enforcement proceeding that might follow from the issue of a section 166 notice may become public at the stage of issuance of a final notice. If our U.K. operations become subject to such a notice, originators that currently do business with us may cease to do so, and our ability to conduct our U.K. operations, along with our reputation, and consequently, our ability to win future business may be adversely affected. We might also have to introduce changes to our business practices in the United Kingdom in response to enforcement action taken against certain of our competitors. |
The FCA is undertaking various reviews relevant to consumer credit businesses, which may affect us. For example, in December 2016, the FCA published a report on its thematic review on arrears management in unsecured lending which assessed the manner in which consumer credit financial institutions collect and recover debt and how customers were being treated by such firms. The review focused on whether firms have due regard to the interests of their customers and exercise appropriate forbearance in compliance with the existing FCA rules, including the Principles for Businesses. We were not directly involved with the review; however, we reviewed the report and no major changes to our current policy and processes were required.
Data Protection
As a consumer finance business, we must comply with the requirements established by the Data Protection Act in relation to processing the personal data of our customers. Any business controlling the processing of personal data (that is, determining the purposes of the processing and the manner in which it is carried out), such as consumer credit firms, must in particular maintain a data protection registration with the ICO for each of its companies. The ICO is an independent governmental authority responsible for maintaining, upholding and promoting the best business practices and legislative requirements for processing personal data and safeguarding the information rights of individuals and their rights to access their personal data.
We control the processing of significant amounts of personal data; therefore, we have a data protection registration for each relevant subsidiary which controls the processing of personal data, a data protection policy and have established data protection processes, which are reviewed and updated from time to time for the
126
purposes of compliance with the requirements of the Data Protection Act and the applicable guidance issued from time to time by the ICO, such as the handling of data subject access requests from individuals. The ICO is empowered to impose requirements through enforcement notices (in effect, stop orders), issue monetary fines and prosecute criminal offences under the Data Protection Act. As of the date of this prospectus we have not received any such notices from the ICO.
Furthermore, we receive third-party data from sources governed by the Steering Committee on Reciprocity, or SCOR, such as mainstream credit bureaux, and from private sources such as closed user groups, or CUGs. CUGs operate by a CUG host taking responsibility for housing the underlying data, matching the records and for compliance with data protection regulations. If one of the contributors of the CUG were to violate data protection laws or other regulatory requirements, it could harm our business or result in penalties being imposed on us. Our ability to obtain, retain and otherwise manage such data is governed by data protection and privacy requirements and regulatory rules and guidance issued by, among others, the ICO and influenced by SCOR.
The EU Data Protection Regulation came into effect in May 2016 and is directly applicable in Member States (including the United Kingdom). It will apply to all affected businesses, which are required to be compliant by May 26, 2018, and will become directly applicable in Member States starting in May 2018. The EU Data Protection Regulation introduces substantial changes to the EU data protection regime and will impose a substantially higher compliance burden on us, may increase our data protection costs and may restrict our ability to use data. Examples of this higher burden include expanding the requirement for informed opt in consent by customers to processing of personal data, where we rely on customer consent to process personal data, and granting customers a right to be forgotten, restrictions on the use of personal data for profiling purposesdisclosure requirements of data sources to customers, the possibility of having to deal with a higher number of subject access requests, among other requirements. The EU Data Protection Regulation also increases the maximum level of fine for the most serious compliance failures in the case of a business to the greater of four per cent of annual worldwide turnover or 20,000,000. As the EU Data Protection Regulation is directly applicable, and directly effective, the United Kingdom does not have any control over its manner of implementation. The ICO is currently consulting on its draft written guidance on consent under the EU Data Protection Regulation. There is a memorandum of understanding in place between the ICO and the FCA which (among other things) provides for information-sharing between the two bodies.
The U.K. government has also published the Data Protection Bill 2017, which it is anticipated will become law in 2018. This will substantially replace the Data Protection Act and address further detail and increase the regulation which will be brought in by the EU Data Protection Regulation. It will not increase the regulatory penalties regime which will become effective under the EU Data Protection Regulation.
In addition, the Privacy and Electronic Communications (EC Directive) Regulations 2003 originating as the implementation of European Directive 2002/58/EC, also known as the E-Privacy Directive, impose obligations on U.K. businesses in respect of electronic marketing by email and marketing by telephone, it is anticipated that a new wider scope EU regulation will come into force in 2018.
It remains to be seen what impact the recent vote by the United Kingdom in favor of leaving the EU will have on the regulatory environment in the EU and the United Kingdom and on the applicability of EU law in the United Kingdom.
We continue to monitor the evolving regulatory activity in the United Kingdom. We cannot provide any assurances that additional statutes or regulations will not be enacted in the future in the United Kingdom. Additionally, we cannot provide any assurances that any future changes to statutes or regulations will not have a material adverse effect on our results of operations and financial condition.
127
Executive Officers and Directors
The following table sets forth the names, ages and positions of our executive officers and directors as of the date of this prospectus:
Name |
Age |
Position |
||||
Doug Rippel |
51 | Executive Chairman of Board of Directors | ||||
Don Gayhardt |
53 | President, Chief Executive Officer and Director | ||||
William Baker |
37 | Executive Vice President and Chief Operating Officer | ||||
Roger Dean |
55 | Treasurer, Executive Vice President and Chief Financial Officer | ||||
Terry Pittman |
60 | Executive Vice President and Chief Information Officer | ||||
Vin Thomas |
40 | Secretary and Chief Legal Officer | ||||
Chad Faulkner |
50 | Director | ||||
Mike McKnight |
51 | Director | ||||
Christopher A. Masto |
50 | Director | ||||
Andrew Frawley (1) |
55 | Director | ||||
Dale E. Williams (2) |
54 | Director | ||||
Karen Winterhof |
30 | Director |
(1) | Mr. Frawleys appointment to our Board of Directors will be effective upon the listing of our shares of common stock on the NYSE. |
(2) | Mr. Williams appointment to our Board of Directors will be effective upon the listing of our shares of common stock on the NYSE. |
Executive Officers
Doug Rippel co-founded the Company and has served as our Executive Chairman of the Board of Directors since 2012. Mr. Rippel was our Chairman of the Board of Directors from 2008 to 2012, our Chief Executive Officer from 1997 to January 2012 and our Secretary and Treasurer from 1997 to 2008. As one of our founders, he has led the Company in its entire geographic and product expansion. Mr. Rippel serves as a director of several private companies. Mr. Rippel also serves as a director and officer of each of our wholly owned subsidiaries. Mr. Rippel shares, together with the other Founder Holders, 100% ownership of Ad Astra, which we employ to provide third-party collection activities for our U.S. operations. Mr. Rippel also co-owns with the other Founder Holders certain real estate companies from which we lease some of our corporate stores and offices. For more information, see Certain Relationships and Related-Party TransactionsRelated-Party Transactions. Mr. Rippel has also served as the Chief Executive Officer of American First Finance since 2013. Mr. Rippel holds a Bachelor of Science degree in Electrical Engineering from Kansas State University and a Master of Business Administration from Wichita State University.
Don Gayhardt has served as the Companys Chief Executive Officer since January 2012, as the Companys President since July 2013 and on our Board of Directors since December 2012. Prior to joining the Company, Mr. Gayhardt served in various capacities at Dollar Financial Corp., (now known as DFC Global Corp.,) from 1990 to 2008, including President and a member of the board of directors from 1998 to 2008. During his time with Dollar, the company expanded from 60 stores to over 1,100 and revenue increased from $14 million to over $550 million. Since 2008, Mr. Gayhardt has been an investor and advisor to a number of finance, financial technology and retail businesses, and currently serves on the board of directors of Beneficial Bancorp. Mr. Gayhardt earned his Bachelor of Business Administration degree in Accounting from the University of Notre Dame.
William Baker has served as the Companys Chief Operating Officer since February 2016. Mr. Baker was our Companys Chief Marketing Officer from September 2011 until 2016 and Vice President of Marketing and Business Development from April 2007 until September 2011. Mr. Baker also serves on the Board of Directors for the Companys U.K. subsidiaries SRC Transatlantic LTD and CURO Transatlantic Limited. Mr. Baker earned a Bachelor of Science Degree in Integrated Marketing Communications from Gannon University.
128
Roger Dean has served as an Executive Vice President and our Chief Financial Officer since joining CURO in May 2016. Prior to joining the Company, Mr. Dean was Senior Vice PresidentController with Fifth Third Bancorp and Senior Manager with Deloitte. Most recently, Mr. Dean served as Chief Financial Officer for CNG Holdings, Inc. from 2005 to 2016. Mr. Dean earned his Bachelor of Science in Accountancy from Miami University, Oxford, Ohio.
Terry Pittman joined the Company as our Chief Information Officer in 2003, and has been an Executive Vice President since March 2016. Mr. Pittman is responsible for overseeing all aspects of Information Technology for operations, processes, security, application development and infrastructure across the global reach of the Company. Mr. Pittman has over 30 years in technology management and his background includes a wide range of industries including retail, rental and consumer lending companies managing the growth to over thousands of locations. Mr. Pittman holds a Bachelor of Science degree from Wichita State University in Computer Science.
Vin Thomas joined the Company in September 2014 as Chief Legal Officer and has served as our Secretary since 2016. Mr. Thomas also serves on the Board of Directors for the Companys U.K. subsidiaries, SRC Transatlantic LTD and CURO Transatlantic Limited. Prior to joining the Company, Mr. Thomas served as General Counsel and Assistant Secretary at TMX Finance LLC from May 2009 to September 2014. Prior to his tenure with TMX Finance LLC, Mr. Thomas was in the private practice of law. Mr. Thomas holds a Bachelor of Arts, cum laude, from the University of Georgia, and a juris doctor degree from the Mercer University School of Law.
Directors
Chad Faulkner co-founded the Company and has served on our Board of Directors since 1997. Mr. Faulkner served as our President and Chief Operating Officer from 1997 to 2013. As one of our founders, he has led the Company in its entire geographic and product expansion. Mr. Faulkner serves as a director of several private companies. Mr. Faulkner also serves as a director of each of our wholly-owned subsidiaries. Most recently, Mr. Faulkner has served as Chief Executive Officer of Sports Academy since 2015. Mr. Faulkner shares, together with the other Founder Holders, 100% ownership of Ad Astra, which we employ to provide third-party collection activities for our U.S. operations. Mr. Faulkner also co-owns with the other Founder Holders certain real estate companies from which we lease some of our corporate stores and offices. For more information, see Certain Relationships and Related-Party TransactionsRelated-Party Transactions. Mr. Faulkner holds a Bachelor of Science degree from Kansas State University and is a graduate of the Executive Program at the Anderson School of BusinessUniversity of California Los Angeles.
Mike McKnight co-founded the Company and has served on our Board of Directors since 1997. From 1997 to 2008, Mr. McKnight served as Vice President of the Company. He was involved with the Companys strategic direction and governmental affairs. He initially managed loan office operations, and then later directed the real estate, construction, media and marketing arms of the Company, utilizing his prior career as a radio advertising executive to build a successful advertising campaign. Mr. McKnight shares, together with the other Founder Holders, 100% ownership of Ad Astra, which we employ to provide third-party collection activities for our U.S. operations. Mr. McKnight also co-owns with the other Founder Holders certain real estate companies from which we lease some of our corporate stores and offices. For more information, see Certain Relationships and Related-Party TransactionsRelated-Party Transactions. From 2010 until 2014, Mr. McKnight served as the Managing Member of Gusto, LLC, a Dominos Pizza franchisee in Kansas and Western Missouri. Since 2011, Mr. McKnight serves as a director of Gusto, LLC, Decorus Investments, LLC, and CDM Development, LLC, and has been a Partner of Tacoma Capital since 2016. Mr. McKnight earned a Bachelor of Science degree in Journalism from Kansas State University.
Christopher A. Masto has served on our Board of Directors since 2008. Mr. Masto is Co-Founder and Senior Advisor at FFL Partners, a private equity firm, which he co-founded in 1997 and where, until 2017, he served as a Partner, member of the Investment Committee, and member of firm leadership. He transitioned to a Senior Advisor role in 2017. Prior to co-founding FFL Partners, he worked as a management consultant with
129
Bain & Company. Prior to that, Mr. Masto was employed at Morgan Stanley & Co., where he worked as an investment banker. Mr. Masto also currently serves on the board of directors of Enjoy Beer LLC. He was previously a director of Tempur Sealy International and Chairman of TriTech Software Systems. Mr. Masto graduated magna cum laude from Brown University with an Sc.B. in Electrical Engineering, and received an Master of Business Administration from Harvard Business School.
Karen Winterhof has served on our Board of Directors since March 2016. Ms. Winterhof currently serves as a Vice President with FFL Partners. Prior to joining FFL Partners in June 2015, Ms. Winterhof was an associate at Highbridge Principal Strategies from August 2013 to February 2015 in the Specialty Loan Fund, where she participated in evaluating and executing senior debt investments and had ongoing responsibilities with portfolio investments across a variety of industries. Prior to that, she was a private equity associate at Clayton, Dubilier & Rice in New York from July 2011 to July 2013. Ms. Winterhof also currently serves on the board of directors of Crisis Prevention Institute and Icynene. Ms. Winterhof received a Bachelor of Science in Engineering in Operations Research and Financial Engineering from Princeton University.
Andrew Frawley will become a member of our Board of Directors upon the listing of our shares of common stock on the NYSE in connection with this offering. Mr. Frawley currently serves as the Chief Executive Officer of AJ Frawley & Associates LLC. Most recently, from December 2014 to September 2016, Mr. Frawley served as Chief Executive Officer of Epsilon, a segment of Alliance Data Systems Corporation. Prior to that, he served as Epsilons President from January 2012 to December 2014 and as its President of Marketing Technology from January 2009 to December 2011. Mr. Frawley also currently serves on the board of directors of the Data & Marketing Association, and has been the Chairman of the board of directors of Cybba Inc. since September 2017. Mr. Frawley earned a Master of Business Administration from Babson College and a Bachelor of Science in Finance from The University of Maine.
Dale E. Williams will become a member of our board of directors upon the listing of our shares of common stock on the NYSE in connection with this offering. From July 2003 to September 2015, Mr. Williams served as Executive Vice President and Chief Financial Officer of Tempur Sealy International. From 2001 through 2002, Mr. Williams served as Vice President and Chief Financial Officer of Honeywell Control Products, a division of Honeywell International, Inc. From 2000 to 2001, Mr. Williams served as Vice President and Chief Financial Officer of Saga Systems, Inc./Software AG, Inc. Prior to that, Mr. Williams spent 15 years in various management positions at General Electric Company. Mr. Williams also currently serves on the board of directors of Intralink-Spine and Xooker, LLC. Mr. Williams received a Bachelor of Science in Finance from Indiana University.
Corporate Governance
Composition of the Board of Directors
In connection with this offering, we will be amending and restating our certificate of incorporation to provide for a classified board of directors of nine directors, which may be increased or decreased in size, with three directors in Class I (expected to be , and ), three directors in Class II (expected to be , and ) and three directors in Class III (expected to be , and ). Each director will serve staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. See Description of Capital StockAnti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and BylawsClassified Board.
Background and Experience of Directors
When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy its oversight responsibilities effectively in light of our
130
business and structure, the board of directors focused primarily on each persons background and experience as reflected in the information discussed in each of the directors individual biographies set forth above. We believe our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business.
Director Independence
Our board of directors has evaluated the independence of its members based upon the rules of NYSE and the SEC. Applying these standards, our board of directors has affirmatively determined that is an independent director.
Board Leadership Structure
Our board of directors includes our Chief Executive Officer. Our Executive Chairman is not an officer or employee of the Company. Our board of directors understands that there is no single, generally accepted approach to providing board leadership and that given the dynamic and competitive environment in which we operate, the right board leadership structure may vary as circumstances warrant. The board of directors will discuss and consider the matter from time to time as circumstances change and, subject to our amended and restated bylaws, will have the flexibility to modify our board structure as it deems appropriate.
Board Committees
Upon the completion of this offering, the board of directors will establish an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Our Chief Executive Officer and other executive officers will regularly report to the non-executive directors and the board committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls.
Audit Committee
The Audit Committee will be responsible for, among other things, assisting the board of directors in reviewing: our financial reporting and other internal control processes; our financial statements; the independent auditors qualifications, independence and compensation; the performance of our internal audit function and independent auditors; and our compliance with legal and regulatory requirements and our Code of Business Conduct and Ethics.
Upon the completion of this offering, the Audit Committee will consist of , and . Rule 10A-3 under the Exchange Act and the NYSE rules require us to have one independent Audit Committee member upon the listing of our common stock, a majority of independent directors on our Audit Committee within 90 days of the date of this prospectus and an Audit Committee composed entirely of independent directors within one year of the date of this prospectus. Our board of directors has affirmatively determined that each of , and meet the definition of independent director for purposes of serving on an audit committee under Rule 10A-3 under the Exchange Act and the NYSE rules. We intend to comply with the other independence requirements within the time periods specified. We have identified as our audit committee financial expert as that term is defined in the rules and regulations of the SEC. The Audit Committee will have adopted a written charter that, among other things, specifies the scope of its rights and responsibilities and satisfies the applicable standards of the SEC and NYSE. Upon the completion of this offering, the charter of the Audit Committee will be available on our website. The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this prospectus. The responsibilities of our Audit Committee will include, among other things:
| appointing, as well as reviewing and approving the compensation, retention and termination of, the independent registered public accounting firm engaged to audit our financial statements; |
131
| helping to ensure the independence of and overseeing the performance of the independent registered public accounting firm; |
| reviewing and pre-approving audit and non-audit services and fees; |
| reviewing financial statements and discussing with management and the independent registered public accounting firm our annual audited and quarterly financial statements, the results of the independent audit and the quarterly reviews and the reports and certifications regarding internal controls over financial reporting and disclosure controls; |
| preparing the Audit Committee report that the SEC requires be included in an annual proxy statement; |
| assisting the board of directors in overseeing our internal audit function; |
| reviewing reports and communications from the independent registered public accounting firm; |
| reviewing the adequacy and effectiveness of our internal control over financial reporting (on which our management will be required to provide a report for our second annual report on Form 10-K); |
| reviewing and overseeing related-party transactions; and |
| establishing and maintaining procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, auditing matters, or federal and state rules and regulations, and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. |
Compensation Committee
The Compensation Committee will be responsible for, among other things, determining the compensation of our executive officers, reviewing our executive compensation policies and plans, administering and implementing our equity compensation plans, and preparing a report on executive compensation for inclusion in our proxy statement for our annual meeting.
Upon the completion of this offering, the Compensation Committee will consist of , , and . The Compensation Committee will have adopted a written charter that, among other things, specifies the scope of its rights and responsibilities and satisfies the applicable standards of the SEC and NYSE. Upon the completion of this offering, the charter of the Compensation Committee will be available on our website. The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this prospectus. The responsibilities of our Compensation Committee will include, among other things:
| overseeing our overall compensation philosophy, compensation policies, compensation plans and benefit programs; |
| reviewing and approving for our executive officers: the annual base salary, annual incentive compensation (including the specific goals and amounts), equity compensation, employment agreements, severance or termination agreements, change in control arrangements and any other benefits, compensation or arrangements; and |
| reviewing and making recommendations to our Board of Directors with respect to employee compensation and benefit plans. |
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee will be responsible for, among other things, reviewing board structure, composition and practices and making recommendations on these matters to our board of directors reviewing, soliciting and making recommendations to our board of directors and stockholders with
132
respect to candidates for election to the board of directors, overseeing our board of directors performance and self-evaluation process, reviewing the compensation payable to board and committee members and providing recommendations to our board of directors in regard thereto, and developing and reviewing a set of corporate governance principles.
Upon the completion of this offering, the Nominating and Corporate Governance Committee will consist of , and . The Nominating and Corporate Governance Committee will have adopted a written charter that, among other things, specifies the scope of its rights and responsibilities and satisfies the applicable standards of the SEC and NYSE. Upon the completion of this offering, the charter of the Nominating and Corporate Governance Committee will be available on our website. The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this prospectus.
Corporate Governance Guidelines
The board of directors has developed and adopted a set of corporate governance principles to provide the framework for the governance of CURO and to assist our board in the exercise of its responsibilities. These guidelines reflect the boards commitment to monitoring the effectiveness of policy and decision making both at the board and management level, with a view to enhancing stockholder value over the long term. Following the completion of this offering, the corporate governance guidelines will be available on our website. We expect that any amendments to the guidelines, or any waivers of its requirements, will be disclosed on our website. The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this prospectus.
Compensation Committee Interlocks and Insider Participations
None of the members of our Compensation Committee is, or has at any time during the past year been, one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or Compensation Committee.
Code of Business Conduct and Ethics
Upon the completion of this offering, we will adopt a code of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer, controller or principal accounting officer, or other persons performing similar functions, which fulfills applicable guidelines issued by the SEC. Following the completion of this offering, the code of business conduct and ethics will be available on our website. We expect that any amendments to the code, or any waivers of its requirements, will be disclosed on our website within four business days the extent required by the rules and regulations of the SEC. The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this prospectus.
Director Compensation
We reimburse our directors for their reasonable travel and accommodation expenses incurred in connection with attending board and committee meetings and fulfilling their duties as members of our board of directors. See Executive CompensationDirector Compensation for a discussion of the compensation and reimbursement policies for our directors upon the completion of this offering.
133
Compensation of our Named Executive Officers
The following table sets forth information regarding the compensation awarded to, earned by or paid to certain of our executive officers during the fiscal year ended December 31, 2016. As an emerging growth company, we have chosen to comply with the executive compensation disclosure rules applicable to smaller reporting companies as such term is defined in the rules promulgated under the Securities Act, which require compensation disclosure for our principal executive officer and our next two other most highly compensated executive officers. Throughout this prospectus, these three officers are referred to as our named executive officers.
The compensation reported in this Summary Compensation Table below is not necessarily indicative of how we will compensate our named executive officers in the future. We expect that we will continue to review, evaluate and modify our compensation framework as a result of becoming a publicly-traded company and our compensation program following the completion of this offering could vary significantly from our historical practices.
Summary Compensation Table
Year(1) | Salary(2) | Bonus(3) |
Stock
Awards |
Option
Awards(4) |
Non-Equity
Incentive Plan Compensation(5) |
Nonqualified
Deferred Compensation Earnings(6) |
All Other
Compensation(7) |
Total | ||||||||||||||||||||||||||||
Don Gayhardt |
2016 | $ | 726,458 | $ | 461,884 | | $ | 11,452 | $ | 555,788 | | $ | 229,443 | $ | 1,985,025 | |||||||||||||||||||||
President, Chief Executive Officer and Director |
||||||||||||||||||||||||||||||||||||
William Baker |
2016 | $ | 568,750 | $ | 105,850 | | $ | 190,339 | $ | 268,125 | | $ | 117,785 | $ | 1,250,849 | |||||||||||||||||||||
Executive Vice President and Chief Operating Officer |
||||||||||||||||||||||||||||||||||||
Terry Pittman |
2016 | $ | 419,192 | $ | 52,194 | | $ | 61,085 | $ | 205,871 | | $ | 78,734 | $ | 817,076 | |||||||||||||||||||||
Executive Vice President and Chief Information Officer |
(1) | Mr. Baker became our Executive Vice President and Chief Operating Officer and Mr. Pittman became our Executive Vice President and Chief Information Officer on March 5, 2016. Prior to such date, Mr. Baker served as our Chief Marketing Officer and Mr. Pittman served as our Chief Information Officer. |
(2) | The amount reported as earned in this column by Mr. Baker includes a catch-up payment of $83,333 paid in March 2016 for the increase in Mr. Bakers base salary from $400,000 to $500,000 that was approved and made effective in May 1, 2015, but not implemented until March 6, 2016. |
(3) | The amounts reported as earned in this column represent the following bonuses earned with respect to 2016 by each executive officer: |
| Don Gayhardt . The amounts reported represent (i) a $411,884 bonus paid pursuant to a special bonus declared in 2013 further described in 2013 Special Bonus Notices below, the aggregate value of which was initially $2,339,348, paid in installments over a four year period subject to the executives continued employment with the Company through the applicable payment dates, and (ii) a one-time $50,000 discretionary bonus, further described in 2016 Leadership Bonus, below. |
| William Baker. The amounts reported represent (i) a $55,850 bonus paid pursuant to a special bonus declared in 2013 further described in 2013 Special Bonus Notices below, the aggregate value of which was initially $467,825, paid in installments over a four year period subject to the executives continued employment with the Company through the applicable payment dates, and (ii) a one-time $50,000 discretionary bonus, further described in 2016 Leadership Bonus, below. |
|
Terry Pittman. The amounts reported represent (i) a $27,194 bonus paid pursuant to a special bonus declared in 2013 further described in 2013 Special Bonus Notices below, the aggregate value of which was initially $467,825, paid in |
134
installments over a four year period subject to the executives continued employment with the Company through the applicable payment dates, and (ii) a one-time $25,000 discretionary bonus, further described in 2016 Leadership Bonus, below. |
For additional information, please see Compensation of our Named Executive OfficersNarrative to Summary Compensation Table below.
(4) | Represents the aggregate grant date fair value of options granted to our named executive officers in 2016, determined under FASB ASC Topic 718. With respect to time-vesting options, the grant date fair value was determined using a Black-Scholes option-pricing model. For additional information with respect to options granted during 2016, including a discussion of the assumptions made in valuation, see Note 12, Share-Based Compensation of our Notes to Consolidated Financial Statements included elsewhere in this prospectus. The amounts above reflect our aggregate accounting expense for these awards and do not necessarily correspond to the actual value that will be recognized by our named executive officers, which depends on the market value of our common stock on a date in the future. |
(5) | The amounts reported as earned in this column represent the bonuses earned with respect to 2016 by each executive, with respect to Mr. Gayhardt, pursuant to his employment agreement, and with respect to Messrs. Baker and Pittman, pursuant to the 2016 Annual Corporate Incentive Plan. These amounts were paid in December 2016. For additional information, please see Compensation of our Named Executive OfficersNarrative to Summary Compensation Table below. |
(6) | Our named executive officers had no above-market or preferential earnings on deferred compensation during 2016. |
(7) | The amounts reported as earned by each named executive officer in this column include the cost of the following perquisites and other benefits received by our named executive officers: |
| Don Gayhardt. The amount reported represents: (i) employer contributions equal to $185,263 made to our non-qualified deferred compensation plan with respect to 2016; (ii) reimbursement for $25,000 in life insurance premiums; (iii) reimbursements for travel expenses incurred while commuting between the executives primary residence and our corporate office in Wichita, Kansas, equal to $16,600; and (iv) payments by us equal to $1,260 for executive life insurance premiums and $1,320 for executive long term disability benefits. |
| William Baker . The amount reported represents: (i) matching contributions equal to $7,950 made to our tax qualified retirement plan during 2016; (ii) employer contributions equal to $89,375 made to our non-qualified deferred compensation plan with respect to 2016; (iii) reimbursements for travel expenses incurred while commuting between the executives primary residence and our corporate office in Wichita, Kansas, equal to $18,300; and (iv) payments by us equal to $840 for executive life insurance premiums and $1,320 for executive long term disability benefits. |
| Terry Pittman . The amount reported represents (i) matching contributions equal to $7,950 made to our tax qualified retirement plan with respect to 2016; (ii) employer contributions equal to $68,624 made to our non-qualified deferred compensation plan during 2016; and (iii) payments by us equal to $840 for executive life insurance premiums and $1,320 for executive long term disability benefits. |
Executive Employment Agreements
Certain of the compensation paid to our named executive officers reflected in the Summary Compensation Table was provided pursuant to employment agreements, which are summarized below. For a discussion of the severance pay and other benefits to be provided to our named executive officers in connection with a termination of employment and/or a change in control under arrangements with each of our named executive officers, please see Potential Payments Upon Termination or Change in Control below.
Don Gayhardt
New Employment Agreement . We entered into an amended and restated employment agreement with Mr. Gayhardt, effective as of January 1, 2017, pursuant to which he serves as our President and Chief Executive Officer. The agreement provides for an indefinite term, subject to earlier termination upon death, disability, a termination by the Company or Mr. Gayhardts resignation. Pursuant to his employment agreement, Mr. Gayhardt is entitled to a base salary, which was increased, effective as of December 15, 2016, to $760,000 from $725,000. In addition, Mr. Gayhardt is eligible to earn the following bonuses for each calendar year: (i) a bonus equal to 75% of his base salary if our (a) revenue, less provision for loan losses and (b) EBITDA targets for the year are met, and (ii) an additional bonus in an amount equal to 3% of Mr. Gayhardts base salary multiplied by the number of percentage points by which our actual EBITDA for such calendar year exceeds the EBITDA target established by our board of directors in the annual budget for the applicable fiscal year, up to a maximum of 60% of base salary if our base revenue targets are achieved.
135
In addition, Mr. Gayhardt is entitled to reimbursements for up to $25,000, per annum, of documented personal life insurance premiums and is eligible to participate in the Companys non-qualified deferred compensation plan on terms consistent with other executives. Mr. Gayhardts agreement also provides that we will split the costs for Mr. Gayhardts documented expenditures for private aircraft charters for flights taken for legitimate business purposes, up to a maximum aggregate reimbursement of $125,000 in each calendar year. For a discussion of Mr. Gayhardts severance entitlements pursuant to his employment agreement, see Potential Payments Upon Termination or Change in Control below.
Prior Employment Agreement . Prior to January 1, 2017, Mr. Gayhardt was subject to an employment agreement entered into in January of 2012, the initial term for which expired in January 2017. Pursuant to Mr. Gayhardts employment agreement, he was eligible to earn a base salary, equal to $725,000 for 2016, which was increased, effective as of December 15, 2016, to $760,000. In addition, Mr. Gayhardt was eligible to earn, for each calendar year: (i) a bonus equal to 75% of his base salary if our revenue and EBITDA targets for the year were met and (ii) an additional bonus in an amount equal to 3% of Mr. Gayhardts base salary multiplied by the number of percentage points by which our actual EBITDA for such calendar year exceeded the EBITDA target established by our board of directors in the annual budget for the applicable fiscal year, up to a maximum of 60% of base salary if our base revenue targets are achieved.
During 2016, our target revenue was $823.4 million and our EBITDA target was $179.9 million. Actual revenue totaled $828.6 million, while actual EBITDA totaled $191.3 million.
William Baker
We have entered into an employment agreement with Mr. Baker, dated March 5, 2016, pursuant to which he serves as our Executive Vice President and Chief Operating Officer. Prior to entering into such agreement, Mr. Baker was not a party to an employment agreement with CURO. The agreement provides for an initial term of three years, with automatic renewals for additional one year terms thereafter, unless terminated by either party upon 45 days advance written notice prior to the expiration of the applicable term. Pursuant to his employment agreement, Mr. Baker is entitled to a base salary, which was increased from $500,000 to $550,000, effective as of December 15, 2016. In addition, Mr. Baker is eligible to earn an annual bonus in an amount equal to 50% of his base salary based on the satisfaction of performance criteria agreed to by Mr. Baker and our Chief Executive Officer at the beginning of each year. For a discussion of Mr. Bakers severance entitlements pursuant to his employment agreement, see Potential Payments Upon Termination or Change in Control below.
Terry Pittman
We have entered into an employment agreement with Mr. Pittman, dated April 10, 2017, pursuant to which he serves as our Executive Vice President and Chief Information Officer. Prior to entering into such agreement, Mr. Pittman was not a party to an employment agreement with CURO. The agreement provides for an initial term of three years, with automatic renewals for additional one year terms thereafter, unless terminated by either party upon 45 days advance written notice prior to the expiration of the applicable term. Pursuant to his employment agreement, Mr. Pittman is entitled to a base salary of $422,300. In addition, Mr. Pittman is eligible to earn an annual bonus in an amount equal to 50% of his base salary for each calendar year if: (i) our EBITDA targets for the applicable calendar year are met and (ii) he achieves specified non-financial performance objectives agreed to by Mr. Pittman and our Chief Executive Officer at the beginning of each year. For a discussion of Mr. Pittmans severance entitlements pursuant to his employment agreement, see Potential Payments Upon Termination or Change in Control below.
2016 Annual Corporate Incentive Plan
Certain executives designated by us were eligible to participate in the 2016 Annual Corporate Incentive Plan for fiscal year 2016, or the 2016 Annual Plan, pursuant to which such executives were eligible to receive a bonus
136
with respect to such year. Each employees target bonus was equal to a specified percentage of his base salary, and the actual bonus paid was based on the achievement of certain financial and personal performance objectives for the year. Bonus payments for 2016 were paid in December 2016. Employees were required to be employed at the time of calculation to receive any portion of the bonus.
Our financial performance objective under the 2016 Annual Plan was based on achieving an Adjusted EBITDA goal, which was $180.7 million. Actual Adjusted EBITDA for 2016 was $189.4 million. See Managements Discussion and Analysis of Financial Condition and Results of OperationsSupplemental Non-GAAP Financial Information for more information on how we define and calculate Adjusted EBITDA and for reconciliation of net income, the most comparable GAAP measure, to Adjusted EBITDA. If the target was met, then the maximum amount payable with respect to our financial performance would be paid. Accomplishment of stated individual or departmental goals would determine the percentage of the yearly bonus to be awarded with respect to personal performance objectives for the year. Not all goals and objectives would need to be met to receive a portion of the bonus.
During 2016, each of Messrs. Baker and Pittman were eligible to earn a target bonus under the 2016 Annual Plan equal to 50% of his base compensation. One-half of such bonus was tied to the achievement of the Adjusted EBITDA goal discussed above, and the remaining one-half was tied to the achievement of certain specified personal performance objectives, each of which were subjective in nature.
2017 Annual Corporate Incentive Plan
Certain executives designated by us are eligible to participate in the 2017 Annual Corporate Incentive Plan for fiscal year 2017, or the 2017 Annual Plan, pursuant to which such executives are eligible to receive a bonus with respect to such year. Each employees target bonus is equal to a specified percentage of his base salary, and the actual bonus paid will be based on the achievement of certain financial and personal performance objectives for the year. Employees are required to be employed at the time of calculation to receive any portion of the bonus.
Our financial performance objective under the 2017 Annual Plan will be based on achieving an Adjusted EBITDA goal. If the target is met, then the maximum amount payable with respect to our financial performance will be paid. Accomplishment of stated individual or departmental goals will determine the percentage of the yearly bonus to be awarded with respect to personal performance objectives for the year. Not all goals and objectives will need to be met to receive a portion of the bonus.
During 2017, each of Messrs. Baker and Pittman are eligible to earn a target bonus under the 2017 Annual Plan equal to 50% of his base compensation. One-half of such bonus will be tied to the achievement of CUROs Adjusted EBITDA goal, and the remaining one-half will be tied to the achievement of certain specified personal performance objectives, each of which will be subjective in nature.
2016 Leadership Bonus
During 2016, our board of directors granted a one-time discretionary bonus to certain members of our management team in recognition of their exceptional performance and the Companys positive performance during the first half of the fiscal year, referred to herein as the 2016 Leadership Bonus. Specifically, Messrs. Gayhardt, Baker and Pittman were each paid a bonus equal to $50,000, $50,000 and $25,000, respectively, in September, July and August of 2016, respectively.
2013 Special Bonus Notices
In 2013, in connection with a dividend paid to our stockholders, we granted holders of our stock options a cash bonus, or the 2013 Special Bonuses, payable over four years, in each case, subject to the award holders
137
continued employment through such date. The final portion of the 2013 Special Bonuses were paid in 2017. Each of Messrs. Gayhardt, Baker and Pittman was entitled to receive an aggregate 2013 Special Bonus of $2,339,348, $467,825, and $467,825, respectively, of which $411,884, $55,850 and $27,194 was paid during 2016, respectively.
2017 Special Bonus Notices
On May 15, 2017, we granted holders of our stock options a cash bonus, or, the 2017 Special Bonuses, a portion of which was payable immediately and the remainder of which was payable on the last day of each calendar quarter during 2017 through 2022 following the date of grant, in each case, subject to the award holders continued employment through such date. The portion of the 2017 Special Bonus paid in May 2017 was equal to $26.60 times the number of vested stock options held by the bonus recipient as of May 15, 2017, or $562,084.60, $129,196 and $118,317 for each of Messrs. Gayhardt, Baker and Pittman, respectively. In addition, on the last day of each calendar quarter thereafter, the bonus recipient will receive a payment equal to $26.60 times the number of stock options held by the bonus recipient that become vested during the applicable calendar quarter, other than due to a disposition event (as defined in the stock option agreements granted pursuant to the Companys 2010 Equity Incentive Plan). Upon a disposition event, the 2017 Special Bonus recipient will be entitled to a bonus equal to $26.60 times the number of stock options that become vested solely as a result of the disposition event pursuant to the terms of the award holders individual award agreement, provided that the award holder is employed by the Company on the consummation of the disposition event. The recipients of the bonus were provided the opportunity to defer their bonus compensation pursuant to our non-qualified deferred compensation plan. The aggregate 2017 Special Bonus granted to each of Messrs. Gayhardt, Baker and Pittman that will become payable in respect of unvested stock options from 2017 through 2022 is equal to $11,704, $70,037, and $26,147, respectively.
On August 10, 2017, we granted holders of our stock options a cash bonus, or, the August 2017 Special Bonuses, a portion of which was payable immediately and the remainder of which is payable on the last day of each calendar quarter during 2017 through 2022 following the date of grant, in each case, subject to the award holders continued employment through such date. The portion of the August 2017 Special Bonus paid in August 2017 was equal to $8.07 times the number of vested stock options held by the bonus recipient as of August 10, 2017, or $170,633, $39,220 and $35,918 for each of Messrs. Gayhardt, Baker and Pittman, respectively. In addition, in each calendar quarter thereafter, the bonus recipient will receive a payment equal to $8.07 times the number of stock options held by the bonus recipient that become vested during the applicable calendar quarter, other than due to a disposition event (as defined in the stock option agreements granted pursuant to the Companys 2010 Equity Incentive Plan). Upon a disposition event, the August 2017 Special Bonus recipient will be entitled to a bonus equal to $8.07 times the number of stock options that become vested solely as a result of the disposition event pursuant to the terms of the award holders individual award agreement, provided that the award holder is employed by the Company on the consummation of the disposition event. The recipients of the bonus may elect to defer their bonus compensation pursuant to our non-qualified deferred compensation plan. The aggregate August 2017 Special Bonus granted to each of Messrs. Gayhardt, Baker and Pittman that will become payable in respect of unvested stock options from 2017 through 2022 is equal to $3,550, $21,248, and $7,932, respectively.
On October 18, 2017, we granted holders of our stock options a cash bonus, or, the October 2017 Special Bonuses, a portion of which was payable immediately and the remainder of which is payable on the last day of each calendar quarter during 2017 through 2022 following the date of grant, in each case, subject to the award holders continued employment through such date. The portion of the October 2017 Special Bonus paid in October 2017 was equal to $5.22 times the number of vested stock options held by the bonus recipient as of October 13, 2017, or $110,409, $25,378 and $23,242 for each of Messrs. Gayhardt, Baker and Pittman, respectively. In addition, in each calendar quarter thereafter, the bonus recipient will receive a payment equal to $5.22 times the number of stock options held by the bonus recipient that become vested during the applicable calendar quarter, other than due to a disposition event (as defined in the stock option agreements granted
138
pursuant to the Companys 2010 Equity Incentive Plan). Upon a disposition event, the October 2017 Special Bonus recipient will be entitled to a bonus equal to $5.22 times the number of stock options that become vested solely as a result of the disposition event pursuant to the terms of the award holders individual award agreement, provided that the award holder is employed by the Company on the consummation of the disposition event. The recipients of the bonus may elect to defer their bonus compensation pursuant to our non-qualified deferred compensation plan. The aggregate October 2017 Special Bonus granted to each of Messrs. Gayhardt, Baker and Pittman that will become payable in respect of unvested stock options from 2017 through 2022 is equal to $2,299, $13,757 and $5,136, respectively.
Stock Plans, Health and Welfare Plans, and Retirement Plans
Stock Plan
We currently provide grants of equity based awards to eligible service providers under our 2010 Equity Incentive Plan, or the 2010 EIP. In 2016, we granted options to members of our management team, including to each of our named executive officers, under the 2010 EIP. The options granted to our named executive officers are subject to time-based vesting, as described in each individual award agreement. For a summary of the principal features of the 2010 EIP, see Additional Incentive Compensation Plans and Awards Equity Incentive Plans below and for a summary of the vesting terms of the stock option granted to our named executive offices, see Outstanding Equity Awards at Fiscal Year End below.
Immediately prior to this offering, our board of directors intends to adopt, and we expect our shareholders to approve, the 2017 Incentive Plan, or the 2017 Incentive Plan. For a summary of the 2017 Incentive Plan, see Additional Incentive Compensation Plans and Awards Equity Incentive Plans below.
Non-Qualified Deferred Compensation Plan
In 2015 we instituted our Nonqualified Deferred Compensation Plan, as amended, that provides certain of our employees with the opportunity to elect to defer his or her base salary and performance-based compensation, which upon such election, will be credited to the applicable participants deferred compensation account. Participant contributions are fully vested at all times. Each deferred compensation account will be notionally invested in one or more investment funds made available by us and selected by the participant. We may make discretionary contributions to the individual deferred compensation accounts, which amount, if any, will be determined annually by us. Company contributions generally vest over a term of three years, however, vesting with respect to company contributions made on behalf of each of our named executive officers will be accelerated upon the occurrence of a disposition event. A disposition event for these purposes is defined as: (a)(i) the sale of all or substantially all of the assets of CURO and its subsidiaries in a single transaction or series of related transactions whether by liquidation, dissolution, merger, consolidation or sale or (ii) the sale or other transfer of at least a majority of the outstanding shares of our common stock in a single transaction or a series of related transactions, in either case to any person who is not an affiliate of CURO, or of a stockholder thereof, immediately prior to such transaction or transactions, or (b) the effective time of any merger, share exchange, consolidation or other business combination of CURO if immediately after such transaction persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) are not persons who, immediately prior to such transaction, held the securities of CURO entitled to vote generally in the election of directors; provided, however, that such sale, transfer or other event described in (a) and (b) results in a change in the ownership or effective control, or a change in the ownership of a substantial portion of the assets, of CURO within the meaning of Section 409A of the Code.
Each vested deferred compensation account will be paid out in a lump sum upon a participants separation from service with the Company. Each of our named executive officers contributes to our non-qualified deferred compensation plan. For a discussion of the employer contributions made to our non-qualified deferred compensation plan on behalf of each of our named executive officers with respect to 2016, please see the Summary Compensation Table, above.
139
Health and Welfare Plans
Our named executive officers are generally eligible to participate in our employee benefit plans, including medical, dental, vision, life, disability, health and dependent care flexible spending accounts and accidental death and dismemberment benefit plans, in each case on the same basis as all of our other employees. Executive employees are provided with company paid life insurance equal to two times base pay, up to $750,000, and company paid long term disability benefits equal to 60% of earnings, up to $15,000 per month.
Tax-Qualified Retirement Plan
We sponsor a retirement plan intended to qualify for favorable tax treatment under Section 401(a) of the Internal Revenue Code of 1986, as amended, or the Code, which contains a cash or deferred feature that is intended to meet the requirements of Section 401(k) of the Code. We match the employee contribution at a rate of 50% of the first 6% of compensation contributed to the plan. Employee contributions vest immediately. Employer contributions vest in full after three years of employment. Each of Messrs. Baker and Pittman contributes to our qualified retirement plan.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth outstanding equity awards to acquire shares of common stock held by each of our named executive officers as of December 31, 2016. The following table does not give effect to the for split of our common stock to occur immediately prior to the completion of this offering.
Name |
Grant date | Option awards | Stock awards | |||||||||||||||||||||||||||||||||
Number of
securities underlying unexercised options exercisable (#) |
Number of
securities underlying unexercised options unexercisable (#) |
Equity
incentive plan awards: number of securities underlying unexercised unearned options (#) |
Option
exercise price ($) |
Option
expiration date |
Number
of shares or units of stock that have not vested (#) |
Market
Value of shares or units of stock that have not vested ($) |
Incentive
plan awards: number of unearned shares, units or other rights that have not vested (#) |
Incentive
plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) |
||||||||||||||||||||||||||||
Don Gayhardt |
May 7, 2012(1) | | 21,057 | | 96.41 | January 1, 2022 | | | | | ||||||||||||||||||||||||||
March 28, 2016(2) | | 223 | | 122.00 | January 1, 2026 | | | | | |||||||||||||||||||||||||||
William Baker |
December 9, 2010(3) | | 1,579 | | 30.59 | January 1, 2019 | | | | | ||||||||||||||||||||||||||
October 24, 2011(3) | | 2,632 | | 96.41 | September 1, 2021 | | | | | |||||||||||||||||||||||||||
March 28, 2016(2) | | 138 | | 122.00 | January 1, 2026 | | | | | |||||||||||||||||||||||||||
June 30, 2016(3) | | 3,000 | | 133.94 | May 1, 2026 | | | | | |||||||||||||||||||||||||||
Terry Pittman |
December 9, 2010(3) | | 4,211 | | 30.59 | January 1, 2019 | | | | | ||||||||||||||||||||||||||
March 28, 2016(2) | | 112 | | 122.00 | January 1, 2026 | | | | | |||||||||||||||||||||||||||
June 30, 2016(3) | | 1,000 | | 133.94 | May 1, 2026 | | | | |
(1) | 20% of the options vest on each of the first five anniversaries beginning on January 1, 2012, subject to the option holders continued employment through such date; however, the options are only exercisable upon the first of the following events to occur: (i) upon the first disposition event to occur (as defined in the stock option agreement); (ii) at any time after an initial public offering of our common stock; (iii) following a termination of employment for any reason other than by us for cause; or (iv) on the 30th day prior to the expiration date. Options must be exercised during the 30-day period following an exercise event described in (iii) and (iv). Upon the occurrence of a disposition event prior to a termination of employment, all of the unvested options will become vested. |
(2) | Options vest in three equal installments on December 31 st of each of 2016, 2017 and 2018, subject to the option holders continued employment through such date; however, the options are only exercisable upon the first of the following events to occur: (i) upon the first disposition event to occur (as defined in the stock option agreement); (ii) at any time after an initial public offering of our common stock; (iii) following a termination of employment for any reason other than by us for cause; or (iv) on the 30 th day prior to the expiration date. Options must be exercised during the 30-day period following an exercise event described in (iii) and (iv). Upon the occurrence of a disposition event prior to a termination of employment, all of the unvested options will become vested. |
(3) | 20% of the options vest on each of the first five anniversaries of the applicable vesting commencement date set forth in the option agreement, subject to the option holders continued employment through such date; however, the options are only exercisable upon the first of the following events to occur: (i) upon the first disposition event to occur; (ii) at any time after an initial public offering of our common stock; (iii) following a termination of employment for any reason other than by us for cause; or (iv) on the 30th day prior to the expiration date. Options must be exercised during the 30-day period following an exercise event described in (iii) and (iv). Upon the occurrence of a disposition event prior to a termination of employment, all of the unvested options will become vested. |
140
Potential Payments Upon Termination or Change in Control
The following summaries describe the potential payments and benefits that we would provide to our named executive officers in connection with a termination of employment and/or a change in control.
Severance Benefits
We have entered into an employment agreement with each of our named executive officers, which provides for certain payments to be made in connection with certain terminations of service. Other than as set forth below, we do not offer or have in place for our named executive officers any formal retirement, severance or similar compensation programs providing for additional benefits or payments in connection with a termination of employment, change in job responsibility or change in control (other than our tax-qualified and non-qualified contributory defined contribution plans).
Don Gayhardt . Mr. Gayhardts amended and restated employment agreement provides that if his employment is terminated by us without cause or by him for good reason (each as defined in the employment agreement), subject to his timely execution of a release of claims, he would be entitled to severance benefits equal to: (i) continued payment of his base salary for a two-year period; (ii) any bonus earned for a completed calendar year, but not yet paid, payable at such times as bonuses are paid; (iii) a pro-rated bonus for the year of termination (based on actual performance), payable at such times as bonuses are paid; (iv) reimbursement for the cost of maintaining his personal life insurance premiums, up to $25,000 per year, for a period of two years; and (v) continued participation in our benefit plans for a period of two years. Upon a termination due to the executives death or disability, a termination by the Company for cause, or a resignation without good reason, Mr. Gayhardt is entitled to receive his base salary through the date of termination. Mr. Gayhardts agreement subjects him to an indefinite confidentiality provision, an inventions assignment provision, a covenant not to compete with us while employed with us and for a two year period thereafter, and a covenant not to solicit our employees while employed with us and for a two year period thereafter.
William Baker . Mr. Bakers employment agreement provides that if his employment is terminated by us without cause, by him for good reason (each as defined in the employment agreement) or following a non-renewal of his term, subject to his timely execution of a release of claims, Mr. Baker would be entitled to severance equal to continued payment of his base salary for a twelve month period. Mr. Bakers employment agreement subjects him to an indefinite confidentiality provision, an inventions assignment provision, a covenant not to compete with us while employed with us and for an eighteen-month period thereafter, and a covenant not to solicit our employees while employed with us and for an eighteen-month period thereafter.
Terry Pittman . Mr. Pittmans employment agreement provides that if his employment is terminated by us without cause, by him for good reason (each as defined in the employment agreement) or following a non-renewal of his term, subject to his timely execution of a release of claims, Mr. Pittman would be entitled to severance equal to continued payment of his base salary for a twelve month period. Upon a termination due to the executives death or disability, the expiration of the term, a termination by the Company for cause, or a resignation without good reason, Mr. Pittman is entitled to receive his base salary through the date of termination. Mr. Pittmans employment agreement subjects him to an indefinite confidentiality provision, an inventions assignment provision, a covenant not to compete with us while employed with us and for an eighteen-month period thereafter, and a covenant not to solicit our employees while employed with us and for an eighteen-month period thereafter.
Vesting of Outstanding Equity Awards
We maintain the 2010 EIP, further described under Additional Incentive Compensation Plans and Awards below. Upon the occurrence of a disposition event prior to a termination of employment, all of the unvested options granted to our named executive officers will become vested. For purposes of each option
141
agreement, a disposition event is defined as: (a)(i) the sale of all or substantially all of the assets of CURO and its subsidiaries in a single transaction or series of related transactions whether by liquidation, dissolution, merger, consolidation or sale or (ii) the sale or other transfer of at least a majority of the outstanding shares of our common stock in a single transaction or a series of related transactions, in either case to any person who is not an affiliate of CURO, or of a stockholder thereof, immediately prior to such transaction or transactions, or (b) the effective time of any merger, share exchange, consolidation, or other business combination of CURO if immediately after such transaction persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) are not persons who, immediately prior to such transaction, held the securities of CURO entitled to vote generally in the election of directors; provided, however, that such sale, transfer or other event described in (a) and (b) results in a change in the ownership or effective control, or a change in the ownership of a substantial portion of the assets, of CURO within the meaning of Section 409A of the Code.
Non-Qualified Deferred Compensation Plan
We maintain the Non-Qualified Deferred Compensation Plan, the material terms of which are described under Narrative to Summary Compensation Table, above. Company contributions to the Non-Qualified Deferred Compensation Plan generally vest over a term of three years; however, vesting with respect to Company contributions made on behalf of each of our named executive officers will be accelerated upon the occurrence of a disposition event. A disposition event for these purposes is defined above. Each vested deferred compensation account will be paid out in a lump sum upon a participants separation from service with the Company. Each of our named executive officers contribute to our non-qualified deferred compensation plan.
Equity Incentive Plans
We currently maintain the 2010 EIP, pursuant to which we may grant various forms of equity compensation to our service providers, including our key employees, non-employee directors and consultants. We have historically granted options to service providers under the 2010 EIP. In connection with this offering, our board of directors intends to adopt, and we expect our shareholders to approve, the 2017 Incentive Plan, which will be effective immediately prior to the completion of the offering. The principal features of the 2010 EIP and the 2017 Incentive Plan are summarized below. This summary is qualified in its entirety by reference to the actual text of the 2010 EIP and the 2017 Incentive Plan, which are filed as exhibits to the registration statement of which this prospectus is a part.
2010 EIP
In 2010, our board of directors approved the 2010 EIP. Under the 2010 EIP, we may grant stock options, restricted shares and other stock-based awards to our key employees, directors and consultants.
There are 60,000 shares of our common stock reserved for issuance under the 2010 EIP. This number is subject to additional adjustment in the event of a corporate transaction, distribution or similar event, as determined by the compensation committee of the board of directors. As of July 5, 2017, options in respect of 54,929 shares of common stock, were outstanding under the 2010 EIP. Our compensation committee has full power and authority to determine the terms of awards granted pursuant to the 2010 EIP, including, without limitation, which key employees, directors and consultants will be granted awards and the number of shares of common stock subject to awards.
Our board of directors may amend or discontinue the 2010 EIP at any time and may amend or cancel any outstanding award. No such amendment may adversely affect the rights under any outstanding award without the holders consent.
142
2017 Incentive Plan
Introduction
In connection with this offering, we intend to adopt, and we expect our stockholders to approve, the 2017 Stock Incentive Plan, or the 2017 Incentive Plan. The 2017 Incentive Plan will authorize the grant of stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards and other awards that may be settled in or based upon our common stock. The 2017 Incentive Plan will become effective immediately prior to the effective date of the offering and no further grants will be made under any other stock incentive plan maintained by us, including the 2010 EIP.
Purpose
The purpose of the 2017 Incentive Plan is to give us the ability to attract, retain, motivate and reward certain officers, employees, directors and consultants and to provide a means whereby officers, employees, directors and/or consultants can acquire and maintain ownership of our common stock or be paid incentive compensation measured by reference to the value of our common stock, thereby strengthening their commitment to our welfare and that of our affiliates and promoting an identity of interest between our stockholders and these persons and encouraging such eligible people to expend maximum effort in the creation of stockholder value.
The following summary is not a complete description of all provisions of the 2017 Incentive Plan and is qualified in its entirety by reference to the 2017 Incentive Plan, the final version of which is subject to further internal discussion and review, and possible revision.
Plan Administration
The 2017 Incentive Plan will be administered by our compensation committee. Our compensation committee will have the authority, among other things, to select participants, grant awards, determine types of awards and terms and conditions of awards for participants, prescribe rules and regulations for the administration of the plan and make all decisions and determinations as deemed necessary or advisable for the administration of the 2017 Incentive Plan. Our compensation committee may delegate certain of its authority as it deems appropriate, pursuant to the terms of the 2017 Incentive Plan and to the extent permitted by applicable law, to our officers or employees, although any award granted to any person who is not our employee, who is subject to Section 16 of the Exchange Act, or who is granted an award that is intended to qualify as performance-based compensation under Section 162(m) of the Code must be expressly approved by the compensation committee. Our compensation committees actions will be final, conclusive and binding.
Authorized Stock
A total of shares of common stock will be reserved and available for issuance under the 2017 Incentive Plan, subject to adjustment in accordance with the terms of the 2017 Incentive Plan. The number of shares of common stock reserved and available for issuance under the 2017 Incentive Plan is subject to adjustment, as described below. The maximum number of shares of common stock that may be issued in respect of incentive stock options will be . Common stock issued under the 2017 Incentive Plan may consist of authorized but unissued stock or previously issued common stock. Common stock underlying awards that are settled in cash, expire or are canceled, forfeited, or otherwise terminated without delivery to a participant, will again be available for issuance under the 2017 Incentive Plan. Common stock withheld or surrendered in connection with the payment of an exercise price of an award or to satisfy tax withholding will again become available for issuance under the 2017 Incentive Plan.
Individual Limits
At all times that we are subject to Section 162(m) of the Code, the maximum number of shares of common stock subject to stock options, stock appreciation rights or performance-based awards intended to qualify as
143
qualified performance-based compensation (within the meaning of Section 162(m) of the Code), in each case, that may be granted to any individual in any one calendar year is , subject to adjustment, as described below. The maximum value of performance-based awards intended to qualify as qualified performance-based compensation (within the meaning of Section 162(m) of the Code) that is valued in dollars that an individual may receive in respect of any annual performance period is $ million, and for any performance period in excess of one year, such amount multiplied by a fraction, the numerator of which is the number of months in the performance period and denominator of which is 12. The maximum value of any awards granted to any non-employee director in any one calendar year during such calendar year, may not exceed .
Types of Awards
The types of awards that may be available under the 2017 Incentive Plan are described below. All of the awards described below will be subject to the terms and conditions determined by our compensation committee in its sole discretion, subject to certain limitations provided in the 2017 Incentive Plan. Each award granted under the 2017 Incentive Plan will be evidenced by an award agreement, which will govern that awards terms and conditions.
Non-qualified Stock Options . A non-qualified stock option is an option that is not intended to meet the qualifications of an incentive stock option, as described below. An award of a non-qualified stock option grants a participant the right to purchase a certain number of shares of our common stock during a specified term in the future, or upon the achievement of performance or other conditions, at an exercise price set by our compensation committee on the grant date. The term of a non-qualified stock option will be set by our compensation committee but may not exceed ten years from the grant date. The exercise price may be paid using any of the following payment methods: (i) immediately available funds in U.S. dollars or by certified or bank cashiers check, (ii) by delivery of stock having a value equal to the exercise price, (iii) a broker assisted cashless exercise, or (iv) by any other means approved by our compensation committee. The 2017 Incentive Plan provides that unless otherwise specifically determined by the compensation committee, vesting of non-qualified stock options will be suspended during the period of any approved leave of absence by a participant following which the participant has a right to reinstatement and will resume upon such participants return to employment. The 2017 Incentive Plan also provides that participants terminated for cause (as such term is defined in the 2017 Incentive Plan) will forfeit all of their non-qualified stock options, whether or not vested. Participants terminated for any other reason will forfeit their unvested non-qualified stock options, retain their vested non-qualified stock options, and will have one year (in the case of a termination by reason of death or disability) or 90 days (in all other cases) following their termination date to exercise their vested non-qualified stock options. The 2017 Incentive Plan authorizes our compensation committee to provide for different treatment of non-qualified stock options upon termination than that described above, as determined in its discretion.
Incentive Stock Options . An incentive stock option is a stock option that meets the requirements of Section 422 of the Code. Incentive stock options may be granted only to our employees or employees of certain of our subsidiaries and must have an exercise price of no less than 100% of the fair market value (or 110% with respect to a 10% shareholder) of a share of common stock on the grant date and a term of no more than ten years (or five years with respect to a 10% shareholder). The aggregate fair market value, determined at the time of grant, of our common stock subject to incentive stock options that are exercisable for the first time by a participant during any calendar year may not exceed $100,000. The 2017 Incentive Plan provides that unless otherwise specifically determined by the compensation committee, vesting of incentive stock options will be suspended during the period of any approved leave of absence by a participant following which the participant has a right to reinstatement and will resume upon such participants return to employment. The 2017 Incentive Plan also provides that participants terminated for cause will forfeit all of their incentive stock options, whether or not vested. Participants terminated for any other reason will forfeit their unvested incentive stock options, retain their vested incentive stock options, and will have one year (in the case of a termination by reason of death or disability) or 90 days (in all other cases) following their termination date to exercise their vested incentive stock options, unless such appreciation right expires sooner. The 2017 Incentive Plan authorizes our
144
compensation committee to provide for different treatment of incentive stock options upon termination than that described above, as determined in its discretion.
Stock Appreciation Rights . A stock appreciation right entitles the participant to receive an amount equal to the difference between the fair market value of our common stock on the exercise date and the base price of the stock appreciation right that is set by our compensation committee on the grant date, multiplied by the number of shares of common stock subject to the stock appreciation right. The term of a stock appreciation right will be set by our compensation committee but may not exceed ten years from the grant date. Payment to a participant upon the exercise of a stock appreciation right may be either in cash, stock or property as specified in the award agreement or as determined by our compensation committee. The 2017 Incentive Plan provides that unless otherwise specifically determined by the compensation committee, vesting of stock appreciation rights will be suspended during the period of any approved leave of absence by a participant following which the participant has a right to reinstatement and will resume upon such participants return to employment. The 2017 Incentive Plan provides that participants terminated for cause will forfeit all of their stock appreciation rights, whether or not vested. Participants terminated for any other reason will forfeit their unvested stock appreciation rights, retain their vested stock appreciation rights, and will have one year (in the case of a termination by reason of death or disability) or 90 days (in all other cases) following their termination date to exercise their vested stock appreciation rights. The 2017 Incentive Plan authorizes our compensation committee to provide for different treatment of stock appreciation rights upon termination than that described above, as determined in its discretion.
Restricted Stock . A restricted stock award is an award of restricted common stock that does not vest until a specified period of time has elapsed and/or upon the achievement of performance or other conditions determined by our compensation committee, and which will be forfeited if the conditions to vesting are not met. During the period that any restrictions apply, transfer of the restricted common stock is generally prohibited. Unless otherwise specified in their award agreement, participants generally have all of the rights of a stockholder as to the restricted common stock, including the right to vote such common stock. However, any cash or stock dividends with respect to the restricted common stock will be withheld by us and will be subject to forfeiture to the same degree as the restricted common stock to which such dividends relate. The 2017 Incentive Plan provides that unless otherwise specifically determined by the compensation committee, vesting of restricted stock awards will be suspended during the period of any approved leave of absence by a participant following which the participant has a right to reinstatement and will resume upon such participants return to employment. Except as otherwise provided by our compensation committee, in the event a participant is terminated for any reason, the vesting with respect to the participants restricted stock will cease, and as soon as practicable following the termination, we will repurchase all of such participants unvested restricted stock at a purchase price equal to the original purchase price paid for the restricted stock, or if the original purchase price is equal to $0, the unvested restricted stock will be forfeited by the participant to us for no consideration.
Restricted Stock Units . A restricted stock unit is an unfunded and unsecured obligation to issue common stock (or an equivalent cash amount) to the participant in the future. Restricted stock units become payable on terms and conditions determined by our compensation committee and will vest and be settled at such times in cash, common stock, or other specified property, as determined by our compensation committee. Participants have no rights of a stockholder as to the restricted stock units, including no voting rights or rights to dividends, until the underlying common stock is issued or becomes payable to the participant. The 2017 Incentive Plan provides that unless otherwise specifically determined by the compensation committee, vesting of restricted stock units will be suspended during the period of any approved leave of absence by a participant following which the participant has a right to reinstatement and will resume upon such participants return to employment. Except as otherwise provided by our compensation committee, in the event a participant is terminated for any reason, the vesting with respect to the participants restricted stock units will cease, each of the participants outstanding unvested restricted stock units will be forfeited for no consideration as of the date of such termination, and any stock remaining undelivered with respect to the participants vested restricted stock units will be delivered on the delivery date specified in the applicable award agreement.
145
Performance Awards . Performance awards (which may be classified as performance stock, performance units or cash awards) represent the right to receive certain amounts based on the achievement of pre-determined performance goals during a designated performance period. The terms of each performance award will be set forth in the applicable award agreement. Our compensation committee will be responsible for setting the applicable performance goals, which will be limited to specific levels of or increases in one or more of the following business criteria (alone or in combination with any other criterion, whether gross or net, before or after taxes, and/or before or after other adjustments, as determined by our compensation committee): (i) earnings, including net earnings, total earnings, operating earnings, earnings growth, operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or unusual, non-recurring or special items or book value per share (which may exclude nonrecurring items), tangible book value or growth in tangible book value per share; (ii) pre-tax income or after tax income; (iii) earnings per share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth, or rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on capital, return on equity, financial return ratios, or internal rates of return; (vii) returns on sales or revenues; (viii) operating expenses; (ix) stock price appreciation; (x) cash flow (including, but not limited to, operating cash flow and free cash flow), cash flow return on investment (discounted or otherwise), net cash provided by operations or cash flow in excess of cost of capital, or working capital turnover; (xi) implementation or completion of critical projects or processes; (xii) economic value created; (xiii) balance sheet measurements; (xiv) cumulative earnings per share growth; (xv) operating margin, profit margin, or gross margin; (xvi) stock price or total stockholder return; (xvii) cost or expense targets, reductions and savings, productivity and efficiencies; (xviii) sales or sales growth; (xix) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, market share, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions, divestitures, joint ventures, and similar transactions, and budget comparisons; (xx) personal professional objectives, including any of the foregoing performance goals, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, the formation of joint ventures, and the completion of other corporate transactions; (xxi) billings, billings growth, or rate of billings growth; (xxii) underwriting income or profit; (xxiii) loss ratio or combined ratio; and (xxiv) for any period of time in which Section 162(m) of the Code is not applicable to us, or in the case of persons whose compensation is not subject to Section 162(m) of the Code, such other criteria as may be determined by our compensation committee. The business criteria may be combined with cost of capital, assets, invested capital and stockholder equity to form an appropriate measure of performance and will have any reasonable definitions that our compensation committee may specify.
Performance goals may be established on a company-wide basis, project or geographical basis or, as the context permits, with respect to one or more of our business units, divisions, lines of business or business segments, subsidiaries, products, regions, or other operational units or administrative departments (or in combination thereof) or may be related to the performance of an individual participant and may be expressed in absolute terms, or relative or comparative to (i) current internal targets or budgets, (ii) our past performance (including the performance of one or more of our subsidiaries, divisions, or operating units), (iii) the performance of one or more similarly situated companies, (iv) the performance of an index covering multiple companies, or (v) other external measures of the selected performance criteria. Performance goals may be in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies.
Our compensation committee will make appropriate adjustments in the method of calculating the attainment of applicable performance goals to provide for objectively determinable adjustments, modifications or amendments, as determined in accordance with generally accepted accounting principles, to any of the business criteria described above for one or more of the following items of gain, loss, profit or expense: (i) determined to be items of an unusual nature or of infrequency of occurrence or non-recurring items; (ii) related to changes in accounting principles under generally accepted accounting principles or tax laws; (iii) related to currency fluctuations; (iv) related to financing activities (such as effect on earnings per share of issuing convertible debt securities); (v) related to restructuring, divestitures, productivity initiatives or new business initiatives; (vi) related to discontinued operations that do not qualify as a segment of business under
146
generally accepted accounting principles; (vii) attributable to the business operations of any entity acquired by us during the fiscal year; (viii) non-operating items; and (ix) acquisition or divestiture expenses.
Performance awards which have been earned as a result of the relevant performance goals being achieved may be paid in the form of cash, common stock or other awards under the 2017 Incentive Plan (or some combination thereof). The 2017 Incentive Plan provides that unless otherwise specifically determined by the compensation committee, a participant will only be eligible to earn a performance award while the participant is employed or rendering services, and that vesting of performance awards will be suspended during the period of any approved leave of absence by a participant following which the participant has a right to reinstatement and will resume upon such participants return to employment. Except as otherwise provided by the compensation committee, if a participant is terminated for any reason, the participant will forfeit all performance awards held by such participant.
Other Stock-Based Compensation . Under the 2017 Incentive Plan, our compensation committee may grant other types of equity-based awards subject to such terms and conditions that our compensation committee may determine. Such awards may include the grant of dividend equivalents, which generally entitle the participant to receive amounts equal to the dividends that are paid on the stock underlying the award.
Adjustments
The aggregate number of shares of common stock reserved and available for issuance under the 2017 Incentive Plan, the individual limitations, the number of shares of common stock covered by each outstanding award and the price per share of common stock underlying each outstanding award will be equitably and proportionally adjusted or substituted, as determined by our compensation committee in its sole discretion, as to the number, price or kind of stock or other consideration subject to such awards in connection with stock dividends, extraordinary cash dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers, amalgamations, consolidations, combinations, exchanges, or other relevant changes in our capitalization affecting our common stock or our capital structure which occurs after the date of grant of any award, in connection with any extraordinary dividend declared and paid in respect of stock or in the event of any change in applicable law or circumstances that results in or could result in, as determined by the compensation committee in its sole discretion, any substantial dilution or enlargement of the rights intended to be granted to, or available for, participants in the 2017 Incentive Plan.
Corporate Events
In the event of a merger, amalgamation or consolidation involving us in which we are not the surviving corporation or in which we are the surviving corporation but the holders of our common stock receive securities of another corporation or other property or cash, a change in control (as defined in the 2017 Incentive Plan) or a reorganization, dissolution or liquidation of us, our compensation committee may, in its discretion, provide for the assumption or substitution of outstanding awards, accelerate the vesting of outstanding awards, cash-out outstanding awards or replace outstanding awards with a cash incentive program that preserves the value of the awards so replaced. With respect to any award that is assumed or substituted in connection with a change in control, the vesting, payment, purchase or distribution of such award will not be accelerated by reason of the change in control for any participant unless the participants employment is involuntarily terminated as a result of the change in control during the two-year period commencing on the change in control.
Transferability
Awards under the 2017 Incentive Plan may not be sold, transferred, pledged, or assigned other than by will or by the applicable laws of descent and distribution, unless (for awards other than incentive stock options) otherwise provided in an award agreement or determined by our compensation committee.
147
Amendment
Our board of directors or our compensation committee may amend the 2017 Incentive Plan or outstanding awards at any time. Our stockholders must approve any amendment if their approval is required pursuant to applicable law or the applicable rules of each national securities exchange on which our common stock is traded. No amendment to the 2017 EIP or outstanding awards which materially impairs the right of a participant is permitted unless the participant consents in writing.
Termination
The 2017 Incentive Plan will terminate on the day before the tenth anniversary of the date our stockholders approve the 2017 Incentive Plan, although incentive stock options may not be granted following the earlier of the tenth anniversary of (i) the date the 2017 Incentive Plan is adopted by our board of directors and (ii) the date our stockholders approve the 2017 Incentive Plan. In addition, our board of directors or our compensation committee may suspend or terminate the 2017 Incentive Plan at any time. Following any such suspension or termination, the 2017 Incentive Plan will remain in effect to govern any then outstanding awards until such awards are forfeited, terminated or otherwise canceled or earned, exercised, settled or otherwise paid out, in accordance with their terms.
Clawback; Sub-Plans
All awards under the 2017 Incentive Plan will be subject to any incentive compensation clawback or recoupment policy currently in effect, or as may be adopted by our board of directors (or any committee or subcommittee thereof) and, in each case, as may be amended from time to time. In addition, our compensation committee may adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the 2017 Incentive Plan by individuals who are non-U.S. nationals or are primarily employed or providing services outside the United States, and may modify the terms of any awards granted to such participants in a manner deemed by our compensation committee to be necessary or appropriate in order that such awards conform with the laws of the country or countries where such participants are located.
No-Repricing of Awards
No awards under the 2017 Incentive Plan may be repriced without stockholder approval. For purposes of the 2017 Incentive Plan, repricing means any of the following (or any other action that has the same effect as any of the following): (i) changing the terms of the award to lower its exercise price or base price (other than on account of capital adjustments resulting from stock splits), (ii) any other action that is treated as a repricing under generally accepted accounting principles and (iii) repurchasing for cash or canceling an award in exchange for another award at a time when its exercise price or base price is greater than the fair market value of the underlying stock.
Equity Awards Pursuant to the 2017 Incentive Plan
In connection with the consummation of the offering, we expect to grant to members of senior management, including each of our named executive officers, under the 2017 Incentive Plan.
Employee Stock Purchase Plan
In connection with this offering, we intend to adopt, and we expect our stockholders to approve, a 2017 Employee Stock Purchase Plan, or the ESPP. We do not expect to grant purchase rights under our ESPP until after the completion of this offering.
148
Share Reserve
The maximum number of shares of our common stock that will be available for purchase under the ESPP is shares. Shares subject to purchase rights granted under our ESPP that terminate without having been exercised in full will not reduce the number of shares available for issuance under the ESPP.
Administration
Our compensation committee, or such other duly authorized committee or subcommittee of our board of directors, will administer our ESPP.
Limitations
Our employees, including executive officers, directors and the employees of any of our parent or subsidiary corporations will be eligible to participate in the ESPP, provided that they may have to satisfy one or more of the following service requirements before participating in the ESPP, as determined by the compensation committee: (i) customary employment with us or one of our parents or subsidiaries for more than 20 hours per week and more than five months per calendar year; or (ii) continuous employment with us or one of our subsidiaries for a minimum period of time, not to exceed two years, prior to the first date of an offering. An employee may not be granted rights to purchase stock under the ESPP (x) if such employee immediately after the grant would own stock representing 5% or more of the total combined voting power or value of all classes of our common stock or the common stock of any of our parent or subsidiary corporations or (y) to the extent that such rights would accrue at a rate that exceeds $25,000 worth of our stock for each calendar year that the rights remain outstanding, provided that no such employee may purchase more than 5,000 shares of our common stock in any purchase period in which purchase rights are outstanding.
Our ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Code. The compensation committee may specify offerings with a duration of not more than 27 months, and may specify one or more shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our common stock will be purchased for the employees who are participating in the offering. The compensation committee, in its discretion, will determine the terms of offerings under our ESPP.
A participant may not transfer purchase rights under the ESPP other than by will, the laws of descent and distribution or as otherwise provided under the ESPP.
Holding Period
Our ESPP permits our compensation committee to establish a holding period for any shares of our common stock purchased in a particular offering, during which such shares will be subject to a resale restriction barring the holder from selling such shares. The holding period, if any, will commence on the purchase date and will end automatically on the earliest of (i) the termination of the participants employment, (ii) the occurrence of a change in control or (iii) the twelve month anniversary of the purchase date or such earlier date as established by our compensation committee.
Payroll Deductions
Our ESPP permits participants to purchase shares of our common stock through payroll deductions up to 15% of their earnings. Subject to other limitations determined by the compensation committee, the purchase price of the shares will be not less than 85% of the fair market value of our common stock on the date of purchase. Participants may end their participation at any time during an offering and will be paid their accrued contributions that have not yet been used to purchase shares. Participation ends automatically upon termination of employment with us.
149
Corporate Transactions
In the event of a change in control, a successor corporation may assume, continue or substitute each outstanding purchase right. If the successor corporation does not assume, continue or substitute for the outstanding purchase rights, then employees accumulated payroll deductions will be used to purchase shares of our common stock within ten business days prior to any such change in control. The participants purchase rights will be exercised on the new exercise date and such purchase rights will terminate immediately thereafter.
Amendment and Termination
Our board of directors or our compensation committee has the authority to amend, suspend or terminate our ESPP, at any time and for any reason, provided certain types of amendments will require the approval of our stockholders. Our ESPP will remain in effect until terminated by our board of directors or our compensation committee in accordance with the terms of the ESPP.
Director Compensation
Director Compensation Policy
For 2016, members of our board of directors received no cash, equity or other non-equity compensation for services rendered. We currently have no other formal arrangements under which our directors receive compensation for service to the board of directors or its committees. For compensation paid in 2016 to Don Gayhardt, our President, Chief Executive Officer and director, see the Summary Compensation Table.
All Other Compensation
We reimburse our directors for reasonable and necessary out-of-pocket expenses incurred in attending board and committee meetings or performing other services for us in their capacities as directors. We do not provide tax gross-up payments to members of our board of directors. Our board expects to review director compensation periodically to ensure that the director compensation package remains competitive such that we are able to recruit and retain qualified directors.
150
Policies and Procedures for Related-Party Transactions
Upon the completion of this offering, we intend to adopt a policy applicable to our transactions with related parties, which we define to include our executive officers, directors and nominees for director, any immediate family member or affiliated entity of any of our executive officers, directors or nominees for director and any person (and his or her immediate family members and affiliated entities) or entity (including affiliates) that is a beneficial owner of 5% or more of any class of our outstanding voting securities. Pursuant to this policy, an appropriate committee of our board of directors must approve the terms, arrangements and policies of, and provide ongoing oversight over, all transactions with a related party in which the amount involved exceeds $120,000. This committee, which may be our Audit Committee, will consist of directors independent from the related party in question. In conducting its initial and ongoing reviews, the committee will take into account, among other factors it deems appropriate, the terms of the transaction, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, the extent of the related-partys interest in the transaction, the qualifications and performance of the related party and other business considerations that would be applied to similar arrangements with unaffiliated parties. To perform its ongoing review of related party transactions, the committee will meet to discuss and review the relevant transaction at least once every twelve months. All of our directors, executive officers and employees will be required to report to an appropriate committee of our board any such related-party transaction. Under the policy, if we should discover related-party transactions that have not been approved, this committee will determine the appropriate action, including ratification, rescission or amendment of the transaction. Upon completion of this offering, we will make a copy of our related-party transactions policy available on our website.
Related-Party Transactions
Services Provided by Ad Astra
We employ the services of Ad Astra Recovery Services, Inc., or Ad Astra, which is owned by the Founder Holders. Ad Astra is our exclusive provider of third-party collection services for our U.S. operations. Generally, once loans are between 91 and 121 days delinquent we refer them to Ad Astra for collections. See BusinessCollections. Ad Astra earns a commission fee equal to 30% of any amounts they successfully recover (as well as reimbursement for any third party legal work incurred in connection with its collection activities). We net settle payments Ad Astra collects on our behalf and our commissions payable to Ad Astra on a one month lag. The net amounts receivable from Ad Astra at June 30, 2017, December 31, 2016 and December 31, 2015 were $0.9 million, $0.6 million and $0.2 million, respectively. These amounts are included in prepaid expenses and other in our consolidated balance sheets. We paid commission expense to Ad Astra for the six months ended June 30, 2017 and 2016, and the years ended December 31, 2016, 2015 and 2014 of $6.6 million, $7.1 million, $12.1 million, $10.6 million and $8.9 million, respectively, and these amounts are included in other store operating expenses in our consolidated statements of income. Our relationship with Ad Astra is to be overseen in a manner consistent with our policy regarding related party transactions detailed above. We believe that our relationship with Ad Astra is on terms that are at least as favorable as would be available from unaffiliated parties.
Operating Leases
We have entered into several operating lease agreements for our corporate office, collection office and stores in which we operate, with several real estate entities that are related through common ownership.
We are party to lease agreements and arrangements with Doug Rippel, CDM Development LLC, Dimensions Real Estate Group LLC, Foresome Real Estate LLC and Summit Real Estate LLC pursuant to which we lease corporate offices and stores. The aggregate annual base rent pursuant to the terms of these agreements is
151
approximately $3.1 million per year, and the leases have an average term of five years with two renewal options, each for an additional five-year term. Payments made under these leases and the related rent expenses for the six months ended June 30, 2017 and the years ended December 31, 2016, 2015 and 2014 were $1.6 million, $3.3 million, $3.2 million and $3.2 million, respectively. Mr. Rippel is a co-founder of the Company, serves as our Executive Chairman of the board of directors and holds approximately 18% of the outstanding common stock of the Company. CDM Development LLC, Dimensions Real Estate Group LLC, Foresome Real Estate LLC and Summit Real Estate LLC are each entities owned by one or more of the Founder Holders. Our relationship with Mr. Rippel and these entities is to be overseen in a manner consistent with our policy regarding related-party transactions described above. We believe that the operating lease agreements and arrangements to which we are party are on terms that are at least as favorable as would be available from unaffiliated parties.
12.00% Senior Secured Notes Placement
On February 15, 2017 we issued $470.0 million aggregate principal amount of 12.00% Senior Secured Notes due March 1, 2022. $6.0 million of these notes were privately placed by us directly with certain members of the board of directors of CURO Financial Technologies Corp., namely Doug Rippel and Mike McKnight. The notes issued to these board members contain the same terms as those issued to other investors in the offering. For more information, see Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesBorrowings.
Amended and Restated Investors Rights Agreement
In connection with the completion of this offering, we will enter into an amended and restated investors rights agreement with certain of our current holders, including the Founder Holders and the FFL Holders, whom we collectively refer to as the principal holders. Pursuant to the amended and restated investors rights agreement, we will agree to register the sale of shares of our common stock held by the principal holders under certain circumstances.
Demand Rights
At any time after the 180-day lock-up restriction described in Underwriting, and subject to certain limitations, including those described below, any principal holder who beneficially owns at least 8% of the Companys then-outstanding common stock may make a written request that we prepare and file a registration statement under the Securities Act registering the offer and sale of shares of its common stock. Once we are eligible to effect a registration on Form S-3, any such demand registration may be for a shelf registration statement. Generally, we are required to file a demand registration statement on Form S-1 within 90 days of a written request and to file a demand registration statement on Form S-3 within 30 days of a written request.
We are not required to effect any demand registration in which the amount of common stock to be registered has an anticipated aggregate public price of less than $10 million (in the case of a registration on Form S-1) or $5 million (in the case of a registration on Form S-3). In addition, the Company is not required to effect a demand registration on Form S-1 if the Company has already effected three registrations in response to a demand by such party or if the Company has effected a registration on Form S-1 in the prior twelve months, or effect a demand registration on Form S-3 if the Company has effected a registration on Form S-3 in response to a demand by such party in the prior six months.
Piggyback Rights
Subject to certain exceptions, any time we propose to register any of our securities for public sale, whether or not for our own account, we must notify each principal holder of such proposal and, if applicable, permit them an opportunity to include shares of their common stock in such registration.
152
Expenses
We will pay all reasonable expenses incident to our performance of the registration rights described above, including certain reasonable fees and disbursements (not including underwriting discounts and commissions).
Certain Conditions and Limitations
The registration rights described above are subject to certain conditions and limitations, including the right of the underwriters of an underwritten offering to limit the number of shares to be included in a registration and our right to delay or withdraw a registration statement under certain circumstances.
Indemnification
In certain circumstances we will indemnify, to the extent permitted by law, each principal holder, and each underwriter, if any, and certain other persons against claims arising in connection with any prospectus or other similar or incident document, or any violation or alleged violation of applicable securities laws, rules or regulations by us in an offering that includes common stock being sold by a participating holder. Similarly, each such principal holder will, if common stock held by such principal holder is included in the securities to be registered, indemnify us, each underwriter, if any, each other principal holder and certain other persons, against similar claims arising in connection with and to the extent made in reliance upon and in conformity with written information furnished by such principal holder and stated to be specifically for use in any such prospectus or document.
153
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock as of , 2017 for each of our directors, our named executive officers, all directors and named executive officers as a group, each stockholder known by us to be the beneficial owner of more than 5% of our outstanding common stock and each selling shareholder. The table gives effect to the application of a for split of our common stock and the filing of our amended and restated certificate of incorporation.
To our knowledge, each person named in the table has sole voting and investment power with respect to all of the securities shown as beneficially owned by such person, subject to community property laws and except as otherwise set forth in the notes to the table. The number of securities shown represents the number of securities the person beneficially owns, as determined by the rules of the SEC. The SEC has defined beneficial ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power. A security holder is also deemed to be, as of any date, the beneficial owner of all securities that such security holder has the right to acquire within 60 days after that date through (i) the exercise of any option, warrant or right or the vesting of restricted stock units, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement or (iv) the automatic termination of a trust, discretionary account or similar arrangement. Shares beneficially owned by a person pursuant to a right to acquire the shares within 60 days are deemed to be outstanding for the purpose of computing the percentage ownership of such person, but are not deemed to be outstanding and to be beneficially owned for the purpose of computing the percentage ownership of any other person. Certain of the selling stockholders have granted the underwriters a 30-day option to purchase up to shares of common stock.
The percentages reflect beneficial ownership immediately prior to and immediately after the completion of this offering as determined in accordance with Rule 13d-3 under the Exchange Act and are based on no shares of our common stock outstanding as of , 2017. Unless otherwise noted below, each stockholders address is c/o CURO Group Holdings Corp., 3527 North Ridge Road, Wichita, Kansas 67205.
Shares
Beneficially Owned Prior to Offering |
Number of
Shares to be Sold in the Offering(1) |
Shares Beneficially Owned
After the Offering Assuming the Underwriters Option Is Not Exercised |
Shares Beneficially Owned
After the Offering Assuming the Underwriters Option Is Fully Exercised(2) |
|||||||||||||||||||||||||
Name and Address |
# of
Shares |
% of
Total Common Stock and Voting Power |
# of
Shares |
# of
Shares |
% of Total
Common Stock and Voting Power |
# of
Shares |
% of Total
Common Stock and Voting Power |
|||||||||||||||||||||
5% Stockholders |
||||||||||||||||||||||||||||
FFL Holders(3) |
367,000 | 34.86 | % | 367,000 | % | % | ||||||||||||||||||||||
J.P. Genova Family Trust(4) |
52,632 | 5.00 | 52,632 | |||||||||||||||||||||||||
Directors and Named Executive Officers |
||||||||||||||||||||||||||||
Chad Faulkner(5) |
191,209 | 18.16 | 191,209 | |||||||||||||||||||||||||
Mike McKnight(6) |
191,209 | 18.16 | 191,209 | |||||||||||||||||||||||||
Doug Rippel(7) |
191,209 | 18.16 | 191,209 | |||||||||||||||||||||||||
Don Gayhardt |
| * | | |||||||||||||||||||||||||
William Baker |
| * | | |||||||||||||||||||||||||
Terry Pittman |
| * | | |||||||||||||||||||||||||
Christopher A. Masto(8) |
| * | | |||||||||||||||||||||||||
Karen Winterhof(9) |
| * | | |||||||||||||||||||||||||
All directors and executive officers as a group (10 persons) |
573,627 | 54.50 | % | 573,627 | % | % |
154
* | Represents beneficial ownership of less than 1%. |
(1) | Assumes that the underwriters fully exercise their option to purchase additional shares. The selling stockholders are only selling shares pursuant to that option, so if it is not exercised, the selling stockholders will not sell any shares in this offering. |
(2) | If the underwriters partially exercise their option to purchase additional shares, the shares sold by the selling stockholders will be decreased on a pro rata basis. |
(3) | Amounts shown reflect 347,335 shares of common stock held by Friedman Fleischer & Lowe Capital Partners II, L.P., 13,001 shares of common stock held by FFL Executive Partners II, L.P. and 6,664 shares of common stock held by FFL Parallel Fund II, L.P. or the FFL Holders. The FFL Holders are controlled by Friedman Fleischer & Lowe GP II, LP, their general partner, which may be deemed a beneficial owner of the shares of common stock, with shared voting and dispositive over such shares. The address of the FFL Holders is c/o FFL Partners, LLC, One Maritime Plaza, Suite 2200, San Francisco, California 94111. |
(4) | The address of the J.P. Genova Family Trust is 145 Haist Avenue, Unit 8, Vaughan, Ontario Canada L4L 5V1. |
(5) | Amounts shown reflect the aggregate number of shares of common stock held by Mr. Faulkner and the Chadwick Faulkner 2014 GRAT (the Trust). |
(6) | Amounts shown reflect the number of shares of common stock held by McKnight Holdings, LLC of which Mr. McKnight is the sole member. |
(7) | Amounts shown reflect the number of shares of common stock held by Rippel Holdings, LLC of which Mr. Rippel is the sole member. |
(8) | The address of Mr. Masto is c/o FFL Partners, LLC, One Maritime Plaza, Suite 2200, San Francisco, California 94111. |
(9) | The address of Ms. Winterhof is c/o FFL Partners, LLC, One Maritime Plaza, Suite 2200, San Francisco, California 94111. |
155
General
The following description summarizes the most important terms of our capital stock, as they will be in effect following the completion of this offering. Because it is only a summary, it does not contain all the information that may be important to you. Immediately prior to the completion of this offering, we will adopt and file an amended and restated certificate of incorporation, adopt amended and restated bylaws and effect a for split of our common stock. This description summarizes provisions that will be included in the amended and restated certificate of incorporation and bylaws. For a complete description, you should refer to our amended and restated certificate of incorporation, amended and restated bylaws and amended and restated investors rights agreement, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law. Upon the completion of this offering, pursuant to the terms of our amended and restated certificate of incorporation, our authorized capital stock will consist of shares of common stock, $0.001 par value per share, and shares of blank check preferred stock, $0.001 par value per share.
Upon completion of this offering and the stock split, there will be shares of our common stock outstanding.
Common Stock
Voting rights
Holders of shares of our common stock will be entitled to one vote for each share of common stock held on all matters submitted to a vote of the stockholders. Generally, holders of shares of our common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of the stockholders, unless otherwise required by law or with respect to the matters described in the immediately following paragraph. Generally, all matters to be voted on by the stockholders must be approved by a majority (or, in the case of the election of directors, by a plurality) of the votes entitled to be cast by all shares of common stock present in person or represented by proxy, voting together as a single class.
Notwithstanding the foregoing paragraph, amendments to our amended and restated certificate of incorporation, including as a result of a statutory merger, that would alter or change the powers, preferences or rights of the common stock so as to affect them adversely must also be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class. Upon the completion of this offering, under our amended and restated certificate of incorporation, we may not increase or decrease the authorized number of shares of common stock without the affirmative vote of the holders of a majority of the voting power of the outstanding shares of our capital stock entitled to vote, voting together as a single class.
Dividend rights
Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine. See Dividend Policy for additional information.
No preemptive or similar rights
Our common stock is not entitled to preemptive rights and is not subject to redemption or sinking fund provisions.
156
Right to receive liquidation distributions
Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of shares of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of, and the payment of liquidation preferences on, if any, any outstanding shares of preferred stock.
All of the shares of our common stock to be issued pursuant to this offering will be fully paid and non-assessable.
Preferred Stock
Under the terms of our amended and restated certificate of incorporation, our board of directors will be authorized to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors will have the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.
The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible future acquisitions and other corporate purposes, will affect, and may adversely affect, the rights of holders of common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of common stock until the board of directors determines the specific rights attached to that preferred stock. The effects of issuing preferred stock could include one or more of the following:
| restricting dividends on the common stock; |
| diluting the voting power of the common stock; |
| impairing the liquidation rights of the common stock; or |
| delaying or preventing changes in control or management of us. |
We have no preferred stock outstanding and no present plans to issue any shares of preferred stock.
Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws
The provisions of Delaware law and the amended and restated certificate of incorporation and amended and restated bylaws that we expect to adopt in connection with the completion of this offering may have the effect of delaying, deferring or discouraging another person from acquiring control of the Company. These provisions, which are summarized below, may have the effect of hampering takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us, because negotiation of these proposals could result in an improvement of their terms.
Delaware Anti-Takeover Statute
Section 203 of the General Corporation Law of the State of Delaware prohibits a publicly held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:
| prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
157
| upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, calculated as provided under Section 203; or |
| at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder. |
Generally, a business combination includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own, 15% or more of a corporations outstanding voting stock.
The provisions of Delaware law and the provisions of our amended and restated certificate of incorporation and amended and restated bylaws, could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they might also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions might also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders might otherwise deem to be in their best interests.
Classified Board
Our board of directors will be classified into three classes of directors, and directors may be removed from office only for cause. The existence of a classified board of directors could delay a successful tender offeror from obtaining majority control of our board of directors, and the prospect of that delay might deter a potential offeror. See ManagementCorporate GovernanceComposition of the Board of Directors for additional information.
Undesignated Preferred Stock
As discussed above in Preferred Stock, our board of directors will have the ability to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of us.
No Cumulative Voting
Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation specifically authorizes cumulative voting. Our amended and restated certificate of incorporation will not authorize cumulative voting. Therefore, stockholders holding a majority in voting power of the shares of our stock entitled to vote generally in the election of directors will be able to elect all our directors.
Action by Written Consent
Our amended and restated certificate of incorporation will provide that actions by our stockholders may not be taken by written consent. Actions to be taken by our stockholders may be taken only at an annual or special meeting of our stockholders.
Ability of Stockholders to Call a Special Meeting
Our amended and restated bylaws will provide that special meetings of the stockholders may be called only by the chairperson of the board of directors, our Chief Executive Officer or a majority of our board of directors. Stockholders may not otherwise call a special meeting, which may delay the ability of our stockholders to force consideration of a proposal.
158
Requirements for Advance Notification of Stockholder Nominations and Proposals
Our amended and restated bylaws will establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of our board of directors. These provisions may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirers own slate of directors or otherwise attempting to obtain control of us.
Amendment of Charter Provisions
The amendment of the above provisions of our amended and restated certificate of incorporation and amended and restated bylaws will require approval by holders of at least a majority of our outstanding capital stock entitled to vote generally in the election of directors. In addition, amendments to our amended and restated certificate of incorporation, including as a result of a statutory merger, that would alter or change the powers, preferences or rights of the common stock so as to affect them adversely must also be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class. Upon the completion of this offering, under our amended and restated certificate of incorporation, we may not increase or decrease the authorized number of shares of common stock without the affirmative vote of the holders of a majority of the voting power of the outstanding shares of our capital stock entitled to vote, voting together as a single class.
Choice of Forum
Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty; (iii) any action asserting a claim against us arising pursuant to the General Corporation Law of the State of Delaware, our certificate of incorporation or bylaws; and (iv) any action asserting a claim against us that is governed by the internal affairs doctrine.
Corporate Opportunity
Our amended and restated certificate of incorporation will provide that we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any business opportunity that may from time to time be presented to the FFL Holders or any of their respective officers, directors, agents, stockholders, members, managers, partners, affiliates and subsidiaries (other than us and our subsidiaries) and that may be a business opportunity for the FFL Holders, even if the opportunity is one that we might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. No such person will be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, to the fullest extent permitted by law, by reason of the fact that such person pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information regarding any such business opportunity, to us. Neither the FFL Holders nor any of their respective representatives has any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us or any of our subsidiaries.
Limitation on Director and Officer Liability and Indemnification
Our amended and restated certificate of incorporation will contain provisions that limit the liability of our directors and officers for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors and officers will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors or officers, except liability for:
| any breach of the duty of loyalty to us or our stockholders; |
159
| any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
| unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the General Corporation Law of the State of Delaware; or |
| any transaction from which an improper personal benefit is derived. |
Our amended and restated certificate of incorporation and amended and restated bylaws will provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. Our amended and restated bylaws will also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law.
We expect to enter into agreements to indemnify our directors, and executive officers. With specified exceptions, these agreements will provide for indemnification for related expenses including, among other things, attorneys fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors and officers liability insurance.
The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholders investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
Registration Rights
The Amended and Restated Investor Rights Agreement provides certain holders of our common stock, subject to certain conditions, certain registration rights following this offering and the expiration of any related lock-up period. See Certain Relationships and Related-Party TransactionsRelated-Party TransactionsAmended and Restated Investor Rights Agreement.
Market Listing
We have applied to list our common stock on NYSE under the symbol CURO.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC. The transfer agents address and telephone number is (800)-937-5449 .
160
SHARES ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering, there was no public market for our common stock. Sales of substantial amounts of shares of our common stock in the public market could adversely affect the prevailing market price of our common stock. Certain shares of our common stock will not be eligible for sale for a certain period of time after this offering because they are subject to contractual and legal restrictions on resale, some of which are described below. Sales of substantial amounts of shares of our common stock in the public market after these restrictions lapse, or the perception that these sales could occur, could adversely affect the prevailing market price of our common stock and our ability to raise equity capital in the future.
Sales of Restricted Securities
After this offering, shares of our common stock will be outstanding. Of these shares, all of the shares of common stock sold in this offering will be freely tradable without restriction under the Securities Act, other than shares purchased by our affiliates, as that term is defined in Rule 144 under the Securities Act. Our remaining shares outstanding will be restricted securities, which means they may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration, including, among others, those under Rule 144 or Rule 701 under the Securities Act, which are summarized below. Subject to the lock-up agreements described below, shares held by non-affiliates that are not restricted securities or that have been owned for more than one year may be sold under Rule 144 without restriction.
As a result of lock-up agreements described below, and the provisions of Rule 144 under the Securities Act, the restricted securities will be available for sale in the public market as follows:
Lock-up Agreements
We, our executive officers and directors and certain of our significant stockholders, who together hold an aggregate of % of our common stock, have agreed with the underwriters not to dispose of or hedge any of the shares of our common stock or securities convertible into or exchangeable for shares of our common stock during the period from the date of this prospectus continuing through the date that is 180 days after the date of this prospectus, except with the prior written consent of Credit Suisse Securities (USA) LLC and Jefferies LLC . These agreements are described below under Underwriting.
Rule 144
Non-Affiliates
Under Rule 144, a person may sell shares of our common stock acquired from us immediately upon the completion of this offering without regard to volume limitations or the availability of public information about us, if:
| the person is not our affiliate and has not been our affiliate at any time during the preceding three months; and |
161
| the person has beneficially owned the shares to be sold for at least one year, including the holding period of any prior owner other than one of our affiliates. |
Approximately shares of our common stock that are not subject to the lock-up agreements described above, will be eligible for sale under Rule 144 immediately upon the completion of this offering.
In addition, beginning 90 days after the date of this prospectus, Rule 144 will entitle a person who is not our affiliate and has not been our affiliate at any time during the preceding three months to sell any shares that such person has beneficially owned for at least six months, including the holding period of any prior owner other than one of our affiliates. These non-affiliated holders would be able to make these sales without regard to any volume limitations. Sales of shares of our common stock by any such person would be subject to the availability of current public information about us.
Affiliates
Beginning 90 days after the date of this prospectus, and subject to the lock-up agreements described above, our affiliates who have beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
| 1% of the number of shares of our common stock then outstanding, which will equal shares immediately after this offering; and |
| the average weekly trading volume in our common stock on NYSE during the four calendar weeks preceding the date of filing of a Notice of Proposed Sale of Securities Pursuant to Rule 144 with respect to the sale. |
Sales under Rule 144 by our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 701
Any of our employees, officers or directors who acquired shares under a written compensatory plan or contract may be entitled to sell them in reliance on Rule 701. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. Rule 701 further provides that non-affiliates may sell these shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation or notice provisions of Rule 144. All holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling those shares. However, all shares issued under Rule 701 are subject to lock-up agreements and will only become eligible for sale when the 180-day lock-up agreements expire.
Equity Incentive Plans
We intend to file a registration statement on Form S-8 under the Securities Act to register shares of our common stock reserved for future issuance under our equity incentive plans. We expect to file this registration statement on, or as soon as practicable after, the effective date of this prospectus. The registration statement on Form S-8 will become effective automatically upon filing. However, the shares registered on Form S-8 will not be eligible for resale until expiration of the lock-up agreements and market standoff provisions to which they are subject, and will be subject to vesting provisions and Rule 144 volume limitations applicable to affiliates.
Registration Rights
The Amended and Restated Investor Rights Agreement provides the holders of up to shares of our common stock, subject to certain conditions, certain registration rights following this offering and the expiration of any related lock-up period. See Certain Relationships and Related-Party TransactionsRelated-Party TransactionsAmended and Restated Investor Rights Agreement.
162
MATERIAL TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following is a discussion of material U.S. federal income tax and estate tax consequences to non-U.S. holders relating to the ownership and disposition of our common stock issued pursuant to this offering, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, existing final, temporary and proposed Treasury Regulations promulgated thereunder, administrative rulings and judicial decisions, all as in effect on the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income or estate tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service, or the IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.
This summary also does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction, or under U.S. federal gift and estate tax laws, except to the limited extent below. In addition, this discussion does not address tax considerations applicable to a non-U.S. holders particular circumstances or to non-U.S. holders that may be subject to special tax rules, including, without limitation:
| banks, insurance companies and other financial institutions; |
| persons subject to the alternative minimum tax; |
| tax-exempt or governmental organizations, agencies or instrumentalities; |
| controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax; |
| partnerships or other entities treated as pass-through entities for U.S. federal income tax purposes; |
| brokers, dealers or traders in securities, commodities or currencies; |
| persons that elect to use a mark-to-market method of accounting for their securities holdings; |
| persons that own, or are deemed to own, more than 5% of our common stock, except to the extent specifically set forth below; |
| real estate investment trusts or regulated investment companies; |
| certain former citizens or long-term residents of the United States; |
| persons who hold our common stock as part of a straddle, hedge, conversion, constructive sale or other integrated security transaction; |
| persons who hold or receive our common stock as compensation; and |
| persons who do not hold our common stock as a capital asset (within the meaning of Section 1221 of the Internal Revenue Code). |
If a partnership, or entity treated as a partnership for U.S. federal income tax purposes, holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors.
You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.
163
Non-U.S. Holder Defined
For purposes of this discussion, a non-U.S. holder is a beneficial owner of shares of our common stock that is not, for U.S. federal income tax purposes:
| an individual citizen or resident of the United States; |
| a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state or political subdivision thereof or the District of Columbia; |
| a partnership; |
| an estate whose income is subject to U.S. federal income tax regardless of its source; or |
| a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a U.S. person. |
Distributions
If we make a distribution of cash or other property (other than certain pro rata distributions of our common stock) in respect of our common stock, the distribution will be treated as a dividend to the extent it is paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). If the amount of a distribution exceeds our current and accumulated earnings and profits, such excess first will be treated as a tax-free return of capital to the extent of the non-U.S. holders adjusted tax basis in our common stock, and thereafter will be treated as capital gain. Distributions treated as dividends on our common stock held by a non-U.S. holder generally will be subject to U.S. federal withholding tax at a rate of 30%, or at a lower rate if provided by an applicable income tax treaty and the non-U.S. holder has provided the documentation required to claim benefits under such treaty. Generally, to claim the benefits of an income tax treaty, a non-U.S. holder will be required to provide a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable successor form).
If, however, a dividend is effectively connected with the conduct of a trade or business in the United States by the non-U.S. holder (and, if an applicable tax treaty so provides, is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States), the dividend will not be subject to the 30% U.S. federal withholding tax (provided the non-U.S. holder has provided the appropriate documentation, generally an IRS Form W-8ECI (or applicable successor form), to the withholding agent), but the non-U.S. holder generally will be subject to U.S. federal income tax in respect of the dividend on a net income basis, and at graduated rates, in substantially the same manner as U.S. persons. Dividends received by a non-U.S. holder that is a corporation for U.S. federal income tax purposes and which are effectively connected with the conduct of a U.S. trade or business may also be subject to a branch profits tax at the rate of 30% (or a lower rate if provided by an applicable tax treaty).
A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for a refund, together with the required information, with the IRS.
Gain on Disposition of Common Stock
Subject to the discussion below of the Foreign Account Tax Compliance Act, or FATCA, and backup withholding, a non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on any gain realized on the sale or other disposition of our common stock unless:
| such non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of such sale or disposition, and certain other conditions are met; |
164
| such gain is effectively connected with the conduct by the non-U.S. holder of a trade or business in the United States (and, if an applicable tax treaty so provides, is attributable to a permanent establishment or a fixed base maintained by the non-U.S. holder in the United States); or |
| our common stock constitutes a U.S. real property interest by reason of our status as a United States real property holding corporation for U.S. federal income tax purposes, or a USRPHC, at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holders holding period for our common stock. |
A non-U.S. holder who is an individual and that is present in the United States for 183 days or more in the taxable year of such sale or disposition, if certain other conditions are met, will be subject to tax at a rate of 30% on the amount by which such non-U.S. holders taxable capital gains allocable to U.S. sources, including gain from the sale or other disposition of our common stock, exceed capital losses allocable to U.S. sources, except as otherwise provided in an applicable income tax treaty.
Gain realized by a non-U.S. holder that is effectively connected with such non-U.S. holders conduct of a trade or business in the United States generally will be subject to U.S. federal income tax on a net income basis, and at graduated rates, in substantially the same manner as a U.S. person (except as provided by an applicable tax treaty). In addition, if such non-U.S. holder is a corporation for U.S. federal income tax purposes, it may also be subject to a branch profits tax at the rate of 30% (or a lower rate if provided by an applicable tax treaty).
Generally, a corporation is a USRPHC if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business (all as determined for U.S. federal income tax purposes). We do not expect to be treated as a USRPHC as of the date hereof; however, there can be no assurances that we are not now or will not become in the future a USRPHC. If we were a USRPHC during the applicable testing period, as long as our common stock is regularly traded on an established securities market, our common stock will be treated as a U.S. real property interest only for a non-U.S. holder who actually or constructively holds (at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holders holding period) more than 5% of such regularly traded stock. Please note, though, that we can provide no assurance that our common stock will remain regularly traded.
Federal Estate Tax
Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of death will generally be includable in the decedents gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.
Withholdable Payments to Foreign Financial Entities and Other Foreign Entities
A 30% withholding tax may be imposed on certain payments to certain foreign financial institutions and other foreign entities, including intermediaries, or FATCA withholding. Such payments will include U.S.-source dividends and, after December 31, 2018, the gross proceeds from the sale or other disposition of property that can produce certain U.S.-source interest or dividends. FATCA withholding may be imposed on such payments to a foreign financial institution unless such foreign financial institution enters into (or is deemed to have entered into) an agreement with the IRS to, among other things, undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts and withhold 30% of payments to such account holders whose actions prevent the financial institution from complying with these reporting and other requirements. FATCA withholding is imposed on similar types of payments to a non-financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner. Certain countries have entered into, and other countries are expected to enter into, agreements with the United States to facilitate the type of information reporting required to avoid FATCA withholding. You should consult your own tax advisors regarding the relevant U.S. law and other official guidance on FATCA withholding.
165
Backup Withholding and Information Reporting
Generally, we must report annually to the IRS the amount of dividends paid to a non-U.S. holder, the non-U.S. holders name and address and the amount of tax withheld, if any. A similar report is sent to the non-U.S. holder. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in the non-U.S. holders country of residence.
Payments of dividends or of proceeds on the disposition of stock made to a non-U.S. holder may be subject to information reporting and backup withholding unless the non-U.S. holder establishes an exemption, for example by properly certifying the non-U.S. holders status on an IRS Form W-8BEN, W-8BEN-E or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that the non-U.S. holder is a U.S. person.
Backup withholding is not an additional tax; rather, the U.S. income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.
The preceding discussion of U.S. federal income and estate tax considerations is for general information only. It is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our common stock, including the consequences of any proposed change in applicable laws.
166
Under the terms and subject to the conditions contained in an underwriting agreement dated , 2017, we and the selling stockholders have agreed to sell to the underwriters named below, for whom Credit Suisse Securities (USA) LLC, Jefferies LLC and Stephens Inc. are acting as representatives, the following respective numbers of shares of common stock:
Underwriter |
Number
of Shares |
|||
Credit Suisse Securities (USA) LLC |
||||
Jefferies LLC |
||||
Stephens Inc. |
||||
William Blair & Company, L.L.C. |
||||
Janney Montgomery Scott LLC |
||||
|
|
|||
Total |
||||
|
|
The underwriting agreement provides that the underwriters are obligated to purchase all the shares of common stock in the offering if any are purchased, other than those shares covered by the over-allotment option described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.
We have agreed to indemnify the underwriters and certain of their controlling persons against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make in respect of those liabilities.
The selling stockholders have granted to the underwriters a 30-day option to purchase on a pro rata basis up to additional shares from the selling stockholders at the initial public offering price less the underwriting discounts and commissions. The option may be exercised by Credit Suisse Securities (USA) LLC and Jefferies LLC only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of up to $ per share. After the initial public offering the representatives may change the public offering price and selling concession.
The following table summarizes the compensation and estimated expenses we and the selling stockholders will pay:
Per Share | Total | |||||||||||||||
Without
Over-allotment |
With
Over-allotment |
Without
Over-allotment |
With
Over-allotment |
|||||||||||||
Underwriting discounts and commissions paid by us |
$ | $ | $ | $ | ||||||||||||
Expenses payable by us |
||||||||||||||||
Underwriting discounts and commissions paid by selling stockholders |
||||||||||||||||
Expenses payable by the selling stockholders |
$ | $ | $ | $ |
We have also agreed to reimburse the underwriters for their FINRA counsel fee. In accordance with FINRA Rule 5110, this reimbursed fee is deemed underwriting compensation for this offering.
Solebury Capital, or Solebury, has acted as our financial advisor in connection with this offering. Solebury is not acting as an underwriter in connection with this offering, and accordingly, Solebury is neither purchasing
167
shares of common stock nor offering shares of common stock to the public in connection with this offering. With gross offering proceeds of $ million, the maximum aggregate compensation that Solebury is eligible to receive in connection with this offering, including reimbursement of out-of-pocket expenses, is $ (or $ if the underwriters exercise in full their option to purchase additional shares).
We have agreed that we will not, subject to certain exceptions, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Credit Suisse Securities (USA) LLC and Jefferies LLC for a period of 180 days after the date of this prospectus.
Our officers, directors and stockholders have agreed that, subject to certain exceptions, they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Credit Suisse Securities (USA) LLC and Jefferies LLC for a period of 180 days after the date of this prospectus.
The underwriters have reserved for sale at the initial public offering price up to shares of the common stock for employees, directors and other persons associated with us who have expressed an interest in purchasing common stock in the offering. If purchased by these persons, these shares will be subject to a 180-day lock-up restriction. The number of shares available for sale to the general public in the offering will be reduced to the extent these persons purchase the reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares.
We have applied to list the shares of common stock on NYSE under the symbol CURO.
In connection with the listing of the common stock on NYSE, the underwriters will undertake to sell in the United States round lots of 100 shares or more to a minimum of 400 U.S. holders.
Prior to this offering, there has been no public market for our common stock. The initial public offering price was determined by negotiations among us and the representatives and will not necessarily reflect the market price of the common stock following this offering. The principal factors that were considered in determining the initial public offering price included:
| the information presented in this prospectus and otherwise available to the underwriters; |
| the history of, and prospects for, the industry in which we will compete; |
| the ability of our management; |
| the prospects for our future earnings; |
| the present state of our development, results of operations and our current financial condition; |
| the general condition of the securities markets at the time of this offering; |
| the recent market prices of, and the demand for, publicly traded common stock of generally comparable companies; and |
| other factors deemed relevant by the underwriters and us. |
168
We cannot assure you that the initial public offering price will correspond to the price at which the common stock will trade in the public market subsequent to this offering or that an active trading market for the common stock will develop and continue after this offering.
In connection with the offering the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate-covering transactions, penalty bids and passive market making in accordance with Regulation M under the Exchange Act.
| Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. |
| Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market. |
| Syndicate-covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, which is a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. |
| Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate-covering transaction to cover syndicate short positions. |
| In passive market making, market makers in the common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchases of our common stock until the time, if any, at which a stabilizing bid is made. |
These stabilizing transactions, syndicate-covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on NYSE or otherwise and, if commenced, may be discontinued at any time.
A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.
Conflicts of Interest
The underwriters and their respective affiliates are full-service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory,
169
investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.
The representatives have informed us that they do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5.0% of the shares of common stock being offered.
In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. These investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Notice to Canadian Residents
Resale Restrictions
The distribution of shares of common stock in Canada is being made only in the provinces of Ontario, Quebec, Manitoba, Alberta and British Columbia on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of shares of common stock are made. Any resale of the shares of common stock in Canada must be made under applicable securities laws which may vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of shares of common stock.
Representations of Canadian Purchasers
By purchasing shares of common stock in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received that:
| the purchaser is entitled under applicable provincial securities laws to purchase shares of common stock without the benefit of a prospectus qualified under those securities laws as it is an accredited investor as defined under National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), as applicable, |
| the purchaser is a permitted client as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations , |
| where required by law, the purchaser is purchasing as principal and not as agent, and |
| the purchaser has reviewed the text above under Resale Restrictions. |
Conflicts of Interest
Canadian purchasers are hereby notified that the Underwriters are relying on the exemption set out in section 3A.3 of National Instrument 33-105 Underwriting Conflicts from having to provide certain conflict of interest disclosure in this document.
Statutory Rights of Action
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if an offering memorandum (including any amendment thereto) such as this offering
170
memorandum contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchasers province or territory. The purchaser of shares of common stock in Canada should refer to any applicable provisions of the securities legislation of the purchasers province or territory for particulars of these rights or consult with a legal advisor.
Enforcement of Legal Rights
All of our directors and executive officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.
Taxation and Eligibility for Investment
Canadian purchasers of shares of common stock should consult their own legal and tax advisors with respect to the tax consequences of an investment in the shares of common stock in their particular circumstances and about the eligibility of the shares of common stock for investment by the purchaser under relevant Canadian legislation.
171
The validity of the shares of common stock offered hereby will be passed upon for us by Willkie Farr & Gallagher LLP, New York, New York. Certain legal matters in connection with this offering will be passed upon for the underwriters by White & Case LLP, New York, New York.
The audited consolidated financial statements included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report of Grant Thornton LLP, independent registered public accountants, upon the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1, including exhibits, schedules and amendments filed with the registration statement, under the Securities Act with respect to the shares of common stock being offered. This prospectus, which constitutes a part of the registration statement, does not contain all of the information described in the registration statement and the related exhibits and schedules, portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information with respect to us and the shares of common stock being offered, reference is made to the registration statement and the related exhibits and schedules. With respect to statements contained in this prospectus regarding the contents of any contract or any other document, reference is made to the copy of the contract or other document filed as an exhibit to the registration statement. Statements concerning the contents of any contract or other document filed as an exhibit are qualified by reference to such filed exhibit.
As a result of this offering, we will become subject to the full informational requirements of the Exchange Act. We will fulfill our obligations with respect to such requirements by filing periodic reports, proxy statements and other information with the SEC. A copy of the registration statement and the related exhibits, schedules and amendments, as well as any documents we file with or furnish to the SEC, may be inspected without charge at the public reference facilities maintained by the SEC in Washington D.C. at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Such documents may be obtained from these offices upon the payment of the fees prescribed by the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. Document requests may be directed to CURO Group Holdings Corp. at 3527 North Ridge Road, Wichita, Kansas 67205. We also maintain a corporate website at www.curo.com. Any information available on, or accessible through, our website is not incorporated by reference in this prospectus.
172
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Consolidated Financial Statements for the three and six months ended June 30, 2017 and 2016 |
||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
Consolidated Financial Statements for the years ended December 31, 2016 and 2015 |
||||
F-40 | ||||
F-41 | ||||
F-42 | ||||
F-43 | ||||
F-44 | ||||
F-45 | ||||
F-46 |
F-1
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30,
2017 |
December 31,
2016 |
|||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Cash |
$ | 113,780 | $ | 193,525 | ||||
Restricted cash (includes restricted cash of consolidated VIEs of $7,336 and $2,770 as of June 30, 2017 and December 31, 2016, respectively) |
12,429 | 7,828 | ||||||
Gross loans receivable (includes loans of consolidated VIEs of $171,241 and $130,199 as of June 30, 2017 and December 31, 2016, respectively) |
350,362 | 286,196 | ||||||
Less: allowance for loan losses (includes allowance for losses of consolidated VIEs of $43,903 and $22,134 as of June 30, 2017 and December 31, 2016, respectively) |
(70,438 | ) | (39,192 | ) | ||||
|
|
|
|
|||||
Loans receivable, net |
279,924 | 247,004 | ||||||
Deferred income taxes |
13,907 | 12,635 | ||||||
Income taxes receivable |
3,939 | 9,378 | ||||||
Prepaid expenses and other |
36,295 | 39,248 | ||||||
Property and equipment, net |
91,865 | 95,896 | ||||||
Goodwill |
143,772 | 141,554 | ||||||
Other intangibles, net of accumulated amortization of $39,789 and $37,670 |
31,370 | 30,901 | ||||||
Other |
8,657 | 2,829 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 735,938 | $ | 780,798 | ||||
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Accounts payable and accrued liabilities |
$ | 41,320 | $ | 42,663 | ||||
Deferred revenue |
12,269 | 12,342 | ||||||
Income taxes payable |
2,759 | 1,372 | ||||||
Current maturities of long-term debt |
| 147,771 | ||||||
Accrued interest (includes accrued interest of consolidated VIEs of $1,017 and $775 as of June 30, 2017 and December 31, 2016, respectively) |
22,010 | 8,183 | ||||||
Credit services organization guarantee liability |
15,582 | 17,052 | ||||||
Deferred rent |
11,977 | 11,868 | ||||||
Long-term debt (includes long-term debt and issuance costs of consolidated VIEs of $107,706 and $4,722 and $68,311 and $5,257 as of June 30, 2017 and December 31, 2016, respectively) |
551,773 | 477,136 | ||||||
Subordinated shareholder debt |
2,373 | 2,227 | ||||||
Other long-term liabilities |
4,646 | 5,016 | ||||||
Deferred tax liabilities |
15,090 | 14,313 | ||||||
|
|
|
|
|||||
Total Liabilities |
679,799 | 739,943 | ||||||
|
|
|
|
|||||
Commitments and contingencies |
||||||||
Stockholders Equity |
||||||||
Common Stock$0.001 par value; 2,000,000 shares authorized; 1,052,632 issued and outstanding |
1 | 1 | ||||||
Dividends in excess of paid-in capital |
(35,777 | ) | (35,996 | ) | ||||
Retained earnings |
141,816 | 136,835 | ||||||
Accumulated other comprehensive loss |
(49,901 | ) | (59,985 | ) | ||||
|
|
|
|
|||||
Total Stockholders Equity |
56,139 | 40,855 | ||||||
|
|
|
|
|||||
Total Liabilities and Stockholders Equity |
$ | 735,938 | $ | 780,798 | ||||
|
|
|
|
See accompanying Notes to Interim Consolidated Financial Statements.
F-2
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF INCOMEUNAUDITED
(in thousands)
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue |
$ | 216,944 | $ | 194,307 | $ | 441,524 | $ | 396,768 | ||||||||
Provision for losses |
65,446 | 58,029 | 127,182 | 100,278 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net revenue |
151,498 | 136,278 | 314,342 | 296,490 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cost of providing services |
||||||||||||||||
Salaries and benefits |
26,300 | 26,108 | 52,733 | 53,086 | ||||||||||||
Occupancy |
13,511 | 13,864 | 27,606 | 27,023 | ||||||||||||
Office |
4,936 | 4,729 | 9,804 | 9,478 | ||||||||||||
Other costs of providing services |
13,108 | 12,430 | 27,963 | 26,785 | ||||||||||||
Advertising |
11,641 | 10,296 | 19,329 | 17,094 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of providing services |
69,496 | 67,427 | 137,435 | 133,466 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross margin |
82,002 | 68,851 | 176,907 | 163,024 | ||||||||||||
Operating (income) expense |
||||||||||||||||
Corporate and district |
36,085 | 32,056 | 69,351 | 64,756 | ||||||||||||
Interest expense |
18,484 | 16,039 | 41,850 | 32,192 | ||||||||||||
Loss on extinguishment of debt |
| | 12,458 | | ||||||||||||
Restructuring costs |
| 186 | | 1,481 | ||||||||||||
Other (income)/expense |
472 | (464 | ) | 199 | (445 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expense |
55,041 | 47,817 | 123,858 | 97,984 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income before income taxes |
26,961 | 21,034 | 53,049 | 65,040 | ||||||||||||
Provision for income taxes |
10,619 | 7,862 | 20,068 | 24,958 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 16,342 | $ | 13,172 | $ | 32,981 | $ | 40,082 | ||||||||
|
|
|
|
|
|
|
|
See accompanying Notes to Interim Consolidated Financial Statements.
F-3
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEUNAUDITED
(in thousands)
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income |
$ | 16,342 | $ | 13,172 | $ | 32,981 | $ | 40,082 | ||||||||
Other comprehensive income (loss): |
||||||||||||||||
Cash flow hedges |
375 | | 333 | | ||||||||||||
Foreign currency translation adjustment |
6,961 | (4,980 | ) | 9,751 | 3,809 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income (loss) |
7,336 | (4,980 | ) | 10,084 | 3,809 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income |
$ | 23,678 | $ | 8,192 | $ | 43,065 | $ | 43,891 | ||||||||
|
|
|
|
|
|
|
|
See accompanying Notes to Interim Consolidated Financial Statements.
F-4
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWSUNAUDITED
(in thousands)
Six Months Ended
June 30, |
||||||||
2017 | 2016 | |||||||
Cash flows from operating activities |
||||||||
Net income |
$ | 32,981 | $ | 40,082 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
9,330 | 10,328 | ||||||
Provision for loan losses |
127,182 | 100,278 | ||||||
Restructuring costs |
| 523 | ||||||
Amortization of debt issuance costs |
1,702 | 1,611 | ||||||
Amortization of bond discount/(premium) |
424 | (753 | ) | |||||
Deferred income tax benefit |
(653 | ) | (169 | ) | ||||
Loss on disposal of property and equipment |
244 | 22 | ||||||
Loss on extinguishment of debt |
12,458 | | ||||||
Increase in cash surrender value of life insurance |
(679 | ) | | |||||
Share-based compensation expense |
219 | 519 | ||||||
Changes in operating assets and liabilities: |
||||||||
Loans receivable |
(150,450 | ) | (85,282 | ) | ||||
Prepaid expenses and other assets |
2,974 | 4,090 | ||||||
Accounts payable and accrued liabilities |
(6,146 | ) | (3,600 | ) | ||||
Deferred revenue |
(698 | ) | (1,823 | ) | ||||
Income taxes payable |
3,780 | 6,146 | ||||||
Income taxes receivable |
3,200 | (721 | ) | |||||
Deferred rent |
31 | 266 | ||||||
Other liabilities |
13,875 | 1,031 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
49,774 | 72,548 | ||||||
|
|
|
|
|||||
Cash flows from investing activities |
||||||||
Purchase of property, equipment and software |
(6,828 | ) | (4,866 | ) | ||||
Cash paid for Cognical Holdings, Inc. preferred shares |
(4,975 | ) | | |||||
Changes in restricted cash |
(4,437 | ) | 6,011 | |||||
|
|
|
|
|||||
Net cash (used in) provided by investing activities |
(16,240 | ) | 1,145 | |||||
|
|
|
|
|||||
Cash flows from financing activities |
||||||||
Proceeds from Non-Recourse U.S. SPV facility and ABL facility |
41,130 | | ||||||
Payments on Non-Recourse U.S. SPV facility and ABL facility |
(25,142 | ) | | |||||
Proceeds from issuance of 12.00% Senior Secured Notes |
461,329 | | ||||||
Payments on 10.75% Senior Secured Notes |
(426,034 | ) | | |||||
Payments on 12.00% Senior Cash Pay Notes |
(125,000 | ) | ||||||
Debt issuance costs paid |
(14,002 | ) | | |||||
Dividend paid to stockholders |
(28,000 | ) | | |||||
Proceeds from credit facilities |
| 30,000 | ||||||
Payments on credit facilities |
| (38,050 | ) | |||||
|
|
|
|
|||||
Net cash used in financing activities |
(115,719 | ) | (8,050 | ) | ||||
|
|
|
|
|||||
Effect of exchange rate changes on cash |
2,440 | 1,591 | ||||||
|
|
|
|
|||||
Net (decrease) increase in cash |
(79,745 | ) | 67,234 | |||||
Cash at beginning of period |
193,525 | 100,561 | ||||||
|
|
|
|
|||||
Cash at end of period |
$ | 113,780 | $ | 167,795 | ||||
|
|
|
|
See accompanying Notes to Interim Consolidated Financial Statements.
F-5
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED
NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
Basis of Presentation
The terms CURO, we, our, us, and the Company, refer to CURO Group Holdings Corp. and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated.
We have prepared the accompanying unaudited Interim Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (US GAAP), and with the accounting policies described in our 2016 consolidated financial statements. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with US GAAP have been condensed or omitted, although we believe that the disclosures are adequate to enable a reasonable understanding of the information presented.
The unaudited Interim Consolidated Financial Statements and the accompanying notes (the Interim Statements) reflect all adjustments, which are, in the opinion of management, necessary to present fairly our results of operations, financial position and cash flows for the periods presented. The adjustments consist solely of normal recurring adjustments. The Interim Statements should be read in conjunction with the Consolidated Financial Statements and related Notes included in our 2016 consolidated financial statements. Interim results of operations are not necessarily indicative of results that may be expected for future interim periods or for the entire year ending December 31, 2017.
The Company evaluated and disclosed subsequent events through October 23, 2017, which represents the date as of which the financial statements were available to be issued.
Principles of Consolidation
The Interim Consolidated Financial Statements include the accounts of CURO and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of interim consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the periods reported. Some of the significant estimates that we have made in the accompanying Interim Consolidated Financial Statements include allowances for loan losses, certain assumptions related to goodwill and intangibles, accruals related to self-insurance, Credit Services Organization (CSO) guarantee liability and estimated tax liabilities. Actual results may differ from those estimates.
Nature of Operations
We are a growth-oriented, technology-enabled, highly-diversified consumer finance company serving a wide range of underbanked consumers in the United States, the United Kingdom and Canada.
Revenue Recognition
We offer a broad range of consumer finance products including Unsecured Installment Loans, Secured Installment Loans, Open-End Loans and Single-Pay Loans. Revenue in the consolidated statements of income includes: interest income, finance charges, CSO fees, late fees and non-sufficient funds fees as permitted by applicable laws and pursuant to the agreement with the customer. Product offerings differ by jurisdiction and are
F-6
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
governed by the laws in each separate jurisdiction. Installment Loans include Secured Installment Loans and Unsecured Installment Loans. These loans are fully amortizing, with a fixed payment amount, which includes principal and accrued interest, due each period during the term of the loan. The loan terms for Installment Loans can range up to 48 months depending on state regulations. We record revenue from Installment Loans on a simple-interest basis. Accrued interest and fees are included in gross loans receivable in the Interim Consolidated Balance Sheets. CSO fees are recognized ratably over the term of the loan.
Open-End Loans function much like a revolving line-of-credit, whereby the periodic payment is a set percentage of the customers outstanding loan balance, and there is no defined loan term. We record revenue from Open-End Loans on a simple interest basis. Accrued interest and fees are included in gross loans receivable in the Interim Consolidated Balance Sheets.
Single-Pay Loans are primarily unsecured, short-term, small denomination loans, with a very small portion being auto title loans, which allow a customer to obtain a loan using their car as collateral. Revenues from Single-Pay Loan products are recognized each period on a constant-yield basis ratably over the term of each loan. We defer recognition of the unearned fees we expect to collect based on the remaining term of the loan at the end of each reporting period.
Check cashing fees, money order fees and other fees from ancillary products and services are generally recognized at the point-of-sale when the transaction is completed. We also earn revenue from the sale of credit protection insurance in the Canadian market. Insurance revenues are recognized ratably over the term of the loan.
Current and Past-Due Loans Receivable
We classify our loans receivable as either current or past-due. Single-Pay and Open-End Loans are considered past-due when a customer misses a scheduled payment and charged-off to the allowance for loan losses. The charge-off of Unsecured Installment and Secured Installment Loans was impacted by a change in accounting estimate in the first quarter of 2017.
Effective January 1, 2017, we modified the timeframe in which Installment Loans are charged-off and made related refinements to our loss provisioning methodology. Prior to January 1, 2017, we deemed all loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past-due. Because of the Companys continuing shift from Single-Pay to Installment Loan products and our analysis of payment patterns on early-stage versus late-stage delinquencies, we have revised our estimates and now consider Installment Loans uncollectible when the loan has been past-due for 90 consecutive days. Consequently, past-due Installment Loans remain in loans receivable, with disclosure of past-due balances, for 90 days before being charged-off against the allowance for loan losses. We evaluate the adequacy of the allowance for loan losses compared to the related gross receivables balances that include accrued interest.
In the income statement, the provision for losses for Installment Loans is based on an assessment of the cumulative net losses inherent in the underlying loan portfolios, by vintage, and several other quantitative and qualitative factors. The resulting loss provision rate is applied to loan originations to determine the provision for losses. In addition to improving estimated collectability and loss recognition for Installment Loans, we also believe these refinements are better aligned with industry comparisons and practices.
The aforementioned change is treated as a change in accounting estimate. In accordance with Accounting Standards Codification 250 which addresses a change in accounting estimate, the change is being applied prospectively and is effective January 1, 2017. As a result, some credit quality metrics in 2017 may not be comparable to historical periods. Throughout the remainder of this report, the change in estimate is referred to as Q1 Loss Recognition Change.
F-7
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Installment Loans generally are considered past-due when a customer misses a scheduled payment. Loans zero to 90 days past-due are disclosed and included in gross loans receivable. The Company accrues interest on past-due loans until charged off. The amount of the resulting charge-off includes unpaid principal, accrued interest and any uncollected fees, if applicable. Consequently, net loss rates that include accrued interest will be higher than under the methodology applied prior to January 1, 2017.
The result of this change in estimate resulted in an approximately $45.6 million of Installment Loans at June 30, 2017 that remained on our balance sheet that were between 1 and 90 days delinquent, as compared to none in the prior year period. Additionally, the installment allowance for loan losses as of June 30, 2017 of $60.6 million includes an estimated allowance of $28.4 million for the Installment Loans between 1 and 90 days delinquent, as compared to none in the prior year period.
For Single-Pay and Open-End Loans, past-due loans are charged-off upon payment default and do not return to current for any subsequent payment activity. For Installment Loans, customers with payment delinquency of 90 consecutive days are charged off. Charged-off loans are never returned to current or performing and all subsequent activity is accounted for within recoveries in the Allowance for loan losses. If a past-due Installment Loan customer makes payments sufficient to bring the account current for principal plus all accrued interest or fees pursuant to the original terms of the loan contract before becoming 90 consecutive days past due, the underlying loan balance returns to classification as current. Modifications to the original term of the loan agreement would not result in a loan returning to current classification and only loan customers that are current are eligible for refinancing.
Depending upon underlying state or provincial regulations, a borrower may be eligible for more than one outstanding loan.
Allowance for Loan Losses
The allowance for loan losses is primarily based on back-testing of subsequent collections history by product and cumulative aggregate net losses by product and by vintage. We do not specifically reserve for any individual loan but rather segregate loans into separate pools based upon loan portfolios containing similar risk characteristics. Additional quantitative factors, such as current default trends, past-due account roll rates and changes to underwriting and portfolio mix are also considered in evaluating the adequacy of the allowance and current provision rates. Qualitative factors such as the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions impact managements judgment on the overall adequacy of the allowance for loan losses.
In addition to the effect on Unsecured and Secured Installment provision rates and loan balances, the Q1 Loss Recognition Change affected comparability of activity in the related allowance for loan losses. Specifically, no Unsecured or Secured Installment Loans were charged-off to the allowance for loan losses in the first quarter of 2017 because charge-off effectively occurs on day 91 under the revised methodology and no affected loans originated during the first quarter reached day 91 until April 2017. Actual charge-offs and recoveries on defaulted/charged-off loans from the first quarter of 2017 will affect the allowance for loan losses in prospective periods. But, as discussed previously, the related net losses were recognized in the Interim Consolidated Statement of Income during the three and six months ended June 30, 2017 by applying expected net loss provision rates to the related loan originations.
F-8
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Credit Services Organization
Through our CSO programs, we act as a credit services organization/credit access business on behalf of customers in accordance with applicable state laws. We currently offer loans through CSO programs in stores and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and Secured Installment Loans with a maximum term of 180 days. In Ohio we offer an Unsecured Installment Loan product with a maximum term of 18 months. As a CSO we earn revenue by charging the customer a fee (the CSO fee) for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customers obligation to repay the loan the customer receives from the third-party lender. CSO fees are calculated based on the amount of the customers loan. For CSO loans, each lender is responsible for providing the criteria by which the customers application is underwritten and, if approved, determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans if they go into default.
As of June 30, 2017, the maximum amount payable under all such guarantees was $52.7 million, compared to $59.6 million at December 31, 2016. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover the amount we pay from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $15.6 million and $17.1 million at June 30, 2017 and December 31, 2016, respectively. Changes in the fair value of the guarantee liability are recognized through the provision for losses.
CSO fees are calculated based on the amount of the customers loan. We comply with the applicable jurisdictions Credit Services Organization Act or a similar statue. These laws generally define the services that we can provide to consumers and require us to provide a contract to the customer outlining our services and the cost of those services to the customer. For services we provide under our CSO programs we receive cash from customers on their scheduled loan repayment due dates. The CSO fee is earned ratably over the term of the loan as the customers make payments. If a loan is paid off early, no additional CSO fees are due or collected. The maximum CSO loan term is six months and 18 months in Texas and Ohio, respectively. During the year ended December 31, 2016 and the six months ended June 30, 2017, approximately 53.2% and 58.4%, respectively, of Unsecured Installment Loans, and 62.5% and 58.8%, respectively, of Secured Installment Loans originated under CSO programs were paid off prior to the original maturity date.
Since CSO loans are made by a third-party lender, we do not include them in our Consolidated Balance Sheets as loans receivable. CSO fees receivable are included in Prepaid expense and other in our Consolidated Balance Sheets. We receive cash from customers for these fees on their scheduled loan repayment due dates.
Recently Adopted Accounting Pronouncements
In October 2016, the FASB issued Accounting Standards Update (ASU) 2016-17, Consolidation (Topic 810): Interests Held Through Related Parties that are Under Common Control (ASU 2016-17). The amendments affect the evaluation of whether to consolidate a Variable Interest Entity (VIE) in certain
F-9
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
situations involving entities under common control. Specifically, the amendments change the evaluation of whether an entity is the primary beneficiary of a VIE for an entity that is a single decision maker of a variable interest by changing how an entity treats indirect interests in the VIE held through related parties that are under common control with the reporting entity. The guidance in ASU 2016-17 must be applied retrospectively to all relevant periods. ASU 2016-17 will be effective for us beginning January 1, 2017. The adoption of this ASU did not have a material effect on our Consolidated Financial Statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The amendments in ASU 2016-09 simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for us beginning January 1, 2017, with early adoption permitted. The adoption of this ASU did not have a material effect on our Consolidated Financial Statements.
In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (ASU 2015-16), which requires an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined and eliminates the requirement to retrospectively account for those adjustments. The new standard became effective for us on January 1, 2017. Early adoption is permitted. The amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update. The adoption of this ASU did not have a material effect on our Consolidated Financial Statements.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial StatementsGoing Concern (Subtopic 205-40) (ASU 2014-15) , which provides new guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements and is intended to enhance the timeliness, clarity and consistency of disclosure concerning such uncertainties. The new guidance requires management to perform assessments, on an interim and annual basis, of an entitys ability to continue as a going concern within one year of the date of issuance of the entitys interim or annual financial statements, as applicable. In addition, entities must provide certain disclosures if there is substantial doubt about the entitys ability to continue as a going concern. The guidance is effective for periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of ASU 2014-15 did not have a material effect on our consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In May 2017, the FASB issued ASU 2017-09, CompensationStock Compensation (Topic 718): Scope of Modification Accounting (ASU 2017-09). Under modification accounting, all entities are required to re-value its equity awards each time there is a modification to the terms of the awards. The provisions in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to account for the effects of a modification unless certain conditions are met. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. We are currently assessing the impact the adoption of ASU 2017-09 will have on our consolidated financial statements and footnote disclosures.
F-10
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
In January 2017, the FASB issued ASU 2017-04, IntangiblesGoodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). The amendments in ASU 2017-04 simplified the goodwill impairment test by eliminating Step 2 of the test which requires an entity to compute the implied fair value of goodwill. Instead, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value, and is limited to the amount of total goodwill allocated to that reporting unit. Under this ASU, an entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The provisions of ASU 2017-04 are effective for an entitys annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2020. We are currently assessing the impact the adoption of ASU 2017-04 will have on our consolidated financial statements and footnote disclosures.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a Business (ASU 2017-01). The amendments in ASU 2017-01 narrow the definition of a business and provide a framework that gives an entity a basis for making reasonable judgments about whether a transaction involves an asset or a business and provide a screen to determine when a set (an integrated set of assets and activities) is not a business. The screen requires a determination that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the amendments in this Update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. ASU 2017-01 will be effective for us beginning January 1, 2019, and interim periods within annual periods beginning after January 1, 2020. Early adoption is permitted. We are currently assessing the impact the adoption of ASU 2017-01 will have on our consolidated financial statements and footnote disclosures.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (ASU 2016-15). The amendments in ASU 2016-15 provide guidance on eight specific cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and beneficial interests in securitization transactions. ASU 2016-15 will be effective for us beginning January 1, 2019. Early adoption is permitted, including adoption in an interim period. We are assessing the potential impact this ASU will have on our statement of cash flows.
In June 2016, the FASB issued ASU 2016-13, Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 will be effective for us beginning January 1, 2021. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.
In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessees obligation to make lease payment arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessees right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged and lessees will no longer be provided with a source of off-balance sheet financing. This ASU is effective for us beginning on January 1, 2020. Early adoption is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or
F-11
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.
In January 2016, the FASB issued ASU No. 2016-01, Financial InstrumentsOverall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) which requires (i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, (ii) public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and (iii) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). This amendment eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This amendment is effective for us beginning on January 1, 2019. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.
In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17). This amendment eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The new standard becomes effective for us on January 1, 2018. We do not expect that the adoption of this amendment will have a material impact on our Consolidated Financial Statements.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) (ASU 2015-14), which deferred the effect date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), to annual reporting periods beginning after December 15, 2018 for entities other than public business entities, certain not-for-profit entities, and certain employee benefit plans. In May 2014, the FASB issued ASU 2014-09 which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The guidance is effective for us beginning January 1, 2019. We have not yet determined the potential effects on the Consolidated Financial Statements, if any.
NOTE 2PREPAID EXPENSES AND OTHER
Prepaid expenses and other current assets were as follows:
(in thousands) |
June 30,
2017 |
December 31,
2016 |
||||||
Settlements due from third-party lenders |
$ | 16,456 | $ | 18,576 | ||||
Fees receivable for third-party loans |
10,017 | 9,181 | ||||||
Prepaid expenses |
6,963 | 5,892 | ||||||
Other current assets |
2,859 | 5,599 | ||||||
|
|
|
|
|||||
Total |
$ | 36,295 | $ | 39,248 | ||||
|
|
|
|
F-12
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
NOTE 3PROPERTY AND EQUIPMENT
The classification of property and equipment is as follows:
(in thousands) |
June 30,
2017 |
December 31,
2016 |
||||||
Leasehold improvements |
$ | 123,830 | $ | 122,419 | ||||
Furniture, fixtures and equipment |
38,195 | 35,060 | ||||||
|
|
|
|
|||||
Property and equipment, gross |
162,025 | 157,479 | ||||||
Accumulated depreciation |
(70,160 | ) | (61,583 | ) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | 91,865 | $ | 95,896 | ||||
|
|
|
|
Depreciation expense was $4.1 million and $4.4 million for the three months ended June 30, 2017 and June 30 2016, respectively. Depreciation expense was $8.2 million and $8.1 million for the six months ended June 30, 2017 and June 30 2016, respectively.
NOTE 4GOODWILL AND INTANGIBLES
The change in the carrying amount of goodwill, by operating segment for the first six months of 2017 was as follows:
(in thousands) |
U.S. | U.K. | Canada | Total | ||||||||||||
Balance as of December 31, 2016 |
$ | 91,131 | $ | 21,882 | $ | 28,541 | $ | 141,554 | ||||||||
Foreign currency translation |
| 1,087 | 1,131 | 2,218 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance as of June 30, 2017 |
$ | 91,131 | $ | 22,969 | $ | 29,672 | $ | 143,772 | ||||||||
|
|
|
|
|
|
|
|
Identifiable intangible assets consisted of the following:
June 30, 2017 | December 31, 2016 | |||||||||||||||
(in thousands) |
Gross
Carrying Amount |
Accumulated
Amortization |
Gross
Carrying Amount |
Accumulated
Amortization |
||||||||||||
Trade name |
$ | 26,076 | $ | (13 | ) | $ | 25,046 | $ | (12 | ) | ||||||
Customer relationships |
27,182 | (24,936 | ) | 26,411 | (23,603 | ) | ||||||||||
Computer software |
17,190 | (14,129 | ) | 16,429 | (13,370 | ) | ||||||||||
Provincial licenses |
387 | (387 | ) | 372 | (372 | ) | ||||||||||
Franchise agreements |
309 | (309 | ) | 298 | (298 | ) | ||||||||||
Positive leasehold interest |
15 | (15 | ) | 15 | (15 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of year |
$ | 71,159 | $ | (39,789 | ) | $ | 68,571 | $ | (37,670 | ) | ||||||
|
|
|
|
|
|
|
|
Our identifiable intangible assets are amortized using the straight-line method over the estimated remaining useful lives, except for the Wage Day and Cash Money trade name intangible assets, which were determined to have indefinite lives and are not amortized. The estimated useful lives for our other intangible assets range from 1 to 8 years. Aggregate amortization expense related to identifiable intangible assets was $0.6 million and $1.1 million for the three months ended June 30, 2017 and 2016, respectively. Aggregate amortization expense related to identifiable intangible assets was $1.2 million and $2.2 million for the six months ended June 30, 2017 and 2016, respectively.
F-13
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
The following table outlines the estimated future amortization expense related to intangible assets held at June 30, 2017:
(in thousands) |
Year Ending
December 31, |
|||
2017 (Excluding the first six months of 2017) |
$ | 1,161 | ||
2018 |
2,148 | |||
2019 |
1,403 | |||
2020 |
183 | |||
2021 |
30 |
NOTE 5VARIABLE INTEREST ENTITIES
In 2016, we closed a facility whereby certain loan receivables were sold to wholly owned, bankruptcy-remote special purpose subsidiaries (VIEs) and additional debt was incurred through the ABL facility and the Non-Recourse U.S. SPV facility (See Note 11 Long-Term Debt for further discussion) that was collaterized by these underlying loan receivables.
We have evaluated the VIEs for consolidation and we determined that we are the primary beneficiary of the VIEs and are required to consolidate them. The assets and liabilities related to the VIEs are included in our consolidated financial statements and are accounted for as secured borrowings. We parenthetically disclose on our consolidated balance sheets the VIEs assets that can only be used to settle the VIEs obligations and the VIEs liabilities if the VIEs creditors have no recourse against our general credit. The carrying amounts of consolidated VIEs assets and liabilities associated with our special purpose subsidiaries were as follows:
(in thousands) |
June 30,
2017 |
December 31,
2016 |
||||||
Assets |
||||||||
Restricted cash |
$ | 7,336 | $ | 2,770 | ||||
Loans receivable less allowance for loan losses |
127,338 | 108,065 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 134,674 | $ | 110,835 | ||||
|
|
|
|
|||||
Liabilities |
||||||||
Accounts payable and accrued liabilities |
$ | 19 | $ | | ||||
Accrued interest |
1,017 | 775 | ||||||
Long-term debt |
102,984 | 63,054 | ||||||
|
|
|
|
|||||
Total Liabilities |
$ | 104,020 | $ | 63,829 | ||||
|
|
|
|
NOTE 6RESTRICTED CASH
At June 30, 2017 and December 31, 2016 we had $21.6 million and $23.8 million, respectively, on deposit in collateral accounts with financial institutions. At June 30, 2017, approximately $5.1 million and $16.5 million were included as a component of Restricted cash and Prepaid expenses and other, respectively, in our Interim Consolidated Balance Sheets. At December 31, 2016, approximately $5.1 million and $18.7 million were included as a component of Restricted cash and Prepaid expenses and other, respectively, in our Consolidated Balance Sheets.
As a result of the loan facilities that commenced in December 2016 and are disclosed in Note 5Variable Interest Entities, $7.3 million and $2.8 million were included as Restricted cash of consolidated VIEs in our Consolidated Balance Sheets at June 30, 2017 and December 31, 2016, respectively.
F-14
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
NOTE 7LOANS RECEIVABLE AND REVENUE
Unsecured and Secured Installment revenue includes interest income and non-sufficient-funds or returned-items fees on late or defaulted payments on past-due loans (to which we refer collectively in this prospectus as late fees). Late fees comprise less than one-half of one percent of Installment revenues.
Open-End revenues include interest income on outstanding revolving balances and other usage or maintenance fees as permitted by underlying statutes.
Single-Pay revenues represent deferred presentment or other fees as defined by the underlying state, provincial or national regulations.
The following table summarizes revenue by product for the periods indicated:
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
(in thousands) |
2017 | 2016 | 2017 | 2016 | ||||||||||||
Unsecured Installment |
$ | 105,149 | $ | 72,188 | $ | 214,580 | $ | 151,022 | ||||||||
Secured Installment |
23,173 | 19,003 | 46,842 | 40,426 | ||||||||||||
Open-End |
15,805 | 15,817 | 33,712 | 33,213 | ||||||||||||
Single-Pay |
63,241 | 78,237 | 127,031 | 153,623 | ||||||||||||
Ancillary |
9,576 | 9,062 | 19,359 | 18,484 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue |
$ | 216,944 | $ | 194,307 | $ | 441,524 | $ | 396,768 | ||||||||
|
|
|
|
|
|
|
|
Loans receivable consisted of the following:
June 30, 2017 | ||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Total | |||||||||||||||
Current loans receivable |
$ | 91,230 | $ | 122,541 | $ | 64,195 | $ | 26,771 | $ | 304,737 | ||||||||||
Delinquent loans receivable |
| 33,534 | 12,091 | | 45,625 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans receivable |
91,230 | 156,075 | 76,286 | 26,771 | 350,362 | |||||||||||||||
Less: allowance for losses |
(5,313 | ) | (41,406 | ) | (19,196 | ) | (4,523 | ) | (70,438 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loans receivable, net |
$ | 85,917 | $ | 114,669 | $ | 57,090 | $ | 22,248 | $ | 279,924 | ||||||||||
|
|
|
|
|
|
|
|
|
|
The following table summarizes delinquent loans receivable by product for the periods indicated.
June 30, 2017 | ||||||||||||||||||||
(dollars in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Total | |||||||||||||||
Delinquent loans receivable |
||||||||||||||||||||
0-30 days past due |
$ | | $ | 15,263 | $ | 6,577 | $ | | $ | 21,840 | ||||||||||
31-60 days past due |
| 8,838 | 2,869 | | 11,707 | |||||||||||||||
61-90 days past due |
| 9,433 | 2,645 | | 12,078 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total delinquent loans receivable |
$ | | $ | 33,534 | $ | 12,091 | $ | | $ | 45,625 | ||||||||||
|
|
|
|
|
|
|
|
|
|
F-15
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
December 31, 2016 | ||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Total | |||||||||||||||
Current loans receivable |
$ | 90,487 | $ | 102,090 | $ | 63,157 | $ | 30,462 | $ | 286,196 | ||||||||||
Delinquent loans receivable |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans receivable |
90,487 | 102,090 | 63,157 | 30,462 | 286,196 | |||||||||||||||
Less: allowance for losses |
(5,501 | ) | (17,775 | ) | (10,737 | ) | (5,179 | ) | (39,192 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loans receivable, net |
$ | 84,986 | $ | 84,315 | $ | 52,420 | $ | 25,283 | $ | 247,004 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Prior to January 1, 2017, we deemed all loans uncollectible and charged-off when a customer missed a scheduled payment and the loan was considered past-due. See Note 1 for a discussion of the Q1 Loss Recognition Change. The Q1 Loss Recognition Change added an average of $26.3 million and $8.2 million of Unsecured and Secured Installment past-due principal balances, respectively, that would not have been recognized prior to January 1, 2017 since loans were previously charged off when a scheduled payment was missed. Using current Unsecured and Secured loss provision rates as a percentage of gross combined loans receivable, this change added approximately $4.1 million to the provision for losses.
Loans guaranteed by us under our CSO programs:
(in thousands) |
June 30,
2017 |
December 31,
2016 |
||||||
Current loans receivable guaranteed by the Company |
$ | 53,337 | $ | 68,033 | ||||
Delinquent loans receivable guaranteed by the Company |
8,744 | | ||||||
|
|
|
|
|||||
Total loans receivable guaranteed by the Company |
62,081 | 68,033 | ||||||
|
|
|
|
|||||
Less: CSO guarantee liability |
(15,582 | ) | (17,052 | ) | ||||
Loans receivable guaranteed by the Company, net |
$ | 46,499 | $ | 50,981 | ||||
|
|
|
|
The following table summarizes delinquent loans by product that are guaranteed by us under our CSO programs.
June 30, 2017 | ||||||||||||
(dollars in thousands) |
Installment
Unsecured |
Installment
Secured |
Total | |||||||||
Delinquent loans receivable |
||||||||||||
0-30 days past due |
$ | 7,498 | $ | 479 | $ | 7,977 | ||||||
31-60 days past due |
499 | 52 | 551 | |||||||||
61-90 days past due |
208 | 8 | 216 | |||||||||
|
|
|
|
|
|
|||||||
Total delinquent loans receivable |
$ | 8,205 | $ | 539 | $ | 8,744 | ||||||
|
|
|
|
|
|
F-16
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Summary of the activity in the allowance for loan losses during the three months ended June 30, 2017:
Three Months Ended June 30, 2017 | ||||||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 4,719 | $ | 42,040 | $ | 20,270 | $ | 4,572 | $ | | $ | 71,601 | ||||||||||||
Charge-offs |
(44,020 | ) | (24,574 | ) | (6,941 | ) | (8,447 | ) | (1,261 | ) | (85,243 | ) | ||||||||||||
Recoveries |
30,190 | 5,716 | 1,787 | 4,104 | 777 | 42,574 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(13,830 | ) | (18,858 | ) | (5,154 | ) | (4,343 | ) | (484 | ) | (42,669 | ) | ||||||||||||
Provision for losses |
14,284 | 17,845 | 4,081 | 4,298 | 484 | 40,992 | ||||||||||||||||||
Effect of foreign currency translation |
140 | 379 | (1 | ) | (4 | ) | | 514 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 5,313 | $ | 41,406 | $ | 19,196 | $ | 4,523 | $ | | $ | 70,438 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Allowance for loan losses as a percentage of gross loan receivables |
5.8 | % | 26.5 | % | 25.2 | % | 16.9 | % | N/A | 20.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Summary of activity in the CSO guarantee liability during the three months ended June 30, 2017:
Three Months Ended June 30, 2017 | ||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Total | ||||||||||||
Balance, beginning of period |
$ | 14 | $ | 18,482 | $ | 1,287 | $ | 19,783 | ||||||||
Charge-offs |
(373 | ) | (33,166 | ) | (2,141 | ) | (35,680 | ) | ||||||||
Recoveries |
354 | 5,857 | 814 | 7,025 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net charge-offs |
(19 | ) | (27,309 | ) | (1,327 | ) | (28,655 | ) | ||||||||
Provision for losses |
5 | 23,575 | 874 | 24,454 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | | $ | 14,748 | $ | 834 | $ | 15,582 | ||||||||
|
|
|
|
|
|
|
|
Summary of activity in the allowance for loan losses and the CSO guarantee liability, in total, during the three months ended June 30, 2017:
Three Months Ended June 30, 2017 | ||||||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 4,733 | $ | 60,522 | $ | 21,557 | $ | 4,572 | $ | | $ | 91,384 | ||||||||||||
Charge-offs |
(44,393 | ) | (57,740 | ) | (9,082 | ) | (8,447 | ) | (1,261 | ) | (120,923 | ) | ||||||||||||
Recoveries |
30,544 | 11,573 | 2,601 | 4,104 | 777 | 49,599 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(13,849 | ) | (46,167 | ) | (6,481 | ) | (4,343 | ) | (484 | ) | (71,324 | ) | ||||||||||||
Provision for losses |
14,289 | 41,420 | 4,955 | 4,298 | 484 | 65,446 | ||||||||||||||||||
Effect of foreign currency translation |
140 | 379 | (1 | ) | (4 | ) | | 514 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 5,313 | $ | 56,154 | $ | 20,030 | $ | 4,523 | $ | | $ | 86,020 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
F-17
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Summary of the activity in the allowance for loan losses during the three months ended June 30, 2016:
Three Months Ended June 30, 2016 | ||||||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 6,713 | $ | 10,140 | $ | 8,883 | $ | 4,521 | $ | | $ | 30,257 | ||||||||||||
Charge-offs |
(53,667 | ) | (35,421 | ) | (34,537 | ) | (20,174 | ) | (1,394 | ) | (145,193 | ) | ||||||||||||
Recoveries |
35,540 | 26,873 | 30,258 | 14,736 | 895 | 108,302 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(18,127 | ) | (8,548 | ) | (4,279 | ) | (5,438 | ) | (499 | ) | (36,891 | ) | ||||||||||||
Provision for losses |
17,467 | 8,878 | 4,213 | 5,736 | 499 | 36,793 | ||||||||||||||||||
Effect of foreign currency translation |
576 | (176 | ) | | | | 400 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 6,629 | $ | 10,294 | $ | 8,817 | $ | 4,819 | $ | | $ | 30,559 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Allowance for loan losses as a percentage of gross loan receivables |
6.9 | % | 17.6 | % | 17.0 | % | 17.9 | % | N/A | 13.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Summary of activity in the CSO guarantee liability during the three months ended June 30, 2016:
Three Months Ended June 30, 2016 | ||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Total | ||||||||||||
Balance, beginning of period |
$ | 258 | $ | 12,142 | $ | 1,164 | $ | 13,564 | ||||||||
Charge-offs |
(2,334 | ) | (37,066 | ) | (3,448 | ) | (42,848 | ) | ||||||||
Recoveries |
544 | 19,371 | 2,684 | 22,599 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net charge-offs |
(1,790 | ) | (17,695 | ) | (764 | ) | (20,249 | ) | ||||||||
Provision for losses |
2,093 | 18,440 | 703 | 21,236 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | 561 | $ | 12,887 | $ | 1,103 | $ | 14,551 | ||||||||
|
|
|
|
|
|
|
|
Summary of activity in the allowance for loan losses and the CSO guarantee liability, in total, during the three months ended June 30, 2016:
Three Months Ended June 30, 2016 | ||||||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 6,971 | $ | 22,282 | $ | 10,047 | $ | 4,521 | $ | | $ | 43,821 | ||||||||||||
Charge-offs |
(56,001 | ) | (72,487 | ) | (37,985 | ) | (20,174 | ) | (1,394 | ) | (188,041 | ) | ||||||||||||
Recoveries |
36,084 | 46,244 | 32,942 | 14,736 | 895 | 130,901 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(19,917 | ) | (26,243 | ) | (5,043 | ) | (5,438 | ) | (499 | ) | (57,140 | ) | ||||||||||||
Provision for losses |
19,560 | 27,318 | 4,916 | 5,736 | 499 | 58,029 | ||||||||||||||||||
Effect of foreign currency translation |
576 | (176 | ) | | | | 400 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 7,190 | $ | 23,181 | $ | 9,920 | $ | 4,819 | $ | | $ | 45,110 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
F-18
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Summary of the activity in the allowance for loan losses during the six months ended June 30, 2017:
Six Months Ended June 30, 2017 | ||||||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 5,501 | $ | 17,775 | $ | 10,737 | $ | 5,179 | $ | | $ | 39,192 | ||||||||||||
Charge-offs |
(88,905 | ) | (24,574 | ) | (6,941 | ) | (17,676 | ) | (2,400 | ) | (140,496 | ) | ||||||||||||
Recoveries |
63,341 | 10,634 | 4,815 | 9,457 | 1,529 | 89,776 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(25,564 | ) | (13,940 | ) | (2,126 | ) | (8,219 | ) | (871 | ) | (50,720 | ) | ||||||||||||
Provision for losses |
25,178 | 37,154 | 10,585 | 7,563 | 871 | 81,351 | ||||||||||||||||||
Effect of foreign currency translation |
198 | 417 | | | | 615 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 5,313 | $ | 41,406 | $ | 19,196 | $ | 4,523 | $ | | $ | 70,438 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Allowance for loan losses as a percentage of gross loan receivables |
5.8 | % | 26.5 | % | 25.2 | % | 16.9 | % | N/A | 20.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Summary of activity in the CSO guarantee liability during the six months ended June 30, 2017:
Six Months Ended June 30, 2017 | ||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Total | ||||||||||||
Balance, beginning of period |
$ | 274 | $ | 15,630 | $ | 1,148 | $ | 17,052 | ||||||||
Charge-offs |
(1,886 | ) | (61,122 | ) | (5,303 | ) | (68,311 | ) | ||||||||
Recoveries |
1,102 | 16,725 | 3,183 | 21,010 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net charge-offs |
(784 | ) | (44,397 | ) | (2,120 | ) | (47,301 | ) | ||||||||
Provision for losses |
510 | 43,515 | 1,806 | 45,831 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | | $ | 14,748 | $ | 834 | $ | 15,582 | ||||||||
|
|
|
|
|
|
|
|
Summary of activity in the allowance for loan losses and the CSO guarantee liability, in total, during the six months ended June 30, 2017:
Six Months Ended June 30, 2017 | ||||||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 5,775 | $ | 33,405 | $ | 11,885 | $ | 5,179 | $ | | $ | 56,244 | ||||||||||||
Charge-offs |
(90,791 | ) | (85,696 | ) | (12,244 | ) | (17,676 | ) | (2,400 | ) | (208,807 | ) | ||||||||||||
Recoveries |
64,443 | 27,359 | 7,998 | 9,457 | 1,529 | 110,786 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(26,348 | ) | (58,337 | ) | (4,246 | ) | (8,219 | ) | (871 | ) | (98,021 | ) | ||||||||||||
Provision for losses |
25,688 | 80,669 | 12,391 | 7,563 | 871 | 127,182 | ||||||||||||||||||
Effect of foreign currency translation |
198 | 417 | | | | 615 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 5,313 | $ | 56,154 | $ | 20,030 | $ | 4,523 | $ | | $ | 86,020 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
F-19
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Summary of the activity in the allowance for loan losses during the six months ended June 30, 2016:
Six Months Ended June 30, 2016 | ||||||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 8,313 | $ | 10,604 | $ | 9,209 | $ | 4,823 | $ | | $ | 32,949 | ||||||||||||
Charge-offs |
(110,269 | ) | (72,196 | ) | (66,582 | ) | (41,608 | ) | (2,788 | ) | (293,443 | ) | ||||||||||||
Recoveries |
76,369 | 56,830 | 60,669 | 31,099 | 1,758 | 226,725 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(33,900 | ) | (15,366 | ) | (5,913 | ) | (10,509 | ) | (1,030 | ) | (66,718 | ) | ||||||||||||
Provision for losses |
31,478 | 15,242 | 5,521 | 10,505 | 1,030 | 63,776 | ||||||||||||||||||
Effect of foreign currency translation |
738 | (186 | ) | | | | 552 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 6,629 | $ | 10,294 | $ | 8,817 | $ | 4,819 | $ | | $ | 30,559 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Allowance for loan losses as a percentage of gross loan receivables |
6.9 | % | 17.6 | % | 17.0 | % | 17.9 | % | N/A | 13.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Summary of activity in the CSO guarantee liability during the six months ended June 30, 2016:
Six Months Ended June 30, 2016 | ||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Total | ||||||||||||
Balance, beginning of period |
$ | 334 | $ | 15,910 | $ | 1,507 | $ | 17,751 | ||||||||
Charge-offs |
(3,936 | ) | (78,690 | ) | (7,999 | ) | (90,625 | ) | ||||||||
Recoveries |
978 | 43,196 | 6,749 | 50,923 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net charge-offs |
(2,958 | ) | (35,494 | ) | (1,250 | ) | (39,702 | ) | ||||||||
Provision for losses |
3,185 | 32,471 | 846 | 36,502 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | 561 | $ | 12,887 | $ | 1,103 | $ | 14,551 | ||||||||
|
|
|
|
|
|
|
|
Summary of activity in the allowance for loan losses and the CSO guarantee liability, in total, during the six months ended June 30, 2016:
Six Months Ended June 30, 2016 | ||||||||||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 8,647 | $ | 26,514 | $ | 10,716 | $ | 4,823 | $ | | $ | 50,700 | ||||||||||||
Charge-offs |
(114,205 | ) | (150,886 | ) | (74,581 | ) | (41,608 | ) | (2,788 | ) | (384,068 | ) | ||||||||||||
Recoveries |
77,347 | 100,026 | 67,418 | 31,099 | 1,758 | 277,648 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(36,858 | ) | (50,860 | ) | (7,163 | ) | (10,509 | ) | (1,030 | ) | (106,420 | ) | ||||||||||||
Provision for losses |
34,663 | 47,713 | 6,367 | 10,505 | 1,030 | 100,278 | ||||||||||||||||||
Effect of foreign currency translation |
738 | (186 | ) | | | | 552 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 7,190 | $ | 23,181 | $ | 9,920 | $ | 4,819 | $ | | $ | 45,110 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 8CREDIT SERVICES ORGANIZATION
The CSO fee receivable amounts under our CSO programs were $10.0 million and $9.2 million at June 30, 2017 and December 31, 2016, respectively. As noted, we bear the risk of loss through our guarantee to purchase any defaulted customer loans from the lenders. The terms of these loans range from six to eighteen months. This guarantee represents an obligation to purchase specific loans that go into default. (See Note 1 for a description of
F-20
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
our accounting policies.) As of June 30, 2017 and December 31, 2016, the maximum amount payable under all such guarantees was $52.7 million and $59.6 million, respectively. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover the amount we pay from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $15.6 million and $17.1 million at June 30, 2017 and December 31, 2016, respectively.
We have placed $16.5 million and $18.7 million in collateral accounts for the lenders at June 30, 2017 and December 31, 2016, respectively, which is reported in Prepaid expenses and other in the Interim Consolidated Balance Sheets. The balances required to be maintained in these collateral accounts vary based upon lender, but are typically based on a percentage of the outstanding loan balances held by the lender. The percentage of outstanding loan balances required for collateral is defined within the terms agreed to between us and each such lender.
NOTE 9ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities were are follows:
(in thousands) |
June 30, 2017 | December 31, 2016 | ||||||
Trade accounts payable |
$ | 16,807 | $ | 18,588 | ||||
Money orders payable |
6,354 | 7,356 | ||||||
Accrued taxes, other than income taxes |
369 | 447 | ||||||
Accrued payroll and fringe benefits |
17,030 | 14,621 | ||||||
Reserve for store closure costs |
372 | 1,258 | ||||||
Other accrued liabilities |
388 | 393 | ||||||
|
|
|
|
|||||
Total |
$ | 41,320 | $ | 42,663 | ||||
|
|
|
|
NOTE 10RESTRUCTURING COSTS
During the first quarter of 2016 we closed six stores in Texas. These stores were all underperforming stores that were acquired as part of The Money Box acquisition. Our results for the six months ended June 30, 2016 included $1.1 million of charges related to these store closures primarily consisting of certain lease obligations and the write-down and loss on the disposal of fixed assets. We also determined that we were unable to reopen one store in Missouri that was damaged by a fire. In December 2015, we closed ten store locations in the United Kingdom as part of an overall plan to reduce operating losses in the wake of ongoing regulatory and market changes in the United Kingdom. Our results for the six months ended June 30, 2016 include $0.4 million of charges related to these store closures primarily consisting of lease obligations.
F-21
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Impairments and store closure costs for the three and six months ended June 30, 2016 were as follows:
(in thousands) |
Three Months Ended
June 30, 2016 |
Six Months Ended
June 30, 2016 |
||||||
Lease obligations and related costs |
$ | 186 | $ | 863 | ||||
Write-down and loss on disposal of fixed assets |
| 618 | ||||||
|
|
|
|
|||||
Ending balance |
$ | 186 | $ | 1,481 | ||||
|
|
|
|
Activity for the closed store reserve for the six months ended June 30, 2017 was as follows:
(in thousands) |
Six Months Ended
June 30, 2017 |
|||
Beginning balanceJanuary 1, 2017 |
$ | 1,258 | ||
Additions and adjustments |
| |||
Payments and write-downs |
(886 | ) | ||
|
|
|||
Ending balanceJune 30, 2017 |
$ | 372 | ||
|
|
Closed store reserves of $0.4 million are included in the Accounts payable and accrued liabilities line item on the accompanying Interim Consolidated Balance Sheets at June 30, 2017.
NOTE 11LONG-TERM DEBT
Long-term debt consisted of the following:
(in thousands) |
June 30, 2017 | December 31, 2016 | ||||||
February 2017 senior secured notes (due 2022) |
$ | 448,789 | $ | | ||||
May 2011 senior secured notes (due 2018) |
| 223,164 | ||||||
May 2012 senior secured notes (due 2018) |
| 89,734 | ||||||
February 2013 senior secured notes (due 2018) |
| 101,184 | ||||||
February 2013 cash pay notes (due 2017) |
| 124,365 | ||||||
Non-Recourse U.S. SPV Facility |
102,984 | 63,054 | ||||||
ABL Facility |
| 23,406 | ||||||
|
|
|
|
|||||
Total long-term debt, including current portion |
551,773 | 624,907 | ||||||
Less: current maturities of long-term debt |
| 147,771 | ||||||
|
|
|
|
|||||
Long-term debt |
$ | 551,773 | $ | 477,136 | ||||
|
|
|
|
Senior Secured Note
On February 15, 2017 CURO Financial Technologies Corp. (CFTC), a subsidiary of CURO, issued $470.0 million 12.00% Senior Secured Notes due March 1, 2022. Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The proceeds from the Notes were used, together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of our wholly-owned subsidiary, CURO Intermediate, (ii) redeem the outstanding 12.00% Senior Cash Pay Notes due 2017, and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. Consequently, we received a $130.1 million dividend from CFTC in February 2017 to fund the redemption of the 12.00% Senior Cash Pay Notes. The extinguishment of the 10.75% Senior Secured Notes and the 12.00% Senior Cash Pay Notes resulted in a pretax loss of $12.5 million for the six months ended June 30, 2017.
In connection with this debt issuance we capitalized financing costs of approximately $14.0 million, the balance of which are included in the Interim Consolidated Balance Sheets as a component of Long-term debt, and are being amortized over the term of the Senior Secured Notes and included as a component of interest expense.
F-22
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Ranking and Guarantees
The 12% Senior Secured Notes (the Notes) due 2022 rank senior in right of payment to all of our and our guarantor entities existing and future subordinated indebtedness and equal in right of payment with all our and our guarantor entities existing and future senior indebtedness of the Company, including borrowings under our revolving credit facilities. Pursuant to our Intercreditor Agreement, the Notes and the guarantees will be effectively subordinated to our credit facilities and certain other indebtedness to the extent of the value of the assets securing such indebtedness and to liabilities of our subsidiaries that are not guarantors.
The Notes are secured by liens on substantially all of our and the guarantors assets, subject to certain exceptions. On or after March 1, 2019, we may redeem some or all of the Notes at a premium that will decrease over time, plus accrued and unpaid interest, if any to the applicable date of redemption. Prior to March 1, 2019, we will be able to redeem up to 40% of the Notes at a redemption price of 112.000% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the redemption date with the net cash proceeds of certain equity offerings. Prior to March 1, 2019, subject to certain terms and conditions, we will also be able to redeem the Notes at a redemption price of 100% of the principal amount of the Notes redeemed, plus the applicable premium and any accrued and unpaid interest to the redemption date.
Subordinated Shareholder Debt
As part of the acquisition of Cash Money in 2011, we issued an Escrow Note to the Seller which provided us indemnification for certain claims. This note bears interest at 10.0% per annum, and quarterly interest payments are due until the note matures in May 2019. The balance of this note at June 30, 2017 and December 31, 2016 was $2.4 million and $2.2 million, respectively.
Non-Recourse U.S. SPV Facility
On November 17, 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company (the SPV Borrower) and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provides for an $80.0 million term loan and $45.0 million of initial revolving borrowing capacity, with the ability to expand such revolving borrowing capacity over time and an automatic expansion to $70.0 million on the six month anniversary of the closing date, (our Non-Recourse U.S. SPV Facility). Our Non-Recourse U.S. SPV Facility is secured by a first lien against assets of the SPV Borrower, which is a special purpose vehicle holding certain receivables originated by the operating entities of Intermediate and CURO Receivables Holdings I, LLC, a Delaware limited liability company (Holdings) which is a holding company that owns the equity of the SPV Borrower. The lender advances to the SPV Borrower 80% of the principal balance of the eligible installment loans that we sell to the SPV Borrower, which serve as collateral for the lender. As customer loan payments come into the SPV Borrower, such payments are subjected to a conventional priority-of-payment waterfall provided the loan-to-value doesnt exceed 80%. The loans will bear interest at an annual rate of up to 12.0% plus the greater of (x) 1.0% per annum and (y) the three-month LIBOR. The SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. Revolving commitment terminations and voluntary prepayments of term loans made prior to the 30th month anniversary of the closing date are subject to a fee equal to 3.0% of the amount of revolving loans commitments terminated or term loans voluntarily prepaid. This facility matures in 2021.
ABL Facility
On November 17, 2016, CURO Intermediate entered into a six-month recourse credit facility with Victory Park Management, LLC and certain other lenders which provides for $25.0 million of borrowing capacity, (our ABL Facility). Our ABL Facility is secured by a first lien against our assets and the assets of CURO
F-23
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Intermediate and its domestic subsidiaries. The lender advances to CURO Intermediate 80% of the principal balance of the eligible installment loans held by CURO Intermediate and its guarantor subsidiaries. As customer loan payments come into CURO Intermediate and its guarantor subsidiaries, such payments are subjected to a conventional priority-of-payment waterfall provided the loan-to-value doesnt exceed 80%. The loans will bear interest at an annual rate of up to 8.0% plus the greater of (x) 1.0% per annum and (y) the three-month LIBOR. The ABL Facility provides that CURO Intermediate pays a 0.50% per annum commitment fee on the unused portion of the commitments and a 4.0% per annum monitoring fee on the loans outstanding. Commitment terminations and voluntary prepayments of loans made prior to the 30th month anniversary of the closing date of the Non-Recourse U.S. SPV Facility are subject to a fee equal to 3.0% of the amount of revolving loan commitments terminated or loans voluntarily prepaid. This facility matured in May 2017 and was fully converted to the Non-Recourse U.S. SPV Facility.
NOTE 12SHARE-BASED COMPENSATION
Share-based compensation expense for the three months ended June 30, 2017 and 2016 was $0.1 million and $0.2 million, respectively, and for the six months ended June 30, 2017 and 2016 was $0.2 million and $0.5 million, respectively and is included in the Interim Consolidated Statements of Income as a component of Corporate and District expenses.
The 2010 Equity Incentive Plan (the Plan) was originally approved by the Companys shareholders in November 2010, and amended in December 2013. The Plan provides for the issuance of up to 60,000 shares, subject to certain adjustment provisions described in the Plan. The Plan provides for the granting of stock options, restricted stock, and stock grants. Awards may be granted to employees, consultants and directors of the Company. The Plan provides that shares of Class B common stock subject to awards granted become available for issuance if such awards expire, terminate, are canceled for any reason, or are forfeited by the recipient. Pursuant to the formation of CURO, all of the rights and obligations under the stock option agreements were transferred from CFTC. Thus, the outstanding and unexercised options now represent an option to purchase the same number of shares of common stock of CURO at the same exercise price and on the same terms and conditions as provided in the original option agreement. No awards may be granted after November 30, 2020.
During the first quarter of 2017, we granted an incremental 1,511 stock options at an exercise price of $319.08 per share. The options vest ratably over a three year period and are subject to limitations on transferability. We also granted an incremental 1,250 stock options at an exercise price of $319.08 per share. The options vest ratably over a five year period and are subject to limitations on transferability. The fair value of the options granted was calculated at each grant date using a Black-Scholes option-pricing model which assumed the following weighted average assumptions: expected volatility of 45.3%, expected term of 6.1 years, risk-free interest rate of 2.2%, and expected dividend yield of 0%.
As of June 30, 2017, there was $1.0 million of unrecognized compensation cost, net of estimated forfeitures, related to share-based awards, which will be recognized over a weighted-average period of 3.4 years.
NOTE 13INCOME TAXES
Our effective tax rate was 39.6% and 37.9% for the three months ended June 30, 2017 and 2016, respectively. Our effective tax rate was 38.0% and 38.5% for the six months ended June 30, 2017 and 2016, respectively. As of June 30, 2017, the Company had not provided U.S. tax on its cumulative undistributed foreign earnings of $127.9 million. The Company intends to reinvest its foreign earnings indefinitely in its non-U.S. operations. If the earnings were distributed to the United States., the Company would be subject to estimated U.S. taxes of approximately $57.5 million. In the event the earnings were distributed to the United States, the Company would adjust its income tax provision for the period and would determine the amount of credit for foreign tax credit that would be available to reduce the U.S. tax liability.
F-24
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
NOTE 14FINANCIAL INSTRUMENTS AND CONCENTRATIONS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We are required to use valuation techniques that are consistent with the market approach, income approach, and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability based on market data obtained from independent sources, or unobservable, meaning those that reflect our own estimate about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs.
The three levels of inputs used to measure fair value are listed below.
Level 1Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have access to at the measurement date.
Level 2Inputs include quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3Unobservable inputs reflecting our own judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. We develop these inputs based on the best information available, including our own data.
Financial Assets and Liabilities Not Measured at Fair Value
The table below presents the assets and liabilities that were not measured at fair value at June 30, 2017.
Estimated Fair Value | ||||||||||||||||||||
(in thousands) |
Carrying Value
June 30, 2017 |
Level 1 | Level 2 | Level 3 |
June 30,
2017 |
|||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash |
$ | 113,780 | $ | 113,780 | $ | | $ | | $ | 113,780 | ||||||||||
Restricted cash |
12,429 | 12,429 | | | 12,429 | |||||||||||||||
Loans receivable, net |
279,924 | | | 279,924 | 279,924 | |||||||||||||||
Investment |
4,975 | | | 4,975 | 4,975 | |||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Credit services organization guarantee liability |
$ | 15,582 | $ | | $ | | $ | 15,582 | $ | 15,582 | ||||||||||
February 2017 senior secured notes |
448,789 | 492,913 | | | 492,913 | |||||||||||||||
Non-Recourse U.S. SPV facility |
102,984 | | | 107,706 | 107,706 |
F-25
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
The table below presents the assets and liabilities that were not measured at fair value at December 31, 2016.
Estimated Fair Value | ||||||||||||||||||||
(in thousands) |
Carrying Value
December 31, 2016 |
Level 1 | Level 2 | Level 3 |
December 31,
2016 |
|||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash |
$ | 193,525 | $ | 193,525 | $ | | $ | | $ | 193,525 | ||||||||||
Restricted cash |
7,828 | 7,828 | | | 7,828 | |||||||||||||||
Loans receivable, net |
247,004 | | | 247,004 | 247,004 | |||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Credit services organization guarantee liability |
$ | 17,052 | $ | | $ | | $ | 17,052 | $ | 17,052 | ||||||||||
May 2011 senior secured notes |
223,164 | 216,449 | | | 216,449 | |||||||||||||||
May 2012 senior secured notes |
89,734 | 86,625 | | | 86,625 | |||||||||||||||
February 2013 senior secured notes |
101,184 | 96,250 | | | 96,250 | |||||||||||||||
February 2013 cash pay notes |
124,365 | 118,301 | | | 118,301 | |||||||||||||||
Non-Recourse U.S. SPV facility |
63,054 | | | 68,311 | 68,311 | |||||||||||||||
ABL facility |
23,406 | | | 23,406 | 23,406 |
Loans receivable are carried on the Interim Consolidated Balance Sheets net of the allowance for estimated loan losses, which is calculated primarily based upon models that backtest subsequent collections history for each type of loan product. The unobservable inputs used to calculate the carrying value include additional quantitative factors, such as current default trends and changes to the portfolio mix are also considered in evaluating the accuracy of the models; as well as additional qualitative factors such as the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Loans generally have terms ranging from 1 day to 42 months. The carrying value of loans receivable approximates the fair value.
In connection with our CSO programs, the accounting for which is discussed in detail in Note 1, we guarantee consumer loan payment obligations to unrelated third-party lenders for loans that we arrange for consumers on the third-party lenders behalf. The Company is required to purchase from the lender defaulted loans we have guaranteed. The estimated fair value of the guarantee liability related to CSO loans we have guaranteed was $15.6 million and $17.1 million as of June 30, 2017 and December 31, 2016, respectively. The initial measurement of this guarantee liability is recorded at fair value using Level 3 inputs with subsequent measurement of the liability measured as a contingent loss. The unobservable inputs used to calculate fair value include the nature of the loan products, the creditworthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions.
The fair value of our Senior Secured Notes and Cash Pay Notes was based on broker quotations. The fair values of the Non-Recourse U.S. SPV facility and the ABL facility were based on the cash needed for final settlement.
Derivative Financial Instrument
We had a cash flow hedge in which the hedging instrument is a forward extra to sell GBP 4,800,000 that expired in May 2017. We have performed an assessment that determined that all critical terms of the hedging instrument and the hedged transaction match and as such have qualitatively concluded that changes in the
F-26
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
hedges intrinsic value will completely offset the change in the expected cash flows based on changes in the spot rate. Since the effectiveness of this hedge is assessed based on changes in the hedges intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness.
Changes in the hedges intrinsic value, to the extent that they are effective as a hedge, were recorded in other comprehensive income. As of June 30, 2017 we have recorded a realized loss of $0.3 million in our consolidated statement of income associated with this hedge.
Concentration Risk
We are subject to regulation by federal, state and provincial governmental authorities that affect the products and services that we provide, particularly Single-Pay Loans. The level and type of regulation for payday advance loans varies greatly by jurisdiction, ranging from jurisdictions with moderate regulations or legislation, to other jurisdictions having very strict guidelines and requirements.
Revenues originated in Texas, Ontario, and California represented approximately 24.7%, 13.5%, and 18.1%, respectively, of our consolidated total revenues for the three months ended June 30, 2017. Revenues originated in Texas, Ontario, and California represented approximately 24.6%, 16.1%, and 15.2%, respectively, of our consolidated total revenues for the three months ended June 30, 2016.
Revenues originated in Texas, Ontario, and California represented approximately 25.7%, 13.1%, and 17.7%, respectively, of our consolidated total revenues for the six months ended June 30, 2017. Revenues originated in Texas, Ontario, and California represented approximately 25.5%, 14.9%, and 15.2%, respectively, of our consolidated total revenues for the six months ended June 30, 2016.
To the extent that laws and regulations are passed that affect the manner in which we conduct business in any one of those markets, our financial position, results of operations and cash flows could be adversely affected. Additionally, our ability to meet our financial obligations could be negatively impacted.
We hold cash at major financial institutions that often exceed FDIC insured limits. We manage our concentration risk by placing our cash deposits in high quality financial institutions and by periodically evaluating the credit quality of the financial institutions holding such deposits. Historically, we have not experienced any losses due to such cash concentration.
Financial instruments that potentially subject us to concentrations of credit risk primarily consist of our loans receivable. Concentrations of credit risk with respect to loans receivable are limited due to the large number of customers comprising our customer base.
Purchase of Cognical Holdings, Inc. Preferred Shares
On April 20, 2017, we purchased 2,926,715 preferred shares of Cognical Holdings, Inc. (Cognical) for $5.0 million. Cognical operates as a business under an online website, www.zibby.com . Zibby is a leasing platform for online, brick and mortar and omnichannel retailers. Customers can apply in 30 seconds in-store or via the Zibby button on a retailers website and be approved for $300 to $3,500. Zibby increases retailer sales by providing a fast and easy lease payment option for nonprime customers seeking to acquire furniture, appliances, electronics and other consumer durables. As a result of this transaction, we own 8.9% of the equity of Cognical. Cognical has also awarded the Company warrants to purchase the common stock of Cognical in partial consideration of services provided by Cognical. These warrants are subject to a certain vesting schedule. We have accounted for this investment and its related warrants using the fair value method of accounting.
F-27
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
NOTE 15STOCKHOLDERS EQUITY
In connection with the formation of CURO Group in 2013, the stockholders entered into an Investor Rights Agreement. Under the Investor Rights Agreement, one of CURO Groups investors, Freidman Fleisher & Lowe Capital Partners II, L.P. (and its affiliated funds, the FFL Partners), may request, any time after the sixth anniversary of their initial investment in the Company (which occurred in September 2008), that the Company repurchase their shares on terms to be negotiated by the parties in good faith. If no agreement can be reached on the repurchase terms, the FFL Partners can request that the Company be solicited for sale of all of its capital.
As discussed in Note 11Long-Term Debt , we received a $130.1 million dividend from our subsidiary in February 2017 to fund the redemption of the 12.00% Senior Cash Pay Notes. We also paid a dividend of $28.0 million to our stockholders on May 15, 2017.
NOTE 16SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
Six Months Ended June 30, | ||||||||
(in thousands) |
2017 | 2016 | ||||||
Cash paid for: |
||||||||
Interest |
$ | 25,788 | $ | 31,335 | ||||
Income taxes |
14,594 | 19,935 | ||||||
Non-cash investing activities: |
||||||||
Property and equipment accrued in accounts payable |
$ | 40 | $ | 2,811 |
NOTE 17SEGMENT REPORTING
Segment information is prepared on the same basis that our chief operating decision maker reviews financial information for operational decision making purposes. We have three reportable operating segments: the United States, Canada and the United Kingdom.
The segment performance measure below is based on gross margin. In managements evaluation of performance, certain costs, such as corporate expenses, district expenses and interest expense, are not allocated by segment, and accordingly the following reporting segment results do not include such allocated costs. There are no intersegment revenues, and the amounts below were determined in accordance with the same accounting principles used in our consolidated financial statements.
The following table illustrates summarized financial information concerning our reportable segments.
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
(in thousands) |
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues by segment: |
||||||||||||||||
U.S. |
$ | 163,764 | $ | 138,027 | $ | 338,086 | $ | 288,427 | ||||||||
Canada |
43,595 | 47,814 | 85,161 | 91,221 | ||||||||||||
U.K. |
9,585 | 8,466 | 18,277 | 17,120 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Consolidated revenue |
$ | 216,944 | $ | 194,307 | $ | 441,524 | $ | 396,768 | ||||||||
|
|
|
|
|
|
|
|
F-28
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
(in thousands) |
2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross margin by segment: |
||||||||||||||||
U.S. |
$ | 63,119 | $ | 44,757 | $ | 140,252 | $ | 118,310 | ||||||||
Canada |
15,962 | 20,434 | 30,262 | 38,676 | ||||||||||||
U.K. |
2,921 | 3,660 | 6,393 | 6,038 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Consolidated gross margin |
$ | 82,002 | $ | 68,851 | $ | 176,907 | $ | 163,024 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Expenditures for long-lived assets by segment: |
||||||||||||||||
U.S. |
$ | 2,976 | $ | 888 | $ | 4,648 | $ | 1,906 | ||||||||
Canada |
61 | 1,793 | 1,352 | 2,919 | ||||||||||||
U.K. |
698 | 4 | 828 | 41 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Consolidated expenditures for long-lived assets |
$ | 3,735 | $ | 2,685 | $ | 6,828 | $ | 4,866 | ||||||||
|
|
|
|
|
|
|
|
The proportion of gross loans receivable by segment is reflected in the table below.
(in thousands) |
June 30,
2017 |
December 31,
2016 |
||||||
U.S. |
$ | 241,478 | $ | 206,215 | ||||
Canada |
91,206 | 66,988 | ||||||
U.K. |
17,678 | 12,993 | ||||||
|
|
|
|
|||||
Total gross loans receivable |
$ | 350,362 | $ | 286,196 | ||||
|
|
|
|
The following table illustrates our net long-lived assets, comprised of property and equipment by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located.
(in thousands) |
June 30,
2017 |
December 31,
2016 |
||||||
U.S. |
$ | 55,557 | $ | 58,733 | ||||
Canada |
33,069 | 34,310 | ||||||
U.K. |
3,239 | 2,853 | ||||||
|
|
|
|
|||||
Total |
$ | 91,865 | $ | 95,896 | ||||
|
|
|
|
Our chief operating decision maker does not review assets by segment for purposes of allocating resources or decision-making purposes; therefore, total assets by segment are not disclosed.
NOTE 18LITIGATION
Harrison, et al v. Principal Investments, Inc. et al
During the period relevant to this matter, the Company pursued in excess of 16,000 claims in the limited actions and jurisdiction court in Clark County, Nevada, seeking repayment of loans on which customers defaulted. The Company used outside counsel to file these debt collection lawsuits. On Scene Mediations, a process serving company, was employed to serve the summons and petitions in the majority of these cases. In an unrelated matter, the principal of On Scene Mediations was convicted of multiple accounts of perjury and filing false affidavits to obtain judgments on behalf of a Las Vegas collection agency. In September 2010, we were sued by four former customers in a proposed class action suit filed in District Court in Clark County, Nevada. The plaintiffs in this case claimed that they, and others in the proposed class, were not properly served notice of the debt collection lawsuits by the Company.
F-29
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
On June 7, 2017, the parties reached a settlement in this matter. The Company accrued approximately $2.0 million as a result of this settlement during the second quarter of 2017. At a hearing before the District Court in Clark County, Nevada, on July 24, 2017 the Court granted preliminary approval of the settlement. The final fairness hearing is scheduled for October 30, 2017.
Other Legal Matters
We are, from time to time, involved in litigation arising in the normal course of business. It is not possible to state the ultimate outcome of these matters, but in the opinion of management, such litigation will not have a material effect on our Interim Consolidated Financial Statements.
NOTE 19EARNINGS PER SHARE
The following presents the computation of basic earnings per share (in thousands, except per share amounts):
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Basic: |
||||||||||||||||
Net income |
$ | 16,342 | $ | 13,172 | $ | 32,981 | $ | 40,082 | ||||||||
Weighted average common shares |
1,053 | 1,053 | 1,053 | 1,053 | ||||||||||||
Basic earnings per share |
$ | 15.52 | $ | 12.51 | $ | 31.32 | $ | 38.06 |
The following computation reconciles the differences between the basic and dilutes earnings per share presentations (in thousands, except per share amounts):
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Diluted: |
||||||||||||||||
Net income |
$ | 16,342 | $ | 13,172 | $ | 32,981 | $ | 40,082 | ||||||||
Weighted average common shares (basic) |
1,053 | 1,053 | 1,053 | 1,053 | ||||||||||||
Dilutive effect of stock options |
30 | 22 | 30 | 21 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average common sharesdiluted |
1,083 | 1,075 | 1,083 | 1,074 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share |
$ | 15.09 | $ | 12.25 | $ | 30.46 | $ | 37.32 | ||||||||
|
|
|
|
|
|
|
|
Potential common shares that would have the effect of increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted earnings per share. For the three and six months ended June 30, 2016, there were 4,632 potential common shares not included in the calculation of diluted earnings per share because their effect was anti-dilutive.
NOTE 20CONDENSED CONSOLIDATING FINANCIAL INFORMATION
On February 15, 2017, CFTC issued $470.0 million aggregate principal amount 12.00% senior secured notes due March 1, 2022, the proceeds of which were used together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of our wholly-owned subsidiary, CURO Intermediate, (ii) redeem the outstanding 12.00% Senior Cash Pay Notes due 2017 of its parent, CURO, and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. The Senior Secured Notes were sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the Securities Act); or outside the United States to non-U.S. Persons in compliance with Regulation S of the Securities Act.
F-30
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
The following condensed consolidating financial information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(d) of Regulation S-X promulgated under the Securities Act, presents the condensed consolidating financial information separately for:
(i) | CFTC as the issuer of the 12.00% senior secured notes; |
(ii) | CURO Intermediate as the issuer of the 10.75% senior secured notes that were redeemed in February 2017; |
(iii) | The Companys subsidiary guarantors, which are comprised of our domestic subsidiaries, excluding CFTC and CURO Intermediate (the Subsidiary Guarantors), on a combined basis, which are 100% owned by CURO, and which are guarantors of the 12.00% senior secured notes issued in February 2017 and the 10.75% senior secured notes redeemed in February 2017; |
(iv) | The Companys other subsidiaries on a combined basis, which are not guarantors of the 12.00% senior secured notes or the 10.75% senior secured notes (the Subsidiary Non-Guarantors) |
(v) | Consolidating and eliminating entries representing adjustments to: |
a. | eliminate intercompany transactions between or among the Company, the Subsidiary Guarantors and the Subsidiary Non-Guarantors; and |
b. | eliminate the investments in the Companys subsidiaries; |
(vi) | The Company and its subsidiaries on a consolidated basis. |
F-31
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Condensed Consolidating Balance Sheets
June 30, 2017 | ||||||||||||||||||||||||||||||||||||||||
(in thousands) |
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non-Guarantors |
SPV
Subs |
Eliminations | Consolidated | CURO | Eliminations |
CURO
Consolidated |
||||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||||||||||
Cash |
$ | | $ | | $ | 67,576 | $ | 46,124 | $ | | $ | | $ | 113,700 | $ | 80 | $ | | $ | 113,780 | ||||||||||||||||||||
Restricted cash |
| | 3,418 | 1,675 | 7,336 | | 12,429 | | | 12,429 | ||||||||||||||||||||||||||||||
Loans receivable, net |
| | 61,040 | 91,546 | 127,338 | | 279,924 | | | 279,924 | ||||||||||||||||||||||||||||||
Deferred income taxes |
| 9,723 | 1,076 | 3,149 | | | 13,948 | (41 | ) | | 13,907 | |||||||||||||||||||||||||||||
Income taxes receivable |
| | | 3,939 | | | 3,939 | | | 3,939 | ||||||||||||||||||||||||||||||
Prepaid expenses and other |
| | 32,575 | 3,613 | | | 36,188 | 107 | | 36,295 | ||||||||||||||||||||||||||||||
Property and equipment, net |
| | 55,557 | 36,308 | | | 91,865 | | | 91,865 | ||||||||||||||||||||||||||||||
Goodwill |
| | 91,131 | 52,641 | | | 143,772 | | | 143,772 | ||||||||||||||||||||||||||||||
Other intangibles, net |
18 | | 4,902 | 26,450 | | | 31,370 | | | 31,370 | ||||||||||||||||||||||||||||||
Intercompany receivable |
358,816 | 44,344 | 456,132 | | 37,850 | (897,142 | ) | | | | | |||||||||||||||||||||||||||||
Investment in subsidiaries |
118,515 | 954,007 | | | | (1,072,522 | ) | | 44,854 | (44,854 | ) | | ||||||||||||||||||||||||||||
Other |
4,975 | | 646 | 3,036 | | | 8,657 | | | 8,657 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 482,324 | $ | 1,008,074 | $ | 774,053 | $ | 268,481 | $ | 172,524 | $ | (1,969,664 | ) | $ | 735,792 | $ | 45,000 | $ | (44,854 | ) | $ | 735,938 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Liabilities and Stockholders equity: |
||||||||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities |
$ | 352 | $ | | $ | 31,557 | $ | 9,415 | $ | 18 | $ | | $ | 41,342 | $ | (22 | ) | $ | | $ | 41,320 | |||||||||||||||||||
Deferred revenue |
| | 6,413 | 5,856 | | | 12,269 | | | 12,269 | ||||||||||||||||||||||||||||||
Income taxes payable |
(59,796 | ) | 57,307 | 7,641 | | | | 5,152 | (2,393 | ) | | 2,759 | ||||||||||||||||||||||||||||
Accrued interest |
20,993 | | | | 1,017 | | 22,010 | | | 22,010 | ||||||||||||||||||||||||||||||
Payable to CURO Holdings Corp. |
30,002 | | (21,278 | ) | | | | 8,724 | (8,724 | ) | | | ||||||||||||||||||||||||||||
CSO guarantee liability |
| | 15,582 | | | | 15,582 | | | 15,582 | ||||||||||||||||||||||||||||||
Deferred rent |
| | 9,986 | 1,991 | | | 11,977 | | | 11,977 | ||||||||||||||||||||||||||||||
Long-term debt (excluding current maturities) |
448,789 | | | | 102,984 | | 551,773 | | | 551,773 | ||||||||||||||||||||||||||||||
Subordinated shareholder debt |
| | | 2,373 | | | 2,373 | | | 2,373 | ||||||||||||||||||||||||||||||
Intercompany payable |
| 821,605 | | 75,537 | | (897,142 | ) | | | | | |||||||||||||||||||||||||||||
Other long-term liabilities |
| | 2,366 | 2,280 | | | 4,646 | | | 4,646 | ||||||||||||||||||||||||||||||
Deferred tax liabilities |
(2,870 | ) | 10,647 | 144 | 7,169 | | | 15,090 | | | 15,090 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total liabilities |
437,470 | 889,559 | 52,411 | 104,621 | 104,019 | (897,142 | ) | 690,938 | (11,139 | ) | | 679,799 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Stockholders equity |
44,854 | 118,515 | 721,642 | 163,860 | 68,505 | (1,072,522 | ) | 44,854 | 56,139 | (44,854 | ) | 56,139 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 482,324 | $ | 1,008,074 | $ | 774,053 | $ | 268,481 | $ | 172,524 | $ | (1,969,664 | ) | $ | 735,792 | $ | 45,000 | $ | (44,854 | ) | $ | 735,938 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-32
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Condensed Consolidating Statements of Income
Three Months Ended June 30, 2017 | ||||||||||||||||||||||||||||||||||||||||
(in thousands) |
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non-Guarantors |
SPV
Subs |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
||||||||||||||||||||||||||||||
Revenue |
$ | | $ | | $ | 102,189 | $ | 53,180 | $ | 61,575 | $ | | $ | 216,944 | $ | | $ | | $ | 216,944 | ||||||||||||||||||||
Provision for losses |
| | 36,079 | 13,489 | 15,878 | | 65,446 | | | 65,446 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net revenue |
| | 66,110 | 39,691 | 45,697 | | 151,498 | | | 151,498 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Cost of providing services: |
||||||||||||||||||||||||||||||||||||||||
Salaries and benefits |
| | 17,736 | 8,564 | | | 26,300 | | | 26,300 | ||||||||||||||||||||||||||||||
Occupancy |
| | 7,791 | 5,720 | | | 13,511 | | | 13,511 | ||||||||||||||||||||||||||||||
Office |
| | 3,721 | 1,215 | | | 4,936 | | | 4,936 | ||||||||||||||||||||||||||||||
Other store operating expenses |
| | 11,513 | 1,566 | 29 | | 13,108 | | | 13,108 | ||||||||||||||||||||||||||||||
Advertising |
| | 7,898 | 3,743 | | | 11,641 | | | 11,641 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total cost of providing services |
| | 48,659 | 20,808 | 29 | | 69,496 | | | 69,496 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Gross Margin |
| | 17,451 | 18,883 | 45,668 | | 82,002 | | | 82,002 | ||||||||||||||||||||||||||||||
Operating (income) expense: |
||||||||||||||||||||||||||||||||||||||||
Corporate and district |
2,447 | (78 | ) | 20,974 | 8,601 | 4,067 | | 36,011 | 74 | | 36,085 | |||||||||||||||||||||||||||||
Intercompany management fee |
| | (3,865 | ) | 3,865 | | | | | | | |||||||||||||||||||||||||||||
Interest expense |
15,174 | | | 61 | 3,249 | | 18,484 | | | 18,484 | ||||||||||||||||||||||||||||||
Loss on extinguishment of debt |
| | | | | | | | | | ||||||||||||||||||||||||||||||
Intercompany interest (income) expense |
| (1,042 | ) | 1,691 | 1,207 | (1,856 | ) | | | | | | ||||||||||||||||||||||||||||
Other (income) expense |
| | 510 | (38 | ) | | | 472 | | | 472 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total operating expense |
17,621 | (1,120 | ) | 19,310 | 13,696 | 5,460 | | 54,967 | 74 | | 55,041 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income (loss) before income taxes |
(17,621 | ) | 1,120 | (1,859 | ) | 5,187 | 40,208 | | 27,035 | (74 | ) | | 26,961 | |||||||||||||||||||||||||||
Provision for income tax expense (benefit) |
(6,166 | ) | 17,560 | (3,072 | ) | 2,389 | | | 10,711 | (92 | ) | | 10,619 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income (loss) |
(11,455 | ) | (16,440 | ) | 1,213 | 2,798 | 40,208 | | 16,324 | 18 | | 16,342 | ||||||||||||||||||||||||||||
Equity in net income (loss) of subsidiaries: |
||||||||||||||||||||||||||||||||||||||||
Intermediate |
(16,440 | ) | | | | | 16,440 | | 16,324 | (16,324 | ) | | ||||||||||||||||||||||||||||
Guarantor Subsidiaries |
1,213 | | | | | (1,213 | ) | | | | | |||||||||||||||||||||||||||||
Non-Guarantor Subsidiaries |
2,798 | | | | | (2,798 | ) | | | | | |||||||||||||||||||||||||||||
SPV Subs |
40,208 | | | | | (40,208 | ) | | | | | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income (loss) attributable to CFTC |
$ | 16,324 | $ | (16,440 | ) | $ | 1,213 | $ | 2,798 | $ | 40,208 | $ | (27,779 | ) | $ | 16,324 | $ | 16,342 | $ | (16,324 | ) | $ | 16,342 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-33
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Three Months Ended June 30, 2016 | ||||||||||||||||||||||||||||||||||||
(in thousands) |
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non-Guarantors |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
|||||||||||||||||||||||||||
Revenue |
$ | | $ | | $ | 138,027 | $ | 56,280 | $ | | $ | 194,307 | $ | | $ | | $ | 194,307 | ||||||||||||||||||
Provision for losses |
| | 47,230 | 10,799 | | 58,029 | | | 58,029 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net revenue |
| | 90,797 | 45,481 | | 136,278 | | | 136,278 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cost of providing services: |
||||||||||||||||||||||||||||||||||||
Salaries and benefits |
| | 17,020 | 9,088 | | 26,108 | | | 26,108 | |||||||||||||||||||||||||||
Occupancy |
| | 7,999 | 5,865 | | 13,864 | | | 13,864 | |||||||||||||||||||||||||||
Office |
| | 3,528 | 1,201 | | 4,729 | | | 4,729 | |||||||||||||||||||||||||||
Other store operating expenses |
| | 10,749 | 1,681 | | 12,430 | | | 12,430 | |||||||||||||||||||||||||||
Advertising |
| | 6,744 | 3,552 | | 10,296 | | | 10,296 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total cost of providing services |
| | 46,040 | 21,387 | | 67,427 | | | 67,427 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Gross Margin |
| | 44,757 | 24,094 | | 68,851 | | | 68,851 | |||||||||||||||||||||||||||
Operating (income) expense: |
||||||||||||||||||||||||||||||||||||
Corporate and district |
403 | 123 | 20,210 | 11,097 | | 31,833 | 223 | | 32,056 | |||||||||||||||||||||||||||
Intercompany management fee |
| | (3,136 | ) | 3,136 | | | | | | ||||||||||||||||||||||||||
Interest expense |
| 12,095 | | 13 | | 12,108 | 3,931 | | 16,039 | |||||||||||||||||||||||||||
Intercompany interest (income) expense |
| (1,235 | ) | (84 | ) | 1,319 | | | | | | |||||||||||||||||||||||||
Restructuring costs |
| | | 186 | | 186 | | | 186 | |||||||||||||||||||||||||||
Other (income) expense |
| | (306 | ) | (158 | ) | | (464 | ) | | | (464 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total operating expense |
403 | 10,983 | 16,684 | 15,593 | | 43,663 | 4,154 | | 47,817 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) before income taxes |
(403 | ) | (10,983 | ) | 28,073 | 8,501 | | 25,188 | (4,154 | ) | | 21,034 | ||||||||||||||||||||||||
Provision for income tax expense (benefit) |
104 | 3,636 | 2,548 | 3,247 | | 9,535 | (1,673 | ) | | 7,862 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) |
(507 | ) | (14,619 | ) | 25,525 | 5,254 | | 15,653 | (2,481 | ) | | 13,172 | ||||||||||||||||||||||||
Equity in net income (loss) of subsidiaries: |
||||||||||||||||||||||||||||||||||||
CFTC |
| | | | | | 15,653 | (15,653 | ) | | ||||||||||||||||||||||||||
Intermediate |
(14,619 | ) | | | | 14,619 | | | | | ||||||||||||||||||||||||||
Guarantor Subsidiaries |
25,525 | | | | (25,525 | ) | | | | | ||||||||||||||||||||||||||
Non-Guarantor Subsidiaries |
5,254 | | | | (5,254 | ) | | | | | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) attributable to CFTC |
$ | 15,653 | $ | (14,619 | ) | $ | 25,525 | $ | 5,254 | $ | (16,160 | ) | $ | 15,653 | $ | 13,172 | $ | (15,653 | ) | $ | 13,172 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-34
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Six Months Ended June 30, 2017 | ||||||||||||||||||||||||||||||||||||||||
(in thousands) |
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non-Guarantors |
SPV
Subs |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
||||||||||||||||||||||||||||||
Revenue |
$ | | $ | | $ | 214,312 | $ | 103,438 | $ | 123,774 | $ | | $ | 441,524 | $ | | | $ | 441,524 | |||||||||||||||||||||
Provision for losses |
| | 64,136 | 26,030 | 37,016 | | 127,182 | | | 127,182 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net revenue |
| | 150,176 | 77,408 | 86,758 | | 314,342 | | | 314,342 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Cost of providing services: |
||||||||||||||||||||||||||||||||||||||||
Salaries and benefits |
| | 35,589 | 17,144 | | | 52,733 | | | 52,733 | ||||||||||||||||||||||||||||||
Occupancy |
| | 15,936 | 11,670 | | | 27,606 | | | 27,606 | ||||||||||||||||||||||||||||||
Office |
| | 7,486 | 2,318 | | | 9,804 | | | 9,804 | ||||||||||||||||||||||||||||||
Other store operating expenses |
| | 25,015 | 2,884 | 64 | | 27,963 | | | 27,963 | ||||||||||||||||||||||||||||||
Advertising |
| | 12,592 | 6,737 | | | 19,329 | | | 19,329 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total cost of providing services |
| | 96,618 | 40,753 | 64 | | 137,435 | | | 137,435 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Gross Margin |
| | 53,558 | 36,655 | 86,694 | | 176,907 | | | 176,907 | ||||||||||||||||||||||||||||||
Operating (income) expense: |
||||||||||||||||||||||||||||||||||||||||
Corporate and district |
2,977 | (70 | ) | 43,379 | 16,716 | 4,181 | | 67,183 | 2,168 | | 69,351 | |||||||||||||||||||||||||||||
Intercompany management fee |
| | (6,809 | ) | 6,809 | | | | | | | |||||||||||||||||||||||||||||
Interest expense |
22,456 | 9,613 | 1 | 82 | 6,388 | | 38,540 | 3,310 | | 41,850 | ||||||||||||||||||||||||||||||
Loss on extinguishment of debt |
| 11,884 | | | | | 11,884 | 574 | | 12,458 | ||||||||||||||||||||||||||||||
Intercompany interest (income) expense |
| (2,190 | ) | (330 | ) | 2,520 | | | | | | | ||||||||||||||||||||||||||||
Other (income) expense |
| | 408 | (209 | ) | | | 199 | | | 199 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total operating expense |
25,433 | 19,237 | 36,649 | 25,918 | 10,569 | | 117,806 | 6,052 | | 123,858 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income (loss) before income taxes |
(25,433 | ) | (19,237 | ) | 16,909 | 10,737 | 76,125 | | 59,101 | (6,052 | ) | | 53,049 | |||||||||||||||||||||||||||
Provision for income tax expense (benefit) |
(10,126 | ) | 34,171 | (6,047 | ) | 4,433 | | | 22,431 | (2,363 | ) | | 20,068 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income (loss) |
(15,307 | ) | (53,408 | ) | 22,956 | 6,304 | 76,125 | | 36,670 | (3,689 | ) | | 32,981 | |||||||||||||||||||||||||||
Equity in net income (loss) of subsidiaries: |
||||||||||||||||||||||||||||||||||||||||
Intermediate |
(53,408 | ) | | | | | 53,408 | | 36,670 | (36,670 | ) | | ||||||||||||||||||||||||||||
Guarantor Subsidiaries |
22,956 | | | | | (22,956 | ) | | | | | |||||||||||||||||||||||||||||
Non-Guarantor Subsidiaries |
6,304 | | | | | (6,304 | ) | | | | | |||||||||||||||||||||||||||||
SPV Subs |
76,125 | | | | | (76,125 | ) | | | | | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income (loss) attributable to CFTC |
$ | 36,670 | $ | (53,408 | ) | $ | 22,956 | $ | 6,304 | $ | 76,125 | $ | (51,977 | ) | $ | 36,670 | $ | 32.981 | $ | (36,670 | ) | $ | 32.981 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-35
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Six Months Ended June 30, 2016 | ||||||||||||||||||||||||||||||||||||
(in thousands) |
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non-Guarantors |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
|||||||||||||||||||||||||||
Revenue |
$ | | $ | | $ | 288,427 | $ | 108,341 | $ | | $ | 396,768 | $ | | $ | | $ | 396,768 | ||||||||||||||||||
Provision for losses |
| | 78,034 | 22,244 | | 100,278 | | | 100,278 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net revenue |
| | 210,393 | 86,097 | | 296,490 | | | 296,490 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cost of providing services: |
||||||||||||||||||||||||||||||||||||
Salaries and benefits |
| | 35,201 | 17,885 | | 53,086 | | | 53,086 | |||||||||||||||||||||||||||
Occupancy |
| | 15,601 | 11,422 | | 27,023 | | | 27,023 | |||||||||||||||||||||||||||
Office |
| | 7,051 | 2,427 | | 9,478 | | | 9,478 | |||||||||||||||||||||||||||
Other store operating expenses |
| | 23,894 | 2,891 | | 26,785 | | | 26,785 | |||||||||||||||||||||||||||
Advertising |
| | 10,336 | 6,758 | | 17,094 | | | 17,094 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total cost of providing services |
| | 92,083 | 41,383 | | 133,466 | | | 133,466 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Gross Margin |
| | 118,310 | 44,714 | | 163,024 | | | 163,024 | |||||||||||||||||||||||||||
Operating (income) expense: |
||||||||||||||||||||||||||||||||||||
Corporate and district |
877 | 147 | 42,638 | 20,825 | | 64,487 | 269 | | 64,756 | |||||||||||||||||||||||||||
Intercompany management fee |
| | (5,978 | ) | 5,978 | | | | | | ||||||||||||||||||||||||||
Interest expense |
| 24,276 | | 53 | | 24,329 | 7,863 | | 32,192 | |||||||||||||||||||||||||||
Intercompany interest (income) expense |
| (2,464 | ) | (158 | ) | 2,622 | | | | | | |||||||||||||||||||||||||
Restructuring costs |
| | 1,102 | 379 | | 1,481 | | | 1,481 | |||||||||||||||||||||||||||
Other (income) expense |
| | (513 | ) | 68 | | (445 | ) | | | (445 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total operating expense |
877 | 21,959 | 37,091 | 29,925 | | 89,852 | 8,132 | | 97,984 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) before income taxes |
(877 | ) | (21,959 | ) | 81,219 | 14,789 | | 73,172 | (8,132 | ) | | 65,040 | ||||||||||||||||||||||||
Provision for income tax expense (benefit) |
(258 | ) | 13,533 | 8,950 | 5,972 | | 28,197 | (3,239 | ) | | 24,958 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) |
(619 | ) | (35,492 | ) | 72,269 | 8,817 | | 44,975 | (4,893 | ) | | 40,082 | ||||||||||||||||||||||||
Equity in net income (loss) of subsidiaries: |
||||||||||||||||||||||||||||||||||||
CFTC |
| | | | | | 44,975 | (44,975 | ) | | ||||||||||||||||||||||||||
Intermediate |
(35,492 | ) | | | | 35,492 | | | | | ||||||||||||||||||||||||||
Guarantor Subsidiaries |
72,269 | | | | (72,269 | ) | | | | | ||||||||||||||||||||||||||
Non-Guarantor Subsidiaries |
8,817 | | | | (8,817 | ) | | | | | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) attributable to CFTC |
$ | 44,975 | $ | (35,492 | ) | $ | 72,269 | $ | 8,817 | $ | (45,594 | ) | $ | 44,975 | $ | 40,082 | $ | (44,975 | ) | $ | 40,082 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-36
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2017 | ||||||||||||||||||||||||||||||||||||||||
(in thousands) |
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non-Guarantors |
SPV
Subs |
Eliminations | Consolidated | CURO | Eliminations |
CURO
Consolidated |
||||||||||||||||||||||||||||||
Cash flows from operating activities |
||||||||||||||||||||||||||||||||||||||||
Net cash provided (used) |
$ | (284,269 | ) | $ | 424,080 | $ | (55,496 | ) | $ | (17,605 | ) | $ | (11,422 | ) | $ | (431 | ) | $ | 54,857 | $ | (5,083 | ) | $ | | $ | 49,774 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||||||||||||||||||
Purchase of property, equipment and software |
| | (4,648 | ) | (2,180 | ) | | | (6,828 | ) | | | (6,828 | ) | ||||||||||||||||||||||||||
Cash paid for Zibby investment |
(4,975 | ) | | | | | | (4,975 | ) | | | (4,975 | ) | |||||||||||||||||||||||||||
Change in restricted cash |
| | 8 | 121 | (4,566 | ) | | (4,437 | ) | | | (4,437 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net cash used |
(4,975 | ) | | (4,640 | ) | (2,059 | ) | (4,566 | ) | | (16,240 | ) | | | (16,240 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||||||||||||||||||||||
Proceeds from Non-Recourse U.S. SPV facility and ABL facility |
| | | | 41,130 | | 41,130 | | | 41,130 | ||||||||||||||||||||||||||||||
Payments on Non-Recourse U.S. SPV facility and ABL facility |
| | | | (25,142 | ) | | (25,142 | ) | | | (25,142 | ) | |||||||||||||||||||||||||||
Proceeds from issuance of 12.00% Senior Secured Notes |
461,329 | | | | | | 461,329 | | | 461,329 | ||||||||||||||||||||||||||||||
Payments on 10.75% Senior Secured Notes |
| (426,034 | ) | | | | | (426,034 | ) | | | (426,034 | ) | |||||||||||||||||||||||||||
Payments on 12.00% Senior Cash Pay Notes |
| | | | | | | (125,000 | ) | | (125,000 | ) | ||||||||||||||||||||||||||||
Dividends (paid) received to/from CURO Group Holdings Corp. |
(158,083 | ) | | | | | | (158,083 | ) | 158,083 | | | ||||||||||||||||||||||||||||
Debt issuance costs paid |
(14,002 | ) | | | | | | (14,002 | ) | | | (14,002 | ) | |||||||||||||||||||||||||||
Dividend paid to stockholders |
| | | | | | | (28,000 | ) | | (28,000 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net cash provided (used) |
289,244 | (426,034 | ) | | | 15,988 | | (120,802 | ) | 5,083 | | (115,719 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Effect of exchange rate changes on cash |
| | | 2,009 | | 431 | 2,440 | | | 2,440 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net increase (decrease) in cash |
| (1,954 | ) | (60,136 | ) | (17,655 | ) | | | (79,745 | ) | | | (79,745 | ) | |||||||||||||||||||||||||
Cash at beginning of period |
| 1,954 | 127,712 | 63,779 | | | 193,445 | 80 | | 193,525 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Cash at end of period |
$ | | $ | | $ | 67,576 | $ | 46,124 | $ | | $ | | $ | 113,700 | $ | 80 | $ | | $ | 113,780 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-37
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
(in thousands) |
Six Months Ended June 30, 2016 | |||||||||||||||||||||||||||||||||||
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non-Guarantors |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
||||||||||||||||||||||||||||
Cash flows from operating activities |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net cash provided (used) |
$ | 18 | $ | 8,509 | $ | 42,036 | $ | 23,889 | $ | (502 | ) | $ | 73,950 | $ | (1,402 | ) | $ | | $ | 72,548 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||||||||||||||
Purchase of property, equipment and software |
(18 | ) | | (1,888 | ) | (2,960 | ) | | (4,866 | ) | | | (4,866 | ) | ||||||||||||||||||||||
Change in restricted cash |
| (459 | ) | 4,500 | 1,970 | | 6,011 | | | 6,011 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net cash provided (used) |
(18 | ) | (459 | ) | 2,612 | (990 | ) | | 1,145 | | | 1,145 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||||||||||||||||||
Proceeds from credit facility |
| 30,000 | | | | 30,000 | | | 30,000 | |||||||||||||||||||||||||||
Payments on credit facility |
| (38,050 | ) | | | | (38,050 | ) | | | (38,050 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net cash provided (used) |
| (8,050 | ) | | | | (8,050 | ) | | | (8,050 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Effect of exchange rate changes on cash |
| | | 1,089 | 502 | 1,591 | | | 1,591 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net increase (decrease) in cash |
| | 44,648 | 23,988 | | 68,636 | (1,402 | ) | | 67,234 | ||||||||||||||||||||||||||
Cash at beginning of period |
| 2 | 57,149 | 41,928 | | 99,079 | 1,482 | | 100,561 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cash at end of period |
$ | | $ | 2 | $ | 101,797 | $ | 65,916 | $ | | $ | 167,715 | $ | 80 | $ | | $ | 167,795 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 21SUBSEQUENT EVENTS
In the third quarter of 2017, the Boards of Directors of the Company and its U.K. subsidiaries approved a plan to close our remaining 13 branch locations in the United Kingdom. The affected branches closed in the third quarter of 2017.
The Company estimates that it will incur pre-tax cash charges in the range of $4.5 million to $6.0 million in the third quarter of 2017 for the remaining net obligations for store leases, employee redundancy and severance payments. In addition, we expect to incur non-cash pre-tax charges of $2.5 million for the write-off of fixed assets and leasehold improvements associated with these locations.
On August 2, 2017, CFTC declared a dividend of $8.5 million to the Company which was paid to our stockholders on August 11, 2017 and on October 16, 2017, CFTC declared a dividend of $5.5 million to the Company which was paid to our stockholders on October 16, 2017.
On September 1, 2017, we closed a $25 million Senior Secured Revolving Loan Facility with BayCoast Bank (the Senior Revolver). The negative covenants of the Senior Revolver generally conform to the related provisions in the Indenture for our 12.00% Senior Secured Notes due 2022. We believe this facility complements our other financing sources, while providing seasonal short-term liquidity. Under the Senior Revolver, there is $25 million maximum availability, including up to $5 million of standby letters of credit, for a one-year term, renewable for successive terms following annual review. The Senior Revolver accrues interest at the one-month LIBOR (which may not be negative) plus 5.00% per annum and is repayable on demand. The terms of the Senior Revolver require that the outstanding balance be reduced to $0 for at least 30 consecutive days in each calendar year. The Senior Revolver is guaranteed by all subsidiaries of CURO that guarantee our 12% Senior Secured Notes due 2022 and is secured by a lien on substantially all assets of CURO and the guarantor subsidiaries that is senior to the lien securing our 12% Senior Secured Notes due 2022.
Legal Proceedings: Harrison, et al v. Principal Investments, Inc. et al
During the period relevant to this matter, the Company pursued in excess of 16,000 claims in the limited actions and jurisdiction court in Clark County, Nevada, seeking repayment of loans on which customers had defaulted. The Company utilized
F-38
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSUNAUDITED (continued)
outside counsel to file these debt collection lawsuits. On Scene Mediations, a process serving company, was employed to serve the summons and petitions in the majority of these cases. In an unrelated matter, the principal of On Scene Mediations was convicted of multiple accounts of perjury and filing false affidavits to obtain judgments on behalf of a Las Vegas collection agency. In September 2010, we were sued by four former customers in a proposed class action suit filed in the District Court in Clark County, Nevada. The plaintiffs in this case claimed that they, and others in the proposed class, were not properly served notice of the debt collection lawsuits by the Company.
On June 7, 2017, the parties reached a settlement in this matter. The Company accrued approximately $2.0 million as a result of this settlement during the second quarter of 2017. At a hearing before the District Court in Clark County, Nevada, on July 24, 2017 the Court granted preliminary approval of the settlement. The final fairness hearing is scheduled for October 30, 2017.
City of Austin
We were cited on July 5, 2016 by the City of Austin, Texas for alleged violations of the Austin, Texas ordinance addressing products offered by CSOs. The Texas ordinances regulate aspects of products offered under our CAB programs, including loan sizes and repayment terms. We believe that: (1) the Austin ordinance (like its counterparts elsewhere in the state) conflicts with Texas state law and (2) our product in any event complies with the ordinance, when it is properly construed. An Austin trial court agreed with our position that the ordinance conflicts with Texas law and, accordingly, did not address our second argument. In August 2017, an Austin appellate court reversed a trial courts decision and remanded the case to trial court for further proceedings. We appealed the appellate decision in October 2017, and the appeal is currently pending. We will not have a final determination of the lawfulness of our CAB program under the Austin ordinance (and similar ordinances in other Texas cities) for some time. A final adverse decision could potentially result in material monetary liability in Austin and elsewhere and would force us to restructure the loans we arrange in Texas.
These events were evaluated through the date the financial statements were available to be issued, October 23, 2017.
F-39
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Board of Directors and Shareholders
CURO Group Holdings Corp.
We have audited the accompanying consolidated balance sheets of CURO Group Holdings Corp. and subsidiaries (the Company) as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, changes in stockholders equity, and cash flows for each of the two years in the period ended December 31, 2016. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CURO Group Holdings Corp. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, the Company adopted new accounting guidance in 2016 and 2015, related to the presentation of deferred financing costs.
/s/ GRANT THORNTON LLP
Kansas City, Missouri
July 12, 2017
F-40
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
See accompanying Notes to Consolidated Financial Statements.
F-41
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
Year Ended
December 31, |
||||||||
2016 | 2015 | |||||||
REVENUE |
||||||||
Revenues |
$ | 828,596 | $ | 813,131 | ||||
COST OF PROVIDING SERVICES |
||||||||
Provision for losses |
258,289 | 281,210 | ||||||
Salaries and benefits |
104,541 | 107,059 | ||||||
Occupancy |
54,509 | 53,288 | ||||||
Office |
20,463 | 19,929 | ||||||
Other store operating expenses |
53,617 | 47,380 | ||||||
Advertising |
43,921 | 65,664 | ||||||
|
|
|
|
|||||
Total cost of providing services |
535,340 | 574,530 | ||||||
|
|
|
|
|||||
GROSS MARGIN |
293,256 | 238,601 | ||||||
OTHER (INCOME) EXPENSE |
||||||||
Corporate expenses |
114,269 | 117,109 | ||||||
District expenses |
10,850 | 11,937 | ||||||
Interest expense |
64,334 | 65,020 | ||||||
Gain on extinguishment of debt |
(6,991 | ) | | |||||
Goodwill and intangible asset impairment charges |
| 2,882 | ||||||
Restructuring costs |
3,618 | 4,291 | ||||||
Fair value adjustment to contingent consideration |
| | ||||||
Other, net |
(845 | ) | 1,488 | |||||
|
|
|
|
|||||
Total other expense |
185,235 | 202,727 | ||||||
|
|
|
|
|||||
NET INCOME BEFORE INCOME TAXES |
108,021 | 35,874 | ||||||
Provision for income taxes |
42,577 | 18,105 | ||||||
|
|
|
|
|||||
NET INCOME |
$ | 65,444 | $ | 17,769 | ||||
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
F-42
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
Year Ended
December 31, |
||||||||
2016 | 2015 | |||||||
NET INCOME |
$ | 65,444 | $ | 17,769 | ||||
Other comprehensive loss: |
||||||||
Cash flow hedges |
(333 | ) | | |||||
Foreign currency translation adjustment |
(6,022 | ) | (30,512 | ) | ||||
|
|
|
|
|||||
Other comprehensive loss |
(6,355 | ) | (30,512 | ) | ||||
|
|
|
|
|||||
COMPREHENSIVE INCOME (LOSS) |
$ | 59,089 | $ | (12,743 | ) | |||
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
F-43
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(in thousands, except share data)
Stockholders Equity | ||||||||||||||||||||
Common
Stock |
Dividends in
excess of paid-in capital |
Retained
earnings |
AOCI(1) | Total | ||||||||||||||||
Balance, December 31, 2014 |
$ | 1 | $ | (38,044 | ) | $ | 53,622 | $ | (23,118 | ) | $ | (7,539 | ) | |||||||
Net income |
| | 17,769 | | 17,769 | |||||||||||||||
Foreign currency translation adjustment |
| | | (30,512 | ) | (30,512 | ) | |||||||||||||
Repurchase of equity award |
| (371 | ) | | | (371 | ) | |||||||||||||
Share-based compensation expense |
| 1,271 | | | 1,271 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2015 |
1 | (37,144 | ) | 71,391 | (53,630 | ) | (19,382 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income |
| | 65,444 | | 65,444 | |||||||||||||||
Foreign currency translation adjustment |
| | | (6,022 | ) | (6,022 | ) | |||||||||||||
Cash flow hedge |
| | | (333 | ) | (333 | ) | |||||||||||||
Share-based compensation expense |
| 1,148 | | | 1,148 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2016 |
$ | 1 | $ | (35,996 | ) | $ | 136,835 | $ | (59,985 | ) | $ | 40,855 | ||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Accumulated other comprehensive loss. |
See accompanying Notes to Consolidated Financial Statements.
F-44
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended
December 31, |
||||||||
2016 | 2015 | |||||||
Cash flows from operating activities |
||||||||
Net income |
$ | 65,444 | $ | 17,769 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
18,905 | 19,112 | ||||||
Provision for loan losses |
258,289 | 281,210 | ||||||
Goodwill and intangible asset impairment charges |
| 2,882 | ||||||
Restructuring costs |
523 | 2,249 | ||||||
Fair value adjustment to contingent consideration |
| | ||||||
Amortization of deferred financing costs |
3,289 | 3,221 | ||||||
Amortization of bond premium |
(1,541 | ) | (1,404 | ) | ||||
Benefit for deferred income taxes |
(680 | ) | (2,190 | ) | ||||
Loss on disposal of property and equipment |
217 | 628 | ||||||
Gain on extinguishment of debt |
(6,991 | ) | | |||||
Increase in cash surrender value of life insurance |
(918 | ) | | |||||
Share-based compensation expense |
1,148 | 1,271 | ||||||
Changes in operating assets and liabilities, net of effects from business acquisition: |
||||||||
Loans receivable |
(287,827 | ) | (301,581 | ) | ||||
Prepaid expenses and other assets |
(5,733 | ) | (3,152 | ) | ||||
Accounts payable and accrued liabilities |
2,010 | (2,168 | ) | |||||
Deferred revenue |
(2,080 | ) | 4,644 | |||||
Income taxes payable |
6,852 | (4,278 | ) | |||||
Income taxes receivable |
(7,154 | ) | (1,713 | ) | ||||
Deferred rent |
290 | 554 | ||||||
Other liabilities |
3,669 | 60 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
47,712 | 17,114 | ||||||
|
|
|
|
|||||
Cash flows from investing activities |
||||||||
Purchase of property, equipment and software |
(16,026 | ) | (19,832 | ) | ||||
Changes in restricted cash |
3,104 | (6,423 | ) | |||||
Cash paid for business acquisition, net of cash acquired |
| | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
(12,922 | ) | (26,255 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities |
||||||||
Proceeds from credit facilities |
30,000 | 57,050 | ||||||
Payments on credit facilities |
(38,050 | ) | (69,000 | ) | ||||
Deferred financing costs incurred |
(5,346 | ) | | |||||
Proceeds from Non-Recourse U.S. SPV facility and ABL facility |
91,717 | | ||||||
Purchase of May 2011 senior secured notes |
(18,939 | ) | | |||||
Payment for cash settlement of equity award |
| (371 | ) | |||||
Payments on contingent consideration |
| | ||||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
59,382 | (12,321 | ) | |||||
|
|
|
|
|||||
Effect of exchange rate changes on cash |
(1,208 | ) | (8,064 | ) | ||||
|
|
|
|
|||||
Net increase (decrease) in cash |
92,964 | (29,526 | ) | |||||
Cash at beginning of period |
100,561 | 130,087 | ||||||
|
|
|
|
|||||
Cash at end of period |
$ | 193,525 | $ | 100,561 | ||||
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
F-45
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
On May 11, 2016, we changed the name of Speedy Group Holdings Corp. to CURO Group Holdings Corp. (CURO); the name of Speedy Cash Holdings Corp. to CURO Financial Technologies Corp. (CFTC); and the name of Speedy Cash Intermediate Holdings Corp. to CURO Intermediate Holdings Corp (CURO Intermediate).
The terms we, our, us, and the Company refer to CURO and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated.
We have prepared the accompanying audited Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (US GAAP).
The Company evaluated and disclosed subsequent events through September 27, 2017, which represents the date as of which the financial statements were available to be issued.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of CURO and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the periods reported. Some of the significant estimates that we have made in the accompanying consolidated financial statements include allowances for loan losses, certain assumptions related to goodwill and intangibles, contingent consideration, accruals related to self-insurance, Credit Services Organization (CSO) guarantee liability and estimated tax liabilities. Actual results may differ from those estimates.
Cash
We currently maintain cash balances in the United States, Canada and the United Kingdom. At December 31, 2016 we have $129.7 million, $53.1 million and $10.7 million in our cash accounts in the United States, Canada and the United Kingdom, respectively. Of the $129.7 million in the United States, approximately $128.4 million is not insured by the Federal Deposit Insurance Corporation.
Consumer Loans Receivable
Consumer loans receivable are net of the allowance for loan losses and are comprised of single-pay and Unsecured Installment and Secured Installment Loans. Our Single-Pay Loans are primarily comprised of payday loans and auto title loans. A payday loan transaction consists of providing a customer cash in exchange for the customers personal check or Automated Clearing House (ACH) authorization (in the aggregate amount of that cash plus a service fee), with an agreement to defer the presentment or deposit of that check or scheduled ACH withdrawal until the customers next payday, which is typically either two weeks or a month from the loans
F-46
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
origination date. An auto title loan allows a customer to obtain a loan using the customers car as collateral for the loan, with a typical loan term of 30 days. Because of the short-term nature of these receivables, we classify all single-pay payday and single-pay auto title loans as current receivables.
Unsecured Installment, Secured Installment and Open-End Loans require periodic payments of principal and interest. Installment Loans are fully amortized loans with a fixed payment amount due each period during the term of the loan. Open-End Loans function much like a revolving line-of-credit, whereby the periodic payment is a set percentage of the customers outstanding loan balance, and there is no defined loan term. The loan terms for Installment Loans can range from 3 to 42 months, depending on state regulations. Installment Loans with a maturity of twelve months or less are classified as current receivables. For Installment Loans with a maturity of greater than twelve months, payments due within twelve months are classified as current receivables, and the payments that are due past twelve months are classified as noncurrent receivables. Open-End Loans are classified as noncurrent receivables. Installment and Open-End Loans are offered as both Secured auto title loans and as Unsecured Loan products. The product offerings differ by jurisdiction and are governed by the laws in each separate jurisdiction.
Provision for Loan Losses and Allowance for Loan Losses
We maintain an allowance for loan losses at a level estimated to be adequate to absorb credit losses associated with our consumer loans receivable. The allowance is shown as a reduction of the consumer loans receivable balance on the accompanying Consolidated Balance Sheets. The allowance is established by loan type and is based upon an evaluation of our historical collection performance and loan losses for each type of loan product.
The allowance for loan losses is primarily based upon models that backtest subsequent collections history for each type of loan product. We do not specifically reserve for any individual loan but rather segregate loans into separate pools based upon loan portfolios containing similar risk characteristics. Additional quantitative factors, such as current default trends and changes to the portfolio mix are also considered in evaluating the accuracy of the models. Qualitative factors such as the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions impact managements judgment on the overall adequacy of the allowance for loan losses.
Management believes that the allowance for loan losses is adequate. Potential losses associated with returned checks or ACHs for consumer loans receivable are immediately charged to operations in the period such checks are returned or loan nonpayment occurs, since ultimate collection of these items is uncertain. Delinquent loans are removed from the balance sheet and are charged to the provision for losses. Recoveries are credited to the provision for losses in the period in which the recovery is received.
Credit Services Organization
Through our CSO programs, we act as a credit services organization/credit access business on behalf of customers in accordance with applicable state laws. We currently offer loans through CSO programs in stores and online in the state of Texas and online in the state of Ohio. In Texas we offer Unsecured Installment Loans and Secured Installment Loans with a maximum term of 180 days. In Ohio we offer an Unsecured Installment Loan product with a maximum term of 18 months. As a CSO we earn revenue by charging the customer a fee (the CSO fee) for arranging an unrelated third-party to make a loan to that customer. When a customer executes an agreement with us under our CSO programs, we agree, for a CSO fee payable to us by the customer, to provide certain services to the customer, one of which is to guarantee the customers obligation to repay the
F-47
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
loan the customer receives from the third-party lender if the customer fails to do so. CSO fees are calculated based on the amount of the customers loan. For CSO loans, each lender is responsible for providing the criteria by which the customers application is underwritten and, if approved, determining the amount of the customer loan. We in turn are responsible for assessing whether or not we will guarantee the loan. This guarantee represents an obligation to purchase specific loans, if they go in to default.
As of December 31, 2016, the maximum amount payable under all such guarantees was $59.6 million, compared to $52.0 million at December 31, 2015. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover some or the entire amount from the customers. We hold no collateral in respect of the guarantees. Because of the economic exposure for potential losses related to the guarantee of these loans, the initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the creditworthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. The guarantee liability was $17.1 million and $17.8 million at December 31, 2016 and December 31, 2015, respectively. Changes in the fair value of the guarantee liability are recognized through the provision for losses.
CSO fees are calculated based on the amount of the customers loan. We comply with the applicable jurisdictions Credit Services Organization Act or a similar statue. These laws generally define the services that we can provide to consumers and require us to provide a contract to the customer outlining our services and the cost of those services to the customer. For services we provide under our CSO programs we receive cash from customers on their scheduled loan repayment due dates. The CSO fee is earned ratably over the term of the loan as the customers make payments. If a loan is paid off early, no additional CSO fees are due or collected. The maximum CSO loan term is six months and 18 months in Texas and Ohio, respectively. During the year ended December 31, 2016 and December 31, 2015, approximately 53.2% and 57.6%, respectively, of Unsecured Installment Loans, and 62.5% and 63.2%, respectively, of Secured Installment Loans originated under CSO programs were paid off prior to the original maturity date.
Since CSO loans are made by a third-party lender, we do not include them in our Consolidated Balance Sheets as loans receivable. CSO fees receivable are included in Prepaid expense and other in our Consolidated Balance Sheets. We receive cash from customers for these fees on their scheduled loan repayment due dates.
Variable Interest Entity
As part of our funding strategy and as part of our efforts to support our liquidity from sources other than our traditional capital market sources, we established a securitization program through a U.S. SPV Facility. We transferred certain consumer loan receivables to a wholly-owned, bankruptcy-remote special purpose subsidiary (VIE), that issues term notes backed by the underlying consumer loan receivables and are serviced by another wholly-owned subsidiary.
We are required to evaluate this VIE for consolidation. We have the ability to direct the activities of the VIE that most significantly impact the economic performance of the entities as the servicer of the securitized loan receivables. Additionally, we have the right to receive residual payments, which expose us to potentially significant losses and returns. Accordingly, we determined that we are the primary beneficiary of the VIE and are required to consolidate them. See Note 10Long-Term Debt for further discussion.
F-48
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Cash Flow Hedge
As of December 31, 2016 we have an outstanding cash flow hedge in which the hedging instrument is a forward extra to sell GBP 4,800,000 with monthly expiration dates through May 2017. We have performed an assessment that determined that all critical terms of the hedging instrument and the hedged transaction match and as such have qualitatively concluded that changes in the hedges intrinsic value will completely offset the change in the expected cash flows based on changes in the spot rate. In making that determination, the guidance in ASC 815-20-25-84 was used. Future assessment will be performed utilizing the guidance in ASC 815-20-35-9 through 35-13, Relative Ease of Assessing Effectiveness. Additionally, in accordance with ASC 815-20-25-82, since the effectiveness of this hedge is assessed based on changes in the hedges intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness.
We recorded the hedges fair value on the balance sheet in current liabilities. Changes in the hedges intrinsic value, to the extent that they are effective as a hedge, are recorded in other comprehensive income. As of December 31, 2016 we have recorded $0.3 million in other comprehensive income associated with this hedge.
Property and Equipment
Property and equipment is carried at cost less accumulated depreciation and amortization, except for property and equipment accounted for as part of a business combination, which is carried at fair value as of the acquisition date less accumulated depreciation and amortization. Expenditures for major additions and improvements are capitalized. Maintenance repairs and renewals, which neither materially add to the value, nor appreciably prolong its life, are charged to expense as incurred. Gains and losses on dispositions of property and equipment are included in operations.
The estimated useful lives for furniture, fixtures and equipment are seven to ten years. The estimated useful lives for leasehold improvements are the shorter of the estimated useful life of the asset, or the term of the lease, and vary from one year to fifteen years.
Goodwill and Other Intangible Assets
Our impairment testing for goodwill and indefinite-lived intangible assets is performed annually during the fourth quarter. However, we test for impairment between our annual tests if an event occurs or if circumstances change that indicate that the asset would be impaired, or, in the case of goodwill, that the fair value of a reporting unit is below its carrying value. These events or circumstances could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit, or future economic factors.
Goodwill
Goodwill is initially valued based on the excess of the purchase price of a business combination over the fair value of the acquired net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Intangible assets other than goodwill are initially valued at fair value. When appropriate, we utilize independent valuation experts to advise and assist us in determining the fair value of the identified intangible assets acquired in connection with a business acquisition and in determining appropriate amortization methods and periods for those intangible assets. Any contingent consideration included as part of the purchase is recognized at its fair value on the acquisition date.
Our annual impairment review for goodwill consists of performing a qualitative assessment to determine whether it is more likely than not that a reporting units fair value is less than its carrying amount as a basis for
F-49
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
determining whether or not further testing is required. We may elect to bypass the qualitative assessment and proceed directly to the two-step process, for any reporting unit, in any period. We can resume the qualitative assessment for any reporting unit in any subsequent period. If we determine, on the basis of qualitative factors, that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, we will then apply a two-step process of determining the fair value of the reporting unit and comparing it to the carrying value of the net assets allocated to the reporting unit. When performing the two-step process, if the fair value of the reporting unit exceeds it carrying value, no further analysis or write-down of goodwill is required. In the event the estimated fair value of a reporting unit is less than the carrying value, additional analysis is required. The additional analysis compares the carrying amount of the reporting units goodwill with the implied fair value of the goodwill. The use of external independent valuation experts may be required to assist management in determining the fair value of the reporting unit. The implied fair value of the goodwill is the excess of the fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of that unit as if the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its implied fair value, an impairment loss equal to such excess is recognized, which could significantly and adversely impact reported results of operations and shareholders equity. During the fourth quarter of 2016, we performed the first step of the two-step process and determined that the implied fair value of our reporting units exceed their carrying values, and therefore, the second step was not performed and no further analysis or write-down of goodwill is required.
During the third quarter of 2015, due to the declines in our overall financial performance in the United Kingdom, we determined that a triggering event had occurred requiring an impairment evaluation of our goodwill and other intangible assets in the United Kingdom. As a result, during the third quarter of 2015, we recorded non-cash impairment charges of $2.9 million which were comprised of a $1.8 million charge related to the Wage Day trade name, a $0.2 million charge related to the customer relationships acquired as part of the Wage Day acquisition, and a $0.9 million non-cash goodwill impairment charge in our U.K. reporting segment.
For the U.K. reporting unit, the estimated fair value as determined by the Discounted Cash Flow (DCF) model was lower than the associated carrying value. As a result, management performed the second step of the impairment analysis in order to determine the implied fair value of the U.K.s goodwill. The results of the second-step analysis indicated that the implied fair value of goodwill was £17.7 million. Therefore, in 2015, we recorded a non-cash goodwill impairment charge of £0.6 million ($0.9 million). The key assumptions used to determine the fair value of the U.K. reporting unit included the following: (a) the discount rate was 11%; (b) terminal period growth rate of 2.0%; and (c) effective combined tax rate of 20%.
During the 2015 annual review of goodwill, we performed the qualitative assessment for our United States and Canada reporting units. Management concluded that it was not more likely than not that the estimated fair values of these two reporting units were less than their carrying values. As such, no further analysis was required for these reporting units. As part of this annual impairment test in the fourth quarter, we reviewed our analysis done in the third quarter for the United Kingdom and updated projections as appropriate. Management concluded as a result of this analysis that it was not more likely than not that the estimated fair values of the reporting units were less than their carrying values.
The impairment of the goodwill on our U.K. reporting unit resulted primarily from changes to the regulatory environment in the United Kingdom that resulted in managements downward revision of its cash flow projections for the U.K. reporting unit. The primary driver of decreased volumes in the United Kingdom was the direct result of regulatory changes, primarily the new Financial Conduct Authority (FCA) rules that took effect on July 1, 2014, which reduced loan refinancing transactions from three to two and reduced the number of continuous payment authority attempts from three to two. Additionally, the FCA implemented a rate cap on high-cost short-term credit products that took effect on January 2, 2015. This price cap includes three components: 1)
F-50
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
an initial cap of 0.8% of the outstanding principal per day; 2) a default fee fixed rate of £15; and 3) a total cost of credit cap of 100% of the total amount borrowed applying to all interest, fees and charges. With the imposition of the new rate cap, we ceased offering any new Installment Loan products in the United Kingdom in favor of a new rate capped Single-Pay Loan product. Additionally, the increase in compliance requirements has driven up the administrative costs necessary to operate in the United Kingdom. We modeled the impact of all of these regulatory changes in the projections used in our second-step analysis.
Other Intangible Assets
Our identifiable intangible assets, which resulted from business combinations, consist of trade names, customer relationships, computer software, provincial licenses, franchise agreements and positive leasehold interests.
The Wage Day and Cash Money trade names were determined to be intangible assets with indefinite lives. Intangible assets with indefinite lives are not amortized and are tested annually for impairment and are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset might not be recoverable. Impairment of identifiable intangible assets with indefinite lives occurs when the fair value of the asset is less than its carrying amount. If impaired, the assets carrying amount is reduced to its fair value. In the fourth quarter of 2016, we tested these intangible assets with indefinite lives for impairment and concluded that no impairment exists as the fair value of these assets is greater than its carrying amounts.
In our interim analysis during the third quarter of 2015 mentioned above, we estimated the fair value of the Wage Day trade name using the relief-from-royalty method, which utilized several significant assumptions, including management projections of future revenue, a royalty rate, a long-term growth rate, and a discount rate. As these assumptions are largely unobservable, the estimate of fair value is considered to be unobservable within the fair value hierarchy. The significant unobservable inputs included projected revenues with annual growth rates, a royalty rate, a growth rate of 2.0% in the terminal period, and a discount rate of 15%. The carrying value of the Wage Day trade name exceeded its estimated fair value by £1.2 million. Accordingly, we recorded an impairment charge of £1.2 million ($1.8 million) during 2015, which was included in Goodwill and intangible asset impairment charges in our Consolidated Statements of Income.
As part of the annual impairment test in the fourth quarter of 2015, we relied on our analysis done in the third quarter for the Wage Day trade name intangible asset. Management concluded as a result of this analysis that the fair value of the asset was equal to its carrying amount.
Our finite lived intangible assets are amortized over their estimated economic benefit period, generally from three to seven years. These finite lived intangible assets are reviewed for impairment whenever events or changes in circumstances have indicated that the carrying amount of these assets might not be recoverable. If we were to determine that events and circumstances warrant a change to the estimate of an identifiable intangible assets remaining useful life, then the remaining carrying amount of the identifiable intangible asset would be amortized prospectively over that revised remaining useful life. Additionally, information resulting from our annual assessment, or other events and circumstances, may indicate that the carrying value of one or more identifiable intangible assets is not recoverable which would result in recognition of an impairment charge. There were no changes in events or circumstances that would cause us to review our finite lived intangible assets for impairment in 2016.
Business Combination Accounting
We have acquired businesses in the past, and we may acquire additional businesses in the future. Business combination accounting requires us to determine the fair value of all assets acquired, including identifiable
F-51
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
intangible assets, liabilities assumed, and contingent consideration issued in a business combination. The cost of the acquisition is allocated to these assets and liabilities in amounts equal to the estimated fair value of each asset and liability, and any remaining acquisition cost is classified as goodwill. This allocation process requires extensive use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. We engage third-party appraisal firms to assist in fair value determination when appropriate. Our acquisitions may also include contingent consideration, or earn-out provisions, which provide for additional consideration to be paid to the seller if certain future conditions are met. These earn-out provisions are estimated and recognized at fair value at the acquisition date based on projected earnings or other financial metrics over specified periods after the acquisition date. These estimates are reviewed during each reporting period and adjusted based upon actual results. Acquisition-related costs for potential and completed acquisitions are expensed as incurred, and are included in corporate expense in the Consolidated Statements of Income.
Deferred Financing Costs
Deferred financing costs consist of debt issuance costs incurred in obtaining financing. These costs are presented in the balance sheet as a direct reduction from the carrying amount of associated debt, consistent with discounts or premiums. The effective interest rate method is used to amortize the deferred financing costs over the life of the notes and the straight-line method is used to amortize the deferred financing costs of the Non-Recourse U.S. SPV facility.
Financial Instruments
The carrying amounts reflected in the Consolidated Balance Sheets for cash, loans receivable, borrowings under credit facilities and accounts payable approximate fair value due to their short maturities and applicable interest rates. The outstanding borrowings under our credit facilities are variable interest rate debt instruments and their fair value approximates their carrying value due to the borrowing rates currently available to us for debt with similar terms.
Deferred Rent
We have entered into operating lease agreements for store locations and corporate offices, some of which contain provisions for future rent increases or periods in which rent payments are reduced (abated). In accordance with generally accepted accounting principles, we record monthly rent expense equal to the total of the payments due over the lease term, divided by the number of months of the lease term. The difference between rent expense recorded and the amount paid is charged to Deferred rent which is reflected as a separate line item in the accompanying Consolidated Balance Sheets.
Advertising Costs
Advertising costs are expensed as incurred.
Revenue Recognition
Revenue in the consolidated statements of income includes: interest income, finance charges, CSO fees, late fees and non-sufficient funds fees as permitted by applicable laws and pursuant to the agreement with the customer. We offer a variety of consumer loan products, including payday loans, title loans and signature loans. These loans can be offered as either Single-Pay Loans or Installment Loans. Installment Loans require periodic payments of principal and interest. Installment Loans are fully amortized loans with a fixed payment amount due each period during the term of the loan. We also offer an Open-End Loan product in certain markets. Open-End
F-52
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Loans function much like a revolving line-of-credit, whereby the periodic payment is a set percentage of the customers outstanding loan balance, and there is no set maturity date. Lending laws in the jurisdictions in which we conduct business determine the repayment terms that can be offered for each of our loan products. Single-Pay Loans require full repayment of principal and interest on the loans due date, which typically ranges from 11 to 40 days from the loans origination date. The due date is set to coincide with the customers pay date.
Installment Loans are payable in periodic payments of principal and accrued interest. Open-End Loans are payable based on a periodic payment that is a set percentage of the customers outstanding loan balance. We record revenue from Installment and Open-End Loans on a simple interest basis. Unpaid and accrued interest and fees are included in Consumer loans receivable, less allowance for loan losses in the Consolidated Balance Sheets.
Revenues from Single-Pay Loan products are recognized each period on a constant yield basis ratably over the term of each loan. We defer recognition of the unearned fees we expect to collect based on the remaining term of the loan at the end of each reporting period.
Check cashing fees, money order fees and other fees from ancillary products and services are generally recognized at the point-of-sale when the transaction is completed.
Share-Based Compensation
We account for share-based compensation expense for awards to our employees and directors at the estimated fair value on the grant date. The fair value of stock option grants is determined using the Black-Scholes option pricing model, which requires us to make several assumptions including, but not limited to, risk-free interest rate, and the expected volatility of publicly traded stocks from our industry section, which we have determined to include the alternative financial sector. Our expected option term is calculated using the average of the vesting period and the original contractual term. The estimated fair value of share-based awards is recognized as compensation expense on a straight-line basis over the vesting period.
Income Taxes
A deferred tax asset or liability is recognized for the anticipated future tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements and for operating loss and tax credit carryforwards. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Realization of the deferred tax assets is dependent on our ability to generate sufficient future taxable income and, if necessary, execution of our tax planning strategies. In the event we determine that future taxable income, taking into consideration tax planning strategies, may not generate sufficient taxable income to fully realize net deferred tax assets, we may be required to establish or increase valuation allowances by a charge to income tax expense in the period such a determination is made. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
We follow accounting guidance which prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under this guidance, tax positions are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50%
F-53
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. Application of this guidance requires numerous estimates based on available information. We consider many factors when evaluating and estimating our tax positions and tax benefits, and our recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As we obtain additional information, we may need to periodically adjust our recognized tax positions and tax benefits. For additional information related to uncertain tax positions, see Note 13 Income Taxes.
Foreign Currency Translation
The local currencies are considered the functional currencies for our operations in the United Kingdom and Canada. All balance sheet accounts are translated into U.S. dollars at the current exchange rate at each period end. The income statement is translated at the average rates of exchange for the period. We have determined that certain of our intercompany balances are long-term in nature, and therefore, currency translation adjustments related to those accounts are recorded as a component of accumulated other comprehensive income (loss) in the Statements of Stockholders Equity. For intercompany balances that are settled on a regular basis, currency translation adjustments related to those accounts are recorded as a component of Other, net in the Consolidated Statements of Income.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss at December 31, 2016 and 2015 were as follows:
(in thousands) |
December 31,
2016 |
December 31,
2015 |
||||||
Foreign currency translation adjustment |
$ | (59,652 | ) | $ | (53,630 | ) | ||
Cash flow hedge |
(333 | ) | | |||||
|
|
|
|
|||||
Total |
$ | (59,985 | ) | $ | (53,630 | ) | ||
|
|
|
|
Recently Adopted Accounting Pronouncements
In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03), which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of associated debt, consistent with discounts or premiums. We adopted the provisions of this ASU in the first quarter of 2016, and reclassified $8.5 million and $5.9 million to Long-term debt as of December 31, 2016 and December 31, 2015, respectively. Debt issuance costs had previously been reported as Deferred financing costs, a component of long-term assets, in our Consolidated Balance Sheets.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial StatementsGoing Concern (Subtopic 205-40) (ASU 2014-15) , which provides new guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements and is intended to enhance the timeliness, clarity and consistency of disclosure concerning such uncertainties. The new guidance requires management to perform assessments, on an interim and annual basis, of an entitys ability to continue as a going concern within one year of the date of issuance of the entitys interim or annual financial statements, as applicable. In addition, entities must provide certain disclosures if there is substantial doubt about the entitys ability to continue as a going concern. The guidance is effective for annual periods ending after December 15, 2016, and interim periods ending thereafter, with early adoption permitted. The adoption of ASU 2014-15 did not have a material effect on our consolidated financial statements.
F-54
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Recently Issued Accounting Pronouncements Not Yet Adopted
In January 2017, the FASB issued ASU 2017-04, IntangiblesGoodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). The amendments in ASU 2017-04 simplified the goodwill impairment test by eliminating Step 2 of the test which requires an entity to compute the implied fair value of goodwill. Instead, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value, and is limited to the amount of total goodwill allocated to that reporting unit. Under this ASU, an entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The provisions of ASU 2017-04 are effective for an entitys annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2020. We are currently assessing the impact the adoption of ASU 2017-04 will have on our consolidated financial statements and footnote disclosures.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a Business (ASU 2017-01). The amendments in ASU 2017-01 narrow the definition of a business and provide a framework that gives an entity a basis for making reasonable judgments about whether a transaction involves an asset or a business and provide a screen to determine when a set (an integrated set of assets and activities) is not a business. The screen requires a determination that when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the amendments in this Update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. We are currently assessing the impact the adoption of ASU 2017-01 will have on our consolidated financial statements and footnote disclosures.
In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held Through Related Parties that are Under Common Control (ASU 2016-17). The amendments affect the evaluation of whether to consolidate a VIE in certain situations involving entities under common control. Specifically, the amendments change the evaluation of whether an entity is the primary beneficiary of a VIE for an entity that is a single decision maker of a variable interest by changing how an entity treats indirect interests in the VIE held through related parties that are under common control with the reporting entity. The guidance in ASU 2016-17 must be applied retrospectively to all relevant periods. ASU 2016-17 will be effective for us beginning January 1, 2017. We are currently assessing the impact the adoption of ASU 2016-17 will have on our consolidated financial statements and footnote disclosures.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (ASU 2016-15). The amendments in ASU 2016-15 provide guidance on eight specific cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees and beneficial interests in securitization transactions. ASU 2016-15 will be effective for us beginning January 1, 2019. Early adoption is permitted, including adoption in an interim period. We are assessing the potential impact this ASU will have on our statement of cash flows.
In June 2016, the FASB issued ASU 2016-13, Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU 2016-13 will be effective for us beginning January 1, 2021. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.
F-55
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The amendments in ASU 2016-09 simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for us beginning January 1, 2017, with early adoption permitted. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.
In February 2016, the FASB issued its new lease accounting guidance in ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessees obligation to make lease payment arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessees right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged and lessees will no longer be provided with a source of off-balance sheet financing. This ASU is effective for us beginning on January 1, 2020. Early adoption is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) which requires (i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, (ii) public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and (iii) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). This amendment eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. This amendment is effective for us beginning on January 1, 2019. We are currently evaluating the impact this ASU will have on our Consolidated Financial Statements.
In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17). This amendment eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The new standard becomes effective for us on January 1, 2018. We do not expect that the adoption of this amendment will have a material impact on our Consolidated Financial Statements.
In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (ASU 2015-16), which requires an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined and eliminates the requirement to retrospectively account for those adjustments. The new standard becomes effective for us on January 1, 2017. Early adoption is permitted. The amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update. We do not expect that the adoption of this new guidance will have a material effect on our Consolidated Financial Statements.
F-56
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) (ASU 2015-14), which deferred the effect date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), to annual reporting periods beginning after December 15, 2018 for entities other than public business entities, certain not-for-profit entities, and certain employee benefit plans. In May 2014, the FASB issued ASU 2014-09 which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The guidance is effective for us beginning January 1, 2019. We have not yet determined the potential effects on the Consolidated Financial Statements, if any.
NOTE 2PREPAID EXPENSES AND OTHER
Prepaid expenses and other current assets at December 31, 2016 and 2015 were are follows:
(in thousands) |
December 31,
2016 |
December 31,
2015 |
||||||
Settlements due from third-party lenders |
$ | 18,576 | $ | 16,876 | ||||
Fees receivable for third-party loans |
9,181 | 8,914 | ||||||
Prepaid expenses |
5,892 | 5,201 | ||||||
Other current assets |
5,599 | 2,485 | ||||||
|
|
|
|
|||||
Total |
$ | 39,248 | $ | 33,476 | ||||
|
|
|
|
NOTE 3PROPERTY AND EQUIPMENT
The classification of property and equipment is as follows:
(in thousands) |
December 31,
2016 |
December 31,
2015 |
||||||
Leasehold improvements |
$ | 122,419 | $ | 116,703 | ||||
Furniture, fixtures and equipment |
35,060 | 30,345 | ||||||
|
|
|
|
|||||
Property and equipment, gross |
157,479 | 147,048 | ||||||
Less accumulated depreciation |
(61,583 | ) | (47,341 | ) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | 95,896 | $ | 99,707 | ||||
|
|
|
|
Depreciation expense for the years ended December 31, 2016 and 2015 was $15.4 million and $14.5 million, respectively.
NOTE 4GOODWILL AND INTANGIBLES
The change in the carrying amount of goodwill, by operating segment, for 2016 and 2015 was as follows:
(in thousands) |
U.S. | U.K. | Canada | Total | ||||||||||||
Balance as of January 1, 2015 |
$ | 91,131 | $ | 28,577 | $ | 33,102 | $ | 152,810 | ||||||||
Impairment |
| (905 | ) | | (905 | ) | ||||||||||
Foreign currency translation |
| (1,475 | ) | (5,395 | ) | (6,870 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance as of December 31, 2015 |
91,131 | 26,197 | 27,707 | 145,035 | ||||||||||||
Foreign currency translation |
| (4,315 | ) | 834 | (3,481 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance as of December 31, 2016 |
$ | 91,131 | $ | 21,882 | $ | 28,541 | $ | 141,554 | ||||||||
|
|
|
|
|
|
|
|
F-57
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Identifiable intangible assets as of December 31, 2016 and 2015 consisted of the following:
2016 | 2015 | |||||||||||||||
(in thousands) |
Gross
Carrying Amount |
Accumulated
Amortization |
Gross
Carrying Amount |
Accumulated
Amortization |
||||||||||||
Trade name |
$ | 25,046 | $ | 12 | $ | 25,676 | $ | 634 | ||||||||
Customer relationships |
26,411 | 23,603 | 27,710 | 23,174 | ||||||||||||
Computer software |
16,429 | 13,370 | 15,440 | 12,322 | ||||||||||||
Provincial licenses |
372 | 372 | 361 | 361 | ||||||||||||
Franchise agreements |
298 | 298 | 289 | 289 | ||||||||||||
Positive leasehold interests |
15 | 15 | 11 | 11 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of year |
$ | 68,571 | $ | 37,670 | $ | 69,487 | $ | 36,791 | ||||||||
|
|
|
|
|
|
|
|
As a result of our 2015 analysis of the Wage Day trade name intangible asset, we recorded an impairment charge of £1.2 million ($1.8 million). These amounts are included in Goodwill and intangible asset impairment charges in our Consolidated Statements of Income.
As a result of our 2015 analysis of the customer relationship intangible asset associated with the Wage Day acquisition, we recorded an impairment charge of £0.1 million ($0.2 million). These amounts are included in Goodwill and intangible asset impairment charges in our Consolidated Statements of Income.
Our identifiable intangible assets are amortized using the straight-line method over the estimated remaining useful lives, except for the Wage Day and Cash Money trade name intangible assets, which were determined to have indefinite lives and are not amortized. The estimated useful lives for our other intangible assets range from 1 to 8 years. Aggregate amortization expense related to identifiable intangible assets was $3.5 million and $4.6 million for the years ended December 31, 2016 and 2015, respectively.
The following table outlines the estimated future amortization expense for the next five years related to intangible assets held at December 31, 2016:
(in thousands) |
||||
Year ending December 31, 2017 |
$ | 2,296 | ||
2018 |
1,987 | |||
2019 |
1,389 | |||
2020 |
161 | |||
2021 |
7 |
NOTE 5RESTRICTED CASH
At December 31, 2016 and 2015 we had $23.8 million and $28.3 million, respectively, on deposit in collateral accounts with financial institutions. At December 31, 2016, $5.1 million and $18.7 million were included as a component of Restricted cash and Prepaid expenses and other, respectively, in our Consolidated Balance Sheets. At December 31, 2015, approximately $11.8 million and $16.5 million were included as a component of Restricted cash and Prepaid expenses and other, respectively, in our Consolidated Balance Sheets.
As a result of the securitization program that commenced in 2016 and disclosed in Note 10Long-Term Debt , $2.8 million was included as Restricted cash of consolidated VIE in our Consolidated Balance Sheets at December 31, 2016.
F-58
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 6LOANS RECEIVABLE AND REVENUE
Unsecured and Secured Installment revenue includes interest income and non-sufficient-funds or returned-items fees on late or defaulted payments on past-due loans (collectively, late fees). Late fees comprise less than one-half of one percent of Installment revenues.
Open-End revenues include interest income on outstanding revolving balances and other usage or maintenance fees as permitted by underlying statutes.
Single-Pay revenues represent deferred presentment or other fees as defined by the underlying state, provincial or national regulations.
The following table summarizes revenue by product for the periods indicated:
Year Ended
December 31, |
||||||||
(dollars in thousands) |
2016 | 2015 | ||||||
Unsecured Installment |
$ | 330,713 | $ | 314,383 | ||||
Secured Installment |
81,453 | 86,325 | ||||||
Open-End |
66,948 | 51,311 | ||||||
Single-Pay |
313,276 | 321,597 | ||||||
Ancillary |
36,206 | 39,515 | ||||||
|
|
|
|
|||||
Total revenue |
$ | 828,596 | $ | 813,131 | ||||
|
|
|
|
Loans receivable consisted of the following:
December 31, 2016 | ||||||||||||||||||||
(dollars in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Total | |||||||||||||||
Current loans receivable |
$ | 90,487 | $ | 102,090 | $ | 63,157 | $ | 30,462 | $ | 286,196 | ||||||||||
Delinquent loans receivable |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans receivable |
90,487 | 102,090 | 63,157 | 30,462 | 286,196 | |||||||||||||||
Less: allowance for losses |
(5,501 | ) | (17,775 | ) | (10,737 | ) | (5,179 | ) | (39,192 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loans receivable, net |
$ | 84,986 | $ | 84,315 | $ | 52,420 | $ | 25,283 | $ | 247,004 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Loans receivable consisted of the following:
December 31, 2015 | ||||||||||||||||||||
(dollars in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Total | |||||||||||||||
Current loans receivable |
$ | 104,258 | $ | 67,647 | $ | 54,361 | $ | 25,914 | $ | 252,180 | ||||||||||
Delinquent loans receivable |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total loans receivable |
104,258 | 67,647 | 54,361 | 25,914 | 252,180 | |||||||||||||||
Less: allowance for losses |
(8,313 | ) | (10,603 | ) | (9,209 | ) | (4,823 | ) | (32,948 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loans receivable, net |
$ | 95,945 | $ | 57,044 | $ | 45,152 | $ | 21,091 | $ | 219,232 | ||||||||||
|
|
|
|
|
|
|
|
|
|
In order to manage our portfolio of consumer loans effectively, we utilize a variety of proprietary underwriting criteria, monitor the performance of the portfolio, and maintain either an allowance or accrual for
F-59
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
losses on consumer loans (including fees and interest) at a level estimated to be adequate to absorb credit losses inherent in the portfolio. We have defined our portfolio segment as consumer loans. We do not specifically reserve for any individual loan but rather segregate loans into separate pools based upon loan portfolios containing similar risk characteristics. The portfolios include balances outstanding from all consumer loans, including short-term single payment loans and installment loans. In addition, we maintain an accrual for losses related to loans guaranteed under our CSO programs. Because our revenue from consumer lending activities is generated through a high volume of small-dollar transactions, our exposure to loss from a single customer transaction is minimal. Increases in our allowance, net of charge-offs and recoveries, are recorded as a Provision for losses in our Consolidated Statements of Income. Recoveries on loans previously charged to the allowance are credited to the allowance when collected.
Our Unsecured Installment, Secured Installment and Open-End Loans are typically for larger amounts than the single pay loans. Unsecured Installment Loans are for a duration of up to 48 months, and Secured Installment Loans for a duration of up to 42 months; and Open-End Loans have an indefinite term. Unsecured Installment and Secured Installment Loans are considered delinquent and charged-off when a payment has not been made on the due date.
Our Single-Pay Loans are typically small dollar loans, and generally are for a term of up to 62 days. The entire amount of principal and interest is due at the end of the loan term. Single-Pay Loans are considered delinquent and charged-off when a payment has not been made on the due date.
When evaluating the adequacy of our allowance for loan losses we consider both quantitative and qualitative factors which include: the review of subsequent receipts; a review of current period charge offs, net of recoveries, as a percentage of revenues; the impact of new loan products; changes to underwriting criteria or lending policies; new store development or entrance into new markets; changes in regulations or laws; recent credit trends; and general economic conditions. The accuracy of our allowance estimates is dependent upon several factors, including our ability to predict future default rates based on historical trends and expected future events.
Although the balance is not part of our allowance for loan losses, the process for evaluating and estimating credit risk for the loans guaranteed under our CSO programs is similar to that of our consumer loan portfolio because CSO loans are offered as single pay or installment products, and are therefore evaluated in a manner similar to our Single-Pay or Installment Loans. The liability for estimated losses related to loans guaranteed under our CSO programs is initially recorded at fair value and is included in Credit service organization guarantee liability in the consolidated balance sheets.
F-60
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table summarizes the activity in the allowance for loan losses during the year ended December 31, 2016:
Year Ended December 31, 2016 | ||||||||||||||||||||||||
(dollars in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 8,313 | $ | 10,603 | $ | 9,209 | $ | 4,823 | $ | | $ | 32,948 | ||||||||||||
Charge-offs |
(225,066 | ) | (165,843 | ) | (145,160 | ) | (86,586 | ) | (5,786 | ) | (628,441 | ) | ||||||||||||
Recoveries |
157,398 | 120,446 | 128,886 | 62,859 | 3,671 | 473,260 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(67,668 | ) | (45,397 | ) | (16,274 | ) | (23,727 | ) | (2,115 | ) | (155,181 | ) | ||||||||||||
Provision for losses |
64,919 | 52,776 | 17,802 | 24,083 | 2,115 | 161,695 | ||||||||||||||||||
Effect of foreign currency translation |
(63 | ) | (207 | ) | | | | (270 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 5,501 | $ | 17,775 | $ | 10,737 | $ | 5,179 | $ | | $ | 39,192 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Allowance for loan losses as a percentage of gross loan receivables |
6.1 | % | 17.4 | % | 17.0 | % | 17.0 | % | N/A | 13.7 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Summary of the activity in the CSO guarantee liability during the year ended December 31, 2016:
Year Ended December 31, 2016 | ||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Total | ||||||||||||
Balance, beginning of period |
$ | 334 | $ | 15,910 | $ | 1,507 | $ | 17,751 | ||||||||
Charge-offs |
(17,379 | ) | (164,853 | ) | (16,930 | ) | (199,162 | ) | ||||||||
Recoveries |
4,807 | 83,112 | 13,950 | 101,869 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net charge-offs |
(12,572 | ) | (81,741 | ) | (2,980 | ) | (97,293 | ) | ||||||||
Provision for losses |
12,512 | 81,461 | 2,621 | 96,594 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | 274 | $ | 15,630 | $ | 1,148 | $ | 17,052 | ||||||||
|
|
|
|
|
|
|
|
The following table summarizes the activity in the allowance for loan losses and the CSO guarantee liability, in total, during the year ended December 31, 2016.
Year Ended December 31, 2016 | ||||||||||||||||||||||||
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | |||||||||||||||||||
Balance, beginning of period |
$ | 8,647 | $ | 26,513 | $ | 10,716 | $ | 4,823 | $ | | $ | 50,699 | ||||||||||||
Charge-offs |
(242,445 | ) | (330,696 | ) | (162,090 | ) | (86,586 | ) | (5,786 | ) | (827,603 | ) | ||||||||||||
Recoveries |
162,205 | 203,558 | 142,836 | 62,859 | 3,671 | 575,129 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(80,240 | ) | (127,138 | ) | (19,254 | ) | (23,727 | ) | (2,115 | ) | (252,474 | ) | ||||||||||||
Provision for losses |
77,431 | 134,237 | 20,423 | 24,083 | 2,115 | 258,289 | ||||||||||||||||||
CTA |
(63 | ) | (207 | ) | | | | (270 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 5,775 | $ | 33,405 | $ | 11,885 | $ | 5,179 | $ | | $ | 56,244 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
F-61
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table summarizes the activity in the allowance for loan losses during the year ended December 31, 2015:
Year Ended December 31, 2015 | ||||||||||||||||||||||||
(dollars in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | ||||||||||||||||||
Balance, beginning of period |
$ | 8,312 | $ | 8,680 | $ | 8,726 | $ | 3,969 | $ | | $ | 29,687 | ||||||||||||
Charge-offs |
(277,932 | ) | (119,704 | ) | (134,159 | ) | (57,960 | ) | (6,348 | ) | (596,103 | ) | ||||||||||||
Recoveries |
171,126 | 70,485 | 117,419 | 48,545 | 3,820 | 411,395 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(106,806 | ) | (49,219 | ) | (16,740 | ) | (9,415 | ) | (2,528 | ) | (184,708 | ) | ||||||||||||
Provision for losses |
107,458 | 51,170 | 17,223 | 10,269 | 2,528 | 188,648 | ||||||||||||||||||
Effect of foreign currency translation |
(651 | ) | (28 | ) | | | | (679 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 8,313 | $ | 10,603 | $ | 9,209 | $ | 4,823 | $ | | $ | 32,948 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Allowance for loan losses as a percentage of gross loan receivables |
8.0 | % | 15.7 | % | 16.9 | % | 18.6 | % | N/A | 13.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Summary of the activity in the CSO guarantee liability during the year ended December 31, 2015.
Year Ended December 31, 2015 | ||||||||||||||||
(in thousands) |
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Total | ||||||||||||
Balance, beginning of period |
$ | | $ | 15,187 | $ | 1,439 | $ | 16,626 | ||||||||
Charge-offs |
(162 | ) | (163,960 | ) | (20,415 | ) | (184,537 | ) | ||||||||
Recoveries |
300 | 75,225 | 17,575 | 93,100 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net charge-offs |
138 | (88,735 | ) | (2,840 | ) | (91,437 | ) | |||||||||
Provision for losses |
196 | 89,458 | 2,908 | 92,562 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | 334 | $ | 15,910 | $ | 1,507 | $ | 17,751 | ||||||||
|
|
|
|
|
|
|
|
The following table summarizes the activity in the allowance for loan losses and the CSO guarantee liability, in total, during the year ended December 31, 2015.
Year Ended December 31, 2015 | ||||||||||||||||||||||||
Single-Pay |
Installment
Unsecured |
Installment
Secured |
Open-End | Other | Total | |||||||||||||||||||
Balance, beginning of period |
$ | 8,312 | $ | 23,867 | $ | 10,165 | $ | 3,969 | $ | | $ | 46,313 | ||||||||||||
Charge-offs |
(278,094 | ) | (283,664 | ) | (154,574 | ) | (57,960 | ) | (6,348 | ) | (780,640 | ) | ||||||||||||
Recoveries |
171,426 | 145,710 | 134,994 | 48,545 | 3,820 | 504,495 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net charge-offs |
(106,668 | ) | (137,954 | ) | (19,580 | ) | (9,415 | ) | (2,528 | ) | (276,145 | ) | ||||||||||||
Provision for losses |
107,654 | 140,628 | 20,131 | 10,269 | 2,528 | 281,210 | ||||||||||||||||||
CTA |
(651 | ) | (28 | ) | | | | (679 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, end of period |
$ | 8,647 | $ | 26,513 | $ | 10,716 | $ | 4,823 | $ | | $ | 50,699 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 7CREDIT SERVICES ORGANIZATION
The CSO fee receivable amounts under our CSO programs were $9.2 million and $8.9 million at December 31, 2016 and 2015, respectively. As noted, we bear the risk of loss through our guarantee to purchase any defaulted customer loans from the lenders. The terms of these loans range from six to eighteen months. This guarantee represents an obligation to purchase specific loans that go into default. (See Note 1 for a description of our accounting policies.) As of December 31, 2016 and 2015, the maximum amount payable under all such
F-62
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
guarantees was $59.6 million and $52.0 million, respectively. Should we be required to pay any portion of the total amount of the loans we have guaranteed, we will attempt to recover the amount we pay from the customers. We hold no collateral in respect of the guarantees. The initial measurement of this guarantee liability is recorded at fair value and reported in the Credit services organization guarantee liability line in our Consolidated Balance Sheets. The fair value of the guarantee is measured by assessing the nature of the loan products, the credit worthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, and historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Our guarantee liability was $17.1 million and $17.8 million at December 31, 2016 and 2015, respectively.
We have placed $18.7 million and $16.5 million in collateral accounts for the lenders at December 31, 2016 and 2015, respectively, which is reported in Prepaid expenses and other in the Interim Consolidated Balance Sheets. The balances required to be maintained in these collateral accounts vary based upon lender, but are typically based on a percentage of the outstanding loan balances held by the lender. The percentage of outstanding loan balances required for collateral is defined within the terms agreed to between us and each such lender.
NOTE 8ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at December 31, 2016 and 2015 were as follows:
(in thousands) |
December 31,
2016 |
December 31,
2015 |
||||||
Trade accounts payable |
$ | 18,588 | $ | 17,107 | ||||
Money orders payable |
7,356 | 7,771 | ||||||
Accrued taxes, other than income taxes |
447 | 406 | ||||||
Accrued payroll and fringe benefits |
14,621 | 15,526 | ||||||
Reserve for store closure costs |
1,258 | 1,972 | ||||||
Other accrued liabilities |
393 | 368 | ||||||
|
|
|
|
|||||
Total |
$ | 42,663 | $ | 43,150 | ||||
|
|
|
|
NOTE 9RESTRUCTURING COSTS
Impairments, store closure and severance costs for the year ended December 31, 2016 were as follows:
(in thousands) |
Year Ended
December 31, 2016 |
Year Ended
December 31, 2015 |
||||||
Lease obligations and related costs |
$ | 1,620 | $ | 1,711 | ||||
Write-down and loss on disposal of fixed assets |
772 | 2,253 | ||||||
Severance costs |
1,226 | 327 | ||||||
|
|
|
|
|||||
Ending balance |
$ | 3,618 | $ | 4,291 | ||||
|
|
|
|
F-63
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Activity for the closed store reserve for the year ended December 31, 2016 was as follows:
(in thousands) |
Year Ended
December 31, 2016 |
|||
Beginning balance |
$ | 1,972 | ||
Additions and adjustments |
2,812 | |||
Payments and write-downs |
(3,526 | ) | ||
|
|
|||
Ending balance |
$ | 1,258 | ||
|
|
Closed store reserves of $1.3 million are included in the Accounts payable and accrued liabilities line item on the accompanying Consolidated Balance Sheets at December 31, 2016.
In July 2016, we eliminated 35 Corporate positions in our Canadian headquarters. The eliminated positions, primarily Finance and IT, comprised 49% of total Corporate headcount in Canada and represented approximately $2.5 million in annualized salaries and benefits costs. The transition of the related duties to our U.S. headquarters was completed in the third quarter of 2016. Total related severance cost, the majority of which was statutory, was approximately $1.2 million, and is included in Restructuring costs in our Consolidated Statements of Income for the year ended December 31, 2016. At December 31, 2016 we have accrued $0.4 million of expense for estimated severance payments yet to be paid.
During 2016 we closed 7 underperforming acquired Money Box stores in Texas and determined that we were unable to reopen a Missouri store that was damaged by a fire. Our 2016 results include $1.4 million of charges related to these store closures primarily consisting of certain lease obligations and the write-down and loss on the disposal of fixed assets.
In December 2015, we closed ten store locations in the United Kingdom as part of an overall plan to reduce operating losses in the wake of ongoing regulatory and market changes in the United Kingdom. These stores were all closed in December. Our 2015 results include $4.3 million of charges relating to these store closures primarily consisting of certain lease obligations, write-down and loss on disposal of fixed assets, and severance costs associated with these locations. Our 2016 results include $1.0 million of charges related to these store closures primarily consisting of adjustments to lease obligations associated with these locations.
NOTE 10LONG-TERM DEBT
Long-term debt (net of deferred financing costs) consisted of the following:
(in thousands) |
December 31,
2016 |
December 31,
2015 |
||||||
May 2011 10.75% senior secured notes |
$ | 223,164 | $ | 246,692 | ||||
May 2012 10.75% senior secured notes |
89,734 | 89,406 | ||||||
February 2013 10.75% senior secured notes |
101,184 | 101,937 | ||||||
February 2013 cash pay notes |
124,365 | 123,640 | ||||||
Non-Recourse U.S. SPV facility |
63,054 | | ||||||
ABL facility |
23,406 | | ||||||
Revolving credit facility |
| 8,050 | ||||||
|
|
|
|
|||||
Total long-term debt, including current portion |
624,907 | 569,725 | ||||||
Current maturities of long-term debt |
147,771 | 8,050 | ||||||
|
|
|
|
|||||
Long-term debt |
$ | 477,136 | $ | 561,675 | ||||
|
|
|
|
F-64
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Senior Secured Notes
On May 12, 2011, in connection with the acquisition of Cash Money, CURO Intermediate Holdings Corp. (Intermediate) issued and sold $250.0 million aggregate principal amount 10.75% senior secured notes due May 15, 2018 (the May 2011 Senior Secured Notes). The Senior Secured Notes were issued at par. Interest on the Notes is payable semi-annually, in arrears, on May 15 and November 15 of each year, beginning on November 15, 2011.
In accordance with the terms of the Notes, we used the net proceeds from the $250.0 million offering to finance our acquisition of Cash Money Group, Inc., to refinance our existing indebtedness, to fund the liquidation value of our Series A Participating Preferred Stock, to pay fees and expenses in connection with the transaction, and to fund an incremental $16.2 million to the balance sheet.
In connection with this debt offering and amendments to the Credit Agreement, in 2011 we capitalized financing costs of approximately $9.6 million, the balance of which are included in the Consolidated Balance Sheets as a direct reduction of Long-term debt, and are being amortized over the term of the May 2011 Senior Secured Notes and included as a component of interest expense.
On September 29, 2016, CURO Intermediate Holdings Corp. purchased $25.1 million of outstanding May 2011 10.75% Senior Secured Notes at 71.25% of the principal, plus accrued and unpaid interest of $1.0 million via an open-market purchase. A gain on extinguishment of $7.0 million related to the discount on repurchase, net of the unamortized deferred financing costs and fees, was recognized in the year ended December 31, 2016.
On May 14, 2012, Intermediate issued and sold $90.0 million aggregate principal amount of 10.75% Senior Secured Notes due 2018 (the May 2012 Senior Secured Notes). The May 2012 Senior Secured Notes were issued under the same indenture, dated May 12, 2011, as the May 2011 Senior Secured Notes.
In accordance with the terms of the Notes, we used the net proceeds from the $90.0 million offering to finance our acquisition of The Money Store, L.P., a Texas limited partnership which operated as The Money Box ® Check Cashing for approximately $26.1 million in August 2012. The remaining cash was used to fund working capital growth and for other general corporate purposes.
The May 2012 Senior Secured Notes were issued at 101.75% of their face value for total proceeds of $91.6 million, with an effective interest rate of 10.35%. The original issue premium (OIP) was $1.6 million, which is the difference between the stated principal amount and the issue price. The OIP is included in the Consolidated Balance Sheets as a component of Long-term debt, and is being amortized over the term of the May 2012 Senior Secured Notes using the effective interest rate method and reported as an offset to non-cash interest expense. Interest on the May 2012 Senior Secured Notes is payable semi-annually, in arrears, on May 15 and November 15 of each year, beginning on November 15, 2012.
In connection with this debt offering and the increase to our U.S. Revolving Credit Facility, in 2012 we incurred $3.5 million of financing costs, the balance of which are included in the Consolidated Balance Sheets as a direct reduction of Long-term debt. The deferred financing costs are being amortized over the term of the May 2012 Senior Secured Notes and included as a component of interest expense.
On February 8, 2013, Intermediate issued and sold $100.0 million aggregate principal amount of 10.75% Senior Secured Notes due 2018 (the February 2013 Senior Secured Notes). The February 2013 Senior Secured Notes were issued under the same indenture, dated May 12, 2011, and the same terms as the May 2011 and May 2012 Senior Secured Notes.
F-65
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In accordance with the terms of the Notes, we used the net proceeds from the $100.0 million offering to finance our acquisition of Wage Day Advance, Limited for approximately $80.9 million in February 2013. The remaining cash was used for general corporate purposes.
The February 2013 Senior Secured Notes were issued at 106.25% of their face value for total proceeds of $106.2 million, with an effective interest rate of 9.24%. The original issue premium (OIP) was $6.2 million, which is the difference between the stated principal amount and the issue price. The OIP is included in the Consolidated Balance Sheets as a component of Long-term debt, and is being amortized over the term of the February 2013 Senior Secured Notes using the effective interest rate method and reported as an offset to non-cash interest expense. Interest on the February 2013 Senior Secured Notes is payable semi-annually, in arrears, on May 15 and November 15 of each year, beginning on May 15, 2013.
In connection with this incremental borrowing in 2013, we incurred $2.9 million of financing costs, the balance of which are included in the Consolidated Balance Sheets as a direct reduction of Long-term debt. The deferred financing costs are being amortized over the term of the February 2013 Senior Secured Notes and included as a component within interest expense.
Cash Pay Notes
On February 14, 2013, Speedy Group issued $125.0 million 12.00% Senior Cash Pay Notes due November 15, 2017 (February 2013 Cash Pay Notes). The majority of the proceeds from this offering were used to fund a $116.9 million dividend to the stockholders on February 14, 2013. In connection with this borrowing, we incurred $3.4 million of financing costs, the balance of which are included in the Consolidated Balance Sheets as a direct reduction of Long-term debt. The deferred financing costs are being amortized over the term of the February 2013 Cash Pay notes and included as a component of interest expense.
Ranking and Guarantees
The May 2011 Senior Secured Notes, May 2012 Senior Secured Notes, and the February 2013 Senior Secured Notes (collectively, the Notes) rank senior in right of payment to all of our and our guarantor entities existing and future subordinated indebtedness and equal in right of payment with all our and our guarantor entities existing and future senior indebtedness of the Company, including borrowings under our revolving credit facilities. Pursuant to our Intercreditor Agreement, the Notes and the guarantees will be effectively subordinated to our credit facilities and certain other indebtedness to the extent of the value of the assets securing such indebtedness and to liabilities of our subsidiaries that are not guarantors.
The Notes are secured by liens on substantially all of our and the guarantors assets, subject to certain exceptions. On or after May 15, 2015, we are able to redeem some or all of the Notes at a premium that will decrease over time, plus accrued and unpaid interest, if any to the applicable date of redemption. Prior to May 15, 2015, we were able to redeem the Notes, in whole or in part, by paying a make-whole premium.
The February 2013 Cash Pay Notes are unsecured obligations of Speedy Group. Interest on the Senior Cash Pay Notes is payable semiannually, in arrears, on May 15 and November 15 of each year, beginning on May 15, 2013. Interest payments are funded from dividend payments made to Speedy Group by Speedy Holdings and its subsidiaries. Dividend payments made by Speedy Holdings to Speedy Group are dependent upon Speedy Holdings ability to generate sufficient dividend paying capacity. Under the terms of Speedy Holdings indenture agreement, dividends and other restrictive payments are generally limited to 50% of consolidated net income, as defined in the agreement.
F-66
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Non-Recourse U.S. SPV Facility
On November 17, 2016, CURO Receivables Finance I, LLC, a Delaware limited liability company (the SPV Borrower) and a wholly-owned subsidiary, entered into a five-year revolving credit facility with Victory Park Management, LLC and certain other lenders that provides for an $80.0 million term loan and $45.0 million of initial revolving borrowing capacity, with the ability to expand such revolving borrowing capacity over time and an automatic expansion to $70.0 million on the six month anniversary of the closing date, (our Non-Recourse U.S. SPV Facility). Our Non-Recourse U.S. SPV Facility is secured by a first lien against assets of the SPV Borrower, which is a special purpose vehicle holding certain receivables originated by the operating entities of Intermediate and CURO Receivables Holdings I, LLC, a Delaware limited liability company (Holdings) which is a holding company that owns the equity of the SPV Borrower. The lender advances to the SPV Borrower 80% of the principal balance of the eligible installment loans that we sell to the SPV Borrower, which serve as collateral for the lender. As customer loan payments come into the SPV Borrower, such payments are subjected to a conventional priority-of-payment waterfall provided the loan-to-value doesnt exceed 80%. The loans will bear interest at an annual rate of up to 12.0% plus the greater of (x) 1.0% per annum and (y) the three-month LIBOR. The SPV Borrower also pays a 0.50% per annum commitment fee on the unused portion of the commitments. Revolving commitment terminations and voluntary prepayments of term loans made prior to the 30th month anniversary of the closing date are subject to a fee equal to 3.0% of the amount of revolving loans commitments terminated or term loans voluntarily prepaid. This facility matures in 2021.
ABL Facility
On November 17, 2016, CURO Intermediate entered into a six-month recourse credit facility with Victory Park Management, LLC and certain other lenders which provides for $25.0 million of borrowing capacity, (our ABL Facility). Our ABL Facility is secured by a first lien against our assets and the assets of CURO Intermediate and its domestic subsidiaries. The lender advances to CURO Intermediate 80% of the principal balance of the eligible installment loans held by CURO Intermediate and its guarantor subsidiaries. As customer loan payments come into CURO Intermediate and its guarantor subsidiaries, such payments are subjected to a conventional priority-of-payment waterfall provided the loan-to-value doesnt exceed 80%. The loans will bear interest at an annual rate of up to 8.0% plus the greater of (x) 1.0% per annum and (y) the three-month LIBOR. The ABL Facility provides that CURO Intermediate pays a 0.50% per annum commitment fee on the unused portion of the commitments and a 4.0% per annum monitoring fee on the loans outstanding. Commitment terminations and voluntary prepayments of loans made prior to the 30th month anniversary of the closing date of the ABL Facility are subject to a fee equal to 3.0% of the amount of revolving loans commitments terminated or loans voluntarily prepaid. The ABL Facility matured and was fully converted to the SPV facility in 2017.
We are required to evaluate the SPV Borrower for consolidation as it is a variable interest entity (VIE). We have the ability to direct the activities of the VIE that most significantly impact the economic performance of the entity as the servicer of the securitized loan receivables. Additionally, we have the right to receive residual payments, which exposes the Company to potentially significant losses and returns. Accordingly, we determined that we are the primary beneficiary of the VIE and are required to consolidate this VIE.
Therefore, the financial results of the SPV Borrower are consolidated in this report and all inter-company transactions have been eliminated. See Note 22Condensed Consolidating Financial Information for detail.
As of December 31, 2016, the outstanding borrowings under the Non-Recourse U.S. SPV Facility were $68.9 million, consisting of $68.3 million of principal and $0.6 million of accrued interest. As of December 31, 2016, the outstanding borrowings under the ABL Facility were $23.6 million, consisting of $23.4 million of principal and $0.2 million of accrued interest. Unamortized issuance costs related to these borrowings at
F-67
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
December 31, 2016 were $5.3 million. The total interest expense recognized for the year ended December 31, 2016 was $0.9 million, of which $0.1 million represented the non-cash amortization of the deferred financing costs.
The assets that are used to secure our Non-Recourse U.S. SPV Facility borrowings are classified as part of Consumer loans receivables and Restricted cash as noted in our Consolidated Balance Sheets.
Revolving Credit Facility
On May 10, 2016 we entered into a third amendment to our U.S. Revolving Credit facility. The amendment (a) extended the maturity of our U.S. Revolving Credit Facility to August 31, 2016; (b) reduced the commitment thereunder to $10.0 million; (c) eliminated the requirement that we pay an unused line fee for the unused portion of the commitment; and (d) provided that we would make no further requests for loans or letters of credit thereunder. On August 31, 2016 this facility expired.
The weighted average interest rate on the $8.1 million of variable debt outstanding at December 31, 2015 was approximately 7.0%. There was no variable rate debt outstanding at December 31, 2016.
We also maintain cash collateral of $0.5 million with Jefferies LLC, as issuing bank for our letters of credit, in respect of a letter of credit issued at our request.
Cash Money Credit Facility
On November 4, 2011, Cash Money entered into a C$7.5 million revolving credit facility (Cash Money Revolving Credit Facility) which will afford us an additional element of liquidity to meet the short-term working capital needs of our Canadian operations. Aggregate draws on the Cash Money Revolving Credit Facility are limited to the lesser of: 1) the borrowing base, which is defined as a percentage of cash, deposits in transit and accounts receivable, and 2) C$7.5 million.
The Cash Money Revolving Credit Facility is collateralized by substantially all of Cash Moneys assets and contains various covenants that include, among other things, that the aggregate borrowings outstanding under the facility not exceed the borrowing base, restrictions on the encumbrance of assets and the creation of indebtedness. Borrowings under the Cash Money Revolving Credit Facility are subject to compliance with these covenants.
Borrowings under the Cash Money Revolving Credit Facility bear interest (per annum) at Royal Bank of Canada Prime (RBC prime) plus 1.95%. In order to determine the amount available for borrowings under the Cash Money Revolving Credit Facility, the balance available is reduced by any amounts outstanding and C$0.3 million in outstanding letters of credit. At December 31, 2016 and 2015, we had no outstanding borrowings under this facility.
Future Maturities of Long-Term Debt
Our Notes mature in May 2018. We may from time to time explore opportunities to (i) secure additional financing through a revolving credit facility; (ii) secure additional senior secured or other asset-backed financing; and (iii) refinance, redeem, repurchase or restructure outstanding Notes; and (iv) review strategic alternatives.
F-68
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Annual maturities of outstanding long-term debt (before deferred financing costs and premiums) for each of the five years after December 31, 2016 are as follows:
(in thousands) |
Amount | |||
2017 |
$ | 148,406 | ||
2018 |
414,882 | |||
2019 |
| |||
2020 |
| |||
2021 |
68,311 | |||
|
|
|||
$ | 631,599 | |||
|
|
Subordinated Shareholder Debt
As part of the acquisition of Cash Money in 2011, we issued an Escrow Note to the Seller which provided us indemnification for certain claims. The balance of this note at December 31, 2016 and 2015 was $2.2 million. This note bears interest at 10.0% per annum, and quarterly interest payments are due until the note matures in May 2019.
Debt offeringSubsequent Event
On February 15, 2017, CFTC issued $470.0 million 12.00% Senior Secured Notes due March 1, 2022. Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The proceeds from the Notes were used, together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of our wholly-owned subsidiary, CURO Intermediate, (ii) redeem our outstanding 12.00% Senior Cash Pay Notes due 2017, and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering.
NOTE 11STOCKHOLDERS EQUITY
Stockholders Equity
In connection with the formation of CURO in 2013, the stockholders entered into an Investor Rights Agreement. Under the Investor Rights Agreement, one of CURO investors, Freidman Fleisher & Lowe Capital Partners II, L.P. (and its affiliated funds, the FFL Holders), may request, any time after the sixth anniversary of their initial investment in the Company (which occurred in September 2008), that the Company repurchase their shares on terms to be negotiated by the parties in good faith. If no agreement can be reached on the repurchase terms, the FFL Holders can request that the Company be solicited for sale of all of its capital.
Common Stock
We have authorized 2 million shares of common stock. As of December 31, 2016 and 2015, we had issued 1,052,632 shares of common stock.
In connection with the 2011 acquisition of Cash Money, the Company issued 52,632 of its common stock to the J.P. Genova Family Trust as partial consideration to the Seller. The shares represented 5% of our outstanding common equity and $13.0 million of the purchase price.
In connection with the adoption of the 2010 Equity Incentive Plan (the Plan), we reserved for issuance under the Plan and for issuance upon exercise of the stock options under the Plan, 50,000 shares of common stock. In 2013, the Plan was amended to increase the number of shares available for issuance to 60,000 shares.
F-69
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 12SHARE-BASED COMPENSATION
The 2010 Equity Incentive Plan (the Plan) was originally approved by the Companys shareholders in November 2010, and amended in December 2013. The Plan provides for the issuance of up to 60,000 shares, subject to certain adjustment provisions described in the Plan. The Plan provides for the granting of stock options, restricted stock, and stock grants. Awards may be granted to employees, consultants and directors of the Company. The Plan provides that shares of Class B common stock subject to awards granted become available for issuance if such awards expire, terminate, are canceled for any reason, or are forfeited by the recipient. Pursuant to the formation of CURO, all of the rights and obligations under the stock option agreements were transferred from CFTC. Thus, the outstanding and unexercised options now represent an option to purchase the same number of shares of common stock of CURO at the same exercise price and on the same terms and conditions as provided in the original option agreement. No awards may be granted after November 30, 2020.
Stock options are awards which allow the grantee to purchase shares of our common stock at prices equal to the fair value at the date of grant. The stock options that have been granted under the Plan thus far all vest at a rate of 20% per year over a 5-year period, have a term of 10 years and are subject to limitations on transferability.
We measure the cost of share-based compensation at fair value on the grant date and recognize such cost in the financial statements on a straight-line basis over the requisite service period of the awards. For the year ended December 31, 2016, the fair value of each stock option grant was estimated at the date of the grant using a Black-Scholes option pricing model based on the following assumptions: risk free interest rate of 1.9%, expected term of options of 6.0 years, expected volatility of 44.7% and no expected dividends. There were no awards granted in 2015.
Estimates of fair value are not intended to predict actual future events or the value ultimately realized by individuals who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company. We have estimated the expected term of our stock options using a formula considering the weighted average vesting term and the original contract term. The expected volatility is estimated based upon the historical volatility of publicly traded stocks from our industry sector (the alternative financial services sector). The expected risk-free interest rate is based on an average of various U.S. Treasury rates. The Company estimates forfeitures at the grant date based on its historical forfeiture rates.
Share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period. See Note1 for additional information.
The following table summarizes the Companys stock option activity for the year ended December 31, 2016:
Stock
Options |
Weighted
Average Exercise Price |
|||||||
Outstanding at beginning of year |
53,323 | $ | 84.18 | |||||
Granted |
12,828 | 131.61 | ||||||
Exercised |
| | ||||||
Forfeited |
(13,948 | ) | 75.05 | |||||
|
|
|
|
|||||
Outstanding at end of year |
52,203 | $ | 98.27 | |||||
|
|
|
|
|||||
Options vested at end of year |
34,402 | $ | 81.75 | |||||
|
|
|
|
F-70
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Share-based compensation expense, which is included in the Consolidated Statements of Income as a component of Corporate expenses, was $1.1 million, ($0.7 million net of related taxes) and $1.3 million, ($0.8 million net of related taxes) for the years ended December 31, 2016 and 2015, respectively. Total unrecognized compensation expense related to stock options at December 31, 2016 was $0.8 million, which will be recognized over a weighted-average period of 3.8 years. At December 31, 2016, the intrinsic value of stock options outstanding was $2.1 million and the intrinsic value of vested stock options was $1.9 million.
NOTE 13INCOME TAXES
Income tax expense (benefit) is comprised of the following for the years ended December 31, 2016 and 2015 as follows:
(in thousands) |
2016 | 2015 | ||||||
Current tax provision |
||||||||
Federal |
$ | 24,508 | $ | 8,716 | ||||
State |
5,495 | 486 | ||||||
Foreign |
13,254 | 11,146 | ||||||
|
|
|
|
|||||
Total current provision |
43,257 | 20,348 | ||||||
|
|
|
|
|||||
Deferred tax provision (benefit) |
||||||||
Federal |
186 | (1,167 | ) | |||||
State |
(134 | ) | (221 | ) | ||||
Foreign |
(732 | ) | (855 | ) | ||||
|
|
|
|
|||||
Total deferred tax benefit |
(680 | ) | (2,243 | ) | ||||
|
|
|
|
|||||
Total provision for income taxes |
$ | 42,577 | $ | 18,105 | ||||
|
|
|
|
As of December 31, 2016, the Company had not provided U.S. tax on its cumulative undistributed foreign earnings of $112.8 million. The Company intends to reinvest its foreign earnings indefinitely in its non-U.S. operations. If the earnings were distributed to the United States, the Company would be subject to estimated U.S. taxes of approximately $50.8 million. In the event the earnings were distributed to the United States, the Company would adjust its income tax provision for the period and would determine the amount of credit for foreign tax credit that would be available to reduce the U.S. tax liability.
F-71
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The sources of deferred income tax assets (liabilities) are summarized as follows at December 31, 2016 and 2015:
(in thousands) |
2016 | 2015 | ||||||
Deferred tax assets related to: |
||||||||
Loans receivable |
$ | 8,142 | $ | 7,511 | ||||
Accrued expenses and other reserves |
8,630 | 9,013 | ||||||
Compensation accruals |
4,387 | 3,762 | ||||||
Deferred revenue |
247 | 365 | ||||||
State and provincial net operating loss carryforwards |
516 | 593 | ||||||
Foreign net operating loss and capital loss carryforwards |
12,953 | 12,449 | ||||||
Tax credit carryforwards |
284 | | ||||||
|
|
|
|
|||||
Gross deferred tax assets |
35,159 | 33,693 | ||||||
Less: valuation allowance |
(14,072 | ) | (13,097 | ) | ||||
|
|
|
|
|||||
Net deferred tax assets |
21,087 | 20,596 | ||||||
|
|
|
|
|||||
Deferred tax liabilities related to: |
||||||||
Property and equipment |
(5,564 | ) | (7,153 | ) | ||||
Goodwill and other intangible assets |
(17,015 | ) | (15,549 | ) | ||||
Prepaid expenses and other assets |
(186 | ) | (255 | ) | ||||
|
|
|
|
|||||
Gross deferred tax liabilities |
(22,765 | ) | (22,957 | ) | ||||
|
|
|
|
|||||
Net deferred tax liabilities |
$ | (1,678 | ) | $ | (2,361 | ) | ||
|
|
|
|
Deferred tax assets and liabilities are included on the following line items in the Consolidated Balance Sheets at December 31, 2016 and 2015:
(in thousands) |
2016 | 2015 | ||||||
Net current deferred tax assets |
$ | 12,635 | $ | 13,399 | ||||
Net long-term deferred tax liabilities |
(14,313 | ) | (15,760 | ) | ||||
|
|
|
|
|||||
Net deferred tax assets (liabilities) |
$ | (1,678 | ) | $ | (2,361 | ) | ||
|
|
|
|
F-72
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Differences between our effective tax rate computed on net earnings before income taxes and the statutory federal income tax rate are as follows for the years ended December 31, 2016 and 2015:
(dollars in thousands) |
2016 | 2015 | ||||||
Income tax expense using the statutory federal rate in effect |
$ | 37,807 | $ | 12,556 | ||||
Tax effect of: |
||||||||
State, local, and provincial income taxes, net of federal benefit |
9,045 | 4,373 | ||||||
Tax credits |
(713 | ) | | |||||
Nondeductible expenses |
521 | 263 | ||||||
Impact of goodwill impairment charges |
| 310 | ||||||
Nontaxable income |
| | ||||||
Foreign exchange gain/loss on intercompany loan |
| (1,423 | ) | |||||
Valuation allowance for foreign and state net operating loss and capital loss carryforwards |
3,129 | 5,827 | ||||||
Effects of foreign rates different than U.S. statutory rate |
(7,569 | ) | (3,350 | ) | ||||
Deferred remeasurement |
205 | 62 | ||||||
Other |
152 | (513 | ) | |||||
|
|
|
|
|||||
Total provision for income taxes |
$ | 42,577 | $ | 18,105 | ||||
|
|
|
|
|||||
Effective tax rate |
39.4 | % | 50.5 | % | ||||
|
|
|
|
|||||
Statutory federal tax rate |
35.0 | % | 35.0 | % | ||||
|
|
|
|
At December 31, 2016 and December 31, 2015 we had no reserves related to uncertain tax positions.
The tax years 2013 through 2015 remain open to examination by the taxing authorities in the United States. The tax years 2010 through 2015 remain open to examination by the taxing authorities in the U.K. The tax years 2011 through 2015 remain open to examination by the taxing authorities in Canada. We expect no material change related to our current positions in recorded unrecognized income tax benefit liability in the next twelve months.
We file income tax returns in U.S. federal jurisdictions, the United Kingdom, Canada (including provinces), and various state jurisdictions.
A summary of the valuation allowances for the years ended December 31, 2016 and 2015 are as follows:
(in thousands) |
2016 | 2015 | ||||||
Balance at beginning of year |
$ | 13,097 | $ | 5,447 | ||||
Revaluation of valuation allowance due to change in statutory rates |
(1,234 | ) | | |||||
Increase to balance charged as expense |
3,129 | 5,827 | ||||||
Increase to balance charged to Other Comprehensive Income |
1,627 | 2,099 | ||||||
Effect of foreign currency translation |
(2,547 | ) | (276 | ) | ||||
|
|
|
|
|||||
Balance at end of year |
$ | 14,072 | $ | 13,097 | ||||
|
|
|
|
As of December 31, 2016, we had as filed foreign operating loss carryforwards of $9.5 million and additional accrued foreign operating loss and capital loss carryforwards of $3.8 million. These carryforwards do not expire and can be used at any time. As of December 31, 2016, we have $0.3 million of deferred tax assets on foreign entities with foreign operating loss carryforwards. We are not expecting to have taxable income in the near future in this jurisdiction and have recorded a $13.3 million valuation allowance related to these foreign
F-73
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
operating losses and a $0.3 million valuation allowance related to the deferred tax assets. As of December 31, 2016, we had as filed state operating loss carryforwards of $0.4 million and accrued utilization of state operating loss carryforwards and additional state operating losses of (net) $(0.2) million. These carryforwards expire in varying amounts in years 2017 through 2035 and are generated in states in which the Company may have taxable income in the near future. We have recorded a valuation allowance of $0.2 million related to these state operating losses. As of December 31, 2016 we have a state tax credit carryforward of $0.3 million. The utilization of this tax credit carryforward has various training expense requirements which we may or may not meet. Therefore, we have recorded a valuation allowance of $0.3 million related to this state tax credit carryforward. We have classified interest and penalties as a component of income tax expense. However, during 2016 and 2015 we did not record any estimated interest or penalties.
NOTE 14FINANCIAL INSTRUMENTS AND CONCENTRATIONS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We are required to use valuation techniques that are consistent with the market approach, income approach, and/or cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability based on market data obtained from independent sources, or unobservable, meaning those that reflect our own estimate about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are listed below.
Level 1Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have access to at the measurement date.
Level 2Inputs include quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3Unobservable inputs reflecting our own judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. We develop these inputs based on the best information available, including our own data.
Assets that are Measured at Fair Value on a Non-recurring Basis
The following table summarizes certain information for non-financial assets that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.
In accordance with ASC 350-10 and ASC 350-20, during the third quarter of 2015, long-lived assets in the United Kingdom with a carrying amount of $6.1 million were written down to their fair value of $4.1 million, resulting in an impairment charge of $2.0 million. This impairment charge was included in earnings for the year ended December 31, 2015.
F-74
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In accordance with ASC 350-20, during the third quarter of 2015, goodwill associated with our U.K. reporting unit with a carrying amount of $27.7 million was written down to its fair value of $26.8 million, resulting in an impairment charge of $0.9 million. This impairment charge was included in earnings for the year ended December 31, 2015.
Fair Value Measurements at the End
of the Reporting Period |
||||||||||||||||||||
(in thousands) |
December 31,
2015 |
Level 1 | Level 2 | Level 3 |
Total Gains
(Losses) |
|||||||||||||||
Non-recurring fair value measurements |
||||||||||||||||||||
Long-lived assets |
$ | 4,024 | $ | | $ | | $ | 4,024 | $ | (1,977 | ) | |||||||||
Goodwill |
26,197 | | | 26,197 | (905 | ) |
Financial Assets and Liabilities Not Measured at Fair Value
The table below presents the assets and liabilities that were not measured at fair value at December 31, 2016.
Estimated Fair Value | ||||||||||||||||||||
(in thousands) |
Carrying Value
December 31, 2016 |
Level 1 | Level 2 | Level 3 |
December 31,
2016 |
|||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash |
$ | 193,525 | $ | 193,525 | $ | | $ | | $ | 193,525 | ||||||||||
Restricted cash of consolidated VIE |
2,770 | 2,770 | | | 2,770 | |||||||||||||||
Consumer loans receivable, net |
247,004 | | | 247,004 | 247,004 | |||||||||||||||
Restricted cash |
5,058 | 5,058 | | | 5,058 | |||||||||||||||
Financial liabilities: |
||||||||||||||||||||
May 2011 senior secured notes |
$ | 223,164 | $ | 216,449 | $ | | $ | | $ | 216,449 | ||||||||||
May 2012 senior secured notes |
89,734 | 86,625 | | | 86,625 | |||||||||||||||
February 2013 senior secured notes |
101,184 | 96,250 | | | 96,250 | |||||||||||||||
February 2013 cash pay notes |
124,365 | 118,301 | | | 118.301 | |||||||||||||||
Non-Recourse U.S. SPV facility |
63,054 | | | 68,311 | 68,311 | |||||||||||||||
ABL facility |
23,406 | | | 23,406 | 23.406 |
The table below presents the assets and liabilities that were not measured at fair value at December 31, 2015.
Estimated Fair Value | ||||||||||||||||||||
(in thousands) |
Carrying Value
December 31, 2015 |
Level 1 | Level 2 | Level 3 |
December 31,
2015 |
|||||||||||||||
Financial assets: |
||||||||||||||||||||
Cash |
$ | 100,561 | $ | 100,561 | $ | | $ | | $ | 100,561 | ||||||||||
Consumer loans receivable, net |
219,231 | | | 219,231 | 219,231 | |||||||||||||||
Financial liabilities: |
||||||||||||||||||||
Revolving credit facility |
$ | 8,050 | $ | | $ | 8,050 | $ | | $ | 8,050 | ||||||||||
May 2011 senior secured notes |
250,000 | 142,500 | | | 142,500 | |||||||||||||||
May 2012 senior secured notes |
90,739 | 51,300 | | | 51,300 | |||||||||||||||
February 2013 senior secured notes |
103,206 | 57,000 | | | 57,000 | |||||||||||||||
February 2013 cash pay notes |
125,000 | 61,250 | | | 61,250 |
F-75
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consumer loans receivable are carried on the Consolidated Balance Sheets net of the allowance for estimated loan losses, which is calculated primarily based upon models that backtest subsequent collections history for each type of loan product. The unobservable inputs used to calculate the carrying value include additional quantitative factors, such as current default trends and changes to the portfolio mix are also considered in evaluating the accuracy of the models; as well as additional qualitative factors such as the impact of new loan products, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions. Consumer loans generally have terms ranging from 1 day to 42 months. The carrying value of consumer loans receivable approximates the fair value.
In connection with our CSO programs, the accounting for which is discussed in detail in Note 1, we guarantee consumer loan payment obligations to unrelated third-party lenders for loans that we arrange for consumers on the third-party lenders behalf. The Company is required to purchase from the lender defaulted loans we have guaranteed. The estimated fair value of the guarantee liability related to CSO loans we have guaranteed was $17.1 million and $17.8 million as of December 31, 2016 and 2015, respectively. The initial measurement of this guarantee liability is recorded at fair value using Level 3 inputs with subsequent measurement of the liability measured as a contingent loss. The unobservable inputs used to calculate fair value include the nature of the loan products, the creditworthiness of the borrowers in the customer base, the Companys historical loan default history for similar loans, industry loan default history, historical collection rates on similar products, current default trends, past-due account roll rates, changes to underwriting criteria or lending policies, new store development or entrance into new markets, changes in jurisdictional regulations or laws, recent credit trends and general economic conditions.
The outstanding borrowing under our U.S. Revolving Credit Facility and our Cash Money Revolving Credit Facility are variable interest debt instruments and their fair value approximates their carrying value due to the borrowing rates currently available to us for debt with similar terms.
The fair value of our Senior Secured Notes and Cash Pay Notes was based on broker quotations. The fair values of the Non-Recourse U.S. SPV facility and the ABL facility were based on the cash needed for final settlement.
Derivative Financial Instrument
As of December 31, 2016 we have an outstanding cash flow hedge in which the hedging instrument is a forward extra to sell GBP 4,800,000 with monthly expiry dates through May 2017. We have performed an assessment that determined that all critical terms of the hedging instrument and the hedged transaction match and as such have qualitatively concluded that changes in the hedges intrinsic value will completely offset the change in the expected cash flows based on changes in the spot rate. In making that determination, the guidance in ASC 815-20-25-84 was used. Future assessment will be performed utilizing the guidance in ASC 815-20-35-9 through 35-13, Relative Ease of Assessing Effectiveness. Additionally, in accordance with ASC 815-20-25-82, since the effectiveness of this hedge is assessed based on changes in the hedges intrinsic value, the change in the time value of the contract would be excluded from the assessment of hedge effectiveness.
The hedges fair value, which is recorded on a recurring basis based on broker quotations, is classified on the balance sheet in current liabilities. Changes in the hedges intrinsic value, to the extent that they are effective as a hedge, are recorded in other comprehensive income. As of December 31, 2016 we have recorded $0.3 million in other comprehensive income associated with this hedge.
Concentration Risk
We are subject to regulation by federal, state and provincial governmental authorities that affect the products and services that we provide, particularly payday advance loans. The level and type of regulation for
F-76
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
payday advance loans varies greatly by jurisdiction, ranging from jurisdictions with moderate regulations or legislation, to other jurisdictions having very strict guidelines and requirements.
Revenues originated in Texas, Ontario, and California represented approximately 26.1%, 14.4%, and 15.1%, respectively, of our consolidated total revenues for the year ended December 31, 2016. Revenues originated in Texas, Ontario and California represented approximately 26.1%, 15.1% and 13.7%, respectively, of our consolidated total revenues for the year ended December 31, 2015.
To the extent that laws and regulations are passed that affect the manner in which we conduct business in any one of those markets, our financial position, results of operations and cash flows could be adversely affected. Additionally, our ability to meet our financial obligations could be negatively impacted.
We hold cash at major financial institutions that often exceed FDIC insured limits. We manage our concentration risk by placing our cash deposits in high quality financial institutions and by periodically evaluating the credit quality of the financial institutions holding such deposits. Historically, we have not experienced any losses due to such cash concentration.
Financial instruments that potentially subject us to concentrations of credit risk primarily consist of our consumer loans receivable. Concentrations of credit risk with respect to consumer loans receivable are limited due to the large number of customers comprising our customer base.
NOTE 15SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows for the years ended December 31, 2016 and 2015:
(in thousands) |
2016 | 2015 | ||||||
Cash paid for: |
||||||||
Interest |
$ | 61,019 | $ | 61,802 | ||||
Income taxes |
43,650 | 26,001 | ||||||
Non-cash investing and financing activities: |
||||||||
Property and equipment accrued in accounts payable |
3,338 | 4,758 |
NOTE 16LEGAL PROCEEDINGS
On a quarterly basis, we review outstanding legal proceedings and claims to determine if an unfavorable outcome is considered remote, reasonably possible or probable, as defined by U.S. GAAP. If we determine that an unfavorable outcome is not probable or not reasonably estimable, we do not accrue for potential litigation losses. In contrast, if we determine that an unfavorable outcome is both probable and reasonably estimable, we accrue for potential litigation losses. The liability we may ultimately incur for such litigation matters, in the event of a negative outcome, may exceed the amounts for which we accrue.
Harrison, et al v. Principal Investments, Inc. et al
During the relevant period, the Company pursued in excess of 16,000 claims in the limited actions and jurisdiction court in Clark County, Nevada, seeking repayment of loans on which customer defaulted. The Company used outside counsel to file these debt collection lawsuits. On Scene Mediations, a process serving company, was employed to serve the summons and petitions in these cases. In an unrelated matter, the principals of On Scene Mediations were convicted of multiple accounts of perjury and filing false affidavits to obtain judgments on behalf of a Las Vegas collection agency. In September 2010, the Company was sued by four
F-77
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
former customers in a proposed class action suit filed in District Court in Clark County, Nevada. The plaintiffs in this case claimed that they, and others in the proposed class, were not properly served notice of the debt collection lawsuits by the Company.
On June 7, 2017, the parties reached a settlement in this matter. At a hearing before the District Court in Clark County, Nevada, on July 10, 2017 the terms of the settlement were outlined before the Court and a fairness hearing was scheduled for July 24, 2017.
Other
We are also a defendant in certain routine litigation matters encountered in the ordinary course of our business. Certain of these matters may be covered to an extent by insurance. In the opinion of management, based upon the advice of legal counsel, the likelihood is remote that the impact of any such pending legal proceedings and claims, either individually or in the aggregate, would have a material adverse effect on our consolidated financial condition, results of operations or cash flows. However, because the ultimate outcome of legal proceedings and claims involves judgments, estimates and inherent uncertainties, actual outcomes of these proceedings and claims may materially differ from our current estimates. It is possible that resolution of one or more of the proceedings currently pending or threatened could result in losses material to our consolidated results of operations, liquidity or financial condition.
NOTE 17SEGMENT REPORTING
Segment information is prepared on the same basis that our chief operating decision maker reviews financial information for operational decision making purposes.
Our operations consist of three reportable segments as follows:
U.S. As of December 31, 2016, we operated a total of 216 U.S. retail locations. Our store count is comprised of stores in Texas (93), California (36), Nevada (18), Arizona (13), Tennessee (11), Kansas (10), Illinois (8), Alabama (7), Missouri (5), Louisiana (5), Colorado (3), Oregon (3), Washington (2) and Mississippi (2). We opened 1 store in the United States during 2016 and we have online presence in 24 states.
We provide Single-Pay Loans, Installment Loans and Open-End Loans, vehicle title loans, check cashing, gold buying, money transfer services, reloadable prepaid debit cards and a number of other ancillary financial products and services to our customers in the United States.
Canada We operate under the Cash Money and LendDirect brands in Canada. As of December 31, 2016 we operated a total of 191 stores across seven Canadian provinces and territories, including stores in Ontario (121), Alberta (28), British Columbia (26), Saskatchewan (6), Nova Scotia (5), Manitoba (4) and New Brunswick (1). We opened a total of seven stores in Canada during 2016, and we have online presence in five provinces.
We provide Single-Pay Loans, Installment Loans, check cashing, money transfer services, foreign currency exchange, reloadable prepaid debit cards, and a number of other ancillary financial products and services to our customers in Canada.
U.K. We operate under the Speedy Cash ® and WageDayAdvance brands in the United Kingdom. As of December 31, 2016 we operated a total of 13 retail Speedy Cash locations in the United Kingdom, the majority of which are located in metropolitan London. We also offer loans online to U.K. customers as Wage Day Advance.
F-78
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
We provide Single-Pay Loans, Installment Loans, check cashing, gold buying, reloadable prepaid debit cards, foreign exchange services, and a number of other financial products and services to our customers in the United Kingdom.
The segment performance measure below is based on gross margin. In managements evaluation of performance, certain costs, such as corporate expenses, district expenses and interest expense, are not allocated by segment, and accordingly the following reporting segment results do not include such allocated costs. There are no intersegment revenues, and the amounts below were determined in accordance with the same accounting principles used in our consolidated financial statements.
The following table illustrates summarized financial information concerning our reportable segments.
Year Ended December 31, | ||||||||
(in thousands) |
2016 | 2015 | ||||||
Revenues by segment: |
||||||||
U.S. |
$ | 606,797 | $ | 573,664 | ||||
Canada |
188,079 | 184,859 | ||||||
U.K. |
33,720 | 54,608 | ||||||
|
|
|
|
|||||
Consolidated revenue |
$ | 828,596 | $ | 813,131 | ||||
|
|
|
|
|||||
Gross margin by segment: |
||||||||
U.S. |
$ | 204,328 | $ | 151,628 | ||||
Canada |
78,639 | 77,469 | ||||||
U.K. |
10,289 | 9,504 | ||||||
|
|
|
|
|||||
Consolidated gross margin |
$ | 293,256 | $ | 238,601 | ||||
|
|
|
|
|||||
Expenditures for long-lived assets by segment: |
||||||||
U.S. |
$ | 10,125 | $ | 8,642 | ||||
Canada |
5,872 | 11,062 | ||||||
U.K. |
29 | 128 | ||||||
|
|
|
|
|||||
Consolidated expenditures for long-lived assets |
$ | 16,026 | $ | 19,832 | ||||
|
|
|
|
The following table illustrates our net long-lived assets, comprised of property and equipment and construction in progress, by geographic region. These amounts are aggregated on a legal entity basis and do not necessarily reflect where the asset is physically located.
(in thousands) |
December 31,
2016 |
December 31,
2015 |
||||||
U.S. |
$ | 58,733 | $ | 62,895 | ||||
Canada |
34,310 | 32,487 | ||||||
U.K. |
2,853 | 4,325 | ||||||
|
|
|
|
|||||
Total |
$ | 95,896 | $ | 99,707 | ||||
|
|
|
|
Our chief operating decision maker does not review assets by segment for purposes of allocating resources or decision-making purposes; therefore, total assets by segment are not disclosed.
F-79
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 18OPERATING LEASES
We have entered into operating lease agreements for the buildings in which we operate that expire at various times through 2030. The majority of the leases have an original term of five years with two 5-year renewal options. Most of the leases have escalation clauses and several also require payment of certain period costs including maintenance, insurance and property taxes.
Some of the leases are with related parties and have terms similar to the non-related party leases previously described. Rent expense on unrelated third-party leases for the years ended December 31, 2016 and 2015 was $23.1 million and $23.3 million, respectively; and for related party leases was $3.3 million and $3.2 million, respectively.
Future minimum lease payments that we are contractually obligated to make under operating leases are as follows at December 31, 2016.
(in thousands) |
Third Party | Related Party | Total | |||||||||
2017 |
$ | 22,933 | $ | 3,363 | $ | 26,296 | ||||||
2018 |
20,382 | 1,115 | 21,497 | |||||||||
2019 |
17,030 | 830 | 17,860 | |||||||||
2020 |
13,307 | 725 | 14,032 | |||||||||
2021 |
9,921 | 675 | 10,596 | |||||||||
Thereafter |
24,330 | 1,524 | 25,854 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 107,903 | $ | 8,232 | $ | 116,135 | ||||||
|
|
|
|
|
|
NOTE 19RELATED-PARTY TRANSACTIONS
We employ the services of Ad Astra Recovery Services, Inc. (Ad Astra), which is owned by our shareholders Doug Rippel, Chad Faulkner and Mike McKnight. Ad Astra provides third party collection activities for our U.S. operations. Generally, once loans are between 91 and 121 days delinquent we refer them to Ad Astra for collections. Ad Astra earns a commission fee equal to 30% of any amounts successfully recovered. Payments collected by Ad Astra on our behalf and commissions payable to Ad Astra are net settled on a one month lag. The net amount receivable from Ad Astra at December 31, 2016 and December 31, 2015 was $0.6 million, and $0.2 million, respectively. These amounts are included in Prepaid expenses and other in the Consolidated Balance Sheets. The commission expense paid to Ad Astra for the years ended December 31, 2016 and 2015 was $12.1 million and $10.6 million, respectively, and is included in Other store operating expenses in the Consolidated Statements of Income.
We have entered into several operating lease agreements for our corporate office, collection office, and stores in which we operate, with several real estate entities that are related through common ownership. These operating leases are discussed in Note 18 .
NOTE 20BENEFIT PLANS
In 2010 we instituted a 401(k) retirement savings plan which covers all U.S. employees. Employees may voluntarily contribute up to 90% of their compensation, as defined, to the plan. We match the employee contribution at a rate of 50% of the first 6% of compensation contributed to the plan. Employee contributions vest immediately. Employer contributions vest in full after three years of employment. Company contributions to the plan were $1.1 million and $1.0 million for the years ended December 31, 2016 and 2015, respectively.
In 2013 we instituted a Registered Retirement Savings Plan (RRSP) which covers all Canadian employees. We match the employee contribution at a rate of 50% of the first 6% of compensation contributed to
F-80
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
the RRSP. Employee contributions vest immediately. Employer contributions vest 50% after one year and 100% after two years. Company contributions to the RRSP were $0.2 million for each of the two years ended December 31, 2016 and 2015.
In 2014, we instituted a pension plan which covers all U.K. employees. Employees are automatically enrolled at 1% of their compensation, and the Company will match the employees contribution up to 3% of the employees compensation. Company contributions to the plan were $0.2 million and $0.3 million for the years ended December 31, 2016 and 2015, respectively.
In 2015 we instituted a nonqualified deferred compensation plan that provides certain employees of the Company with the opportunity to elect to defer his or her base salary and performance-based compensation, which upon such election, will be credited to the applicable participants deferred compensation account. Participant contributions are fully vested at all times. Each deferred compensation account will be invested in one or more investment funds made available by the Company and selected by the participant. The Company may make discretionary contributions to the individual deferred compensation accounts, which the amount, if any, to be determined annually by the Company. Company contributions vest over a term of three years. Each vested deferred compensation account will be paid out in a lump sum upon a participants separation from service with the Company. The amount deferred under this plan totaled $1.4 million and $0.2 million as of December 31, 2016 and 2015, respectively, and was recorded in long-term liabilities.
The Company owns life insurance policies on plan beneficiaries as an informal funding vehicle to meet future benefit obligations. These policies are recorded at their cash surrender value and are included in other assets. Income generated from policies is recorded as other income.
NOTE 21EARNINGS PER SHARE
The following presents the computation of basic earnings per share (in thousands, except per share amounts):
Year Ended December 31, | ||||||||
2016 | 2015 | |||||||
Basic: |
||||||||
Net income |
$ | 65,444 | $ | 17,769 | ||||
Weighted average common shares |
1,053 | 1,053 | ||||||
Basic earnings per share |
$ | 62.15 | $ | 16.87 |
The following computation reconciles the differences between the basic and dilutes earnings per share presentations (in thousands, except per share amounts):
Year Ended December 31, | ||||||||
2016 | 2015 | |||||||
Diluted: |
||||||||
Net income |
$ | 65,444 | $ | 17,769 | ||||
Weighted average common shares (basic) |
1,053 | 1,053 | ||||||
Dilutive effect of stock options |
25 | 27 | ||||||
|
|
|
|
|||||
Weighted average common sharesdiluted |
1,078 | 1,080 | ||||||
|
|
|
|
|||||
Diluted earnings per share |
$ | 60.71 | $ | 16.45 |
F-81
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Potential common shares that would have the effect of increasing diluted earnings per share or decreasing diluted loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted earnings per share. For the fiscal years ended December 31, 2016 there were 2,000 potential common shares not included in the calculation of diluted earnings per share because their effect was anti-dilutive.
NOTE 22CONDENSED CONSOLIDATING FINANCIAL INFORMATION
On May 12, 2011, in connection with the acquisition of Cash Money, CURO Intermediate issued and sold $250.0 million aggregate principal amount 10.75% senior secured notes due May 15, 2018. The Senior Secured Notes were sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the Securities Act); or outside the United States to non-U.S. Persons in compliance with Regulation S of the Securities Act. Subsequent offerings of $90.0 million and $100.0 million aggregate principal amounts were sold on May 14, 2012 and February 5, 2013, respectively.
The following condensed consolidating financial information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(d) of Regulation S-X promulgated under the Securities Act, presents the condensed consolidating financial information separately for:
(i) | CURO as the parent company of all entities listed below; |
(ii) | CFTC as the parent company of CURO Intermediate and the subsidiary guarantors and the other subsidiaries of the Company; |
(iii) | Intermediate as the issuer of the 10.75% senior secured notes; |
(iv) | The Companys subsidiary guarantors, which are comprised of our domestic subsidiaries, excluding: CFTC, CURO Intermediate, the Non-Recourse U.S. SPV Facility and the ABL Facility (the Subsidiary Guarantors), on a combined basis, which are 100% owned by CFTC, and which are guarantors of the 10.75% senior secured notes; |
(v) | The Companys other subsidiaries, which are comprised of our foreign subsidiaries, which are not guarantors of the 10.75% senior secured notes (the Subsidiary Non-Guarantors); |
(vi) | The Non-Recourse U.S. SPV Facility and the ABL Facility (SPV Subs) which are not guarantors of the 10.75% senior secured notes; |
(vii) | Consolidating and eliminating entries representing adjustments to: |
1. | eliminate intercompany transactions between or among the Company, the Subsidiary Guarantors and the Subsidiary Non-Guarantors; and |
2. | eliminate the investments in the Companys subsidiaries; |
(viii) | The Company and its subsidiaries on a consolidated basis. |
F-82
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Condensed Consolidating Balance Sheets
(in thousands) |
December 31, 2016 | |||||||||||||||||||||||||||||||||||||||
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non- Guarantors |
SPV
Subs |
Elimination |
CFTC
Consolidated |
CURO | Elimination |
CURO
Consolidated |
|||||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||||||||||
Cash |
$ | | $ | 1,954 | $ | 127,712 | $ | 63,779 | $ | | $ | | $ | 193,445 | $ | 80 | $ | | $ | 193,525 | ||||||||||||||||||||
Restricted cash of consolidated VIE |
| | | | 2,770 | | 2,770 | | | 2,770 | ||||||||||||||||||||||||||||||
Consumer loans receivable, net |
| | 47,869 | 63,156 | 49,973 | | 160,998 | | | 160,998 | ||||||||||||||||||||||||||||||
Deferred income taxes |
2,833 | 8,802 | 2,925 | 2,768 | | (4,693 | ) | 12,635 | | | 12,635 | |||||||||||||||||||||||||||||
Income taxes receivable |
34,667 | | | 6,151 | | (37,710 | ) | 3,108 | 6,270 | | 9,378 | |||||||||||||||||||||||||||||
Intercompany receivable |
| 444 | 366,314 | | | (366,758 | ) | | | | | |||||||||||||||||||||||||||||
Prepaid expenses and other |
| | 32,964 | 4,205 | | | 37,169 | 4,735 | (2,656 | ) | 39,248 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total current assets |
37,500 | 11,200 | 577,784 | 140,059 | 52,743 | (409,161 | ) | 410,125 | 11,085 | (2,656 | ) | 418,554 | ||||||||||||||||||||||||||||
Property and equipment, net |
| | 58,733 | 37,163 | | | 95,896 | | | 95,896 | ||||||||||||||||||||||||||||||
Goodwill |
| | 91,131 | 50,423 | | | 141,554 | | | 141,554 | ||||||||||||||||||||||||||||||
Other intangibles, net |
19 | | 5,616 | 25,266 | | | 30,901 | | | 30,901 | ||||||||||||||||||||||||||||||
Consumer loans receivable, net |
| | 19,689 | 8,225 | 58,092 | | 86,006 | | | 86,006 | ||||||||||||||||||||||||||||||
Intercompany receivable |
| 55,000 | 17,573 | | | (72,573 | ) | | | | | |||||||||||||||||||||||||||||
Investment in subsidiaries |
187,473 | 830,443 | | | | (1,017,916 | ) | | 155,964 | (155,964 | ) | | ||||||||||||||||||||||||||||
Restricted cash |
| 459 | 1,223 | 3,376 | | | 5,058 | | | 5,058 | ||||||||||||||||||||||||||||||
Other |
| | 1,745 | 1,084 | | | 2,829 | | | 2,829 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 224,992 | $ | 897,102 | $ | 773,494 | $ | 265,596 | $ | 110,835 | $ | (1,499,650 | ) | $ | 772,369 | $ | 167,049 | $ | (158,620 | ) | $ | 780,798 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Liabilities and equity: |
||||||||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities |
$ | 253 | $ | 3 | $ | 32,528 | $ | 9,900 | $ | | $ | | $ | 42,684 | $ | (21 | ) | $ | | $ | 42,663 | |||||||||||||||||||
Deferred revenue |
| | 6,520 | 5,822 | | | 12,342 | | | 12,342 | ||||||||||||||||||||||||||||||
Income taxes payable |
| 23,087 | 12,952 | 3,043 | | (37,710 | ) | 1,372 | | | 1,372 | |||||||||||||||||||||||||||||
Current maturities of long-term debt |
| 23,406 | | | | | 23,406 | 124,365 | | 147,771 | ||||||||||||||||||||||||||||||
Accrued interest |
| 5,575 | | | 775 | | 6,350 | 1,833 | | 8,183 | ||||||||||||||||||||||||||||||
Payable to CURO Group |
2,656 | | | | | | 2,656 | | (2,656 | ) | | |||||||||||||||||||||||||||||
Intercompany payable |
65,822 | 233,537 | | 12,773 | 54,626 | (366,758 | ) | | | | | |||||||||||||||||||||||||||||
CSO guarantee liability |
| | 17,052 | | | 17,052 | | | 17,052 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total current liabilities |
68,731 | 285,608 | 69,052 | 31,538 | 55,401 | (404,468 | ) | 105,862 | 126,177 | (2,656 | ) | 229,383 | ||||||||||||||||||||||||||||
Deferred rent |
| | 10,006 | 1,862 | | | 11,868 | | | 11,868 | ||||||||||||||||||||||||||||||
Long-term debt (ex. current maturities) |
| 414,082 | | | 63,054 | | 477,136 | | | 477,136 | ||||||||||||||||||||||||||||||
Subordinated shareholder debt |
| | | 2,227 | | | 2,227 | | | 2,227 | ||||||||||||||||||||||||||||||
Intercompany payable |
| | | 72,573 | | (72,573 | ) | | | | | |||||||||||||||||||||||||||||
Other long-term liabilities |
299 | | 1,741 | 2,976 | | | 5,016 | | | 5,016 | ||||||||||||||||||||||||||||||
Deferred tax liabilities |
(2 | ) | 9,914 | 2,495 | 6,582 | | (4,693 | ) | 14,296 | 17 | | 14,313 | ||||||||||||||||||||||||||||
Stockholders equity (deficit) |
155,964 | 187,498 | 690,200 | 147,838 | (7,620 | ) | (1,017,916 | ) | 155,964 | 40,855 | (155,964 | ) | 40,855 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 224,992 | $ | 897,102 | $ | 773,494 | $ | 265,596 | $ | 110,835 | $ | (1,499,650 | ) | $ | 772,369 | $ | 167,049 | $ | (158,620 | ) | $ | 780,798 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-83
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands) |
December 31, 2015 | |||||||||||||||||||||||||||||||||||
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non- Guarantors |
Elimination |
CFTC
Consolidated |
CURO | Elimination |
CURO
Consolidated |
||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||||||
Cash |
$ | | $ | 2 | $ | 57,149 | $ | 41,928 | $ | | $ | 99,079 | $ | 1,482 | $ | | $ | 100,561 | ||||||||||||||||||
Consumer loans receivable, net |
| | 92,456 | 54,763 | | 147,219 | | | 147,219 | |||||||||||||||||||||||||||
Deferred income taxes |
2,735 | 8,577 | 2,660 | 2,189 | (2,735 | ) | 13,426 | | (27 | ) | 13,399 | |||||||||||||||||||||||||
Income taxes receivable |
15,138 | | | 2,176 | (15,138 | ) | 2,176 | 6,457 | (831 | ) | 7,802 | |||||||||||||||||||||||||
Prepaid expenses and other |
| | 30,616 | 2,572 | 218 | 33,406 | 12,003 | (11,933 | ) | 33,476 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total current assets |
$ | 17,873 | $ | 8,579 | $ | 182,881 | $ | 103,628 | $ | (17,655 | ) | $ | 295,306 | $ | 19,942 | $ | (12,791 | ) | $ | 302,457 | ||||||||||||||||
Property and equipment, net |
| | 62,895 | 36,812 | | 99,707 | | | 99,707 | |||||||||||||||||||||||||||
Goodwill |
| | 91,131 | 53,904 | | 145,035 | | | 145,035 | |||||||||||||||||||||||||||
Other intangibles, net |
| | 6,633 | 26,063 | | 32,696 | | | 32,696 | |||||||||||||||||||||||||||
Consumer loans receivable, net |
| | 71,621 | 392 | | 72,013 | | | 72,013 | |||||||||||||||||||||||||||
Intercompany receivable |
| 39,735 | 215,515 | | (255,250 | ) | | | | | ||||||||||||||||||||||||||
Investment in subsidiaries |
117,585 | 653,985 | | | (771,570 | ) | | 86,149 | (86,149 | ) | | |||||||||||||||||||||||||
Restricted cash |
| | 5,700 | 6,063 | | 11,763 | | | 11,763 | |||||||||||||||||||||||||||
Other |
| 55,000 | 961 | 1,385 | (55,000 | ) | 2,346 | | | 2,346 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total assets |
$ | 135,458 | $ | 757,299 | $ | 637,337 | $ | 228,247 | $ | (1,099,475 | ) | $ | 658,866 | $ | 106,091 | $ | (98,940 | ) | $ | 666,017 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Liabilities and equity: |
||||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities |
$ | 50 | $ | 8 | $ | 31,905 | $ | 11,212 | $ | | $ | 43,175 | $ | | $ | (25 | ) | $ | 43,150 | |||||||||||||||||
Deferred revenue |
| | 7,017 | 8,702 | | 15,719 | | | 15,719 | |||||||||||||||||||||||||||
Income taxes payable |
| 10,033 | 5,936 | | (15,138 | ) | 831 | | (831 | ) | | |||||||||||||||||||||||||
Current maturities of long-term debt |
| 8,050 | | | | 8,050 | | | 8,050 | |||||||||||||||||||||||||||
Accrued interest |
| 5,959 | | | | 5,959 | 1,833 | | 7,792 | |||||||||||||||||||||||||||
Payable to CURO Group |
11,935 | | | | | 11,935 | | (11,935 | ) | | ||||||||||||||||||||||||||
Intercompany payable |
37,131 | 167,461 | | 50,440 | (255,032 | ) | | | | | ||||||||||||||||||||||||||
CSO guarantee liability |
| | 17,751 | | | 17,751 | | | 17,751 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total current liabilities |
$ | 49,116 | $ | 191,511 | $ | 62,609 | $ | 70,354 | $ | (270,170 | ) | $ | 103,420 | $ | 1,833 | $ | (12,791 | ) | $ | 92,462 | ||||||||||||||||
Deferred rent |
| | 9,745 | 1,872 | | 11,617 | | | 11,617 | |||||||||||||||||||||||||||
Long-term debt (ex. current maturities) |
| 438,035 | | 55,000 | (55,000 | ) | 438,035 | 123,640 | | 561,675 | ||||||||||||||||||||||||||
Subordinated shareholder debt |
| | | 2,162 | | 2,162 | | | 2,162 | |||||||||||||||||||||||||||
Other long-term liabilities |
193 | | 875 | 655 | | 1,723 | | | 1,723 | |||||||||||||||||||||||||||
Deferred tax liabilities |
| 10,168 | 1,590 | 6,737 | (2,735 | ) | 15,760 | | | 15,760 | ||||||||||||||||||||||||||
Stockholders equity (deficit) |
86,149 | 117,585 | 562,518 | 91,467 | (771,570 | ) | 86,149 | (19,382 | ) | (86,149 | ) | (19,382 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Liabilities and Stockholders equity (deficit) |
$ | 135,458 | $ | 757,299 | $ | 637,337 | $ | 228,247 | $ | (1,099,475 | ) | $ | 658,866 | $ | 106,091 | $ | (98,940 | ) | $ | 666,017 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-84
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Condensed Consolidating Statements of Income
(in thousands) |
Year ended December 31, 2016 | |||||||||||||||||||||||||||||||||||||||
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non- Guarantors |
SPV
Subs |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
|||||||||||||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||||||||||||||
Total revenues |
$ | | $ | | $ | 581,820 | $ | 221,799 | $ | 24,977 | $ | | $ | 828,596 | $ | | $ | | $ | 828,596 | ||||||||||||||||||||
Cost of providing services: |
||||||||||||||||||||||||||||||||||||||||
Provision for losses |
| | 176,546 | 50,540 | 31,203 | | 258,289 | | | 258,289 | ||||||||||||||||||||||||||||||
Salaries and benefits |
| | 69,549 | 34,992 | | | 104,541 | | | 104,541 | ||||||||||||||||||||||||||||||
Occupancy |
| | 31,451 | 23,058 | | | 54,509 | | | 54,509 | ||||||||||||||||||||||||||||||
Office |
| | 15,883 | 4,580 | | | 20,463 | | | 20,463 | ||||||||||||||||||||||||||||||
Other store operating expenses |
| | 47,491 | 6,120 | 6 | | 53,617 | | | 53,617 | ||||||||||||||||||||||||||||||
Advertising |
| | 30,340 | 13,581 | | | 43,921 | | | 43,921 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total cost of providing services |
| | 371,260 | 132,871 | 31,209 | | 535,340 | | | 535,340 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Gross Margin |
| | 210,560 | 88,928 | (6,232 | ) | | 293,256 | | | 293,256 | |||||||||||||||||||||||||||||
Other (income) expense: |
||||||||||||||||||||||||||||||||||||||||
Corporate expenses |
1,898 | 338 | 78,873 | 32,713 | | | 113,822 | 447 | 114,269 | |||||||||||||||||||||||||||||||
Intercompany management fee (income) expense |
| | (12,632 | ) | 12,632 | | | | | | | |||||||||||||||||||||||||||||
District expenses |
| | 7,563 | 3,287 | | | 10,850 | | | 10,850 | ||||||||||||||||||||||||||||||
Interest expense |
| 47,684 | 2 | 58 | 864 | | 48,608 | 15,726 | | 64,334 | ||||||||||||||||||||||||||||||
Intercompany interest (income) expense |
| (4,961 | ) | (1,319 | ) | 5,741 | 539 | | | | | | ||||||||||||||||||||||||||||
Gain on extinguishment of debt |
| (6,991 | ) | | | | | (6,991 | ) | | | (6,991 | ) | |||||||||||||||||||||||||||
Restructuring costs |
| | 1,726 | 1,892 | | | 3,618 | | | 3,618 | ||||||||||||||||||||||||||||||
Other, net |
| | (984 | ) | 140 | | | (844 | ) | (1 | ) | | (845 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total other expense |
1,898 | 36,070 | 73,229 | 56,463 | 1,403 | | 169,063 | 16,172 | | 185,235 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net earnings (loss) before income taxes |
(1,898 | ) | (36,070 | ) | 137,331 | 32,465 | (7,635 | ) | | 124,193 | (16,172 | ) | | 108,021 | ||||||||||||||||||||||||||
Provision for income tax expense (benefit) |
(682 | ) | 22,788 | 14,543 | 12,522 | | | 49,171 | (6,594 | ) | | 42,577 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net earnings (loss) |
(1,216 | ) | (58,858 | ) | 122,788 | 19,943 | (7,635 | ) | | 75,022 | (9,578 | ) | | 65,444 | ||||||||||||||||||||||||||
Equity in net income (loss) of subsidiaries: |
||||||||||||||||||||||||||||||||||||||||
CFTC |
| | | | | | | 75,022 | (75,022 | ) | | |||||||||||||||||||||||||||||
Intermediate |
(58,858 | ) | | | | | 58,858 | | | | | |||||||||||||||||||||||||||||
Guarantor Subsidiaries |
122,788 | | | | | (122,788 | ) | | | | | |||||||||||||||||||||||||||||
Non-Guarantor Subsidiaries |
19,943 | | | | | (19,943 | ) | | | | | |||||||||||||||||||||||||||||
SPV Subs |
(7,635 | ) | | | | | 7,635 | | | | | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net earnings (loss) attributable to CFTC |
$ | 75,022 | $ | (58,858 | ) | $ | 122,788 | $ | 19,943 | $ | (7,635 | ) | $ | (76,238 | ) | $ | 75,022 | $ | 65,444 | $ | (75,022 | ) | $ | 65,444 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-85
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands) |
Year ended December 31, 2015 | |||||||||||||||||||||||||||||||||||
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non- Guarantors |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
||||||||||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||||||||||
Total revenues |
$ | | $ | | $ | 573,664 | $ | 239,467 | $ | | $ | 813,131 | $ | | $ | | $ | 813,131 | ||||||||||||||||||
Cost of providing services: |
||||||||||||||||||||||||||||||||||||
Provision for losses |
| | 222,868 | 58,342 | | 281,210 | | | 281,210 | |||||||||||||||||||||||||||
Salaries and benefits |
| | 68,928 | 38,131 | | 107,059 | | | 107,059 | |||||||||||||||||||||||||||
Occupancy |
| | 30,504 | 22,784 | | 53,288 | | | 53,288 | |||||||||||||||||||||||||||
Office |
| | 15,089 | 4,840 | | 19,929 | | | 19,929 | |||||||||||||||||||||||||||
Other store operating expenses |
| | 41,661 | 5,719 | | 47,380 | | | 47,380 | |||||||||||||||||||||||||||
Advertising |
| | 42,986 | 22,678 | | 65,664 | | | 65,664 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total cost of providing services |
| | 422,036 | 152,494 | | 574,530 | | | 574,530 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Gross Margin |
| | 151,628 | 86,973 | | 238,601 | | | 238,601 | |||||||||||||||||||||||||||
Other (income) expense: |
||||||||||||||||||||||||||||||||||||
Corporate expenses |
2,035 | 178 | 71,754 | 41,993 | | 115,960 | 1,149 | | 117,109 | |||||||||||||||||||||||||||
Intercompany management fee (income) expense |
| 1 | (13,064 | ) | 13,063 | | | | | | ||||||||||||||||||||||||||
District expenses |
| | 7,412 | 4,525 | | 11,937 | | | 11,937 | |||||||||||||||||||||||||||
Interest expense |
| 49,167 | 17 | 111 | | 49,295 | 15,725 | | 65,020 | |||||||||||||||||||||||||||
Intercompany interest (income) expense |
| (5,583 | ) | (265 | ) | 5,848 | | | | | | |||||||||||||||||||||||||
Goodwill and intangible asset impairment charges |
| | | 2,882 | | 2,882 | | | 2,882 | |||||||||||||||||||||||||||
Fair value adjustment to contingent consideration |
| | | 4,291 | | 4,291 | | | 4,291 | |||||||||||||||||||||||||||
Other, net |
| | (11 | ) | 1,499 | | 1,488 | | | 1,488 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total other expense |
2,035 | 43,763 | 65,843 | 74,212 | | 185,853 | 16,874 | | 202,727 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net earnings (loss) before income taxes |
(2,035 | ) | (43,763 | ) | 85,785 | 12,761 | | 52,748 | (16,874 | ) | | 35,874 | ||||||||||||||||||||||||
Provision for income tax expense (benefit) |
(673 | ) | 10,704 | 4,164 | 10,291 | | 24,486 | (6,381 | ) | | 18,105 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net earnings (loss) |
(1,362 | ) | (54,467 | ) | 81,621 | 2,470 | | 28,262 | (10,493 | ) | | 17,769 | ||||||||||||||||||||||||
Equity in net income (loss) of subsidiaries: |
||||||||||||||||||||||||||||||||||||
CFTC |
| | | | | | 28,262 | (28,262 | ) | | ||||||||||||||||||||||||||
Intermediate |
(54,467 | ) | | | | 54,467 | | | | | ||||||||||||||||||||||||||
Guarantor Subsidiaries |
81,621 | | | | (81,621 | ) | | | | | ||||||||||||||||||||||||||
Non-Guarantor Subsidiaries |
2,470 | | | | (2,470 | ) | | | | | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net earnings (loss) attributable to CFTC |
$ | 28,262 | $ | (54,467 | ) | $ | 81,621 | $ | 2,470 | $ | (29,624 | ) | $ | 28,262 | $ | 17,769 | $ | (28,262 | ) | $ | 17,769 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-86
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Condensed Consolidating Statements of Cash Flows
(in thousands) |
Year ended December 31, 2016 | |||||||||||||||||||||||||||||||||||||||
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non- Guarantors |
SPV
Subs |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
|||||||||||||||||||||||||||||||
Cash flows from operating activities |
||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net cash provided (used) |
$ | 20 | $ | 29,400 | $ | 76,191 | $ | 27,731 | $ | (83,601 | ) | $ | (627 | ) | $ | 49,114 | $ | (1,402 | ) | $ | | $ | 47,712 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||||||||||||||||||
Purchase of property, equipment and software |
(20 | ) | | (10,105 | ) | (5,901 | ) | | | (16,026 | ) | | | (16,026 | ) | |||||||||||||||||||||||||
Change in restricted cash |
| (459 | ) | 4,477 | 1,856 | (2,770 | ) | | 3,104 | | | 3,104 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net cash used |
(20 | ) | (459 | ) | (5,628 | ) | (4,045 | ) | (2,770 | ) | | (12,922 | ) | | | (12,922 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||||||||||||||||||||||
Proceeds from credit facility |
| 30,000 | | | | | 30,000 | | | 30,000 | ||||||||||||||||||||||||||||||
Payments on credit facility |
| (38,050 | ) | | | | | (38,050 | ) | | | (38,050 | ) | |||||||||||||||||||||||||||
Deferred financing costs incurred |
| | | | (5,346 | ) | | (5,346 | ) | | | (5,346 | ) | |||||||||||||||||||||||||||
Proceeds from Non-Recourse U.S. SPV facility and ABL facility |
| | | | 91,717 | | 91,717 | | | 91,717 | ||||||||||||||||||||||||||||||
Purchase of May 2011 senior secured notes |
| (18,939 | ) | | | | | (18,939 | ) | | | (18,939 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net cash provided (used) |
| (26,989 | ) | | | 86,371 | | 59,382 | | | 59,382 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Effect of exchange rate changes on cash |
| | | (1,835 | ) | | 627 | (1,208 | ) | | | (1,208 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net increase in cash |
| 1,952 | 70,563 | 21,851 | | | 94,366 | (1,402 | ) | | 92,964 | |||||||||||||||||||||||||||||
Cash at beginning of period |
| 2 | 57,149 | 41,928 | | | 99,079 | 1,482 | | 100,561 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Cash at end of period |
$ | | $ | 1,954 | $ | 127,712 | $ | 63,779 | $ | | $ | | $ | 193,445 | $ | 80 | $ | | $ | 193,525 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-87
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands) |
Year ended December 31, 2015 | |||||||||||||||||||||||||||||||||||
CFTC |
CURO
Intermediate |
Subsidiary
Guarantors |
Subsidiary
Non- Guarantors |
Eliminations |
CFTC
Consolidated |
CURO | Eliminations |
CURO
Consolidated |
||||||||||||||||||||||||||||
Cash flows from operating activities |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net cash provided (used) |
$ | | $ | 11,950 | $ | 27,698 | $ | (6,345 | ) | $ | 1,048 | $ | 34,351 | $ | (17,237 | ) | $ | | $ | 17,114 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||||||||||||||
Purchase of property, equipment and software |
| | (8,642 | ) | (11,190 | ) | | (19,832 | ) | | | (19,832 | ) | |||||||||||||||||||||||
Intercompany dividends |
18,471 | | (18,471 | ) | | | | | | | ||||||||||||||||||||||||||
Change in restricted cash |
| | (300 | ) | (6,123 | ) | | (6,423 | ) | | | (6,423 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net cash provided (used) |
18,471 | | (27,413 | ) | (17,313 | ) | | (26,255 | ) | | | (26,255 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cash flows from financing activities: |
||||||||||||||||||||||||||||||||||||
Proceeds from credit facility |
| 57,050 | | | | 57,050 | | 57,050 | ||||||||||||||||||||||||||||
Payments on credit facility |
| (69,000 | ) | | | | (69,000 | ) | | (69,000 | ) | |||||||||||||||||||||||||
Dividend paid to CURO Group |
(18,100 | ) | | | | | (18,100 | ) | 18,100 | | | |||||||||||||||||||||||||
Payment for cash settlement of equity award |
(371 | ) | | | | | (371 | ) | | (371 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net cash used |
(18,471 | ) | (11,950 | ) | | | | (30,421 | ) | 18,100 | | (12,321 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Effect of exchange rate changes on cash |
| | | (7,016 | ) | (1,048 | ) | (8,064 | ) | | | (8,064 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net increase (decrease) in cash |
| | 285 | (30,674 | ) | | (30,389 | ) | 863 | | (29,526 | ) | ||||||||||||||||||||||||
Cash at beginning of period |
| 2 | 56,864 | 72,602 | | 129,468 | 619 | | 130,087 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cash at end of period |
$ | | $ | 2 | $ | 57,149 | $ | 41,928 | $ | | $ | 99,079 | $ | 1,482 | $ | | $ | 100,561 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 23SUBSEQUENT EVENTS
Debt offering
On February 15, 2017 CFTC issued $470.0 million 12.00% Senior Secured Notes due March 1, 2022. Interest on the notes is payable semiannually, in arrears, on March 1 and September 1 of each year, beginning on September 1, 2017. The proceeds from the Notes were used, together with available cash, to (i) redeem the outstanding 10.75% Senior Secured Notes due 2018 of our wholly-owned subsidiary, CURO Intermediate Holdings, (ii) redeem our outstanding 12.00% Senior Cash Pay Notes due 2017 and (iii) pay fees, expenses, premiums and accrued interest in connection with the offering. Consequently, we received a $130.1 million dividend in February 2017 to fund the redemption of the 12.00% Senior Cash Pay Notes.
ABL Facility
On November 17, 2016, CURO Intermediate entered into a six-month recourse credit facility with Victory Park Management, LLC and certain other lenders, or the ABL Facility, which provided for $25.0 million of borrowing capacity. The ABL Facility matured in May 2017 and was fully converted to the SPV facility.
Dividends received
On May 12, 2017, CFTC declared a dividend of $28.0 million to CURO, which was paid to our stockholders on May 15, 2017.
Acquisition of preferred shares
On April 20, 2017, we purchased 2,926,715 preferred shares of Cognical Holdings, Inc. (Cognical) for $5.0 million. Cognical operates as a business under an online website, www.zibby.com. The online business facilitates the purchase of household items and serves the underbanked consumers. As a result of this transaction, we own 8.9% of the equity of Cognical.
F-88
CURO GROUP HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Legal Proceedings: Harrison, et al v. Principal Investments, Inc. et al
On June 7, 2017, the parties in the Harrison, et al v. Principal Investments, Inc. et al class action lawsuit reached a settlement. At a hearing before the District Court in Clark County, Nevada, on July 10, 2017 the terms of the settlement were outlined before the Court and a fairness hearing was scheduled for July 24, 2017. In the opinion of management, the cost of such settlement should not have a material adverse effect on our financial position, results of operations or liquidity.
The Company evaluated and disclosed subsequent events through July 12, 2017, which represents the date as of which the financial statements were available to be issued.
F-89
PART IIINFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses to be paid by the registrant, other than estimated underwriting discounts and commissions, in connection with our initial public offering. All amounts shown are estimates except for the SEC registration fee and the FINRA filing fee:
(in thousands) |
||||
SEC registration fee |
$ | 12,450 | ||
FINRA filing fee |
$ | 15,500 | ||
NYSE listing fee |
$ | 25,000 | ||
Printing and engraving expenses |
$ | * | ||
Legal fees and expenses |
$ | * | ||
Accounting fees and expenses |
$ | * | ||
Transfer agent and registrar fees and expenses |
$ | * | ||
Miscellaneous |
$ | * | ||
|
|
|||
Total |
$ | * | ||
|
|
* | To be completed by amendment. |
Item 14. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware authorizes a court to award, or a corporations board of directors to grant, indemnity to officers and directors under certain circumstances and subject to certain limitations. The terms of Section 145 of the General Corporation Law of the State of Delaware are sufficiently broad to permit indemnification under certain circumstances for liabilities, including reimbursement of expenses incurred, arising under the Securities Act of 1933, as amended.
As permitted by Section 102(b)(7) of the General Corporation Law of the State of Delaware, the registrants amended and restated certificate of incorporation, to be in effect upon the completion of this offering, includes provisions that eliminate the personal liability of its directors for monetary damages for any breach of fiduciary duties as a director, except liability for the following:
| any breach of the directors duty of loyalty to the registrant or its stockholders; |
| acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; |
| under Section 174 of the General Corporation Law of the State of Delaware (regarding unlawful dividends and stock purchases); or |
| any transaction from which the director derived an improper personal benefit. |
To the extent Section 102(b)(7) is interpreted, or the General Corporation Law of the State of Delaware is amended, to allow similar protections for officers of a corporation, such provisions of the registrants amended and restated certificate of incorporation shall also extend to those persons.
In addition, as permitted by Section 145 of the General Corporation Law of the State of Delaware, the amended and restated bylaws of the registrant, to be in effect upon the completion of this offering, provide that:
| The registrant shall indemnify its directors and officers for serving the registrant in those capacities or for serving other business enterprises at the registrants request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such persons conduct was unlawful. |
II-1
| The registrant may, in its discretion, indemnify employees and agents as set forth in the General Corporation Law of the State of Delaware. |
| The registrant is required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such director or officer shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification. |
| The registrant will not be obligated pursuant to its amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person, except with respect to proceedings authorized by the registrants board of directors or brought to enforce a right to indemnification. |
| The rights conferred in the amended and restated bylaws are not exclusive, and the registrant is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons. |
The registrant has entered, and intends to continue to enter, into separate indemnification agreements with each of its directors and officers that provide the maximum indemnity allowed to directors and officers by Section 145 of the General Corporation Law of the State of Delaware and also provide for certain additional procedural protections. The registrant also maintains directors and officers insurance to insure such persons against certain liabilities.
The indemnification provisions in the registrants amended and restated certificate of incorporation, amended and restated bylaws and the indemnification agreements entered into between the registrant and its officers and directors may be sufficiently broad to permit indemnification of the registrants officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933.
The underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification in limited circumstances by the underwriters of the registrant and its officers and directors for liabilities, including arising under the Securities Act of 1933 and otherwise.
Item 15. Recent Sales of Unregistered Securities.
| Since January 1, 2014, we granted stock options to employees and directors under our stock option plans covering an aggregate of 17,589 shares, with exercise prices ranging from $122.00 per share to $319.08 per share. |
| On February 15, 2017, we issued $470,000,000 aggregate principal amount of 12.00% Senior Secured Notes due March 1, 2022 at an offering price of 98.155%. The initial purchasers were Jefferies LLC and Stephens Inc., and $6,000,000 of the 12.00% Senior Secured Notes were privately placed by the Company directly with certain members of the Companys board of directors. |
Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D or Regulation S promulgated thereunder), or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701 under the Securities Act. In connection with the issuance of the 12.00% Senior Secured Notes referenced above, the initial purchasers resold the 12.00% Senior Secured Notes to qualified institutional buyers within the meaning of Rule 144A under the Securities Act, in reliance on the exemption from registration requirements of the Securities Act provided by Rule 144A and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The indenture governing the Notes permits transfers of such securities to accredited investors (as defined in Regulation D of the Securities Act of 1933), among others, subject to compliance with applicable law.
II-2
Item 16. Exhibits and Financial Statement Schedules.
(a) | Exhibits |
The list of exhibits is set forth under Exhibit Index at the end of this registration statement and is incorporated herein by reference.
(b) | Financial Statement Schedules |
All financial statement schedules have been omitted because the required information is included in the consolidated financial statements and the notes thereto or the information therein is not applicable.
Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriters, at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-3
EXHIBIT INDEX
Exhibit
|
Description |
|
1.1 |
Form of Underwriting Agreement* |
|
3.1 |
Form of Amended and Restated Certificate of Incorporation of the Registrant, to be in effect upon the completion of this offering* |
|
3.2 |
Form of Amended and Restated Bylaws of the Registrant, to be in effect upon the completion of this offering* |
|
4.1 |
Form of common stock certificate* |
|
4.2 |
Amended and Restated Investors Rights Agreement between the Registrant and the investors listed on the signature pages thereto* |
|
5.1 |
Opinion of Willkie Farr & Gallagher LLP* |
|
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 |
CURO Group Holdings Corp. 2017 Stock Incentive Plan and form of Stock Option Agreement*+ |
|
10.6 |
CURO Group Holdings Corp. Employee Stock Purchase Plan*+ |
|
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
10.13 | ||
10.14 | ||
10.15 | ||
10.16 | ||
10.17 | ||
10.18 |
II-4
Exhibit
|
Description |
|
10.19 | ||
10.20 | ||
10.21 | ||
10.22 | ||
10.23 | ||
10.24 | ||
10.25 | ||
10.26 | ||
10.27 | ||
10.28 | ||
10.29 | ||
10.30 | ||
10.31 |
Form of Director and Officer Indemnification Agreement*+ |
|
10.32 | ||
10.33 | ||
10.34 | ||
10.35 | ||
10.36 | ||
10.37 | ||
10.38 |
II-5
Exhibit
|
Description |
|
10.39 | ||
10.40 | ||
10.41 | ||
10.42 | ||
10.43 | ||
10.44 | ||
10.45 | ||
10.46 | ||
10.47 | ||
10.48 | ||
10.49 | ||
10.50 | ||
10.51 | ||
10.52 | ||
10.53 | ||
10.54 | ||
10.55 | ||
10.56 | ||
10.57
|
II-6
Exhibit
|
Description |
|
10.58 | ||
21.1 | ||
23.1 | ||
23.2 |
Consent of Willkie Farr & Gallagher LLP (included in Exhibit 5.1)* |
|
24.1 |
Power of Attorney (included in the signature page to registration statement) |
|
99.1 | ||
99.2 |
* | To be filed by amendment. |
+ | Indicates management contract or compensatory plan, contract or arrangement. |
¥ | Confidential treatment pursuant to Rule 406 under the Securities Act has been requested as to certain portions of this exhibit, which portions have been omitted and submitted separately to the Securities and Exchange Commission. |
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Wichita, State of Kansas, on this 23 rd day of October, 2017.
CURO GROUP HOLDINGS CORP. |
||
By: |
/s/ Don Gayhardt |
|
Name: Don Gayhardt |
||
Title: President and Chief Executive Officer |
II-8
Each person whose signature appears below constitutes and appoints Don Gayhardt, Roger Dean and Vin Thomas, and each of them, as attorney-in-fact with full power of substitution, for him or her in any and all capacities, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the registrant to comply with the Securities Act of 1933, and any rules, regulations and requirements of the SEC thereunder, in connection with the registration under the Securities Act of 1933 of shares of common stock of the registrant, or the Shares, including, without limitation, the power and authority to sign the name of each of the undersigned in the capacities indicated below to the registration statement on Form S-1, or the registration statement to be filed with the SEC with respect to such Shares, to any and all amendments or supplements to such registration statement, whether such amendments or supplements are filed before or after the effective date of such registration statement, to any related registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to any and all instruments or documents filed as part of or in connection with such registration statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such registration statement, and each of the undersigned hereby ratifies and confirms all that such attorney and agent shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature |
Title |
Date |
||
/s/ Don Gayhardt Don Gayhardt |
President, Chief Executive Officer and Director (Principal Executive Officer) | October 23, 2017 | ||
/s/ Roger Dean Roger Dean |
Treasurer, Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | October 23, 2017 | ||
/s/ Doug Rippel Doug Rippel |
Executive Chairman | October 23, 2017 | ||
/s/ Chad Faulkner Chad Faulkner |
Director | October 23, 2017 | ||
/s/ Mike McKnight Mike McKnight |
Director | October 23, 2017 | ||
/s/ Christopher A. Masto Christopher A. Masto |
Director | October 23, 2017 | ||
/s/ Karen Winterhof Karen Winterhof |
Director | October 23, 2017 |
II-9
Exhibit 10.1
EXECUTION VERSION
LOAN AGREEMENT
By and among
CURO RECEIVABLES FINANCE I, LLC
as Borrower
VICTORY PARK MANAGEMENT, LLC
as Agent
Each of the financial institutions
now or hereafter a party hereto
as Lenders
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
TABLE OF CONTENTS
Article 1 DEFINITIONS |
1 | |||||
Section 1.1 |
Certain Definitions | 1 | ||||
Section 1.2 |
Rules of Construction | 24 | ||||
Article 2 THE CREDIT FACILITY | 25 | |||||
Section 2.1 |
The Loans | 25 | ||||
Section 2.2 |
The Notes | 26 | ||||
Section 2.3 |
Method of Payment | 26 | ||||
Section 2.4 |
Application of Proceeds | 27 | ||||
Section 2.5 |
Use of Proceeds | 28 | ||||
Section 2.6 |
Interest | 28 | ||||
Section 2.7 |
Advances | 29 | ||||
Section 2.8 |
Commitment Reductions and Prepayments | 32 | ||||
Section 2.9 |
Fees | 33 | ||||
Section 2.10 |
Regulatory Changes in Capital Requirements; Replacement of a Lender or Holder; and Funding Losses |
33 | ||||
Section 2.11 |
Sharing of Payments |
35 | ||||
Section 2.12 |
Pro Rata Treatment |
35 | ||||
Section 2.13 |
Controlled Accounts |
35 | ||||
Article 3 [Intentionally Omitted] | 35 | |||||
Article 4 REPRESENTATIONS AND WARRANTIES | 35 | |||||
Section 4.1 |
Representations and Warranties as to Receivables | 36 | ||||
Section 4.2 |
Organization and Good Standing | 37 | ||||
Section 4.3 |
Perfection of Security Interest | 37 | ||||
Section 4.4 |
No Violations | 37 | ||||
Section 4.5 |
Power and Authority | 37 | ||||
Section 4.6 |
Validity of Agreements | 38 | ||||
Section 4.7 |
Litigation | 38 | ||||
Section 4.8 |
Compliance | 38 | ||||
Section 4.9 |
Accuracy of Information; Full Disclosure | 38 | ||||
Section 4.10 |
Taxes |
39 | ||||
Section 4.11 |
Indebtedness |
39 | ||||
Section 4.12 |
Investments |
39 | ||||
Section 4.13 |
ERISA |
39 | ||||
Section 4.14 |
Hazardous Wastes, Substances and Petroleum Products |
40 | ||||
Section 4.15 |
Solvency |
40 | ||||
Section 4.16 |
Business Location |
40 | ||||
Section 4.17 |
Equity Interests |
41 | ||||
Section 4.18 |
No Extension of Credit for Securities |
41 | ||||
Section 4.19 |
[Intentionally Omitted] |
41 | ||||
Section 4.20 |
Regulated Entities |
41 | ||||
Section 4.21 |
Insurance |
41 |
i
Section 4.22 |
Deposit Accounts and Other Accounts |
41 | ||
Section 4.23 |
Foreign Assets Control Regulations and Anti-Money Laundering |
41 | ||
Section 4.24 |
USA PATRIOT Act |
42 | ||
Article 5 CONDITIONS TO EFFECTIVENESS AND TO EACH ADVANCE | 42 | |||
Section 5.1 |
Documents to be Delivered to Agent Prior to Effectiveness | 42 | ||
Section 5.2 |
Conditions to all Advances | 44 | ||
Section 5.3 |
Conditions to Each Release of Funds | 45 | ||
Article 6 AFFIRMATIVE COVENANTS | 46 | |||
Section 6.1 |
Place of Business and Books and Records | 46 | ||
Section 6.2 |
Reporting Requirements | 46 | ||
Section 6.3 |
Books and Records | 47 | ||
Section 6.4 |
Financial Covenants | 47 | ||
Section 6.5 |
Compliance With Applicable Law | 48 | ||
Section 6.6 |
Notice of Default or Regulatory Trigger Event | 48 | ||
Section 6.7 |
Existence, Properties | 48 | ||
Section 6.8 |
Payment of Indebtedness; Taxes | 49 | ||
Section 6.9 |
Notice Regarding Any Plan | 49 | ||
Section 6.10 |
Other Information |
49 | ||
Section 6.11 |
Litigation |
49 | ||
Section 6.12 |
Business Location, Legal Name and State of Organization |
50 | ||
Section 6.13 |
Operations |
50 | ||
Section 6.14 |
Post-Closing Covenant |
50 | ||
Section 6.15 |
Further Assurances |
52 | ||
Section 6.16 |
Insurance |
52 | ||
Section 6.17 |
Cash Management Systems |
52 | ||
Section 6.18 |
Meetings |
53 | ||
Section 6.19 |
Borrower Agent as Disregarded Entity |
53 | ||
Section 6.20 |
Board Observation Rights |
53 | ||
Section 6.21 |
Credit Policy Notice |
54 | ||
Section 6.22 |
Purchase of Additional Eligible Receivables |
54 | ||
Article 7 NEGATIVE COVENANTS | 54 | |||
Section 7.1 |
Payments to and Transactions with Affiliates | 55 | ||
Section 7.2 |
Restricted Payments | 55 | ||
Section 7.3 |
Indebtedness | 55 | ||
Section 7.4 |
Guaranties | 55 | ||
Section 7.5 |
Nature of Business | 55 | ||
Section 7.6 |
Sale of Assets/Negative Pledge | 55 | ||
Section 7.7 |
Investments | 55 | ||
Section 7.8 |
Subsidiaries | 56 | ||
Section 7.9 |
Mergers and Acquisitions | 56 | ||
Section 7.10 |
Use of Proceeds |
56 | ||
Section 7.11 |
Ownership and Management |
56 | ||
Section 7.12 |
Amendment to Material Contracts |
56 |
ii
Section 7.13 |
No Negative Pledges |
56 | ||
Section 7.14 |
Changes in Accounting, Name and Jurisdiction of Organization |
57 | ||
Section 7.15 |
OFAC; USA PATRIOT Act |
57 | ||
Section 7.16 |
Right of First Refusal |
57 | ||
Article 8 EVENTS OF DEFAULT | 58 | |||
Section 8.1 |
Failure to Make Payments | 58 | ||
Section 8.2 |
Information, Representations and Warranties | 58 | ||
Section 8.3 |
Covenants | 58 | ||
Section 8.4 |
Collateral | 59 | ||
Section 8.5 |
Defaults Under Other Agreements | 59 | ||
Section 8.6 |
Certain Events | 59 | ||
Section 8.7 |
Possession of Collateral | 60 | ||
Section 8.8 |
Guarantor | 60 | ||
Section 8.9 |
Credit Documents | 60 | ||
Section 8.10 |
Hedging Agreements |
60 | ||
Section 8.11 |
Regulatory Trigger Event |
60 | ||
Section 8.12 |
Key Person Event |
60 | ||
Section 8.13 |
Change of Control |
61 | ||
Section 8.14 |
Minimum Liquidity |
61 | ||
Section 8.15 |
Backup Servicing Agreement |
61 | ||
Article 9 REMEDIES OF AGENT AND WAIVER | 61 | |||
Section 9.1 |
Agents Remedies | 61 | ||
Section 9.2 |
Waiver and Release by Borrowers | 62 | ||
Section 9.3 |
No Waiver | 62 | ||
Section 9.4 |
Commitment Termination Fee and Prepayment Fee | 62 | ||
Article 10 MISCELLANEOUS | 63 | |||
Section 10.1 |
Indemnification and Release Provisions |
63 | ||
Section 10.2 |
Amendments |
63 | ||
Section 10.3 |
APPLICABLE LAW |
64 | ||
Section 10.4 |
Notices |
64 | ||
Section 10.5 |
Termination and Release |
66 | ||
Section 10.6 |
Counterparts |
66 | ||
Section 10.7 |
Costs, Expenses and Taxes |
66 | ||
Section 10.8 |
Participations and Assignments |
67 | ||
Section 10.9 |
Effectiveness of Agreement |
70 | ||
Section 10.10 |
JURISDICTION AND VENUE |
71 | ||
Section 10.11 |
WAIVER OF JURY TRIAL |
71 | ||
Section 10.12 |
REVIEW BY COUNSEL |
71 | ||
Section 10.13 |
Confidentiality; Sharing Information |
71 | ||
Section 10.14 |
USA PATRIOT Act Notice |
72 | ||
Section 10.15 |
Acknowledgment of Receipt |
72 | ||
Section 10.16 |
Advertisement |
72 | ||
Section 10.17 |
Taxes |
72 |
iii
Section 10.18 |
Release |
77 | ||
Article 11 AGENT | 77 | |||
Section 11.1 |
Appointment of Agent |
77 | ||
Section 11.2 |
Nature of Duties of Agent |
77 | ||
Section 11.3 |
Lack of Reliance on Agent |
78 | ||
Section 11.4 |
Certain Rights of Agent |
78 | ||
Section 11.5 |
Reliance by Agent |
78 | ||
Section 11.6 |
Indemnification of Agent |
79 | ||
Section 11.7 |
Agent in its Individual Capacity |
79 | ||
Section 11.8 |
Holders of Notes |
79 | ||
Section 11.9 |
Successor Agent |
79 | ||
Section 11.10 |
Collateral Matters |
80 | ||
Section 11.11 |
Delivery of Information |
81 | ||
Section 11.12 |
Defaults |
81 |
iv
EXHIBITS | ||
Exhibit A: |
Form of Annual Compliance Certificate | |
Exhibit B: |
Form of Monthly Statement | |
Exhibit C: |
Form of Request for Advance | |
Exhibit D: |
Credit Policy | |
Exhibit E: |
Form of Borrowing Base Certificate | |
Exhibit F: |
Form of Funds Release Request | |
SCHEDULES | ||
Schedule I: |
Lenders | |
Schedule II: |
Permitted Indebtedness | |
Schedule III: |
Permitted Liens | |
Schedule 4.2: |
Organization and Good Standing | |
Schedule 4.7: |
Litigation | |
Schedule 4.12: |
Investments | |
Schedule 4.16: |
Business Locations | |
Schedule 4.17: |
Equity Interests | |
Schedule 4.23: |
Deposit Accounts |
v
LOAN AGREEMENT
This LOAN AGREEMENT is made as of November 17, 2016 by and among CURO RECEIVABLES FINANCE I, LLC, a Delaware limited liability company ( Borrower Agent ), and such other Persons joined hereto from time to time after the date hereof as borrowers with the prior written consent of Agent (collectively with Borrower Agent, the Borrowers and each individually is referred to as a Borrower ), VICTORY PARK MANAGEMENT, LLC, as agent for Lenders and Holders ( Agent ), and the financial institutions from time to time party hereto (collectively, the Lenders and each individually is referred to as a Lender ).
BACKGROUND
Borrowers have requested and Agent and Lenders have agreed to make available to Borrowers a senior secured revolving and term credit facility in the initial amount of the Maximum Principal Amount, all on terms and subject to the conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Certain Definitions . The terms defined in this Section 1.1 , whenever used and capitalized in this Agreement shall, unless the context otherwise requires, have the respective meanings herein specified.
Acceptance Date has the meaning assigned to that term in Section 10.8(c) .
Advance(s) means each Revolving Loan Advance and the Term Loan Advance.
Advance Rate means, 80%; provided, however, that at any time during which a Level I Trigger Event has occurred and is continuing the Advance Rate shall be 70%.
Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by and under common control with), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. Notwithstanding anything to the contrary herein or in any other Credit Document, the term Affiliate shall not include any entity that would otherwise qualify as an Affiliate solely by reason of the FFL Groups ownership interest in the Curo Entities, other than each Curo Entity or a Subsidiary of a Curo Entity; and provided, further, that Ad Astra Recovery Services Inc. shall not be considered an Affiliate of Borrower, Guarantor, any Originator or any Curo Entity.
Agent has the meaning assigned to that term in the preamble.
1
Aggregate Eligible Receivables mean Eligible Receivables and Eligible Receivables as defined and financed under the Bridge Credit Agreement.
Aggregate Online Receivables means Online Receivables and Online Receivables as defined and financed under the Bridge Credit Agreement.
Aggregate Title Receivables mean Title Receivables and Title Receivables as defined and financed under the Bridge Credit Agreement.
Agreement means this Loan Agreement and all exhibits and schedules hereto, as the same may be amended, modified or supplemented from time to time.
Annual Compliance Certificate means a certificate in the form of Exhibit A attached hereto and made a part hereof.
Anti-Terrorism Laws means any laws relating to terrorism or money laundering, such as the USA PATRIOT Act and other laws administered by the U.S. Department of the Treasury Financial Crimes Enforcement Network.
Assignment and Acceptance means an assignment and acceptance entered into by an assigning Lender or Holder and an assignee Lender or Holder, accepted by Agent, in accordance with Section 10.8 in form and substance satisfactory to Agent (in its sole and absolute discretion).
Backup Servicer means a Person, reasonably satisfactory to Agent, that the Borrowers have appointed and that is providing backup servicing and its permitted successors and assigns reasonably satisfactory to Agent.
Backup Servicing Agreement means the Backup Servicing Agreement among the Servicer, Backup Servicer and Borrower Agent as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
Bankruptcy Code means the United States Bankruptcy Code as now constituted or hereafter amended and any similar statute or law affecting the rights of debtors.
Base Rate means the greater of (i) 1.00% and (ii) the LIBOR Rate.
Board of Directors means:
(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;
(2) with respect to a partnership, the board of directors or other governing body of the general partner of the partnership;
(3) with respect to a limited liability company, the board of directors, managers or other governing body, and in the absence of the same, the managing member or members or any controlling committee of managing members thereof; and
2
(4) with respect to any other Person, the board or committee of such Person or other individual or entity serving a similar function.
Books and Records means all of Credit Parties original ledger cards, payment schedules, credit applications, contracts, lien and security instruments, guarantees relating in any way to the Collateral and other books and records or transcribed information of any type, whether expressed in electronic form in tapes, discs, tabulating runs, programs and similar materials now or hereafter in existence relating to the Collateral.
Borrower Agent has the meaning assigned to that term in the preamble.
Borrower Parties means the Borrowers, Guarantors and the Curo Entities.
Borrower(s) has the meaning assigned to that term in the preamble.
Borrowers Loan Account has the meaning assigned to that term in Section 2.1 .
Borrowing Base means, as of the date of determination, an amount equal to (a) the product of (i) the Advance Rate and (ii) the Principal Receivables balance of the sum of all of the Eligible Receivables minus (b) the Facilities Excess Concentration Amount.
Borrowing Base Certificate means a certificate, substantially in the form of Exhibit E , executed by an officer of each Borrower and delivered to the Agent, which sets forth the calculation of the Borrowing Base, including a calculation of each component thereof.
Borrowing Base Deficiency means, as of the date of determination, an amount equal to (a) the sum of the aggregate unpaid principal amount of all Revolving Loan Advances and all Term Loan Advances minus (b) the Borrowing Base.
Bridge Credit Agreement shall mean the Short-Term Credit Agreement, dated as of November 17, 2016, by and among Curo Financial Technologies Corp., Curo Intermediate, the Lenders party thereto from time to time, and the Agent.
Bridge Notes shall mean Notes as defined in the Bridge Credit Agreement.
Business Day means any day except a Saturday, Sunday or other day on which national banks are authorized by law to close including, without limitation, United States federal government holidays.
Cash Equivalents means (a) any readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or insured by the United States federal government or (ii) issued by any agency or instrumentality of the United States federal government the obligations of which are fully backed by the full faith and credit of the United States federal government, (b) any readily-marketable direct obligations issued by any other agency of the United States federal government, any state, territory or commonwealth of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case having a rating of at least A-1 from S&P or at least P-1 from Moodys, (c) any commercial paper rated at least A-1 by S&P or P-1 by Moodys and issued by any Person organized
3
under the laws of any state, territory or commonwealth of the United States, (d) any dollar-denominated time deposit, insured certificate of deposit, overnight bank deposit or bankers acceptance issued or accepted by (i) any Lender or (ii) any commercial bank that is (A) organized under the laws of the United States, any state, territory or commonwealth thereof or the District of Columbia, (B) adequately capitalized (as defined in the regulations of its primary federal banking regulators) and (C) has Tier 1 capital (as defined in such regulations) in excess of $250,000,000 and (e) shares of any United States money market fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clause (a), (b), (c) or (d) above with maturities as set forth in the proviso below, (ii) has net assets in excess of $500,000,000 and (iii) has obtained from either S&P or Moodys the highest rating obtainable for money market funds in the United States; provided, however, that the maturities of all obligations specified in any of clauses (a), (b), (c) or (d) above shall not exceed 365 days.
Cash Management System has the meaning assigned to that term in Section 6.17(b) .
Change of Control means the occurrence of any of the following:
(1) the direct or indirect sale, conveyance, transfer, lease or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of Holdings and its Subsidiaries, taken as a whole, to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders;
(2) the adoption of a plan relating to the liquidation or dissolution of Holdings;
(3) the consummation of any transaction (including any merger or consolidation) the result of which is that any person (as defined above) other than the Permitted Holders, becomes the beneficial owner (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (3) such person shall be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the voting stock of Holdings;
(4) after an initial public offering of Holdings or any direct or indirect parent of Holdings, the first day on which a majority of the members of the Board of Directors of Holdings, Curo Intermediate, the Borrower Agent or any Guarantor are not Continuing Directors;
(5) the consummation of the first transaction (including any merger or consolidation), the result of which is that any person (as defined above) other than the Permitted Holders becomes the beneficial owner (as defined above), directly or indirectly, of more of the voting stock of Holdings than is at that time beneficially owned by the Permitted Holders in the aggregate (except that for purposes of this clause (5) such Permitted Holders shall be deemed to have beneficial ownership of all shares of voting stock that such Permitted Holders have the right to acquire, whether such right is exercisable immediately or only after the passage of time); provided, that such transaction shall not constitute a Change of Control unless such person then owns, directly or indirectly, in the aggregate, more than 35% of the voting stock of Holdings; or
4
(6) the first day on which Holdings ceases to beneficially own (as defined above) 100% of the outstanding voting stock of Curo Financial Technologies Corp., Curo Intermediate, any Guarantor or the Borrower Agent.
Charged-Off Receivables means any Receivable or Curo Receivable, as applicable, which has principal, interest or fees that has been delinquent for 30 days or charged off or deemed uncollectible by the Servicer or related Originator, as applicable, pursuant to the Credit Policy.
Closing Date means November 17, 2016.
Closing Fee means the fee pursuant to Section 2.9(c) .
Code means the Internal Revenue Code of 1986, as amended from time to time, and regulations with respect thereto in effect from time to time.
Collateral means Collateral as defined in the Guaranty and Security Agreement.
Collateral Assignment means that certain letter agreement regarding the collateral assignment of servicing and collection rights dated on or about the date hereof among the Agent, Borrower Agent and the Servicer, as amended, modified, restated or extended from time to time.
Collection Account has the meaning assigned to that term in Section 2.13(a) .
Collection Account Bank means any account control bank reasonably acceptable to the Agent, which initially shall be Wells Fargo Bank, National Association.
Collection Agency means Ad Astra Recovery Service, Inc. or such other replacement collection agency that may be appointed with the prior written consent of the Agent.
Collection Agency Agreement means that certain Collection Agency Agreement dated on or about the date hereof between Borrower and Collection Agency.
Collections means payment of principal, interest and fees on Receivables, the cash and non-cash proceeds realized from the enforcement of such Receivables and any security therefor, or the Collateral, proceeds of credit, group life or non-filing insurance, or proceeds of insurance on any real or personal property which is part of the collateral for the Receivables.
Commitment(s) means the Revolving Loan Commitment and the Term Loan Commitment.
Commitment Percentage(s) means, for any Lender, the Revolving Loan Commitment Percentage and the Term Loan Commitment Percentage.
5
Commitment Termination Fee means, a fee in the following amount: (i) for a Commitment termination occurring between the Closing Date and the twenty-four month anniversary of the Closing Date, an amount equal to the sum of (1) the product of (A) the number of days from the date of such Commitment termination until the twenty-four month anniversary of the Closing Date divided by 360 days and (B) the product of the aggregate principal amount of the Commitments being terminated and the Loan Interest Rate, and (2) the product of (A) 3.0% and (B) the aggregate principal amount of the Commitments being terminated; (ii) for a Commitment termination occurring after the twenty-four month anniversary of the Closing Date and on or prior to the thirty month anniversary of the Closing Date, the product of (A) 3.0% and (B) the aggregate principal amount of the Commitments being terminated and (iii) for a Commitment termination occurring after the thirty month anniversary of the Closing Date, none.
Commodity Exchange Act means the Commodity Exchange Act (7 U.S.C. Section 1 et seq.), as amended from time to time, and any successor statute.
Competitors means the following Persons and their Subsidiaries and Affiliates: Enova International, Inc., Elevate Credit, Inc., TMX Finance LLC (f.k.a TitleMax Holdings, LLC), CNG Holdings - CNG Holdings, Inc., Advance America (including Grupo Elektra, the Mexican parent of Advance America) - Advance America, Cash Advance Centers Inc. (Parent: Grupo Salinas), Check Into Cash, Inc. (Parent: CreditCorp), Community Choice Financial, Inc., QC Holdings, Inc., DFC Global Corp., Wheels Financial Group, LLC d/b/a LoanMart, Avant, Inc., OneMain Holdings, Inc. (f.k.a Springleaf Holdings, Inc.) (Parent: Springleaf Financial Holdings, LLC.), NCP Finance Limited Partnership (Parent: NCP Holdings, L.P), Integrity Texas Funding, LP (Parent: The Capital Corporation) and Ivy Management, LLC.
Consumer Finance Laws means all applicable laws, regulations, interpretations and guidance, federal, state and local, relating to the extension of consumer credit, and the creation of a security interest in personal property in connection therewith, as the case may be, and laws with respect to protection of consumers interests in connection with such transactions, including without limitation, any usury laws, any privacy laws, the Electronic Signatures in Global and National Commerce Act, the Federal Consumer Credit Protection Act, the Federal Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Federal Trade Commissions Rules and Regulations and Regulations B, E and Z of the Consumer Financial Protection Bureau, as any of the foregoing may be amended from time to time.
Continuing Director means, as of any date of determination, any member of the Board of Directors of Holdings, Curo Intermediate, the Borrower Agent or any Guarantor (as applicable) who (1) was a member of such Board of Directors on the date of this Agreement or (2) was (x) nominated for election or elected to such Board of Directors with the approval, recommendation or endorsement of a majority of the directors who were members of such Board of Directors on the date of this Agreement or whose nomination or election to the Board of Directors was previously so approved or (y) designated or appointed, directly or indirectly, by the Permitted Holders.
6
Contractual Obligation means, as to any Person, any provision of any security (whether in the nature of Stock or otherwise) issued by such Person or of any written agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement (other than a Credit Document) to which such Person is a party or by which it or any of its Property is bound or to which any of its Property is subject.
Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms Controlling and Controlled shall have meanings correlative thereto.
Control Agreement means, collectively, (a) that certain deposit account control agreement dated on or about the date hereof among the Borrower, Agent and Collection Account Bank and (b) any other deposit account control agreement entered into among one or more of the Borrowers, Agent and a financial institution, as each may be amended, modified, restated or extended from time to time.
Costs and Expenses mean all costs incurred by Agent, Lenders, Holders and Senior Participant in connection with the transaction contemplated herein up to and including the Closing Date, including, without limitation, legal fees, advisor fees, consultant fees, costs and expenses, collateral valuations, appraisals, surveys, field examinations, third party diligence, lien searches, filing fees, and all other out-of-pocket costs and expenses in any way related to the transaction contemplated herein, and the enforcement and collection thereof.
Credit Documents means this Agreement, the Notes, the Control Agreements, the Custodian Agreement, the Guaranty and Security Agreement, the Loan Sale Agreement, the Loan Transfer Agreement, the Collateral Assignment, the Servicing Agreement, the Backup Servicing Agreement and any and all additional documents, instruments, agreements and other writings executed and delivered pursuant to or in connection with this Agreement, as each may be amended, modified, restated or extended from time to time.
Credit Party means each Borrower and each Guarantor.
Credit Policy means, with respect to each Originator, the applicable credit policy for the Receivables as in effect on the Closing Date, as attached hereto as Exhibit D (collectively, as amended to the extent permitted under this Agreement).
Cumulative Net Loss means, as of any date of determination and with respect to any Vintage Pool, the aggregate principal amount of related Curo Receivables in such Vintage Pool that have become Charged-Off Receivables or otherwise liquidated, net of all liquidation proceeds and other recoveries with respect to such Curo Receivables, during the period beginning on the applicable date of origination through the end of the ninth completed fiscal month.
Cumulative Net Loss Rate means, as of any date of determination and with respect to any Vintage Pool, a rate, expressed as a percentage equal to a fraction, (I) the numerator of which is the aggregate Cumulative Net Loss with respect to all related Curo Receivables in such Vintage Pool and (II) the denominator of which is the aggregate principal balance of all Curo Receivables in such Vintage Pool at the time of origination; provided , that the Cumulative Net Loss Rate shall not be calculated for any Vintage Pool (and shall not be measured hereunder) unless and until nine completed fiscal months have occurred following the origination of such Vintage Pool.
7
Cumulative Net Losses In-Store Receivables means, with respect to any Vintage Pool, the Cumulative Net Loss Rate of the In-Store Receivables included in such Vintage Pool.
Cumulative Net Losses Online Receivables means, with respect to any Vintage Pool, the Cumulative Net Loss Rate of the Online Receivables included in such Vintage Pool.
Cumulative Net Losses Title Receivables means, with respect to any Vintage Pool, the Cumulative Net Loss Rate of the Title Receivables included in such Vintage Pool.
Curo Concentration Account means that certain deposit account established and maintained by Curo Intermediate, which shall initially be a deposit account at Wells Fargo Bank, National Association with the account number 6540.
Curo Entities means, collectively, Curo Group Holdings Corp., Curo Financial Technologies Corp. and Curo Intermediate.
Curo Intermediate means Curo Intermediate Holdings Corp.
Curo Receivables means the indebtedness and other obligations originally owed to any Originator in connection with any and all liens, title retention and security agreements, chattel mortgages, chattel paper, bailment leases, installment sale agreements, instruments, consumer finance paper and/or promissory notes securing and evidencing unsecured multi-pay consumer installment loans and auto title loans made, and/or time sale transactions or acquired by an Originator which were originated in accordance with the Credit Policy and, in the case of auto title loans, the repayment of which is secured by a perfected first priority security interest in a motor vehicle.
Custodian means one or more Person(s) as custodian under one or more Custodian Agreement that is reasonably acceptable to Agent.
Custodian Agreement means one or more Custodian Agreement(s) dated as of the dates thereof by and among Agent, Borrowers, Guarantors and Custodian, as the same may be amended, modified, restated or extended from time to time, that is reasonably acceptable to Agent.
Debt means as of the date of determination, all outstanding indebtedness including without limitation (a) all loans made hereunder to Borrowers; (b) accounts payable as of the date of determination (other than trade payables in the ordinary course of business); (c) mortgages; (d) debenture instruments, and other instruments, including all accruals of interest and fees related thereto; and (e) all other obligations of a Person, which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise).
8
Debt-to-Equity Ratio means with respect to each Borrower, at any time, the ratio between (i) the aggregate amount of Debt, liabilities and other obligations of each Borrower (including the Obligations), determined in accordance with GAAP, at such time, and (ii) the sum of (A) the aggregate amount of capital contributions made to the Borrowers and retained earnings of the Borrowers, determined in accordance with GAAP, in each case, as of such time reduced by (B) the aggregate amount of cash distributions made by Curo Intermediate to any of its shareholders as of such time.
Default means an event, condition or circumstance which, with the giving of notice or the passage of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default.
Defaulting Lender has the meaning assigned to that term in Section 2.7 .
Dissenting Lender has the meaning assigned to that term in Section 10.2(a) .
Distributions means payments by Borrowers, or on behalf of Borrowers, which constitute redemptions, repurchases, dividends or distributions of any kind with respect to a Borrowers equity interests or any warrants, rights or options to purchase or otherwise acquire any shares of a Borrowers equity interests; provided, Distributions shall be deemed not to include any payments by Borrowers with respect to amounts received pursuant to clause Seventh of Section 2.4 , whether in the form of cash dividends, distributions or payment of purchase price for Receivables to be included in the Collateral.
Eligible Receivables means, as of the date of determination, Receivables (net of unearned interest, fees, unearned discounts, insurance commissions, reserves and holdbacks thereon) that are Receivables designated as product type M in Curo Intermediates system, and solely in the case of Title Receivables, Receivables which are Chattel Paper, and which conform to the warranties set forth in Section 4.1 , in which Agent has a validly perfected first priority Lien, and which are not any of the following:
(a) Receivables that are 30 days delinquent or are otherwise Charged-Off Receivables;
(b) Receivables to employees, affiliates (other than their employees) or shareholders other than on an arms length basis;
(c) Receivables with respect to which the account debtor is not a natural person domiciled in the United States;
(d) Receivables not denominated in U.S. Dollars;
(e) Receivables involved in litigation or subject to legal, bankruptcy or insolvency proceedings or Receivables with obligors subject to bankruptcy or insolvency proceedings;
(f) Receivables with a balloon payment and/or Receivables that are non-amortizing accounts with 3 or more monthly payments;
(g) Receivables with terms in excess of 48 months;
9
(h) Receivables originated, acquired or participated in that are not in compliance with the Credit Policy, the Installment Loan Program of Curo Intermediate or the Originators underwriting guidelines;
(i) Receivables that violate applicable consumer protection state or usury laws in any material respect;
(j) Receivables where the obligor has missed the first scheduled payment of principal, interest or any other costs, fees and expenses;
(k) Receivables with respect to which any obligations of the related Originator or any assignee thereof to fund additional advances or other amounts remains outstanding;
(l) Receivables that are subject to assignment or confidentiality restrictions applicable to the related Originator or Borrower;
(m) Receivables made to residents in states where the related Originator was not licensed or registered as required by applicable state law when such loan was made;
(n) Receivables that are single-pay accounts requiring repayment in a single payment;
(o) Receivables that are open-ended or are able to roll or defer with respect to maturity date;
(p) Unsecured Receivables with a principal amount greater than $5,000;
(q) Title Receivables with a principal amount greater than $25,000;
(r) Receivables that have been modified in any respect, excluding immaterial modifications not impacting the existing economics or payment schedule of the loan by more than fifteen (15) days;
(s) Receivables where any Borrower Party acts or acted as a credit services organization or credit access business, each as defined by relevant state statutes; provided, that if a Borrower Party acts or acted as a credit services organization or credit access business with respect to a particular state, only the Receivables generated as a result of such license or registration shall not qualify as Eligible Receivables pursuant to this clause; or
(t) Receivables originated in the states of Colorado, Illinois, Nevada, South Carolina, Wisconsin and such other states where Borrower is prevented by applicable Requirements of Law from acquiring, holding and enforcing consumer loans without the grant of a necessary license or approval from any applicable Governmental Authority; provided, in any such state where the Borrower has received such license or approval as evidenced by a license, permit, authorization, certificate or other similar document evidencing the same from a Governmental Authority, then such state will be deemed to be removed from this clause (t) as of the business day immediately following the effective date of such document evidencing such license or approval.
10
Environmental Control Statutes means any applicable federal, state, county, regional or local laws governing the control, storage, removal, spill, release or discharge of Hazardous Substances, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act, the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976, the Hazardous Materials Transportation Act, the Emergency Planning and Community Right to Know Act of 1986, the National Environmental Policy Act of 1975, the Oil Pollution Act of 1990, any similar or implementing state law, and in each case including all amendments thereto, all binding rules and regulations promulgated thereunder and requirements in permits issued in connection therewith.
EPA means the United States Environmental Protection Agency, or any successor thereto.
ERISA means the Employee Retirement Income Security Act of 1974, all amendments thereto, and any successor statute of similar import, and regulations thereunder, in each case as in effect from time to time.
ERISA Affiliate means any trade or business (whether or not incorporated) that together with any Borrower is treated as a single employer under Section 414(b) or (c) of the Code or, solely with respect to Section 412 of the Code, Section 414(m) or (o) of the Code.
Event of Default has the meaning assigned to that term in Article 8 of this Agreement.
Excess Concentration Amounts shall include the following:
(a) Aggregate Eligible Receivables where the original term is greater than 9 months in excess of 75% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(b) The Principal Receivables balance of the Aggregate Title Eligible Receivables in excess of 55% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(c) The Principal Receivables balance of the second-lien Aggregate Title Eligible Receivables in excess of 35% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(d) The Principal Receivables balance of the Aggregate Title Eligible Receivables with the lowest interest rate until the weighted average interest rate of all the remaining Aggregate Title Eligible Receivables ( i.e. , excluding such lowest interest rate Aggregate Title Eligible Receivables) is at or above 95%;
(e) The Principal Receivables balance of the Aggregate Eligible Receivables constituting unsecured Aggregate Eligible Receivables with the lowest interest rate until the weighted average interest rate of all the remaining Aggregate Eligible Receivables constituting unsecured Aggregate Eligible Receivables ( i.e. , excluding such lowest interest rate Aggregate Eligible Receivables) is at or above 200%
11
(f) The Principal Receivables balance of the Aggregate Eligible Receivables with the lowest FICO score until the weighted average FICO score of all the remaining Aggregate Eligible Receivables ( i.e. , excluding such lowest FICO score Aggregate Eligible Receivables) is at or above 575;
(g) The Principal Receivables balance of the Aggregate Eligible Receivables with the longest original term until the weighted average original term to maturity of all the remaining Aggregate Eligible Receivables ( i.e. , excluding such longest original maturity Aggregate Eligible Receivables) is at or below 30 months;
(h) The Principal Receivables balance of the Aggregate Eligible Receivables with the highest original principal balance until the average original principal balance of the remaining Aggregate Eligible Receivables ( i.e. , excluding such highest original principal balance Aggregate Eligible Receivables) is at or below $800;
(i) Aggregate Eligible Receivables where the applicable obligors have monthly income less than $2,000 in excess of 30% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(j) Aggregate Online Eligible Receivables in excess of 30% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date; or
(k) Aggregate Eligible Receivables originated in the State of California in excess of 60% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date.
Excluded Property has the meaning assigned to that term within the definition of Collateral in Section 1.1 .
Excluded Rights and Obligations has the meaning assigned to the term in Section 10.8(j) .
Excluded Taxes means any of the following Taxes imposed on or with respect to Agent or any Lender or Holder or required to be withheld or deducted from a payment to Agent or any Lender or Holder, (a) Taxes imposed on or measured by net income (in each case, however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Person being organized under the laws of, or having its principal office or, in the case of any Lender or Holder, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account of a Lender or Holder with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender or Holder acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrowers under Section 2.10(b) ), (ii) such Lender or Holder changes its lending office (other than pursuant to Section 10.17(j) ) or (iii) in the case of a Foreign Lender or Foreign Holder that is not the beneficial owner of some or all payments
12
received by it under this Agreement, any beneficial interest in any of its rights hereunder is assigned or transferred (other than pursuant to an assignment request by the Borrowers under Section 2.10 ), except in each case to the extent that, pursuant to Section 10.17 , amounts with respect to such Taxes were payable either to such Lenders or Holders assignor (or in the case of an assignment or transfer of a beneficial interest in a Foreign Lender or Foreign Holder that is not the beneficial owner of some or all payments received by it under this Agreement, to such Foreign Lender or Foreign Holder with respect to the assigned or transferred beneficial interest) immediately before such Lender or Holder became a party hereto or to such Lender or Holder immediately before it changed its lending office, (c) Taxes attributable to such Persons failure to comply with Section 10.17(d) and (d) any U.S. federal withholding Taxes imposed under FATCA.
Facilities Excess Concentration Amount means the product of (a) the Excess Concentration Amount and (b) the Facilities Percentage.
Facilities Percentage means an amount equal to (a) the outstanding principal balance of the Notes divided by (b) the sum of (i) the amount in the foregoing clause (a) and the outstanding principal balance of the Bridge Notes.
Facility Availability means, with respect to any date of determination prior to the Termination Date, an amount equal to (i) all Collections on deposit in the Collection Account minus (ii) the total amount of funds estimated to be distributed pursuant to clauses First through Fourth of Section 2.4(a) on the immediately succeeding Payment Date.
FATCA means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any applicable agreements entered into pursuant to Section 1471(b)(1) of the Code, and any applicable intergovernmental agreement and laws, regulations or official administrative guidance implementing such intergovernmental agreements.
FFL Group means (i) Friedman Fleischer & Lowe, LLC and its Affiliates and (ii) any investment vehicle that is managed (whether through ownership of securities having a majority of the voting power or through management of investments) by any Person listed in clause (i), but excluding any portfolio companies (other than any Curo Entity or any Subsidiary of a Curo Entity) of any such Person.
Fiscal Year means any of the annual accounting periods of Borrowers ending on December 31 of each year.
Foreclosure Sale has the meaning specified in Section 9.4 .
Foreign Lender means any Lender or Participant that is not a United States person within the meaning of the Code section 7701(a)(30).
Foreign Holder means any Holder than is not a United States person within the meaning of the Code section 7701(a)(30).
13
Founders means each of (i) Doug Rippel, (ii) Chad Faulkner, (iii) Mike McKnight, (iv) Joseph Genova, (v) the J.P. Genova Family Trust and (vi) any (a) spouse or lineal descendent (whether natural or adopted) of any Person listed in clauses (i) through (v) or (b) trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or persons beneficially holding an 80% or more controlling interest of which consist of such Person and/or any of the Persons referred to in the immediately preceding clause (a).
Funds Release Request means a notice substantially in the form of Exhibit F .
GAAP means generally accepted accounting principles applied on a consistent basis, in the United States of America. The requirement that such principles be applied on a consistent basis shall mean that the accounting principles observed in a current period are comparable in all material respects to those applied in a preceding period, or, in the event of a material change in any accounting principle from that observed in any previous period (i) financial reports covering preceding periods during the term of this Agreement are restated to reflect such change and provide a consistent basis for comparison among periods and (ii) the financial covenants set forth in Section 6.4 shall be adjusted as determined by Agent to reflect similar performance standards as those measured by the existing covenants using the previously observed accounting principles.
Governmental Authority means any nation or government, any state, local or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. The term Governmental Authority shall further include any institutional review board, ethics committee, data monitoring committee, or other committee or entity with defined authority to oversee regulatory matters.
Guarantors means (a) CURO Receivables Holdings I, LLC and all of its current and future Subsidiaries (other than the Borrowers), whether or not wholly-owned, and (b) any other Persons from time to time that are parties to the Guaranty and Security Agreement.
Guaranty and Security Agreement means that certain Guaranty and Security Agreement dated on or about the date hereof among Guarantors, Borrowers and Agent, as may be amended, modified, restated or extended from time to time.
Hazardous Substance means any toxic, reactive, corrosive, carcinogenic, flammable or hazardous pollutant or other substance regulated under Environmental Control Statutes due to its dangerous or deleterious properties or characteristics, including without limitation petroleum and items defined in Environmental Control Statutes as hazardous substances, hazardous wastes, pollutants or contaminants.
Hedging Agreement means an agreement relating to any interest rate hedge, exchange, swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk (including, without limitation, any ISDA Master Agreement).
Holder means a holder of a Note.
14
Holdings means Curo Group Holdings Corp., a Delaware corporation.
Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment (or amount payable) made by or on account of any obligation of the Borrowers under any Credit Document and (b) to the extent not otherwise described in (a), Other Taxes.
In-Store Eligible Receivables means all In-Store Receivables that meet the definition of an Eligible Receivable.
In-Store Receivables means all Receivables that were originated (and, for the avoidance of doubt, fully funded) in a brick and mortar store front location of the Originators in accordance with applicable Requirements of Law.
Intangible Assets means all assets of any Person which would be classified in accordance with GAAP as intangible assets, including without limitation (a) all franchises, licenses, permits, patents, applications, copyrights, trademarks, trade names, goodwill, experimental or organization expenses and other like intangibles, and (b) unamortized debt discount and expense and unamortized stock discount and expense.
Key Person has the meaning specified in Section 8.12 .
Lender(s) has the meaning assigned to that term in the preamble.
Level I Trigger Event means the occurrence of any of the following:
(a) Maximum Cumulative Net Loss Rate In-Store Receivables : the Cumulative Net Losses In-Store Receivables as of the last day of any fiscal month, is greater than 24.2%;
(b) Maximum Cumulative Net Loss Rate Online Receivables : the Cumulative Net Losses Online Receivables as of the last day of any fiscal month, is greater than 56.8%; or
(c) Maximum Cumulative Net Loss Rate Title Receivables : the Cumulative Net Losses Title Receivables as of the last day of any fiscal month, is greater than 25.0%;
provided , however , that any Level I Trigger Event may be cured if such Level I Trigger Event or any other Level I Trigger Event does not exist for two (2) consecutive fiscal months following the period during which such Level I Trigger Event occurred.
Level II Trigger Event means the occurrence of any of the following:
(a) Maximum Cumulative Net Loss Rate In-Store Receivables : the Cumulative Net Losses In-Store Receivables as of the last day of any fiscal month, is greater than 26.2%;
15
(b) Maximum Cumulative Net Loss Rate Online Receivables : the Cumulative Net Losses Online Receivables as of the last day of any fiscal month, is greater than 61.5%; or
(c) Maximum Cumulative Net Loss Rate Title Receivables : the Cumulative Net Losses Title Receivables as of the last day of any fiscal month, is greater than 27.1%.
LIBOR Rate means the three (3) month London Interbank Offered Rate in effect two (2) Business Days prior to the date an Advance is to be made as found in the Wall Street Journal, Interactive Edition, or any successor edition or publication; provided any change in the LIBOR Rate during a calendar month that exists as of the last Business Day of a calendar month shall take effect for purposes of Section 2.6 hereof on the first (1st) day of the immediately following month.
Lien means any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, including without limitation any conditional sale or title retention arrangement, and any collateral assignment, deposit arrangement or lease intended as, or having the effect of, security but excluding the interests of a lessor under operating leases.
Loan Interest Rate has the meaning assigned to that term in Section 2.6(a) .
Loan(s) means each Revolving Loan and the Term Loan.
Loan Sale Agreement means the Loan Sale Agreement dated on or about the date hereof between the Guarantor and the Originators.
Loan Transfer Agreement means the Loan Transfer Agreement dated on or about the date hereof between the Guarantor and the Borrower Agent.
Local Authorities means individually and collectively the state and local governmental authorities which govern the business and operations owned or conducted by Borrowers or any of them.
Material Adverse Change means any development, event, condition, obligation, liability or circumstance or set of events, conditions, obligations, liabilities or circumstances or any change(s) which:
(a) has, had or reasonably could be expected to have a material adverse effect upon or material adverse change in (i) the legality, validity or enforceability of this Agreement or any other Credit Document, (ii) the status, perfection or priority of any Lien granted to Agent, any Lender or any Holder under any of the Credit Documents, (iii) the value, validity, enforceability or collectability of 15% or more of the Receivables or the other Collateral (measured in both cases by the outstanding amount of the Receivables or other Collateral), (iv) the rights and remedies of the Agent, Lenders or Holders under the Credit Documents, or (v) the business, properties, assets, operations, the collateral, results of operations, or financial condition of any Borrower; or
16
(b) has materially impaired or reasonably could be expected to materially impair the ability of any Borrower to perform any of the Obligations or the ability of any party to the Credit Documents to perform its obligations under, or to consummate the transactions contemplated under, the Credit Documents.
Maturity Date means the earlier of (a) the fifth (5th) anniversary of the Closing Date and (b) such date as the unpaid principal balance of all outstanding Notes becomes due and payable in accordance with the terms hereunder. Upon the written agreement of Borrowers, Agent, each Lender and each Holder, the date specified in clause (a) of this definition may be extended.
Maximum Principal Amount means the sum of (a) the Revolving Loan Maximum Principal Amount and (b) the Term Loan Maximum Principal Amount.
Modification has the meaning specified in Section 6.22 .
Monthly Statement means the certificate in substantially the form of Exhibit B attached hereto and made a part hereof.
Net Loss means, as of any date of determination and with respect to any Vintage Pool, the aggregate principal amount of Curo Receivables in such Vintage Pool that have become Charged-Off Receivables or otherwise liquidated, net of all liquidation proceeds and other recoveries with respect to such Curo Receivables, during the most recently completed fiscal month.
New Borrower has the meaning specified in Section 7.16 .
New Credit Facility has the meaning specified in Section 7.16 .
New Credit Facility Opportunity has the meaning specified in Section 7.16 .
New Credit Facility ROFR Notice has the meaning specified in Section 7.16 .
Notes mean collectively, the Revolving Loan Notes and the Term Loan Notes.
Obligations means each and every draft, liability and obligation of every type and description which Borrowers may now or at any time hereafter owe to Agent, Holders and Lenders arising under this Agreement, the Notes, any fee letter or any other Credit Document, including without limitation, all Loans (whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it arises in a transaction involving Agent and/or any Lender or Holder alone or in a transaction involving other creditors of Borrowers, or any of them, and whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several).
OFAC has the meaning specified in Section 4.24 .
Online Eligible Receivables means all Online Receivables that meet the definition of an Eligible Receivable.
17
Online Receivables means all Receivables that were originated (and, for the avoidance of doubt, fully funded) by the Originators through an online platform in accordance with applicable Requirements of Law.
Organization Documents means, (a) for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, and any shareholder rights agreement, (b) for any partnership, the partnership agreement and, if applicable, certificate of limited partnership, (c) for any limited liability company, the operating agreement and articles or certificate of formation or (d) any other document setting forth the manner of election or duties of the officers, directors, managers or other similar persons, or the designation, amount or relative rights, limitations and preference of the Stock of a Person.
Originators mean A Speedy Cash Car Title Loans, LLC, Advance Group, Inc., Cash Colorado, LLC, Concord Finance, Inc., FMMR Investments, Inc., Galt Ventures, LLC, Principal Investments, Inc., SCIL, Inc., Speedy Cash, Speedy Cash Illinois, Inc., and Todd Car Title, Inc.
Other Connection Taxes means, with respect to the Agent, any Holder or any Lender, Taxes imposed as a result of a present or former connection between such Person and the jurisdiction imposing such Tax (other than connections arising from such Person having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document).
Other Taxes means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, but excluding any Excluded Taxes and any Taxes that are Other Connection Taxes imposed with respect to an assignment or grant of a participation by a Lender or Holder hereunder (other than pursuant to a request by a Borrower under Section 2.10(b) ).
Participant has the meaning assigned to that term in Section 10.8 .
Participant Register has the meaning specified in Section 10.8(i) .
Participation Interest Rate has the meaning assigned to that term in Section 2.6(a) .
Payment Date has the meaning assigned to that term in Section 2.4 .
PBGC means the Pension Benefit Guaranty Corporation or any successor thereto.
Permitted Holders means the Founders and the FFL Group.
Permitted Indebtedness means with respect to all of the Credit Parties, (i) borrowings from Agent, Lenders and Holders hereunder; (ii) obligations with respect to cash management services and other indebtedness in respect of netting services, overdraft protections and similar
18
arrangements, in each case in connection with deposit accounts and incurred in the ordinary course of business; (iii) indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument or payment item drawn against insufficient funds in the ordinary course of business; and (iv) indebtedness consisting of endorsements for collection or deposit in the ordinary course of business.
Permitted Liens means with respect to all of the Credit Parties, (i) Liens granted to Agent by the Credit Parties pursuant to this Agreement; (ii) Liens for Taxes, assessments or other governmental charges not delinquent or being properly contested; (iii) normal and customary rights of setoff upon (A) deposits of cash in favor of Agent or the Lenders, if applicable, and (B) deposits of cash in favor of other banks and depository institutions arising as a matter of law or pursuant to customary deposit account agreements and other similar agreements, in each case encumbering deposits, on cash deposits to secure ACH/EDI transactions in the ordinary course of business; (iv) Liens arising by virtue of the rendition, entry or issuance against any Borrower, or any property of any Borrower, of any judgment, writ, order, or decree for so long as each such Lien does not give rise to an Event of Default hereunder; (v) mechanics, workers, carriers, materialmens, warehousemen or landlords or other like Liens arising in the ordinary course of business with respect to obligations which are not delinquent for more than ninety (90) days or remain payable without penalty or which are being contested in good faith; (vi) Liens on insurance proceeds and the unearned portion of insurance premiums incurred in the ordinary course of business in connection with the financing of insurance premiums; and (vii) extensions, renewals, or replacements of any Lien referred to above, provided that any Lien resulting from such extensions, renewals or replacements is limited to the assets originally encumbered by the Lien so extended, renewed or replaced.
Person means all natural persons, corporations, limited partnerships, general partnerships, joint stock companies, limited liability companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and federal and state governments and agencies or regulatory authorities and political subdivisions thereof, or any other entity.
Plan means any employee benefit plan, as defined in Section 3(3) of ERISA subject to the provisions of Title IV of ERISA or Sections 412 or 430 of the Code or Section 302 of ERISA, which is maintained in whole or in part for employees of Borrowers or with respect to which any Borrower has any liability (including on account of being considered a single employer with any ERISA Affiliate).
Pre-Approved Replacement means each of (a) Bill Baker, (b) Chad Faulkner, (c) Doug Rippel and (d) each other person proposed in writing by the Borrower Parties to the Agent and consented to by the Agent in writing, such consent not to be unreasonably withheld, conditioned or delayed.
Prepayment Fee means, a fee in the following amount: (i) for a prepayment of the Term Loan occurring between the Closing Date and the twenty-four month anniversary of the Closing Date, an amount equal to the sum of (1) the product of (A) the number of days from the date of such prepayment until the twenty-four month anniversary of the Closing Date divided by 360 days and (B) the product of the principal amount of the Term Loan being prepaid and the
19
Loan Interest Rate, and (2) the product of (A) 3.0% and (B) the principal amount of the Term Loan being prepaid; (ii) for a prepayment of the Term Loan occurring after the twenty-four month anniversary of the Closing Date and on or prior to the thirty month anniversary of the Closing Date, the product of (A) 3.0% and (B) the principal amount of the Term Loan being prepaid; and (iii) for a prepayment of the Term Loan occurring after the thirty month anniversary of the Closing Date until the Closing Date, none.
Press Release has the meaning assigned to that term in Section 10.16 .
Principal Only Assignment has the meaning assigned to that term in Section 10.8(j) .
Principal Receivables means with respect to Receivables as of any date of determination, the aggregate amount advanced under such Receivables less (i) amounts paid under such Receivables and attributable to principal pursuant to the terms thereof and (ii) unearned interest, unearned insurance commissions, unearned insurance premiums, and any other unearned income represented on the Credit Parties balance sheet.
Property means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
Receivables means the indebtedness and other obligations owed to any Borrower or any Guarantor in connection with any and all liens, title retention and security agreements, chattel mortgages, chattel paper, bailment leases, installment sale agreements, instruments, consumer finance paper and/or promissory notes securing and evidencing unsecured multi-pay consumer installment loans and auto title loans made, and/or time sale transactions or acquired by a Borrower or a Guarantor which were originated in accordance with the Credit Policy and, in the case of auto title loans, the repayment of which is secured by a perfected first priority security interest in a motor vehicle.
Register has the meaning specified in Section 10.8(h) .
Regulatory Trigger Event means (a) any Guarantor, any Borrower, any direct or indirect parent of any Borrower (including, but not limited to, the Curo Entities) or any Subsidiaries of any Borrower becomes the subject of any investigation, stay, order, ruling or judgment, issued by any Governmental Authority involving compliance of its business with Requirements of Law which is not satisfied, released, stayed, vacated or discharged within thirty (30) days of such Persons knowledge thereof and, in either case, the effect, outcome or resolution of such action listed above would reasonably be expected to result in (i) in the case of any Borrower, a Material Adverse Change, or (ii) in the case of any Guarantor, any such direct or indirect parent or any such Subsidiary, a material adverse change in the business, properties, assets, operations, the collateral, results of operations, or financial condition of any such Person; or (b) the enactment of a usury cap applicable to the Receivables or the passage of any applicable State or Federal statute or regulation restricting the offering or sale of the Receivables which, in either case, would reasonably be expected to result in a Material Adverse Change in the sole discretion of Agent.
Reinvestment Criteria has the meaning assigned to that term in Section 2.5 .
20
Release Date has the meaning assigned to that term in Section 5.3(b) .
Replacement Holder has the meaning assigned to that term in Section 2.10(b) .
Replacement Lender has the meaning assigned to that term in Section 2.10(b) .
Reportable Event has the meaning assigned to that term in Section 4.13 .
Request for Advance means the certificate in the form of Exhibit C attached hereto and made a part hereof or an online advance request.
Requirements of Law means, as to any Person, any law (statutory or common), ordinance, treaty, rule, regulation, order, policy, other legal requirement or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or products or to which such Person or any of its Property or products is subject. It is hereby acknowledged and agreed by the Credit Parties that Requirements of Law shall include, without limitation, from the effective date of any such rule, binding opinion or mandatory guideline, (a) the adoption of any final rule directly related to the proposed rule captioned 12 CFR Part 1041, Docket No. CFPB 2016-0025, RIN 3170-AA40 released by the Consumer Financial Protection Bureau on June 2, 2016, as of the effective date of such final rule and as such final rule may be amended, supplemented or otherwise modified from time to time, and (b) any other final rules, binding opinions or mandatory guidelines promulgated by the Consumer Financial Protection Bureau or any other Governmental Authority from time to time relating to credit (including, without limitation, consumer credit); servicing; disclosures; information security and privacy as such final rule, binding opinion or mandatory guideline may be amended, supplemented or otherwise modified from time to time.
Restricted Payments means payments by Borrowers, or any of them, which constitute a Distribution.
Reviewing Parties means the Agent, the Lenders, the Holders and their respective attorneys, officers, employees, representatives, consultants and agents.
Revolving Loan means the aggregate principal amount advanced by Lenders to Borrowers pursuant to Section 2.1 in respect of the senior secured revolving loan, together with interest accrued thereon and fees and costs incurred in connection therewith.
Revolving Loan Advance means each advance of the Revolving Loan made to Borrowers pursuant to Section 2.1 .
Revolving Loan Commitment means, with respect to each applicable Lender, the commitment of such Lender to make its portion of the Revolving Loan Advance in a principal amount up to each such Lenders Revolving Loan Commitment Percentage of the Revolving Loan Maximum Principal Amount.
Revolving Loan Commitment Percentage means, for any Lender, the percentage identified as the Revolving Loan Commitment Percentage on Schedule I, as such percentage may be modified in connection with any assignment made in accordance with Section 10.8 .
21
Revolving Loan Maximum Principal Amount means FORTY-FIVE MILLION DOLLARS ($45,000,000); provided , as additional states are removed from clause (t) of the definition of Eligible Receivables, upon the written agreement of the Borrower Agent and the Agent, the Revolving Loan Maximum Principal Amount shall be increased in an amount to be agreed upon by such parties; provided further, on the date that is six months after the Closing Date, the Revolving Loan Maximum Principal Amount shall mean SEVENTY MILLION DOLLARS ($70,000,000).
Revolving Loan Notes mean collectively, the promissory notes executed pursuant to this Agreement of Borrowers in favor of each Lender or Holder, as applicable, evidencing the joint and several obligation of Borrowers to repay the Revolving Loan, and any and all amendments, renewals, replacements or substitutions therefor, and each is referred to individually as a Revolving Loan Note.
Schedule of Receivables and Assignment means a schedule in form and substance acceptable to Agent to be submitted by Borrowers to Agent.
SDN List has the meaning specified in Section 4.24 .
Senior Participant means a Person, satisfactory to the Agent in its sole discretion, acting as the Senior Participant under the Senior Participation Agreement and such Persons permitted successors and assigns pursuant to such Senior Participation Agreement.
Senior Participation Agreement means one or more Participation Agreements among the Lenders, Holders, Agent, and Senior Participant, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
Senior Participations mean the Participations, if any, issued to the Senior Participant by certain of the Lenders and Holders pursuant to the Senior Participation Agreement.
Servicer means CURO Management, LLC.
Servicing Agreement means the Servicing Agreement dated on or about the date hereof among the Borrower Agent and the Servicer.
Settlement Period has the meaning assigned to that term in Section 2.7(c) .
Stock means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, limited liability company interests or any other equity security (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).
Subsidiary of any entity means any corporation, limited liability company, partnership or other legal entity of which such entity directly or indirectly owns or controls at least a majority of the outstanding stock or other equity interest having general voting power. For purposes of this definition, control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.
22
Tax or Taxes means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Tax Return means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
Term Loan means the aggregate principal amount advanced by Lenders to Borrowers pursuant to Section 2.1 in respect of the senior secured term loan, together with interest accrued thereon and fees and costs incurred in connection therewith.
Term Loan Advance means each advance of the Term Loan made to Borrowers pursuant to Section 2.1 .
Term Loan Commitment means, with respect to each applicable Lender, the commitment of such Lender to make its portion of the Term Loan Advance in a principal amount up to each such Lenders Term Loan Commitment Percentage of the Term Loan Maximum Principal Amount.
Term Loan Commitment Percentage means, for any Lender, the percentage identified as the Term Loan Commitment Percentage on Schedule I, as such percentage may be modified in connection with any assignment made in accordance with Section 10.8 .
Term Loan Maximum Principal Amount means EIGHTY MILLION DOLLARS $(80,000,000).
Term Loan Notes mean collectively, the promissory notes executed pursuant to this Agreement of Borrowers in favor of each Lender or Holder as applicable, evidencing the joint and several obligation of Borrowers to repay the Term Loan, and any and all amendments, renewals, replacements or substitutions therefor, and each is referred to individually as a Term Loan Note.
Termination Date means the earlier of: (a) the Maturity Date, as such date may be extended from time to time in accordance with the provisions of Section 2.4 , or (b) the date on which the Commitments are terminated and the Loan becomes due and payable pursuant to Section 9.1 .
Title Eligible Receivables means all Title Receivables that meet the definition of an Eligible Receivable.
Title Receivables means all Receivables that were originated by the Originators the repayment of which is secured by a perfected first priority security interest in a motor vehicle.
23
Trailing Excess Yield means, as of any date of determination, the average, for each of the three immediately preceding completed fiscal months, of the rate, (x) expressed as a percentage equal to a fraction, (a) the numerator of which is the sum of Collections constituting principal with respect to all Curo Receivables for such fiscal month, and (b) the denominator of which is the aggregate principal balance of all Curo Receivables at the opening of such fiscal month and (y) multiplied by 12.
Trailing Net Loss Rate means, as of any date of determination, the average, for each of the three immediately preceding completed fiscal months, of the rate, (x) expressed as a percentage equal to a fraction, (a) the numerator of which is the Net Loss with respect to all Curo Receivables for such fiscal month, and (b) the denominator of which is the aggregate principal balance of all Curo Receivables at the opening of such fiscal month and (y) multiplied by 12.
UCC means the Uniform Commercial Code as in effect in the State of New York from time to time.
Unused Commitment Fee means the fee pursuant to Section 2.9(b) .
USA PATRIOT Act means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).
Vintage Pool means and refers to, at any given time, all Curo Receivables that were originated in a particular calendar month. By way of example, and not by way of limitation, all Curo Receivables that were originated in June 2016 shall constitute one Vintage Pool for the calendar month that ended on June 30, 2016; all Curo Receivables that were purchased in July 2016 shall constitute one Vintage Pool for the calendar month that ended on July 31, 2016; all Curo Receivables that were purchased in August 2016 shall constitute one Vintage Pool for the calendar month that ended on August 31, 2016; and so on.
Section 1.2 Rules of Construction .
(a) Accounting Terms . Except as otherwise provided herein, financial and accounting terms used in the foregoing definitions or elsewhere in this Agreement shall be defined in accordance with GAAP. No change in the accounting principles used in the preparation of any financial statement hereafter adopted by Borrowers shall be given effect for purposes of measuring compliance with any provision of Article 6 or Article 7 unless the Borrower Agent and Agent agree to modify such provisions to reflect such changes in GAAP and, unless such provisions are modified, all financial statements, the compliance certificate and similar documents provided hereunder shall be provided together with a reconciliation between the calculations and amounts set forth therein before and after giving effect to such change in GAAP. For purposes of this Agreement, any obligations of a Person under a lease that is not (or would not be) required to be classified and accounted for as a capitalized lease on a balance sheet of such Person under GAAP as in effect as of the Closing Date shall not be treated as a capitalized lease as a result of the adoption of changes in GAAP or changes in the application of GAAP.
24
(b) Uniform Commercial Code . Except as otherwise provided herein, terms used in the foregoing definitions or elsewhere in this Agreement that are defined in the Uniform Commercial Code, including without limitation, Accounts , Deposit Accounts , Documents , Instruments , Investment Property , General Intangibles , Chattel Paper , Inventory , Goods , Equipment , Fixtures , Supporting Obligations , and Letter of Credit Rights shall have the respective meanings given to such terms in the UCC.
ARTICLE 2
THE CREDIT FACILITY
Section 2.1 The Loans . Until the earliest to occur of the Termination Date, a Regulatory Trigger Event and the third (3 rd ) anniversary of the Closing Date, Borrowers may request to Agent on behalf of the Lenders to make Revolving Loan Advances to Borrowers and, subject to the terms and conditions of this Agreement, each Lender severally and not jointly agrees to lend such Lenders Revolving Loan Commitment Percentage of each requested Revolving Loan Advance up to such Lenders Revolving Loan Commitment which Borrowers may repay and reborrow from time to time until the occurrence of one of the foregoing events. Until the earliest to occur of the Termination Date, a Regulatory Trigger Event or the third (3 rd ) anniversary of the Closing Date, Borrowers may request to Agent on behalf of the Lenders to make Term Loan Advances to Borrowers and, subject to the terms and conditions of this Agreement, each Lender severally and not jointly agrees to lend such Lenders Term Loan Commitment Percentage of each requested Term Loan Advance up to such Lenders Term Loan Commitment which Borrowers may not reborrow after repayment thereof. Requests for Advances shall be made no more than one (1) time per calendar month (excluding any deemed request made under Section 2.6(b) ); provided, a simultaneous request for a Revolving Loan Advance and a Term Loan Advance shall be considered a single Advance request. The aggregate unpaid principal amount at any one time outstanding of all Revolving Loan Advances shall not exceed the Revolving Loan Maximum Principal Amount; the aggregate unpaid principal amount at any one time outstanding of all Term Loan Advances shall not exceed the Term Loan Maximum Principal Amount; and the aggregate unpaid principal amount at any one time outstanding of all Advances shall not exceed the lesser of the Maximum Principal Amount then in effect or the Borrowing Base in effect as of the date of determination. No Revolving Loan Advance shall be made until the aggregate original principal amount of all Term Loan Advances made since the Closing Date equal the Term Loan Maximum Principal Amount. No Revolving Loan may be made or held by a Foreign Lender or Foreign Holder.
(a) Agent shall establish on its books an account in the name of Borrowers (the Borrowers Loan Account ). A debit balance in Borrowers Loan Account shall reflect the amount of Borrowers indebtedness to Agent, Holders and Lenders from time to time by reason of Advances and other appropriate charges (including, without limitation, interest charges) hereunder. At least once each month, Agent shall provide to Borrowers a statement of Borrowers Loan Account which statement shall be considered correct and accepted by Borrowers and conclusively binding upon Borrowers unless Borrowers notify Agent to the contrary within thirty (30) days of Agents providing such statement to Borrowers.
25
(b) Each Advance made hereunder shall, in accordance with GAAP, be entered as a debit to Borrowers Loan Account, and (i) in respect of Revolving Loan Advances, shall be in a principal amount which, when aggregated with all other Revolving Loan Advances then outstanding, shall not exceed the Revolving Loan Maximum Principal Amount, (ii) in respect of Term Loan Advances, shall be in a principal amount which, when aggregated with all other Term Loan Advances then outstanding, shall not exceed the Term Loan Maximum Principal Amount, and (iii) in respect of all Advances, shall be in a principal amount which, when aggregated with all other Advances then outstanding, shall not exceed the lesser of the then effective Borrowing Base or Maximum Principal Amount.
(c) The Loans shall be due and payable on the Termination Date. Upon the occurrence of an Event of Default, Agent shall have rights and remedies available to it under Article 9 of this Agreement.
Section 2.2 The Notes . The indebtedness of Borrowers to each Lender or Holder hereunder, if requested by such Lender or Holder, shall be evidenced by separate Notes executed by Borrowers in favor of such Lender or Holder in the principal amounts equal to (i) with respect to the Revolving Loan Note, (A) each such Lenders Revolving Loan Commitment Percentage of the Revolving Loan Maximum Principal Amount and (B) in the case of a Principal Only Assignment, the principal amount of each Revolving Loan Advance as shall have been assigned to such Holder pursuant to such Principal Only Assignment and (ii) with respect to the Term Loan Note, (A) each such Lenders Term Loan Commitment Percentage of the Term Loan Maximum Principal Amount and (B) in the case of a Principal Only Assignment, the principal amount of each Term Loan Advance as shall have been assigned to such Holder pursuant to such Principal Only Assignment. The aggregate principal amount of the Notes will be the Maximum Principal Amount; provided , however, that notwithstanding the face amount of the Notes, Borrowers liability under the Notes shall be limited at all times to the actual indebtedness (principal, interest and fees) then outstanding and owing by Borrowers to Agent, Holders and Lenders hereunder.
Section 2.3 Method of Payment . Borrowers shall make all payments of principal and interest on the Notes in lawful money of the United States of America and in funds immediately available by wire transfer or automated clearing house transfer, to Agent at its address referred to in Section 10.4 or at such other address as Agent otherwise directs. Whenever any payment is due on a day, which is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and interest shall be paid for such extended time. As soon as practicable after Agent receives payment from Borrowers, but in no event later than one (1) Business Day after such payment has been made, subject to Section 2.7 , Agent will cause to be distributed like funds relating to the payment of principal, interest or fees (other than amounts payable to Agent to reimburse Agent for fees and expenses payable solely to Agent pursuant to the terms of this Agreement) or expenses payable to Agent, Holders and Lenders in accordance with the terms of this Agreement, in like funds relating to the payment of any such other amounts payable to Lenders. Borrowers obligations to Lenders and Holders with respect to such payment shall be discharged by making such payments to Agent pursuant to this Section 2.3 or, if not timely paid or any Event of Default or Default then exists, may be added to the principal amount of the Loans outstanding.
26
Section 2.4 Application of Proceeds .
(a) Notwithstanding any other provisions of this Agreement or any other Credit Document to the contrary but subject to Section 2.4(b) and Section 2.8(d) , all amounts in the Collection Account and any interest earned thereon and any other amounts in the Borrowers Loan Account as of the last Business Day of each calendar month will be applied on the fifth (5 th ) Business Day of the immediately succeeding calendar month (each date of distribution, a Payment Date ) in the following order of priority:
FIRST, to the payment, on a pari passu basis, to the Servicer, as servicer, any accrued and unpaid servicing fees payable in accordance with the Servicing Agreement, to the Collection Agency, any accrued and unpaid collection fees payable in accordance with the Collection Agency Agreement, to the Back-up Servicer, any accrued and unpaid back-up servicing fees and any amount of reasonable transition costs, fees and expenses, to the Custodian, any accrued and unpaid fees, and to the account control bank(s) under the Control Agreements, any accrued and unpaid fees to the extent due and payable;
SECOND, to the payment of all costs, fees, expenses, and other amounts owing to Agent, pursuant to Section 10.7 , in connection with enforcing the rights of Agent, Holders and Lenders under the Credit Documents;
THIRD, to payment of any costs, fees or expenses owed to Agent or to any Affiliate of Agent hereunder or under any other Credit Document;
FOURTH, to the payment of all Obligations consisting of accrued fees and interest payable to Lenders and Holders hereunder;
FIFTH, if the Reinvestment Criteria are not satisfied, to the payment of the outstanding principal amount of first, the Revolving Loans until their outstanding principal amount is reduced to zero, second, the Term Loans until their outstanding principal amount is reduced to zero and third, any remaining Obligations;
SIXTH, to all other Obligations which shall have become due and payable under the Credit Documents and not repaid pursuant to clauses FIRST through FIFTH above; and
SEVENTH, to the payment of the surplus, if any, to the Borrowers for any legal purpose not in violation of this Agreement including the acquisition of additional Eligible Receivables.
In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; and (b) each of the Lenders and Holders shall receive an amount equal to its pro rata share (based on the proportion of its then outstanding Loans and Obligations outstanding of amounts available to be applied above).
(b) In addition, so long as the Reinvestment Criteria are satisfied and so long as the conditions in Section 5.3 are satisfied, the Agent may, at any time, instruct the Collection Account Bank to release funds to the Borrowers in an amount up to the Facility Availability to be used by Borrowers to purchase additional Eligible Receivables in accordance with Sections 5.3 and 6.22 .
27
Section 2.5 Use of Proceeds . Advances shall be used solely (i) to finance the acquisition of Eligible Receivables on and after the Closing Date and (ii) for other lawful purposes permitted under the Credit Documents. In addition, the Borrowers shall be permitted in accordance with Section 2.4 to use Collections to acquire additional Eligible Receivables if none of the following shall occur before or after giving effect to any such acquisition: (i) a Regulatory Trigger Event, Default or Event of Default, (ii) any event which could reasonably be expected to have a Material Adverse Change on the business and operations of the Guarantors; and (iii) the third (3 rd ) anniversary of the Closing Date (the Reinvestment Criteria ).
Section 2.6 Interest .
(a) In the absence of an Event of Default hereunder, and prior to maturity, the outstanding balance of the Revolving Loans and the Term Loans will bear interest at an annual rate at all times equal to the Base Rate plus 12.0% (the Loan Interest Rate ); provided, if the Agent or Lenders enter into one or more Senior Participations with an interest rate lower than the Loan Interest Rate (the Participation Interest Rate ), as determined by Agent in its sole discretion, on each Payment Date, after and subject to the receipt by the Lenders and Holders of all interest due and owing under clause Fourth of Section 2.4 , such Lenders and Holders shall remit to the Borrower Agent an amount equal to one half (1/2) of the following: (a) the total amount of interest paid under each of clauses First, Second, Third and Fourth of Section 2.4 less (b) the sum of (i) the product of (A) the Participation Interest Rate divided by 12 and (B) the aggregate outstanding principal amount of the Loans subject to a Senior Participation and (ii) the product of (A) the Loan Interest Rate divided by 12 and (ii) the aggregate outstanding principal amount of the Loans not subject to a Senior Participation. Agent, Lenders and Borrowers agree to reasonably cooperate and to take such other actions as may be reasonably requested by Agent in order to implement or effectuate the provisions of this Section 2.6 .
(b) Interest shall be payable in accordance with Section 2.4 until the Commitments are terminated and the Obligations are paid in full. Unless otherwise required by Agent at any time and from time to time or Borrowers have otherwise paid or informed Agent that Borrowers will pay such amount in immediately available funds, Borrowers shall be deemed to have requested an Advance on the first (1 st ) day of each calendar month in an amount equal to accrued and unpaid interest and any other accrued but unpaid fees due and owing hereunder and such amount shall be added to the outstanding principal balance of the Obligations. Interest as provided hereunder will be calculated on the basis of a three hundred sixty (360) day year and the actual number of days elapsed. The rate of interest provided for hereunder is subject to increase or decrease when and as the LIBOR Rate increases or decreases in an amount corresponding to the change in the LIBOR Rate. Any such change in the interest rate hereunder shall take effect the first day of the month following a change in the LIBOR Rate.
(c) From and after the Maturity Date, or such earlier date as the outstanding principal balance of the Loan and other Obligations become due and payable by acceleration or otherwise, or at Agents option upon the occurrence of an Event of Default, Borrowers hereby agree to pay interest on the outstanding principal balance of the Loan and other Obligations and, to the extent permitted by law, overdue interest with respect thereto, at the rate of the lesser of (i) three percent (3.0%) per annum above the rate of interest otherwise applicable to the Loans and (ii) the highest lawful rate.
28
Section 2.7 Advances .
(a) Borrower Agent shall notify Agent in writing pursuant to a Request for Advance not later than 1:00 PM (New York City time) fifteen (15) days before each requested Advance, specifying the amount and type of the Advance to be made. Such Request for Advance shall be certified by the President or Treasurer (or such other authorized Person as Borrower Agent directs from time to time) of Borrower Agent. On the Closing Date, the applicable Lenders shall make Term Loan Advances in an aggregate amount equal to $0.00.
(b) Agent shall give to each applicable Lender prompt notice on the date of Agents receipt of written notice from Borrowers) of each Request for Advance. On the date on which an Advance is requested to be made pursuant to the applicable Request for Advance, each applicable Lender will make available to Agent at the address of Agent set forth in Section 10.4 , in immediately available funds, its Commitment Percentage of such Advance requested to be made. Unless Agent shall have been notified by any Lender prior to the date of Advance that such Lender does not intend to make available to Agent its portion of the Advance to be made on such date, Agent may assume that such Lender will make such amount available to Agent as required above and Agent may, in reliance upon such assumption, make available the amount of the Advance to be provided by such Lender. Upon fulfillment of the conditions set forth in Sections 2.7(a) and 5.2 for such Advance, and as soon as practicable after receipt of funds from Lenders Agent will make such funds as have been received from Lenders available to Borrowers at the account specified by Borrowers in such Request for Advance.
(c) To administer the Loans in an efficient manner and to minimize the transfer of funds between Agent and Lenders, Lenders hereby instruct Agent, and Agent may (in its sole discretion, without any obligation) (i) make available, on behalf of Lenders, the full amount of all Advances requested by Borrowers, without giving each Lender prior notice of the proposed Advance, of such Lenders Commitment Percentage thereof and the other matters covered by the Request for Advance and (ii) if Agent has made any such amounts available as provided in clause (i), upon repayment of the Loans by Borrowers, first apply such amounts repaid directly to the amounts made available by Agent in accordance with clause (i) and not yet settled as described below. If Agent makes an Advance on behalf of Lenders, as provided in the immediately preceding sentence, the amount of outstanding Loans and each Lenders Commitment Percentage thereof shall be computed weekly rather than daily and shall be adjusted upward or downward on the basis of the amount of outstanding Loans as of 5:00 P.M. (New York City time) on the Business Day immediately preceding the date of each computation; provided , however, that Agent retains the absolute right at any time or from time to time to make the afore-described adjustments at intervals more frequent than weekly. Agent shall deliver to each Lender and Holder at the end of each week, or such lesser period or periods as Agent shall determine, a summary statement of the type and amount of outstanding Loans for such period (such week or lesser period or periods being hereafter referred to as a Settlement Period ). If the summary statement is sent by Agent and received by Lenders prior to 1:00 P.M. (New York City time) on any Business Day each Lender shall make the transfers described in the next
29
succeeding sentence no later than 3:00 P.M. (New York City time) on the day such summary statement was sent; and if such summary statement is sent by Agent and received by Lenders after 1:00 P.M. (New York City time) on any Business Day, each Lender shall make such transfers no later than 3:00 P.M. (New York City time) no later than the next succeeding Business Day after such summary statement was sent. If in any Settlement Period, the amount of a Lenders Commitment Percentage of the Loans is in excess of the amount of Loans actually funded by such Lender, such Lender shall forthwith (but in no event later than the time set forth in the next preceding sentence) transfer to Agent by wire transfer in immediately available funds the amount of such excess; and, on the other hand, if the amount of a Lenders Commitment Percentage of the Loans in any Settlement Period is less than the amount of Loans actually funded by such Lender, Agent shall forthwith transfer to such Lender by wire transfer in immediately available funds the amount of such difference. The obligation of each Lenders to transfer such funds shall be irrevocable and unconditional, without recourse to or warranty by Agent and made without setoff or deduction of any kind. Each of Agent and Lenders agree to mark their respective books and records at the end of each Settlement Period to show at all times the dollar amount of their respective Commitment Percentages of the outstanding Loans. Because Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to the time when Lenders will actually advance and/or be repaid Loans, interest with respect to Loans shall be allocated by Agent to each Lender (including Agent) in accordance with the type and amount of Loans actually advanced by and repaid to each Lender (including Agent) during each Settlement Period and shall accrue from and including the date such Advance is made by Agent to but excluding the date such Loans are repaid by Borrowers in accordance with Section 2.3 or actually settled by the applicable Lender as described in this Section 2.7(c) . All such Advances made by Agent on behalf of Lenders hereunder shall bear interest at the applicable interest rate for such Advances.
(d) If the amounts described in subsection (b) or (c) of this Section 2.7 are not in fact made available to Agent by a Lender (such Lender being hereinafter referred to as a Defaulting Lender ) and Agent has made such amount available to Borrowers, Agent shall be entitled to recover such corresponding amount on demand from such Defaulting Lender. If such Defaulting Lender does not pay such corresponding amount forthwith upon Agents demand therefor, Agent shall promptly notify Borrowers and Borrowers shall immediately pay such corresponding amount to Agent. Agent shall also be entitled to recover from such Defaulting Lender and Borrowers, (i) interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by Agent to Borrowers to the date such corresponding amount is recovered by Agent, at a rate per annum equal to either (A) if paid by such Defaulting Lender, the overnight federal funds rate or (B) if paid by Borrowers, the then applicable rate of interest, calculated in accordance with Section 2.6 , plus (ii) in each case, an amount equal to any costs (including reasonable legal expenses) and losses incurred as a result of the failure of such Defaulting Lender to provide such amount as provided in this Agreement. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights which Borrowers may have against any Lender as a result of any default by such Lender hereunder, including, without limitation, the right of Borrowers to seek reimbursement from any Defaulting Lender for any amounts paid by Borrowers under clause (ii) above on account of such Defaulting Lenders default.
30
(e) The failure of any Lender to make its portion of the Advance to be made by it as part of any Advance shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Advance. The amounts payable by each Lender shall be a separate and independent obligation.
(f) Each Lender shall be entitled to earn interest at the then applicable rate of interest, calculated in accordance with Section 2.6 , on outstanding Loans which it has funded to Agent from the date such Lender funded such Advance to, but excluding, the date on which such Lender is repaid with respect to the Loan.
(g) Notwithstanding the obligation of Borrowers to send written confirmation of a Request for Advance, in the event that Agent agrees to accept a Request for Advance made by telephone, such telephonic request shall be binding on Borrowers whether or not written confirmation is sent by Borrowers or requested by Agent. Agent may act prior to the receipt of any requested written confirmation, without any liability whatsoever, based upon telephonic notice believed by Agent in good faith to be from Borrowers or their agents. Agents records of the terms of any telephonic requests for Advances shall be conclusive on Borrowers in the absence of gross negligence or willful misconduct on the part of Agent (as determined by a court of competent jurisdiction in a final, non-appealable judgment or order) in connection therewith.
(h) Agent shall not be obligated to transfer to any Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lenders benefit; nor will a Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, re-lend to Borrowers the amount of all such payments received or retained by it for the account of such Defaulting Lender. Any amounts so re-lent to Borrowers shall earn interest at the interest rate applicable hereunder and for all other purposes of this Agreement shall be treated as if they were Advances; provided , however , that for purposes of voting or consenting to matters with respect to the Credit Documents and determining Commitment Percentages, such Defaulting Lender shall be deemed not to be a Lender, and each of such Defaulting Lenders Commitment and the unpaid principal balance of the Advances owing to such Defaulting Lender shall be deemed to be zero (-0-). Until a Defaulting Lender cures its failure to fund its pro rata share of any Advance, such Defaulting Lender shall not be entitled to any portion of the unused commitment fee payable pursuant to Section 2.9(b) . This Section 2.7(h) shall remain effective with respect to such Lender until such time as the Defaulting Lender shall no longer be in default of any of its obligations under this Agreement. The terms of this Section 2.7(h) shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by Borrowers of their duties and obligations hereunder or under any of the other Credit Documents. Nothing contained in this Section 2.7 or otherwise in this Agreement shall impair or limit any claim of Borrowers against a Defaulting Lender (including, without limitation, expenses incurred by Borrowers by reason of any such default) who breaches its commitment to fund Advances hereunder.
(i) Each request for an Advance pursuant to this Section 2.7 shall be irrevocable and binding on Borrowers.
31
Section 2.8 Commitment Reductions and Prepayments .
(a) Voluntary Commitment Reductions . The Borrowers may elect to terminate the Commitments in whole or in part so long (A) Borrower Agent provides Agent with at least sixty (60) days prior written notice which shall be irrevocable (but may be conditioned upon the effectiveness of other credit or debt facilities or other refinancing arrangements or other conditions), (B) any amount of Commitment reductions in part is in increments of $1,000,000 and (C) the Borrowers promptly (and in any event, within three (3) Business Days) pay to the Agent the Commitment Termination Fee.
(b) Mandatory Commitment Reductions and Terminations . If a Regulatory Trigger Event occurs, the Commitments shall be automatically terminated, and the Borrowers shall promptly (and in any event, within three (3) Business Days) pay to the Agent the product of (i) one-half (1/2) and (ii) the Commitment Termination Fee; provided that amounts payable by Borrowers to the Agent pursuant to this Section 2.8(b) shall not exceed, in the aggregate (together with amounts payable to the Administration Agent (as defined in the Bridge Credit Agreement) pursuant to Section 4.03(d) of the Bridge Credit Agreement), seven million dollars ($7,000,000).
(c) Voluntary Prepayments . Upon forty-five (45) days prior written notice from Borrower Agent to Agent, Borrowers may voluntarily prepay the Term Loans, in whole but not in part, as long as such prepayment is accompanied by the Prepayment Fee. Any such prepayment of Term Loans shall reduce Lenders Term Loan Commitments under this Agreement to $0.00 and may not be reborrowed. Any prepayment of Revolving Loans shall not reduce Lenders Revolving Loan Commitments under this Agreement and may be reborrowed, subject to the terms and conditions hereof for borrowing under the Revolving Loan. For the avoidance of doubt, any voluntary prepayments under this Section 2.8(c) will be applied at the time and in the manner set forth in Section 2.4 . For the avoidance of doubt, collections applied in payment of the outstanding principal amount of the Revolving Loans and any Term Loan in accordance with the Payment Priorities shall not be considered a voluntary prepayment for purposes of this Section 2.8(c) and shall not be subject to the Prepayment Fee.
(d) Mandatory Prepayments . In the event that amounts outstanding hereunder at any time exceed the Borrowing Base (whether established by an Monthly Statement, Borrowing Base Certificate or otherwise), within three (3) Business Days of the time that a Borrowing Base calculation was delivered or required to be delivered, Borrowers shall pay to Agent without demand or notice of any kind required, unless waived in writing by the Agent, the amount by which Borrowers indebtedness hereunder exceeds the Borrowing Base then applicable, together with all accrued interest on the amount so paid and any fees and costs incurred in connection therewith. For the avoidance of doubt, any mandatory prepayment pursuant to this Section 2.8(d) shall not be subject to the Prepayment Fee. Notwithstanding Section 2.4 , any such payment shall be applied first, to the extent of such payment, to the Revolving Loan until its outstanding principal amount is reduced to zero and second, to the Term Loan until its outstanding principal amount is reduced to zero. Any prepayment amounts payable under this Section 2.8(d) shall be applied to the payment of the outstanding principal amount of first, the Revolving Loans until their outstanding principal amount is reduced to zero and second, the Term Loans until their outstanding principal amount is reduced to zero; provided, that any such mandatory prepayment of Revolving Loans shall not reduce Lenders Revolving Loan Commitments under this Agreement and may be reborrowed, subject to the terms and conditions hereof for borrowing under the Revolving Loan.
32
Section 2.9 Fees . In addition to any fees required to be paid under this Agreement, Borrowers shall pay to Agent, at Agents offices, the following:
(a) Fee . The fees in the amounts and at the times set forth in this Agreement and the other Credit Documents, as applicable.
(b) Unused Commitment Fee . An unused commitment fee at the rate of one-half of one percent (0.50%) per annum (computed on the basis of a three hundred sixty (360) day year and the actual number of days elapsed) on the average daily unused Commitments shall be due and payable monthly in arrears on the 1st day of each month commencing on the first such date upon which an initial Advance may be requested by Borrower and continuing until the Commitments are terminated and the Obligations are paid in full, in which event a monthly installment of the administrative fee shall be paid on the date of such termination.
(c) Closing Fee . On or prior to the date on which the first Advance is made, the Borrowers shall pay to the Agent a fee in the amount of $1,250,000, which is the product of 1.0% of the Maximum Principal Amount on the Closing Date.
Section 2.10 Regulatory Changes in Capital Requirements; Replacement of a Lender or Holder; and Funding Losses .
(a) Regulatory Changes in Capital Requirements . If any Lender or Holder shall have determined that the adoption or the effectiveness after the date hereof of any law, rule, regulation or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoing by any governmental authority, central lender or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender or Holder (or any lending office of such Lender or Holder) or such Lenders or Holders holding company with any industry wide request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central lender or comparable agency, (i) has or would have the effect of reducing the rate of return on such Lenders or Holders capital or on the capital of such Lenders or Holders holding company, if any, as a consequence of this Agreement, to a level below that which such Lender, Holder or their holding company could have achieved on the portion of the Loans made by such Lender or Holder pursuant hereto but for such adoption, change or compliance (taking into consideration such Lenders or Holders policies and the policies of such Lenders or Holders holding company with respect to capital adequacy) by an amount deemed by such Lender or Holder to be material or (ii) would subject any Lender or Holder to any Taxes (other than Indemnified Taxes or Excluded Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, then from time to time Borrowers shall pay to such Lender or Holder within thirty (30) days of receiving written demand, including evidence reasonably satisfactory to the Borrowers of such additional amounts or Taxes attributable to this Agreement, such additional amount or amounts as will compensate such Lender, Holder or their holding company for any such reduction or Taxes
33
suffered together with interest on each such amount from the date demanded until payment in full thereof at the rate provided in Section 2.6 with respect to amounts not paid when due. Agent will notify Borrowers of any event occurring after the date of this Agreement that will entitle a Lender or Holder to compensation pursuant to this Section 2.10(a) as promptly as practicable after it obtains knowledge thereof and determines to request such compensation.
(b) Replacement of a Lender or Holder . If Borrowers become obligated to pay additional amounts to any Lender or Holder pursuant to Section 2.10(a) or Section 10.17 , then Borrowers may within thirty (30) days thereafter designate another bank that is acceptable to Agent in its discretion (such other bank being called a Replacement Lender or Replacement Holder as applicable) to purchase the Loans of such Lender or Holder and such Lenders or Holders rights hereunder, without recourse to or warranty by, or expense to, such Lender or Holder, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender or Holder plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender or Holder and any other amounts payable to such Lender or Holder under this Agreement, and to assume all the obligations of such Lender or Holder hereunder, and, upon such purchase and assumption (pursuant to an Assignment and Acceptance), such Lender or Holder shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender or Holder prior to the date of such purchase and assumption) and shall be relieved from all obligations to such Borrower hereunder, and the Replacement Lender or Replacement Holder shall succeed to the rights and obligations of such Lender or Holder hereunder.
(c) The Borrowers agree to reimburse each Lender or Holder and to hold each Lender or Holder harmless from any loss or expense which such Lender or Holder may sustain or incur as a consequence of:
(i) the failure of the Borrowers to borrow a Loan after the Borrowers have given (or are deemed to have given) a Request for Advance;
(ii) the failure of the Borrowers to make any prepayment after the Borrowers has given a notice in accordance with Section 2.8 ; or
(iii) the prepayment (including pursuant to Section 2.8 ) of a Loan on a day which is not the first Business Day of a calendar month;
including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Loans hereunder or from fees payable to terminate the deposits from which such funds were obtained; provided that, with respect to the expenses described in clause (iii) above, such Lender or Holder shall have notified Agent of any such expense within two (2) Business Days of the date on which such expense was incurred. Solely for purposes of calculating amounts payable by the Borrowers to the Lenders or Holders under this Section 2.10(c) : each Loan made by a Lender or Holder (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the LIBOR Rate used in determining the interest rate for such Loan by a matching deposit or other borrowing in the relevant interbank market for a comparable amount and for a comparable period, whether or not such Loan is in fact so funded.
34
Section 2.11 Sharing of Payments . If any Lender or Holder shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff or otherwise) on account of the Loans made by it in excess of its pro rata share of such payment as provided for in this Agreement, such Lender or Holder shall forthwith purchase from the other Lenders or Holders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender or Holder to share the excess payment accruing to all Lenders and Holders in accordance with their respective ratable shares as provided for in this Agreement; provided , however, that if all or any portion of such excess is thereafter recovered from such purchasing Lender or Holder, such purchase from each Lender or Holder shall be rescinded and each such Lender or Holder shall repay to the purchasing Lender of Holder the purchase price to the extent of such recovery together with an amount equal to such Lenders or Holders ratable share (according to the proportion of (a) the amount of such Lenders or Holders required repayment to (b) the total amount so recovered from the purchasing Lender or Holder) or any interest or other amount paid or payable by the purchasing Lender or Holder in respect to the total amount so recovered. Borrowers agree that any Lender or Holder so purchasing a participation from another Lender or Holder pursuant to this Section 2.11 may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender or Holder were the direct creditor of Borrowers in the amount of such participation.
Section 2.12 Pro Rata Treatment . Subject to Section 2.4 and Section 2.8(d) , each payment or prepayment of principal of the Loan and each payment of interest on the Loans, actually received by Agent shall be allocated pro rata among Lenders and Holder in accordance with the respective principal amounts of their outstanding Loans.
Section 2.13 Controlled Accounts .
(a) On or prior to the date hereof, the Borrower Agent shall cause to be established and maintained, a deposit account at a Collection Account Bank, in the name of the Borrower Agent, designated as the Collection Account , as to which the Agent has control for the benefit of the Lenders within the meaning of Section 9-104(a)(2) of the UCC pursuant to the Control Agreement.
(b) Notwithstanding anything to the foregoing, subject to the Facility Availability and to the conditions set forth in Section 2.4(b) and Section 5.3 , the Borrowers, in accordance with Section 6.22 , shall use amounts on deposit in the Collection Account to purchase additional Eligible Receivables.
ARTICLE 3
[INTENTIONALLY OMITTED]
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Agent, Holders and Lenders as follows:
35
Section 4.1 Representations and Warranties as to Receivables .
(a) As to the Receivables generally:
(i) Each Borrower or Originator or, where a Borrower or Originator was not the original lender, to the best of such Borrowers knowledge, the original lender or seller had and continue to have full power, authorization, permits, licenses and other authority to hold, enforce, and make the loans (or other extensions of credit) evidenced by the Receivables and all such Receivables and all Books and Records comprising such Receivables are genuine and enforceable;
(ii) All Receivables have been duly authorized, executed, delivered by the parties whose names appear thereon and are valid and enforceable in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization or similar laws relating to the enforcement of creditors rights or by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law, and consumer protection laws; if auto title loans, constitute chattel paper; any chattels described in any Receivable are and will be accurately described and are and will be in the possession of the parties granting the security interest therein; and any applicable filing, recording or lien notation law with respect to any collateral securing a Receivable will have been complied with to the extent such filing or recording is necessary under applicable law to create or perfect such Borrowers or such Guarantors security interest in such collateral consistent with the Credit Policy.
(iii) The form and content of all Receivables and the security related thereto comply in all material respects (and in any event in all material respects necessary to maintain and ensure the validity and enforceability of the Receivables) with any and all applicable laws, rules and regulations, including without limitation, the Consumer Finance Laws;
(iv) The original amount and unpaid balance of each Receivable on Borrowers Books and Records and on any statement or schedule delivered to Agent and/or any Lender, including without limitation the Schedule of Receivables and Assignment, is and will be the true and correct amount actually owing to a Borrower as of the date each Receivable is pledged to Agent or as of such date specified on such statement of schedule, is not, to the best of Borrowers knowledge, subject to any claim of reduction, counterclaim, set-off, recoupment or any other claim, allowance or adjustment; and no Borrower has any knowledge of any fact which would impair the validity or collectability of any Receivables;
(v) All security agreements, title retention instruments and other documents and instruments which are security for Receivables contain a correct and sufficient description of the personal property covered thereby (if any), and, subject to the rights of Agent hereunder and the interests of Borrowers as holder of such security agreements or title retention instruments or other documents or instruments, are or create security interests and Liens (if any);
(vi) The applicable Originator has made an adequate credit investigation of the obligor of each Receivable and has determined that his or her credit is satisfactory and meets the standards generally observed by prudent finance companies that are in
the business of making unsecured multi-pay consumer installment loans or auto title loans, as applicable, and is in conformity in all material respects with the Credit Policy; and
36
(vii) A Borrower has good and valid title to the Receivables, free and clear of all prior assignments, claims, liens, encumbrances and security interests, other than Permitted Liens, and has the right to pledge and grant Agent, for the benefit of Lenders, a first priority security interest in the same, in the manner provided in this Agreement.
Section 4.2 Organization and Good Standing . Each Borrower and each Guarantor is duly organized and validly existing in good standing under the laws of the state identified on Schedule 4.2 attached hereto and made a part hereof and has the power and authority to engage in the business it conducts and is qualified and in good standing in those states wherein the nature of business or property owned by it requires such qualification, is not required to be qualified in any other state; or if not so qualified, no adverse effect on such Borrowers, or such Guarantors business would result therefrom. The organizational number assigned to each Borrower, each Guarantor by the state of its organization is set forth on Schedule 4.2 attached hereto and made a part hereof.
Section 4.3 Perfection of Security Interest . Upon filing of financing statements in all places as are necessary to perfect the security interests of Agent in the Collateral and disclosing each Borrower, each Guarantor as debtor and Agent as secured party, Agent will have a first perfected security interest in the Collateral which can be perfected by the filing of a UCC-1 financing statement in each Borrowers, each Guarantors state of organization, superior in right of interest to any other Person other than, solely with respect to Collateral other than Receivables, holders of Permitted Liens (including, without limitation, purchasers from, or creditors or receivers or a trustee in bankruptcy of, Borrowers and Guarantors).
Section 4.4 No Violations . The making and performance of the Credit Documents do not and will not violate any provisions of any law, rule, regulation, judgment, order, writ, decree, determination or award or breach any provisions of the certificate of formation, operating agreement or other organizational documents of any Borrower, any Guarantor, or constitute a default or result in the creation or imposition of any security interest in, or lien or encumbrance upon, any assets of any Borrower, any Guarantor (immediately or with the passage of time or with the giving of notice and passage of time, or both) under any other contract, agreement, indenture or instrument to which a Borrower or a Guarantor is a party or by which a Borrower or a Guarantor or their respective property is bound where such violation, breach, default, creation of any security interest in or lien or encumbrance upon will result in the case of any Borrower, in a Material Adverse Change, or in the case of any Guarantor or any direct or indirect parent of such Person, a material adverse change in the business, properties, assets, operations, the collateral, results of operations, or financial condition of any such Person. The making and performance of the Credit Documents will not cause any existing Borrower or any Guarantor securities, indebtedness or facility to be subject to any price reset or any other material change in terms.
Section 4.5 Power and Authority .
37
(a) Each Borrower and each Guarantor has full power and authority under the law of the state of its organization and under its organizational documents to enter into, execute and deliver and perform the Credit Documents; to borrow monies hereunder, to incur the obligations herein provided for and to pledge and grant to Agent, for the benefit of the Lenders and the Holders, a security interest in the Collateral; and
(b) All actions (corporate or otherwise) necessary or appropriate for each Borrowers, each Guarantors execution, delivery and performance of the Credit Documents have been taken.
Section 4.6 Validity of Agreements . Each of the Credit Documents is, or when delivered to Agent will be, duly executed and constitute valid and legally binding obligations of each Borrower and each Guarantor enforceable against such Borrower and such Guarantor, in accordance with their respective terms except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors rights generally or by equitable principles relating to enforceability.
Section 4.7 Litigation and Arbitration . There is no order, notice, claim, action, suit, litigation, arbitration, proceeding or investigation pending or, threatened in writing against or affecting any Borrower or any Guarantor as of the date hereof where the amount in controversy is in excess of Two Hundred Fifty Thousand Dollars ($250,000), whether or not fully covered by insurance, except as identified and described on Schedule 4.7 attached hereto and made a part hereof.
Section 4.8 Compliance . Each Borrower and each Guarantor is in compliance in all material respects with all applicable laws and regulations, federal, state and local (including all Consumer Finance Laws (including being in compliance with privacy notice requirements under the Gramm-Leach-Bliley Act)), material to the conduct of its business and operations; each Borrower and each Guarantor possesses all the franchises, permits, licenses, certificates of compliance and approval and grants of authority necessary or required in the conduct of its business and the same are valid, binding, enforceable and subsisting without any defaults thereunder or enforceable adverse limitations thereon, and are not subject to any proceedings or claims opposing the issuance, development or use thereof or contesting the validity thereof; and no approvals, waivers or consents, governmental (federal, state or local) or non-governmental, under the terms of contracts or otherwise, are required by reason of or in connection with such Borrowers and such Guarantors execution and performance of the Credit Documents.
Section 4.9 Accuracy of Information; Full Disclosure .
(a) All financial statements, including any related schedules and notes appended thereto, delivered and to be delivered to Agent and/or any Lender pursuant to the Credit Documents have been or will be prepared in accordance with GAAP and do and will fairly present in all material respects the financial condition of each Borrower, each Guarantor and their respective Subsidiaries, if any, on the dates thereof and results of operations for the periods covered thereby and discloses all liabilities (including contingent liabilities) of any kind of such Borrower and such Guarantor to the extent required by GAAP, subject to adjustments as required by the quality of earnings report delivered prior to the Closing Date.
38
(b) Since the date of the most recent financial statements furnished to Agent and/or any Lender, there has not been in the case of any Borrower, a Material Adverse Change, or in the case of any Guarantor or any direct or indirect parent of such Person, a material adverse change in the business, properties, assets, operations, the collateral, results of operations, or financial condition of any such Person.
(c) None of the representations or warranties made by any Credit Party or any of their Subsidiaries in the Credit Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in each exhibit, report, statement or certificate furnished by or on behalf of any Credit Party or any of their Subsidiaries in connection with the Credit Documents, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.
Section 4.10 Taxes . Each Borrower and each Guarantor has filed and will file all income and other material Tax Returns which are required to be filed and all such Tax Returns were correct and complete in all material respects and were prepared in substantial compliance with all applicable laws and regulations, and has paid or will pay when due all material Taxes, license and other fees (whether or not shown on any Tax Return) of such Borrower or such Guarantor except Taxes contested in good faith for which adequate reserves in accordance with GAAP have been established by such Borrower or such Guarantor on its Books and Records. There are no unpaid Taxes in any material amount claimed to be delinquent by the Governmental Authority of any jurisdiction (other than those being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and subject to adequate reserves taken by the Credit Parties or such Subsidiaries as shall be required in conformity with GAAP), and the executive officers of each of the Credit Parties and their Subsidiaries know of no basis for any such claim. No written claim has ever been made by an authority in a jurisdiction where any Credit Party or any of its Subsidiaries does not file Tax Returns that any Credit Party or any of its Subsidiaries is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Credit Parties or any of their respective Subsidiaries.
Section 4.11 Indebtedness . No Borrower or Guarantor has presently outstanding indebtedness or obligations including contingent obligations and obligations under capitalized leases, except Permitted Indebtedness.
Section 4.12 Investments . No Borrower has direct or indirect Subsidiaries or Affiliates (solely as such term is defined in subsections (i), (ii) or (iii) of Affiliate contained in Section 1.1 ), or investments in or loans to any other individuals or business entities, except as described in Schedule 4.12 attached hereto and made a part hereof and Investments permitted by Section 7.7 .
Section 4.13 ERISA . Each Borrower, each Guarantor and each ERISA Affiliate, is in compliance in all material respects with all applicable provisions of ERISA and the regulations promulgated thereunder. No reportable event, as such term is defined in Section 4043(c) of ERISA (hereinafter called a Reportable Event ), but excluding any Reportable Event for which
39
the 30-day notice requirement is waived by applicable regulation, has occurred with respect to any Plan. There has been no filing by the administrator of any Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distressed termination under Section 4041(c) of ERISA and the PBGC has not instituted proceedings to terminate any Plan and no event or condition occurs which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan.
Section 4.14 Hazardous Wastes, Substances and Petroleum Products .
(a) Each Borrower and each Guarantor (i) has received all permits and filed all notifications necessary to carry on its respective business; and (ii) is in compliance in all respects with all Environmental Control Statutes.
(b) No Borrower or Guarantor has given any written notice to the EPA or any state or local agency with regard to any actual or imminently threatened removal, spill, release or discharge of Hazardous Substances at products or properties owned or leased by such Borrower or such Guarantor or in connection with the conduct of its business and operations.
(c) No Borrower or Guarantor has received written notice that it is potentially responsible for costs of clean-up of any actual or imminently threatened spill, release or discharge of hazardous or toxic wastes or substances or petroleum products pursuant to any Environmental Control Statute.
Section 4.15 Solvency . The Borrowers and Guarantors are, on a consolidated basis, and after receipt and application of the first Advance will be, solvent such that (a) the fair value of its assets (including without limitation the fair salable value of Borrowers and Guarantors Intangible Assets) is greater than the total amount of its liabilities, including without limitation, contingent liabilities, (b) the present fair salable value of its assets (including without limitation the fair salable value of its Intangible Assets) is not less than the amount that will be required to pay the probable liability on its debts as they become absolute and matured, and (c) it is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business. No Borrower or Guarantor intends to, or believes that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature, and is not engaged in a business or transaction, or about to engage in a business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice and industry in which it is engaged. For purposes of this Section 4.15 , in computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that reasonably can be expected to become an actual matured liability.
Section 4.16 Business Location . As of the date hereof, each Borrowers and each Guarantors address set forth on Schedule 4.16 attached hereto and made a part hereof is the location of such Borrowers and such Guarantors principal place of business and such address, together with the addresses set forth on Schedule 4.16 attached hereto and made a part hereof, is the only location where such Borrower or such Guarantor keeps its records concerning the Collateral. The location of all other places of business of each Borrower and each Guarantor and the names in which each Borrower and each Guarantor conducts business at each such location as of the date hereof are set forth in Schedule 4.16 attached hereto and made a part hereof.
40
Section 4.17 Equity Interests . All of the issued and outstanding equity interests or other ownership interest of each Borrower and each Guarantor is owned as of the date hereof as described on Schedule 4.17 attached hereto and made a part hereof, and all such ownership interests are fully paid and non- assessable.
Section 4.18 No Extension of Credit for Securities . No Borrower or Guarantor is, nor will it be, engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying or trading in any margin stocks or margin securities (within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System) or other securities, and no part of the proceeds of the Loan hereunder has been or will be applied for the purpose of purchasing or carrying or trading in any such stock or securities or of refinancing any credit previously extended, or of extending credit to others, for the purpose of purchasing or carrying any such margin stock, margin securities or other securities in contravention of such Regulations.
Section 4.19 [Intentionally Omitted] .
Section 4.20 Regulated Entities . No Borrower or Guarantor is (a) an investment company within the meaning of the Investment Company Act of 1940.
Section 4.21 Insurance . Each Borrower and each Guarantor and their respective Properties are insured with financially sound and reputable insurance companies which are not Affiliates of the Borrowers or Guarantors, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses of the same size and character as the business of the Borrowers and Guarantors and, to the extent relevant, owning similar Properties in localities where such Persons operate. As of the date hereof, a true and complete, in all material respects, listing of such insurance, including issuers, coverages and deductibles, has been provided to Agent.
Section 4.22 Deposit Accounts and Other Accounts . Schedule 4.23 lists all banks and other financial institutions at which any Borrower or any Guarantor maintains deposit or other accounts as of the Closing Date and in which any Collateral may be deposited, and such Schedule correctly identifies the name, address and any other relevant contact information reasonably requested by Agent with respect to each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.
Section 4.23 Foreign Assets Control Regulations and Anti-Money Laundering . Each Borrower and each Guarantor is in compliance in all material respects with all applicable U.S. economic sanctions laws, Executive Orders and implementing regulations as promulgated by the U.S. Department of the Treasury Office of Foreign Assets Control ( OFAC ), and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act and all regulations issued pursuant to it. No Borrower or Guarantor (i) is a Person designated by the U.S. government on OFACs list of Specially Designated Nationals and Blocked Persons (the SDN List ), (ii) is a Person who is otherwise the target of U.S. economic sanctions laws such
41
that a U.S. Person cannot deal or otherwise engage in business transactions with such Person or (iii) is controlled by (including by virtue of such Person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any Person on the SDN List or a foreign government that is the target of U.S. economic sanctions prohibitions such that the entry into, or performance under, this Agreement or any other Credit Document would be prohibited under U.S. law.
Section 4.24 USA PATRIOT Act . Each Borrower and each Guarantor is in compliance in all material respects with (a) the Trading with the Enemy Act, and each of OFACs foreign assets control regulations and any other enabling legislation or executive order relating thereto, (b) the USA PATRIOT Act and (c) other federal or state laws relating to know your customer and anti-money laundering rules and regulations. No part of the proceeds of any Loan will be used directly or indirectly for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977.
ARTICLE 5
CONDITIONS TO EFFECTIVENESS AND TO EACH ADVANCE
Section 5.1 Documents to be Delivered to Agent Prior to Effectiveness . Prior to the effectiveness of this Agreement, Borrowers shall deliver or cause to be delivered to Agent (all documents to be in form and substance satisfactory to Agent in its sole and absolute discretion):
(a) Credit Documents . This Agreement, the Notes, the Bridge Credit Agreement and all other Credit Documents, including a Custodian Agreement in connection with Eligible Receivables evidenced by physical documents, duly and properly executed by the parties thereto in form and substance acceptable to the Agent in its sole discretion;
(b) Searches . Uniform Commercial Code, tax and judgment searches against each of the Borrower Parties in those offices and jurisdictions as Agent shall reasonably request which shall show that no financing statement, liens, or assignments or other filings have been filed or remain in effect against any of the Borrower Parties or any Collateral except for Permitted Liens and those other Liens, financing statements, assignments or other filings with respect to which the secured party or existing lender (i) has delivered to Agent Uniform Commercial Code termination statements or other documentation evidencing the termination of its Liens and security interests in Collateral, or (ii) has agreed in writing to release or terminate its Lien and security interest in Collateral upon receipt of proceeds of the Advances;
(c) Organizational Documents . A copy of each of the Borrower Parties (i) organization documents, certified as of a recent date by such Persons secretary (or other appropriate officer), and (ii) bylaws, partnership agreement or operating agreement, as applicable, certified as of a recent date by such Persons secretary (or other appropriate officer); together with certificates of good standing existence or fact in such Borrower Partys state of organization and in each jurisdiction in which such Person is qualified to do business, each dated within thirty (30) days from the date of this Agreement;
42
(d) Authorization Documents . A certified copy of resolutions of each of the Borrower Parties board of directors, members, managers or partners, as applicable, authorizing the execution, delivery and performance of the Notes, this Agreement and all other Credit Documents, the pledge of the Collateral to Agent as security for the Loan made hereunder and the borrowing evidenced by the Notes and designating the appropriate officers to execute and deliver the Credit Documents;
(e) Incumbency Certificates . A certificate of each of the Borrower Parties secretary (or other appropriate officer) as to the incumbency and signatures of officers of such Borrower Party signing this Agreement, the Notes and other Credit Documents, as applicable;
(f) Opinion of Counsel . Agent shall have received a written opinion of the Borrower Parties counsel addressed to Agent and Lenders in form and substance satisfactory to Agent in its sole discretion;
(g) Officers Certificate . A certificate, dated the date of this Agreement, signed by the President of each of the Borrower Parties, to the effect that (i) all representations and warranties of such Person set forth in this Agreement and the other Credit Documents, as applicable, are true and correct as of the date hereof in all material respects, including financial covenants set forth in Section 6.4 , (ii) each of the Borrower Parties is solvent and (iii) no Default or Event of Default hereunder has occurred;
(h) Due Diligence . Completion of Agents legal, tax, business, regulatory and other customary due diligence of Borrowers with results satisfactory to Agent;
(i) Insurance . Evidence of insurance issued by a reputable carrier with respect to each Borrowers and Guarantors fire, casualty, liability, and other insurance covering its Property, and any key owner/operator insurance;
(j) Data Tape . A data tape containing information as to Borrowers loan portfolio submitted as of the most recent month end;
(k) Material Adverse Change . Since December 31, 2015, there shall have occurred in the case of any Borrower, no Material Adverse Change, or in the case of any Guarantor or any direct or indirect parent of such Person, no material adverse change in the business, properties, assets, operations, the collateral, results of operations, or financial condition of any such Person and the absence of the liquidation, dissolution or termination of any Borrower or any Guarantor;
(l) Litigation . Absence of any litigation that negatively would impact any Borrowers or any Guarantors ability to perform their respective obligations under the Credit Documents to which they are party;
(m) Employment Agreements . Each Key Person shall be employed by the Borrower Parties in the same position and with duties substantially similar to those held as of the Closing Date;
43
(n) Credit Policy . Agent shall have received a complete copy of the Credit Policy;
(o) Closing Agenda . Such other documents, information and reports listed on the closing agenda delivered to Borrowers;
(p) Other Documents . Such additional documents as Agent reasonably may request;
(q) Regulatory . Non-occurrence of any Regulatory Trigger Event or other regulatory event, regulatory change or pending or threatened (in writing) proceeding that could reasonably be expected to have a material adverse effect on any Borrowers or Guarantors ability to fulfill their respective obligations under this Agreement or the Credit Documents or which would reasonably be expected to affect either such Persons ability to remain a going concern;
(r) Payments . Payment in cash by Borrowers to Agent of all of the amounts that have become due and owing as of the Closing Date, and all Costs and Expenses to the extent invoiced on or prior to the Closing Date;
(s) Debt-to Equity Ratio . The Debt-to-Equity Ratio of the Borrowers shall not be more than 9-to-1; and
(t) Build Out . The Borrowers shall have built out the Borrowing Base in a manner satisfactory to the Agent in its sole discretion.
Section 5.2 Conditions to all Advances . The obligation of Lenders to make each subsequent Advance hereunder pursuant to Section 2.1 is conditioned upon:
(a) Advance Requirements . Borrowers satisfaction of each of the conditions specified in Sections 2.1 and 2.7 as of the date of such Advance;
(b) Representations and Warranties . The accuracy as of the date of such Advance of the representations and warranties, including financial covenants set forth in Section 6.4 , made by Borrowers under this Agreement in all material respects (without duplication of any materiality qualifiers contained therein), except to the extent that such representations and warranties expressly relate to any earlier date (in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date);
(c) Event of Default or Default . The absence, after giving effect to such Advance and the receipt of the proceeds thereof and the retirement of any indebtedness then being retired out of the proceeds of such Advance, of any Default or Event of Default;
(d) Advance Amount . The aggregate amount of the requested Advance is in increments of One Million Dollars ($1,000,000);
44
(e) Commitment . After giving effect to such Advance, the aggregate outstanding principal amount of the Loans would not exceed the Commitments including the Revolving Loan Commitments and the Term Loan Commitments;
(f) Borrowing Base . The Borrowers shall have delivered a Monthly Statement demonstrating that the outstanding amount of the Loans does not exceed the Borrowing Base after giving effect to such proposed Advance;
(g) Regulatory Trigger Event . The absence, before and after giving effect to such Advance, of a Regulatory Trigger Event;
(h) Costs and Expenses . The Borrowers and Guarantors shall have paid or reimbursed the Agent and the Lenders for all costs and expenses required to be paid or reimbursed by them on or prior to such Advance date, subject to the limitations set forth in Section 10.7 ;
(i) Control Agreements . The Control Agreements shall be executed, delivered and in full force and effect;
(j) Facility Availability . The amount of the Facility Availability shall be zero;
(k) Senior Participation Agreement . A Senior Participation Agreement is duly and properly executed by the parties thereto in form and substance acceptable to the Agent in its sole discretion; and
(l)
Initial Advance Fee
. Solely with respect to the initial
Advance and in addition to any fees payable pursuant to
Section 5.2(h)
, payment in cash by Borrowers to Agent of the Closing Fee.
Section 5.3 Conditions to Each Release of Funds . The obligation of the Agent to release funds in the Collection Account to the Borrowers in accordance with Section 2.4(b) is subject to the satisfaction, or waiver in accordance with Section 10.2 , of the following conditions precedent:
(a) the Agent shall have received a fully executed Funds Release Request together with a Borrowing Base Certificate no later than 1:00 P.M. two (2) Business Days prior to the date on which Borrowers propose to use the requested funds to purchase additional Eligible Receivables (the Release Date ), evidencing sufficient Facility Availability with respect to the requested funds together with an updated schedule of Receivables including the Receivables to be purchased on the Release Date and any other information reasonably requested by the Agent with respect to such Release Date; and
(b) each of the conditions in Section 5.2 and the Reinvestment Criteria shall be satisfied.
45
ARTICLE 6
AFFIRMATIVE COVENANTS
In addition to the covenants contained in Article 4 of this Agreement relating to the Collateral, until all Obligations (other than unasserted contingent indemnification obligations) have been satisfied in full and the Commitments have expired or otherwise have been terminated, each Borrower and each Guarantor covenants and agrees as follows:
Section 6.1 Place of Business and Books and Records . Each Borrower and each Guarantor will promptly (and in any event, within three (3) Business Days) advise Agent in writing of (a) the establishment of any new places of business by such Borrower or Guarantor and of the discontinuance of any existing places of business of such Borrower or Guarantor; (b) the creation of any new Subsidiaries of any Borrower or any Guarantor and (c) the acquisition and or use of any trade name or trade style.
Section 6.2 Reporting Requirements . Borrowers will deliver to Agent (which Agent will thereafter deliver to Lenders):
(a) within twenty five (25) days after the end of each fiscal month, company prepared consolidated and consolidating financial statements of Curo Intermediate and its Subsidiaries for such previous fiscal month, consisting of a balance sheet, income statement, and schedules as of the end of such fiscal month, all in reasonable detail, prepared in accordance with GAAP consistently applied, together with a covenant compliance certificate for the month then ending;
(b) within five (5) Business Days after the end of each fiscal month (or during the continuance of an Event of Default, as may be more frequently required by Agent from time to time), Borrowers shall prepare a completed Monthly Statement and Borrowing Base Certificate as of such fiscal month end detailing the payments to be made on the next applicable Payment Date in accordance with Section 2.4 and a calculation of the Borrowing Base;
(c) within (i) ten (10) days after the end of each fiscal month, for the fiscal month then ending, reports in form and substance reasonably satisfactory to Agent, setting forth an aging of Receivables, Schedule of Receivables and Assignment, detailed delinquency report books and records consisting of data tape information of Borrowers portfolios in a format and consisting of data elements reasonably acceptable to Agent, and repossession report in respect of any Title Receivables and (ii) within twenty (20) days after the end of each fiscal month, for the fiscal month then ending, report of Cumulative Net Losses by Vintage Pool and in form reasonably acceptable to Agent, charge-off report, detailed analysis in respect of any Title Receivables and reserve report, performance triggers collections, reconciliation reports with sufficient detail to permit Agent to tie cash remittances to applied cash, and such other documentation and information promptly (and in any event, within three (3) Business Days) after request therefor by Agent;
(d) within one hundred twenty (120) days after the close of each fiscal year, consolidated financial statements of Curo Intermediate and its Subsidiaries for the fiscal year then ended consisting of a balance sheet, income statement, and statement of cash flow of Curo
46
Intermediate and its consolidated Subsidiaries as of the end of such fiscal year, all in reasonable detail, including all supporting schedules and footnotes, prepared in accordance with GAAP consistently applied, and shall be audited and certified without qualification by an independent certified public accountant selected by Borrowers and acceptable to Agent and accompanied by an Annual Compliance Certificate; and cause Agent to be furnished at the time of completion thereof, a copy of any management letter for Borrowers or Guarantors prepared by such certified public accounting firm;
(e) upon request by Agent from time to time, copies of Curo Intermediates consolidated income tax returns (including any schedules attached thereto) filed with the Internal Revenue Service promptly (and in any event, within three (3) Business Days) after the filing thereof with the Internal Revenue Service; and
(f) upon request by Agent from time to time, such other financial information and reports concerning Borrowers and Guarantors and their businesses and property as Agent reasonably requests.
Section 6.3 Books and Records . Borrowers, Guarantors and Curo Entities will keep accurate and complete Books and Records concerning the Collateral and all transactions with respect thereto consistent with sound business practices (including, without limitation, accurately account for insurance commissions) and will comply with Agents reasonable requirements, from time to time in effect, including those concerning the submission of reports on all items of Collateral including those which are deemed to be delinquent. Borrowers and Guarantors shall create and maintain electronic copies of all contracts relating to Receivables and certificates of title for vehicles securing Receivables and Agent shall be provided with access to such electronic copies at all times during normal business hours at a location of one or more Borrowers and Guarantors. The form of delinquency reports, the frequency with which such reports shall be submitted to Agent (which in any case shall be no less frequently than monthly) and the standards for determining which Collateral transactions are deemed delinquent for this purpose, shall at all times be satisfactory to Agent. Agent shall have the right at any time and from time to time during regular business hours, at Borrowers sole cost and expense (subject to the limitations set forth in Section 10.7 ), to inspect, audit, and copy the Books and Records of Borrowers and Guarantors and inspect, audit and conduct appraisals of any Collateral.
Section 6.4 Financial Covenants . Borrowers shall maintain the following financial covenants:
(a) Minimum Three-Month Rolling Average Monthly Excess Yield . The Trailing Excess Yield calculated as of the last day of each fiscal month shall not be less than 225%.
(b) Maximum Three-Month Rolling Average Monthly Net Loss . The Trailing Net Loss Rate calculated as of the last day of each fiscal month shall not be greater than 10%.
The determination of the financial covenants contained herein shall exclude any asset, liability, expense or income associated with Statement of Financial Accounting Standard No. 133.
47
Section 6.5 Compliance With Applicable Law .
(a) All Receivables shall comply in all material respects with all applicable federal, state and local laws, rules, regulations, proclamations, statutes, orders and interpretations at the time when Agent obtains any interest therein pursuant to this Agreement.
(b) Each Borrower and each Guarantor shall comply in all material respects with all local, state and federal laws and regulations applicable to its business including without limitation the Consumer Finance Laws, (including complying with privacy notice requirements under the Gramm-Leach- Bliley Act), Anti-Terrorism Laws, Environmental Control Statutes, and all laws and regulations of the Local Authorities, and the provisions and requirements of all franchises, permits, certificates of compliance and approval issued by regulatory authorities and other like grants of authority held by Borrowers and Guarantors; and notify Agent promptly (and in any event, within five (5) Business Days) (and in reasonable detail) of any actual or alleged failure to materially comply with or perform, breach, violation or default under any such laws or regulations or under the terms of any of such franchises or licenses, grants of authority, or of the occurrence or existence of any facts or circumstances which with the passage of time, the giving of notice or otherwise could create such a breach, violation or default or could occasion the termination of any of such franchises or grants of authority.
(c) With respect to the Environmental Control Statutes, Borrowers and Guarantors shall notify Agent when, in connection with the conduct of Borrowers or Guarantors business or operations, any Person (including, without limitation, EPA or any state or local agency) provides written notification to any Borrower, any Guarantor or any of their Subsidiaries with regard to an actual or imminently threatened removal, spill, release or discharge of hazardous or toxic wastes, substances or petroleum products; and notify Agent immediately (and in detail) upon the receipt by any Borrower or any Guarantor of an assertion of liability under the Environmental Control Statutes, of any actual or alleged failure to comply with or perform, breach, violation or default under any such statutes or regulations or of the occurrence or existence of any facts, events or circumstances which with the passage of time, the giving of notice, or both, could create such a breach, violation or default.
Section 6.6 Notice of Default or Regulatory Trigger Event . Borrowers will promptly (and in any event, within three (3) Business Days) notify Agent of the occurrence of any Default, Event of Default or Regulatory Trigger Event; provided, that Borrowers shall not be obligated to provide such notice in respect of any Regulatory Trigger Event (or Default or Event of Default arising therefrom) to the extent that (but only to the extent that) Borrowers are prohibited by applicable Requirements of Law from disclosing the existence of any such Regulatory Trigger Event or any facts and circumstances related thereto; provided further, if the foregoing proviso is applicable, the Borrowers will use best efforts to obtain from the relevant Persons permission to provide such notice to the Agent and Lenders.
Section 6.7 Existence, Properties . Borrowers and Guarantors will (a) do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises and comply in all material respects with all laws applicable to it; (b) maintain, preserve and protect all franchises, licenses and trade names and preserve all the remainder of its property used or useful in the conduct of its business; and (c) maintain in effect insurance with
48
responsible and reputable insurance companies or associations in such amounts and covering such risks as shall be consistent with prudent business practices in the industry in which Borrowers and Guarantors operate and furnish to Agent from time to time, upon their request therefor, evidence of same. The Borrowers and Guarantors will provide the Agent with written evidence of policy renewal and payment of premiums no less frequently than annually.
Section 6.8 Payment of Indebtedness; Taxes . Borrowers and Guarantors will (a) pay all of their indebtedness and obligations promptly and in accordance with normal terms; and (b) pay and discharge or cause to be paid and discharged promptly all Taxes, assessments, and governmental charges or levies imposed upon it or upon its income and profits, or upon any of its property, real, personal or mixed, or upon any part thereof, before the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided , however, that Borrowers and Guarantors shall not be required to pay and discharge or to cause to be paid and discharged any such indebtedness, Tax, assessment, charge, levy or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings and Borrowers or Guarantors shall have set aside on their books adequate reserves (as may be required in accordance with GAAP) with respect to any such indebtedness, Tax, assessment, charge, levy or claim, so contested.
Section 6.9 Notice Regarding Any Plan . Borrowers shall furnish to Agent:
(a) as soon as possible, and in any event within ten (10) days after any senior officer of Borrowers or Guarantors know or have reason to know that any Reportable Event has occurred with respect to any Plan maintained in whole or in part for the employees of a Borrower, a Guarantor or any of their Subsidiaries, a statement of the President or Treasurer of Borrowers and Guarantors setting forth details as to such Reportable Event and the action which is proposed to be taken with respect thereto, together with a copy of the notice of such Reportable Event given to the PBGC; and
(b) promptly (and in any event, within three (3) Business Days) after receipt thereof, a copy of any notice which a Borrower or a Guarantor may receive from the PBGC relating to the intention of a Borrower or Guarantor to terminate any Plan maintained in whole or in part for the benefit of employees of any Borrower, any Guarantor or any of their Subsidiaries or to appoint a trustee to administer any such Plan.
Section 6.10 Other Information . From time to time upon reasonable request of Agent, Borrower Agent and Guarantor will furnish to Agent such additional information and reports regarding the Collateral and the operations, businesses, affairs, prospects and financial condition of the Borrower Parties.
Section 6.11 Litigation . Borrowers, Guarantors and Curo Entities will promptly (and in any event, within three (3) Business Days) notify Agent (a) of any litigation, arbitration or action instituted or, to Borrowers or Guarantors knowledge, threatened in writing against any Borrower or any Guarantor and (b) of the entry of any judgment or lien against any property of Borrowers or Guarantors, in each case, as applicable, in an amount of Two Hundred Fifty Thousand Dollars ($250,000) or more (provided that with regard to clause (a), the amount in
49
controversy exceeds $250,000) as to any separate action, litigation, arbitration, judgment or lien instituted, threatened or entered or in an aggregate amount of Five Hundred Thousand Dollars ($500,000) or more as to all actions, litigation, arbitration, judgments, or liens instituted, threatened or entered.
Section 6.12 Business Location, Legal Name and State of Organization . Borrowers and Guarantors shall notify Agent: (a) at least thirty (30) days prior to: (i) any proposed change in a Borrowers or Guarantors principal place of business, a Borrowers or Guarantors legal name or a Borrowers or Guarantors state of organization; (ii) any additional places of business of any Borrower or any Guarantor; (iii) the change in the names in which a Borrower or a Guarantor conducts business at each such location; (iv) the change of a Borrowers or Guarantors jurisdiction of organization; and (b) at least one (1) Business Day prior to any proposed change in or additional custodians under any Custodian Agreement (which change in or additional custodian shall be acceptable to Agent in its sole but reasonable discretion). Upon request of Agent, Borrowers and Guarantors will execute and deliver such additional documents, instruments and writings, and take such other action as Agent shall reasonably request to obtain, maintain or continue its perfected and first priority Lien on and security interest in the Collateral.
Section 6.13 Operations . Guarantors and Borrowers shall maintain, or cause to be maintained on their behalf, satisfactory credit underwriting and operating standards, including, with respect to each obligor of each Receivable, the completion of an adequate investigation of such obligor and a determination that the credit history and anticipated performance of such obligor is and will be satisfactory and meets the standards generally observed by prudent finance companies in the business of making unsecured multi-pay consumer installment loans and auto title loans.
Section 6.14 Post-Closing Covenant .
(a) The Borrowers and Guarantors shall on or prior to sixty (60) days after the Closing Date (or such later date as may be approved by the Agent in its sole discretion), deliver additional insured and lenders loss payee endorsements as described in Section 6.16(b).
(b) The Borrowers and Guarantors shall on or prior to sixty (60) days after the Closing Date (or such later date as may be approved by the Agent in its sole discretion), appoint a Backup Servicer that is satisfactory to the Agent in its sole discretion and enter into a Backup Servicing Agreement that is satisfactory to the Agent in its sole discretion.
(c) The Borrowers and Guarantors shall provide thirty (30) days prior written notice to the Agent if any Borrower or Guarantor intends to materially modify any of their business operations or product offerings. The Borrowers and Guarantors shall, (i) in a manner satisfactory to the Agent, cooperate with and assist the Reviewing Parties in connection with any Reviewing Partys review of any such business operation modifications and new product offers as well as any other regulatory reviews or due diligence related to the business and operations of the Borrowers and Guarantors after the Closing Date, (ii) review and consider in good faith any issues raised by, or comments, recommendations or guidance from, any Reviewing Party with respect to the foregoing and (iii) within thirty (30) days (or such longer period as may be agreed to by the Agent in its sole discretion) of any Borrowers or Guarantors receipt of written notice of any comments, recommendations or guidance from a Reviewing Party, resolve or address any such issues, in each case, in a manner satisfactory to the Agent.
50
(d) The Borrowers and Guarantors shall appoint, or shall cause to appoint, on or prior to sixty (60) days after the Closing Date (or such later date as may be approved by the Agent in its sole discretion), a Custodian that is satisfactory to the Agent in its sole discretion and shall enter, or shall cause to enter, into a Custodian Agreement that is satisfactory to the Agent in its sole discretion in connection with Eligible Receivables evidenced in electronic form.
(e) Within ninety (90) days of the Closing Date (provided, that such period shall be extended for additional 30 day periods if Borrower is diligently implementing such changes in good faith and the Agent has requested additional changes), the Borrowers shall implement or cause to be implemented the following enhanced policies, procedures and internal controls (to the reasonable satisfaction of the Agent):
(i) In all states and for all consumer loan products that may qualify as Eligible Receivables, revise consumer credit applications to inquire as to sources of income rather than wages;
(ii) Revise applicable collection policies and procedures to comply with all card association rules (including Visa Operating Rule 5.9.10.1);
(iii) Revise the Customer Relations Manual to reflect compliance with the association rules referenced in Section 6.14(e)(ii);
(iv) Provide information to Agent as to how account adjustments are documented for the consumer and whether or not new ACH authorizations are obtained and describe whether state contractual requirements related to these modifications are satisfied;
(v) Develop new debt collection scripts related to CFPB guidance;
(vi) Provide information on the number of Receivables that are pursued in small-claims court directly or through the Collection Agency on behalf of the Curo Entities; and
(vii) To the extent applicable to any particular consumer loan product that may qualify as Eligible Receivables, develop loan-to-value policies and procedures that are implemented in connection with the offering of all consumer loan products.
(f) Within twenty (20) days of the Closing Date, the Borrowers shall deliver, or shall cause to be delivered, to Agent any county-level lien searches in connection with any Originator that was not delivered to Agent on or prior to the Closing Date. Borrowers shall remedy, or shall cause to be remedied, any liens listed in such missing lien searches that are not Permitted Liens.
(g) Within thirty (30) days after the Closing Date (or such later date as may be approved by the Agent in its sole discretion), Borrower shall enter into a Collection Agency Agreement in a form substantially satisfactory to the Agent that shall replace the Collection Agency Agreement entered into as of the Closing Date.
51
Section 6.15 Further Assurances . Borrowers and Guarantors shall from time to time execute and deliver to Agent such other documents and shall take such other action as may be reasonably requested by Agent in order to implement or effectuate the provisions of, or more fully perfect the rights granted or intended to be granted by Borrowers and Guarantors to Agent pursuant to the terms of this Agreement, the Notes or any other Credit Documents.
Section 6.16 Insurance . Each Borrower and each Guarantor shall (a) maintain in full force and effect all policies of insurance of any kind with respect to the Property and businesses of the Borrowers and Guarantors with financially sound and reputable insurance companies or associations (in each case that are not Affiliates of the Borrowers or Guarantors) of a nature and providing such coverage as is sufficient and as is customarily carried by businesses of the size and character of the business of the Borrowers and Guarantors and (b) cause all such insurance relating to any Property or business of any Borrower and any Guarantor to name Agent as additional insured or lenders loss payee as agent for the Lenders, as appropriate and in form and substance satisfactory to Agent.
Section 6.17 Cash Management Systems .
(a) Each Borrower shall and shall cause each Guarantor to enter into, and cause each depository, securities intermediary or commodities intermediary, including but not limited to any Collection Account Bank, to enter into, Control Agreements with respect to each deposit, securities, commodity or similar account, including but not limited to the Collection Account, maintained by such Person and any account where any Collateral is deposited or located; provided, however, the Curo Concentration Account shall not be required to be subject to a Control Agreement.
(b) The Borrowers shall and shall cause the Guarantors to instruct (or otherwise cause) (i) all account debtors to make payments in respect of Receivables and all other Collateral directly into the Curo Concentration Account and (ii) Curo Intermediate to deposit, on each Business Day, all amounts on deposit in the Curo Concentration Account in respect of Collections into the Collection Account, in accordance with the instructions of the Agent (the Cash Management System ).
(c) The Borrowers shall and shall cause the Guarantors to not establish any new Cash Management System without the prior written consent of the Agent in its sole discretion, and prior to establishing any such new Cash Management System, the Borrowers shall and shall cause the Guarantors and each bank, financial institution or post office box, as applicable, with which it seeks to establish such a Cash Management System to enter into a control agreement similar to the Control Agreement.
(d) Without the prior written consent of the Agent, the Borrowers shall not, in a manner adverse to the Agent or the Lenders, (A) change the general instructions given to Curo Intermediate in respect of payments on account of Receivables to be deposited in the Cash Management System, or (B) change any instructions given to any bank or financial institution which in any manner redirects the proceeds of any collections in the Cash Management System to any account which is not subject to a control agreement in favor of the Agent.
52
(e) Notwithstanding the foregoing, in accordance with the terms of the Collection Agency Agreement, the Collection Agency shall be permitted to deposit Collections on Receivables subject to the Collection Agency Agreement in a trust account to be held in trust for the benefit of the Borrowers, and remit such Collections to the Collection Account net of contingency fees due such Collection Agency with respect to such Collections.
(f) The Borrowers acknowledge and agree that the funds on deposit in the Collection Account shall continue to be collateral security for the Obligations secured hereby.
(g) The Borrowers shall, or shall cause, the Agent to have electronic read-only access to each deposit, securities, commodity or similar account, including but not limited to the Collection Account, maintained by any Person where any Collateral is deposited or located.
Section 6.18 Meetings . The Borrowers and Agent shall cause Curo Financial Technologies Corp.s CLO, CCO and SVP Public Affairs to conduct monthly regulation, legislation and compliance calls with the Agent. Notwithstanding the foregoing, Curo Financial Technologies Corp. shall not be obligated to include Agent in discussions or materials reasonably determined, based upon advice from counsel, by management (i) to represent a conflict of interest for Lender, (ii) to be subject to attorney-client privilege or confidentiality and/or nondisclosure requirements imposed by applicable Requirements of Law or (iii) to otherwise contain highly sensitive or proprietary information (including, but not limited to, IT initiatives, advertising and customer acquisition plans, new product development, acquisitions and strategic alliances, and other ad hoc topics that involve competitive intelligence or strategic plans).
Section 6.19 Borrower Agent as Disregarded Entity . Each Borrower and each Guarantor agrees and represents that Borrower Agent is and shall be treated at all times as a disregarded entity of Curo Intermediate for U.S. tax purposes. The Parties agree to treat and report (including on any Tax Return, audit or any other Tax proceeding) all loans under this Agreement and all Notes (and any loans made thereunder) as debt of Curo Intermediate for U.S. federal income tax purposes, unless otherwise required pursuant to a final non-appealable judgment of a court of competent jurisdiction.
Section 6.20 Board Observation Rights . Each Borrower and each Guarantor agrees to cause Agent to have observation rights at quarterly Board of Directors meetings of Curo Financial Technologies Corp. until such time as the Obligations are paid in full. At each such quarterly meeting, the Agent, at its option, shall be permitted to have a designee attend in-person or via telephone for sessions covering matters relating to Curo Financial Technologies Corp.s business in the United States including, but not limited to, (a) financial results; (b) operational KPI details (including store performance, internet operations, credit, and collection and servicing); (c) human resources; (d) legal and regulatory updates (to the extent not subject to attorney client privilege or confidentiality requirements imposed by applicable Requirements of Law); and (e) public affairs highlights. At such meetings, Lender shall have the opportunity to ask questions and receive answer from the Board of Directors. The Agent shall be provided, in
53
advance, all materials provided to the Board of Directors for the quarterly meetings except Diligent Boardbooks and upon request, the Agent shall receive audit reports (external and internal) and audit committee materials. For the avoidance of doubt, Agent shall not be included in (a) individual committee meetings of the Board of Directors; (b) discussions or materials reasonably determined, based upon advice from counsel, by the Board of Directors (i) to represent a conflict of interest for Lender, (ii) to be subject to attorney-client privilege or confidentiality and/or nondisclosure requirements imposed by applicable Requirements of Law or (iii) to otherwise contain highly sensitive or proprietary information (including, but not limited to, IT initiatives, advertising and customer acquisition plans, new product development, acquisitions and strategic alliances, and other ad hoc topics that involve competitive intelligence or strategic plans).
Section 6.21 Credit Policy Notice . The Credit Parties shall provide Agent with a notice and copy of any modifications, amendments, supplements or changes to the Credit Policy with respect to any Originator that affects any of the Receivables (collectively, a Modification ) at least fifteen (15) days before the effectiveness of such Modification. If prior to the effectiveness of such Modification, the Agent, in its sole discretion, determines that such Modification is both material and not required pursuant to applicable Requirements of Law, and the Originator accepts or implements such Modification without the prior written consent of the Agent, then the Agent may deem such Modification an Event of Default permitting the Agent to pursue any and all remedies in the Loan Agreement.
Section 6.22 Purchase of Additional Eligible Receivables .
(a) The Borrowers may use funds distributed to them from the Collection Account in accordance with Section 2.4 to purchase additional Eligible Receivables. For the avoidance of doubt, notwithstanding that such purchased receivables are Eligible Receivables and will be included in the Borrowing Base, the Lender will have no obligation to make Loans with respect to any purchased Receivables if the Commitments have been reduced to zero.
(b) The Agent shall, upon satisfaction of the conditions precedent specified in Section 5.3 and in accordance with Section 2.4(b) , direct the Collection Account Bank to release funds in the Collection Account in the amount specified in the related Funds Release Request (subject to the Facility Availability), to the Borrowers not later than 1:00 P.M. (New York City time) on the Release Date by wire transfer of same day funds in Dollars, to such account as may be designated in writing to the Collateral Agent by the Borrowers.
ARTICLE 7
NEGATIVE COVENANTS
Each Borrower and each Guarantor covenants and agrees with Agent, Holders and Lenders that until all Obligations (other than unasserted contingent indemnification obligations) have been satisfied in full and the Commitments have expired or otherwise have been terminated, no Borrower or Guarantor will do or permit any of the following:
54
Section 7.1 Payments to and Transactions with Affiliates . With respect to the Credit Parties (a) make any loan, advance, extension of credit or payment to any Affiliate, officer, employee, member, manager, equity holder or director of any Borrower, any such Guarantor or any of their respective Affiliates or (b) enter into any other transaction, including, without limitation, the purchase, sale, lease or exchange of property, or the rendering or any service, to or with any Affiliate or any equity holder, officer, or employee of any Borrower, any such Guarantor or any of their respective Affiliates except for transactions with or services rendered to any Affiliate of a Borrower or any such Guarantor in the ordinary course of business and pursuant to the reasonable requirements of the business of such Affiliate and upon terms no less favorable to a Borrower or any such Guarantor than such Borrower or such Guarantor would obtain in a comparable arms length transaction with a Person not affiliated with a Borrower or any such Guarantor; provided , however, that Borrowers and such Guarantors may in any event, (a) pay a servicing fee to Servicer pursuant to the terms of this Agreement and the Servicing Agreement and (b) enter into the transactions permitted under Sections 7.2 , 7.6 and 7.7 .
Section 7.2 Restricted Payments . With respect to the Credit Parties, make any Restricted Payment, except that Borrowers and such Guarantors may make payments to the Servicer of the servicing fee in accordance with this Agreement and the Servicing Agreement.
Section 7.3 Indebtedness . With respect to the Credit Parties, borrow any monies or create any Debt except for Permitted Indebtedness.
Section 7.4 Guaranties . With respect to the Credit Parties, guaranty or assume or agree to become liable in any way, either directly or indirectly, for any additional indebtedness or liability of others except to endorse checks or drafts in the ordinary course of business.
Section 7.5 Nature of Business . With respect to each Credit Party, engage in any business other than the business in which such Borrower or Guarantor currently is engaged or make any material change in the nature of the financings which such Borrower or Guarantor is permitted to extend hereunder (including without limiting the generality of the foregoing, matters relating to size, type, term, nature and dollar amount).
Section 7.6 Sale of Assets/Negative Pledge . With respect to the Credit Parties, sell, assign, discount, pledge, grant a Lien in, encumber or otherwise dispose of any Receivables or the Collateral, except for Permitted Liens and as otherwise provided herein and except for the following:
(a) dispositions of Cash Equivalents in the ordinary course of business made to a Person that is not an Affiliate of any Borrower, any such Guarantor or Subsidiary;
(b) transactions permitted under Sections 7.2 or 7.7 ;
(c) sale of Charged Off Receivables in the ordinary course; and
(d) creation of Permitted Liens.
Section 7.7 Investments . With respect to the Credit Parties, make any investments in any other Person except for such investments as Agent may approve in its sole but reasonable discretion; or enter into any new business activities or ventures not related to such Borrowers or such Guarantors business existing as of the date of this Agreement except for:
55
(a) investments in cash and Cash Equivalents;
(b) investments in Receivables pursuant to the Credit Documents; and
(c) investments in deposit accounts and securities accounts maintained in the ordinary course of business.
Section 7.8 Subsidiaries . With respect to the Credit Parties, without the prior written consent of the Agent, create or form any Subsidiaries.
Section 7.9 Mergers and Acquisitions . With respect to the Credit Parties, except for such transactions as Agent may approve in its sole discretion, acquire any assets or shares of stock of or other equity interest in any Person, or be a party to any consolidation or merger.
Section 7.10 Use of Proceeds . With respect to the Credit Parties, use the proceeds of any loan or advance made by Agent, Holders or Lenders hereunder for purposes other than as permitted by Section 2.5 herein.
Section 7.11 Ownership and Management . With respect to the Credit Parties, allow any Change of Control.
Section 7.12 Amendment to Material Contracts . With respect to the Credit Parties, amend or permit the amendment of the Loan Sale Agreement, the Loan Transfer Agreement or the Collection Agency Agreement.
Section 7.13 No Negative Pledges . With respect to the Credit Parties:
(a) Permit any of their Subsidiaries, to (i) create or otherwise cause or suffer to exist or become effective any consensual restriction or encumbrance of any kind on the ability of any Borrower or any such Guarantor to pay dividends or make any other distribution on any of such Borrowers or such Guarantors Stock or to pay fees, including management fees, or make other payments and distributions to any Borrower or any such Guarantor or (ii) directly or indirectly, enter into, assume or become subject to any Contractual Obligation prohibiting or otherwise restricting the existence of any Lien upon any of its assets in favor of Agent, whether now owned or hereafter acquired, except, in the case of clauses (i) and (ii), the following: (1) this Agreement and the other Credit Documents, (2) in connection with any document or instrument governing Permitted Liens, provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Liens, (3) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Credit Documents on any Collateral securing the Obligations and does not require the direct or indirect granting of any Lien securing any indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Borrower or any such Guarantor to secure the Obligations or (4) any prohibition or limitation that (a) exists pursuant to applicable Requirements of Law, (b) consists of customary restrictions and conditions contained in any agreement relating to the disposition of any property permitted under Section 7.6 pending the consummation of such disposition or (c) restricts subletting or assignment of any lease governing a leasehold interest of a Borrower or such Guarantor.
56
(b) Issue any Stock (i) if such issuance would result in an Event of Default and (ii) unless such Stock is pledged to Agent, for the benefit of the Lenders or Holders, as security for the Obligations, on substantially the same terms and conditions as the Stock of Borrower Agent is pledged to Agent as of the Closing Date.
Section 7.14 Changes in Accounting, Name and Jurisdiction of Organization . With respect to the Credit Parties, (i) make any significant change in accounting treatment or reporting practices, except as required by GAAP and (ii) change their Fiscal Year or method for determining their Fiscal Quarters.
Section 7.15 OFAC; USA PATRIOT Act . With respect to the Credit Parties, fail to comply in any material respect with the laws, regulations and executive orders referred to in Section 4.24 and Section 4.25 .
Section 7.16 Right of First Refusal . In the event Borrowers or any other Subsidiary of Curo Financial Technologies Corp. (any such Person, a New Borrower ) undertakes to enter into an additional or subsequent credit facility (the New Credit Facility ), Agent and its designees shall have a right of first refusal (but not an obligation) to provide such New Credit Facility on the same material terms and conditions (as such term is described below) as would be provided by such third parties or on terms and condition no less favorable (as mutually agreed by Agent and the New Borrower) to New Borrower than would be provided by such third-party, pursuant to the following terms:
(a) The Borrowers shall provide Agent written notice (a New Credit Facility ROFR Notice ) describing the New Credit Facility and the terms and conditions thereof (collectively, the New Credit Facility Opportunity ). The Agent and its designees shall have ten (10) days from the date of the Agents receipt of a New Credit Facility ROFR Notice to agree to provide such New Credit Facility pursuant to the New Credit Facility Opportunity.
(b) If the Agent and its designees fail to exercise such right of first refusal within said ten (10)-day period with respect to the New Credit Facility Opportunity, then the New Credit Facility Opportunity may be offered to a third-party upon terms and conditions that are substantially comparable or more favorable to (including economic terms that are substantially identical or more favorable to) the New Borrower than, the material terms and conditions as are specified in the applicable New Credit Facility ROFR Notice. Such material terms and conditions will include (1) aggregate principal amount, (2) pricing (including, without limitation, interest rate; closing, commitment, structuring, arrangement or similar fees; and original issue discount) and payment terms, (3) term and/or duration, and (4) financial covenants, borrowing base or availability, material conditions to borrowing, and similar restrictions. In the event the New Credit Facility Opportunity has not been consummated within the one hundred eighty (180)-day period from the date of the applicable New Credit Facility ROFR Notice, the New Credit Facility Opportunity may not be offered by the Borrowers to any third-party without again offering such New Credit Facility Opportunity to the Agent in the manner provided above. Notwithstanding the foregoing to the contrary, unless the proceeds of any such New Credit Facility Opportunity shall be used promptly to repay in full in cash all Obligations, the provisions of this Section 7.16 shall be subject to the restrictions contained in Sections 7.3 and 7.6 hereof.
57
(c) No obligations by the Borrowers or any other Subsidiary of Curo Financial Technologies Corp. shall exist under this Section 7.16 to provide the Agent with a right of first refusal with respect to such New Credit Facility Opportunity if the all-in cost of capital with respect to any New Credit Facility Opportunity, as determined by Borrowers in good faith, is less than eight percent (8%) per annum. In addition, such right shall not apply to any indebtedness issued to the holders of the 12.00% Senior Cash Pay Notes due 2017 issued pursuant to the Indenture dated as of February 14, 2013 between Wilmington Trust, National Association as Trustee and Speedy Group Holdings Corp. as the Issuer or the 10.75% Senior Secured Notes due 2018 issued pursuant to the Indenture dated as of May 12, 2011 among Speedy Cash Intermediate Holdings Corp. as the Issuer and the Guarantors party hereto and Wilmington Trust FSB as Trustee and Collateral Agent in connection with a purchase of, or tender offer, exchange offer for or other extinguishment of any such existing bonds.
(d) The rights under this Section 7.16 shall terminate upon the earlier to occur of (i) the termination of the Obligations and (ii) a Change of Control of the Borrower; provided that if the Obligations are terminated by a capital contribution from Borrowers direct or indirect parent, this Section 7.16 shall terminate six (6) months after the date of such capital contribution.
ARTICLE 8
EVENTS OF DEFAULT
Each of the following events shall constitute an Event of Default under this Agreement:
Section 8.1 Failure to Make Payments . The failure of Borrowers to make any payment of principal or interest under the Notes or this Agreement or any other payment hereunder including the amount of any Borrowing Base Deficiency or in respect of any other Obligation within three (3) Business Days of becoming due.
Section 8.2 Information, Representations and Warranties . Any representation or warranty made by any Credit Party herein or in any certificate or instrument delivered by any Credit Party in connection herewith or any other Credit Document shall be false, misleading or incorrect in any material respect at the time made or deemed made or furnished.
Section 8.3 Covenants . Except as otherwise provided for in Sections 8.1 and 8.3(b) , (a) failure or neglect of any Borrower or any Guarantor to perform, keep or observe any term, provision, condition, covenant contained in this Agreement, or contained in any other Credit Document (subject to any applicable grace or cure period in such other Credit Document), which is not cured within twenty-five (25) days after the earlier of (x) the date on which such failure or neglect shall first become known to any officer of a Borrower or a Guarantor or the date when any such officer of a Borrower or a Guarantor should reasonably have known or been aware thereof, whichever is earlier, or (y) the date on which written notice thereof is given to Borrower Agent or a Guarantor by Agent, or (b) failure or neglect of any Borrower or any Guarantor to perform, keep or observe any term, provision, condition or covenant, contained in Sections 6.2 , the third sentence of 6.3 , 6.4 , 6.6 , 6.11 , 6.12 , 6.14 , 6.15 , 6.16 , 6.17 , 6.19 , 6.21 , and Article 7 hereof.
58
Section 8.4 Collateral . At any time after the grant to Agent for the benefit of Lenders and Holders of a security interest in or Lien upon any Collateral, Agents interest therein shall for any reason cease to be a valid and subsisting first priority Lien (other than with respect to Permitted Liens) in favor of Agent and/or a valid and perfected first priority security interest in and to the Collateral purported to be covered thereby having the priority set forth therein.
Section 8.5 Defaults Under Other Agreements . Any default by any Borrower or any Guarantor under any agreement to which such Borrower or such Guarantor is a party and with respect to which the amount claimed exceeds Five Hundred Thousand Dollars ($500,000), singly or in the aggregate or any acceleration or redemption of indebtedness of any Borrower or any Guarantor after any such default regardless of monetary amount.
Section 8.6 Certain Events . The occurrence of any of the following with respect to any Borrower or any Guarantor:
(a) Voluntary Proceedings . It shall (i) apply for or consent to the appointment of a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) be generally not paying its debts as such debts become due as defined in the Bankruptcy Code, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under the Bankruptcy Code, (v) fail to controvert in a timely or appropriate manner, or acquiesce in writing to, any petition filed against it in any involuntary case under the Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting any of the foregoing.
(b) Involuntary Proceeding . A proceeding or case shall be commenced against it without its application or consent in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding up, or composition or readjustment of debts, of it, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for it or of all or any substantial part of its assets, or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case shall continue undismissed or unstayed and in effect, for a period of sixty (60) days, or an order for relief against it shall be entered in an involuntary case under the Bankruptcy Code.
(c) Reportable and Other Events . (i) The occurrence of any Reportable Event which Agent determines in good faith constitutes grounds for the termination of any Plan by the PBGC or for the appointment by the United States District Court of a trustee to administer any Plan; (ii) the institution by the PBGC of proceedings to terminate any Plan; or (iii) the failure of any Borrower, any Guarantor or any Subsidiary of Curo Intermediate to meet the minimum funding standards established in Section 412 of the Code.
(d) Suspension of Activities . Any Borrower or any Guarantor liquidates, dissolves, terminates or suspends its business operations or otherwise fails to operate its business in the ordinary course whether done voluntarily or pursuant to a court, regulatory or other order or directive.
59
(e) Judgments . Any money judgment, writ or warrant of attachment or similar process involving in the aggregate at any time an amount in excess of Five Hundred Thousand Dollars ($500,000) (to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has not denied coverage or which has not been paid with proceeds of an equity issuance) shall be entered or filed against any Borrower or any Guarantor or any of their respective assets and shall remain undischarged, unsatisfied, unvacated, unbonded or unstayed for a period of thirty (30) days (or in any event later than five (5) days prior to the date of any proposed sale thereunder in connection with any enforcement proceedings commenced by a creditor upon such judgment, writ, warrant of attachment or similar process).
(f) Collateral Performance . A Level II Trigger Event shall occur and be continuing.
Section 8.7 Possession of Collateral . A judgment creditor of any Borrower or any Guarantor shall take possession of any of the Collateral by any means including without limitation, by levy, distraint, replevin, self-help, seizure or attachment.
Section 8.8 Guarantor . Any Guarantor shall repudiate, purport to revoke or fail to perform any such Guarantors obligations under the Guaranty and Security Agreement or any other Credit Document to which it is party or any individual Guarantor shall die or a petition shall be filed by or against any Guarantor under the Bankruptcy Code naming such Guarantor as a debtor.
Section 8.9 Credit Documents . An event of default following the expiration of any cure period (however defined) shall occur under any Credit Document other than this Agreement or any material provision of any Credit Document shall at any time for any reason be declared to be null and void or the validity or enforceability thereof shall be contested by any Borrower or any Guarantor. Any Borrower or any Guarantor shall in writing rescind or repudiate any Credit Document or any of its obligations under any Credit Document or any material term thereof shall cease to be, or is asserted by any Borrower or any Guarantor not to be, a legal, valid and binding obligation of any Borrower or any Guarantor enforceable in accordance with its terms.
Section 8.10 Hedging Agreements . Any material default by Borrowers or Guarantors under any Hedging Agreement.
Section 8.11 Regulatory Trigger Event . The occurrence of any Regulatory Trigger Event or any other regulatory event, regulatory change or pending or threatened (in writing) proceeding that could reasonably be expected to cause any Borrower or any Guarantor to be unable to comply with any of its financial covenants or questions any Borrowers or any Guarantors ability to remain a going concern.
Section 8.12 Key Person Event . Don Gayhardt (along with his permitted successors as determined hereunder, a Key Person ) shall, at any time for any reason, cease to be the employed by the Borrower Parties in the same position and with duties substantially similar to those held as of the Effective Date, unless a replacement (with, other than in the case of a Pre-Approved Replacement, the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld, conditioned or delayed) shall have been appointed and employed (including on an interim basis) within ninety (90) days of such Key Persons cessation of such employment;
60
Section 8.13 Change of Control . The occurrence of a Change of Control.
Section 8.14 Minimum Liquidity . CURO Intermediate, together with its consolidated Subsidiaries, shall fail to maintain cash and Cash Equivalents at any one time in an amount equal to or greater than $25,000,000.
Section 8.15 Backup Servicing Agreement . The Backup Servicing Agreement or any provision thereof shall cease to be in full force or effect.
ARTICLE 9
REMEDIES OF AGENT AND WAIVER
Section 9.1 Agents Remedies . Upon the occurrence and during the continuance of any Event of Default, Agent may cease the requirement to make Advances hereunder and/or suspend or terminate, in whole or in part, the Commitments. Upon the occurrence and during the continuance of an Event of Default, Agent may (i) immediately terminate this Agreement or (ii) declare the Obligations immediately due and payable without presentment, notice of dishonor, protest or further notice of any kind, all of which Borrowers and Guarantors hereby expressly waive. Upon such occurrence and/or declaration, Agent shall have, in addition to the rights and remedies given to it by the Notes, this Agreement and the other Credit Documents, all the rights and remedies of a secured party as provided in the UCC (regardless of whether such Code has been adopted in the jurisdiction where such rights and remedies are asserted) and without limiting the generality of the foregoing, and without demand of performance and without other notice (except as specifically required by the Notes, this Agreement or the documents executed in connection herewith) or demand whatsoever to Borrowers or Guarantors, all of which are hereby expressly waived, Agent may, in addition to all the rights conferred upon it by law, exercise one or more of the following rights successively or concurrently: (a) to take possession of the Collateral, or any evidence thereof, proceeding without judicial process or by judicial process (without a prior hearing or notice thereof, which Borrowers and Guarantors hereby expressly waive), (b) to lawfully dispose of the whole or any part of the Receivables or any other Collateral, or any other Property, instrument or document pledged as security for any Obligation at public or private sale, with the right on the part of Agent or their respective nominees to become the purchaser thereof as provided by law absolutely freed and discharged from any equity of redemption, and all trusts and other claims whatsoever; (c) after deduction of all legal and other costs and expenses permitted by law, including attorneys fees, to apply the Collateral or all or any portion of proceeds thereof on account of, or to hold as a reserve against, all Obligations; and (d) to exercise any other rights and remedies available to it by law or agreement. Any remainder of the proceeds after satisfaction in full of the Obligations shall be distributed as required by applicable law. Notice of any sale or disposition of Collateral shall be given to Borrowers and Guarantors at least ten (10) days before any intended public sale or the time after which any intended private sale or other disposition of the Collateral is to be made, which Borrowers and Guarantors agree shall be reasonable notice of such sale or other disposition. Notwithstanding the foregoing, upon the occurrence of an Event of Default described in Section 8.6(a) or (b) , the Commitments shall immediately terminate and the Loan made pursuant to this Agreement and all other Obligations, together with all accrued interest, shall be immediately due and payable in full without presentment, demand, or protest or notice of any kind, all of which Borrowers and Guarantors hereby expressly waive.
61
Section 9.2 Waiver and Release by Borrowers . To the extent permitted by applicable law, each Borrower and each Guarantor: (a) waives (i) presentment and protest of the Notes and this Agreement or any Receivables held by Agent on which any Borrower or any Guarantor is any way liable and (ii) notice and opportunity to be heard, after acceleration in the manner provided in Article 9 of this Agreement, before exercise by Agent of the remedies of self-help or set-off permitted by law or by any agreement with any Borrower or any Guarantor, and except where required hereby or by law, notice of any other action taken by Agent; and (b) releases Agent, Lenders, Holders and their respective officers, attorneys, agents and employees from all claims for loss or damage caused by any act or omission on the part of Agent, Lenders, Holders or their respective officers, attorneys, agents and employees, except willful misconduct or gross negligence.
Section 9.3 No Waiver . Neither the failure nor any delay on the part of Agent or any Lender or Holder to exercise any right, power or privilege under the Notes or this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other further exercise of any right, power or privilege.
Section 9.4 Commitment Termination Fee and Prepayment Fee . The Prepayment Fee and the Commitment Termination Fee shall become immediately due and owing in the event of any acceleration of the Obligations whether at the election of Agent or automatically pursuant to the terms of this Agreement. The Prepayment Fee, as well as the Commitment Termination Fee, shall be secured by all security and collateral for the Obligations and shall, after it becomes due and payable, be treated as if it were added to the Obligations for all purposes including accrual of interest, foreclosure (whether through power of sale, judicial proceeding, or otherwise) ( Foreclosure Sale ), redemption, and bankruptcy (including pursuant to Section 506 of the Bankruptcy Code or any successor provision); without limiting the generality of the foregoing, it is understood and agreed that the Prepayment Fee, as well as the Commitment Termination Fee, may be added to Agents bid at any Foreclosure Sale. If a Prepayment Fee or a Commitment Termination Fee is due hereunder, Agent shall deliver to the Borrower Agent a statement setting forth the amount and determination of the Prepayment Fee or Commitment Termination Fee, and, provided that Agent shall have in good faith applied the formula described in the definition of Prepayment Fee or Commitment Termination Fee, as applicable, the Borrower Agent shall not have the right to challenge the calculation or the method of calculation set forth in any such statement in the absence of manifest error, which calculation may be made by Agent on any day during the thirty (30) day period preceding the date of such prepayment; provided, however, that delivery of such statement shall not be a condition to such Prepayment Fee or Commitment Termination Fee becoming immediately due and owing in accordance with this Section 9.4. Each Borrower and each Guarantor acknowledges that the above described fees are estimates of Lenders and Holders damages in the event of early termination and is not a penalty. In the event of termination of the Commitments established pursuant to this Agreement, all of the Obligations shall be immediately due and payable upon the termination date stated in any notice of termination. All undertakings, agreements, covenants, warranties and representations of Borrowers and Guarantors contained in the Credit Documents shall survive any such termination, and Agent shall retain its liens in the Collateral and all of its rights and remedies under the Credit Documents notwithstanding such termination until Borrowers have paid the Obligations to Agent, Holders and Lenders, in full, in immediately available funds, together with the applicable fees, if any.
62
ARTICLE 10
MISCELLANEOUS
Section 10.1 Indemnification and Release Provisions . Each Borrower and each Guarantor hereby agrees to defend Agent, Holders and Lenders and their directors, officers, agents and employees and attorneys from, and hold each of them harmless against, any and all losses, liabilities (including without limitation settlement costs and amounts), claims, damages, interests, judgments, costs, or expenses, including without limitation, reasonable and documented fees and disbursements of attorneys, incurred by any of them arising out of or in connection with or by reason of this Agreement, the making of the Loan or any Collateral, or any other Credit Document, or related transaction, including without limitation, any and all losses, liabilities, claims, damages, interests, judgments, costs or expenses relating to or arising under any Consumer Finance Laws or Environmental Control Statute or the application of any such statute to Borrowers or Guarantors properties or assets ( provided , however , that the indemnification in this Section 10.1 shall not extend to any Taxes, however denominated, or any costs attributable to any Taxes, including without limitation penalties and interest), other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim). Each Borrower and each Guarantor hereby releases Agent, Holders, Lenders and their respective directors, officers, agents, employees and attorneys from any and all claims for loss, damages, costs or expenses caused or alleged to be caused by any act or omission on the part of any of them, other than such loss, damage cost or expense which has been determined by a court of competent jurisdiction to have been caused by the gross negligence or willful misconduct of Agent, Holders and Lenders. All obligations provided for in this Section 10.1 shall survive any termination of this Agreement or the Commitments and the repayment of the Loan.
Section 10.2 Amendments .
(a) Neither the amendment or waiver of any provision of this Agreement or any other Credit Document, nor the consent to any departure by Borrowers or Guarantors therefrom, shall in any event be effective unless the same shall be in writing and signed by the Agent, Guarantors and Borrowers, and each such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall unless in writing and signed by all Lenders and Holders, do any of the following: (a) increase or extend the Commitments of Lenders, (b) except as otherwise expressly provided in this Agreement, reduce the interest payable under this Agreement, (c) postpone any date fixed for any payment in respect of principal of, or interest on, the Loans or any fees hereunder, (d) change the percentage of the Commitments, or any minimum requirement necessary for Lenders or Holders to take any action hereunder, (e) amend or waive this Section 10.2 , (f) except as otherwise expressly provided in this Agreement, and other than in connection with the financing, refinancing, sale or other disposition of any Property of Borrowers or Guarantors permitted under this Agreement, release any Liens in favor of Lenders or Holders on all or substantially all of the Collateral, (g) permit any Borrower or Guarantor to delegate, transfer or assign any of its obligations to any Lender or Holder and (h) release any Guarantor from its obligations and liabilities under the Guaranty and Security Agreement or the other Credit Documents, and, provided , further , that no amendment, waiver or consent affecting the rights or duties of Agent under any Credit Document shall in any event be effective, unless in writing and signed by Agent, as applicable, in addition to Lenders and
63
Holders required hereinabove to take such action. In addition, Borrowers, Guarantors and Lenders hereby authorize Agent and Holders to modify this Agreement by unilaterally amending or supplementing Schedule I from time to time in the manner requested by Borrowers, Guarantors, Agent or any Lender or Holder in order to reflect any assignments or transfers of the Loans as provided for hereunder; provided , however, that Agent shall promptly deliver a copy of any such modification to Borrowers, Guarantors and each Lender and Holder. Without regard to any other provision hereof, if any Lender or Holder (for such purpose, a Dissenting Lender ) dissents to any action Agent desires to take requiring either the unanimous consent of Lenders or Holders or fails to respond to Agent within five (5) Business Days of Agents request for a consent, any Borrowers or any Guarantors (if no Event of Default or Default is outstanding and with the prior written consent of Agent, in its sole and absolute discretion) or Agent may compel such Dissenting Lender to assign its entire Commitment (either to one or more existing Lenders, Holders or other financial institution(s) who is to become a Lender or Holder, as applicable, pursuant to the terms hereof) so long as (i) such Dissenting Lender receives written notice of such intended assignment (and the proposed effective date thereof) within one hundred twenty (120) days of its providing its dissent to Agent or such Dissenting Lender failing to respond to Agent within the required five (5) Business Day period and the effective date of such intended assignment is not later than ten (10) days thereafter and (ii) the Dissenting Lender receives full payment on the effective date of such assignment of its entire portion of the outstanding Obligations, with accrued interest and unpaid fees to such date (but excluding any otherwise applicable early termination fee under Section 2.8(a) ).
Section 10.3 APPLICABLE LAW . THIS AGREEMENT AND ALL DOCUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 10.4 Notices . All communications provided for hereunder shall be in writing and shall be deemed to have been delivered, if delivered in person, or sent by certified mail, postage pre- paid, return receipt requested, by reliable overnight courier or by E-mail, as follows:
If to the Agent or any Holder:
Victory Park Management, LLC
227 W. Monroe Street, Suite 3900
Chicago, Illinois 60606
Telephone: (312) 705-2786
Facsimile: (312) 701-0794
Attention: Scott R. Zemnick, General Counsel
E-mail: szemnick@vpcadvisors.com
with a copy (for informational purposes only) to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
64
Telephone: (312) 902-5297 and (312) 902-5495
Facsimile: (312) 577-8964 and (312) 577-8854
Attention: Mark R. Grossmann, Esq. and Scott E. Lyons, Esq.
E-mail: mg@kattenlaw.com and scott.lyons@kattenlaw.com
If to Borrowers:
CURO Receivables Finance I, LLC
c/o CURO Management LLC
3527 North Ridge Road
Wichita, KS 67205
Attention: Don Gayhardt
E-Mail: don.gayhardt@curo.com
With a copy to:
CURO Financial Technologies Corp.
3527 North Ridge Road
Wichita, KS 67205
Attention: Vin Thomas
E-Mail: vinthomas@curo.com
If to CURO Receivables Holdings I, LLC:
CURO Receivables Holdings I, LLC
c/o CURO Management LLC
3527 North Ridge Road
Wichita, KS 67205
Attention: Don Gayhardt
E-Mail: don.gayhardt@curo.com
With a copy to:
CURO Financial Technologies Corp.
3527 North Ridge Road
Wichita, KS 67205
Attention: Vin Thomas
E-Mail: vinthomas@curo.com
If to any Lender:
To the address set forth on Schedule I
If any Curo Entity:
c/o CURO Management LLC
3527 North Ridge Road
Wichita, KS 67205
Attention: Don Gayhardt
E-Mail: don.gayhardt@curo.com
65
or to such other address as any party shall specify to the other party in writing in accordance with this Section 10.4 .
Section 10.5 Termination and Release . This Agreement shall not terminate until all amounts due under the Notes, this Agreement and any other Credit Document and other Obligations (other than unasserted contingent obligations), together with all interest and costs due, shall have been paid in full and the Commitments have expired or otherwise have been terminated. Upon such termination and payment of amounts owing under this Agreement, the Collateral securing the Loan, the Notes, this Agreement and the other Obligations shall be released from the provisions of this Agreement and any right, title and interest of Agent in or to the same shall cease. Thereafter, Agent agrees to deliver to Borrowers and Guarantors such documents as Borrowers and Guarantors request to release of record any security interest or lien of Agent in the Collateral.
Section 10.6 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Signature by facsimile or electronic transmission shall bind the parties hereto.
Section 10.7 Costs, Expenses and Taxes . Borrowers agree to pay promptly (and in any event, within three (3) Business Days) upon demand reasonable and documented out-of-pocket legal fees and other out-of-pocket expenses of Agent and each Lender related to the preparation, negotiation, documentation, execution, filing or delivery of this Agreement, any Senior Participation Agreement or any other Credit Document and any and all waivers, amendments or modifications of any Senior Participation Agreement or any of the Credit Documents or any of the terms and provisions thereof. In any calendar year, the Agent and the Lenders shall be permitted to conduct audits and inspections in accordance with this Agreement, any Senior Participation Agreement and any other Credit Documents. The Borrowers shall reimburse the Agent and Lenders for up to four (4) such audits or inspections in any calendar year in an amount not to exceed $200,000 in the aggregate, and any additional audits or inspections will be conducted at the sole expense of the Agent and the Lender; provided and notwithstanding the foregoing, upon the occurrence of an Event of Default, any such audit or inspection will be conducted at the sole expense of the Borrowers without regard to such reimbursement cap. Borrowers shall also pay promptly (and in any event, within three (3) Business Days) upon demand therefor all reasonable out-of-pocket fees (including without limitation, legal fees and expenses), costs and other expenses incurred by Agent and each Lender in connection with collection of the Loan, the maintenance or preservation of the security interest in the Collateral, the sale, disposition or other realization on the Collateral, or the enforcement of Agents, Holders and Lenders rights hereunder, under any Senior Participation Agreement or under any Credit Document, including, without limitation, such fees, costs and expenses incurred by Agent which Agent, in its reasonable business judgment, deems reasonably necessary to preserve or protect the business conducted by Borrowers, the Guarantors the Collateral, or any portion thereof. In addition, Borrowers shall also pay any and all Other Taxes or filing fees payable or determined to be payable in connection with the execution and delivery of the Notes and this Agreement, the Collateral and other documents to be delivered hereunder, and agrees to save Agent, Holders and Lenders harmless from and against any and all liabilities with respect to or resulting from any delay in payment or omission to pay such Taxes.
66
Section 10.8 Participations and Assignments .
(a) This Agreement shall bind and inure to the benefit of each signatory, its successors and assigns; provided , however that, Borrowers and Guarantors shall not have the right to assign or delegate their obligations and duties under this Agreement or any other Credit Documents or any interest therein except with the prior written consent of Agent.
(b) Notwithstanding subsection (c) of this Section 10.8 , nothing herein shall restrict, prevent or prohibit any Lender or Holder from (i) pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lender or Holder from such Federal Reserve Bank, (ii) granting assignments in such Lenders or Holders Loans hereunder to its parent and/or to any affiliate of such Lender or Holder or to any existing Lender or Holder or affiliate thereof or (iii) granting participations in such Lenders or Holders Loans hereunder to any Person. Any Lender or any Holder may make, carry or transfer Loans at, to or for the account of, any of its branch offices or the office of an affiliate of such Lender or such Holder except to the extent such transfer would result in increased costs to Borrower.
(c) Each Lender or Holder may, with the prior written consent of Agent and, so long as no Event of Default has occurred and is continuing, the Borrower, assign to one or more banks or other financial institutions all or a portion of its rights and obligations under this Agreement and the Notes. In connection with each assignment: (i) the parties thereto shall execute and deliver to Agent, for its acceptance (if properly completed and executed in accordance with the terms hereof) and recording in its books and records, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and a processing and recordation fee of Three Thousand Five Hundred Dollars ($3,500) to be paid by the assignee, (ii) no such assignment shall be for less than Five Million Dollars ($5,000,000), provided, further, that the assignee (and each subsequent assignee) thereof shall be permitted to assign the rights and obligations assigned to it to another Person) or, if less, the entire remaining Commitment of such Lender or Holder, each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of both the Commitment of such Lender or such Holder and all Loans of such Lender or such Holder; provided and notwithstanding the foregoing, the recordation fee in the foregoing clause (i) and the assignment restrictions in the foregoing clause (ii) shall not be applicable with respect to any assignment to a Person who is an affiliate of the Agent or a Lender. Upon such execution and delivery of the Assignment and Acceptance to Agent, from and after the date specified as the effective date in the Assignment and Acceptance ( Acceptance Date ), (x) the assignee thereunder shall be a party hereto, and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, such assignee shall have the rights and obligations of a Lender or a Holder hereunder and (y) the assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than any rights it may have pursuant to Section 10.1 which will survive) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lenders or Holders rights and obligations under this Agreement, such Lender shall cease to be a party hereto).
67
(d) Promptly (and in any event, within three (3) Business Days) after demand by Agent, Borrowers shall execute and deliver to Agent in exchange for any surrendered Note or Notes (which the assigning Lender or Holder agrees to promptly deliver to Borrowers) a new Note or Notes to the assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender or Holder has retained a Commitment hereunder, a new Note or Notes to the assigning Lender or Holder in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall re-evidence the indebtedness outstanding under the old Notes or Notes and shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes and shall otherwise be in substantially the form of the Note or Notes subject to such assignments.
(e) Each Lender and each Holder may, with the prior written consent of Agent, but without the consent of any other Lender or (except as set forth below) Borrowers, sell participations to one or more parties (a Participant ) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Loans owing to it and the Note or Notes held by it); provided, that so long as no Event of Default has occurred and is continuing, the consent of the Borrowers shall be required for the sale to any Participant that is or is an Affiliate of, a Competitor of any Originator or the Curo Entities; provided further that if such Lender or Holder obtains the consent required under this clause (e) then (i) such Lenders or Holders obligations under this Agreement (including, without limitation, its Commitment to Borrowers hereunder) shall remain unchanged, (ii) such Lender or Holder shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender or Holder shall remain the holder of any such Note for all purposes of this Agreement, (iv) Borrowers, Agent, Holders and the other Lenders shall continue to deal solely and directly with such Lender or Holder in connection with such Lenders or Holders rights and obligations under this Agreement (v) except as may otherwise be provided in the operative documentation governing such participation, the consent of such participant shall not be required (either directly, as a restraint on such Lenders or Holders ability to consent hereunder or otherwise) for any amendments, waivers or consents with respect to any Credit Document or to exercise or refrain from exercising any powers or rights such Lender or Holder may have under or in respect of the Credit Documents (including the right to enforce or direct enforcement of the Obligations), and (vi) such Lender or Holder shall not transfer, grant, assign or sell any participation under which the Participant shall have rights to approve any amendment or waiver of this Agreement. The Borrowers agrees that each Participant shall be entitled to the benefits of Section 2.10 and Section 10.17 (subject to the requirements and limitations therein, including the requirements under Section 10.17(d) ) to the same extent as if it were a Lender or Holder and had acquired its interest by assignment; provided that such Participant (A) agrees to be subject to the provisions of Section 2.10(b) and Section 10.17 as if it were an assignee; and (B) shall not be entitled to receive any greater payment under Section 10.17 , with respect to any participation, than its participating Lender or Holder would have been entitled to receive, unless (if no Default or Event of Default is outstanding) the Borrowers gave prior written consent (not to be unreasonably withheld or delayed) to the grant of such participation and then only to the extent such entitlement to receive a greater payment results from a change in law that occurs after the Participant acquired the applicable participation.
68
(f) Each Lender and Each Holder agrees that, without the prior written consent of Borrowers and Agent, it will not make any assignment or sell a participation hereunder in any manner or under any circumstances that would require registration or qualification of, or filings in respect of, any Advance, Note or other Obligation under the securities laws of the United States of America or of any jurisdiction.
(g) In connection with the efforts of any Lender or any Holder to assign its rights or obligations or to participate interests, Agent or such Lender or such Holder may disclose any information in its possession regarding Borrowers and Guarantors, their finances and/or Property subject to the prospective assignee or participant agreeing to confidentiality restrictions substantially as set forth in Section 10.13 . By executing and delivering an Assignment and Acceptance, the assigning Lender or Holder thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender or Holder makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Credit Document furnished pursuant hereto; (ii) such assigning Lender or Holder makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or Guarantors or the performance or observance by Borrowers or Guarantors of any of their obligations under this Agreement or any other Credit Document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon Agent, such assigning Lender, Holder or any other Lender or Holder, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender or Holder.
(h) Agent, acting for this purpose as a non-fiduciary agent of Borrower, shall maintain at its principal executive office (or such other office or agency of the Agent as it may designate from time to time) a register (the Register ) showing the principal amount (and stated interest) of the Commitments, and Loans and Notes held by each Lender and each Holder, the Advances owing to each Lender and each Holder, and the interests therein of each Lender and each Holder, from time to time, and such Register shall, absent manifest error, conclusively be presumed to be correct and accurate. Agent shall update the Register to reflect any assignments under this Section 10.8 . Notwithstanding anything to the contrary contained in this Agreement, the Notes and Loans made under this Agreement are registered obligations and the right, title, and interest of each Holder, each Lender and their assignees in and to such Notes (or any rights under this Agreement) shall be transferable only upon notation of such transfer in the Register.
69
It is the intent of the parties hereto that the Obligations and interests therein be in registered form for purposes of Code Sections 163(f), 871(h) and 881(c) and Treasury Regulations Sections 5f.103-1(c), and 1.871-14, and the provisions of this Section 10.8 shall be interpreted and applied consistently with such purpose. The Register shall be available for inspection by the Borrower Agent and any Lender and any Holder, at any reasonable time and from time to time upon reasonable prior notice.
(i) Any Lender and any Holder that sells participations shall maintain a register on which it enters the name and the address of each Participant and the principal amounts of each Participants participation interest in the Commitments and Loans (or other rights or obligations) held by it (each, a Participant Register ). The entries in each Participant Register shall be conclusive, absent manifest error, and such Lender and such Holder shall treat each Person whose name is recorded in the Participant Register as the owner of such participation interest as the owner thereof for all purposes notwithstanding any notice to the contrary. In maintaining the Participant Register, such Lender and such Holder shall be acting as the non-fiduciary agent of the Borrower, solely for purposes of applicable United States federal income tax law. Each Participant Register shall be available for inspection by the Borrower Agent and Agent from time to time upon reasonable prior notice. For the avoidance of doubt, Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.
(j) For purposes of clarification, subject to the Register requirements of clause (h) above, a Lender or a Holder may assign (i) all or a portion of such Lenders or such Holders outstanding Notes (and its corresponding rights and obligations hereunder in connection therewith) with or without an assignment of all or a portion of such Lenders or such Holders portion of the Commitments or (ii) any current or future commitment, right or obligation to make any additional loans under such Notes or this Agreement or to purchase any Notes or to lend or relend any amount (collectively, the Excluded Rights and Obligations ). Any assignee of all or a portion of a Lenders or a Holders outstanding Notes (and its corresponding rights and obligations hereunder in connection therewith) who shall not have also been assigned all or a portion of such Lenders or such Holders Commitment and other Excluded Rights and Obligations (such assignment, a Principal Only Assignment ), shall be deemed a Holder and not a Lender hereunder, and all or such portion of the Notes held by such Lender or such Holder that shall have been assigned to such Holder pursuant to the Principal Only Assignment shall be evidenced by and entitled to the benefits of this Agreement and, if requested by such Holder, a Note payable to such Holder in an amount equal to the principal amount of outstanding Notes as shall have been assigned to such Holder pursuant to such Principal Only Assignment. For the avoidance of doubt, any Assignee of a Principal Only Assignment shall have no obligation to purchase any Notes. For purposes of determining whether the Borrowers have reached the Revolving Loan Maximum Principal Amount or Term Loan Maximum Principal Amount, any principal amount of Notes outstanding with respect to a Principal Only Assignment shall be included in such determination.
Section 10.9 Effectiveness of Agreement . Anything to the contrary in this Agreement notwithstanding, the provisions hereof shall not be effective until this Agreement is: (a) duly executed, and delivered by authorized officers of Borrowers to Agent; and (b) duly signed by an authorized officer of each of Agent, Holders and Lender.
70
Section 10.10 JURISDICTION AND VENUE . IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, BORROWERS AND GUARANTORS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN AND AGREE NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH JURISDICTION. BORROWERS AND GUARANTORS AGREE THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE DULY EFFECTED UPON IT BY MAILING A COPY THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID, TO BORROWERS AND GUARANTORS.
Section 10.11 WAIVER OF JURY TRIAL . EACH PARTY HERETO AND THE GUARANTORS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR AGENT, HOLDERS AND LENDERS TO ENTER INTO THIS AGREEMENT.
Section 10.12 REVIEW BY COUNSEL . BORROWERS AND GUARANTORS ACKNOWLEDGE THAT THEY HAVE HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND, SPECIFICALLY, SECTIONS 10.10 AND 10.11 HEREOF, AND FURTHER ACKNOWLEDGE THAT THE MEANING AND EFFECT OF THE FOREGOING WAIVER OF JURISDICTION AND VENUE OBJECTION AND JURY TRIAL HAVE BEEN FULLY EXPLAINED TO BORROWERS AND GUARANTORS BY THEIR COUNSEL.
Section 10.13 Confidentiality; Sharing Information . Agent, each Holder and each Lender shall hold all non-public information obtained by Agent or such Lender or such Holder pursuant to the requirements of this Agreement in accordance with Agents or such Lenders or such Holders customary procedures for handling confidential information of this nature; provided, however, Agent, each Holder and each Lender may disclose such confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any Holder or any Lender, (c) to a prospective participant, lender or holder to the extent such prospective participant, lender or holder agrees to keep such confidential information confidential on a basis similar to the terms of this Section 10.13 and (d) as required or requested by any governmental authority or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by applicable law, Agent, each Holder and each Lender shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable Borrower or applicable Guarantor of the applicable request for disclosure of such non-public information (A) by a governmental authority or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or Holder by such governmental authority) or (B) pursuant to legal process and (ii) in no event shall Agent, any Holder or any Lender be obligated to return any materials furnished by any Borrower or any Guarantor other than those documents and instruments in possession of Agent, any Holder
71
or any Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated. Each Borrower and each Guarantor acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to such Borrower or such Guarantor or one or more of their respective Affiliates (in connection with this Agreement or otherwise) by any Lender, any Holder or by one or more of their respective Subsidiaries or Affiliates and each Borrower and each Guarantor hereby authorizes each Lender and each Holder to share any information delivered to such Lender or such Holder by such Borrower or such Guarantor pursuant to this Agreement, or in connection with the decision of such Lender or such Holder to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender or such Holder, it being understood that any such Subsidiary or Affiliate of any Lender or any Holder receiving such information shall be bound by the provisions of this Section 10.13 as if it were a Lender or a Holder hereunder. Such authorization shall survive the repayment of the Obligations and the termination of this Agreement.
Section 10.14 USA PATRIOT Act Notice . Agent hereby notifies Borrowers that pursuant to the requirements of the USA PATRIOT Act, Agent, Holders and Lenders are required to obtain, verify and record information that identifies Borrowers, including their legal names, address, tax ID numbers and other information that will allow Agent, Holders and Lenders to identify Borrowers in accordance with the USA PATRIOT Act. Agent, Holders and Lenders will also require information regarding each Guarantor, if any, and may require information regarding Borrowers and Guarantors management and owners, such as legal name, address, social security number and date of birth.
Section 10.15 Acknowledgment of Receipt. Each Borrower and each Guarantor acknowledges receipt of a copy of this Agreement and each other Credit Document.
Section 10.16 Advertisement . Agent, each Lender, each Holder, each Guarantor and each Borrower hereby authorize Agent and Borrower Agent to publish the name of Agent, such Holder, such Lender, such Guarantor and such Borrower, the existence of the financing arrangements referenced under this Agreement, the primary purpose and/or structure of those arrangements, the title and role of each party to this Agreement and the total amount of the financing evidenced hereby in any tombstone, comparable advertisement or press release which Agent or Borrower Agent (with the approval of Agent) elects to submit for publication ( Press Release ). With respect to any of the foregoing, Agent and Borrower Agent shall provide each other with an opportunity to review and confer with Agent or Borrower Agent, as applicable, regarding the contents of any Press Release prior to its submission for publication.
Section 10.17 Taxes .
(a) Any and all payments by or on account of any obligation of the Borrowers under any Credit Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such
72
Tax is an Indemnified Tax, then the sum payable by the Borrowers shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 10.17 ), the applicable recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) The Borrowers shall jointly and severally indemnify Agent, each Lender and each Holder, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 10.17 ) payable or paid by such Person or required to be withheld or deducted from a payment to such Person and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender or Holder (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender or Holder, shall be conclusive absent manifest error.
(c) As soon as practicable after any payment of Taxes by the Borrowers to a Governmental Authority pursuant to this Section 10.17 , the Borrowers shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.
(d) Each Lender, Holder and Participant shall deliver to Borrower Agent and to Agent, prior to the date on which such Lender, Holder, or Participant becomes a party to any Credit Document, and thereafter whenever any previously provided documentation expires, becomes invalid, or becomes inaccurate, or whenever reasonably requested by Borrower Agent or Agent, such properly completed and executed documentation as will permit such payments to be made without withholding or at a reduced rate of withholding or as prescribed by applicable laws and such other reasonably requested information as will permit Borrower Agent or Agent, as the case may be, (A) to determine whether or not any payments made hereunder or under any other Credit Document are subject to any Taxes or withholding, (B) to determine, if applicable, the required rate of withholding or deduction and (C) otherwise required by Borrower Agent or Agent to comply with its obligations with respect to laws pertaining to Taxes (including without limitation FATCA). Notwithstanding anything to the contrary in the preceding sentence, the completion, execution and submission of such documentation (other than such documentation set forth in Section 10.17(d)(i) , (ii) and (iii) below) shall not be required if in reasonable judgment of such Lender, Holder or Participant, such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Person. Without limiting the generality of the foregoing:
(i) Any Lender, Holder or Participant shall deliver to Agent, to the extent legally entitled to do so, in such number of copies as shall be requested by Agent and Borrower Agent, before becoming a party to any Credit Document (and from time to time thereafter upon reasonable request by either Agent or Borrower Agent) whichever of the following is applicable:
73
(a) if such Lender or Holder or such Participant is entitled to claim an exemption from United States withholding Tax pursuant to the portfolio interest exception under Section 881(c) of the Code, (A) a statement of such Lender or Holder or such Participant, signed under penalty of perjury, that it is not a (I) a bank as described in Section 881(c)(3)(A) of the Code, (II) a ten percent (10%) shareholder of any Borrower (within the meaning of Section 881(c)(3)(B) of the Code), or (III) a controlled foreign corporation related to any Borrower within the meaning of Section 881(c)(3)(C) of the Code, and (B) a properly completed and executed IRS Form W-8BEN, Form W-8BEN-E or Form W-8IMY (with proper attachments);
(b) if such Lender or Holder or such Participant is entitled to claim an exemption from, or a reduction of, withholding Tax under a United States Tax treaty, a properly completed and executed copies of IRS Form W-8BEN or Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the interest article of such Tax treaty and with respect to any other applicable payments under any Credit Document, properly completed and executed copies of IRS Form W-8BEN or Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the business profits or other income article of such Tax treaty;
(c) properly completed and executed copies of IRS Form W-8ECI;
(d) if such Lender or Holder or such Participant is not the beneficial owner, properly completed and executed copies of IRS Form W-8IMY, accompanied by , properly completed and executed copies of IRS Form W-8ECI, IRS Form W-8BEN or Form W-8BEN-E, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable;
(e) entitled to claim that interest paid under this Agreement is exempt from United States withholding Tax because such Lender or Holder or such Participant serves as an intermediary, a properly completed and executed copy of IRS Form W-8IMY (with proper attachments); or
(f) a properly completed and executed IRS Form W-9 certifying that such person is not subject to U.S. federal backup withholding Tax.
(ii) If a Lender, Holder or a Participant claims an exemption from withholding Tax in a jurisdiction other than the United States, such Lender or Holder or such Participant agrees with and in favor of Agent and Borrowers, to deliver to Borrower Agent and Agent any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding Tax before becoming a party to any Credit Document, but only if such Lender or Holder or such Participant is legally able to deliver such forms; provided, however, that nothing in this Section 10.17(d)(ii) shall require a Lender, Holder or Participant to disclose any information that it deems to be confidential (including without limitation, its Tax Returns), unless otherwise required by applicable law.
74
(iii) Each Lender and each Holder and each Participant shall provide, to the extent legally entitled to do so, new forms (or successor forms) upon the expiration or obsolescence of any previously delivered forms and shall promptly notify Agent and Borrower Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction.
(e) If a Lender or Holder or a Participant claims exemption from, or reduction of, withholding Tax and such Lender or Holder or such Participant sells, assigns, grants a participation in, or otherwise transfers all or part of its interest in the Obligations owed to such Lender or Holder or such Participant, such Lender or Holder or such Participant agrees to notify Agent of the percentage amount in which it is no longer the beneficial owner of such interest in the Obligations owed to such Lender or Holder or such Participant. To the extent of such percentage amount, Agent will treat such Lenders or Holders or such Participants documentation provided pursuant to Section 10.17(d) as no longer valid. With respect to such percentage amount, such Participant or assignee may provide new documentation, pursuant to Section 10.17(d) , if applicable.
(f) If a Lender or Holder or a Participant is entitled to a reduction in the applicable withholding Tax, the applicable withholding agent may withhold from any interest payment to such Lender or Holder or such Participant an amount equivalent to the applicable withholding Tax after taking into account such reduction. If the forms or other documentation required by Section 10.17(d) are not delivered to the applicable withholding agent, then the applicable withholding agent may withhold from any interest payment to such Lender or Holder or such Participant not providing such forms or other documentation an amount equivalent to the applicable withholding Tax.
(g) If a payment made to a Lender, Holder or Participant under this Agreement or any other Credit Document would be subject to Tax imposed under FATCA if such Lender, Holder or Participant were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender, Holder or Participant shall deliver to Borrower Agent and Agent, at the time or times prescribed by law and at such time or times reasonably requested by Borrower Agent or Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower Agent or Agent as may be necessary for Borrower Agent or Agent to comply with their obligations under FATCA, to determine that such Lender, Holder or Participant has complied with such Lenders, Holders or Participants obligations under FATCA, or to determine the amount to deduct and withhold from such payment under FATCA, if any. Solely for purposes of this clause (g), FATCA shall include any amendments made to FATCA after the date of this Agreement.
(h) If the Internal Revenue Service or any other governmental authority of the United States or other jurisdiction asserts a claim that Agent or Borrowers did not properly withhold Tax from amounts paid to or for the account of any Lender or Holder or any Participant due to a failure on the part of such Lender or Holder or such Participant (because the appropriate form was not delivered, was not properly executed, or because such Lender, Holder or Participant failed to notify Agent or Borrower Agent of a change in circumstances which
75
rendered the exemption from, or reduction of, withholding Tax ineffective, or for any other reason) such Lender, Holder or Participant shall indemnify and hold Agent and Borrowers harmless for all amounts paid, directly or indirectly, by Agent, as Tax or otherwise, including penalties and interest, and including any Taxes imposed by any jurisdiction on the amounts payable to Agent under this Section 10.17 , together with all costs and expenses (including attorneys fees and expenses).
(i) If Agent or a Lender, Holder or Participant determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts hereunder, it shall pay to Borrowers an amount equal to such refund, net of all reasonable out-of-pocket expenses (including any Taxes) of Agent or such Lender or Holder, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that such Borrower, upon the request of such Agent or such Lender, Holder or Participant, agrees to repay the amount paid over to such Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority, but net of all reasonable out-of-pocket expenses, including Taxes) to such Agent or such Lender, Holder or Participant in the event such Agent or such Lender, Holder or Participant is required to repay such refund to such governmental authority. Notwithstanding anything to the contrary in this paragraph (i), in no event will Agent or any Lender, Holder or Participant be required to pay any amount to a Borrower pursuant to this paragraph (i) the payment of which would place Agent or such Lender, Holder or Participant in a less favorable net after-Tax position than Agent or such Lender, Holder or Participant would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require Agent or any Lender or Holder to make available its Tax Returns (or any other information relating to its Taxes that it deems confidential) to any Borrower or any other Person.
(j) If any Lender or Holder requests compensation under Section 10.17 or 2.10, or any Borrower is required to pay any additional amount to any Lender or Holder or any Governmental Authority for the account of any Lender or Holder pursuant to Section 10.17 , then such Lender or Holder shall use reasonable efforts to designate a different lending office for booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the sole judgment of such Lender or Holder, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.10 or Section 10.17 , as the case may be, in the future and (ii) would not subject such Lender or Holder to any unreimbursed cost or expense. Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender or Holder in connection with any such designation or assignment. A certificate setting forth such costs and expenses submitted by such Lender or Holder to Borrowers shall be conclusive absent manifest error.
(k) Each partys obligations under this Section 10.17 shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender or Holder, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Credit Document.
76
Section 10.18 Release . Upon any sale or other transfer or disposal by any Borrower or Guarantor of any Collateral that is permitted pursuant to Section 7.6 or 10.5 to a Person that is not a Borrower or Guarantor, the security interest in such Collateral shall be automatically released from the Liens created hereby, all without delivery of any instrument or performance of any act by any party. In connection with any termination or release pursuant to this Section 10.18 , Agent shall promptly execute and deliver to Borrower, at Borrowers expense, all releases or other documents that Borrower Agent shall reasonably request to evidence such termination or release and assign, transfer and deliver to Borrower Agent such of the Collateral as is then being (or has been) so sold or otherwise disposed of, or released, and as may be in the possession of Agent or the other Lenders and has not theretofore been released pursuant to this Agreement. Any execution and delivery of documents pursuant to this Section 10.18 shall be without recourse to or warranty by Agent.
ARTICLE 11
AGENT
Section 11.1 Appointment of Agent .
(a) Each Lender and each Holder hereby designates Victory Park Management, LLC as Agent to act as herein specified. Each Lender and each Holder hereby irrevocably authorizes, and each holder of any Note by the acceptance of a Note or participation, shall be deemed irrevocably to authorize Agent to take such action on its behalf under the provisions of this Agreement and the Notes and any other Credit Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. Agent shall hold all Collateral and all payments of principal, interest, fees (other than any fees payable solely for the account of Agent), charges and expenses received pursuant to this Agreement or any other Credit Document for the ratable benefit of Lenders and Holder except as otherwise provided herein. Agent may perform any of its duties hereunder by or through its agents or employees.
(b) The provisions of this Article 11 are solely for the benefit of Agent and Lenders, Holder and Borrowers shall not have any rights as a third party beneficiary of any of the provisions hereof (except for the applicable provision of Section 11.9(a) ). In performing its functions and duties under this Agreement, Agent shall act solely as agent of Lenders and Holders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for Borrowers or Guarantors.
Section 11.2 Nature of Duties of Agent . Agent shall have no duties or responsibilities except those expressly set forth in this Agreement. Neither Agent nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted by it as such hereunder or in connection herewith, unless caused by its or their gross negligence or willful misconduct. The Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein.
77
Section 11.3 Lack of Reliance on Agent .
(a) Independently and without reliance upon Agent, each Lender and Holder, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial or other condition and affairs of Borrowers and Guarantors in connection with the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of Borrowers, and, except as expressly provided in this Agreement, Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender or any Holder with any credit or other information with respect thereto, whether coming into its possession before the making of Advances or at any time or times thereafter. In addition to the foregoing, Agent agrees to provide summary reports to Lenders and Holders in connection with inspections and audits performed under Section 6.3 for informational purposes only and Agent shall not be responsible for the accuracy of any information contained therein.
(b) Agent shall not be responsible to any Holder or any Lender for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, collectability, priority or sufficiency of this Agreement, the Notes, the Credit Documents or the financial or other condition of Borrowers or Guarantors. Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or the Notes, or the financial condition of Borrowers or Guarantors, or the existence or possible existence of any Default or Event of Default, unless specifically requested to do so in writing by any Lender or any Holder.
Section 11.4 Certain Rights of Agent . Without limiting Agents rights and discretion under any provision hereof, Agent shall have the right to request instructions from each of Lenders and Holders. If Agent shall request instructions from each of the Lenders and Holders, as the case may be, with respect to any act or action (including the failure to act) in connection with this Agreement, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from each of Lenders and Holders, as the case may be, and Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender or Holder shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder in accordance with the instructions of each of the Lenders and Holders.
Section 11.5 Reliance by Agent . Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, facsimile, telex teletype or telecopier message, e-mail or other electronic transmission, cablegram, radiogram, order or other documentary, teletransmission or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person. Agent may consult with legal counsel (including counsel for Borrowers and Guarantors with respect to matters concerning Borrowers and Guarantors), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.
78
Section 11.6 Indemnification of Agent . To the extent Agent is not reimbursed and indemnified by Borrowers or Guarantors, each Lender and each Holder will reimburse and indemnify Agent, in proportion to its respective Commitment, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in any way relating to or arising out of this Agreement, provided that no Lender or Holder shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from Agents gross negligence or willful misconduct.
Section 11.7 Agent in its Individual Capacity . With respect to its obligation to lend under this Agreement, the Advances made by it and the Notes issued to it and all of its rights and obligations as a Lender or Holder hereunder and under other Credit Documents, Agent shall have the same rights and powers hereunder as any other Lender or Holder of a Note or participation interests and may exercise the same as though it was not performing the duties specified herein; and the terms Lenders, holders of Notes, or any similar terms shall, unless the context clearly otherwise indicates, include Agent in its individual capacity. Agent may accept deposits from, lend money to, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory or other business with Borrowers, Guarantors, any Affiliate of a Guarantor or any Affiliate of a Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrowers or Guarantors for services in connection with this Agreement and otherwise without having to account for the same with Lenders or Holders.
Section 11.8 Holders of Notes . Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor.
Section 11.9 Successor Agent .
(a) Agent may, upon five (5) Business Days notice to Lenders, Holders and Borrowers, resign at any time (effective upon the appointment of a successor Agent pursuant to the provisions of this Section 11.9(a) ) by giving written notice thereof to Lenders, Holders and Borrowers. Upon any such resignation, Lenders and Holders shall have the right, upon five (5) days notice, to appoint a successor Agent with the consent of Borrower Agent, such consent to be required only if (i) no Default or Event of Default is outstanding or (ii) the successor Agent is not an Affiliate of the retiring Agent, a Holder or a Lender. If no successor Agent shall have been so appointed, and shall have accepted such appointment, within thirty (30) days after the retiring Agents giving of notice of resignation, then, upon five (5) days notice, the retiring Agent may, on behalf of Lenders and Holders, appoint a successor Agent, which shall be a bank or other financial institution which maintains an office in the United States, or a commercial bank organized under the laws of the United States of America or of any State thereof, or any affiliate of such bank or trust or other financial institution; provided , however, that Lenders and
79
Holders may, upon five (5) days notice, replace any such successor Agent appointed by a retiring Agent.
(b) Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agents resignation hereunder as Agent, the provisions of this Article 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. In the event Agent or its assets are taken over by any state or federal agency having jurisdiction over Agent or its assets, a majority of the Lenders and Holders other than Agent may appoint a successor to Agent.
Section 11.10 Collateral Matters .
(a) Each Lender and each Holder authorizes and directs Agent to accept the other Credit Documents for the benefit of Lenders and Holders. Agent is hereby authorized, on behalf of all Lenders and Holders, without the necessity of any notice to or further consent from any Lender or any Holder, from time to time prior to an Event of Default, to take any action, in its sole discretion, with respect to any Collateral or Credit Document which may be necessary or appropriate to perfect and maintain perfected or enforce the Liens upon the Collateral granted pursuant to this Agreement.
(b) Lenders and Holders hereby authorize Agent, at its option and in its discretion, to release any Lien granted to or held by Agent upon any Collateral (i) upon termination of the Commitments and payment in immediately available funds and satisfaction of all of the Obligations at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting Property being sold or disposed of upon receipt of the proceeds of such sale by Agent if the sale or disposition is permitted under this Agreement or any other Credit Document or is made by Agent in the enforcement of its rights hereunder following the occurrence of an Event of Default or (iii) if approved, authorized or ratified in writing by all Lenders and Holders to the extent such release is required to be approved by all Lenders and Holders; provided , however, that Agent may, in its discretion, upon request by Borrowers, release Agents Liens on Collateral value in the aggregate not in excess of One Million Dollars ($1,000,000) during any one year period without the prior written approval or authorization of any of the other Lenders. Upon request by Agent at any time, Lenders and Holders will confirm in writing Agents authority to release particular types or items of Collateral pursuant to this Section 11.10(b) .
(c) Agent shall have no obligation whatsoever to Lenders, Holders or to any other Person to assure that the Collateral exists or is in the possession of a custodian pursuant to the Custodian Agreement or is owned by Borrowers or is cared for, protected or insured or that the Liens granted to Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Agent in this Section 11.10 or in any of the Credit Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agents own interest in the Collateral as one of the Lenders or Holders and that Agent shall have no duty or liability whatsoever to Lenders and Holders, except for its gross negligence or willful misconduct.
80
Section 11.11 Delivery of Information . Agent shall not be required to deliver to any Lender or any Holder originals or copies of any documents, instruments, agreements, notices, communications or other information received by Agent from Borrowers or Guarantors, any Lender, any Holder or any other Person under or in connection with this Agreement or any other Credit Document except (a) as specifically provided in this Agreement or any other Credit Document and (b) as requested from time to time in writing by any Lender or any Holder with respect to documents, instruments, notices or other written communications from Borrowers received by and in the possession of Agent.
Section 11.12 Defaults . Agent shall not be deemed to have knowledge of the occurrence of a Default or Event of Default (other than the non-payment of principal of or interest on a Loan to the extent the same is required to be paid to Agent for the account of Lenders or Holders) unless Agent has actual knowledge thereof or has received notice from a Lender, a Holder or the Borrower Agent specifying such Default or Event of Default and stating that such notice is a Notice of Default. In the event that Agent has such knowledge of or receives such a notice of the occurrence of a Default or Event of Default, Agent shall give prompt notice thereof to Lenders and Holders. Agent shall (subject to Article 9) take such action with respect to such Default or Event of Default or refrain from taking such action, with respect to such Default or Event of Default as Agent shall deem advisable in the best interest of Lenders and Holders and shall, without limiting Agents rights or discretion under this Agreement, use reasonable efforts under the circumstances to consult with Lenders and Holders before taking any material enforcement action; and provided further that Agent shall not be required to take any such action which it determines to be contrary to law.
[SIGNATURES ON FOLLOWING PAGE(S)]
81
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
Dated the date and year first set forth above
BORROWER AGENT | ||||||
AND BORROWER: | CURO RECEIVABLES FINANCE I, LLC | |||||
By: |
/s/ Donald F. Gayhardt Jr. |
|||||
Name: | Donald F. Gayhardt Jr. | |||||
Title: | President & Chief Executive Officer | |||||
AGENT: | VICTORY PARK MANAGEMENT, LLC | |||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory |
Loan Agreement
LENDERS: | VPC Specialty Finance Fund I, L.P. | |||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory | |||||
VPC Investor Fund B, L.P. | ||||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory |
Loan Agreement
SCHEDULE I
Commitments
Lender |
Revolving
Loan Commitment Percentage |
Term
Loan Commitment Percentage |
||||||
VPC Specialty Finance Fund I, L.P. |
[****] | [****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
Loan Agreement
VPC Investor Fund B, L.P. |
[ | ****] | [ | ****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
Loan Agreement
SCHEDULE II
Permitted Indebtedness
None.
Loan Agreement
SCHEDULE III
Permitted Liens
None.
Loan Agreement
Schedule 4.2:
Organization and Good Standing
Entity |
Jurisdiction of Organization and Organizational ID |
|
CURO Receivables Finance I, LLC | Delaware | |
Org ID # 6171635 | ||
CURO Receivables Holdings I, LLC | Delaware | |
Org ID # 6171631 |
Loan Agreement
Schedule 4.7
Litigation
1. Harrison, et al v. Principal Investments, Inc. et al , 2011 WL 5296581 (Nev.Dist.Ct.) (September 28, 2011) proposed class action filed in the Superior Court in Las Vegas, Clark County, in September 2009, related to an alleged failure by an Originator, through a third party vendor, to properly serve consumers who had defaulted on their Loan obligations to such Originator. This action could potentially exceed $250,000 in liability for which no indemnification or insurance is available.
Loan Agreement
Schedule 4.12
Investments
None.
Loan Agreement
Schedule 4.16
Business Locations
Entity |
Business Location |
|
CURO Receivables Finance I, LLC | 3527 N. Ridge Road, Wichita, KS 67205 | |
CURO Receivables Holdings I, LLC | 3527 N. Ridge Road, Wichita, KS 67205 |
Loan Agreement
Schedule 4.17
Equity Interests
Entity |
Equity Ownership |
|
CURO Receivables Finance I, LLC | CURO Receivables Holdings I, LLC | |
(100%) | ||
CURO Receivables Holdings I, LLC | Curo Intermediate Holdings Corp. | |
(100% Class A Units) | ||
A Speedy Cash Car Title Loans, LLC | ||
Advance Group, Inc. | ||
Cash Colorado, LLC | ||
Concord Finance, Inc. | ||
FMMR Investments, Inc. | ||
Galt Ventures, LLC | ||
Principal Investments, Inc. | ||
SCIL, Inc. | ||
Speedy Cash | ||
Speedy Cash Illinois, Inc. | ||
Todd Car Title, Inc. | ||
(together, 100% Class B Units) |
Loan Agreement
Schedule 4.23
Deposit Accounts
Name of Account |
Address |
Contact
Person |
Telephone
Number |
Name
Held |
Purpose of Acct |
Account
Number |
||||||||
CURO Receivables Finance I, LLC | 801 E. Douglas, Suite 101, Wichita, KS 67202 |
Monica
Towns |
(316) 425-2121 |
Wells
Fargo |
SPV Settlement
Account |
|
[****]
|
|
||||||
CURO Receivables Holdings I, LLC | 801 E. Douglas, Suite 101, Wichita, KS 67202 |
Monica
Towns |
(316) 425-2121 |
Wells
Fargo |
SPV Settlement
Account |
|
[****]
|
|
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
Loan Agreement
Exhibit A
Form of Annual Compliance Certificate
In connection with that certain Loan Agreement dated as of November 17, 2016 by and among CURO RECEIVABLES FINANCE I, LLC ( Borrower ), the other Borrowers party thereto from time to time, VICTORY PARK MANAGEMENT, LLC, as agent for Lenders and Holders (Agent), and the financial institutions from time to time party thereto as Lenders and the other agreements and documents executed and delivered by Borrower to Agent in connection therewith, as the same may have been amended from time to time (collectively, the Loan Agreement ), the undersigned hereby certifies, represents and warrants to the Agent, the truth, accuracy and completeness of the following statements as of the date set opposite the signatures below:
Borrower remains in compliance with all financial covenants and other covenants contained in the Loan Agreement as of the date hereof; all representations and warranties contained in the Loan Agreement are and remain true, accurate and complete in all material respects as of the date hereof; and no event has occurred as of the date hereof that constitutes, or, with the passage of time or the giving of notice, or both, would constitute, a Default or an Event of Default under the Loan Agreement.
Other than Non-Material Violations (as defined below), Borrower is in compliance with, and has appropriate internal control processes, policies and procedures in place to remain in compliance with, all federal, state and local laws, rules and regulations ( Laws and Regulations ) applicable to (i) the transactions contemplated in the Loan Agreement and (ii) the extension of consumer credit, and the creation of a security interest in personal property or a mortgage in real property in connection therewith, as the case may be, and laws with respect to protection of consumers interests in connection with such transactions, including without limitation, any usury laws, any privacy laws, the Electronic Signatures in Global and National Commerce Act, the Federal Consumer Credit Protection Act, the Federal Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Federal Trade Commissions Rules and Regulations and Regulations B, E and Z of the Consumer Financial Protection Bureau, as any of the foregoing may be amended from time to time. The term Non-Material Violations as used above means violations of Laws and Regulations by Borrower that would not, either presently or with the passage of time, and either individually or in the aggregate, (i) have a material adverse effect on Borrowers financial condition or business taken as a whole, (ii) adversely affect the condition or value of the Collateral (as defined in the Loan Agreement) or the enforceability of material contracts and Receivables (as defined in the Loan Agreement), (iii) a Material Adverse Change or (iv) a Regulatory Trigger Event.
The undersigned is the [President or Chief Executive Officer] of Borrower, and, as such, the undersigned has the full power and authority to execute and deliver this Certificate to Agent. The undersigned does hereby personally verify that the statements made herein are true, correct and complete in every respect, and the undersigned understands that the failure of any statement made herein to be true, correct or complete will constitute an Event of Default (however the same may be designated) under the Loan Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the date written below.
Date:
By: |
|
|
Name: | ||
Title: |
Exhibit B
Form of Monthly Statement
(See attached)
MONTHLY STATEMENT
CURO Receivables Finance I, LLC
Commitment Amount: |
$ | [ | ] | |||||||||
Reporting Period Ending: |
[ | ] |
Part I: Availability Calculation
3 | Total | |||
1a. Gross Prin Receivables Ending Balance: |
[ | ] | ||
Accrued and Payable Interest |
[ | ] | ||
1b. Gross Receivables Ending Balance: |
[ | ] | ||
|
|
|||
2. Less Additional Items: |
||||
a) Unearned Fees |
[ | ] | ||
b) Other |
| |||
|
|
|||
TOTAL ADDITIONAL ITEMS |
[ | ] | ||
|
|
|||
3. Total Receivables, Net of Additional Items |
[ | ] | ||
|
|
|||
4. Less Ineligibles (from Part II): |
||||
a) Ineligible Receivables |
[ | ] | ||
b) Concentration Ineligibles |
[ | ] | ||
|
|
|||
TOTAL INELIGIBLES |
[ | ] | ||
|
|
|||
5. Total Eligible Receivables |
[ | ] | ||
|
|
|||
6. Advance Rate, including any CPI adjustment: |
[ | ]% | ||
|
|
|||
7. Total Advance Availability |
[ | ] | ||
7b. Minimum Availability Reserve |
[ | ] | ||
7c. Regulatory Reserve |
[ | ] | ||
|
|
|||
8. Total Cash Availability |
[ | ] | ||
8b. Max Commitment |
[ | ] | ||
9. Estimated Funding on Closing |
[ | ] | ||
|
|
|||
10. Additional Cash Available at End of Period |
[ | ] | ||
|
|
AVAILABILITY STATEMENT (cont.)
Appendix A
A. Ineligible Receivables
Ineligibles | ||||
1. Accounts 30 or more days delinquent or charged-off. |
||||
2. Accounts to employees, dealers, affiliates (other than their employees) or shareholders other than on an arms length basis. |
||||
3. Accounts with respect to which customer is not a natural person domiciled in the United States. |
||||
4. Accounts not denominated in U.S. Dollars. |
||||
5. Accounts involved in litigation or subject to legal proceedings. |
||||
6. Accounts with a balloon payment and/or non-amortizing accounts. |
||||
7. Accounts with original terms in excess of 48 months. |
||||
8. Accounts acquired that are not in compliance with Borrowers or Guarantors Credit Policy. |
||||
9. Accounts that violate applicable consumer protection or usury laws. |
||||
10. Accounts where customer has missed the first payment date. |
||||
11. Accounts with respect to which any obligations of the obligor or any affiliates remains outstanding. |
||||
12. Accounts that are subject to assignment or confidentiality restrictions. |
| |||
13. Loans made to residents in states where Company was not licensed as required by applicable state law when such loan was made. |
| |||
14. Accounts that are single-pay accounts. |
||||
15. Accounts that are open-ended or are able to roll. |
||||
16. Unsecured Accounts with a principal amount greater than $25,000. |
||||
17. Accounts that have been modified |
||||
18. Accounts where the Borrower acts or acted as a credit services organization or credit access business |
||||
19. Accounts originated in ineligible states |
||||
Exclusion List |
| |||
|
|
|||
TOTAL INELIGIBLE RECEIVABLES |
||||
|
|
Appendix B
B. Excess Concentration Amounts
Current | Maximum | Overage | %Utilized | |||||||||||||
1. Accounts where the original term is greater than 9 months in excess of 75% of all eligible accounts. |
||||||||||||||||
2. Title accounts in excess of 55% of all eligible accounts. |
||||||||||||||||
3. Second-Lien title Accounts in excess of 35% of all eligible accounts. |
||||||||||||||||
4. Title Accounts with the lowest interest rate until the weighted average rate of all eligible title accounts is at or above 95%. |
||||||||||||||||
5. Accounts constituting unsecured accounts with the lowest interest rate until the weighted average interest rate is at or above 200%. |
||||||||||||||||
6. Accounts with the lowest FICO score until the weighted average FICO score is at or above 575. |
||||||||||||||||
7. Accounts with the longest original term until the weighted average original term is at or below 30 months. |
||||||||||||||||
8. Accounts with the highest original principal balance until the average original balance is at or below $800. |
||||||||||||||||
9. Accounts where the applicable obligors have monthly income less than $2,000 in excess of 30% of the principal receivables balance. |
||||||||||||||||
10. Aggregate online accounts in excess of 30% of the principal balance of all eligible accounts. |
||||||||||||||||
11. Aggregate accounts originated in California in excess of 60% of the principal balance of all eligible accounts. |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
TOTAL CONCENTRATION INELIGIBLES |
||||||||||||||||
|
|
|
|
|
|
Exhibit C
Form of Request for Advance
To: | Victory Park Management, LLC |
227 W. Monroe Street, Suite 3900 |
Chicago, Illinois 60606 |
Attn: Scott Zemnick |
Re: Loan Agreement (as amended from time to time, Loan Agreement ), dated as of November 17, 2016 by and among CURO Receivables Finance I, LLC ( Borrower ), the other Borrowers party thereto from time to time, Victory Park Management, LLC, as agent for Lenders and Holders ( Agent ), and the financial institutions from time to time party thereto as Lenders ( Lenders ).
Date of Request: [ ], 2016
This Advance Request is delivered pursuant to the Loan Agreement. All terms defined in the Loan Agreement shall have the same meaning herein, except as expressly defined in this Request for Advance [or as set forth in the Monthly Statement].
I. |
Borrowing Base from line [ ] of the most recent Monthly Statement provided to Agent |
$ | [ ] | |||
|
|
|||||
II. |
Outstanding amount of the Loan from line [ ] of the most recent Monthly Statement |
$
$ |
[ ]
[ ] |
|
||
|
|
|||||
III. |
A. All Revolving Loan principal repayments since most recent Monthly Statement |
$ | [ ] | |||
B. All Term Loan principal repayments since most recent Monthly Statement |
$ | [ ] | ||||
|
|
|||||
IV. |
A. All Revolving Loan Advances since most recent Monthly Statement |
$ | [ ] | |||
B. All Term Loan Advances since most recent Monthly Statement |
$ | [ ] | ||||
|
|
|||||
V. |
A. Request for Revolving Loan Advance |
$ | [ ] | |||
B. Request for Term Loan Advance |
$ | [ ] | ||||
|
|
|||||
VI. |
Outstanding amount of the Loan after Request for Advances |
$ | [ ] | |||
|
|
|||||
VII. |
Receiving account number for wire transaction |
[ ] | ||||
|
|
The undersigned is the [ ] of Borrower and hereby certifies, not individually but solely in [his/her] capacity as [ ] of Borrower that:
a) | Upon making the Advance, the principal balance of the outstanding Advances made by Agent shall be equal to or less than the lesser of (i) the Maximum Principal Amount or (ii) the Borrowing Base; |
b) | Upon making the Revolving Loan Advance, the principal balance of the outstanding Revolving Loan Advances made by Agent shall be equal to or less than the Revolving Loan Maximum Principal Amount and the Term Loan Advance is equal to the Term Loan Maximum Principal Amount; |
c) | Upon making the Term Loan Advance, the principal balance of the outstanding Term Loan Advances made by Agent shall be equal to or less than the Term Loan Maximum Principal Amount; |
d) | The representations and warranties made in the Loan Agreement are true and correct in all material respects (without duplication of any materiality qualifiers) as of the date of this Request for Advance; |
e) | No Event of Default or Default has occurred and is continuing or would be caused by the Advance requested; |
f) | Borrower is in compliance with Sections 2.1 and 2.7 of the Loan Agreement both immediately prior to and after the Advance requested; |
g) | There has been no material adverse change in the financial condition, operations or business of Borrower since the date of the financial statements most recently delivered to Agent pursuant to Section 6.2 of the Loan Agreement. |
[Remainder of Page Intentionally Left Blank]
Signature of officer authorized by Borrower to request Advance:
By: |
|
|
Name: | ||
Title: |
Signature Page to Request for Advance
Exhibit D
Credit Policy
(Provided Separately in Electronic Format)
Exhibit E
Form of Borrowing Base Certificate
(See attached)
BORROWING BASE CERTIFICATE
CURO Receivables Finance I, LLC
Commitment Amount: |
$ | [ | ] | |||||||||
Reporting Period Ending: |
[ | ] |
Part I: Availability Calculation
3 | Total | |||
1a. Gross Prin Receivables Ending Balance: |
[ | ] | ||
Accrued and Payable Interest |
[ | ] | ||
1b. Gross Receivables Ending Balance: |
[ | ] | ||
|
|
|||
2. Less Additional Items: |
||||
a) Unearned Fees |
[ | ] | ||
b) Other |
| |||
|
|
|||
TOTAL ADDITIONAL ITEMS |
[ | ] | ||
|
|
|||
3. Total Receivables, Net of Additional Items |
[ | ] | ||
|
|
|||
4. Less Ineligibles (from Part II): |
||||
a) Ineligible Receivables |
[ | ] | ||
b) Concentration Ineligibles |
[ | ] | ||
|
|
|||
TOTAL INELIGIBLES |
[ | ] | ||
|
|
|||
5. Total Eligible Receivables |
[ | ] | ||
|
|
|||
6. Advance Rate, including any CPI adjustment: |
[ | ]% | ||
|
|
|||
7. Total Advance Availability |
[ | ] | ||
|
|
|||
7b. Minimum Availability Reserve |
[ | ] | ||
7c. Regulatory Reserve |
[ | ] | ||
|
|
|||
8. Total Cash Availability |
[ | ] | ||
8b. Max Commitment |
[ | ] | ||
9. Estimated Funding on Closing |
[ | ] | ||
|
|
|||
10. Additional Cash Available at End of Period |
[ | ] | ||
|
|
Exhibit F
Form of Funds Release Request
Reference is made to the Loan Agreement, dated as of November 17, 2016 (as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, the Loan Agreement ), among CURO Receivables Finance I, LLC (the Borrower ), the other Borrowers party thereto from time to time, Victory Park Management, LLC, as agent for Lenders and Holders (the Agent ), and the financial institutions from time to time party thereto as Lenders (collectively, the Lenders ). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Loan Agreement.
Pursuant to Section 6.22 of the Loan Agreement, the Borrower desires that the Agent release funds in the Collection Account to the Borrower to purchase additional Eligible Receivables in accordance with the applicable terms and conditions of the Loan Agreement on [mm/dd/yy] (the Release Date ):
1. Amount Requested: |
$ | [___,___,___ | ] |
The Borrower hereby certifies that:
(i) as of the date hereof and with regards to the Facility:
1. Facility Availability: |
$ | [___,___,___ | ] |
(ii) as of the Release Date, Borrower has satisfied each of the conditions specified in Sections 2.1 and 2.7 of the Loan Agreement;
(iii) as of the Release Date, the representations and warranties, including financial covenants set forth in Section 6.4 of the Loan Agreement, made by Borrower under the Loan Agreement is accurate in all material respects (without duplication of any materiality qualifiers contained therein);
(iv) as of the Release Date, after giving effect to the requested release of funds from the Collection Account on the Release Date, no event has occurred and is continuing or would result from the consummation of the borrowing contemplated hereby that would constitute an Event of Default or a Default;
(v) as of the Release Date, the requested amount is in increments of One Million Dollars ($1,000,000);
(vi) as of the Release Date, after giving effect to the requested release of funds from the Collection Account on the Release Date, the aggregate outstanding principal amount of the Loans would not exceed the Commitments including the Revolving Loan Commitments and the Term Loan Commitments;
(vii) after giving effect to the requested release of funds from the Collection Account and the purchase by the Borrower of additional Eligible Receivables on such Release Date, no Borrowing Base Deficiency shall exist;
(viii) as of the Release Date, a Regulatory Trigger Event with regards to any Credit Party shall not have occurred;
(ix) as of the Release Date, Borrower and Guarantors shall have paid or reimbursed the Agent and the Lenders for all costs and expenses required to be paid or reimbursed by them on or prior to the Release Date, subject to the limitations set forth in Section 10.7 of the Loan Agreement;
(x) as of the Release Date, the Control Agreements shall be executed, delivered and in full force and effect; and
(xi) as of the Release Date, the Reinvestment Criteria shall be satisfied.
Date: [mm/dd/yy] | CURO Receivables Finance I, LLC | |||||
By: |
|
|||||
Name: | ||||||
Title: |
Exhibit 10.2
Execution Version
FIRST AMENDMENT TO LOAN AGREEMENT
This FIRST AMENDMENT TO LOAN AGREEMENT (this Amendment ) is made and entered into as of May 5, 2017 by and among CURO Receivables Finance I, LLC, a Delaware limited liability company (the Borrower ), CURO Receivables Holdings I, LLC, a Delaware limited liability company (the Guarantor, and collectively with the Borrower, the Credit Parties ), the Lenders party hereto and Victory Park Management, LLC, as administrative agent and collateral agent for the Lenders and the Holders (in such capacity, the Agent ). Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Loan Agreement.
WHEREAS , the Borrower, the Lenders and the Agent are parties to that certain Loan Agreement dated as of November 17, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the Loan Agreement );
WHEREAS , the Borrower, the Guarantor and the Agent are parties to that certain Guaranty and Security Agreement dated as of November 17, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the Guaranty ); and
WHEREAS , the Credit Parties, the Lenders and the Agent desire to amend certain provisions of the Loan Agreement on the terms set forth herein.
NOW, THEREFORE , in consideration of the premises and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendments to Loan Agreement . Subject to the terms and conditions of this Amendment, including the satisfaction of the conditions precedent set forth in Section 2 hereof, the Loan Agreement is amended as follows:
(a) The definition of Excess Concentration Amounts set forth in Section 1.1 of the Loan Agreement is hereby amended by deleting the following sections in their entirety and substituting the following therefor (changes are in italics ):
(a) Aggregate Eligible Receivables where the original term is greater than 9 months in excess of 81% until November 8, 2017 or such later date as may be agreed to by the Agent in its sole discretion and 75% thereafter of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(g) The Principal Receivables balance of the Aggregate Eligible Receivables with the longest original term until the weighted average original term to maturity of all the remaining Aggregate Eligible Receivables (i.e., excluding such longest original maturity Aggregate Eligible Receivables) is at or below 33 months until November 8, 2017 or such later date as may be agreed to by the Agent in its sole discretion and 30 months thereafter ;
(k) Aggregate Eligible Receivables originated in the State of California in excess of 65% until November 8, 2017 or such later date as may be agreed to by the Agent in its sole discretion and 60% thereafter of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date.
(b) The definition of Trailing Excess Yield set forth in Section 1.1 of the Loan Agreement is hereby deleted in its entirety and substituting the following definition of Minimum Monthly Annualized Net Yield therefor in alphabetical order:
Minimum Monthly Annualized Net Yield means, as of any date of determination, the product of (a) expressed as a percentage equal to a fraction, (i) the numerator of which is the sum of Collections constituting interest and fees minus Net Loss with respect to all Curo Receivables for such fiscal month, and (ii) the denominator of which is the aggregate principal balance of all Eligible Receivables at the opening of such fiscal month and (b) twelve.
(c) Section 6.4(a) of the Loan Agreement is hereby amended by deleting the following section in its entirety and substituting the following therefore (changes are in italics ):
(a)
Minimum
Three-Month Rolling Average
Monthly
Annualized
Excess
Net
Yield
. The
Trailing Excess Yield
Minimum Monthly
Annualized Net Yield
calculated as of the last day of each fiscal month shall not be less than
225%
70%.
2. Conditions Precedent . This Amendment shall become effective upon the satisfaction in full of each of the following conditions:
(a) the Borrower shall have executed and delivered, or caused to be delivered, to the Agent evidence satisfactory to the Agent that the Borrower shall pay to the Agent on the date hereof all fees and other amounts due and owing thereon under this Amendment and the other Credit Documents; and
(b) the representations and warranties of the Credit Parties contained herein shall be true and correct except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date.
2
3. General Release . In consideration of the Agents agreements contained in this Amendment, each Credit Party hereby irrevocably releases and forever discharge the Lenders, the Holders and the Agent and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants, attorneys, managers, investment managers, principles and portfolio companies (each, a Released Person ) of and from any and all claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which such Credit Party ever had or now has against Agent, any Lender, any Holder or any other Released Person which relates, directly or indirectly, to any acts or omissions of Agent, any Lender, any Holder or any other Released Person relating to the Loan Agreement, the Guaranty or any other Credit Document on or prior to the date hereof.
4. Representations and Warranties of the Credit Parties . To induce the Agent to execute and deliver this Amendment, each Credit Party represents, warrants and covenants that:
(a) The execution, delivery and performance by each Credit Party of this Amendment and all documents and instruments delivered in connection herewith have been duly authorized by all necessary action required on its part, and this Amendment and all documents and instruments delivered in connection herewith are legal, valid and binding obligations of such Credit Party enforceable against such Credit Party in accordance with its terms except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors rights and remedies.
(b) Each of the representations and warranties set forth in the Credit Documents is true and correct on and as of the date hereof as if made on the date hereof, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date, and each of the agreements and covenants in the Credit Documents is hereby reaffirmed with the same force and effect as if each were separately stated herein and made as of the date hereof.
(c) Neither the execution, delivery and performance of this Amendment nor the consummation of the transactions contemplated hereby or thereby does or shall (i) result in a violation of any Credit Partys certificate of incorporation, certificate of formation, bylaws, limited liability company agreement or other governing documents, or the terms of any capital stock or other equity interests of any Credit Party; (ii) conflict with, or constitute a breach or default (or an event which, with notice or lapse of time or both, would become a breach or default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which any Credit Party is a party; (iii) result in any price reset or other material change in or other modification to the terms of any Indebtedness, Equity Interests or other securities of any Credit Party; or (iv) result in a violation of any law, rule, regulation, order, judgment or decree.
(d) No Event of Default has occurred or is continuing under this Amendment or any other Credit Document.
5. Ratification of Liability . Each Credit Party, as debtor, grantor, pledgor, guarantor, assignor, or in other similar capacity in which such party grants liens or security interests in its properties or otherwise acts as an accommodation party or guarantor, as the case may be, under the Loan Agreement, the Guaranty or any other Credit Document, hereby ratifies
3
and reaffirms all of its payment and performance obligations and obligations to indemnify, contingent or otherwise, under each Credit Document to which such party is a party, and each such party hereby ratifies and reaffirms its grant of liens on or security interests in its properties pursuant to such Credit Documents to which it is a party as security for the obligations under or with respect to the Loan Agreement, the Notes and the other Credit Documents, and confirms and agrees that such liens and security interests hereafter secure all of the obligations under the Credit Documents, including, without limitation, all additional obligations hereafter arising or incurred pursuant to or in connection with this Amendment or any Credit Document. Each Credit Party further agrees and reaffirms that the Credit Documents to which it is a party now apply to all obligations as modified hereby (including, without limitation, all additional obligations hereafter arising or incurred pursuant to or in connection with this Amendment or any Credit Document). Each such party (a) further acknowledges receipt of a copy of this Amendment and all other agreements, documents, and instruments executed or delivered in connection herewith, (b) consents to the terms and conditions of same, and (c) agrees and acknowledges that each of the Credit Documents, as modified hereby, remains in full force and effect and is hereby ratified and confirmed. Except as expressly provided herein, the execution of this Amendment shall not operate as a waiver of any right, power or remedy of any Lender, any Holder or the Agent, nor constitute a waiver of any provision of any of the Credit Documents nor constitute a novation of any of the obligations under the Credit Documents.
6. Reference to and Effect Upon the Credit Documents .
(a) Except as specifically amended hereby, all terms, conditions, covenants, representations and warranties contained in the Credit Documents, and all rights of the Lenders, the Holders and the Agent and all of the obligations under the Credit Documents, shall remain in full force and effect. Each Credit Party hereby confirms that the Credit Documents are in full force and effect, and that no Credit Party has any right of setoff, recoupment or other offset or any defense, claim or counterclaim with respect to any Credit Document or the Credit Parties obligations thereunder.
(b) Except as expressly set forth herein, the execution, delivery and effectiveness of this Amendment and any consents or waivers set forth herein shall not directly or indirectly: (i) create any obligation to make any further loans or to defer any enforcement action after the occurrence of any Event of Default; (ii) constitute a consent or waiver of any past, present or future violations of any Credit Document; (iii) amend, modify or operate as a waiver of any provision of any Credit Document or any right, power or remedy of any Lender, any Holder or the Agent or (iv) constitute a course of dealing or other basis for altering any obligations under the Credit Documents or any other contract or instrument. Except as expressly set forth herein, each Lender, each Holder and the Agent reserve all of their rights, powers, and remedies under the Credit Documents and applicable law. All of the provisions of the Credit Documents, including, without limitation, the time of the essence provisions, are hereby reiterated, and if ever waived previously, are hereby reinstated.
(c) From and after the date hereof, (i) the term Agreement in the Loan Agreement, and all references to the Loan Agreement in any Credit Document shall mean the Loan Agreement, as amended by this Amendment and (ii) the term Credit Documents defined in the Loan Agreement shall include, without limitation, this Amendment and any agreements, instruments and other documents executed or delivered in connection herewith.
4
7. Costs and Expenses . The Credit Parties shall reimburse each Lender, each Holder and the Agent, as the case may be, promptly on demand for all reasonable and documented out-of-pocket fees, costs, charges and expenses, including the fees, costs and expenses of counsel and other expenses incurred in connection with this Amendment as provided in Section 10.7 of the Loan Agreement.
8. Governing Law; Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Amendment shall be governed by the internal laws of the State of New York, without giving effect to its conflicts of law principles other than §5-1401 and 5-1402 of the New York General Obligations Law. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Amendment and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AMENDMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY.
9. No Strict Construction . The language used in this Amendment will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
10. Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Signatures of the parties hereto transmitted by facsimile or by electronic media or similar means shall be deemed to be their original signature for all purposes.
11. Severability . The invalidity, illegality, or unenforceability of any provision in or obligation under this Amendment in any jurisdiction shall not affect or impair the validity, legality, or enforceability of the remaining provisions or obligations under this Amendment or of such provision or obligation in any other jurisdiction. If feasible, any such offending provision shall be deemed modified to be within the limits of enforceability or validity; provided that if the offending provision cannot be so modified, it shall be stricken and all other provisions of this Amendment in all other respects shall remain valid and enforceable.
5
12. Further Assurances . The parties hereto shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Amendment and the consummation of the transactions contemplated hereby.
13. Headings . The headings of this Amendment are for convenience of reference and shall not form part of, or affect the interpretation of, this Amendment.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
6
IN WITNESS WHEREOF , each party has caused its signature page to this Amendment to be duly executed as of the date first written above.
BORROWER: | CURO RECEIVABLES FINANCE I, LLC | |||||
By: |
/s/ Roger Dean |
|||||
Name: | Roger Dean | |||||
Title: | Executive VP & CFO | |||||
AGENT: | VICTORY PARK MANAGEMENT, LLC | |||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory |
[SIGNATURE PAGES CONTINUE]
[Signature Page to First Amendment to Loan Agreement]
LENDERS: | VPC SPECIALTY FINANCE FUND I, L.P. | |||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory | |||||
VPC INVESTOR FUND B, L.P. | ||||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory | |||||
VPC SPECIALTY LENDING FUND (NE), L.P. | ||||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory | |||||
VPC SPECIALTY LENDING FUND (NE), LTD. | ||||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory | |||||
VPC SPECIALTY LENDING INVESTMENTS PLC | ||||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory | |||||
VPC SPECIALTY FINANCE FUND II, L.P. | ||||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory |
[SIGNATURE PAGES CONTINUE]
[Signature Page to First Amendment to Loan Agreement]
ACKNOWLEDGED AND AGREED: | ||
CURO RECEIVABLES HOLDINGS I, LLC,
|
||
By: |
/s/ Roger Dean |
|
Name: | Roger Dean | |
Title: | Executive VP & CFO |
[Signature Page to First Amendment to Loan Agreement]
Exhibit 10.3
EXECUTION VERSION
CURO Financial Technologies Corp.
as the Issuer
and the Guarantors party hereto
$470,000,000
aggregate principal amount of
12.000% SENIOR SECURED NOTES DUE 2022
INDENTURE
Dated as of February 15, 2017
TMI Trust Company
as Trustee and Collateral Agent
Table of Contents
Page | ||||||
ARTICLE 1 Definitions and Incorporation by Reference |
1 | |||||
Section 1.01 |
Definitions |
1 | ||||
Section 1.02 |
Other Definitions |
34 | ||||
Section 1.03 |
Incorporation by Reference of Trust Indenture Act |
34 | ||||
Section 1.04 |
Rules of Construction |
34 | ||||
ARTICLE 2 The Notes |
35 | |||||
Section 2.01 |
Form and Dating |
35 | ||||
Section 2.02 |
Execution and Authentication |
37 | ||||
Section 2.03 |
Registrar and Paying Agent |
37 | ||||
Section 2.04 |
Paying Agent to Hold Money in Trust |
38 | ||||
Section 2.05 |
Holder Lists |
38 | ||||
Section 2.06 |
Transfer and Exchange |
38 | ||||
Section 2.07 |
Replacement Notes |
51 | ||||
Section 2.08 |
Outstanding Notes |
52 | ||||
Section 2.09 |
Treasury Notes |
52 | ||||
Section 2.10 |
Temporary Notes |
52 | ||||
Section 2.11 |
Cancellation |
53 | ||||
Section 2.12 |
Defaulted Interest |
53 | ||||
Section 2.13 |
CUSIP Numbers |
53 | ||||
Section 2.14 |
Issuance of Additional Notes |
53 | ||||
ARTICLE 3 Redemption and Prepayment |
54 | |||||
Section 3.01 |
Notices to Trustee |
54 | ||||
Section 3.02 |
Selection of Notes to be Redeemed |
54 | ||||
Section 3.03 |
Notice of Redemption |
55 | ||||
Section 3.04 |
Effect of Notice of Redemption |
55 | ||||
Section 3.05 |
Deposit of Redemption Price |
56 | ||||
Section 3.06 |
Notes Redeemed in Part |
56 | ||||
Section 3.07 |
Optional Redemption |
56 | ||||
Section 3.08 |
Mandatory Redemption |
57 | ||||
Section 3.09 |
Offer to Purchase by Application of Excess Proceeds |
57 | ||||
Section 3.10 |
Offer to Purchase by Application of Excess Cash Flow |
59 | ||||
Section 3.11 |
Company May Acquire Notes |
61 | ||||
ARTICLE 4 Satisfaction and Discharge |
61 | |||||
Section 4.01 |
Satisfaction and Discharge |
61 | ||||
Section 4.02 |
Application of Trust Money |
62 | ||||
ARTICLE 5 Covenants |
62 | |||||
Section 5.01 |
Payment of Notes |
62 | ||||
Section 5.02 |
Maintenance of Office or Agency |
62 | ||||
Section 5.03 |
Reports |
63 | ||||
Section 5.04 |
Compliance Certificate |
64 |
Table of Contents
(continued)
Page | ||||||
Section 5.05 |
Taxes |
65 | ||||
Section 5.06 |
Stay, Extension and Usury Laws |
65 | ||||
Section 5.07 |
Restricted Payments |
65 | ||||
Section 5.08 |
Dividend and Other Payment Restrictions Affecting Subsidiaries |
69 | ||||
Section 5.09 |
Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock |
71 | ||||
Section 5.10 |
Asset Sales |
76 | ||||
Section 5.11 |
Transactions with Affiliates |
78 | ||||
Section 5.12 |
Liens |
80 | ||||
Section 5.13 |
Corporate Existence; Maintenance of Property and Insurance |
80 | ||||
Section 5.14 |
Offer to Repurchase Upon Change of Control |
80 | ||||
Section 5.15 |
Designation of Restricted and Unrestricted Subsidiaries |
82 | ||||
Section 5.16 |
Excess Cash Flow |
83 | ||||
Section 5.17 |
Additional Subsidiary Guarantees |
84 | ||||
Section 5.18 |
Business Activities |
85 | ||||
Section 5.19 |
[Reserved] |
85 | ||||
Section 5.20 |
Payments for Consent |
85 | ||||
Section 5.21 |
Mortgages |
85 | ||||
Section 5.22 |
Further Assurances |
86 | ||||
ARTICLE 6 Successors |
86 | |||||
Section 6.01 |
Merger, Consolidation or Sale of Assets |
86 | ||||
Section 6.02 |
Successor Entity Substituted |
89 | ||||
ARTICLE 7 Defaults and Remedies |
89 | |||||
Section 7.01 |
Events of Default |
89 | ||||
Section 7.02 |
Acceleration |
92 | ||||
Section 7.03 |
Other Remedies |
92 | ||||
Section 7.04 |
Waiver of Past Defaults |
92 | ||||
Section 7.05 |
Control by Majority |
92 | ||||
Section 7.06 |
Limitation on Suits |
93 | ||||
Section 7.07 |
Rights of Holders To Receive Payment |
93 | ||||
Section 7.08 |
Collection Suit By Trustee |
93 | ||||
Section 7.09 |
Trustee May File Proofs of Claim |
94 | ||||
Section 7.10 |
Priorities |
94 | ||||
Section 7.11 |
Undertaking For Costs |
95 | ||||
Section 7.12 |
Rights and Remedies Cumulative |
95 | ||||
Section 7.13 |
Delay or Omission Not Waiver |
95 | ||||
ARTICLE 8 Trustee |
95 | |||||
Section 8.01 |
Duties of Trustee |
95 | ||||
Section 8.02 |
Rights of Trustee |
96 | ||||
Section 8.03 |
Individual Rights of Trustee |
98 | ||||
Section 8.04 |
Trustees Disclaimer |
98 |
ii
Table of Contents
(continued)
Page | ||||||
Section 8.05 |
Notice of Defaults |
99 | ||||
Section 8.06 |
Reports by Trustee to Holders |
99 | ||||
Section 8.07 |
Compensation and Indemnity |
99 | ||||
Section 8.08 |
Replacement of Trustee |
100 | ||||
Section 8.09 |
Successor Trustee by Merger, Etc. |
101 | ||||
Section 8.10 |
Eligibility, Disqualification |
101 | ||||
Section 8.11 |
Preferential Collection of Claims Against Company |
102 | ||||
ARTICLE 9 Legal Defeasance and Covenant Defeasance |
102 | |||||
Section 9.01 |
Option to Effect Legal Defeasance or Covenant Defeasance |
102 | ||||
Section 9.02 |
Legal Defeasance and Discharge |
102 | ||||
Section 9.03 |
Covenant Defeasance |
103 | ||||
Section 9.04 |
Conditions to Legal or Covenant Defeasance |
103 | ||||
Section 9.05 |
Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions |
104 | ||||
Section 9.06 |
Repayment to Company |
105 | ||||
Section 9.07 |
Reinstatement |
105 | ||||
ARTICLE 10 Amendment, Supplement and Waiver |
105 | |||||
Section 10.01 |
Without Consent of Holders |
105 | ||||
Section 10.02 |
With Consent of Holders |
107 | ||||
Section 10.03 |
Revocation and Effect of Consents |
108 | ||||
Section 10.04 |
Notation On or Exchange of Notes |
109 | ||||
Section 10.05 |
Trustee or Collateral Agent to Sign Amendments, Etc. |
109 | ||||
ARTICLE 11 Guarantees |
109 | |||||
Section 11.01 |
Guarantees |
109 | ||||
Section 11.02 |
Additional Guarantors |
110 | ||||
Section 11.03 |
Releases of Guarantees |
111 | ||||
Section 11.04 |
Limitation on Guarantor Liability |
111 | ||||
Section 11.05 |
Trustee to Include Paying Agent |
112 | ||||
ARTICLE 12 Miscellaneous |
112 | |||||
Section 12.01 |
Notices |
112 | ||||
Section 12.02 |
Communication by Holders with Other Holders |
114 | ||||
Section 12.03 |
Certificate and Opinion as to Conditions Precedent |
114 | ||||
Section 12.04 |
Statements Required in Certificate or Opinion |
115 | ||||
Section 12.05 |
Rules by Trustee and Agents |
116 | ||||
Section 12.06 |
No Personal Liability of Directors, Officers, Employees and Stockholders |
116 | ||||
Section 12.07 |
Governing Law |
116 | ||||
Section 12.08 |
No Adverse Interpretation of Other Agreements |
116 | ||||
Section 12.09 |
Successors |
116 | ||||
Section 12.10 |
Severability |
116 | ||||
Section 12.11 |
Counterpart Originals |
116 |
iii
Table of Contents
(continued)
Page | ||||||
Section 12.12 |
Table of Contents, Headings, Etc. |
116 | ||||
Section 12.13 |
Intercreditor Agreement |
116 | ||||
Section 12.14 |
Payments Due on Non-Business Days |
117 | ||||
Section 12.15 |
Waiver of Jury Trial |
117 | ||||
ARTICLE 13 Collateral and Security |
117 | |||||
Section 13.01 |
Collateral Documents |
117 | ||||
Section 13.02 |
Recording and Opinions |
117 | ||||
Section 13.03 |
Release of Collateral |
118 | ||||
Section 13.04 |
Specified Releases of Collateral |
118 | ||||
Section 13.05 |
Release upon Satisfaction or Defeasance of all Outstanding Obligations |
119 | ||||
Section 13.06 |
Form and Sufficiency of Release and Subordination |
119 | ||||
Section 13.07 |
Purchaser Protected |
120 | ||||
Section 13.08 |
Authorization of Actions to be Taken by the Collateral Agent Under the Collateral Documents |
120 | ||||
Section 13.09 |
Authorization of Receipt of Funds by the Trustee Under the Collateral Documents |
122 | ||||
Section 13.10 |
Action by the Collateral Agent |
122 | ||||
Section 13.11 |
Compensation and Indemnity |
123 | ||||
Section 13.12 |
Co-Collateral Agent; Separate Collateral Agent |
124 |
EXHIBITS | ||||
Exhibit A | - | Form of Note | ||
Exhibit B | - | Form of Certificate of Transfer | ||
Exhibit C | - | Form of Certificate of Exchange | ||
Exhibit D | - | Form of Certificate from Acquiring Accredited Investor | ||
Exhibit E | - | Form of Supplemental Indenture |
iv
INDENTURE dated as of February 15, 2017, among CURO Financial Technologies Corp., a Delaware corporation (the Company ), the Guarantors (as defined herein) from time to time party hereto and TMI Trust Company, as trustee and collateral agent.
The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 12.000% Senior Secured Notes due 2022 (the Notes , including the $470,000,000 aggregate principal amount of Notes to be issued on the date hereof (the Initial Notes ) and any Additional Notes (as defined herein) that may be issued from time to time):
ARTICLE 1
Definitions and Incorporation by Reference
Section 1.01 Definitions .
144A Global Note means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend, the Private Placement Legend and the Original Issue Discount Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.
Accession Agreement means an accession agreement, if any, to the Collateral Documents, in substantially the form provided therein, entered into by the Company, the Guarantors, the agent, trustee or other representative for the holders of any Pari Passu Indebtedness and the Collateral Agent from time to time.
Accredited Investor means an accredited investor as defined in Rule 501(a) under the Securities Act, who is not also a QIB.
Acquired Debt means with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person was merged with or into or became a Subsidiary of such specified Person, including Indebtedness Incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person at the time such asset is acquired by such specified Person.
Acquisition Agreement means the Share Purchase Agreement dated as of April 8, 2011, among the Company, Cash Money Group Inc., Joseph Genova, the J.P. Genova Family Trust and 2275958 Ontario Inc.
Additional Notes means any Notes issued after the date of this Indenture from time to time in accordance with the terms of this Indenture including the provisions of Sections 2.02 , 2.14 and 5.09 .
Administrative Agent means the administrative agent under the Credit Agreement or any successor thereto.
Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by and under common control with), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. No Person (other than the Company or any Subsidiary of the Company) in whom a Receivables Entity makes an Investment in connection with a Qualified Receivables Transaction will be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of such Investment.
Agent means any Registrar, Paying Agent, any co-Registrar or any additional Paying Agent.
AI Global Note means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend, the Private Placement Legend and the Original Issue Discount Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Accredited Investors .
Applicable Premium means with respect to a Note at any redemption date, the greater of (i) 1.00% of the principal amount of such Note and (ii) the excess of (A) the present value at such redemption date of (1) the redemption price of such Note on March 1, 2019 (such redemption price being set forth in subsection (a) of Section 3.07 exclusive of any accrued interest) plus (2) all required remaining scheduled interest payments due on such Note through March 1, 2019 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate plus 0.50%, over (B) the principal amount of such Note on such redemption date.
Applicable Procedures means, with respect to any tender, redemption, payment, transfer or exchange of beneficial interests in a Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that are applicable to such tender, redemption, payment, transfer or exchange.
Asset Sale means:
(1) the sale, lease, transfer, conveyance or other disposition of any assets; provided that the sale, lease, transfer, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole, or the Company and its Restricted Subsidiaries, taken as a whole, as applicable, will be governed by the provisions of Section 5.14 and/or the provisions of Section 6.01 and not by the provisions of Section 5.10 ;
(2) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Companys Restricted Subsidiaries; and
2
(3) an Event of Loss.
In the case of clauses (1), (2) or (3), whether in a single transaction or a series of related transactions:
(A) that have a Fair Market Value in excess of $2.5 million; or
(B) for Net Proceeds in excess of $2.5 million.
Notwithstanding the foregoing, none of the following will be deemed to be an Asset Sale:
(1) a transfer of assets to the Company or any Restricted Subsidiary of the Company (other than a Receivables Entity);
(2) an issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company or to a Restricted Subsidiary of the Company;
(3) for purposes of Section 5.10 only, a Restricted Payment that is permitted by Section 5.07 or a Permitted Investment;
(4) the Incurrence of Permitted Liens and the disposition of assets subject to such Liens by or on behalf of the Person holding such Liens;
(5) the sale, transfer or other disposition of accounts in accordance with industry practice in connection with the compromise or collection thereof;
(6) any disposition of cash or Cash Equivalents;
(7) the lease, assignment or sub-lease of any property in the ordinary course of business;
(8) any surrender or waiver of contract rights or the settlement, release or surrender of contract rights or other litigation claims in the ordinary course of business;
(9) sales of assets that have become worn out, obsolete or damaged or otherwise unsuitable for use in connection with the business of the Company or any of its Restricted Subsidiaries;
(10) the license of patents, trademarks, copyrights, software applications and know-how to Restricted Subsidiaries of the Company and to third Persons in the ordinary course of business;
(11) the sale, transfer or other disposition of precious metals in the ordinary course of business;
(12) dispositions of motor vehicles securing consumer loans made by the Company and its Restricted Subsidiaries in the ordinary course of business;
3
(13) sales of loans receivable and related assets of the type specified in the definition of Qualified Receivables Transaction to a Receivables Entity; and
(14) transfers of loans receivable and related assets of the type specified in the definition of Qualified Receivables Transaction by a Receivables Entity in a Qualified Receivables Transaction.
Bankruptcy Law means any of Title 11, U.S. Code, the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act (Canada) and the U.K. Insolvency Act 1986, each as now and hereafter in effect, any successors to such statutes and any other applicable bankruptcy, insolvency, winding-up, dissolution, restructuring, receivership, arrangement, liquidation, reorganization or similar law of any jurisdiction providing relief from or otherwise affecting the rights of creditors.
Board of Directors means:
(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;
(2) with respect to a partnership, the board of directors or other governing body of the general partner of the partnership;
(3) with respect to a limited liability company, the board of directors, managers or other governing body, and in the absence of the same, the managing member or members or any controlling committee of managing members thereof; and
(4) with respect to any other Person, the board or committee of such Person or other individual or entity serving a similar function.
Business Day means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the City of New York or in the city of the Corporate Trust Office of the Trustee are authorized or obligated by law or executive order to close.
Capital Lease Obligation of any Person means the obligations of such Person to pay rent or other amounts under a lease of (or other Indebtedness arrangements conveying the right to use) real or personal property which are required to be classified and accounted for as a capital lease or capitalized on a balance sheet of such Person determined in accordance with GAAP and the amount of such obligations shall be the capitalized amount thereof in accordance with GAAP and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease or other arrangement prior to the first date upon which such lease or other arrangement may be terminated by the lessee without payment of a penalty; provided that any obligations of the Company and its Restricted Subsidiaries either existing on the date of this Indenture or created prior to the recharacterization described below (i) that were not included on the consolidated balance sheet of the Company as capital lease obligations and (ii) that are subsequently recharacterized as capital lease obligations due to a change in accounting treatment or otherwise, shall for all purposes of this Indenture (including, without limitation, the calculation of Consolidated Net Income and Consolidated Cash Flow) not be treated as Capital Lease Obligations or Indebtedness.
4
Capital Stock means:
(1) in the case of a corporation, corporate stock or shares;
(2) in the case of an association or business entity other than a corporation, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of the issuing Person;
but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with such Capital Stock.
Cash Equivalents means:
(1) marketable direct obligations issued by, or unconditionally Guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition;
(2) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers acceptances having maturities of one year or less from the date of acquisition issued by any lender to the Company or any of its Subsidiaries or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $250,000,000;
(3) commercial paper of an issuer rated at least A-1 by Standard & Poors Ratings Group ( S&P ) or P-1 by Moodys Investors Service, Inc. ( Moodys ), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within one year from the date of acquisition;
(4) repurchase obligations of any financial institution satisfying the requirements of clause (2) of this definition, having a term of not more than 30 days, with respect to securities issued or fully Guaranteed or insured by the United States government;
(5) securities with maturities of one year or less from the date of acquisition issued or fully Guaranteed by any state of the United States, by any political subdivision or taxing authority of any such state or by any foreign government, the securities of which state, political subdivision, taxing authority or foreign government (as the case may be) have one of the two highest rating obtainable from either S&P or Moodys;
5
(6) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any financial institution satisfying the requirements of clause (2) of this definition;
(7) money market, mutual or similar funds that invest at least 95% of their assets in assets satisfying the requirements of clauses (1) through (6) of this definition;
(8) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moodys and (iii) have portfolio assets of at least $1,000,000,000; and
(9) with respect to Foreign Subsidiaries only, any Investments outside of the United States that are functional foreign equivalents in all material respects to the Cash Equivalents described in clauses (1) through (5) above.
Cash Management Obligations means, with respect to any Person, all obligations of such Person in respect of overdrafts and liabilities owed to any other Person that arise from treasury, depositary or cash management services, including in connection with any automated clearing house transfers of funds, or any similar transactions.
CFC means a controlled foreign corporation within the meaning of Section 957(a) of the Code and any entity that wholly-owns the stock of a CFC and which is disregarded for United States federal income purposes as an entity that is separate from its owner.
Change of Control means the occurrence of any of the following:
(1) the direct or indirect sale, conveyance, transfer, lease or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders;
(2) the adoption of a plan relating to the liquidation or dissolution of the Company;
(3) the consummation of any transaction (including any merger or consolidation) the result of which is that any person (as defined above) other than the Permitted Holders, becomes the beneficial owner (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (3) such person shall be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the voting stock of the Company; or
(4) the consummation of the first transaction (including any merger or consolidation), the result of which is that any person (as defined above) other than the Permitted Holders becomes the beneficial owner (as defined above), directly or indirectly, of more of the voting stock of the Company than is at that time beneficially owned by the Permitted
6
Holders in the aggregate (except that for purposes of this clause (4) such Permitted Holders shall be deemed to have beneficial ownership of all shares of voting stock that such Permitted Holders have the right to acquire, whether such right is exercisable immediately or only after the passage of time); provided , that such transaction shall not constitute a Change of Control unless such person then owns, directly or indirectly, in the aggregate, more than 35% of the voting stock of the Company.
Clearstream means Clearstream Banking, societe anonyme, Luxembourg (or any successor thereto).
Code means the Internal Revenue Code of 1986.
Collateral means the collateral securing the Indenture Obligations.
Collateral Agent means TMI Trust Company, in its capacity as Collateral Agent under the Collateral Documents, together with its successors in such capacity.
Collateral Documents means the Security Agreement, the Pledge Agreement, the Mortgages and any other agreement, document or instrument pursuant to which a Lien is granted by the Company or a Guarantor to secure any Indenture Obligations and any Pari Passu Payment Lien Obligations or under which rights or remedies with respect to any such Lien are governed.
Consolidated Cash Flow means, with respect to any Person for any period, the Consolidated Net Income of such Person and its Restricted Subsidiaries for such period plus :
(1) an amount equal to any extraordinary or non-recurring loss, to the extent that such losses were deducted in computing such Consolidated Net Income; plus
(2) an amount equal to any net loss realized in connection with an Asset Sale, the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness by such Person or its Restricted Subsidiaries, to the extent such losses were deducted in computing such Consolidated Net Income; plus
(3) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus
(4) Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period; plus
(5) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) to the extent deducted in computing such Consolidated Net Income; plus
(6) without duplication of the application of clause (4) of the definition of Consolidated Net Income, write offs, write downs or impairment of goodwill or other intangible assets, unrealized mark to market losses, and other non cash charges and expenses (excluding
7
any such other non cash charge or expense to the extent that it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent deducted in computing such Consolidated Net Income; plus
(7) any fees or expenses relating to a Qualified Receivables Transaction, to the extent such fees or expenses are deducted in computing Consolidated Net Income; plus
(8) any one-time, non-recurring expenses or charges related to any Equity Offering, Permitted Investment, acquisition, recapitalization or Indebtedness permitted to be incurred under this Indenture (including a refinancing thereof), whether or not successful, including (i) such fees, expenses or charges related to the offering of the Notes and the Credit Agreement and (ii) any amendment or other modification of this Indenture, in each case, deducted in computing Consolidated Net Income; minus
(9) all non-cash items to the extent that such non-cash items increased Consolidated Net Income for such period (excluding the recognition of deferred revenue or any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period and any items for which cash was received in a prior period).
Notwithstanding the foregoing, the provision for taxes based on income or profits of, and the depreciation and amortization and other non-cash charges of, a Restricted Subsidiary of a Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person.
Consolidated Interest Expense means, with respect to any Person for any period, the sum of, without duplication:
(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges Incurred in respect of letter of credit or bankers acceptance financings, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations); provided that the amortization or write-off of capitalized financing or debt issuance costs shall be excluded; plus
(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person to the extent that such Indebtedness is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on the assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon).
8
Consolidated Net Income means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided that:
(1) solely for the purpose of Section 5.07 , the Net Income of any Person that is not a Restricted Subsidiary of such Person, or that is accounted for by the equity method of accounting shall be included, but only to the extent of the amount of dividends or distributions that have been distributed in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, unless such restriction has been legally waived;
(3) the cumulative effect of a change in accounting principles shall be excluded;
(4) the effect of any non-cash impairment charges or write-ups, write-downs or write-offs of assets or liabilities of Foreign Subsidiaries resulting from the application of GAAP and the amortization of intangibles of Foreign Subsidiaries arising from the application of GAAP, including pursuant to ASC 805, Business Combinations, ASC 350, Intangibles-Goodwill and Other, or ASC 360, Property, Plant and Equipment, as applicable, shall be excluded; and
(5) Consolidated Net Income shall not be reduced by any fees and expenses paid or payable in respect of the offering contemplated hereby, the application of the use of proceeds therefrom and related transactions.
Consolidated Tangible Assets means with respect to the Company as of any date, the aggregate of the assets of the Company and its Restricted Subsidiaries, excluding goodwill and any other assets properly classified as intangible assets in accordance with GAAP, shown on the balance sheet for the most recently ended fiscal quarter for which financial statements are available, determined on a consolidated basis in accordance with GAAP.
Consolidated Total Debt means, as of any date of determination, an amount equal to the aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with any acquisition permitted under this Indenture), with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of the term Consolidated Total Leverage Ratio.
9
Consolidated Total Leverage Ratio means, with respect to any specified Person, as of any date of determination, the ratio of (i) the Consolidated Total Debt to (ii) Consolidated Cash Flow of such Person for the most recently ended four fiscal quarters for which internal financial statements are available. In the event that the Company or any of its Restricted Subsidiaries Incurs or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems Preferred Stock subsequent to the commencement of the period for which the Consolidated Total Leverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Consolidated Total Leverage Ratio is made (the Calculation Date ), the Consolidated Total Leverage Ratio shall be calculated giving pro forma effect to such Incurrence or redemption of Indebtedness, or such issuance or redemption of Preferred Stock (including the application of any proceeds therefrom), as if the same had occurred at the beginning of the applicable four quarter reference period. In addition, for purposes of making the computation referred to above:
(1) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four quarter reference period and Consolidated Cash Flow for such reference period shall be calculated to include the Consolidated Cash Flow of the acquired entities (adjusted to exclude (A) the cost of any compensation, remuneration or other benefit paid or provided to any employee, consultant, Affiliate or equity owner of the acquired entities to the extent such costs are eliminated and not replaced and (B) the amount of any reduction in general, administrative or overhead costs of the acquired entities, in each case, as determined in good faith by an officer of the Company);
(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded;
(3) any Person that is a Restricted Subsidiary of the Company on the Calculation Date will be deemed to have been a Restricted Subsidiary of the Company at all times during such four quarter period;
(4) any Person that is not a Restricted Subsidiary of the Company on the Calculation Date will be deemed not to have been a Restricted Subsidiary of the Company at any time during such four quarter period; and
(5) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).
Consolidated Working Capital means, with respect to any Person, at any date of determination, the excess of (a) the sum of all amounts (other than cash and cash equivalents) that would, in conformity with GAAP, be set forth opposite the captions (i) total current assets (or any like caption) or (ii) consumer loans receivable (or any like caption) set forth under long-term assets (or any like caption), in each case, on a consolidated balance sheet of such
10
Person and its Restricted Subsidiaries at such date over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption total current liabilities (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries on such date other than the current portion of any long-term Indebtedness.
Corporate Trust Office of the Trustee shall be the address of the Trustee specified in Section 12.01 or such other address as to which the Trustee may give notice to the Company.
Credit Agreement means the Credit Agreement, dated as of November 17, 2016, by and among the Company, CURO Intermediate Holdings Corp., the several lenders from time to time parties thereto and the Administrative Agent, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith.
Credit Facility means one or more debt facilities, including the Credit Agreement, or other financing arrangements (including commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit, bankers acceptances or other indebtedness, including any notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case, as amended, extended, renewed, restated, supplemented, replaced (whether or not upon termination and whether with the original lenders, institutional investors or otherwise), refinanced (including through the issuance of debt securities), restructured or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement (and related document) governing Indebtedness incurred to refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Facility or a successor Credit Facility, whether by the same or any other agent, lender or group of lenders (or institutional investors).
CSO Obligations means obligations to purchase, or other Guarantees of, consumer loans the making of which were facilitated by the Company or a Restricted Subsidiary of the Company acting as a credit services organization or other similar service provider.
Default means any event that is or with the passage of time or the giving of notice or both would be an Event of Default; provided that any Default that results solely from the taking of an action that would have been permitted but for the continuation of a previous Default shall be deemed to be cured if such previous Default is cured prior to becoming an Event of Default.
Definitive Note means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 , substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the Schedule of Exchanges of Interests in the Global Note attached thereto.
Depositary means a clearing agency registered under the Exchange Act that is designated to act as Depositary for the Notes until a successor Depositary shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and,
thereafter, Depositary shall mean or include such successor Depositary. The Depositary initially is DTC.
11
Designated Non-Cash Consideration means the Fair Market Value of non-cash consideration received by the Company or any of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-Cash Consideration pursuant to an Officers Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent payment, redemption, retirement, sale or other disposition of such Designated Non-Cash Consideration. A particular item of Designated Non-Cash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with Section 5.10 .
Disqualified Stock means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock convertible or exchangeable solely at the option of the Company or a Subsidiary of the Company; provided that any such conversion or exchange will be deemed an Incurrence of Indebtedness or Disqualified Stock, as applicable); or
(3) is redeemable at the option of the holder thereof, in whole or in part,
in the case of each of clauses (1), (2) and (3), on or prior to the 91st day after the Stated Maturity of the Notes; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an asset sale or change of control occurring on or prior to the 91st day after the Stated Maturity of the Notes will not constitute Disqualified Stock if the terms of such Capital Stock provide that such Person may not repurchase or redeem any such Capital Stock pursuant to such provisions prior to the Companys purchase of the Notes as are required to be purchased pursuant to Sections 5.10 and 5.14 .
Domestic Subsidiary means any Restricted Subsidiary other than a Foreign Subsidiary.
DTC means The Depository Trust Company, a New York corporation.
Escrow Note means that certain Promissory Note, dated May 12, 2011, made in favor of the J.P. Genova Family Trust by a Restricted Subsidiary of the Company.
Equity Interests means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for Capital Stock).
12
Equity Offering means a sale for cash of either (1) common equity securities or units including or representing common equity securities of the Company (other than to a Subsidiary of the Company) or (2) common equity securities or units including or representing common equity securities of a Parent Entity (other than to a Subsidiary of the Company) to the extent that the net proceeds therefrom are contributed to the common equity capital of the Company.
Euroclear means Euroclear Bank S.A./N.V., as operator of the Euroclear System (or any successor thereto).
Event of Loss means, with respect to any property or asset, any (i) loss or destruction of, or damage to, such property or asset or (ii) any condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property or asset, or confiscation or requisition of the use of such property or asset.
Excess Cash Flow means, with respect to any Person for any period, Consolidated Cash Flow for such Person for such period adjusted as follows (i) plus or minus, respectively, any net decrease or increase in the Consolidated Working Capital of such Person for such period; provided that the amount of any reduction of Excess Cash Flow pursuant to this clause (i) attributable to any increase in gross loans receivable of such Person for such period shall not exceed an amount equal to 25% of the gross loans receivable of such Person and its Restricted Subsidiaries set forth on such Persons audited consolidated balance sheet as of the end of such period; provided further that if such Person makes an Excess Cash Flow Offer for such period or any other offer in the open market on terms, conditions and at times as are substantially similar to those with respect to an Excess Cash Flow Offer for such period, in each case, to repurchase Notes in an aggregate principal amount of at least $25.0 million, then the cap set forth in the immediately preceding proviso shall be inapplicable to the calculation of Excess Cash Flow for such period; (ii) minus the sum, without duplication, of (A) the aggregate amount of capital expenditures made in cash (other than any such capital expenditures made with Asset Sale proceeds (without giving effect to the threshold set forth in the definition thereof)) by such Person and its Restricted Subsidiaries during such period, (B) the cash portion of Consolidated Interest Expense paid by such Person and its Restricted Subsidiaries during such period, (C) the aggregate amount (without duplication) of all income and franchise taxes paid in cash by such Person and its Restricted Subsidiaries during such period, (D) cash expenditures actually made in connection with the acquisition of a business or assets of another Person that are used or useful in a Similar Business permitted under this Indenture (other than any such cash expenditures made with Asset Sale proceeds (without giving effect to the threshold set forth in the definition thereof)) by such Person and its Restricted Subsidiaries during such period, (E) any reduction in the principal amount of Indebtedness (other than the Notes or any Indebtedness that is subordinated to the Notes or any Notes Guarantee) of such Person and its Restricted Subsidiaries resulting from principal payments made thereon during such period (provided that (i) such Indebtedness has been incurred in accordance with this Indenture and (ii) to the extent such Indebtedness is revolving in nature, such payment shall have been accompanied by a concurrent corresponding permanent reduction in the revolving commitment relating thereto) and (F) all amounts added back pursuant to clauses (1), (7) and (8) of the definition of Consolidated Cash Flow to the extent paid in cash by such Person and its Restricted Subsidiaries during such period, and (iii) plus the amount of cash received by such Person and its Restricted Subsidiaries during such period from any Qualified Receivables Transaction.
13
Exchange Act means the U.S. Securities Exchange Act of 1934, as amended.
Excluded Assets means:
(1) the voting Capital Stock of any CFC in excess of 65% of all of the outstanding voting Capital Stock of such CFC;
(2) motor vehicles covered by certificates of title or ownership to the extent that a security interest cannot be perfected solely by filing a UCC-1 financing statement (or similar instrument);
(3) (x) real property owned by the Company or any of the Guarantors in fee simple that has a Fair Market Value of less than $2.5 million and (y) leasehold interests in real property with respect to which the Company or any Guarantor is a tenant or subtenant;
(4) rights under any contracts that contain a valid and enforceable prohibition on assignment of such rights (other than to the extent that any such prohibition would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code of any relevant jurisdiction or any other applicable law or principles of equity), but only for so long as such prohibition exists and is effective and valid;
(5) property and assets owned by the Company or any Guarantor that are the subject of Permitted Liens described in clause (7) of the definition thereof for so long as such Permitted Liens are in effect and the Indebtedness secured thereby otherwise prohibits any other Liens thereon, but only for so long as such prohibition exists and is effective and valid;
(6) deposit accounts of the Company or any Guarantor exclusively used for payroll, payroll taxes and other employee wage and benefit payments;
(7) property or assets owned by any Subsidiary of the Company that is not a Guarantor;
(8) any application for registration of a trademark filed with the United States Patent and Trademark Office on an intent-to-use basis until such time (if any) as a statement of use or amendment to allege use is accepted by such office, at which time such trademark shall automatically become part of the Collateral and subject to the security interest of this Agreement;
(9) letter of credit rights in favor of the Company or any Guarantor that do not secure the Companys or such Guarantors obligations under any Credit Facility;
(10) Equity Interests in any joint venture only to the extent and for so long as a pledge thereof is not permitted by the terms of the joint venture or other agreement under which such joint venture is organized;
14
(11) any segregated deposits that constitute Permitted Liens under clauses (5), (6), (9), (11), (12) and (19) of the definition of Permitted Liens, in each case, that are prohibited from being subject to other Liens; and
(12) proceeds and products from any and all of the foregoing excluded assets described in clauses (1) through (11), unless such proceeds or products would otherwise constitute Collateral securing the Notes.
Notwithstanding the foregoing, to the extent that the Company or a Guarantor grants a Lien on any asset or right described in clause (1) through (12) above to secure any First Priority Claims or any Pari Passu Payment Lien Obligations, such asset or right shall not constitute Excluded Assets.
Excluded Contributions means the net cash proceeds and/or Cash Equivalents received by the Company after the date of this Indenture from:
(1) contributions to its common equity capital; and
(2) the sale (other than to the Company or to a Subsidiary of the Company or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Company or any Subsidiary of the Company) of Capital Stock (other than Disqualified Stock) of the Company;
in each case designated as Excluded Contributions pursuant to an Officers Certificate executed on or promptly after the date of such contribution or sale, the proceeds of which are excluded from the calculation set forth in Section 5.07(a)(iv)(C) .
Existing Indebtedness means any Indebtedness of the Company or any of its Restricted Subsidiaries outstanding on the date of this Indenture (other than the Existing SPV Facility) until such Indebtedness is repaid.
Existing SPV Facility means the five-year non-recourse revolving credit facility, dated as of November 17, 2016, among CURO Receivables Finance I, LLC, Victory Park Management, LLC and certain other lenders party thereto.
Fair Market Value means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Company, as applicable; provided , however , that with respect to any such value less than $5.0 million, only the good faith determination of the Companys senior management shall be required.
FFL Group means (i) Friedman Fleischer & Lowe, LLC and its Affiliates and (ii) any investment vehicle that is managed (whether through ownership of securities having a majority of the voting power or through management of investments) by any Person listed in clause (i), but excluding any portfolio companies (other than the Company) of any such Person.
15
First Priority Agent means the agent designated as such under the Intercreditor Agreement and shall initially be the Administrative Agent, together with its successors and permitted assigns in such capacity.
First Priority Cash Management Obligations means any Cash Management Obligations secured by any Collateral under the First Priority Collateral Documents.
First Priority Claims means (a) Indebtedness under Credit Facilities permitted pursuant to clauses (i) and/or (xvii) of the definition of the term Permitted Debt, (b) First Priority Cash Management Obligations and First Priority Hedging Obligations and (c) all other Obligations of the Company and the Guarantors under the documents relating to Indebtedness described in clauses (a) and (b) above.
First Priority Collateral Documents means the First Priority Security Agreement, the First Priority Pledge Agreement, the First Priority Mortgages and any other agreement, document or instrument pursuant to which a Lien is granted (or purported to be granted) securing any First Priority Claims or under which rights or remedies with respect to such Liens are governed.
First Priority Hedging Obligations means any Hedging Obligations that are permitted to be incurred under clause (vii) of the definition of the term Permitted Debt and that are secured (or purported to be secured) by any collateral under the First Priority Collateral Documents.
First Priority Mortgages means a collective reference to each mortgage, deed of trust, deed to secure debt and any other document or instrument under which any Lien on real property owned by the Company or any Guarantor is granted to secure any First Priority Claims or under which rights or remedies with respect to any such Liens are governed.
First Priority Pledge Agreement means the Pledge Agreement, to be dated as of the date of this Indenture, among the Company and the Guarantors in favor of the First Priority Agent, as amended or supplemented from time to time in accordance with its terms.
First Priority Security Agreement means the Security Agreement, to be dated as of the date of this Indenture, among the Company and the Guarantors in favor of the First Priority Agent, as amended or supplemented from time to time in accordance with its terms.
Foreign Subsidiary means any Restricted Subsidiary incorporated or organized in a jurisdiction other than the United States or any state thereof or the District of Columbia and any Restricted Subsidiary that wholly-owns the stock of a CFC and which is disregarded for United States federal income tax purposes as an entity that is separate from its owner.
Founders means each of (i) Doug Rippel, (ii) Chad Faulkner, (iii) Mike McKnight, (iv) Joseph Genova, (v) the J.P. Genova Family Trust and (vi) any (a) spouse or lineal descendent (whether natural or adopted) of any Person listed in clauses (i) through (v) or (b) trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or persons beneficially holding an 80% or more controlling interest of which consist of such Person and/or any of the Persons referred to in the immediately preceding clause (a).
16
GAAP means generally accepted accounting principles in the United States of America, as in effect on the date of this Indenture and as commonly applied to private companies, including those set forth in:
(1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants;
(2) the statements and pronouncements of the Financial Accounting Standards Board; and
(3) such other statements by such other entity as have been approved by a significant segment of the accounting profession.
Global Notes means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the Depositary or its nominee, substantially in the form of Exhibit A hereto and that bears the Global Note Legend and that has the Schedule of Exchanges of Interests in the Global Note attached thereto, issued in accordance with Section 2.01 , 2.06(b) or 2.06(d) .
Global Note Legend means the legend set forth in Section 2.06(g)(2) , which is required to be placed on all Global Notes issued under this Indenture.
Guarantee by any Person means any obligation, contingent or otherwise, of such Person guaranteeing any Indebtedness or other obligation of any other Person (the primary obligor ) in any manner, whether directly or indirectly, and including any obligation of such Person to:
(1) purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness;
(2) purchase property, securities or services for the purposes of assuring the holder of such Indebtedness of the payment of such Indebtedness; or
(3) maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness;
provided , however , that the Guarantee by any Person shall not include endorsements by such Person for collection or deposit, in either case, in the ordinary course of business. The term Guarantee used as a verb has a corresponding meaning.
Guarantors means each Domestic Subsidiary of the Company (other than any Receivables Entities or Immaterial Subsidiaries) and any other Restricted Subsidiary of the Company, in each case, that executes a Notes Guarantee in accordance with the provisions of this Indenture.
Holder means a Person in whose name a Note is registered.
17
Immaterial Subsidiary means any Restricted Subsidiary of the Company that (i) has tangible assets together with all other Immaterial Subsidiaries (as determined in accordance with GAAP) of less than 2.0% of the Companys Consolidated Tangible Assets measured at the end of the most recent fiscal period for which internal financial statements are available and on a pro forma basis giving effect to any acquisitions or dispositions of companies, division or lines of business since such balance sheet date and on or prior to the date of acquisition of such Subsidiary and (ii) has gross revenue together with all other Immaterial Subsidiaries (as determined in accordance with GAAP) for the period of four consecutive fiscal quarters ending on such date of less than 2.0% of the consolidated revenue of the Company and its Restricted Subsidiaries for such period (measured for the four quarters ended most recently for which internal financial statements are available and on a pro forma basis giving effect to any acquisitions or dispositions of companies, division or lines of business since the start of such four quarter reference period); provided that (i) a Restricted Subsidiary of the Company that no longer meets the foregoing requirements of this definition shall no longer constitute an Immaterial Subsidiary and (ii) any Restricted Subsidiary that incurs or Guarantees Indebtedness incurred under a Credit Facility or any Pari Passu Payment Lien Document shall not constitute an Immaterial Subsidiary.
Incur means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise), assume (pursuant to a merger, consolidation, acquisition or other transaction), Guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person (and Incurrence and Incurred shall have meanings correlative to the foregoing); provided , however , that a change in GAAP that results in an obligation of such Person that exists at such time becoming Indebtedness shall not be deemed an Incurrence of such Indebtedness. Indebtedness otherwise Incurred by a Person before it becomes a Subsidiary of the Company will be deemed to have been Incurred at the time it becomes such a Subsidiary.
Indebtedness means (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent:
(1) obligations of such Person in respect of principal for money borrowed;
(2) obligations of such Person in respect of principal evidenced by bonds, debentures, notes or other similar instruments;
(3) every reimbursement obligation of such Person with respect to letters of credit, bankers acceptances or similar facilities issued for the account of such Person, other than obligations with respect to letters of credit securing obligations, other than obligations referred to in clauses (1), (2) and (5), entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the 10th day following payment on the letter of credit;
(4) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade payables, credit on open account, provisional credit, accrued liabilities or similar terms arising in the ordinary course of business which are not overdue by more than 30 days or which are being contested in good faith);
18
(5) every Capital Lease Obligation of such Person;
(6) the maximum fixed redemption or repurchase price of Disqualified Stock of such Person at the time of determination plus accrued but unpaid dividends;
(7) every net payment obligation of such Person under interest rate swap, cap, collar or similar agreements or foreign currency hedge, exchange or similar agreements of such Person (collectively, Hedging Obligations ); and
(8) every obligation of the type referred to in clauses (1) through (7) of this definition of another Person the payment of which, in either case, such Person has Guaranteed or is liable, directly or indirectly, as obligor, guarantor or otherwise, to the extent of such Guarantee or other liability.
Notwithstanding the foregoing, Indebtedness shall not include CSO Obligations.
Indenture means this Indenture, as amended or supplemented from time to time.
Indenture Documents means the Notes, this Indenture, the Notes Guarantees, the Collateral Documents and the Intercreditor Agreement.
Indenture Obligations means all Obligations in respect of the Notes or arising under the Indenture Documents, including the fees and expenses (including, without limitation, fees, expenses and disbursements of agents, counsel and professional advisors) of the Trustee and Collateral Agent. Indenture Obligations shall include all interest accrued (or which would, absent the commencement of an insolvency or liquidation proceeding, accrue) after the commencement of an insolvency or liquidation proceeding in accordance with and at the rate specified in the relevant Indenture Document whether or not the claim for such interest is allowed as a claim in such insolvency or liquidation proceeding.
Independent Financial Advisor means an accounting, appraisal or investment banking firm or consultant to Persons, in each case of nationally recognized standing that is, in the good faith determination of the Company, qualified to perform the task for which it has been engaged.
Indirect Participant means a Person who holds a beneficial interest in a Global Note through a Participant.
Initial Purchasers means Jefferies LLC and Stephens Inc.
Intercreditor Agreement means the intercreditor agreement, dated as of the date of this Indenture, between the First Priority Agent and the Collateral Agent, as it may be amended, restated, supplemented and/or otherwise modified from time to time.
19
Investments means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of direct or indirect loans (including Guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commissions, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that an acquisition of assets, Equity Interests or other securities by the Company or a Restricted Subsidiary of the Company for consideration consisting of common equity securities of the Company or such Restricted Subsidiary shall not be deemed to be an Investment. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that after giving effect to any such sale or disposition, such Person is no longer a direct or indirect Restricted Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Equity Interests of such Restricted Subsidiary not sold or disposed of. For purposes of the definition of Unrestricted Subsidiary and Section 5.07 :
(1) Investments shall include the portion (proportionate to the Companys equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent Investment in an Unrestricted Subsidiary in an amount (if positive) equal to:
(a) the Companys Investment in such Subsidiary at the time of such redesignation; less
(b) the portion (proportionate to the Companys equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary of the Company will be valued at its Fair Market Value at the time of such transfer.
The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by the Company or a Restricted Subsidiary of the Company in respect of such Investment.
Lien means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, encumbrance or hypothecation of any kind in respect of that asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any other agreement to give a security interest in and any filing of any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
20
Mortgages means a collective reference to each mortgage, deed of trust, deed to secure debt and any other document or instrument under which any Lien on real property owned by the Company or any Guarantor is granted to secure any Indenture Obligations or under which rights or remedies with respect to any such Liens are governed.
Net Income means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends, excluding, however, (1) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (A) any Asset Sale or (B) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries and (2) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss).
Net Proceeds means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including any cash received upon the sale or other disposition of any non cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including legal, accounting and investment banking fees and sales commissions) and any relocation expenses Incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness (other than any Credit Facility or Pari Passu Indebtedness) secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.
Non-Recourse Debt means Indebtedness:
(1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise; and
(2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary of the Company) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity.
Non-U.S. Person means a Person who is not a U.S. Person.
Note Custodian means the Trustee, as custodian for the Depositary with respect to the Notes in global form, or any successor entity thereto.
Notes Guarantee means, collectively, the Guarantees of the Guarantors set forth in Article 11 .
21
Notes Secured Parties means, collectively, the Collateral Agent, the Trustee and the Holders.
Obligations means any principal, interest (including, with respect to the Notes, interest that accrues after the commencement of an insolvency or bankruptcy case, regardless of whether such interest is an allowed claim under such case), penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.
Offering Memorandum means the Companys offering memorandum, dated February 1, 2017, relating to the initial offering of the Notes.
Officer means, with respect to any Person, the chairman of the board, chief executive officer, chief financial officer, president, any executive vice president, senior vice president or vice president, the treasurer, principal accounting officer or the secretary of such Person.
Officers Certificate means a certificate signed by the Chairman of the Board of Directors, the President, a Vice President or the Chief Financial Officer, and by the Treasurer, Assistant Treasurer, Secretary or the Assistant Secretary of the Company and delivered to the Trustee.
Opinion of Counsel means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company.
Original Issue Discount Legend means the legend set forth in Section 2.06(g)(4), which is required to be placed on all Global Notes issued under this Indenture.
Participant means, with respect to the Depositary, a Person who has an account with the Depositary.
Parent Entity means any direct or indirect parent of the Company.
Pari Passu Indebtedness means any Indebtedness (other than any Indebtedness evidenced by an a Additional Note or related Notes Guarantee) (1) that is permitted to be incurred under Section 5.09 and (2) that is secured on a pari passu basis with the Notes and the Notes Guarantees, as applicable, by a Permitted Lien described in clause (16) of the definition thereof; provided that (i) such Indebtedness is so designated as Pari Passu Indebtedness in an Officers Certificate delivered to the Collateral Agent and (ii) an authorized representative of the holders of such Indebtedness shall have executed and delivered a supplement to the Intercreditor Agreement and an Accession Agreement.
Pari Passu Indebtedness Secured Parties means, collectively, the agent, the trustee or other representative, if any, and the holders of Pari Passu Indebtedness identified in a supplement to the Intercreditor Agreement and an Accession Agreement.
22
Pari Passu Payment Lien Documents means any loan agreement, indenture or other instrument that evidences or governs any Pari Passu Indebtedness and all other related documents identified in a supplement to the Intercreditor Agreement.
Pari Passu Payment Lien Obligations means all Obligations (including interest that accrues after the commencement of an insolvency or bankruptcy case, regardless of whether such interest is an allowed claim under such case) outstanding under the Pari Passu Payment Lien Documents.
Permitted Holders means the Founders and the FFL Group.
Permitted Investments means:
(1) any Investment in the Company or a Restricted Subsidiary of the Company (other than a Receivables Entity);
(2) any Investment in cash or Cash Equivalents or the Notes;
(3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (A) such Person becomes a Restricted Subsidiary of the Company (other than a Receivables Entity) or (B) such Person is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company (other than a Receivables Entity);
(4) any Investment existing on the date of this Indenture or made pursuant to binding commitments in effect on the date of this Indenture or an Investment consisting of any extension, modification or renewal of any Investment existing on the date of this Indenture; provided that the amount of any such Investment may be increased (x) as required by the terms of such Investment as in existence on the date of this Indenture or (y) as otherwise permitted under this Indenture;
(5) any Restricted Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 5.10 ;
(6) Hedging Obligations that are Incurred by the Company or any of its Restricted Subsidiaries for the purpose of fixing or hedging (A) interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding or (B) currency exchange risk in connection with existing financial obligations and not for purposes of speculation;
(7) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and other similar deposits;
(8) loans and advances to officers, directors and employees of the Company and its Restricted Subsidiaries in the ordinary course of business not to exceed $2.0 million in the aggregate at any one time outstanding;
23
(9) any Investment consisting of a Guarantee permitted by Section 5.09 ;
(10) Investments consisting of non-cash consideration received in the form of securities, notes or similar obligations in connection with dispositions of assets permitted pursuant to this Indenture;
(11) Investments received in settlement of bona fide disputes or as distributions in bankruptcy, insolvency, foreclosure or similar proceedings;
(12) advances to customers or suppliers in the ordinary course of business;
(13) Investments consisting of purchases and acquisitions of supplies, materials and equipment or purchases or contract rights or licenses of intellectual property, in each case in the ordinary course of business;
(14) receivables owing to the Company or any of its Restricted Subsidiaries if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;
(15) CSO Obligations of the Company and its Restricted Subsidiaries;
(16) Investments consisting of obligations of officers and employees to the Company or its Restricted Subsidiaries in connection with such officers and employees acquisition of Equity Interests in the Company (other than Disqualified Stock) so long as no cash is actually advanced by the Company or any of its Restricted Subsidiaries in connection with the acquisition of such obligations);
(17) Investments in a Receivables Entity, or any Investment by a Receivables Entity in any other Person, in each case, in connection with a Qualified Receivables Transaction, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Transaction or any related Indebtedness; provided, however, that any Investment in a Receivables Entity is in the form of a purchase money note, contribution of additional receivables or an equity interest; and
(18) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (18) that are at the time outstanding, not to exceed $5.0 million.
Permitted Liens means:
(1) Liens securing First Priority Claims;
(2) Liens in favor of the Company or a Guarantor;
(3) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or a Restricted Subsidiary of the Company, provided that such Liens were not created in connection with, or in contemplation of, such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or a Restricted Subsidiary of the Company;
24
(4) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were not created in connection with, or in contemplation of, such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds, workmens compensation or unemployment obligations or other obligations of a like nature, or to secure letters of credit issued with respect to such obligations, Incurred in the ordinary course of business;
(6) Liens consisting of deposits in connection with leases or other similar obligations, or securing letters of credit issued in lieu of such deposits, incurred in the ordinary course of business, and cash deposits in connection with acquisitions otherwise permitted under this Indenture;
(7) Liens securing Indebtedness (including Capital Lease Obligations) permitted by Section 5.09(b)(iii) covering only the assets acquired with such Indebtedness and directly related assets such as proceeds (including insurance proceeds), products, replacements, substitutions and accessions thereto;
(8) Liens existing on the date of this Indenture and replacement Liens that do not encumber additional assets, unless such encumbrance is otherwise permitted;
(9) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent for more than 30 days or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;
(10) Liens securing Permitted Refinancing Debt, provided that the obligor under such Indebtedness was permitted to Incur such Liens with respect to the Indebtedness so refinanced under this Indenture and:
(a) the new Lien is limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and
(b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged with such Permitted Refinancing Indebtedness; and (y) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;
25
(11) statutory and common law Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business with respect to amounts that are not yet delinquent for more than 30 days or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;
(12) Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor;
(13) Liens arising from filings of Uniform Commercial Code financing statements or similar documents regarding leases or otherwise for precautionary purposes relating to arrangements not constituting Indebtedness;
(14) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Company or any of its Restricted Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Company and its Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Company or any of its Restricted Subsidiaries in the ordinary course of business;
(15) Liens securing Indenture Obligations;
(16) Liens securing Pari Passu Indebtedness; provided that the holders of such Pari Passu Indebtedness (or their designated representative or agent) shall have executed and delivered a supplement to the Intercreditor Agreement and an Accession Agreement to the Collateral Documents;
(17) Liens Incurred by the Company or any Restricted Subsidiary of the Company with respect to obligations in an aggregate principal amount that does not exceed $10.0 million at any one time outstanding;
(18) encumbrances or exceptions expressly permitted pursuant to the Mortgages;
(19) Liens incurred or deposits made in the ordinary course of business in connection with workers compensation, unemployment insurance and other types of social security, including Liens securing letters of credit issued in the ordinary course of business in connection therewith;
(20) pledges of Equity Interests of an Unrestricted Subsidiary of the Company securing Non-Recourse Debt of such Unrestricted Subsidiary;
(21) Liens securing Indebtedness of Foreign Subsidiaries to the extent such Indebtedness is permitted under Section 5.09(b)(xi) ; provided , however , that such Liens only extend to the assets of the Foreign Subsidiaries that are obligors with respect to such Indebtedness; and
26
(22) any Lien on loans receivable and related assets of the types specified in the definition of Qualified Receivables Transaction transferred to a Receivables Entity or on assets of a Receivables Entity, in each case, Incurred in connection with a Qualified Receivables Transaction.
For purposes of this definition, the term Indebtedness shall be deemed to include interest in connection with or in respect of any referenced Indebtedness.
Permitted Payments to Parent means the declaration and payment of dividends or other payments to, or the making of loans to, any Parent Entity in amounts required for any Parent Entity (and, in the case of clause (3) below, its direct or indirect members), to pay, in each case without duplication:
(1) general corporate operating and overhead costs and expenses (including, without limitation, expenses related to reporting obligations and any franchise and similar taxes, and other fees and expenses required to maintain their corporate existence) of any Parent Entity to the extent such costs and expenses are reasonably attributable to the ownership or operation of the Company and its Restricted Subsidiaries;
(2) reasonable fees and expenses (other than to Affiliates of the Company) incurred in connection with any unsuccessful debt or equity offering or other financing transaction by such Parent Entity;
(3) for any taxable period for which the Company and/or any of its Subsidiaries are members of a consolidated, combined or similar income tax group for U.S. federal and/or applicable state, local or foreign income tax purposes of which a Parent Entity is the common parent (a Tax Group ), the portion of any U.S. federal, foreign, state and local income and similar taxes (including alternative minimum taxes) of such Tax Group that are attributable to the taxable income of the Company and its Restricted Subsidiaries and, to the extent of the amount actually received from its Unrestricted Subsidiaries, in amounts required to pay such taxes that are attributable to the taxable income of such Unrestricted Subsidiaries; provided that in each case the amount of such payments with respect to any taxable period does not exceed the amount that the Company and its Restricted Subsidiaries (and, if applicable, the Companys Unrestricted Subsidiaries) would have been required to pay in respect of such U.S. federal, foreign, state and local income taxes with respect to such taxable period were such entities paying taxes separately from any such Parent Entity; and
(4) customary salary, bonus, severance, indemnification obligations and other benefits payable to officers and employees of such Parent Entity to the extent such salaries, bonuses, severance, indemnification obligations and other benefits are attributable to the ownership or operation of the Company and its Restricted Subsidiaries.
Permitted Refinancing Debt means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net cash proceeds of which are used to extend, refinance (including through the issuance of debt securities), renew, replace (whether or not upon termination and whether with the original lenders, institutional investors or otherwise), defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries, in whole or in part; provided that:
27
(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Debt does not exceed the principal amount and premium, if any, plus accrued interest (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of any fees and expenses Incurred in connection therewith);
(2) such Permitted Refinancing Debt has a final scheduled maturity date later than the final scheduled maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Debt is subordinated in right of payment to, the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary of the Company that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded or would otherwise be permitted to Incur such Indebtedness.
Person means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock corporation, trust, unincorporated organization or government or agency or political subdivision thereof or any other entity.
Pledge Agreement means the Pledge Agreement, dated as of the date of this Indenture, among the Company and the Guarantors in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.
Preferred Stock as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
Private Placement Legend means the legend set forth in Section 2.06(g)(1) .
QIB means a qualified institutional buyer as defined in Rule 144A.
Qualified Receivables Transaction means any transaction or series of transactions that may be entered into by the Company or any of the Restricted Subsidiaries pursuant to which the Company or any of the Restricted Subsidiaries may sell, convey or otherwise transfer to:
28
(1) a Receivables Entity (in the case of a transfer by the Company or any of the Restricted Subsidiaries); or
(2) any other Person (in the case of a transfer by a Receivables Entity),
or may grant a security interest in, any loans receivable (whether now existing or arising in the future) of the Company or any of the Restricted Subsidiaries, and any assets related thereto, including all collateral securing such loans receivable, all contracts and all Guarantees or other obligations in respect of such loans receivable, proceeds of such loans receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving loans receivable; provided , however , that the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the chief financial officer of the Company).
Receivables Entity means (a) a Wholly-Owned Subsidiary of the Company or (b) another Person engaging in a Qualified Receivables Transaction with the Company, in each case, that engages in no activities other than in connection with the financing of loans receivables and is designated by the Board of Directors of the Company (as provided below) as a Receivables Entity, and in either of clause (a) or (b):
(1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of such entity:
(A) is Guaranteed by the Company or any Subsidiary of the Company (excluding Guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings),
(B) is recourse to or obligates the Company or any Subsidiary of the Company in any way (other than pursuant to Standard Securitization Undertakings), or
(C) subjects any property or asset of the Company or any Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof (other than pursuant to Standard Securitization Undertakings);
(2) the entity is not an Affiliate of the Company or is an entity with which neither the Company nor any Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms that the Company reasonably believes to be not materially less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company; and
(3) is an entity to which neither the Company nor any Subsidiary of the Company has any obligation to maintain or preserve such entitys financial condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company will be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors giving effect to such designation and an Officers Certificate certifying that such designation complied with the foregoing conditions.
29
Notwithstanding anything to the contrary contained herein, solely for purposes of the calculation of Consolidated Interest Expense, Consolidated Tangible Assets and Consolidated Total Debt, any Receivables Entity shall be deemed not to be a Restricted Subsidiary.
Refinance means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, purchase, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness (in each case, whether or not upon termination and whether with the original lenders, institutional investors or otherwise, including through the issuance of debt securities). Refinanced and refinancing shall have correlative meanings.
Regulation S means Regulation S promulgated under the Securities Act.
Regulation S Global Note means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate.
Regulation S Permanent Global Note means a permanent Global Note in the form of Exhibit A hereto bearing the Global Note Legend, the Private Placement Legend and the Original Issue Discount Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period.
Regulation S Temporary Global Note means a temporary Global Note in the form of Exhibit A hereto bearing the Global Note Legend, the Private Placement Legend, the Original Issue Discount Legend and the Regulation S Temporary Global Note Legend, each as set forth in Section 2.06(g) , deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903.
Regulation S Temporary Global Note Legend means the legend set forth in Section 2.06(g)(3) .
Responsible Officer when used with respect to the Trustee, means any officer or employee within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject, and who shall, in each case, have direct responsibility for the administration of this Indenture.
Restricted Definitive Note means a Definitive Note bearing the Private Placement Legend.
Restricted Global Note means a Global Note bearing the Private Placement Legend.
30
Restricted Investment means an Investment other than a Permitted Investment.
Restricted Period means the 40-day distribution compliance period as defined in Regulation S.
Restricted Subsidiary means, with respect to any Person, any Subsidiary of such Person that is not an Unrestricted Subsidiary.
Rule 144 means Rule 144 promulgated under the Securities Act.
Rule 144A means Rule 144A under the Securities Act.
Rule 903 means Rule 903 promulgated under the Securities Act.
Rule 904 means Rule 904 promulgated under the Securities Act.
SEC means the Securities and Exchange Commission, or any successor agency thereto.
Secured Parties means, collectively, the Notes Secured Parties and the Pari Passu Indebtedness Secured Parties, if any.
Securities Act means the U.S. Securities Act of 1933, as amended.
Security Agreement means the Security Agreement, dated as of the date of this Indenture, among the Company and the Guarantors in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.
Significant Subsidiary means any Subsidiary that would be a significant subsidiary as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such regulation is in effect on the date of this Indenture.
Similar Business means any business conducted or proposed to be conducted by the Company and its Restricted Subsidiaries on the date of this Indenture or any business that is similar, reasonably related, incidental, complementary or ancillary thereto, or a reasonable extension or expansion thereof.
Standard Securitization Undertakings means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company that, taken as a whole, are customary in a loans receivable transaction.
Stated Maturity when used with respect to any security or any installment of interest thereon, means the date specified in such security as the fixed date on which the principal of such security or such installment of interest is due and payable.
Subsidiary means, with respect to any Person, (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of
31
directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person (or a combination thereof) and (2) any partnership (A) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (B) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).
TIA means the Trust Indenture Act of 1939 (15 U.S.C §§ 77aaa-77bbbb), as in force on the date of this Indenture; provided , however , that in the event that the Trust Indenture Act of 1939 is amended after such date, TIA means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.
Treasury Rate means, at any redemption date, the yield to maturity as of such redemption date of constant maturity United States Treasury securities (as compiled and published in the most recent Federal Reserve Statistical Release H. 15 (519) that has become publicly available at least two Business Days prior to such redemption date (or, if such statistical release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to March 1, 2019; provided, however , that if no published maturity exactly corresponds with such date, then the Treasury Rate shall be interpolated or extrapolated on a straight-line basis from the arithmetic mean of the yields for the next shortest and next longest published maturities; provided further, however , that if the period from such redemption date to March 1, 2019, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
Trustee means TMI Trust Company, in its capacity as Trustee, until a successor or assign replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor or assign serving hereunder.
Unrestricted Definitive Note means a Definitive Note that does not bear and is not required to bear the Private Placement Legend.
Unrestricted Global Note means a Global Note that does not bear and is not required to bear the Private Placement Legend.
Unrestricted Subsidiary means, with respect to any Person, any Subsidiary of such Person that is designated by the Board of Directors of such Person as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors of such Person, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) except as permitted by Section 5.11 , is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;
32
(3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Persons financial condition or to cause such Person to achieve any specified levels of operating results; and
(4) has not guaranteed or otherwise directly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries.
U.S. Government Obligation means:
(1) any security which is: a direct obligation of the United States of America the payment of which the full faith and credit of the United States of America is pledged or an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally Guaranteed as a full faith and credit obligation of the United States of America, which, in either case, is not callable or redeemable at the option of the issuer thereof; and
(2) any depository receipt issued by a bank (as defined in the Securities Act) as custodian with respect to any U.S. Government Obligation and held by such bank for the account of the holder of such depository receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation which is so specified and held, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depository receipt.
U.S. Person means a U.S. Person as defined in Rule 902(k) under the Securities Act.
Weighted Average Life to Maturity means, when applied to any Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (A) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (B) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by
(2) the then outstanding principal amount of such Indebtedness.
Wholly-Owned Subsidiary of any Person means a Subsidiary of such Person all of the outstanding Capital Stock of which (other than directors qualifying shares and nominal amounts required to be held by local nationals) shall at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person (or any combination thereof).
33
Section 1.02 Other Definitions.
Term | Defined in Section | |
Action | 13.10 | |
Ad Astra | 5.11 | |
Affiliate Transaction | 5.11 | |
Asset Sale Offer | 3.09 | |
Authentication Order | 2.02 | |
Calculation Date | Definition of Consolidated | |
Total Leverage Ratio | ||
Change of Control Offer | 5.14 | |
Change of Control Payment | 5.14 | |
Change of Control Payment Date | 5.14 | |
Company | Recitals | |
Covenant Defeasance | 9.03 | |
Custodian | 7.01 | |
Event of Default | 7.01 | |
Excess Cash Flow Offer | 5.16 | |
Excess Cash Flow Offer Amount | 5.16 | |
Excess Cash Flow Offer Period | 3.10 | |
Excess Cash Flow Purchase Date | 3.10 | |
Excess Proceeds | 5.10 | |
Hedging Obligations | Definition of Indebtedness | |
Initial Notes | Recitals | |
Legal Defeasance | 9.02 | |
Moodys | Definition of Cash Equivalents | |
New Guarantor | Section 11.02 | |
Notes | Recitals | |
Offer Amount | 3.09 | |
Offer Period | 3.09 | |
Paying Agent | 2.03 | |
Payment Default | 7.01 | |
Permitted Debt | 5.09 | |
Premises | 5.21 | |
Purchase Date | 3.09 | |
Registrar | 2.03 | |
Restricted Payments | 5.07 | |
S&P | Definition of Cash Equivalents | |
Tax Group | Definition of Permitted | |
Payments to Parent |
Section 1.03 Incorporation by Reference of Trust Indenture Act . Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. Except as expressly provided herein, the provisions of the TIA shall not apply hereto. All other terms used in this Indenture that are defined by the TIA, defined by the TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.
Section 1.04 Rules of Construction . Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
34
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) or is not exclusive;
(4) including means including without limitation;
(5) words in the singular include the plural, and in the plural include the singular;
(6) provisions apply to successive events and transactions;
(7) will shall be interpreted to express a command;
(8) references to sections of or rules under the Securities Act, Exchange Act or TIA shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;
(9) references to any statute, law or regulation shall be deemed to refer to the same as from time to time amended and in effect and to any successor statute, law or regulation;
(10) references to the date the Notes were originally issued shall refer to the date of this Indenture;
(11) herein, hereof and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and
(12) all references to Articles, Sections or subdivisions refer to Articles, Sections or subdivisions of this Indenture unless otherwise indicated.
ARTICLE 2
The Notes
Section 2.01 Form and Dating .
(a) General . The Notes and the Trustees certificate of authentication will be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes shall be in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The Notes shall bear interest and be payable upon the terms as set forth in Exhibit A.
The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
35
(b) Global Notes . Notes issued in global form will be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the Schedule of Exchanges of Interests in the Global Note attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the Schedule of Exchanges of Interests in the Global Note attached thereto). Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 .
(c) Temporary Global Notes . Notes offered and sold in reliance on Regulation S will be issued initially in the form of a Regulation S Temporary Global Note, which will be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period will be terminated upon the receipt by the Trustee of an Officers Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note will be automatically deemed exchanged for beneficial interests in the Regulation S Permanent Global Note, which will be represented by the same global note certificate and by the same CUSIP number as the Regulation S Temporary Global Note (provided that the Regulation S Temporary Global Note Legend shall be deemed deleted therefrom). Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee will cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.
(d) Euroclear and Clearstream Procedures Applicable . The provisions of the Operating Procedures of the Euroclear System and Terms and Conditions Governing Use of Euroclear and the General Terms and Conditions of Clearstream Banking and Customer Handbook of Clearstream will be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Note that are held by Participants through Euroclear or Clearstream.
36
Section 2.02 Execution and Authentication .
At least one Officer of the Company must sign the Notes for the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid.
A Note will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee will, upon receipt of a written order of the Company signed by an Officer of the Company (an Authentication Order ), authenticate Notes for original issue up to the aggregate principal amount of the Notes that may be validly issued under this Indenture including (i) Initial Notes for original issuance in an aggregate principal amount of $470,000,000 and (ii) subject to compliance with Sections 2.14 and 5.09 , any Additional Notes for original issuance from time to time after the date hereof.
All Notes issued under this Indenture (including Additional Notes) shall be treated as a single class of securities under this Indenture, including for purposes of any vote, consent, waiver or other act of Holders.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.
Section 2.03 Registrar and Paying Agent .
The Company will maintain an office or agency where Notes may be presented for registration of transfer or for exchange ( Registrar ) and an office or agency where Notes may be presented for payment ( Paying Agent ). The Registrar will keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term Registrar includes any co-registrar and the term Paying Agent includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. Until the Trustee receives notice of the Companys appointment of another entity as Registrar or Paying Agent, the Trustee will act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints DTC to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian.
37
Section 2.04 Paying Agent to Hold Money in Trust .
The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the Company) will have no further liability for the money. If the Company or a Subsidiary of the Company acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee will serve as Paying Agent for the Notes.
Section 2.05 Holder Lists .
The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Company will furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders and the Company will otherwise comply with TIA § 312(a).
Section 2.06 Transfer and Exchange .
(a) Transfer and Exchange of Global Notes . A Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Any Global Note will be exchanged by the Company for Definitive Notes if:
(1) the Depositary (a) notifies the Company that it is unwilling or unable to continue as depositary for the Global Note or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, the Company fails to appoint a successor depositary within 90 days thereafter;
(2) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes; provided that in no event shall the Regulation S Temporary Global Note be exchanged for Definitive Notes prior to (a) the expiration of the Restricted Period and (b) the receipt of any certificates required under the provisions of Regulation S; or
(3) there has occurred and is continuing a Default or Event of Default with respect to the Notes and the Depositary has requested that Definitive Notes be issued.
38
Upon the occurrence of any of the preceding events described in subparagraphs (1), (2) or (3) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 . Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 , shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a) ; however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) .
(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(1) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided , however , that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1) .
(2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes . In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) , the transferor of such beneficial interest must deliver to the Registrar either:
(A) both:
(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or
39
(B) both:
(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (i) above;
provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903.
Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee will adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) .
(3) Transfer of Beneficial Interests to Another Restricted Global Note . A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Permanent Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a beneficial interest in the AI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) and the Registrar receives the following:
40
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to this clause (4) at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 , the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this clause (4).
Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes .
(1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes . If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the occurrence of any of the events described in paragraph (1), (2) or (3) of Section 2.06(a) and receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
41
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee will cause the
aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(h)
, and the Company will execute and the Trustee will, upon receipt of an Authentication Order, authenticate and deliver to
the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this
Section
2.06(c)
shall
be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The
Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this
Section
2.06(c)(1)
shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(2)
Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes
. Notwithstanding
Sections 2.06(c)(1)(A)
and
(C)
, a beneficial interest in the
Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a
Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to
an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(3) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes . A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only upon the occurrence of any of the events described in paragraph (1), (2) or (3) of Section 2.06(a) and only if the Registrar receives the following:
42
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(4) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes . If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of any of the events described in paragraph (1), (2) or (3) of Section 2.06(a) and satisfaction of the conditions set forth in Section 2.06(b)(2) , the Trustee will cause the aggregate principal amount of the applicable Unrestricted Global Note to be reduced accordingly pursuant to Section 2.06(h) , and the Company will execute and the Trustee will, upon receipt of an Authentication Order, authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) will not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests .
(1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes . If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
43
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the AI Global Note.
(2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a
44
Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(A) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(B) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this clause (2), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions in this Section 2.06(d)(2) , the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
(3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to clause (2) above or this clause (3) at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 , the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes . Upon request by a Holder of Definitive Notes and such Holders compliance with the provisions of this Section 2.06(e) , the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e) .
45
(1) Restricted Definitive Notes to Restricted Definitive Notes . Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(2) Restricted Definitive Notes to Unrestricted Definitive Notes . Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(A) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(B) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(3) Unrestricted Definitive Notes to Unrestricted Definitive Notes . A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
46
(f) [Intentionally Omitted]
(g) Legends . The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(1) Private Placement Legend .
(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO SUCH PURCHASER IN THE JURISDICTION IN WHICH SUCH PURCHASE IS MADE, OR (C) IT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES ACT AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE APPLICABLE HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144 UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO IT IN THE JURISDICTION IN WHICH SUCH PURCHASE IS MADE, (D) TO AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE
47
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANYS AND THE TRUSTEES, OR REGISTRARS, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE EXPIRATION OF THE APPLICABLE HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144 UNDER THE SECURITIES ACT.
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4) , (c)(3) , (c)(4) , (d)(2) , (d)(3) , (e)(2) or (e)(3) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.
(2) Global Note Legend . Each Global Note will bear a legend in substantially the following form:
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (DTC), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
48
(3) Regulation S Temporary Global Note Legend . The Regulation S Temporary Global Note will bear a legend in substantially the following form:
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN REGULATION S (REGULATION S) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT)), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), UNLESS SUCH TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
(4) Original Issue Discount Legend . Each Global Note will bear the following legend:
THE FOLLOWING INFORMATION IS SUPPLIED SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES. THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT (OID) WITHIN THE MEANING OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE), AND THIS LEGEND IS REQUIRED BY SECTION 1275(c) OF THE CODE. HOLDERS MAY OBTAIN INFORMATION REGARDING THE AMOUNT OF OID, THE ISSUE PRICE, THE ISSUE DATE AND THE YIELD TO MATURITY, COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE RELATING TO THE NOTES BY CONTACTING THE ISSUER AT 3527 NORTH RIDGE ROAD, WICHITA, KANSAS 67205, ATTENTION: ROGER DEAN.
(h) Cancellation or Adjustment of Global Notes . At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 . At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
49
(i) General Provisions Relating to Transfers and Exchanges .
(1) To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrars request.
(2) No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10 , 3.06 , 3.09 , 5.10 , 5.14 , 5.16 and 10.04 ).
(3) Neither the Trustee nor the Registrar will be required to register the transfer of or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(5) Neither the Registrar, the Trustee nor the Company will be required:
(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 and ending at the close of business on the day of selection;
(B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.
(6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, the Registrar, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, the Registrar, any Agent or the Company will be affected by notice to the contrary.
50
(7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 .
(8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.
(9) The Trustee and the Registrar shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
(10) Neither the Trustee nor any agent of the Trustee will have any responsibility for any actions taken or not taken by the Depositary.
(11) The Trustee will have no responsibility or obligation to any Participant or Indirect Participant or any other Person with respect to the accuracy of the books or records, or the acts or omissions, of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any Participant or Indirect Participant or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the Applicable Procedures. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its Participants or Indirect Participants.
Section 2.07 Replacement Notes .
If any mutilated Note is surrendered to the Trustee or the Company or if the Trustee receives credible evidence of the destruction, loss or theft of any Note, the Company will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note if the Trustees standard requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee determined for itself and the Company determined for itself to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
51
Section 2.08 Outstanding Notes .
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 , a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07 , it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.
If the principal amount of any Note is considered paid under Section 4.01 , it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.
Section 2.09 Treasury Notes .
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee knows are so owned will be so disregarded. Upon request of the Trustee, the Company will furnish to the Trustee promptly an Officers Certificate listing and identifying all Notes, if any, known by the Company to be owned or held by or for the account of any of the above described Persons, and the Trustee will be entitled to accept and rely upon such Officers Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any determination.
Section 2.10 Temporary Notes .
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Company will prepare and the Trustee will, upon receipt of an Authentication Order, authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes will be entitled to all of the benefits of this Indenture.
52
Section 2.11 Cancellation .
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will dispose of canceled Notes in accordance with the Trustees standard procedures (subject to the record retention requirement of the Exchange Act). Certification of such disposal of all canceled Notes will be delivered to the Company upon request. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12 Defaulted Interest .
If the Company defaults in a payment of interest on the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 5.01 . The Company will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company will fix or cause to be fixed each such special record date and payment date; provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) will mail or cause to be mailed to Holders a notice prepared by the Company that states the special record date, the related payment date and the amount of such interest to be paid.
Section 2.13 CUSIP Numbers .
The Company in issuing the Notes may use CUSIP, ISIN or other numbers, if then generally in use, and thereafter the Company and the Trustee may use such numbers in any notice issued pursuant to this Indenture, including any notice of redemption, provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption or other notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any such notice or notice of redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP, ISIN or other numbers.
Section 2.14 Issuance of Additional Notes .
The Company will be entitled, from time to time, subject to its compliance with Section 5.09 , without consent of the Holders, to issue Additional Notes under this Indenture with identical terms as the Initial Notes other than with respect to (i) the date of issuance, (ii) the issue price, (iii) the amount of interest payable on the first interest payment date and (iv) any adjustments in order to conform to and ensure compliance with the Securities Act (or other applicable securities laws) or to reflect differences with respect to original issue discount for U.S. federal income tax purposes.
53
With respect to any Additional Notes, the Company will set forth in an Officers Certificate pursuant to a resolution of the Board of Directors of the Company, copies of which shall be delivered to the Trustee, the following information:
(i) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture; and
(ii) the issue price, the issue date and the CUSIP number of such Additional Notes and the date on which interest on such Additional Notes shall begin to accrue.
ARTICLE 3
Redemption and Prepayment
Section 3.01 Notices to Trustee . If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 , it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers Certificate setting forth (i) the subsection of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. If the redemption price is not known at the time such notice is to be given, the actual redemption price, calculated as described in this Indenture or the terms of the Notes to be redeemed, will be set forth in an additional Officers Certificate of the Company delivered to the Trustee no later than two Business Days prior to the redemption date.
Section 3.02 Selection of Notes to be Redeemed . If less than all of the Notes are to be redeemed at any time, selection of Notes for redemption shall be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot to the extent practicable or by such other method in accordance with the Applicable Procedures of the Depositary; provided that no Notes of $2,000 or less shall be redeemed in part. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption.
The Trustee will promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in minimum amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued (or book-entry notation made) in the name of the Holder thereof upon cancellation of the original Note. On and after the redemption date, unless the Company defaults in the payment of the redemption price, interest shall cease to accrue on the principal amount of the Notes or portions thereof called for redemption. Except as provided in this Section 3.02 , provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
54
Section 3.03 Notice of Redemption . Subject to the provisions of Sections 3.09 , 3.10 , 5.14 and 5.16 , at least 30 but not more than 60 days before the redemption date, the Company will mail or caused to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address.
The notice shall be prepared by the Company, shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is to be redeemed in part only, the portion of the principal amount thereof to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(h) the CUSIP number; provided that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Companys written request, the Trustee will give the notice of redemption in the Companys name and at its expense; provided , however , that the Company will have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
If any of the Notes to be redeemed are in the form of a Global Note, then the Company may modify such notice to the extent necessary to comply with the Applicable Procedures of the Depositary.
Section 3.04 Effect of Notice of Redemption . Once notice of redemption is mailed in accordance with Section 3.03 , Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. Notice of any redemption upon any Equity Offering or other securities offering or financing, or in connection with a transaction (or series of related transactions) that constitute a Change of Control, may, in the Companys discretion, be given prior to the completion thereof and be subject to one or more conditions
55
precedent, including, but not limited to, completion of the related Equity Offering, securities offering, financing or Change of Control. If such redemption is so subject to satisfaction of one or more conditions precedent, such notice shall describe each such condition, and if applicable, shall state that such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date. In addition, the Company may provide in such notice that payment of the redemption price and performance of the Companys obligations with respect to such redemption may be performed by another Person.
Section 3.05 Deposit of Redemption Price . Prior to 10:00 a.m., New York City time, on the redemption date, the Company will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price and accrued interest on all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 5.01 .
Section 3.06 Notes Redeemed in Part . If any Note is to be redeemed in part only, the notice of redemption sent pursuant to Section 3.03 that relates to such Note shall state the portion of the principal amount of that Note to be redeemed. Upon receipt of an Authentication Order, the Trustee will (i) cancel the original Note and (ii) authenticate for the Holder at the expense of the Company a new Note in principal amount equal to the unredeemed portion of the original Note in the name of the Holder thereof, or in the case of a Global Note make such notation on the schedule of exchanges to such Global Note.
Section 3.07 Optional Redemption . (a) On and after March 1, 2019, the Company may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest to the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on March 1 of each of the years set forth below.
Year |
Percentage | |||
2019 |
106.000 | % | ||
2020 |
103.000 | % | ||
2021 and thereafter |
100.000 | % |
56
(i) Prior to March 1, 2019, the Company may redeem up to 40% of the aggregate principal amount of the Notes (including Additional Notes) originally issued under this Indenture at a redemption price of 112.000% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date) if:
(1) such redemption is made with the proceeds of one or more Equity Offerings;
(2) at least 60% of the aggregate principal amount of the Notes (including Additional Notes) originally issued under this Indenture remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company or any of its Subsidiaries); and
(3) the redemption occurs within 90 days of such Equity Offering.
(j) Prior to March 1, 2019, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date).
(k) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 .
Section 3.08 Mandatory Redemption . Except as set forth in Sections 5.10 , 5.14 and 5.16 , the Company will not be required to make mandatory redemption or sinking fund payments or offers to purchase with respect to the Notes.
Section 3.09 Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 5.10 , the Company will be required to commence an offer to all Holders to purchase Notes (an Asset Sale Offer ), it shall follow the procedures specified in this Section 3.09 .
The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the Offer Period ). No later than five Business Days after the termination of the Offer Period (the Purchase Date ), the Company will purchase the principal amount of Notes required to be purchased pursuant to Section 5.10 (the Offer Amount ). Payment for any Notes so purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer.
57
Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The notice, which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 5.10 and the length of time the Asset Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may only elect to have Notes in minimum denominations of $2,000, or integral multiples of $1,000 in excess thereof (unless such amount represents the entire principal amount of Notes held by such Holder), purchased;
(f) that Holders electing to have any Notes purchased pursuant to any Asset Sale Offer shall be required to surrender the Notes, with the form entitled Option of Holder to Elect Purchase on the reverse of the Note completed, to the Paying Agent or the Depositary, as applicable, at the address specified in the notice prior to the close of business on the third Business Day preceding the Purchase Date, subject to the Applicable Procedures;
(g) that Holders shall be entitled to withdraw their election if the Paying Agent or the Depositary, as applicable, receives, not later than the close of business on the third Business Day preceding the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Note purchased, subject to the Applicable Procedures;
(h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Trustee will select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in minimum denominations of $2,000, or integral multiples of $1,000 in excess thereof, shall be purchased), subject to the Applicable Procedures; and
(i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).
If any of the Notes subject to the Asset Sale Offer are in the form of a Global Note, then the Company may modify such notice to the extent necessary to comply with the Applicable Procedures of the Depositary.
58
On or before the Purchase Date, subject to the Applicable Procedures, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof validly tendered pursuant to the Asset Sale Offer (and not withdrawn), or, if less than the Offer Amount has been validly tendered, all Notes tendered (and not withdrawn), and shall deliver to the Trustee an Officers Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09 . The Paying Agent shall promptly (but in any case not later than five Business Days after the Purchase Date) mail or deliver to each tendering Holder an amount received from the Company equal to the purchase price of the Notes validly tendered by such Holder and accepted by the Company for purchase, and the Company will promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order, shall authenticate and mail (or cause to be transferred by book-entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed (or caused to be transferred by book-entry) by the Company to the Holder thereof. The Company will publicly announce the results of the Asset Sale Offer promptly after the Purchase Date.
Other than as specifically provided in this Section 3.09 , any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 .
Section 3.10 Offer to Purchase by Application of Excess Cash Flow . In the event that, pursuant to Section 5.16 , the Company will be required to commence an Excess Cash Flow Offer, it shall follow the procedures specified in this Section 3.10 .
The Excess Cash Flow Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the Excess Cash Flow Offer Period ). No later than five Business Days after the termination of the Offer Period (the Excess Cash Flow Purchase Date ), the Company will purchase the principal amount of Notes equal to the Excess Cash Flow Offer Amount. Payment for any Notes so purchased shall be made in the same manner as interest payments are made.
If the Excess Cash Flow Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Excess Cash Flow Offer.
Upon the commencement of an Excess Cash Flow Offer, the Company will send, by first class mail, a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Excess Cash Flow Offer. The notice, which shall govern the terms of the Excess Cash Flow Offer, shall state:
(a) that the Excess Cash Flow Offer is being made pursuant to this Section 3.10 and Section 5.16 and the length of time the Excess Cash Flow Offer shall remain open;
59
(b) the Offer Amount, the purchase price and the Excess Cash Flow Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Excess Cash Flow Offer shall cease to accrue interest after the Excess Cash Flow Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Excess Cash Flow Offer may only elect to have Notes in minimum denominations of $2,000, or integral multiples of $1,000 in excess thereof (unless such amount represents the entire principal amount of Notes held by such Holder), purchased;
(f) that Holders electing to have any Notes purchased pursuant to any Excess Cash Flow shall be required to surrender the Notes, with the form entitled Option of Holder to Elect Purchase on the reverse of the Note completed, to the Paying Agent or the Depositary, as applicable, at the address specified in the notice prior to the close of business on the third Business Day preceding the Purchase Date, subject to the Applicable Procedures;
(g) that Holders shall be entitled to withdraw their election if the Paying Agent or the Depositary, as applicable, receives, not later than the close of business on the third Business Day preceding the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Note purchased, subject to the Applicable Procedures;
(h) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Excess Cash Flow Offer Amount, the Trustee will select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in minimum denominations of $2,000, or integral multiples of $1,000 in excess thereof, shall be purchased), subject to the Applicable Procedures; and
(i) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).
If any of the Notes subject to the Excess Cash Flow Offer are in the form of a Global Note, then the Company may modify such notice to the extent necessary to comply with the Applicable Procedures of the Depositary.
On or before the Purchase Date, subject to the Applicable Procedures, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof validly tendered pursuant to the Excess Cash Flow Offer (and not withdrawn), or, if less than the Offer Amount has been validly
60
tendered, all Notes tendered (and not withdrawn), and shall deliver to the Trustee an Officers Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.10 The Paying Agent shall promptly (but in any case not later than five Business Days after the Excess Cash Flow Purchase Date) mail or deliver to each tendering Holder an amount received from the Company equal to the purchase price of the Notes validly tendered by such Holder and accepted by the Company for purchase, and the Company will promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order, shall authenticate and mail (or cause to be transferred by book-entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed (or caused to be transferred by book-entry) by the Company to the Holder thereof. The Company will publicly announce the results of the Excess Cash Flow promptly after the Excess Cash Flow Purchase Date.
Other than as specifically provided in this Section 3.10 , any purchase pursuant to this Section 3.10 shall be made pursuant to the provisions of Sections 3.01 through 3.06 .
Section 3.11 Company May Acquire Notes . The Company or its Affiliates (or any Person acting on behalf of the Company or its Affiliates) may at any time and from time to time acquire the Notes by means other than redemption, including by tender offer, open market purchases, negotiated transactions or otherwise, so long as such acquisition is not prohibited by applicable securities laws or regulations or the terms of this Indenture. In accordance with, and subject to, Section 2.11 , the Company may deliver such acquired Notes to the Trustee for cancellation.
ARTICLE 4
Satisfaction and Discharge
Section 4.01 Satisfaction and Discharge . This Indenture will be discharged and will cease to be of further effect as to all outstanding Notes issued hereunder (except Sections 2.06 , 2.07 , 2.08 , 8.01 , 8.02 , 8.07 , 12.07 , 12.15 and 13.11 ), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture if:
(a) either:
(i) the Company will have paid or caused to be paid the principal of, premium, if any, and interest as and when the same shall have become due and payable;
(ii) all outstanding Notes (other than Notes which have been lost, stolen or destroyed and which have been replaced or paid as provided in Section 2.07 ) have been delivered to the Trustee for cancellation; or
(iii) all Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable by reason of the mailing of a notice of redemption or (ii) (A) shall become due and payable at their Stated Maturity within one (1) year or (B) are to be called for redemption within one (1) year under arrangements reasonably satisfactory to the Trustee, and the Company has irrevocably deposited or caused to be
61
deposited with the Trustee funds in trust of cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination thereof in an amount sufficient to pay and discharge the principal, premium, if any, and interest on the Notes to the date of Stated Maturity or such redemption, as the case may be;
(b) the Company has paid all other sums payable by it under the Indenture Documents; and
(c) the Company has delivered an Officers Certificate and an Opinion of Counsel stating that all conditions for the satisfaction and discharge have been met.
Section 4.02 Application of Trust Money . Subject to the provisions of the last paragraph of Section 9.05 , all money deposited with the Trustee pursuant to Section 4.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such funds need not be segregated from other funds except to the extent required by law.
ARTICLE 5
Covenants
Section 5.01 Payment of Notes . The Company will pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. New York City time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.
The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and installments of interest (without regard to any applicable grace period) at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful.
The Company will be responsible for making calculations called for under the Notes, including, but not limited to, determination of redemption price, premium, if any, and other amounts payable on the Notes, if any. The Company will make the calculations in good faith and, absent manifest error, its calculations will be final and binding on the Holders. The Company will provide a schedule of its calculations to the Trustee when applicable, and the Trustee is entitled to rely conclusively on the accuracy of the Companys calculations without independent verification.
Section 5.02 Maintenance of Office or Agency . The Company will maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and
62
any change in the location, of such office or agency. If at any time the Company will fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided , however , that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee one such office or agency of the Company.
Section 5.03 Reports . So long as any Notes are outstanding, the Company will furnish to the Holders or cause the Trustee to furnish to the Holders:
(1) within 120 days after the end of each fiscal year of the Company, all annual financial statements of the Company for such fiscal year that would be required to be contained in a filing with the SEC on Form 10 K if the Company were required to file such Form, including a Managements Discussion and Analysis of Financial Condition and Results of Operations that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Managements Discussion and Analysis of Financial Condition and Results of Operations the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company) and a report on the annual financial statements by the Companys certified independent accountants;
(2) within 50 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, all quarterly financial statements that would be required to be contained in a filing with the SEC on Form 10 Q if the Company were required to file such Form, including a Managements Discussion and Analysis of Financial Condition and Results of Operations that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Managements Discussion and Analysis of Financial Condition and Results of Operations the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company); and
63
(3) promptly, and in any event within ten (10) Business Days, after the occurrence of an event that the Company determines in its good faith judgment is material to holders, reports summarizing such event and containing substantially the same information that would be required to be filed with the SEC on Form 8 K if the Company were required to file such reports. Subject to the preceding sentence, such events shall include (i) entry into material definitive agreements, (ii) termination of a material definitive agreement, (iii) bankruptcy or receivership, (iv) completion of acquisition or disposition of assets, (v) creation of a direct financial obligations or an obligation under an off balance sheet arrangement, (vi) triggering events that accelerate or increase a material direct financial obligation or an obligation under an off balance sheet arrangement, (vii) costs associated with exit or disposal activities, (viii) material impairments of assets, (ix) material modification to rights of security holders, (x) changes in accountants, (xi) non reliance on previously issued financial statements or a related audit report or completed interim review, (xii) changes in control, (xiii) departure of directors or certain officers; election of directors; appointment of certain officers; compensatory arrangements of certain officers, (xiv) amendments to articles of incorporation or bylaws and (xv) change in fiscal year;
provided that reports provided pursuant to clauses (1) and (2) shall not be required to comply with (a) Sections 302, 906 and 404 of the Sarbanes-Oxley Act of 2002 and Items 307, 308 and 402 of Regulation S-K, (b) Regulation G under the Exchange Act or item 10(e) of Regulation S-K with respect to any non-GAAP financial information contained therein or (c) Rule 3-10 (except for the inclusion of footnote disclosure of condensed consolidating financial information) or Rule 3-16 of Regulation S-X.
In addition, the Company agrees that, for so long as any Notes remain outstanding, it will use commercially reasonable efforts to hold and participate in quarterly conference calls with holders of Notes, beneficial owners of the Notes and securities analysts to discuss such financial information no later than ten business days after distribution of such financial information.
Furthermore, the Company agrees that, for so long as any Notes remain outstanding, it will furnish to the holders of Notes, any beneficial owner of the Notes, securities analysts and prospective investors, upon their request, the information and reports described above and any other information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
The Company may satisfy its obligations in this Section 5.03 with respect to financial statements relating to the Company by furnishing financial statements relating to a Parent Entity; provided that the same is accompanied by consolidating information that explains in reasonable detail the differences (if any) between the information relating to such Parent Entity of the Company (and other direct or indirect Parent Entities of the Company included in such information, if any), on the one hand, and the information relating to the Company and its Restricted Subsidiaries on a standalone basis, on the other hand; and provided , further that such Parent Entity of the Company has guaranteed the Notes and has no independent operations.
Section 5.04 Compliance Certificate . (a) The Company will deliver to the Trustee, within 120 days after the end of each fiscal year commencing with the fiscal year ending December 31, 2017, an Officers Certificate that need not comply with Section 12.03 or 12.04 , one signer of which shall be the principal executive officer, principal financial officer, or
64
principal accounting officer of the Company, stating that a review of the activities of the Company and its Affiliates during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company and the Guarantors have kept, observed, performed and fulfilled their obligations under the Indenture Documents, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge each of the Company and each Guarantor during the preceding fiscal year has kept, observed, performed and fulfilled each and every covenant contained in the Indenture Documents and is not in Default at the date of such certificate in the performance or observance of any of the terms, provisions and conditions of the Indenture Documents (or, if a Default or Event of Default shall have occurred and is continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company or Guarantor is taking or proposes to take with respect thereto).
(b) The Company will, so long as any of the Notes are outstanding, deliver to the Trustee, within ten Business Days of any Officer becoming aware of any Default or Event of Default, an Officers Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.
Section 5.05 Taxes . The Company will pay, and will cause each of its Restricted Subsidiaries to pay, prior to delinquency, all material taxes, assessments and governmental levies, except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders.
Section 5.06 Stay, Extension and Usury Laws . Each of the Company and the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
Section 5.07 Restricted Payments . (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend on, or make any other payment or distribution in respect of, its Equity Interests (including any dividend or distribution payable in connection with any merger or consolidation involving the Company) or similar payment to the direct or indirect holders thereof in their capacity as such (other than any dividends or distributions payable solely in its Equity Interests (other than Disqualified Stock) and dividends or distributions payable to the Company or any of its Restricted Subsidiaries (and, if such Restricted Subsidiary has stockholders other than the Company or other Restricted Subsidiaries, to its other stockholders on no more than a pro rata basis));
65
(ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company held by any Person or any Equity Interests of any Restricted Subsidiary of the Company held by any Affiliate of the Company (in each case other than held by the Company or a Restricted Subsidiary of the Company), including in connection with any merger or consolidation and including the exercise of any option to exchange any Equity Interests (other than into Equity Interests of the Company that are not Disqualified Stock);
(iii) make any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to the scheduled maturity, scheduled repayment or scheduled sinking fund payment of the Escrow Note or any Indebtedness that is contractually subordinated in right of payment to the Notes or any Notes Guarantee thereof (other than the payment of interest and other than the purchase, repurchase or other acquisition of such Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition); or
(iv) make any Restricted Investment.
(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as Restricted Payments ),
unless, at the time of and after giving effect to such Restricted Payment:
(A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;
(B) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Total Leverage Ratio test set forth in Section 5.09(a) ; and
(C) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by clauses (ii) through (xiv) of subsection (b) below), is, at the time of determination, less than the sum of:
(1) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) beginning on the first day of the fiscal quarter during which the date of this Indenture occurs and ending on the last day of the Companys most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus
66
(2) 100% of the aggregate net cash proceeds received by the Company from a contribution to its common equity capital or from the issuance or sale of its Equity Interests (other than Disqualified Stock) subsequent to the date of this Indenture (other than an issuance or sale to a Subsidiary of the Company) and 100% of any cash capital contribution received by the Company from its shareholders subsequent to the date of this Indenture, plus
(3) the amount by which the principal amount of any Indebtedness of the Company or a Restricted Subsidiary of the Company is reduced upon the conversion or exchange (other than by a Restricted Subsidiary of the Company) subsequent to the date of this Indenture of any Indebtedness of the Company or a Restricted Subsidiary of the Company convertible or exchangeable for Equity Interests (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other property, distributed by the Company or a Restricted Subsidiary of the Company upon such conversion or exchange); provided , however , that the foregoing amount shall not exceed the net cash proceeds received by the Company or any Restricted Subsidiary of the Company from the sale of such Indebtedness (excluding net cash proceeds from sales to a Restricted Subsidiary of the Company), plus
(4) the amount equal to the sum of (x) the net reduction in the Restricted Investments made by the Company or any Restricted Subsidiary of the Company in any Person resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds realized on the sale or other disposition of such Investment and proceeds representing the return of capital (excluding dividends and distributions to the extent included in Consolidated Net Income), in each case realized by the Company or any Restricted Subsidiary of the Company, and (y) in the event that any Unrestricted Subsidiary of the Company is re-designated as a Restricted Subsidiary, the portion (proportionate to the Companys equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary, that in each case have occurred subsequent to the date of this Indenture; provided , however , that the foregoing sum will not exceed, in the case of any such Person, the amount of Restricted Investments previously made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary of the Company in such Person or Unrestricted Subsidiary, plus
(5) 100% of any dividends received by the Company or a Guarantor after the date of this Indenture from an Unrestricted Subsidiary of the Company, to the extent such dividends were not otherwise included in the Consolidated Net Income of the Company for such period.
(b) The foregoing provisions will not prohibit:
(i) the payment of any dividend or other distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or other distribution or giving of the irrevocable redemption notice, if at said date of declaration or notice, such payment would have complied with the provisions of this Indenture;
67
(ii) any Restricted Payment made in exchange for, or with the net cash proceeds from, the substantially concurrent sale of Equity Interests of the Company (other than any Disqualified Stock and other than Equity Interests issued or sold to a Subsidiary of the Company) or a substantially concurrent cash capital contribution received by the Company from its shareholders; provided that the net cash proceeds from such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded from clause (C)(2) of subsection (a) above;
(iii) the defeasance, redemption, repurchase, retirement or other acquisition of Indebtedness of the Company or any Guarantor that is contractually subordinated in right of payment to the Notes or to any Notes Guarantee in exchange for, or with the net cash proceeds from, an Incurrence of Permitted Refinancing Debt;
(iv) the redemption, repurchase, retirement or other acquisition for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by employees, former employees, directors, former directors, consultants or former consultants of the Company (or any of its Subsidiaries); provided that the aggregate amount of such repurchases and other acquisitions (excluding amounts representing cancellation of Indebtedness) shall not exceed $2.0 million in any fiscal year (plus the amount of net cash and proceeds received by the Company and its Restricted Subsidiaries (a) in respect of key man life insurance and (b) from the issuance of Equity Interests by the Company to members of management of the Company and its Subsidiaries, to the extent that those amounts did not provide the basis for any previous Restricted Payment);
(v) payments of dividends on Disqualified Stock issued pursuant to Section 5.09 ;
(vi) repurchases of Capital Stock deemed to occur upon exercise of stock options if such Capital Stock represents a portion of the exercise price of such options;
(vii) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company; provided , however , that any such cash payment shall not be for the purpose of evading the limitation of this Section 5.07 ;
(viii) so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, payments of intercompany subordinated Indebtedness, the Incurrence of which was permitted under clause (v) of Section 5.09(b) ;
(ix) the repurchase, redemption or other acquisition or retirement for value of any Indebtedness of the Company or any Guarantor that is contractually subordinated in right of payment to the Notes or to any Notes Guarantee (i) pursuant to provisions similar to those set forth in Section 5.14 ; provided that all Notes tendered by holders in connection with a Change of Control Offer have been repurchased, redeemed or acquired for value and (ii) pursuant to provisions similar to those set forth in Section 5.10 ; provided that all Notes tendered by holders in connection with an Asset Sale Offer have been repurchased, redeemed or acquired for value;
68
(x) the payments described under the caption Use of Proceeds in the Offering Memorandum made on or about the date of this Indenture;
(xi) reductions of principal on the Escrow Note resulting from setoff against indemnity claims or other claims against the vendors under the Acquisition Agreement;
(xii) Permitted Payments to Parent;
(xiii) Restricted Payments that are made with Excluded Contributions; or
(xiv) Restricted Payments in an amount that, when taken together with all Restricted Payments previously made pursuant to this clause (xiv) and then outstanding, does not exceed $10.0 million.
The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of the Restricted Payment of the assets proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
As of the date of this Indenture, all of the Subsidiaries of the Company will be Restricted Subsidiaries. The Company will not permit any Unrestricted Subsidiary of the Company to become a Restricted Subsidiary of the Company except pursuant to the last sentence of the second paragraph under Section 5.15 . For purposes of designating any Restricted Subsidiary of the Company as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of Investment. Such designation will be permitted only if a Restricted Payment in such amount would be permitted at such time pursuant to Section 5.07 or pursuant to the definition of Permitted Investments, and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Section 5.08 Dividend and Other Payment Restrictions Affecting Subsidiaries . (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary of the Company to:
(i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries with respect to its Capital Stock or any other interest or participation in, or measured by, its profits;
(ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries;
69
(iii) make any loans or advances to the Company or any of its Restricted Subsidiaries; or
(iv) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.
(b) However, the foregoing restrictions will not apply to encumbrances or restrictions existing under or by reason of:
(i) any agreements in effect or entered into on the date of this Indenture, including agreements governing Existing Indebtedness as in effect on the date of this Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof (in each case, regardless of whether such replacement or refinancing is consummated at the same time or later than the termination or repayment of the Indebtedness being refinanced or replaced), in whole or in part; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the agreements governing such Indebtedness as in effect on the date of this Indenture;
(ii) the Credit Agreement as in effect as of the date of this Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof (in each case, regardless of whether such replacement or refinancing is consummated at the same time or later than the termination or repayment of the Indebtedness being refinanced or replaced) and any additional Credit Facilities permitted under this Indenture; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements, refinancings or additional facilities are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Credit Agreement as in effect on the date of this Indenture;
(iii) the Indenture Documents;
(iv) applicable law and any applicable rule, regulation or order;
(v) customary non-assignment provisions in leases, licenses or other agreements entered into in the ordinary course of business;
(vi) purchase money obligations and Capital Lease Obligations that impose restrictions of the nature described in clause (iv) of Section 5.08(a) on the property so acquired;
(vii) any agreement for the sale or other disposition of all or substantially all of the Capital Stock or assets of a Restricted Subsidiary of the Company that restricts distributions by that Restricted Subsidiary pending its sale or other disposition thereof;
70
(viii) any agreement or other instrument of a Person acquired by the Company or any Restricted Subsidiary of the Company in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired;
(ix) Liens that limit the right of the Company or any of its Restricted Subsidiaries to dispose of the asset or assets subject to such Lien;
(x) customary provisions limiting the disposition or distribution of assets or property in partnership, joint venture, asset sale agreements, stock sale agreements and other similar agreements, which limitation is applicable only to the assets that are the subject of such agreements;
(xi) Permitted Refinancing Debt, provided that the restrictions contained in the agreements governing such Permitted Refinancing Debt are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;
(xii) any such encumbrance or restriction with respect to any Foreign Subsidiary of the Company pursuant to an agreement governing Indebtedness incurred by such Foreign Subsidiary, (a) if the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially more restrictive to the holders of the Notes than the encumbrances and restrictions contained in the agreements described in clauses (i) and (ii) above (as determined in good faith by the Company), or (b) if such encumbrance or restriction is not materially more restrictive to the holders of the Notes than is customary in comparable financings (as determined in good faith by the Company) and either (x) the Company determines in good faith that such encumbrance or restriction will not materially affect the Companys ability to make the principal or interest payments on the Notes or (y) such encumbrance or restriction applies only if a default occurs in respect of a payment or financial covenant relating to such Indebtedness;
(xiii) any encumbrance or restriction existing under or by reason of contractual requirements of a Receivables Entity in connection with a Qualified Receivables Transaction; provided that such restrictions apply only to such Receivables Entity; and
(xiv) restrictions on cash or other deposits or net worth imposed by landlords, suppliers and customers under contracts entered into in the ordinary course of business.
Section 5.09 Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock . (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness (including Acquired Debt) and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided , however , that the Company and any Guarantor may Incur Indebtedness (including Acquired Debt) and the Company may issue shares of
71
Disqualified Stock, if (i) the Consolidated Total Leverage Ratio for the Companys most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is Incurred or such Disqualified Stock is issued would have been no greater than 3.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net cash proceeds therefrom, including the effect of acquisitions or repayments or redemptions of Indebtedness to be funded by such proceeds), as if the additional Indebtedness had been Incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four quarter period and (ii) such Indebtedness (including Acquired Debt) does not mature, is not mandatorily redeemable or prepayable pursuant to a sinking fund obligation or otherwise and is not redeemable or prepayable at the option of the holder thereof, in whole or in part, in each case, on or prior to the Stated Maturity of the Notes other than pursuant to provisions similar to those set forth in Sections 5.10 and 5.14 .
(b) The foregoing provisions will not prohibit the Incurrence of any of the following items of Indebtedness (collectively, Permitted Debt ):
(i) the Incurrence by the Company or any Guarantor (including any Guarantees thereof) of Indebtedness pursuant to Credit Facilities in an aggregate principal amount not to exceed as of any date of Incurrence the sum of (A) the greater of (i) $25.0 million and (ii) 5.0% of Consolidated Tangible Assets, plus (B) in the event of any refinancing of any such Indebtedness, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing, less the aggregate amount of all Net Proceeds of Asset Sales applied to permanently repay any such Indebtedness (and to correspondingly reduce commitments with respect thereto) pursuant to Section 5.10 ;
(ii) the Incurrence by the Company and the Guarantors of Indebtedness represented by the Notes (other than Additional Notes) and the related Notes Guarantees;
(iii) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (including Capital Lease Obligations, mortgage financings or purchase money obligations) for the purpose of financing (or refinancing) all or any part of the purchase price or cost of construction or improvement of property (real or personal), plant or equipment used in the business of the Company or such Restricted Subsidiary that, added to all other Indebtedness Incurred pursuant to this clause (iii) and then outstanding, will not exceed $5.0 million;
(iv) the Incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Debt in exchange for, or the net cash proceeds of which are used to extend, refinance, renew, replace, defease or refund (in each case, whether or not upon termination and whether with the original lenders, institutional investors or otherwise, including through the issuance of debt securities), in whole or in part, Indebtedness that was Incurred pursuant to subsection (a) above or pursuant to clause (ii), (iv) or (viii) of this Section 5.09(b) ;
72
(v) the Incurrence of (a) intercompany Indebtedness of the Company, a Guarantor or any Restricted Subsidiary of the Company (other than a Receivables Entity) for so long as such Indebtedness is held by the Company or a Guarantor; provided that (i) such Indebtedness shall be unsecured and if owing by the Company or any Guarantor, contractually subordinated in all respects (other than with respect to the maturity thereof) to the obligations of the Company under the Notes or such Guarantor under its Notes Guarantee, as the case may be and (ii) if as of any date any Person other than the Company or a Guarantor owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness (other than Permitted Liens of the type described in clause (1) of the definition thereof that secure First Priority Claims that are permitted under this Indenture or a Permitted Lien of the type described in clause (15) of the definition thereof), such date shall be deemed the incurrence of Indebtedness not permitted under this clause (v) by the issuer of such Indebtedness and (b) intercompany Indebtedness of the Company, any Guarantor or any Foreign Subsidiary of the Company for so long as such Indebtedness is held by a Foreign Subsidiary of the Company; provided that (i) if such Indebtedness is owing by the Company or any Guarantor, such Indebtedness shall be unsecured and contractually subordinated in all respects (other than with respect to the maturity thereof) to the obligations of the Company under the Notes or such Guarantor under its Notes Guarantee, as the case may be and (ii) if as of any date any Person other than such other Foreign Subsidiary owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness (other than Permitted Liens of the type described in clause (20) of the definition thereof), such date shall be deemed the incurrence of Indebtedness not constituting Indebtedness permitted under this clause (v) by the issuer of such Indebtedness;
(vi) Guarantees by the Company or any Restricted Subsidiary of the Company of Indebtedness of the Company or any Restricted Subsidiary of the Company (other than a Receivables Entity) otherwise permitted hereunder so long as the Person giving such Guarantee could have Incurred the Indebtedness that is being Guaranteed; provided that if the Indebtedness being guaranteed (x) is subordinated to the Notes or a Notes Guarantee, then the Guarantee must be subordinated to the same extent as the Indebtedness being guaranteed or (y) is owed by any Restricted Subsidiary of the Company that is not a Guarantor, such Guarantee shall be subordinated to the prior payment in full of the Notes in the case of the Company or the Notes Guarantees in the case of a Guarantor;
(vii) the Incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are Incurred for the purpose of fixing or hedging (A) interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding or (B) currency exchange risk in connection with existing financial obligations in the ordinary course of business and not for purposes of speculation;
(viii) the Incurrence of Existing Indebtedness (other than Indebtedness described in clause (i), (ii) or (v) of this Section 5.09(b) );
(ix) the Incurrence of obligations in respect of letters of credit, bank guarantees, performance, bid and surety bonds and completion guarantees provided by the Company or any of its Restricted Subsidiaries in the ordinary course of business;
73
(x) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided , however , that such Indebtedness is extinguished within four Business Days of its Incurrence;
(xi) Indebtedness of Foreign Subsidiaries that, when added together with any other Indebtedness incurred under this clause (xi) and then outstanding, will not exceed $15.0 million;
(xii) Indebtedness of the Company or any Restricted Subsidiary of the Company consisting of the financing of insurance premiums in the ordinary course of business;
(xiii) Indebtedness consisting of promissory notes or similar Indebtedness issued by the Company or any Restricted Subsidiary of the Company to current, future or former officers, directors and employees thereof, or to their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Equity Interests of the Company or a Restricted Subsidiary of the Company to the extent described in clause (iv) of Section 5.07(b) ;
(xiv) Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company or such Restricted Subsidiary in connection with such disposition;
(xv) the Incurrence by the Company or any of its Restricted Subsidiaries of (i) Acquired Debt outstanding on the date on which such Person became a Restricted Subsidiary or was acquired by, or merged into, the Company or any Restricted Subsidiary or (ii) Indebtedness to finance all or a portion of any such transaction; provided , however , with respect to this clause (xv), that at the time of the acquisition or other transaction pursuant to which such Indebtedness was deemed to be Incurred either (x) the Company would have been able to Incur $1.00 of additional Indebtedness pursuant to the Consolidated Total Leverage Ratio test set forth in Section 5.09(a) after giving pro forma effect to such acquisition or merger and the Incurrence of such Indebtedness pursuant to this clause (xv) or (y) the Consolidated Total Leverage Ratio of the Company would not be greater than it was immediately prior to giving pro forma effect to such acquisition or merger and the Incurrence of such Indebtedness pursuant to this clause (xv);
74
(xvi) Indebtedness Incurred by a Receivables Entity in a Qualified Receivables Transaction in an aggregate principal amount (or accreted value, as applicable) that does not exceed an amount equal to 60% of the gross loans receivable of the Company set forth on the most recent internal consolidated balance sheet of the Company and its Restricted Subsidiaries available at the time of such Incurrence; and
(xvii) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness, or issuance of Disqualified Stock by the Company (in addition to Indebtedness or Disqualified Stock permitted by any other clause of this paragraph) in an aggregate principal amount (or accreted value, as applicable) that, when added to all other Indebtedness Incurred pursuant to this clause (xvii) and then outstanding, will not exceed $10.0 million.
(c) For purposes of determining compliance with this Section 5.09 , in the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness described in clauses (i) through (xvii) of paragraph (b) above or under paragraph (a) above, the Company will, in its sole discretion, divide and classify such item of Indebtedness in any manner that complies with this Section 5.09 and will only be required to include the amount and type of such Indebtedness in one of such clauses or pursuant to Section 5.09(a) , and may re-classify any such item of Indebtedness from time to time among such clauses or Section 5.09(a) , so long as such item meets the applicable criteria for such category. For the avoidance of doubt, Indebtedness may be classified as Incurred in part pursuant to one of the clauses (i) through (xvii) above, and in part under one or more other clauses or under Section 5.09(a) . Indebtedness outstanding on the date of this Indenture under the Credit Agreement shall be treated as Incurred pursuant to clause (i) of paragraph (b) above. Indebtedness outstanding on the date of this Indenture under the Existing SPV Facility shall be treated as Incurred pursuant to clause (xvi) above.
(d) For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced.
(e) The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing.
(f) Accrual of interest and dividends, accretion of accreted value, issuance of securities paid-in-kind, amortization of original issue discount, changes to amounts outstanding in respect of Hedging Obligations solely as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder shall not be deemed to be an Incurrence of Indebtedness for purposes of this Section 5.09 .
75
(g) The Company will not incur, and will not permit any other Guarantor to incur, any Indebtedness that is contractually subordinated in right of payment to any other Indebtedness of the Company or such other Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Notes Guarantee on substantially identical terms; provided , however , that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness solely by virtue of being unsecured or by virtue of being secured on junior Lien or priority basis.
(h) No Parent Entity may Incur any Indebtedness (including Acquired Debt) that matures, is mandatorily redeemable or prepayable pursuant to a sinking fund obligation or otherwise or is redeemable or prepayable at the option of the holder thereof, in whole or in part, in each case, on or prior to the Stated Maturity of the Notes other than pursuant to provisions similar to those set forth in Sections 5.10 and 5.14 .
Section 5.10 Asset Sales . (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale (except with respect to an Event of Loss) unless:
(i) the Company or the Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and
(ii) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents;
provided that the amount of:
(1) any liabilities (as shown on the Companys or such Restricted Subsidiarys most recent balance sheet) of the Company or any Restricted Subsidiary of the Company (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Notes Guarantee thereof) that are assumed by the transferee of any such assets and with respect to which the Company or such Restricted Subsidiary is unconditionally released from further liability;
(2) (A) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted within 90 days by the Company or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received in that conversion) and (B) accounts receivable of a business retained by the Company or any of its Restricted Subsidiaries, as the case may be, following the sale of such business that (i) are not past due more than 30 days and (ii) do not have a payment date greater than 90 days from the date of the invoices creating such accounts receivable; and
(3) any Designated Non-Cash Consideration received by the Company or any such Restricted Subsidiary in such Asset Sale; provided that at the time of receipt of such Designated Non-Cash Consideration, the aggregate Fair Market Value of all Designated Non-Cash Consideration (with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value), less the amount of Net Proceeds previously realized in cash or Cash Equivalents from the sale of previously received Designated Non-Cash Consideration is less than the greater of (i) $2.5 million and (ii) 0.5% of Consolidated Tangible Assets,
will be deemed to be cash for purposes of this Section 5.10 .
76
(b) Within 365 days after the receipt of any Net Proceeds from an Asset Sale by the Company or a Restricted Subsidiary of the Company, the Company or such Restricted Subsidiary may apply such Net Proceeds at its option:
(i) to permanently reduce Indebtedness under the Credit Facilities (and to correspondingly reduce commitments with respect thereto);
(ii) with respect to Asset Sales of assets of a Restricted Subsidiary of the Company that is not a Guarantor, to permanently reduce Indebtedness of a Restricted Subsidiary of the Company that is not a Guarantor (and to correspondingly reduce commitments with respect thereto), other than Indebtedness owed to the Company or another Subsidiary of the Company;
(iii) to the extent the Asset Sale constituted the sale of consumer loans, or other loans generated through the conduct of Similar Businesses, to the making of advances and the extension of credit to customers in the ordinary course of business consistent with past practice that are either (A) recorded as accounts receivable or consumer loans on the consolidated balance sheet of the Company or (B) consumer loans the making of which are facilitated by the Company or a Restricted Subsidiary acting as a credit services organization or similar services provider in an amount no greater than the cash used to cash collateralize or repurchase such loans; and/or
(iv) to the making of a capital expenditure or the acquisition of a controlling interest in another business or other assets, in each case, that are used or useful in a Similar Business or that replace the assets that are the subject of such Asset Sale.
(c) Pending the final application of any such Net Proceeds, the Company or a Restricted Subsidiary of the Company may temporarily reduce Indebtedness under the Credit Facilities or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture.
(d) Any Net Proceeds from Asset Sales that are not applied or invested (by election or as a result of the passage of time) as provided in the first sentence of the preceding paragraph will be deemed to constitute Excess Proceeds . When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be required to make an offer (an Asset Sale Offer ) to all holders of Notes and all holders of Pari Passu Indebtedness evidenced or governed by Pari Passu Payment Lien Documents containing provisions similar to those set forth in this Indenture to purchase from such holders on a ratable basis the maximum principal amount of Notes and such Pari Passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price for such Asset Sale Offer shall be an amount in cash equal to 100% of the principal amount of the Notes and such Pari Passu Indebtedness (or, in the case of Pari Passu Indebtedness issued with original issue discount, 100% of the accreted value thereof), plus
77
accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in this Indenture. To the extent that the aggregate amount of Notes and Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company and its Restricted Subsidiaries may use any remaining Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and Pari Passu Indebtedness surrendered by holders thereof exceeds the amount of the Excess Proceeds, the Trustee will select the Notes and the applicable agent or representative of the holders of such Pari Passu Indebtedness or the Company will select such Pari Passu Indebtedness to be purchased on a pro rata basis based upon the principal amount of Notes tendered and the principal amount or accreted value, as applicable, of such Pari Passu Indebtedness tendered (subject to adjustments so that no Notes in an unauthorized denomination are repurchased in part). Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. Notes (or portions thereof) purchased pursuant to an Asset Sale Offer will be cancelled and may not be reissued.
(e) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of, and Rule 14e-1 under, the Exchange Act and any other securities laws and regulations thereunder in connection with the repurchase of the Notes as a result of an Asset Sale. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture (including Section 3.09 ), the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue of its compliance with such securities laws or regulations.
Section 5.11 Transactions with Affiliates . The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, exchange, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an Affiliate Transaction ) involving aggregate consideration in excess of $1.0 million, unless:
(a) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction at the time in an arms-length transaction with a person who was not an Affiliate; and
(b) if such Affiliate Transaction involves an amount in excess of $5.0 million, the terms of the Affiliate Transaction are set forth in writing and a majority of the non-employee directors of the Company disinterested with respect to such Affiliate Transaction has determined in good faith that the criteria set forth in clause (a) of this Section 5.11 are satisfied and has approved the relevant Affiliate Transaction as evidenced by a resolution of the Board of Directors of the Company set forth in an Officers Certificate.
78
The foregoing provisions will not apply to the following:
(i) any employment agreement or compensation plan or arrangement and other benefits (including retirement, health, stock option and other benefit plans) entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business of the Company or such Restricted Subsidiary;
(ii) transactions exclusively between or among the Company and/or its Restricted Subsidiaries (other than a Receivables Entity); provided that such transactions are not otherwise prohibited by this Indenture;
(iii) any agreement existing on the date of this Indenture, as in effect on the date of this Indenture, or as modified, amended or amended and restated by any modification, amendment or amendment and restatement (x) that, taken as a whole, is not more disadvantageous to the holders of the Notes in any material respect than such agreement as it was in effect on the date of this Indenture or (y) made in compliance with the applicable provisions of clauses (a) and (b) of this Section 5.11 , and agreements created after the date of this Indenture between Ad Astra Recovery Services, Inc. ( Ad Astra ) and Restricted Subsidiaries of the Company that contain substantially identical or more advantageous terms to those agreements between Ad Astra and Restricted Subsidiaries of the Company existing on the date of this Indenture;
(iv) reasonable compensation of, and indemnity arrangements in favor of, directors of the Company and its Subsidiaries;
(v) the issuance or sale of any Equity Interests (other than Disqualified Stock) of the Company and any contribution to the common equity of the Company;
(vi) transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, deliver to the Trustee a letter from an Independent Financial Advisor stating that such transaction (i) is fair to the Company or such Restricted Subsidiary from a financial point of view or (ii) meets the requirements of Section 5.11(a) ;
(vii) transactions with Unrestricted Subsidiaries, customers, clients, lessors, landlords, suppliers, contractors, or purchasers or sellers of goods or services that are Affiliates, in each case, in the ordinary course of business and otherwise in compliance with the terms of this Indenture that are fair to the Company and its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of the Company;
(viii) sales or other transfers or dispositions of accounts receivable and other related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Entity in a Qualified Receivables Transaction, and acquisitions of Permitted Investments in connection with, and
79
any other customary transactions effected as a part of, a Qualified Receivables Transaction; and
(ix) Restricted Payments that are permitted by Section 5.07 and Permitted Investments.
Section 5.12 Liens . The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind on any asset now owned or hereafter acquired, except Permitted Liens.
Section 5.13 Corporate Existence; Maintenance of Property and Insurance . Subject to Section 5.10 , Article 6 and Article 11 , the Company will do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary and (ii) the material rights (charter and statutory), licenses and franchises of the Company and each of its Restricted Subsidiaries; provided , however , that the Company will not be required to preserve any such material right, license or franchise, or the corporate, partnership or other existence of a Restricted Subsidiary of the Company, if the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders.
The Company will, and will cause each of its Restricted Subsidiaries to, keep all property material to the operation of the business of the Company and its Restricted Subsidiaries, taken as a whole, in good working order and condition in all material respects, ordinary wear and tear and casualty loss excepted; provided , that the Company will not be obligated to comply with this paragraph to the extent that the failure to do so is not adverse in any material respect to the Holders.
The Company will, and will cause each of its Restricted Subsidiaries to, maintain with one or more insurance companies of national standing insurance on all property material to the operation of the business of the Company and its Restricted Subsidiaries, taken as a whole, in at least such amounts and against at least such risks as are determined by the Company in good faith to be reasonable and prudent, taking into account the risks that are usually insured against in the same general area by companies engaged in the same or a similar business (in each case, after giving effect to any self-insurance determined by the Company to be reasonable and prudent, taking into account the practices of similarly situated Persons engaged in the same or similar businesses as the Company and the Companys Restricted Subsidiaries).
Section 5.14 Offer to Repurchase Upon Change of Control . (a) Upon the occurrence of a Change of Control, unless the Company has previously or concurrently mailed a redemption notice with respect to all of the outstanding Notes as provided by Section 3.07 , each Holder shall have the right to require the Company to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of such Holders Notes pursuant to the offer described below at a purchase price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest to the date of purchase (the Change of Control
80
Payment ). Within 30 days following any Change of Control, unless the Company has previously or concurrently mailed a redemption notice with respect to all of the outstanding Notes as provided by Section 3.07 , the Company will mail a notice to each Holder with a copy to the Trustee (the Change of Control Offer ) stating:
(i) that a Change of Control has occurred and that such holder has the right to require the Company to purchase such holders Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date);
(ii) the circumstances and relevant facts regarding such Change of Control;
(iii) the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed);
(iv) that any Notes not tendered or accepted for payment shall continue to accrue interest;
(v) that, unless the Company defaults in making the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date;
(vi) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer shall be required to surrender the Notes, with the form entitled Option of Holder to Elect Purchase on the reverse of the Notes completed, to the Paying Agent or Depositary, as applicable, at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date, subject to the Applicable Procedures;
(vii) that Holders shall be entitled to withdraw their election if the Paying Agent or Depositary, as applicable, receives, not later than the close of business on the third Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing its election to have the Notes purchased, subject to the Applicable Procedures;
(viii) that Holders whose Notes are being purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer), which unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of $1,000 in excess thereof; and
(ix) the instructions, as determined by the Company, consistent with this Section 5.14 , that a Holder must follow in order to have its Notes purchased.
(b) On a date that is at least 30 but no more than 60 days from the date on which the Company mails notice of the Change of Control (the Change of Control Payment Date ), the Company will, to the extent lawful, (i) accept for payment all Notes or portions
81
thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered, and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will, upon receipt of an Authentication Order, promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. Notes (or portions thereof) purchased pursuant to a Change of Control Offer will be cancelled and may not be reissued.
(c) The Company will not be required to make a Change of Control Offer upon a Change of Control if a third-party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.
A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon such Change of Control occurring, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer.
The Company will comply, to the extent applicable, with the requirements of Section 14(e) of, and Rule 14e-1 under, the Exchange Act and any other securities laws and regulations thereunder in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue of its compliance with such securities laws or regulations.
In the event that holders of not less than 90% in aggregate principal amount of the then outstanding Notes accept a Change of Control Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described above) purchases all of the Notes held by such holders, the Company will have the right, upon not less than 30 nor more than 60 days prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus accrued and unpaid interest, if any, on the Notes that remain outstanding, to the date of redemption, subject to the rights of holders on the relevant regular record date to receive interest due on the relevant interest payment date that is on or prior to the applicable redemption date.
Section 5.15 Designation of Restricted and Unrestricted Subsidiaries . The Board of Directors of the Company may designate any Restricted Subsidiary of the Company to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary of the Company is designated as an Unrestricted Subsidiary, the aggregate Fair
82
Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 5.07 or under one or more clauses of the definition of Permitted Investments, as determined by the Company . That designation will only be permitted if the Restricted Payment or Investment would be permitted at that time and if the Restricted Subsidiary of the Company otherwise meets the definition of an Unrestricted Subsidiary.
Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of the Company giving effect to such designation and an Officers Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 5.07 . If, at any time, any Unrestricted Subsidiary of the Company fails to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 5.09 , the Company will be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Company; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under Section 5.09 , calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.
Section 5.16 Excess Cash Flow .
(a) If the Company and its Restricted Subsidiaries have Excess Cash Flow for any fiscal year commencing with the fiscal year ending December 31, 2017, then, within 125 days after the end of such fiscal year, the Company will be required to make an offer (an Excess Cash Flow Offer ) to all holders of Notes to purchase the maximum principal amount of Notes that may be purchased with 50% of such Excess Cash Flow for such fiscal year (the Excess Cash Flow Offer Amount ). The offer price for such Excess Cash Flow Offer shall be an amount in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase, in accordance with the procedures set forth in this Indenture. To the extent that the aggregate amount of Notes tendered pursuant to an Excess Cash Flow Offer is less than the Excess Cash Flow Offer Amount, the Company and its Restricted Subsidiaries may use any remaining Excess Cash Flow Offer Amount for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes surrendered by holders thereof exceeds the Excess Cash Flow Offer Amount, the Trustee will select the Notes to be purchased on a pro rata basis based upon principal amount (subject to adjustments so that no Notes in an unauthorized denomination are repurchased in part).
83
(b) With respect to each Excess Cash Flow Offer, the Company will be entitled to reduce the applicable Excess Cash Flow Offer Amount with respect thereto by an amount equal to the sum of (x) the aggregate repurchase price paid for any Notes theretofore repurchased by the Company in the open market (and cancelled by the Company) and (y) the aggregate redemption price paid for any Notes theretofore redeemed pursuant to one or more optional redemptions (other than any redemptions pursuant to Section 3.07(b) ), in each case, during the period with respect to which such Excess Cash Flow was being computed. Notwithstanding anything to the contrary in the immediately preceding sentence, the Company will not be entitled to reduce the applicable Excess Cash Flow Offer Amount by the aggregate repurchase price of any Notes theretofore repurchased by the Company pursuant to any Asset Sale Offers, Change of Control Offers, Excess Cash Flow Offers or any other offers in the open market on terms, conditions and at times as are substantially similar to those with respect to an Excess Cash Flow Offer in accordance with the second proviso of clause (i) of the definition of Excess Cash Flow during such period.
(c) Notwithstanding the foregoing, the Company will not be required (but may elect to do so) to make an Excess Cash Flow Offer in accordance with this Section 5.16 unless the Excess Cash Flow Offer Amount with respect to the applicable period in respect of which such Excess Cash Flow Offer is to be made exceeds $5.0 million (with lesser amounts being carried forward for purposes of determining whether the $5.0 million threshold has been met for any future period). Upon completion of each Excess Cash Flow Offer, the Excess Cash Flow Offer Amount will be reset at zero.
(d) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of, and Rule 14e-1 under, the Exchange Act and any other securities laws and regulations thereunder in connection with the repurchase of the Notes as a result of an Excess Cash Flow Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture (including Section 3.10 ), the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue of its compliance with such securities laws or regulations.
(e) Notes (or portions thereof) purchased pursuant to an Excess Cash Flow Offer will be cancelled and may not be reissued.
Section 5.17 Additional Subsidiary Guarantees . If (i) the Company or any of its Restricted Subsidiaries shall acquire or create another Domestic Subsidiary after the date of this Indenture (other than an Immaterial Subsidiary or a Subsidiary that has been designated as an Unrestricted Subsidiary or a Receivables Entity) or (ii) any Foreign Subsidiary or Immaterial Subsidiary of the Company Guarantees (or otherwise becomes liable for) Indebtedness of the Company or a Guarantor, then the Company will cause such Subsidiary to become a Guarantor and:
(1) execute a supplemental indenture substantially in the form of Exhibit E attached hereto, in accordance with the terms of this Indenture, pursuant to which such Subsidiary shall unconditionally guarantee, on a senior secured basis, all of the Companys Obligations under the Indenture Documents on the terms set forth in this Indenture;
84
(2) execute and deliver to the Collateral Agent such amendments or supplements to the Collateral Documents necessary in order to grant to the Collateral Agent, for the benefit of the Notes Secured Parties, a perfected security interest in the Equity Interests of such Subsidiary, subject to Permitted Liens and the Intercreditor Agreement, which are owned by the Company or a Guarantor and are required to be pledged pursuant to the Collateral Documents;
(3) take such actions as are necessary to grant to the Collateral Agent for the benefit of the Notes Secured Parties a perfected security interest in the assets of such Subsidiary, other than Excluded Assets and subject to Permitted Liens and the Intercreditor Agreement, including the filing of Uniform Commercial Code financing statements, in each case as may be required by the Collateral Documents;
(4) take such further action and execute and deliver such other documents specified in the Indenture Documents or as otherwise may be reasonably requested by the Trustee or Collateral Agent to give effect to the foregoing; and
(5) deliver to the Trustee and the Collateral Agent an Opinion of Counsel that (i) such supplemental indenture and any other documents required to be delivered have been duly authorized, executed and delivered by such Subsidiary and constitute legal, valid, binding and enforceable obligations of such Subsidiary and (ii) the Collateral Documents to which such Subsidiary is a party create a valid perfected Lien on the Collateral covered thereby.
Section 5.18 Business Activities . The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Similar Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole.
Section 5.19 [Reserved] .
Section 5.20 Payments for Consent . The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Notes or any other Indenture Document unless such consideration is offered to be paid and is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.
Section 5.21 Mortgages . With respect to any fee interest in any real property that is acquired by the Company or a Guarantor after the date of this Indenture that does not constitute an Excluded Asset set forth in clause (3) of the definition thereof (such real property referred to individually and collectively as the Premises ), within 90 days of such acquisition, the Company will or will cause the applicable Guarantor, as the case may be, to:
(1) deliver to the Collateral Agent, as mortgagee, for the benefit of the Notes Secured Parties, fully executed Mortgages, duly executed by the Company or the applicable Guarantor, as the case may be, together with evidence of the completion (or satisfactory arrangements for the completion), or all recordings and filings of such Mortgage as may be necessary to create a valid, perfected Lien, subject to Permitted Liens and the Intercreditor Agreement, against the Premises purported to be covered thereby;
85
(2) deliver to the Collateral Agent, a mortgagees title insurance policy in favor of the Collateral Agent in an amount equal to 100% of the Fair Market Value of the Premises purported to be covered by the related Mortgage, insuring that the interests created by the Mortgage constitute valid Liens thereon free and clear of all Liens, defects and encumbrances other than Permitted Liens and any other exceptions disclosed in such policy, and such policy shall also include, to the extent available and issued at ordinary rates, customary endorsements and shall be accompanied by evidence of the payment in full (or satisfactory arrangements for the payment) of all premiums thereon;
(3) deliver to the Collateral Agent, the most recent survey of such Premises, together with either (i) an updated survey certification in favor of the Collateral Agent from the applicable surveyor stating that, based on a visual inspection of the property and the knowledge of the surveyor, there has been no change in the facts depicted in the survey or (ii) an affidavit and/or indemnity from the Company or the applicable Guarantor, as the case may be, stating that to its knowledge there has been no change in the facts depicted in the survey, other than, in each case, changes that do not materially adversely affect the use by the Company or Guarantor, as applicable, of such Premises for the Companys or such Guarantors business as so conducted, or intended to be conducted, at such Premises and in each case, in form sufficient for the title insurer issuing the title policy to remove the standard survey exception from such policy and issue a survey endorsement to such policy; and
(4) deliver an Opinion of Counsel to the Collateral Agent that such Mortgage has been duly authorized, executed and delivered by the Company or such Guarantor, constitutes a legal, valid, binding and enforceable obligation of the Company or such Guarantor and creates a valid perfected Lien in the Premises purported to be covered thereby.
Section 5.22 Further Assurances . The Company will, and will cause each Guarantor to, at their sole cost and expense, (i) execute and deliver all such agreements and instruments as may be necessary and as the Collateral Agent shall reasonably request to more fully or accurately describe the property intended to be Collateral or the obligations intended to be secured by the Collateral Documents and (ii) file any such notice filings or other agreements or instruments as may be reasonably necessary under applicable law to perfect (and maintain the perfection and priority of) the Liens created by the Collateral Documents, subject to Permitted Liens, at such times and at such places as the Collateral Agent may reasonably request, in each case subject to the terms of the Collateral Documents.
ARTICLE 6
Successors
Section 6.01 Merger, Consolidation or Sale of Assets .
(a) The Company . The Company may not, in any transaction or series of related transactions, consolidate or amalgamate with or merge with or into (whether or not the Company survives), or sell, assign, convey, transfer, lease or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of its property and assets whether as an entirety or substantially as an entirety, to any Person, unless:
86
(i) either:
(A) if the transaction or series of transactions is a consolidation of the Company with or a merger of the Company with or into any other Person, the Company will be the surviving Person of such merger or consolidation; or
(B) the Person formed by any consolidation or merger with or into the Company or to which all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries, taken as a whole, are sold, assigned, conveyed, transferred, leased or otherwise disposed of shall be a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia, and such Person shall expressly assume by (i) a supplemental indenture executed and delivered to the Trustee, all of the obligations of the Company under the Notes and this Indenture, and this Indenture, as so supplemented, shall remain in full force and effect and (ii) an amendment, supplement or other instrument, executed and delivered to the Trustee, all obligations of the Company under the Collateral Documents, and in connection therewith will cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Documents on the Collateral owned by or transferred to the surviving entity;
(ii) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (including any Indebtedness Incurred or anticipated to be Incurred in connection with or in respect of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; and
(iii) at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable period (but without giving effect to the costs and expenses of such transaction), the Company or the successor entity to the Company, either (x) would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Total Leverage Ratio test set forth in Section 5.09(a) or (y) would have a Consolidated Total Leverage Ratio that is less than or equal to the Consolidated Total Leverage Ratio calculated immediately prior to such transaction.
The foregoing requirements shall not apply to any transaction or series of transactions involving the sale, assignment, conveyance, transfer, lease or other disposition of any properties or assets by any Subsidiary of the Company to the Company or any Guarantor, the consolidation or merger of any Subsidiary of the Company with or into any Guarantor or the Company or, for the avoidance of doubt, the consolidation or merger of any Subsidiary of the Company that is not a Guarantor with or into any other Subsidiary of the Company that is not a Guarantor.
87
In connection with any consolidation, merger, sale, assignment, conveyance, transfer, lease or other disposition contemplated by the foregoing provisions, the Company will deliver, or cause to be delivered, to the Trustee an Officers Certificate stating that such consolidation, merger, sale, assignment, conveyance, transfer, lease or other disposition and the supplemental indenture in respect thereof comply with the requirements of this Indenture and an Opinion of Counsel. Each such Officers Certificate shall set forth the manner of determination of the Companys compliance with clause (iii) of this subsection (a).
(b) The Guarantors . Subject to Section 11.03 , each Restricted Subsidiary of the Company that is a Guarantor will not, in any transaction or series of related transactions merge or consolidate or amalgamate with or into (whether or not such Guarantor survives), or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to, any Person, unless either:
(i) either:
(A) if the transaction or series of transactions is a consolidation of such Guarantor with or a merger of such Guarantor with or into any other Person, such Guarantor shall be the surviving Person of such consolidation or merger; or
(B) the Person formed by any consolidation or merger with or into such Guarantor, or to which all or substantially all of the properties and assets of such Guarantor and its Subsidiaries, taken as a whole, as the case may be, are sold, assigned, conveyed, transferred, leased or otherwise disposed of shall be a corporation, partnership, limited liability company or trust organized and existing under the laws of the United States, any state thereof or the District of Columbia, and shall expressly assume by (i) a supplemental indenture executed and delivered to the Trustee, all of the obligations of such Guarantor under its Notes Guarantee and this Indenture, and this Indenture, as so supplemented, shall remain in full force and effect and (ii) an amendment, supplement or other instrument, executed and delivered to the Trustee, all obligations of such Guarantor under the Collateral Documents, and in connection therewith will cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Documents on the Collateral owned by or transferred to the surviving entity; or
(ii) the transaction is made in compliance with Section 5.10 .
The foregoing requirements shall not apply to any transaction or series of transactions involving the sale, assignment, conveyance, transfer, lease or other disposition of any properties or assets by any Subsidiary of the Company to the Company or any Guarantor, or the consolidation or merger of any Subsidiary of the Company with or into the Company or any Guarantor, or, for the avoidance of doubt, the consolidation or merger of any Subsidiary of the Company that is not a Guarantor with or into any other Subsidiary of the Company that is not a Guarantor.
88
In connection with any consolidation, merger, sale, assignment, conveyance, transfer, lease or other disposition contemplated by Section 6.01(b)(i) , such Guarantor shall deliver, or cause to be delivered, to the Trustee an Officers Certificate stating that such consolidation, merger, sale, assignment, conveyance, transfer, lease or other disposition and the supplemental indenture in respect thereof comply with the requirements of this Indenture and an Opinion of Counsel.
Section 6.02 Successor Entity Substituted . Upon any consolidation or merger of the Company or any Guarantor, or any sale, assignment, conveyance, transfer or other disposition of all or substantially all of the assets of the Company or such Guarantor in accordance with the foregoing, in which the Company or such Guarantor is not the continuing obligor under the Notes or its Notes Guarantee, the surviving entity formed by such consolidation or into which the Company or such Guarantor is merged or to which the sale, assignment, conveyance, transfer or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or such Guarantor under the Indenture Documents with the same effect as if such surviving entity had been named herein and therein as the Company or such Guarantor and, except in the case of a lease, the Company or such Guarantor, as the case may be, shall be released from the obligation to pay the principal of, premium, if any, and interest on the Notes or in respect of its Notes Guarantee, as the case may be, and all of the Companys or such Guarantors other obligations and covenants under the Indenture Documents, if applicable.
ARTICLE 7
Defaults and Remedies
Section 7.01 Events of Default . Each of the following shall be an Event of Default :
(a) default for 30 days in the payment when due of interest on the Notes;
(b) default in payment when due of the principal, or premium, if any, of any Note when due at maturity, upon optional redemption, upon required purchase, upon acceleration or otherwise;
(c) (i) failure by the Company or any of its Restricted Subsidiaries to comply with its obligations under Section 5.10 , 5.14 , Section 5.16 or Article 6 or (ii) the incurrence by any Parent Entity of Indebtedness in violation of Section 5.09(h) ;
(d) failure to perform any other covenant or agreement of the Company or any of its Restricted Subsidiaries under the Indenture Documents for 30 days after written notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class;
(e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries) whether such
89
Indebtedness or Guarantee now exists, or is created after the date of this Indenture, which default (A) is caused by a failure to pay principal at final stated maturity (after giving effect to all applicable grace periods provided in such Indebtedness) (a Payment Default ) or (B) results in the acceleration of such Indebtedness prior to its final stated maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates in excess of $10.0 million (or its foreign currency equivalent);
(f) failure by the Company or any of its Restricted Subsidiaries to pay final judgments which are non-appealable aggregating in excess of $10.0 million (or its foreign currency equivalent) (not covered by independent third-party insurance as to which liability has not been denied by such insurance carrier), which judgments are not paid, discharged or stayed for a period of 60 days following such judgment becoming final, and in the event such judgment is covered by insurance, any enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;
(g) (i) any security interest created by any Collateral Document ceases to be in full force and effect (except as permitted by the terms of this Indenture or the Collateral Documents) or (ii) the breach or repudiation by the Company or any of its Restricted Subsidiaries of any of their obligations under any Collateral Document; provided that, in the case of clauses (i) and (ii), such cessation, breach or repudiation, individually or in the aggregate, results in Collateral having a Fair Market Value in excess of $5.0 million not being subject to a valid, perfected security interest;
(h) except as permitted by this Indenture, any Notes Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Notes Guarantee;
(i) the Company, or any Significant Subsidiary of the Company or any group of Restricted Subsidiaries of the Company that, taken as a whole, would constitute a Significant Subsidiary of the Company, pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case or proceeding,
(ii) consents to the entry of an order for relief against it in an involuntary case or proceeding,
(iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its creditors; and
90
(j) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Company, or any Significant Subsidiary of the Company or any group of Restricted Subsidiaries of the Company that, taken as a whole, would constitute a Significant Subsidiary of the Company, in an involuntary case;
(ii) appoints a Custodian of the Company, or any Significant Subsidiary of the Company or any group of Restricted Subsidiaries of the Company that, taken as a whole, would constitute a Significant Subsidiary of the Company, or for all or substantially all of the property of the Company, or any Significant Subsidiary of the Company or any group of Restricted Subsidiaries of the Company that, taken as a whole, would constitute a Significant Subsidiary of the Company; or
(iii) orders the liquidation of the Company, or any Significant Subsidiary of the Company or any group of Restricted Subsidiaries of the Company that, taken as a whole, would constitute a Significant Subsidiary of the Company;
and the order or decree remains unstayed and in effect for 60 consecutive days.
The term Custodian means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
In the event of any Event of Default specified under subsection (e) above, such Event of Default and all consequences thereof (excluding any resulting payment default, other than as a result of acceleration of the Notes) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the holders of Notes, if within 20 days after such Event of Default arose the Company delivers an Officers Certificate to the Trustee stating that:
(a) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged; or
(b) holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default;
(c) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction; and
(d) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived.
91
Section 7.02 Acceleration . If any Event of Default (other than an Event of Default specified in subsection (i) or (j) of Section 7.01 ) occurs and is continuing and has not been waived by the Holders, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in subsection (i) or (j) of Section 7.01 occurs, all outstanding Notes shall be due and payable immediately without further action or notice. The Holders of at least a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, premium, if any, or interest that has become due solely because of the acceleration) have been cured or waived and all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements, and advances of the Trustee and its agents and counsel have been paid or deposited with the Trustee or provision therefor satisfactory to the Trustee has been made.
Section 7.03 Other Remedies . If an Event of Default occurs and is continuing, if directed pursuant to Section 7.05, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Indenture Documents.
If directed pursuant to Section 7.05, the Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
Section 7.04 Waiver of Past Defaults . The Holders of at least a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive (including in connection with a purchase of, or tender offer or exchange offer for, Notes) any existing Default or Event of Default and its consequences under this Indenture (including any acceleration of the Notes), except a continuing Default or Event of Default in the payment of principal of, premium, if any, or interest on the Notes (including in connection with an offer to purchase); provided , however , that the Holders of at least a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, premium, if any, or interest that has become due solely because of the acceleration) have been cured or waived. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.
Section 7.05 Control by Majority . Holders of at least a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines is unduly prejudicial to the rights of other Holders (it being understood that the Trustee will have no duty to ascertain
92
whether such actions or forbearances are unduly prejudicial to such other Holders) or that would involve the Trustee in personal liability. The Trustee will be entitled to indemnification satisfactory to it prior to taking any action. The Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Section 7.06 Limitation on Suits . A Holder may pursue a remedy with respect to this Indenture or the Notes only if:
(a) the Holder gives to the Trustee written notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer and, if requested, provide to the Trustee security or indemnity satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of security or indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not any uses are unduly prejudicial to such Holders) or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. The Trustee will mail to all Holders any notice it receives from Holders under this Section 7.06 .
Section 7.07 Rights of Holders To Receive Payment . Notwithstanding any other provision of this Indenture, the contractual right of any Holder to receive payment of principal, premium, if any, or interest on any Note, on or after the respective due dates expressed in any such Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
Section 7.08 Collection Suit By Trustee . If an Event of Default specified in Section 7.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, or interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
93
Section 7.09 Trustee May File Proofs of Claim . The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company or any of the Guarantors (or any other obligor upon the Notes) or their respective creditors or property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee will consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07 . To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07 out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors or other similar committee.
Section 7.10 Priorities . Subject to the terms of the Intercreditor Agreement, any money collected by the Trustee pursuant to this Article 7 or by the Collateral Agent pursuant to the Collateral Documents, or any money or other property distributable in respect of the Companys or the Guarantors obligations under the Indenture Documents after an Event of Default, shall be applied in the following order:
First : to the Trustee, the Collateral Agent and their respective agents, reasonably retained professional advisors, and attorneys for amounts due or reasonably anticipated to become due under Section 8.07 , including payment of all reasonable compensation, expense and liabilities incurred, and all advances made, by the Trustee and the Collateral Agent and the costs and expenses of collection;
Second : to Holders for amounts due and unpaid on the Notes for interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for interest;
Third : to Holders for amounts due and unpaid on the Notes for principal and premium, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and premium, respectively; and
Fourth : to the Company or to such party as a court of competent jurisdiction shall direct.
94
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 7.10 .
Section 7.11 Undertaking For Costs . In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 7.07 or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.
Section 7.12 Rights and Remedies Cumulative . No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy are, to the extent permitted by law, cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 7.13 Delay or Omission Not Waiver . No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE 8
Trustee
Section 8.01 Duties of Trustee . (a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(b) Prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Defaults that may have occurred:
(i) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements
95
of this Indenture. However, the Trustee will examine the certificates and opinions to determine whether or not they are in a form that conforms to the requirements of this Indenture (but need not confirm or investigate, and may rely exclusively upon, the accuracy of mathematical calculations or other facts, statements, opinions or conclusions stated therein).
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of subsection (b) of this Section;
(ii) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;
(iii) the Trustee will not be liable, in any event, with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 7.05 , or a direction from the Holders of a majority in principal amount of the outstanding Notes concerning the exercise of any right, trust or power conferred upon the Trustee; and
(iv) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to subsections (a), (b), and (c) of this Section.
(e) The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request or direction of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g) The Trustee is hereby authorized and directed to execute and deliver each Indenture Document or Collateral Document to which it is a party.
Section 8.02 Rights of Trustee . (a) In the absence of bad faith on its part, the Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.
96
(b) Before the Trustee acts or refrains from acting, it may require an Officers Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers Certificate or Opinion of Counsel. The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. The Trustee may act and rely and shall be protected in acting and relying in good faith on the opinion or advice of, or information obtained from, any accountant, appraiser or other expert or adviser, whether retained or employed by the Company or by the Trustee, in relation to any matter arising in the administration of the trusts hereof.
(c) The Trustee may employ or retain such counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the purpose of determining and discharging its rights and duties hereunder and shall not be responsible for any misconduct on the part of any of them. The Trustee may act through its attorneys and agents and shall not be responsible for the acts or omissions of any agent or attorney appointed with due care, and the Trustee will not be responsible for the supervision of officers and employees of such agents or attorneys or the application of any money by any Agent other than the Trustee.
(d) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company will be sufficient if signed by an Officer of the Company.
(f) The rights, privileges, protections, immunities and benefits given to the Trustee, including, its right to be compensated, reimbursed, provided security and indemnified, and its right to resign, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder or in any Indenture Document or Collateral Document, including but not limited to its capacities as Collateral Agent, Note Custodian, Paying Agent and Registrar, and to each agent, custodian and other Person employed to act hereunder or in any Indenture Document or Collateral Document.
(g) In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee will use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
(h) The Trustee will not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee with responsibility over matters concerning the Notes and this Indenture has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture and is provided by the Company or any Holder of the Notes.
97
(i) The Trustee need not investigate any fact or matter stated in any document delivered to it, but the Trustee, in its discretion or if directed to do so, may make such further inquiry or investigation into such facts or matters, and, if the Trustee will determine in good faith or if directed to do so to make such further inquiry or investigation, it shall be entitled upon reasonable notice during normal business hours to examine the books, records and premises of the Company and the Guarantors, personally or by agent or attorney at the sole cost of the Company and the Guarantors and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(j) In no event shall the Trustee be responsible or liable for special, indirect, exemplary, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(k) The Trustee may, from time to time, request that the Company and the Guarantors deliver an Officers Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to the Indenture Documents, which Officers Certificate may be signed by any Person authorized to sign an Officers Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded.
(l) No permissive or discretionary power or authority available to the Trustee will be construed to be a duty of the Trustee.
(m) The Company will provide prompt written notice to the Trustee of any change to its fiscal year.
Section 8.03 Individual Rights of Trustee . The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee and nothing in this Indenture shall deprive the Trustee of any rights as a holder or pledge of Notes. However, in the event that the Trustee acquires any conflicting interest as defined by the TIA it must eliminate such conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 8.10 and 8.11 .
Section 8.04 Trustees Disclaimer . The Trustee will not be responsible for and makes no representation as to the validity or adequacy of any of the Indenture Documents or the Collateral. The Trustee will not be accountable for the Companys use of the proceeds from the Notes or any money paid to the Company or upon the Companys direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
98
Section 8.05 Notice of Defaults . If a Default or Event of Default occurs and is continuing and if it is actually known to a Responsible Officer of the Trustee, the Trustee will mail to Holders, with a copy to the Company, a notice of the Default or Event of Default within 90 days after it occurs or if known to the Trustee later than 90 days after it occurs, as soon as practicable, unless such Default or Event of Default shall have been cured or waived before the giving of such notice. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as the Trustee in good faith determines that withholding the notice is in the interests of the Holders.
Section 8.06 Reports by Trustee to Holders . Within 60 days after each February 1 beginning February 1, 2018, and for so long as Notes remain outstanding, the Trustee will mail to the Holders a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA § 313(b)(2). The Trustee will also transmit by mail all reports as required by TIA § 313(c).
A copy of each report at the time of its mailing to the Holders shall be mailed to the Company and filed with each stock exchange on which the Notes are listed. The Company will promptly notify the Trustee, in writing, each time the Notes are listed on any stock exchange.
Section 8.07 Compensation and Indemnity . The Company will pay to the Trustee from time to time compensation for its acceptance of this Indenture and services hereunder as the Trustee and the Company will have agreed in writing. The Trustees compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and out-of-pocket expenses incurred or made by it in connection with the Trustees duties under this Indenture, including the reasonable compensation, disbursements and expenses of the Trustees agents, reasonably retained professional advisors, and counsel, except any disbursement, advance or expenses as may be attributable to the Trustees willful misconduct, bad faith or gross negligence.
The Company will indemnify and hold harmless the Trustee against any and all claims, demands, causes of action, losses, liabilities, damages, fines, penalties, costs, fees, charges or expenses including taxes (other than taxes based upon, measured by or determined by income of the Trustee) incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 8.07 ) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence, bad faith or willful misconduct. The Trustee will notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company will not relieve the Company of its obligations hereunder, except to the extent the Company is materially prejudiced thereby. The Company will defend the claim and the Trustee will cooperate in the defense. In the event the Trustee is advised by counsel that a conflict of interest exists, the Trustee may have its own separate counsel, which, so long as no Default or Event of Default has occurred, shall be reasonably satisfactory to the Company, and the Company will pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.
99
Notwithstanding anything to the contrary herein, the Company need not reimburse the Trustee for any cost or expense or indemnify it against any loss or liability incurred by the Trustee through its own gross negligence or willful misconduct.
The obligations of the Company under this Section 8.07 shall survive the satisfaction and discharge of the Notes, the termination for any reason of this Indenture and the resignation or removal of the Trustee.
To secure the Companys payment obligations in this Section, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal, premium, if any, and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 7.01(i) or (j) occurs, the expenses and the compensation for the services (including the reasonable fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
The Trustee will comply with the provisions of TIA § 313(b)(2) to the extent applicable.
At all times, there shall be only one Trustee hereunder.
The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its rights to be secured and indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder and under the Indenture Documents and each agent, custodian or other Person employed to act hereunder.
Section 8.08 Replacement of Trustee . A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustees acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company in writing no later than 30 days prior to the date of the proposed resignation. The Holders of at least a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 8.10 ;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its property; or
100
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of at least a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 8.10 , such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture other than those designated as continuing notwithstanding the Trustees resignation or removal and those that otherwise are personal to the Trustee in its individual capacity. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 8.07 . Notwithstanding replacement of the Trustee pursuant to this Section 8.08 , the Companys obligations and the Trustees rights and remedies under Section 8.07 shall continue for the benefit of the retiring Trustee.
Section 8.09 Successor Trustee by Merger, Etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another entity, the successor entity without any further act or filings of any papers shall be the successor Trustee; provided such successor entity shall be otherwise qualified and eligible under this Article 8 .
Section 8.10 Eligibility, Disqualification . There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has trust assets under administration of not less than $100,000,000.
This Indenture shall always have a Trustee who satisfies the requirements of TIA §§ 310(a)(1),(2) and (5). The Trustee is subject to TIA § 310(b).
No provision of this Indenture shall be deemed to impose any duty or obligation on the Trustee to perform any act or acts, receive or obtain any interest in property or exercise any interest in property, or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Trustee will be unqualified or
101
incompetent in accordance with applicable law, to perform any such act or acts, to receive or obtain any such interest in property or to exercise any such right, power, duty or obligation; and no permissive or discretionary power or authority available to the Trustee will be construed to be a duty.
Section 8.11 Preferential Collection of Claims Against Company . The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.
ARTICLE 9
Legal Defeasance and Covenant Defeasance
Section 9.01 Option to Effect Legal Defeasance or Covenant Defeasance . The Company may, at its option, elect to have either Section 9.02 or 9.03 be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 9 .
Section 9.02 Legal Defeasance and Discharge . Upon the Companys exercise under Section 9.01 of the option applicable to this Section 9.02 , the Company and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 9.04 , be deemed to have been discharged from their respective obligations under the Indenture Documents with respect to all outstanding Notes on and after the date all the conditions set forth below are satisfied (hereinafter, Legal Defeasance ). For this purpose, Legal Defeasance means that the Company will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be outstanding only for the purposes of Section 9.05 and the other Sections of this Indenture referred to in subsections (a) and (b) of this Section 9.02 below, and the Company and the Guarantors to have satisfied all their other obligations under such Notes and the Indenture Documents (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 9.04 , and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due;
(b) the Companys obligations with respect to such Notes under Article 2 ;
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Companys obligations in connection therewith; and
(d) this Article 9 .
Subject to compliance with this Article 9 , the Company may exercise its option under this Section 9.02 notwithstanding the prior exercise of its option under Section 9.03 .
102
Section 9.03 Covenant Defeasance . Upon the Companys exercise under Section 9.01 of the option applicable to this Section 9.03 , the Company and the Companys Restricted Subsidiaries shall, subject to the satisfaction of the conditions set forth in Section 9.04 , be released from the obligations under the covenants contained in Sections 5.03, 5.04 , 5.07 , 5.08 , 5.09 , 5.10 , 5.11 , 5.12 , 5.14 , 5.15 , 5.16 , 5.17 , 5.18 , 5.20 , 5.21 and 5.22 with respect to the outstanding Notes on and after the date all the conditions set forth in Section 9.04 are satisfied (hereinafter, Covenant Defeasance ), and the Notes shall thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed outstanding for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company and its Restricted Subsidiaries may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 7.01 , but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Companys exercise under Section 9.01 of the option applicable to this Section 9.03 , subject to the satisfaction of the conditions set forth in Section 9.04 , Sections 7.01(c) through Section 7.01(g) shall not constitute Events of Default.
Section 9.04 Conditions to Legal or Covenant Defeasance . The following shall be the conditions to the application of either Section 9.02 or 9.03 to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent certified public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to Stated Maturity or to a particular redemption date;
(b) in the case of an election under Section 9.02 , the Company will have delivered to the Trustee an Opinion of Counsel confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable United States federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
103
(c) in the case of an election under Section 9.03 , the Company will have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such Covenant Defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the granting of Liens with respect thereto);
(e) such deposit, defeasance and discharge or deposit and defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;
(f) the Company will have delivered to the Trustee an Officers Certificate stating that the deposit was not made by the Company with the intent of preferring the holders of the Notes over the other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and
(g) the Company will have delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent contained in this Indenture relating to the Legal Defeasance or the Covenant Defeasance have been satisfied.
Section 9.05 Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions . Subject to Section 9.06 , all money and non-callable U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 9.05 , the Trustee ) pursuant to Section 9.04 in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable U.S. Government Obligations deposited pursuant to Section 9.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 9 to the contrary notwithstanding, the Trustee will deliver or pay to the Company from time to time upon the written request of the Company and within five Business Days following the receipt of such request any money or non-callable U.S. Government Obligations held by it as provided in Section 9.04 which, in the opinion of a nationally recognized firm of independent certified public accountants selected by the Trustee expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 9.04(a) ), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
104
Section 9.06 Repayment to Company . Subject to Section 8.07 , any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times or The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Company or as required by applicable abandoned property law.
Section 9.07 Reinstatement . If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable U.S. Government Obligations in accordance with Section 9.02 or 9.03 , as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Companys and the Guarantors obligations under the Indenture Documents shall be revived and reinstated as though no deposit had occurred pursuant to Section 9.02 or 9.03 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 9.02 or 9.03 , as the case may be; provided , however , that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 10
Amendment, Supplement and Waiver
Section 10.01 Without Consent of Holders . Notwithstanding Section 10.02 , the Company, the Trustee and the Collateral Agent may amend, supplement or waive any provision of the Indenture Documents without the consent of any Holder to:
(a) cure any ambiguity, defect, mistake or inconsistency or to make a modification of a formal, minor or technical nature or to correct a manifest error;
(b) provide for uncertificated Notes in addition to or in place of certificated Notes;
(c) comply with Article 6;
105
(d) provide for the assumption of the Companys or any Guarantors obligations to Holders in the case of a merger or consolidation or sale of all or substantially all of the Companys or such Guarantors assets;
(e) add Guarantees with respect to the Notes or to secure the Notes;
(f) add to the covenants of the Company or any Guarantor for the benefit of the holders of the Notes or surrender any right or power conferred upon the Company or any Guarantor;
(g) make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the Indenture Documents of any such Holder;
(h) if it becomes necessary to qualify this Indenture under the TIA, comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;
(i) (i) enter into additional or supplemental Collateral Documents, (ii) release Collateral or Guarantors in accordance with the terms of this Indenture and the Collateral Documents or (iii) enter into any replacement intercreditor agreement substantially in the form of the Intercreditor Agreement entered into on the date of this Indenture;
(j) evidence and provide for the acceptance and appointment under this Indenture of a successor trustee pursuant to the requirements hereof;
(k) make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including to facilitate the issuance and administration of the Notes or to comply with the rules of any applicable securities depository; provided , however , that (i) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Notes;
(l) conform the text of the Indenture Documents to any provision of the Description of Notes section of the Offering Memorandum to the extent that such provision of the Description of Notes was intended to be a verbatim recitation of a provision of the Indenture Documents, which intent shall be evidenced by an Officers Certificate of the Company to that effect;
(m) provide for or confirm the issuance of Additional Notes in accordance with the terms of this Indenture; or
(n) subject the security interests in the Collateral in respect of Pari Passu Payment Lien Obligations to the terms of the Collateral Documents and Intercreditor Agreement, to the extent the incurrence of such Pari Passu Indebtedness and the grant of all Liens on Collateral held for the benefit of such Pari Passu Indebtedness was permitted under this Indenture.
106
After an amendment, supplement or waiver under this Section 10.01 becomes effective, the Company will mail to Holders a notice briefly describing such amendment, supplement or waiver. However, the failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of the amendment, supplement or waiver.
Section 10.02 With Consent of Holders . Except as provided below in this Section 10.02 , the Indenture Documents may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or Event of Default or compliance with any provision of the Indenture Documents may be waived with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with purchase of, or tender offer or exchange offer for, the Notes), in each case without notice to any other Holder, but subject to Section 5.20 .
It shall not be necessary for the consent of the Holders under this Section 10.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 10.02 becomes effective, the Company will mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver. Subject to Sections 7.04 and 7.07 , the Holders of at least a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company and the Companys Subsidiaries with any provision of any Indenture Document. However, without the consent (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) of each Holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of, premium, if any, or extend the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than the provisions of Sections 3.09 , 3.10 , 5.10 , 5.14 and 5.16 prior to the time at which an obligation to make such an offer has arisen);
(c) reduce the rate of or extend the time for payment of interest, including default interest, on any Note;
(d) waive a Default in the payment of principal of, premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
107
(f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of holders of Notes to receive payments of principal of, premium, if any, or interest on the Notes;
(g) release any Guarantor from any of its obligations under its Notes Guarantee or this Indenture, except in accordance with the terms of this Indenture; or
(h) make any change to Sections 10.01 or 10.02 .
No amendment, supplement or waiver shall, without the consent of Holders of not less than 66 2/3% in aggregate principal amount of the then outstanding Notes issued under this Indenture, release (or have the effect of releasing) all or substantially all of the Collateral from the Liens securing the Indenture Obligations.
Section 10.03 Revocation and Effect of Consents . Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder or portion of a Note that evidences the same debt as the consenting Holders Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to its Note if the Trustee and the Company receive written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be, at the Companys election, either (a) at least 30 days prior to the first solicitation of such consent or (b) the date of the most recent list furnished to the Trustee under Section 2.05 . If a record date is fixed, then notwithstanding the second to last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date.
A consent to any amendment, supplement or waiver under any Indenture Document by any Holder given in connection with a purchase of, or tender offer or exchange offer for, such Holders Notes shall not be rendered invalid by such purchase, tender or exchange.
After an amendment, supplement or waiver becomes effective, it shall bind every Holder unless it makes a change described in Section 10.02 which cannot be made without the consent of each Holder affected, in which case, the amendment, supplement or waiver shall bind only each Holder who has consented to it and every subsequent Holder or portion of a Note that evidences the same debt as the consenting Holders Note; provided that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of, premium, if any, and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates without the consent of such Holder.
108
Section 10.04 Notation On or Exchange of Notes . The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee will authenticate new Notes that reflect any amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
Section 10.05 Trustee or Collateral Agent to Sign Amendments, Etc. . The Trustee or the Collateral Agent, as the case may be, shall sign any amendment, supplement or waiver authorized pursuant to this Article 10 if the amendment, supplement or waiver does not affect the rights, duties, liabilities, indemnities or immunities of the Trustee or the Collateral Agent, as the case may be. The Company may not sign an amendment or supplemental indenture until its Board of Directors approves it. In executing any amendment, supplement or waiver, the Trustee and the Collateral Agent shall be entitled to receive and (subject to Section 8.01 ) shall be fully protected in relying upon, an Officers Certificate and an Opinion of Counsel stating that the execution of such amendment, supplement or waiver is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company and any Guarantors party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof.
ARTICLE 11
Guarantees
Section 11.01 Guarantees . Subject to the limitations set forth in Section 11.04, the Guarantors hereby, jointly and severally, unconditionally Guarantee to each Holder of Notes and to the Trustee and their respective successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the Obligations of the Company hereunder or thereunder, that: (a) the principal of, premium, if any, and interest on the Notes shall be promptly paid in full when due, subject to any applicable grace period, whether at Stated Maturity, by acceleration, redemption, required purchase or repurchase or otherwise, and interest on the overdue principal of and interest on premium, if any, and interest, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at Stated Maturity, by acceleration, redemption, required purchase or repurchase or otherwise. In the event the Company fails to make payment when due, subject to any applicable grace period, of any amount so Guaranteed or any performance so Guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company or any Guarantor, any action to enforce the
109
same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than the payment in full of the amounts Guaranteed). Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company or another Guarantor, protest, notice and all demands whatsoever and covenant that the Notes Guarantees shall not be discharged except by complete performance of the obligations contained in the Indenture Documents. If any Holder or the Trustee is required by any court or otherwise to return to the Company or any of the Guarantors, or any Custodian or other similar official acting in relation to either the Company or any of the Guarantors, any amount paid either to the Trustee or to such Holder, the Notes Guarantees, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations Guaranteed hereby until payment in full of all obligations Guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations Guaranteed hereby may be accelerated as provided in Article 7 for the purposes of the Notes Guarantees, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations Guaranteed hereby and (y) in the event of any declaration of acceleration of such obligations as provided in Article 7 , such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of the Notes Guarantees. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Trustee or the Holders under the Notes Guarantees.
Section 11.02 Additional Guarantors . To the extent not a party to this Indenture on the date hereof, each Guarantor shall execute and deliver to the Trustee a supplemental indenture substantially in the form of Exhibit E hereto, pursuant to which it shall become a Guarantor under this Article 11 (a New Guarantor ) and shall Guarantee the obligations of the Company under this Indenture and the Notes. Concurrently with the execution and delivery of such supplemental indenture, such New Guarantor shall deliver to the Trustee an Opinion of Counsel that the foregoing have been duly authorized, executed and delivered by such New Guarantor and that such New Guarantors Guarantee is a valid and legally binding obligation of such New Guarantor, enforceable against such New Guarantor in accordance with its terms, subject to customary limitations, qualifications, exceptions and assumptions.
The Notes Guarantee of any Guarantor shall be evidenced solely by its execution and delivery of this Indenture (or, in the case of any New Guarantor, a supplemental indenture thereto) and not by an endorsement on, or attachment to, any Note of any Notes Guarantee or notation thereof.
Each Guarantor hereby agrees that its Notes Guarantee set forth in Section 11.01 shall be and remain in full force and effect notwithstanding any failure to endorse on any Note a notation of such Notes Guarantee.
The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Notes Guarantees set forth in this Indenture on behalf of each of the Guarantors.
110
If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Note, the Notes Guarantee shall be valid nevertheless.
Section 11.03 Releases of Guarantees . In the event of:
(a) the Company exercising its Legal Defeasance or Covenant Defeasance option with respect to the Notes in accordance with Article 9 or the satisfaction and discharge of this Indenture in accordance with Section 4.01 ;
(b) a sale or other disposition of all or substantially all of the assets of a Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale or other disposition complies with Section 5.10 ;
(c) a sale, issuance or other disposition of Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale, issuance or other disposition complies with Section 5.10 and the Guarantor ceases to be a Restricted Subsidiary of the Company as a result of such sale, issuance or other disposition;
(d) the designation by the Company of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with the terms of this Indenture; or
(e) a Guarantor that was required to become a Guarantor pursuant to clause (ii) of Section 5.17 ceasing to Guarantee (or otherwise be liable for) any Indebtedness of the Company or any other Guarantor;
such Guarantor (and any of its Subsidiaries that are Guarantors) shall be automatically and unconditionally released and relieved of any obligations under its Notes Guarantee and the Indenture Documents. Upon delivery by the Company to the Trustee of an Officers Certificate and an Opinion of Counsel to the effect that (i) in the case of clauses (a) through (d) above, such defeasance, discharge, sale, issuance, disposition or designation was made by the Company in accordance with the provisions of this Indenture, including, in the case of clauses (b) and (c), Section 5.10 or (ii) in the case of clause (e) above, such Guarantor has ceased to Guarantee (or otherwise be liable for) any Indebtedness of the Company or any other Guarantor, then in each case, the Trustee or the Collateral Agent, as applicable, shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Notes Guarantee and the Indenture Documents.
Any Guarantor not released from its obligations under its Notes Guarantee shall remain liable for the full amount of principal of, premium, if any, and interest on the Notes and for the other obligations of any Guarantor under the Indenture Documents as provided in this Article 11 .
Section 11.04 Limitation on Guarantor Liability . For purposes hereof, each Guarantors liability shall be that amount from time to time equal to the aggregate liability of such Guarantor under its Notes Guarantee, but shall be limited to the lesser of (a) the aggregate amount of the obligations of the Company under the Indenture Documents and (b) the amount, if
111
any, which would not have (A) rendered such Guarantor insolvent (as such term is defined in the federal Bankruptcy Law and in the Debtor and Creditor Law of the State of New York), (B) left it with unreasonably small capital at the time its Notes Guarantee was entered into, or at the time such Guarantor Incurred liability thereunder, after giving effect to the Incurrence of Existing Indebtedness immediately prior to such time or (C) left such Guarantor with debts beyond such Guarantors ability to pay as such debts mature; provided that, it shall be a presumption in any lawsuit or other proceeding in which such Guarantor is a party that the amount Guaranteed pursuant to its Notes Guarantee is the amount set forth in subsection (a) above unless any creditor, or representative of creditors of such Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor, otherwise proves in such a lawsuit or other proceeding that the aggregate liability of such Guarantor is limited to the amount set forth in subsection (b). In making any determination as to the solvency or sufficiency of capital of a Guarantor in accordance with the previous sentence, the right of such Guarantor to contribution from other Guarantors and any other rights such Guarantor may have, contractual or otherwise, shall be taken into account.
Section 11.05 Trustee to Include Paying Agent . In case at any time any Paying Agent other than the Trustee will have been appointed by the Company and be then acting hereunder, the term Trustee as used in this Article 11 shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article 11 in place of the Trustee.
ARTICLE 12
Miscellaneous
Section 12.01 Notices . Any notice or communication by the Company, the Trustee or the Collateral Agent to the others is duly given if in writing and delivered in person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others addresses:
If to the Company:
CURO Financial Technologies Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Fax: (316) 722-7751
Attn: Vin Thomas, Chief Legal Officer
With a copy to:
Willkie Farr & Gallagher LLP
787 7 th Avenue
New York, New York, 10019
Fax: (212) 728-9272
Attn: Cristopher Greer
112
If to the Trustee:
TMI Trust Company
1100 Abernathy Road NE, Suite 480
Atlanta, Georgia 30328
Phone: (678) 221-5917
Fax: (404) 365-7055
Attn: Kathy Knapp, Vice President
With a copy to:
Adams and Reese LLP
6075 Poplar Avenue, Suite 700
Memphis, Tennessee 38119
Fax: (901) 524-5419
Attn: James B. McLaren, Jr.
If to the Collateral Agent:
TMI Trust Company
1100 Abernathy Road NE, Suite 480
Atlanta, Georgia 30328
Phone: (678) 221-5917
Fax: (404) 365-7055
Attn: Kathy Knapp, Vice President
With a copy to:
Adams and Reese LLP
6075 Poplar Avenue, Suite 700
Memphis, Tennessee 38119
Fax: (901) 524-5419
Attn: James B. McLaren, Jr.
The Company, the Trustee or the Collateral Agent, by notice to the others may designate additional or different addresses for subsequent notices or communications.
Any notice to any Guarantor may be sent to the Guarantor in care of the Company as set forth above.
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery, provided that notice to the Trustee will be effective only upon receipt.
113
Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it, provided that notice to the Trustee will be effective only upon receipt.
If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
The Trustee will have the right, but shall not be required, to rely upon and comply with instructions and directions sent by e-mail, facsimile and other similar unsecured electronic methods by persons believed by the Trustee to be authorized to give instructions and directions on behalf of the Company or any Person. The Trustee will have no duty or obligation to verify or confirm that the Person who sent such instructions or directions is, in fact, a Person authorized to give instructions or directions on behalf of the Company or Guarantors; and the Trustee will have no liability for any losses, liabilities, costs or expenses incurred or sustained by the Company or Guarantors as a result of such reliance upon or compliance with such instructions or directions. The Company or Guarantors agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including, without limitation, the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties.
Where this Indenture provides for notice of any event to a Holder of a Global Note, such notice shall be sufficiently given if given to the Depositary for such Note (or its designee), pursuant to its Applicable Procedures, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.
Section 12.02 Communication by Holders with Other Holders . Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Guarantors, the Trustee, the Collateral Agent, the Registrar and anyone else shall have the protection of TIA § 312(c).
Section 12.03 Certificate and Opinion as to Conditions Precedent . Upon any request or application by the Company or any Guarantor to the Trustee or the Collateral Agent, as the case may be, to take any action under the Indenture Documents, the Company will furnish to the Trustee:
114
(a) an Officers Certificate in form and substance reasonably satisfactory to the Trustee or the Collateral Agent, as the case may be, (which shall include the statements set forth in Section 12.04 ) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee or the Collateral Agent, as the case may be, (which shall include the statements set forth in Section 12.04 ) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with.
Section 12.04 Statements Required in Certificate or Opinion . Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of any Person may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of, or representation by, counsel or any Opinion of Counsel may be based, insofar as it relates to factual matters, upon certificates of public officials or upon a certificate or opinion of, or representations by, an officer or officers of the Company or any Guarantor (including an Officers Certificate) stating that the information with respect to such factual matters is in the possession of the Company or such Guarantor unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
115
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Section 12.05 Rules by Trustee and Agents . The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
Section 12.06 No Personal Liability of Directors, Officers, Employees and Stockholders . No director, officer, employee or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or any Guarantor under the Indenture Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the United States federal securities laws or other corporate laws, and it is the view of the SEC that such a waiver is against public policy.
Section 12.07 Governing Law . THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE.
Section 12.08 No Adverse Interpretation of Other Agreements . This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or the Companys Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture and the Notes Guarantees.
Section 12.09 Successors . All agreements of the Company and each Guarantor in the Indenture Documents shall bind its successors. All agreements of the Trustee and the Collateral Agent in this Indenture shall bind their respective successors.
Section 12.10 Severability . In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.11 Counterpart Originals . The parties may sign any number of copies of this Indenture (including by electronic transmission). Each signed copy shall be an original, but all of them together represent the same agreement.
Section 12.12 Table of Contents, Headings, Etc. . The table of contents, cross-reference table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
Section 12.13 Intercreditor Agreement . Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to the Indenture Documents and the exercise of any right or remedy thereunder are subject to the provisions of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the other Indenture Documents, the terms of the Intercreditor Agreement shall govern and control. If any conflict or inconsistency exists between this Indenture and any Collateral Document (other than the Intercreditor Agreement), this Indenture shall govern.
116
Section 12.14 Payments Due on Non-Business Days . In any case where any interest payment date, redemption date, Purchase Date, Stated Maturity of the Notes or any other date upon which any payment is due on the Notes shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the interest payment date, redemption date, Purchase Date, at the Stated Maturity or any other date upon which any payment is due on the Notes, provided that no interest will accrue for the period from and after such interest payment date, redemption date, Purchase Date, Stated Maturity or other payment date, as the case may be.
Section 12.15 Waiver of Jury Trial . THE COMPANY, EACH GUARANTOR, THE TRUSTEE AND THE COLLATERAL AGENT HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES, ANY OTHER INDENTURE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
ARTICLE 13
Collateral and Security
Section 13.01 Collateral Documents . The due and punctual payment of the principal of, premium, if any, and interest on the Notes and amounts due hereunder and under the Notes Guarantees when and as the same shall be due and payable, subject to any applicable grace period, whether on an interest payment date, by acceleration, purchase, repurchase, redemption or otherwise, and interest on the overdue principal of, premium, if any, and interest to the extent permitted by law, on the Notes and the performance of all other Obligations of the Company and the Guarantors to the Holders, the Collateral Agent or the Trustee under the Indenture Documents are and shall be secured by the Collateral Documents. The Collateral Documents shall provide for the grant by the Company and the Guarantors party thereto to the Collateral Agent of security interests in the Collateral subject to Permitted Liens and the terms of the Intercreditor Agreement.
Section 13.02 Recording and Opinions .
(a) The Company will, and will cause each of the Guarantors to, at their sole cost and expense, take or cause to be taken such actions as may be required by the Collateral Documents, to perfect, maintain (with the priority required under the Collateral Documents and Intercreditor Agreement), preserve and protect the valid and enforceable, perfected (except as expressly provided to the contrary herein or therein) security interests in and on all the Collateral granted by the Collateral Documents in favor of the Collateral Agent as security for the Obligations contained in this Indenture, the Notes, the Notes Guarantees and the Collateral Documents, superior to and prior to the rights of all third Persons (other than as set forth in the
117
Intercreditor Agreement), and subject to no other Liens (other than Permitted Liens), including, without limitation, (i) the preparation and filing of financing statements, amendments and continuation statements, collateral assignments and any instruments of further assurance, in such manner and in such places as may be required by law to preserve and protect fully the rights of the Holders, the Collateral Agent, and the Trustee under this Indenture and the Collateral Documents to all property comprising the Collateral, and (ii) subject to the Intercreditor Agreement, the delivery of the certificates evidencing the securities pledged under the Collateral Documents, duly endorsed in blank or accompanied by undated stock powers or other instruments of transfer executed in blank, it being understood that concurrently with the execution of this Indenture, the Company and the Guarantors have submitted duly prepared financing statements to a reputable filing service for prompt filing in the appropriate filing offices. The Company will from time to time promptly pay all financing and continuation statement recording and/or filing fees, charges and recording, stamp, intangibles and similar taxes relating to this Indenture, the Collateral Documents and any amendments hereto or thereto and any other instruments of further assurance required pursuant hereto or thereto.
(b) The Company will furnish to the Trustee and the Collateral Agent (if other than the Trustee), upon or promptly after the execution and delivery of this Indenture, an Opinion of Counsel in compliance with TIA §314(b)(1), and on or within one month following February 1 of each year, commencing February 1, 2018, an Opinion of Counsel in compliance with TIA §314(b)(2).
Section 13.03 Release of Collateral .
(a) The Collateral Agent shall not at any time release all or any portion of the Collateral from the Liens created by the Collateral Documents unless such release is in accordance with the provisions of this Indenture and the applicable Collateral Documents.
(b) The release of any Collateral from the Liens created by the Collateral Documents shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Collateral is released pursuant to this Indenture and the Collateral Documents.
Section 13.04 Specified Releases of Collateral .
(a) Collateral shall be released from the Liens created by the Collateral Documents at any time or from time to time in accordance with the provisions of the Collateral Documents or as provided in this Indenture. The Liens securing the Collateral shall be automatically released without the need for any further action by any Person under any one or more of the following circumstances:
(i) to enable the Company or a Guarantor to consummate asset dispositions permitted or not prohibited under Section 5.10 ;
(ii) if any Guarantor is released from its Notes Guarantee in accordance with the terms of this Indenture (including by virtue of such Guarantor ceasing to be a Restricted Subsidiary of the Company), that Guarantors assets will also be released from the Liens securing its Notes Guarantee and the other Indenture Obligations;
118
(iii) if required in accordance with the terms of the Intercreditor Agreement;
(iv) as described under Section 13.05 ; or
(v) with the consent of the Holders of the Notes in accordance with Section 10.02 .
(b) Upon the written request of the Company accompanied by an Officers Certificate and Opinion of Counsel confirming that all conditions precedent hereunder and under the Collateral Documents and Intercreditor Agreement have been met, and any necessary or proper instruments of termination, satisfaction or release prepared by the Company or the Guarantors, as the case may be, the Collateral Agent, without the consent of any Holder or the Trustee and at the expense of the Company or the Guarantors, shall execute, deliver or acknowledge such instruments or releases to evidence the release from the Liens created by the Collateral Documents of any Collateral permitted to be released pursuant to this Indenture or the Collateral Documents.
Section 13.05 Release upon Satisfaction or Defeasance of all Outstanding Obligations .
(a) The Liens on all Collateral that secure the Notes and the Notes Guarantees shall be automatically terminated and released without the need for further action by any Person:
(i) if the Company exercise Legal Defeasance or Covenant Defeasance as described under Article 9 ;
(ii) upon satisfaction and discharge of this Indenture as described under Section 4.01 ; or
(iii) upon payment in full in immediately available funds of the principal of, premium, if any, and accrued and unpaid interest on the Notes and all other Obligations under this Indenture and the Collateral Documents that are then due and payable (other than contingent indemnification obligations for which no claim has been asserted).
(b) Upon receipt of an Officers Certificate and Opinion of Counsel confirming that all conditions precedent hereunder and under the Collateral Documents have been satisfied and any necessary or proper instruments of termination, satisfaction or release prepared by the Company or the Guarantors, as the case may be, the Collateral Agent, without the consent of any Holder or the Trustee and at the expense of the Company or the Guarantors, shall execute, deliver or acknowledge such instruments or releases to evidence the release from the Liens created by the Collateral Documents of any Collateral permitted to be released pursuant to this Indenture and the Collateral Documents.
Section 13.06 Form and Sufficiency of Release and Subordination . In the event that the Company or any Guarantor has sold, exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise dispose of any portion of the Collateral that may be sold, exchanged or otherwise disposed of by the Company or such Guarantor to any Person other than the Company or a Guarantor, and the Company or such Guarantor requests that the Trustee or
119
Collateral Agent furnish a written disclaimer, release or quit-claim of any interest in such property under this Indenture and the Collateral Documents, or, to the extent applicable to such Collateral, take all action that is necessary or reasonably requested by the Company (in each case at the expense of the Company) to release and reconvey to the Company or such Guarantor, without recourse, such Collateral or deliver such Collateral in its possession to the Company or such Guarantor, the Trustee and the Collateral Agent, as applicable, shall execute, acknowledge (without any recourse, representation and warranty) and deliver to the Company or such Guarantor (in the form prepared by the Company at the Companys sole expense) such an instrument promptly or take such other action so requested after satisfaction of the conditions set forth herein for delivery of any such release. Notwithstanding the preceding sentence, all purchasers and grantees of any property or rights purporting to be released herefrom shall be entitled to rely upon any release executed by the Trustee or the Collateral Agent, as applicable, as sufficient for the purpose of this Indenture and as constituting a good and valid release of the property therein described from the Lien of this Indenture or of the Collateral Documents but shall have no recourse or claims against the Trustee or the Collateral Agent in respect of any such release. In addition to the foregoing, in the event that the Company or any Guarantor has any Collateral or intends to have any Collateral subject to a Permitted Lien of the type described in clause (7) of the definition thereof, and the Company or such Guarantor requests that the Trustee or Collateral Agent enter into a subordination agreement with the holder of such Permitted Lien in order to subordinate the Lien of the Collateral Agent in such Collateral to the Lien of such holder in such Collateral, the Trustee and the Collateral Agent, as applicable, shall execute, acknowledge and deliver to the Company or such Guarantor or the holder of such Permitted Lien such an instrument (in the form prepared by the Company, or the holder of such Permitted Lien, at the Companys sole expense) promptly after such request.
Section 13.07 Purchaser Protected . No purchaser or grantee of any property or rights purported to have been released from the Lien of this Indenture or of the Collateral Documents shall be bound to ascertain the authority of the Trustee or the Collateral Agent, as applicable, to execute the release or to inquire as to the existence of any conditions herein prescribed for the exercise of such authority; nor shall any purchaser or grantee of any property or rights permitted by this Indenture to be sold or otherwise disposed of by the Company be under any obligation to ascertain or inquire into the authority of the Company to make such sale or other disposition.
Section 13.08 Authorization of Actions to be Taken by the Collateral Agent Under the Collateral Documents .
(a) Each Holder, by acceptance of the Notes, consents to the terms of, directs and agrees that the Collateral Agent shall execute and deliver the Intercreditor Agreement and Collateral Documents to which it is a party, and all agreements, documents and instruments incidental thereto, and act in accordance with the terms thereof. For the avoidance of doubt, the Collateral Agent shall have no discretion under this Indenture, the Intercreditor Agreement or the Collateral Documents and shall not be required to make or give any determination, consent, approval, request or direction without the written direction of the Holders of a majority in aggregate principal amount of the then outstanding Notes, the Trustee or the Company, as applicable. The provisions of this Section 13.08 are solely for the benefit of the Collateral Agent and none of the Trustee, any of the Holders nor the Company or any of the Guarantors shall have
120
any rights as a third party beneficiary of any of the provisions contained herein other than as expressly provided herein. Each Holder agrees that any action taken by the Collateral Agent in accordance with the provision of this Indenture, the Intercreditor Agreement and the Collateral Documents, and the exercise by the Collateral Agent of any rights or remedies set forth herein and therein shall be authorized and binding upon all Holders. Notwithstanding any provision to the contrary contained elsewhere in this Indenture, the Collateral Documents and the Intercreditor Agreement, the duties of the Collateral Agent shall be ministerial and administrative in nature, and the Collateral Agent shall not have any duties or responsibilities, except those expressly set forth herein and in the other documents to which the Collateral Agent is a party, nor shall the Collateral Agent have or be deemed to have any trust or other fiduciary relationship with the Trustee, any Holder, the Company or any Guarantor, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Indenture, the Collateral Documents and the Intercreditor Agreement or otherwise exist against the Collateral Agent. Without limiting the generality of the foregoing sentence, the use of the term agent in this Indenture with reference to the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.
(b) So long as an Event of Default is not continuing, the Company may direct the Collateral Agent in connection with any action required or permitted by this Indenture, the Collateral Documents or the Intercreditor Agreement. During the continuance of an Event of Default, the Trustee may direct the Collateral Agent in connection with any action required or permitted by this Indenture, the Collateral Documents or the Intercreditor Agreement.
(c) No provision of this Indenture, the Intercreditor Agreement or any Collateral Document shall require the Collateral Agent (or the Trustee) to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder or exercise any of its rights and powers at the request or direction of Holders (or the Trustee in the case of the Collateral Agent) if it shall not have received security or indemnity satisfactory to the Collateral Agent against potential costs and liabilities incurred by the Collateral Agent relating thereto. Notwithstanding anything to the contrary contained in this Indenture, the Intercreditor Agreement or the Collateral Documents, in the event the Collateral Agent is entitled or required to commence an action to foreclose or otherwise exercise its remedies to acquire control or possession of the Collateral, the Collateral Agent shall not be required to commence any such action or exercise any remedy or to inspect or conduct any studies of any property under the mortgages or take any such other action if the Collateral Agent has determined that the Collateral Agent may incur personal liability as a result of the presence at, or release on or from, the Collateral or such property, of any hazardous substances unless the Collateral Agent has received security or indemnity from the Holders in an amount and in a form all satisfactory to the Collateral Agent in its sole discretion, protecting the Collateral Agent from all such liability. The Collateral Agent shall at any time be entitled to cease taking any action described above if it no longer reasonably deems any indemnity, security or undertaking from the Company or the Holders to be sufficient.
121
(d) The Collateral Agent (i) shall not be liable for any action taken or omitted to be taken by it in connection with this Indenture, the Intercreditor Agreement and the Collateral Documents or instrument referred to herein or therein, except to the extent that any of the foregoing result from its own gross negligence, bad faith or willful misconduct, (ii) shall not be liable for interest on any money received by it except as the Collateral Agent may agree in writing with the Company (and money held in trust by the Collateral Agent need not be segregated from other funds except to the extent required by law) and (iii) may consult with counsel of its selection and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it in good faith and in accordance with the advice or opinion of such counsel. The grant of permissive rights or powers to the Collateral Agent shall not be construed to impose duties to act.
(e) The Collateral Agent may perform any of its duties under this Indenture, the Collateral Documents or the Intercreditor Agreement by or through receivers, agents, employees, attorneys-in-fact or through its affiliates and shall be entitled to advice of counsel concerning all matters pertaining to such duties, and shall be entitled to act upon, and shall be fully protected in taking action in reliance upon any advice or opinion given by legal counsel. The Collateral Agent shall not be responsible for the negligence or willful misconduct of any receiver, agent, employee, attorney-in-fact or affiliates that it selects as long as such selection was made in good faith and with due care.
Section 13.09 Authorization of Receipt of Funds by the Trustee Under the Collateral Documents .
The Collateral Agent is authorized to receive any funds for the benefit of itself, the Trustee and the Holders distributed under the Collateral Documents or the Intercreditor Agreement and, to the extent not prohibited under the Intercreditor Agreement, to make further distributions of such funds to itself, the Trustee and the Holders in accordance with the provisions of Section 7.10 and the other provisions of this Indenture. Such funds shall be held on deposit by the Trustee without investment, and the Trustee will have no liability for interest or other compensation thereon.
Section 13.10 Action by the Collateral Agent .
In each case that the Collateral Agent may or is required hereunder or under any Collateral Document to take any action (an Action ), including to make any determination, to give consents, to exercise rights, powers or remedies, to release or sell Collateral or otherwise to act hereunder or under any Collateral Document, the Collateral Agent may seek direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes; provided that all Actions so taken shall, at all times, be in compliance with the requirements of the Intercreditor Agreement. The Collateral Agent shall not be liable with respect to any Action taken or omitted to be taken by it in accordance with the direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes. If the Collateral Agent shall request direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes with respect to any Action, the Collateral Agent shall be entitled to refrain from such Action unless and until the Collateral Agent shall have received direction from the Holders of a majority in aggregate principal amount of the then outstanding Notes and security or an indemnification satisfactory to the Collateral Agent, and the Collateral Agent shall not incur liability to any Person by reason of so refraining.
122
Notwithstanding anything to the contrary in this Indenture or any Collateral Document, in no event shall the Collateral Agent be responsible for, or have any duty or obligation with respect to, the recording, filing, registering, perfection, protection or maintenance of the security interests or Liens intended to be created by this Indenture or the Collateral Documents (including the preparation, filing or continuation of any Uniform Commercial Code financing or continuation statements or similar documents or instruments), nor shall the Collateral Agent be responsible for, and the Collateral Agent makes no representation regarding, the validity, enforceability, effectiveness or priority of any of the Collateral Documents or the security interests or Liens intended to be created thereby.
Section 13.11 Compensation and Indemnity .
(a) The Company will pay to the Collateral Agent from time to time compensation as shall be agreed to in writing by the Company and the Collateral Agent for its acceptance of this Indenture, the Intercreditor Agreement, the Collateral Documents and services hereunder. The Company will reimburse the Collateral Agent promptly upon request for all reasonable disbursements, advances and out-of-pocket expenses incurred or made by it in connection with the Collateral Agents duties under the Indenture Documents, including the reasonable compensation, disbursements and expenses of the Collateral Agents agents, reasonably retained professional advisors, and counsel, except any disbursement, advance or expense as may be attributable to the Collateral Agents willful misconduct, bad faith or gross negligence.
(b) The Company and the Guarantors shall, jointly and severally, indemnify the Collateral Agent against any and all claims, demands, causes of action, losses, liabilities, damages, fines, penalties, costs, fees, charges or expenses including taxes (other than taxes based on, measured by or determined by income of the Collateral Agent) incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, the Intercreditor Agreement and the Collateral Documents, including (i) any claim relating to the grant to the Collateral Agent of any Lien in any property or assets of the Company or the Guarantors and (ii) the costs and expenses of enforcing this Indenture, the Intercreditor Agreement and the Collateral Documents against the Company and the Guarantors (including this Section 13.11 ) and defending itself against any claim (whether asserted by the Company, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder or thereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence, willful misconduct or bad faith. The Collateral Agent shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Collateral Agent to so notify the Company will not relieve the Company or the Guarantors of their obligations hereunder, except to the extent the Company is materially prejudiced thereby. The Company or such Guarantor shall defend such claim and the Collateral Agent shall cooperate in the defense. In the event the Collateral Agent is advised by counsel that a conflict of interest exists, the Collateral Agent may have its own separate counsel, which, so long as no Default or Event of Default has occurred, shall be reasonably satisfactory to the Company, and the Company will pay the reasonable fees and expenses of such counsel.
123
Neither the Company nor any Guarantor need pay for any settlement made without its consent, which consent shall not be unreasonably withheld. Notwithstanding anything to the contrary herein, the Company need not reimburse the Collateral Agent for any cost or expense or indemnify it against any loss or liability incurred by the Collateral Agent through its own gross negligence, bad faith or willful misconduct.
(c) The obligations of the Company and the Guarantors under this Section 13.11 shall survive the satisfaction and discharge of this Indenture and the resignation, removal or replacement of the Collateral Agent.
Section 13.12 Co-Collateral Agent; Separate Collateral Agent .
(a) If at any time or times it shall be necessary in order to conform to any applicable law of any jurisdiction in which any of the Collateral shall be located, or to avoid any violation of applicable law or imposition on the Collateral Agent of taxes by such jurisdiction not otherwise imposed on the Collateral Agent, or the Collateral Agent shall be advised by counsel, satisfactory to it, that it is necessary in the interests of the Notes Secured Parties, or the Collateral Agent shall deem it desirable for its own protection in the performance of its duties hereunder or under any Collateral Document, the Collateral Agent and the Company and the Guarantors may (and in the case of conforming to any applicable law or avoiding the violation of any applicable law, shall) execute and deliver all instruments and agreements necessary or proper to constitute another bank or trust company, or one or more persons approved by the Collateral Agent and the Company, either to act as co-collateral agent or co-collateral agents of all or any of the Collateral under this Indenture or under any of the Collateral Documents, jointly with the Collateral Agent originally named herein or therein or any successor Collateral Agent, or to act as separate agent or agents of any of the Collateral. If (x) the Company and the Guarantors shall not have joined in the execution of such instruments and agreements within 10 days after they receive a written request from the Collateral Agent to do so, and (y) the execution of such instruments and agreements is being undertaken in order to conform to any applicable law of any jurisdiction in which any of the Collateral shall be located, or to avoid any violation of applicable law, then the Collateral Agent acting as directed by a majority of Holders shall act under the foregoing provisions of this Section 13.12 without the concurrence of the Company and the Guarantors and execute and deliver such instruments and agreements on behalf of the Company and the Guarantors and any such act shall be binding on the Company and the Guarantors as if executed by the Company and the Guarantors. Each of the Company and each Guarantor hereby appoint the Collateral Agent as its agent and attorney to act for it under the foregoing provisions of this Section 13.12 in either of such contingencies.
(b) Every separate collateral agent and every co-collateral agent, other than any successor Collateral Agent appointed pursuant to this Article, shall, to the extent permitted by law, be appointed and act and be such, subject to the following provisions and conditions:
(1) all rights, powers, duties and obligations conferred upon the Collateral Agent in respect of the custody, control and management of moneys, papers or securities shall be exercised solely by the Collateral Agent or any agent appointed by the Collateral Agent;
124
(2) all rights, powers, duties and obligations conferred or imposed upon the Collateral Agent hereunder and under the relevant Collateral Documents shall be conferred or imposed and exercised or performed by the Collateral Agent and such separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents, jointly, as shall be provided in the instrument appointing such separate collateral agents or co-collateral agent or co-collateral agents, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Collateral Agent shall be incompetent or unqualified to perform such act or acts, or unless the performance of such act or acts would result in the imposition of any tax on the Collateral Agent which would not be imposed absent such joint act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate collateral agent or collateral agents or co-collateral agent or co-collateral agents;
(3) no power given hereby or by the relevant Collateral Documents to, or which it is provided herein or therein may be exercised by, any such co-collateral agent or co-collateral agents or separate collateral agent or collateral agents shall be exercised hereunder or thereunder by such co-collateral agent or co-collateral agents or separate collateral agent or collateral agents except jointly with, or with the consent in writing of, the Collateral Agent, anything contained herein to the contrary notwithstanding; and
(4) no collateral agent hereunder shall be personally liable by reason of any act or omission of any other collateral agent hereunder.
[Signatures on following pages]
125
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above.
CURO FINANCIAL TECHNOLOGIES CORP. | ||
By: |
/s/ Don Gayhardt |
|
Name: Don Gayhardt | ||
Title: Chief Executive Officer | ||
GUARANTORS: |
||
CURO INTERMEDIATE HOLDINGS CORP. A SPEEDY CASH CAR TITLE LOANS, LLC ADVANCE GROUP, INC. ATTAIN FINANCE, LLC AVIO CREDIT, INC. CASH COLORADO, LLC CONCORD FINANCE, INC. EVERGREEN FINANCIAL INVESTMENTS, INC. FMMR INVESTMENTS, INC. GALT VENTURES, LLC PRINCIPAL INVESTMENTS, INC. SCIL TEXAS, LLC SC AURUM, LLC SCIL, INC. SPEEDY CASH SPEEDY CASH ILLINOIS, INC. SC TEXAS MB, INC. THE MONEY STORE, L.P. CURO MANAGEMENT LLC TODD CAR TITLE, INC. TODD FINANCIAL, INC. |
By: |
/s/ Don Gayhardt |
|
Name: Don Gayhardt | ||
Title: President |
CURO Financial Technologies Corp.
Indenture (Cobalt)
TMI TRUST COMPANY, AS TRUSTEE AND COLLATERAL AGENT | ||
By: |
/s/ Kathy Knapp |
|
Name: Kathy Knapp | ||
Title: Vice President |
CURO Financial Technologies Corp.
Indenture (Cobalt)
EXHIBIT A
[Form of Face of Note]
[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Regulation S Temporary Global Note Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Original Issue Discount Legend pursuant to the provisions of the Indenture]
A-1
CURO FINANCIAL TECHNOLOGIES CORP.
12.000% SENIOR SECURED NOTE DUE 2022
CUSIP [__________] | ||
No. [__________] | $[__________] |
CURO Financial Technologies Corp., a Delaware corporation (the Company , which term includes any successor entity), for value received promises to pay to [_______________] or its registered assigns, the principal sum of [_____________________] (or such principal amount as may be set forth in the records of the Trustee hereinafter referred to in accordance with the Indenture) on March 1, 2022, and to pay interest thereon as hereinafter set forth.
Interest Payment Dates: March 1 and September 1, commencing [_________]
Record Dates: February 15 and August 15
Dated: [_________]
Reference is made to the further provisions of this Note contained on the reverse side of this Note, which shall for all purposes have the same effect as if set forth at this place.
A-2
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
CURO FINANCIAL TECHNOLOGIES CORP. | ||
By: |
|
|
Name: | ||
Title: |
A-3
T RUSTEE C ERTIFICATE OF A UTHENTICATION
This Note is one of the 12.000% Senior Secured Notes due 2022 referred to in the within-mentioned Indenture.
TMI TRUST COMPANY, as Trustee | ||
By: |
|
|
Name: | ||
Title: |
Dated: ___________
A-4
[Form of Back of Note]
12.000% Senior Secured Notes due 2022
Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. Interest . CURO Financial Technologies Corp., a Delaware corporation (the Company ), promises to pay interest on the principal amount of this Note at 12.000% per annum from [__________] until maturity. The Company will pay interest semi-annually in arrears every March 1 and September 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day and no interest shall accrue for the intervening period (each, an Interest Payment Date ). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided , that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided , further , that the first Interest Payment Date shall be [__________]. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment . The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders at the close of business on February 15 or August 15 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes shall be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose, or, at the option of the Company, by check mailed to the Holders at their respective addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium, if any, and interest on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Company. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Holders must surrender the Notes to the Company, the Registrar or the Paying Agent to collect payments of principal on the Notes.
3. Paying Agent and Registrar . Initially, TMI Trust Company, as the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.
A-5
4. Indenture . The Company issued the Notes under an Indenture, dated as of February 15, 2022 (as amended, supplemented or otherwise modified from time to time, the Indenture ), among the Company, the Guarantors, the Trustee and the Collateral Agent. This Note is one of a duly authorized issue of notes of the Company designated as its 12.000% Senior Secured Notes due 2022. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by express reference to the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb) (the TIA ). The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.
5. Optional Redemption .
(a) On and after March 1, 2019, the Company may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest to the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on March 1of each of the years set forth below.
Year |
Percentage | |||
2019 |
106.000 | % | ||
2020 |
103.000 | % | ||
2021 and thereafter |
100.000 | % |
(b) Prior to March 1, 2019, the Company may redeem up to 40% of the aggregate principal amount of the Notes (including Additional Notes) originally issued under this Indenture at a redemption price of 112.000% of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date) if:
(1) such redemption is made with the proceeds of one or more Equity Offerings;
(2) at least 60% of the aggregate principal amount of the Notes (including any Additional Notes) originally issued under the Indenture remain outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company or any of its Subsidiaries); and
(3) the redemption occurs within 90 days of such Equity Offering.
(c) Prior to March 1, 2019, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date (subject to the right of Holders on the relevant record date to receive interest due on the relevant interest payment date).
(d) Any redemption pursuant to this Section 5 shall be made pursuant to the provisions of Section 3.01 through 3.06 of the Indenture.
A-6
(e) In the event that holders of not less than 90% in aggregate principal amount of the then outstanding Notes accept a Change of Control Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described above) purchases all of the Notes held by such holders, the Company will have the right, upon not less than 30 nor more than 60 days prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus accrued and unpaid interest, if any, on the Notes that remain outstanding, to the date of redemption, subject to the rights of holders on the relevant regular record date to receive interest due on the relevant interest payment date that is on or prior to the applicable redemption date.
6. Mandatory Redemption . Except as set forth in Sections 5.10, 5.14 and 5.16 of the Indenture, the Company is not required to make mandatory redemption or sinking fund payments or offers to purchase with respect to the Notes.
7. Notice of Redemption . Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000 in excess thereof, unless all of the Notes held by a Holder are to be redeemed. Notice of any redemption upon any Equity Offering or other securities offering or financing, or in connection with a transaction (or series of related transactions) that constitute a Change of Control, may, in the Companys discretion, be given prior to the completion thereof and be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering, securities offering, financing or Change of Control. If such redemption is so subject to satisfaction of one or more conditions precedent, such notice shall describe each such condition, and if applicable, shall state that such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date. In addition, the Company may provide in such notice that payment of the redemption price and performance of the Companys obligations with respect to such redemption may be performed by another Person. On and after the redemption date, unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the principal amount of the Notes or portions thereof called for redemption.
8. Offer to Purchase . Sections 5.10, 5.14 and 5.16 of the Indenture provide that after certain Asset Sales, upon the occurrence of a Change of Control or if the Company has greater than $5.0 million of Excess Cash Flow in any fiscal year, subject to further limitations contained therein, the Company will make an offer to purchase Notes in accordance with the procedures set forth in the Indenture.
9. Denominations, Transfer, Exchange . The Notes are in registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. None of the Trustee, the Registrar or the Company is required to transfer or exchange any Note selected for redemption, except for the unredeemed portion of the Note being redeemed in part. Also, none of the Registrar, the Trustee or the Company is required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed.
A-7
10. Persons Deemed Owners . The registered Holder of a Note may be treated as its owner for all purposes. Only registered Holders shall have rights under the Indenture, the Intercreditor Agreement and the Collateral Documents.
11. Unclaimed Money . If any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its request or, if then held by the Company, will be discharged from such trust. After any such payment, any Holder of a Note entitled to the money must look, as an unsecured creditor, only to the Company and not the Trustee or Paying Agent for payment, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease.
12. Discharge and Defeasance . Subject to the conditions set forth in the Indenture, the Company and the Guarantors at any time shall be entitled to terminate some or all of their obligations under the Indenture and the Notes or the Notes Guarantees, as applicable, if the Company deposits with the Trustee cash in U.S. dollars or non-callable U.S. Government Obligations for the payment of the principal of, premium, if any, and interest on the Notes to redemption or Stated Maturity, as the case may be.
13. Amendment, Supplement and Waiver . Subject to certain exceptions, the Indenture Documents may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), and any existing Default or Event of Default or compliance with any provision of the Indenture Documents may be waived with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with the purchase of, or tender offer or exchange offer for, the Notes), in each case without notice to any other Holder, but subject to Section 5.20 of the Indenture. Without the consent of each Holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting Holder): (1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (2) reduce the principal of, premium, if any, or extend the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than the provisions of Sections 3.09, 3.10, 5.10, 5.14 and 5.16 of the Indenture prior to the time at which an obligation to make such an offer has arisen); (3) reduce the rate of or extend the time for payment of interest, including default interest, on any Note; (4) waive a Default in the payment of principal of, premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (5) make any Note payable in money other than that stated in the Notes; (6) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, premium, if any, or interest on the Notes; (7) release any Guarantor from any of its obligations under its Notes Guarantee or the Indenture,
A-8
except in accordance with the terms of the Indenture; or (8) make any change to Sections 10.01 or 10.02 of the Indenture. No amendment, supplement or waiver shall, without the consent of Holders of not less than 66 2/3% in aggregate principal amount of the then outstanding Notes issued under the Indenture, release (or have the effect of releasing) all or substantially all of the Collateral from the Liens securing the Indenture Obligations. Notwithstanding the foregoing, without the consent of any Holder, the Company, the Trustee and the Collateral Agent may amend, supplement or waive any provision of the Indenture Documents to: (1) cure any ambiguity, defect, mistake or inconsistency or to make a modification of a formal, minor or technical nature or to correct a manifest error, (2) provide for uncertificated Notes in addition to or in place of certificated Notes, (3) comply with the covenant relating to mergers, consolidations and sales of assets; (4) provide for the assumption of the Companys or any Guarantors obligations to Holders in the case of a merger or consolidation or sale of all or substantially all of the Companys or such Guarantors assets, (5) add Guarantees with respect to the Notes or to secure the Notes, (6) add to the covenants of the Company or any Guarantor for the benefit of the Holders or surrender any right or power conferred upon the Company or any Guarantor, (7) make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the Indenture Documents of any such Holder, (8) if it becomes necessary to qualify the Indenture under the TIA, comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA, (9) (i) enter into additional or supplemental Collateral Documents, (ii) release Collateral or Guarantors in accordance with the terms of the Indenture and the Collateral Documents or (iii) enter into any replacement intercreditor agreement substantially in the form of the Intercreditor Agreement entered into on the date of the Indenture, (10) evidence and provide for the acceptance and appointment under the Indenture of a successor trustee pursuant to the requirements thereof, (11) make any amendment to the provisions of the Indenture relating to the transfer and legending of Notes as permitted by the Indenture, including to facilitate the issuance and administration of the Notes or to comply with the rules of any applicable securities depository; provided , however , that (i) compliance with the Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer Notes, (12) conform the text of the Indenture Documents to any provision of the Description of Notes section of the Offering Memorandum to the extent that such provision of the Description of Notes was intended to be a verbatim recitation of a provision of the Indenture Documents, which intent shall be evidenced by an Officers Certificate of the Company to that effect, (13) provide for or confirm the issuance of Additional Notes in accordance with the terms of the Indenture or (14) subject the security interests in the Collateral in respect of Pari Passu Payment Lien Obligations to the terms of the Collateral Documents and Intercreditor Agreement, to the extent the incurrence of such Pari Passu Indebtedness and the grant of all Liens on Collateral held for the benefit of such Pari Passu Indebtedness was permitted under the Indenture. The consent of Holders is not necessary under the Indenture to approve the particular form of any proposed amendment, supplement or waiver. It is sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under the Indenture becomes effective, the Company is required to mail to Holders a notice briefly describing such amendment, supplement or waiver. However, the failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of the amendment, supplement or waiver.
A-9
14. Defaults and Remedies .
(a) Under the Indenture, Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of the principal, or premium, if any, of any Note when due at maturity, upon optional redemption, upon required purchase, upon acceleration or otherwise; (iii) (x) failure by the Company or any of its Restricted Subsidiaries to comply with its obligations under Section 5.10, 5.14, 5.16 or Article 6 of the Indenture or (y) the incurrence by any Parent Entity of Indebtedness in violation of Section 5.09(h) of the Indenture; (iv) failure to perform any other covenant or agreement of the Company or any of its Restricted Subsidiaries under the Indenture Documents for 30 days after written notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created after the date of the Indenture, which default (A) is caused by a failure to pay principal at final stated maturity (after giving effect to all applicable grace periods provided in such Indebtedness) (a Payment Default ) or (B) results in the acceleration of such Indebtedness prior to its final stated maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates in excess of $10.0 million (or its foreign currency equivalent); (vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments which are non-appealable aggregating in excess of $10.0 million (or its foreign currency equivalent) (not covered by independent third-party insurance as to which liability has not been denied by such insurance carrier), which judgments are not paid, discharged or stayed for a period of 60 days following such judgment becoming final, and in the event such judgment is covered by insurance, any enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed; (vii) (A) any security interest created by any Collateral Document ceases to be in full force and effect (except as permitted by the terms of the Indenture or the Collateral Documents) or (B) the breach or repudiation by the Company or any of its Restricted Subsidiaries of any of their obligations under any Collateral Document; provided that, in the case of clauses (A) and (B), such cessation, breach or repudiation, individually or in the aggregate, results in Collateral having a Fair Market Value in excess of $5.0 million not being subject to a valid, perfected security interest; (viii) except as permitted by the Indenture, any Notes Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Notes Guarantee; and (ix) certain events of bankruptcy or insolvency with respect to the Company, or any Significant Subsidiary of the Company or any group of Restricted Subsidiaries of the Company that, taken as a whole, would constitute a Significant Subsidiary of the Company.
(b) If any Event of Default (other than an Event of Default specified in subsection (i) or (j) of Section 7.01 of the Indenture occurs and is continuing and has not been waived by the Holders, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes shall become due and payable immediately.
A-10
Notwithstanding the foregoing, if an Event of Default specified in subsection (i) or (j) of Section 7.01 of the Indenture occurs, all outstanding Notes shall be due and payable immediately without further action or notice. The Holders of at least a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, premium, if any, or interest that has become due solely because of the acceleration) have been cured or waived and all sums paid or advanced by the Trustee under the Indenture and the reasonable compensation, expenses, disbursements, and advances of the Trustee and its agents and counsel have been paid or deposited with the Trustee or provision therefor reasonably satisfactory to the Trustee has been made. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of at least a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest.
(c) The Holders of at least a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of principal, premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration).
(d) In the event of any Event of Default specified in clause (a)(v) above, such Event of Default and all consequences thereof (excluding any resulting payment default, other than as a result of acceleration of the Notes) shall be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if within 20 days after such Event of Default arose the Company delivers an Officers Certificate to the Trustee stating that:
(i) the Indebtedness or guarantee that is the basis for such Event of Default has been discharged; or
(ii) holders thereof have rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default;
(iii) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction; and
(iv) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived.
(e) The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture and the Company is required, upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.
A-11
15. No Recourse Against Others . No past, present or future director, officer, employee or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or any Guarantor under the Indenture Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the United States federal securities laws or other corporate laws, and it is the view of the SEC that such a waiver is against public policy.
16. Authentication . This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
17. Trustee Dealings with the Company . The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest as defined by the TIA it must eliminate such conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 8.10 and 8.11 of the Indenture.
18. Governing Law . THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF SHALL GOVERN AND BE USED TO CONSTRUE THIS NOTE AND THE INDENTURE.
19. Abbreviations . Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
20. CUSIP Numbers . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the correctness or accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
21. Guarantees . The payment of the principal of, premium, if any, and interest on the Notes, is unconditionally guaranteed, jointly and severally, by the Guarantors to the extent set forth in and subject to the provisions of the Indenture.
22. Security . Subject to the terms of the Intercreditor Agreement, the Obligations of the Company and the Guarantors under the Notes and the Notes Guarantees are secured by Liens on the Collateral pursuant to the terms of the Collateral Documents. The actions of the Trustee, the Collateral Agent and the Holders and the application of proceeds from the enforcement of any remedies with respect to such Collateral are limited pursuant to the terms of the Collateral Documents and the Intercreditor Agreement.
A-12
The Company will furnish to any Holder upon written request and without charge a copy of the Indenture, the Collateral Documents and the Intercreditor Agreement. Requests may be made to the Company at the following address:
CURO Financial Technologies Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Attention: Chief Legal Officer
A-13
A SSIGNMENT F ORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
(Insert assignees legal name)
(Insert assignees soc. sec. or tax I.D. no.)
(Print or type assignees name, address and zip code)
and irrevocably appoint to transfer this Note on the books of the Company. The agent may substitute another to act for it.
Date: ____________________
Your Signature: |
|
|
(Sign exactly as your name appears on the face of this Note) |
Signature Guarantee*:
* | Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). |
A-14
O PTION OF H OLDER TO E LECT P URCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 5.10, 5.14 or 5.16 of the Indenture, check the appropriate box below:
☐ Section 5.10 ☐ Section 5.14 ☐ Section 5.16
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 5.10, 5.14 or 5.16 of the Indenture, state the amount you elect to have purchased:
$
Date: ____________________
Your Signature: |
|
|
(Sign exactly as your name appears on the face of this Note) |
Tax Identification No.: |
Signature Guarantee*:
* | Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). |
A-15
S CHEDULE OF E XCHANGES OF I NTERESTS
IN THE G LOBAL N OTE *
The initial outstanding principal amount of this Global Note is $____________. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal | ||||||||
Amount of | Amount of | Amount of this | Signature of | |||||
Decrease in | Increase in | Global Note | Authorized | |||||
Principal | Principal | Following such | Signatory of | |||||
Date of | Amount of this | Amount of this | Decrease or | Trustee or | ||||
Exchange |
Global Note |
Global Note |
Increase |
Custodian |
* | This schedule should be included only if the Note is issued in global form. |
A-16
EXHIBIT B
F ORM OF C ERTIFICATE OF T RANSFER
CURO Financial Technologies Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Attention: Chief Legal Officer
TMI Trust Company, as Trustee and Registrar
[]
Re: 12.000% Senior Secured Notes due 2022
Reference is hereby made to the Indenture, dated as of February 15, 2017 (the Indenture ), among CURO Financial Technologies Corp., a Delaware corporation (the Company ), the Guarantors and TMI Trust Company, as Trustee and as Collateral Agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
___________________ (the Transferor ) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $_________ in such Note[s] or interests (the Transfer ), to _________________ (the Transferee ), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. ☐ Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A . The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the Securities Act ), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.
2. ☐ Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S . The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the
B-1
Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed Transfer is being made prior to the expiration of the Restricted Period, the Transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.
3. ☐ Check and complete if Transferee will take delivery of a beneficial interest in the AI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S . The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) ☐ such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b) ☐ such Transfer is being effected to the Company or a Subsidiary thereof;
or
(c) ☐ such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;
or
(d) ☐ such Transfer is being effected to an Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted
B-2
Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the AI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.
4. ☐ Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note .
(a) ☐ Check if Transfer is pursuant to Rule 144 . (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) ☐ Check if Transfer is Pursuant to Regulation S . (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) ☐ Check if Transfer is Pursuant to Other Exemption . (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
B-3
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
[Insert Name of Transferor] | ||
By: |
|
|
Name: | ||
Title: |
Dated: _________________
B-4
A NNEX A TO C ERTIFICATE OF T RANSFER
1. | The Transferor owns and proposes to transfer the following: |
[CHECK ONE OF (a) OR (b)]
(a) | ☐ a beneficial interest in the: |
(i) | ☐ 144A Global Note (CUSIP _________), or |
(ii) | ☐ Regulation S Global Note (CUSIP _________), or |
(iii) | ☐ AI Global Note (CUSIP _________); or |
(b) | ☐ a Restricted Definitive Note. |
2. | After the Transfer the Transferee will hold: |
[CHECK ONE]
(a) | ☐ a beneficial interest in the: |
(i) | ☐ 144A Global Note (CUSIP _________), or |
(ii) | ☐ Regulation S Global Note (CUSIP _________), or |
(iii) | ☐ AI Global Note (CUSIP _________), or |
(iv) | ☐ Unrestricted Global Note (CUSIP _________); or |
(b) | ☐ a Restricted Definitive Note; or |
(c) | ☐ an Unrestricted Definitive Note, |
in accordance with the terms of the Indenture.
EXHIBIT C
F ORM OF C ERTIFICATE OF E XCHANGE
CURO Financial Technologies Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Attention: Chief Legal Officer
TMI Trust Company, as Trustee and Registrar
[]
Re: 12.000% Senior Secured Notes due 2022
Reference is hereby made to the Indenture, dated as of February 15, 2017 (the Indenture ), among CURO Financial Technologies Corp., a Delaware corporation (the Company ), the Guarantors and TMI Trust Company , as Trustee and as Collateral Agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
________________ (the Owner ) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $_________ in such Note[s] or interests (the Exchange ). In connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note
(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note . In connection with the Exchange of the Owners beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owners own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the Securities Act ), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(b) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note . In connection with the Exchange of the Owners beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owners own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
C-1
(c) ☐ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note . In connection with the Owners Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owners own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(d) ☐ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note . In connection with the Owners Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owners own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes
(a) ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note . In connection with the Exchange of the Owners beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owners own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
(b) ☐ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note . In connection with the Exchange of the Owners Restricted Definitive Note for a beneficial interest in the [CHECK ONE] ☐ 144A Global Note, ☐ Regulation S Global Note, ☐ AI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owners own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any
C-2
applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
[Insert Name of Owner] | ||
By: |
|
|
Name: | ||
Title: |
Dated: _______________
C-3
EXHIBIT D
F ORM OF C ERTIFICATE F ROM
A CQUIRING A CCREDITED I NVESTOR
CURO Financial Technologies Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Attention: Chief Legal Officer
TMI Trust Company, as Trustee and Registrar
[]
Re: 12.000% Senior Secured Notes due 2022
Reference is hereby made to the Indenture, dated as of February 15, 2017 (the Indenture ), among CURO Financial Technologies Corp., a Delaware corporation (the Company ), the Guarantors and TMI Trust Company, as Trustee and as Collateral Agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $_______________ aggregate principal amount of:
(a) ☐ a beneficial interest in a Global Note, or
(b) ☐ a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the Securities Act ).
2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a qualified institutional buyer (as defined therein), (C) to an accredited investor (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F)
D-1
pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an accredited investor (as defined in Rule 501(a) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an accredited investor) as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.
[Insert Name of Accredited Investor] | ||
By: |
|
|
Name: | ||
Title: |
Dated:_____________
D-2
EXHIBIT E
[F ORM OF S UPPLEMENTAL I NDENTURE ]
SUPPLEMENTAL INDENTURE (this Supplemental Indenture ), dated as of [_________], among CURO Financial Technologies Corp. (the Company ), [_________] (the New Guarantor ) and TMI Trust Company, as Trustee (the Trustee ).
W I T N E S S E T H
WHEREAS, the Company and the Guarantors have heretofore executed and delivered to the Trustee an indenture (the Indenture ), dated as of February 15, 2017, providing for the issuance of 12.000% Senior Secured Notes due 2022 (the Notes ).
WHEREAS, Section 5.17 of the Indenture provides that under certain circumstances the Company is required to cause the New Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all of the Companys obligations under the Indenture Documents pursuant to a Notes Guarantee on the terms and conditions set forth herein;
WHEREAS, Section 10.01(e) of the Indenture provides, among other things, that the Company and the Trustee may amend or supplement the Indenture Documents without the consent of any Holder to add Guarantees with respect to the Notes; and
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the New Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees, jointly and severally with all other Guarantors, to Guarantee the Companys obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in Article 11 of the Indenture and to be bound by all other applicable provisions of the Indenture.
3. EFFECTIVENESS. This Supplemental Indenture shall be effective upon execution by the parties hereto.
4. RECITALS. The recitals contained herein shall be taken as the statements of the Company and the New Guarantor and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture.
E-1
5. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
6. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Supplemental Indenture (including by electronic transmission). Each signed copy shall be an original, but all of them together represent the same agreement.
7. EFFECT OF HEADINGS. The section headings in this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following pages]
E-2
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first written above.
CURO FINANCIAL TECHNOLOGIES CORP. | ||
By: |
|
|
Name: | ||
Title: | ||
[NEW GUARANTOR] | ||
By: |
|
|
Name: | ||
Title: |
TMI TRUST COMPANY, AS TRUSTEE | ||
By: |
|
|
Name: | ||
Title: |
Exhibit 10.4
SPEEDY CASH HOLDINGS CORP.
2010 EQUITY INCENTIVE PLAN
TABLE OF CONTENTS
Page
1. PURPOSE |
1 | |||
2. DEFINITIONS |
1 | |||
3. TERM OF THE PLAN |
3 | |||
4. STOCK SUBJECT TO THE PLAN |
3 | |||
5. ADMINISTRATION |
3 | |||
6. AUTHORIZATION AND ELIGIBILITY |
4 | |||
7. SPECIFIC TERMS OF AWARDS |
4 | |||
8. ADJUSTMENT PROVISIONS |
8 | |||
9. SETTLEMENT OF AWARDS |
10 | |||
10. RESERVATION OF STOCK |
12 | |||
11. NO SPECIAL EMPLOYMENT OR OTHER RIGHTS |
12 | |||
12. NONEXCLUSIVITY OF THE PLAN |
12 | |||
13. TERMINATION AND AMENDMENT OF THE PLAN |
12 | |||
14. NOTICES AND OTHER COMMUNICATIONS |
13 | |||
15. GOVERNING LAW |
14 |
i
SPEEDY CASH HOLDINGS CORP.
2010 EQUITY INCENTIVE PLAN
1. Purpose
This Plan is intended to encourage ownership of Common Stock by employees, consultants and directors of the Company and its Affiliates and to provide additional incentive for them to promote the success of the Companys business. The Plan is intended to be an incentive stock option plan within the meaning of Section 422 of the Code, but not all Awards are required to be Incentive Options.
2. Definitions
As used in this Plan, the following terms shall have the following meanings:
2.1. Affiliate means any corporation, partnership, limited liability company, business trust, or other entity controlling, controlled by or under common control with the Company.
2.2. Award means any grant or sale pursuant to the Plan of Options, Restricted Stock or Stock Grants.
2.3. Award Agreement means an agreement between the Company and the recipient of an Award, setting forth the terms and conditions of the Award.
2.4. Board means the Companys Board of Directors.
2.5. Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto, and any regulations issued from time to time thereunder.
2.6. Committee means the Audit Committee established by the Board.
2.7. Common Stock or Stock means (a) the Companys Class A Voting Common Stock, $0.001 par value per share and (b) the Companys Class B Non-Voting Common Stock, $0.001 par value per share.
2.8. Company means Speedy Cash Holdings Corp., a corporation organized under the laws of the State of Delaware.
2.9. Disposition Event has the meaning set forth in the Investor Rights Agreemeot.
2.10. Grant Date means the date as of which an Option is granted, as determined under Section 7.1(a).
2.11. Incentive Option means an Option which by its terms is to be treated as an incentive stock option within the meaning of Section 422 of the Code.
2.12. Investor Rights Agreement means the Investor Rights Agreement, dated as of September 10, 2008, by and among the Company and its stockholders, setting forth, among other things, conditions and restrictions upon the transfer of shares of Stock, as such agreements may be amended, restated, modified or replaced from time to time.
2.13. Market Value means the value of a share of Common Stock on any date as determined by the Committee.
2.14. Nonstatutory Option means any Option that is not an Incentive Option.
2.15. Option means an option to purchase shares of Common Stock.
2.16. Optionee means a Participant to whom an Option shall have been granted under the Plan.
2.17. Participant means any holder of an outstanding Award under the Plan.
2.18. Plan means this 2010 Equity Incentive Plan of the Company, as amended from time to time, and including any attachments or addenda hereto.
2.19. Restricted Stock means a grant of sale of shares of Common Stock to a Participant subject to a Risk of Forfeiture.
2.20. Restriction Period means the period of time, established by the Committee in connection with an Award of Restricted Stock, during which the shares of Restricted Stock are subject to a Risk of Forfeiture described in the applicable Award Agreemeot.
2.21. Risk of Forfeiture means a limitation on the right of the Participant to retain Restricted Stock, including a right of the Company to reacquire the Shares at less than their then Market Value, arising because of the occurrence or non-occurrence of specified events or conditions.
2.22. Stock Grant means the grant of shares of Common Stock not subject to restrictions or other forfeiture conditions.
2
2.23. Ten Percent Owner means a person who owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a Ten Percent Owner shall be determined with respect to an Option based on the facts existing immediately prior to the Grant Date of the Option.
3. Term of the Plan
Unless the Plan shall have been earlier terminated by the Board, Awards may be granted under this Plan at any time in the period commencing on the date of approval of the Plan by the Board and ending immediately prior to the tenth anniversary of the earlier of the adoption of the Plan by the Board or approval of the Plan by the Companys stockholders. Awards granted pursuant to the Plan within that period shall not expire solely by reason of the termination of the Plan. Awards of Incentive Options granted prior to stockholder approval of the Plan are expressly conditioned upon such approval, but in the event of the failure of the stockholders to approve the Plan, such Awards shall thereafter and for all purposes be deemed to constitute Nonstatutory Options.
4. Stock Subject to the Plan
At no time shall the number of shares of Common Stock issued pursuant to or subject to outstanding Awards granted under the Plan (including, pursuant to Incentive Options), nor the number of shares of Stock issued pursuant to Incentive Options, exceed 50,000 shares of Common Stock; subject, however, to the provisions of Section 8 of the Plan. For purposes of applying the foregoing limitation, if any Option expires, terminates, or is cancelled for any reason without having been exercised in full, or if any Award of Restricted Stock is forfeited by the recipient or repurchased at less than its Market Value, the shares (i) not purchased by the Optionee or (ii) forfeited by the recipient shall again be available for Awards to be granted under the Plan and (b) if any Option is exercised by delivering previously owned shares in payment of the exercise price therefore, only the net number of shares, that is the number of shares issued minus the number received by the Company in payment of the exercise price, shall be considered to have been issued pursuant to an Award granted under the Plan. Shares of Common Stock issued pursuant to the Plan may be either authorized but unissued shares or shares held by the Company in its treasury.
5. Administration
The Plan shall be administered exclusively by the Committee. Subject to the provisions of the Plan, the Committee shall have complete authority, in its discretion, to make or to select the manner of making all determinations with respect to each Award to be granted by the Company under the Plan including the employee, consultant or director to receive the Award and the form, terms and conditions of the Award. In making such determinations, the Committee may take into account the nature of the services rendered by the respective employees, consultants, and directors, their present and potential
3
contributions to the success of the Company and its Affiliates, and such other factors as the Committee in its discretion shall deem relevant. Subject to the provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of the respective Award Agreements (which need not be identical), and to make all other determinations necessary or advisable for the administration of the Plan. The Committees determinations made in good faith on matters referred to in the Plan shall be final, binding and conclusive on all persons having or claiming any interest under the Plan or an Award made pursuant to hereto.
6. | Authorization and Eligibility |
The Committee may grant from time to time and at any time prior to the termination of the Plan one or more Awards, either alone or in combination with any other Awards, to any employee of or consultant to one or more of the Company and its Affiliates or to any non-employee member of the Board or of any board of directors (or similar governing authority) of any Affiliate. However, only employees of the Company, and of any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code, shall be eligible for the grant of an Incentive Option. Further, in no event shall the number of shares of Common Stock covered by Options or other Awards granted to any one person in any one calendar year exceed 66-2/3% of the aggregate number of shares of Common Stock subject to the Plan.
Each grant of an Award shall be subject to all applicable terms and conditions of the Plan (including but not limited to any specific terms and conditions applicable to that type of Award set out in the following Section), and such other terms and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No prospective Participant shall have any rights with respect to an Award, unless and until such Participant has executed an agreement evidencing the Award, delivered a fully executed copy thereof to the Company, and otherwise complied with the applicable terms and conditions of such Award.
7. | Specific Terms of Awards |
7.1. Options .
(a) Date of Grant . The granting of an Option shall take place at the time specified in the Award Agreement. Only if expressly so provided in the applicable Award Agreement shall the Grant Date be the date on which the Award Agreement shall have been duly executed and delivered by the Company and the Optionee.
(b) Exercise Price . The price at which shares of Common Stock may be acquired under each Incentive Option shall be not less than 100% of the Market Value of Common Stock on the Grant Date, or not less than 110% of the Market Value of Common Stock on the Grant Date if the Optionee is a Ten Percent Owner. The price at which shares may be acquired under each Nonstatutory Option shall not be so limited solely by reason of this Section.
4
(c) Option Period . No Incentive Option may be exercised on or after the tenth anniversary of the Grant Date, or on or after the fifth anniversary of the Grant Date if the Optionee is a Ten Percent Owner. The Option period under each Nonstatutory Option shall not be so limited solely by reason of this Section.
(d) Exercisability . An Option may be immediately exercisable or become exercisable in such installments, cumulative or non-cumulative, as the Committee may determine. In the case of an Option not otherwise immediately exercisable in full, the Committee may accelerate the exercisability of such Option in whole or in part at any time; provided, that the acceleration of the exercisability of any Incentive Option would not cause the Option to fail to comply with the provisions of Section 422 of the Code.
(e) Termination of Association with the Company . Unless the Committee shall provide otherwise with respect to any Option, if the Optionees employment or other association with the Company and its Affiliates ends for any reason, including because of the Optionees employer ceasing to be an Affiliate, any outstanding Option of the Optionee shall cease to be exercisable in any respect not later than 90 days following that event and, for the period it remains exercisable following that event, shall be exercisable only to the extent exercisable at the date of that event. Military or sick leave or other bona fide leave shall not be deemed a termination of employment or other association, provided that it does not exceed the longer of ninety (90) days or the period during which the absent Optionees reemployment rights, if any, are guaranteed by statute or by contract.
(f) Transferability . Except as otherwise provided in this subsection (f), Options shall not be transferable, and no Option or interest therein may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. All of a Participants rights in any Option may be exercised during the life of the Participant only by the Participant or the Participants legal representative. However, the Committee may, at or after the grant of a Nonstatutory Option, provide that such Option may be transferred by the recipient to a family member; provided, however, that any such transfer is without payment of any consideration whatsoever and that no transfer of an Option shall be valid unless first approved by the Committee, acting in its sole discretion. For this purpose, family member means any child, stepchild, grandchild, parent, stepparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the employees household (other than a tenant or employee), a trust in which the foregoing persons have more than fifty percent (50%) of the beneficial interests, a foundation in which the foregoing persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent (50%) of the voting interests.
5
(g) Method of Exercise . An Option may be exercised by the Optionee giving written notice, in the manner provided in Section 14, specifying the number of shares with respect to which the Option is then being exercised. The notice shall be accompanied by payment in the form of cash or check payable to the order of the Company in an amount equal to the exercise price of the shares to be purchased or, if the Committee had so authorized on the grant of any particular Option hereunder {and subject to such conditions, if any, as the Committee may deem necessary to avoid adverse accounting effects to the Company) by delivery to the Company of that number of shares of Common Stock having a Market Value equal to the exercise price of the shares to be purchased. Receipt by the Company of such notice and payment shall constitute the exercise of the Option. Within thirty (30) days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or cause to be delivered to the Optionee or his agent a certificate or certificates for the number of shares then being purchased. Such shares shall be fully paid and nonassessable. Nothing herein shall be construed to preclude the Company from participating in a so-called cashless exercise, provided the Optionee or other person exercising the Option and each other party involved in any such exercise shall comply with such procedures, and enter into such agreements, of indemnity or otherwise, as the Company shall specify.
(h) Limit on Incentive Option Characterization . An Incentive Option shall be considered to be an Incentive Option only to the extent that the number of shares of Common Stock for which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value (as of the date of the grant of the Option) in excess of the current limit. The current limit for any Optionee for any calendar year shall be $100,000 minus the aggregate Market Value at the date of grant of the number of shares of Common Stock available for purchase for the first time in the same year under each other Incentive Option previously granted to the Optionee under the Plan, and under each other incentive stock option previously granted to the Optionee under any other incentive stock option plan of the Company and its Affiliates, after December 31, 1986. Any shares of Common Stock which would cause the foregoing limit to be violated shall be deemed to have been granted under a separate Nonstatutory Option, otherwise identical in its terms to those of the Incentive Option.
(i) Notification of Disposition . Each person exercising any Incentive Option granted under the Plan shall be deemed to have covenanted with the Company to report to the Company any disposition of such shares prior to the expiration of the holding periods specified by Section 422(a)(l) of the Code and, if and to the extent that the realization of income in such a disposition imposes upon the Company federal, state, local or other withholding tax requirements, or any such withholding is required to secure for the Company an otherwise available tax deduction, to remit to the Company an amount in cash sufficient to satisfy those requirements.
(j) Rights Pending Exercise . No person holding an Option shall be deemed for any purpose to be a stockholder of the Company with respect to any of the shares of Stock issuable pursuant to his Option, except to the extent that the Option shall have been exercised with respect thereto and, in addition, a certificate shall have been issued therefor and delivered to such holder or his agent.
6
7.2. Restricted Stock .
(a) Purchase Price . Shares of Restricted Stock shall be issued under the Plan for such consideration, in cash, other property or services, or any combination thereof, as is determined by the Committee.
(b) Issuance of Certificates . Each Participant receiving a Restricted Stock Award, subject to subsection (c) below, shall be issued a stock certificate in respect of such shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and, if applicable, shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award substantially in the following form:
The transferability of this certificate and the shares represented by this certificate are subject to the terms and conditions of the Speedy Cash Holdings Corp. Equity Incentive Plan (as amended) and an Award Agreement entered into by the registered owner and Speedy Cash Holdings Corp. Copies of such Plan and Agreement are on file in the offices of Speedy Cash Holdings Corp.
(c) Escrow of Shares . The Committee may require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Participant deliver a stock power, endorsed in blank, relating to the Stock covered by such Award.
(d) Restrictions and Restriction Period . During the Restriction Period applicable to shares of Restricted Stock, such shares shall be subject to limitations on transferability and a Risk of Forfeiture arising on the basis of such conditions related to the performance of services, Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.
(e) Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award . Except as otherwise provided in the Plan or the applicable Award Agreement, at all times prior to lapse of any Risk of Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the Participant shall have all of the rights of a stockholder of the Company, including the right to vote, and the right to receive any dividends with respect to, the shares of Restricted Stock. The Committee, as determined at the time of Award, may permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to the extent shares are available under Section 4.
7
(f) Termination of Association with the Company . Unless the Committee shall provide otherwise for any Award of Restricted Stock, upon termination of a Participants employment or other association with the Company and its Affiliates for any reason during the Restriction Period, including because of the Participants employer ceasing to be an Affiliate during the Restriction Period, all shares of Restricted Stock still subject to Risk of Forfeiture shall be forfeited or otherwise subject to return to or repurchase by the Company on the terms specified in the Award Agreement; provided, however, that military or sick leave or other bona fide leave shall not be deemed a termination of employment or other association, if it does not exceed the longer of ninety (90) days or the period during which the absent Participants reemployment rights, if any, are guaranteed by statute or by contract.
(g) Lapse of Restrictions . If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to the Participant promptly if not theretofore so delivered.
7.3. Stock Grants . Stock Grants shall be awarded solely in recognition of significant contributions to the success of the Company or its Affiliates, in lieu of compensation otherwise already due and in such other limited circumstances as the Committee deems appropriate. Stock Grants shall be made without forfeiture conditions of any kind.
7.4. Awards to Participants Outside the United States . The Committee may modify the terms of any Award under the Plan granted to a Participant who is, at the time of grant or during the term of the Award, resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that the Award shall conform to laws, regulations, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participants residence or employment abroad, shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. The Committee may establish supplements to, or amendments, restatements, or alternative versions of the Plan for the purpose of granting and administrating any such modified Award. No such modification, supplement, amendment, restatement or alternative version may increase the share limit of Section 4.
8. | Adjustment Provisions |
8.1. Adjustment for Corporate Actions . All of the share numbers set forth in the Plan reflect the capital structure of the Company as of November 30, 2010. Subject to Section 8.2, if subsequent to that date the outstanding shares of Common Stock (or any other securities covered by the Plan by reason of the prior application of this Section) are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to shares of Common Stock or other securities, through merger, consolidation, sale of all or substantially all the property of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other distribution with respect to such shares of Common Stock, or other securities, an appropriate and proportionate adjustment will be made in (i) the maximum numbers and
8
kinds of shares provided in Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding Awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding Options (without change in the aggregate purchase price as to which such Options remain exercisable), and (iv) the repurchase price of each share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase right.
8.2. Consolidation or Merger . Subject to the remainder of this Section 8.2 and the terms and provisions of any specific Award Agreement, in the event of any consolidation or merger of the Company with or into another company or in case of any sale or conveyance to another company or entity of the property of the Company as a whole or substantially as a whole, or in the case of any Disposition Event, regardless of how effected (including by sale of assets or sale of the Companys outstanding equity securities), shares of stock or other securities equivalent in kind and value to those shares and other securities an Optionee would have received if he or she had held the full number of shares of Stock remaining subject to the Option immediately prior to such consolidation, merger, sale or conveyance and had continued to hold those shares (together with all other shares, stock and securities thereafter issued in respect thereof) to the time of the exercise of the Option shall thereupon be subject to the Option. However, unless any Award Agreement shall provide different or additional terms, in any such transaction the Committee, in its discretion and as to one, some or all outstanding Options, may provide instead that any outstanding Option shall terminate, to the extent not exercised by the Optionee prior to termination, either (a) at the close of a period of not less than ten (10) days specified by the Committee and commencing on the Committees delivery of written notice to the Participant of its decision to terminate such Option without payment of consideration as provided in the following clause or (b) as of the date of the transaction, in consideration of the Companys payment to the Optionee of an amount of cash equal to the difference between the aggregate Market Value of the shares of Stock for which the Option is then exercisable and the aggregate exercise price for such shares under the Option.
8.3. Dissolution or Liquidation . Upon dissolution or liquidation of the Company, each outstanding Option shall terminate, but the Optionee (if at the time in the employ of or otherwise associated with the Company or any of its Affiliates) shall have the right, immediately prior to the dissolution or liquidation, to exercise the Option to the extent exercisable on the date of dissolution or liquidation.
8.4. Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events . In the event of any corporate action not specifically covered by the preceding Sections, including but not limited to an extraordinary cash distribution on Common Stock, a corporate separation or other reorganization or liquidation, the Committee may make such adjustment of outstanding Awards and their terms, if any, as it, in its sole discretion, may deem equitable and appropriate in the circumstances.
9
8.5. Related Matters . Any adjustment in Awards made pursuant to this Section 8 shall be determined and made, if at all, by the Committee and shall include any correlative modification of terms, including of Option exercise prices, rates of vesting or exercisability, Risks of Forfeiture and applicable repurchase prices for Restricted Stock, which the Committee may deem necessary or appropriate so as to ensure the rights of the Participants in their respective Awards are not substantially diminished nor enlarged as a result of the adjustment and corporate action other than as expressly contemplated in this Section 8. No fraction of a share shall be purchasable or deliverable upon exercise, but in the event any adjustment herennder of the number of shares covered by an Award shall cause such number to include a fraction of a share, such number of shares shall be adjusted to the nearest smaller whole number of shares. No adjustment of an Option exercise price per share pursuant to this Section 8 shall result in an exercise price which is less than the par value of the Stock.
9. | Settlement of Awards |
9.1. Violation of Law . Notwithstanding any other provision of the Plan or the relevant Award Agreement, if, at any time, in the reasonable opinion of the Company, the issuance of shares of Common Stock covered by an Award may constitute a violation of law, then the Company may delay such issuance and the delivery of a certificate for such shares until (i) approval shall have been obtained from such governmental agencies, other than the Securities and Exchange Commission, as may be required under any applicable law, rule, or regulation and (ii) in the case where such issuance would constitute a violation of a law administered by or a regulation of the Securities and Exchange Commission, one of the following conditions shall have been satisfied:
(a) the shares are at the time of the issue of such shares effectively registered under the Securities Act of 1933; or
(b) the Company shall have determined, on such basis as it deems appropriate (including an opinion of counsel in form and substance satisfactory to the Company) that the sale, transfer, assignment, pledge, encumbrance or other disposition of such shares or such beneficial interest, as the case may be, does not require registration under the Securities Act of 1933, as amended or any applicable State securities laws.
The Company shall make all reasonable efforts to bring about the occurrence of said events.
9.2. Corporate Restrictions on Rights in Stock . Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the Company. Whenever Stock is to be issued pursuant to an Award, the Company shall be under no obligation to issue such shares until such time, if ever, as the recipient of the Award (and any person who exercises any Option, in whole or in part), shall have become a party to and bound by the Investor Rights Agreement, if any. In the event of any conflict between the provisions of this Plan and the provisions of the Investor Rights Agreement, the provisions of the Investor Rights Agreement shall control except as required to fulfill the intention that this Plan constitute an incentive stock option plan within the meaning of Section 422 of the Code, but insofar as possible the provisions of the Plan and such Agreement shall be construed so as to give full force and effect to all such provisions.
10
9.3. Investment Representations . The Company shall be under no obligation to issue any shares covered by any Award unless the shares to be issued pursuant to Awards granted under the Plan have been effectively registered under the Securities Act of 1933, as amended, or the Participant shall have made such written representations to the Company (upon which the Company believes it may reasonably rely) as the Company may deem necessary or appropriate for purposes of confirming that the issuance of such shares will be exempt from the registration requirements of that Act and any applicable state securities laws and otherwise in compliance with all applicable laws, rules and regulations, including but not limited to that the Participant is acquiring the shares for his or her own account for the purpose of investment and not with a view to, or for sale in connection with, the distribution of any such shares.
9.4. Registration . If the Company shall deem it necessary or desirable to register under the Securities Act of 1933, as amended or other applicable statutes any shares of Stock issued or to be issued pursuant to Awards granted under the Plan, or to qualify any such shares of Stock for exemption from the Securities Act of 1933, as amended or other applicable statutes, then the Company shall take such action at its own expense. The Company may require from each recipient of an Award, or each holder of shares of Stock acquired pursuant to the Plan, such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for that purpose and may require reasonable indemnity to the Company and its officers and directors from that holder against all losses, claims, damage and liabilities arising from use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. In addition, the Company may require of any such person that he or she agree that, without the prior written consent of the Company or the managing underwriter in any public offering of shares of Stock, he or she will not sell, make any short sale of, loan, grant any option for the purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares of Common Stock during the 180 day period commencing on the effective date of the registration statement relating to the underwritten public offering of securities.
9.5. Placement of Legends; Stop Orders; etc . Each share of Common Stock to be issued pursuant to Awards granted under the Plan may bear a reference to the investment representation made in accordance with Section 9.3 in addition to any other applicable restriction under the Plan, the terms of the Award and if applicable under the Investor Rights Agreement and to the fact that no registration statement has been filed with the Securities and Exchange Commission in respect to such shares of Common Stock. All certificates for shares of Common Stock or other securities delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of any stock exchange upon which the Common Stock is then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
11
9.6. Tax Withholding . Whenever shares of Stock are issued or to be issued pursuant to Awards granted under the Plan, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy federal, state, local or other withholding tax requirements if, when, and to the extent required by law (whether so required to secure for the Company an otherwise available tax deduction or otherwise) prior to the delivery of any certificate or certificates for such shares. The obligations of the Company under the Plan shall be conditional on satisfaction of all such withholding obligations and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the recipient of an Award.
10. | Reservation of Stock |
The Company shall at all times during the term of the Plan and any outstanding Options granted hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient to satisfy the requirements of the Plan (if then in effect) and the Options and shall pay all fees and expenses necessarily incurred by the Company in connection therewith.
11. | No Special Employment or Other Rights |
Nothing contained in the Plan or in any Award Agreement shall confer upon any recipient of an Award any right with respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement or provision of law or corporate charter, certificate or articles, or by-laws, to the contrary, at any time to terminate such employment or consulting agreement or to increase or decrease, or otherwise adjust, the other terms and conditions of the recipients employment or other association with the Company and its Affiliates.
12. | Nonexclusivity of the Plan |
Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of stock options and restricted stock other than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
13. | Termination and Amendment of the Plan |
Subject to the Certificate of Incorporation of the Company, the Board may at any time terminate the Plan or make such modifications of the Plan as it shall deem advisable. Unless the Board otherwise expressly provides, no amendment of the Plan shall affect the terms of any Award outstanding on the date of such amendment.
12
The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, provided that the Award as amended is consistent with the terms of the Plan. Also within the limitations of the Plan, the Committee may modify, extend or assume outstanding Awards or may accept the cancellation of outstanding Awards or of outstanding stock options or other equity-based compensation awards granted by another issuer in return for the grant of new Awards for the same or a different number of shares and on the same or different terms and conditions (including but not limited to the exercise price of any Option). Furthermore, the Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Award previously granted or (b) authorize the recipient of an Award to elect to cash out an Award previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.
No amendment or modification of the Plan by the Board, or of an outstanding Award by the Committee, shall impair the rights of the recipient of any Award outstanding on the date of such amendment or modification or such Award, as the case may be, without the Participants consent; provided, however, that no such consent shall be required if (i) the Board or Committee, as the case may be, determines in its sole discretion and prior to the date of any Disposition Event that such amendment or alteration either is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, or (ii) the Board or Committee, as the case may be, determines in its sole discretion that such amendment or alteration is not reasonably likely to significantly diminish the benefits provided under the Award, or that any such diminution has been adequately compensated.
14. Notices and Other Communications
Any notice, demand, request or other communication hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to the recipient of an Award, at his or her residence address last filed with the Company and (ii) if to the Company, to Speedy Cash Holdings Corp, 3527 North Ridge Road, Wichita, Kansas 67205 Attention: Chief Executive Officer, with copies to Friedman Flesischer & Lowe LLC, One Maritime Plaza, Suite 1000, San Francisco, California 94111, Fax No. (415) 402-2111, Attention: Chris Masto and Aaron Money, and to Bingham McCutchen LLP, 399 Park Avenue, New York, New York 10022, Attention: Neil W. Townsend, Esq., Fax No. (212) 752-5378, or to such other address or telecopier number, as the case may be, as the addressee may have designated by notice to the addressor. All such notices, requests, demands and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile transmission, when confirmed by facsimile machine report.
13
15. Governing Law
The Plan and all Award Agreements and actions taken thereunder shall be governed, interpreted and enforced in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.
14
Exhibit 10.7
SPEEDY GROUP HOLDINGS CORP.
NONQUALIFIED DEFERRED COMPENSATION PLAN
Effective as of June 1, 2015
RECITALS
This Nonqualified Deferred Compensation Plan (the Plan) is adopted by Speedy Group Holdings Corp. (the Employer), a corporation organized and existing under the laws of the State of Delaware, for the benefit of the Eligible Employees of the Employer. The purpose of the Plan is to offer selected Eligible Employees who contribute significantly to the future business success of the Employer an opportunity to elect to defer a portion of their Base Salary and/or Bonus Compensation and to provide a deferred compensation vehicle to which the Employer may credit Discretionary and/or LTIP Contributions pursuant to the terms of the Plan.
The Plan is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly-compensated Employees, and as such, is intended to be exempt from the provisions of Parts 2, 3, and 4 of Title I of the Employee Retirement Income Security Act of 1974, as amended, by operation of Sections 201(2), 301(a)(3) and 401(a)(1) thereof.
The Plan is intended to comply in form and operation with all applicable law, including, to the extent applicable, the requirements of Internal Revenue Code Section 409A and will be administered, operated and construed in accordance with this intention.
ARTICLE 1
Definitions
The words and phrases defined in this Article shall have the meaning set out in the definition, unless the context in which the word or phrase appears reasonably requires a broader, narrower or different meaning.
1.1 Account shall mean all bookkeeping accounts pertaining to a Participant which are maintained by the Plan Administrator or Plan recordkeeper to reflect the Employers obligation to the Participant under the Plan, including a Deferral Account, Scheduled Withdrawal Account(s), and Employer Discretionary Contribution Account and LTIP Contribution Account. To the extent that it is considered necessary or appropriate to reflect the entire interest of the Participant under the Plan, the Plan Administrator or Plan recordkeeper shall maintain additional subaccounts. The Account and any subaccounts shall be used solely as a device to measure and determine the amounts, if any, to be paid to a Participant or a Beneficiary under the Plan.
1.2 Affiliate shall mean any corporation, partnership, joint venture, association, or similar organization or entity, other than the Employer, that is a member of a controlled group of corporations of which the Employer is a member, as defined in Internal Revenue Code Section 414(b) and all other trade or business (whether or not incorporated) under common control of or with the Employer, as defined in Internal Revenue Code Section 414(c).
1.3 Base Salary shall mean a Participants base annual salary excluding incentive and discretionary bonuses, commissions, and other non-regular forms of compensation, before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans sponsored by the Employer.
1.4 Beneficiary or Beneficiaries shall mean one or more persons, trusts, estates or other entities, designated by a Participant in accordance with the Plan, that are entitled to receive benefits under the Plan upon the death of a Participant.
1
1.5 Beneficiary Designation Form shall mean the form established from time to time by the Plan Administrator that a Participant completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.
1.6 Bonus Compensation shall mean amounts paid to the Participant by the Employer in the form of discretionary or incentive compensation or any other bonus designated by the Employer before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans sponsored by the Employer.
1.7 Cause shall mean, unless otherwise provided in an effective employment or similar agreement between an Eligible Employee and the Employer, conduct by a Participant determined by the Employer to be: (a) gross negligence or willful malfeasance in the performance of his or her duties; (b) actions or omissions that harm the Employer and are undertaken or omitted knowingly or are criminal or fraudulent or involve material dishonesty or moral turpitude; (c) being indicted in a court of law for any felony or for a crime involving misuse or misappropriation of Employer funds; or (d) breach of fiduciary duty to the Employer.
1.8 Change in Control shall mean a change in ownership or effective control of the Employer or in the ownership of a substantial portion of the assets of the Employer, within the meaning of Internal Revenue Code Section 409A and as described in Treasury Regulations §§1.409A-3(i)(5)(v), (vi) and (vii).
1.9 Claimant shall mean a Participant or a Beneficiary who believes that he or she is entitled to a benefit under this Plan or is being denied a benefit to which he or she is entitled hereunder.
1.10 Code shall mean the U.S. Internal Revenue Code of 1986, as amended, or any successor statue, and the Treasury Regulations and other authoritative guidance issued thereunder.
1.11 Deemed Investment shall mean the notional conversion of the balance held in a Participants Account(s) into shares or units of the Deemed Investment Options that are used as measuring devices for determining the value of a Participants Account(s).
1.12 Deemed Investment Options shall mean the hypothetical securities or other investments described under Section 5.1 from which the Plan Administrator may select to be used as measuring devices to determine the Deemed Investment gains or losses of the Participants Account(s). A Participant shall have no real or beneficial ownership in the security or other investment represented by the Deemed Investment Options.
1.13 Deferral Account shall mean: (i) the sum of a Participants Deferral Amounts for any Plan Year that may be allocated, in whole or in part, by the Participant, in accordance with his or her Deferral Election, to the Deferral Account, plus (ii) Deemed Investment gains or losses credited or debited thereon, less (iii) all distributions made to a Participant or his or her Beneficiary, and tax withholding amounts (if any) deducted from the Participants Deferral Account.
1.14 Deferral Amount shall mean that portion of a Participants Base Salary and/or Bonus Compensation that a Participant elects to defer for any Plan Year or Performance Period.
1.15 Deferral Election shall mean an election by an Eligible Employee on a Election Form approved by the Plan Administrator to defer a portion of his or her Base Salary and/or Bonus Compensation in accordance with the Article 3.
1.16 Disability or Disabled shall be defined as a condition of a Participant whereby he or she either: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of
2
not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employer. A Participant shall be deemed Disabled if the Social Security Administration has determined him or her to be totally disabled. Additionally, a Participant will be deemed Disabled if determined to be disabled in accordance with a disability insurance program, provided that the definition of disability applied under such program complies with Code Section 409A. Upon the request of the Plan Administrator, the Participant must submit proof to the Plan Administrator of the Social Security Administrations or providers determination.
1.17 Discretionary Contribution shall mean the deferred compensation amount(s) credited on behalf of a Participant by the Employer to the Discretionary Contribution Account, as described in Article 4.
1.18 Discretionary Contribution Account shall mean: (i) the sum of the Discretionary Contribution amounts (if any), plus (ii) Deemed Investment gains or losses credited or debited thereon, less (iii) all distributions made to a Participant or his or her Beneficiary that relate to the Discretionary Contribution Account, and tax withholding amounts deducted (if any) from the Discretionary Contribution Account.
1.19 Effective Date shall mean June 1, 2015.
1.20 Election Form shall mean the form or forms established from time to time by the Plan Administrator (in a paper or electronic format) on which a Participant makes certain designations as required under the terms of this Plan.
1.21 Eligibility Date shall mean the date designated by the Plan Administrator on which an Eligible Employee shall become eligible to participate in the Plan.
1.22 Eligible Employee shall mean an Employee who is selected by the Employer to participate in the Plan. Participation in the Plan is limited to a select group of the Employers key management or highly compensated employees.
1.23 Employee shall mean an individual who provides services to the Employer in the capacity of a common law employee of the Employer.
1.24 Employer shall mean Speedy Group Holdings Corp., and its successors and assigns, unless otherwise provided in this Plan, or any other corporation or business organization which, with the consent of Speedy Group Holdings Corp., or its successors or assigns, assumes the Employers obligations under this Plan, or any Affiliate which agrees, with the consent of Speedy Group Holdings Corp., or its successors or assigns, to become a party to the Plan.
1.25 ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and guidance promulgated thereunder.
1.26 LTIP Contribution shall mean the amount(s) contributed by the Employer related to a company-sponsored Long Term Incentive Plan based on achieving certain company targets, and which are credited to a Participants LTIP Contribution Account, as described in Article 4.
1.27 LTIP Contribution Account shall mean: (i) the sum of the LTIP Contribution amounts (if any), plus (ii) Deemed Investment gains or losses credited or debited thereon, less (iii) all distributions made to a Participant or his or her Beneficiary that relate to the LTIP Contribution Account, and tax withholding amounts deducted (if any) from the LTIP Contribution Account.
3
1.28 Participant shall mean an Eligible Employee of the Employer who is designated as eligible to participate in this Plan and who completes the requirements of participation in accordance with the provisions of Article 2. An Eligible Employee who has become a Participant shall be considered to continue as a Participant in this Plan until the date of the Participants death or, if earlier, the date when the Participant is no longer employed by the Employer or Affiliate and upon which the Participant no longer has any Account under this Plan (that is, the Participant has received a payment of all of the Participants Account or the Account has been forfeited as hereinafter provided).
1.29 Participation Agreement shall mean the agreement entered into by and between a Participant and the Employer which sets forth the terms and conditions of participation in the Plan and the particulars of each Participants benefits to which the Participant or Participants Beneficiary become entitled under the Plan.
1.30 Performance-Based Compensation shall mean that portion of a Participants Bonus Compensation, the amount of which or the entitlement to which, is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a Performance Period of at least twelve (12) consecutive months and which qualifies as performance-based compensation under Code Section 409A. Performance criteria shall be established in writing not later than ninety (90) days after the commencement of the period of service to which the criteria relate; provided that the outcome is substantially uncertain at the time the criteria are established. Performance-Based Compensation does not include any amount or portion of any amount that will be paid regardless of performance or is based upon a level of performance that is substantially certain to be met at the time the criteria are established.
1.31 Performance Period shall mean, with respect to any Bonus Compensation, the period of time over which such Bonus Compensation is earned.
1.32 Plan shall mean this Speedy Group Holdings Corp. Nonqualified Deferred Compensation Plan, Participation Agreements, Beneficiary Designation Forms and Election Forms, as amended from time to time. For purposes of Section 409A, the portion of the amounts deferred by a Participant and Deemed Investment gains or losses attributable thereto, shall be considered an elective account balance plan as defined in Treasury Regulation §1.409A-1(c)(2)(i)(A), or as otherwise provided by the Code; the portion of the amounts deferred as Discretionary Contributions and LTIP Contributions and Deemed Investment gains or losses attributable thereto, shall be considered a nonelective account balance plan as defined in Treasury Regulation §1.409A-1(c)(2)(i)(B), or as otherwise provided in the Code.
1.33 Plan Administrator shall mean the Employers board of directors, or any committee of the board of directors duly authorized to act as Plan Administrator, or any individual or entity duly authorized by the Plan Administrator to act on its behalf with respect to the Plan. The Plan Administrator shall appoint delegates and service providers as it, in its sole discretion, deems necessary to properly administer the Plan, and may from time to time consult with the Employers legal counsel. No person who is a Plan Administrator shall participate in an action on a matter which applies solely to that person.
1.34 Plan Year shall mean for the first Plan Year, the period beginning on the Effective Date of the Plan and ending December 31, 2015, and thereafter, a twelve (12) month period beginning January 1 of each calendar year and continuing through December 31 of such calendar year during which the Plan is in effect.
1.35 Scheduled Withdrawal Account shall mean: (i) the sum of a Participants Deferral Amounts for any Plan Year that may be allocated, in whole or in part, by the Participant, in accordance with his or her Deferral Election, to a Scheduled Withdrawal Account, plus (ii) Deemed Investment gains or losses credited or debited thereon, less (iii) all distributions made to the Participant or his or her Beneficiary, and tax withholding amounts which may have been deducted (if any) from the Participants Scheduled Withdrawal Account.
4
1.36 Section 409A shall mean Code Section 409A and the Treasury Regulations or other authoritative guidance issued thereunder.
1.37 Separation from Service or Separates from Service shall mean an anticipated permanent reduction in the level of bona fide services to be performed by a Participant to twenty percent (20%) or less of the average level of bona fide services performed by the Participant over the immediately preceding 36-month period (or the full period during which the Participant performed services for the Employer, if that is less than 36 months). Whether a Participant has had a Separation from Service shall be determined pursuant to Section 409A.
1.38 Specified Employee shall mean a specified employee as defined by Code Section 409A(a)(2)(B)(i), determined by applying the default rules applicable under such Code section except to the extent such rules are modified by a written resolution that is adopted by the Employer and that applies for purposes of all applicable Nonqualified Deferred Compensation Plans of the Employer. No Participant shall be considered a Specified Employee unless the stock of the Employer or an Affiliate is publicly traded on an established securities market or otherwise within the meaning of Section 409A.
1.39 Specified Time shall mean, with respect to a Scheduled Withdrawal Account, the date on which the Scheduled Withdrawal Account shall be paid to a Participant.
1.40 Treasury Regulation or Treasury Regulations shall mean regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, as they may be amended from time to time.
1.41 Trust shall mean one or more trusts that may be established in accordance with the terms of this Plan.
1.42 Valuation Date shall mean the date through which Deemed Investment gains and/or losses are credited or debited to a Participants Account(s). The Valuation Date shall be as close to the payout or other event triggering valuation as is administratively feasible. The Valuation Date shall be interpreted as each day at the close of business of the New York Stock Exchange (currently 4:00 p.m. Eastern Time), on days that the New York Stock Exchange (NYSE) is open for trading or any other day on which there is sufficient trading in securities of the applicable fund to materially affect the unit value of the fund and the corresponding unit value of the Participants Deemed Investment Option(s).
ARTICLE 2
Eligibility and Participation
2.1 Requirements for Participation . Every Eligible Employee selected by the Employer on the Effective Date shall be eligible to become a Participant on the Effective Date. Before the beginning of each subsequent Plan Year, or such other times as determined by the Employer, the Employer shall select those Employees who shall become Eligible Employees for such Plan Year.
2.2 Election to Participate . Each Eligible Employee may become a Participant in the Plan by executing and submitting to the Plan Administrator, a Participation Agreement, a Deferral Election, a Beneficiary Designation Form, and any other Election Forms within the time period specified by the Plan Administrator and Section 409A. An Eligible Employee who elects to participate in the Plan is eligible to receive Discretionary Contributions and LTIP Contributions, if any. If an Eligible Employee fails to meet all requirements contained in this Section within the period required, that Eligible Employee shall not be entitled to participate in the Plan during such Plan Year. In addition, the Plan Administrator may establish from time to time such other enrollment requirements as it determines in its sole discretion that are necessary or desirable.
5
2.3 Re-employment . The re-employment of a former Participant by the Employer shall not entitle such individual to become a Participant hereunder. Such individual shall not become a Participant until the individual is again designated as an Eligible Employee in accordance with Section 2.1. If a Participant who has experienced a Separation from Service is receiving installment distributions and is re-employed by the Employer, distributions due to the Participant shall not be suspended.
2.4 Ceasing to be an Eligible Employee . The Plan Administrator may remove an Eligible Employee from further active participation in the Plan at its discretion. If this occurs, the Participant shall not have additional amounts credited to the Discretionary Contribution Account or LTIP Contribution Account and shall be prevented from making Participant Deferral Elections for subsequent Plan Years. Such individual shall continue to be subject to all the terms and conditions of the Plan, including the crediting or debiting of Deemed Investment gains and/or losses thereon, until the amounts credited to a Participants Account are distributed or forfeited. Any existing Deferral Election shall continue in effect for the remainder of the Plan Year and may only be cancelled in accordance with Section 3.5(b) hereof.
2.5 Termination of Participation . A Participant will cease to be a Participant as of the date on which his or her entire Account balance has been distributed or forfeited.
ARTICLE 3
Participant Elective Deferrals
3.1 Establishment of Participant Account(s) . The Plan Administrator shall establish and maintain one (1) Deferral Account and up to five (5) Scheduled Withdrawal Accounts, if applicable, in the name of each Participant.
3.2 Minimum and Maximum Deferral Limits . For each Plan Year or Performance Period, as applicable, a Participants election to defer Base Salary and/or Bonus Compensation shall be subject to the minimums or maximums (if any) established by the Plan Administrator and communicated to the Participant on the Participants Election Form.
3.3 Deferral Elections First Year of Eligibility.
(a) Application . This Section applies to each Eligible Employee who first becomes eligible to participate in the Plan. The Plan Administrator shall determine (in accordance with Treasury Regulation §1.409A-2(a)(7)(ii)) the date upon which a Participant who ceased being eligible to participate in the Plan, can again become eligible to participate in the Plan.
(b) Deferral Election . An Eligible Employee may elect to defer receipt of Base Salary earned during such Plan Year or Bonus Compensation earned during a Performance Period by filing a Deferral Election with the Plan Administrator in accordance with the following rules:
(i) Timing . The Deferral Election must be filed with the Plan Administrator by, and shall become irrevocable as of, the thirtieth (30 th ) day following the Participants Eligibility Date (or such earlier date as specified by the Plan Administrator).
(ii) Base Salary . For Participants joining in 2015, the Deferral Election shall only apply to Base Salary earned October 1 through December 31 of 2015 beginning with the first payroll period in October. For Participants joining the plan in 2016 and thereafter, the Deferral Election shall only apply to Base Salary earned during such calendar year beginning with the first payroll period that begins immediately after the date the Deferral Election becomes irrevocable. Base Salary payable after the last day of a calendar year solely for services performed during the final payroll period, described in Section 3401(b) of the Code, containing December 31 st of such year, shall be treated as earned during the subsequent calendar year.
6
(iii) Bonus Compensation . Where a Deferral Election is filed in the first year of eligibility but after the commencement of the Performance Period, then, except as otherwise provided in Section 3.4 below, the Deferral Election shall only apply to that portion of Bonus Compensation earned for such Performance Period equal to the total amount of the Bonus Compensation earned during such Performance Period multiplied by a fraction, the numerator of which is the number of days beginning on the day immediately after the date that the Deferral Election becomes irrevocable and ending on the last day of the Performance Period, and the denominator of which is the total number of days in the Performance Period.
3.4 Annual Deferral Elections . Unless Section 3.3 applies, each Eligible Employee may elect to defer receipt of Base Salary for a Plan Year or Bonus Compensation for a Performance Period by filing a Deferral Election with the Plan Administrator in accordance with the following rules:
(a) Base Salary . A Deferral Election must be filed with the Plan Administrator by, and shall become irrevocable following, December 31 st (or such earlier date as specified by the Plan Administrator on the Deferral Election) of the calendar year next preceding the calendar year for which such amounts would otherwise be earned.
(b) Bonus Compensation . The Deferral Election with respect to Bonus Compensation must be filed with the Plan Administrator by, and shall become irrevocable following, December 31 st (or such earlier date as specified by the Plan Administrator on the Deferral Election) of the calendar year next preceding the first day of the Performance Period for which such Bonus Compensation would otherwise be earned. If the Employer has a fiscal year other than the calendar year, Bonus Compensation relating to services in the fiscal year of the Employer, of which no amount is paid or payable during the fiscal year, may be deferred at the Participants election if the Deferral Election is made not later than the close of the Employers fiscal year next preceding the first fiscal year in which the Participant performs any services for which such Bonus Compensation is payable.
(c) Bonus Compensation Qualifying as Performance-Based Compensation .
(i) Notwithstanding anything contained in this Section to the contrary, and only to the extent permitted by the Plan Administrator, the Deferral Election with respect to Bonus Compensation that constitutes Performance-Based Compensation, must be filed with the Plan Administrator by, and shall become irrevocable as of, the date that is six (6) months before the end of the applicable Performance Period (or such earlier date as specified by the Plan Administrator on the Deferral Election), provided that in no event may such Deferral Election be filed after such Bonus Compensation has become readily ascertainable within the meaning of Section 409A.
(ii) In order to make a Performance-Based Compensation Deferral Election, the Participant must perform services continuously from the later of the beginning of the Performance Period or the date the performance criteria are established through the date a Deferral Election becomes irrevocable.
(iii) A Performance-Based Compensation Deferral Election shall not apply to any portion of the Performance-Based Compensation that is actually earned by a Participant regardless of satisfaction of the performance criteria.
(iv) To the extent permitted by the Plan Administrator, a newly Eligible Employee in his or her first year of eligibility shall be permitted to make a Performance-Based Compensation Deferral Election provided that the Eligible Employee satisfies all of the other requirements of this Section.
7
3.5 Duration and Cancellation of Deferral Elections .
(a) Duration. Once irrevocable, a Deferral Election shall only be effective for the Plan Year with respect to which such election was timely filed with the Plan Administrator. Except as provided in Section 3.5(b), a Deferral Election, once irrevocable, cannot be cancelled or altered during a Plan Year.
(b) Cancellation.
(i) The Plan Administrator may cancel a Participants Deferral Election where such cancellation occurs by the later of: (a) the end of the Participants taxable year, or (b) the fifteenth (15 th ) day of the third (3 rd ) month following the date the Participant incurs a disability, in accordance with Treasury Regulation §1.409A-3(j)(4)(xii). For purposes of this Section 3.5(b)(i), a disability refers to any medically determinable physical or mental impairment resulting in the Participants inability to perform duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, in accordance with Treasury Regulation §1.409A-3(i)(3).
(ii) The Plan Administrator may cancel a Participants Deferral Election due to an Unforeseeable Emergency pursuant to Treasury Regulation §1.401(k)-1(d)(3) or a hardship distribution pursuant to Treasury Regulation §1.401(k)-1(d)(3).
(iii) If a Participants Deferral Election is cancelled with respect to a particular Plan Year, he or she may complete a new Deferral Election for a subsequent Plan Year, only in accordance with Section 3.4.
3.6 Elections as to Time and Form of Payment .
(a) In General . Concurrent with any Deferral Election, a Participant may make an irrevocable election to allocate all or a portion of his or her elected Deferral Amount to the Deferral Account and/or up to five (5) Scheduled Withdrawal Accounts. A Participant may elect to allocate Deferral Amounts to an existing Scheduled Withdrawal Account(s) in subsequent Election Forms but may only change the Specified Time for an existing Account in accordance with Section 7.1(c). A Participant may not establish a sixth (6 th ) Scheduled Withdrawal Account until all of the amounts in one of the first five (5) Scheduled Withdrawal Accounts have been completely distributed. To the extent that a Participant does not designate the Account to which the Deferral Amounts will be allocated for a Plan Year, such Deferral Amounts shall be allocated and credited to the Participants Deferral Account. Discretionary Contributions and LTIP Contributions shall not be allocated to a Scheduled Withdrawal Account, and instead shall be allocated to the Discretionary Contribution Account or the LTIP Contribution Account, as applicable.
(b) Scheduled Withdrawal Accounts . A Participant may designate, on any Deferral Election in which Deferral Amounts are credited to a Scheduled Withdrawal Account, the year in which payments will commence to be paid from that Scheduled Withdrawal Account and the form of payment for such Scheduled Withdrawal Account. A Participant may elect to receive a distribution of a Scheduled Withdrawal Account no sooner than January 1 st of the fifth (5 th ) Plan Year following the Plan Year of the deferral. (For example: If a Participant elects to allocate 2015 Deferral Amounts into a Scheduled Withdrawal Account, the earliest date these Deferral Amounts could be distributed would be January 1, 2020). The Participant must also make an election as to the form of payment in a single lump sum or in a number of approximately equal annual installments over a period not to exceed five (5) years. To the extent that the elected scheduled distribution date does not comply with the terms of this Section or the Participant does not designate the time of payment on an Election Form, then that Scheduled Withdrawal Account shall be paid at the earliest permissible date in accordance with this Section. To the extent that a Participant does not designate the form of payment or such designation does not comply with the terms of the Plan, the Scheduled Withdrawal Account shall be paid in a single lump sum.
8
(c) Deferral Account, Discretionary Contribution Account and LTIP Contribution Account. A Participants Deferral Account, Discretionary Contribution Account (if any) and LTIP Contribution Account (if any) shall be paid to the Participant or his or her Beneficiary in accordance with Article 7. If the Participant is permitted to select the form of payment for an event, the payment election must be made concurrent with his or her acceptance to participate in the Plan. To the extent that a Participant does not designate the form of payment or such designation does not comply with the terms of the Plan, the Accounts shall be paid in a single lump sum.
3.7 Withholding and Crediting of Deferral Amounts . For each Plan Year, the Base Salary portion of the Deferral Amount shall be withheld from each regularly scheduled payroll in approximately equal amounts (or as otherwise specified by the Plan Administrator), as adjusted from time to time for increases and decreases in Base Salary (if the Participants Deferral Election is expressed as a percentage). The Bonus Compensation portion of the Deferral Amount shall be withheld as soon as administratively feasible following the time the amounts would otherwise be paid to the Participant, whether or not this occurs during the Plan Year or Performance Period, as the case may be. Deferral Amounts shall be credited to the Deferral Account and/or to a Scheduled Withdrawal Account as soon as administratively feasible following the time such amounts would otherwise have been paid to a Participant.
ARTICLE 4
Employer Contributions
4.1 Establishment of Employer Contribution Account(s) . The Plan Administrator shall establish and maintain a Discretionary Contribution Account and an LTIP Contribution Account, as applicable, in the name of each Participant, in order to provide for separate vesting schedules, as described in Article 6.
4.2 Discretionary Contributions and LTIP Contributions . Each Plan Year, the Employer may make a Discretionary Contribution and/or an LTIP Contribution to the Plan on behalf of a Participant in such amount(s) as the Employer shall determine in its sole discretion. The Employer is under no obligation to make a Discretionary Contribution or LTIP Contribution for a Plan Year, and Discretionary Contributions and LTIP Contributions, if made, need not be uniform among Participants. Any Discretionary Contribution and/or LTIP Contribution shall be credited to the Discretionary Contribution Account or LTIP Contribution Account, as applicable, as of the last business day of any Plan Year or such other date as determined by the Employer.
ARTICLE 5
Deemed Investment Gains or Losses
5.1 Deemed Investment Options . The Plan Administrator will determine the available Deemed Investment Options for purposes of crediting or debiting the Deemed Investment gains or losses to the Account. The Plan Administrator may discontinue, substitute, or add Deemed Investment Options in its sole discretion on a prospective basis. Any discontinuance, substitution, or addition of a Deemed Investment Option will take effect as soon as administratively practicable. The Deemed Investment Options are to be used for measurement purposes only, and the Plan Administrators selection of any such Deemed Investment Option, the allocation of such Deemed Investment Options to the Account, the calculation of additional amounts, and the crediting or debiting of such amounts to the Account shall not be considered or construed in any manner as an actual investment of the Account. The Plan Administrator will not be responsible in any manner to any Participant, Beneficiary or other person for any damages, losses, liabilities, costs or expenses of any kind arising in connection with any designation or elimination of a Deemed Investment Option. Without limiting the foregoing, the Account shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Plan Administrator, or the Trust (if any). A Participant (or Beneficiary) shall at all times remain an unsecured creditor of the Employer. Any liability or obligation of the Employer to any Participant, former Participant, or Beneficiary with respect to a right to payment shall be based solely upon contractual obligations created by this Plan.
9
5.2 Participants Allocation of Deemed Investment Options . Each Participant shall have the right to direct the Plan Administrator as to how the Participants Deferral Amounts, Employer Discretionary Contribution and LTIP Contribution amounts shall be deemed to be invested among the Deemed Investment Options offered under the Plan, subject to any operating rules and procedures imposed by the Plan Administrator. As of each Valuation Date, the Account will be credited or debited to reflect the performance of the Deemed Investment Options elected by the Participant. If a Deemed Investment Option selected by a Participant sustains a loss, the Account shall be reduced to reflect such loss. If a Participant fails to elect a Deemed Investment Option, the Deemed Investment shall be based on an investment alternative selected for this purpose by the Plan Administrator. During payout, the Participants Account shall continue to be credited with Deemed Investment gains or losses based on the Deemed Investment Options selected by the Participant and made available by the Plan Administrator for such purpose.
5.3 Participant Responsibilities . Each Participant is solely responsible for any and all consequences of his or her investment directions made pursuant to this Article 5. Neither the Employer, any of its directors, officers or employees, nor the Plan Administrator, has any responsibility to any Participant or other person for any damages, losses, liabilities, costs or expenses of any kind arising in connection with any investment direction made by a Participant pursuant to this Article 5.
5.4 No Required Investment of Employer Assets . Notwithstanding anything contained herein to the contrary, the Employer reserves the right to invest its assets, including any assets that may have been set aside for the purpose of informally funding the benefits to be provided under the Plan, at its own discretion, and such assets shall remain the property of the Employer, or may be held in a Trust, as the case may be, subject to the claims of the general creditors of the Employer, and no Participant shall have any right to any portion of such assets other than as an unsecured general creditor of the Employer.
ARTICLE 6
Vesting / Forfeitures / Taxes
6.1 Participant Accounts . A Participant shall at all times be one hundred percent (100%) vested in his or her Deferral Amounts and Deemed Investment gains or losses credited or debited thereto with respect to amounts credited to the Deferral Account and Scheduled Withdrawal Account(s).
6.2 Discretionary Contribution Accounts . Except for an event of forfeiture for Cause in accordance with Section 6.5, a Participant shall become vested in his or her Discretionary Contribution Accounts and Deemed Investment gains or losses credited or debited thereto, at such times and under such terms and conditions as may be specified by the Plan Administrator at the time such amounts are contributed to the Plan.
6.3 LTIP Contribution Accounts . Except for an event of forfeiture for Cause in accordance with Section 6.5, a Participant shall become vested in his or her LTIP Contribution Accounts and Deemed Investment gains or losses credited or debited thereto, in accordance with the following schedule:
Vesting Date |
Vested % | |||
December 31 st of the Plan Year in which the LTIP Contributions are credited. |
33 | % | ||
December 31 st of the first Plan Year after the LTIP Contributions are credited. |
66 | % | ||
December 31 st of the second Plan Year after the LTIP Contributions are credited. |
100 | % |
10
For example, LTIP Contribution amounts credited to the Plan in 2016 will become 33% vested on December 31, 2016; 66% vested on 12/31/2017; and 100% vested on 12/31/2018; LTIP Contribution amounts credited to the Plan in 2017 will become 33% vested on December 31, 2017; 66% vested on 12/31/2018; and 100% vested on 12/31/2019; and so on.
6.4 Acceleration of Vesting . Notwithstanding the foregoing vesting schedules above, the Employer shall accelerate vesting of each Participants Discretionary Contribution Accounts and LTIP Contribution Accounts (including Deemed Investment gains and/or losses attributable thereto) to one hundred percent (100%) upon: (i) a Participants death; (ii) a Participants Disability; (iii) a Participants attainment of age sixty-five (65); or (iv) the Employers Change in Control.
6.5 Forfeitures . Notwithstanding any other provision to the contrary, if a Separation from Service occurs because the Participants employment is terminated for Cause, no benefits of any kind will be due or payable by the Employer under the terms of this Plan from the Discretionary Contribution Account or the LTIP Contribution Account, and all rights of the Participant, his or her designated Beneficiary, executors, or administrators, or any other person, to receive payments thereof shall be forfeited. Additionally, a Participant will forfeit any portion of said Account that is non-vested upon Separation from Service.
6.6 Taxes and Withholding .
(a) Federal Insurance Contribution Act (FICA) . Deferred compensation amounts, in accordance with Code §3121(v)(2), are taken into account as wages for FICA tax purposes as of the later of: (i) when the services are performed; or (ii) when there is no substantial risk of forfeiture with respect to the Participants right to receive the deferred amounts in a later calendar year. Amounts are subject to FICA taxes at the time of the deferral, unless the Participant is required to perform substantial future services in order for the Participant to have a legal right to the future compensation. If the Participant is required to perform future services in order to have a vested right to the future payment, the deferred amounts (plus Deemed Investment earnings up to the date of vesting) are subject to FICA taxes when all the required services have been performed. FICA taxes only apply up to the annual wage base for Social Security taxes and without withholding limitations for Medicare taxes.
(b) Federal Unemployment Tax Act (FUTA) . Deferred compensation amounts are taken into account for FUTA purposes at the later of: (i) when services are performed; or (ii) when there is no substantial risk of forfeiture with respect to the Participants right to receive the deferred amounts up to the FUTA wage base.
(c) Income Tax Withholding and Payment of Section 409A Taxes . The Employer or the trustee (as applicable), shall withhold from any benefit payable under this Plan all federal, state, city, income, employment or other taxes as shall be required pursuant to any law or governmental regulation then in effect. The Participant, however, shall be responsible for the payment of all individual tax liabilities relating to any such benefits.
ARTICLE 7
Payment of Participant Account(s)
11
7.1 Payments in General .
(a) Payment Events. A Participant (or, in the event of the death of the Participant, the Participants designated Beneficiary) shall be entitled to a benefit equal to the Participants vested interest in the Account(s) upon the earliest to occur of the following payment events: (i) Separation from Service; (ii) death; (iii) Disability; or (iv) Specified Time.
(b) Source of Payments. The Employer will pay, from its general assets, the portion of any benefit payable pursuant to this Article that is attributable to a Participants Account, and all costs, charges and expenses relating thereto.
(c) Subsequent Deferral Elections. A Participant may delay the time of a payment election or change the form of payment election as expressly provided under this Section and Section 409A (hereinafter, a Subsequent Deferral Election). Notwithstanding the foregoing, a Subsequent Deferral Election cannot accelerate any payment. A Subsequent Deferral Election which delays payment or changes the form of payment is permitted only if all of the following requirements are met:
(i) The Subsequent Deferral Election does not take effect until at least twelve (12) months after the date on which the Subsequent Deferral Election is made and approved by the Plan Administrator;
(ii) If the Subsequent Deferral Election relates to a payment based on Separation from Service or at a Specified Time, the Subsequent Deferral Election must result in payment being deferred for a period of not less than five (5) years from the date the first amount was scheduled to be paid;
(iii) If the Subsequent Deferral Election relates to a payment at a Specified Time, the Participant must make the Subsequent Deferral Election not less than twelve (12) months before the date the first amount was scheduled to be paid.
For purposes of applying the Subsequent Deferral Election requirements, installment payments shall be treated as a single payment. Any election made pursuant to this Section shall be made on such Election Forms or electronic media as is required by the Plan Administrator, in accordance with the rules established by the Plan Administrator and shall comply with all requirements of Section 409A.
7.2 Separation from Service Benefit. In the event that a Participant Separates from Service (other than for Cause or death), the Participant shall be paid his or her vested interest in the Account(s), calculated as described below. Payment shall be made or commence on January 1 of the year following the Participants Separation from Service (the payment date) in a lump sum payment or annual installments over a five (5) or ten (10) year period as elected by the Participant within thirty (30) days of his or her Eligibility Date. For purposes of calculating this benefit, the Participants Account shall be valued on December 31 prior to the payment date and shall include any Deemed Investment gains or losses attributable to the Account. If the Participant is to be paid in installments, the amount of each installment shall be determined by valuing the Account on each subsequent January 1 during the installment period and dividing the value of the Account by the number of installments remaining to be paid. (For example, if the Participant elects to receive payments in annual installments over a period of five (5) years, the first payment shall equal 1/5 of the Account balance as of the payment date. The following year, the payment shall be 1/4 of the Account balance as of the anniversary of the payment date. The final installment payment shall be equal to the balance of the Account(s), as of the applicable anniversary date.) Any unpaid Account balance shall continue to be deemed to be invested, in which case any deemed income, gains, losses, or expenses shall be reflected in the actual payments.
12
7.3 Disability Benefit. In the event of a Participants Disability, the Participant shall be paid his or her vested interest in the Account(s), calculated as of the Valuation Date, in a single lump sum within ninety (90) days following the determination of the Participants Disability.
7.4 Death Benefit.
(a) In the event of a Participants death while employed with the Employer, the Employer shall pay the Participants vested interest in his or her Account(s), calculated as of the Valuation Date, to the Participants designated Beneficiary in a single lump sum within ninety (90) days following the Participants date of death.
(b) In the event of a Participants death before benefit distributions have commenced under Section 7.2 but after becoming entitled to those benefits, the Participants Beneficiary shall be entitled to receive a lump sum payment equal to the benefit calculated as of the Valuation Date. This benefit shall commence to be paid to the Beneficiary within ninety (90) days following the Participants date of death.
(c) In the event of a Participants death after benefit payments have commenced under this Article, but prior to receiving complete payment of benefits, the Employer shall pay to the Participants Beneficiary the remaining balance of the Participants Account as of the Valuation Date in a single lump sum within ninety (90) days following the Participants date of death.
7.5 Payment at a Specified Time. A Participant shall be paid the vested balance of a Scheduled Withdrawal Account within sixty (60) days following the Specified Time and in the form of payment elected by the Participant pursuant to his or her Deferral Election. For purposes of calculating this benefit, the Participants Scheduled Withdrawal Account shall be valued on December 31 prior to the Specified Time and shall include any Deemed Investment gains or losses attributable to the Account. If the Participant is to be paid in installments, the amount of each installment shall be determined by valuing the Account on each subsequent December 31 during the installment period and dividing the value of the Account by the number of installments remaining to be paid. (For example, if the Participant elects to receive payments in annual installments over a period of five (5) years, the first payment shall equal 1/5 of the Account balance as of the payment date. The following year, the payment shall be 1/4 of the Account balance as of the anniversary of the payment date. The final installment payment shall be equal to the balance of the Account(s), as of the applicable anniversary date.) Any unpaid Account balance shall continue to be deemed to be invested, in which case any deemed income, gains, losses, or expenses shall be reflected in the actual payments. Notwithstanding anything contained herein to the contrary, should an event occur that triggers a payment under Separation from Service, Disability or death, any Account balances subject to a Participants Scheduled Withdrawal Account(s) that have not yet been paid shall not be paid under the election as to time and form of the Participants Scheduled Withdrawal Account, but instead shall be paid, in time and form, in accordance with the event that triggers the distribution and as permitted under Section 409A.
7.6 Delay in Payment to Specified Employees. Notwithstanding any other provisions of this Plan to the contrary, distributions to a Specified Employee (if any) made on account of Separation from Service may not be made before: (a) the date which is six (6) months after the date of the Specified Employees Separation from Service or (b) if earlier, the date of death of the Specified Employee. If payments to a Specified Employee are to be made in installments, each installment payment to which a Specified Employee is entitled upon a Separation from Service will be delayed by six (6) months.
7.7 Permissible Acceleration Events. Except as specifically permitted herein or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated hereunder by the Employer (without any direct or indirect election on the part of any Participant), in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) and any subsequent guidance issued by the United States Treasury Department. Accordingly, payments may be accelerated, in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) in the following
13
circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the federal government; (iii) in compliance with ethics laws or conflicts of interest laws; (iv) in limited cashouts (but not in excess of the limit under Code Section 402(g)(1)(B)); (v) to pay employment-related taxes; or (vi) to pay any taxes that may become due at any time that the Plan fails to meet the requirements of Section 409A (but in no case shall such payments exceed the amount to be included in income as a result of the failure to comply with the requirements of Section 409A).
7.8 Rights of Participant and Beneficiary.
(a) Creditor Status of Participant and Beneficiary. The Plan constitutes the unfunded, unsecured promise of the Employer to make payments to a Participant or Beneficiary in the future and shall be a liability solely against the general assets of the Employer. The Employer shall not be required to segregate, set aside or escrow any amounts for the benefit of a Participant or Beneficiary. A Participant and Beneficiary shall have the status of a general unsecured creditor of the Employer and may look only to the Employer and its general assets for payment of benefits under the Plan.
(b) Rights with Respect to a Trust. Any Trust and any assets held thereby to assist the Employer in meeting their obligations under the Plan shall in no way be deemed to controvert the provisions of this Section.
(c) Investments. In its sole discretion, the Employer may acquire insurance policies, annuities or other financial vehicles for the purpose of providing future assets of the Employer to meet its anticipated liabilities under the Plan. Such policies, annuities or other investments shall at all times be and remain unrestricted general property and assets of the Employer. A Participant and his or her designated Beneficiary shall have no rights, other than as general creditors, with respect to such policies, annuities or other acquired assets. In the event that the Employer purchases an insurance policy or policies insuring the life of a Participant or Employee, to allow the Employer to recover or meet the cost of providing benefits, in whole or in part, hereunder, no Participant or Beneficiary shall have any rights whatsoever in said policy or the proceeds therefrom. The Employer shall be the primary owner and beneficiary of any such insurance policy or property and shall possess and may exercise all incidents of ownership therein. No insurance policy with regard to any director, highly compensated employee, or highly compensated individual, as defined in Code Section 101(j), shall be acquired before satisfying the Code Section 101(j) Notice and Consent requirements.
7.9 Facility of Payment. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Plan Administrator may make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence; or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Employer and the Plan Administrator from further liability on account thereof.
7.10 Discharge of Obligations. The payment to a Participant or his or her Beneficiary of the Account balance in a single lump sum, or in the number of installments as dictated by the Plan, shall discharge all obligations of the Employer to such Participant or Beneficiary under the Plan.
ARTICLE 8
Beneficiary Designation
8.1 Designation of Beneficiaries.
(a) Each Participant may designate any person or persons (who may be named contingently or successively) to receive any benefits payable under the Plan upon the Participants death, and the
14
designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke all prior designations by the same Participant, shall be in the form prescribed by the Employer, and shall be effective only when signed by the Participant and filed with the Employer during the Participants lifetime.
(b) In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the Employer shall pay the benefit payment to the Participants spouse, if then living, and if the spouse is not then living to the Participants then living descendants, if any, per stirpes, and if there are no living descendants, to the Participants estate. In determining the existence or identity of anyone entitled to a benefit payment, the Employer may rely conclusively upon information supplied by the Participants personal representative, executor, or administrator.
(c) A Participants designation of a Beneficiary will not be revoked or changed automatically by any future marriage or divorce. Should the Participant wish to change the designated Beneficiary in the event of a future marriage or divorce, the Participant will have to do so by means of filing a new designation.
(d) If a question arises as to the existence or identity of anyone entitled to receive a death benefit payment under the Plan, or if a dispute arises with respect to any death benefit payment under the Plan, the Employer may distribute the payment to the Participants estate without liability for any tax or other consequences, or may take any other action which the Employer deems to be appropriate.
8.2 Information to be Furnished by Participants and Beneficiaries; Inability to locate Participants or Beneficiaries. Any communication, statement or notice addressed to a Participant or to a Beneficiary at his or her last post office address as shown on the Employers records shall be binding on the Participant or Beneficiary for all purposes of the Plan. The Employer shall not be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to such last known address.
ARTICLE 9
Plan Amendment
9.1 Right to Amend. The Employer may unilaterally amend the Plan at any time and in any manner, except that no amendment may adversely affect a benefit to which a Participant or the Beneficiary of a deceased Participant is entitled under the Plan as of the later of the adoption date or effective date of the amendment without written consent from the Participant or Beneficiary.
9.2 Amendment to Insure Proper Characterization of the Plan. Notwithstanding the provisions of Section 9.1, the Plan may be unilaterally amended by the Employer at any time, retroactively if required, if found necessary, in the opinion of the Employer, in order to ensure that the Plan is characterized as top-hat plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA Sections 201(2), 301(a)(3), and 401(a)(1), to conform the Plan to the provisions of Section 409A and to conform the Plan to the requirements of any other applicable law (including ERISA and the Code). No such amendment shall be considered prejudicial to any interest of a Participant or a Beneficiary hereunder without written consent of the Participant or Beneficiary.
ARTICLE 10
Plan Termination
10.1 Employers Right to Suspend Plan. The Employer reserves the right to suspend the operation of the Plan for a fixed or indeterminate period of time, in its sole discretion. In the event of a suspension of the Plan, during the period of the suspension, the Employer shall continue all aspects of the Plan, other than crediting of Discretionary Contributions and LTIP Contributions, and Deferral Amounts shall be suspended effective with the first day of the Plan Year following the date the Plan is suspended. Payments of distributions will continue to be made during the period of the suspension in accordance with Article 7.
15
10.2 Termination and Liquidation of Plan. The Employer may terminate and liquidate the Plan (without any direct or indirect election on the part of any Participant) in connection with (a) a corporate dissolution or approval by a bankruptcy court, (b) the termination and liquidation of all plans of the Employer or Affiliate that are required to be aggregated, as described under §1.409A-1(c)(2) of the Treasury Regulations or (c) a Change in Control. Upon the date of termination, the value of the vested Account balance of all affected Participants and Beneficiaries shall be determined. After deduction of estimated expenses in liquidating and paying Plan benefits, the vested Account balance shall be paid to Participants and Beneficiaries in a lump sum distribution in accordance with Treasury Regulation §1.409A-3(j)(4)(ix).
ARTICLE 11
Administration
11.1 Administrative Authority. The Plan Administrator shall have the sole responsibility for and the sole control of the operation and administration of the Plan, and shall have the power and authority to take all action and to make all decisions and interpretations which may be necessary or appropriate in order to administer and operate the Plan, including, without limiting the generality of the foregoing, the power, duty and responsibility to:
(a) Resolve and determine all disputes or questions arising under the Plan, and to remedy any ambiguities, inconsistencies or omissions in the Plan.
(b) Adopt such rules of procedure and regulations as in its opinion may be necessary for the proper and efficient administration of the Plan and as are consistent with the Plan.
(c) Implement the Plan in accordance with its terms and the rules and regulations adopted as above.
(d) Make determinations with respect to the eligibility of any Eligible Employee as a Participant and make determinations concerning the crediting of Plan Accounts.
(e) Appoint any persons or firms, or otherwise act to secure specialized advice or assistance, as it deems necessary or desirable in connection with the administration and operation of the Plan, and the Plan Administrator shall be entitled to rely conclusively upon, and shall be fully protected in any action or omission taken by it in good faith reliance upon, the advice or opinion of such firms or persons. The Plan Administrator shall have the power and authority to delegate from time to time by written instrument all or any part of its duties, powers or responsibilities under the Plan, both ministerial and discretionary, as it deems appropriate, to any person or committee, and in the same manner to revoke any such delegation of duties, powers or responsibilities. Any action of such person or committee in the exercise of such delegated duties, powers or responsibilities shall have the same force and effect for all purposes under this Plan as if such action had been taken by the Plan Administrator. Further, the Plan Administrator may authorize one or more persons to execute any certificate or document on behalf of the Employer, in which event any person notified by the Plan Administrator of such authorization shall be entitled to accept and conclusively rely upon any such certificate or document executed by such person as representing action by the Plan Administrator until such notified person shall have been notified of the revocation of such authority.
11.2 Litigation. Except as may be otherwise required by law, in any action or judicial proceeding affecting the Plan, no Participant or Beneficiary shall be entitled to any notice or service of process, and any final judgment entered in such action shall be binding on all persons interested in, or claiming under, the Plan.
16
11.3 Payment of Administrative Expenses. All expenses incurred in the administration and operation of the Plan shall be paid by the Employer.
11.4 Periodic Statements. Under procedures established by the Plan Administrator, a Participant shall be provided a statement of account on an annual basis (or more frequently as the Plan Administrator shall determine) with respect to such Participants Account(s).
11.5 Compliance with Section 409A.
(a) Notwithstanding anything contained herein to the contrary, the interpretation and distribution of Participants benefits under the Plan shall be made in a manner and at such times as to comply with all applicable provisions of Section 409A and the regulations and guidance promulgated thereunder, or an exception or exclusion therefrom to avoid the imposition of any accelerated or additional taxes. Any defined terms shall be construed consistent with Section 409A and any terms not specifically defined shall have the meaning set forth in Section 409A.
(b) The intent of this Section is to ensure that the Participant is not subject to any tax liability or interest penalty, by reason of the application of Code Section 409A(a)(1) as a result of any failure to comply with all the requirements of Section 409A, and this Section shall be interpreted in light of, and consistent with, such requirements. This Section shall apply to distributions under the Plan, but only to the extent required in order to avoid taxation of, or interest penalties on, the Participant under Section 409A. These rules shall also be deemed modified or supplemented by such other rules as may be necessary, from time to time, to comply with Section 409A.
ARTICLE 12
Claims Procedures
12.1 Claims Procedure. This Article is based on Department of Labor Regulation Section 2560.503-1. If any provision of this Article conflicts with the requirements of those regulations, the requirements of those regulations will prevail. A Claimant who has not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits as follows:
(a) Initiation - Written Claim. The Claimant initiates a claim by submitting a written request for the benefits to the Plan Administrator. The Plan Administrator will, upon written request of a Claimant, make available copies of all forms and instructions necessary to file a claim for benefits or advise the Claimant where such forms and instructions may be obtained. If the claim relates to Disability benefits, then the Plan Administrator shall designate a sub-committee to conduct the initial review of the claim (and applicable references below to the Plan Administrator shall mean such sub-committee).
(b) Timing of Employer Response. The Plan Administrator shall respond to such Claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the Claimant in writing prior to the end of the initial 90-day period that an additional period is required. In the event that the claim for benefits pertains to Disability, the Plan Administrator shall provide written response within forty-five (45) days, but can extend this response period by an additional thirty (30) days, if necessary, due to circumstances beyond the Plan Administrators control. Any notice of extension must set forth the special circumstances requiring an extension of time and the date by which the Plan Administrator expects to render its decision.
(c) Notice of Decision. If the Plan Administrator denies the claim, in whole or in part, the Plan Administrator shall notify the Claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:
17
(i) | The specific reasons for the denial; |
(ii) | A reference to the specific provisions of the Plan on which the denial is based; |
(iii) | A description of any additional information or material necessary for the Claimant to perfect the claim and an explanation of why it is needed; |
(iv) | An explanation of the Plans review procedures and the time limits applicable to such procedures; and |
(v) | A statement of the Claimants right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review. |
12.2 Review Procedure. If the Plan Administrator denies the claim, in whole or in part, the Claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial, as follows:
(a) Initiation - Written Request. To initiate the review, the Claimant, within sixty (60) days after receiving the Plan Administrators notice of denial, must file with the Plan Administrator a written request for review.
(b) Review of a Disability Benefit Claim. If the Claimants initial claim is for Disability benefits, any review of a denied claim shall be made by members of the Plan Administrator other than the original decision maker(s) and such person(s) shall not be a subordinate of the original decision maker(s).
(c) Additional Submissions - Information Access. The Claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the Claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimants claim for benefits.
(d) Considerations on Review. In considering the review, the Plan Administrator shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. Additional considerations shall be required in the case of a claim for Disability benefits. For example, the claim will be reviewed without deference to the initial adverse benefits determination and, if the initial adverse benefit determination was based in whole or in part on a medical judgment, the Plan Administrator will consult with a health care professional with appropriate training and experience in the field of medicine involving the medical judgment. The health care professional who is consulted on appeal will not be the same individual who was consulted during the initial determination or the subordinate of such individual. If the Plan Administrator obtained the advice of medical or vocational experts in making the initial adverse benefits determination (regardless of whether the advice was relied upon), the Plan Administrator will identify such experts.
(e) Timing of Employer Response. The Plan Administrator shall respond in writing to such Claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the Claimant in writing, prior to the end of the initial 60-day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.
(f) Notice of Decision. The Plan Administrator shall notify the Claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:
18
(i) | The specific reasons for the denial; |
(ii) | A reference to the specific provisions of the Plan on which the denial is based; |
(iii) | A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimants claim for benefits; and |
(iv) | A statement of the Claimants right to bring a civil action under ERISA Section 502(a). |
12.3 Exhaustion of Remedies. A Claimant must follow the claims review procedures under this Plan and exhaust his or her administrative remedies before taking any further action with respect to a claim for benefits.
12.4 Arbitration. If a Claimant continues to dispute the benefit denial based upon completed performance of the Plan or the meaning and effect of the terms and conditions thereof, then the Claimant must submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Employer and the Claimant. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination. Where a dispute arises as to the Employers discharge of the Participant for Cause, such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.
ARTICLE 13
THE TRUST
13.1 Establishment of Trust . The Employer may establish a grantor trust (the Trust), of which the Employer is the grantor, within the meaning of subpart E, part I, subchapter J, subtitle A of the Code, to pay benefits under this Plan. To the extent such benefits are not paid from the Trust, the benefits shall be paid from the general assets of the Employer. The Trust (if any) shall be a grantor trust similar to the terms of the model trust as described in IRS Revenue Procedure 92-64, I.R.B. 1992-33, as same may be amended or modified from time to time. If the Employer establishes a Trust, the assets of the Trust will be subject to the claims of the Employers creditors in the event of its insolvency. Except as may otherwise be provided under the Trust, the Employer shall not be obligated to set aside, earmark, or escrow any funds or other assets to satisfy its obligations under this Plan, and a Participant and/or his or her designated Beneficiaries shall not have any property interest in any specific assets of the Employer other than the unsecured right to receive payments from the Employer, as provided in this Plan.
13.2 Interrelationship of the Plan and the Trust . The provisions of this Plan shall govern the rights of a Participant to receive distributions pursuant to this Plan. The provisions of the Trust (if established) shall govern the rights of the Participant and the creditors of the Employer to the assets transferred to the Trust. The Employer and each Participant shall at all times remain liable to carry out its obligations under this Plan. The Employers obligations under this Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust.
13.3 Contribution to the Trust . Amounts may be contributed by the Employer to the Trust at the sole discretion of the Employer.
ARTICLE 14
Miscellaneous
14.1 Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.
19
14.2 Nonassignability. Neither any Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony, or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participants or any other persons bankruptcy or insolvency, or be transferable to a spouse as a result of a property settlement or otherwise. If any Participant, Beneficiary, or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary, or successor in interest in such manner as the Plan Administrator shall direct.
14.3 Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Employer and a Participant. Nothing in this Plan shall be deemed to give the Participant the right to be retained in the service of the Employer as an Employee or otherwise or to interfere with the right of the Employer to discipline or discharge the Participant at any time. The Participant confirms his or her understanding that Participants employment with Employer is and shall continue to be on an At-Will basis, such that Participant is free to resign at any time and that Employer is free to terminate or modify Participants employment relationship at any time (including the right to demote, to reduce compensation and other benefits and to transfer Participant), with or without cause (as defined in this Plan as well as any other cause) or advance notice.
14.4 Governing Law. The Plan shall be administered, construed and governed in all respects under and by the laws of the State of Delaware, without reference to the principles of conflicts of law (except and to the extent preempted by applicable federal law).
14.5 Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Plan shall be in writing and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed, it shall be sent by United States certified mail, postage prepaid, addressed to the addressees last known address as shown on the records of the Employer. The date of such mailing shall be deemed the date of notice consent or demand. Any person may change the address to which notice is to be sent by giving notice of the change of address in the manner aforesaid.
14.6 Other Benefits. The benefits provided for a Participant or a Participants Beneficiary under this Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Employer. This Plan shall supplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided herein.
IN WITNESS WHEREOF, Speedy Group Holdings Corp. has adopted this Plan as of the Effective Date written above.
SPEEDY GROUP HOLDINGS CORP.: |
By: |
/s/ Donald F. Gayhardt |
Title: |
Pres/CEO |
Printed Name: |
Donald F. Gayhardt |
20
Exhibit 10.8
Name : [ ] |
Manager : [ ] |
|
Job Title : [ ] |
Department : [ ] |
Incentive Compensation Program Guidelines
The Company Incentive Compensation Program has been developed to track and objectively measure key areas of responsibility for certain positions. It is specially designed to financially reward those employees who meet expectations and excel in supporting bottom line profitability for the company.
There are many other important areas of responsibilities and duty which are required but are not specially addressed in this compensation plan. While this plan purposefully rewards an employee for meeting several defined expectations, the plan in no way attempts to define or provide bonus compensation for all of the functions performed in the course of daily work.
The bonus plan consists of these components:
Company Financial Performance
The company financial performance objective will be based on meeting an Adjusted EBITDA goal. If this target is met, then the maximum % listed below for company financial performance will be paid out.
Individual/Departmental Goals and Objectives
Accomplishment of stated Individual/Departmental Goals and Objectives will determine the % of the yearly bonus to be awarded. (maximum % of for goals and objective of your total eligible incentive bonus is listed above). Not all goals and objectives will need to be met to receive a portion of the bonus.
The individual/departmental goals and objectives are designed to align with the strategic goals of the Company for the plan year. These goals may be revisited and revised on a quarterly basis depending on company growth, business needs and future expectations.
The bonus will be calculated on the fiscal year (January to December) results for both categories. Employees must be employed at the time of calculation in order to receive any portion of the bonus. Employees, who are demoted or otherwise become non-eligible for the plan during the year, will not receive any portion of the bonus. Employees who are employed but inactive for a period of more than thirty (30) days during the year will receive a pro-rated payout of their earned bonus. Payouts will be made by the 28th of the second month following the end of the plan year. Applicable taxes and other statutory deductions will apply.
The company may at anytime revise, enhance or discontinue this bonus program, as well as determine who is eligible for the program.
Incentive Plan Eligibility
Total Eligible Incentive as a % of base salary: 50% |
Company Financial incentive as a % of base salary: 25% |
Personal Objectives incentive as a % of base salary: 25% |
Financial Plan Objectives
Plan | % of base salary | |||
Financial Plan #1 | Company Consolidated Financial Plan | 25% | ||
Financial Plan #2 (if any) |
Personal Objectives
Self: | Title: | |||
|
Title: | |||
|
Start: | Due: | ||
|
|
|
||
Self: | Title: | |||
|
Title: | |||
|
Start: | Due: | ||
|
|
|
||
Self: | Title: | |||
|
Title: | |||
|
Start: | Due: | ||
|
|
|
||
Self: | Title: | |||
|
Title: | |||
|
Start: | Due: | ||
|
|
|
||
Self: | Title: | |||
|
Title: | |||
|
Start: | Due: | ||
|
|
|
Exhibit 10.9
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this Agreement ), dated as of January 13, 2012, is between Speedy Cash Holdings Corp., a Delaware corporation (the Employer ), and Don Gayhardt (the Employee ).
WHEREAS, the Employer wishes to employ the Employee as the Chief Executive Officer of the Employer, and the Employee wishes to be employed as the Chief Executive Officer of the Employer, on the terms set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
§1. EMPLOYMENT . The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.
§2. DUTIES . The Employee shall be employed as the Chief Executive Officer of the Employer. In such capacity, the Employee shall have the responsibilities and duties customary for such offices and such other executive responsibilities and duties as are assigned by the Board of Directors (the Board ) of the Employer which are consistent with the Employees position. At all times during the performance of this Agreement, the Employee will adhere to the rules and regulations (the Policies ) that have been or may hereafter be established by the Board (and any committee thereof) for the conduct of the employees of the Employer and its subsidiaries or for the position or positions held by the Employee. Until further notice from the Board, the Employee will consult regularly with Doug Rippel and Chad Faulkner on management and strategy matters. The Employee will attend and participate in meetings of the Board. Subject to the completion of certain amendments to the Companys Investor Rights Agreement to address Board voting arrangements, as discussed with the Employee, the Employee will serve on the Board of Directors for as long as he is employed as the Chief Executive Officer of the Employer (but, for the avoidance of doubt, the Employee will not serve on the Audit Committee or Compliance Committee of the Board). The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer. Employee will resign from the boards of directors of Factor Trust and Mariner Finance Holdings on or before January 31, 2012. The Employee may continue to serve on the boards of directors of Music Training Center Holdings, LLC and Beneficial Mutual Bancorp as long as such service does not, in the good faith judgment of the Board, materially interfere with the performance of his duties hereunder. Any additional board service or similar roles with other organizations shall be subject to the prior approval of the Board.
§3. TERM . The initial term of employment of the Employee hereunder shall commence on the date hereof (the Commencement Date ) and shall continue until the fifth (5th) anniversary of the Commencement Date (the Initial Term ), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms (each, a Renewal Term ) thereafter unless terminated by either party by written notice to the other given at least forty-five (45) days prior to the expiration of the then current term.
§4. COMPENSATION AND BENEFITS . Until the termination of the Employees employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate (or cause one of its subsidiaries to compensate) the Employee as follows:
(a) Base Salary . The Employer shall pay the Employee, in accordance with the Employers then current payroll practices, a base salary (the Base Salary ). The Base Salary will be paid at an annual rate of $500,000.
(b) Bonus . Subject to Schedule 1 , for each calendar year during the Term (commencing with the 2012 calendar year), the Employee shall be eligible to receive (i) a performance-based bonus equal to 75% of Base Salary if the Companys revenue and EBITDA (as defined on Schedule 1 ) targets established by the Board in the annual budget for such calendar year are met (the Base Bonus ) and (ii) if the revenue and EBITDA targets in the annual budget for a given calendar year are achieved, an additional performance-based bonus in an amount equal to three percent (3%) of Base Salary multiplied by the number of percentage points (if any) by which actual EBITDA for such calendar year exceeds the EBITDA target established by the Board in the annual budget for such calendar year, up to a maximum of 60% of Base Salary (the Additional Bonus , together with the Base Bonus, the Bonuses ). Bonuses payable in respect of any calendar year (if any) shall be paid in the immediately following calendar year by the earlier to occur of (A) 30 days following the completion of the consolidated audited financial statements of the Employer and its subsidiaries for the calendar year for which the Bonus was earned and (B) April 30 of such immediately following calendar year.
(c) Vacation . The Employee shall be entitled to three (3) weeks vacation each calendar year plus one (1) week of sick time (prorated for any partial calendar year of employment). Any vacation shall be taken at the reasonable and mutual convenience of the Employer and the Employee.
(d) Insurance; Other Benefits . The Employee shall be entitled to receive any health, accident, disability and life insurance and other employee benefits provided by the Employer under group health, accident, disability and life insurance plans and other employee benefit plans and fringe benefits (including a vehicle allowance consistent with other senior executive officers) maintained by the Employer for its full-time, salaried executive employees as such benefits may be modified from time to time by the Board. In addition, the Employer will reimburse the Employee for up to $25,000 of documented personal life insurance premiums paid by the Employee (it being understood that the Employer will not be listed as the beneficiary).
(e) Withholding . All amounts payable by the Employer to the Employee hereunder (including, but not limited to, the Base Salary and Bonus) shall be reduced prior to the delivery of such payment to the Employee by an amount sufficient to satisfy any applicable federal, state, local or other withholding tax requirements.
2
(f) Stock Options . The Employee will be awarded an option to purchase 21,057 shares of Class B Common Stock of the Empoyer at an exercise price of $96.41 per share on terms substantially consistent with the draft stock option agreement provided to the Employee prior to the date hereof (with five (5) year annual vesting on each anniversary of January 1, 2012). The parties will consider arrangements to grant the stock options, or to permit the transfer of the stock options, to a trust for the benfit of the Employee and/or his family members (provided that any such arranagements shall be subject to the final consent and approval of the Board in its sole discretion).
§5. EXPENSES . The Employer shall reimburse the Employee for all documented reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder. The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.
§6. TERMINATION . The Employees employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, or any Renewal Term as contemplated by §3 above, except that the employment of the Employee hereunder shall earlier terminate:
(a) Death . Upon the death of the Employee during the term of his employment hereunder.
(b) Disability . At the option of the Employer, in the event of the Employees Disability (as defined below), upon thirty (30) days written notice from the Employer. For purposes hereof, the Employee shall be deemed to have a Disability if the Employee is unable (as reasonably determined in good faith by the Board), on account of a physical or mental illness, injury or disease or combination thereof, to substantially perform his duties and obligations under this Agreement for a period of more than 90 consecutive days or for a total of 180 days within any 12 month period.
(c) For Cause . For Cause immediately upon written notice by the Employer to the Employee. For purposes of this Agreement, a termination shall be for Cause if the Board shall reasonably determine, that any one or more of the following has occurred:
(i) the Employee shall have committed an act of fraud, embezzlement, misappropriation or breach of fiduciary duty against the Employer or any of its subsidiaries (collectively, the Companies ), including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the business of any of the Companies; or
(ii) the Employee shall have committed or been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any other crime that could reasonably be expected to have a material adverse effect on the business or reputation of any of the Companies; or
(iii) the Employee shall have committed a material breach of any of the covenants, terms and provisions of §§7, 8 or 9 hereof; or
3
(iv) the Employee shall have breached in any material respects any one or more of the provisions of this Agreement (excluding §§7, 8 and 9 hereof), including, without limitation, any failure to comply with the Policies, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail; or
(v) the Employee shall have refused, after written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or
(vi) the Employee shall be chronically absent from work (excluding vacation, illnesses or leaves of absence approved by the Board) and such absence shall continue following written notice to the Employee; or
(vii) the Employee, subject to Section 1 hereof, shall have failed to devote his full time and best efforts to the performance of his duties to the Employer and such failure continues for more than ten (10) days after written notice of such failure has been given to the Employee; or
(viii) the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs or shall have possessed illegal, unpermitted or unregistered weapons, in each case on the premises of the Employer or any of its direct or indirect subsidiaries.
(d) Resignation or Termination Without Cause . At any time, upon written notice by either the Employer or the Employee to the other party hereto.
(e) Resignation For Good Reason . The Employee may terminate his employment for Good Reason upon prior written notice to the Employer. For purposes of this Agreement, the term Good Reason shall mean:
(i) a material breach by the Employer of any of its obligations under this Agreement that shall have continued for a period of thirty (30) days after written notice to the Employer specifying such breach in reasonable detail and that is continuing as of the date of termination;
(ii) any other action by the Employer which results in a material diminution in the Employees title, position, compensation, status, reporting relationships, authority, duties or responsibilities, which is not remedied by the Board within ten (10) business days after receipt of notice thereof given by the Employee to the Board (it being understood and agreed that any changes or arrangements arising from the continued service and involvement of Doug Rippel and Chad Faulkner as contemplated by the second paragraph of that certain letter agreement among certain stockholders of the Company executed on the date hereof (a copy of which has been made available to the Employer) will not serve as a basis for Good Reason hereunder); or
4
(iii) the completion of any Disposition Event (as defined in that certain Stock Option Agreement, of event date herewith, between the Employer and the Employee) in which the acquiring entity is actively engaged in the consumer finance business, including but not limited to, payday lending.
(f) Rights and Remedies on Termination .
(i) If the Employees employment hereunder is terminated pursuant to §6(a), §6(b) or §6(c), by the Employee pursuant to §6(d) or pursuant to §3 in connection with the expiration of the Initial Term or any subsequent term hereunder, then the Employee (or his estate, as applicable) shall be entitled to receive his Base Salary through the date of termination or expiration.
(ii) If the Employees employment hereunder is terminated by the Employer pursuant to §6(d), in connection with the Employers election not to renew the Term or any Renewal Term pursuant to §3 above, or by the Employee pursuant to §6(e), then the Employee shall be entitled to continue to receive (A) payment, in accordance with the Employers then current payroll practices, of the Employees Base Salary in effect at the time of such termination (the Termination Date ) for a twelve (12) month period following such termination (the Severance Period ), (B) any Bonus earned for a completed calendar year pursuant to §4(b) but not yet paid as of the Termination Date, and (C) an amount equal to the Base Bonus for the calendar year in which the termination occurs, whether or not the applicable targets are achieved for that calendar year (it being understood and agreed that any Bonuses payable pursuant to clauses (B) or (C) above shall be paid at such time as such Bonuses would have otherwise been payable under §4(b)). Notwithstsnding the foregoing, (A) the Employees right to receive the foregoing payments and benefits is expressly conditioned upon receipt by the Employer within thirty (30) days following the Termination Date of a written release executed by the Employee, in form and substance satisfactory to the Employer, of any and all claims or causes of action of any nature relating directly or indirectly to such Employees employment or termination of employment by the Employer, and (B) in the event that the Employee breaches any of the covenants, terms or provisions of §§7, 8 or 9 hereof, without limiting any other rights that the Employer may have, the Employers obligation to make payments or provide benefits under this §6(f)(ii) shall immediately terminate.
(iii) Except as otherwise set forth in this §6(f), the Employee shall not be entitled to any severance, bonus or other compensation after termination other than payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination or benefits or compensation to which the Employee is entitled pursuant to applicable law (e.g. COBRA).
§7. INVENTIONS; ASSIGNMENT . All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of any of the Companies, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, either alone or with others and whether or not during working hours or by the use of the facilities of any of the Companies ( Inventions ), shall be the
5
exclusive property of the Companies. The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect the rights of the Companies therein, and shall assist the Companies, at the Companies expense, in obtaining, defending and enforcing the Companies rights therein. The Employee hereby appoints the Employer and each of the other Companies, individually, as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer or any of the other Companies to protect or perfect their rights to any Inventions.
§8. CONFIDENTIAL INFORMATION . The Employee recognizes and acknowledges that certain assets of, and information relating to, the Companies, including, without limitation, information regarding the Companies methods of operation, financial information, strategic planning, operational budgets and strategies, payroll data, management systems programs, computer systems, marketing plans and strategies, merger and acquisition strategies and customer lists (hereinafter called Confidential Information ) are valuable, special, and unique assets or information of the Companies and their affiliates. The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder; provided , that Confidential Information shall in no event include (a) Confidential Information which was generally available to the public at the time of disclosure by the Employee or (b) Confidential Information which becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder. In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information. Nothing contained within this §8 shall prohibit the Employee from disclosing Confidential Information if such disclosure is required by law, governmental process or valid legal process. In the event that the Employee is legally compelled to disclose any of the Confidential Information, he shall provide the Employer with prompt written notice so that the Employer, at its sole cost and expense, may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, or that Employer waives compliance with the provisions of this Agreement, Employee shall furnish only that portion of the Confidential Information that he is advised by counsel is legally required to be disclosed.
§9. NON-COMPETITION . During the term of the Employees employment hereunder and for the Designated Period (as defined below) after termination of the Employees employment hereunder, the Employee will not (a) anywhere within any country in which any Company conducts business, engage, directly or indirectly, alone or as a shareholder (other than as a holder of less than one percent (1%) of the common stock of any publicly traded corporation), partner, officer, director, employee, consultant or advisor, or otherwise in any way participate in or become associated with, any other business organization that is engaged or becomes engaged in any business that provides the same or any substantially similar services or products offered or planned to be offered by any of the Companies during the term of the
6
Employees employment or at the time of the Employees termination or that any Company has notified the Employee at any time prior to the time of such termination that it proposes to conduct and for which any of the Companies have, prior to the time of such termination, expended substantial resources (the Designated Industry ), or (b) solicit any employee of any of the Companies to leave its employ for alternative employment, or hire or offer employment to any person to whom the Employee actually knows any of the Companies has offered employment. For purposes hereof, the term Designated Period shall mean eighteen (18) months. The Employee acknowledges that the provisions of this §9 are essential to protect the business and goodwill of the Companies. The Employee will continue to be bound by the provisions of this §9 until their expiration and shall not be entitled to any compensation from the Employer with respect thereto except as provided above. If at any time the provisions of this §9 shall be determined to be invalid or unenforceable by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. The Employee hereby acknowledges that he has agreed to be bound by the provisions of this §9 in consideration for the compensation, severance and other benefits to be provided by the Employer to the Employee pursuant to the terms of this Agreement.
§10. GENERAL.
(a) Notices . All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):
If to the Employer, to:
Speedy Cash Holdings Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Attention:
Fax:
7
With copies to:
Friedman Fleischer & Lowe, LLC
One Maritime Plaza
Suite 2200
San Francisco, CA 94111
Attention: Christopher Masto
Fax: (415) 402-2111
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Attention: Neil W. Townsend, Esq.
Fax: (212) 72809272
If to the Employee, to:
(b) Equitable Remedies . Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of his obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.
(c) Severability . If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
(d) Waivers . No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.
(e) Counterparts . This Agreement may be executed in multiple counterparts (including by telecopier), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(f) Assigns . This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto, including any entity which acquires substantially all of the assets or stock of the Employer.
8
(g) Entire Agreement . This Agreement contains the entire understanding of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, including, without limitation, any other employment agreements or any other agreements or memoranda entitling the Employee to compensation (including any bonus) from the Employer or any of the Companies. This Agreement shall not be amended except by a written instrument hereafter signed by each of the parties hereto.
(h) Governing Law . This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of New York.
(i) Section 409A .
(i) Purpose. This section is intended to help ensure that compensation paid or delivered to the Employee pursuant to this Agreement either is paid in compliance with, or is exempt from, Section 409A of the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder (collectively, Section 409A ). However, the Employer does not warrant to the Employee that all compensation paid or delivered to him for his services will be exempt from, or paid in compliance with, Section 409A.
(ii) Amounts Payable On Account of Termination. For the purposes determining when amounts otherwise payable on account of the Employees termination of employment under this Agreement will be paid, which amounts become due because of his termination of employment, termination of employment or words of similar import, as used in this Agreement, shall be construed as the date that the Employee first incurs a separation from service for purposes of Section 409A on or following termination of employment.
(iii) Reimbursements. Any taxable reimbursement of business or other expenses as specified under this Agreement shall be subject to the following conditions: (1) the expenses eligible for reimbursement in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year; (2) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.
(iv) Releases. Any amounts otherwise payable on account of the Employees termination of employment under this Agreement which (i) are conditioned in any part on a release of claims and (ii) would otherwise be paid (assuming the release is given) prior to the last day on which the release could become irrevocable assuming the Employees latest possible execution and delivery of the release (such last day, the Release Deadline ) shall be paid, if ever, only on the Release Deadline, even if the Employees release becomes irrevocable before that date. The Employer may elect to make such payment up to thirty (30) days prior to the Release Deadline, however. If no such last day is specified in this Agreement, then such last day will be the sixtieth (60 th ) day after the Employees termination of employment.
9
(v) Interpretative Rules. In applying Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
[Remainder of page intentionally left blank; signature page follows]
10
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.
SPEEDY CASH HOLDINGS CORP. |
||
By: |
/s/ Doug Rippel |
|
Name: Doug Rippel |
||
Title: Executive Chairman |
||
/s/ Don Gayhardt |
||
Name: Don Gayhardt |
11
SCHEDULE 1
EBITDA means, with respect to any calendar year, the sum of the Consolidated Net Income (or loss) of the Employer and its subsidiaries for such calendar year plus all amounts deducted in the computation thereof on account of (a) interest expense (net of any interest income), (b) income taxes, and (c) depreciation and amortization.
Consolidated Net Income means, for any calendar year, the net income (or loss) of the Employer and its subsidiaries for such year on a consolidated basis determined in accordance with generally accepted accounting principles applied in a manner consistent with the Companys audited financial statements for such calendar year (but in any case eliminating all intercompany items and excluding any extraordinary gains and/or losses including any gains and/or losses from the sale or other disposition of assets other than in the ordinary course of business).
If the Employer or any of its subsidiaries enters into any extraordinary transaction in any calendar year, such as a business acquisition or disposition, for purposes of Section 4(b) above the Board in the exercise of its sole discretion may, at any time during such calendar year, adjust upward or downward the target revenue and/or EBITDA in the budget for such calendar year to take into account such extraordinary transaction. The Board shall notify the Employee of the adjusted budgeted revenue and/or EBITDA for any such calendar year promptly after the determination thereof.
1
Exhibit 10.10
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This EMPLOYMENT AND NONCOMPETITION AGREEMENT (this Agreement), dated as of January 1 , 2017, is between CURO Financial Technologies Corp., a Delaware corporation (the Employer), and Donald F. Gayhardt, Jr. (the Employee).
WHEREAS, the Employer wishes to employ the Employee as the President and Chief Executive Officer of the Employer, and the Employee wishes to be employed as the President and Chief Executive Officer of the Employer, on the terms set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
1 . EMPLOYMENT. The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.
2 . DUTIES. The Employee shall be employed as the President and Chief Executive Officer of the Employer. In such capacity, the Employee shall have the responsibilities and duties customary for such offices and such other executive responsibilities and duties as are reasonably assigned by the Board of Directors (the Board) of the Employer which are consistent with the Employees position. At all times during the performance of this Agreement, the Employee will adhere to the rules and regulations (the Policies) that have been or may hereafter be established by the Board (and any committee thereof) for the conduct of the employees of the Employer and its subsidiaries or for the position or positions held by the Employee. Until further notice from the Board, the Employee will consult regularly with Doug Rippel and Chad Faulkner on management and strategy matters and serve as a member of the Board. The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer. The Employee may continue to serve on the boards of directors of Music Training Center Holdings, LLC and Beneficial Bancorp as long as such service does not, in the good faith judgment of the Board, materially interfere with the performance of his duties hereunder. Any additional board service or similar roles with other organizations shall be subject to the prior approval of the Board.
3 . TERM. The initial term of employment of the Employee hereunder shall commence on the date hereof (the Commencement Date) and shall continue until terminated in accordance with §6 below.
4. COMPENSATION AND BENEFITS. Until the termination of the Employees employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate (or cause one of its subsidiaries to compensate) the Employee as follows:
(a) Base Salary. The Employer shall pay the Employee, in accordance with the Employers then current payroll practices, a base salary (the Base Salary). The Base Salary will be paid at an annual rate of $760,000.
(b) Bonus. Subject to Schedule 1, for each calendar year during the Term (commencing with the 2017 calendar year), the Employee shall receive (i) a performance-based bonus equal to 75% of Base Salary if the Companys (a) revenue, less provision for loan losses; and (b) EBITDA (as defined on Schedule 1) targets established by the Board in the annual budget for such calendar year are met (the Base Bonus) and (ii) an additional performance-based bonus in an amount equal to three percent (3%) of Base Salary multiplied by the number of percentage points by which actual EBITDA for such calendar year exceeds the EBITDA target established by the Board in the annual budget for such calendar year and the Base Revenue Target is achieved, up to a maximum of 60% of Base Salary (the Additional Bonus, together with the Base Bonus, the Bonuses). Bonuses payable in respect of any calendar year (if any) shall be paid in the immediately following calendar year by the earlier to occur of (A) 30 days following the completion of the consolidated audited financial statements of the Employer and its subsidiaries for the calendar year for which the Bonus was earned and (B) April 30 of such immediately following calendar year.
(c) Vacation. The Employee shall be entitled to three (3) weeks vacation each calendar year plus one (1) week sick time (prorated for any partial calendar year of employment). Any vacation shall be taken at the reasonable and mutual convenience of the Employer and the Employee.
(d) Insurance; Other Benefits. The Employee shall be entitled to receive any health, accident, disability and life insurance and other employee benefits provided by the Employer under group health, accident, disability and life insurance plans and other employee benefit plans and fringe benefits maintained by the Employer for its full-time, salaried executive employees as such benefits may be modified from time to time by the Board. In addition: (i) the Employer will reimburse the Employee for up to $25,000, per annum, of documented personal life insurance premiums paid by the Employee (it being understood that the Employer will not be listed as the beneficiary); (ii) Employee shall be entitled to participate in the Companys Non-Qualified Deferred Compensation Plan, on terms consistent with other senior executives of the Company; and (iii) Company will match Employees documented expenditures for private aircraft charters (i.e. split the costs) for flights taken for legitimate business purposes, up to a maximum aggregate reimbursement of $125,000 in any calendar year (with no additional duplicative reimbursement for first class equivalent or similar fares).
(e) Withholding. All amounts payable by the Employer to the Employee hereunder (including, but not limited to, the Base Salary and Bonus) shall be reduced prior to the delivery of such payment to the Employee by an amount sufficient to satisfy any applicable federal, state, local or other withholding tax requirements.
5. EXPENSES. The Employer shall reimburse the Employee for all documented reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder. The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.
2
6. TERMINATION. The Employees employment hereunder shall commence on the Commencement Date and continue until the expiration of the term as contemplated by §3 above, except that the employment of the Employee hereunder shall earlier terminate:
(a) Death. Upon the death of the Employee during the term of his employment hereunder.
(b) Disability. At the option of the Employer, in the event of the Employees Disability (as defined below), upon thirty (30) days written notice from the Employer. For purposes hereof, the Employee shall be deemed to have a Disability if the Employee is unable (as reasonably determined in good faith by the Board), on account of a physical or mental illness, injury or disease or combination thereof, to substantially perform his material duties and obligations under this Agreement for a period of more than 90 consecutive days or for a total of 180 days within any 12 month period.
(c) For Cause. For Cause immediately upon written notice by the Employer to the Employee. For purposes of this Agreement, a termination shall be for Cause if the Board shall reasonably determine, that any one or more of the following has occurred:
(i) the Employee shall have committed an act of fraud, embezzlement, misappropriation or breach of fiduciary duty against the Employer or any of its subsidiaries (collectively, the Companies), including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the business of any of the Companies; or
(ii) the Employee shall have committed or been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any other crime that could reasonably be expected to have a material adverse effect on the business or reputation of any of the Companies; or
(iii) the Employee shall have committed a material breach of any of the covenants, terms and provisions of §§7, 8 or 9 hereof; or
(iv) the Employee shall have breached in any material respects any one or more of the provisions of this Agreement (excluding §§7, 8 and 9 hereof), including, without limitation, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail; or
(v) the Employee shall have refused, after written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or
(vi) the Employee shall be chronically absent from work (excluding vacation, illnesses or leaves of absence approved by the Board) and such absence shall continue following written notice to the Employee; or
(vii) the Employee, subject to Section 1 hereof, shall have failed to devote his full time and best efforts to the performance of his duties to the Employer and such failure continues for more than ten (10) days after written notice of such failure has been given to the Employee; or
3
(viii) Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs or shall have possessed illegal, unpermitted or unregistered weapons, in each case on the premises of the Employer or any of its direct or indirect subsidiaries.
(d) Resignation or Termination Without Cause. At any time, upon written notice by either the Employer or the Employee to the other party hereto.
(e) Resignation For Good Reason. The Employee may terminate his employment for Good Reason upon prior written notice to the Employer. For purposes of this Agreement, the term Good Reason shall mean:
(i) a material breach by the Employer of any of its obligations under this Agreement that shall have continued for a period of thirty (30) days after written notice to the Employer specifying such breach in reasonable detail and that is continuing as of the date of termination; or
(ii) any other action by the Employer which results in a material diminution in the Employees title, position, compensation, status, reporting relationships, authority, duties or responsibilities, other than insubstantial or inadvertent actions not taken in bad faith which are remedied by the Employer within ten (10) business days after receipt of notice thereof given by the Employee. For purposes of the foregoing, (a) changes in the reporting relationships of officers and management personnel other than the Chief Executive Officer shall not be deemed to constitute a material diminution as long as all such officers and management personnel report to the Chief Executive Officer directly or through one or more other officers or management personnel and (b) the Employer and the Employee acknowledge and agree that legal and compliance related functions may be required to report to the Board or a committee thereof and that any such reporting arrangements will not constitute a material diminution of reporting relationships.
(f) Rights and Remedies on Termination.
(i) If the Employees employment hereunder is terminated pursuant to §6(a), §6(b) or §6(c), by the Employee pursuant to §6(d) or pursuant to §3 in connection with the expiration of the initial term hereunder, then the Employee (or his estate, as applicable) shall be entitled to receive his Base Salary through the date of termination or expiration.
(ii) If the Employees employment hereunder is terminated by the Employer pursuant to §6(d), in connection with the Employers election not to renew the term pursuant to §3 above, or by the Employee pursuant to §6(e), then the Employee shall be entitled to continue to receive (A) payment, in accordance with the Employers then current payroll practices, of the Employees Base Salary in effect at the time of such termination (the Termination Date ) for a twenty-four (24) month period following such termination (the Severance Period ), (B) any Bonus earned for a completed calendar year pursuant to §4(b) but not yet paid as of the Termination Date, (C) to the extent that the Board
4
determines that the Company was on track to meet the current calendar year Base Bonus targets contemplated by §4(b) at the time of termination and those targets are actually met for such calendar year, the amount of the applicable Base Bonus prorated for the number days elapsed (out of 365) in such year prior to such termination (it being understood and agreed that any Bonuses or prorated Bonuses payable pursuant to clauses (B) or (C) above shall be paid at such time as such Bonuses would have otherwise been payable under §4(b)) and (D) the benefits described in §4(d) (other than aircraft charter reimbursement) during the Severance Period; provided , however , that (x) the Employees right to receive the foregoing payments and benefits is expressly conditioned upon receipt by the Employer within thirty (30) days following the Termination Date of a written release executed by the Employee, in form and substance satisfactory to the Employer, of any and all claims or causes of action of any nature relating directly or indirectly to such Employees employment or termination of employment by the Employer, and (y) in the event that the Employee breaches any of the covenants, terms or provisions of §§7, 8 or 9 hereof, without limiting any other rights that the Employer may have, the Employers obligation to make payments under this §6(f)(ii) shall immediately terminate.
(iii) Except as otherwise set forth in this §6(f), the Employee shall not be entitled to any severance, bonus or other compensation after termination other than payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination or benefits or compensation to which the Employee is entitled pursuant to applicable law (e.g. COBRA).
7 . INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of any of the Companies, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, either alone or with others and whether or not during working hours or by the use of the facilities of any of the Companies (Inventions), shall be the exclusive property of the Companies. The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect the rights of the Companies therein, and shall assist the Companies, at the Companies expense, in obtaining, defending and enforcing the Companies rights therein. The Employee hereby appoints the Employer and each of the other Companies, individually, as his attorney in fact to execute on his behalf any assignments or other documents deemed necessary by the Employer or any of the other Companies to protect or perfect their rights to any Inventions.
8 . CONFIDENTIAL INFORMATION. The Employee recognizes and acknowledges that certain assets of, and information relating to, the Companies, including, without limitation, information regarding the Companies methods of operation, financial information, strategic planning, operational budgets and strategies, payroll data, management systems programs, computer systems, marketing plans and strategies, merger and acquisition strategies and customer lists (hereinafter called Confidential Information) are valuable, special, and unique assets or information of the Companies and their affiliates. The Employee shall not, during or after his term of employment, disclose
5
any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder; provided, that Confidential Information shall in no event include (a) Confidential Information which was generally available to the public at the time of disclosure by the Employee or (b) Confidential Information which becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder. In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information. Nothing contained within this §8 shall prohibit the Employee from disclosing Confidential Information if such disclosure is required by law, governmental process or valid legal process. In the event that the Employee is legally compelled to disclose any of the Confidential Information, he shall provide the Employer with prompt written notice so that the Employer, at its sole cost and expense, may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, or that Employer waives compliance with the provisions of this Agreement, Employee shall furnish only that portion of the Confidential Information that he is advised by counsel is legally required to be disclosed.
9 . NONCOMPETITION . During the term of the Employees employment hereunder and for the Designated Period (as defined below) after termination of the Employees employment hereunder, the Employee will not (a) anywhere within any county in which any Company conducts business, engage, directly or indirectly, alone or as a shareholder (other than as a holder of less than one percent (1%) of the common stock of any publicly traded corporation), partner, officer, director, employee, consultant or advisor, or otherwise in any way participate in or become associated with, any other business organization that is engaged or becomes engaged in any business that provides the same or any substantially similar services or products offered by any of the Companies during the term of the Employees employment or at the time of the Employees termination or that any Company has notified the Employee at any time prior to the time of such termination that it proposes to conduct and for which any of the Companies have, prior to the time of such termination, expended substantial resources (the Designated Industry), or (b) solicit any employee of any of the Companies to leave its employ for alternative employment, or hire or offer employment to any person to whom the Employee actually knows any of the Companies has offered employment. For purposes hereof, the term Designated Period shall mean twenty-four (24) months. The Employee acknowledges that the provisions of this §9 are essential to protect the business and goodwill of the Companies. The Employee will continue to be bound by the provisions of this §9 until their expiration and shall not be entitled to any compensation from the Employer with respect thereto except as provided above. If at any time the provisions of this §9 shall be determined to be invalid or unenforceable by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter;
6
and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. The Employee hereby acknowledges that he has agreed to be bound by the provisions of this §9 in consideration for the compensation, severance and other benefits to be provided by the Employer to the Employee pursuant to the terms of this Agreement.
10 . GENERAL.
(a) Notices. All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):
If to the Employer, to:
CURO Financial Technologies Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Attention: General Counsel
Fax:
With copies to:
Friedman Fleischer & Lowe, LLC
One Maritime Plaza
Suite 2200
San Francisco, CA 94111
Attention: Christopher Masto
Fax: (415) 402-2111
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Attention: Neil W. Townsend, Esq.
Fax: (212) 72809272
7
If to the Employee, to:
Mr. Donald F. Gayhardt, Jr.
[ADDRESS REDACTED]
(b) Equitable Remedies. Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of his obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.
(c) Severability. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
(d) Waivers. No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.
(e) Counterparts. This Agreement may be executed in multiple counterparts (including by telecopier), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(f) Assigns. This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto, including any entity which acquires substantially all of the assets or stock of the Employer.
(g) Entire Agreement. This Agreement contains the entire understanding of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, including, without limitation, any other employment agreements or any other agreements or memoranda entitling the Employee to compensation (including any bonus) from the Employer or any of the Companies. This Agreement shall not be amended except by a written instrument hereafter signed by each of the parties hereto.
(h) Governing Law. This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of New York.
8
(i) Section 409A.
(i) Purpose. This section is intended to help ensure that compensation paid or delivered to the Employee pursuant to this Agreement either is paid in compliance with, or is exempt from, Section 409A of the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder (collectively, Section 409A). However, the Employer does not warrant to the Employee that all compensation paid or delivered to him for his services will be exempt from, or paid in compliance with, Section 409A.
(ii) Amounts Payable On Account of Termination. For the purposes determining when amounts otherwise payable on account of the Employees termination of employment under this Agreement will be paid, which amounts become due because of his termination of employment, termination of employment or words of similar import, as used in this Agreement, shall be construed as the date that the Employee first incurs a separation from service for purposes of Section 409A on or following termination of employment.
(iii) Reimbursements. Any taxable reimbursement of business or other expenses as specified under this Agreement shall be subject to the following conditions: (1) the expenses eligible for reimbursement in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year; (2) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.
(iv) Releases. Any amounts otherwise payable on account of the Employees termination of employment under this Agreement which (i) are conditioned in any part on a release of claims and (ii) would otherwise be paid (assuming the release is given) prior to the last day on which the release could become irrevocable assuming the Employees latest possible execution and delivery of the release (such last day, the Release Deadline) shall be paid, if ever, only on the Release Deadline, even if the Employees release becomes irrevocable before that date. The Employer may elect to make such payment up to thirty (30) days prior to the Release Deadline, however. If no such last day is specified in this Agreement, then such last day will be the sixtieth (60 th ) day after the Employees termination of employment.
(v) Interpretative Rules. In applying Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
[Remainder of page intentionally left blank; signature page follows]
9
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.
CURO FINANCIAL TECHNOLOGIES Corp. |
||
By: |
/s/ Doug Rippel |
|
Name: Doug Rippel | ||
Title: Chairman of Board | ||
/s/ Donald F. Gayhardt, Jr. | ||
Name: Donald F. Gayhardt, Jr. |
10
Schedule 1
EBITDA means, with respect to any calendar year, the sum of the Consolidated Net Income (or loss) of the Employer and its subsidiaries for such calendar year plus all amounts deducted in the computation thereof on account of (a) interest expense (net of any interest income), (b) income taxes, and (c) depreciation and amortization.
Consolidated Net Income means, for any calendar year, the net income (or loss) of the Employer and its subsidiaries for such year on a consolidated basis determined in accordance with generally accepted accounting principles applied in a manner consistent with the Companys audited financial statements for such calendar year (but in any case eliminating all intercompany items and excluding any extraordinary gains and/or losses including any gains and/or losses from the sale or other disposition of assets other than in the ordinary course of business).
If the Employer or any of its subsidiaries enters into any extraordinary transaction in any calendar year, such as a business acquisition or disposition, for purposes of Section 4(b) above the Board in the exercise of its sole discretion may, at any time during such calendar year, adjust upward or downward the target Revenue and/or EBITDA in the budget for such calendar year to take into account such extraordinary transaction. The Board shall notify the Employee of the adjusted budgeted Revenue and EBITDA for any such calendar year promptly after the determination thereof.
1
Exhibit 10.11
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this Agreement ), dated as of March 5, 2016, is between Speedy Group Holdings Corp., a Delaware corporation (the Employer ) and William Baker (the Employee ).
WHEREAS, the Employer wishes to employ the Employee as the Executive Vice President and Chief Operating Officer of the Employer, and the Employee wishes to be employed as the Executive Vice President and Chief Operating Officer of the Employer, on the terms set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
§1. EMPLOYMENT . The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.
§2. DUTIES . As of the date hereof, the Employee shall be employed as the Executive Vice President and Chief Operating Officer of the Employer. In such capacity, the Employee shall have the responsibilities and duties customary for such offices and such other executive responsibilities and duties as are assigned by the Chief Executive Officer of the Employer which are consistent with the Employees position. At all times during the performance of this Agreement, the Employee will adhere to the rules and regulations (the Policies ) that have been or may hereafter be established by Employers Board of Directors (the Board) (and any committee thereof) for the conduct of the employees of the Employer and its subsidiaries or for the position or positions held by the Employee. The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer. Any additional board service or similar roles with other organizations shall be subject to the prior approval of the Board.
§3. TERM . The initial term of employment of the Employee hereunder shall commence on the date hereof (the Commencement Date ) and shall continue until the third (3rd) anniversary of the Commencement Date (the Initial Term ), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms (each, a Renewal Term ) thereafter unless terminated by either party by written notice to the other given at least forty-five (45) days prior to the expiration of the then current term.
§4. COMPENSATION AND BENEFITS . Until the termination of the Employees employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate (or cause one of its subsidiaries to compensate) the Employee as follows:
(a) Base Salary . The Employer shall pay the Employee, in accordance with the Employers then current payroll practices, a base salary (the Base Salary ). The Base Salary will be paid at an annual rate of $500,000. Employee will be eligible for merit-based increases in Base Salary based upon performance reviews to be conducted on an annual basis.
(b) Bonus . The Employee shall be entitled to receive an annual performance based bonus (the Bonus ) of up to fifty percent (50%) of Base Salary with respect to each calendar year
1
of the Employer, based on satisfaction of performance criteria to be set by the Board for such fiscal year. The Bonus payable in respect of any calendar year (if any) shall be paid in the immediately following calendar year by the earlier to occur of (A) 30 days following the completion of the consolidated audited financial statements of the Employer and its subsidiaries for the calendar year for which the Bonus was earned; and (B) April 30 of such immediately following calendar year.
(c) Vacation . The Employee shall be entitled to three (3) weeks vacation each calendar year plus one (1) week sick time (pro-rated for any partial calendar year of employment). Any vacation shall be taken at the reasonable and mutual convenience of the Employer and the Employee.
(d) Insurance; Other Benefits . The Employee shall be entitled to receive any health, accident, disability and life insurance and other employee benefits provided by the Employer under group health, accident, disability and life insurance plans and other employee benefit plans and fringe benefits maintained by the Employer for its full-time, salaried executive employees as such benefits may be modified from time to time by the Board.
(e) Withholding . All amounts payable by the Employer to the Employee hereunder (including, but not limited to, the Base Salary and Bonus) shall be reduced prior to the delivery of such payment to the Employee by an amount sufficient to satisfy any applicable federal, state, local or other withholding tax requirements.
(f) Stock Options . The Employee will be awarded an option to purchase 3,000 shares of Class B Common Stock of the Employer at an exercise price equal to the fair market value of the Employers Class B Common Stock as of the date hereof, as determined by the Board in its discretion, on terms substantially consistent with the draft stock option agreement provided to the Employee prior to the date hereof (with five (5) year vesting on each anniversary of the Commencement Date).
§5. EXPENSES . The Employer shall reimburse the Employee for all documented reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder. The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.
§6. TERMINATION . The Employees employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, or any Renewal Term as contemplated by §3 above, except that the employment of the Employee hereunder shall earlier terminate:
(a) Death . Upon the death of the Employee during the term of his employment hereunder.
(b) Disability . At the option of the Employer, in the event of the Employees Disability (as defined below), upon thirty (30) days written notice from the Employer. For purposes hereof, the Employee shall be deemed to have a Disability if the Employee is unable (as reasonably determined in good faith by the Board), on account of a physical or mental illness, injury or disease or combination thereof, to perform his duties and obligations under this Agreement for a period of more than 90 consecutive days or for a total of 180 days within any 12 month period.
2
(c) For Cause . For Cause immediately upon written notice by the Employer to the Employee. For purposes of this Agreement, a termination shall be for Cause if the Board shall reasonably determine, that any one or more of the following has occurred:
(i) the Employee shall have committed an act of fraud, embezzlement, misappropriation or breach of fiduciary duty against the Employer or any of its subsidiaries (collectively, the Companies ), including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the business of any of the Companies; or
(ii) the Employee shall have committed or been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any other crime that could reasonably be expected to have a material adverse effect on the business or reputation of any of the Companies; or
(iii) the Employee shall have committed a material breach of any of the covenants, terms and provisions of §§7, 8 or 9 hereof; or
(iv) the Employee shall have breached in any material respects any one or more of the provisions of this Agreement (excluding §§7, 8 and 9 hereof), including, without limitation, any failure to comply with the Policies, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail; or
(v) the Employee shall have refused, after written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or
(vi) the Employee shall be chronically absent from work (excluding vacation, illnesses or leaves of absence approved by the Board) and such absence shall continue following written notice to the Employee; or
(vii) the Employee, subject to §1 hereof, shall have failed to devote his full time and best efforts to the performance of his duties to the Employer and such failure continues for more than ten (10) days after written notice of such failure has been given to the Employee; or
(viii) the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs or shall have possessed illegal, unpermitted or unregistered weapons, in each case on the premises of the Employer or any of its direct or indirect subsidiaries.
(d) Resignation or Termination Without Cause . At any time, upon written notice by either the Employer or the Employee to the other party hereto.
3
(e) Resignation For Good Reason . The Employee may terminate his employment for Good Reason upon prior written notice to the Employer. For purposes of this Agreement, the term Good Reason shall mean a material breach by the Employer of any of its obligations under this Agreement that shall have continued for a period of thirty (30) days after written notice to the Employer specifying such breach in reasonable detail and that is continuing as of the date of termination.
(f) Rights and Remedies on Termination .
(i) If the Employees employment hereunder is terminated pursuant to §6(a), §6(b) or §6(c), by the Employee pursuant to §6(d) or pursuant to §3 in connection with the expiration of the Initial Term or any subsequent term hereunder, then the Employee (or his estate, as applicable) shall be entitled to receive his Base Salary through the date of termination or expiration.
(ii) If the Employees employment hereunder is terminated by the Employer pursuant to §6(d), in connection with the Employers election not to renew the Term or any Renewal Term pursuant to §3 above, or by the Employee pursuant to §6(e), then the Employee shall be entitled to continue to receive payment, in accordance with the Employers then current payroll practices, of the Employees Base Salary in effect at the time of such termination (the Termination Date ) for a twelve (12) month period following such termination (the Severance Period ), provided , however , that (A) the Employees right to receive the foregoing payments is expressly conditioned upon receipt by the Employer within thirty (30) days following the Termination Date of a written release executed by the Employee, in form and substance satisfactory to the Employer, of any and all claims or causes of action of any nature relating directly or indirectly to such Employees employment or termination of employment by the Employer, and (B) in the event that the Employee breaches any of the covenants, terms or provisions of §§7, 8 or 9 hereof, without limiting any other rights that the Employer may have, the Employers obligation to make payments under this §6(f)(ii) shall immediately terminate.
(iii) Except as otherwise set forth in this §6(f), the Employee shall not be entitled to any severance, bonus or other compensation after termination other than payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination or benefits or compensation to which the Employee is entitled pursuant to applicable law (e.g. COBRA).
§7. INVENTIONS; ASSIGNMENT . All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of any of the Companies, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, either alone or with others and whether or not during working hours or by the use of the facilities of any of the Companies ( Inventions ), shall be the exclusive property of the Companies. The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect the rights of the Companies therein, and shall assist the Companies, at the Companies expense, in obtaining, defending and enforcing the Companies
4
rights therein. The Employee hereby appoints the Employer and each of the other Companies, individually, as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer or any of the other Companies to protect or perfect their rights to any Inventions.
§8. CONFIDENTIAL INFORMATION . The Employee recognizes and acknowledges that certain assets of, and information relating to, the Companies, including, without limitation, information regarding the Companies methods of operation, financial information, strategic planning, operational budgets and strategies, payroll data, management systems programs, computer systems, marketing plans and strategies, merger and acquisition strategies and customer lists (hereinafter called Confidential Information ) are valuable, special, and unique assets or information of the Companies and their affiliates. The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder; provided , that Confidential Information shall in no event include (a) Confidential Information which was generally available to the public at the time of disclosure by the Employee or (b) Confidential Information which becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder. In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information. Nothing contained within this §8 shall prohibit the Employee from disclosing Confidential Information if such disclosure is required by law, governmental process or valid legal process. In the event that the Employee is legally compelled to disclose any of the Confidential Information, he shall provide the Employer with prompt written notice so that the Employer, at its sole cost and expense, may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, or that Employer waives compliance with the provisions of this Agreement, Employee shall furnish only that portion of the Confidential Information that he is advised by counsel is legally required to be disclosed.
§9. NON-COMPETITION . During the term of the Employees employment hereunder and for the Designated Period (as defined below) after termination of the Employees employment hereunder, the Employee will not (a) anywhere within any county in which any Company conducts business, engage, directly or indirectly, alone or as a shareholder (other than as a holder of less than one percent (1%) of the common stock of any publicly traded corporation), partner, officer, director, employee, consultant or advisor, or otherwise in any way participate in or become associated with, any other business organization that is engaged or becomes engaged in any business that provides the same or any substantially similar services or products offered or planned to be offered by any of the Companies during the term of the Employees employment or at the time of the Employees termination or that any Company has notified the Employee at any time prior to the time of such termination that it proposes to conduct and for which any of the Companies have, prior to the time of such termination, expended substantial resources (the Designated Industry ), or (b) solicit any employee of any of the Companies to leave its employ
5
for alternative employment, or hire or offer employment to any person to whom the Employee actually knows any of the Companies has offered employment. For purposes hereof, the term Designated Period shall mean eighteen (18) months. The Employee acknowledges that the provisions of this §9 are essential to protect the business and goodwill of the Companies. The Employee will continue to be bound by the provisions of this §9 until their expiration and shall not be entitled to any compensation from the Employer with respect thereto except as provided above. If at any time the provisions of this §9 shall be determined to be invalid or unenforceable by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. The Employee hereby acknowledges that he has agreed to be bound by the provisions of this §9 in consideration for the compensation, severance and other benefits to be provided by the Employer to the Employee pursuant to the terms of this Agreement.
§10. GENERAL .
(a) Notices . All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):
If to the Employer, to:
Speedy Group Holdings Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Attention: Chief Executive Officer
With copies to:
Friedman Fleischer & Lowe, LLC
One Maritime Plaza
Suite 2200
San Francisco, CA 94111
Attention: Christopher Masto
Fax: (415) 402-2111
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Attention: Neil W. Townsend, Esq.
Fax: (212) 728-9272
6
If to the Employee, to the address set forth on the signature page hereto.
(b) Equitable Remedies . Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of his obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.
(c) Severability . If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
(d) Waivers . No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.
(e) Counterparts . This Agreement may be executed in multiple counterparts (including by telecopier), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(f) Assigns . This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto, including any entity which acquires substantially all of the assets or stock of the Employer.
(g) Entire Agreement . This Agreement contains the entire understanding of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, including, without limitation, any other employment agreements or any other agreements or memoranda entitling the Employee to compensation (including any bonus) from the Employer or any of the Companies. This Agreement shall not be amended except by a written instrument hereafter signed by each of the parties hereto.
(h) Governing Law . This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of New York.
(i) Section 409A .
(i) Purpose . This section is intended to help ensure that compensation paid or delivered to the Employee pursuant to this Agreement either is paid in compliance with, or is exempt from, Section 409A of the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder (collectively, Section 409A ). However, the Employer does not warrant to the Employee that all compensation paid or delivered to him for his services will be exempt from, or paid in compliance with, Section 409A.
7
(ii) Amounts Payable On Account of Termination . For the purposes determining when amounts otherwise payable on account of the Employee's termination of employment under this Agreement will be paid, which amounts become due because of his termination of employment, termination of employment or words of similar import, as used in this Agreement, shall be construed as the date that the Employee first incurs a separation from service for purposes of Section 409A on or following termination of employment.
(iii) Reimbursements . Any taxable reimbursement of business or other expenses as specified under this Agreement shall be subject to the following conditions: (1) the expenses eligible for reimbursement in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year; (2) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.
(iv) Releases . Any amounts otherwise payable on account of the Employee's termination of employment under this Agreement which (i) are conditioned in any part on a release of claims and (ii) would otherwise be paid (assuming the release is given) prior to the last day on which the release could become irrevocable assuming the Employee's latest possible execution and delivery of the release (such last day, the Release Deadline ) shall be paid, if ever, only on the Release Deadline, even if the Employee's release becomes irrevocable before that date. The Employer may elect to make such payment up to thirty (30) days prior to the Release Deadline, however. If no such last day is specified in this Agreement, then such last day will be the sixtieth (60 th ) day after the Employee's termination of employment.
(v) Interpretative Rules . In applying Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
[Remainder of page intentionally left blank; signature page follows]
8
IN WITNESS WHEREOF , and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.
SPEEDY GROUP HOLDINGS CORP. |
||
By: |
/s/ Donald F. Gayhardt |
|
Name: Donald F. Gayhardt | ||
Title: Chief Executive Officer |
EMPLOYEE |
||
/s/ William Baker |
||
Name: | William Baker | |
Address: | [ADDRESS REDACTED] | |
9
Exhibit 10.12
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this Agreement ), dated as of 4/10/17 is between CURO Group Holdings Corp., a Delaware corporation (the Employer ), and Terry Pittman (the Employee ).
WHEREAS, the Employer wishes to employ the Employee as Chief Information Officer of the Employer, and the Employee wishes to be employed as the Chief Information Officer of the Employer, on the terms set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
§1. EMPLOYMENT . The Employer hereby employs the Employee, and the Employee hereby accepts employment, upon the terms and subject to the conditions hereinafter set forth.
§2. DUTIES . The Employee shall be employed as the Chief Information Officer of the Employer. In such capacity, the Employee shall have the responsibilities and duties customary for such offices and such other executive responsibilities and duties as are assigned by the Chief Executive Officer of the Employer which are consistent with the Employees position. At all times during the performance of this Agreement, the Employee will adhere to the rules and regulations (the Policies ) that have been or may hereafter be established by the Employers Board of Directors (the Board ) (and any committee thereof) for the conduct of the employees of the Employer and its subsidiaries or for the position or positions held by the Employee. The Employee agrees to devote his full time and best efforts to the performance of his duties to the Employer. Any additional board service or similar roles with other organizations shall be subject to the prior approval of the Board.
§3. TERM . The initial term of employment of the Employee hereunder shall commence on the date hereof (the Commencement Date ) and shall continue until the third (3rd) anniversary of the Commencement Date (the Initial Term ), unless earlier terminated pursuant to §6, and shall be renewed automatically for additional one (1) year terms (each, a Renewal Term ) thereafter unless terminated by either party by written notice to the other given at least forty-five (45) days prior to the expiration of the then current term.
§4. COMPENSATION AND BENEFITS . Until the termination of the Employees employment hereunder, in consideration for the services of the Employee hereunder, the Employer shall compensate (or cause one of its subsidiaries to compensate) the Employee as follows:
(a) Base Salary . The Employer shall pay the Employee, in accordance with the Employers then current payroll practices, a base salary ( Base Salary ). Base Salary will be paid at an annual rate of $422,300. The Employee will be eligible for merit-based increases of Base Salary based upon performance reviews to be conducted on an annual basis.
(b) Performance-Based Bonus . Subject to Schedule 1 , for each calendar year during the Term, the Employee shall be eligible to receive a performance-based bonus ( Performance-Based Bonus ) equal to 50% of Base Salary as follows:
(i) 25% of Base Salary if the Companys EBITDA (as defined on Schedule 1 ) target established by the Board in the annual budget for such calendar year is met. Performance-Based Bonus payable in respect of any calendar year (if any) shall be paid in the immediately following calendar year by the earlier to occur of (A) 30 days following the completion of the consolidated audited financial statements of the Employer and its subsidiaries for the calendar year for which the Performance-Based Bonus was earned; and (B) April 30 of such immediately following calendar year;
(ii) 25% of Base Salary based upon achievement (as determined by the Employees supervisor) of specified non-financial objectives, which objectives shall be agreed upon and documented by the Employee and the Employees supervisor at the beginning of each fiscal year.
(c) Stock Options . Intentionally Omitted.
(d) Long Term Incentive Plan . Provided the Employees employment is active and in good standing with the Employer, the Employee shall be eligible to participate in the Employers Long Term Incentive Plan (LTIP).
(e) Vacation . The Employee shall be entitled to four (4) weeks vacation each calendar year plus one (1) week sick time (pro-rated for any partial calendar year of employment). Any vacation shall be taken at the reasonable and mutual convenience of the Employer and the Employee.
(f) Insurance; Other Benefits . The Employee shall be entitled to receive any health, accident, disability and life insurance and other employee benefits provided by the Employer under group health, accident, disability and life insurance plans and other employee benefit plans and fringe benefits maintained by the Employer for its full-time, salaried executive employees as such benefits may be modified from time to time by the Board.
(g) Withholding . All amounts payable by the Employer to the Employee hereunder (including, but not limited to, the Base Salary and Performance-Based Bonus) shall be reduced prior to the delivery of such payment to the Employee by an amount sufficient to satisfy any applicable federal, state, local or other withholding tax requirements.
§5. EXPENSES . The Employer shall reimburse the Employee for all documented reasonable expenses of types authorized by the Employer and incurred by the Employee in the performance of his duties hereunder. The Employee shall comply with such budget limitations and approval and reporting requirements with respect to expenses as the Employer may establish from time to time.
§6. TERMINATION . The Employees employment hereunder shall commence on the Commencement Date and continue until the expiration of the Initial Term, or any Renewal Term as contemplated by §3 above, except that the employment of the Employee hereunder shall earlier terminate:
2
(a) Death . Upon the death of the Employee during the term of his employment hereunder.
(b) Disability . At the option of the Employer, in the event of the Employees Disability (as defined below), upon thirty (30) days written notice from the Employer. For purposes hereof, the Employee shall be deemed to have a Disability if the Employee is unable (as reasonably determined in good faith by the Board), on account of a physical or mental illness, injury or disease or combination thereof, to perform his duties and obligations under this Agreement for a period of more than 90 consecutive days or for a total of 180 days within any 12 month period.
(c) For Cause . For Cause immediately upon written notice by the Employer to the Employee. For purposes of this Agreement, a termination shall be for Cause if the Board shall reasonably determine, that any one or more of the following has occurred:
(i) the Employee shall have committed an act of fraud, embezzlement, misappropriation or breach of fiduciary duty against the Employer or any of its subsidiaries (collectively, the Companies ), including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the business of any of the Companies; or
(ii) the Employee shall have committed or been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, any felony or any other crime that could reasonably be expected to have a material adverse effect on the business or reputation of any of the Companies; or
(iii) the Employee shall have committed a material breach of any of the covenants, terms and provisions of §§7, 8 or 9 hereof; or
(iv) the Employee shall have breached in any material respects any one or more of the provisions of this Agreement (excluding §§7, 8 and 9 hereof), including, without limitation, any failure to comply with the Policies, and such breach shall have continued for a period of ten (10) days after written notice to the Employee specifying such breach in reasonable detail; or
(v) the Employee shall have refused, after written notice, to obey any lawful resolution of or direction by the Board which is consistent with his duties hereunder; or
(vi) the Employee shall be chronically absent from work (excluding vacation, illnesses or leaves of absence approved by the Board) and such absence shall continue following written notice to the Employee; or
(vii) the Employee, subject to Section 1 hereof, shall have failed to devote his full time and best efforts to the performance of his duties to the Employer and such failure continues for more than ten (10) days after written notice of such failure has been given to the Employee; or
3
(viii) the Employee shall have engaged in the unlawful use (including being under the influence) or possession of illegal drugs or shall have possessed illegal, unpermitted or unregistered weapons, in each case on the premises of the Employer or any of its direct or indirect subsidiaries.
(d) Resignation or Termination Without Cause . At any time, upon written notice by either the Employer or the Employee to the other party hereto.
(e) Resignation For Good Reason . The Employee may terminate his employment for Good Reason upon prior written notice to the Employer. For purposes of this Agreement, the term Good Reason shall mean a material breach by the Employer of any of its obligations under this Agreement that shall have continued for a period of thirty (30) days after written notice to the Employer specifying such breach in reasonable detail and that is continuing as of the date of termination.
(f) Rights and Remedies on Termination .
(i) If the Employees employment hereunder is terminated pursuant to §6(a), §6(b) or §6(c), by the Employee
pursuant to
§6(d) or pursuant to §3 in connection with the expiration of the Initial Term or any subsequent term hereunder, then the Employee (or his estate, as applicable) shall be entitled to receive his Base Salary through the
date of termination or expiration.
(ii) If the Employees employment hereunder is terminated by the Employer pursuant to §6(d), in connection with the Employers election not to renew the Term or any Renewal Term pursuant to §3 above, or by the Employee pursuant to §6(e), then the Employee shall be entitled to continue to receive payment, in accordance with the Employers then current payroll practices, of the Employees Base Salary in effect at the time of such termination (the Termination Date ) for a twelve month period following such termination (the Severance Period ), provided , however , that (A) the Employees right to receive the foregoing payments is expressly conditioned upon receipt by the Employer within thirty (30) days following the Termination Date of a written release executed by the Employee, in form and substance satisfactory to the Employer, of any and all claims or causes of action of any nature relating directly or indirectly to such Employees employment or termination of employment by the Employer, and (B) in the event that the Employee breaches any of the covenants, terms or provisions of §§7, 8 or 9 hereof, without limiting any other rights that the Employer may have, the Employers obligation to make payments under this §6(f)(ii) shall immediately terminate.
(iii) Except as otherwise set forth in this §6(f), the Employee shall not be entitled to any severance, bonus or other compensation after termination other than payment of any expense reimbursements under §5 hereof for expenses incurred in the performance of his duties prior to termination or benefits or compensation to which the Employee is entitled pursuant to applicable law (e.g. COBRA).
4
§7. INVENTIONS; ASSIGNMENT . All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of any of the Companies, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that the Employee may discover, invent or originate during the term of his employment hereunder, either alone or with others and whether or not during working hours or by the use of the facilities of any of the Companies ( Inventions ), shall be the exclusive property of the Companies. The Employee shall promptly disclose all Inventions to the Employer, shall execute at the request of the Employer any assignments or other documents the Employer may deem necessary to protect or perfect the rights of the Companies therein, and shall assist the Companies, at the Companies expense, in obtaining, defending and enforcing the Companies rights therein. The Employee hereby appoints the Employer and each of the other Companies, individually, as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Employer or any of the other Companies to protect or perfect their rights to any Inventions.
§8. CONFIDENTIAL INFORMATION . The Employee recognizes and acknowledges that certain assets of, and information relating to, the Companies, including, without limitation, information regarding the Companies methods of operation, financial information, strategic planning, operational budgets and strategies, payroll data, management systems programs, computer systems, marketing plans and strategies, merger and acquisition strategies and customer lists (hereinafter called Confidential Information ) are valuable, special, and unique assets or information of the Companies and their affiliates. The Employee shall not, during or after his term of employment, disclose any or any part of the Confidential Information to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, directly or indirectly, except as may be required pursuant to his employment hereunder; provided , that Confidential Information shall in no event include (a) Confidential Information which was generally available to the public at the time of disclosure by the Employee or (b) Confidential Information which becomes publicly available other than as a consequence of the breach by the Employee of his confidentiality obligations hereunder. In the event of the termination of his employment, whether voluntary or involuntary and whether by the Employer or the Employee, the Employee shall deliver to the Employer all documents and data pertaining to the Confidential Information and shall not take with him any documents or data of any kind or any reproductions (in whole or in part) or extracts of any items relating to the Confidential Information. Nothing contained within this §8 shall prohibit the Employee from disclosing Confidential Information if such disclosure is required by law, governmental process or valid legal process. In the event that the Employee is legally compelled to disclose any of the Confidential Information, he shall provide the Employer with prompt written notice so that the Employer, at its sole cost and expense, may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, or that Employer waives compliance with the provisions of this Agreement, Employee shall furnish only that portion of the Confidential Information that he is advised by counsel is legally required to be disclosed.
§9. NON-COMPETITION . During the term of the Employees employment hereunder and for the Designated Period (as defined below) after termination of the Employees employment hereunder, the Employee will not (a) anywhere within any county in which any Company conducts business, engage, directly or indirectly, alone or as a shareholder (other than as a holder of less than one percent (1%) of the common stock of any publicly traded corporation),
5
partner, officer, director, employee, consultant or advisor, or otherwise in any way participate in or become associated with, any other business organization that is engaged or becomes engaged in any business that provides the same or any substantially similar services or products offered or planned to be offered by any of the Companies during the term of the Employees employment or at the time of the Employees termination or that any Company has notified the Employee at any time prior to the time of such termination that it proposes to conduct and for which any of the Companies have, prior to the time of such termination, expended substantial resources (the Designated Industry ), or (b) solicit any employee of any of the Companies to leave its employ for alternative employment, or hire or offer employment to any person to whom the Employee actually knows any of the Companies has offered employment. For purposes hereof, the term Designated Period shall mean eighteen (18) months. The Employee acknowledges that the provisions of this §9 are essential to protect the business and goodwill of the Companies. The Employee will continue to be bound by the provisions of this §9 until their expiration and shall not be entitled to any compensation from the Employer with respect thereto except as provided above. If at any time the provisions of this §9 shall be determined to be invalid or unenforceable by reason of being vague or unreasonable as to area, duration or scope of activity, this §9 shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter; and the Employee agrees that this §9 as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein. The Employee hereby acknowledges that he has agreed to be bound by the provisions of this §9 in consideration for the compensation, severance and other benefits to be provided by the Employer to the Employee pursuant to the terms of this Agreement.
§10. GENERAL .
(a) Notices . All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified mail, return receipt requested, postage prepaid or sent by written telecommunication or telecopy, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this §10(a):
If to the Employer, to:
CURO Group Holdings Corp.
3527 North Ridge Road
Wichita, Kansas 67205
Attention: Don Gayhardt, President & Chief Executive
Officer
6
With copies to:
Friedman Fleischer & Lowe, LLC
One Maritime Plaza
Suite 2200
San Francisco, CA 94111
Attention: Christopher Masto
Fax: (415) 402-2111
If to the Employee, to:
Mr. Terry Pittman
[ADDRESS REDACTED]
(b) Equitable Remedies . Each of the parties hereto acknowledges and agrees that upon any breach by the Employee of his obligations under §§7, 8 and 9 hereof, the Employer will have no adequate remedy at law, and accordingly will be entitled to specific performance and other appropriate injunctive and equitable relief.
(c) Severability . If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
(d) Waivers . No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.
(e) Counterparts . This Agreement may be executed in multiple counterparts (including by telecopier), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(f) Assigns . This Agreement shall be binding upon and inure to the benefit of the heirs and successors of each of the parties hereto, including any entity which acquires substantially all of the assets or stock of the Employer.
(g) Entire Agreement . This Agreement contains the entire understanding of the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, including, without limitation, any other employment agreements or any other agreements or memoranda entitling the Employee to compensation (including any bonus) from the Employer or any of the Companies. This Agreement shall not be amended except by a written instrument hereafter signed by each of the parties hereto.
(h) Governing Law . This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of New York.
7
(i) Section 409A .
(i) Purpose. This section is intended to help ensure that compensation paid or delivered to the Employee pursuant to this Agreement either is paid in compliance with, or is exempt from, Section 409A of the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder (collectively, Section 409A ). However, the Employer does not warrant to the Employee that all compensation paid or delivered to him for his is services will be exempt from, or paid in compliance with, Section 409A.
(ii) Amounts Payable On Account of Termination. For the purposes determining when amounts otherwise payable on account of the Employees termination of employment under this Agreement will be paid, which amounts become due because of his termination of employment, termination of employment or words of similar import, as used in this Agreement, shall be construed as the date that the Employee first incurs a separation from service for purposes of Section 409A on or following termination of employment.
(iii) Reimbursements. Any taxable reimbursement of business or other expenses as specified under this Agreement shall be subject to the following conditions: (1) the expenses eligible for reimbursement in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year; (2) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.
(iv) Releases. Any amounts otherwise payable on account of the Employees termination of employment under this Agreement which (i) are conditioned in any part on a release of claims and (ii) would otherwise be paid (assuming the release is given) prior to the last day on which the release could become irrevocable assuming the Employees latest possible execution and delivery of the release (such last day, the Release Deadline ) shall be paid, if ever, only on the Release Deadline, even if the Employees release becomes irrevocable before that date. The Employer may elect to make such payment up to thirty (30) days prior to the Release Deadline, however. If no such last day is specified in this Agreement, then such last day will be the sixtieth (60 th ) day after the Employees termination of employment.
(v) Interpretative Rules. In applying Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
[Remainder of page intentionally left blank; signature page follows]
8
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.
CURO GROUP HOLDINGS CORP. | ||
By: |
/s/ Donald F. Gayhardt |
|
Donald F. Gayhardt, President & Chief Executive Officer |
EMPLOYEE | ||
By: |
/s/ Terry Pittman |
|
Terry Pittman |
9
SCHEDULE 1
EBITDA means, with respect to any calendar year, the sum of the Consolidated Net Income (or loss) of the Employer and its subsidiaries for such calendar year plus all amounts deducted in the computation thereof on account of (a) interest expense (net of any interest income), (b) income taxes, and (c) depreciation and amortization.
Consolidated Net Income means, for any calendar year, the net income (or loss) of the Employer and its subsidiaries for such year on a consolidated basis determined in accordance with generally accepted accounting principles applied in a manner consistent with the Companys audited financial statements for such calendar year (but in any case eliminating all intercompany items and excluding any extraordinary gains and/or losses including any gains and/or losses from the sale or other disposition of assets other than in the ordinary course of business).
If the Employer or any of its subsidiaries enters into any extraordinary transaction in any calendar year, such as a business acquisition or disposition, for purposes of Section 4(b) above the Board in the exercise of its sole discretion may, at any time during such calendar year, adjust upward or downward the target Revenue and/or EBITDA in the budget for such calendar year to take into account such extraordinary transaction. The Board shall notify the Employee of the adjusted budgeted Revenue and EBITDA for any such calendar year promptly after the determination thereof.
Exhibit 10.13
February 18, 2013
SPEEDY GROUP HOLDINGS CORP.
SPECIAL BONUS NOTICE
On February 14, 2013, Speedy Group Holdings Corp. (the Company) paid a dividend in the amount of $111.096 to its holders of common stock. While there is no requirement to pay a dividend in respect of the stock options issued to you by the Company (as the options have not been exercised), subject to the terms and conditions set forth herein, we have determined to pay to you the bonuses set forth herein in recognition of your dedication and commitment to Speedy Cash. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in that certain Stock Option Agreement, dated May 7, 2012 (the Stock Option Agreement), between you and the Company.
BONUSES
On or promptly following the date upon which you return an executed copy of this Special Bonus Notice, the Company will cause its subsidiary to pay to you a bonus (the Initial Bonus) equal to (a) the number of Vested Optioned Shares under the Stock Option Agreement on the date hereof (as set forth in the chart below) multiplied by (b) $111.096 per share (, the Per Share Amount).
If you remain employed with the Company or any of its subsidiaries on the earlier to occur of (a) the date on which the first Disposition Event is consummated after the date hereof and (b) February 14, 2017 (such earlier date, the Payment Date), the Company will cause its subsidiary to pay to you a bonus (the Second Bonus) equal to (i) the number of Unvested Optioned Shares under the Stock Option Agreement on the date hereof (as set forth in the chart below) multiplied by (ii) the Per Share Amount (as may be equitably adjusted by the Company for any recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar event affecting the outstanding shares of Common Stock of the Company). The Second Bonus will be paid to you upon or promptly following the Payment Date.
OTHER TERMS
In all cases, each bonus shall be subject to reduction for applicable federal, state and local tax or other withholdings made by the Company or its subsidiary in the ordinary course. As a condition to the payment of any Second Bonus in connection with a Disposition Event, the Company or its subsidiary may require you to provide reasonable cooperation and assistance in connection with a Disposition Event and/or to satisfy other reasonable requirements in respect of the payment of the Second Bonus (including, without limitation, the execution and delivery by you (prior to a specified date) of a release of claims against the Company and its affiliates in a form to be determined by the Company).
All determinations related to the calculation of, conditions to the payment of, and your eligibility to receive any bonus in accordance herewith, or any adjustments contemplated hereby, will be made by the Company in its discretion, in good faith, and all such determinations shall be final, binding and conclusive. The terms of this notice shall not be deemed to amend, supplement or modify in any way the terms and conditions of your Stock Option Agreement with the Company. This Special Bonus Notice embodies the complete agreement and understanding among you, the Company with respect to the subject matter hereof and supersedes any prior understandings, agreements, communications or representations by or among the parties, written or oral, relating in any way to the subject matter hereof.
[Remainder of page intentionally left blank.]
Please acknowledge your agreement to the terms and conditions set forth in this Special Bonus Notice by returning a copy executed by you where indicated below to Doug Maxwell NO LATER THAN 5:00 CT ON Thursday, February 21, 2013. The Company and their affiliates shall have no obligations to pay bonuses hereunder if you have not returned your executed copy of this notice prior to such time.
Name:
Date:
NAME |
VESTED
OPTIONED SHARES |
FIRST
BONUS |
UNVESTED
OPTIONED SHARES |
SECOND
BONUS |
||||
[ ] | [ ] | $[ ] | [ ] | $[ ] |
- 2 -
Exhibit 10.14
May [ ], 2017
CURO GROUP FINANCIAL TECHNOLOGIES CORP. (the Company)
SPECIAL BONUS NOTICE
On May [ ], 2017, our parent company Curo Group Holdings Corp. (the Holdings ) paid a dividend in the amount of $[26.60] per share to its holders of common stock. While there is no requirement to pay a dividend in respect of the stock options issued to you by the Holdings (as the options have not been exercised) and you are not otherwise entitled to receive the bonuses set forth herein pursuant to such stock options, subject to the terms and conditions set forth herein, we have determined to pay to you the bonuses set forth herein as discretionary compensation in recognition of your dedication and commitment to Curo. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in that certain Stock Option Agreement(s), dated [ ] (the Stock Option Agreement(s) ), between you and the Company.
BONUSES
Initial Bonus . On or promptly following the date upon which you return an executed copy of this Special Bonus Notice, the Company will pay or cause to be paid to you a bonus (the Initial Bonus ) equal to (a) the number of Vested Optioned Shares under the Stock Option Agreement on the date hereof (as set forth in the chart below) multiplied by (b) $[26.60] per share (the Per Share Amount ).
Quarterly Bonuses for [2017-2022] Calendar Years . If you remain employed with the Company or any of its subsidiaries on last day of each calendar quarter during each of [2017, 2018, 2019, 2020, 2021 and 2022] commencing with the first calendar quarter ending after the date hereof (each, a Quarterly Payment Date ), the Company will cause its subsidiary to pay to you a bonus for each such calendar quarter (each, a Quarterly Bonus ) equal to the Quarterly Payment Amount. The term Quarterly Payment Amount means, for each applicable calendar quarter, (i) the number of Unvested Optioned Shares under the Stock Option Agreement that become Vested Option Shares pursuant to the Option Agreement during the calendar quarter, in each case, other than due to a Disposition Event, multiplied by (ii) the Per Share Amount (as may be equitably adjusted by the Company for any recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar event affecting the outstanding shares of Common Stock of the Company). Quarterly Bonuses will be paid to you upon or within ten (10) business days following the applicable Quarterly Payment Date.
Disposition Event Bonus . If you remain employed with the Company or any of its subsidiaries on the date on which the first Disposition Event is consummated after the date hereof (such date, the Disposition Event Payment Date ), the Company will pay or cause to be paid to you a bonus (the DE Bonus ) equal to the DE Payment Amount. The term DE Payment Amount means (i) the number of Unvested Optioned Shares under the Stock Option Agreement which become Vested Option Shares solely as a result of the Disposition Event multiplied by (ii) the Per Share Amount (as may be equitably adjusted by the Company for any recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar event affecting the outstanding shares of Common Stock of the Company). Subject to the terms hereof, the DE Bonus will be paid to you upon or within ten (10) business days following the Disposition Event whereupon the Companys undertakings hereunder shall be terminated and discharged in full.
OTHER TERMS
In all cases, each bonus shall be subject to reduction for applicable federal, state and local tax or other withholdings made by the Company or its subsidiary in the ordinary course. As a condition to the payment of any DE Bonus in connection with a Disposition Event, the Company or its subsidiary may require you to provide reasonable cooperation and assistance in connection with a Disposition Event and/or to satisfy other reasonable requirements in respect of the payment of the DE Bonus (including, without limitation, the execution and delivery by you (prior to a specified date) of a release of claims against the Company and its affiliates in a form to be determined by the Company).
[Notwithstanding the payment dates specified above for the bonuses payable pursuant to this Special Bonus Notice in respect of the 2017 calendar year, such bonuses shall be deferred pursuant to the Companys Nonqualified Deferred Compensation Plan if and to the extent you have validly elected to defer your Bonus Compensation in respect of the 2017 calendar year thereunder.] or [Amounts payable hereunder are not eligible for deferral under the Companys Nonqualified Deferred Compensation Plan.]
All determinations related to the calculation of, conditions to the payment of, and your eligibility to receive any bonus in accordance herewith, or any adjustments contemplated hereby, will be made by the Company in its discretion, in good faith, and all such determinations shall be final, binding and conclusive. The terms of this notice shall not be deemed to amend, supplement or modify in any way the terms and conditions of your Stock Option Agreement with the Company. The Companys undertakings hereunder shall terminate in full upon any termination of your employment for any reason. This Special Bonus Notice embodies the complete agreement and understanding among you, the Company with respect to the subject matter hereof and supersedes any prior understandings, agreements, communications or representations by or among the parties, written or oral, relating in any way to the subject matter hereof.
[Remainder of page intentionally left blank.]
2
Please acknowledge your agreement to the terms and conditions set forth in this Special Bonus Notice by returning a copy executed by you where indicated below to [Roger Dean] NO LATER THAN 5:00 CT ON May [ ], 2017 . The Company and its subsidiaries shall have no obligations to pay bonuses hereunder if you have not returned your executed copy of this notice prior to such time.
Name:
Date:
NAME |
VESTED
|
UNVESTED
|
INITIAL
|
3
Exhibit 10.15
2017 Annual Corporate Incentive Plan
Name: [ ] |
Manager: [ ] |
|
Job Title: [ ] |
Department: [ ] |
Incentive Compensation Program Guidelines
The Company Incentive Compensation Program has been developed to track and objectively measure key areas of responsibility for certain positions. It is specially designed to financially reward those employees who meet expectations and excel in supporting bottom line profitability for the company.
There are many other important areas of responsibilities and duty which are required but are not specially addressed in this compensation plan. While this plan purposefully rewards an employee for meeting several defined expectations, the plan in no way attempts to define or provide bonus compensation for all of the functions performed in the course of daily work.
The bonus plan consists of these components:
Company Financial Performance
The company financial performance objective will be based on meeting an Adjusted EBITDA goal. If this target is met, then the maximum % listed below for company financial performance will be paid out.
Individual/Departmental Goals and Objectives
Accomplishment of stated Individual/Departmental Goals and Objectives will determine the % of the yearly bonus to be awarded. (maximum % of for goals and objective of your total eligible incentive bonus is listed above). Not all goals and objectives will need to be met to receive a portion of the bonus.
The individual/departmental goals and objectives are designed to align with the strategic goals of the Company for the plan year. These goals may be revisited and revised on a quarterly basis depending on company growth, business needs and future expectations.
The bonus will be calculated on the fiscal year (January to December) results for both categories. Employees must be employed at the time of calculation in order to receive any portion of the bonus. Employees, who are demoted or otherwise become non-eligible for the plan during the year, will not receive any portion of the bonus. Employees who are employed but inactive for a period of more than thirty (30) days during the year will receive a pro-rated payout of their earned bonus. Payouts will be made by the 28th of the second month following the end of the plan year. Applicable taxes and other statutory deductions will apply.
The company may at anytime revise, enhance or discontinue this bonus program, as well as determine who is eligible for the program.
Incentive Plan Eligibility Summary
Company Financial Objectives incentive as a % of base salary: | [ ] | |
Personal Objectives incentive as a % of base salary: | [ ] | |
Total incentive as a % of base salary (Financial + Personal): | [ ] |
Company Financial Objectives
Plan | % of base salary | |||||||
Financial Plan #1 |
Company Consolidated Financial Plan | [ ] | ||||||
Financial Plan #2 (if any) |
Personal Objectives
Self: |
Title: [ ] | |||||||
Title: [ ] | ||||||||
Start: [ ] | Due: 31-Dec-2017 |
Self: |
Title: [ ] | |||||||
Title: [ ] | ||||||||
Start: [ ] | Due: 31-Dec-2017 |
Employee Advisement & Acceptance
By clicking on complete, I acknowledge that I am committing towards meetings these objectives and I accept the terms and conditions of the corporate objectives program.
HR Rep: [ ] (electronic signature for the evaluation of [ ])
Date (dd-MM-yyyy): [ ]
Electronic confirmation: [ ]
- 2 -
Exhibit 10.16
Execution Copy
SUBORDINATED NOTE
$7,500,000 | May 12, 2011 |
Section 1. Indebtedness
FOR VALUE RECEIVED, and subject to the other terms and provisions of this Subordinated Note (including, without limitation, Section 2 hereof), the undersigned, Cash Money Acquisition Inc., an Ontario corporation (the Purchaser ), promises to pay to The J.P. Genova Family Trust (the Seller ):
(a) the principal amount of SEVEN MILLION, FIVE HUNDRED THOUSAND DOLLARS ($7,500,000), payable on the eighth (8th) anniversary of the date first written above (the Maturity Date ); provided , that , upon the occurrence of a Disposition Event (as defined below) prior to the Maturity Date, the entire principal amount remaining outstanding hereunder as of the date of such Disposition Event, together with all accrued and unpaid interest outstanding hereunder as of such date, shall be payable in full on such date, and
(b) interest on the unpaid principal balance hereof at a rate equal to ten percent (10%) per annum, calculated on the basis of a year of 365 days and paid for the actual days elapsed (the Applicable Rate ), until the date that the principal amount hereunder shall have been paid in full, as follows: (i) until the second (2nd) anniversary of the date first written above, such interest shall be capitalized on the unpaid principal balance hereunder, such capitalization to occur on the last day of each calendar quarter ending prior to the second (2nd) anniversary of the date first written above (provided that, for the avoidance of doubt, such additional unpaid principal balance shall represent evidence of the obligation to pay, and not absolute satisfaction of, such capitalized interest) and (ii) thereafter, such interest amount shall be paid in cash to the Seller at the end of each calendar quarter, with the first cash payment due on June 30, 2013 and with the final cash payment due on the Maturity Date.
All payments hereunder shall be made to the account of the holder at such place as the Seller shall have designated to the Purchaser in writing.
Disposition Event means: (a) the sale of substantially all of the assets of the Purchaser or Speedy Cash Holdings Corp., a Delaware corporation and the parent corporation of the Purchaser ( Parent ), or the sale of a majority of the outstanding capital stock of Purchaser or Parent to one or more persons who is not a stockholder of Parent or an affiliate of Parent or any stockholder of Parent, or (b) a merger, consolidation or recapitalization of Purchaser or Parent in which a majority of the outstanding capital stock of Purchaser or Parent is transferred or sold to one or more persons who is not a stockholder of Parent or an affiliate of Parent or any stockholder of Parent prior to such merger, consolidation or recapitalization.
Section 2. Set-Off
This the Note required to be delivered by the Purchaser to the Seller, pursuant to the Agreement for the Purchase of All the Shares of Cash Money Group Inc., dated as of April 8, 2011 (the Share Purchase Agreement ), by and among Parent, 2275958 Ontario Inc., an Ontario corporation (the Company ), the Seller, and the J.P. Genova Family Trust. Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Share Purchase Agreement.
Amounts payable hereunder shall, at all times, be subject to set-off in the manner set forth in Section 6.12 of the Share Purchase Agreement.
Section 3. Subordination
The liabilities and obligations evidenced by this Note will be subordinated to any senior indebtedness that may be undertaken by the Parent or the Purchaser (or any of their subsidiaries) from time to time and subject to any restrictions set forth in any senior credit agreements or subordination agreements entered into by the Parent or the Purchaser (or any of their subsidiaries). In connection therewith, upon the Purchasers request, the Seller shall be required to enter into subordination arrangements on terms satisfactory to the Parents or the Purchasers (or its subsidiaries) lenders.
Section 4. Default
Provided that acceleration is not then prohibited by the terms of any subordination or other credit agreement with the Parents or the Purchasers lenders, if an Event of Default exists under the provisions of this Note, the Seller may accelerate the entire balance outstanding under this Note, by written notice to the Purchaser, and the entire balance outstanding under this Note together with any accrued but unpaid interest or other charges shall become immediately due and payable twenty (20) days after receipt by the Purchaser of said notice. After such twenty (20) day period, the Seller shall be entitled to exercise any remedies that they may have at law, or in equity, in order to collect their debt hereunder including, without limitation, the commencement of legal proceedings against the Purchaser.
An Event of Default means the occurrence of any of the following:
(a) the failure of the Purchaser to make any payment of principal, interest or other charges pursuant to the terms of this Note (other than as a result of any set-off against this Note of amounts due to the Purchaser or Purchaser Indemnified Parties by the Seller pursuant to the Share Purchase Agreement or otherwise or as a result of such payment being prohibited or restricted by the Parents or the Purchasers lenders) within ten (10) days after Purchasers receipt of notice from the Seller that same was due;
(b) the filing by the Purchaser of a voluntary application for bankruptcy or application seeking the appointment of a receiver for it or its assets; or
-2-
(c) the filing of an involuntary application for bankruptcy against the Purchaser which remains unstayed or undischarged in excess of ninety (90) days.
Section 5. Miscellaneous
(a) Waiver . The Purchaser hereby waives, to the extent not prohibited by provisions of applicable law, presentment, demand, protest and notice thereof or dishonor, and waives any right to be released by reason of any extension of time or change in the terms of payment or any change, alteration or release of any security given for the payment hereof. No course of dealing between the Purchaser on the one hand, and the legal holder hereof on the other hand, shall operate as a waiver of any of its rights under this Note. No delay or omission in exercising any right under this Note shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a waiver of or bar to any right or remedy on any other occasion.
(b) Notices . All notices hereunder shall be given in the manner provided in the Share Purchase Agreement. Any such notice, direction, certificate, consent, determination or other communication required or permitted to be given or made under this Note shall be in writing and shall be effectively given and made if (i) delivered personally, (ii) sent by prepaid courier service or mail, or (iii) sent by fax or other similar means of electronic communication.
(c) Severability . In the event that any one or more of the provisions contained in this Note shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision or provisions in every other respect and the remaining provisions of this Note shall not in any way be impaired.
(d) Prepayment . All or any portion of this Note, together with all accrued and unpaid interest thereon, may be prepaid at any time without premium or penalty, subject to any restrictions required by the Parents or the Purchasers lenders.
(e) Assignment . The Seller may not assign, transfer, pledge or otherwise dispose of this Note, or its rights to payment hereunder, without the prior written consent of the Purchaser. Any purported transfer in violation hereof shall be null and void.
(f) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable in such Province and this Agreement shall be treated, in all respects, as an Ontario contract.
(g) Attornment . Each party agrees (i) that any action or proceeding relating to this Note may (but need not) be brought in any court of competent jurisdiction in the Province of Ontario, and for that purpose now irrevocably and unconditionally attorns and submits to the jurisdiction of such Ontario court; (ii) that it irrevocably waives any right to, and will not, oppose any such Ontario action or proceeding on any jurisdictional basis, including forum non conveniens; and (iii) not to oppose the enforcement against it in any other jurisdiction of any Order duly obtained from an Ontario court as contemplated by this Section 6(g).
[Remainder Of Page Intentionally Left Blank; Signature Page Follows]
-3-
IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed and delivered as of the date and year first above written.
CASH MONEY ACQUISITION INC. | ||
By: | /s/ Chad Faulkner | |
Name: Chad Faulkner Title: President |
||
ACCEPTED AND AGREED: | ||
THE J.P. GENOVA FAMILY TRUST, | ||
by its trustees | ||
By: | ||
Name: Elenora Genova | ||
Title: Trustee | ||
By: | ||
Name: Joseph Genova | ||
Title: Trustee | ||
By: | ||
Name: Anthony Coombs | ||
Title: Trustee |
[S IGNATURE P AGE TO S UBORDINATED N OTE ]
IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed and delivered as of the date and year first above written.
CASH MONEY ACQUISITION INC. | ||
By: | ||
Name: Chad Faulkner Title: President |
||
ACCEPTED AND AGREED: | ||
THE J.P. GENOVA FAMILY TRUST, | ||
by its trustees | ||
By: | /s/ Elenora Genova | |
Name: Elenora Genova | ||
Title: Trustee | ||
By: | /s/ Joseph Genova | |
Name: Joseph Genova | ||
Title: Trustee | ||
By: | /s/ Anthony Coombs | |
Name: Anthony Coombs | ||
Title: Trustee |
[S IGNATURE P AGE TO S UBORDINATED N OTE ]
Exhibit 10.17
COMMERCIAL LEASE AGREEMENT
This Commercial Lease Agreement (Lease) is entered into this December 22, 2007 between Tiger Financial Management, LLC. (Tenant) and CDM Development, LLC., 3527 North Ridge Road, Wichita, Kansas 67205 (Landlord).
1. Premises: Landlord rents to Tenant, and Tenant rents from Landlord the building (Building) and property at 3527 N Ridge Rd, Wichita, KS 67205 (the Premises), of which Landlord is the owner, subject to the terms and conditions in this Agreement. The Premises comprises approximately 8,140 square feet (100% of the Building).
2. Term: The term of this Lease shall be for five (5) years (Term) beginning December 22, 2007 (Lease Commencement Date) unless sooner terminated as herein set forth or unless extended in accordance with the provisions hereof. Possession shall be given at the Lease Commencement Date. For purposes of this Lease, the first Lease Year shall be deemed to begin on the Lease Commencement Date and to end twelve (12) months thereafter; provided, if said first twelve (12) month period does not end on the last day of a calendar month, the first Lease Year shall be extended to the end of said month, and each succeeding twelve (12) month period thereafter shall be deemed a Lease Year. Any partial month shall be pro-rated on a thirty (30) day calendar month.
3. Options: Tenant shall have two (2) five (5) year options to extend the term of the Lease. Tenant shall exercise its right to by written notice to Landlord delivered on or before 120 days prior to the expiration of the Term or First Option Term. In the event Landlord does not received Tenants notice as stated above, Tenant shall not lose its option to renew unless and until the Tenant has had at least ten (10) days after receipt of written notice from Landlord in which to exercise its option to renew. Options shall be personal to Tenant.
4. Rent: Payment of Base Rent and Additional Rent shall begin on December 22, 2007 (Rent Commencement Date). Tenant will pay to Landlord rent payable in equal installments of $12,210.00 for Base Rent on the first day of each month, the first such payment on the Rent Commencement Date and subsequent monthly payments on the first (1st) day of each succeeding month during the Term, except when that day falls on a weekend or a legal holiday, in which case rent is due on the next business day. The Base Rent shall be increased, but in no event decreased, on each annual anniversary of the Lease Commencement Date (each such anniversary, an Adjustment Date) by a fixed amount of three (3%) per annum, compounded annually.
5. Common Area Maintenance Expenses, Taxes and other Additional Rent: Tenant shall, during the term of this Lease, keep in good order, condition, and repair, the Premises and every part thereof, structural (pertaining to the premises and within the premises) or nonstructural, and all adjacent sidewalks, landscaping, driveways, parking lots, fences, and signs located in the areas which are adjacent to and included with the Premises. Landlord shall incur no expense nor have any obligation of any kind whatsoever in connection with maintenance of the Premises.
Tenant shall pay all real property taxes applicable to the Premises during the term of this Lease. All such payment shall be made at least ten (10) days prior to the delinquency of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid. If any such taxes paid by Tenant shall cover any period of the time prior to or after the expiration of the term hereof, Tenants share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required.
6. Late Charges: Any installment of Rent or any part thereof which is not made when due shall bear interest at the rate of Wall Street Journal Prime Rate plus three percent (3%) per annum from the date when the same is due hereunder until the same shall be paid (Late Charge).
7. Utilities: All applications and connections for necessary utility services on the demised premises shall be made in the name of Tenant only, and Tenant shall be solely liable for utility charges as they become due, including those for sewer, water, gas, electricity, and telephone services.
8. Insurance: The Tenant shall maintain at all times during the term of this Lease policies of insurance as follows: Tenant, as a common area expense, shall maintain:
(a) Insurance against loss or damage to the Building and all other improvements by fire and such other hazards as may be covered by the form of all-risk coverage then customarily in use, in such amount as Landlord may determine to be sufficient to cover one hundred percent (100%) of the full replacement value from time to time of the Building and all other improvements, the proceeds of which shall be payable to Landlord.
Tenant, at its sole cost and expense, shall maintain:
(b) Comprehensive general public liability insurance against claims for bodily injury, death, and property damage occurring in or about the Premises or Adjacent Facilities, to afford protection in such limits as shall be reasonably requested by Landlord from time to time, but in any event not less than Two .Million Dollars ($2,000,000) as a single limit policy in respect to any one occurrence causing injury or death, and property damage.
(c) Such other insurance, including personal property and business interruption insurance, in such amounts as may from time to time be reasonably required by Landlord against other insurable hazards that are at the time commonly insured against in the case of premises similarly situated.
All policies of insurance shall be written by companies reasonably satisfactory to Landlord and any mortgagee of Landlord and shall name as insured Landlord and such other persons or entities as Landlord may designate, as their interests may appear, and shall provide that losses shall be paid to such insureds as their interests may appear. At the request of Landlord, a mortgagee clause shall be included in such policies covering Landlords mortgagee. Certificates evidencing renewals of each policy of insurance shall be delivered to Landlord at least twenty (20) days prior to the expiration dates of the respective policies. Tenant shall perform and satisfy all requirements of the companies writing any insurance policies referred to in this Lease so that at all times companies of good standing satisfactory to Landlord shall be willing to write such insurance.
Whenever (a) any loss, cost, damage or expense resulting from fire or other casualty or occurrence is incurred by either of the parties to this Lease, or anyone claiming by, through or under it, in connection with the Premises, and (b) such party is then covered in whole or in part by insurance with respect to such loss, cost, damage or expense, then the party so insured hereby releases the other party from any liability it may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance and waives any right of subrogation which might otherwise exist in or accrue to any person on account thereof, provided that such release of liability and waiver of the right of subrogation shall not be operative in any case when the effect thereof is to invalidate such insurance coverage or increase the cost thereof (provided that in the case of increased cost the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereupon keeping such release and waiver in full force and effect).
In case any action or proceeding shall be commenced against Landlord growing out of any loss, cost, damage or expense under this Section, Landlord may give written notice of the same to Tenant and thereafter Tenant shall assume and discharge all obligation to defend the same and save and keep Landlord harmless from all costs, expenses (including, but not limited to, Landlords attorneys fees), liabilities, judgments and executions in any manner growing out of, pertaining to or connected therewith. In case Tenant shall at any time fail, neglect or refuse to procure or renew any insurance hereinabove provided, then Landlord shall have the right, but not the obligation, to procure or renew such insurance and any amounts paid therefore by Landlord shall be so much Additional Rent due at the next rent day after any such payment, with interest thereon at the rate of Wall Street Journal Prime Rate plus three percent (3%) per annum from the date of payment thereof.
9. Signage: Tenant may install, at its sole cost and expense, maximum allowable signage (permitted by law) on the storefront of the Premises using its standard corporate or concept colors and logo. Tenant will be included on monument sign, if any. If monument signage is unavailable, and monument signage is allowed under all applicable local ordinances, Tenant, at Tenants sole cost and expense, may install monument signage for its sole and exclusive use. Design and location of the monument sign is subject to Landlords approval. All Tenant Signage shall be subject to all applicable local ordinances. Subject to local governmental approvals, Tenant may display professionally designed and installed COMING SOON, NOW HIRING and GRAND OPENING exterior banners and/or window signage at the Premises after the Lease is signed and prior to Tenant opening for business.
10. Parking: Landlord shall provide all unassigned common area parking for Tenants employees and customers as required by applicable code or law.
- 2 -
11. Default: Each of the following shall be an Event of Default:
1. If Tenant shall fail to pay rent when due, the Landlord, at his option, may terminate all rights of the Tenant herein after not less than five (5) days written notice of such default given unless Tenant rectifies or cures the default within the said time.
2. If Tenant shall fail to pay any other payment of money, costs or expenses to be paid by Tenant under this Lease, when due, and the continuance of such failure for a period of ten (10) days after written notice from Landlord specifying such failure;
3. In the event of a default made by Tenant in any of the other covenants or conditions to be kept, observed and performed by Tenant, Tenant shall have thirty (30) days after receipt of written notice thereof to cure such default.
4. The filing or execution or occurrence of any of the following will be considered a Default on the part of Tenant:
(a) A petition in bankruptcy by or against Tenant;
(b) A petition against or answer by Tenant seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or other relief of the same or different kind under any provision of any bankruptcy laws;
(c) Adjudication of Tenant as a bankrupt or insolvent;
(d) An assignment by Tenant for the benefit of creditors;
(e) A petition against or proceeding by Tenant for, or the appointment of, a trustee, receiver, guardian, conservator or liquidator of Tenant with respect to the Premises or with respect to all or substantially all of Tenants property; or
(f) A petition against or proceeding by or against Tenant for its dissolution or liquidation or the taking of possession of Tenants property by any governmental authority in connection with dissolution or liquidation. Where in the case of a petition filed against Tenant under (a), (b), (d) or (e) above, such petition is not dismissed within ninety (90) days after the filing thereof;
(g) Entry of an order, judgment or decree by any court of competent jurisdiction granting any prayer or demand contained in any petition under (a), (b), (e) or (f) above, which order, judgment or decree is not reversed or vacated within ninety (90) days after it is entered;
(h) Vacation or abandonment of the Premises; or (i) Taking by any person of Tenants interest in this Lease upon execution, attachment or other process of law or equity.
In the event that the Tenant shall fail to cure any default within the time allowed under this section, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages.
In the event of Default on the part of Tenant, Landlord, at its option, in addition to all other rights and remedies provided in this Lease, at law or in equity: (a) terminate this Lease and Tenants right of possession of the Premises, and recover all damages to which Landlord is entitled at law, specifically including, without limitation, the excess of the aggregate Fixed Rent and Additional Rent that would have accrued for the balance of the Term, together with all of Landlords expenses of re-leasing (including repairs, alterations, improvements, additions, decorations, legal fees and brokerage commissions) or (b) terminate Tenants right of possession of the Premises without terminating this Lease. In all events, Landlord may re-lease the Premises, or any part thereof for the account of Tenant, for such rent and term and upon such terms and conditions as are acceptable to Landlord. If Landlord shall have elected to pursue its right to terminate Tenants right of possession of the Premises without terminating the Lease, then Landlord shall have the further right and remedy to subsequently rescind such election and terminate the Lease. For purposes of any such re-leasing, Landlord is authorized to decorate, repair, alter and improve the Premises to the extent deemed necessary by Landlord, in its reasonable discretion, all at Tenants expense. If Landlord fails to re-lease the Premises, or if the Premises are re-leased and a sufficient sum is not realized therefrom after payment of all Landlords expenses of re-leasing (including without limitation repairs, alterations, improvements, additions, decorations, legal fees and brokerage commissions) to satisfy the payment, when due, of Fixed Rent and Additional Rent reserved under this Lease for any monthly period, then Tenant shall pay Landlord a sum equal to the amount of Fixed Rent and Additional Rent due under this Lease for each such monthly period, or if the Premises have been re-leased, Tenant shall pay any such deficiency on the rent day applicable to such month. Tenant agrees that Landlord may file suit to recover any sums due to Landlord hereunder at any time or from time to time and that such suit or recovery of any amount due Landlord hereunder shall not be any defense to any subsequent action brought for any amount not theretofore reduced to judgment in favor of Landlord. In the event Landlord elects to terminate Tenants right of possession only, without
- 3 -
terminating this Lease, Landlord may, at Landlords option, enter into the Premises, remove Tenants property, and other evidences of tenancy, and take and hold possession thereof; provided, however, that such entry and possession shall not terminate this Lease or release Tenant, in whole or in part, from Tenants obligation to pay the Fixed Rent and Additional Rent reserved hereunder for the full Term or from any other obligation of Tenant under this Lease. Any and all property which may be removed from the Premises by the Landlord pursuant to the authority of the Lease or of law, to which the Tenant is or may be entitled, may be handled, removed or stored by the Landlord at the risk, cost and expense of the Tenant, and the Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. Tenant shall pay to the Landlord, upon demand, any and all reasonable expenses incurred in such removal and all storage charges against such property so long as the same shall be in the Landlords possession or under the Landlords control. In the event Landlord exercises any remedy provided under this Section, all deposits theretofore made by Tenant with utility companies or under this Lease, all unearned insurance premiums and all rights of Tenant under all insurance policies required under this Lease, any claims for refund of any Imposition, any pending insurance claims or condemnation awards, and all fuel and supplies on the Premises shall be deemed to be and are hereby assigned to and transferred to Landlord, to be applied in payment of Tenants liability under this Lease.
No waiver of any default of Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition.
12. Condemnation: If any legally, constituted authority condemns or takes by eminent domain the Premises or such part thereof which shall make the Premises unsuitable for leasing for Tenants business purposes, this Lease shall cease when the public authority takes possession, and Landlord and Tenant shall account for Rent as of that date. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that in the event Tenant has paid for all or part of the construction of the building or outside improvements, which it occupies, it shall be entitled to receive any award with regard to the condemnation of the building and outside improvements pertaining to that portion for which it paid, whether for the taking or diminution in value thereof, if such condemnation occurs during the first fifteen (15) years after the Commencement Date of this Lease, and provided further that Tenant shall be entitled to any compensation, separately awarded to Tenant for Tenants relocation expenses and/ or loss of Tenants Trade Fixtures.
13. Assignment of Agreement and Subletting : Tenant shall not without Landlords consent, which shall not be unreasonably withheld or conditioned, assign or sublease the Premises. The following shall not be deemed an assignment or sublease: assignment of the Lease (in whole or part) or sublease of the Premises (in whole or in part to a corporation or entity which is (a) a parent, subsidiary, affiliate, franchisee, or licensee of Tenant; (b) a corporation with which Tenant merges; and (c) the result of a reorganization or the surviving corporation or entity following a consolidation, merger or other corporate restructuring.
14. Violation of Laws : Tenant, guests and invitees of either Tenant or guests will not use the premises in such a manner that violates any law, ordinance, statutes or requirement of any municipal, state or federal authority now in force, or which may hereafter be in force, pertaining to the premises, occasioned by or affecting the use thereof by Tenant. Landlord shall comply with all laws, orders, ordinances, statutes or requirements now or hereafter affecting the premises.
15. Property Damage And Destruction : In the event (a) of partial or total destruction of the Premises or the building in which the Premises are located which requires repairs to either the Premises or said building, Landlord shall forthwith make said repairs, provided Tenant gives Landlord thirty (30) days prior written notice of the necessity therefor and provided Tenant did not cause such damage or destruction. If Tenant caused such damage or destruction and the cost of repair is not covered by the insurance provided for hereunder, Tenant shall forthwith make said repairs at its sole cost and expense. However, if the building in which the Premises are located is damaged as a result of fire or any other insured casualty to an extent in excess of forty percent (40%) of its then replacement cost (excluding foundation[s]); fifty percent (50%), or more, of the total square footage of the Building is damaged or destroyed by any casualty, at anytime, Landlord may within sixty (60) days following the date such damage occurs terminate this Lease by written notice to Tenant. During the period that Landlord is making said repairs, this Lease shall continue in full force and effect, and the Monthly Base Rent shall be proportionately reduced based upon the extent to which the making of such repairs shall interfere with the business carried on by Tenant in the Premises. If Landlord elects to terminate this Lease, all rentals shall be prorated between Landlord and Tenant as of the date of such destruction.
- 4 -
16. Hazardous Material: Hazardous Materials as used herein, shall mean any product, substance, chemical, material or waste whose presence, nature, quantity, and/ or intensity of existence, use, manufacture, disposal, transportation, spill, release, or effect, either by itself or in combination with other materials is either (i) potentially injurious to the public health, safety, or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental agency, or (iii) a basis for liability to any governmental agency or third party under any applicable statute or common law theory. Hazardous Materials shall also include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil, or any products, by-products, or fractions thereof, asbestos, all products defined in the environmental laws of the state of the Premises, or defined by the United States Government, and those products described in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Article 9601 et seq., or defined by any applicable state or local laws and the regulations adopted thereunder.
Tenant hereby indemnifies and holds Landlord and Landlords officers, directors, shareholders, managers, members, agents and employees harmless from and against, and shall reimburse Landlord and Landlords officers, directors, shareholders, managers, members, agents and employees for, any and all Losses (as hereinafter defined) arising from, out of or as a consequence, directly or indirectly, of the release by Tenant of any Hazardous Materials on the Premises which first occurs during the Term of this Lease. Losses shall mean any and all loss, claim, liability, damages, injuries to person, property or natural resources, cost, expense, action or cause of action and includes, but is not limited to, all costs of removal, remediation of any kind, detoxification, clean up and disposal of such Hazardous Materials and the preparation of any closure or other required plans, all costs of determining whether the Premises is in compliance and causing the Premises to be in compliance with all applicable Environmental Laws, all costs and fees associated with claims for damages to persons, property, or natural resources, and reasonable attorneys fees and consultants fees and court costs in respect thereto whether or not litigation or administrative proceedings shall occur, including all costs and expenses incurred or suffered by Landlord by reason of any violation of any applicable Environmental Law which occurs, or has occurred, upon the Premises during the Term of this Lease, or by reason of the imposition of any governmental lien for the recovery of environmental clean-up costs expended by reason of such violation.
The parties hereby covenant and agree that all obligations of a party under this Section shall survive any termination of the Lease, it being further understood and agreed that the rights of the indemnified party under this Section shall be in addition to any other rights and remedies under this Lease or at law or in equity. Any amount due to the indemnified party under this Section not paid by the other party within thirty (30) days after written demand therefor shall bear interest at Prime plus three percent (3%) per annum.
17. Alterations and Repairs by Tenant: Tenant shall not replace, alter or repair the Premises or any part thereof or any equipment or appurtenance thereto if the cost thereof exceeds in the aggregate Twenty Thousand and No/100 Dollars ($20,000.00) (any such action being hereinafter referred to as a Capital Improvement), unless Tenant shall comply with the following requirements, which shall be applicable to all Capital Improvements:
(a) Tenant shall, before the commencement of the work, obtain Landlords prior consent to the proposed Capital Improvement and shall at least ten (10) days prior to the commencement of the work furnish the Landlord with the following:
(1) Complete plans and specifications for the work prepared by a licensed architect approved by Landlord, which plans and specifications shall also meet with Landlords approval, together with the approval thereof by any governmental board, bureau or body then exercising jurisdiction over the Premises, which plans and specifications shall be and become Landlords sole and absolute property in the event that this Lease shall be terminated for any reason;
(2) A fixed-sum contract in assignable form made with a reputable and responsible contractor satisfactory to Landlord, providing for the erection, completion and terms of payment for all work, labor and materials necessary to perform the work within the fixed price provided for in such contract;
(3) An assignment to Landlord of such contract, duly executed and acknowledged by Tenant, to be effective upon any termination of this Lease or upon Landlords re-entry upon the Premises following an Event of Default prior to complete performance of such contract, such assignment also to include the benefits of all payments made on account of such contract, including payments made prior to the effective date of such assignment; and
- 5 -
(4) At Landlords specific request, a surety company completion bond, in form and from an insurer satisfactory to Landlord, issued by an insurer licensed to do business in the State in which the Premises are located, guaranteeing the full completion of the work and payment therefor within a reasonable time, free and clear of all mechanics or similar liens, encumbrances, chattel mortgages, conditional bills of sale and other charges, in accordance with the plans and specifications approved by Landlord, or other security satisfactory to Landlord, in Landlords sole discretion.
(b) Tenant shall (1) at its expense carry or cause to be carried the necessary workers compensation insurance and cause the insurance policies required under the Section entitled Insurance to be endorsed to cover the additional risk during the course of the work, and (2) procure all necessary permits from all governmental agencies and departments having jurisdiction in connection with such work. Tenant shall deliver evidence of compliance with the foregoing requirements to Landlord prior to the commencement of the work. Whenever requested by Landlord during the period of work, Tenant shall cause the architect in charge of the work (or if there is no architect in charge, the general contractor performing the work) to report in writing to Landlord as to whether the work is being done promptly and in a good and workmanlike manner, and in substantial compliance with the plans and specifications for the work. Tenant shall also deliver to Landlord copies of any and all interim or progress certificates or other reports submitted by Tenants architect, engineer or contractor.
(c) The Capital Improvements shall be made promptly, in a first-class and workmanlike manner, in compliance with all Requirements and shall not lessen the value of the Premises. Title to any Building, Improvements, fixtures, (other than Trade Fixtures), additions, alterations, restorations, repairs and replacements constructed, made or installed by Tenant, whether or not resulting from any Capital Improvement and including, but not limited to, any repairs, restoration and other work required to be done pursuant to the provisions of other Sections of this Lease, shall be and become Landlords sole property at the end of the Term without the necessity of Tenants execution and delivery of any instrument transferring title thereto. Notwithstanding the foregoing, Tenant covenants and agrees upon Landlords request to execute, acknowledge and deliver to Landlord any instrument reasonably requested by Landlord to confirm such title, and if Tenant shall fail or refuse to execute, and deliver any such instrument, Landlord is hereby irrevocably appointed Tenants attorney-in-fact to execute, acknowledge and deliver such instrument in Tenants name.
18. Tenants Maintenance: Tenant shall, at its sole expense, keep the Premises, including all systems and equipment, in good repair and in a clean and in conformance with the applicable law, including, but not limited to, the lawful and valid requirements of any municipality in which such Premises may be situated and of all other public authorities, and shall make, at Tenants own expense, all additions, improvements, alterations and repairs on the Premises and on and to the improvements, interior and exterior required by any lawful authorities. Tenant shall not commit or suffer, and shall use all reasonable precautions to prevent, waste, damage or injury to all of the foregoing. Tenant shall also make all necessary replacements, renewals, alterations and additions required to maintain all portions of the Premises in good condition.
19. Liens: Tenant shall not do any act which shall in any way encumber the title of Landlord in and to the Premises, nor shall Tenant create or permit to be created, and shall promptly discharge, any such lien (including, but not limited to, any mechanics, contractors, subcontractors or material mans lien or any lien, encumbrance or charge arising out of any agreement (expressed or implied), chattel mortgage, security agreement, financing statement or otherwise) upon the Premises or any part thereof or the income therefrom or any personal property used in connection with the operation of the Premises, and Tenant shall not suffer any other matter or thing whereby the estate, rights and interest of Landlord in the Premises or any part thereof might be impaired.
If Tenant shall fail to cause any such lien to be discharged of record, then Landlord, after thirty (30) days notice of its intention to do so, shall have the right, but not the obligation, in addition to any other right or remedy, to discharge such lien either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or bonding proceedings, and in any such event Landlord shall be entitled if it so elects to compel the prosecution of an action for foreclosure of such lien by the lienor and to pay the amount of judgment in favor of the lien owner with interest, costs and allowances. Any amount so paid by Landlord and all costs and expenses (including reasonable attorneys fees) incurred by Landlord in connection therewith shall constitute Additional Rent payable by Tenant under this Lease, due from Tenant to Landlord at the next rent day after any such payment, with interest thereon at Prime plus three percent (3%) per annum from the date of payment thereof.
This Lease shall constitute notice that Landlord shall not be liable for any work performed or to be performed, or any materials furnished or to be furnished, at the Premises for Tenant upon credit, and that no mechanics or other lien for such work or materials shall attach to or affect the estate or interest of Landlord in and to the Premises, unless specifically ordered by Landlord in writing. Tenant shall have no power to do any act or make any contract that may create or be the foundation for any lien, mortgage or other encumbrance upon the estate of Landlord, or any other interest of Landlord in the Premises, the Building or the other Improvements or any part thereof.
- 6 -
20. Surrender of Possession: Tenant shall on the last day of the Term or upon any sooner termination thereof, whether by lapse of time or by reason of Tenants Default or otherwise, surrender and deliver to Landlord the Premises in broom clean, good condition, ordinary wear and tear excepted, and if Tenant shall thereafter remain in possession thereof, it shall be deemed guilty of forcible detainer of the Premises and shall be subject to all the conditions and provisions contained herein and to ejection and removal, forcibly and otherwise, with or without process of law. Upon the termination of this Lease by lapse of time, Tenant shall remove furniture, trade fixtures and other personal property belonging to Tenant that are incident to the business of Tenant (as distinguished from personal property used in the operation of the Premises); such furniture, trade fixtures and other personal property belonging to Tenant and incident to the business of Tenant are hereinafter referred to as Trade Fixtures. Tenant shall repair any injury or damage to the Premises from such removal. If Tenant does not remove such Trade Fixtures from the Premises prior to the end of the Term, however ended, Landlord may, at its option, remove the same and deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the cost of such removal (including the repair of any injury or damage to the Premises or the Improvements resulting from such removal), delivery and warehousing to Landlord on demand, or Landlord may treat such Trade Fixtures as having been conveyed to Landlord with this Lease as a bill of sale, without further payment or credit by Landlord or Tenant.
Any holding over by Tenant of the Premises after the expiration of this Lease shall operate and be construed to be a tenancy from month to month only, at one hundred thirty percent (130%) of the monthly installments of fixed rent, plus additional rent and other sums otherwise payable hereunder for the Term. Nothing contained in this Section shall be construed to give Tenant the right to hold over after the expiration of this Lease, and Landlord may exercise any and all remedies at law or in equity to recover possession of the Premises and may seek damages in the event of such a hold over tenancy.
21. Brokerage Fees, Commissions: Tenant has not otherwise engaged in any activity which could form the basis for a claim for real estate commission, brokerage fee, finders fee or other similar charge, in connection with this Lease.
22. Indemnification of Landlord: To the fullest extent permitted by Law, Tenant agrees to indemnify and save Landlord and its respective agents and employees harmless from and against all liabilities, claims, suits, fines, penalties, damages, losses, fees, costs and expenses (including, but not limited to, Landlords attorneys fees) that may be imposed upon, incurred by or asserted against Landlord by reason of:
(a) Any work or thing to be done in, on or about the Premises or any part thereof other than Landlords work or improvements;
(b) Any use, occupation, condition, operation of the Premises or any part thereof or of any adjacent property or any occurrence on any of the same;
(c) Any action or omission on the part of Tenant or any Sub Tenant or any of its or their agents, contractors, servants, employees, licensees or invitees;
(d) Any accident, injury (including death) or damage, regardless of the cause thereof, to any person or property occurring in, on or about the Premises or any part thereof or any Adjacent Facility; and / or
(e) Any failure on Tenants part to perform or comply with any of the covenants, agreements, terms or conditions in this Lease or in any sublease, license, concession or other agreement entered into by Tenant.
The provisions of this Section shall survive the expiration or earlier termination of this Lease. Tenant agrees to pay, and to indemnify Landlord against, all costs and expenses (including, but not limited to, Landlords reasonable attorneys fees) incurred by or imposed upon Landlord by or in connection with any litigation to which Landlord becomes or is made a party without fault in its part, whether commenced by or against Tenant, or that may be incurred by Landlord in enforcing any of the covenants and agreements of this Lease (with or without the institution of any action or proceeding relating to the Premises or this Lease) or in obtaining possession of the Premises after an Event of Default or upon expiration or earlier termination of this Lease. Landlord may, but shall not be obligated to, cure any Default by Tenant hereunder. All sums expended and all costs and expenses (including, but not limited to, reasonable attorneys fees) incurred by Landlord pursuant to the provisions of this Lease or on account of any Default by Tenant under this Lease shall bear interest thereon from the respective dates when expended or incurred by Landlord at Prime plus three per cent (3%) per annum until repaid by Tenant to Landlord, and all such sums together with such interest shall become Additional Rent under this Lease, payable by Tenant to Landlord on the next rent date after such expenditure. All Rent and other amounts payable by Tenant under this Lease shall be and are hereby declared to be a valid and first lien upon Tenants interest in the Premises and upon the rents, issues and profits in any manner arising or growing out of the same, and upon Tenants interest in this Lease.
- 7 -
Landlords granting of any consent under this Lease, or Landlords failure to object to any action taken by Tenant without Landlords consent required under this Lease, shall not be deemed a waiver by Landlord of its rights to require such consent for any further similar act by Tenant. No waiver by a party of any other breach of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach or to be a waiver, acquiescence in or consent to any further or succeeding breach of the same covenant. None of the covenants under this Lease, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by Landlord. No remedy conferred upon or reserved to a party under this Lease or under law shall be considered exclusive of any other remedy, but such remedies shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise, and every power and remedy given by this Lease to that party which may be exercised from time to time and as often as occasion may arise or as may be deemed expedient, without precluding that partys simultaneous or later exercise of any or all other rights or remedies. No delay or omission of a party Landlord to exercise any right or power arising from any Default or Event of Default shall impair any such right to power or shall be construed to be a waiver of any such Default or Event of Default or acquiescence therein.
23. Court Costs and Attorneys Fees: In any action or legal proceeding to enforce any part of this Lease, the prevailing party shall recover reasonable attorneys fees and court costs.
24. Prevailing Law: This Lease shall be construed and enforced in accordance with the laws of the state in which the Premises is located.
25. Binding on Successors: All covenants, agreements, conditions and undertakings contained in this Lease shall extend and inure to and be binding upon Landlords successors and assigns and Tenants permitted successors and assigns as if such successors and assigns were in each case specifically named, and shall be construed as covenants running with the land. Wherever reference is made in this Lease to either party, it shall be held to include and apply to such successors and assigns. The provisions of this Section shall not be construed to grant or to confer any greater rights of assignment upon Tenant than are provided in the Section entitled Assignment of Agreement and Subletting.
26. Time is of the Essence: Time is of the essence with respect to every provision of this Lease.
27. Entire Agreement: This document and any Attachments constitute the entire Agreement between the parties, and no promises or representations, other than those contained here and those implied by law, have been made by Landlord or Tenant. Any modifications to this Agreement must be in writing and signed by Landlord and Tenant.
28. Severability: The provisions of this Lease are severable and in the event any provision, clause, sentence, section or part thereof is held to be invalid, illegal, unconstitutional, inapplicable or unenforceable to any person or circumstances, such invalidity, illegality, unconstitutionality, inapplicability or unenforceability shall not affect or impair any of the remaining provisions, sentences, clauses, sections, parts of the lease or their application to Tenant or other persons or circumstances. To the extent that any portion of this agreement found to be invalid, illegal, unconstitutional, inapplicable or unenforceable may be valid by striking of certain words or phrases, such words or phrases shall be deemed to be stricken and the remainder of the provisions and the remainder of the other portions of this Lease agreement shall remain in full force and effect. It is further agreed that this Lease may be executed in counterparts, each of which when considered together shall constitute the original contract.
- 8 -
IN WITNESS WHEREOF the parties set their hands the date first set forth above.
Landlord: CDM Development, LLC
By: |
/s/ Douglas R. Rippel |
|
Name: | Douglas R. Rippel | |
Title: | Manager |
Tenant: Tiger Financial Management, LLC
By: |
/s/ Chad H. Faulkner |
|
Name: | Chad H. Faulkner | |
Title: | Manager |
- 9 -
Exhibit 10.18
6/7/12
CDM Development LLC
3527 N Ridge Rd
Wichita, KS 67205
Re: | Lease: 3527 N Ridge Rd- Lease Exercise of Option to Renew |
Dear Sirs:
Pursuant to Section 3 of the Lease effective December 22, 2007 please accept this letter as our Notice of Exercise of the Option to extend the term of the Lease, by and between CDM Development, LLC and assigned to Tiger Financial Management, LLC. This option is for an additional five years beginning on January 1 2013.
In addition, this letter serves to amend Section 3 to maintain 2 (two) additional lease options notwithstanding the exercise of this option
Please indicate your agreement and return one copy of this letter to my attention. Kindly call me with questions. My mobile is 316-214-5174 and my office is 316-494- 6561. Thank you.
Very truly yours,
|
Agreed this June 8 2012
|
|||||
/s/ Chris Darnell | ||||||
Chris Darnell VP of Real Estate |
Exhibit 10.19
SUBLEASE
THIS SUBLEASE (Sublease) is made 11/16/2010, between Dinning-Beard, Inc. (Sublessor) and Tiger Financial Management, LLC (Subtenant).
Recitals
A. Sublessor is the tenant under an Amended Lease in which The Amigos Rental, LLC is lessor (Landlord), dated October 2, 2000 (the Base Lease). The Base Lease includes all amendments and extensions thereof entered into by Sublessor hereafter. A copy of the executed Base Lease is attached hereto as Exhibit A .
B. The Base Lease covers certain property at 3531 N. Ridge Road, Wichita, Kansas (the Property). The square footage of the Property is 9,241 on the First Floor and 8,848 on the Second Floor. This Sublease leases that portion of the Property that is the entire Second Floor thereof (Sublease Property).
C. The term under the Base Lease expires July 31, 2015, but Sublessor has the right to extend the term of the Base Lease to March 31, 2021. Subtenant wants to sublet the Property for five years from the Effective Date of this Sublease and to have an option to extend for another five years.
Agreement
1. SUBLEASE : Sublessor subleases to Subtenant, and Subtenant subleases from Sublessor, the Sublease Property under the terms described in this Sublease. Upon Subtenant paying the rent hereunder and observing and performing all of the covenants, conditions, and provisions on Subtenants part to be observed and performed hereunder, Subtenant shall have quiet possession of the Sublease Property for the entire term hereof, subject to all provisions of this Sublease. Provided that Subtenant performs all of its obligations under this Sublease, Sublessor will not take any action or permit or suffer any circumstance that constitutes or that, with the passage of time or the giving of notice, would constitute a default under the Base Lease, except to the extent that such default is attributable to Subtenant or corresponds to or arises out of a default by Subtenant under this Sublease.
2. TERM : The term shall commence on the first day of the month following completion of Subtenants Leasehold Improvements, as described herein, but no later than January 1, 2011 (the Effective Date), and end five years after the Effective Date.
3. CONDITION OF PROPERTY : Subtenant accepts the Property as is, in its current condition. Subtenant shall deliver the Property at the end of the term in the same condition as it is upon completion of Subtenants Leasehold Improvements, as described herein, ordinary wear and tear excepted, or as otherwise permitted under the Base Lease.
4. RENT : For the first sublease year, Subtenant shall pay $115,024.00 to Sublessor as rent, payable in monthly installments of $9,585.33. For each subsequent sublease year, the rent shall increase to 103% of the rent for the previous sublease year, payable in monthly installments of 1/12 of the rent for that year. Such system of increases shall continue during any extension of this Sublease. Rent is due on the first day of each calendar month. Subtenant shall pay a late charge of 5% of the monthly payment for any payment not received by midnight of the fifth day after its due date.
5. SECURITY DEPOSIT . Subtenant shall deposit with Landlord the amount of $19,170.66 as security for Subtenants performance of its rent and other obligations under this Sublease. Subtenant grants to Sublessor a security interest in such deposit. Upon satisfactory completion of Subtenants Leasehold Improvements, Sublessor shall apply $9,585.33 of such deposit to pay the first months rent.
6. UTILITIES . In addition to the rent specified above, Subtenant shall pay to Sublessor each month one-half of all of Lessors monthly costs of compliance with its obligations for utilities. Subtenant shall pay such charges to Sublessor within five business days of Sublessors invoicing same to Subtenant. Such charges shall be deemed rent under this Sublease.
7. COMPLIANCE WITH BASE LEASE : The terms of the Base Lease are incorporated into this Sublease as if set forth in full, except references to the Landlord shall mean Sublessor, and references to the Tenant shall mean the Subtenant. Subtenant shall perform and be bound by all covenants and agreements in the Base Lease as if Subtenant was the Tenant and Sublessor was the Landlord, except to the extent otherwise modified in this Sublease, but only to the extent that such covenants and agreements (i) relate to that portion of the Property in which Subtenant is then in possession and (ii) arise during the term hereof. Sublessor may enforce these covenants and agreements against Subtenant as if Sublessor was the Landlord and Subtenant was the Tenant under the Base Lease. Subtenant will indemnify Sublessor against any claims, damages, costs, and expenses with respect to any breaches of the Base Lease by Subtenant. Sublessor agrees that it will take such action as may be required for the purpose of enforcing the provisions of the Base Lease for the benefit of Subtenant, provided that Sublessor shall not be obligated to file suit or be required to incur any expense whatsoever until Subtenant prepays the estimated cost of such expense.
8. IMPROVEMENTS : Subtenant shall, at its own expense, make certain improvements to the Sublease Property, including changing configuration of rooms, installing its own security system and coding the elevator for Subtenant-only access to the Sublease Property (Leasehold Improvements). All such improvements shall be made according to plans and specifications approved in writing in advance by Sublessor. Such improvements will be completed as soon as reasonably practicable. Subtenant shall not make any other improvements to the Property without Sublessors prior, written consent of the plans, which consent shall not be unreasonably withheld or delayed. No Sublessors consent to the Leasehold Improvements or other improvements shall be considered as subjecting Sublessors interest in the Property to a lien for labor and materials, pursuant to K.S.A. 60-1101, et seq. In addition to the provisions of the Base Lease, if such a lien is claimed, Subtenant shall reimburse Sublessor for any expense which Sublessor may incur in defending or otherwise dealing with such lien.
9. ASSIGNMENT AND SUBLETTING : This Sublease may not be assigned or sublet without the prior written consent of Sublessor; such consent may be withheld by Sublessor in its sole and absolute discretion.
2
10. INDEMNITY : Subtenant shall indemnify, defend (by counsel reasonably acceptable to Sublessor), protect, and hold harmless Sublessor and Landlord and each of their respective directors, officers, employees, agents, attorneys, successors, and assigns from and against any and all claims, liabilities, penalties, fines, judgments, forfeitures, losses, costs, or expenses (including attorneys fees, consultants fees, and expert fees) for:
(a) | violation of any local, state, or federal statute or other law (Law) with respect to Subtenants use or control of the Property, or liability to any third party in connection with any violation of a Law by Subtenant or with any other action by Subtenant, its agents, or invitees; or |
(b) | the death of or injury to any person or damage to any property whatsoever, arising during the term of this Sublease or anytime thereafter from or caused in whole or in part, directly or indirectly, by (i) the presence in, on, under, or about the Property, or any discharge or release in or from the Property, of any Hazardous Substance, except to the extent that any such presence, discharge, or release was caused by negligent or tortious acts or omissions of Landlord or Sublessor or by either of their activities on the Property, or (ii) Subtenants failure to comply with any Hazardous Substance law. The term Hazardous Substance shall mean any Hazardous Materials or the presence of any Hazardous Substance Condition as defined in the Base Lease. |
The indemnity obligation created hereunder shall include, without limitation, and whether foreseeable or unforeseeable, any and all costs incurred (other than incidental or consequential damages) in connection with any site investigation, and any and all costs for repair, cleanup, detoxification, or decontamination, or other remedial action of the Property. The obligations hereunder shall survive the expiration or earlier termination of this Sublease and any extensions thereof
11. DAMAGE TO PROPERTY : If the Property becomes untenantable by fire, other casualty, or condemnation, then rent shall abate upon the same terms as provided in the Base Lease.
12. INSURANCE : Subtenant shall have the same obligations to procure and maintain commercial and general liability insurance to protect Sublessors interest as Sublessor has to the Landlord in Article 10 of the Base Lease. Sublessor shall be named as additional insured on Subtenants liability coverage and as a loss payee on its casualty coverage. Subtenant shall deliver certification of paid-up insurance to Sublessor upon issuance and renewal of all such policies. Sublessor shall cause each insurance policy carried by it insuring the Sublease Property against loss by fire or any of the casualties covered by its insurance to be written in such a manner so as to provide that the insurer waives all right of recovery by way of subrogation against Subtenant in connection with any loss or damage covered by the policy. Sublessor and Subtenant will each cause each insurance policy carried by it insuring the Sublease Property as well as the contents thereof, including trade fixtures and merchandise, against loss by fire or any of the casualties covered by its insurance to be written in the manner provided in Section 10.02 of the Lease, and to provide that the insurer waives all right of recovery by way of subrogation against Sublessor in connection with any loss or damage covered by the policy.
3
Neither party hereto shall be liable to the other for any loss or damage caused by fire or any of the casualties covered by such insurance policies maintained by the other party. It is agreed that should either party fail to procure such waiver, it will pay to the other in liquidated damages all monies to which any insurer becomes entitled from the party for whose benefit such waiver was intended.
13. OPTION TO RENT ADDITIONAL SPACE . Provided that Subtenant is not in default of its obligations under this Sublease, then during the term hereof, including any extension, Subtenant shall have the right of first offer to lease space on the first floor of the Property. Sublessor shall give Tenant written notice of the availability of any said additional office space and the rent shall be at the then-charged rate per square foot of the 2 nd floor rent. In addition, subtenant shall pay a prorata share of the taxes, property insurance, and common area maintenance for said additional first floor space. Subtenant shall have ten business days from the receipt of Sublessors notice to notify Sublessor in writing whether it will lease the additional space at the rent specified in Sublessors notice. In the event Subtenant declines the offer to lease additional space or fails to notify Sublessor within 10 business days, Subtenants right of first offer with respect to that space shall be null and void and of no further force and effect as to that particular oiler of space, and Sublessor shall be free to lease such space to any person or entity upon the same terms and for any purpose. Any subsequent decision to offer the space to a third party shall be first made to Subtenant.
Subtenant shall have a right of first refusal to any such space offered to a third person. Subtenant shall have ten (10) business days from written notice by the Sublessor of such space availability and terms offered to the third party.
Notwithstanding the foregoing provisions of this Section, Subtenant shall not have any right of first offer with respect to any First Floor space Sublessor may offer to a title company or mortgage origination company.
However it may occur, in one or more transactions, if Subtenant becomes the occupant of the entire First Floor, as well as the Second Floor, then, from that date forward, Subtenant shall be obligated to Landlord for payment and performance of all obligations of the tenant under the Base Lease except for Fixed Rental under Section 3.01 thereof; and Subtenant shall indemnify Sublessor for and hold Sublessor harmless from all such obligations.
14. OPTION TO EXTEND . Provided Subtenant is not in default under this Sublease, Subtenant may, at its option, renew this Sublease for a period of five years upon the same terms and conditions, including escalating rent as provided above, by giving notice to Sublessor of its intention to renew on or before July 1, 2015. Subtenant shall have no other rights to extend or renew this Sublease.
15. OPTION TO PURCHASE . Sublessor shall deliver to Subtenant the written grant of Landlord to Subtenant of an option to purchase the Property at the end of the second year and at the end of five years after the Effective Date of this Sublease, a copy of which Grant of Option to Purchase is attached hereto as Exhibit B . If Subtenant exercises its purchase option, then upon the closing of its purchase, this Sublease shall terminate.
4
16. FORBEARANCE/CONSENT NOT A WAIVER : Any failure by Sublessor to declare a default or breach of this Sublease shall not be considered as a waiver of the right to thereafter declare a default or breach for any other succeeding default or breach. Any consent by Sublessor to any situation requiring Sublessors consent shall be deemed as consent to that situation only, and only for that particular instance, and shall not be deemed as consent to any subsequent situation where Sublessors consent is required.
17. NOTICE : All notice required in this Sublease shall be in writing and either personally delivered, sent by nationally-recognized overnight delivery carrier (such as Federal Express), or sent by certified United States mail, postage prepaid, to:
Sublessor at : Dinning-Beard, Inc. Attention: President 8415 E. 32nd St. North Wichita, KS 67226 Email: mstein@prudentialkansas.com |
with copy to : Michael P. Cannady Adams Jones Law Firm, P.A. 1635 N. Waterfront Pkwy., Suite 200 Wichita, KS 67206 Email: mcannady@adamsjones.com |
|
Subtenant at : Tiger Financial Management, LLC Attn: Chris Darnell 3611 North Ridge Road Wichita, Kansas 67205 Email: chrisdarnell@speedyinc.com |
with copy to : Thomas L. Steele Gen. Cnsl. / Speedy Cash Holdings Corp. 3527 North Ridge Road Wichita, Kansas 67205 Email: tlsteele@speedyinc.com |
18. BROKERS : The parties hereto each represent and warrant to the other that it has had no dealings with any broker or agent in connection with this Sublease. Each party agrees to indemnify and hold the other harmless from and against any and all claims, liabilities, or expenses (including reasonable attorneys fees and expenses) imposed upon, asserted, or incurred by the other party as a consequence of any breach of such representations. This indemnity shall survive the expiration or earlier termination of this Sublease.
19. SUCCESSORS AND ASSIGNS : This Sublease shall be binding upon the parties and their successors and permitted assigns.
20. MISCELLANEOUS :
A. | Time is of the essence of this Sublease. |
B. | Sublessor will have the exclusive right to reserve parking in the parking row closest to the front of the Property, except for spaces indicated as parking exclusively for persons with disabilities. |
C. | Subtenant shall use the Property only as a business office compatible with Sublessors activities. |
D. | This Sublease requires Landlords consent before it becomes effective. |
5
E. | Subtenant shall prohibit smoking in the Subleased Property and within 30 feet from any exterior doors of the Property and shall maintain signage as permitted by Law. |
F. | As between Sublessor and Subtenant, Subtenant shall be responsible, at Subtenants expense, for assuring the Property complies with the Americans With Disabilities Act and the Kansas Act Against Discrimination. |
DINNING-BEARD, INC, Sublessor | Tiger Financial Management, LLC, Subtenant | |||||||
By: |
/s/ M.K. Stein |
By: |
/s/ Chadwick H. Faulkner |
|||||
Name: | Mona Stein | Name: | Chadwick H. Faulkner | |||||
Title: | Executive Vice President, CFO | Title: | President | |||||
Date: | 11/16/2010 | Date: | 11/16/2010 |
Consent of Landlord
The Amigos Rental, LLC, Landlord under the Base Lease, hereby consents to the foregoing Sublease.
Executed 11/16/2010.
THE AMIGOS RENTAL, LLC | ||
By: Name: Title: |
/s/ M.K. Stein Mona Stein Managing Member |
6
EXHIBIT A
BASE LEASE
7
AMMENDED LEASE
THIS LEASE, made and entered into at Wichita, Kansas, as of the 2nd day of October, 2000.
BY AND BETWEEN | The Amigos Rental, LLC | |
a Kansas corporation, hereinafter called |
||
Landlord | ||
AND |
Dinning-Beard, Inc., a Kansas corporation hereinafter called |
|
Tenant |
W I T N E S S E T H : That;
WHEREAS, the parties have previously entered into a Lease dated August 1, 2000, which the parties desire to modify and replace with this Lease; said prior lease dated August 1, 2000, to become null and void upon the execution of this Lease.
WHEREAS, Landlord is the owner of certain real property described herein, and Landlord agrees to construct certain improvements thereon and to lease such real property and improvements to Tenant; and
WHEREAS, Tenant agrees to lease such real property and improvements from Landlord under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows:
ARTICLE 1
Demised Premises-Use of Premises
Section 1.01. Real Property Description . The real property covered by this Lease is legally described as follows:
The North 250 feet of Lot 1, Block 1, Hoskinson 2 nd Addition Sedgwick County, Kansas (commonly known as 3531 N. Ridge Road, Wichita, Kansas)
Section 1.02. Improvements . Landlord shall construct on the above-described real property a building containing approximately 18,000 square feet, together with certain parking and other site improvements, all as shown on those certain plans and specifications (the Plans) that have been agreed upon and initialed by the parties, and which are incorporated herein by reference. Such
improvements shall be constructed at Landlords sole cost and expense in a good and workmanlike manner and in compliance with all applicable governmental rules and regulations. Any additional work done by Landlord at Tenants request which is not contained in the Plans shall be at Tenants sole cost and expense and shall be paid for, at Landlords election, either prior to the commencement of such additional work or within five (5) days after Landlord presents to Tenant a bill for such work. It is understood that the maximum amount Landlord has agreed to expend for the building and improvements is $2,500000. In the event that the construction costs are less than $2,500,000, the amount of fixed rental hereunder will be reduced as described in Section 3.01 below.
Section 1.04. Use of Premises . Tenant shall use and occupy the Demised Premises as a real estate sales office, and for the conduct of related businesses. Tenant also may use the Demised Premises for any office use without Landlords consent or for any other use with Landlords prior written consent, which consent will not unreasonably be withheld. For purposes of this paragraph, Landlord shall be deemed to have reason to withhold consent to any use which is not a reputable use in keeping with the general class and character of the area surrounding the Demised Premises.
ARTICLE 2
Term
Section 2.01. Term . Tenant is to have and hold the Demised Premises for a term of fifteen (15) years from and after the Commencement Date defined below (the Term).
Section2.02. Commencement Date . The Commencement Date (the Commencement Date) shall mean and be defined as the first to occur of the following: (a) Ten (10) days following the issuance of a Certificate of occupancy for the improvements to be constructed by Landlord on the Demised Premises; or, (b) the date Tenant opens for business at the Demised Premises. Landlord and Tenant shall execute an addendum to this Lease to set forth the Commencement Date as soon as such date has been determined. The first four (4) months of rent shall be deferred until the debt to Prudential Real Estate Financial Services of America (PREFSA) is paid in full. At said time, deferred rent shall be paid in sixty (60) equal monthly installments.
ARTICLE 3
Rental
Section 3.01. Fixed Rental .
(a) During the first five (5) years of this Lease Tenant shall pay to Landlord, in such coin or currency of the United States as shall be lawful for the payment of private debts, at the address of Landlord specified in this Lease, or at such other place as Landlord may in writing from time to time as rental for the Demised Premises, a monthly rental, payable in advance on the first day of each month, of Thirty Thousand Dollars ($30,000); provided that the rental shall not be deemed to be late if it is received within the first five (5) business days of the month. Notwithstanding the foregoing, in the event the construction costs incurred by Landlord are less than the maximum amount stated in Section 1.02 above, the fixed rental shall be reduced by 14% of the difference between the actual construction costs and the maximum amount.
(b) The fixed rental rate for each of the following five (5) year periods of this Lease shall be increased by the lesser of (i) 15%, or (ii) a percentage equal to the percentage increase from the Commencement Date through the end of the fifth year of this Lease in the All Items figure of the Consumer Price Index Urban Wage Earners and Clerical Workers U.S. City Averages (1982-1984 = 100) issued by the Bureau of Labor Statistics of the United States Department of Labor. In the event such index is discontinued in the future, then the index substituted by the Bureau of Labor Statistics shall be used, or if there is no such substitute, the parties shall use an index of consumer inflation published by the government or a business or trade association.
Section 3.02. Additional Rental . The Tenant will also pay, without notice, and without abatement, deduction, or setoff, except as may be required or permitted by this Lease, as additional rent, all sums, taxes, assessments, costs, expenses, and other payments which the Tenant in any of the provisions of this Lease assumes or agrees to pay, and, in the event of any nonpayment thereof, the Landlord shall have (in addition to all other rights and remedies) all the rights and remedies provided herein or by law in the case of nonpayment of the net rent.
ARTICLE 4
Taxes and Other Charges
Section 4.01. Tenant to Pay Taxes, Etc . Tenant shall bear, pay, and discharge, on or before the last day on which payment may be made without penalty or interest, all taxes, special assessments, charges for public utilities, excises, levies, and other governmental impositions and charges of every kind and nature whatsoever, including any interest thereon, which shall or may during the term be charged, laid, levied, assessed, imposed, become due and payable, or liens upon, or which arise in connection with the use, occupancy or possession of, or grow due or payable out of, or for, the Demised Premises, or any part thereof, or any building, appurtenances, or equipment thereon or therein. Tenant shall, within thirty (30) days after the time above provided for the payment by Tenant of any such tax, assessment, or other governmental levy, imposition, or charge, produce and exhibit to Landlord satisfactory evidence of such payment.
Section 4.02. A pportionment . All such taxes, assessments, and other governmental levies, impositions, and charges which shall be charged, laid, levied, assessed, or imposed for a fiscal period in which the term of this Lease commences or terminates shall be apportioned pro rata between Landlord and Tenant, in accordance with the respective portions of each such fiscal period during which such terms shall be in effect.
Section 4.03. Right to Contest . Tenant shall have the right to contest, or review by legal proceedings, or in such other manner as it may deem suitable (which, if instituted, Tenant shall conduct promptly at its own expense, and free of any expense to Landlord, and Landlord shall cooperate with Tenant with respect to any such suit or proceeding) any tax, assessment, or other
governmental levy, imposition, or charge. Tenant may defer payment of a contested item. Tenant shall promptly pay such contested item or items if, at any time, the Demised Premises, or any part thereof, shall be in danger of being sold, forfeited, or otherwise lost or Landlord shall be subjected to criminal liability for such nonpayment. The legal proceedings herein referred to shall include appropriate proceedings to review tax assessments and appeals from orders therein and appeals from any judgments, decrees, or orders, but all such proceedings shall be begun as soon as possible after the imposition or assessment of any contested item and shall be prosecuted to final adjudication with dispatch. If there shall be any refund with respect to any contested item based on a payment by Tenant, Tenant shall be entitled to reimbursement for Tenants actual reasonable expenses in pursuing such refund, and shall be entitled to retain any remaining refund amount subject to apportionment as provided in section 4.02.
Section 4.04. Excluded Taxes of Landlord . Nothing herein contained shall require, or be construed to require, Tenant to pay any inheritance, estate, succession, transfer, gift, franchise, corporation, income or profit tax, or capital levy that is, or may be, imposed upon Landlord, or (to the extent applicable) Landlords members, successors, or assigns; provided, however, that if at any time during the term of this Lease the methods of taxation prevailing at the commencement of the term hereof shall be altered so that in lieu of, or as a substitute for, the whole or any part of the taxes, assessments, levies, impositions, or charges now levied, assessed, or imposed on real estate and the improvements thereon as described in Section 4.01 hereof, there shall be levied, assessed, or imposed any such substitute tax, assessment, or charge upon Landlord or Landlords interest in the Demised Premises, Tenant shall pay and discharge the same as herein provided.
ARTICLE 5
Assignments, Mortgages, and Subleases
Section 5.01. Prohibition of Mortgages . Neither Tenant, nor Tenants permitted successors or assigns, shall (unless hereinafter expressly permitted to do so) mortgage, pledge, or encumber this Lease, in whole or in part, without the prior consent in writing of Landlord in each instance, which consent shall not be unreasonably withheld or delayed. The consent by Landlord to a mortgage, pledge, or encumbrance shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further mortgage, pledge, or encumbrance.
Section 5.02. Assignment or Subletting . Tenant shall not have the right to assign or sublet this Lease,, in whole or in part, without Landlords consent, which consent shall not unreasonably be withheld. Requests for approval of such assignment or subletting shall be made by Tenant to Landlord in writing, and shall set forth in detail the terms of such proposed assignment or subletting. Landlord shall have fifteen (15) days following receipt of such request to notify Tenant in writing of Landlords approval or disapproval of such proposed assignment or subletting. The consent by Landlord to an assignment or subletting of this Lease shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment of the Lease. No assignment or subletting shall relieve Tenant of Tenants liability under this Lease.
Section 5.03. Assumption by Permitted Assignees . No assignment made with Landlords consent shall be effective until there shall have been delivered to Landlord an executed counterpart of such assignment containing an agreement, in recordable form, executed by the assignor and the proposed assignee, whereby such assignee assumes due performance of the obligations on the assignors part to be performed under this Lease to the end of the term hereof.
ARTICLE 6
Alterations
Section 6.01. Consent Required . No portion of any building or other improvements on the Demised Premises shall be demolished, altered, or removed by Tenant without the prior consent in writing of Landlord, and if necessary, of any mortgagee, and Tenant shall not at any time during the term make any material alteration, rebuilding, replacement, change, addition, or improvement in or to the Demised Premises, or to any building or other improvement thereon, unless:
a. The same shall be performed in a first class workmanlike manner, at Tenants sole cost and expense, and shall not weaken or impair the structural strength, or lessen the value, of such buildings as shall be on the Demised Premises at the time, or change the purposes for which such buildings may be used; and
b. The same shall be made according to detailed plans, specifications, and a construction budget therefor which shall be first submitted to, and approved in writing, by Landlord, which consent may be granted or denied by Landlord in Landlords sole discretion.
Section 6.02. Ownership of Improvements . All buildings, alterations, rebuildings, replacements, changes, additions, improvements, equipment, and appurtenances on or in the Demised Premises on the Commencement Date and which may be erected, installed, or affixed on or in the Demised Premises during the Term, are, and shall be deemed to be and immediately become, part of the realty and the sole and absolute property of Landlord and shall be deemed to be part of the Demised Premises, except that all movable trade fixtures, which can be removed without causing damage to the Demised Premises, installed by Tenant or any permitted subtenant shall be, and remain; the property of Tenant or such permitted subtenant; provided, that Tenant shall repair any damage caused by the removal of such trade fixtures.
ARTICLE 7
RepairsCondition of Premises
Section 7.01. Landlords Duty to Repair . Landlord shall be responsible for the structural repair of the foundation, exterior walls (except doors, door frames, windows, and window frames), and the replacement, when necessary, of the roof and/or HVAC system of the Demised Premises, except when such repair or replacement, respectively, is necessitated by Tenants negligence.
Section 7.02. Tenants Duty to Repair . Except for structural repairs or replacements which are the obligation of Landlord under Section 7.01, Tenant shall, at all times during the term, and at its own cost and expense, keep and maintain in good order and condition all buildings and improvements on the Demised Premises at the commencement of the term and thereafter erected on the Demised Premises, or forming part thereof, and their full equipment and appurtenances, and make all repairs thereto and restorations, replacements, and renewals thereof, both inside and outside, extraordinary and ordinary, seen or unforeseen, howsoever the necessity or desirability for repairs may occur, and shall use all reasonable precaution to prevent waste, damage, or injury.
Section 7.03. Maintenance of Sidewalks, Parking Lots. Etc . Tenant shall also, at its own cost and expense, keep, and maintain in thorough repair and in good, safe, and substantial order and condition, and free from dirt, snow, ice, rubbish, and other obstructions or encumbrances, the sidewalks, driveways, parking facilities, areas, railings, gutters, and curbs in front of, and adjacent to, the Demised Premises. Replacement of such improvements, when necessary, shall be Landlords responsibility at Landlords sole expense.
Section 7.04. No Services by Landlord . Landlord shall not be required to furnish to Tenant any facilities or services of any kind whatsoever during the Term, such as, but not limited to: water, steam, heat, gas, hot water, electricity, light, and power. Landlord shall in no event be required to make any alterations, rebuildings, replacements, changes, additions, improvements, or repairs during the term unless caused by the negligence or willful misconduct of Landlord, its employees, agents, or contractors.
Section 7.05. Condition of Premises . Landlord warrants that as of the Commencement Date, to the best of Landlords knowledge, the Demised Premises will be free of latent defects and will be in good order, condition, and repair. Tenants entry into possession of the Demised Premises shall be deemed its acceptance of the Demised Premises in good order, condition, and repair. Landlord agrees to use its best efforts to have all repairs covered by contractors or suppliers warranties made by such contractors or suppliers.
ARTICLE 8
Mechanics and Other Liens
Section 8.01. Tenant to Create No Liens . Tenant shall promptly pay any contractor supplying work to the Demised Premises to minimize the possibility of any lien, mortgage, or other encumbrance upon the reversion or other estate of Landlord, or upon any interest of Landlord in the Demised Premises, or in the buildings or improvements thereon; it being agreed that should Tenant cause any alterations, rebuildings, replacements, changes, additions, improvements, or repairs to be made to the Demised Premises, or cause any labor to be performed, or material to be furnished therein, thereon, or thereto, neither Landlord, nor the Demised Premises, shall under any circumstances be liable for the payment of any expense incurred, or for the value of any work done, or material furnished, but all such alterations, rebuildings, replacements, changes, additions, improvements, repairs, and labor and material, shall be made, furnished, and performed at Tenants expense, and Tenant shall be solely and wholly responsible to contractors, laborers, and materialmen furnishing and performing such labor and material.
Section 8.02. Removal of Liens . If, because of any act or omission of Tenant, any mechanics or materialmens lien, charge, or order for the payment of money shall be filed against the Demised Premises, or any building or improvements thereon, or against Landlord, Tenant shall, at its own cost and expense, cause the same to be cancelled and discharged of record or fully bonded against within thirty (30) days after notice from Landlord to Tenant of the filing thereof.
ARTICLE 9
Requirements of Law
Section 9.01. Lawful Conduct Required . During the Term, Tenant shall, at its own cost and expense, promptly observe and comply with all present and future laws, ordinances; requirements, orders, directions, rules, and regulations of the federal, state, county, and municipal governments and of all other governmental authorities having or claiming jurisdiction over the Demised Premises, or appurtenances, or any part thereof, and of all their respective departments, bureaus, and officials, and of the insurance underwriting board, or insurance inspection bureau, having or claiming jurisdiction, or any other body exercising similar functions, and of all insurance companies writing policies covering the Demised Premises, or any part thereof, whether such laws, ordinances, requirements, orders, directions, rules, or regulations relate to structural alterations, changes, additions, improvements, replacements, or repairs, either inside or outside, extraordinary or ordinary, seen or unforeseen, or otherwise, to, or in and about, the Demised Premises, or any building thereon, or to any vaults, passageways, franchises, or privileges appurtenant thereto, or connected with the enjoyment thereof, whether the same are in force at the commencement of the term or may in the future be passed, enacted, or directed.
Section 9.02. Contest . Tenant, after notice to Landlord, may, by proceedings conducted promptly at Tenants own expense, contest in good faith the validity or enforcement of any such statute, law, ordinance, regulation, or order referred to in Section 9.01 so long as (i) such deferment shall not subject Landlord to liability, fine, or criminal liability, and (ii) Tenant shall be diligently prosecuting such contest to a final determination by a court, department, or governmental authority or body having jurisdiction thereof.
ARTICLE 10
Insurance
Section 10.01. Required Insurance . During the term, Tenant, at its own cost and expense,
shall:
a. Keep all buildings, improvements, and equipment on, in, or appurtenant to the Demised Premises at the commencement of the Term and thereafter erected thereon or therein, including all alterations, rebuildings, replacements, changes, additions, and improvements, insured against loss or damage by fire and such other risks as may be included in the standard form of extended coverage from time to time available, in an amount deemed appropriate by Landlord; and
b. Provide and keep in force comprehensive general public liability insurance against claims for personal injury, death, or property damage occurring on, in, or about the Demised Premises, or any elevators or escalators therein, and on, in, or about the adjoining streets, property, and passageways, such insurance to afford minimum protection, during the term of this Lease, of not less than One Million Dollars ($1,000,000) in respect of personal injury or death to any one person, and of not less than Two Million Dollars ($2,000,000) in respect of any one occurrence, and of not less than Five Hundred Thousand Dollars ($500,000) for property damage.
Section 10.02. Policy Requirements . All insurance provided by Tenant as required by this Article 10 shall be carried in favor of Landlord and Tenant, as their respective interests may appear. If requested by Landlord, such insurance against fire or other casualty shall include the interest of the holder of any mortgage on the fee and shall provide that loss, if any, shall be payable to such holder under a standard mortgagee clause. All such insurance shall be taken in such responsible companies, licensed to do business in Kansas, as Landlord shall approve in Landlords sole discretion, and the policies therefor shall at all times be held by Landlord or, when appropriate, by the holder of any such mortgage, in which case copies of the policies or certificates of such insurance shall be delivered by Tenant to Landlord. All such policies shall be nonassessable and shall require thirty (30) days notice by registered mail to Landlord of any cancellation thereof or change affecting Landlords coverage thereunder. Tenant will cause an endorsement or other policy provision to be included in all fire and casualty policies waiving all rights of subrogation by Tenants insurance carriers against Landlord for loss or liability arising under such policies.
Section 10.03. Collection of Insurance Proceeds . Tenant and Landlord shall cooperate in connection with the collection of any insurance monies that may be due in the event of loss, and Tenant shall execute and deliver to Landlord such proofs of loss and other instruments which may be required for the purpose of obtaining the recovery of any such insurance monies.
ARTICLE 11
DestructionFire or Other Causes
Section 11.01. Tenant to Restore . If, during the term, the buildings or improvements on, in, or appurtenant to the Demised Premises at the commencement of the term, or thereafter erected thereon or therein, shall be destroyed or damaged, in whole or in part, by fire or other cause, Tenant shall give to Landlord immediate notice thereof, and Tenant (regardless of the size of the damage), at its own cost and expense, shall promptly repair, replace, and rebuild the same, at least to the extent of the value and as nearly as possible to the character of the buildings and improvements and the equipment therein existing immediately prior to such occurrence; and Landlord shall in no event be called upon to repair, replace, or rebuild any such buildings, improvements, or equipment, nor to pay any of the costs or expenses thereof beyond, or in excess of, the insurance proceeds as herein provided.
Section 11.02. Insurance Proceeds . Subject to the rights of any mortgagee, all insurance proceeds received by Landlord on account of such damage or destruction, less the actual cost, fees, and expenses, if any, incurred in connection with adjustment of the loss, shall be paid by Landlord to Tenant from time to time as such proceeds are required by Tenant to pay the costs of such repairs, replacement, and rebuilding. Landlord shall cause any future mortgagee of Landlords interest in the Demised Premises to provide in the mortgage documents that such insurance proceeds shall be applied to restoration of the Demised Premises. The adjustment of the loss shall be subject to Tenants approval, which shall not be unreasonably withheld or delayed.
Section 11.03. Manner of Restoring . Such work, and the performance thereof, shall be subject to, and shall be performed in accordance with, the provisions of Section 6.01 hereof.
Section 11.04. Notification . At least ten (10) days before the commencement of such repairs, replacement, or rebuilding, Tenant shall notify Landlord of its intention to commence the same.
Section 11.05. No Lease Termination . This Lease shall not terminate, or be affected in any manner, by reason of damage to, or total, substantial, or partial destruction of, the buildings, improvements, or equipment on, in, or appurtenant to the Demised Premises at the commencement of the term or thereafter erected thereon or therein, or by reason of the untenantability of the Demised Premises, or any part thereof, for or due to any reason or cause whatsoever; provided, however, that in the event the Demised Premises become wholly or partially untenantable because of damage to, or destruction of, the buildings or improvements located on the Demised Premises, the rental payable hereunder shall abate in proportion and to the extent that the Demised Premises have been rendered untenantable, but in no event shall the period of such rent abatement exceed one hundred eighty (180) days regardless of whether the Demised Premises continue to be untenantable thereafter.
Section 11.06. Last Year . Notwithstanding Section 11.05 above, if such fire or other casualty occurs during the last year of the Initial Term or extended term and (i) the cost of so repairing or restoring the Demised Premises will exceed twice the annual rent then in effect, or (ii) if such fire or casualty results in more than fifty percent (50%) of the floor area of the Demised Premises being untenantable, then Tenant shall have the right to terminate this Lease by written notice to the Landlord. In the event this option to terminate is exercised, all insurance proceeds received or receivable by Tenant as a result of such damage or loss shall belong to, and to the extent possible shall be paid directly to, Landlord.
ARTICLE 12
Condemnation
Section 12.01. Termination of Lease . If Landlords fee simple title to the Demised Premises shall be taken for any public or any quasi-public use under any statute or by right of eminent domain, or by private purchase in lieu thereof (herein the Taking), then this Lease shall terminate automatically as of the date possession is given to the condemning authority. If there is a Taking of any part of the Demised Premises as to render the remainder thereof unusable for the purposes for which the Demised Premises were leased, then Tenant shall have the right to terminate this Lease on thirty (30) days notice to the other given within ninety (90) days before the estimated date of possession being given to the condemning authority. In the event of a partial taking and the remainder of the Demised Premises are usable, rent shall be reduced in proportion to the amount of square feet condemned.
Section 12.02. Compensation . All compensation awarded or paid upon a total or partial Taking of the Demised Premises shall belong to and be the property of Landlord without any participation by Tenant; provided, however, that nothing contained herein shall be construed to preclude Tenant, at its sole cost and expense, from independently prosecuting any claim directly against the condemning authority in such condemnation proceedings for loss of business, depreciation to, damage to, or cost of removal of stock or trade fixtures, furniture and other personal property belonging to Tenant; provided, however, that no such claim shall diminish or otherwise adversely affect Landlords award.
ARTICLE 13
Landlord Not Liable for Injury or Damage
Tenant is, and shall be, in exclusive control and possession of the Demised Premises as provided herein. Landlord shall not in any event whatsoever be liable for any injury or damage to any property or to any person happening on or about the Demised Premises, nor for any injury or damage to any property of Tenant, or of any other person contained therein; and Tenant shall fully indemnify Landlord against any loss, liability, or expense arising therefrom, except for any injury or damage caused by the negligence or willful misconduct of Landlord, its employees, agents, or contractors. The provisions hereof permitting Landlord to enter and inspect the Demised Premises are made for the purpose of enabling Landlord to be informed as to whether Tenant is complying with the agreements, terms, covenants, and conditions hereof.
ARTICLE 14
No Rent Abatement
Except as provided in Section 12.01 and Section 11.05 hereof, no abatement, diminution, or reduction of rent, charges, or other compensation shall be claimed by, or allowed to, Tenant, or any persons claiming under it, under any circumstances, whether for inconvenience, discomfort, interruption of business, or otherwise arising from the making of alterations, changes, additions, improvements, or repairs to any buildings now on or which may hereafter be erected on the Demised Premises, by virtue or because of any present or future governmental laws, ordinances, requirements, orders, directions, rules, or regulations or by virtue or arising from, and during, the restoration of the Demised Premises after the destruction or damage thereof by fire or other cause or the taking or condemnation of a portion only of the Demised Premises or arising from any other cause or reason.
ARTICLE 15
Access to Premises
Tenant shall permit Landlord or its agents to enter the Demised Premises at all reasonable hours for the purpose of inspection, or of making repairs that Tenant may neglect or refuse to make in accordance with the agreements, terms, covenants, and conditions hereof, and also for the purpose of showing the Demised Premises to persons wishing to purchase the same or to make a mortgage loan on the same and, at any time within six (6) months prior to the expiration of the term, to persons wishing to rent the same; and Tenant shall within three (3) months prior to the expiration of the term permit the usual notices of For Rent and For Sale to be placed on the Demised Premises and to remain thereon without hindrance and molestation. Landlord shall use good faith efforts to avoid interfering with Tenants use of the Demised Premises.
ARTICLE 16
Compliance with Laws; Environmental Liabilities
Section 16.01. Definitions . For purposes of this Lease, the following terms shall have the meanings set forth below:
a. Environmental Law shall mean the Comprehensive Environmental Response, Compensation and Liability Act, any so-called Superfund or Superlien law, the Toxic Substances Control Act, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Materials.
b. Hazardous Materials shall mean any hazardous, toxic, or dangerous waste, substance, material, pollutant or contaminant defined as such under any Environmental Law.
c. Hazardous Substance Condition shall mean the existence of Hazardous Materials at levels which would require remediation under any Environmental Law.
Section 16.02. Use of Hazardous Materials . Except for fuels and cleaning supplies in and about the Demises Premises in the ordinary course of Tenants business (the Permitted Materials), Tenant shall keep the Demised Premises free of Hazardous Materials, and neither Tenant nor any occupant of the Demised Premises shall use or be permitted to use, transport, store, dispose of, or in any manner deal with Hazardous Materials on the Demised Premises, except with the prior written consent of Landlord and in strict compliance with all applicable present and future federal, state, and local laws, ordinances, rules, regulations, directions, requirements and administrative and judicial orders and decrees. Landlords consent shall not be unreasonably withheld as long as Tenant demonstrates to Landlords reasonable satisfaction that such Hazardous Materials do not present an unreasonable risk, that it is necessary or useful to Tenants business and will be used, kept, and stored in a manner that complies with all laws regulating any such Hazardous Materials so brought upon or used or kept in or about the Demised Premises.
Section 16.03. Indemnification of Landlord . In the event Tenant creates any Hazardous Substance Condition upon the Demised Premises, Tenant shall, at Tenants sole cost and expense, promptly eliminate said Hazardous Substance Condition, Additionally, Tenant shall indemnify and hold harmless Landlord from any and all claims, causes of actions, damages, costs of remediation, expenses (including reasonable attorneys fees, consulting fees, or expert fees) governmental orders, court orders, or any other obligation or liability imposed upon Landlord or suffered by Landlord, as a result of Tenants creation of any Hazardous Substance Condition.
Section 16.04. Compliance with Law .
a. Landlord warrants that as of the Commencement Date the Demised Premises will be in compliance with all federal, state, and local laws, ordinances, rules, regulations, directions, requirements and administrative and judicial orders and decrees.
b. Tenant shall at its cost strictly comply with, and ensure strict compliance by all occupants of the Demised Premises with, all applicable present and future federal, state, and local laws, ordinances, rules, regulations, directions, requirements and administrative and judicial orders and decrees pertaining to Tenants use of the Demised Premises and with all existing recorded covenants, conditions, and restrictions. These include, without limitation, any required alteration of the Premises because of Tenants specific use, and all applicable federal, state, and local laws, ordinances, rules, regulations, directions, requirements, orders and decrees pertaining to air and water quality, Hazardous Materials, waste disposal, air emissions, underground storage tanks, and other environmental matters, all zoning and other land use matters, and utility availability, and with any direction of any public officer or officers, pursuant to law, which shall impose any duty upon Landlord or Tenant with respect to the use or occupation of Premises, and Tenant shall keep the Demised Premises free and clear of any liens, charges, or impositions imposed pursuant to such laws, ordinances, rules, regulations, directions, requirements or administrative or judicial orders or decrees. Landlord agrees not to execute any covenants, conditions, restrictions, or easements enforceable against the Demised Premises and/or Tenants use thereon without Tenants prior written consent, which consent will not unreasonably be withheld.
c. In the furtherance of, and not in limitation of, Tenants obligations under the foregoing paragraph, throughout the term of this Lease, Tenant shall at its cost do or cause to be done all things necessary to preserve and keep in full force and effect permits required for the conduct of its business and operations from the time of commencement of this lease until its expiration or termination.
d. Tenant shall not use or occupy, nor permit or suffer the Demised Premises, or any part thereof, to be used or occupied, for any unlawful or illegal business, use, or purpose, nor for any business, use, or purpose reasonably deemed by Landlord to be extrahazardous, nor in such manner as to constitute a nuisance of any kind, nor for any purpose or in any way in violation of any present or future governmental laws, ordinances, requirements, orders, directions, rules, or regulations. Tenant shall promptly upon the discovery of any such unlawful, illegal, or extrahazardous use take all necessary steps, legal and equitable, to compel the discontinuance of such use and to oust and remove any occupants or other persons guilty of such unlawful, illegal, or extrahazardous use.
Section 16.05. Inspection . Landlord and its agents shall have the right, but not the duty, to inspect the Demised Premises at any reasonable time upon reasonable advance notice to Tenant to determine whether Tenant is complying with the terms of this Article. If Tenant is not in compliance with this Article, Landlord shall have the right to immediately enter upon the Demised Premises to remedy any contamination caused by Tenants failure to comply notwithstanding any other provision of this Lease. Landlord shall use good faith efforts to minimize interference with Tenants business but shall not be liable for any interference caused thereby.
ARTICLE 17
Indemnity
Section 17.01. Indemnity by Tenant . Subject to any contrary provision of Section 17.02, Tenant shall indemnify and save harmless Landlord against and from all costs, fees, interests, charges, reimbursements, obligations, expenses, liabilities, losses, damages, injunctions, suits, actions, fines, penalties, claims, and demands of every kind or nature, including reasonable counsel fees, by or on behalf of any person, party, or governmental authority whatsoever arising out of (i) any failure by Tenant to perform any of the agreements, terms, covenants, or conditions of this Lease on Tenants part to be performed; (ii) any accident, injury, or damage which shall happen in or about the Demised Premises, or appurtenances, or on or under the streets, sidewalks, curbs, or vaults in front of or adjacent thereto, however occurring, and any matter or thing growing out of the condition, occupation, maintenance, alteration, repair, use, or operation of the Demised Premises, or any part thereof, and/or of the streets, sidewalks, curbs, or vaults adjacent thereto during the term; (iii) failure to comply with any laws, ordinances, requirements, orders, directions, rules, or regulations of any federal, state, county, or city governmental authority; (iv) any contest permitted by the provisions of Sections 4.03 and 9.02 hereof; (v) any mechanics lien or financing statement filed against the Demised Premises; any equipment therein, or any building or improvement thereon; or (vi) any tax attributable to the execution, delivery, or recording of this Lease or any modification thereof; and any liability arising under Article 16 hereof resulting from Tenants activities during the term of this Lease.
Section 17.02. Indemnity by Landlord . Landlord shall indemnify and save harmless Tenant against and from all costs, fees, interests, charges, reimbursements, obligations, expenses, liabilities, losses, damages, injunctions, suits, actions, fines, penalties, claims, and demands of every kind or nature, including reasonable counsel fees, by or on behalf of any person, party, or governmental authority whatsoever arising out of the breach of any of Landlords representations and warranties or obligations hereunder.
Section 17.03. Survival . The indemnity set forth in this Article 17 of this Lease, and in Section 16.03 of this Lease, shall survive the termination, suspension, or expiration of the Lease. All indemnification and contribution rights conferred by equity, law, statute or regulation, including those relating to environmental matters shall survive the termination, expiration or surrender of this Lease and any assignment or conveyance provided under this Lease.
ARTICLE 18
Default
Section 18.01. Events of Default . Each of the following events shall be a default hereunder by Tenant and a breach of this Lease:
a. If Tenant shall file a petition in bankruptcy, or insolvency, or for reorganization, or arrangement under the bankruptcy laws of the United States, or any insolvency act of any state, or shall voluntarily take advantage of any such law or act by answer or otherwise, or shall be dissolved, or shall make an assignment for the benefit of creditors;
b. If involuntary proceedings under any such bankruptcy law, or insolvency act, or for the dissolution of a corporation shall be instituted against Tenant, or if a receiver or trustee shall be appointed of all or substantially all of the property of Tenant, and such proceedings shall not be dismissed, or such receivership or trusteeship vacated within sixty (60) days after such institution or appointment;
c. If Tenant shall fail to pay Landlord any rent or additional rent by the fifth business day of each month and shall not make such payment within ten (10) business days after written notice thereof by Landlord to Tenant;
d. If Tenant shall breach or fail to perform any of the agreements, terms, covenants, or conditions hereof on Tenants part to be performed and such nonperformance shall continue for a period within which performance is required to be made by specific provision of this Lease, or if no such period is so provided, for a period of thirty (30) days after notice thereof by Landlord to Tenant (provided, however, that except for those matters addressed in 18 . 01. c, Tenant shall not be in default hereunder if it shall, within the period of cure otherwise set forth herein, commence and at all times thereafter diligently pursue all practicable efforts to cure the default if, but only if, Landlord shall not actually suffer any damage by reason thereof);
e. If Tenant shall vacate or abandon the Demised Premises; or
f. If this Lease or the estate of Tenant hereunder shall be transferred to, or shall pass to, or devolve upon, any other person or party, except in a manner permitted under ARTICLE 5 hereof.
Section 18.02. Remedies Upon Default . If any such event of default shall occur and be uncured, Landlord shall have the right to:
a. Cancel and terminate this Lease, as well as all of the right, title, and interest of Tenant hereunder, by giving to Tenant written notice of such cancellation and termination, and upon such notice, this Lease and the term hereof, as well as all of the right, title, and interest of Tenant hereunder, shall expire in the same manner and with the same force and effect, except as to Tenants liability, as if the expiration of the time fixed in such notice of cancellation and termination were the end of the term herein originally demised, or
b. Landlord may reenter and repossess the Demised Premises, using such force for that purpose as may be necessary and without being liable to prosecution therefor, other than such loss or damage which may be the result of Landlords negligence or willful misconduct. If Landlord shall so reenter, Landlord may repair and alter the Demised Premises in such manner as to Landlord may deem necessary or advisable.
Section 18.03. Continued Obligation to Pay Rent . Notwithstanding Landlords termination of the Lease or reentry of the Demised Premises without termination of the Lease, Tenant shall nevertheless remain and continue liable to Landlord in a sum equal to all net rent, additional rent, and other charges payable hereunder for the remainder of the term herein originally demised. Landlord shall use reasonable efforts to let or relet the Demised Premises, or any parts thereof, for the whole or any part of the remainder of the term herein originally demised, or for a longer period, in Landlords name or as the agent of Tenant, and out of any rent collected or received from subtenants or as a result of such letting or reletting Landlord shall first pay to itself the reasonable cost and expense of retaking, repossessing, repairing, and/or altering the Demised Premises, and the reasonable cost and expense of removing all persons and property therefrom; second, pay to itself the reasonable cost and expense sustained in securing any new tenant; and, if Landlord shall maintain and operate the Demised Premises, the reasonable cost and expense of operating and maintaining the Demised Premises; and, third, pay to itself any balance remaining on account of the liability of Tenant to Landlord for the sum equal to all net rent, additional rent, and other charges payable hereunder and unpaid by Tenant for the remainder of the term herein originally demised. No reentry by Landlord, whether had or taken under summary proceedings or otherwise, shall absolve or discharge Tenant from liability hereunder.
Section 18.04. Payment of Rent After Termination . Should any rent collected by Landlord as provided in Section 18.03 be insufficient to fully pay to Landlord a sum equal to all net rent, additional rent reserved herein, and other charges payable hereunder for the remainder of the term herein originally demised, the balance or deficiency shall be paid by Tenant on the rent days herein specified, that is, upon each of such rent days, Tenant shall pay to Landlord the amount of the deficiency then existing; and Tenant shall be and remain liable for any such deficiency, and the right of Landlord to recover from Tenant the amount thereof, or a sum equal to all such net rent, additional rent, and other charges payable hereunder, if there shall be no reletting, shall survive the issuance of any dispossessory warrant or other cancellation or termination hereof, and Landlord shall be entitled to retain any overage; and Tenant hereby expressly waives any defense that might be predicated upon the issuance of such dispossessory warrant or other cancellation or termination hereof.
Section 18.05. When Suits May Be Commenced . Upon an uncured event of default, suit or suits for the recovery of the deficiency or damages referred to in Section 18.04 or for any installment or installments, or net rent and additional rent hereunder, or for a sum equal to any such installment or installments, may be brought by Landlord, from time to time at Landlords election, and nothing in this Lease contained shall be deemed to require Landlord to await the date whereon this Lease or the term hereof would have expired by limitation had there been no such default by Tenant or no such cancellation or termination.
Section 18.06. Right to Equitable Relief . In the event of a breach or a threatened breach by Tenant of any of the agreements, terms, covenants, or conditions hereof, Landlord shall have the right of injunction to restrain the same and the right to invoke any remedy allowed by law or in equity, as if specific remedies, indemnity, or reimbursement were not herein provided.
Section 18.07. Remedies Cumulative . The rights and remedies given to Landlord in this Lease are distinct, separate, and cumulative, and no one. of them, whether or not exercised by Landlord, shall be deemed to be in exclusion of any of the others herein or by law or in equity provided.
Section 18.08. Effect of Receipt of Rent After Termination . No receipt of monies by Landlord from Tenant, after the cancellation or termination thereof in any lawful manner, shall reinstate, continue, or extend the Term, or affect any notice theretofore given to Tenant, or operate as a waiver of the right of Landlord to enforce the payment of rent and additional rent then due or thereafter falling due, or operate as a waiver of the right of Landlord to recover possession of the Demised Premises by proper suit, action, proceeding, or other remedy; it being agreed that, after the service of notice to cancel or terminate as herein specified, after the commencement of any suit, action, proceeding, or other remedy, or after a final order or judgment for possession of the Demised Premises, Landlord may demand, receive, and collect any monies due, or thereafter falling due, without in any manner affecting such notice, suit, action, proceedings, order, or judgment; and any and all such monies so collected shall be deemed to be payments on account of the use and occupation of the Demised Premises, or at the election of Landlord, on account of Tenants liability hereunder.
Section 18.09. Nonwaiver . The failure of Landlord to insist upon a strict performance of any of the agreements, terms, covenants, and conditions hereof shall not be deemed a waiver of any rights or remedies that Landlord may have and shall not be deemed a waiver of any subsequent breach or default in any of such agreements, terms, covenants, and conditions.
Section 18.10. Landlords Right to Cure . Upon any uncured default, Landlord at its option may, but shall not be obligated to, make any payment required of Tenant herein, or comply with any agreement, term, covenant, or condition required hereby to be performed by Tenant and the amount so paid, together with interest thereon at the rate of ten percent (10%) per annum from the date of such payment by Landlord shall be deemed to be additional rent hereunder payable by Tenant and collectible as such by Landlord with the next succeeding monthly installment of rent. Landlord shall have the right to enter the Demised Premises for the purpose of correcting or remedying any such default and to remain therein until the same shall have been corrected or remedied, but neither any such expenditure, nor any such performance, by Landlord shall be deemed to waive or release Tenants default or the right of Landlord to take such action as may be otherwise permissible hereunder in the case of such default.
ARTICLE 19
Landlord Default
Section 19.01. Notice of Default . Upon the occurrence of an event of Landlord default in the performance of its covenants, duties and obligations hereunder, Tenant shall give Landlord written notice of default. Landlord shall have thirty (30) days in which to cure such default, provided however that such 30 day period shall be extended so long as Landlord diligently pursues all practicable efforts to cure the default and Tenant shall not actually suffer any damage by reason thereof.
Section 19.02. Tenants Remedies . In the event Landlord fails or is unable to cure an event of Landlord default as provided above, Tenant may, at its option, but shall not be obligated to, proceed as follows:
a. Make any payment required of Landlord herein, or comply with any agreement, term, covenant or condition required hereby to be performed by Landlord, and the amount so paid, together with interest thereon at the rate often percent (10%) per annum from the date of payment by Tenant, shall be immediately due and owing by Landlord.
b. Obtain injunctive relief from a court of competent jurisdiction.
c. Setoff from Tenants rental obligation the amount paid by Tenant on behalf of Landlord-as provided above.
d. Commence suit in a court of competent jurisdiction for the recovery of sums paid by Tenant on behalf of Landlord as provided above and any other damages incurred by Tenant by reason of Landlords default.
e. Terminate this Lease, except as to any then-accrued liability of Landlord.
f. Avail itself of all other rights and remedies allowed by law or in equity.
Section 19.03. Tenants Remedies Cumulative . The rights and remedies given to Tenant in this Lease are distinct, separate and cumulative, and no one of them, whether or not exercised by Tenant, shall be deemed to be in exclusion of any of the others herein or by law or in equity provided.
Section 19.04. Nonwaiver . The failure of Tenant to insist upon a strict performance of any of the agreements, terms, covenants and conditions imposed upon Landlord shall not be deemed a waiver of any rights or remedies that Tenant may have and shall not be deemed a waiver of any subsequent breach or default in any of such agreements, terms, covenants and conditions.
ARTICLE 20
End of Term
Section 20.01. Surrender of Premises . Tenant shall, on the last day of the term, or upon the sooner termination of the term, peaceably and quietly surrender and deliver the Demised Premises to Landlord free of subtenancies (unless Landlord shall consent to the continuance thereof), broom-clean, including all buildings, replacements, changes, additions, and improvements constructed, erected, added, or placed by Tenant thereon, with all equipment in or appurtenant thereto, except all movable (without doing substantial damage to the Premises) trade fixtures installed by Tenant or any subtenant, in good condition and repair, reasonable wear and tear excepted.
Section 20.02. Personal Property of Tenant and Subtenant . Any trade fixtures or personal property not used in connection with the operation of the Demised Premises and belonging to Tenant or any subtenant, if not removed at such termination and if Landlord shall so elect, shall be deemed abandoned and become the property of Landlord without any payment or offset therefor. If Landlord shall not so elect, Landlord may remove such fixtures or property from the Demised Premises and store them at the risk and expense of Tenant or such subtenant. Tenant shall repair and restore, and save Landlord harmless from, all damage to the Demised Premises caused by the removal therefrom, whether by Tenant or a subtenant or by Landlord, of all such trade fixtures and personal property.
Section 20.03. Deposits of Prepayment of Subtenant . Upon surrendering the Demised Premises to Landlord as provided in Section 19.01 hereof, Tenant will pay to Landlord all deposits or other security and all prepaid rents received from subtenants and other occupants whose tenancies may continue beyond the last day of the term of this Lease or the sooner termination thereof and will deliver to Landlord all original subleases and modifications thereof, lease files, plans, records, registers, and all other papers and documents which may be required for the proper operation and management of the Demised Premises and are then in Tenants possession. Nothing herein shall require Landlord to recognize any such existing sublease as continuing in effect after such last day or sooner termination.
Section 20.04. Holding Over . In the event Tenant remains in possession of the Demised Premises, or any part thereof, after the expiration of this Lease and Landlord elects to accept rental payments, Tenant shall be and shall be deemed to be a tenant from month-to-month.
Section 20.05. Survival . The provisions of this Article 20 shall survive the expiration or sooner termination of this Lease.
ARTICLE 21
Quiet Enjoyment
Landlord covenants that, so long as Tenant shall faithfully perform the agreements, terms, covenants, and conditions hereof, Tenant shall and may peaceably and quietly have, hold, and enjoy the Demised Premises for the term hereby granted without molestation or disturbance by or from Landlord and free of any encumbrance created or suffered by Landlord, except those to which this Lease is made subject and subordinate as herein provided.
ARTICLE 22
Estoppel Certificate
a. Tenant shall, without charge, at any time and from time to time hereafter, within ten (10) days after request by Landlord, certify by written instrument, duly executed and acknowledged, to any mortgagee or purchaser, or proposed mortgagee or proposed purchaser, or any other person, firm, or corporation specified by Landlord, as to the validity and force and effect of this Lease, in accordance with its tenor, as then constituted, as to the existence of any default on the part of any party thereunder, as to the existence of any offsets, counterclaims or defenses thereto on the part of Tenant, and as to any other matters which may be reasonably requested by Landlord.
b. Landlord shall, without charge, at anytime and from time to time hereafter, within ten (10) days after request by Tenant, certify by written instrument, duly executed and acknowledged, to any permitted assignee of Tenants interest in this Lease, or any other person, firm, or corporation specified by Tenant, as to the validity and force and effect of this Lease, in accordance with its tenor, as then constituted, as to the existence of any default on the part of any party thereunder, as to the existence of any claims on the part of Landlord, and as to any other matters which may be reasonably requested by Tenant.
ARTICLE 23
Notices
Whenever it is provided herein that notice, demand, request, or other communication shall or may be given to or served upon either of the parties by the other, and whenever either of the parties shall desire to give or serve upon the other any notice, demand, request, or other communication with respect hereto or the Demised Premises, each such notice, demand, request, or other communication shall be in writing and, any law or statute to the contrary notwithstanding, shall be effective for any purpose if given or served as follows:
a. If by Landlord, by personal delivery, reputable courier service (charges prepaid), telecopier, or by mailing the same to Tenant by certified or registered mail, postage prepaid, return receipt requested, addressed to Tenant at 8415 E, 32nd Street North, Wichita, Kansas 67226, ATTENTION: President, or at such other address as Tenant may from time to time designate by notice given to Landlord by certified or registered mail; or
b. If by Tenant, by personal delivery, reputable courier service (charges prepaid), telecopier, or by mailing the same to Landlord by certified or registered mail, postage prepaid, return receipt requested, addressed to Landlord at 9435 E. Central, Building 200, Wichita, Kansas, ATTENTION: James E. Fisher, III, or at such other address as Landlord may from time to time designate by notice given to Tenant by certified or registered mail.
Every notice, demand, request, or other communication hereunder shall be deemed to have been given or served at the time that the same shall be personally delivered, sent by telecopier, or deposited in -the United States mail, postage prepaid, in the manner aforesaid. Nothing herein contained however shall be construed to preclude personal service of any notice, demand, request, or other communication in the same manner that personal service of a summons or other legal process may be made.
ARTICLE 24
Miscellaneous
Section 24.01. Entire Agreement . This Lease contains the entire agreement between the parties and cannot be changed or terminated orally, but only by an instrument in writing executed by the parties.
Section 24.02. Applicable Law . This agreement shall be interpreted in accordance with the internal laws of the State of Kansas without giving effect to its conflict of laws principles.
Section 24.03. Captions . The captions of the various articles of this Lease are inserted only as a matter of convenience and for reference and in no way define, limit, or describe the scope or intent of this Lease, nor in any way affect this Lease.
Section 24.04. Binding Effect . The agreements, terms, covenants, and conditions herein shall bind and inure to the benefit of Landlord and Tenant and their respective heirs, legal representatives, successors, and, except as otherwise provided herein, their assigns.
Section 24.05. Force Maleure . Tenants performance under this Lease (other than the payment of rent or additions to rent) is subject to delay for acts of God, weather, strikes, labor troubles, or governmental preemption in connection with a national emergency, the conditions of supply and demand which have been or are affected by war, hostilities, or other similar emergency.
Section 24.06. Memorandum of Lease . At the request of either party, Landlord and Tenant shall promptly execute, acknowledge, and deliver a memorandum of lease in recordable form giving notice of the existence and term of this Lease. In the event such a memorandum of lease is recorded, Tenant agrees to promptly execute, acknowledge, and deliver to Landlord, upon the termination of this Lease for any reason, an affidavit, release, or disclaimer in recordable form evidencing the termination of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease the date first above written.
The Amigos Rental, LLC | ||
By |
/s/ James E. Fisher, III |
|
Landlord | ||
Dinning-Beard, Inc. | ||
By |
/s/ Barry West |
|
Tenant |
GUARANTY
The undersigned, in order to induce Landlord to enter into this Lease, hereby irrevocably and unconditionally personally guarantees the performance by Tenant of each and every one of its obligations under the foregoing Lease.
/s/ Barry West |
||
Barry West |
EXHIBIT B
GRANT OF OPTION TO PURCHASE
8
GRANT OF OPTION TO PURCHASE REAL ESTATE
This option (Option) is made , 2010 from The Amigos Rental, LLC (Landlord) to Tiger Financial Management LLC, a Kansas Limited Liability Company (Subtenant).
For valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Landlord, Landlord grants to Subtenant the following rights:
1. The Property . This Option is with respect to the following-described real estate (the Property):
The North 250 feet of Lot 1, Block 1, Hoskinson 2 nd Addition, Sedgwick County, Kansas (commonly known as 3531 N. Ridge Road, Wichita, Kansas).
2. Recital . Landlord and Dinning-Beard, Inc. (Tenant) are the parties to an Amended Lease entered into in Wichita, Kansas as of October 2, 2000. Tenant, as Sublessor, and Subtenant have entered into a Sublease dated contemporaneously with this Option, which provides that Sublessor shall deliver this Option to Subtenant. This Option is to Landlords economic advantage, and Landlord wishes to accommodate Tenant by granting this Option.
3. Effective Date of Option Exercise . Subtenant may exercise this Option as of either one of two dates, January 1, 2013 or January 1, 2016.
4. Option to Purchase . Subtenant shall have the option to buy the Property in the following manner and upon the following terms:
(a) | 120 days prior to the option exercise date, Subtenant will give Landlord written notice of its election to buy, stating the offered purchase price in the notice. Landlord shall reply within 30 days, in writing, with its acceptance or rejection of the price. If rejected, Landlord shall state a price it will accept. |
(b) | If Subtenant and Landlord have not agreed upon a price in writing within 20 days after Landlords reply was originally due, then the price shall be determined by an appraiser selected jointly by Landlord and Subtenant. If Landlord and Subtenant cannot agree upon an appraiser within 40 days after Landlords reply was originally due, then Landlord and Subtenant shall each select a state-certified general appraiser and the two appraisers shall select a third state-certified general appraiser. The three appraisers shall then appraise the Property and the average of the three appraisals shall be the purchase price. If one appraiser is used, the cost shall be shared equally between Landlord and Subtenant. If three appraisers are used, Subtenant shall pay the cost of the appraiser it selects, Landlord shall pay the cost of the appraiser it selects, and the cost of the third appraiser shall be shared equally between Landlord and Subtenant. |
(c) | Buyer, at its option, and at its own expense, may procure a title insurance commitment to insure the Property, in which case Tenant shall furnish a complete copy of the commitment to Landlord, together with copies of all documents supporting any exceptions to the commitment. If Subtenant objects to any such exceptions and the exceptions are caused by Landlord, Landlord shall cure such exceptions at its expense and shall be allowed a reasonable time within which to effectuate such cure. Landlord shall have no obligation to cure exceptions not caused by it. |
(d) | The purchase shall close within 45 days after the price has been determined. The purchase price shall be paid in full at closing in immediately-available funds. If Subtenant fails to close within that time, then Subtenants option to purchase is forever terminated. |
(e) | Closing shall occur at the office of the title company issuing the commitment ordered by Subtenant. If Subtenant has not ordered a title insurance commitment, Landlord shall designate a title company to conduct the closing, and the closing shall occur at that title companys office. The date and time of closing shall be set by the title company conducting the closing. |
(f) | At the closing, Landlord shall deliver its special warranty deed, subject to easements and restrictions of record and any other items shown as exceptions to the title insurance commitment to which Tenant has not objected. |
(g) | At the closing, the Amended Lease and the Sublease shall be terminated. |
(h) | For the year in which closing occurs, taxes and special assessments shall be prorated to the date of closing; the proportion of such charges attributable to the time prior to the closing shall be paid by Landlord. |
(i) | The closing fee and document preparation fees charged by the title company shall be paid one-half each by Landlord and Subtenant. Subtenant shall pay the costs of recording the deed and any other closing documents, and all of its financing-related costs. Each party shall pay its own fees and expenses for legal counsel incurred in connection with the purchase. |
(j) | Each party shall cooperate with the other in preparing and delivering documents related to the closing, including tax notifications, sales validation questionnaire, customary affidavits and a simple real estate purchase contract if required by the title company. |
(k) | Subtenant agrees to participate in a Tax-free Exchange (IRS Section 1031) arrangement if so desired by the Landlord. |
5. | Time . Time is of the essence of this Option. |
THE AMIGOS RENTAL, LLC (Landlord) | ||
By: | /s/ Mona Stein | |
Name: | Mona Stein | |
Title: | Managing Member |
Accepted
Subtenant hereby accepts the foregoing Grant of Option.
Tiger Financial Management, LLC | ||
By: | /s/ Chad Faulkner | |
Name: | Chad Faulkner | |
Title: | President |
2
Exhibit 10.20
9002
ups
6/22/15
June 15, 2015
SENT VIA UPS
Amigos Rental LLC
Attn: Mona Stein
12021 E 13 th ST N, Building 100
Wichita, Ks 67206
Re: | Exercise of Option to Renew |
3531 N Ridge Rd, 2 nd Floor
Wichita, Ks 67205
Dear Landlord:
Please accept this letter as notice that we wish to extend the term of our lease pursuant to the Lease Agreement, Section 14, dated on November 16, 2010 by and between Dinning Beard, Inc and Tiger Financial Management, LLC.
Very truly yours,
Suzie McDonald
Lease Administrator
(316) 494-6512
suziemcdonald@speedyinc.com
Exhibit 10.21
COMMERCIAL LEASE AGREEMENT
This Commercial Lease Agreement (Lease) is entered into this January 1, 2008 between Tiger Financial Management, LLC. (Tenant) and CDM Development, LLC., 3527 North Ridge Road, Wichita, Kansas 67205 (Landlord).
1. Premises: Landlord rents to Tenant, and Tenant rents from Landlord space (see Exhibit A) in the building (Building) and property at 3611 N Ridge Rd, Wichita, KS 67205 (the Premises), of which Landlord is the owner, subject to the terms and conditions in this Agreement. The Premises comprises approximately 8,438 square feet (78% of the Building). In addition to the Premises mentioned above, Tenant shall also have access to the Buildings common restroom and break rooms, as indicated in Exhibit A.
2. Term: The term of this Lease shall be for five (5) years (Term) beginning January 1, 2008 (Lease Commencement Date) unless sooner terminated as herein set forth or unless extended in accordance with the provisions hereof. Possession shall be given at the Lease Commencement Date. For purposes of this Lease, the first Lease Year shall be deemed to begin on the Lease Commencement Date and to end twelve (12) months thereafter; provided, if said first twelve (12) month period does not end on the last day of a calendar month, the first Lease Year shall be extended to the end of said month, and each succeeding twelve (12) month period thereafter shall be deemed a Lease Year. Any partial month shall be pro-rated on a thirty (30) day calendar month.
3. Options: Tenant shall have two (2) five (5) year options to extend the term of the Lease. Tenant shall exercise its right to by written notice to Landlord delivered on or before 120 days prior to the expiration of the Term or First Option Term. In the event Landlord does not received Tenants notice as stated above, Tenant shall not lose its option to renew unless and until the Tenant has had at least ten (10) days after receipt of written notice from Landlord in which to exercise its option to renew. Options shall be personal to Tenant.
4. Rent: Payment of Base Rent and Additional Rent shall begin on January 1, 2008 (Rent Commencement Date). Tenant will pay to Landlord rent payable in equal installments of $11,250.67 for Base Rent on the first day of each month, the first such payment on the Rent Commencement Date and subsequent monthly payments on the first (1st) day of each succeeding month during the Term, except when that day falls on a weekend or a legal holiday, in which case rent is due on the next business day. The Base Rent shall be increased, but in no event decreased, on each annual anniversary of the Lease Commencement Date (each such anniversary, an Adjustment Date) by a fixed amount of three (3%) per annum, compounded annually.
5. Common Area Maintenance Expenses, Taxes and other Additional Rent: Tenant shall, during the term of this Lease, keep in good order, condition, and repair, the Premises and every part thereof, structural (pertaining to the premises and within the premises) or nonstructural, and all adjacent sidewalks, landscaping, driveways, parking lots, fences, and signs located in the areas which are adjacent to and included with the Premises. Landlord shall incur no expense nor have any obligation of any kind whatsoever in connection with maintenance of the Premises.
Tenant shall pay all real property taxes applicable to the Premises during the term of this Lease. All such payment shall be made at least ten (10) days prior to the delinquency of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid. If any such taxes paid by Tenant shall cover any period of the time prior to or after the expiration of the term hereof, Tenants share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required.
6. Late Charges: Any installment of Rent or any part thereof which is not made when due shall bear interest at the rate of Wall Street Journal Prime Rate plus three percent (3%) per annum from the date when the same is due hereunder until the same shall be paid (Late Charge).
7 . Utilities: All applications and connections for necessary utility services on the demised premises shall be made in the name of Tenant only, and Tenant shall be solely liable for utility charges as they become due, including those for sewer, water, gas, electricity, and telephone services.
8. Insurance: The Tenant shall maintain at all times during the term of this Lease policies of insurance as follows:
Tenant, as a common area expense, shall maintain:
(a) Insurance against loss or damage to the Building and all other improvements by fire and such other hazards as may be covered by the form of all-risk coverage then customarily in use, in such amount as Landlord may determine to be sufficient to cover one hundred percent (100%) of the full replacement value from time to time of the Building and all other improvements, the proceeds of which shall be payable to Landlord.
Tenant, at its sole cost and expense, shall maintain:
(b) Comprehensive general public liability insurance against claims for bodily injury, death, and property damage occurring in or about the Premises or Adjacent Facilities, to afford protection in such limits as shall be reasonably requested by Landlord from time to time, but in any event not less than Two Million Dollars ($2,000,000) as a single limit policy in respect to any one occurrence causing injury or death, and property damage.
(c) Such other insurance, including personal property and business interruption insurance, in such amounts as may from time to time be reasonably required by Landlord against other insurable hazards that are at the time commonly insured against in the case of premises similarly situated.
All policies of insurance shall be written by companies reasonably satisfactory to Landlord and any mortgagee of Landlord and shall name as insured Landlord and such other persons or entities as Landlord may designate, as their interests may appear, and shall provide that losses shall be paid to such insureds as their interests may appear. At the request of Landlord, a mortgagee clause shall be included in such policies covering Landlords mortgagee. Certificates evidencing renewals of each policy of insurance shall be delivered to Landlord at least twenty (20) days prior to the expiration dates of the respective policies. Tenant shall perform and satisfy all requirements of the companies writing any insurance policies referred to in this Lease so that at all times companies of good standing satisfactory to Landlord shall be willing to write such insurance.
Whenever (a) any loss, cost, damage or expense resulting from fire or other casualty or occurrence is incurred by either of the parties to this Lease, or anyone claiming by, through or under it, in connection with the Premises, and (b) such party is then covered in whole or in part by insurance with respect to such loss, cost, damage or expense, then the party so insured hereby releases the other party from any liability it may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance and waives any right of subrogation which might otherwise exist in or accrue to any person on account thereof, provided that such release of liability and waiver of the right of subrogation shall not be operative in any case when the effect thereof is to invalidate such insurance coverage or increase the cost thereof (provided that in the case of increased cost the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereupon keeping such release and waiver in full force and effect).
In case any action or proceeding shall be commenced against Landlord growing out of any loss, cost, damage or expense under this Section, Landlord may give written notice of the same to Tenant and thereafter Tenant shall assume and discharge all obligation to defend the same and save and keep Landlord harmless from all costs, expenses (including, but not limited to, Landlords attorneys fees), liabilities, judgments and executions in any manner growing out of, pertaining to or connected therewith. In case Tenant shall at any time fail, neglect or refuse to procure or renew any insurance hereinabove provided, then Landlord shall have the right, but not the obligation, to procure or renew such insurance and any amounts paid therefore by Landlord shall be so much Additional Rent due at the next rent day after any such payment, with interest thereon at the rate of Wall Street Journal Prime Rate plus three percent (3%) per annum from the date of payment thereof.
9. Signage: Tenant may install, at its sole cost and expense, maximum allowable signage (permitted by law) on the storefront of the Premises using its standard corporate or concept colors and logo. Tenant will be included on monument sign, if any. If monument signage is unavailable, and monument signage is allowed under all applicable local ordinances, Tenant, at Tenants sole cost and expense, may install monument signage for its sole and exclusive use. Design and location of the monument sign is subject to Landlords approval. All Tenant Signage shall be subject to all applicable local ordinances. Subject to local governmental approvals, Tenant may display professionally designed and installed COMING SOON, NOW HIRING and GRAND OPENING exterior banners and/or window signage at the Premises after the Lease is signed and prior to Tenant opening for business.
10. Parking: Landlord shall provide all unassigned common area parking for Tenants employees and customers as required by applicable code or law.
- 2 -
11. Default: Each of the following shall be an Event of Default:
1. If Tenant shall fail to pay rent when due, the Landlord, at his option, may terminate all rights of the Tenant herein after not less than five (5) days written notice of such default given unless Tenant rectifies or cures the default within the said time.
2. If Tenant shall fail to pay any other payment of money, costs or expenses to be paid by Tenant under this Lease, when due, and the continuance of such failure for a period of ten (10) days after written notice from Landlord specifying such failure;
3. In the event of a default made by Tenant in any of the other covenants or conditions to be kept, observed and performed by Tenant, Tenant shall have thirty (30) days after receipt of written notice thereof to cure such default.
4. | The filing or execution or occurrence of any of the following will be considered a Default on the part of Tenant: |
(a) A petition in bankruptcy by or against Tenant;
(b) A petition against or answer by Tenant seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or other relief of the same or different kind under any provision of any bankruptcy laws;
(c) Adjudication of Tenant as a bankrupt or insolvent;
(d) An assignment by Tenant for the benefit of creditors;
(e) A petition against or proceeding by Tenant for, or the appointment of, a trustee, receiver, guardian, conservator or liquidator of Tenant with respect to the Premises or with respect to all or substantially all of Tenants property; or
(f) A petition against or proceeding by or against Tenant for its dissolution or liquidation or the taking of possession of Tenants property by any governmental authority in connection with dissolution or liquidation. \Where in the case of a petition filed against Tenant under (a), (b), (d) or (e) above, such petition is not dismissed within ninety (90) days after the filing thereof;
(g) Entry of an order, judgment or decree by any court of competent jurisdiction granting any prayer or demand contained in any petition under (a), (b), (e) or (f) above, which order, judgment or decree is not reversed or vacated within ninety (90) days after it is entered;
(h) Vacation or abandonment of the Premises; or (i) Taking by any person of Tenants interest in this Lease upon execution, attachment or other process of law or equity.
In the event that the Tenant shall fail to cure any default within the time allowed under this section, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages.
In the event of Default on the part of Tenant, Landlord, at its option, in addition to all other rights and remedies provided in this Lease, at law or in equity: (a) terminate this Lease and Tenants right of possession of the Premises, and recover all damages to which Landlord is entitled at law, specifically including, without limitation, the excess of the aggregate Fixed Rent and Additional Rent that would have accrued for the balance of the Term, together with all of Landlords expenses of re-leasing (including repairs, alterations, improvements, additions, decorations, legal fees and brokerage commissions) or (b) terminate Tenants right of possession of the Premises without terminating this Lease. In all events, Landlord may re-lease the Premises, or any part thereof for the account of Tenant, for such rent and term and upon such terms and conditions as are acceptable to Landlord. If Landlord shall have elected to pursue its right to terminate Tenants right of possession of the Premises without terminating the Lease, then Landlord shall have the further right and remedy to subsequently rescind such election and terminate the Lease. For purposes of any such re-leasing Landlord is authorized to decorate, repair, alter and improve the Premises to the extent deemed necessary by Landlord, in its reasonable discretion, all at Tenants expense. If Landlord fails to release the Premises, or if the Premises are released and a sufficient sum is not realized therefrom after payment of all Landlords expenses of re-leasing (including without limitation repairs, alterations, improvements, additions, decorations, legal fees and brokerage commissions) to satisfy the payment, when due, of Fixed Rent and Additional Rent reserved under this Lease for any monthly period, then Tenant shall pay Landlord a sum equal to the amount of Fixed Rent and Additional Rent due under this Lease for each such monthly period, or if the Premises have been re-leased, Tenant shall pay any such deficiency on the rent day applicable to such month. Tenant agrees that Landlord may file suit to recover any sums due to Landlord hereunder at any time or from time to time and that such suit or recovery of any amount due Landlord hereunder shall not be any defense to any subsequent action brought for any amount not theretofore reduced to
- 3 -
judgment in favor of Landlord. In the event Landlord elects to terminate Tenants right of possession only, without terminating this Lease, Landlord may, at Landlords option, enter into the Premises, remove Tenants property, and other evidences of tenancy, and take and hold possession thereof; provided, however, that such entry and possession shall not terminate this Lease or release Tenant, in whole or in part, from Tenants obligation to pay the Fixed Rent and Additional Rent reserved hereunder for the full Term or from any other obligation of Tenant under this Lease. Any and all property which may be removed from the Premises by the Landlord pursuant to the authority of the Lease or of law, to which the Tenant is or may be entitled, may be handled, removed or stored by the Landlord at the risk, cost and expense of the Tenant, and the Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. Tenant shall pay to the Landlord, upon demand, any and all reasonable expenses incurred in such removal and all storage charges against such property so long as the same shall be in the Landlords possession or under the Landlords control. In the event Landlord exercises any remedy provided under this Section, all deposits theretofore made by Tenant with utility companies or under this Lease, all unearned insurance premiums and all rights of Tenant under all insurance policies required under this Lease, any claims for refund of any Imposition, any pending insurance claims or condemnation awards, and all fuel and supplies on the Premises shall be deemed to be and are hereby assigned to and transferred to Landlord, to be applied in payment of Tenants liability under this Lease.
No waiver of any default of Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition.
12. Condemnation: If any legally, constituted authority condemns or takes by eminent domain the Premises or such part thereof which shall make the Premises unsuitable for leasing for Tenants business purposes, this Lease shall cease when the public authority takes possession, and Landlord and Tenant shall account for Rent as of that date. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that in the event Tenant has paid for all or part of the construction of the building or outside improvements, which it occupies, it shall be entitled to receive any award with regard to the condemnation of the building and outside improvements pertaining to that portion for which it paid, whether for the taking or diminution in value thereof, if such condemnation occurs during the first fifteen (15) years after the Commencement Date of this Lease, and provided further that Tenant shall be entitled to any compensation, separately awarded to Tenant for Tenants relocation expenses and/ or loss of Tenants Trade Fixtures.
13. Assignment of Agreement and Subletting: Tenant shall not without Landlords consent, which shall not be unreasonably withheld or conditioned, assign or sublease the Premises. The following shall not be deemed an assignments or sublease: assignments of the Lease (in whole or part) or sublease of the Premises (in whole or in part to a corporation or entity which is (a) a parent, subsidiary, affiliate, franchisee, or licensee of Tenant; (b) a corporation with which Tenant merges; and (c) the result of a reorganization or the surviving corporation or entity following a consolidation, merger or other corporate restructuring.
14. Violation of Laws: Tenant, guests and invitees of either Tenant or guests will not use the premises in such a manner that violates any law, ordinance, statutes or requirement of any municipal, state or federal authority now in force, or which may hereafter be in force, pertaining to the premises, occasioned by or affecting the use thereof by Tenant. Landlord shall comply with all laws, orders, ordinances, statutes or requirements now or hereafter affecting the premises.
15. Property Damage And Destruction: In the event (a) of partial or total destruction of the Premises or the building in which the Premises are located which requires repairs to either the Premises or said building, Landlord shall forthwith make said repairs, provided Tenant gives Landlord thirty (30) days prior written notice of the necessity therefor and provided Tenant did not cause such damage or destruction. If Tenant caused such damage or destruction and the cost of repair is not covered by the insurance provided for hereunder, Tenant shall forthwith make said repairs at its sole cost and expense. However, if the building in which the Premises are located is damaged as a result of fire or any other insured casualty to an extent in excess of forty percent (40%) of its then replacement cost (excluding foundation[s]); fifty percent (50%), or more, of the total square footage of the Building is damaged or destroyed by any casualty, at anytime, Landlord may within sixty (60) days following the date such damage occurs terminate this Lease by written notice to Tenant. During the period that Landlord is making said repairs, this Lease shall continue in full force and effect, and the Monthly Base Rent shall be proportionately reduced based upon the extent to which the making of such repairs shall interfere with the business carried on by Tenant in the Premises. If Landlord elects to terminate this Lease, all rentals shall be prorated between Landlord and Tenant as of the date of such destruction.
- 4 -
16. Hazardous Material: Hazardous Materials as used herein, shall mean any product, substance, chemical, material or waste whose presence, nature, quantity, and/ or intensity of existence, use, manufacture, disposal, transportation, spill, release, or effect, either by itself or in combination with other materials is either (i) potentially injurious to the public health, safety, or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental agency, or (iii) a basis for liability to any governmental agency or third party under any applicable statute or common law theory. Hazardous Materials shall also include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil, or any products, by-products, or fractions thereof, asbestos, all products defined in the environmental laws of the state of the Premises, or defined by the United States Government, and those products described in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Article 9601 et seq., or defined by any applicable state or local laws and the regulations adopted thereunder.
Tenant hereby indemnifies and holds Landlord and Landlords officers, directors, shareholders, managers, members, agents and employees harmless from and against, and shall reimburse Landlord and Landlords officers, directors, shareholders, managers, members, agents and employees for, any and all Losses (as hereinafter defined) arising from, out of or as a consequence, directly or indirectly, of the release by Tenant of any Hazardous Materials on the Premises which first occurs during the Term of this Lease. Losses shall mean any and all loss, claim, liability, damages, injuries to person, property or natural resources, cost, expense, action or cause of action and includes, but is not limited to, all costs of removal, remediation of any kind, detoxification, clean up and disposal of such Hazardous Materials and the preparation of any closure or other required plans, all costs of determining whether the Premises is in compliance and causing the Premises to be in compliance with all applicable Environmental Laws, all costs and fees associated with claims for damages to persons, property, or natural resources, and reasonable attorneys fees and consultants fees and court costs in respect thereto whether or not litigation or administrative proceedings shall occur, including all costs and expenses incurred or suffered by Landlord by reason of any violation of any applicable Environmental Law which occurs, or has occurred, upon the Premises during the Term of this Lease, or by reason of the imposition of any governmemtal lien for the recovery of environmental clean-up costs expended by reason of such violation.
The parties hereby covenant and agree that all obligations of a party under this Section shall survive any termination of the Lease, it being further understood and agreed that the rights of the indemnified party under this Section shall be in addition to any other rights and remedies under this Lease or at law or in equity. Any amount due to the indemnified party under this Section not paid by the other party within thirty (30) days after written demand therefor shall bear interest at Prime plus three percent (3%) per annum.
17. Alterations and Repairs by Tenant: Tenant shall not replace, alter or repair the Premises or any part thereof or any equipment or appurtenance thereto if the cost thereof exceeds in the aggregate Twenty Thousand and No/100 Dollars ($20,000.00) (any such action being hereinafter referred to as a Capital Improvement), unless Tenant shall comply with the following requirements, which shall be applicable to all Capital Improvements:
(a) Tenant shall, before the commencement of the work, obtain Landlords prior consent to the proposed Capital Improvement and shall at least ten (10) days prior to the commencement of the work furnish the Landlord with the following:
(1) Complete plans and specifications for the work prepared by a licensed architect approved by Landlord, which plans and specifications shall also meet with Landlords approval, together with the approval thereof by any governmental board, bureau or body then exercising jurisdiction over the Premises, which plans and specifications shall be and become Landlords sole and absolute property in the event that this Lease shall be terminated for any reason;
(2) A fixed-sum contract in assignable form made with a reputable and responsible contractor satisfactory to Landlord, providing for the erection, completion and terms of payment for all work, labor and materials necessary to perform the work within the fixed price provided for in such contract;
(3) An assignment to Landlord of such contract, duly executed and acknowledged by Tenant, to be effective upon any termination of this Lease or upon Landlords re-entry upon the Premises following an Event of Default prior to complete performance of such contract, such assignment also to include the benefits of all payments made on account of such contract, including payments made prior to the effective date of such assignment; and
- 5 -
(4) At Landlords specific request, a surety company completion bond, in form and from an insurer satisfactory to Landlord, issued by an insurer licensed to do business in the State in which the Premises are located, guaranteeing the full completion of the work and payment therefor within a reasonable time, free and clear of all mechanics or similar liens, encumbrances, chattel mortgages, conditional bills of sale and other charges, in accordance with the plans and specifications approved by Landlord, or other security satisfactory to Landlord, in Landlords sole discretion.
(b) Tenant shall (1) at its expense carry or cause to be carried the necessary workers compensation insurance and cause the insurance policies required under the Section entitled Insurance to be endorsed to cover the additional risk during the course of the work, and (2) procure all necessary permits from all governmental agencies and departments having jurisdiction in connection with such work. Tenant shall deliver evidence of compliance with the foregoing requirements to Landlord prior to the commencement of the work. Whenever requested by Landlord during the period of work, Tenant shall cause the architect in charge of the work (or if there is no architect in charge, the general contractor performing the work) to report in writing to Landlord as to whether the work is being done promptly and in a good and workmanlike manner, and in substantial compliance with the plans and specifications for the work. Tenant shall also deliver to Landlord copies of any and all interim or progress certificates or other reports submitted by Tenants architect, engineer or contractor.
(c) The Capital Improvements shall be made promptly, in a first-class and workmanlike manner, in compliance with all Requirements and shall not lessen the value of the Premises. Title to any Building, Improvements, fixtures, (other than Trade Fixtures), additions, alterations, restorations, repairs and replacements constructed, made or installed by Tenant, whether or not resulting from any Capital Improvement and including, but not limited to, any repairs, restoration and other work required to be done pursuant to the provisions of other Sections of this Lease, shall be and become Landlords sole property at the end of the Term without the necessity of Tenants execution and delivery of any instrument transferring title thereto. Notwithstanding the foregoing, Tenant covenants and agrees upon Landlords request to execute, acknowledge and deliver to Landlord any instrument reasonably requested by Landlord to confirm such title, and if Tenant shall fail or refuse to execute, and deliver any such instrument, Landlord is hereby irrevocably appointed Tenants attorney-in-fact to execute, acknowledge and deliver such instrument in Tenants name.
18. Tenants Maintenance: Tenant shall, at its sole expense, keep the Premises, including all systems and equipment, in good repair and in a clean and in conformance with the applicable law, including, but not limited to, the lawful and valid requirements of any municipality in which such Premises may be situated and of all other public authorities, and shall make, at Tenants own expense, all additions, improvements, alterations and repairs on the Premises and on and to the improvements, interior and exterior required by any lawful authorities. Tenant shall not commit or suffer, and shall use all reasonable precautions to prevent, waste, damage or injury to all of the foregoing. Tenant shall also make all necessary replacements, renewals, alterations and additions required to maintain all portions of the Premises in good condition.
19. Liens: Tenant shall not do any act which shall in any way encumber the title of Landlord in and to the Premises, nor shall Tenant create or permit to be created, and shall promptly discharge, any such lien (including, but not limited to, any mechanics, contractors, subcontractors or material mans lien or any lien, encumbrance or charge arising out of any agreement (expressed or implied), chattel mortgage, security agreement, financing statement or otherwise) upon the Premises or any part thereof or the income therefrom or any personal property used in connection with the operation of the Premises, and Tenant shall not suffer any other matter or thing whereby the estate, rights and interest of Landlord in the Premises or any part thereof might be impaired.
If Tenant shall fail to cause any such lien to be discharged of record, then Landlord, after thirty (30) days notice of its intention to do so, shall have the right, but not the obligation, in addition to any other right or remedy, to discharge such lien either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or bonding proceedings, and in any such event Landlord shall be entitled if it so elects to compel the prosecution of an action for foreclosure of such lien by the lienor and to pay the amount of judgment in favor of the lien owner with interest, costs and allowances. Any amount so paid by Landlord and all costs and expenses (including reasonable attorneys fees) incurred by Landlord in connection therewith shall constitute Additional Rent payable by Tenant under this Lease, due from Tenant to Landlord at the next rent day after any such payment, with interest thereon at Prime plus three percent (3%) per annum from the date of payment thereof.
This Lease shall constitute notice that Landlord shall not be liable for any work performed or to be performed, or any materials furnished or to be furnished, at the Premises for Tenant upon credit, and that no mechanics or other lien for such work or materials shall attach to or affect the estate or interest of Landlord in and to the Premises, unless specifically ordered by Landlord in writing. Tenant shall have no power to do any act or make any contract that may create or be the foundation for any lien, mortgage or other encumbrance upon the estate of Landlord, or any other interest of Landlord in the Premises, the Building or the other Improvements or any part thereof.
- 6 -
20. Surrender of Possession: Tenant shall on the last day of the Term or upon any sooner termination thereof, whether by lapse of time or by reason of Tenants Default or otherwise, surrender and deliver to Landlord the Premises in broom clean, good condition, ordinary wear and tear excepted, and if Tenant shall thereafter remain in possession thereof, it shall be deemed guilty of forcible detainer of the Premises and shall be subject to all the conditions and provisions contained herein and to ejection and removal, forcibly and otherwise, with or without process of law. Upon the termination of this Lease by lapse of time, Tenant shall remove furniture, trade fixtures and other personal property belonging to Tenant that are incident to the business of Tenant (as distinguished from personal property used in the operation of the Premises); such furniture, trade fixtures and other personal property belonging to Tenant and incident to the business of Tenant are hereinafter referred to as Trade Fixtures. Tenant shall repair any injury or damage to the Premises from such removal. If Tenant does not remove such Trade Fixtures from the Premises prior to the end of the Term, however ended, Landlord may, at its option, remove the same and deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the cost of such removal (including the repair of any injury or damage to the Premises or the Improvements resulting from such removal), delivery and warehousing to Landlord on demand, or Landlord may treat such Trade Fixtures as having been conveyed to Landlord with this Lease as a bill of sale, without further payment or credit by Landlord or Tenant.
Any holding over by Tenant of the Premises after the expenses of this Lease shall operate and be construed to be a tenancy from month to month only, at one hundred thirty percent (130%) of the monthly installments of fixed rent, plus additional rent and other sums otherwise payable hereunder for the Term. Nothing contained in this Section shall be construed to give Tenant the right to hold over after the expiration of this Lease, and Landlord may exercise any and all remedies at law or in equity to recover possession of the Premises and may seek damages in the event of such a hold over tenancy.
21. Brokerage Fees, Commissions: Tenant has not otherwise engaged in any activity which could form the basis for a claim for real estate commission, brokerage fee, finders fee or other similar charge, in connection with this Lease.
22. Indemnification of Landlord: To the fullest extent permitted by Law, Tenant agrees to indemnify and save Landlord and its respective agents and employees harmless from and against all liabilities, claims, suits, fines, penalties, damages, losses, fees, costs and expenses (including, but not limited to, Landlords attorneys fees) that may be imposed upon, incurred by or asserted against Landlord by reason of:
(a) Any work or thing to be done in, on or about the Premises or any part thereof other than Landlords work or improvements;
(b) Any use, occupation, condition, operation of the Premises or any part thereof or of any adjacent property or any occurrence on any of the same;
(c) Any action or omission on the part of Tenant or any Sub Tenant or any of its or their agents, contractors, servants, employees, licensees or invitees;
(d) Any accident, injury (including death) or damage, regardless of the cause thereof, to any person or property occurring in, on or about the Premises or any part thereof or any Adjacent Facility; and/ or
(e) Any failure on Tenants part to perform or comply with any of the covenants, agreements, terms or conditions in this Lease or in any sublease, license, concession or other agreement entered into by Tenant.
The provisions of this Section shall survive the expiration or earlier termination of this Lease. Tenant agrees to pay, and to indemnify Landlord against, all costs and expenses (including, but not limited to, Landlords reasonable attorneys fees) incurred by or imposed upon Landlord by or in connection with any litigation to which Landlord becomes or is made a party without fault in its part, whether commenced by or against Tenant, or that may be incurred by Landlord in enforcing any of the covenants and agreements of this Lease (with or without the institution of any action or proceeding relating to the Premises or this Lease) or in obtaining possession of the Premises after an Event of Default or upon expenses or earlier termination of this Lease. Landlord may, but shall not be obligated to, cure any Default by Tenant hereunder. All sums expended and all costs and expenses (including, but not limited to, reasonable attorneys fees) incurred by Landlord pursuant to the provisions of this Lease or on account of any Default by Tenant under this Lease shall bear interest thereon from the respective dates when expended or incurred by Landlord at Prime plus three per cent (3%) per annum until repaid by Tenant to Landlord, and all such sums together with such interest shall become Additional Rent under this Lease, payable by Tenant to Landlord on the next rent date after such expenditure. All Rent and other amounts payable by Tenant under this Lease shall be and are hereby declared to be a valid and first lien upon Tenants interest in the Premises and upon the rents, issues and profits in any manner arising or growing out of the same, and upon Tenants interest in this Lease.
- 7 -
Landlords granting of any consent under this Lease, or Landlords failure to object to any action taken by Tenant without Landlords consent required under this Lease, shall not be deemed a waiver by Landlord of its rights to require such consent for any further similar act by Tenant. No waiver by a party of any other breach of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach or to be a waiver, acquiescence in or consent to any further or succeeding breach of the same covenant. None of the covenants under this Lease, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by Landlord. No remedy conferred upon or reserved to a party under this Lease or under law shall be considered exclusive of any other remedy, but such remedies shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise, and every power and remedy given by this Lease to that party which may be exercised from time to time and as often as occasion may arise or as may be deemed expedient, without precluding that partys simultaneous or later exercise of any or all other rights or remedies. No delay or omission of a party Landlord to exercise any right or power arising from any Default or Event of Default shall impair any such right to power or shall be construed to be a waiver of any such Default or Event of Default or acquiescence therein.
23. Court Costs and Attorneys Fees: In any action or legal proceeding to enforce any part of this Lease, the prevailing party shall recover reasonable attorneys fees and court costs.
24. Prevailing Law: This Lease shall be construed and enforced in accordance with the laws of the state in which the Premises is located.
25. Binding on Successors: All covenants, agreements, conditions and undertakings contained in this Lease shall extend and inure to and be binding upon Landlords successors and assigns and Tenants permitted successors and assigns as if such successors and assigns were in each case specifically named, and shall be construed as covenants running with the land. Wherever reference is made in this Lease to either party, it shall be held to include and apply to such successors and assigns. The provisions of this Section shall not be construed to grant or to confer any greater rights of assignments upon Tenant than are provided in the Section entitled Assignment of Agreement and Subletting.
26. Time is of the Essence: Time is of the essence with respect to every provision of this Lease.
27. Entire Agreement: This document and any Attachments constitute the entire Agreement between the parties, and no promises or representations, other than those contained here and those implied by law, have been made by Landlord or Tenant. Any modifications to this Agreement must be in writing and signed by Landlord and Tenant.
28. Severability: The provisions of this Lease are severable and in the event any provision, clause, sentence, section or part thereof is held to be invalid, illegal, unconstitutional, inapplicable or unenforceable to any person or circumstances, such invalidity, illegality, unconstitutionality, inapplicability or unenforceability shall not affect or impair any of the remaining provisions, sentences, clauses, sections, parts of the lease or their application to Tenant or other persons or circumstances. To the extent that any portion of this agreement found to be invalid, illegal, unconstitutional, inapplicable or unenforceable may be valid by striking of certain words or phrases, such words or phrases shall be deemed to be stricken and the remainder of the provisions and the remainder of the other portions of this Lease agreement shall remain in full force and effect. It is further agreed that this Lease may be executed in counterparts, each of which when considered together shall constitute the original contract.
- 8 -
IN WITNESS WHEREOF the parties set their hands the date first set forth above.
Landlord: CDM Development, LLC
By: |
/s/ Douglas R. Rippel |
|
Name: | Douglas R. Rippel | |
Title: | Manager | |
Tenant: Tiger Financial Management, LLC | ||
By: |
/s/ Chad H. Faulkner |
|
Name: | Chad H. Faulkner | |
Title: | Manager |
- 9 -
EXHIBIT A
The Premises
Exhibit 10.22
AMENDMENT TO LEASE
This Lease Amendment (Amendment) is entered into on December 1 st , 2008 by and between CDM Development, LLC (Landlord) and Tiger Financial Management, LLC (Tenant), and amends the lease regarding the property commonly known as 3611 North Ridge Road, Wichita, Kansas 67205 between Landlord and Tenant executed on January 1 st , 2008 (Lease)
For Ten Dollars and other good and valuable consideration the receipt and adequacy of which is hereby acknowledged, the parties hereto agree to amend the Lease as follows:
Section 1. Premises
1. | This section is hereby amended to increase the square feet from the current 8,438 feet to 9,467 feet. |
2. | Further, this section is hereby amended to increase the amount of the building from the current 78% to 88.05%. |
Section 4. Rent
1. | This section is hereby amended to increase the monthly rent from the current $11,250.67 to $12,622.67. |
All other provisions of the Lease remain in full force and effect.
CDM Development, LLC | Tiger Financial Management, LLC | |||
By: |
/s/ Doug Rippel |
/s/ Chad Faulkner |
||
Title: | CEO | President | ||
Date: December 1, 2008 | December 1, 2008 |
Exhibit 10.23
AMENDMENT TO LEASE
This Lease Amendment (Amendment) is entered into on August 1, 2009 by and between CDM Development, LLC (Landlord) and Tiger Financial Management, LLC 3527 N Ridge Rd., Wichita, Kansas 67205 (Tenant), and amends the lease between Landlord and Tenant executed on or about January 1, 2008 (Lease) regarding the property commonly known as 3611 N Ridge Rd., Wichita, Kansas 67205.
For Ten Dollars and other good and valuable consideration the receipt and adequacy of which is hereby acknowledged, the parties hereto agree to amend the Lease as follows:
Section 1. Premises
1. | This section is hereby amended to increase the square feet from the current 9,467 feet to 10,752 feet. |
2. | Further, this section is hereby amended to increase the amount of the building from the current 88.05% to 100%. |
Section 4. Rent
1. | This section is hereby amended to increase the monthly rent from $13,001.35 to $14,766.08. |
All other provisions of the Lease remain in full force and effect.
CDM Development, LLC | Tiger Financial Management, LLC | |||
By: |
/s/ Doug Rippel |
/s/ Chad Faulkner |
||
Signature: |
|
|
||
Title: | CEO | President | ||
Date: November 10 , 2009 | November 10, 2009 |
EXHIBIT 10.24
COMMERCIAL LEASE AGREEMENT
This Commercial Lease Agreement (Lease) is entered into this April 16, 2012 between Tiger Financial Management, LLC (Tenant) and Douglas R. Rippel, 3527 North Ridge Road, Wichita, Kansas 67205 (Landlord).
1. Premises: Landlord rents to Tenant, and Tenant rents from Landlord a portion (Suite 106) of the building. (Building) and property at 3607 N Ridge Rd, Wichita, KS 67205 (the Premises), of which Landlord is the owner, subject to the terms and conditions in this Agreement. The Premises comprises approximately 3,193 square feet and thirty-five percent (35%) of the Building (Building is 9,105 total square feet).
2. Term: The term of this Lease shall be for ten (10) years (Term) beginning April 1st, 2012 (Commencement Date) unless sooner terminated as herein set forth or unless extended in accordance with the provisions hereof. Possession shall be given at the Commencement Date.
3. Options: Tenant shall have one (1) five (5) year option to extend the term of the Lease. Tenant shall exercise its right to by written notice to Landlord delivered on or before 180 days prior to the expiration of the Term.
4. Rental: Payment of Base Rent and Additional Rent shall begin on the (Commencement Date). Tenant will pay to Landlord rent payable in equal installments of $3,991.25 for Base Rent ($15/sf/yr) and an amount estimated to be $1,330.42 as Additional Rent ($5/sf/yr) on the first day of each month, the first such payment on the Rent Commencement Date and subsequent monthly payments on the first (1st) day of each succeeding month during the Term, except when that day falls on a weekend or a legal holiday, in which case rent is due on the next business day. The Base Rent (compounded) shall be increased, but in no event decreased, every three (3) years on the anniversary of the Commencement Date (each such anniversary, an Adjustment Date) by a fixed amount of five percent (5%).
5. Common Area Maintenance Expenses, Taxes and other Additional Rent: It is the intention of the parties that this be a full triple net lease (NNN). In addition to paying the Base Rent specified in Section 4 of this Lease, Tenant shall pay its prorate share of utilities, services, repairs, maintenance, insurance, real property and personal property taxes and Impositions (as defined below) of, for, attributable or applicable to the Premises (including the Building) (collectively Additional Rent). Such Additional Rent payments by Tenant, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease, are hereinafter collectively referred to as the Additional Rent, and the Base Rent and the Additional Rent are herein collectively referred to as Rent. Without limitation on other obligations of Tenant which survive the expiration of the Lease Term, the obligations of Tenant to pay the Additional Rent provided for in this Lease shall survive the expiration of the Lease Term. Notwithstanding any provision to the contrary contained in this Lease, any other monetary obligations payable by Tenant to Landlord hereunder and under this Lease shall be considered Rent.
Tenant shall not be required to pay any Imposition upon or against the Premises or any part thereof or the Improvements so long as Tenant shall, to the extent permitted by law, in good faith and with due diligence, contest the same or the validity thereof by appropriate legal proceedings which shall have the effect of preventing the collection of the Imposition so contested. In the event that Tenant at any time institutes suit to recover any Imposition or charge paid by Tenant under protest in Landlords name, Tenant shall have the right, at its sole expense, to institute and prosecute such suit or suits in Landlords name, in which event Tenant covenants and agrees to indemnify Landlord and save Landlord harmless from and against all costs, expenses (including, but not limited to, Landlords attorneys fees), charges or liabilities in connection with any such suit. Nothing herein contained shall require Tenant to pay any inheritance, estate, succession, transfer or gift taxes or state or federal income taxes of Landlord. Any Imposition that relates in part to a period extending beyond the Term (including any Imposition that has been converted into installment payments as provided in this Section, as to which the period over which such installments are payable shall be deemed to be the period to which such Imposition relates) shall be apportioned between Landlord and Tenant at the expiration of the Term. Tenant shall furnish to Landlord, upon request, within thirty (30) days after the due date of any Imposition payable by Tenant official receipts of the proper taxing authority or other proof satisfactory to Landlord evidencing payment thereof.
6. Late Charges: Any installment of Rent or any part thereof which is not made when due shall bear interest at the rate of Wall Street Journal Prime Rate plus three percent (3%) per annum from the date when the same is due hereunder until the same shall be paid (Late Charge).
7. Utilities: All applications and connections for necessary utility services on the demised premises shall be made in the name of Tenant only, and Tenant shall be solely liable for utility charges as they become due, including those for sewer, water, gas, electricity, and telephone services.
8. Insurance: The parties shall maintain at all times during the term of this Lease policies of insurance as follows:
Landlord, as a common area expense, shall maintain:
(a) Insurance against loss or damage to the Building and all other improvements by fire and such other hazards as may be covered by the form of all-risk coverage then customarily in use, in such amount as Landlord may determine to be sufficient to cover one hundred percent (100%) of the full replacement value from time to time of the Building and all improvements supplied by landlord but not including personal property or tenant supplied leasehold improvements, the proceeds of which shall be payable to Landlord.
Tenant, at its sole cost and expense, shall maintain:
(b) Comprehensive general public liability insurance against claims for bodily injury, death, and property damage occurring in or about the Premises or Adjacent Facilities, to afford protection in such limits as shall be reasonably requested by Landlord from time to time, but in any event not less than One Million Dollars ($2,000,000) as a single limit policy in respect to any one occurrence causing injury or death, and property damage.
(c) Such other insurance, including personal property and business interruption insurance, in such amounts as may from time to time be reasonably required by Landlord against other insurable hazards that are at the time commonly insured against in the case of premises similarly situated.
All policies of insurance shall be written by companies reasonably satisfactory to Landlord and any mortgagee of Landlord and shall name as insured Landlord and such other persons or entities as Landlord may designate, as their interests may appear, and shall provide that losses shall be paid to such insureds as their interests may appear. At the request of Landlord, a mortgagee clause shall be included in such policies covering Landlords mortgagee. Certificates evidencing renewals of each policy of insurance shall be delivered to Landlord at least twenty (20) days prior to the expiration dates of the respective policies. Tenant shall perform and satisfy all requirements of the companies writing any insurance policies referred to in this Lease so that at all times companies of good standing satisfactory to Landlord shall be willing to write such insurance.
Whenever (a) any loss, cost, damage or expense resulting from fire or other casualty or occurrence is incurred by either of the parties to this Lease, or anyone claiming by, through or under it, in connection with the Premises, and (b) such party is then covered in whole or in part by insurance with respect to such loss, cost, damage or expense, then the party so insured hereby releases the other party from any liability it may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance and waives any right of subrogation which might otherwise exist in or accrue to any person on account thereof, provided that such release of liability and waiver of the right of subrogation shall not be operative in any case when the effect thereof is to invalidate such insurance coverage or increase the cost thereof (provided that in the case of increased cost the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereupon keeping such release and waiver in full force and effect).
In case any action or proceeding shall be commenced against Landlord growing out of any loss, cost, damage or expense under this Section, Landlord may give written notice of the same to Tenant and thereafter Tenant shall assume and discharge all obligation to defend the same and save and keep Landlord harmless from all costs, expenses (including, but not limited to, Landlords attorneys fees), liabilities, judgments and executions in any manner growing out of, pertaining to or connected therewith. In case Tenant shall at any time fail, neglect or refuse to procure or renew any insurance hereinabove provided, then Landlord shall have the right, but not the obligation, to procure or renew such insurance and any amounts paid therefore by Landlord shall be so much Additional Rent due at the next rent day after any such payment, with interest thereon at the rate of Wall Street Journal Prime Rate plus three percent (3%) per annum from the date of payment thereof.
2
9. Signage: Tenant may install, upon approval from landlord, at its sole cost and expense, maximum allowable signage (permitted by law) on the storefront of the Premises using its standard corporate or concept colors and logo. Tenant will be included on monument sign upon approval of landlord, if any. If monument signage is unavailable, and monument signage is allowed under all applicable local ordinances, Tenant, at Tenants sole cost and expense, may install monument signage for its sole and exclusive use. Design and location of the monument sign is subject to Landlords approval. All Tenant Signage shall be subject to all applicable local ordinances. Subject to local governmental approvals, Tenant may display professionally designed and installed COMING SOON, NOW HIRING and GRAND OPENING exterior banners and/or window signage at the Premises after the Lease is signed and prior to Tenant opening for business.
10. Parking: Landlord shall provide all unassigned common area parking for Tenants employees and customers as required by applicable code or law.
11. Default: Each of the following shall be an Event of Default:
1. If Tenant shall fail to pay rent when due, the Landlord, at his option, may terminate all rights of the Tenant herein after not less than five (5) days written notice of such default given unless Tenant rectifies or cures the default within the said time.
2. If Tenant shall fail to pay any other payment of money, costs or expenses to be paid by Tenant under this Lease, when due, and the continuance of such failure for a period of ten (10) days after written notice from Landlord specifying such failure;
3. In the event of a default made by Tenant in any of the other covenants or conditions to be kept, observed and performed by Tenant, Tenant shall have thirty (30) days after receipt of written notice thereof to cure such default.
4. The filing or execution or occurrence of any of the following will be considered a Default on the part of Tenant:
(a) A petition in bankruptcy by or against Tenant;
(b) A petition against or answer by Tenant seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or other relief of the same or different kind under any provision of any bankruptcy laws;
(c) Adjudication of Tenant as a bankrupt or insolvent;
(d) An assignment by Tenant for the benefit of creditors;
(e) A petition against or proceeding by Tenant for, or the appointment of, a trustee, receiver, guardian, conservator or liquidator of Tenant with respect to the Premises or with respect to all or substantially all of Tenants property; or
(f) A petition against or proceeding by or against Tenant for its dissolution or liquidation or the taking of possession of Tenants property by any governmental authority in connection with dissolution or liquidation. Where in the case of a petition filed against Tenant under (a), (b), (d) or (e) above, such petition is not dismissed within ninety (90) days after the filing thereof;
(g) Entry of an order, judgment or decree by any court of competent jurisdiction granting any prayer or demand contained in any petition under (a), (b), (e) or (f) above, which order, judgment or decree is not reversed or vacated within ninety (90) days after it is entered;
(h) Vacation or abandonment of the Premises; or (i) Taking by any person of Tenants interest in this Lease upon execution, attachment or other process of law or equity.
In the event that the Tenant shall fail to cure any default within the time allowed under this section, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages.
In the event of Default on the part of Tenant, Landlord, at its option, in addition to all other rights and remedies provided in this Lease, at law or in equity: (a) terminate this Lease and Tenants right of possession of the Premises, and recover all damages to which Landlord is entitled at law, specifically including, without limitation, the excess of the aggregate Fixed Rent and Additional Rent that would have accrued for the balance of the Term, together with all of Landlords expenses of re-leasing (including repairs, alterations, improvements, additions, decorations, legal fees and brokerage commissions) or (b) terminate Tenants right of possession of the Premises without terminating this
3
Lease. In all events, Landlord may re-lease the Premises, or any part thereof for the account of Tenant, for such rent and term and upon such terms and conditions as are acceptable to Landlord. If Landlord shall have elected to pursue its right to terminate Tenants right of possession of the Premises without terminating the Lease, then Landlord shall have the further right and remedy to subsequently rescind such election and terminate the Lease. For purposes of any such re-leasing, Landlord is authorized to decorate, repair, alter and improve the Premises to the extent deemed necessary by Landlord, in its reasonable discretion, all at Tenants expense. If Landlord fails to re-lease the Premises, or if the Premises are re-leased and a sufficient sum is not realized therefrom after payment of all Landlords expenses of re-leasing (including without limitation repairs, alterations, improvements, additions, decorations, legal fees and brokerage commissions) to satisfy the payment, when due, of Fixed Rent and Additional Rent reserved under this Lease for any monthly period, then Tenant shall pay Landlord a sum equal to the amount of Fixed Rent and Additional Rent due under this Lease for each such monthly period, or if the Premises have been re-leased, Tenant shall pay any such deficiency on the rent day applicable to such month. Tenant agrees that Landlord may file suit to recover any sums due to Landlord hereunder at any time or from time to time and that such suit or recovery of any amount due Landlord hereunder shall not be any defense to any subsequent action brought for any amount not theretofore reduced to judgment in favor of Landlord. In the event Landlord elects to terminate Tenants right of possession only, without terminating this Lease, Landlord may, at Landlords option, enter into the Premises, remove Tenants property, and other evidences of tenancy, and take and hold possession thereof; provided, however, that such entry and possession shall not terminate this Lease or release Tenant, in whole or in part, from Tenants obligation to pay the Fixed Rent and Additional Rent reserved hereunder for the full Term or from any other obligation of Tenant under this Lease. Any and all property which may be removed from the Premises by the Landlord pursuant to the authority of the Lease or of law, to which the Tenant is or may be entitled, may be handled, removed or stored by the Landlord at the risk, cost and expense of the Tenant, and the Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. Tenant shall pay to the Landlord, upon demand, any and all reasonable expenses incurred in such removal and all storage charges against such property so long as the same shall be in the Landlords possession or under the Landlords control. In the event Landlord exercises any remedy provided under this Section, all deposits theretofore made by Tenant with utility companies or under this Lease, all unearned insurance premiums and all rights of Tenant under all insurance policies required under this Lease, any claims for refund of any Imposition, any pending insurance claims or condemnation awards, and all fuel and supplies on the Premises shall be deemed to be and are hereby assigned to and transferred to Landlord, to be applied in payment of Tenants liability under this Lease.
No waiver of any default of Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition.
12. Condemnation: If any legally, constituted authority condemns or takes by eminent domain the Premises or such part thereof which shall make the Premises unsuitable for leasing for Tenants business purposes, this Lease shall cease when the public authority takes possession, and Landlord and Tenant shall account for Rent as of that date. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that in the event Tenant has paid for all or part of the construction of the building or outside improvements, which it occupies, it shall be entitled to receive any award with regard to the condemnation of the building and outside improvements pertaining to that portion for which it paid, whether for the taking or diminution in value thereof, if such condemnation occurs during the first fifteen (15) years after the Commencement Date of this Lease, and provided further that Tenant shall be entitled to any compensation, separately awarded to Tenant for Tenants relocation expenses and/or loss of Tenants Trade Fixtures.
13. Assignment of Agreement and Subletting: Tenant shall not without Landlords consent, which shall not be unreasonably withheld or conditioned, assign or sublease the Premises. The following shall not be deemed an assignment or sublease: assignment of the Lease (in whole or part) or sublease of the Premises (in whole or in part to a corporation or entity which is (a) a parent, subsidiary, affiliate, franchisee, or licensee of Tenant; (b) a corporation with which Tenant merges; and (c) the result of a reorganization or the surviving corporation or entity following a consolidation, merger or other corporate restructuring.
4
14. Violation of Laws: Tenant, guests and invitees of either Tenant or guests will not use the premises in such a manner that violates any law, ordinance, statutes or requirement of any municipal, state or federal authority now in force, or which may hereafter be in force, pertaining to the premises, occasioned by or affecting the use thereof by Tenant. Landlord shall comply with all laws, orders, ordinances, statutes or requirements now or hereafter affecting the premises.
15. Property Damage And Destruction: In the event (a) of partial or total destruction of the Premises or the building in which the Premises are located which requires repairs to either the Premises or said building, Landlord shall forthwith make said repairs, provided Tenant gives Landlord thirty (30) days prior written notice of the necessity therefor and provided Tenant did not cause such damage or destruction. If Tenant caused such damage or destruction and the cost of repair is not covered by the insurance provided for hereunder, Tenant shall forthwith make said repairs at its sole cost and expense. However, if the building in which the Premises are located is damaged as a result of fire or any other insured casualty to an extent in excess of forty percent (40%) of its then replacement cost (excluding foundation[s]); fifty percent (50%), or more, of the total square footage of the Building is damaged or destroyed by any casualty, at any time, Landlord may within sixty (60) days following the date such damage occurs terminate this Lease by written notice to Tenant. During the period that Landlord is making said repairs, this Lease shall continue in full force and effect, and the Monthly Base Rent shall be proportionately reduced based upon the extent to which the making of such repairs shall interfere with the business carried on by Tenant in the Premises. If Landlord elects to terminate this Lease, all rentals shall be prorated between Landlord and Tenant as of the date of such destruction.
16. Hazardous Material: Hazardous Materials as used herein, shall mean any product, substance, chemical, material or waste whose presence, nature, quantity, and/or intensity of existence, use, manufacture, disposal, transportation, spill, release, or effect, either by itself or in combination with other materials is either (i) potentially injurious to the public health, safety, or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental agency, or (iii) a basis for liability to any governmental agency or third party under any applicable statute or common law theory. Hazardous Materials shall also include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil, or any products, by-products, or fractions thereof, asbestos, all products defined in the environmental laws of the state of the Premises, or defined by the United States Government, and those products described in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Article 9601 et seq., or defined by any applicable state or local laws and the regulations adopted thereunder.
Tenant hereby indemnifies and holds Landlord and Landlords officers, directors, shareholders, managers, members, agents and employees harmless from and against, and shall reimburse Landlord and Landlords officers, directors, shareholders, managers, members, agents and employees for, any and all Losses (as hereinafter defined) arising from, out of or as a consequence, directly or indirectly, of the release by Tenant of any Hazardous Materials on the Premises which first occurs during the Term of this Lease. Losses shall mean any and all loss, claim, liability, damages, injuries to person, property or natural resources, cost, expense, action or cause of action and includes, but is not limited to, all costs of removal, remediation of any kind, detoxification, clean up and disposal of such Hazardous Materials and the preparation of any closure or other required plans, all costs of determining whether the Premises is in compliance and causing the Premises to be in compliance with all applicable Environmental Laws, all costs and fees associated with claims for damages to persons, property, or natural resources, and reasonable attorneys fees and consultants fees and court costs in respect thereto whether or not litigation or administrative proceedings shall occur, including all costs and expenses incurred or suffered by Landlord by reason of any violation of any applicable Environmental Law which occurs, or has occurred, upon the Premises during the Term of this Lease, or by reason of the imposition of any governmental lien for the recovery of environmental clean-up costs expended by reason of such violation.
The parties hereby covenant and agree that all obligations of a party under this Section shall survive any termination of the Lease, it being further understood and agreed that the rights of the indemnified party under this Section shall be in addition to any other rights and remedies under this Lease or at law or in equity. Any amount due to the indemnified party under this Section not paid by the other party within thirty (30) days after written demand therefor shall bear interest at Prime plus three percent (3%) per annum.
17. Alterations and Repairs by Tenant: Tenant shall not replace, alter or repair the Premises or any part thereof or any equipment or appurtenance thereto if the cost thereof exceeds in the aggregate Twenty Thousand and No/100
5
Dollars ($20,000.00) (any such action being hereinafter referred to as a Capital Improvement), unless Tenant shall comply with the following requirements, which shall be applicable to all Capital Improvements:
(a) Tenant shall, before the commencement of the work, obtain Landlords prior consent to the proposed Capital Improvement and shall at least ten (10) days prior to the commencement of the work furnish the Landlord with the following:
(1) Complete plans and specifications for the work prepared by a licensed architect approved by Landlord, which plans and specifications shall also meet with Landlords approval, together with the approval thereof by any governmental board, bureau or body then exercising jurisdiction over the Premises, which plans and specifications shall be and become Landlords sole and absolute property in the event that this Lease shall be terminated for any reason;
(2) A fixed-sum contract in assignable form made with a reputable and responsible contractor satisfactory to Landlord, providing for the erection, completion and terms of payment for all work, labor and materials necessary to perform the work within the fixed price provided for in such contract;
(3) An assignment to Landlord of such contract, duly executed and acknowledged by Tenant, to be effective upon any termination of this Lease or upon Landlords re-entry upon the Premises following an Event of Default prior to complete performance of such contract, such assignment also to include the benefits of all payments made on account of such contract, including payments made prior to the effective date of such assignment; and
(4) A surety company completion bond, in form and from an insurer satisfactory to Landlord, issued by an insurer licensed to do business in the State in which the Premises are located, guaranteeing the full completion of the work and payment therefor within a reasonable time, free and clear of all mechanics or similar liens, encumbrances, chattel mortgages, conditional bills of sale and other charges, in accordance with the plans and specifications approved by Landlord, or other security satisfactory to Landlord, in Landlords sole discretion.
(b) Tenant shall (1) at its expense carry or cause to be carried the necessary workers compensation insurance and cause the insurance policies required under the Section entitled Insurance to be endorsed to cover the additional risk during the course of the work, and (2) procure all necessary permits from all governmental agencies and departments having jurisdiction in connection with such work. Tenant shall deliver evidence of compliance with the foregoing requirements to Landlord prior to the commencement of the work. Whenever requested by Landlord during the period of work, Tenant shall cause the architect in charge of the work (or if there is no architect in charge, the general contractor performing the work) to report in writing to Landlord as to whether the work is being done promptly and in a good and workmanlike manner, and in substantial compliance with the plans and specifications for the work. Tenant shall also deliver to Landlord copies of any and all interim or progress certificates or other reports submitted by Tenants architect, engineer or contractor.
(c) The Capital Improvements shall be made promptly, in a first-class and workmanlike manner, in compliance with all Requirements and shall not lessen the value of the Premises. Title to any Building, Improvements, fixtures, (other than Trade Fixtures), additions, alterations, restorations, repairs and replacements constructed, made or installed by Tenant, whether or not resulting from any Capital Improvement and including, but not limited to, any repairs, restoration and other work required to be done pursuant to the provisions of other Sections of this Lease, shall be and become Landlords sole property at the end of the Term without the necessity of Tenants execution and delivery of any instrument transferring title thereto. Notwithstanding the foregoing, Tenant covenants and agrees upon Landlords request to execute, acknowledge and deliver to Landlord any instrument reasonably requested by Landlord to confirm such title, and if Tenant shall fail or refuse to execute, and deliver any such instrument, Landlord is hereby irrevocably appointed Tenants attorney-in-fact to execute, acknowledge and deliver such instrument in Tenants name.
18. Tenants Maintenance: Tenant shall, at its sole expense, keep the Premises, including all systems and equipment such as HVAC, plumbing, storefront frames/glass/door(s), electrical, etc., clean and in good repair and in conformance with the applicable law, including, but not limited to, the lawful and valid requirements of any municipality in which such Premises may be situated and of all other public authorities, and shall make, at Tenants own expense, all additions, improvements, alterations and repairs on the Premises and to the improvements, interior and exterior required by any lawful authorities. However, Tenant shall not be responsible for the structural aspects of the Premises, including the footings, foundation, floor slab and roof. Tenant shall not commit or suffer, and shall use all reasonable precautions to prevent, waste, damage or injury to all of the foregoing. Tenant shall also make all necessary replacements, renewals, alterations and additions required to maintain all portions of the Premises in good condition.
6
19. Liens: Tenant shall not do any act which shall in any way encumber the title of Landlord in and to the Premises, nor shall Tenant create or permit to be created, and shall promptly discharge, any such lien (including, but not limited to, any mechanics, contractors, subcontractors or material mans lien or any lien, encumbrance or charge arising out of any agreement (expressed or implied), chattel mortgage, security agreement, financing statement or otherwise) upon the Premises or any part thereof or the income therefrom or any personal property used in connection with the operation of the Premises, and Tenant shall not suffer any other matter or thing whereby the estate, rights and interest of Landlord in the Premises or any part thereof might be impaired.
If Tenant shall fail to cause any such lien to be discharged of record, then Landlord, after thirty (30) days notice of its intention to do so, shall have the right, but not the obligation, in addition to any other right or remedy, to discharge such lien either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or bonding proceedings, and in any such event Landlord shall be entitled if it so elects to compel the prosecution of an action for foreclosure of such lien by the lienor and to pay the amount of judgment in favor of the lien owner with interest, costs and allowances. Any amount so paid by Landlord and all costs and expenses (including reasonable attorneys fees) incurred by Landlord in connection therewith shall constitute Additional Rent payable by Tenant under this Lease, due from Tenant to Landlord at the next rent day after any such payment, with interest thereon at Prime plus three percent (3%) per annum from the date of payment thereof.
This Lease shall constitute notice that Landlord shall not be liable for any work performed or to be performed, or any materials furnished or to be furnished, at the Premises for Tenant upon credit, and that no mechanics or other lien for such work or materials shall attach to or affect the estate or interest of Landlord in and to the Premises, unless specifically ordered by Landlord in witting. Tenant shall have no power to do any act or make any contract that may create or be the foundation for any lien, mortgage or other encumbrance upon the estate of Landlord, or any other interest of Landlord in the Premises, the Building or the other Improvements or any part thereof.
20. Surrender of Possession: Tenant shall on the last day of the Term or upon any sooner termination thereof, whether by lapse of time or by reason of Tenants Default or otherwise, surrender and deliver to Landlord the Premises in broom clean, good condition, ordinary wear and tear excepted, and if Tenant shall thereafter remain in possession thereof, it shall be deemed guilty of forcible detainer of the Premises and shall be subject to all the conditions and provisions contained herein and to ejection and removal, forcibly and otherwise, with or without process of law. Upon the termination of this Lease by lapse of time, Tenant shall remove furniture, trade fixtures and other personal property belonging to Tenant that are incident to the business of Tenant (as distinguished from personal property used in the operation of the Premises); such furniture, trade fixtures and other personal property belonging to Tenant and incident to the business of Tenant are hereinafter referred to as Trade Fixtures. Tenant shall repair any injury or damage to the Premises from such removal. If Tenant does not remove such Trade Fixtures from the Premises prior to the end of the Term, however ended, Landlord may, at its option, remove the same and deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the cost of such removal (including the repair of any injury or damage to the Premises or the Improvements resulting from such removal), delivery and warehousing to Landlord on demand, or Landlord may treat such Trade Fixtures as having been conveyed to Landlord with this Lease as a bill of sale, without further payment or credit by Landlord or Tenant.
Any holding over by Tenant of the Premises after the expiration of this Lease shall operate and be construed to be a tenancy from month to month only, at one hundred thirty percent (130%) of the monthly installments of fixed rent, plus additional rent and other sums otherwise payable hereunder for the Term. Nothing contained in this Section shall be construed to give Tenant the right to hold over after the expiration of this Lease, and Landlord may exercise any and all remedies at law or in equity to recover possession of the Premises and may seek damages in the event of such a hold over tenancy.
21. Brokerage Fees, Commissions: Tenant has not otherwise engaged in any activity which could form the basis for a claim for real estate commission, brokerage fee, finders fee or other similar charge, in connection with this Lease.
7
22. Indemnification of Landlord: To the fullest extent permitted by Law, Tenant agrees to indemnify and save Landlord and its respective agents and employees harmless from and against all liabilities, claims, suits, fines, penalties, damages, losses, fees, costs and expenses (including, but not limited to, Landlords attorneys fees) that may be imposed upon, incurred by or asserted against Landlord by reason of:
(a) Any work or thing to be done in, on or about the Premises or any part thereof other than Landlords work or improvements;
(b) Any use, occupation, condition, operation of the Premises or any part thereof or of any adjacent property or any occurrence on any of the same;
(c) Any action or omission on the part of Tenant or any Sub Tenant or any of its or their agents, contractors, servants, employees, licensees or invitees;
(d) Any accident, injury (including death) or damage, regardless of the cause thereof, to any person or property occurring in, on or about the Premises or any part thereof or any Adjacent Facility; and/or
(e) Any failure on Tenants part to perform or comply with any of the covenants, agreements, terms or conditions in this Lease or in any sublease, license, concession or other agreement entered into by Tenant.
The provisions of this Section shall survive the expiration or earlier termination of this Lease. Tenant agrees to pay, and to indemnify Landlord against, all costs and expenses (including, but not limited to, Landlords reasonable attorneys fees) incurred by or imposed upon Landlord by or in connection with any litigation to which Landlord becomes or is made a party without fault in its part, whether commenced by or against Tenant, or that may be incurred by Landlord in enforcing any of the covenants and agreements of this Lease (with or without the institution of any action or proceeding relating to the Premises or this Lease) or in obtaining possession of the Premises after an Event of Default or upon expiration or earlier termination of this Lease. Landlord may, but shall not be obligated to, cure any Default by Tenant hereunder. All sums expended and all costs and expenses (including, but not limited to, reasonable attorneys fees) incurred by Landlord pursuant to the provisions of this Lease or on account of any Default by Tenant under this Lease shall bear interest thereon from the respective dates when expended or incurred by Landlord at Prime plus three per cent (3%) per annum until repaid by Tenant to Landlord, and all such sums together with such interest shall become Additional Rent under this Lease, payable by Tenant to Landlord on the next rent date after such expenditure. All Rent and other amounts payable by Tenant under this Lease shall be and are hereby declared to be a valid and first lien upon Tenants interest in the Premises and upon the rents, issues and profits in any manner arising or growing out of the same, and upon Tenants interest in this Lease.
Landlords granting of any consent under this Lease, or Landlords failure to object to any action taken by Tenant without Landlords consent required under this Lease, shall not be deemed a waiver by Landlord of its rights to require such consent for any further similar act by Tenant. No waiver by a party of any other breach of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach or to be a waiver, acquiescence in or consent to any further or succeeding breach of the same covenant. None of the covenants under this Lease, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by Landlord. No remedy conferred upon or reserved to a party under this Lease or under law shall be considered exclusive of any other remedy, but such remedies shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise, and every power and remedy given by this Lease to that party which may be exercised from time to time and as often as occasion may arise or as may be deemed expedient, without precluding that partys simultaneous or later exercise of any or all other rights or remedies. No delay or omission of a party Landlord to exercise any right or power arising from any Default or Event of Default shall impair any such right to power or shall be construed to be a waiver of any such Default or Event of Default or acquiescence therein.
23. Court Costs and Attorneys Fees: In any action or legal proceeding to enforce any part of this Lease, the prevailing party shall recover reasonable attorneys fees and court costs.
24. Prevailing Law: This Lease shall be construed and enforced in accordance with the laws of the state in which the Premises is located.
25. Binding on Successors: All covenants, agreements, conditions and undertakings contained in this Lease shall extend and inure to and be binding upon Landlords successors and assigns and Tenants permitted successors and assigns as if such successors and assigns were in each case specifically named, and shall be construed as covenants
8
running with the land. Wherever reference is made in this Lease to either party, it shall be held to include and apply to such successors and assigns. The provisions of this Section shall not be construed to grant or to confer any greater rights of assignment upon Tenant than are provided in the Section entitled Assignment of Agreement and Subletting.
26. Time is of the Essence: Time is of the essence with respect to every provision of this Lease.
27. Entire Agreement: This document and any Attachments constitute the entire Agreement between the parties, and no promises or representations, other than those contained here and those implied by law, have been made by Landlord or Tenant. Any modifications to this Agreement must be in writing and signed by Landlord and Tenant.
28. Severability: The provisions of this Lease are severable and in the event any provision, clause, sentence, section or part thereof is held to be invalid, illegal, unconstitutional, inapplicable or unenforceable to any person or circumstances, such invalidity, illegality, unconstitutionality, inapplicability or unenforceability shall not affect or impair any of the remaining provisions, sentences, clauses, sections, parts of the lease or their application to Tenant or other persons or circumstances. To the extent that any portion of this agreement found to be invalid, illegal, unconstitutional, inapplicable or unenforceable may be valid by striking of certain words or phrases, such words or phrases shall be deemed to be stricken and the remainder of the provisions and the remainder of the other portions of this Lease agreement shall remain in full force and effect. It is further agreed that this Lease may be executed in counterparts, each of which when considered together shall constitute the original contract.
9
IN WITNESS WHEREOF the parties set their hands the date first set forth above.
Landlord: Douglas R. Rippel | ||
By: | /s/ Douglas R Rippel | |
Name: | Douglas R Rippel | |
Title: | Manager |
Tenant: Tiger Financial Management, LLC | ||
By: | /s/ Chad Faulkner | |
Name: | Chad Faulkner | |
Title: | President |
10
Exhibit 10.25
LEASE AGREEMENT
DATED:
July 26, 2012
LANDLORD:
MCIB Partners
A Kansas General Partnership
TENANT:
Tiger Financial Management, LLC
A Nevada Limited Liability Company
INDEX
ARTICLE |
HEADING |
PAGE | ||||
1.1 |
TERM OF LEASE | 2 | ||||
1.2 |
HOLDOVER BY TENANT | 2 | ||||
2.1 |
RENT | 2 | ||||
2.2 |
ANNUAL FIXED RENT | 2 | ||||
2.3 |
ADDITIONAL RENT | 3 | ||||
2.3.1 |
INSURANCE PREMIUMS | 3 | ||||
2.3.2 |
REAL ESTATE TAXES | 3 | ||||
2.3.3 |
COMMON AREA MAINTENANCE | 3 | ||||
2.4 |
PRIOR YEAR ADJUSTMENT ADDITIONAL RENT | 3 | ||||
2.5 |
PAYMENT | 3 | ||||
2.5.1 |
ANNUAL ADJUSTMENT ADDITIONAL RENT | 4 | ||||
2.6 |
TENANTS PERSONAL PROPERTY TAX | 4 | ||||
3 |
LIEN ON PERSONAL PROPERTY | 4 | ||||
4 |
USE OF PROPERTY | 4 | ||||
4.1 |
USE | 5 | ||||
4.2 |
CONTINUOUS OCCUPANCY | 5 | ||||
4.3 |
PARKING | 5 | ||||
4.4 |
USE OF COMMON AREAS | 5 | ||||
4.5 |
OCCUPANCY IN A SAFE MANNER | 5 | ||||
4.6 |
REFUSE REMOVAL | 5 | ||||
4.7 |
ODORS AND SOUND | 5 | ||||
5 |
MAINTENANCE | 5 | ||||
5.1 |
LANDLORDS RESPONSIBILITIES | 5 | ||||
5.2 |
TENANTS RESPONSIBILITIES | 6 | ||||
5.2.1 |
ROOF PENETRATIONS | 6 | ||||
5.3 |
HVAC MAINTENANCE | 6 | ||||
6 |
ALTERATIONS, ADDITIONS AND IMPROVEMENTS | 7 | ||||
6.1 |
ALTERATION OF PREMISES | 7 | ||||
6.2 |
SURRENDER OF PREMISES | 7 | ||||
6.3 |
SIGNAGE APPROVAL AND INSTALLATION | 7 | ||||
6.4 |
SIGNAGE REMOVAL | 7 | ||||
6.5 |
LANDLORDS RIGHT TO CONSTRUCT | 7 | ||||
7 |
INSURANCE, WAIVERS AND INDEMNITY | 8 | ||||
7.1 |
INDEMNIFICATION BY TENANT | 8 | ||||
7.2 |
PUBLIC LIABILITY INSURANCE | 8 |
INDEX
ARTICLE |
HEADING |
PAGE | ||||
7.3 |
FIRE, EXTENDED COVERAGE AND ALL OTHER PERILS INSURANCE |
8 | ||||
7.4 |
ADDITIONAL PREMIUM DUE TO TENANTS USE |
8 | ||||
7.5 |
MUTUAL WAIVER OF SUBROGATION |
9 | ||||
8 |
UTILITIES |
9 | ||||
9 |
ACCESS TO PREMISES |
9 | ||||
9.1 |
LANDLORDS RIGHT TO INSPECT PREMISES |
9 | ||||
9.2 |
LANDLORDS SHOWING OF PREMISES |
9 | ||||
10 |
NOTICE |
9 | ||||
10.2 |
PERSONAL SERVICE |
9 | ||||
11 |
LIABILITY OF LANDLORD |
10 | ||||
11.1 |
TENANTS ACCEPTANCE OF PREMISES |
10 | ||||
11.2 |
TENANTS PERSONAL PROPERTY |
10 | ||||
11.3 |
MODIFICATION REQUIRED BY GOVERNMENTAL AUTHORITY |
10 | ||||
12 |
EVENT OF CASUALTY |
10 | ||||
12.1 |
TOTAL DESTRUCTION OF PREMISES |
10 | ||||
12.2 |
PARTIAL DESTRUCTION OF PREMISES |
11 | ||||
13 |
CONDEMNATION |
11 | ||||
14 |
ASSIGNMENT |
11 | ||||
15 |
SUBORDINATION |
11 | ||||
16 |
APPLICABLE LAW |
12 | ||||
17 |
DEFAULT |
12 | ||||
18 |
FILING |
12 | ||||
19 |
LANDLORD - TENANT RELATIONSHIP |
13 | ||||
20 |
BANKRUPTCY |
13 | ||||
21 |
WAIVERS |
13 | ||||
22 |
QUIET ENJOYMENT |
13 | ||||
23 |
DEFINITION OF TERMS |
13 | ||||
24 |
TOTAL AGREEMENT: APPLICABLE TO SUCCESSORS |
13 | ||||
25 |
TIME OF THE ESSENCE |
13 | ||||
26 |
FURNITURE, FIXTURES & EQUIPMENT |
14 | ||||
27 |
EXCULPATORY CLAUSE |
14 | ||||
28 |
SECURITY DEPOSIT |
14 | ||||
29 |
OPTION TO RENEW |
15 |
INDEX
ATTACHMENT A |
LEASED PREMISES | 19 | ||||
ATTACHMENT B |
ADJOINING PROPERTY | 20 | ||||
EXHIBIT A |
LANDLORDS PERSONAL PROPERTY |
21 |
LEASE AGREEMENT
THIS AGREEMENT, made and entered into this 31 st day of July, 2012 (execution date), in Sedgwick County, Kansas
BY AND BETWEEN
MCIB Partners
A Kansas General Partnership
Party of the First Part (whether one or
more), hereinafter referred to as
LANDLORD,
having an office at 2420 North Woodlawn, Building 300, Wichita, Kansas 67220, Telephone (316) 681-0529, Telefax (316) 681-2691, and
Tiger Financial Management, LLC
A Nevada Limited Liability Company
Party of the Second Part (whether one
or more), hereinafter referred to as
TENANT,
Having an office at: 3527 N Ridge Road, Wichita, Kansas 67205.
WITNESSETH:
WHEREAS, the Landlord is the owner of the following described real property:
Legally described as:
Lot 4, Block 2, Mediterranean Plaza Addition and the East 89.16 feet of Lot 6, Block 1,
Mediterranean Plaza 2 nd Addition, Wichita, Sedgwick County, Kansas
and commonly known as: 8400 E 32 nd St N, Wichita, Kansas (the Premises)
AND WHEREAS,
Tenant desires to lease that portion of the commercial structure designated as: 8400 E 32 nd St N, Wichita, KS consisting of approximately 40,500 square feet as further described in Attachment A (hereinafter referred to as the Leased Premises) and the non-exclusive use of all entrances, drives and common areas and facilities on said Premises.
AND WHEREAS,
Tenant desires to Lease the Leased Premises and Landlord is agreeable to leasing the Leased Premises; and the parties desire to enter into a written contract setting forth their agreement.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 1 OF 21 |
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the strict adherence to the terms and conditions contained herein, the parties do agree as follows:
1 TERM OF LEASE
Subject to and upon the terms and conditions set forth herein, this Lease shall continue for a term of Five (5) years, Two (2) months (Lease Term), beginning August 1, 2012 and expiring at midnight on September 30, 2017.
1.2 | HOLDOVER BY TENANT |
If Tenant remains in possession of the Leased Premises after the expiration of this Lease and without the execution of a new lease, Tenant shall be deemed to be occupying the Leased Premises as a Tenant from month to month, subject to all conditions, provisions and obligations of this Lease insofar as the same are applicable to a month to month tenancy. Such month-to-month tenancy shall be terminable by either by not less than thirty (30) days written notice prior to the end of a Lease month. The Rent for the holdover period shall be an amount equal to one and a half (1 1/4) the amount of the Annual Fixed Rent for the last Lease month of the Lease Term, prorated on a daily basis for each day that Tenant remains in possession. Furthermore, any remaining Tenant made alterations or remaining trade fixtures belonging to Tenant shall not constitute a holdover by Tenant.
2. LEASE PAYMENTS
2.1 | RENT |
The rent payable to Landlord hereunder during the Lease Term, which Tenant agrees to pay to Landlord as herein provided, shall consist of Annual Fixed Rent and Additional Rent (herein separately the Annual Fixed Rent and the Additional Rent and collectively the Rent) is set forth below:
ANNUAL | ANNUAL | ANNUAL | ||||||||||
FIXED | ADDITIONAL | TOTAL | ||||||||||
LEASE TERM |
RENT | RENT | RENT | |||||||||
08-01-2012 to 09-30-2012 |
$ 0.00 | *$ 9,112.50 | ||||||||||
10-01-2012 to 09-30-2013 |
$243,000.00 | $109,350.00 | $352,350.00 | |||||||||
10-01-2013 to 09-30-2014 |
$253,125.00 | $109,350.00 | $362,475.00 | |||||||||
10-01-2014 to 09-30-2015 |
$273,375.00 | $109,350.00 | $382,725.00 | |||||||||
10-01-2015 to 09-30-2016 |
$303,750.00 | $109,350.00 | $413,100.00 | |||||||||
10-01-2016 to 09-30-2017 |
$324,000.00 | $109,350.00 | $433,350.00 |
* | For August and September 2012 Tenant shall pay Additional Rent only of $9,112.50 per month. |
2.2 | ANNUAL FIXED RENT |
Tenant agrees to pay as Annual Fixed Rent for the Leased Premises, for the Lease Term, in advance, 1/12 th of the Annual Fixed Rent on the first (1 st ) day of each month during the Lease Term. If the Commencement Date is other than the first day of a month, the Annual Fixed Rent for such
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 2 OF 21 |
partial month shall be prorated for the portion of the month remaining. Receipt of the first full month and any partial months Annual Fixed Rent and Security Deposit is hereby acknowledged. The Rent payments shall be made to the Landlord at the above mentioned address or to such other place as the Landlord shall designate in writing. Tenant shall automatically be assessed an additional five percent (5%) monthly late charge for any Rent payment not received by Landlord by midnight of the 5 th day after the due date to compensate Landlord for liquidated damages as result of the late payment. If Tenant shall fail to pay Landlord by the 30 th day after payment is due, interest shall accrue at the lesser of 1 and l / 2 % per month or the maximum rate allowed by law.
2.3 | ADDITIONAL RENT |
All sums required to be paid by Tenant pursuant to the provisions of this Lease, other than the Annual Fixed Rent, shall be referred to as Additional Rent. Additional Rent will include but not be limited to the following: Tenants pro rata share of all Insurance Premiums, Real Estate Taxes, and Common Area Maintenance. For purposes hereof the following definitions shall apply.
The Additional Rent payable by Tenant during the first calendar year of the Lease Term for its pro rata share of Insurance Premiums, Real Estate Taxes and Common Area Maintenance shall be estimated at $2.70 per square foot or $9,112.50 per month.
Additional Rent shall be paid in advance in equal monthly installments of one-twelfth of the Additional Rent due for the year on the first day of each month during the Lease Term.
2.3.1 | INSURANCE PREMIUMS |
Insurance Premiums shall be all premiums required to be paid by Landlord pertaining to the building located on the Premises (the Building), including but not limited to that required to be paid pursuant to § 7 of this Lease.
2.3.2 | REAL ESTATE TAXES |
Real Estate Taxes shall include all taxes and assessments, special or otherwise, assessed upon or with respect to the ownership and/or all other taxable interests in the Building and the real estate on which it and the access-ways, parking areas and grounds servicing or used in connection with same, imposed by federal, state, or local governmental authority or any political subdivision of any of the foregoing or any other taxing authority having jurisdiction over the Building and such real estate, together with the expenses of contesting the amount or validity of any such taxes. Landlord indemnifies Tenant against any tax and/or penalty levied against the property due t or as a result of the previous tenant.
2.3.3 | COMMON AREA MAINTENANCE |
Common Area Maintenance shall be all reasonable and ordinary expenses incurred with respect to servicing, maintaining, repairing and operating the Building and the real estate on which it and the access-ways, parking areas, driveways, entrances and exits thereto, sidewalks, ramps and all other common areas and facilities are provided by Landlord for the common use of tenants, their officers, agents, employees and customers. The common area expenses are to include without limitation, the operating, managing, equipping, repairing, replacing, and maintaining the common areas, specifically including landscaping and gardening, exterior building lighting and parking lot lighting, parking lot maintenance to include crack and coal tar seal, pot-hole repairs, line painting, roofing system and coating, traffic control, if any, removal of snow and ice, cost of all rentals of machinery equipment in such maintenance and the cost of personnel to implement such services. The term Common Area Maintenance shall not include costs and expenses of: capital
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 3 OF 21 |
improvements; repairs, maintenance and replacements paid for by insurance proceeds or by Tenant or by third parties; alterations to the Building attributable solely to tenants of the Building other than Tenant; principal and interest payments made by the Landlord on mortgages on the Building; depreciation; or leasing commissions; provided that capital expenditures for the purpose of reducing or minimizing the increase in operating expenses shall be included, but not in an amount to exceed such reduction for the relevant year.
PRIOR YEAR ADJUSTMENT ADDITIONAL RENT
Within a reasonable period of time following the end of each calendar year, but in no event later than ninety (90) days, Landlord shall submit to Tenant a statement showing the amount due, or overpayment of, if any, for Tenants pro rata share of Insurance Premiums, Real Estate Taxes and Common Area Maintenance and any other Additional Rent due hereunder for the immediately preceding Lease calendar year.
PAYMENT
Tenant agrees to remit to Landlord the amount of any underpayment of Additional Rent within thirty (30) days after the date of the aforesaid statement.
In the event of overpayment, if any, Landlord will adjust the 1/12 proration of Additional Rent for the following calendar year.
2.5.1 | ANNUAL ADJUSTMENT ADDITIONAL RENT |
Prior to the commencement of each subsequent calendar year, during the Lease Term and any extension or renewal, Landlord shall estimate for that calendar year, Tenants pro rata share of Insurance Premiums, Real Estate Taxes and Common Area Maintenance. Tenant shall pay as Additional Rent per month 1/12 of Landlords estimated amount.
2.6 | TENANTS PERSONAL PROPERTY TAX |
Tenant agrees to pay the taxes assessed upon all leasehold improvements installed and/or owned by Tenant.
3. LIEN ON PERSONAL PROPERTY
3.1 Tenant understands and agrees as a requirement and part of the consideration of this Lease that the Landlord shall have a first and prior lien paramount to all others on every right and interest of the Tenant in and to this Lease, upon any and all building or improvements on or hereafter placed on the Leased Premises, and on any furnishings, equipment, fixtures, or other personal property of any kind belonging to Tenant, or the equity of Tenant therein, located on the Leased Premises. Such lien is granted for the purpose of securing the payment of Rent, charges, liens, penalties, and damages herein covenanted to be paid by Tenant, and for the purpose of securing the performance of all of the Tenants obligations under this Lease. Such lien shall be in addition to all rights of Landlord given under law, which are now or shall hereinafter be in effect. Any Tenant IT equipment that contains or stores customer financial data is excluded from this Lien.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 4 OF 21 |
4. USE OF PROPERTY
4.1 | USE |
It is understood and agreed that the Leased Premises is being leased for non-residential purposes for use as general office space and call center, and that no other business shall be conducted therein or thereon without the written consent of Landlord.
4.2 | CONTINUOUS OCCUPANCY |
Tenant agrees that it will keep its place of business in the center open continuously during the term of this Lease, on such days and for such hours as shall be compatible with the major stores in said center, and will not cease operations in said Leased Premises without the express written consent of the Landlord, unless prevented from doing business therein by reason of applicable ordinances or other acts of governmental authorities, or by acts of God, or conditions beyond the control of Tenant.
4.3 | PARKING |
Landlord agrees to reserve for Tenant any existing parking accommodations as shown on Attachment A. The Tenant and Tenants employees shall park their vehicles in areas designated by the Landlord. Failure of Tenant to park vehicles in such designated areas shall be grounds for towing the parked vehicle away at the expense of the vehicle owner or Tenant.
4.4 | USE OF COMMON AREAS |
Tenant shall have reasonable use of all common areas in accordance with other Tenants rights and privileges on the Premises. The Landlord shall have the right to operate and maintain the same in such a manner as Landlord, in its sole discretion, shall determine from time to time. The common areas shall at all times be subject to the exclusive control and management of Landlord, and Landlord shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to the use of all such common areas and facilities.
4.5 | OCCUPANCY IN A SAFE MANNER |
Tenant will occupy the Leased Premises in a safe and careful manner and in compliance with all laws, ordinances, rules, regulations and orders of any governmental bodies having jurisdiction over the Leased Premises. The terms of this paragraph shall especially apply to § 6.1 Alterations.
4.6 | REFUSE REMOVAL |
Tenant shall keep refuse in proper containers until such refuse is removed from the Leased Premises and shall not allow any accumulation around the exterior or interior of the Leased Premises. Tenant shall contract for this service and Landlord shall approve dumpster location.
4.7 | ODORS AND SOUND |
Tenant shall not permit any reproduction of sound which is audible outside the Leased Premises nor permit odors to be unreasonably dispelled from the Leased Premises.
5. MAINTENANCE
5.1 | LANDLORDS RESPONSIBILITIES |
Landlords responsibility is to maintain the structure of the Leased Premises, in a safe and sound condition, limited to the roof structure, footings, foundations, slab floor, and exterior walls.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 5 OF 21 |
5.2 | TENANTS RESPONSIBILITIES |
The Tenant shall, at Tenants expense, keep in good repair and operating condition the interior of the Leased Premises, including plumbing and electrical fixtures, supplies and equipment including but not limited to exposed installations on floors, and ceiling; all hardware; all doors including overhead door; all windows & storefronts; all plate glass; all interior walls; fire system; maintain and keep clear all floor drains and drain lines of all kinds in or upon the Leased Premises to their juncture of same with public sewer main; suffer no waste and keep the water pipes and connections free from ice and other obstructions to the satisfaction of all municipal and other governmental authorities during the Lease Term. The sidewalks in the front, sides and rear entrances, break areas and the loading area of the Leased Premises shall be kept clean and free from, rubbish by Tenant to the reasonable satisfaction of Landlord, and Tenant shall not place or permit any obstructions or merchandise in such areas.
5.2.1 | ROOF PENETRATIONS |
Tenant will coordinate with Landlord any installation of equipment and any penetrations needed on roof. Tenant shall be responsible for damage to roof coating caused by Tenants servicing of equipment or penetration of roof without Landlords prior written approval.
5.3 | HVAC MAINTENANCE |
Tenant shall maintain and repair the HVAC system including all vents and flues, and keep the same in good working order and condition during the Lease Term. On or before the Commencement Date of the Lease Term, Tenant shall enter into and maintain a service maintenance agreement with a reputable HVAC company approved by Landlord, to perform regular maintenance and to make all necessary repairs to the HVAC system. The company shall be required to examine all equipment no less than semi-annually (pre-cooling & pre-heating) each year. Filters shall be changed quarterly. Maintenance shall include, without limitation, changing filters, repair or replacing motors, fans, switches, coils, oiling, lubricating and replacing all belts and pulleys.
Tenant shall furnish Landlord within thirty (30) days of commencement of the Lease Term and every anniversary date thereafter a copy of the service agreement.
If Tenant refuses or neglects to subscribe to such service agreement, Landlord may subscribe to such service and Tenant shall pay the cost thereof to Landlord upon demand.
Any HVAC repairs or replacements shall be per the warranties provided by the vendor/manufacturer. Following the expiration of said warranties, all costs of repairs or replacements shall be the responsibility of the Tenant.
Landlord shall be responsible for any required replacement of the existing HVAC units (excluding those presently under warranty which are unit numbers 3,7,8,9 and 13), including the compressor and heat exchanger, of the leased premises during the Lease Term.
Landlord represents and warrants that as of the Commencement Date, the HVAC system is in good working order and condition.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 6 OF 21 |
6. ALTERATIONS, ADDITIONS AND IMPROVEMENTS
6.1 | ALTERATION OF PREMISES |
Tenant may erect such alterations, additions or improvements inside the Leased Premises covered by this Lease as it desires upon receiving written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Any such alterations, additions or improvements shall be erected at the sole cost and expense of Tenant, and Tenant shall have no right, authority, or power to bind Landlord or any interest of Landlord in the Leased Premises, for the payment of any claim for labor or material or for any charge or expense incurred in the erection, construction, or maintenance of such improvements, nor to render said Leased Premises liable for any lien for labor, material, or any other charge incurred in connection therewith, and Tenant shall in no way be considered the agent of Landlord in the erection, construction, operation and maintenance of said improvements. Tenant agrees to supply lien waivers on any such improvements.
6.2 | SURRENDER OF PREMISES |
All alterations, additions and improvements, put in at the expense of Tenant, shall remain upon and be surrendered with the Leased Premises at the termination of this Lease, and shall become the property of the Landlord if Landlord so desires. If Landlord desires the removal of said alterations, additions and improvements at the termination of this Lease, and so states in writing to the Tenant, the Tenant shall return the Leased Premises to its original condition at the Tenants expense, ordinary wear and tear excepted. Nothwithstanding the foregoing, Tenant may remove any moveable trade fixture and repair all damage caused by the removal. Tenant shall leave all alterations, improvements and additions not installed by it in their original condition, ordinary wear and tear excepted. It is specifically understood that all IT equipment containing storage media and installed by the Tenant remains the Tenants property.
6.3 | SIGNAGE APPROVAL AND INSTALLATION |
Landlord specifically reserves and retains the sole right to approve the design and placement of any sign, decoration, marquee, exterior light, or similar item. If Tenant erects any such item without Landlords written approval, which shall not be unreasonably withheld, Tenant will comply with Landlords written request to remove or modify said item promptly. If Tenant does not comply promptly, Landlord may remove said item at cost to Tenant. Tenant shall obtain necessary permits for such items and shall maintain such items in a state of repair reasonably satisfactory to Landlord. Tenant shall be responsible for the installation and maintenance of Tenants signage.
6.4 | SIGNAGE REMOVAL |
Tenant shall on the expiration or earlier termination of this Lease, at its own expense, remove all such signs and advertising devices and repair any damage caused by such removal.
6.5 | LANDLORDS RIGHT TO CONSTRUCT |
Landlord hereby reserves the right at any time to make alterations and/or additions to the Building in which the Leased Premises are located. Landlord also reserves the right to construct other buildings or improvements in the center from time to time and to make alterations thereof or additions thereto. Landlord shall use its best efforts to make such changes in a manner that is least disruptive to the Tenant.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 7 OF 21 |
7. INSURANCE, WAIVERS AND INDEMNITY
7.1 | INDEMNIFICATION BY TENANT |
Tenant will indemnify and hold Landlord harmless from and against all loss, cost, expense and liability whatsoever (including Landlords cost of defending against the foregoing and such cost to include attorneys fees) resulting or occurring by reason of Tenants construction, use or occupancy of the Leased Premises including the adjoining commons area; unless such loss, cost, expense or liability is caused by the negligence or willful misconduct of Landlord.
INDEMNIFICATION BY LANDLORD
Landlord will indemnify and hold Tenant harmless from and against all loss, cost, expense and liability whatsoever (including Tenants cost of defending against the foregoing and such cost to include attorneys fees) resulting or occurring by reason of the wrongful act or negligence of Landlord in conjunction with Landlords entry onto the Leased Premises; unless such loss, cost, expense or liability is caused by the negligence or willful misconduct of Tenant.
7.2 | PUBLIC LIABILITY INSURANCE |
Tenant agrees to carry comprehensive liability insurance covering products, along with the Leased Premises and Tenants use thereof, including Tenants obligation set forth in § 7.1, in companies and in a form reasonably satisfactory to Landlord, with minimum limits of $5,000,000.00 per occurrence/ $5,000,000.00 general aggregate for bodily injury or death and property damage, and to deposit a certificate thereof with Landlord prior to the date of any use or occupancy of the Leased Premises by Tenant. Said policy or policies shall name Landlord as additional insured and shall bear endorsements to the effect the insurer agrees to notify Landlord not less than thirty (30) days in advance of any modification or cancellation thereof.
7.3 | FIRE, EXTENDED COVERAGE AND ALL OTHER PERILS INSURANCE |
Landlord agrees to carry policies insuring the Building on the Premises against fire, extended coverage and all other perils and such other perils as are normally covered in the county where the Premises are located, in an amount equal to at least eighty percent (80%) of the replacement cost of such improvements, together with insurance against such other risks (including loss of Rent) and in such amounts as Landlord deems appropriate. Tenant shall have no rights in said policy or policies maintained by Landlord and shall not be entitled to be a named insured thereunder. In the event any of Landlords policies insures premises or risks other than the Premises or the rents therefrom, the statement of the insurer shall be conclusive as to the portion the total premium attributable to the Premises.
Tenant agrees to carry insurance against fire, extended coverage, and all other perils and such other risks as it desires, insuring Tenants stock-in-trade, trade fixtures, furniture, furnishings, improvements and betterments, special equipment, floor and wall coverings and all other items of personal property of Tenant located on or within the Leased Premises, such coverage to be in an amount equal to at least eighty percent (80%) of replacement cost thereof. Prior to the Commencement Date of this Lease, Tenant shall furnish Landlord with a certificate evidencing such coverage and policies shall be endorsed to the effect the insurer agrees to notify Landlord not less than thirty (30) days in advance of any modification or cancellation thereof.
7.4 | ADDITIONAL PREMIUM DUE TO TENANTS USE |
Tenant shall neither do nor suffer anything to be done or kept in or about the Leased Premises which contravenes Landlords insurance policies or increases the premiums therefore. If due to any such activities by Tenant, Landlords insurance premiums shall increase, Tenant shall be responsible to pay for such increase as Additional Rent.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 8 OF 21 |
7.5 | MUTUAL WAIVER OF SUBROGATION |
Landlord and Tenant each agree to cause to be included in their respective policies of insurance under Section 7.3, the agreement of the insured thereof that said policies shall not be invalidated by a waiver of claim by the insured against the Landlord or Tenant, as the case may be, and each will furnish evidence thereof to the other. Each party hereto does hereby remises, releases and discharges the other party hereto, and any officer, agent, employee or representative of such party, of and from any liability whatsoever hereafter arising from loss, damage or injury caused by fire or other casualty for which insurance is carried by the injured party under Section 7.3, at the time of such loss, damage or injury to the extent of any recovery by the injured party under such insurance.
8. UTILITIES
8.1 Tenant agrees to contract in the name of Tenant only, before occupancy, and to pay, as and when due and payable, all bills for electric current, water, gas, refuse removal and other utilities pertaining to the Leased Premises. Landlord shall not be responsible for the failure of any utility service to Tenant except if such failure is the direct result of the negligence or willful misconduct of Landlord, and Tenant acknowledges and agrees that no Rent or other obligations shall abate due to any such failure.
9. ACCESS TO PREMISES
9.1 | LANDLORDS RIGHT TO INSPECT PREMISES |
Landlord and Landlords agents shall have the right to enter upon the Leased Premises at all reasonable business hours for the purpose of inspecting the Leased Premises and Landlords Personal Property, as defined below. If Landlord deems any repairs are necessary to those areas for which Tenant is responsible, Landlord may demand that Tenant make the repairs forthwith; if Tenant refuses or neglects to commence such repairs and complete the same with reasonable dispatch, Landlord may make or cause to be made such repairs, and Tenant agrees to pay the actual cost thereof to the Landlord. Landlord and any guests, subcontractors, etc., shall comply with building security and sign in procedures except in the case of an emergency.
9.2 | LANDLORDS SHOWING OF PREMISES |
At any time within one hundred twenty (120) days prior to the expiration of this Lease, Landlord and Landlords agents may enter and show the Leased Premises to persons wishing to rent the Leased Premises and may post upon Leased Premises For Rent and For Sale.
10. NOTICE
10.1 | NOTICES AND COMMUNICATIONS |
No notice, request, consent, approval, waiver or other communication under this Lease shall be effective unless the same is in writing and delivered to the address or facsimile number set forth above, or such other location as the parties may from time to time direct in writing. Such communication sent via registered or certified mail, postage prepaid, sent return receipt requested, shall be deemed delivered on the earlier of the date actually received by, refused by, or when delivery was first attempted to, the receiving party. Other communications will be deemed to be duly given: (1) upon receipt if delivered in person, (2) upon printed confirmation of transmittal if sent by facsimile, or (3) the next business day if sent by express overnight delivery service, UPS, or Fed Ex with charges prepaid, signature required.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 9 OF 21 |
11. LIABILITY OF LANDLORD
11.1 | TENANTS ACCEPTANCE OF PREMISES |
Tenant will have had full opportunity to examine the Leased Premises, and acceptance of the space will acknowledge that there is in and about said Leased Premises nothing apparently dangerous to life, limb or health. Upon acceptance of the Leased Premises, Tenant agrees to enter into possession of the Leased Premises in their then condition.
11.2 | TENANTS PERSONAL PROPERTY |
All personal property of any kind or description, whatsoever, in the Leased Premises shall be at the Tenants sole risk, and the Landlord shall not be liable for any damage done to or loss of such personal property or damage or loss suffered by the business or occupation of the Tenant arising from any act or neglect of co-tenants or other persons, from bursting, overflowing, or leaking of water, sewer or steam pipes or from the heating or plumbing fixtures or from electric wires, or from gas, or odors, or caused in any other manner whatsoever except in the case of willful neglect or gross negligence on the part of the Landlord.
11.3 | MODIFICATION REQUIRED BY GOVERNMENTAL AUTHORITY |
The Tenant and Landlord agree that if during the Lease Term, they shall be required by the City of Wichita or by any order or decree of any court or of any other governmental authority to repair, alter, remove, reconstruct, or improve any part of the Leased Premises, then such repair, alteration, removal, reconstruction, or improvement shall be made by and at the expense of the Tenant or Landlord in the same formula of responsibility as is described in Section 5 (Maintenance). Landlords obligations shall be those areas and items as are covered in Section 5.1 and Tenants obligations shall be those areas and items as are covered in Sections 5.2 and 5.3 of this Lease.
Landlord and Tenant shall not in any way affect the obligation or covenants herein contained, and the Tenant hereby waives all claims for damages or abatement of Rent because of such work.
12. EVENT OF CASUALTY
12.1 | TOTAL DESTRUCTION OF PREMISES |
In the event the improvements located on the Leased Premises shall be destroyed or so damaged by fire, tornado, or other storms, explosion, earthquake, or any other casualty as to become untenable, then the Landlord may, if Landlord so elects, either rebuild and put said improvements in good condition and fit for occupancy within a reasonable time after such destruction, or may give notice in writing terminating this Lease. If Landlord elects to repair or rebuild said improvements, Landlord shall give the Tenant reasonable prompt notice after such casualty of Landlords intention to repair, and then proceed with reasonable speed to repair. If notice is NOT given within sixty (60) days, the Lease shall be deemed terminated. Tenant shall not be obligated to pay any Rent from the time of such destruction or damage until said Leased Premises are again fit and ready for occupancy, unless Tenant caused the damage.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 10 OF 21 |
12.2 PARTIAL DESTRUCTION OF PREMISES
If there be only partial destruction of the improvements located on the Leased Premises by any means stated above, such partial destruction shall neither annul nor void this Lease, except that Tenant shall be entitled to a proportionate reduction of Rent while the repairs are being made, any proportionate reduction being based on the extent to which the making of repairs shall interfere with the business carried on by Tenant in the Leased Premises. In the event the repairs cannot be made within a reasonable time, or the Landlord elects not to make repairs or repairs cannot be made under the laws and regulations of the applicable government authority, this Lease may be terminated at the option of either party by providing written notice to the other party.
13. CONDEMNATION
13.1 In the event the Leased Premises, or any part thereof, are taken or condemned for a public or quasi-public use, or proceedings therefore be commenced, then as to such part as is so taken or condemned, this Lease (or this Lease in its entirety, at the option of Landlord) shall, after written notice thereof given to Tenant, immediately terminate, and the Rents reserved herein shall abate proportionately, and Tenants right to any compensation or damages awarded in any such proceedings is hereby assigned to Landlord.
Notwithstanding the foregoing, Tenant shall have the right to make a claim against the condemnor for its fixtures removal expenses, business dislocation damages and moving expenses.
14. ASSIGNMENT
14.1 Tenant agrees not to assign nor in any manner transfer this Lease or any estate or interest therein, or to sublet the Leased Premises or any part thereof, or permit any person, firm, or corporation to share any part thereof with Tenant, without previous written consent of the Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Any violation of this paragraph shall be deemed to constitute a default or breach of this Lease, at the option of the Landlord. Tenant shall pay any and all reasonable costs for Landlords approval of any proposed sub-tenant. No consent by Landlord shall operate to relieve Tenant from primary liability for the performance of Tenants obligations under the terms of this Lease. The following shall not be deemed an assignment or sublease: assignment of the Lease (in whole or part) or sublease of the Premises (in whole or in part to a corporation or entity which is (a) a parent, subsidiary, affiliate, franchisee, or licensee of Tenant; (b) a corporation with which Tenant merges; and (c) the result of a reorganization or the surviving corporation or entity following a consolidation, merger or other corporate restructuring.
15. SUBORDINATION
15.1 This Lease and all rights of Tenant hereunder shall be subject and subordinate to the lien of any and all mortgages that may now or hereafter affect the Leased Premises, or any part thereof, and to any and all renewals, modifications, or extensions of any such mortgages. Tenant shall on demand execute, acknowledge, and deliver to Landlord, at Landlords expense, any and all instruments that may be necessary or proper to subordinate this Lease and all rights therein to the lien of any such mortgage or mortgages and each renewal, modification, or extension, and if Tenant shall fail at any time to execute, acknowledge, and deliver any such subordination instrument, Landlord in addition to any other remedies available in consequence thereof, may execute, acknowledge, and deliver the same as Tenants attorney in fact and in Tenants name.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 11 OF 21 |
16. APPLICABLE LAW
16.1 This agreement shall be governed by and construed in accordance with the laws of the State of Kansas.
17. DEFAULT
17.1 Default: If Tenant shall default in the payment of any Rent when due and shall fail to cure such default within ten (10) days of due date, or if Tenant shall default in the performance of any other covenant or condition of this Lease and shall fail to cure such default within thirty (30) days after Landlord gives Tenant written notice thereof (unless such default cannot reasonably be cured within thirty (30) days and in such case, Tenant shall have commenced to cure said default within said thirty (30) days and thereafter continue diligently to pursue to completion the curing of same), Landlord shall, at its election, have the right to accelerate the total rental due under this Lease as a reasonable estimate of monetary damages.
As an additional option, Landlord may terminate this Lease and with or without terminating this Lease have immediate possession of the Leased Premises without waiving or relinquishing any claim for Rent or damages then due or to become due thereafter, and Tenant shall remain liable as hereinafter provided. In such event Landlord, without prejudice to any other right or remedy which it may have hereunder or at law, may re-enter the Leased Premises, or dispossess Tenant, any legal representative of Tenant or other occupant of the Leased Premises as if this Lease had not been made. Notwithstanding that Landlord may elect to terminate this Lease, and during the full period which would otherwise have constituted the balance of the Lease Term, Tenant shall continue to be liable for the performance of all the covenants of Tenant under this Lease, including Tenants covenant to pay the full amount of Rent reserved hereunder and Landlord at its option may rent the Leased Premises for a term, or terms, which may be shorter or longer than the balance of the term hereof, in which event or events Landlord shall apply any moneys collected first to the expense of resuming or obtaining possession of and re-letting the Leased Premises and second to the payment of the Rent due and to become due to Landlord hereunder, and Tenant shall be and remain liable for any deficiency. Should Landlord fail to exercise any remedy it may have for default of Tenant, such failure shall not be deemed to be a waiver of Landlords rights to exercise such remedy it may have for default at a later time or for subsequent defaults, or other wise to insist upon strict compliance with the terms hereof.
In the event of default, Tenant shall be further liable for Landlords costs, fees and expenses, including reasonable attorneys fees.
18. FILING
18.1 The parties hereto understand and agree that this Lease and/or the Commencement Date Agreement can be filed, and public notice given as to the terms and conditions contained herein if ever required.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 12 OF 21 |
19. LANDLORD TENANT RELATIONSHIP
19.1 Nothing contained herein shall be deemed or construed by the parties hereto or by any third party, as creating the relationship of principal and agent, or partnership, or joint venture between the parties hereto. It is understood and agreed that neither the method of computation of Rent, nor any other provisions contained herein, nor any acts of the parties hereto, shall create a relationship other than the relationship of Landlord and Tenant.
20. BANKRUPTCY
20.1 Neither this Lease nor any renewal or extension thereof, nor any interest therein, nor any estate hereby created, shall pass to any trustee or receiver in bankruptcy, or to any other receiver or assignee for the benefit of creditors or otherwise by operation of law.
21. WAIVERS
21.1 The failure of Landlord to insist on strict performance of any of the terms and conditions hereof shall be deemed a waiver of the rights or remedies that Landlord may have regarding that specific instance only, and shall not be deemed a waiver of any subsequent breach or default in any terms and conditions.
22. QUIET ENJOYMENT
22.1 Landlord covenants that Tenant, on payment of all the aforesaid installments and performance of all the covenants herein provided shall and may peacefully and quietly have, hold and enjoy the Leased Premises for the Lease Term.
23. DEFINITION OF TERMS
23.1 Wherever herein the singular number is used, the same shall include the plural, and the masculine gender shall include the feminine and neuter gender.
24. TOTAL AGREEMENT: APPLICABLE TO SUCCESSORS
24.1 This Agreement contains the entire agreement between the parties hereto; any agreements not contained herein shall not be binding upon either party, nor of any force or effect. This Agreement and all of its terms and conditions shall be binding upon the parties hereto and their representatives, heirs, devisees, legal representatives, successors and assigns. This Agreement shall not be amended, except in a writing executed by both parties.
25. TIME OF THE ESSENCE
25.1 Time is of the essence in all provisions of this Agreement.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 13 OF 21 |
26. FURNITURE, FIXTURES AND EQUIPMENT
26.1 Landlord and Tenant agree that:
a. Landlord owns the HVAC equipment.
b. Landlord owns the equipment, furniture, and fixtures listed on Exhibit A hereto (Landlords Personal Property). Tenant has the right to use, on the Leased Premises, and only during the term of this Lease, Landlords Personal Property. Tenant will maintain, Landlords Personal Property in good working order and repair, and, as reasonably necessary, will repair or replace Landlords Personal Property, all at Tenants sole cost and expense. Tenant will insure Landlords Personal Property for the benefit of Landlord (or, at Landlords option, reimburse Landlord for its expense in insuring Landlords Personal Property). Landlord makes no express or implied warranty or representation as to Landlords Personal Property, including any warranty of fitness for a particular purpose, and it is understood that Landlords Personal Property is being delivered for Tenants use on an AS-IS, WHERE-IS basis, and by accepting the use thereof, Tenant is assuming all risks relating thereto.
27. EXCULPATORY CLAUSE
27.1 Anything to the contrary in this Agreement notwithstanding, the covenants contained in this Lease to be performed by Landlord shall not be binding personally, but instead said covenants are made for the purpose of binding only the fee simple or leasehold estate which Landlord owns in the Premises and Landlords liability hereunder shall be limited to Landlords ownership interests in the Premises, and no other assets of Landlord.
28. SECURITY DEPOSIT
28.1 To secure the faithful performance by Tenant of the covenants, conditions, and agreements set forth in this Lease to be performed by it, Tenant has deposited with Landlord the sum of One Hundred Thousand Dollars ($100,000.00) on the understanding:
1 | that such deposit or any portion thereof may be applied to the curing of any default that may exist, without prejudice to any other remedy or remedies which the Landlord may have on account thereof, and upon such application Tenant shall pay Landlord on demand the amount so applied which shall be added to the security deposit so that same will be restored to its original amount; |
(ii) that should the Leased Premises be transferred by Landlord, the security deposit or any balance thereof may be turned over to Landlords successor or transferee and Tenant agrees to look solely to such successor or transferee for such application or return;
(iii) that Landlord or its successor shall not be obligated to hold the security deposit as a separate fund, but may commingle it with other funds; and
(iv) that if Tenant shall faithfully perform all of the covenants and agreements in this Lease contained on the part of Tenant to be performed, the security deposit, or any then remaining balance thereof, shall be returned to Tenant (without interest) within thirty (30) days after the expiration of the Lease Term.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 14 OF 21 |
29. OPTION TO RENEW
29.1 | OPTION |
Tenant shall have the option to renew this Agreement for Two (2), Five (5) year terms, upon the same terms and conditions as are herein contained (except for this paragraph providing for renewal and except for the Rent) at the expiration of the Lease Term.
The Annual Fixed Rent for the First, Five (5) year term shall be :
ANNUAL FIXED
RENT |
||||
10-01-2017 to 09-30-2018 |
$ | 317,925.00 | ||
10-01-2018 to 09-30-2019 |
$ | 332,910.00 | ||
10-01-2019 to 09-30-2020 |
$ | 348,705.00 | ||
10-01-2020 to 09-30-2021 |
$ | 365,310.00 | ||
10-01-2021 to 09-30-2022 |
$ | 382,725.00 |
The Rent for the second, Five (5) year term shall be:
The Annual Fixed Rent for the Second, Five (5) year term shall be:
ANNUAL FIXED
RENT |
||||
10-01-2022 to 09-30-2023 |
$ | 380,700.00 | ||
10-01-2023 to 09-30-2024 |
$ | 399,735.00 | ||
10-01-2024 to 09-30-2025 |
$ | 419,580.00 | ||
10-01-2025 to 09-30-2026 |
$ | 440,640.00 | ||
10-01-2026 to 09-30-2027 |
$ | 462,510.00 |
29.2 | NOTIFICATION |
Tenant must notify Landlord in writing of its intent to renew or vacate at least one hundred twenty (120) days prior to the expiration of the Lease Term.
30. ENVIRONMENTAL ASSURANCES
30.1 | COVENANTS |
(i) Tenant shall not cause any Hazardous Materials to be used, generated, stored or disposed of on, under or about, or transported to or from, the Leased Premises unless the same is specifically approved in advance by Landlord in writing other than small quantities of retail, household, and office chemicals customarily sold over-the-counter to the public and which are related to Tenants permitted uses under Section 4.1.
(ii) Tenant shall comply with all obligations imposed by Environmental Laws, and all other restrictions and regulations upon the uses, generation, storage or disposal of Hazardous Materials at, to or from the Leased Premises.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 15 OF 21 |
(iii) Tenant shall deliver promptly to Landlord true and complete copies of all notices received by Tenant from any governmental authority with respect to the use, generation, storage or disposal by Tenant of Hazardous Materials at, to or from the Leased Premises and shall immediately notify Landlord both by telephone and in writing of any unauthorized discharge of Hazardous Materials or of any condition that poses an imminent hazard to the Property, the public or the environment.
(iv) Tenant shall complete fully, truthfully and promptly any questionnaires sent by Landlord with respect to Tenants use of the Leased Premises and its use, generation, storage and disposal of Hazardous Materials at, to or from the Leased Premises.
(v) Tenant shall permit entry onto the Leased Premises by Landlord or Landlords representatives at any reasonable time to verify and monitor Tenants compliance with its covenants set forth in this paragraph and to perform other environmental inspections of the Leased Premises.
(vi) If Landlord conducts any environmental inspections because it reasonably believes that Tenants activities have or are likely to result in a violation of Environmental Laws or a release of Hazardous Materials on the Leased Premises, then Tenant shall pay to Landlord, as Additional Rent, the actual costs incurred by Landlord for such inspections.
(vii) Tenant shall cease immediately upon notice from Landlord any activity which violates or creates a risk of violation of any Environmental Laws.
(viii) After notice to and approval by Landlord, Tenant shall promptly remove, clean-up, dispose of or otherwise remediate in accordance with Environmental Laws and good commercial practice, any Hazardous Materials on, under or about the Property resulting from Tenants activities on the Leased Premises.
30.2 INDEMNIFICATION
Tenant shall indemnify, defend with counsel acceptable to Landlord and hold Landlord harmless from and against any claims, damages, costs, liabilities or losses (including, without limitation, any decrease in the value of the Leased Premises, loss or restriction of any area of the Leased Premises, and adverse impact of the marketability of the Leased Premises) arising solely out of Tenants use, generation, storage or disposal of Hazardous Materials at, to or from the Leased Premises.
30.3 DEFINITIONS
Hazardous Materials shall include but not be limited to substances defined as hazardous substances, toxic substances, or hazardous wastes in the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended; the federal Hazardous Materials Transportation Act, as amended; and the federal Resource Conservation and Recovery Act, as amended; those substances defined as hazardous substances, materials, or wastes under the law of the state in which the Leased Premises are located; and as such substances are defined in any regulations adopted and publications promulgated pursuant to said laws (Environmental Laws); materials containing asbestos or urea formaldehyde; gasoline and other petroleum products; flammable products; flammable explosive; radon and other natural gases; and radioactive materials.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 16 OF 21 |
30.4 SURVIVAL
The obligations of Tenant in this Paragraph shall survive the expiration or termination of this Agreement.
31. AMERICANS WITH DISABILITIES ACT
31.1 COMPLIANCE
Tenant shall comply with the American with Disabilities Act of 1990 (ADA) and the regulations promulgated thereunder. Tenant hereby expressly assumes all responsibility for compliance with the ADA relating to the Leased Premises and the activities conducted by Tenant within the Leased Premises. Except as otherwise provided herein, any alterations to the Leased Premises made by Tenant for the purpose of complying with the ADA or which otherwise require compliances with the ADA shall be done in accordance with this Agreement; provided, that Landlords consent to such alterations shall not constitute either Landlords assumption, in whole or in part, of Tenants responsibility for compliance with the ADA, or representation or confirmation by Landlord that such alterations comply with the provisions of the ADA.
32. RIGHT OF FIRST REFUSAL
Landlord owns adjoining property legally described as: the east 214 feet of Lot 6, Block 1, Mediterranean Plaza 2 nd Addition, Wichita, Sedgwick County, Kansas, as shown on Attachment B (the Adjoining Property). Should Landlord, at any time during the Term of this Lease, elect to sell the Adjoining Property to an unrelated third party, Tenant will have the right of first refusal to meet any bona fide written offer of sale on the same terms and conditions of such offer. Upon Tenants failure to meet such bona fide written offer within fifteen (15) days after written notice thereof from Landlord, Landlord will be free to sell the Adjoining Property or any portion thereof to such third person, in accordance with the terms and conditions of such offer, and Tenants rights under this Section 32 will terminate.
Any development of this property by Landlord, or transfer to another entity affiliated with Landlord shall be excluded from this Section 32.
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 17 OF 21 |
THIS AGREEMENT executed the day and year first above written, by the full signatures appearing as set out below:
LANDLORD: MCIB Partners
/s/ Alfred A. Caro |
By: Alfred A. Caro, manager of Caro Properties, LLC manager of MCIB Partners |
TENANT: Tiger Financial Management, LLC |
/s/ Chad Faulkner By: Chad Faulkner, President |
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 18 OF 21 |
ATTACHMENT A
LEASED PREMISES
8400 E 32 ND ST N
WICHITA, KANSAS
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 19 OF 21 |
ATTACHMENT B
Adjoining Property
EXHIBIT A
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 20 OF 21 |
LANDLORDS PERSONAL PROPERTY
1. | Generator CAT3512, 1250kw Diesel, Model SR4B-60, located west exterior side of building. |
2. | Transfer Switch, main power room, ATS Zenith 2000 amp, Model ZTGK00FS3-7, Serial 1335468 |
3. | 600 amp UPS system |
4. | IT room, Two (2) power conditioners |
5. | IT room, Two (2) Liebert Units |
6. | IT room, fire suppressions system |
7. | IT room, racks, ladders and cabling |
8. | 372 call center floor workstations, including all attached accessories |
9. | Three (3) presentation drop down screens |
10. | 1000 lockers |
Tiger Financial Management 8400 Bldg Lease Revised 7-26-2012 |
PAGE 21 OF 21 |
GUARANTY OF LEASE
WHEREAS Tiger Financial Management, LLC., hereinafter referred to as Tenant and MCIB Partners, hereinafter referred to as Landlord, have entered into a Lease Agreement referenced to as Lease dated July 26, 2012 concerning the premises commonly known as 8400 East 32nd Street North, Wichita, Kansas 67226.
WHEREAS the undersigned business organization (hereinafter referred to as Guarantor), their shareholders, members and parent corporations and their shareholders have a financial interests in, with and concerning the Tenant, and
WHEREAS, Landlord would not execute the Lease if Guarantors did not execute and deliver to Landlord this Guaranty of Lease.
NOW THEREFORE and in consideration of the execution of the foregoing Lease by Landlord and as a material inducement to Landlord to execute said Lease and other valuable consideration, the receipt and sufficiency of which is acknowledged and accepted as good and sufficient, the Guarantor hereby jointly, severally, unconditionally and irrevocably guarantee the prompt payment by Tenant of all rentals and all other sums payable by Tenant under said Lease and the faithful and prompt performance by Tenant of each and every one of the terms, conditions and covenants of said Lease to be kept and performed by Tenant.
It is specifically agreed and understood that the terms of the foregoing Lease may be altered, affected, modified or changed by agreement between Landlord and Tenant, or by a course of conduct and said Lease may be assigned by Landlord or any assignee of Landlord without consent or notice to Guarantor and that this Guaranty shall thereupon and thereafter guarantee the performance of said Lease as so changed, modified, altered or assigned.
This Guaranty shall not be released, modified or affected by failure or delay on the part of Landlord to enforce any of the rights or remedies of the Landlord under said Lease whether pursuant to the terms thereof or a law or in equity. The Lease may be amended or modified, and further agreements may be entered into between Landlord and Tenant, without further authorization from or notice to the Guarantor and no such action shall terminate, release, reduce, diminish or in any way affect any of the obligations of the Guarantor hereunder or give any Guarantor recourse or defense against Landlord.
Notice of default shall be given to Guarantor at the same time as transmitted to Tenant, however it being specifically agreed and understood that the guaranty of the undersigned is a continuing guaranty under which Landlord may proceed forthwith and immediately against Tenant or against Guarantor following any breach or default by Tenant or for the enforcement of any rights which Landlord may have as against Tenant pursuant to or under the terms of the within Lease or at law or in equity.
Landlord shall have the right to proceed against Guarantor hereunder following any breach or default by Tenant without first proceeding against provided that previous notice to or demand has been timely made upon Tenant and Guarantor.
Guarantor hereby waives (a) notice of acceptance of the Guaranty (b) demand of payment, presentation and protest, (c) all right to assert or plead any statute of limitations as to or relating to this Guaranty and the Lease, (d) any right to require the Landlord to proceed against the Tenant or any other Guarantor or any other person or entity liable to Lessor, (e) any right to require Landlord to apply to any default and security deposit or other security it may hold under the Lease, (f) any right to require Landlord to proceed under any other remedy Landlord may have before proceeding against Guarantor, or (g) any right of subrogation.
Guarantor does hereby subrogate all existing or future indebtedness of Tenant to Guarantor to the obligations owed to Landlord under the Lease and this Guaranty.
The obligations of Tenant under the Lease to execute and deliver estoppel statements and financial statements, as therein provided, shall be deemed to also require the Guarantor hereunder to so do and provide the same relative to Guarantor.
The term Lessor whenever hereinabove used, refers to and means the Landlord in the foregoing identified Lease specifically named and also any assignee of said Lessor, whether by outright assignment or by assignment for security, and also any successor to the interest of said Landlord or of any assignee in such Lease or any part thereof, whether by assignment or otherwise. So long as the Lessors interest in or to the leased premises or the rents, issues and profits there from, or in, to or under said Lease are subject to any mortgage or deed of trust or assignment for security, no acquisition by Guarantor of the Lessors interest in the leased premises or under said Lease shall affect the continuing obligation of Guarantor under this Guaranty which shall nevertheless continue in full force and effect for the benefit of the mortgagee, beneficiary, trustee or assignee under such mortgage, deed of trust or assignment of any purchase at sale by judicial foreclosure or under private power of sale, and of the successors and assigns of any such mortgagee, beneficiary, trustee, assignee or purchaser.
The term Tenant whenever hereinabove used refers to and means the Tenant in the foregoing Lease specifically named and also any assignee or subtenant of said Lease and also any successor to the interests of said Tenant, assignee, or subtenant of such Lease or any part thereof, whether by assignment, sublease or otherwise.
GUARANTOR:
Executed at: Wichita, Kansas on the 26th day of July, 2012
Speedy Cash Intermediate Holdings Corp.
/s/ Chad Faulkner |
||
By: | Chad Faulkner, President |
Exhibit 10.26
COMMERCIAL LEASE AGREEMENT
This Commercial Lease Agreement (Lease) is entered into this March 29, 2012 (Effective Date) between Tiger Financial Management, LLC, 3527 N Ridge Rd, Wichita, KS 67205 (Tenant) and CDM Development, LLC, 3527 N Ridge Rd, Wichita, KS 67205 (Landlord).
1. Premises: Landlord rents to Tenant, and Tenant rents from Landlord the building to be developed (Building) and property at 3615 N Ridge Rd, Wichita, KS 67205 (the Premises), of which Landlord is the owner, subject to the terms and conditions in this Agreement. The Premises comprises of approximately 1.838 acres with a proposed 20,999 sq ft building.
2. Term: The term of this Lease shall be for ten (10) years (Term) beginning when Landlord and Tenant agree upon and fully execute a letter of commencement, following development of the proposed Building (Commencement Date) and expire on the last day of the 120 th month from Commencement Date, unless sooner terminated as herein set forth or unless extended in accordance with the provisions hereof. Possession of the Premises shall be given at the Effective Date with possession of the Building being granted at the Commencement Date. Should Landlord fail to deliver possession of the Building within 36 months of the Effective Date, this Lease will be null and void unless mutually extended and agreed in writing by both Landlord and Tenant.
3. Options: Tenant shall have two (2) five (5) year options to extend the term of the Lease at the same terms and conditions as the original term. Tenant shall exercise its right to by written notice to Landlord delivered on or before 90 days prior to the expiration of the Term or First Option Term.
4. Monthly Rent: Payment of Monthly Rent shall commence on the Commencement Date. Tenant will pay to Landlord rent payable in equal installments of $35,855.79 NNN ($20.49/yr NNN) the first such payment on the Commencement Date and subsequent monthly payments on the first (1st) day of each succeeding month during the Term, except when that day falls on a weekend or a legal holiday, in which case rent is due on the next business day.
4.1 Adjustment to Monthly Rent: The Monthly Rent set forth in Section 4 shall be subject to a 3% increase for the remainder of the Term, with increases occurring on the anniversary of the Commencement Date.
4.2 TI Allowance: None. Tenant agrees to accept abated rent in lieu of TI Allowance.
4.3 Security Deposit: None; Landlord accepts Tenants audited financial statements as acceptable. Tenant agrees to provide updated annual financial statements upon request.
5. Common Area Maintenance Expenses, Taxes and other Additional Rent: Tenant shall, from the Effective Date through the term of this Lease, keep in good order, condition, and repair, the Premises and every part thereof, structural (pertaining to the premises and within the premises) or nonstructural, and all adjacent sidewalks, landscaping, driveways, parking lots, fences, and signs included with the Premises. Landlord shall incur no expense nor have any obligation of any kind whatsoever in connection with maintenance of the Premises.
Tenant shall pay all real property taxes applicable to the Premises from the Effective Date through and during the term of this Lease. All such payment shall be made at least ten (10) days prior to the delinquency of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid. If any such taxes paid by Tenant shall cover any period of the time prior to or after the expiration of the term hereof, Tenants share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required.
6. Late Charges: Any installment of Rent or any part thereof which is not made when due shall bear interest at the rate of Wall Street Journal Prime Rate plus three percent (3%) per annum from the date when the same is due hereunder until the same shall be paid (Late Charge).
7. Utilities: All applications and connections for necessary utility services on the demised premises shall be made in the
name of Tenant only, and Tenant shall be solely liable for utility charges as they become due, including those for sewer, water, gas, electricity, and telephone services.
8. Insurance: The Tenant shall maintain at all times from the Effective Date through and during the term of this Lease policies of insurance as follows:
Tenant, as a common area expense, shall maintain:
(a) Insurance against loss or damage to the Building and all other improvements by fire and such other hazards as may be covered by the form of all-risk coverage then customarily in use, in such amount as Landlord may determine to be sufficient to cover one hundred percent (100%) of the full replacement value from time to time of the Building and all other improvements, the proceeds of which shall be payable to Landlord.
Tenant, at its sole cost and expense, shall maintain:
(b) Comprehensive general public liability insurance against claims for bodily injury, death, and property damage occurring in or about the Premises or Adjacent Facilities, to afford protection in such limits as shall be reasonably requested by Landlord from time to time, but in any event not less than One Million Dollars ($1,000,000) as a single limit policy in respect to any one occurrence causing injury or death, and property damage.
(c) Such other insurance, including personal property and business interruption insurance, in such amounts as may from time to time be reasonably required by Landlord against other insurable hazards that are at the time commonly insured against in the case of premises similarly situated.
All policies of insurance shall be written by companies reasonably satisfactory to Landlord and any mortgagee of Landlord and shall name as insured Landlord and such other persons or entities as Landlord may designate, as their interests may appear, and shall provide that losses shall be paid to such insured as their interests may appear. At the request of Landlord, a mortgagee clause shall be included in such policies covering Landlords mortgagee. Certificates evidencing renewals of each policy of insurance shall be delivered to Landlord at least twenty (20) days prior to the expiration dates of the respective policies. Tenant shall perform and satisfy all requirements of the companies writing any insurance policies referred to in this Lease so that at all times companies of good standing satisfactory to Landlord shall be willing to write such insurance.
Whenever (a) any loss, cost, damage or expense resulting from fire or other casualty or occurrence is incurred by either of the parties to this Lease, or anyone claiming by, through or under it, in connection with the Premises, and (b) such party is then covered in whole or in part by insurance with respect to such loss, cost, damage or expense, then the party so insured hereby releases the other party from any liability it may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance and waives any right of subrogation which might otherwise exist in or accrue to any person on account thereof, provided that such release of liability and waiver of the right of subrogation shall not be operative in any case when the effect thereof is to invalidate such insurance coverage or increase the cost thereof (provided that in the case of increased cost the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereupon keeping such release and waiver in full force and effect).
In case any action or proceeding shall be commenced against Landlord growing out of any loss, cost, damage or expense under this Section, Landlord may give written notice of the same to Tenant and thereafter Tenant shall assume and discharge all obligation to defend the same and save and keep Landlord harmless from all costs, expenses (including, but not limited to, Landlords attorneys fees), liabilities, judgments and executions in any manner growing out of, pertaining to or connected therewith. In case Tenant shall at any time fail, neglect or refuse to procure or renew any insurance hereinabove provided, then Landlord shall have the right, but not the obligation, to procure or renew such insurance and any amounts paid therefore by Landlord shall be so much Additional Rent due at the next rent day after any such payment, with interest thereon at the rate of Wall Street Journal Prime Rate plus three percent (3%) per annum from the date of payment thereof.
9. Signage: Tenant may install, at its sole cost and expense, maximum allowable signage (permitted by law) on the storefront of the Premises using its standard corporate or concept colors and logo. Tenant will be included on monument sign, if any. If monument signage is unavailable, and monument signage is allowed under all applicable local ordinances, Tenant, at Tenants sole cost and expense, may install monument signage for its sole and exclusive use. Design and location of the monument sign is subject to Landlords approval. All Tenant Signage shall be subject to all applicable local ordinances. Subject to local governmental approvals, Tenant may display professionally designed and installed COMING SOON, NOW HIRING and GRAND OPENING exterior banners and/or window signage at the Premises after the Lease is signed and prior to Tenant opening for business.
- 2 -
10. Parking: Landlord shall provide all unassigned common area parking for Tenants employees and customers as required by applicable code or law.
11. Default: Each of the following shall be an Event of Default:
1. If Tenant shall fail to pay rent when due, the Landlord, at his option, may terminate all rights of the Tenant herein after not less than five (5) days written notice of such default given unless Tenant rectifies or cures the default within the said time.
2. If Tenant shall fail to pay any other payment of money, costs or expenses to be paid by Tenant under this Lease, when due, and the continuance of such failure for a period of ten (10) days after written notice from Landlord specifying such failure;
3. In the event of a default made by Tenant in any of the other covenants or conditions to be kept, observed and performed by Tenant, Tenant shall have thirty (30) days after receipt of written notice thereof to cure such default.
4. | The filing or execution or occurrence of any of the following will be considered a Default on the part of Tenant: |
(a) A petition in bankruptcy by or against Tenant;
(b) A petition against or answer by Tenant seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or other relief of the same or different kind under any provision of any bankruptcy laws;
(c) Adjudication of Tenant as a bankrupt or insolvent;
(d) An assignment by Tenant for the benefit of creditors;
(e) A petition against or proceeding by Tenant for, or the appointment of, a trustee, receiver, guardian, conservator or liquidator of Tenant with respect to the Premises or with respect to all or substantially all of Tenants property; or
(f) A petition against or proceeding by or against Tenant for its dissolution or liquidation or the taking of possession of Tenants property by any governmental authority in connection with dissolution or liquidation. Where in the case of a petition filed against Tenant under (a), (b), (d) or (e) above, such petition is not dismissed within ninety (90) days after the filing thereof;
(g) Entry of an order, judgment or decree by any court of competent jurisdiction granting any prayer or demand contained in any petition under (a), (b), (e) or (f) above, which order, judgment or decree is not reversed or vacated within ninety (90) days after it is entered;
(h) Vacation or abandonment of the Premises; or (i) Taking by any person of Tenants interest in this Lease upon execution, attachment or other process of law or equity.
In the event that the Tenant shall fail to cure any default within the time allowed under this section, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages.
In the event of Default on the part of Tenant, Landlord, at its option, in addition to all other rights and remedies provided in this Lease, at law or in equity: (a) terminate this Lease and Tenants right of possession of the Premises, and recover all damages to which Landlord is entitled at law, specifically including, without limitation, the excess of the aggregate Fixed Rent and Additional Rent that would have accrued for the balance of the Term, together with all of Landlords expenses of re-leasing (including repairs, alterations, improvements, additions, decorations, legal fees and brokerage commissions) or (b) terminate Tenants right of possession of the Premises without terminating this Lease. In all events, Landlord may re-lease the Premises, or any part thereof for the account of Tenant, for such rent and term and upon such terms and conditions as are acceptable to Landlord. If Landlord shall have elected to pursue its right to terminate Tenants right of possession of the Premises without terminating the Lease, then Landlord shall have the further right and remedy to subsequently rescind such election and terminate the Lease. For purposes of any such re-leasing, Landlord is authorized to decorate, repair, alter and improve the Premises to the extent deemed necessary by Landlord, in its reasonable discretion, all at Tenants expense. If Landlord fails to re-lease the Premises, or if the Premises are re-leased and a sufficient sum is not realized there from after payment of all Landlords expenses of re-leasing (including without limitation repairs, alterations, improvements, additions, decorations, legal fees and brokerage
- 3 -
commissions) to satisfy the payment, when due, of Fixed Rent and Additional Rent reserved under this Lease for any monthly period, then Tenant shall pay Landlord a sum equal to the amount of Fixed Rent and Additional Rent due under this Lease for each such monthly period, or if the Premises have been re-leased, Tenant shall pay any such deficiency on the rent day applicable to such month. Tenant agrees that Landlord may file suit to recover any sums due to Landlord hereunder at any time or from time to time and that such suit or recovery of any amount due Landlord hereunder shall not be any defense to any subsequent action brought for any amount not theretofore reduced to judgment in favor of Landlord. In the event Landlord elects to terminate Tenants right of possession only, without terminating this Lease, Landlord may, at Landlords option, enter into the Premises, remove Tenants property, and other evidences of tenancy, and take and hold possession thereof; provided, however, that such entry and possession shall not terminate this Lease or release Tenant, in whole or in part, from Tenants obligation to pay the Fixed Rent and Additional Rent reserved hereunder for the full Term or from any other obligation of Tenant under this Lease. Any and all property which may be removed from the Premises by the Landlord pursuant to the authority of the Lease or of law, to which the Tenant is or may be entitled, may be handled, removed or stored by the Landlord at the risk, cost and expense of the Tenant, and the Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. Tenant shall pay to the Landlord, upon demand, any and all reasonable expenses incurred in such removal and all storage charges against such property so long as the same shall be in the Landlords possession or under the Landlords control. In the event Landlord exercises any remedy provided under this Section, all deposits theretofore made by Tenant with utility companies or under this Lease, all unearned insurance premiums and all rights of Tenant under all insurance policies required under this Lease, any claims for refund of any Imposition, any pending insurance claims or condemnation awards, and all fuel and supplies on the Premises shall be deemed to be and are hereby assigned to and transferred to Landlord, to be applied in payment of Tenants liability under this Lease.
No waiver of any default of Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition.
12. Condemnation: If any legally, constituted authority condemns or takes by eminent domain the Premises or such part thereof which shall make the Premises unsuitable for leasing for Tenants business purposes, this Lease shall cease when the public authority takes possession, and Landlord and Tenant shall account for Rent as of that date. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that in the event Tenant has paid for all or part of the construction of the building or outside improvements, which it occupies, it shall be entitled to receive any award with regard to the condemnation of the building and outside improvements pertaining to that portion for which it paid, whether for the taking or diminution in value thereof, if such condemnation occurs during the first fifteen (15) years after the Commencement Date of this Lease, and provided further that Tenant shall be entitled to any compensation, separately awarded to Tenant for Tenants relocation expenses and/or loss of Tenants Trade Fixtures.
13. Assignment of Agreement and Subletting: Tenant shall not without Landlords consent, which shall not be unreasonably withheld or conditioned, assign or sublease the Premises. The following shall not be deemed an assignment or sublease: assignment of the Lease (in whole or part) or sublease of the Premises (in whole or in part to a corporation or entity which is (a) a parent, subsidiary, affiliate, franchisee, or licensee of Tenant; (b) a corporation with which Tenant merges; and (c) the result of a reorganization or the surviving corporation or entity following a consolidation, merger or other corporate restructuring.
14. Violation of Laws: Tenant, guests and invitees of either Tenant or guests will not use the premises in such a manner that violates any law, ordinance, statutes or requirement of any municipal, state or federal authority now in force, or which may hereafter be in force, pertaining to the premises, occasioned by or affecting the use thereof by Tenant. Landlord shall comply with all laws, orders, ordinances, statutes or requirements now or hereafter affecting the premises.
15. Property Damage And Destruction: In the event (a) of partial or total destruction of the Premises or the building in which the Premises are located which requires repairs to either the Premises or said building, Landlord shall forthwith make said repairs, provided Tenant gives Landlord thirty (30) days prior written notice of the necessity therefor and provided Tenant did not cause such damage or destruction. If Tenant caused such damage or destruction and the cost of repair is not covered by the insurance provided for hereunder, Tenant shall forthwith make said repairs at its sole cost
- 4 -
and expense. However, if the building in which the Premises are located is damaged as a result of fire or any other insured casualty to an extent in excess of forty percent (40%) of its then replacement cost (excluding foundation[s]); fifty percent (50%), or more, of the total square footage of the Building is damaged or destroyed by any casualty, at anytime, Landlord may within sixty (60) days following the date such damage occurs terminate this Lease by written notice to Tenant. During the period that Landlord is making said repairs, this Lease shall continue in full force and effect, and the Monthly Base Rent shall be proportionately reduced based upon the extent to which the making of such repairs shall interfere with the business carried on by Tenant in the Premises. If Landlord elects to terminate this Lease, all rentals shall be prorated between Landlord and Tenant as of the date of such destruction.
16. Hazardous Material: Hazardous Materials as used herein, shall mean any product, substance, chemical, material or waste whose presence, nature, quantity, and/or intensity of existence, use, manufacture, disposal, transportation, spill, release, or effect, either by itself or in combination with other materials is either (i) potentially injurious to the public health, safety, or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental agency, or (iii) a basis for liability to any governmental agency or third party under any applicable statute or common law theory. Hazardous Materials shall also include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil, or any products, by-products, or fractions thereof, asbestos, all products defined in the environmental laws of the state of the Premises, or defined by the United States Government, and those products described in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Article 9601 et seq., or defined by any applicable state or local laws and the regulations adopted there under.
Tenant hereby indemnifies and holds Landlord and Landlords officers, directors, shareholders, managers, members, agents and employees harmless from and against, and shall reimburse Landlord and Landlords officers, directors, shareholders, managers, members, agents and employees for, any and all Losses (as hereinafter defined) arising from, out of or as a consequence, directly or indirectly, of the release by Tenant of any Hazardous Materials on the Premises which first occurs during the Term of this Lease. Losses shall mean any and all loss, claim, liability, damages, injuries to person, property or natural resources, cost, expense, action or cause of action and includes, but is not limited to, all costs of removal, remediation of any kind, detoxification, clean up and disposal of such Hazardous Materials and the preparation of any closure or other required plans, all costs of determining whether the Premises is in compliance and causing the Premises to be in compliance with all applicable Environmental Laws, all costs and fees associated with claims for damages to persons, property, or natural resources, and reasonable attorneys fees and consultants fees and court costs in respect thereto whether or not litigation or administrative proceedings shall occur, including all costs and expenses incurred or suffered by Landlord by reason of any violation of any applicable Environmental Law which occurs, or has occurred, upon the Premises during the Term of this Lease, or by reason of the imposition of any governmental lien for the recovery of environmental clean-up costs expended by reason of such violation.
The parties hereby covenant and agree that all obligations of a party under this Section shall survive any termination of the Lease, it being further understood and agreed that the rights of the indemnified party under this Section shall be in addition to any other rights and remedies under this Lease or at law or in equity. Any amount due to the indemnified party under this Section not paid by the other party within thirty (30) days after written demand therefor shall bear interest at Prime plus three percent (3%) per annum.
17. Alterations and Repairs by Tenant: Tenant shall not replace, alter or repair the Premises or any part thereof or any equipment or appurtenance thereto if the cost thereof exceeds in the aggregate Twenty Thousand and No/100 Dollars ($20,000.00) (any such action being hereinafter referred to as a Capital Improvement), unless Tenant shall comply with the following requirements, which shall be applicable to all Capital Improvements:
(a) Tenant shall, before the commencement of the work, obtain Landlords prior consent to the proposed Capital Improvement and shall at least ten (10) days prior to the commencement of the work furnish the Landlord with the following:
(1) Complete plans and specifications for the work prepared by a licensed architect approved by Landlord, which plans and specifications shall also meet with Landlords approval, together with the approval thereof by any governmental board, bureau or body then exercising jurisdiction over the Premises, which plans and specifications shall be and become Landlords sole and absolute property in the event that this Lease shall be terminated for any reason;
(2) A fixed-sum contract in assignable form made with a reputable and responsible contractor satisfactory to Landlord, providing for the erection, completion and terms of payment for all work, labor and materials necessary to perform the work within the fixed price provided for in such contract;
- 5 -
(3) An assignment to Landlord of such contract, duly executed and acknowledged by Tenant, to be effective upon any termination of this Lease or upon Landlords re-entry upon the Premises following an Event of Default prior to complete performance of such contract, such assignment also to include the benefits of all payments made on account of such contract, including payments made prior to the effective date of such assignment; and
(b) Tenant shall (1) at its expense carry or cause to be carried the necessary workers compensation insurance and cause the insurance policies required under the Section entitled Insurance to be endorsed to cover the additional risk during the course of the work, and (2) procure all necessary permits from all governmental agencies and departments having jurisdiction in connection with such work. Tenant shall deliver evidence of compliance with the foregoing requirements to Landlord prior to the commencement of the work. Whenever requested by Landlord during the period of work, Tenant shall cause the architect in charge of the work (or if there is no architect in charge, the general contractor performing the work) to report in writing to Landlord as to whether the work is being done promptly and in a good and workmanlike manner, and in substantial compliance with the plans and specifications for the work. Tenant shall also deliver to Landlord copies of any and all interim or progress certificates or other reports submitted by Tenants architect, engineer or contractor.
(c) The Capital Improvements shall be made promptly, in a first-class and workmanlike manner, in compliance with all Requirements and shall not lessen the value of the Premises. Title to any Building, Improvements, fixtures, (other than Trade Fixtures), additions, alterations, restorations, repairs and replacements constructed, made or installed by Tenant, whether or not resulting from any Capital Improvement and including, but not limited to, any repairs, restoration and other work required to be done pursuant to the provisions of other Sections of this Lease, shall be and become Landlords sole property at the end of the Term without the necessity of Tenants execution and delivery of any instrument transferring title thereto. Notwithstanding the foregoing, Tenant covenants and agrees upon Landlords request to execute, acknowledge and deliver to Landlord any instrument reasonably requested by Landlord to confirm such title, and if Tenant shall fail or refuse to execute, and deliver any such instrument, Landlord is hereby irrevocably appointed Tenants attorney-in-fact to execute, acknowledge and deliver such instrument in Tenants name.
18. Tenants Maintenance: Tenant shall, at its sole expense, keep the Premises, including all systems and equipment, in good repair and in a clean and in conformance with the applicable law, including, but not limited to, the lawful and valid requirements of any municipality in which such Premises may be situated and of all other public authorities, and shall make, at Tenants own expense, all additions, improvements, alterations and repairs on the Premises and on and to the improvements, interior and exterior required by any lawful authorities. Tenant shall not commit or suffer, and shall use all reasonable precautions to prevent, waste, damage or injury to all of the foregoing. Tenant shall also make all necessary replacements, renewals, alterations and additions required to maintain all portions of the Premises in good condition.
19. Liens: Tenant shall not do any act which shall in any way encumber the title of Landlord in and to the Premises, nor shall Tenant create or permit to be created, and shall promptly discharge, any such lien (including, but not limited to, any mechanics, contractors, subcontractors or material mans lien or any lien, encumbrance or charge arising out of any agreement (expressed or implied), chattel mortgage, security agreement, financing statement or otherwise) upon the Premises or any part thereof or the income therefrom or any personal property used in connection with the operation of the Premises, and Tenant shall not suffer any other matter or thing whereby the estate, rights and interest of Landlord in the Premises or any part thereof might be impaired.
If Tenant shall fail to cause any such lien to be discharged of record, then Landlord, after thirty (30) days notice of its intention to do so, shall have the right, but not the obligation, in addition to any other right or remedy, to discharge such lien either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or bonding proceedings, and in any such event Landlord shall be entitled if it so elects to compel the prosecution of an action for foreclosure of such lien by the lienor and to pay the amount of judgment in favor of the lien owner with interest, costs and allowances. Any amount so paid by Landlord and all costs and expenses (including reasonable attorneys fees) incurred by Landlord in connection therewith shall constitute Additional Rent payable by Tenant under this Lease, due from Tenant to Landlord at the next rent day after any such payment, with interest thereon at Prime plus three percent (3%) per annum from the date of payment thereof.
This Lease shall constitute notice that Landlord shall not be liable for any work performed or to be performed, or any materials furnished or to be furnished, at the Premises for Tenant upon credit, and that no mechanics or other lien for such work or materials shall attach to or affect the estate or interest of Landlord in and to the Premises, unless specifically ordered by Landlord in writing. Tenant shall have no power to do any act or make any contract that may create or be the foundation for any lien, mortgage or other encumbrance upon the estate of Landlord, or any other interest of Landlord in the Premises, the Building or the other Improvements or any part thereof.
- 6 -
20. Surrender of Possession: Tenant shall on the last day of the Term or upon any sooner termination thereof, whether by lapse of time or by reason of Tenants Default or otherwise, surrender and deliver to Landlord the Premises in broom clean, good condition, ordinary wear and tear excepted, and if Tenant shall thereafter remain in possession thereof, it shall be deemed guilty of forcible detainer of the Premises and shall be subject to all the conditions and provisions contained herein and to ejection and removal, forcibly and otherwise, with or without process of law. Upon the termination of this Lease by lapse of time, Tenant shall remove furniture, trade fixtures and other personal property belonging to Tenant that are incident to the business of Tenant (as distinguished from personal property used in the operation of the Premises); such furniture, trade fixtures and other personal property belonging to Tenant and incident to the business of Tenant are hereinafter referred to as Trade Fixtures. Tenant shall repair any injury or damage to the Premises from such removal. If Tenant does not remove such Trade Fixtures from the Premises prior to the end of the Term, however ended, Landlord may, at its option, remove the same and deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the cost of such removal (including the repair of any injury or damage to the Premises or the Improvements resulting from such removal), delivery and warehousing to Landlord on demand, or Landlord may treat such Trade Fixtures as having been conveyed to Landlord with this Lease as a bill of sale, without further payment or credit by Landlord or Tenant.
Any holding over by Tenant of the Premises after the expiration of this Lease shall operate and be construed to be a tenancy from month to month only, at one hundred thirty percent (130%) of the monthly installments of fixed rent, plus additional rent and other sums otherwise payable hereunder for the Term. Nothing contained in this Section shall be construed to give Tenant the right to hold over after the expiration of this Lease, and Landlord may exercise any and all remedies at law or in equity to recover possession of the Premises and may seek damages in the event of such a hold over tenancy.
21. Brokerage Fees, Commissions: Tenant has not otherwise engaged in any activity which could form the basis for a claim for real estate commission, brokerage fee, finders fee or other similar charge, in connection with this Lease.
22. Indemnification of Landlord:
To the fullest extent permitted by Law, Tenant agrees to indemnify and save Landlord and its respective agents and employees harmless from and against all liabilities, claims, suits, fines, penalties, damages, losses, fees, costs and expenses (including, but not limited to, Landlords attorneys fees) that may be imposed upon, incurred by or asserted against Landlord by reason of:
(a) Any work or thing to be done in, on or about the Premises or any part thereof other than Landlords work or improvements;
(b) Any use, occupation, condition, operation of the Premises or any part thereof or of any adjacent property or any occurrence on any of the same;
(c) Any action or omission on the part of Tenant or any Sub Tenant or any of its or their agents, contractors, servants, employees, licensees or invitees;
(d) Any accident, injury (including death) or damage, regardless of the cause thereof, to any person or property occurring in, on or about the Premises or any part thereof or any Adjacent Facility; and/or
(e) Any failure on Tenants part to perform or comply with any of the covenants, agreements, terms or conditions in this Lease or in any sublease, license, concession or other agreement entered into by Tenant.
The provisions of this Section shall survive the expiration or earlier termination of this Lease. Tenant agrees to pay, and to indemnify Landlord against, all costs and expenses (including, but not limited to, Landlords reasonable attorneys fees) incurred by or imposed upon Landlord by or in connection with any litigation to which Landlord becomes or is made a party without fault in its part, whether commenced by or against Tenant, or that may be incurred by Landlord in enforcing any of the covenants and agreements of this Lease (with or without the institution of any action or proceeding relating to the Premises or this Lease) or in obtaining possession of the Premises after an Event of Default or upon expiration or earlier termination of this Lease. Landlord may, but shall not be obligated to, cure any Default by Tenant hereunder. All sums expended and all costs and expenses (including, but not limited to, reasonable attorneys fees) incurred by Landlord pursuant to the provisions of this Lease or on account of any Default by Tenant under this Lease shall bear interest thereon from the respective dates when expended or incurred by Landlord at Prime plus three per cent (3%) per annum until repaid by Tenant to Landlord, and all such sums together with such interest shall become Additional Rent under this Lease, payable by Tenant to Landlord on the next rent date after such expenditure. All Rent and other amounts payable by Tenant under this Lease shall be and are hereby declared to be a valid and first lien upon Tenants interest in the Premises and upon the rents, issues and profits in any manner arising or growing out of the same, and upon Tenants interest in this Lease.
- 7 -
Landlords granting of any consent under this Lease, or Landlords failure to object to any action taken by Tenant without Landlords consent required under this Lease, shall not be deemed a waiver by Landlord of its rights to require such consent for any further similar act by Tenant. No waiver by a party of any other breach of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach or to be a waiver, acquiescence in or consent to any further or succeeding breach of the same covenant. None of the covenants under this Lease, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by Landlord. No remedy conferred upon or reserved to a party under this Lease or under law shall be considered exclusive of any other remedy, but such remedies shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise, and every power and remedy given by this Lease to that party which may be exercised from time to time and as often as occasion may arise or as may be deemed expedient, without precluding that partys simultaneous or later exercise of any or all other rights or remedies. No delay or omission of a party Landlord to exercise any right or power arising from any Default or Event of Default shall impair any such right to power or shall be construed to be a waiver of any such Default or Event of Default or acquiescence therein.
23. Court Costs and Attorneys Fees: In any action or legal proceeding to enforce any part of this Lease, the prevailing party shall recover reasonable attorneys fees and court costs.
24. Prevailing Law: This Lease shall be construed and enforced in accordance with the laws of the state in which the Premises is located.
25. Binding on Successors: All covenants, agreements, conditions and undertakings contained in this Lease shall extend and inure to and be binding upon Landlords successors and assigns and Tenants permitted successors and assigns as if such successors and assigns were in each case specifically named, and shall be construed as covenants running with the land. Wherever reference is made in this Lease to either party, it shall be held to include and apply to such successors and assigns. The provisions of this Section shall not be construed to grant or to confer any greater rights of assignment upon Tenant than are provided in the Section entitled Assignment of Agreement and Subletting.
26. Time is of the Essence: Time is of the essence with respect to every provision of this Lease.
27. Entire Agreement: This document and any Attachments constitute the entire Agreement between the parties, and no promises or representations, other than those contained here and those implied by law, have been made by Landlord or Tenant. Any modifications to this Agreement must be in writing and signed by Landlord and Tenant.
28. Severability: The provisions of this Lease are severable and in the event any provision, clause, sentence, section or part thereof is held to be invalid, illegal, unconstitutional, inapplicable or unenforceable to any person or circumstances, such invalidity, illegality, unconstitutionality, inapplicability or unenforceability shall not affect or impair any of the remaining provisions, sentences, clauses, sections, parts of the lease or their application to Tenant or other persons or circumstances. To the extent that any portion of this agreement found to be invalid, illegal, unconstitutional, inapplicable or unenforceable may be valid by striking of certain words or phrases, such words or phrases shall be deemed to be stricken and the remainder of the provisions and the remainder of the other portions of this Lease agreement shall remain in full force and effect. It is further agreed that this Lease may be executed in counterparts, each of which when considered together shall constitute the original contract.
(SIGNATURES ON NEXT PAGE)
- 8 -
IN WITNESS WHEREOF the parties set their hands the date first set forth above.
Landlord: CDM Development, LLC
By: |
/s/ Doug Rippel |
|
Name: Doug Rippel | ||
Title: | Managing Member | |
Tenant: Tiger Financial Management, LLC | ||
By: |
/s/ Chris Darnell |
|
Name: Chris Darnell | ||
Title: | Vice President, Real Estate |
- 9 -
Exhibit 10.27
EXECUTION COPY
SHORT-TERM CREDIT AGREEMENT
among
CURO FINANCIAL TECHNOLOGIES CORP.,
CURO INTERMEDIATE HOLDINGS CORP.,
VARIOUS LENDERS,
and
VICTORY PARK MANAGEMENT, LLC,
as ADMINISTRATIVE AGENT
Dated as of November 17, 2016
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
SHORT-TERM CREDIT AGREEMENT, dated as of November 17, 2016, among CURO FINANCIAL TECHNOLOGIES CORP., a Delaware corporation ( Holdings ), CURO INTERMEDIATE HOLDINGS CORP., a Delaware corporation (the Borrower ), the Lenders party hereto from time to time and VICTORY PARK MANAGEMENT, LLC, as Administrative Agent. All capitalized terms used herein and defined in Section 1.01 are used herein as therein defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth herein, the Lenders are willing to make available to the Borrower the respective credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Definitions and Accounting Terms .
1.01. Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
Acquired Entity or Business shall mean either (x) the assets constituting a business, division or product line of any Person that is not already a Subsidiary or an Unrestricted Subsidiary of the Borrower or (y) 100% of the Equity Interests of any such Person, which Person shall, as a result of the acquisition of such Equity Interests, become a Wholly-Owned Subsidiary of the Borrower (or shall be merged with and into the Borrower or another Wholly-Owned Subsidiary of the Borrower; provided that (i) in the case of any such merger involving the Borrower, the Borrower shall be the surviving or continuing Person, and (ii) in the case of any such merger involving a Subsidiary Guarantor, a Subsidiary Guarantor shall be the surviving or continuing Person).
Additional Security Documents shall have the meaning provided in Section 9.12.
Administrative Agent shall mean Victory Park Management LLC, in its capacity as Administrative Agent for the Lenders hereunder and under the other Credit Documents, and shall include any successor to the Administrative Agent appointed pursuant to Section 12.09.
Advance Rate shall mean, 80%; provided, however, that at any time during which a Level I Trigger Event has occurred and is continuing the Advance Rate shall be 70%.
Advisors shall mean legal counsel (including local, foreign and in-house counsel), auditors, accountants, consultants, appraisers, engineers or other advisors (including financial advisors).
-1-
Affiliate shall mean, with respect to any Person, any other Person directly or indirectly Controlling (including, but not limited to, all directors and officers of such Person), Controlled by, or under direct or indirect common Control with, such Person; provided , however , (x) for purposes of Section 10.06, the term Affiliate also shall include any Person that possesses, directly or indirectly, the power to vote 10% or more of the securities having ordinary voting power for the election of directors (or equivalent governing body) of such Person and (y) that none of the Administrative Agent, any Lender or any of their respective Affiliates shall be considered an Affiliate of Holdings or any Subsidiary thereof.
Affiliate Transaction shall have the meaning provided in Section 10.06.
Agents shall mean, collectively, the Administrative Agent and the Collateral Agent.
Aggregate Eligible Receivables mean Eligible Receivables and Eligible Receivables as defined and financed under the SPV Loan Agreement.
Aggregate Online Receivables means Online Receivables and Online Receivables as defined and financed under the SPV Loan Agreement.
Aggregate Title Receivables mean Title Receivables and Title Receivables as defined and financed under the SPV Loan Agreement.
Agreement shall mean this Credit Agreement, as modified, supplemented, amended, restated (including any amendment and restatement hereof), extended or renewed from time to time.
Anti-Terrorism Laws shall have the meaning provided in Section 8.17(a).
Asset Sale shall mean any sale, transfer or other disposition by Holdings or any of its Subsidiaries to any Person (including by way of redemption by such Person) other than to Holdings or a Wholly-Owned Subsidiary of Holdings of any asset (including, without limitation, any capital stock or other securities of, or Equity Interests in, another Person), but excluding sales of assets pursuant to Sections 10.02(ii), (iii), (vi), (vii) (viii), (ix), (xi), (xii), (xiii), (xiv), (xv) and (xvii).
Assignment and Assumption Agreement shall mean an Assignment and Assumption Agreement substantially in the form of Exhibit L (appropriately completed).
Authorized Officer shall mean, with respect to (i) delivering Notices of Borrowing, Notices of Conversion/Continuation and similar notices, any person or persons that has or have been authorized by the board of directors of the Borrower to deliver such notices pursuant to this Agreement and that has or have appropriate signature cards on file with the Administrative Agent, (ii) delivering financial information and officers certificates pursuant to this Agreement, the chief executive officer, the chief operating officer, the chief financial officer, the treasurer, the controller or the principal accounting officer of Holdings or the Borrower, and (iii) any other matter in connection with this Agreement or any other Credit Document, any officer (or a person or persons so designated by any two officers) of Holdings or the Borrower.
-2-
Available Basket Amount shall mean, on any date of determination, an amount equal to the remainder of (A) the sum of (I) 50% of the Modified Consolidated Net Income for the period (taken as one accounting period) beginning on the first day of the first fiscal quarter of Holdings occurring after the Effective Date and ending on the last day of the most recently ended fiscal quarter of Holdings for which financial statements are available at the date of determination (or, if such Modified Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (II) 100% of the aggregate net cash proceeds received by Holdings from the issuance or sale of its Equity Interests (not prohibited by the terms of Section 10.11(a)) subsequent to the Effective Date (other than an issuance or sale to a Subsidiary of Holdings) and 100% of any cash capital contribution received by Holdings from its shareholders subsequent to the Effective Date, provided that any amounts described in sub-clause (b) of Section 10.03(v), Section 10.03(vi), Section 10.05(xvii) and Section 10.09(iv)(b) shall be excluded from this sub-clause (II), plus (III) the amount by which the principal amount of any Indebtedness of Holdings or any of its Subsidiaries is reduced upon the conversion or exchange (other than by any Subsidiary of Holdings) subsequent to the Effective Date of any such Indebtedness that is convertible or exchangeable for Equity Interests (the issuance of which are not prohibited by the terms of Section 10.11(a)) of Holdings (less the amount of any cash, or the fair value of any other property, distributed by Holdings or any of its Subsidiaries upon such conversion or exchange); provided , however , that the foregoing amount shall not exceed the net cash proceeds received by Holdings or any of its Subsidiaries from the sale of such Indebtedness (excluding net cash proceeds from sales to any Subsidiary of Holdings), plus (IV) the amount equal to the sum of (x) the net reduction in the Restricted Investments made by Holdings or any of its Subsidiaries in any Person (other than a Subsidiary of Holdings) resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds realized on the sale or other disposition of such Investment and proceeds representing the return of capital (excluding any such amounts to the extent included in the calculation of Modified Consolidated Net Income), in each case realized by Holdings or any of its Subsidiaries, and (y) in the event that any Unrestricted Subsidiary of Holdings is re-designated as a Subsidiary, the portion (proportionate to Holdings Equity Interest in such Subsidiary) of the Fair Market Value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Subsidiary; provided , however , that the foregoing sum under this clause (IV) will not exceed, in the case of any such Person, the amount of Restricted Investments previously made by Holdings or any of its Subsidiaries in such Person or Unrestricted Subsidiary, plus (V) 100% of any cash dividends received by the Borrower or any Subsidiary Guarantor after the Effective Date from an Unrestricted Subsidiary, to the extent such dividends were not otherwise included in the calculation of Consolidated Net Income for such period, plus (VI) $40,000,000, minus (B) the sum of (I) the aggregate amount of Investments made pursuant to Section 10.05(xviii) since the Effective Date, plus (II) the aggregate amount of Dividends paid pursuant to Section 10.03(x) since the Effective Date plus (III) the aggregate amount of prepayments, redemptions, repurchases or acquisitions of any Indebtedness made pursuant to Section 10.09(iv)(c) since the Effective Date.
Backup Servicer means a Person, reasonably satisfactory to Agent, that the Borrower has appointed and that is providing backup servicing and its permitted successors and assigns reasonably satisfactory to Agent.
-3-
Backup Servicing Agreement means the Backup Servicing Agreement among the Servicer, Backup Servicer and Borrower as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
Bankruptcy Code shall have the meaning provided in Section 11.05.
Base Rate shall mean the greater of (i) 1.00% and (ii) the LIBOR Rate.
Books and Records shall mean all of Credit Parties original ledger cards, payment schedules, credit applications, contracts, lien and security instruments, guarantees relating in any way to the Receivables Collateral and other books and records or transcribed information of any type, whether expressed in electronic form in tapes, discs, tabulating runs, programs and similar materials now or hereafter in existence relating to the Receivables Collateral.
Borrower shall have the meaning provided in the first paragraph of this Agreement.
Borrowing shall mean a borrowing of Loans from all the Lenders on a given date.
Borrowing Base shall mean, as of the date of determination, an amount equal to (a) the product of (i) the Advance Rate and (ii) the Principal Receivables balance of all of the Eligible Receivables as of such date, minus (b) the Facilities Excess Concentration Amounts.
Borrowing Base Certificate shall mean a certificate, substantially in the form of Exhibit P , executed by an officer of Borrower and delivered to the Administrative Agent, which sets forth the calculation of the Borrowing Base, including a calculation of each component thereof.
Borrowing Base Deficiency shall mean, as of the date of determination, a positive amount, if any, equal to (a) the sum of the aggregate unpaid principal amount of all Loans minus (b) the Borrowing Base.
Business Day shall mean any day other than a Saturday, Sunday or other day on which banks in New York, New York are authorized or required by law to close.
Calculation Period shall mean, with respect to any Permitted Acquisition, any Significant Asset Sale or any other event expressly required to be calculated on a Pro Forma Basis pursuant to the terms of this Agreement, the Test Period most recently ended prior to the date of such Permitted Acquisition, Significant Asset Sale or other event for which financial statements have been delivered to the Lenders pursuant to this Agreement.
Capital Expenditures shall mean, with respect to any Person, all expenditures by such Person which should be capitalized in accordance with GAAP and, without duplication, the amount of Capitalized Lease Obligations incurred by such Person.
-4-
Capitalized Lease Obligations shall mean, with respect to any Person, all rental obligations of such Person which, under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at the amount thereof accounted for as indebtedness in accordance with such principles; provided , that any obligations of Holdings and its Subsidiaries either existing on the Effective Date or created prior to the recharacterization described below (i) that were not included on the consolidated balance sheet of Holdings as capitalized lease obligations and (ii) that are subsequently recharacterized as capitalized lease obligations due to a change in accounting treatment or otherwise, shall for all purposes of this Agreement not be treated as Capitalized Lease Obligations or Indebtedness.
Cash Equivalents shall mean:
(1) | marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition; |
(2) | certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers acceptances having maturities of one year or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $250,000,000; |
(3) | commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moodys, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within one year from the date of acquisition; |
(4) | repurchase obligations of any financial institution satisfying the requirements of clause (2) of this definition, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; |
(5) | securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state of the United States, by any political subdivision or taxing authority of any such state or by any foreign government, the securities of which state, political subdivision, taxing authority or foreign government (as the case may be) have one of the two highest rating obtainable from either S&P or Moodys; |
(6) | securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any financial institution satisfying the requirements of clause (2) of this definition; |
(7) | money market, mutual or similar funds that invest at least 95% of their assets in assets satisfying the requirements of clauses (1) through (6) of this definition; |
-5-
(8) | money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moodys and (iii) have portfolio assets of at least $1,000,000,000; and |
(9) | with respect to Foreign Subsidiaries only, any Investments outside of the United States that are functional foreign equivalents in all material respects to the Cash Equivalents described in clauses (1) through (5) above. |
Cash Management System has the meaning assigned to such term in Section 9.18(b) .
CERCLA shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same has been amended and may hereafter be amended from time to time, 42 U.S.C. § 9601 et seq .
Change of Control shall mean the occurrence of any of the following:
(1) the direct or indirect sale, conveyance, transfer, lease or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of Holdings and its Subsidiaries, taken as a whole, to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders;
(2) the adoption of a plan relating to the liquidation or dissolution of Holdings or the Borrower;
(3) the consummation of any transaction (including any merger or consolidation) the result of which is that any person (as defined above) other than the Permitted Holders, becomes the beneficial owner (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (3) such person shall be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the voting stock of Holdings;
(4) after an initial public offering of Holdings or any direct or indirect parent of Holdings, the first day on which a majority of the members of the Board of Directors of Holdings are not Continuing Directors;
(5) the consummation of the first transaction (including any merger or consolidation), the result of which is that any person (as defined above) other than the Permitted Holders, becomes the beneficial owner (as defined above), directly or indirectly, of more of the voting stock of Holdings than is at that time beneficially owned by the Permitted Holders in the aggregate (except that for purposes of this clause (5) such Permitted Holders shall be deemed to have beneficial ownership of all shares of voting stock that such Permitted Holders have the right to acquire, whether such right is exercisable immediately or only after the passage of time); provided , that such transaction shall not constitute a Change of Control unless such person then owns, directly or indirectly, in the aggregate, more than 35% of the voting stock of Holdings; or
-6-
(6) the first day on which Holdings ceases to own directly 100% of the outstanding Equity Interests of the Borrower.
Charged-Off Receivables means any Receivable or Curo Receivable, as applicable, which has principal, interest or fees that has been delinquent for 30 days or charged off or deemed uncollectible by the Servicer or related Originator, as applicable, pursuant to the Credit Policy.
Claims shall have the meaning provided in the definition of Environmental Claims.
Code shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor.
Collateral shall mean all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Security Document, including, without limitation, all Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged Properties and all cash and Cash Equivalents delivered as collateral pursuant to Section 5.02 or 11; provided that Collateral shall not include any Collateral as defined in in the SPV Loan Agreement.
Collateral Agent shall mean the Administrative Agent acting as collateral agent for the Secured Creditors pursuant to the Security Documents.
Collection Account has the meaning assigned to such term in Section 2.15(a) .
Collection Account Bank means any account control bank reasonably acceptable to the Administrative Agent, which initially shall be Wells Fargo Bank, National Association.
Collections shall mean payment of principal, interest and fees on the Receivables Collateral, the cash and non-cash proceeds realized from the enforcement of such Receivables Collateral and any security therefor, or the Receivables Collateral, proceeds of credit, group life or non-filing insurance, or proceeds of insurance on any real or personal property which is part of the collateral for the Receivables Collateral.
Commitment Termination Fee shall mean a fee in the following amount: (i) for a Loan Commitment termination occurring between the Effective Date and the twenty-four month anniversary of the Effective Date, an amount equal to the sum of (1) the product of (A) the number of days from the date of such Loan Commitment termination until the twenty-four month anniversary of the Effective Date divided by 360 days and (B) the product of the principal amount of the Loan Commitment being terminated and the Loan Interest Rate and (2) the product of (A) 3% and (B) the aggregate principal amount of the Loan Commitments being
-7-
terminated; (ii) for a Loan Commitment termination occurring after the twenty-four month anniversary of the Effective Date and on or prior to the thirty month anniversary of the Effective Date, the product of (A) 3.0% and (B) the aggregate principal amount of the Loan Commitments being terminated; and (iii) for a Loan Commitment termination occurring after the thirty month anniversary of the Effective Date, none.
Communications shall have the meaning provided in Section 13.03(d).
Company shall mean any corporation, limited liability company, partnership or other business entity (or the adjectival form thereof, where appropriate).
Consolidated EBITDA shall mean, for any period, Consolidated Net Income for such period (without giving effect to any losses from sales of assets other than inventory sold in the ordinary course of business) adjusted by (A) adding thereto (in each case to the extent deducted in determining Consolidated Net Income for such period), without duplication, the amount of (i) total interest expense (inclusive of amortization of deferred financing fees and other original issue discount and banking fees, charges and commissions ( e.g. , letter of credit fees and commitment fees)) of Holdings and its Subsidiaries determined on a consolidated basis for such period, (ii) provision for taxes based on income and foreign withholding taxes for Holdings and its Subsidiaries determined on a consolidated basis for such period, (iii) all depreciation and amortization expense of Holdings and its Subsidiaries determined on a consolidated basis for such period, (iv) any other non-cash charges or losses (including deferred rent expense and standard purchase accounting non-cash adjustments) for such period, (v) any non-recurring cash expenses or losses for such period in an aggregate amount not to exceed $1,000,000 for any period and (vi) in the case of any period including the fiscal quarter of Holdings ending December 31, 2016, the amount of all fees and expenses incurred in connection with the Transaction during such fiscal quarter in an aggregate amount not to exceed $6,000,000 and (B) subtracting therefrom the amount of all cash payments and cash charges made during such period relating to any non-cash charges or losses taken in a previous period pursuant to clause (A)(iv) above. For the avoidance of doubt, it is understood and agreed that, to the extent any amounts are excluded from Consolidated Net Income by virtue of the proviso to the definition thereof contained herein, any add backs to Consolidated Net Income in determining Consolidated EBITDA as provided above shall be limited (or denied) in a fashion consistent with the proviso to the definition of Consolidated Net Income contained herein. Notwithstanding anything to the contrary contained above, for purposes of determining Consolidated EBITDA for any Test Period which ends prior to the first anniversary of the Effective Date, Consolidated EBITDA for all portions of such period occurring prior to the Effective Date shall be calculated in accordance with the definition of Test Period contained herein. For purposes of this definition, the term non-recurring shall mean any expense or loss as of any date that is not reasonably likely to recur within the two years following the date of occurrence of such expense or loss; provided that if there is an expense or loss similar to such expense or loss within the two years preceding such date, such expense or loss shall not be deemed non-recurring.
Consolidated Interest Expense shall mean, for any period, (i) the total consolidated interest expense of Holdings and its Subsidiaries (including, without limitation, all commissions, discounts and other commitment and banking fees and charges ( e.g. , fees with respect to letters of credit, Interest Rate Protection Agreements and Other Hedging Agreements))
-8-
for such period (calculated without regard to any limitations on payment thereof), adjusted to exclude (to the extent same would otherwise be included in the calculation above in this clause (i)) the amortization of any deferred financing costs for such period, any interest expense actually paid in kind or accreted or capitalized during such period and any interest expense on outstanding Shareholder Subordinated Notes during such period, plus (ii) without duplication, (x) that portion of Capitalized Lease Obligations of Holdings and its Subsidiaries on a consolidated basis representing the interest factor for such period and (y) the deemed interest expense ( i.e. , the interest expense which would have been applicable if the respective obligations were structured as on-balance sheet financing arrangements) with respect to all Indebtedness of Holdings and its Subsidiaries of the type described in clause (viii) of the definition of Indebtedness contained herein (to the extent same does not arise from a financing arrangement constituting an operating lease) for such period.
Consolidated Net Income shall mean, for any period, the net income (or loss) of Holdings and its Subsidiaries determined on a consolidated basis for such period (taken as a single accounting period) in accordance with GAAP (without giving effect to (x) any extraordinary gains or any non-recurring gains, (y) any non-cash income, and (z) any gains (but not losses) from sales of assets other than inventory sold in the ordinary course of business), provided that the following items shall be excluded in computing Consolidated Net Income (without duplication): (i) the net income (or loss) of any Person in which a Person or Persons other than Holdings and its Wholly-Owned Subsidiaries has an Equity Interest or Equity Interests to the extent of such Equity Interests held by Persons other than Holdings and its Wholly-Owned Subsidiaries in such Person, (ii) except for determinations expressly required to be made on a Pro Forma Basis, the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or all or substantially all of the property or assets of such Person are acquired by a Subsidiary and (iii) the net income of any Subsidiary to the extent that the declaration or payment of cash dividends or similar cash distributions by such Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary. For purposes of this definition, the term non-recurring shall mean any gain as of any date that is not reasonably likely to recur within the two years following the date of occurrence of such gain; provided that if there is a gain similar to such gain within the two years preceding such date, such gain shall not be deemed non-recurring. For purposes of the calculation of Consolidated Net Income hereunder, the cumulative effect of a change in accounting principles shall be excluded.
Consolidated Tangible Assets shall mean, with respect to Holdings as of any date, the aggregate of the assets of Holdings and its Subsidiaries, excluding goodwill and any other assets properly classified as intangible assets in accordance with GAAP, shown on the balance sheet of Holdings for the most recently ended fiscal quarter of Holdings for which financial statements are available, determined on a consolidated basis in accordance with GAAP.
Consolidated Tangible Domestic Assets shall mean, with respect to the Borrower and the Subsidiary Guarantors as of any date, the aggregate of the assets of the Borrower and the Subsidiary Guarantors, excluding (x) goodwill and any other assets properly classified as intangible assets in accordance with GAAP and (y) to the extent not otherwise excluded pursuant to preceding clause (x), the value of any Equity Interests in Foreign Subsidiaries or Unrestricted Subsidiaries of the Borrower, as would be shown on the balance sheet of the Borrower and the Subsidiary Guarantors for the most recently ended fiscal quarter of Holdings for which financial statements are available.
-9-
Consumer Finance Laws means all applicable laws, regulations, interpretations and guidance, federal, state and local, relating to the extension of consumer credit, and the creation of a security interest in personal property in connection therewith, as the case may be, and laws with respect to protection of consumers interests in connection with such transactions, including without limitation, any usury laws, any privacy laws, the Electronic Signatures in Global and National Commerce Act, the Federal Consumer Credit Protection Act, the Federal Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Federal Trade Commissions Rules and Regulations and Regulations B, E and Z of the Consumer Financial Protection Bureau, as any of the foregoing may be amended from time to time.
Contingent Obligation shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of any other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations ( primary obligations ) of any other Person (the primary obligor ) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided , however , that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
Continuing Directors shall mean, as of any date of determination, any member of the Board of Directors of Holdings who (1) was a member of such Board of Directors on the Effective Date or (2) was (x) nominated for election or elected to such Board of Directors with the approval, recommendation or endorsement of a majority of the directors who were members of such Board of Directors on the Effective Date or whose nomination or election to the Board of Directors was previously so approved or (y) designated or appointed by the Permitted Holders.
Control shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ability to exercise voting power, by contract or otherwise, and the terms Controlling and Controlled shall have meanings correlative thereto.
-10-
Control Agreement shall mean any of (a) that certain deposit account control agreement dated on or about the date hereof among Borrower, Administrative Agent and Collection Account Bank and (b) any other deposit account control agreement entered into among one or more of the Borrower, Administrative Agent and a financial institution, as each may be amended, modified, restated or extended from time to time.
Credit Documents shall mean this Agreement, the Control Agreements, the Subsidiaries Guaranty, the Pledge Agreement, the Security Agreement, the Intercreditor Agreement and, after the execution and delivery thereof pursuant to the terms of this Agreement, each Note and each other Security Document.
Credit Event shall mean the making of any Loan.
Credit Facilities shall mean the revolving credit facility.
Credit Party shall mean Holdings, the Borrower and each Subsidiary Guarantor.
Credit Policy shall mean, with respect to each Originator, the applicable credit policy for the Receivables Collateral credit and collection policy as in effect on the Effective Date, as attached hereto as Exhibit C (collectively, as amended to the extent permitted under this Agreement).
CSO Obligations shall mean obligations to purchase, or other guarantees of, consumer loans the making of which were facilitated by the Borrower or any of its Subsidiaries acting as a credit services organization or other similar service provider.
Cumulative Net Loss means, as of any date of determination and with respect to any Vintage Pool, the aggregate principal amount of related Curo Receivables in such Vintage Pool that have become Charged-Off Receivables or otherwise liquidated, net of all liquidation proceeds and other recoveries with respect to such Curo Receivables, during the period beginning on the applicable date of origination through the end of the ninth completed fiscal month.
Cumulative Net Loss Rate means, as of any date of determination and with respect to any Vintage Pool, a rate, expressed as a percentage equal to a fraction, (I) the numerator of which is the aggregate Cumulative Net Loss with respect to all related Curo Receivables in such Vintage Pool and (II) the denominator of which is the aggregate principal balance of all Curo Receivables in such Vintage Pool at the time of origination; provided , that the Cumulative Net Loss Rate shall not be calculated for any Vintage Pool (and shall not be measured hereunder) unless and until nine completed fiscal months have occurred following the origination of such Vintage Pool.
Cumulative Net Losses In-Store Receivables shall mean, with respect to any Vintage Pool, the Cumulative Net Loss Rate of the In-Store Receivables included in such Vintage Pool.
-11-
Cumulative Net Losses Online Receivables shall mean, with respect to any Vintage Pool, the Cumulative Net Loss Rate of the Online Receivables included in such Vintage Pool.
Cumulative Net Losses Title Receivables shall mean, with respect to any Vintage Pool, the Cumulative Net Loss Rate of the Title Receivables included in such Vintage Pool.
Curo Concentration Account means that certain deposit account established and maintained by Borrower, which shall initially be a deposit account at Wells Fargo Bank, National Association with the account number 6540.
Curo Receivables means the indebtedness and other obligations originally owed to any Originator in connection with any and all liens, title retention and security agreements, chattel mortgages, chattel paper, bailment leases, installment sale agreements, instruments, consumer finance paper and/or promissory notes securing and evidencing unsecured multi-pay consumer installment loans and auto title loans made, and/or time sale transactions or acquired by an Originator which were originated in accordance with the Credit Policy and, in the case of auto title loans, the repayment of which is secured by a perfected first priority security interest in a motor vehicle.
Debit Card Program Accounts shall mean the special purpose deposit accounts established by the Borrower or one of its Subsidiaries with a sponsoring bank in connection with the Borrowers general purpose reloadable debit card business, and with the funds on deposit in such accounts to be held therein solely as security against potential losses incurred by such sponsoring bank associated with customer chargeback claims, fraud or closed customer accounts.
Default shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
Defaulting Lender shall mean any Lender with respect to which a Lender Default is in effect.
Dividend shall mean, with respect to any Person, that such Person has declared or paid a dividend, distribution or returned any equity capital to its stockholders, partners or members or authorized or made any other distribution, payment or delivery of property (other than common Equity Interests of such Person) or cash to its stockholders, partners or members in their capacity as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for a consideration any shares of any class of its capital stock or any other Equity Interests outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock or any other Equity Interests of such Person outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests). Without limiting the foregoing, Dividends with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes.
-12-
Documents shall mean the Credit Documents.
Dollars and the sign $ shall each mean freely transferable lawful money of the United States.
Domestic Subsidiary of any Person shall mean any Subsidiary of such Person incorporated or organized in the United States or any State thereof or the District of Columbia.
Effective Date shall have the meaning provided in Section 13.10.
Eligible Receivables shall mean, as of the date of determination, Receivables (net of unearned interest, fees, unearned discounts, insurance commissions, reserves and holdbacks thereon) that are Receivables designated as product type M in Curo Intermediates system, and solely in the case of Title Receivables, Receivables which are Chattel Paper, and which conform to the warranties set forth in Section 8.24, in which Administrative Agent has a validly perfected first priority Lien, and which are not any of the following:
(a) Receivables that are 30 days delinquent or are otherwise Charged-Off Receivables;
(b) Receivables to employees, affiliates (other than their employees) or shareholders other than on an arms length basis;
(c) Receivables with respect to which the account debtor is not a natural person domiciled in the United States;
(d) Receivables not denominated in U.S. Dollars;
(e) Receivables involved in litigation or subject to legal, bankruptcy or insolvency proceedings or Receivables with obligors subject to bankruptcy or insolvency proceedings;
(f) Receivables with a balloon payment and/or Receivables that are non-amortizing accounts with 3 or more monthly payments;
(g) Receivables with terms in excess of 48 months;
(h) Receivables originated, acquired or participated in that are not in compliance with the Credit Policy, the Installment Loan Program of Borrower or the Originators underwriting guidelines;
(i) Receivables that violate applicable consumer protection state or usury laws in any material respect;
-13-
(j) Receivables where the obligor has missed the first scheduled payment of principal, interest or any other costs, fees and expenses;
(k) Receivables with respect to which any obligations of the related Originator or any assignee thereof to fund additional advances or other amounts remains outstanding;
(l) Receivables that are subject to assignment or confidentiality restrictions applicable to the related Originator or Borrower;
(m) Receivables made to residents in states where the related Originator is not currently licensed or registered as required by applicable state law when such loan was made;
(n) Receivables that are single-pay accounts requiring repayment in a single payment;
(o) Receivables that are open-ended or are able to roll or defer with respect to maturity date;
(p) Unsecured receivables with a principal amount greater than $5,000 that are unsecured;
(q) Title Receivables with a principal amount greater than $25,000;
(r) Receivables that have been modified in any respect, excluding immaterial modifications not impacting the existing economics or payment schedule of the loan by more than fifteen (15) days;
(s) Receivables where any Credit Party acts or acted as a credit services organization or credit access business, each as defined by relevant state statutes; provided, that if a Credit Party acts or acted as a credit services organization or credit access business with respect to a particular state, only the Receivables generated as a result of such license or registration shall not qualify as Eligible Receivables pursuant to this clause; or
(t) Receivables originated in the states of Arizona, California, Missouri, Mississippi, New Mexico and such other states where SPV Borrower is permitted by applicable requirements of law to acquire, hold and enforce such Receivables without the grant of a necessary license or approval from any applicable governmental authority; provided, in any such state where SPV Borrower has received such license or approval as evidenced by a license, permit, authorization, certificate or other similar document evidencing the same from a Governmental Authority, then such state will be deemed to be added to this clause (t) as of the business day immediately following the effective date of such document evidencing such license or approval.
Notwithstanding the foregoing; Administrative Agent shall have a validly perfected second priority Lien (junior to the lien held by Three-Year Credit Agreement Secured Parties), on all Collateral which constitutes Three-Year Credit Agreement Collateral.
-14-
Eligible Transferee shall mean and include a commercial bank, an insurance company, a finance company, a financial institution, any fund that invests in loans or any other accredited investor (as defined in Regulation D of the Securities Act) (other than an individual), but in any event excluding Holdings and its Subsidiaries, Unrestricted Subsidiaries and Affiliates.
Embargoed Person shall have the meaning provided in Section 10.15.
Environmental Claims shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, Claims ), including, without limitation, (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials.
Environmental Law shall mean any Federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety (to the extent relating to the handling of or exposure to Hazardous Materials) or Hazardous Materials, including, without limitation, CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq .; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq .; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. ; the Clean Air Act, 42 U.S.C. § 7401 et seq .; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq .; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq .; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq .; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq .; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq . (to the extent relating to the handling of or exposure to Hazardous Materials); and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.
Environmental Permit shall mean any permit, license, approval, consent, registration, notification, exemption or other authorization required by or from a Governmental Authority under any Environmental Law.
Equity Interests of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interest in (however designated) equity of such Person, including any common stock, preferred stock, any limited or general partnership interest and any limited liability company membership interest.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
-15-
ERISA Affiliate shall mean each person (as defined in Section 3(9) of ERISA) which together with Holdings or a Subsidiary of Holdings would be deemed to be a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.
Event of Default shall have the meaning provided in Section 11.
Excess Concentration Amounts shall include the following:
(a) Aggregate Eligible Receivables where the original term is greater than 9 months in excess of 75% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(b) The Principal Receivables balance of the Aggregate Title Eligible Receivables in excess of 55% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(a) The Principal Receivables balance of the second-lien Aggregate Title Eligible Receivables in excess of 35% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(b) The Principal Receivables balance of the Aggregate Title Eligible Receivables with the lowest interest rate until the weighted average interest rate of all the remaining Aggregate Title Eligible Receivables ( i.e. , excluding such lowest interest rate Aggregate Title Eligible Receivables) is at or above 95%;
(c) The Principal Receivables balance of the Aggregate Eligible Receivables constituting unsecured Aggregate Eligible Receivables with the lowest interest rate until the weighted average interest rate of all the remaining Aggregate Eligible Receivables constituting unsecured Aggregate Eligible Receivables ( i.e. , excluding such lowest interest rate Aggregate Eligible Receivables) is at or above 200%;
(d) The Principal Receivables balance of the Aggregate Eligible Receivables with the lowest FICO score until the weighted average FICO score of all the remaining Aggregate Eligible Receivables ( i.e. , excluding such lowest FICO score Receivables) is at or above 575;
(e) The Principal Receivables balance of the Aggregate Eligible Receivables with the longest original term until the weighted average original term to maturity of all the remaining Aggregate Eligible Receivables ( i.e. , excluding such longest original maturity Aggregate Eligible Receivables) is at or below 30 months;
(f) The Principal Receivables balance of the Aggregate Eligible Receivables with the highest original principal balance until the average original principal balance of the remaining Aggregate Eligible Receivables ( i.e. , excluding such highest original principal balance Aggregate Eligible Receivables) is at or below $800;
-16-
(g) Aggregate Eligible Receivables where the applicable obligors have monthly income less than $2,000 in excess of 30% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date;
(h) Aggregate Online Eligible Receivables in excess of 30% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date; or
(i) Aggregate Eligible Receivables originated in the State of California in excess of 60% of the Principal Receivables balance of all Aggregate Eligible Receivables as of such date.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Executive Order shall have the meaning provided in Section 8.17(a).
Existing Affiliate Agreements shall have the meaning provided in Section 6.05(e).
Existing Indebtedness shall have the meaning provided in Section 8.21.
Existing Indebtedness Agreements shall have the meaning provided in Section 6.05(d).
Facilities Excess Concentration Amount means the product of (a) the Excess Concentration Amount and (b) the Facilities Percentage.
Facilities Percentage means an amount equal to (a) the outstanding principal balance of the Notes divided by (b) the sum of (i) the amount in the foregoing clause (a) and (ii) the outstanding principal balance of the SPV Notes.
Facility Availability means, with respect to any date of determination prior to the Termination Date, an amount equal to (i) all Collections on deposit in the Collection Account minus (ii) the total amount of funds estimated to be distributed pursuant to clauses First through Fourth of Section 2.14 on the immediately succeeding Payment Date.
Fair Market Value shall mean, with respect to any asset (including any Equity Interests of any Person), the price at which a willing buyer, not an Affiliate of the seller, and a willing seller who does not have to sell, would agree to purchase and sell such asset, as determined in good faith by the board of directors or other governing body or, pursuant to a specific delegation of authority by such board of directors or governing body, a designated senior executive officer, of Holdings, or the Subsidiary of Holdings selling such asset.
-17-
FATCA shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any applicable agreement entered into pursuant to Section 1471(b)(1) of the Code, and any applicable intergovernmental agreement and laws, regulations or official administrative guidance implementing such intergovernmental agreements.
Federal Funds Rate shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary to the next 1/100th of 1%) of the quotations for the day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.
Fees shall mean all amounts payable pursuant to or referred to in Section 4.01.
Foreign Lender shall mean a Lender that is not a United States person as defined in Section 7701(a)(30) of the Code.
Foreign Pension Plan shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program (other than any plan, fund or program required by applicable Requirement of Law or maintained by any Governmental Authority or to which more than one employer contributes or is required to contribute which is) established or maintained outside the United States by Holdings or any one or more of its Subsidiaries primarily for the benefit of employees of Holdings or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
Foreign Subsidiary of any Person shall mean any Subsidiary of such Person that is not a Domestic Subsidiary.
Funds Release Request means a notice substantially in the form of Exhibit Q .
GAAP shall mean generally accepted accounting principles in the United States as in effect from time to time; provided that determinations in accordance with GAAP for purposes of Sections 9.16 and 10, including defined terms as used therein are subject (to the extent provided therein) to Section 13.07(a).
Governmental Approval shall mean any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice of, issued by, from or to, or other act by or in respect of, any Governmental Authority.
Governmental Authority shall mean any nation or government, any state, local or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. The term Governmental Authority shall further include any institutional review board, ethics committee, data monitoring committee, or other committee or entity with defined authority to oversee regulatory matters.
-18-
Guaranteed Creditors shall mean and include each of the Administrative Agent, the Collateral Agent and the Lenders.
Guaranteed Obligations shall mean (i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of the principal, premium (if any) and interest on each Note issued by, and all Loans made to, the Borrower under this Agreement, together with all the other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), indebtedness and liabilities (including, without limitation, indemnities, fees (including, but not limited to the Prepayment Fee, the Fee, and the Commitment Termination Fee) and interest (including any interest, fees and/or expenses accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for herein, whether or not such interest, fees and/or expenses are an allowed claim in any such proceeding) thereon) of the Borrower to the Lenders, the Administrative Agent and the Collateral Agent now existing or hereafter incurred under, arising out of or in connection with this Agreement and each other Credit Document to which the Borrower is a party and the due performance and compliance by the Borrower with all the terms, conditions and agreements contained in the Credit Agreement and in each such other Credit Document and (ii) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness (including any interest, fees and/or expenses accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for herein, whether or not such interest, fees and/or expenses are an allowed claim in any such proceeding) of the Borrower owing under any Interest Rate Protection Agreement or Other Hedging Agreement entered into by the Borrower with any Lender or any affiliate thereof (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason) so long as such Lender or affiliate participates in such Interest Rate Protection Agreement or Other Hedging Agreement and their subsequent assigns, if any, whether now in existence or hereafter arising, and the due performance and compliance with all terms, conditions and agreements contained therein.
Guarantor shall mean each of Holdings and each Subsidiary Guarantor.
Guaranty shall mean each of the Holdings Guaranty and the Subsidiaries Guaranty.
Hazardous Materials shall mean (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of hazardous substances, hazardous waste, hazardous materials, extremely hazardous substances, restricted hazardous waste, toxic substances, toxic pollutants, contaminants, or pollutants, or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or Release of which is prohibited, limited or regulated as posing a significant risk of harm to human health, safety, or the environment by any Governmental Authority.
-19-
Holdings shall have the meaning provided in the first paragraph of this Agreement.
Holdings Common Stock shall have the meaning provided in Section 8.13(a).
Holdings Guaranty shall mean the guaranty of Holdings pursuant to Section 14.
Indebtedness shall mean, as to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn or paid under all letters of credit, bankers acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of such Person and all unpaid drawings and unreimbursed payments in respect of such letters of credit, bankers acceptances, bank guaranties, surety and appeal bonds and similar obligations, (iii) all indebtedness of the types described in clause (i), (ii), (iv), (v), (vi), (vii) or (viii) of this definition secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person ( provided that, if the Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the Fair Market Value of the property to which such Lien relates), (iv) all Capitalized Lease Obligations of such Person, (v) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e. , take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person, (vii) all obligations under any Interest Rate Protection Agreement, any Other Hedging Agreement or under any similar type of agreement and (viii) all Off-Balance Sheet Liabilities of such Person. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is directly liable therefor as a result of such Persons ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, Indebtedness shall not include (x) trade payables, accrued expenses and deferred tax and other credits incurred by any Person in accordance with customary practices and in the ordinary course of business of such Person or (y) CSO Obligations.
Indemnitee shall have the meaning provided in Section 13.01(b).
In-Store Eligible Receivables shall mean all In-Store Receivables that meet the definition of an Eligible Receivable.
In-Store Receivables shall mean all Receivables that were originated (and, for the avoidance of doubt, fully funded) in a brick and mortar store front location of the Originators in accordance with applicable Requirements of Law.
Intercompany Loans shall mean any cash intercompany loans or advances between or among Holdings or any of its Subsidiaries (whether pursuant to Section 10.05(viii), (xvii), (xviii) or (xx) or otherwise), in each case so long as (i) any Intercompany Loan held by a Credit Party shall be evidenced by an Intercompany Note (which may, at the election of the
-20-
Borrower, be in the form of a global Intercompany Note), (ii) each such Intercompany Note owned or held by a Credit Party shall be pledged to the Collateral Agent pursuant to the Pledge Agreement, and (iii) each Intercompany Loan made by any Subsidiary of the Borrower that is not a Credit Party to a Credit Party shall be subject to the subordination provisions contained in the respective Intercompany Note.
Intercompany Note shall mean a promissory note evidencing Intercompany Loans, duly executed and delivered substantially in the form of Exhibit M (or such other form as shall be reasonably satisfactory to the Administrative Agent), with blanks completed in conformity herewith.
Intercreditor Agreement shall have the meaning provided in Section 6.16.
Interest Period shall have the meaning provided in Section 2.09.
Interest Rate Protection Agreement shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement or other similar agreement or arrangement.
Internal Control Event shall mean a material weakness in, or fraud (whether actual, constructive or otherwise) that involves management or other employees who have a material role in, Holdings or any of its Subsidiaries internal controls over financial reporting, cash control or other financial or regulatory matters.
Investments shall have the meaning provided in Section 10.05.
IRS shall mean the United States Internal Revenue Service.
Key Person shall have the meaning provided in Section 11.15.
Leaseholds of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.
Lender shall mean each financial institution listed on Schedule I, as well as any Person that becomes a Lender hereunder pursuant to Section 13.04(b).
Lender Default shall mean (i) the wrongful refusal (which has not been retracted) or the failure of a Lender to make available its portion of any Borrowing or (ii) a Lender having notified in writing the Borrower and/or the Administrative Agent that such Lender does not intend to comply with its obligations under Section 2.01(a).
Level I Trigger Event means the occurrence of any of the following:
(a) Maximum Cumulative Net Loss Rate In-Store Receivables : the Cumulative Net Losses In-Store Receivables as of the last day of any fiscal month, is greater than 24.2%;
-21-
(b) Maximum Cumulative Net Loss Rate Online Receivables : the Cumulative Net Losses Online Receivables as of the last day of any fiscal month, is greater than 56.8%; or
(c) Maximum Cumulative Net Loss Rate Title Receivables : the Cumulative Net Losses Title Receivables as of the last day of any fiscal month, is greater than 25.0%;
provided , however , that any Level I Trigger Event may be cured if such Level I Trigger Event or any other Level I Trigger Event does not exist for two (2) consecutive fiscal months following the period during which such Level I Trigger Event occurred.
Level II Trigger Event means the occurrence of any of the following:
(a) Maximum Cumulative Net Loss Rate In-Store Receivables : the Cumulative Net Losses In-Store Receivables as of the last day of any fiscal month, is greater than 26.2%;
(b) Maximum Cumulative Net Loss Rate Online Receivables : the Cumulative Net Losses Online Receivables as of the last day of any fiscal month, is greater than 61.5%; or
(c) Maximum Cumulative Net Loss Rate Title Receivables : the Cumulative Net Losses Title Receivables as of the last day of any fiscal month, is greater than 27.1%.
LIBOR Rate shall mean the three (3) month London Interbank Offered Rate in effect two (2) Business Days prior to the date an Loan is to be made as found in the Wall Street Journal, Interactive Edition, or any successor edition or publication; provided any change in the LIBOR Rate during a calendar month that exists as of the last Business Day of a calendar month shall take effect for purposes of Section 2.08(a) hereof on the first (1st) day of the immediately following month.
Lien shall mean any mortgage, pledge, hypothecation, assignment for collateral purposes, deposit arrangement, encumbrance, lien (statutory or otherwise), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).
Loan shall have the meaning provided in Section 2.01(a).
Loan Commitment shall mean, for each Lender, the amount set forth opposite such Lenders name in Schedule I directly below the column entitled Loan Commitment, as same may be (x) reduced from time to time or terminated pursuant to Sections 4.02, 4.03 and/or 11, as applicable or (y) adjusted from time to time as a result of assignments to or from such Lender pursuant to Section 13.04(b).
Loan Interest Rate shall have the meaning provided in Section 2.08(a).
-22-
Management Agreements shall have the meaning provided in Section 6.05(b).
Margin Stock shall have the meaning provided in Regulation U.
Material Adverse Effect shall mean any development, event, condition, obligation, liability or circumstance or set of events, conditions, obligations, liabilities or circumstances or any change(s) which:
(a) has, had or reasonably could be expected to have a material adverse effect upon or material adverse change in (i) the legality, validity or enforceability of this Agreement or any other Credit Document, (ii) the status, perfection or priority of any Lien granted to Administrative Agent or any Lender under any of the Credit Documents, (iii) the value, validity, enforceability or collectability of 15% or more of the Receivables or the other Collateral (measured in both cases by the outstanding amount of the Receivables or other Collateral), (iv) the rights and remedies of the Administrative Agent, Lenders or holders of any Notes under the Credit Documents, or (v) the business, properties, assets, operations, the collateral, results of operations, or financial condition of Holdings and its Subsidiaries, taken as a whole; or
(b) has materially impaired or reasonably could be expected to materially impair the ability of Holdings and its Subsidiaries, taken as a whole, to perform the Obligations or to consummate the transactions contemplated under the Credit Documents.
Maturity Date shall mean the date that is six (6) months after the Effective Date.
Maximum Principal Amount shall mean the lesser of (a) Fifty-Five Million Dollars ($55,000,000) and (b)(i) One Hundred Fifty Million Dollars ($150,000,000) minus (ii) the Maximum Principal Amount as defined in the SPV Loan Agreement.
Minimum Borrowing Amount shall mean $1,000,000.
Modified Consolidated Net Income shall mean, at any date of determination thereof, Consolidated Net Income at such date as defined in (and determined in accordance with) the Senior Secured Notes Indenture as in effect on the Effective Date.
Monthly Statement shall mean the certificate in substantially the form of Exhibit O attached hereto and made a part hereof.
Moodys shall mean Moodys Investors Service, Inc.
Mortgage shall mean a mortgage, deed of trust, deed to secure debt or similar security instrument.
Mortgage Policy shall mean a Lenders title insurance policy (Form 1992).
Mortgaged Property shall mean any Real Property owned by Holdings or any of its Subsidiaries which is encumbered (or required to be encumbered) by a Mortgage pursuant to the terms hereof.
-23-
Net Cash Proceeds shall mean for any event requiring a reduction of the Total Loan Commitment pursuant to Section 4.03, the gross cash and Cash Equivalent proceeds (including any cash and Cash Equivalents received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) received from any such event.
Net Loss means, as of any date of determination and with respect to any Vintage Pool, the aggregate principal amount of Curo Receivables in such Vintage Pool that have become Charged-Off Receivables or otherwise liquidated, net of all liquidation proceeds and other recoveries with respect to such Curo Receivables, during the most recently completed fiscal month.
Net Sale Proceeds shall mean for any sale or other disposition of assets, the gross cash and Cash Equivalent proceeds (including any cash and Cash Equivalents received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such sale or other disposition of assets, net of (i) reasonable transaction costs (including, without limitation, any underwriting, brokerage or other customary selling commissions, reasonable legal, advisory and other fees and expenses (including title and recording expenses), associated therewith and sales, VAT and transfer taxes arising therefrom), (ii) payments of unassumed liabilities relating to the assets sold or otherwise disposed of at the time of, or within 30 days after, the date of such sale or other disposition, (iii) the amount of such gross cash proceeds required to be used to permanently repay any Indebtedness (other than Indebtedness secured by the Security Documents and the Senior Secured Notes Security Documents) which is secured by the respective assets which were sold or otherwise disposed of, and (iv) the estimated net marginal increase in income taxes which will be payable by Holdings consolidated group or any Subsidiary of Holdings as a result of such sale or other disposition; provided , however , that such gross proceeds shall not include any portion of such gross cash proceeds which Holdings determines in good faith should be reserved for post-closing adjustments (to the extent Holdings delivers to the Lenders a certificate signed by an Authorized Officer as to such determination), it being understood and agreed that on the day that all such post-closing adjustments have been determined (which shall not be later than six months following the date of the respective asset sale), the amount (if any) by which the reserved amount in respect of such sale or disposition exceeds the actual post-closing adjustments payable by Holdings or any of its Subsidiaries shall constitute Net Sale Proceeds on such date received by Holdings and/or any of its Subsidiaries from such sale or other disposition.
New Borrower shall have the meaning provided in Section 10.16.
New Credit Facility shall have the meaning provided in Section 10.16.
New Credit Facility Opportunity shall have the meaning provided in Section 10.16(a).
New Credit Facility ROFR Notice shall have the meaning provided in Section 10.16(a).
-24-
Non-Defaulting Lender shall mean and include each Lender other than a Defaulting Lender.
Non-Wholly Owned Subsidiary shall mean, as to any Person, each Subsidiary of such Person which is not a Wholly-Owned Subsidiary of such Person.
Note shall have the meaning provided in Section 2.05(a).
Notice of Borrowing shall have the meaning provided in Section 2.03(a).
Notice Office shall mean the office of the Administrative Agent located at 227 W. Monroe Street, Suite 3900, Chicago, Illinois 60606, Attention: Scott R. Zemnick, General Counsel, or such other office or person as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.
Obligations shall mean all amounts owing to the Administrative Agent, the Collateral Agent or any Lender pursuant to the terms of this Agreement and each other Credit Document, including, without limitation, all amounts in respect of any principal, premium, interest (including any interest, fees and/or expenses accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in this Agreement, whether or not such interest, fees and/or expenses are an allowed claim under any such proceeding or under applicable state, federal or foreign law), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts.
OFAC shall have the meaning provided in Section 8.17(b)(v).
Off-Balance Sheet Liabilities of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactions that do not create a liability on the balance sheet of such Person, (iii) any obligation under a Synthetic Lease or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.
Online Eligible Receivables shall mean all Online Receivables that meet the definition of an Eligible Receivable.
Online Receivables shall mean all Receivables that were originated (and, for the avoidance of doubt, fully funded) by the Originators through an online platform in accordance with applicable Requirements of Law.
Order shall mean any judgment, decree, verdict, order, consent order, consent decree, writ, declaration or injunction.
Organizational Documents shall mean, with respect to any Person, (i) in the case of any corporation, the certificate of incorporation or deed of incorporation and by-laws (or similar documents) of such Person, (ii) in the case of any limited liability company, the
-25-
certificate or articles of formation or organization and operating agreement or memorandum and articles of association (or similar constitutive documents) of such Person, (iii) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar constitutive documents) of such Person (and, where applicable, the equityholders or shareholders registry of such Person), (iv) in the case of any general partnership, the partnership agreement (or similar constitutive document) of such Person, (v) in any other case, the functional equivalent of the foregoing, and (vi) any shareholder, voting trust or similar agreement between or among any holders of Equity Interests of such Person.
Originators mean A Speedy Cash Car Title Loans, LLC, Advance Group, Inc., Attain Finance, LLC, Cash Colorado, LLC, Concord Finance, Inc., Evergreen Financial Investments, Inc., FMMR Investments, Inc., Galt Ventures, LLC, Principal Investments, Inc., SCIL, Inc., SCIL Texas, LLC, SC Aurum, LLC, SC Texas MB, Inc., Speedy Cash, Speedy Cash Illinois, Inc., Todd Car Title, Inc., and Todd Financial, Inc.
Other Hedging Agreements shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar arrangements, or arrangements designed to protect against fluctuations in currency values or commodity prices.
Patriot Act shall have the meaning provided in Section 13.17.
Payment Office shall mean the office of the Administrative Agent located at 227 W. Monroe Street, Suite 3900, Chicago, Illinois 60606 or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.
PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
Pension Funding Rules shall mean the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to each Plan that is a single-employer plan as defined in Section 4001(a)(3) of ERISA and set forth in Section 412 and 430 of the Code and Sections 302 and 303 of ERISA, as applicable.
Permitted Acquisition shall mean the acquisition by the Borrower or a Wholly-Owned Subsidiary of the Borrower of an Acquired Entity or Business (including by way of merger of such Acquired Entity or Business with and into the Borrower (so long as the Borrower is the surviving corporation), a Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor (so long as the Subsidiary Guarantor is the surviving entity) or, in the case of an Permitted Acquisition by a Wholly-Owned Foreign Subsidiary, a Wholly-Owned Foreign Subsidiary (so long as a Wholly-Owned Foreign Subsidiary is the surviving entity)), provided that (in each case) (A) the consideration paid or to be paid by the Borrower or such Wholly-Owned Subsidiary consists solely of cash (including proceeds of Loans), Holdings Common Stock, Qualified Preferred Stock, the issuance or incurrence of Indebtedness otherwise permitted by Section 10.04 and the assumption/acquisition of any Indebtedness (calculated at face value) which is permitted to remain outstanding in accordance with the requirements of Section 10.04, (B) in the case of the acquisition of 100% of the Equity Interests of any Acquired Entity or Business (including by way of merger), such Acquired Entity or Business shall own no
-26-
Equity Interests of any other Person (other than de minimis amounts) unless either (x) such Acquired Entity or Business owns 100% of the Equity Interests of such other Person or (y) if such Acquired Entity or Business owns Equity Interests in any other Person which is a Non-Wholly Owned Subsidiary of such Acquired Entity or Business, (1) such Acquired Entity or Business shall not have been created or established in contemplation of, or for purposes of, the respective Permitted Acquisition, (2) any such Non-Wholly Owned Subsidiary of the Acquired Entity or Business shall have been a Non-Wholly Owned Subsidiary of such Acquired Entity or Business prior to the date of the respective Permitted Acquisition and shall not have been created or established in contemplation thereof and (3) such Acquired Entity or Business and/or its Wholly-Owned Subsidiaries own at least 80% of the total value of all the assets owned by such Acquired Entity or Business and its subsidiaries (for purposes of such determination, excluding the value of the Equity Interests of Non-Wholly Owned Subsidiaries held by such Acquired Entity or Business and its Wholly-Owned Subsidiaries), (C) except to the extent permitted by Section 9.16, all or substantially all of the business, division or product line acquired pursuant to the respective Permitted Acquisition, or the business of the Person acquired pursuant to the respective Permitted Acquisition and its Subsidiaries taken as a whole, is in the United States, (D) the Acquired Entity or Business acquired pursuant to the respective Permitted Acquisition is in a business permitted by Section 10.13 and (E) all requirements of Sections 9.16, 10.02 and 10.13 applicable to Permitted Acquisitions are satisfied. Notwithstanding anything to the contrary contained in the immediately preceding sentence, an acquisition which does not otherwise meet the requirements set forth above in the definition of Permitted Acquisition shall constitute a Permitted Acquisition if, and to the extent, the Required Lenders agree in writing, prior to the consummation thereof, that such acquisition shall constitute a Permitted Acquisition for purposes of this Agreement.
Permitted Encumbrance shall mean, with respect to any Mortgaged Property, such exceptions to title as are set forth in the Mortgage Policy delivered with respect thereto, all of which exceptions must be acceptable to the Administrative Agent in its reasonable discretion.
Permitted Holders shall mean, collectively, (i) the Sponsor, (ii) Douglas Rippel, Michael McKnight and Chad Faulkner and any majority owned and Controlled Affiliate of any such individual, (iii) Joseph Genova, (iv) the J.P. Genova Family Trust, (v) any (a) spouse or lineal descendent (whether natural or adopted) of any Person listed in preceding clauses (i) through (iv) or (b) trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or persons beneficially holding an 80% or more controlling interest of which consist of such Person and/or any of the Persons referred to in the immediately preceding clause (a) or (vi) in the event of the incompetence or death of any of the Persons described in preceding clauses (ii) through (v), such Persons estate, executor, administrator, committee or other personal representative, in each case who at any particular date shall be the beneficial owner or have the right to acquire, directly or indirectly, capital stock of Holdings.
Permitted Liens shall have the meaning provided in Section 10.01.
Permitted Unsecured Debt shall mean Indebtedness issued in accordance with Section 10.09(iv).
-27-
Person shall mean any individual, partnership, joint venture, firm, corporation, association, limited liability company, trust or other enterprise or any Governmental Authority.
Plan shall mean any pension plan as defined in Section 3(2) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) Holdings or a Subsidiary of Holdings or an ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which Holdings, a Subsidiary of Holdings or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.
Platform shall have the meaning provided in Section 13.03.
Pledge Agreement shall have the meaning provided in Section 6.11.
Pledge Agreement Collateral shall mean all Collateral as defined in the Pledge Agreement.
Pledgee shall have the meaning provided in the Pledge Agreement.
Post-Closing Period shall, solely with respect to a Permitted Acquisition, have the meaning provided in Section 9.16(a).
Pre-Approved Replacement means each of (a) Bill Baker, (b) Chad Faulkner, (c) Doug Rippel and (d) each other person proposed in writing by the Borrower Parties to the Administrative Agent and consented to by the Administrative Agent in writing, such consent not to be unreasonably withheld, conditioned or delayed.
Preferred Equity , as applied to the Equity Interests of any Person, shall mean Equity Interests of such Person (other than common Equity Interests of such Person) of any class or classes (however designed) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Equity Interests of any other class of such Person, and shall include any Qualified Preferred Stock.
Prepayment Fee shall mean a fee in the following amount: (i) for a prepayment of the Loan occurring between the Effective Date and the twenty-four month anniversary of the Effective Date, an amount equal to the sum of (1) the product of (A) the number of days from the date of such prepayment until the twenty-four month anniversary of the Effective Date divided by 360 days and (B) the product of the principal amount of the Loan being prepaid and the Loan Interest Rate, and (2) the product of (A) 3.0% and (B) the principal amount of the Loan being prepaid; (ii) for a prepayment of the Loan occurring after the twenty-four month anniversary of the Effective Date and on or prior to the thirty month anniversary of the Effective Date, the product of (A) 3.0% and (B) the principal amount of the Loan being prepaid; and (iii) for a prepayment of the Loan occurring after the thirty month anniversary of the Effective Date until the Effective Date, none.
Principal Receivables shall mean with respect to Receivables as of any date of determination, the aggregate amount advanced under such Receivables less (i) amounts paid under such Receivables and attributable to principal pursuant to the terms thereof and (ii) unearned interest, unearned insurance commissions, unearned insurance premiums, and any other unearned income represented on the Credit Parties balance sheet.
-28-
Pro Forma Basis shall mean, in connection with any calculation of compliance with any financial covenant or financial term, the calculation thereof after giving effect on a pro forma basis to (x) the incurrence of any Indebtedness (other than revolving Indebtedness, except to the extent same is incurred to refinance other outstanding Indebtedness or to finance a Permitted Acquisition) after the first day of the relevant Calculation Period or Test Period, as the case may be, as if such Indebtedness had been incurred (and the proceeds thereof applied) on the first day of such Test Period or Calculation Period, as the case may be, (y) the permanent repayment of any Indebtedness (other than revolving Indebtedness, except to the extent accompanied by a corresponding permanent commitment reduction) after the first day of the relevant Test Period or Calculation Period, as the case may be, as if such Indebtedness had been retired or repaid on the first day of such Test Period or Calculation Period, as the case may be, and (z) any Permitted Acquisition or any Significant Asset Sale then being consummated, as well as any other Permitted Acquisition or any other Significant Asset Sale if consummated after the first day of the relevant Test Period or Calculation Period, as the case may be, and on or prior to the date of the respective Permitted Acquisition or Significant Asset Sale, as the case may be, then being effected, with the following rules to apply in connection therewith:
(i) all Indebtedness (x) (other than revolving Indebtedness, except to the extent same is incurred to refinance other outstanding Indebtedness, to finance a Permitted Acquisition, to finance a Dividend pursuant to Section 10.03(x) or to finance an Investment pursuant to Section 10.05(xviii)) incurred or issued after the first day of the relevant Test Period or Calculation Period (whether incurred to finance a Permitted Acquisition, to refinance Indebtedness, to finance a Dividend, to finance an Investment or otherwise) shall be deemed to have been incurred or issued (and the proceeds thereof applied) on the first day of such Test Period or Calculation Period, as the case may be, and remain outstanding through the date of determination and (y) (other than revolving Indebtedness, except to the extent accompanied by a corresponding permanent commitment reduction) permanently retired or redeemed after the first day of the relevant Test Period or Calculation Period, as the case may be, shall be deemed to have been retired or redeemed on the first day of such Test Period or Calculation Period, as the case may be, and remain retired through the date of determination;
(ii) all Indebtedness assumed to be outstanding pursuant to preceding clause (i) shall be deemed to have borne interest at (x) the rate applicable thereto, in the case of fixed rate indebtedness, or (y) the rates which would have been applicable thereto during the respective period when same was deemed outstanding, in the case of floating rate Indebtedness (although interest expense with respect to any Indebtedness for periods while same was actually outstanding during the respective period shall be calculated using the actual rates applicable thereto while same was actually outstanding); provided that all Indebtedness (whether actually outstanding or deemed outstanding) bearing interest at a floating rate of interest shall be tested on the basis of the rates applicable at the time the determination is made pursuant to said provisions; and
-29-
(iii) in making any determination of Consolidated EBITDA on a Pro Forma Basis, pro forma effect shall be given to any Permitted Acquisition or any Significant Asset Sale if effected during the respective Calculation Period or Test Period as if same had occurred on the first day of the respective Calculation Period or Test Period, as the case may be, taking into account, in the case of any Permitted Acquisition, (a) factually supportable and identifiable reasonable cost savings and expenses which would otherwise be accounted for as an adjustment pursuant to Article 11 of Regulation S-X under the Securities Act, as if such cost savings or expenses were realized on the first day of the respective period or (b) additional good faith pro forma adjustments (as certified by an Authorized Officer of Holdings) arising out of cost savings initiatives attributable to such transaction and additional costs associated with the combination of the operations of such Permitted Acquisition or Significant Asset Sale with the operations of Holdings and its Subsidiaries, in each case, that are factually supportable and identifiable and are expected to be realized within the twelve-month period immediately following such Permitted Acquisition or Significant Asset Sale, and are in each case, being given pro forma effect, as a result of (x) reduction of costs related to administrative functions and (y) reductions of costs from the consolidation of operations and streamlining of corporate overhead (taking into account, for purposes of determining such compliance, the historical financial statements of the Permitted Acquisition or Significant Asset Sale and the consolidated financial statements of Holdings and its Subsidiaries, assuming such Permitted Acquisition or Significant Asset Sale, and all other Permitted Acquisitions or Significant Asset Sales that have been consummated during the beginning of such period, and any Indebtedness or other liabilities repaid or incurred in connection therewith had been consummated and incurred or repaid at the beginning of such period (and assuming that such Indebtedness to be incurred bears interest during any portion of the applicable period prior to the relevant acquisition at the interest rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination)).
Projections shall mean the projections dated September 28, 2016, that were prepared by or on behalf of the Borrower in connection with the Transaction and delivered to the Administrative Agent and the Lenders prior to the Effective Date.
Property shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
Qualified Preferred Stock shall mean any Preferred Equity of Holdings so long as the terms of any such Preferred Equity (x) do not contain any mandatory put, redemption, repayment, sinking fund or other similar provision prior to the one- year anniversary of the Termination Date, (y) do not require the cash payment of dividends or distributions that would otherwise be prohibited by the terms of this Agreement or any other agreement or contract of Holdings or any of its Subsidiaries and (z) are otherwise reasonably satisfactory to the Administrative Agent.
Real Property of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.
-30-
Receivables shall mean the indebtedness and other obligations owed to any Borrower or any Guarantor in connection with any and all liens, title retention and security agreements, chattel mortgages, chattel paper, bailment leases, installment sale agreements, instruments, consumer finance paper and/or promissory notes securing and evidencing unsecured multi-pay consumer installment loans and auto title loans made, and/or time sale transactions or acquired by a Borrower or a Guarantor which were originated in accordance with the Credit Policy and, in the case of auto title loans, the repayment of which is secured by a perfected first priority security interest in a motor vehicle.
Receivables Collateral shall mean any Collateral which are Eligible Receivables reflected on the most-recent schedule of Receivables delivered in accordance with Section 9.01(d).
Recovery Event shall mean the receipt by Holdings or any of its Subsidiaries of any cash insurance proceeds or condemnation awards payable (i) by reason of theft, loss, physical destruction, damage, taking or any other similar event with respect to any property or assets of Holdings or any of its Subsidiaries and (ii) under any policy of insurance required to be maintained under Section 9.03.
Register shall have the meaning provided in Section 13.15.
Regulation D shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.
Regulation T shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
Regulation U shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
Regulation X shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
Regulatory Actions shall mean any and all administrative or regulatory action, demand, notice of non-compliance or violation, investigation, formal or informal enforcement action (including, but not limited to, commitment letter, memorandum of understanding, written agreement, cease and desist order, or civil money penalty assessment), or similar action involving any state or federal regulatory agency or body.
Regulatory Trigger Event shall mean (a) Holdings, any Guarantor, any Borrower, or any Subsidiaries of any Borrower becomes the subject of any investigation, stay, order, ruling or judgment, issued by any Governmental Authority involving compliance of its business with Requirements of Law which is not satisfied, released, stayed, vacated or discharged within thirty (30) days of such Persons knowledge thereof and, in either case, the effect, outcome or resolution of such action listed above would reasonably be expected to result
-31-
in a Material Adverse Effect; or (b) the enactment of a usury cap applicable to the Receivables or the passage of any applicable State or Federal statute or regulation restricting the offering or sale of the Receivables which, in either case, would reasonably be expected to result in a Material Adverse Effect in the sole discretion of Administrative Agent.
Reinvestment Criteria has the meaning assigned to that term in Section 8.08(a) .
Related Person shall mean, with respect to any Person, (a) each Affiliate of such Person and each of the officers, directors, partners, trustees, employees, affiliates, shareholders, Advisors, agents, attorneys-in-fact and Controlling Persons of each of the foregoing, and (b) if such Person is the Administrative Agent, each other Person designated, nominated or otherwise mandated by or assisting the Administrative Agent pursuant to Section 12.01 or any comparable provision of any Credit Document.
Release shall mean actively or passively disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping, migrating or the like, into or upon any land or water or air, or otherwise entering into the environment.
Release Date has the meaning assigned to that term in Section 2.16(b) .
Reportable Event shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under PBGC Regulation Section 4043.
Required Lenders shall mean, at any time, Non-Defaulting Lenders the sum of whose Loan Commitments at such time (or, after the termination thereof, outstanding Loans at such time) represents at least a majority of the Total Loan Commitment in effect at such time less the Loan Commitments of all Defaulting Lenders at such time (or, after the termination thereof, the sum of total outstanding Loans of Non-Defaulting Lenders at such time); provided , however , if there are two or more Lenders hereunder, the Required Lenders must at all times include a minimum of two Lenders (and with Lenders that are Affiliates of one another being considered as one Lender for purposes of this proviso).
Requirements of Law shall mean, as to any Person, any law (statutory or common), ordinance, treaty, rule, regulation, order, policy, other legal requirement or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or products or to which such Person or any of its Property or products is subject. It is hereby acknowledged and agreed by the Credit Parties that Requirements of Law shall include, without limitation, from the effective date of any such rule, binding opinion or mandatory guideline, (a) the adoption of any final rule directly related to the proposed rule captioned 12 CFR Part 1041, Docket No. CFPB 2016-0025, RIN 3170-AA40 released by the Consumer Financial Protection Bureau on June 2, 2016, as of the effective date of such final rule and as such final rule may be amended, supplemented or otherwise modified from time to time, and (b) any other final rules, binding opinions or mandatory guidelines promulgated by the Consumer Financial Protection Bureau or any other Governmental Authority from time to time relating to credit (including, without limitation, consumer credit); servicing; disclosures; information security and privacy as such final rule, binding opinion or mandatory guideline may be amended, supplemented or otherwise modified from time to time.
-32-
Restricted shall mean, when referring to cash or Cash Equivalents of Holdings or any of its Subsidiaries, that such cash or Cash Equivalents (i) appears (or would be required to appear) as restricted on a consolidated balance sheet of Holdings or of any such Subsidiary (unless such appearance is related to (x) the Credit Documents or Liens created thereunder or (y) Senior Secured Notes Documents or the Liens created thereunder), (ii) are subject to any Lien in favor of any Person other than (x) the Collateral Agent for the benefit of the Secured Creditors or (y) the Senior Secured Notes Collateral Agent for the benefit of the holders of, and the trustee for, the Senior Secured Notes, (iii) is deposited or held at any store of Holdings or any of its Subsidiaries or (iv) are not otherwise generally available for use by Holdings or such Subsidiary.
Restricted Investments shall mean Investments made by Holdings or any of its Subsidiaries in reliance on Section 10.05(xviii).
Returns shall have the meaning provided in Section 8.09.
Reviewing Parties means the Administrative Agent, the Lenders, the holders of Notes and their respective attorneys, officers, employees, representatives, consultants and agents.
S&P shall mean S&P Global Ratings, a division of S&P Global, Inc.
Schedule of Receivables and Assignment shall mean a schedule in form and substance acceptable to Administrative Agent to be submitted by Holdings to the Administrative Agent.
SEC shall have the meaning provided in Section 9.01(i).
Section 5.04(b)(ii) Certificate shall have the meaning provided in Section 5.04(b)(ii).
Section 13.01 Claims shall have the meaning provided in Section 13.01(b).
Secured Creditors shall have the meaning assigned that term in the respective Security Documents.
Securities Act shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Security Agreement shall have the meaning provided in Section 6.12.
Security Agreement Collateral shall mean all Collateral as defined in the Security Agreement.
Security Document shall mean and include each of the Security Agreement, the Pledge Agreement, each Mortgage and, after the execution and delivery thereof, each Additional Security Document.
-33-
Senior Participant means a Person, satisfactory to the Administrative Agent in its sole discretion, acting as the Senior Participant under the Senior Participation Agreement and such Persons permitted successors and assigns pursuant to such Senior Participation Agreement.
Senior Participation Agreement means one or more Participation Agreements among the Lenders, holders of Notes, Agent, and Senior Participant, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
Senior Participations mean the Participations, if any, issued to the Senior Participant by certain of the Lenders and holders of Notes pursuant to the Senior Participation Agreement.
Senior Secured Notes shall mean the Borrowers 10.75% Senior Secured Notes due 2018 and any registered senior secured notes having substantially identical terms and issued pursuant to the Senior Secured Notes Indenture in exchange for the initial, unregistered Senior Secured Notes.
Senior Secured Notes Collateral Agent shall mean the Person acting from time to time in the capacity as collateral agent under the Senior Secured Notes Documents.
Senior Secured Notes Documents shall mean the Senior Secured Notes, the Senior Secured Notes Indenture, the Senior Secured Notes Security Documents and each of the other documents entered into in connections with the Senior Secured Notes.
Senior Secured Notes Indenture shall mean the Indenture, dated as of May 12, 2011, among the Borrower, the Guarantors and the Senior Secured Notes Trustee, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
Senior Secured Notes Security Documents shall mean each of the security agreements, pledge agreements, Mortgages and other collateral documents pursuant to which a Lien or security interest is created (or purported to be created) in respect of the Senior Secured Notes and any guaranties in respect thereof.
Senior Secured Notes Trustee shall mean the Person acting from time to time in the capacity as trustee under the Senior Secured Notes Indenture.
Servicer shall mean Servicer as defined in the Servicing Agreement.
Servicing Agreement shall mean the Servicing Agreement dated on or about the date hereof among the Borrower and Curo Management, LLC, as servicer.
Shareholder Subordinated Note shall mean an unsecured junior subordinated note issued by Holdings and not guaranteed by any Subsidiary of Holdings in the form of Exhibit N , as the same may be modified, amended or supplemented from time to time in accordance with the terms hereof and thereof.
-34-
Shareholders Agreements shall have the meaning provided in Section 6.05(i).
Significant Asset Sale shall mean each Asset Sale (or series of related Asset Sales) which generates Net Sale Proceeds of at least $500,000.
Sponsor shall mean (i) Friedman Fleischer & Lowe, LLC and its Affiliates and (ii) any investment vehicle that is managed (whether through ownership of securities having a majority of the voting power or through management of investments) by any Person listed in clause (i), but excluding any portfolio companies (other than the Company) of any such Person.
SPV Borrower shall mean Curo Receivables Finance I, LLC, a Delaware limited liability company.
SPV Loan Agreement Agent shall mean Victory Park Management, LLC, in its capacity as Agent under and as defined in the SPV Loan Agreement.
SPV Loan Agreement shall mean that certain Loan Agreement by and among the SPV Borrower, the other borrowers party thereto from time to time as borrowers, SPV Loan Agreement Agent, as agent for lenders and holders, and the financial institutions from time to time party thereto as lenders.
SPV Loan Agreement Excess Concentration Amounts shall mean Excess Concentration Amounts as defined in the SPV Loan Agreement.
SPV Notes shall mean Notes as defined in the SPV Loan Agreement.
Subsidiaries Guaranty shall have the meaning provided in Section 6.10.
Subsidiary shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time. Unless otherwise qualified, all references to a Subsidiary or to Subsidiaries in this Agreement shall refer to a Subsidiary of Holdings. Notwithstanding the foregoing (except for the definition of Unrestricted Subsidiary contained herein), no Unrestricted Subsidiary shall be deemed to be a Subsidiary of Holdings, the Borrower or any of their respective other Subsidiaries for purposes of this Agreement and the other Credit Documents.
Subsidiary Guarantor shall mean each Domestic Subsidiary of Holdings (other than the Borrower) (whether existing on the Effective Date or established, created or acquired after the Effective Date), unless and until such time as the respective Subsidiary is released from all of its obligations under the Subsidiaries Guaranty in accordance with the terms and provisions thereof. For the avoidance of doubt, each Originator shall be a Subsidiary Guarantor.
-35-
Synthetic Lease shall mean a lease transaction under which the parties intend that (i) the lease will be treated as an operating lease by the lessee and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.
Tax Benefit shall have the meaning provided in Section 5.04(d).
Tax Sharing Agreements shall have the meaning provided in Section 6.05(c).
Taxes shall have the meaning provided in Section 5.04(a).
Termination Date shall mean the earlier of: (a) the Maturity Date or (b) the date on which the Commitments are terminated and the Loan becomes due and payable pursuant to Article 11.
Test Period shall mean each period of four consecutive fiscal quarters of Holdings then last ended, in each case taken as one accounting period; provided that in the case of any Test Period which includes any fiscal quarter ended on or prior to December 31, 2016, the rules set forth in the immediately succeeding sentence shall apply. If the respective Test Period (a) includes the fiscal quarter of Holdings ended December 31, 2015, (x) Consolidated EBITDA for such fiscal quarter shall be deemed to be $29,225,000, and (y) Consolidated Interest Expense for such fiscal quarter shall be deemed to be $12,483,000, (b) includes the fiscal quarter of Holdings ended March 31, 2016, (x) Consolidated EBITDA for such fiscal quarter shall be deemed to be $66,821,000, and (y) Consolidated Interest Expense for such fiscal quarter shall be deemed to be $12,221,000, (c) includes the fiscal quarter of Holdings ended June 30, 2016, (x) Consolidated EBITDA for such fiscal quarter shall be deemed to be $42,960,000 and (y) Consolidated Interest Expense for such fiscal quarter shall be deemed to be $12,108,000, and (d) includes the fiscal quarter of Holdings ending September 30, 2016, (x) Consolidated EBITDA for such fiscal quarter shall be deemed to be $40,629,000, and (y) Consolidated Interest Expense for such fiscal quarter shall be deemed to be $12,056,000.
Three-Year Credit Agreement shall mean a Three-Year Credit Agreement among Holdings, the Borrower, the lenders from time to time parties thereto and the Three-Year Credit Agreement Agent.
Three-Year Credit Agreement Agent shall mean Victory Park Management, LLC, in its capacity as Administrative Agent under and as defined in the Three-Year Credit Agreement.
Three-Year Credit Agreement Collateral shall mean Collateral as defined in the Three-Year Credit Agreement.
Three-Year Credit Agreement Secured Parties shall mean the Secured Parties, as defined in the Three-Year Credit Agreement.
Title Eligible Receivables means all Title Receivables that meet the definition of an Eligible Receivable.
-36-
Title Receivables means all Receivables that were originated by the Originators the repayment of which is secured by a perfected first priority security interest in a motor vehicle.
Total Loan Commitment shall mean, at any time, the sum of the Loan Commitments of each of the Lenders at such time.
Total Unutilized Loan Commitment shall mean, at any time, an amount equal to the remainder of (x) the Total Loan Commitment in effect at such time less (y) the aggregate principal amount of all Loans outstanding at such time.
Trailing Excess Yield means, as of any date of determination, the average, for each of the three immediately preceding completed fiscal months, of the rate, (x) expressed as a percentage equal to a fraction, (a) the numerator of which is the sum of Collections constituting principal with respect to all Curo Receivables for such fiscal month, and (b) the denominator of which is the aggregate principal balance of all Curo Receivables at the opening of such fiscal month and (y) multiplied by 12.
Trailing Net Loss Rate means, as of any date of determination, the average, for each of the three immediately preceding completed fiscal months, of the rate, (x) expressed as a percentage equal to a fraction, (a) the numerator of which is the Net Loss with respect to all Curo Receivables for such fiscal month, and (b) the denominator of which is the aggregate principal balance of all Curo Receivables at the opening of such fiscal month and (y) multiplied by 12.
Transaction shall mean, collectively, (i) the execution, delivery and performance by each Credit Party of the Credit Documents to which it is a party and (ii) the payment of all fees and expenses in connection with the foregoing.
UCC shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.
Unfunded Current Liability of any Plan shall mean the amount, if any, by which the value of the accumulated plan benefits under the Plan determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds the Fair Market Value of all plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions).
United States and U.S. shall each mean the United States of America.
Unrestricted shall mean, when referring to cash or Cash Equivalents of Holdings or any of its Subsidiaries, that such cash or Cash Equivalents are not Restricted.
Unrestricted Subsidiary shall mean the SPV Borrower and its immediate parent company and any newly formed or existing Subsidiary of the Borrower that is designated by the Borrower after the Effective Date as an Unrestricted Subsidiary hereunder by written notice to the Administrative Agent and shall include any Subsidiary of such Unrestricted Subsidiary; provided that the Borrower shall only be permitted to designate a Subsidiary as an Unrestricted
-37-
Subsidiary so long as (a) no Default or Event of Default then exists or would result therefrom, (b) such Unrestricted Subsidiary does not own any Equity Interests in, or have any Lien on any property of, Holdings or any Subsidiary of Holdings other than a Subsidiary of the Unrestricted Subsidiary, (c) any Indebtedness and other obligations of such Unrestricted Subsidiary are non-recourse to Holdings or any of its other Subsidiaries (other than such Unrestricted Subsidiary and its Subsidiaries) or to any of their respective assets, (d) such Subsidiary is not party to any agreement, contract, arrangement or understanding with Holdings or any Subsidiary of Holdings (other than an Unrestricted Subsidiary) unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Holdings or such Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of Holdings, (e) such Subsidiary is a Person with respect to which neither Holdings nor any of its Subsidiaries (other than an Unrestricted Subsidiary) has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Persons financial condition or to cause such Person to achieve any specified levels of operating results, (f) such Subsidiary has not guaranteed or otherwise directly provided credit support for any Indebtedness of Holdings or any Subsidiary of Holdings (other than an Unrestricted Subsidiary) and (g) the Borrowers and its other Subsidiaries (other than such Unrestricted Subsidiary and its Subsidiaries) aggregate Investments in all Unrestricted Subsidiaries made after the Effective Date do not exceed that amount permitted by Section 10.05(xviii) at such time. With respect to any Subsidiary that is not newly created when it is designated as an Unrestricted Subsidiary, the Borrower will be deemed to have made an Investment pursuant to Section 10.05(xviii) in such Subsidiary on the date of such designation in an amount equal to the Fair Market Value of any assets owned by such Subsidiary on the date of such designation.
Unutilized Loan Commitment shall mean, with respect to any Lender at any time, such Lenders Loan Commitment at such time less the aggregate outstanding principal amount of all Loans made by such Lender at such time.
Vintage Pool means and refers to, at any given time, all Curo Receivables that were originated in a particular calendar month. By way of example, and not by way of limitation, all Curo Receivables that were originated in June 2016 shall constitute one Vintage Pool for the calendar month that ended on June 30, 2016; all Curo Receivables that were purchased in July 2016 shall constitute one Vintage Pool for the calendar month that ended on July 31, 2016; all Curo Receivables that were purchased in August 2016 shall constitute one Vintage Pool for the calendar month that ended on August 31, 2016; and so on.
Wholly-Owned Domestic Subsidiary shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
Wholly-Owned Foreign Subsidiary shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
Wholly-Owned Subsidiary shall mean, as to any Person, (i) any corporation 100% of whose capital stock is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time (other than, in the case of a Foreign Subsidiary of the Borrower with respect to the preceding clauses (i) and (ii), directors qualifying shares and/or other nominal amount of shares required to be held by Persons other than the Borrower and its Subsidiaries under applicable law).
-38-
1.02 Rules of Construction .
(a) Accounting Terms . Except as otherwise provided herein, financial and accounting terms used in the foregoing definitions or elsewhere in this Agreement shall be defined in accordance with GAAP. No change in the accounting principles used in the preparation of any financial statement hereafter adopted by Borrower shall be given effect for purposes of measuring compliance with any provision of Article 9 or Article 10 unless the Borrower and Administrative Agent agree to modify such provisions to reflect such changes in GAAP and, unless such provisions are modified, all financial statements, the compliance certificate and similar documents provided hereunder shall be provided together with a reconciliation between the calculations and amounts set forth therein before and after giving effect to such change in GAAP. For purposes of this Agreement, any obligations of a Person under a lease that is not (or would not be) required to be classified and accounted for as a capitalized lease on a balance sheet of such Person under GAAP as in effect as of the Effective Date shall not be treated as a capitalized lease as a result of the adoption of changes in GAAP or changes in the application of GAAP.
(b) Uniform Commercial Code . Except as otherwise provided herein, terms used in the foregoing definitions or elsewhere in this Agreement that are defined in the Uniform Commercial Code, including without limitation, Accounts , Deposit Accounts , Documents , Instruments , Investment Property , General Intangibles , Chattel Paper , Inventory , Goods , Equipment , Fixtures , Supporting Obligations , and Letter of Credit Rights shall have the respective meanings given to such terms in the UCC.
SECTION 2. Amount and Terms of Credit .
2.01. The Commitments . (a) Subject to and upon the terms and conditions set forth herein, each Lender severally agrees to make, at any time and from time to time on or after the Effective Date and prior to the Termination Date, a revolving loan or revolving loans (each, a Loan and, collectively, the Loans ) to the Borrower, which Loans (i) shall be denominated in Dollars, (ii) may be repaid and reborrowed in accordance with the provisions hereof, and (iii) shall not exceed for any Lender at any time outstanding the Loan Commitment of such Lender at such time.
(b) Each Loan made hereunder shall, in accordance with GAAP and in respect of all Loans, shall be in a principal amount which, when aggregated with all other Loans then outstanding, shall not exceed the lesser of the then effective Borrowing Base or the Maximum Principal Amount.
(c) The Loans shall be due and payable on the Termination Date. Upon the occurrence of an Event of Default, Administrative Agent shall have rights and remedies available to it under Article 11 of this Agreement.
-39-
2.02. Minimum Amount of Each Borrowing . The aggregate principal amount of each Borrowing of Loans shall not be less than the Minimum Borrowing Amount applicable thereto.
2.03. Notice of Borrowing . (a) Whenever the Borrower desires to incur Loans hereunder, the Borrower shall give the Administrative Agent at the Notice Office at least fifteen (15) days prior notice of each Loan to be incurred hereunder, provided that (in each case) any such notice shall be deemed to have been given on a certain day only if given before 1:00 P.M. (New York City time) on such day. Each such notice (each, a Notice of Borrowing ) shall be irrevocable and shall be in writing, or by telephone promptly confirmed in writing, in the form of Exhibit A , appropriately completed to specify: (i) the aggregate principal amount of the Loans to be incurred pursuant to such Borrowing and (ii) the date of such Borrowing (which shall be a Business Day).
(b) Without in any way limiting the obligation of the Borrower to confirm in writing any telephonic notice of any Borrowing or prepayment of Loans, the Administrative Agent may act without liability upon the basis of telephonic notice of such Borrowing or prepayment, as the case may be, believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower, prior to receipt of written confirmation from an Authorized Officer of the Borrower. In each such case, the Borrower hereby waives the right to dispute the Administrative Agents record of the terms of such telephonic notice of such Borrowing or prepayment of Loans, as the case may be, absent manifest error.
2.04. Disbursement of Funds . On the date specified in each Notice of Borrowing, each Lender will make available its pro rata portion (determined in accordance with Section 2.07) of each such Borrowing requested to be made on such date unless otherwise approved by the Administrative Agent. All such amounts will be made available in Dollars and in immediately available funds at the Payment Office, and the Administrative Agent will make available to the Borrower at the Payment Office the aggregate of the amounts so made available by the Lenders. Unless the Administrative Agent shall have been notified by any Lender prior to the date of Borrowing that such Lender does not intend to make available to the Administrative Agent such Lenders portion of any Borrowing to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing and the Administrative Agent may (but shall not be obligated to), in reliance upon such assumption, make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agents demand therefor, the Administrative Agent shall promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent also shall be entitled to recover on demand from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower until the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if recovered from such Lender, the overnight Federal Funds Rate for the first three days and at the interest rate otherwise applicable to such Loans for each day thereafter and (ii) if recovered from the Borrower, the rate of interest
-40-
applicable to the respective Borrowing, as determined pursuant to Section 2.08. Nothing in this Section 2.04 shall be deemed to relieve any Lender from its obligation to make Loans hereunder or to prejudice any rights which the Borrower may have against any Lender as a result of any failure by such Lender to make Loans hereunder.
2.05. Notes . (a) The Borrowers obligation to pay the principal of, and interest on, the Loans made by each Lender shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 13.15 and shall, if requested by such Lender, also be evidenced by a promissory note duly executed and delivered by the Borrower substantially in the form of Exhibit B , with blanks appropriately completed in conformity herewith (each, a Note and, collectively, the Notes ).
(b) Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and prior to any transfer of any of its Notes will endorse on the reverse side thereof the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in such notation shall not affect the Borrowers obligations in respect of such Loans.
(c) Notwithstanding anything to the contrary contained above in this Section 2.05 or elsewhere in this Agreement, Notes shall only be delivered to a Lender to the extent such Lender specifically requests the delivery of such Notes. No failure of any Lender to request or obtain a Note evidencing its Loans to the Borrower shall affect or in any manner impair the obligations of the Borrower to pay the Loans (and all related Obligations) incurred by the Borrower which would otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or guaranties therefor provided pursuant to the various Credit Documents. Any Lender which does not have a Note evidencing its outstanding Loans shall in no event be required to make the notations otherwise described in preceding clause (b). At any time when any Lender requests the delivery of a Note to evidence any of its Loans, the Borrower shall promptly execute and deliver to the respective Lender the requested Note in the appropriate amount or amounts to evidence such Loans.
2.06. [Reserved] .
2.07. Pro Rata Borrowings . All Borrowings of Loans under this Agreement shall be incurred from the Lenders pro rata on the basis of each Lenders Loan Commitment unless otherwise approved by the Administrative Agent. It is understood that no Lender shall be responsible for any default by any other Lender of its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to make its Loans hereunder.
2.08. Interest .
(a) In the absence of an Event of Default hereunder, and prior to the Termination Date, the outstanding balance of the Loans will bear interest at an annual rate at all times equal to the Base Rate plus 8.0% (the Loan Interest Rate ).
-41-
(b) Interest shall be payable in accordance with Section 2.14 until the Commitments are terminated and the Obligations are paid in full. Unless otherwise required by Administrative Agent at any time and from time to time or Borrower has otherwise paid or informed Administrative Agent that Borrower will pay such amount in immediately available funds, Borrower shall be deemed to have requested an Loan on the first (1 st ) day of each calendar month in an amount equal to accrued and unpaid interest and any other accrued but unpaid fees due and owing hereunder and such amount shall be added to the outstanding principal balance of the Obligations. Interest as provided hereunder will be calculated on the basis of a three hundred sixty (360) day year and the actual number of days elapsed. The rate of interest provided for hereunder is subject to increase or decrease when and as the LIBOR Rate increases or decreases in an amount corresponding to the change in the LIBOR Rate. Any such change in the interest rate hereunder shall take effect the first day of the month following a change in the LIBOR Rate.
(c) From and after the Termination Date, or such earlier date as the outstanding principal balance of the Loan and other Obligations become due and payable by acceleration or otherwise, or at Administrative Agents option upon the occurrence of an Event of Default, Borrower hereby agree to pay interest on the outstanding principal balance of the Loan and other Obligations and, to the extent permitted by law, overdue interest with respect thereto, at the rate of the lesser of (i) three percent (3.0%) per annum above the rate of interest otherwise applicable to the Loans and (ii) the highest lawful rate.
2.09. Interest Periods . Interest shall be payable on the date the Monthly Statement is due pursuant to Section 9.01(a).
2.10. [Reserved].
2.11. [Reserved] .
2.12. Change of Lending Office . Each Lender agrees that on the occurrence of any event giving rise to the operation of Section 5.04 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 2.12 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Section 5.04.
2.13. [Reserved]Application of Proceeds .
(a) Notwithstanding any other provisions of this Agreement or any other Credit Document to the contrary but subject to Section 2.14(a) and Section 5.02(b) , all amounts in the Collection Account and any interest earned thereon as of the last Business Day of each calendar month will be applied on the fifth (5 th ) Business Day of the immediately succeeding calendar month (each date of distribution, a Payment Date ) in the following order of priority:
-42-
FIRST, to the payment of all costs, fees, expenses, and other amounts owing to Administrative Agent, pursuant to Section 4.01, in connection with enforcing the rights of Administrative Agent and Lenders under the Credit Documents;
SECOND, to payment of any costs, fees or expenses owed to Administrative Agent or to any Affiliate of Administrative Agent hereunder or under any other Credit Document;
THIRD, to the payment of all Obligations consisting of accrued fees and interest payable to Lenders hereunder;
FOURTH, to all other Obligations which shall have become due and payable under the Credit Documents and not repaid pursuant to clauses FIRST through FOURTH above; and
FIFTH, to the payment of the surplus, if any, to the Borrower for any legal purpose not in violation of this Agreement.
In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; and (b) each of the Lenders shall receive an amount equal to its pro rata share (based on the proportion of its then outstanding Loans and Obligations outstanding of amounts available to be applied above).
(b) In addition, so long as the Reinvestment Criteria are satisfied and so long as the conditions in Section 2.16 are satisfied, the Administrative Agent may, at any time, instruct the Collection Account Bank to release funds to the Borrower in an amount up to the Facility Availability to be used by Borrower to finance additional Eligible Receivables in accordance with Sections 2.16 and 9.23 .
2.15. Controlled Accounts .
(a) On or prior to the date hereof, the Borrower shall cause to be established and maintained, a deposit account at a Collection Account Bank, in the name of the Borrower, designated as the Collection Account, as to which the Administrative Agent has control for the benefit of the Lenders within the meaning of Section 9-104(a)(2) of the UCC pursuant to the Control Agreement.
(b) Notwithstanding anything to the foregoing, subject to the Facility Availability and to the conditions set forth in Section 2.14(a) and Section 2.16 , the Borrower, in accordance with Section 9.23 shall use amounts on deposit in the Collection Account to finance additional Eligible Receivables.
2.16. Conditions to Each Release of Funds . The obligation of the Administrative Agent to release funds in the Collection Account to the Borrower in accordance with Section 2.14(a) is subject to the satisfaction, or waiver in accordance with Section 13.12 , of the following conditions precedent:
-43-
(a) the Administrative Agent shall have received a fully executed Funds Release Request together with a Borrowing Base Certificate no later than 1:00 P.M. (New York City time) two (2) Business Days prior to the date on which Borrower proposes to use the requested funds to finance additional Eligible Receivables (the Release Date ), evidencing sufficient Facility Availability with respect to the requested funds together with an updated schedule of Receivables including the Receivables to be financed on the Release Date and any other information reasonably requested by the Administrative Agent with respect to such Release Date; and
(b) each of the conditions in Section 7 and the Reinvestment Criteria shall be satisfied.
SECTION 3. [RESERVED] .
SECTION 4. Fees; Reductions of Commitment .
4.01. Fees . In addition to any fees required to be paid under this Agreement, Borrower shall pay to Administrative Agent, at Administrative Agents offices, the following:
(a) Fee Letter . The fees in the amounts and at the times set forth in the Fee Letter.
(b) Unused Commitment Fee . An unused commitment fee at the rate of one-half of one percent (0.50%) per annum (computed on the basis of a three hundred sixty (360) day year and the actual number of days elapsed) on the average daily Unutilized Loan Commitments shall be due and payable monthly in arrears on the 1st day of each month commencing on the first such date upon which an initial Loan may be requested by the Borrower and continuing until the Commitments are terminated and the Obligations are paid in full, in which event a monthly installment of the administrative fee shall be paid on the date of such termination.
(c) Closing Fee . On or prior to the date on which the first Loan is made, the Borrower shall pay to the Administrative Agent a fee in the amount of $250,000, which is the product of 1.0% of the Maximum Principal Amount on the Effective Date.
(d) Monitoring Fee . A monitoring fee at the rate of four percent (4.0%) per annum (computed on the basis of a three hundred sixty (360) day year and the actual number of days elapsed) on the average daily Total Loan Commitment shall be due and payable monthly in arrears on the 1 st day of each month commencing on the first such date after the Effective Date and continuing until the termination of this Agreement.
4.02. Voluntary Termination of Unutilized Loan Commitments . Upon at least three Business Days prior written notice to the Administrative Agent at the Notice Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, at any time or from time to time, to terminate the Total Unutilized Loan Commitment in whole, or reduce it in part, pursuant to this Section 4.02, in an integral multiple of $500,000 in the case of partial reductions to the Total Unutilized Loan Commitment, provided that each such reduction shall apply proportionately to permanently reduce the Loan Commitment of each Lender, provided further that the Borrower shall promptly (and in any event, within three (3) Business Days) pay to the Administrative Agent the Commitment Termination Fee.
-44-
4.03. Mandatory Reduction or Termination of Commitments . (a) If at any time the Total Loan Commitment exceeds the Maximum Principal Amount, the Total Loan Commitment shall be immediately and automatically reduced to equal the Maximum Principal Amount.
(b) In addition to any other mandatory commitment reductions pursuant to this Section 4.03, the Total Loan Commitment shall terminate in its entirety on Termination Date.
(c) In addition to any other mandatory commitment reductions pursuant to this Section 4.03, on each date on or after the Effective Date upon which Holdings or any of its Subsidiaries receives any cash proceeds from any issuance or incurrence by Holdings or any of its Subsidiaries of Indebtedness for borrowed money (other than Indebtedness for borrowed money permitted to be incurred pursuant to Section 10.04 as in effect on the Effective Date), the Total Loan Commitment shall be permanently reduced by an amount equal to 100% of the Net Cash Proceeds of the respective incurrence of Indebtedness.
(d) If a Regulatory Trigger Event occurs, the Commitments shall be automatically terminated, and the Borrower shall promptly (and in any event within three (3) Business Days) pay to the Administrative Agent the product of (i) one-half (1/2) and (ii) the Commitment Termination Fee; provided, that, the amounts payable by the Borrower to the Administrative Agent pursuant to this Section 4.03(d) shall not exceed, in the aggregate (together with amounts payable to the SPV Loan Agreement Agent pursuant to Section 2.8(b) of the SPV Loan Agreement) seven million dollars ($7,000,000).
(e) Each reduction to, or termination of, the Total Loan Commitment pursuant to this Section 4.03 shall be applied to proportionately reduce or terminate, as the case may be, the Loan Commitment of each Lender.
SECTION 5. Prepayments; Payments; Taxes .
5.01. Voluntary Prepayments . The Borrower shall have the right to prepay the Loans in whole or in part at any time and from time to time on the following terms and conditions: (i) the Borrower shall give the Administrative Agent prior to 12:00 Noon (New York City time) at the Notice Office at least one Business Days prior written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay Loans and which notice the Administrative Agent shall promptly transmit to each of the Lenders; (ii) each partial prepayment of Loans pursuant to this Section 5.01 shall be in an aggregate principal amount of at least $1,000,000 (or such lesser amount as is acceptable to the Administrative Agent); (iii) each prepayment pursuant to this Section 5.01 in respect of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans, provided that at the Borrowers election in connection with any prepayment of Loans pursuant to this Section 5.01, such prepayment shall not, so long as no Default or Event of Default then exists, be applied to any Loan of a Defaulting
-45-
Lender; and (iv) the Borrower shall pay to the Administrative Agent the Prepayment Fee, provided , that Borrower shall not be required to pay to the Administrative Agent the Prepayment Fee in connection with the prepayment of the Loan due to the transfer of Receivables to the SPV Borrower.
5.02. Mandatory Repayments . (a) On any day on which the aggregate outstanding principal amount of all Loans (after giving effect to all other repayments thereof on such date) exceeds the Total Loan Commitment at such time, the Borrower shall prepay on such day the principal of Loans in an amount equal to such excess.
(b) In the event that a Borrowing Base Deficiency exists (whether established by an Monthly Statement, Borrowing Base Certificate or otherwise), within three (3) Business Days of the time that a Borrowing Base calculation was delivered or required to be delivered, Borrower shall pay to the Administrative Agent without demand or notice of any kind required, unless waived in writing by the Administrative Agent, the amount necessary to cure such Borrowing Base Deficiency, together with all accrued interest on the amount so paid and any fees and costs incurred in connection therewith; provided that any such payment shall not be included in any calculation of the Available Basket Amount. Notwithstanding Section 2.14, any such payment shall be applied first, to the extent of such payment, to the Loan until its outstanding principal amount is reduced to zero. Any prepayment amounts payable under this Section 5.02(b) shall be applied to the payment of the outstanding principal amount of the Loans until their outstanding principal amount is reduced to zero; provided, that any such mandatory prepayment of Loans shall not reduce Lenders Loan Commitments under this Agreement and may be reborrowed, subject to the terms and conditions hereof for borrowing under the Loan.
(c) In addition to any other mandatory repayments pursuant to this Section 5.02, all then outstanding Loans shall be repaid in full on the Termination Date.
5.03. Method and Place of Payment . Except as otherwise specifically provided herein, all payments under this Agreement and under any Note shall be made to the Administrative Agent for the account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York City time) on the date when due and shall be made in Dollars in immediately available funds at the Payment Office. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.
5.04. Net Payments . (a) All payments made by any Credit Party under the Credit Documents will be made without setoff, counterclaim or other defense. Except as provided in Section 5.04(b), all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding, except as provided in the second succeeding sentence, (A) any tax imposed on or measured by the net income or net profits of a Lender or the Administrative Agent pursuant to the laws of the jurisdiction in which the Lender or the Administrative Agent is organized or the
-46-
jurisdiction in which the principal office or applicable lending office of the Lender is located or any subdivision thereof or therein, (B) any branch profits taxes imposed by the United States and (C) any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature imposed under FATCA) and all interest, penalties or similar liabilities with respect to such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as Taxes ). If any Taxes are so levied or imposed, the Borrower and Holdings agree to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under the Credit Documents, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for under the Credit Documents. If any amounts are payable in respect of Taxes pursuant to the preceding sentence, the Borrower agrees to reimburse each Lender and the Administrative Agent, upon the written request of such Lender or the Administrative Agent, as the case may be, for Taxes. A relevant Credit Party will furnish to the Administrative Agent within 45 days after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by the Borrower (or such other evidence of payment acceptable to the Administrative Agent). The Borrower agrees to indemnify and hold harmless each Lender and the Administrative Agent, and reimburse such Lender and the Administrative Agent upon their written request, for the amount of any Taxes so levied or imposed on such Lender or the Administrative Agent, as the case may be.
(b) Notwithstanding anything to the contrary contained in this Agreement, but subject to Section 13.04(b), (x) the Borrower or the Administrative Agent, as applicable, shall be entitled, to the extent it is required to do so by law, to deduct or withhold income or similar taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein) from interest, Fees or other amounts payable hereunder for the account of any Lender and (y) the Borrower shall not be obligated pursuant to Section 5.04(a) to gross-up payments to be made to a Lender in respect of income or similar taxes imposed by the United States if such Lender has not fully complied with Section 5.04(c) or Section 5.04(d).
(c) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 5.04(c)(i) and (iii), and Section 5.04(d)) shall not be required if in the Lenders reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
-47-
(i) Without limiting the generality of the foregoing, each Foreign Lender shall, to the extent legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower, Holdings or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Credit Document, executed copies of IRS Form W-8BEN (or W-8BEN-E, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the interest article of such tax treaty and (y) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN (or W-8BEN-E, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the business profits or other income article of such tax treaty;
(2) executed copies of IRS Form W-8ECI;
(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit R-1 to the effect that such Foreign Lender is not a bank within the meaning of Section 881(c)(3)(A) of the Code, a 10 percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a controlled foreign corporation described in Section 881(c)(3)(C) of the Code (a U.S. Tax Compliance Certificate ) and (y) executed copies of IRS Form W-8BEN (or W-8BEN-E, as applicable); or
(4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN (or W-8BEN-E, as applicable), a U.S. Tax Compliance Certificate substantially in the form of Exhibit R-2 or Exhibit R-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit R-4 on behalf of each such direct and indirect partner;
(ii) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any
-48-
other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower and the Administrative Agent to determine the withholding or deduction required to be made; and
(iii) if a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lenders obligations under FATCA or to determine the amount to deduct and withhold from such payment under FATCA, if any. Solely for purposes of this clause (iii), FATCA shall include any amendments made to FATCA after the date of this Agreement.
(d) Each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes agrees to deliver to the Borrower and the Administrative Agent on or prior to the Effective Date or, in the case of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to Section 13.04(b) (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Lender, or when reasonably requested by the Borrower or when a lapse in time or change in circumstances renders any previous certification obsolete or inaccurate in any material respect, two duly signed, properly completed copies of IRS Form W-9, certifying that such Lender is not subject to United States backup withholding tax, or any successor form. If such Lender fails to deliver such forms, then the Borrower or the Administrative Agent, as applicable, may withhold from any payment to such Lender an amount equivalent to the applicable backup withholding tax imposed by the Code.
(e) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 5.04 (including by the payment of additional amounts pursuant to this Section 5.04), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (e) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (e), in no event will the
-49-
indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (e) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
SECTION 6. Conditions Precedent to the Effective Date and to Credit Events on the Effective Date . The occurrence of the Effective Date pursuant to Section 13.10 and the obligation of each Lender to make Loans on the Effective Date, are subject at the time of the Effective Date and the making of such Loans to the satisfaction of the following conditions:
6.01. Effective Date; Notes . On or prior to the Effective Date, (i) this Agreement shall have been executed and delivered as provided in Section 13.10 and (ii) there shall have been delivered to the Administrative Agent for the account of each of the Lenders that has requested same the appropriate Note executed by the Borrower, in each case in the amount, maturity and as otherwise provided herein.
6.02. Officers Certificate . On the Effective Date, the Administrative Agent shall have received a certificate, dated the Effective Date and signed on behalf of the Borrower by the chairman of the board, the chief executive officer, the president or any vice president of the Borrower, certifying on behalf of the Borrower that all of the conditions in Sections 6.06 through 6.08, inclusive, and 7.01 have been satisfied on such date.
6.03. Opinions of Counsel . On the Effective Date, the Administrative Agent shall have received from (i) Willkie Farr & Gallagher LLP, special counsel to the Credit Parties, a customary legal opinion addressed to the Administrative Agent, the Collateral Agent and each of the Lenders and dated the Effective Date covering such matters incident to the transactions contemplated herein as any Agent may reasonably request, (ii) Lewis Roca Rothgerber Christie LLP, special Nevada counsel to the Credit Parties, a customary legal opinion addressed to the Administrative Agent, the Collateral Agent and each of the Lenders and dated the Effective Date covering such matters incident to the transactions contemplated herein as any Agent may reasonably request and (iii) Morris Laing Evans Brock & Kennedy, Chartered, special Kansas counsel to the Credit Parties, a customary legal opinion addressed to the Administrative Agent, the Collateral Agent and each of the Lenders and dated the Effective Date covering such matters incident to the transactions contemplated herein as any Agent may reasonably request.
6.04. Company Documents; Proceedings; etc. (a) On the Effective Date, the Administrative Agent shall have received a certificate from each Credit Party, dated the Effective Date, signed by an Authorized Officer of such Credit Party, and attested to by the secretary or any assistant secretary of such Credit Party, in the form of Exhibit F with appropriate insertions, together with copies of the Organizational Documents of such Credit Party and the resolutions of such Credit Party referred to in such certificate, and each of the foregoing shall be in form and substance reasonably acceptable to the Agents.
-50-
(b) On the Effective Date, all Company and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the other Documents shall be reasonably satisfactory in form and substance to the Agents, and the Administrative Agent shall have received all information and copies of all documents and papers, including records of Company proceedings, Governmental Approvals, licenses (including, but not limited to, state lender licenses and check cashing licenses) good standing certificates and bring-down telegrams or facsimiles, if any, which any Agent reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper Company or Governmental Authorities. As of the Effective Date, each of the licenses or other material Governmental Approvals held by Holdings or any of its Subsidiaries are set forth in Schedule XII.
6.05. Shareholders Agreements; Management Agreements; Tax Sharing Agreements; Existing Indebtedness Agreements; Existing Affiliate Agreements . On or prior to the Effective Date, there shall have been delivered to the Administrative Agent true and correct copies of the following documents, certified as such by an Authorized Officer of Holdings:
(a) all agreements entered into by Holdings or any of its Subsidiaries governing the terms and relative rights of its equity interests and any agreements entered into by its shareholders relating to any such entity with respect to its equity interests (collectively, the Shareholders Agreements );
(b) all material agreements with members of, or with respect to, the management of Holdings or any of its Subsidiaries (collectively, the Management Agreements );
(c) all tax sharing, tax allocation and other similar agreements entered into by Holdings or any of its Subsidiaries (collectively, the Tax Sharing Agreements );
(d) all agreements evidencing or relating to Indebtedness of Holdings or any of its Subsidiaries which is to remain outstanding after giving effect to the Transaction (the Existing Indebtedness Agreements ); and
(e) to the extent not delivered under clauses (ii), (iii) or (iv) above, all agreements entered into by Holdings or any of its Subsidiaries with an Affiliate of Holdings (collectively, the Existing Affiliate Agreements );
all of which Shareholders Agreements, Management Agreements, Tax Sharing Agreements, Existing Indebtedness Agreements and Existing Affiliate Agreements shall be in form and substance reasonably satisfactory to the Agents and shall be in full force and effect on the Effective Date.
6.06. [Reserved].
6.07. Adverse Change, Approvals . (a) Since December 31, 2015, nothing shall have occurred which could reasonably be expected to have a Material Adverse Effect.
-51-
(b) On or prior to the Effective Date, all necessary and material Governmental Approvals (domestic and foreign) and material third party approvals and/or consents in connection with the Transaction, the other transactions contemplated hereby and the granting of Liens under the Credit Documents shall have been obtained and remain in effect, and all applicable waiting periods with respect thereto shall have expired without any action being taken by any competent authority which restrains, prevents or imposes materially adverse conditions upon the consummation of the Transaction or the other transactions contemplated by the Documents or otherwise referred to herein or therein. On the Effective Date, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon the Transaction or the other transactions contemplated by the Documents or otherwise referred to herein or therein.
6.08. Litigation; Regulatory Actions . On the Effective Date, there shall be no actions, suits, proceedings or Regulatory Actions pending, threatened or in effect (i) with respect to the Transaction, this Agreement or any other Document, or (ii) which have had, or could reasonably be expected to have, a Material Adverse Effect.
6.09. Financial Statements; Pro Forma Balance Sheet; Projections . On or prior to the Effective Date, the Administrative Agent shall have received true and correct copies of the historical financial statements, the pro forma financial statements and the Projections referred to in Sections 8.05(a) and (d), which historical financial statements, pro forma financial statements and Projections shall be in form and substance reasonably satisfactory to the Agents.
6.10. Subsidiaries Guaranty . On the Effective Date, each Subsidiary Guarantor shall have duly authorized, executed and delivered the Subsidiaries Guaranty in the form of Exhibit G (as amended, modified and/or supplemented from time to time, the Subsidiaries Guaranty ), and the Subsidiaries Guaranty shall be in full force and effect.
6.11. Pledge Agreement . On the Effective Date, each Credit Party shall have duly authorized, executed and delivered the Pledge Agreement in the form of Exhibit H (as amended, modified, restated and/or supplemented from time to time, the Pledge Agreement ) and shall have delivered to the Collateral Agent, as Pledgee thereunder, all of the Pledge Agreement Collateral, if any, referred to therein and then owned by such Credit Party, (x) endorsed in blank in the case of promissory notes constituting Pledge Agreement Collateral and (y) together with executed and undated endorsements for transfer in the case of Equity Interests constituting certificated Pledge Agreement Collateral, along with evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Pledge Agreement have been taken, and the Pledge Agreement shall be in full force and effect.
6.12. Security Agreement . On the Effective Date, each Credit Party shall have duly authorized, executed and delivered the Security Agreement in the form of Exhibit I (as amended, modified, restated and/or supplemented from time to time, the Security Agreement ) covering all of such Credit Partys Security Agreement Collateral, together with:
-52-
(a) proper financing statements (Form UCC-1 or the equivalent) fully executed or authorized for filing under the UCC or other appropriate filing offices of each jurisdiction as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Security Agreement;
(b) certified copies of requests for information or copies (Form UCC-11), or equivalent reports as of a recent date, listing all effective financing statements that name Holdings or any of its Subsidiaries as debtor and that are filed in the jurisdictions referred to in clause (i) above and in such other jurisdictions in which Collateral is located on the Effective Date, together with copies of such other financing statements that name Holdings or any of its Subsidiaries as debtor (none of which shall cover any of the Collateral except (x) to the extent evidencing Permitted Liens or (y) those in respect of which the Collateral Agent shall have received termination statements (Form UCC-3) or such other termination statements as shall be required by local law fully executed for filing);
(c) evidence of the completion of all other recordings and filings of, or with respect to, the Security Agreement as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests intended to be created by the Security Agreement; and
(d) evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect and protect the security interests purported to be created by the Security Agreement have been taken, and the Security Agreement shall be in full force and effect.
6.13. Solvency Certificate; Insurance Certificates . On the Effective Date, the Administrative Agent shall have received a solvency certificate from the chief financial officer of each of Holdings, the Borrower and the Originators in the form of Exhibit J hereto.
6.14. Fees, etc. On the Effective Date, the Borrower shall have paid to each Agent (and its relevant affiliates) and each Lender all reasonable costs, fees and expenses (including, without limitation, all reasonable and invoiced legal fees and expenses) and other compensation contemplated hereby payable to each Agent or such Lender to the extent then due.
6.15. Patriot Act . On or prior to the Effective Date, the Administrative Agents and the Lenders shall have received all documentation and other information required under applicable know your customer and anti-money laundering statutes, rules and regulations, including, without limitation, the Patriot Act, to the extent requested prior to the Effective Date.
6.16. Intercreditor Agreement . On the Effective Date, each Credit Party, the Collateral Agent (for and on behalf of the Secured Creditors) and the Senior Secured Notes Collateral Agent (for and on behalf of the holders on the Senior Secured Notes and the Senior Secured Notes Trustee) shall have duly authorized, executed and delivered the Intercreditor and Subordination Agreement in the form of Exhibit E (as amended, modified, restated and/or supplemented from time to time, the Intercreditor Agreement ), and the Intercreditor Agreement shall be in full force and effect.
-53-
6.17. Control Agreements . On the Effective Date, the Collateral Agent shall have received the Control Agreements shall be executed, delivered and in full force and effect.
6.18. [Reserved] .
6.19. Borrowing Base . On the Effective Date, the Administrative Agent shall have received a Monthly Statement demonstrating that a Borrowing Base Deficiency will not exist after giving effect to such proposed Loan.
6.20. Regulatory Trigger Event . On the Effective Date, there shall not have occurred, before and after giving effect to such Loan, a Regulatory Trigger Event.
6.21. SPV Loan Agreement . On the Effective Date, the SPV Loan Agreement shall be executed by all necessary parties and shall be effective.
6.22. Searches . Uniform Commercial Code, tax and judgment searches against each of the Credit Parties in those offices and jurisdictions as Administrative Agent shall reasonably request which shall show that no financing statement, liens, or assignments or other filings have been filed or remain in effect against any of the Credit Parties or any Collateral except for Permitted Liens and those other Liens, financing statements, assignments or other filings with respect to which the secured party or existing lender (i) has delivered to Administrative Agent Uniform Commercial Code termination statements or other documentation evidencing the termination of its Liens and security interests in Collateral, or (ii) has agreed in writing to release or terminate its Lien and security interest in Collateral upon receipt of proceeds of the Loans.
6.23. Material Adverse Change . Since December 31, 2015, there shall have occurred in the case of the Borrower, no Material Adverse Effect, or in the case of Holdings or any Subsidiary Guarantor or any direct or indirect parent of such Person, no material adverse change in the business, properties, assets, operations, the collateral, results of operations, or financial condition of any such Person and the absence of the liquidation, dissolution or termination of any Borrower or any Guarantor;
6.24. Regulatory . Non-occurrence of any Regulatory Trigger Event or other regulatory event, regulatory change or pending or threatened (in writing) proceeding that could reasonably be expected to have a material adverse effect on any Credit Partys ability to fulfill their respective obligations under this Agreement or the Credit Documents or which would reasonably be expected to affect any such Persons ability to remain a going concern;
6.25. Payments . Payment in cash by Borrower to Administrative Agent of all of the amounts that have become due and owing as of the Effective Date, and all costs and expenses to the extent invoiced on or prior to the Effective Date;
6.26. Build Out . The Borrower shall have built out the Borrowing Base in a manner satisfactory to the Administrative Agent in its sole discretion.
-54-
6.27. Borrowing Base . On the Effective Date, the Administrative Agent shall have received a Monthly Statement demonstrating that a Borrowing Base Deficiency will not exist after giving effect to such proposed Loan.
In determining the satisfaction of the conditions specified in this Section 6, (x) to the extent any item is required to be satisfactory to any Lender, such item shall be deemed satisfactory to each Lender which has not notified the Administrative Agent in writing prior to the occurrence of the Effective Date that the respective item or matter does not meet its satisfaction and (y) in determining whether any Lender is aware of any fact, condition or event that has occurred and which would reasonably be expected to have a Material Adverse Effect or a material adverse effect of the type described in Section 6.07, each Lender which has not notified the Administrative Agent in writing prior to the occurrence of the Effective Date of such fact, condition or event shall be deemed not to be aware of any such fact, condition or event on the Effective Date. Upon the Administrative Agents good faith determination that the conditions specified in this Section 6 have been met (after giving effect to the preceding sentence), then the Effective Date shall have been deemed to have occurred, regardless of any subsequent determination that one or more of the conditions thereto had not been met (although the occurrence of the Effective Date shall not release Holdings or the Borrower from any liability for failure to satisfy one or more of the applicable conditions contained in this Section 6).
SECTION 7. Conditions Precedent to All Credit Events .
The obligation of each Lender to make Loans (including Loans made on the Effective Date) are subject, at the time of each such Credit Event (except as hereinafter indicated), to the satisfaction of the following conditions:
7.01. No Default; Representations and Warranties . At the time of each such Credit Event and also after giving effect thereto (i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained herein and in the other Credit Documents, including financial covenants set forth in Section 10.07, shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on the date of such Credit Event (it being understood and agreed that (x) any representation or warranty that is qualified by materiality or reference to Material Adverse Effect shall be true and correct in all respects and (y) any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (or all respects, as the case may be) only as of such specified date).
7.02. Notice of Borrowing . (a) Prior to the making of each Loan, the Administrative Agent shall have received a Notice of Borrowing meeting the requirements of Section 2.03(a).
The occurrence of the Effective Date and the acceptance of the benefits of each Credit Event shall constitute a representation and warranty by Holdings and the Borrower to the Administrative Agent and each of the Lenders that all the conditions specified in Section 6 (with respect to the occurrence of the Effective Date and any Credit Events on the Effective Date) and in this Section 7 (with respect to Credit Events on or after the Effective Date) and applicable to such Credit Event are satisfied as of that time. All of the Notes, certificates, legal opinions and
-55-
other documents and papers referred to in Section 6 and in this Section 7, unless otherwise specified, shall be delivered to the Administrative Agent at the Notice Office for the account of each of the Lenders and, except for the Notes, in sufficient counterparts or copies for each of the Lenders and shall be in form and substance reasonably satisfactory to the Administrative Agent.
7.03. Facility Availability . The amount of the Facility Availability shall be zero.
7.04. Senior Participation Agreement . A Senior Participation Agreement is duly and properly executed by the parties thereto in form and substance acceptable to the Administrative Agent in its sole discretion.
7.05. Initial Loan Fee . Solely with respect to the initial Loan and in addition to any fees payment in connection with a Loan, payment in cash by Borrower to Administrative Agent of the fees payable under Section 4.01(c) .
SECTION 8. Representations, Warranties and Agreements .
In order to induce the Lenders to enter into this Agreement and to make the Loans each of Holdings and the Borrower makes the following representations, warranties and agreements, in each case after giving effect to the Transaction, all of which shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans, with the occurrence of the Effective Date each Credit Event on or after the Effective Date being deemed to constitute a representation and warranty that the matters specified in this Section 8 are true and correct in all material respects on and as of the Effective Date and on the date of each such other Credit Event (it being understood and agreed that (x) any representation or warranty that is qualified by materiality or reference to Material Adverse Effect shall be true and correct in all respects and (y) any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (or all respects, as the case may be) only as of such specified date).
8.01. Company Status . Each of Holdings and each of its Subsidiaries (i) is a duly organized or formed and validly existing Company in good standing under the laws of the jurisdiction of its organization, (ii) has the Company power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the ownership, leasing or operation of its property or the conduct of its business requires such qualifications except for failures to be so qualified or authorized which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
8.02. Power and Authority . Each Credit Party and each of its Subsidiaries has the Company power and authority to execute, deliver and perform the terms and provisions of each of the Documents to which it is party and has taken all necessary Company action to authorize the execution, delivery and performance by it of each of such Documents. Each Credit Party and each of its Subsidiaries has duly executed and delivered each of the Documents to which it is party, and each of such Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
-56-
8.03. No Violation . Neither the execution, delivery or performance by any Credit Party or any of its Subsidiaries of the Documents to which it is a party, nor compliance by it with the terms and provisions thereof, (i) will contravene any provision of any Requirement of Law , (ii) will conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents and the Senior Secured Notes Security Documents) upon any of the property or assets of any Credit Party or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, in each case to which any Credit Party or any of its Subsidiaries is a party or by which it or any its property or assets is bound or to which it may be subject, or (iii) will violate any provision of the Organizational Documents of any Credit Party or any of its Subsidiaries.
8.04. Approvals . No material order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except for (x) those that have otherwise been obtained or made on or prior to the Effective Date and which remain in full force and effect on the Effective Date, (y) those post-closing notifications described on Schedule XII, which filings will be made within the respective time periods set forth on Schedule XII, and (z) filings which are necessary to perfect the security interests created under the Security Documents or the Senior Secured Notes Security Documents, which filings will be made within ten days following the Effective Date), or exemption by, any Governmental Authority is required to be obtained or made by, or on behalf of, any Credit Party to authorize, or is required to be obtained or made by, or on behalf of, any Credit Party in connection with, (i) the execution, delivery and performance of any Document or (ii) the legality, validity, binding effect or enforceability of any such Document.
8.05. Financial Statements; Financial Condition; Undisclosed Liabilities; Projections . (a)(i) (I) The audited financial statements of the respective Persons set forth on, and as of the respective dates and for the respective periods set forth on, Part A of Schedule XIII furnished to the Lenders prior to the Effective Date, present fairly in all material respects the financial position of the respective Persons covered thereby at the date of said financial statements and the results for the respective periods covered thereby and (II) the unaudited financial statements of the respective Persons set forth on, and as of the respective dates and for the respective periods set forth on, Part B of Schedule XIII furnished to the Lenders prior to the Effective Date, present fairly in all material respects the financial condition of the respective Persons covered thereby at the date of said financial statements and the results for the period covered thereby, subject to certain adjustments to accruals made only on an annual and quarterly basis consistent with historical practice. All such financial statements have been prepared in accordance with GAAP (or, in the case of Cash Money Group Inc. and its Subsidiaries, Canadian GAAP) consistently applied except to the extent provided in the notes to said financial statements and subject, in the case of the unaudited financial statements, to certain adjustments to accruals made only on an annual or quarterly basis consistent with historical practice (all of which are of a recurring nature and none of which, individually or in the aggregate, would be material) and the absence of footnotes.
-57-
(ii) The pro forma consolidated balance sheet of Holdings and its Subsidiaries as of June 30, 2016 (after giving effect to the Transaction and the financing therefor), a copy of which has been furnished to the Lenders prior to the Effective Date, presents a good faith estimate of the pro forma consolidated financial position of Holdings and its Subsidiaries as of such date.
(b) On and as of the Effective Date, and after giving effect to the Transaction and to all Indebtedness being incurred or assumed and Liens created by the Credit Parties in connection therewith on such date, (i) the sum of the fair value of the assets, at a fair valuation, of the Borrower (on a stand-alone basis) and of Holdings and its Subsidiaries (taken as a whole) will exceed its or their respective debts, (ii) the sum of the present fair salable value of the assets of the Borrower (on a stand-alone basis) and of Holdings and its Subsidiaries (taken as a whole) will exceed its or their respective debts, (iii) the Borrower (on a stand-alone basis) and each Holdings and its Subsidiaries (taken as a whole) has or have not incurred and does or do not intend to incur, and does or do not believe that it or they will incur, debts beyond its or their respective ability to pay such debts as such debts mature, and (iv) the Borrower (on a stand-alone basis) and Holdings and its Subsidiaries (taken as a whole) will have sufficient capital with which to conduct its or their respective businesses. For purposes of this Section 8.05(b), debt means any liability on a claim, and claim means (a) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (b) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
(c) Except as fully disclosed in the financial statements delivered pursuant to Section 8.05(a), and except for the Indebtedness incurred under this Agreement, there were as of the Effective Date no liabilities or obligations with respect to Holdings or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, could reasonably be expected to be material to Holdings and its Subsidiaries taken as a whole. As of the Effective Date, neither Holdings nor the Borrower knows of any basis for the assertion against it or any of its Subsidiaries of any liability or obligation of any nature whatsoever that is not fully disclosed in the financial statements delivered pursuant to Section 8.05(a) or referred to in the immediately preceding sentence which, either individually or in the aggregate, could reasonably be expected to be material to Holdings and its Subsidiaries taken as a whole.
(d) The Projections delivered to the Agents and the Lenders prior to the Effective Date have been prepared in good faith and are based on reasonable assumptions, and there are no statements or conclusions in the Projections which are based upon or include information known to Holdings or the Borrower to be misleading in any material respect or
-58-
which fail to take into account material information known to Holdings or the Borrower regarding the matters reported therein. On the Effective Date, Holdings and the Borrower believe that the Projections are reasonable and attainable, it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results included in such Projections.
(e) After giving effect to the Transaction (but for this purpose assuming that the Transaction and the related financing had occurred prior to December 31, 2015), since December 31, 2015, there has been no change in the business, operations, property, assets, liabilities, condition (financial or otherwise) or operating results of Holdings or any of its Subsidiaries that has had, or could reasonably be expected to have, a Material Adverse Effect.
8.06. Litigation; Regulatory Actions . There are no actions, suits, proceedings or investigation, or Regulatory Action or Regulatory Trigger Event pending, in effect, or, to the knowledge of Holdings and the Borrower, threatened (i) with respect to the Transaction or any Document or (ii) that has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
8.07. True and Complete Disclosure . As of the Effective Date, all factual information (taken as a whole) furnished by or on behalf of Holdings or the Borrower in writing to any Agent or any Lender (including, without limitation, all information contained in the Documents) for purposes of or in connection with this Agreement, the other Credit Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Holdings or the Borrower in writing to any Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided, it being understood and agreed that for purposes of this Section 8.07, such factual information shall not include the Projections or any pro forma financial information.
8.08. Use of Proceeds; Margin Regulations .
(a) All proceeds of the Loans will be used for the working capital and general corporate purposes of the Borrower and its Subsidiaries (including for Permitted Acquisitions and the fees and expenses incurred in connection with the Transaction). In addition, the Borrower shall be permitted in accordance with Section 2 to use Collections to acquire additional Eligible Receivables if none of the following shall occur before or after giving effect to any such acquisition: (i) a Regulatory Trigger Event, Default or Event of Default and (ii) any event which could reasonably be expected to have a Material Adverse Change on the business and operations of the Guarantors (the Reinvestment Criteria ).
(b) No part of any Credit Event (or the proceeds thereof) will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan nor the use of the proceeds thereof nor the occurrence of any other Credit Event will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.
-59-
8.09. Tax Returns and Payments . Each of Holdings and each of its Subsidiaries has timely filed or caused to be timely filed with the appropriate taxing authority all federal, state and other material returns, statements, forms and reports for taxes (the Returns ) required to be filed by, or with respect to the income, properties or operations of, Holdings and/or any of its Subsidiaries. The Returns accurately reflect in all material respects all liability for taxes of Holdings and its Subsidiaries, as applicable, for the periods covered thereby. Each of Holdings and each of its Subsidiaries has paid all taxes shown on such Returns as due and payable, and all other material taxes and assessments payable by it, other than those that are being contested in good faith and adequately disclosed and fully provided for on the financial statements of Holdings and its Subsidiaries in accordance with GAAP. There is no action, suit, proceeding, investigation, audit or claim now pending or, to the best knowledge of Holdings or any of its Subsidiaries, threatened by any authority regarding any material taxes relating to Holdings or any of its Subsidiaries.
8.10. Compliance with ERISA. (a) Schedule III sets forth each Plan as of the Effective Date; each Plan (other than a multiemployer plan) maintained by Holdings or any Subsidiary of Holdings or any ERISA Affiliate at any relevant time (and each related trust, insurance contract or fund) is in substantial compliance with its terms and with all applicable laws, including without limitation ERISA and the Code; each Plan (other than a multiemployer plan) maintained by Holdings or any Subsidiary of Holdings or any ERISA Affiliate at any relevant time (and each related trust, if any) which is intended to be qualified under Section 401(a) of the Code has received a current determination letter from the Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code (or, in the case of a 401(a) plan based upon a master and prototype or volume submitter form, the sponsor of such form has received a current opinion or advisory letter as to the form); no Reportable Event has occurred with respect to any Plan (other than a multiemployer plan); no Plan which is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has an Unfunded Current Liability which, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other Plans, exceeds $ 1,000,000; neither Holdings nor any Subsidiary of Holdings or ERISA Affiliate has failed to make any required contributions to any Plan under the Pension Funding Rules or has applied for or received a waiver of minimum funding standards or an extension of any amortization period under the Pension Funding Rules; neither Holdings nor any Subsidiary of Holdings nor any ERISA Affiliate has incurred any material liability (including any indirect, contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 436(f), 4971 or 4975 of the Code or expects to incur any such liability under any of the foregoing sections with respect to any Plan; no condition exists which could reasonably be expected to present a material risk to Holdings or any Subsidiary of Holdings or any ERISA Affiliate of incurring a liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings have been instituted to terminate or appoint a trustee to administer any Plan which is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan (other than routine claims for benefits) is pending, expected or threatened; using actuarial assumptions and computation
-60-
methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of Holdings and its Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Plan ended prior to the date of the most recent Credit Event, would not exceed $1,000,000; each group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees or former employees of Holdings, any Subsidiary of Holdings, or any ERISA Affiliate has at all times been operated in compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien imposed under the Code or ERISA on the assets of Holdings or any Subsidiary of Holdings or any ERISA Affiliate exists or is likely to arise on account of any Plan; and Holdings and its Subsidiaries may cease contributions to or terminate any employee benefit plan maintained by any of them without incurring any material liability.
(b) Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. Except as would not be material, all contributions required to be made with respect to a Foreign Pension Plan have been timely made. Neither Holdings nor any of its Subsidiaries has incurred any material obligation in connection with the termination of, or withdrawal from, any Foreign Pension Plan. The present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of Holdings most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities.
8.11. Security Documents . (a) The provisions of the Security Agreement are effective to create in favor of the Collateral Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of the Credit Parties in the Security Agreement Collateral described therein, and the Collateral Agent, for the benefit of the Secured Creditors, has (or within 10 days following the Effective Date will have) a fully perfected security interest in all right, title and interest in all of the Security Agreement Collateral described therein, subject to no other Liens other than Permitted Liens (it being understood that the Permitted Liens described in Section 10.01(iv)(y) are subject to the terms of the Intercreditor Agreement). The recordation of (x) the Grant of Security Interest in U.S. Patents (if any) and (y) the Grant of Security Interest in U.S. Trademarks in the respective form attached to the Security Agreement, in each case in the United States Patent and Trademark Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, and to the extent it may be perfected by such filings and recordation, a perfected security interest in the United States trademarks and patents covered by the Security Agreement, and the recordation of the Grant of Security Interest in U.S. Copyrights (if any) in the form attached to the Security Agreement with the United States Copyright Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States copyrights covered by the Security Agreement.
-61-
(b) The security interests created under the Pledge Agreement in favor of the Collateral Agent, as Pledgee, for the benefit of the Secured Creditors, constitute perfected security interests in the Pledge Agreement Collateral described in the Pledge Agreement, subject to no security interests of any other Person (other than, subject to the terms of the Intercreditor Agreement, Permitted Liens described in Section 10.01(iv)(y)). No filings or recordings are required in order to perfect (or maintain the perfection or priority of) the security interests created in the Pledge Agreement Collateral under the Pledge Agreement other than with respect to that portion of the Pledge Agreement Collateral constituting a general intangible under the UCC.
(c) After the execution, delivery and filing thereof, each Mortgage creates, as security for the obligations purported to be secured thereby, a valid and enforceable perfected security interest in and mortgage lien on the respective Mortgaged Property in favor of the Collateral Agent (or such other trustee as may be required or desired under local law) for the benefit of the Secured Creditors, superior and prior to the rights of all third Persons (except that the security interest and mortgage lien created on such Mortgaged Property may be subject to the Permitted Encumbrances related thereto) and subject to no other Liens (other than Permitted Encumbrances related thereto (it being understood that the Permitted Liens described in Section 10.01(iv)(y) are subject to the terms of the Intercreditor Agreement)).
8.12. Properties . All Real Property owned or leased by Holdings or any of its Subsidiaries as of the Effective Date, and the nature of the interest therein, is set forth in Schedule IV. Each of Holdings and each of its Subsidiaries has good and marketable title to all material properties (and to all buildings, fixtures and improvements located thereon) owned by it, including all material property reflected in the most recent historical balance sheets referred to in Section 8.05(a) (except as sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business or as permitted by the terms of this Agreement), free and clear of all Liens, other than Permitted Liens. Each of Holdings and each of its Subsidiaries has a valid and indefensible leasehold interest in the material properties leased by it free and clear of all Liens other than Permitted Liens.
8.13. Capitalization . (a) On the Effective Date, the authorized capital stock of Holdings consists of (i) 2,000,000 shares of Class A Voting Common Stock, $0.001 par value per share (such authorized shares of common stock, together with any subsequently authorized shares of common stock of Holdings, the Holdings Common Stock ), 1,052,632 of which shares are issued and outstanding on the Effective Date, (ii) 2,000,000 shares of Class B Non-Voting Common Stock, $0.001 par value per share, no shares of which are issued or outstanding on the Effective Date, and (iii) 500,000 shares of Series A Participating Preferred Stock, $0.001 par value per share, no shares of which are issued or outstanding on the Effective Date. All such outstanding shares have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. Holdings does not have outstanding any capital stock or other securities convertible into or exchangeable for its capital stock or any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights, except for (i) options, warrants and rights which may be issued from time to time to purchase, or which are convertible into, Holdings Common Stock and (ii) Qualified Preferred Stock that may be convertible into Holdings Common Stock.
-62-
(b) On the Effective Date, the authorized capital stock of the Borrower consists of 300 shares of common stock, $.01 par value per share, 100 of which shares are issued and outstanding and owned by Holdings. All such outstanding shares have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. The Borrower does not have outstanding any securities convertible into or exchangeable for its capital stock or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.
8.14. Subsidiaries . On and as of the Effective Date, (x) Holdings has no Subsidiaries other than those Subsidiaries listed on Schedule V and (y) the Borrower has no Unrestricted Subsidiaries. Schedule V sets forth, as of the Effective Date, the percentage ownership (direct and indirect) of Holdings in each class of capital stock or other Equity Interests of each of its Subsidiaries and also identifies the direct owner thereof. All outstanding shares of Equity Interests of each Subsidiary of Holdings have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. No Subsidiary of Holdings has outstanding any securities convertible into or exchangeable for its Equity Interests or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its Equity Interests or any stock appreciation or similar rights.
8.15. Compliance with Statutes, etc. Each of Holdings and each of its Subsidiaries is in compliance with all applicable Requirements of Law (including all Consumer Finance Laws (including being in compliance with privacy notice requirements under the Gramm-Leach-Bliley Act)) of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable state or federal statutes, regulations, orders and restrictions relating to usury, consumer lending, check cashing, debt collection, credit reporting or similar consumer finance activities), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; each of Holdings and each of its Subsidiaries possesses all the franchises, permits, licenses, certificates of compliance and approval and grants of authority necessary or required in the conduct of its business and the same are valid, binding, enforceable and subsisting without any defaults thereunder or enforceable adverse limitations thereon, and are not subject to any proceedings or claims opposing the issuance, development or use thereof or contesting the validity thereof; and no approvals, waivers or consents, governmental (federal, state or local) or non-governmental, under the terms of contracts or otherwise, are required by reason of or in connection with Holdings and each of its Subsidiaries execution and performance of the Credit Documents.
8.16. Investment Company Act; etc. Neither Holdings nor any of its Subsidiaries is (i) an investment company or a company controlled by an investment company, within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any Requirement of Law (other than Regulation X) which purports to regulate or restrict its ability to borrow money or to consummate the transactions contemplated by this Agreement and the other Documents or to perform its obligations hereunder or thereunder.
-63-
8.17. Anti-Terrorism Law . (a) Neither Holdings nor any of its Subsidiaries is in violation in any material respect of any applicable Requirement of Law relating to U.S. laws with respect to terrorism or money laundering ( Anti-Terrorism Laws ), including Executive Order No. 13224 on Terrorist Financing effective September 24, 2001 (the Executive Order ), and the Patriot Act.
(b) Neither Holdings nor any of its Subsidiaries is any of the following:
(i) a person that is listed in the annex to, or it otherwise subject to the provisions of, the Executive Order;
(ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
(iii) a person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv) a person that commits, threatens or conspires to commit or supports terrorism as defined in the Executive Order; or
(v) a person that is named as a specially designated national and blocked person on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control ( OFAC ) at its official website or any replacement website or other replacement official publication of such list.
(c) Neither Holdings nor any of its Subsidiaries (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of a person described in Section 8.17(b), (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.
8.18. Environmental Matters . (a) Each of Holdings and each of its Subsidiaries is in compliance with all applicable Environmental Laws and the applicable requirements of any permits issued under such Environmental Laws. There are no pending or, to the knowledge of Holdings and the Borrower, threatened Environmental Claims against Holdings or any of its Subsidiaries or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries (including any such claim arising out of the ownership, lease or operation by Holdings or any of its Subsidiaries of any Real Property formerly owned, leased or operated by Holdings or any of its Subsidiaries but no longer owned, leased or operated by Holdings or any of its Subsidiaries). There are no facts, circumstances, conditions or occurrences with respect to the business or operations of Holdings or any of its Subsidiaries, or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries (including any Real Property formerly owned, leased or operated by Holdings or any of its Subsidiaries but no longer owned, leased or operated by Holdings or any of its Subsidiaries) or, to the knowledge of Holdings and the Borrower, any property adjoining or adjacent to any such Real Property that could be reasonably
-64-
expected (i) to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries or (ii) to cause any Real Property owned, leased or operated by Holdings or any of its Subsidiaries to be subject to any restrictions on the ownership, lease, occupancy or transferability of such Real Property by Holdings or any of its Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, or Released on or from, any Real Property owned, leased or operated by Holdings or any of its Subsidiaries or, to the knowledge of Holdings and the Borrower, any property adjoining or adjacent to any Real Property, where such generation, use, treatment, storage, transportation or Release has violated or could be reasonably expected to violate any applicable Environmental Law or give rise to an Environmental Claim.
(c) Notwithstanding anything to the contrary in this Section 8.18, the representations and warranties made in this Section 8.18 shall be untrue only if the effect of any or all conditions, violations, claims, restrictions, failures and noncompliances of the types described above could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.19. Employment and Labor Relations . Neither Holdings nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings and the Borrower, threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings and the Borrower, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against Holdings or any of its Subsidiaries or, to the knowledge of Holdings and the Borrower, threatened against Holdings or any of its Subsidiaries, (iii) no union representation question exists with respect to the employees of Holdings or any of its Subsidiaries, (iv) no equal employment opportunity charges or other claims of employment discrimination are pending or, to Holdings knowledge, threatened against Holdings or any of its Subsidiaries and (v) no wage and hour department investigation has been made of Holdings or any of its Subsidiaries, except (with respect to any matter specified in clauses (i) (v) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect.
8.20. Intellectual Property, etc. Each of Holdings and each of its Subsidiaries owns or has the right to use all the patents, trademarks, permits, domain names, service marks, trade names, copyrights, licenses, franchises, inventions, trade secrets, proprietary information and know-how of any type, whether or not written (including, but not limited to, rights in computer programs and databases) and formulas, or rights with respect to the foregoing, and has obtained assignments of all leases, licenses and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others which, or the failure to own or have which, as the case may be, could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
-65-
8.21. Indebtedness . Schedule VI sets forth a list of all Indebtedness (including Contingent Obligations) of Holdings and its Subsidiaries as of the Effective Date and which is to remain outstanding after giving effect to the Transaction (excluding the Loans, the Existing Indebtedness ), in each case showing the aggregate principal amount thereof and the name of the respective borrower and any Credit Party or any of its Subsidiaries which directly or indirectly guarantees such debt.
8.22. Insurance . Schedule VII sets forth a listing of all insurance maintained by Holdings and its Subsidiaries as of the Effective Date insured (and any deductibles) set forth therein.
8.23. Subordination, etc. The subordination provisions contained in the Intercreditor Agreement and the Shareholder Subordinated Notes (if any) are enforceable against Holdings or its applicable Subsidiary and the holders of the Senior Secured Notes and the Shareholder Subordinated Notes, as applicable, and all Obligations hereunder and under the other Credit Documents are within the definition of First-Lien Obligations, Senior Indebtedness or Senior Obligations (or any comparable term) included in such subordination provisions.
8.24. Representations and Warranties as to Receivables . As to the Receivables reflected on any Monthly Statement as being Eligible Receivables only:
(a) Each Borrower or Originator or, where a Borrower or Originator was not the original lender, to the best of such Borrowers knowledge, the original lender or seller had and continue to have full power, authorization, permits, licenses and other authority to hold, enforce, and make the loans (or other extensions of credit) evidenced by the Receivables and all such Receivables and all Books and Records comprising such Receivables are genuine and enforceable;
(b) All Receivables have been duly authorized, executed, delivered by the parties whose names appear thereon and are valid and enforceable in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization or similar laws relating to the enforcement of creditors rights or by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law, and consumer protection laws; if auto title loans, constitute chattel paper; any chattels described in any Receivable are and will be accurately described and are and will be in the possession of the parties granting the security interest therein; and any applicable filing, recording or lien notation law with respect to any collateral securing a Receivable will have been complied with to the extent such filing or recording is necessary under applicable law to create or perfect such Borrowers or such Guarantors security interest in such collateral consistent with the Credit Policy.
(c) The form and content of all Receivables and the security related thereto comply in all material respects (and in any event in all material respects necessary to maintain and ensure the validity and enforceability of the Receivables) with any and all applicable laws, rules and regulations, including without limitation, the Consumer Finance Laws;
-66-
(d) The original amount and unpaid balance of each Receivable on Borrowers Books and Records and on any statement or schedule delivered to Administrative Agent and/or any Lender, including without limitation the Schedule of Receivables and Assignment, is and will be the true and correct amount actually owing to a Borrower as of the date each Receivable is pledged to Administrative Agent or as of such date specified on such statement of schedule, is not, to the best of Borrowers knowledge, subject to any claim of reduction, counterclaim, set-off, recoupment or any other claim, allowance or adjustment; and no Borrower has any knowledge of any fact which would impair the validity or collectability of any Receivables;
(e) All security agreements, title retention instruments and other documents and instruments which are security for Receivables contain a correct and sufficient description of the personal property covered thereby (if any), and, subject to the rights of Administrative Agent hereunder and the interests of Borrower as holder of such security agreements or title retention instruments or other documents or instruments, are or create security interests and Liens (if any);
(f) The applicable Originator has made an adequate credit investigation of the obligor of each Receivable and has determined that his or her credit is satisfactory and meets the standards generally observed by prudent finance companies that are in the business of making unsecured multi-pay consumer installment loans or auto title loans, as applicable, and is in conformity in all material respects with the Credit Policy; and
(g) A Borrower has good and valid title to the Receivables, free and clear of all prior assignments, claims, liens, encumbrances and security interests, other than Permitted Liens, and has the right to pledge and grant Administrative Agent, for the benefit of Lenders, a first priority security interest in the same, in the manner provided in this Agreement.
SECTION 9. Affirmative Covenants .
Each of Holdings and the Borrower hereby covenants and agrees that on and after the Effective Date and until the Total Loan Commitment have terminated and the Loans and Notes (in each case together with interest thereon), Fees and all other Obligations (other than indemnities described in Section 13.13 which are not then due and payable) incurred hereunder and thereunder, are paid in full:
9.01. Information Covenants . Holdings will furnish to the Administrative Agent (and the Administrative Agent agrees to promptly distribute to the Lenders upon its receipt thereof):
(a) Monthly Financial Statements . Within five (5) Business Days after the end of each fiscal month (or during the continuance of an Event of Default, as may be more frequently required by Administrative Agent from time to time), Borrower shall prepare a completed Monthly Statement and Borrowing Base Certificate as of such fiscal month end detailing the payments to be made on the next applicable Payment Date in accordance with Section 2.14 and a calculation of the Borrowing Base;
-67-
(b) Quarterly Financial Statements . Within 50 days after the close of each of the first three quarterly accounting periods in each fiscal year of Holdings, all quarterly financial information that would be required to be contained in a filing with the SEC on Form 10-Q if Holdings were required to file such Form, including a Managements Discussion and Analysis of Financial Condition and Results of Operations that describes the financial condition and results of operations of Holdings and its Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Managements Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of Holdings and its Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of Holdings); provided that such information shall not be required to comply with (a) Sections 302, 906 and 404 of the Sarbanes-Oxley Act of 2002 and Items 307, 308 and 402 of Regulation S-K under the Securities Act, (b) Regulation G under the Exchange Act or item 10(e) of Regulation S-K under the Securities Act with respect to any non-GAAP financial information contained therein or (c) Rule 3-10 (except for the inclusion of footnote disclosure of condensed consolidating financial information) or Rule 3-16 of Regulation S-X under the Securities Act.
(c) Annual Financial Statements . Within 120 days after the close of each fiscal year of Holdings, all annual financial information of Holdings for such fiscal year that would be required to be contained in a filing with the SEC on Form 10-K if Holdings were required to file such Form, including a Managements Discussion and Analysis of Financial Condition and Results of Operations that describes the financial condition and results of operations of Holdings and its Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Managements Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of Holdings and its Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Borrower) and a report on the annual financial statements by Holdings certified independent accountants (which certification shall be without a going concern or like qualification or exception and without any qualification or exception as to scope of audit); provided that such information shall not be required to comply with (a) Sections 302, 906 and 404 of the Sarbanes-Oxley Act of 2002 and Items 307, 308 and 402 of Regulation S-K, (b) Regulation G under the Exchange Act or item 10(e) of Regulation S-K with respect to any non-GAAP financial information contained therein or (c) Rule 3-10 (except for the inclusion of footnote disclosure of condensed consolidating financial information) or Rule 3-16 of Regulation S-X .
(d) Schedule of Receivables . Within (i) ten (10) days after the end of each fiscal month, for the fiscal month then ending, reports in form and substance reasonably satisfactory to Administrative Agent, setting forth an aging of Receivables, Schedule of Receivables and Assignment, detailed delinquency report books and records consisting of data tape information of Borrowers portfolios in a format and consisting of data elements reasonably acceptable to Administrative Agent, and repossession report in respect of any Title Receivables and (ii) within twenty (20) days after the end of each fiscal month, for the fiscal month then ending, report of Cumulative Net Losses by Vintage Pool and in form reasonably acceptable to Administrative Agent, charge-off
-68-
report, detailed analysis in respect of any Title Receivables and reserve report, performance triggers collections, reconciliation reports with sufficient detail to permit Administrative Agent to tie cash remittances to applied cash, and such other documentation and information promptly (and in any event, within three (3) Business Days) after request therefor by Administrative Agent.
(e) Management Letters . Promptly after Holdings or any of its Subsidiaries receipt thereof, a copy of any final management letter received from its certified public accountants and managements response thereto.
(f) Budgets . No later than 30 days following the first day of each fiscal year of Holdings, a budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income, sources and uses of cash and balance sheets for Holdings and its Subsidiaries on a consolidated basis) for each of the four fiscal quarters of such fiscal year prepared in detail, in each case setting forth, with appropriate discussion, the principal assumptions upon which such budget is based.
(g) Officers Certificates . At the time of the delivery of the financial statements provided for in Sections 9.01(a), (b) and (c), a compliance certificate from an Authorized Officer of Holdings in the form of Exhibit K certifying on behalf of Holdings that, to such Authorized Officers knowledge after due inquiry, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof, which certificate shall (i) set forth in reasonable detail the calculations required to establish whether Holdings and its Subsidiaries were in compliance with the provisions of Sections 10.02(iv), 10.03(v), 10.03(vii), 10.03(x), 10.04(iv), 10.04(vii), 10.04(ix), 10.04(xvi), 10.04(xvii), 10.04(xviii), 10.05(v), 10.05(xviii), 10.05(xx) and 10.07, inclusive, at the end of such fiscal quarter or year, as the case may be, (ii) set forth the calculation of the amount of the Available Basket Amount at the end of the period covered by such financial statements, and all sources and uses of proceeds relating to the calculations thereof changing during the period covered by such statements, (iii) certify that there have been no changes to Annexes C through F, and Annexes I through K, in each case of the Security Agreement and Annexes A through F of the Pledge Agreement, in each case since the Effective Date or, if later, since the date of the most recent certificate delivered pursuant to this Section 9.01(g), or if there have been any such changes, a list in reasonable detail of such changes (but, in each case with respect to this clause (iii), only to the extent that such changes are required to be reported to the Collateral Agent pursuant to the terms of such Security Documents) and whether Holdings and the other Credit Parties have otherwise taken all actions required to be taken by them pursuant to such Security Documents in connections with any such changes, and (iv) set forth in reasonable detail any material and adverse changes to the state or federal statutes, regulations, orders or restrictions relating to usury, consumer lending, check cashing, debt collection, credit reporting or similar consumer finance activities in each case to the extent applicable to Holdings or any of its Subsidiaries in the states in which Holdings or any of its Subsidiaries engage in such activities to the extent that Holdings or any of its Subsidiaries has knowledge of any such changes after conducting a reasonable and good faith inquiry.
-69-
(h) Notice of Default, Litigation and Material Adverse Effect . Promptly, and in any event within five Business Days after any officer of Holdings or any of its Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default, an Event of Default or a Regulatory Trigger Event or (ii) any other event, change or circumstance that has had, or could reasonably be expected to have, a Material Adverse Effect.
(i) Other Reports and Filings . Promptly after the filing or delivery thereof, copies of all financial information, proxy materials and reports, if any, which Holdings or any of its Subsidiaries shall publicly file with the Securities and Exchange Commission or any successor thereto (the SEC ) or deliver to holders (or any trustee, agent or other representative therefor) of its material Indebtedness pursuant to the terms of the documentation governing the same.
(j) Environmental Matters . Promptly after any officer of Holdings or any of its Subsidiaries obtains knowledge thereof, notice of one or more of the following environmental matters to the extent that such environmental matters, either individually or when aggregated with all other such environmental matters, could reasonably be expected to have a Material Adverse Effect:
(i) any pending or threatened Environmental Claim against Holdings or any of its Subsidiaries or any Real Property owned, leased or operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real Property owned, leased or operated by Holdings or any of its Subsidiaries that (a) results in noncompliance by Holdings or any of its Subsidiaries with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries that could reasonably be expected to cause such Real Property to be subject to any restrictions on the ownership, lease, occupancy, use or transferability by Holdings or any of its Subsidiaries of such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by Holdings or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency; provided that in any event Holdings shall deliver to each Lender all notices received by Holdings or any of its Subsidiaries from any government or governmental agency under, or pursuant to, CERCLA which identify Holdings or any of its Subsidiaries as potentially responsible parties for remediation costs or which otherwise notify Holdings or any of its Subsidiaries of potential liability under CERCLA.
-70-
All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and Holdings or such Subsidiarys response thereto.
(k) Regulatory Actions . To the extent that such disclosure is permitted by law, promptly after any officer of Holdings or any of its Subsidiaries obtains knowledge thereof, notice of (i) one or more Regulatory Actions to the extent that such actions, either individually or when aggregated with all other such Regulatory Actions has had, or could reasonably be expected to have, a Material Adverse Effect and (ii) the occurrence of an Internal Control Event, in each case together with a statement of an Authorized Officer of Holdings setting forth details of such Regulatory Actions or Internal Control Event and the action which the affected Person has taken and proposes to take with respect thereto.
(l) Government Approvals . Within five Business Days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority that could reasonably be expected to have a material adverse effect on any material Governmental Approval or otherwise could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
(m) Patriot Act . Promptly following the Administrative Agents or any Lenders request therefor, all documentation and other information that the Administrative Agent or such Lender reasonably requests in order to comply with its ongoing obligations under the applicable know your customer and anti-money laundering rules and regulations, including the Patriot Act.
(n) Other Information . From time to time, such other information or documents (financial or otherwise) with respect to Holdings or any of its Subsidiaries as the Administrative Agent, any other Agent or any Lender (through the Administrative Agent) may reasonably request.
9.02. Books, Records and Inspections; Meetings . (a) Holdings shall, and shall cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities. Upon reasonable prior notice, Holdings will, and will cause each of its Subsidiaries to, permit officers and designated representatives of any Agent or any Lender to visit and inspect, under guidance of officers of Holdings or such Subsidiary, any of the properties of Holdings or such Subsidiary, and to examine the books of account of Holdings or such Subsidiary and discuss the affairs, finances and accounts of Holdings or such Subsidiary with, and be advised as to the same by, its and their officers and independent accountants, all at such reasonable times and intervals and to such reasonable extent as any such Agent or any such Lender may reasonably request; provided that so long as no Default or Event of Default exists and is continuing, each Agent and the Lenders (as a group) each shall be limited to no more than two (2) such visitations and inspections per calendar year.
-71-
(b) Holdings shall, and shall cause the other Credit Parties to, keep accurate and complete Books and Records concerning the Collateral and all transactions with respect thereto consistent with sound business practices (including, without limitation, accurately account for insurance commissions) and will comply with Administrative Agents reasonable requirements, from time to time in effect, including those concerning the submission of reports on all items of Collateral including those which are deemed to be delinquent. Borrower and Guarantors shall create and maintain electronic copies of all contracts relating to Receivables and certificates of title for vehicles securing Receivables and Administrative Agent shall be provided with access to such electronic copies at all times during normal business hours at a location of one or more Borrower and Guarantors. The form of delinquency reports, the frequency with which such reports shall be submitted to Administrative Agent (which in any case shall be no less frequently than monthly) and the standards for determining which Collateral transactions are deemed delinquent for this purpose, shall at all times be satisfactory to Administrative Agent. Administrative Agent shall have the right at any time and from time to time during regular business hours, at Borrowers sole cost and expense (subject to the limitations set forth in Section 13.01), to inspect, audit, and copy the Books and Records of Borrower and Guarantors and inspect, audit and conduct appraisals of any Collateral.
(c) At a date to be mutually agreed upon between the Administrative Agent and Holdings occurring on or prior to the 120th day after the close of each fiscal year of Holdings, Holdings will, at the request of the Administrative Agent, hold a meeting (which may be held via telephone conference call at the discretion of the Administrative Agent) with all of the Lenders at which meeting will be reviewed the financial results of Holdings and its Subsidiaries for the previous fiscal year and the budgets presented for the current fiscal year of Holdings.
(d) The Holdings CLO, CCO and SVP Public Affairs shall conduct monthly regulation, legislation and compliance calls with the Administrative Agent. Notwithstanding the foregoing, Holdings shall not be obligated to include Administrative Agent in discussions or materials reasonably determined, based upon advice from counsel, by management (i) to represent a conflict of interest for Lender, (ii) to be subject to attorney-client privilege or confidentiality and/or nondisclosure requirements imposed by applicable Requirements of Law or (iii) to otherwise contain highly sensitive or proprietary information (including, but not limited to, IT initiatives, advertising and customer acquisition plans, new product development, acquisitions and strategic alliances, and other ad hoc topics that involve competitive intelligence or strategic plans).
9.03. Maintenance of Property; Insurance . (a) Holdings will, and will cause each of its Subsidiaries to, (i) keep all material property necessary to the business of Holdings and its Subsidiaries in good working order and condition, ordinary wear and tear excepted and subject to the occurrence of casualty events, (ii) maintain with financially sound and reputable insurance companies insurance on all such property and against all such risks as is consistent and in accordance with industry practice for companies similarly situated owning similar properties and engaged in similar businesses as Holdings and its Subsidiaries, and (iii) furnish to the Administrative Agent, upon its request therefor, full information as to the insurance carried. Such insurance shall include physical damage insurance on all real and personal property (whether now owned or hereafter acquired) on an all risk basis and business interruption insurance. The provisions of this Section 9.03 shall be deemed supplemental to, but not duplicative of, the provisions of any Security Documents that require the maintenance of insurance.
-72-
(b) Holdings will, and will cause each of its Subsidiaries to, at all times keep its property insured in favor of the Collateral Agent, and all policies or certificates (or certified copies thereof) with respect to such insurance (and any other insurance maintained by Holdings and/or such Subsidiaries) (i) shall be endorsed to the Collateral Agents satisfaction for the benefit of the Collateral Agent (including, without limitation, by naming the Collateral Agent as loss payee and/or additional insured), (ii) shall state that such insurance policies shall not be canceled without at least 30 days prior written notice thereof by the respective insurer to the Collateral Agent, (iii) shall provide that the respective insurers irrevocably waive any and all rights of subrogation with respect to the Collateral Agent and the other Secured Creditors, and (iv) shall be deposited with the Collateral Agent.
(c) If Holdings or any of its Subsidiaries shall fail to maintain insurance in accordance with this Section 9.03, or if Holdings or any of its Subsidiaries shall fail to so endorse and deposit all policies or certificates with respect thereto, the Administrative Agent shall have the right (but shall be under no obligation) to procure such insurance and Holdings and the Borrower jointly and severally agree to reimburse the Administrative Agent for all costs and expenses of procuring such insurance.
9.04. Existence; Franchises; etc. (a) Holdings will, and will cause each of its Subsidiaries to, do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its rights, franchises, licenses, Governmental Approvals, permits, copyrights, trademarks and patents; provided , however , that nothing in this Section 9.04(a) (A) shall prevent (i) sales of assets and other transactions by Holdings or any of its Subsidiaries in accordance with Section 10.02 or (ii) the withdrawal by Holdings or any of its Subsidiaries of its qualification as a foreign Company in any jurisdiction if such withdrawal could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (B) shall require Holdings or any of its Subsidiaries to preserve and keep in full force and effect any right, franchise, license, Governmental Approval, permit, copyright, trademark or patent if the failure to do so could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Holdings will, and will cause each of its Subsidiaries to, obtain and maintain in full force and effect at all times all necessary state and local consumer lending and check cashing licenses or other similar licenses and all other authorizations, consents, approvals, orders, licenses, permits or registrations from or with any Governmental Authority that are necessary for the operation of its business; provided , however , that nothing in this Section 9.04(b) shall require Holdings or any of its Subsidiaries to obtain and maintain in full force and effect at all times any such licenses, authorizations, consents, approvals, orders, permits or registrations if the failure to do so could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
-73-
9.05. Compliance with Statutes, etc. Holdings will, and will cause each of its Subsidiaries to, comply with all applicable Requirements of Law (including all Consumer Finance Laws (including being in compliance with privacy notice requirements under the Gramm-Leach-Bliley Act)) of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable state or federal statutes, regulations, orders and restrictions relating to usury, consumer lending, check cashing, debt collection, credit reporting or similar consumer finance activities), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; each of Holdings and each of its Subsidiaries possesses all the franchises, permits, licenses, certificates of compliance and approval and grants of authority necessary or required in the conduct of its business and the same are valid, binding, enforceable and subsisting without any defaults thereunder or enforceable adverse limitations thereon, and are not subject to any proceedings or claims opposing the issuance, development or use thereof or contesting the validity thereof; and no approvals, waivers or consents, governmental (federal, state or local) or non-governmental, under the terms of contracts or otherwise, are required by reason of or in connection with Holdings and each of its Subsidiaries execution and performance of the Credit Documents.
9.06. Compliance with Environmental Laws . (a) Holdings will comply, and will cause each of its Subsidiaries to comply, with all Environmental Laws and permits applicable to, or required by, the ownership, lease or use of its Real Property now or hereafter owned, leased or operated by Holdings or any of its Subsidiaries, except such noncompliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, and will keep or cause to be kept all Real Property now owned or hereafter acquired by Holdings or any of its Subsidiaries free and clear of any Liens imposed pursuant to such Environmental Laws. Neither Holdings nor any of its Subsidiaries will generate, use, treat, store, Release or dispose of, or permit the generation, use, treatment, storage, Release or disposal of Hazardous Materials on any Real Property now or hereafter owned, leased or operated by Holdings or any of its Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any such Real Property, except for Hazardous Materials generated, used, treated, stored, Released or disposed of at or transported to or from any such Real Properties in compliance in all material respects with all applicable Environmental Laws and as required in connection with the normal operation, use and maintenance of the business or operations of Holdings or any of its Subsidiaries.
(b) (i) After the receipt by the Administrative Agent or any Lender of any notice of the type described in Section 9.01(j), (ii) at any time that Holdings or any of its Subsidiaries are not in compliance with Section 9.06(a) or (iii) in the event that the Administrative Agent or the Lenders have exercised any of the remedies pursuant to the last paragraph of Section 11, Holdings and the Borrower will (in each case) provide, at the sole expense of Holdings and the Borrower and at the written request of the Administrative Agent, an environmental site assessment report concerning any Real Property owned, leased or operated by Holdings or any of its Subsidiaries, prepared by an environmental consulting firm reasonably approved by the Administrative Agent, indicating the presence or absence of Hazardous Materials, in the event such report identifies Hazardous Materials for which removal or remedial action is required pursuant to applicable Environmental Laws, and the potential cost of any such removal or remedial action in connection with such Hazardous Materials on such Real Property. If Holdings or the Borrower fails to provide the same within 60 days after
-74-
receipt of such written request, the Administrative Agent may order the same, the cost of which shall be borne by Holdings and the Borrower, and Holdings and the Borrower shall grant and hereby grant to the Administrative Agent and the Lenders and their respective agents access to such Real Property and specifically grant the Administrative Agent and the Lenders for the purposes stated in this Section 9.06(b), subject to the rights of tenants, to undertake such an assessment at any reasonable time upon reasonable notice to Holdings or the Borrower, all at the sole expense of Holdings and the Borrower.
9.07. ERISA . (a) As soon as possible and, in any event, within ten (10) days after Holdings, any Subsidiary of Holdings or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, Holdings will deliver to each of the Lenders a certificate of an Authorized Officer of Holdings setting forth the full details as to such occurrence and the action, if any, that Holdings, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given or filed by Holdings, such Subsidiary, the Plan administrator or such ERISA Affiliate to or with the PBGC or any other Governmental Authority or to a Plan participant, and any notices received by Holdings, such Subsidiary or ERISA Affiliate from the PBGC or any other Government Authority with respect thereto: that a Reportable Event has occurred (except to the extent that Holdings has previously delivered to the Lenders a certificate and notices (if any) concerning such event pursuant to the next clause hereof); that Holdings or any Subsidiary of Holdings or any ERISA Affiliate who is a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (or would be, without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days; that Holdings, any Subsidiary of Holdings or any ERISA Affiliate has failed to make any required contribution to any Plan under the Pension Funding Rules or has applied for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under the Pension Funding Rules with respect to a Plan; that any contribution required to be made with respect to a Plan or Foreign Pension Plan has not been timely made; that a Plan has been or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA; that a Plan which Holdings, any Subsidiary of Holdings or any ERISA Affiliate at any relevant time maintains has an Unfunded Current Liability which, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other such Plans, exceeds the aggregate amount of such Unfunded Current Liabilities that existed on the Effective Date by $1,000,000; that proceedings may be or have been instituted to terminate or appoint a trustee to administer a Plan which is subject to Title IV of ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan from Holdings, any Subsidiary of Holdings or any ERISA Affiliate; that Holdings, any Subsidiary of Holdings or any ERISA Affiliate will or may incur any liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212(c) of ERISA or with respect to a Plan under Section 436(f), 4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code; or that Holdings or any Subsidiary of Holdings may incur any material liability with a present value in excess of $1,000,000 pursuant to any employee welfare benefit plan (as defined
-75-
in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan or any Foreign Pension Plan. Holdings will deliver to each of the Lenders copies of any records, documents or other information that must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. Holdings will also deliver to each of the Lenders a complete copy of the annual report (on Internal Revenue Service Form 5500-series) of each Plan (other than a multiemployer plan) that is maintained by Holdings, any Subsidiary of Holdings or any ERISA Affiliate at any relevant time (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information) required to be filed with the Internal Revenue Service. In addition to any certificates or notices delivered to the Lenders pursuant to the first sentence hereof, copies of any records, documents or other information required to be furnished to the PBGC or any other Governmental Authority, and any material notices received by Holdings, any Subsidiary of Holdings or any ERISA Affiliate from the PBGC or any other Governmental Authority with respect to any Plan or Foreign Pension Plan shall be delivered to the Lenders no later than ten (10) days after the date such records, documents and/or information have been furnished to the PBGC or any other Government Authority or such notice has been received by Holdings, the Subsidiary or the ERISA Affiliate, as applicable.
(b) Holdings and each of its applicable Subsidiaries shall ensure that all Foreign Pension Plans maintained by it or into which it makes payments obtains or retains (as applicable) registered status under and as required by applicable law and is administered in a timely manner in all respects in compliance with all applicable laws except where the failure to do any of the foregoing would not be reasonably likely to result in a Material Adverse Effect.
9.08. End of Fiscal Years; Fiscal Quarters . Holdings will cause (i) its and each of its Domestic Subsidiaries fiscal years to end on December 31 of each calendar year and (ii) its and each of its Domestic Subsidiaries fiscal quarters to end on March 31, June 30, September 30 and December 31 of each calendar year.
9.09. Performance of Obligations . Holdings will, and will cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, indenture, security agreement, loan agreement or credit agreement and each other agreement, contract or instrument by which it is bound, except such non-performances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.10. Payment of Taxes . Holdings will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any properties of Holdings or any of its Subsidiaries not otherwise permitted under Section 10.01(i); provided that neither Holdings nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.
-76-
9.11. Use of Proceeds . The Borrower will use the proceeds of the Loans only as provided in Section 8.08.
9.12. Additional Security; Further Assurances; etc. (a) Holdings will, and will cause each other Credit Party to, grant to the Collateral Agent for the benefit of the Secured Creditors security interests and Mortgages in such assets and Real Property of Holdings and such other Credit Party as are not covered by the original Security Documents and as may be reasonably requested from time to time by the Administrative Agent or the Required Lenders (collectively, the Additional Security Documents ). All such security interests and Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Collateral Agent and shall constitute valid and enforceable perfected security interests, hypothecations and Mortgages superior to and prior to the rights of all third Persons and enforceable against third parties and subject to no other Liens except for Permitted Liens or, in the case of Real Property, the Permitted Encumbrances related thereto (it being understood that the Permitted Liens described in Section 10.01(iv)(y) are subject to the terms of the Intercreditor Agreement). The Additional Security Documents or instruments related thereto shall have been duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Security Documents and all taxes, fees and other charges payable in connection therewith shall have been paid in full. Notwithstanding the foregoing, this Section 9.12(a) shall not apply to (and Holdings and its Subsidiaries shall not be required to grant a Mortgage in) any (x) owned Real Property the Fair Market Value of which (including for this purpose, without limitation, all land, improvements and fixtures) is less than $1,000,000 or (y) any Leasehold (unless, in the case of either preceding clause (x) or (y), a Mortgage on any owned real property or a Leasehold is granted (or required to be granted) in favor of the Senior Secured Notes Collateral Agent). Furthermore, Holdings will, and will cause the other Credit Parties that are Subsidiaries of Holdings to, deliver to the Administrative Agent such opinions of counsel, title insurance and other related documents as may be reasonably requested by the Administrative Agent to assure itself that this Section 9.12(a) has been complied with.
(b) Holdings will, and will cause each of the other Credit Parties to, at the expense of Holdings and the Borrower, make, execute, endorse, acknowledge, file and/or deliver to the Administrative Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, real property surveys, reports, landlord waivers, bailee agreements, control agreements and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents as the Administrative Agent may reasonably require. Furthermore, Holdings will, and will cause the other Credit Parties that are Subsidiaries of Holdings to, deliver to the Administrative Agent such opinions of counsel, title insurance and other related documents as may be reasonably requested by the Administrative Agent to assure itself that this Section 9.12 has been complied with.
(c) If the Administrative Agent or the Required Lenders reasonably determine that they are required by any Requirement of Law to have appraisals prepared in respect of any Real Property of Holdings and the other Credit Parties constituting Collateral, Holdings and the Borrower will, at their own expense, provide to the Administrative Agent appraisals which satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of the Financial Institution Reform, Recovery and Enforcement Act of 1989, as amended, and which shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent.
-77-
(d) Holdings and the Borrower agree that each action required by clauses (a) through (c) of this Section 9.12 shall be completed as soon as possible, but in no event later than 60 days after such action is requested to be taken by the Administrative Agent or the Required Lenders (as such date may be extended by the Administrative Agent in its sole discretion); provided that, in no event will Holdings or any of its Subsidiaries be required to take any action, other than using its commercially reasonable efforts, to obtain consents from third parties with respect to its compliance with this Section 9.12.
(e) In addition to the foregoing, within 60 days after the Effective Date (as such date may be extended by the Administrative Agent in its sole discretion), (i) the Borrower shall have used its commercially reasonable efforts to deliver to the Administrative Agent fully executed landlord waivers (the provisions of which also shall include collateral access arrangements) in respect of those Leaseholds of the Borrower or any of its Subsidiaries designated as Leaseholds Subject to Landlord Waivers on Schedule XIV, each of which landlord waivers shall be in form and substance reasonably satisfactory to the Administrative Agent and (ii) the Collateral Agent shall have received fully executed deposit account control agreements required to be delivered under Section 3.9 of the Security Agreement.
(f) In addition to the foregoing, within 5 Business Days after the Effective Date (as such date may be extended by the Collateral Agent in its sole discretion), the Collateral Agent shall have received certificates of insurance complying with the requirements of Section 9.03 for the business and properties of Holdings and its Subsidiaries, in form and substance reasonably satisfactory to the Administrative Agent and naming the Collateral Agent as an additional insured and/or as loss payee, and stating that such insurance shall not be canceled or materially revised without at least 30 days prior written notice by the insurer to the Collateral Agent.
9.13. Ownership of Subsidiaries; etc. Except as otherwise permitted by Sections 10.05(xvii), (xviii) and (xx) or pursuant to a Permitted Acquisition consummated in accordance with the terms hereof, Holdings will, and will cause each of its Subsidiaries to, own 100% of the Equity Interests of each of their Subsidiaries (other than directors qualifying shares to the extent required by applicable law and/or other nominal amount of shares required to be held by local nationals under applicable law).
9.14. Contributions . (a) Except to the extent concurrently used in connection with a repurchase, redemption or other Dividend in favor of other shareholders of Holdings permitted hereunder, Holdings will, upon its receipt thereof, contribute as an equity contribution to the capital of the Borrower, any cash proceeds received by Holdings from any asset sale, any incurrence of Indebtedness, any Recovery Event, any sale or issuance of its equity, any cash capital contributions or any tax refunds.
(b) The Borrower will use the proceeds of all equity contributions received by it from Holdings as provided in the relevant clause of Section 4.03 to the extent required to be so applied.
-78-
9.15. Maintenance of Corporate Separateness . Holdings will, and will cause each of its Subsidiaries and Unrestricted Subsidiaries to, satisfy in all material respects customary Company formalities, including the holding of regular board of directors and shareholders meetings or action by directors or shareholders without a meeting and the maintenance of corporate offices and records. Neither Holdings nor any of its Subsidiaries or Unrestricted Subsidiaries will take any action, or conduct its affairs in a manner, which is likely to result in the corporate existence of Holdings or any of its Subsidiaries or Unrestricted Subsidiaries being ignored, or in the assets and liabilities of Holdings or any of its Subsidiaries or Unrestricted Subsidiaries being substantively consolidated with one another or with those of any other such Person in a bankruptcy, reorganization or other insolvency proceeding. Neither Holdings nor any of its Subsidiaries will make any payment to a creditor of any Unrestricted Subsidiary in respect of any liability of any Unrestricted Subsidiary (other than tax or other payments to Governmental Authorities for which Holdings generally makes payments on behalf of its consolidated group).
9.16. Permitted Acquisitions . (a) Subject to the provisions of this Section 9.16 and the requirements contained in the definition of Permitted Acquisition, the Borrower, each Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor and each Wholly-Owned Foreign Subsidiary of the Borrower may from time to time effect Permitted Acquisitions, so long as (in each case except to the extent the Required Lenders otherwise specifically agree in writing in the case of a specific Permitted Acquisition): (i) no Default or Event of Default shall have occurred and be continuing at the time of the consummation of the proposed Permitted Acquisition or immediately after giving effect thereto; (ii) the Borrower shall have given to the Administrative Agent and the Lenders at least five Business Days prior written notice of any Permitted Acquisition (or such shorter period of time as may be reasonably acceptable to the Administrative Agent), which notice shall describe in reasonable detail the principal terms and conditions of such Permitted Acquisition; (iii) calculations are made by Holdings with respect to the financial covenant contained in Section 10.07 for the Calculation Period most recently ended on or prior to the date of consummation of such Permitted Acquisition on a Pro Forma Basis as if the respective Permitted Acquisition (as well as all other Permitted Acquisitions theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period, and such calculations shall show that such financial covenant would have been complied with as of the last day of such Calculation Period; (iv) all representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Permitted Acquisition (both before and after giving effect thereto) (it being understood that (x) any representation and warranty that is qualified by materiality or Material Adverse Effect shall be true and correct in all respects and (y) any representation and warranty which by its terms is made as of a specified earlier date shall be required to be true and correct in all material respects (or all respects, as the case may be) as of such specified earlier date); (v) immediately before and after giving effect to such Permitted Acquisition (but, for this purpose calculated as if the payment of all post-closing purchase price adjustments required (in the reasonable determination of the Borrower) in connection with such Permitted Acquisition (and all other Permitted Acquisitions for which such purchase price adjustments may be required to be made) within the 360-day period (such period for any Permitted Acquisition, a Post-Closing Period ) following such Permitted Acquisition (and in the businesses acquired pursuant to all other Permitted
-79-
Acquisitions with Post-Closing Periods ended during the Post-Closing Period of such Permitted Acquisition) were then being paid with the proceeds of Loans, the sum of (x) the Unrestricted cash and Cash Equivalents of the Credit Parties plus (y) the Total Unutilized Loan Commitment at such time shall equal or exceed $5,000,000; (vi) to the extent that such Permitted Acquisition is to be consummated by a Wholly-Owned Foreign Subsidiary of the Borrower or any material portion of the business, division or product line to be acquired pursuant to such Permitted Acquisition is outside of the United States, the amount of Consolidated Tangible Domestic Assets at such time (and immediately after giving effect to such Permitted Acquisition) shall equal or exceed two times the amount of the Total Loan Commitment at such time; and (vii) Holdings shall have delivered to the Administrative Agent and each Lender a certificate executed by an Authorized Officer, certifying to the best of such Authorized Officers knowledge, compliance with the requirements of preceding clauses (i) through (vi), inclusive, and containing the calculations (in reasonable detail) required by preceding clauses (iii), (v) and (vi).
(b) At the time of each Permitted Acquisition involving the creation or acquisition of a Subsidiary, or the acquisition of capital stock or other Equity Interest of any Person, the capital stock or other Equity Interests thereof created or acquired in connection with such Permitted Acquisition, to the extent owned by a Credit Party, shall be pledged for the benefit of the Secured Creditors pursuant to (and to the extent required by) the Pledge Agreement.
(c) The Borrower will cause each Subsidiary which is formed to effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and to execute and deliver all of the documentation as and to the extent required by, Sections 9.12 and 10.13, to the reasonable satisfaction of the Administrative Agent.
(d) The consummation of each Permitted Acquisition shall be deemed to be a representation and warranty by each of Holdings and the Borrower that the certifications pursuant to this Section 9.16 are true and correct and that all conditions thereto have been satisfied and that same is permitted in accordance with the terms of this Agreement, which representation and warranty shall be deemed to be a representation and warranty for all purposes hereunder, including, without limitation, Sections 8 and 11.
9.17. Foreign Subsidiaries Security . If following a change in the relevant sections of the Code or the regulations, rules, rulings, notices or other official pronouncements issued or promulgated thereunder, counsel for the Borrower reasonably acceptable to the Administrative Agent does not within 30 days after a request from the Administrative Agent or the Required Lenders deliver evidence, in form and substance mutually satisfactory to the Administrative Agent and the Borrower, with respect to any Foreign Subsidiary of the Borrower which has not already had all of its Equity Interests pledged pursuant to the Pledge Agreement to secure all of the Obligations (as defined in the Pledge Agreement) that a pledge of 66 2 ⁄ 3 % or more of the total combined voting power of all classes of Equity Interests of such Foreign Subsidiary entitled to vote could reasonably be expected to cause the undistributed earnings of such Foreign Subsidiary as determined for Federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiarys United States parent for Federal income tax purposes, then that portion of such Foreign Subsidiarys outstanding Equity Interests so issued by such Foreign Subsidiary, in each case not theretofore pledged pursuant to the Pledge Agreement to secure all of the Obligations (as defined in the Pledge Agreement), shall be pledged to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement in substantially similar form, if needed).
-80-
9.18. Cash Management System Borrower shall and shall cause each Subsidiary Guarantor shall enter into, and cause each depository, securities intermediary or commodities intermediary, including but not limited to any Collection Account Bank, to enter into, Control Agreements with respect to each deposit, securities, commodity or similar account, including but not limited to the Collection Account, maintained by such Person and any account where any Collateral is deposited or located; provided, however, the Curo Concentration Account shall not be required to be subject to a Control Agreement.
(b) Borrower shall and shall cause each Subsidiary Guarantor to instruct (or otherwise cause) (i) all account debtors to make payments in respect of Receivables and all other Collateral directly into the Curo Concentration Account and (ii) Borrower to deposit, on each Business Day, all amounts on deposit in the Curo Concentration Account in respect of Collections into the Collection Account, in accordance with the instructions of the Administrative Agent (the Cash Management System ).
(c) Borrower shall and shall cause each Subsidiary Guarantor to not establish any new Cash Management System without the prior written consent of the Administrative Agent in its sole discretion, and prior to establishing any such new Cash Management System, Borrower shall and shall cause each Subsidiary Guarantors and each bank, financial institution or post office box, as applicable, with which it seeks to establish such a Cash Management System to enter into a control agreement similar to the Control Agreement.
(d) Without the prior written consent of the Administrative Agent, the Borrower shall not, in a manner adverse to the Administrative Agent or the Lenders, (A) change the general instructions given to Borrower in respect of payments on account of Receivables to be deposited in the Cash Management System, or (B) change any instructions given to any bank or financial institution which in any manner redirects the proceeds of any Collections in the Cash Management System to any account which is not subject to a control agreement in favor of the Administrative Agent.
(e) Borrower and each Subsidiary Guarantor acknowledge and agree that the funds on deposit in the Collection Account shall continue to be collateral security for the Obligations secured hereby.
(f) Borrower shall, or shall cause, the Administrative Agent to have electronic access to each deposit, securities, commodity or similar account, including but not limited to the Collection Account, maintained by any Person where any Collateral is deposited or located.
9.19. Operations . Holdings shall maintain, or cause to be maintained on their behalf, satisfactory credit underwriting and operating standards, including, with respect to each obligor of each Receivable, the completion of an adequate investigation of such obligor and a determination that the credit history and anticipated performance of such obligor is and will be satisfactory and meets the standards generally observed by prudent finance companies in the business of making unsecured multi-pay consumer installment loans and auto title loans
-81-
9.20. Credit Policy Notice . Holdings shall provide Administrative Agent with a notice and copy of any modifications, amendments, supplements or changes to the Credit Policy affecting any of the Receivables (collectively, a Modification) at least fifteen (15) days before the effectiveness of such Modification. If prior to the effectiveness of such Modification, the Administrative Agent, in its sole discretion, determines that such Modification is both material and not required pursuant to applicable Requirements of Law, and Borrower implements such Modification without the prior written consent of the Administrative Agent, then the Administrative Agent may deem such Modification an Event of Default permitting the Administrative Agent to pursue any and all remedies in the Credit Agreement.
9.21. Board Observation Rights . Holdings agrees to cause Administrative Agent to have observation rights at quarterly Board of Directors meetings of Holdings until such time as the Obligations are paid in full. At each such quarterly meeting, the Administrative Agent, at its option, shall be permitted to have a designee attend in-person or via telephone for sessions covering matters relating to Holdings business in the United States including, but not limited to, (a) financial results; (b) operational KPI details (including store performance, internet operations, credit, and collection and servicing); (c) human resources; (d) legal and regulatory updates (to the extent not subject to attorney client privilege or confidentiality requirements imposed by applicable Requirements of Law); and (e) public affairs highlights. At such meetings, Lender shall have the opportunity to ask questions and receive answer from the Board of Directors. The Administrative Agent shall be provided, in advance, all materials provided to the Board of Directors for the quarterly meetings except Diligent Boardbooks and upon request, the Administrative Agent shall receive audit reports (external and internal) and audit committee materials. For the avoidance of doubt, Administrative Agent shall not be included in (a) individual committee meetings of the Board of Directors; (b) discussions or materials reasonably determined, based upon advice from counsel, by the Board of Directors (i) to represent a conflict of interest for Lender, (ii) to be subject to attorney-client privilege or confidentiality and/or nondisclosure requirements imposed by applicable Requirements of Law or (iii) to otherwise contain highly sensitive or proprietary information (including, but not limited to, IT initiatives, advertising and customer acquisition plans, new product development, acquisitions and strategic alliances, and other ad hoc topics that involve competitive intelligence or strategic plans).
9.22. Post-Closing Covenants .
(a) Holdings shall, and shall cause its Subsidiaries to, on or prior to sixty (60) days after the Effective Date (or such later date as may be approved by the Administrative Agent in its sole discretion), deliver additional insured and lenders loss payee endorsements as described in Section 9.03.
(b) Holdings shall, and shall cause its Subsidiaries to, on or prior to sixty (60) days after the Effective Date (or such later date as may be approved by the Administrative Agent in its sole discretion), appoint a Backup Servicer that is satisfactory to the Administrative Agent in its sole discretion and enter into a Backup Servicing Agreement that is satisfactory to the Administrative Agent in its sole discretion.
-82-
(c) Holdings shall, and shall cause its Subsidiaries to, provide thirty (30) days prior written notice to the Administrative Agent if any of Holdings or its Subsidiaries intends to materially modify any of their business operations or product offerings. Holdings shall, and shall cause its Subsidiaries to, (i) in a manner satisfactory to the Administrative Agent, cooperate with and assist the Reviewing Parties in connection with any Reviewing Partys review of any such business operation modifications and new product offers as well as any other regulatory reviews or due diligence related to the business and operations of Holdings and its Subsidiaries after the Effective Date, (ii) review and consider in good faith any issues raised by, or comments, recommendations or guidance from, any Reviewing Party with respect to the foregoing and (iii) within thirty (30) days (or such longer period as may be agreed to by the Administrative Agent in its sole discretion) of any of Holdings or its Subsidiaries receipt of written notice of any comments, recommendations or guidance from a Reviewing Party, resolve or address any such issues, in each case, in a manner satisfactory to the Administrative Agent.
(d) Within ninety (90) days of the Effective Date (provided, that such period shall be extended for additional 30 day periods if the Borrower is diligently implementing such changes in good faith and the Administrative Agent has requested additional changes), the Borrower shall implement or cause to be implemented the following enhanced policies, procedures and internal controls (to the reasonable satisfaction of the Administrative Agent):
(i) In all states and for all consumer loan products that may qualify as Eligible Receivables, revise consumer credit applications to inquire as to sources of income rather than wages;
(ii) Revise applicable collection policies and procedures to comply with all card association rules (including Visa Operating Rule 5.9.10.1);
(iii) Revise the Customer Relations Manual to reflect compliance with the association rules referenced in Section 6.14(e)(ii);
(iv) Provide information to the Administrative Agent as to how account adjustments are documented for the consumer and whether or not new ACH authorizations are obtained and describe whether state contractual requirements related to these modifications are satisfied;
(v) Develop new debt collection scripts related to CFPB guidance;
(vi) Provide information on the number of Receivables that are pursued in small-claims court directly or through Ad Astra on behalf of the Borrower and its Subsidiaries; and
(vii) To the extent applicable to any particular consumer loan product that may qualify as Eligible Receivables, develop loan-to-value policies and procedures that are implemented in connection with the offering of all consumer loan products.
(e) Within twenty (20) days of the Effective Date, the Borrower shall deliver, or shall cause to be delivered, to the Administrative Agent any county-level lien searches in connection with any Originator that was not delivered to the Administrative Agent on or prior to the Effective Date. The Borrower shall remedy, or shall cause to be remedied, any liens listed in such missing lien searches that are not Permitted Liens.
-83-
(f) Within thirty (30) days after the Effective Date (or such later date as may be approved by the Administrative Agent in its sole discretion), the Borrower shall enter into a Collection Agency Agreement in a form substantially satisfactory to the Administrative Agent that shall replace the Collection Agency Agreement entered into as of the Effective Date.
9.23. Financing of Additional Eligible Receivables .
(a) Borrower may use funds distributed to it from the Collection Account in accordance with Section 2.14 to finance additional Eligible Receivables. For the avoidance of doubt, notwithstanding that such financed receivables are Eligible Receivables and will be included in the Borrowing Base, the Lender will have no obligation to make Loans with respect to any financed Receivables if the Total Unutilized Loan Commitment has been reduced to zero.
(b) The Administrative Agent shall, upon satisfaction of the conditions precedent specified in Section 2.16 and in accordance with Section 2.14(a) , direct the Collection Account Bank to release funds in the Collection Account in the amount specified in the related Funds Release Request (subject to the Facility Availability), to the Borrower not later than 1:00 P.M. (New York City time) on the Release Date by wire transfer of same day funds in Dollars, to such account as may be designated in writing to the Collateral Agent by the Borrower.
SECTION 10. Negative Covenants .
Each of Holdings and the Borrower hereby covenants and agrees that on and after the Effective Date and until the Total Loan Commitment have terminated and the Loans and Notes (in each case, together with interest thereon), Fees and all other Obligations (other than any indemnities described in Section 13.13 which are not then due and payable) incurred hereunder and thereunder, are paid in full:
10.01. Liens . Holdings will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible) of Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable with recourse to Holdings or any of its Subsidiaries), or assign any right to receive income or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute; provided that the provisions of this Section 10.01 shall not prevent the creation, incurrence, assumption or existence of the following (Liens described below are herein referred to as Permitted Liens ):
(i) inchoate Liens for taxes, assessments or governmental charges or levies not yet due or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;
-84-
(ii) Liens in respect of property or assets of Holdings or any of its Subsidiaries imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers, warehousemens, materialmens and mechanics liens and other similar Liens arising in the ordinary course of business, including Liens securing letters of credit issued in the ordinary course of business in connection therewith, and (x) which do not in the aggregate materially detract from the value of Holdings or such Subsidiarys property or assets or materially impair the use thereof in the operation of the business of Holdings or such Subsidiary or (y) the obligations with respect thereto are not overdue for more than 30 days or which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien;
(iii) Liens in existence on the Effective Date which are listed, and the property subject thereto described, in Schedule VIII, plus renewals, replacements and extensions of such Liens, provided that (x) the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase from that amount outstanding at the time of any such renewal, replacement or extension and (y) any such renewal, replacement or extension does not encumber any additional assets or properties of Holdings or any of its Subsidiaries, unless such encumbrance is otherwise permitted hereunder;
(iv) (x) Liens created by or pursuant to this Agreement and the Security Documents and (y) subject to the terms of the Intercreditor Agreement, Liens created by or pursuant to the Senior Secured Notes Security Documents;
(v) (x) licenses, sublicenses, leases or subleases granted by Holdings or any of its Subsidiaries to other Persons not materially interfering with the conduct of the business of Holdings or any of its Subsidiaries and (y) any interest or title of a lessor, sublessor or licensor under any lease or license agreement permitted by this Agreement to which the Borrower or any of its Subsidiaries is a party;
(vi) Liens upon assets of the Borrower or any of its Subsidiaries subject to Capitalized Lease Obligations (and directly related assets such as proceeds (including insurance proceeds), products, replacements, substitutions and accessions thereto) to the extent such Capitalized Lease Obligations are permitted by Section 10.04(iv), provided that (x) such Liens only serve to secure the payment of Indebtedness arising under such Capitalized Lease Obligation and (y) the Lien encumbering the asset giving rise to the Capitalized Lease Obligation does not encumber any asset of Holdings or any other asset of the Borrower or any Subsidiary of the Borrower;
(vii) Liens upon equipment or machinery acquired after the Effective Date (and directly related assets such as proceeds (including insurance proceeds), products, replacements, substitutions and accessions thereto) and used in the ordinary course of business of the Borrower or any of its Subsidiaries so long as such Liens are created at the time of the acquisition of such equipment or machinery by the Borrower or such Subsidiary or within 120 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such equipment or machinery or extensions,
-85-
renewals or replacements of any of the foregoing for the same or a lesser amount, provided that (x) the Indebtedness secured by such Liens is permitted by Section 10.04(iv) and (y) in all events, the Lien encumbering the equipment or machinery so acquired does not encumber any asset of Holdings or any other asset of the Borrower or such Subsidiary;
(viii) easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies, in each case not securing Indebtedness and not materially interfering with the conduct of the business of Holdings or any of its Subsidiaries;
(ix) Liens arising from precautionary UCC financing statement filings regarding operating leases entered into in the ordinary course of business;
(x) Liens arising out of the existence of judgments or awards not constituting an Event of Default in respect of which Holdings or any of its Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review and in respect of which there shall have been secured a subsisting stay of execution pending such appeal or proceedings;
(xi) statutory and common law landlords liens under leases to which the Borrower or any of its Subsidiaries is a party, any liens consisting of deposits in connection with leases or other similar obligations, or securing letters of credit issued in lieu of such deposits, incurred in the ordinary course of business, and cash deposits in connection with Permitted Acquisitions otherwise permitted hereunder;
(xii) (A) Liens (other than Liens imposed under ERISA) incurred (including deposits made) in the ordinary course of business in connection with workers compensation claims, unemployment insurance and social security benefits and other types of social security and (B) Liens (including deposits made) securing the performance of bids, tenders, leases and contracts in the ordinary course of business, statutory obligations, surety or appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business and consistent with past practices (exclusive of obligations in respect of the payment for borrowed money);
(xiii) Permitted Encumbrances;
(xiv) Liens on property or assets acquired pursuant to a Permitted Acquisition, or on property or assets of a Subsidiary of the Borrower in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition, and directly related assets such as proceeds (including insurance proceeds), products, replacements, substitutions and accessions thereto, provided that (x) any Indebtedness that is secured by such Liens is permitted to exist under Section 10.04(vii), and (y) such Liens are not incurred in connection with, or in contemplation or anticipation of, such Permitted Acquisition and do not attach to any asset of Holdings or any other asset of the Borrower or any of its Subsidiaries;
-86-
(xv) Liens arising out of any conditional sale, title retention, consignment or other similar arrangements for the sale of goods entered into by the Borrower or any of its Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such arrangements;
(xvi) bankers Liens, rights of setoff and other similar Liens (i) existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by Holdings or any Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management, pooled deposit or sweep accounts, and operating account arrangements, and Liens of the sponsoring bank on funds in the Debit Card Program Accounts and (ii) relating to purchase orders and other agreements entered into with customers of the Borrower or any of its Subsidiaries in the ordinary course of business;
(xvii) Liens securing Indebtedness of Foreign Subsidiaries of the Borrower to the extent such Indebtedness is permitted under Section 10.04; provided , however , that no asset of Holdings or any Domestic Subsidiary of Holdings shall be subject to any such Lien;
(xviii) additional Liens of the Borrower or any Subsidiary of the Borrower not otherwise permitted by this Section 10.01 that (v) do not encumber Collateral, (w) do not encumber any assets of Holdings or any of its Subsidiaries the Fair Market Value of which exceeds the amount of the Indebtedness or other obligations secured by such assets, (x) do not materially impair the use of such assets in the operation of the business of the Borrower or such Subsidiary, (y) do not secure Indebtedness for borrowed money and (z) do not secure obligations in excess of $10,000,000 in the aggregate for all such Liens at any time; and
(xix) Liens consisting of second priority liens on Collateral in favor of the Three-Year Credit Agent in connection with the Three-Year Credit Agreement.
In connection with the granting of Liens of the type described in clauses (iii), (vi), (vii), (ix) and (xiv) of this Section 10.01 by the Borrower of any of its Subsidiaries, the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate by it in connection therewith (including, without limitation, by executing appropriate lien releases or lien subordination agreements in favor of the holder or holders of such Liens, in either case solely with respect to the item or items of equipment or other assets subject to such Liens).
10.02. Consolidation, Merger, Purchase or Sale of Assets, etc. Holdings will not, and will not permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any partnership, joint venture, or transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of all or any part of its property or assets (other than sales of inventory in the ordinary course of business), or enter into any sale-leaseback transactions, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary
course of business) of any Person (or agree to do any of the foregoing at any future time), except that:
-87-
(i) Capital Expenditures by the Borrower and its Subsidiaries shall be permitted to the extent not in violation of Section 10.07;
(ii) the Borrower and its Subsidiaries may liquidate or otherwise dispose of obsolete or worn-out property in the ordinary course of business;
(iii) Dividends and Investments may be made to the extent permitted by Sections 10.03 and 10.05, respectively;
(iv) the Borrower and its Subsidiaries may sell assets (other than the capital stock or other Equity Interests of any Wholly-Owned Subsidiary, unless all of the capital stock or other Equity Interests of such Wholly-Owned Subsidiary are sold in accordance with this clause (iv)), so long as (v) no Default or Event of Default then exists or would result therefrom, (w) each such sale is in an arms-length transaction and the Borrower or the respective Subsidiary receives at least Fair Market Value, (x) the consideration received by the Borrower or such Subsidiary consists of at least 75% cash or Cash Equivalents and is paid at the time of the closing of such sale, provided , that the amount of: (a) any liabilities (as shown on the Borrowers or such Subsidiarys most recent balance sheet) of Holdings or any Subsidiary of Holdings (other than contingent liabilities and liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee of any such assets and with respect to which Holdings or such Subsidiary is unconditionally released from further liability; and (b) any securities, notes or other obligations received by the Borrower or any such Subsidiary from such transferee that are converted within 30 days by the Borrower or such Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received in that conversion), will be deemed to be cash for purposes of this sub-clause (x) and (y) the aggregate amount of the cash and non-cash proceeds received from all assets sold pursuant to this clause (iv) shall not exceed $10,000,000 in any fiscal year of Holdings (for this purpose, using the Fair Market Value of property other than cash);
(v) each of the Borrower and its Subsidiaries may lease (as lessee), assign (as assignee), sub-lease (as sub-lessee) or license (as licensee) real or personal property (including, without limitation, licenses and sub-licenses of intellectual property) in the ordinary course of business (so long as any such lease, assignment, sub-lease or license does not create a Capitalized Lease Obligation except to the extent permitted by Section 10.04(iv));
(vi) each of the Borrower and its Subsidiaries may sell or discount, in each case without recourse and in the ordinary course of business, accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and not as part of any financing transaction;
-88-
(vii) each of the Borrower and its Subsidiaries may grant licenses, sublicenses, leases or subleases to one another and to other Persons not materially interfering with the conduct of the business of the Borrower or any of its Subsidiaries, in each case so long as no such grant otherwise affects the Collateral Agents security interest in the asset or property subject thereto;
(viii) the Borrower or any Subsidiary of the Borrower may convey, sell or otherwise transfer all or any part of its business, properties and assets to the Borrower or to any Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor, so long as any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets so transferred shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such transfer) and all actions required to maintain said perfected status have been taken;
(ix) any Subsidiary of the Borrower may merge or consolidate with and into, or be dissolved or liquidated into, the Borrower or any Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor, so long as (i) in the case of any such merger, consolidation, dissolution or liquidation involving the Borrower, the Borrower is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation, (ii) in all other cases, a Wholly-Owned Domestic Subsidiary of the Borrower which is a Subsidiary Guarantor is the surviving or continuing corporation of any such merger, consolidation, dissolution or liquidation, and (iii) any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets of such Subsidiary shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such merger, consolidation, dissolution or liquidation) and all actions required to maintain said perfected status have been taken;
(x) any Foreign Subsidiary of the Borrower may be merged, consolidated or amalgamated with and into, or be dissolved or liquidated into, or transfer any of its assets to, any Wholly-Owned Foreign Subsidiary of the Borrower, so long as (i) such Wholly-Owned Foreign Subsidiary of the Borrower is the surviving or continuing entity of any such merger, consolidation, amalgamation, dissolution or liquidation and (ii) any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the Equity Interests of such Wholly-Owned Foreign Subsidiary and such Foreign Subsidiary shall remain in full force and effect and perfected and enforceable (to at least the same extent as in effect immediately prior to such merger, consolidation, amalgamation, dissolution, liquidation or transfer) and all actions required to maintain said perfected status have been taken;
(xi) (A) Holdings shall be permitted to issue shares of its Equity Interests permitted to be issued by it hereunder, (B) the Borrower shall be permitted to issue to Holdings shares of its Equity Interests permitted to be issued by it hereunder, and (C) Subsidiaries of the Borrower shall be permitted to issue to the Borrower and its Subsidiaries shares of their respective Equity Interests permitted to be issued hereunder;
-89-
(xii) Liens permitted under Section 10.01 may be incurred, and the assets subject to such Liens may be disposed of by or on behalf of the Person holding such Liens (but subject, in the case of the Senior Secured Notes Collateral Agent, to the terms of the Intercreditor Agreement);
(xiii) the Borrower and its Subsidiaries may surrender or waive contract rights or settle, release or surrender contract rights or other litigation claims in the ordinary course of business;
(xiv) the Borrower and its Subsidiaries may sell, transfer or dispose of precious metals in the ordinary course of business;
(xv) the Borrower and its Subsidiaries may dispose of motor vehicles securing consumer loans made by the Borrower and its Subsidiaries in the ordinary course of business;
(xvi) Permitted Acquisitions may be consummated in accordance with the requirements of Section 9.16;
(xvii) the Borrower and its Subsidiaries may liquidate or otherwise dispose of Cash Equivalents in the ordinary course of business, in each case for cash at Fair Market Value; and
(xviii) sales of accounts receivable and loans receivable and related assets for fair market value.
To the extent the Required Lenders waive the provisions of this Section 10.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 10.02 (other than to Holdings or a Subsidiary thereof), such Collateral shall be sold free and clear of the Liens created by the Security Documents, and the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed reasonably appropriate in order to effect the foregoing.
10.03. Dividends . Holdings will not, and will not permit any of its Subsidiaries to, authorize, declare or pay any Dividends with respect to Holdings or any of its Subsidiaries, except that:
(i) (x) any Subsidiary of the Borrower may pay cash Dividends to the Borrower or to any Wholly-Owned Domestic Subsidiary of the Borrower and (y) any Foreign Subsidiary of the Borrower also may pay cash Dividends to any Wholly-Owned Foreign Subsidiary of the Borrower;
(ii) any Non-Wholly-Owned Subsidiary of the Borrower may pay cash Dividends to its shareholders, members or partners generally, so long as the Borrower or its respective Subsidiary which owns the Equity Interest in the Subsidiary paying such Dividends receives at least its proportionate share thereof (based upon its relative holding of the Equity Interest in the Subsidiary paying such Dividends and taking into account the relative preferences, if any, of the various classes of Equity Interests of such Subsidiary);
-90-
(iii) the Borrower may pay cash Dividends to Holdings, so long as the proceeds thereof are promptly used by Holdings to pay operating expenses incurred in the ordinary course of business (including, without limitation, outside directors and professional fees, expenses and indemnities) and other similar corporate overhead costs and expenses (but excluding management or similar fees paid to any Affiliate of Holdings);
(iv) the Borrower may pay cash Dividends to Holdings at the times and in the amounts necessary to enable Holdings to pay its tax obligations; provided that (x) the amount of cash Dividends paid pursuant to this clause (iv) to enable Holdings to pay Federal and state income taxes at any time shall not exceed the amount of such Federal and state income taxes actually owing by Holdings at such time for the respective period and (y) any refunds received by Holdings shall promptly be returned by Holdings to the Borrower;
(v) the Borrower may pay cash Dividends to Holdings in an aggregate amount for all such Dividends not to exceed $10,000,000 (although no more than $2,000,000 of such Dividends may be paid in any twelve-month period) for the purpose of enabling Holdings to redeem, repurchase or otherwise acquire for value, and Holdings may redeem, repurchase or otherwise acquire for value, outstanding shares of Holdings Common Stock (or options or warrants to purchases Holdings Common Stock) held by current or former officers, directors, employees or consultants of Holdings or any of its Subsidiaries and to make payments on outstanding Shareholder Subordinated Notes theretofore issued in exchange for such Equity Interests of Holdings; provided that (x) the only consideration paid by Holdings in respect of such redemptions, repurchases or other acquisitions for value shall be cash and Shareholder Subordinated Notes, (y) the sum of (I) the aggregate amount paid by Holdings in cash in respect of all such redemptions, repurchases or other acquisitions for value pursuant to this clause (v) plus (II) the aggregate amount of all cash payments made on all Shareholder Subordinated Notes shall not exceed $10,000,000 (although no more than $2,000,000 of such redemptions, purchases, acquisitions and payments may be made in any twelve-month period) (in each case, plus the amount of net cash proceeds received by Holdings and its Subsidiaries (a) in respect of key-man life insurance policies obtained for the purpose of making such payments and (b) from the issuance of Equity Interests by Holdings to members of management of Holdings and its Subsidiaries, to the extent that those amounts did not provide the basis for any amount paid under clause (vi) of this Section 10.03, used to make an Investment under Section 10.05(xvii) or make a payment under Section 10.09(iv)(b)) and (z) at the time of any payment of any cash Dividend, purchase or acquisition for value or other payment permitted to be made pursuant to this Section 10.03(v), including any cash payment made under a Shareholder Subordinated Note, no Default or Event of Default shall then exist or result therefrom;
(vi) so long as no Default or Event of Default shall then exist or result therefrom, Holdings may pay or make any Dividend that is made in exchange for, or with the net cash proceeds from, the substantially concurrent sale of Equity Interests of Holdings permitted to be issued by it hereunder or a substantially concurrent cash capital contribution received by Holdings from its shareholders (other than, in either case, any
-91-
such amounts received from a Subsidiary of Holdings), in each case to the extent that such amounts are not otherwise used to pay or make a Dividend under clause (v) of this Section 10.03, make an Investment under Section 10.05(xvii) or make a payment under Section 10.09(iv)(b);
(vii) the Borrower may pay cash Dividends to Holdings for the purpose of enabling Holdings to, and Holdings may, make cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of Holdings, so long as (x) any such cash payment shall not be for the purpose of evading the limitations of this Section 10.03 and (y) no more than $250,000 in the aggregate may be paid under this Section 10.03(vii);
(viii) Holdings may pay regularly scheduled Dividends on its Qualified Preferred Stock pursuant to the terms thereof solely through the issuance of additional shares of such Qualified Preferred Stock (but not in cash), provided that in lieu of issuing additional shares of such Qualified Preferred Stock as Dividends, Holdings may increase the liquidation preference of the shares of Qualified Preferred Stock in respect of which such Dividends have accrued; and
(ix) the Borrower may pay cash Dividends to Holdings, and Holdings may use such proceeds to pay or make cash Dividends, on any date in an amount not to exceed the Available Basket Amount on such date (after giving effect to all prior and contemporaneous adjustments thereto, except as a result of such Dividends), so long as (v) no Default or Event of Default then exists or would result therefrom, (w) at the time that any such Dividend is paid (and immediately after giving effect thereto), Holdings shall be in compliance, on a Pro Forma Basis, with (A) the financial covenant contained in Section 10.07 and (B) a Modified Interest Coverage Ratio of at least 2.50:1.00, in each case for the Calculation Period most recently ended on or prior to the date of payment of the respective Dividend, (x) the amount of Consolidated Tangible Domestic Assets at such time (and immediately after giving effect to such Dividend) shall equal or exceed two times the amount of the Total Loan Commitment at such time, (y) at the time of the payment of such Dividend and after giving effect thereto the sum of (I) the aggregate amount of Unrestricted cash and Cash Equivalents of the Borrower and the Subsidiary Guarantors at such time and (II) the Total Unutilized Loan Commitment at such time shall equal or exceed $10,000,000 and (z) prior to the payment of such Dividend, Holdings shall have delivered to the Administrative Agent a certificate executed by an Authorized Officer of Holdings, certifying to the best of such officers knowledge, compliance with the requirements of preceding clauses (v) through (y), and containing the calculations (in reasonable detail) required by preceding clause (w), (x) and (y).
10.04. Indebtedness . Holdings will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other Credit Documents;
-92-
(ii) Existing Indebtedness outstanding on the Effective Date and listed on Schedule VI (as reduced by any repayments of principal thereof), plus any subsequent extension, renewal, modification or refinancing thereof, provided that the aggregate principal amount of the Indebtedness to be extended, renewed, modified or refinanced does not increase from that amount outstanding at the time of any such extension, renewal, modification or refinancing plus accrued and unpaid interest thereon and the amount of reasonable and customary fees incurred in connection with any such extension, renewal, modification or refinancing;
(iii) (x) Indebtedness of the Borrower under Interest Rate Protection Agreements entered into with respect to other Indebtedness permitted under this Section 10.04 and (y) Indebtedness of the Borrower and its Subsidiaries under Other Hedging Agreements entered into in the ordinary course of business and providing protection to the Borrower and its Subsidiaries against fluctuations in currency values in connection with the Borrowers or any of its Subsidiaries operations, in either case so long as the entering into of such Interest Rate Protection Agreements and Other Hedging Agreements are bona fide hedging activities and are not for speculative purposes;
(iv) Indebtedness of the Borrower and its Subsidiaries evidenced by Capitalized Lease Obligations (to the extent permitted pursuant to Section 10.07), mortgage financings and purchase money Indebtedness described in Section 10.01(vii), provided that in no event shall the sum of the aggregate principal amount of all Capitalized Lease Obligations and purchase money Indebtedness permitted by this clause (iv) exceed $5,000,000 at any time outstanding;
(v) Indebtedness constituting Intercompany Loans to the extent permitted by Sections 10.05(viii), (xvii), (xviii), (xix) and (xx);
(vi) Indebtedness consisting of guaranties (x) by the Borrower and the Wholly-Owned Domestic Subsidiaries of the Borrower that are Subsidiary Guarantors of each others Indebtedness and lease and other contractual obligations permitted under this Agreement and (y) by Wholly-Owned Foreign Subsidiaries of the Borrower of each others Indebtedness and lease and other contractual obligations permitted under this Agreement;
(vii) Indebtedness of a Subsidiary of the Borrower acquired pursuant to a Permitted Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition of an asset securing such Indebtedness), provided that (x) such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition, (y) such Indebtedness does not constitute debt for borrowed money, it being understood and agreed that Capitalized Lease Obligations and purchase money Indebtedness shall not constitute debt for borrowed money for purposes of this clause (y) and (z) the aggregate principal amount of all Indebtedness permitted by this clause (vii) shall not exceed $5,000,000 at any one time outstanding;
-93-
(viii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, so long as such Indebtedness is extinguished within four Business Days of its incurrence;
(ix) Indebtedness of the Borrower and its Subsidiaries (A) with respect to performance bonds, surety bonds, appeal bonds, customs bonds or completion guaranties required in the ordinary course of business or in connection with the enforcement of rights or claims of the Borrower or any of its Subsidiaries and (B) with respect to appeal bonds in connection with judgments that do not result in a Default or an Event of Default;
(x) Indebtedness of the Borrower or any of its Subsidiaries which may be deemed to exist in connection with agreements providing for indemnification, purchase price adjustments and similar obligations in connection with the acquisition or disposition of assets in accordance with the requirements of this Agreement, so long as any such obligations are those of the Person making the respective acquisition or sale, and are not guaranteed by any other Person except as permitted by Section 10.04(vi);
(xi) unsecured subordinated Indebtedness of Holdings under Shareholder Subordinated Notes issued in connection with any redemption or repurchase of Holdings Common Stock pursuant to Section 10.03(v);
(xii) Indebtedness of the Credit Parties under the Senior Secured Notes Documents in an aggregate principal amount not to exceed $440,000,000 (as reduced by any payments of principal thereof after the Effective Date);
(xiii) Indebtedness of the Credit Parties under the Three-Year Credit Agreement in an aggregate principal amount not to exceed (when added to the amount of Indebtedness outstanding hereunder) the amount that the Borrower would be permitted to incur in accordance with the Senior Secured Notes Documents as in effect on the Effective Date;
(xiv) Indebtedness of the Borrower or any Subsidiary of the Borrower consisting of the financing of insurance premiums in the ordinary course of business;
(xv) additional unsecured Indebtedness of the Borrower, which may be guaranteed on an unsecured basis by the other Credit Parties, so long as (I) no Default or Event of Default exists at the time of incurrence or issuance thereof or would result therefrom, (II) Holdings shall be in compliance, on a Pro Forma Basis, with the financial covenant contained in Section 10.07 for the Calculation Period most recently ended on or prior to the date of the respective incurrence or issuance of such Indebtedness (determined after giving effect to such incurrence or issuance), (III) such Indebtedness is not subject to any scheduled amortization, mandatory redemption, mandatory repayment or mandatory prepayment, sinking fund or similar payment (other than, in each case, customary offers to repurchase upon a change of control and asset sale) or have a final maturity date, in either case prior to the date occurring six months following the Maturity Date and (IV) Holdings shall have delivered to the Administrative Agent a certificate from an Authorized Officer of Holdings certifying as to compliance with the requirements of preceding clauses (I) through (III) and containing the calculations (in reasonable detail) required by preceding clause (II);
-94-
(xvi) Indebtedness of Foreign Subsidiaries of the Borrower in an aggregate principal amount not to exceed $15,000,000 at any time outstanding (inclusive of any lines of credit in effect on the Effective Date); and
(xvii) so long as no Default or Event of Default then exists or would result therefrom, additional unsecured Indebtedness incurred by the Borrower and/or its Subsidiaries in an aggregate principal amount not to exceed $10,000,000 at any one time outstanding.
10.05. Advances, Investments and Loans . Holdings will not, and will not permit any of its Subsidiaries to, directly or indirectly, lend money or credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other Equity Interest in, or make any capital contribution to, any other Person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, or hold any cash or Cash Equivalents (each of the foregoing an Investment and, collectively, Investments ), except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may (x) acquire and hold accounts receivables owing to any of them, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms of the Borrower or such Subsidiary and (y) make cash advance loans, consumer oriented loans (including, without limitation, installment loans and other alternative consumer financing options) and automobile title loans to, their respective customers in the ordinary course of business and on a basis consistent with past practices;
(ii) Holdings and its Subsidiaries may acquire and hold cash and Cash Equivalents;
(iii) Holdings and its Subsidiaries may hold the Investments held by them on the Effective Date or made pursuant to binding commitments in effect on the Effective Date and (in each case) described on Schedule IX, provided that any additional Investments made with respect thereto shall be permitted only if permitted under the other provisions of this Section 10.05;
(iv) the Borrower and its Subsidiaries may acquire and own Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;
(v) the Borrower and its Subsidiaries may make loans and advances to their officers and employees in the ordinary course of business in an aggregate amount not to exceed $500,000 at any time (determined without regard to any write-downs or write-offs of such loans and advances);
-95-
(vi) Holdings and its Subsidiaries may acquire and hold obligations of their officers and employees in connection with such officers and employees acquisition of shares of Holdings Common Stock (so long as no cash is actually advanced by Holdings or any of its Subsidiaries in connection with the acquisition of such obligations);
(vii) the Borrower and its Subsidiaries may enter into Interest Rate Protection Agreements and Other Hedging Agreements to the extent permitted by Section 10.04(iii);
(viii) the Borrower and its Wholly-Owned Subsidiaries may make unsecured Intercompany Loans between or among one another, provided , however , Intercompany Loans by a Credit Party to a Wholly-Owned Foreign Subsidiary of the Borrower shall only be permitted so long as (i) no Default or Event of Default then exists or would result therefrom, (ii) to the extent that the aggregate principal amount of Intercompany Loans made and then outstanding from the Credit Parties to Wholly-Owned Foreign Subsidiaries of the Borrower pursuant to this clause (viii), when added to the aggregate amount of cash capital contributions made by the Credit Parties to Wholly-Owned Foreign Subsidiaries of the Borrower pursuant to clause (ix) of this Section 10.05 and then outstanding, exceeds $10,000,000 (in either case, determined without regard to any write-downs or write-offs of any such Intercompany Loans or capital contributions), the amount of Consolidated Tangible Domestic Assets at such time (and immediately after giving effect to the respective Investment) shall equal or exceed two times the amount of the Total Loan Commitment at such time and (iii) at the time of the making of such Intercompany Loans and after giving effect thereto the sum of (I) the aggregate amount of Unrestricted cash and Cash Equivalents of the Borrower and the Subsidiary Guarantors at such time and (II) the Total Unutilized Loan Commitment at such time, shall equal or exceed $5,000,000;
(ix) (A) Holdings may make capital contributions to the Borrower and (B) the Borrower and its Wholly-Owned Subsidiaries may make cash capital contributions to their respective Wholly-Owned Subsidiaries, provided , however , that cash capital contributions made by a Credit Party to a Wholly-Owned Foreign Subsidiary of the Borrower shall only be permitted so long as (i) no Default or Event of Default then exists or would result therefrom, (ii) to the extent that the aggregate principal amount of Intercompany Loans made and then outstanding from the Credit Parties to Wholly-Owned Foreign Subsidiaries of the Borrower pursuant to clause (viii) of this Section 10.05, when added to the aggregate amount of cash capital contributions made by the Credit Parties to Wholly-Owned Foreign Subsidiaries of the Borrower pursuant to this clause (ix) and then outstanding, exceeds $10,000,000 (in either case, determined without regard to any write-downs or write-offs of any such Intercompany Loans or capital contributions), the amount of Consolidated Tangible Domestic Assets at such time (and immediately after giving effect to the respective Investment) shall equal or exceed two times the amount of the Total Loan Commitment at such time and (iii) at the time of the making of such cash capital contribution and after giving effect thereto the sum of (I) the aggregate amount of Unrestricted cash and Cash Equivalents of the Borrower and the Subsidiary Guarantors at such time and (II) the Total Unutilized Loan Commitment at such time shall equal or exceed $5,000,000;
-96-
(x) Holdings and its Subsidiaries may own the Equity Interests of their respective Subsidiaries created or acquired in accordance with the terms of this Agreement (so long as all amounts invested in such Subsidiaries are independently justified under another provision of this Section 10.05);
(xi) CSO Obligations of the Borrower and its Subsidiaries, to the extent constituting Investments;
(xii) Contingent Obligations permitted by Section 10.04, to the extent constituting Investments;
(xiii) Permitted Acquisitions shall be permitted in accordance with the requirements of Section 9.16;
(xiv) the Borrower and its Subsidiaries may receive and hold promissory notes and other non-cash consideration received in connection with any asset sale permitted by Section 10.02(iv);
(xv) the Borrower and its Subsidiaries may make Investments (A) in the form of prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and other similar deposits and (B) in the form of advances to customers or suppliers, in each case, in the ordinary course of business of the Borrower or such Subsidiary;
(xvi) Investments consisting of purchases and acquisitions of supplies, materials and equipment or purchases or contract rights or licenses of intellectual property, in each case in the ordinary course of business;
(xvii) so long as no Default or Event of Default then exists or would result therefrom, the Borrower and its Subsidiaries may make Investments that are made in exchange for, or with the net cash proceeds from, the substantially concurrent sale of Equity Interests of Holdings permitted to be issued by it hereunder or a substantially concurrent cash capital contribution received by Holdings from its shareholders (other than, in either case, any such amounts that are received from a Subsidiary of Holdings), in each case to the extent that such amounts are not otherwise used to pay or make a Dividend under Section 10.03(v) or (vi) or make a payment under Section 10.09(iv)(b);
(xviii) the Borrower and its Subsidiaries may make Investments on any date in an amount not to exceed the Available Basket Amount on such date (after giving effect to all prior and contemporaneous adjustments thereto, except as a result of such Investment), so long as (v) no Default or Event of Default then exists or would result therefrom, (w) at the time that any such Investment is made (and immediately after giving effect thereto), Holdings shall be in compliance, on a Pro Forma Basis, with (A) the financial covenant contained in Section 10.07 and (B) a Modified Interest Coverage Ratio of at least 2.50:1.00, in each case for the Calculation Period most recently ended on or prior to the date of the respective Investment, (x) the amount of Consolidated Tangible Domestic Assets at such time (and immediately after giving effect to such Investment) shall equal or exceed two times the amount of the Total Loan Commitment at such time, (y) at the
-97-
time of the making of such Investment and after giving effect thereto the sum of (I) the aggregate amount of Unrestricted cash and Cash Equivalents of the Borrower and the Subsidiary Guarantors at such time and (II) the Total Unutilized Loan Commitment at such time shall equal or exceed $5,000,000 and (z) prior to the making of such Investment, Holdings shall have delivered to the Administrative Agent a certificate executed by an Authorized Officer of Holdings, certifying to the best of such officers knowledge, compliance with the requirements of preceding clauses (v) through (y), and containing the calculations (in reasonable detail) required by preceding clause (w), (x) and (y);
(xix) [Reserved.];
(xx) in addition to Investments permitted by clauses (i) through (xix) of this Section 10.05, the Borrower and its Subsidiaries may make additional Investments to or in a Person in an aggregate amount for all Investments made pursuant to this clause (xx) (determined without regard to any write-downs or write-offs thereof), net of cash repayments of principal in the case of loans, sale proceeds in the case of Investments in the form of debt instruments and cash equity returns (whether as a distribution, dividend, redemption or sale) in the case of equity investments, not to exceed $10,000,000; and
(xxi) investments in Receivables pursuant to the Credit Documents.
All Investments made pursuant to this Section 10.05, to the extent constituting Intercompany Loans, shall satisfy the requirements of the definition of Intercompany Loans contained herein
10.06. Transactions with Affiliates . Holdings will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of related transactions with any Affiliate of Holdings or any of its Subsidiaries (each an Affiliate Transaction ), unless: (1) such Affiliate Transaction is in the ordinary course of business and is on terms that are no less favorable to Holdings or the relevant Subsidiary than those that would have been obtained in a comparable transaction at the time in an arms length transaction with a Person who was not an Affiliate; (2) if such Affiliate Transaction or series of related Affiliate Transactions involves an amount in excess of $5,000,0000, the terms of such Affiliate Transaction or series of related Affiliate Transactions are set forth in writing and a majority of the non-employee directors of Holdings disinterested with respect to such Affiliate Transaction or series of related Affiliate Transactions has determined in good faith that the criteria set forth in preceding clause (1) are satisfied and has approved the relevant such Affiliate Transaction or series of related Affiliate Transactions as evidenced by a resolution of the Board of Directors of Holdings certified in writing by an Authorized Officer of Holdings; and (3) if such Affiliate Transaction or series of related Affiliate Transactions involves an amount in excess of $10,000,000, Holdings obtains an opinion as to the fairness to Holdings or such Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing or that such Affiliate Transaction or series of related Affiliate Transactions is no more restrictive to Holdings and its Subsidiaries than could reasonably be expected to be obtained at the time in comparable an arms length transaction with a Person who was not an Affiliate, except that the following in any event shall be permitted:
-98-
(i) Dividends may be paid to the extent provided in Section 10.03;
(ii) loans may be made and other transactions may be entered into by Holdings and its Subsidiaries to the extent permitted by Sections 10.02, 10.04 and 10.05;
(iii) customary fees, indemnities and reimbursements may be paid to non-officer directors of Holdings and its Subsidiaries;
(iv) Holdings may issue Holdings Common Stock and Qualified Preferred Stock;
(v) Holdings and its Subsidiaries may enter into, and may make payments under, employment agreements, employee benefits plans, stock option plans, indemnification provisions and other similar compensatory arrangements with officers, employees and directors of Holdings and its Subsidiaries in the ordinary course of business;
(vi) Subsidiaries of the Borrower may pay management fees, licensing fees and similar fees to the Borrower or to any Wholly-Owned Domestic Subsidiary of the Borrower that is a Subsidiary Guarantor;
(vii) the Borrower may reimburse the Sponsor for its reasonable out-of-pocket expenses incurred in connection with its providing management services to Holdings and its Subsidiaries in an aggregate amount not to exceed $250,000 in any fiscal year of Holdings;
(viii) Holdings and its Subsidiaries may enter into and perform their respective obligations under the Existing Affiliate Agreements as more particularly described on Schedule XI or as modified, amended or amended and restated by any modification, amendment or amendment and restatement (x) that, taken as a whole, is not more disadvantageous to the Lenders in any material respect than such agreement as it was in effect on the Effective Date or (y) made in compliance with clauses (1), (2) and (3) of the introductory paragraph of this Section 10.06, and agreements created after the Effective Date between Ad Astra Recovery Services, Inc. ( Ad Astra ) and Subsidiaries of Holdings that contain substantially identical or more advantageous terms to Holdings and its Subsidiaries to those agreements between Ad Astra and Subsidiaries of Holdings existing on the Effective Date;
(ix) transactions exclusively between or among the Borrower and/or its Wholly-Owned Subsidiaries so long as such transactions are not otherwise prohibited by this Agreement;
(x) on the Effective Date, the Borrower may reimburse the Sponsor for its reasonable out-of-pocket costs and expenses incurred in connection with the Transactions; and
(xi) Transactions consisting of contributions and sales of receivables to the SPV Borrower.
-99-
Notwithstanding anything to the contrary contained above in this Section 10.06, in no event shall Holdings or any of its Subsidiaries pay any management, consulting or similar fee to any of their respective Affiliates except as specifically provided in clauses (vi) and (vii) of this Section 10.06.
10.07. Financial Covenants . Holdings shall maintain the following financial covenants:
(c) Minimum Three-Month Rolling Average Monthly Excess Yield . The Trailing Excess Yield calculated as of the last day of each fiscal month shall not be less than 225%.
(d) Maximum Three-Month Rolling Average Monthly Net Loss . The Trailing Net Loss Rate calculated as of the last day of each fiscal month shall not be greater than 10%.
The determination of the financial covenants contained herein shall exclude any asset, liability, expense or income associated with Statement of Financial Accounting Standard No. 133.
10.08. [ Reserved ].
10.09. Modifications of Certificate of Incorporation, By-Laws, Certain Indebtedness and Certain Other Agreements, Payments on Certain Indebtedness, etc. Holdings will not, and will not permit any of its Subsidiaries to:
(i) amend, modify or change the any of its Organizational Documents (including, without limitation, by the filing or modification of any certificate or articles of designation), or any agreement entered into by it with respect to its capital stock or other Equity Interests (including any Shareholders Agreement and any Qualified Preferred Stock), or enter into any new agreement with respect to its capital stock or other Equity Interests, unless such amendment, modification, change or other action contemplated by this clause (i) could not reasonably be expected to be adverse to the interests of the Lenders in any material respect;
(ii) amend, modify or change any provision of (x) any Existing Affiliate Agreement or Management Agreement unless such amendment, modification or change could not reasonably be expected to be adverse in any material respect to the interests of the Lenders (although no amendment, modification or change may be made to any monetary term thereof except to reduce the amount thereof) or (y) any Tax Sharing Agreement or enter into any new tax sharing agreement, tax allocation agreement or similar agreement without the prior written consent of the Administrative Agent;
(iii) amend, modify or waive, or permit the amendment, modification or waiver of, any provision of any Shareholder Subordinated Note;
(iv) make (or give any notice in respect of) any voluntary or optional payment or prepayment on or redemption, repurchase or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of (including, in each case without limitation, by way of depositing with the trustee with
-100-
respect thereto or any other Person money or securities before due for the purpose of paying when due), any Permitted Unsecured Debt; provided , however , so long as no Default or Event of Default then exists or would result therefrom, the Borrower may prepay, redeem, repurchase or acquire Permitted Unsecured Debt (a) with the Net Debt Proceeds received by the Borrower from a new incurrence or issuance of Permitted Unsecured Debt after the Effective Date to the extent issued in accordance with the terms of this Agreement, (b) to the extent made in exchange for, or with the net cash proceeds from, the substantially concurrent sale of Equity Interests of Holdings permitted to be issued by it hereunder or a substantially concurrent cash capital contribution received by Holdings from its shareholders (other than, in either case, any such amounts that are received from a Subsidiary of Holdings), in each case to the extent that such amounts are not otherwise used to pay or make a Dividend under Sections 10.03(v) or (vi) or make an Investment under Section 10.05(xvii) or (c) in an amount not to exceed the Available Basket Amount on such date (after giving effect to all prior and contemporaneous adjustments thereto, except as a result of payment), so long as (i) at the time that any such prepayment, redemption, repurchase or acquisition is made (and immediately after giving effect thereto), Holdings shall be in compliance, on a Pro Forma Basis, with (A) the financial covenant contained in Section 10.07 and (B) a Modified Interest Coverage Ratio of at least 2.50:1.00, in each case for the Calculation Period most recently ended on or prior to the date of the respective prepayment, redemption, repurchase or acquisition, (ii) the amount of Consolidated Tangible Domestic Assets at such time (and immediately after giving effect to the respective payment) shall equal or exceed two times the amount of the Total Loan Commitment at such time, (iii) at the time of the making of such prepayment, redemption, repurchase or acquisition and after giving effect thereto the sum of (I) the aggregate amount of Unrestricted cash and Cash Equivalents of the Borrower and the Subsidiary Guarantors at such time and (II) the Total Unutilized Loan Commitment at such time shall equal or exceed $10,000,000 and (iv) prior to the making of such prepayment, redemption, repurchase or acquisition, Holdings shall have delivered to the Administrative Agent a certificate executed by an Authorized Officer of Holdings, certifying to the best of such officers knowledge, compliance with the requirements of preceding clauses (i) through (iii), and containing the calculations (in reasonable detail) required by such preceding clauses (i) through (iii);
(v) amend or modify, or permit the amendment or modification of, any provision of any Senior Secured Notes Document, the Loan Documents as defined in the Three-Year Credit Agreement, the Holdings Indenture or any document relating to any Permitted Unsecured Debt (other than (x) any such amendment or modification of any Senior Secured Notes Documents, the Holdings Indenture or the Loan Documents as defined in the Three-Year Credit Agreement that (A) makes the provisions thereof less restrictive on Curo Group Holdings Corp., Holdings and its Subsidiaries (including with respect to any representation, warranty, covenant, default or event of default), (B) reduces interest rates, commissions or fees paid (or to be paid) by Curo Group Holdings Corp., Holdings or any of its Subsidiaries in connection therewith, (C) extends the stated maturity of any Senior Secured Notes, notes issued pursuant to the Holdings Indenture or the Three-Year Credit Agreement, (D) reduces or eliminates any prepayment premiums or (E) makes conforming changes to the Senior Secured Notes Security Documents or the Loan Documents as defined in the Three-Year Credit Agreement as permitted by the
-101-
Intercreditor Agreement, in each case so long as no fees (or any economically equivalent payment) are paid to any lender, holder or other Person required to consent to, or otherwise approve, any such amendment or modification except to the extent permitted by the Intercreditor Agreement or (y) any such amendment or modification of any document relating to any Permitted Unsecured Debt to the extent that such Permitted Unsecured Debt in the amended or modified form would not be able to be issued or incurred at such time in accordance with the terms of Section 10.04(xv) and then only so long as no fees (or any economically payment) are made to any lender, holder or other Person required to consent to, or otherwise approve, any such amendment or modification); or
(vi) make (or give any notice in respect of) any principal, interest or other payment on, or any redemption or acquisition for value of any Shareholder Subordinated Note, except to the extent permitted by Section 10.03(v).
10.10. Limitation on Certain Restrictions on Subsidiaries . Holdings will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other Equity Interest or participation in its profits owned by Holdings or any of its Subsidiaries, or pay any Indebtedness owed to Holdings or any of its Subsidiaries, (b) make loans or advances to Holdings or any of its Subsidiaries or (c) transfer any of its properties or assets to Holdings or any of its Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law and any applicable rule, regulation or order, (ii) this Agreement and the other Credit Documents, (iii) the Senior Secured Notes Documents, (iv) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of Holdings or any of its Subsidiaries, (v) customary provisions restricting assignment of any licensing agreement (in which Holdings or any of its Subsidiaries is the licensee) or other contract entered into by Holdings or any of its Subsidiaries in the ordinary course of business, (vi) restrictions on the transfer of any asset pending the close of the sale of such asset, (vii) any agreements in effect or entered into on the Effective Date, including agreements governing Existing Indebtedness as in effect on the Effective Date, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof to the extent permitted hereunder; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the agreements governing such Indebtedness as in effect on the Effective Date, (viii) customary provisions limiting the disposition or distribution of assets or property in partnership, joint venture, asset sale agreements, stock sale agreements and other similar agreements, which limitation is applicable only to the assets that are the subject of such agreements, (ix) any such encumbrance or restriction with respect to any Foreign Subsidiary of Holdings pursuant to an agreement governing Indebtedness incurred by such Foreign Subsidiary, (A) if the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially more restrictive than the encumbrances and restrictions contained in the agreements described in clauses (ii) and (vii) above (as determined in good faith by Holdings), or (B) if such encumbrance or restriction is not materially more restrictive than is customary in comparable financings (as determined in good faith by Holdings) and either (I) Holdings determines in good
-102-
faith that such encumbrance or restriction will not materially affect the Borrowers ability to make the principal, interest or fee payments on the Loans or (II) such encumbrance or restriction applies only if a default occurs in respect of a payment or financial covenant relating to such Indebtedness, (x) restrictions on cash or other deposits or net worth imposed by landlords, suppliers and customers under contracts entered into in the ordinary course of business, and (xi) restrictions on the transfer of any asset subject to a Lien permitted by Section 10.01(iii), (vi), (vii), (xiv), (xvii) or (xviii).
10.11. Limitation on Issuance of Equity Interests . (a) Holdings will not, and will not permit any of its Subsidiaries to, (x) issue (i) any Preferred Equity (other than Qualified Preferred Stock issued by Holdings) or (ii) any redeemable common stock or other redeemable common Equity Interests other than common stock or other redeemable common Equity Interests that is or are redeemable at the sole option of Holdings or such Subsidiary, as the case may be, or (y) convert shares of Qualified Preferred Stock into shares of Holdings Common Stock to the extent that such conversion would require Holdings or any of its Subsidiaries to make a cash payment to the holders of the Qualified Preferred Stock (whether in respect of accrued and unpaid dividends or otherwise), unless such cash payment would otherwise be permitted under Section 10.03.
(b) Holdings will not permit any of its Subsidiaries to issue any capital stock or other Equity Interests (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, capital stock or other Equity Interests, except (i) for transfers and replacements of then outstanding shares of capital stock or other Equity Interests, (ii) for stock splits, stock dividends and other issuances which do not decrease the percentage ownership of Holdings or any of its Subsidiaries in any class of the capital stock or other Equity Interests of such Subsidiary, (iii) in the case of Foreign Subsidiaries of Holdings, to qualify directors to the extent required by applicable law and for other nominal share issuances to Persons other than Holdings and its Subsidiaries to the extent required under applicable law, and (iv) for issuances by Subsidiaries of the Borrower which are newly created or acquired in accordance with the terms of this Agreement.
10.12. Business; etc. (a) Holdings will not, and will not permit any of its Subsidiaries to, engage directly or indirectly in any business other than the businesses engaged in by Holdings and its Subsidiaries as of the Effective Date and reasonable extensions thereof and businesses ancillary, substantially related, incidental or complimentary thereto.
(b) Notwithstanding the foregoing or anything else in this Agreement to the contrary, Holdings will not engage in any business or own any significant assets or have any material liabilities other than (i) (x) its ownership of the capital stock of the Borrower and (y) holding up to $500,000 of cash and Cash Equivalents in the aggregate at any time and (ii) those liabilities which it is responsible for under this Agreement and the other Documents to which it is a party and in respect of any Shareholder Subordinated Notes issued by it, provided that Holdings may engage in those activities that are incidental to (x) the maintenance of its existence in compliance with applicable law and (y) legal, tax and accounting matters in connection with any of the foregoing activities.
-103-
10.13. Limitation on Creation of Subsidiaries . (a) Holdings will not, and will not permit any of its Subsidiaries to, establish, create or acquire after the Effective Date any Subsidiary (other than Foreign Subsidiaries and Non-Wholly Owned Domestic Subsidiaries permitted to be established, created or acquired in accordance with the requirements of Section 10.13(b)), provided that the Borrower and its Wholly-Owned Domestic Subsidiaries shall be permitted to establish, create and, to the extent permitted by this Agreement, acquire Wholly-Owned Domestic Subsidiaries, so long as, in each case, (i) at least 10 Business Days prior written notice thereof is given to the Administrative Agent (or such shorter period of time as is acceptable to the Administrative Agent in any given case), (ii) the capital stock or other Equity Interests of such new Subsidiary are promptly pledged pursuant to, and to the extent required by, this Agreement and the Pledge Agreement and the certificates, if any, representing such stock or other Equity Interests, together with stock or other appropriate powers duly executed in blank, are delivered to the Collateral Agent, (iii) each such new Wholly-Owned Domestic Subsidiary executes a counterpart of or joinder to the Subsidiaries Guaranty, the Security Agreement, the Pledge Agreement and the Intercreditor Agreement, and (iv) each such new Wholly-Owned Domestic Subsidiary, to the extent requested by the Administrative Agent or the Required Lenders, takes all actions required pursuant to Section 9.12. In addition, each new Wholly-Owned Subsidiary that is required to execute any Credit Document shall execute and deliver, or cause to be executed and delivered, all other relevant documentation (including opinions of counsel) of the type described in Section 6 as such new Subsidiary would have had to deliver if such new Subsidiary were a Credit Party on the Effective Date.
(b) In addition to Subsidiaries of the Borrower created pursuant to preceding clause (a), the Borrower and its Subsidiaries may establish, acquire or create, and make Investments in, Foreign Subsidiaries and Non-Wholly Owned Domestic Subsidiaries as a result of Permitted Acquisitions (subject to the limitations contained in the definition thereof) and Investments expressly permitted to be made pursuant to Section 10.05, provided that (i) all of the capital stock or other Equity Interests of each such Foreign Subsidiary and Non-Wholly Owned Domestic Subsidiary shall be pledged by any Credit Party which owns same as, and to the extent, required by the Pledge Agreement, and (ii) each such Non-Wholly Owned Domestic Subsidiary shall take the actions specified in Section 10.13(a) to the same extent that such Non-Wholly Owned Domestic Subsidiary would have been required to take if it were a Wholly-Owned Domestic Subsidiary of the Borrower.
(c) (c) Notwithstanding anything to the contrary contained in this Agreement, Holdings will not, and will not permit any of its Subsidiaries to, establish, create or acquire after the Effective Date any Unrestricted Subsidiary, except to the extent that (i) such establishment, creation or acquisition constitutes an Investment permitted under Section 10.05(xviii), (ii) such Unrestricted Subsidiary meets all of the requirements of the definition thereof and (iii) the Equity Interests of such Unrestricted Subsidiary, to the extent owned by a Credit Party, is promptly pledged pursuant to, and to the extent required by, the Pledge Agreement and the certificates, if any, representing such Equity Interests, together with stock or other appropriate powers duly executed in blank, are delivered to the Collateral Agent.
-104-
10.14. Anti-Terrorism Law; Anti-Money Laundering . (a) Holdings will not, and will not permit any of its Subsidiaries to, directly or indirectly, (i) knowingly conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in Section 8.17(b), (ii) knowingly deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) knowingly engage in or conspire to engage in any transaction that violates, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and Holdings or the Borrower shall deliver to the Lenders any certification or other evidence reasonably requested from time to time by any Lender, confirming Holdings and its Subsidiaries compliance with this Section 10.14).
(b) Holdings will not, and will not permit any of its Subsidiaries to, cause or permit any of the funds of Holdings or any of its Subsidiaries that are used to repay the Loans to be derived from any unlawful activity with the result that the making of the Loans would be in violation of any applicable law.
10.15. Embargoed Person . Holdings will not, and will not permit any of its Subsidiaries to, cause or permit (a) any of the funds or properties of Holdings or any of its Subsidiaries that are used to repay the Loans to constitute property of, or be beneficially owned directly or indirectly by, any Person subject to sanctions or trade restrictions under United States law ( Embargoed Person or Embargoed Persons ) that is identified on (1) the List of Specially Designated Nationals and Blocked Persons maintained by OFAC and/or on any other similar list maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq. , The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq. , and any Executive Order or any applicable law promulgated thereunder, with the result that the investment in Holdings or any of its Subsidiaries (whether directly or indirectly) is prohibited by any applicable law, or the Loans made by the Lenders would be in violation of any applicable law, or (2) the Executive Order, any related enabling legislation or any other similar Executive Orders or (b) any Embargoed Person to have any direct or indirect interest, in Holdings or any of its Subsidiaries, with the result that the investment in Holdings or any of its Subsidiaries (whether directly or indirectly) is prohibited by any applicable law or the Loans are in violation of any applicable law.
10.16. Right of First Refusal . In the event Holdings or any of its Subsidiaries (any such Person, a New Borrower ) undertakes to enter into an additional or subsequent credit facility (the New Credit Facility ), Administrative Agent and its designees shall have a right of first refusal (but not an obligation) to provide such New Credit Facility on the same material terms and conditions (as such term is described below) as would be provided by such third parties or on terms and conditions no less favorable (as mutually agreed by Administrative Agent and the New Borrower) to the New Borrower than would be provided by such third-party, pursuant to the following terms:
(a) The Borrower shall provide Administrative Agent written notice (a New Credit Facility ROFR Notice ) describing the New Credit Facility and the terms and conditions thereof (collectively, the New Credit Facility Opportunity ). The Administrative Agent and its designees shall have ten (10) days from the date of the Administrative Agents receipt of a New Credit Facility ROFR Notice to agree to provide such New Credit Facility pursuant to the New Credit Facility Opportunity.
-105-
(b) If the Administrative Agent and its designees fail to exercise such right of first refusal within said ten (10)-day period with respect to the New Credit Facility Opportunity, then the New Credit Facility Opportunity may be offered to a third-party upon terms and conditions that are substantially comparable or more favorable to (including economic terms that are substantially identical or more favorable to) the New Borrower than, the material terms and conditions as are specified in the applicable New Credit Facility ROFR Notice. Such material terms and conditions will include (1) aggregate principal amount, (2) pricing (including, without limitation, interest rate; closing, commitment, structuring, arrangement or similar fees; and original issue discount) and payment terms, (3) term and/or duration, and (4) financial covenants, borrowing base or availability, material conditions to borrowing, and similar restrictions. In the event the New Credit Facility Opportunity has not been consummated within the one hundred eighty (180)-day period from the date of the applicable New Credit Facility ROFR Notice, the New Credit Facility Opportunity may not be offered by the Borrower to any third-party without again offering such New Credit Facility Opportunity to the Administrative Agent in the manner provided above. Notwithstanding the foregoing to the contrary, unless the proceeds of any such New Credit Facility Opportunity shall be used promptly to repay in full in cash all Obligations, the provisions of this Section 10.16 shall be subject to the restrictions contained in Sections 10.02 and 10.04 hereof.
(c) No obligations by Holdings or any of its Subsidiaries shall exist under this Section 10.16 to provide the Administrative Agent with a right of first refusal with respect to such New Credit Facility Opportunity if the all-in cost of capital with respect to any New Credit Facility Opportunity, as determined by Borrower in good faith, is less than eight percent (8%) per annum. In addition, such right shall not apply to any indebtedness issued to the holders of the 12.00% Senior Cash Pay Notes due 2017 issued pursuant to the Indenture dated as of February 14, 2013 (the Holdings Indenture ) between Wilmington Trust, National Association, as Trustee, and Speedy Group Holdings Corp. as the Issuer or the Senior Secured Notes in connection with a purchase of, or tender offer, exchange offer for or other extinguishment of any such existing bonds.
(d) The rights under this Section 7.16 shall terminate upon the earlier to occur of (i) the termination of the Obligations and (ii) a Change of Control of the Borrower; provided that if the Obligations are terminated by a capital contribution from Borrowers direct or indirect parent, this Section 7.16 shall terminate six (6) months after the date of such capital contribution.
10.17. Indenture Amendments . Except as otherwise permitted by Section 10.09, Holdings will not materially amend, modify or supplement the Holdings Indenture nor the Intermediate Indenture without the prior written consent of the Administrative Agent, which may be provided in its sole discretion.
SECTION 11. Events of Default .
Upon the occurrence of any of the following specified events (each, an Event of Default ):
-106-
11.01. Payments . The Borrower shall (a) default in the payment when due of any principal of any Loan or any Note or (b) default, and such default shall continue unremedied for three or more Business Days, in the payment when due of any interest on any Loan or Note or any Fees or any other amounts owing hereunder or under any other Credit Document; or
11.02. Representations, etc. Any representation, warranty or statement in the nature of a representation or warranty and not covered by one of the other subsections in this Article 11 made or deemed made by any Credit Party herein or in any other Credit Document or in any certificate delivered to the Administrative Agent, the Collateral Agent or any Lender pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made (it being understood that to the extent that any representation, warranty or statement is qualified by materiality or reference to Material Adverse Effect, such representation, warranty or statement shall prove to be untrue or incorrect in any respect on the date as of which made or deemed made); or
11.03. Covenants . Holdings or any of its Subsidiaries shall (a) default in the due performance or observance by it of any term, covenant or agreement contained in Section 9.01, 9.02(c), 9.08, 9.11, 9.16, 9.18, 9.20 or Section 10 (other than Section 10.07), (b) default in the due performance or observance by it of any term, covenant or agreement contained in Section 10.07 and such default (in the case of this clause (b) only) shall continue unremedied for a period of thirty (30) days after written notice thereof to the defaulting party by the Administrative Agent or the Required Lenders or after the date on which such default should reasonably have known or been aware of by the defaulting party or (c) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement (other than those set forth in Sections 11.01, 11.02 and 11.16) and such default (in the case of this clause (c) only) shall continue unremedied for a period of fifteen (15) days after written notice thereof to the defaulting party by the Administrative Agent or the Required Lenders or after the date on which such default should reasonably have known or been aware of by the defaulting party; or
11.04. Default Under Other Agreements . (i) Holdings or any of its Subsidiaries shall (x) default in any payment of any Indebtedness (other than the Obligations) beyond the period of grace, if any, provided in an instrument or agreement under which such Indebtedness was created, (y) default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the Obligations) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity, or (z) allow an Event of Default under and as defined in Three-Year Credit Agreement to occur and be continuing or (ii) any Indebtedness (other than the Obligations) of Holdings or any of its Subsidiaries shall be declared to be (or shall become) due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof, provided that it shall not be a Default or an Event of Default under this Section 11.04 unless, for any Indebtedness other than the Three-Year Credit Facility, the aggregate principal amount of all Indebtedness as described in preceding clauses (i) and (ii) is at least $10,000,000; or
-107-
11.05. Bankruptcy, etc. Holdings or any of its Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled Bankruptcy, as now or hereafter in effect, or any successor thereto (the Bankruptcy Code ); or an involuntary case is commenced against Holdings or any of its Subsidiaries, and the petition is not controverted within 15 days, or is not dismissed within 60 days after the filing thereof, provided , however , that during the pendency of such period, each Lender shall be relieved of its obligation to extender credit hereunder; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of Holdings or any of its Subsidiaries, to operate all or any substantial portion of the business of Holdings or any of its Subsidiaries, or Holdings or any of its Subsidiaries commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Holdings or any of its Subsidiaries, or there is commenced against Holdings or any of its Subsidiaries any such proceeding which remains undismissed for a period of 60 days after the filing thereof, or Holdings or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Holdings or any of its Subsidiaries makes a general assignment for the benefit of creditors; or any Company action is taken by Holdings or any of its Subsidiaries for the purpose of effecting any of the foregoing; or
11.06. ERISA . (a) Holdings or any Subsidiary of Holdings or any ERISA Affiliate shall fail to make any required contribution to any Plan under the Pension Funding Rules, a determination shall have been made that any Plan is, or is expected to be, considered an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA or that any Plan which is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) is in endangered or critical status under Section 305 of ERISA, a Reportable Event shall have occurred, Holdings or any Subsidiary of Holdings or any ERISA Affiliate who is a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur with respect to such Plan within the following 30 days, any Plan which is subject to Title IV of ERISA shall have had or is likely to have a trustee appointed to administer such Plan, any Plan which is subject to Title IV of ERISA is, shall have been or is likely to be terminated or to be the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a contribution required to be made with respect to a Plan or a Foreign Pension Plan has not been timely made, Holdings or any Subsidiary of Holdings or any ERISA Affiliate has incurred or is likely to incur any liability to or on account of a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the Code, or Holdings or any Subsidiary of Holdings has incurred or is likely to incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or Plans or Foreign Pension Plans, a default, within the meaning of Section 4219(c)(5) of ERISA, shall occur with respect to any Plan; (b) there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (c) such lien, security interest or liability, individually, and/or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect; or
-108-
11.07. Security Documents . Any of the Security Documents shall cease to be in full force and effect, or shall cease to give the Collateral Agent for the benefit of the Secured Creditors the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral (other than immaterial portions of the Collateral), in favor of the Collateral Agent, superior to and prior to the rights of all third Persons (except as permitted by Section 10.01), and subject to no other Liens (except as permitted by Section 10.01), or any Credit Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any such Security Document and such default shall continue beyond the period of grace, if any, specifically applicable thereto pursuant to the terms of such Security Document (or, if no period of grace is specifically applicable thereto, such default shall continue for a period of 30 days); or
11.08. Guaranties . Any Guaranty or any provision thereof shall cease to be in full force or effect as to any Guarantor (except as a result of a release of any Subsidiary Guarantor in accordance with the terms thereof), or any Guarantor or any Person acting for or on behalf of such Guarantor shall deny or disaffirm such Guarantors obligations under the Guaranty to which it is a party or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Guaranty to which it is a party; or
11.09. Judgments . One or more judgments or decrees shall be entered against Holdings or any Subsidiary of Holdings involving in the aggregate for Holdings and its Subsidiaries a liability (not paid or to the extent not covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 60 consecutive days, and the aggregate amount of all such judgments equals or exceeds $10,000,000; or
11.10. Change of Control . A Change of Control shall occur; or
11.11. Intercreditor Agreement . The Intercreditor Agreement or any provision thereof shall cease to be in full force or effect (except in accordance with its terms), any of Holdings, any direct or indirect parent thereof or any Subsidiary shall deny or disaffirm its respective obligations thereunder or any party thereto shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the terms thereof; or
11.12. Regulatory Trigger Event . The occurrence of any Regulatory Trigger Event or any other regulatory event, regulatory change or pending or threatened (in writing) proceeding that could reasonably be expected to cause the Borrower or any Guarantor to be unable to comply with any of its financial covenants or questions its ability to remain a going concern; or
11.13. Collateral Performance . A Level II Trigger Event shall occur and be continuing; or
-109-
11.14. Suspension of Activities . Any of Holdings or any of its Subsidiaries liquidates, dissolves, terminates or suspends its business operations or otherwise fails to operate its business in the ordinary course whether done voluntarily or pursuant to a court, regulatory or other order or directive; or
11.15. Key Person Event . Don Gayhardt (along with his permitted successors as determined hereunder, a Key Person ) shall, at any time for any reason, cease to be the employed by the Borrower Parties in the same position and with duties substantially similar to those held as of the Effective Date, unless a replacement (with, other than in the case of a Pre-Approved Replacement, the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld, conditioned or delayed) shall have been appointed and employed (including on an interim basis) within ninety (90) days of such Key Persons cessation of such employment; or
11.16. Backup Servicing Agreement . The Backup Servicing Agreement or any provision thereof shall cease to be in full force or effect; or
11.17. Minimum Liquidity . Borrower, together with its consolidated Subsidiaries, shall fail to maintain cash and Cash Equivalents at any one time in an amount equal to or greater than $25,000,000.
then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent, upon the written request of the Required Lenders, shall by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against any Credit Party ( provided that, if an Event of Default specified in Section 11.05 shall occur with respect to the Borrower, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the Total Loan Commitment terminated, whereupon the Loan Commitment of each Lender shall forthwith terminate immediately without any other notice of any kind; (ii) declare the principal of and any accrued interest in respect of all Loans and the Notes and all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party; and (iii) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents.
SECTION 12. The Administrative Agent .
12.01. Appointment . The Lenders hereby irrevocably designate and appoint Victory Park Management, LLC as Administrative Agent (for purposes of this Section 12 and Section 13.01, the term Administrative Agent also shall include Victory Park Management, LLC in its capacity as Collateral Agent pursuant to the Security Documents) to act as specified herein and in the other Credit Documents. Each Lender hereby irrevocably authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement, the other Credit Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Administrative Agent may perform any of its respective duties hereunder by or through its officers, directors, agents, employees or affiliates.
-110-
12.02. Nature of Duties . The Administrative Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement and in the other Credit Documents. Neither the Administrative Agent nor any of its officers, directors, agents, employees or affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Credit Document or in connection herewith or therewith, unless caused by its or their gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision). The duties of the Administrative Agent shall be mechanical and administrative in nature; the Administrative Agent shall not have by reason of this Agreement or any other Credit Document a fiduciary relationship in respect of any Lender; and nothing in this Agreement or in any other Credit Document, expressed or implied, is intended to or shall be so construed as to impose upon the Administrative Agent any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein or therein.
12.03. Lack of Reliance on the Administrative Agent . Independently and without reliance upon the Administrative Agent, each Lender, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of Holdings and its Subsidiaries in connection with the making and the continuance of the Loans and the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of Holdings and its Subsidiaries and, except as expressly provided in this Agreement, the Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter. The Administrative Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of this Agreement or any other Credit Document or the financial condition of Holdings or any of its Subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Credit Document, or the financial condition of Holdings or any of its Subsidiaries or the existence or possible existence of any Default or Event of Default.
12.04. Certain Rights of the Administrative Agent . If the Administrative Agent requests instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Credit Document, the Administrative Agent shall be entitled to refrain from such act or taking such action unless and until the Administrative Agent shall have received instructions from the Required Lenders; and the Administrative Agent shall not incur liability to any Lender by reason of so refraining. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting hereunder or under any other Credit Document in accordance with the instructions of the Required Lenders.
-111-
12.05. Reliance . The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the Administrative Agent believed to be the proper Person, and, with respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder, upon advice of counsel selected by the Administrative Agent.
12.06. Indemnification . To the extent the Administrative Agent (or any affiliate thereof) is not reimbursed and indemnified by the Borrower, the Lenders will reimburse and indemnify the Administrative Agent (and any affiliate thereof) in proportion to their respective percentage as used in determining the Required Lenders (determined as if there were no Defaulting Lenders) for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by the Administrative Agent (or any affiliate thereof) in performing its duties hereunder or under any other Credit Document or in any way relating to or arising out of this Agreement or any other Credit Document; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agents (or such affiliates) gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).
12.07. The Administrative Agent in its Individual Capacity . With respect to its obligation to make Loans under this Agreement, the Administrative Agent shall have the rights and powers specified herein for a Lender and may exercise the same rights and powers as though it were not performing the duties specified herein; and the term Lender , Required Lenders , holders of Notes or any similar terms shall, unless the context clearly indicates otherwise, include the Administrative Agent in its respective individual capacities. The Administrative Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, investment banking, trust or other business with, or provide debt financing, equity capital or other services (including financial advisory services) to any Credit Party or any Affiliate of any Credit Party (or any Person engaged in a similar business with any Credit Party or any Affiliate thereof) as if they were not performing the duties specified herein, and may accept fees and other consideration from any Credit Party or any Affiliate of any Credit Party for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.
12.08. [RESERVED]
12.09. Resignation by the Administrative Agent . (a) The Administrative Agent may resign from the performance of all its respective functions and duties hereunder and/or under the other Credit Documents at any time by giving 15 Business Days prior written notice to the Lenders and, unless a Default or an Event of Default under Section 11.05 then exists, the Borrower. Such resignation shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.
-112-
(b) Upon any such notice of resignation by the Administrative Agent, the Required Lenders shall appoint a successor Administrative Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to the Borrower, which acceptance shall not be unreasonably withheld or delayed ( provided that the Borrowers approval shall not be required if an Event of Default then exists).
(c) If a successor Administrative Agent shall not have been so appointed within such 15 Business Day period, the Administrative Agent, with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed, provided that the Borrowers consent shall not be required if an Event of Default then exists), shall then appoint a successor Administrative Agent who shall serve as Administrative Agent hereunder or thereunder until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) above by the 20th Business Day after the date such notice of resignation was given by the Administrative Agent, the Administrative Agents resignation shall become effective and the Required Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.
(e) Upon a resignation of the Administrative Agent pursuant to this Section 12.09, the Administrative Agent shall remain indemnified to the extent provided in this Agreement and the other Credit Documents and the provisions of this Section 12 (and the analogous provisions of the other Credit Documents) shall continue in effect for the benefit of the Administrative Agent for all of its actions and inactions while serving as the Administrative Agent.
12.10. Collateral Matters. (a) Each Lender authorizes and directs the Collateral Agent to enter into the Security Documents and the Intercreditor Agreement for the benefit of the Lenders and the other Secured Creditors. Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.
(b) The Lenders hereby authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon termination of the Loan Commitments and payment and satisfaction of all of the Obligations (other than inchoate indemnification obligations) at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting property being sold or otherwise disposed of (to Persons other than
-113-
Holdings and its Subsidiaries) upon the sale or other disposition thereof in compliance with Section 10.02, (iii) if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 13.12) or (iv) as otherwise may be expressly provided in the relevant Security Documents. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agents authority to release particular types or items of Collateral pursuant to this Section 12.10.
(c) The Collateral Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by any Credit Party or is cared for, protected or insured or that the Liens granted to the Collateral Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 12.10 or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agents own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).
12.11. Delivery of Information . The Administrative Agent shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by the Administrative Agent from any Credit Party, any Subsidiary, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Credit Document except (i) as specifically provided in this Agreement or any other Credit Document and (ii) as specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of the Administrative Agent at the time of receipt of such request and then only in accordance with such specific request.
SECTION 13. Miscellaneous .
13.01. Expenses; Indemnity; Damage Waiver . (a) The Borrower agrees to pay promptly upon demand:
(i) all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent, the Collateral Agent, and each Senior Participant, in connection with any Senior Participations of the Loans and the preparation, negotiation, execution and delivery of the Senior Participation Agreements;
(ii) all costs and expenses incurred by the Administrative Agent and/or the Collateral Agent, including the fees, charges and disbursements of Advisors for the Administrative Agent and the Collateral Agent, in connection with any action, claim, suit, litigation, investigation, inquiry or proceeding affecting the Collateral or any part thereof, in which action, claim, suit, litigation, investigation, inquiry or proceeding the Administrative Agent or the Collateral Agent is made a party or participates or in which
-114-
the right to use the Collateral or any part thereof is threatened, or in which it becomes necessary in the judgment of the Administrative Agent or the Collateral Agent to defend or uphold the Liens granted by the Security Documents (including any action, claim, suit, litigation, investigation, inquiry or proceeding to establish or uphold the compliance of the Collateral with any Requirements of Law );
(iii) all costs and expenses incurred by the Administrative Agent and the Lenders, including, without limitation, the fees, charges and disbursements of (A) Advisors to the Administrative Agent (B) one set of Advisors to the Lenders as group counsel for all of the Lenders together (although any such Lender shall be entitled to retain separate counsel to the extent that such Lender has, in good faith (and based on advice of counsel for such Lender), reasonably determined that its interests conflict sufficiently with those of the other Lenders to warrant the employment of separate counsel for such Lender, incurred after the occurrence of any Event of Default in connection with the enforcement or protection of its rights under the Credit Documents, including its rights under this Section 13.01(a), or in connection with the Loans made hereunder and the collection of the Secured Obligations, including all such costs and expenses incurred (x) during any workout, restructuring or negotiations in respect of the Obligations or the Guaranteed Obligations and (y) in connection with any monitoring, evaluation, observation, appraisal or assessment of Holdings and its Subsidiaries and/or the Collateral;
(iv) any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies (including interest, fines, penalties and additions with respect to any of the foregoing) arising from any payment made or required to be made under any Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Credit Document; and
(v) any costs and expenses of Administrative Agent in connection with any audits and inspections in accordance with this Agreement, any Senior Participation Agreement and any other Credit Documents, which such audits and inspections may be conducted up to four (4) times in any single calendar year, in an amount not to exceed $200,000 in the aggregate for all such audits and inspections; provided, upon the occurrence of an Event of Default, no such limit shall apply.
(b) The Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, each Lender and each of their respective Related Persons (each such Person being called an Indemnitee ) against, and to hold each Indemnitee harmless from, all reasonable out-of-pocket costs and any and all losses, claims, damages, liabilities, fees, fines, penalties, actions, judgments, suits and related expenses, including reasonable Advisors fees, charges and disbursements (collectively, Section 13.01 Claims ), incurred by, imposed on or asserted against any Indemnitee, directly or indirectly, arising out of, in any way connected with, or as a result of (i) the execution, delivery, performance, administration or enforcement of the Credit Documents or any agreement or instrument contemplated thereby or the performance by the parties thereto of their respective obligations thereunder, (ii) any actual or proposed use of the proceeds of the Loans, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, (iv) any actual or alleged
-115-
presence or Release or threatened Release of Hazardous Materials, on, at, under or from any property owned, leased or operated by Holdings or any of its Subsidiaries or Unrestricted Subsidiaries at any time, or any Environmental Claim or threatened Environmental Claim related in any way to Holdings or any of its Subsidiaries or Unrestricted Subsidiaries, (v) any past, present or future non-compliance with, or violation of, Environmental Laws or Environmental Permits applicable to Holdings or any of its Subsidiaries or Unrestricted Subsidiaries, or the business of Holdings or any of its Subsidiaries or Unrestricted Subsidiaries, or any property presently or formerly owned, leased, or operated by Holdings or any of its Subsidiaries or Unrestricted Subsidiaries or their respective predecessors in interest, (vi) the environmental condition of any property owned, leased, or operated by Holdings or any of its Subsidiaries or Unrestricted Subsidiaries at any time, or the applicability of any Requirements of Law relating to such property, whether or not occasioned wholly or in part by any condition, accident or event caused by any act or omission of Holdings or any of its Subsidiaries or Unrestricted Subsidiaries, (vii) the imposition of any environmental Lien encumbering any Real Property owned, leased or operated at any time by Holdings or any of its Subsidiaries or Unrestricted Subsidiaries, (viii) the consummation of the Transaction and the other transactions contemplated hereby or (ix) any actual or prospective action, claim, suit, litigation, investigation, inquiry or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Credit Party or otherwise, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have directly resulted solely from the gross negligence or willful misconduct of such Indemnitee.
(c) The Borrower agrees that, without the prior written consent of the Administrative Agent and any affected Lender, which consent(s) will not be unreasonably withheld, neither Holdings nor any of its Subsidiaries will enter into any settlement of a Section 13.01 Claim in respect of the subject matter of clauses (i) through (ix) of Section 13.01(b) unless such settlement includes an explicit and unconditional release from the party bringing such Section 13.01 Claim of all Indemnitees.
(d) The provisions of this Section 13.01 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the Transaction and the other transactions contemplated hereby, the repayment of the Loans, Obligations and Guaranteed Obligations, the release of any Guarantor or of all or any portion of the Collateral, the expiration of the Loan Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Credit Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender. All amounts due under this Section 13.01 shall be accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested.
(e) To the fullest extent permitted by applicable Requirements of Law , no Credit Party shall assert, and each Credit Party hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, exemplary, consequential, or punitive damages (including any loss of profits, business or anticipated savings) arising out of, in connection with, or as a result of, any Credit Document or any agreement or instrument
-116-
contemplated hereby or thereby, the Transaction, any Loan or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with the Credit Documents or the transactions contemplated hereby or thereby.
(f) All amounts due under this Section 13.01 shall be payable not later than 10 days after demand therefor.
(g) This Section 13.01 shall not apply to Taxes to the extent duplicative of Section 5.04.
13.02. Right of Setoff . (a) In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent and each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Credit Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by the Administrative Agent or such Lender (including, without limitation, by branches and agencies of the Administrative Agent or such Lender wherever located) to or for the credit or the account of Holdings or any of its Subsidiaries against and on account of the Obligations and liabilities of the Credit Parties to the Administrative Agent or such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations purchased by such Lender pursuant to Section 13.04(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not the Administrative Agent or such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured.
(b) NOTWITHSTANDING THE FOREGOING SUBSECTION (a), AT ANY TIME THAT THE LOANS OR ANY OTHER OBLIGATION SHALL BE SECURED BY REAL PROPERTY LOCATED IN CALIFORNIA, NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY NOTE UNLESS IT IS TAKEN WITH THE CONSENT OF THE REQUIRED LENDERS OR APPROVED IN WRITING BY THE ADMINISTRATIVE AGENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY OR ENFORCEABILITY OF THE LIENS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THE SECURITY DOCUMENTS OR THE ENFORCEABILITY OF THE NOTES AND OTHER OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OF ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE REQUIRED LENDERS OR THE ADMINISTRATIVE AGENT SHALL BE NULL AND VOID. THIS SUBSECTION (b) SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS AND THE ADMINISTRATIVE AGENT HEREUNDER.
-117-
13.03. Notices; etc. (a) Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopier or cable communication) and mailed, telegraphed, telecopied, cabled or delivered: if to any Credit Party, at the address specified opposite its signature below or in the other relevant Credit Documents; if to any Lender, at its address specified on Schedule II; and if to the Administrative Agent, at the Notice Office; or, as to any Credit Party or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each Lender, at such other address as shall be designated by such Lender in a written notice to the Borrower and the Administrative Agent. All such notices and communications shall, when mailed, telegraphed, telecopied, or cabled or sent by overnight courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telecopier, except that notices and communications to the Administrative Agent and the Borrower shall not be effective until received by the Administrative Agent or the Borrower, as the case may be.
(b) Notices and other communications to the Lenders hereunder may (subject to Section 13.03(d)) be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified the Administrative Agent (in a manner set forth in Section 13.03(a)) that it is incapable of receiving notices under either such Section by electronic communication. The Administrative Agent, the Collateral Agent or the Borrower may, in their respective sole discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures, respectively, approved by it (including as set forth in Section 13.03(d)); provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the senders receipt of an acknowledgement from the intended recipient (including by the return receipt requested function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
(c) Any party hereto may change its address, telecopier number or e-mail address for notices and other communications hereunder by notice to the other parties hereto.
-118-
(d) Each of Holdings and the Borrower hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to this Agreement and any other Credit Document, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing, Borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default under this Agreement or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Borrowing or other extension of credit hereunder (all such non-excluded communications, collectively, the Communications ), by transmitting the Communications in an electronic/soft medium in a format reasonably acceptable to the Administrative Agent at szemnick@vpcadvisors.com or at such other e-mail address(es) provided to Holdings and the Borrower by the Administrative Agent from time to time or in such other form, including hard copy delivery thereof, as the Administrative Agent shall require. In addition, each of Holdings and the Borrower agrees to continue to provide the Communications to the Administrative Agent in the manner specified in this Agreement or any other Credit Document or in such other form, including hard copy delivery thereof, as the Administrative Agent shall require. Nothing in this Section 13.03 shall prejudice the right of the Administrative Agent, the Collateral Agent, any Lender or any Credit Party to give any notice or other communication pursuant to this Agreement or any other Credit Document in any other manner specified in this Agreement or any other Credit Document or as any of the Administrative Agent, the Collateral Agent or any Lender.
To the extent consented to by the Administrative Agent in writing from time to time, the Administrative Agent agrees that receipt of the Communications by the Administrative Agent at its e-mail address(es) set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Credit Documents; provided that Holdings or Borrower shall also deliver to the Administrative Agent an executed original of each compliance certificate required to be delivered hereunder.
Each of Holdings and the Borrower further agrees that the Administrative Agent may make the Communications available to the Collateral Agent and by posting the Communications on IntraLinks, SyndTrak or a substantially similar electronic transmission system (the Platform ). The Platform is provided as is and as available. The Administrative Agent does not warrant the accuracy or completeness of the Communications or the adequacy of the Platform and expressly disclaims liability for errors or omissions in the communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by any of the Administrative Agent, the Collateral Agent or any Lender in connection with the Communications or the Platform.
13.04. Benefit of Agreement; Assignments; Participations . (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided , however , neither Holdings nor the Borrower may assign or transfer any of its rights, obligations or interest hereunder without the prior written consent of the Lenders and, provided further , that, although any Lender may transfer, assign or
-119-
grant participations in its rights hereunder to any Person (other than Holdings or any Subsidiary or Affiliate thereof or a natural person), such Lender shall remain a Lender for all purposes hereunder (and may not transfer or assign all or any portion of its Commitments hereunder except as provided in Sections 2.13 and 13.04(b)) and the transferee, assignee or participant, as the case may be, shall not constitute a Lender hereunder and (i) such Lenders obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Collateral Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lenders rights and obligations under this Agreement. No Lender shall transfer or grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (i) extend the final scheduled maturity of any Loan or Note in which such participant is participating, or reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof (it being understood that any amendment or modification to the financial definitions in this Agreement or to Section 13.07(a) shall not constitute a reduction in the rate of interest or Fees payable hereunder), or increase the amount of the participants participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Total Loan Commitment shall not constitute a change in the terms of such participation, and that an increase in any Loan Commitment (or the available portion thereof) or Loan shall be permitted without the consent of any participant if the participants participation is not increased as a result thereof), (ii) consent to the assignment or transfer by Holdings or the Borrower of any of its rights and obligations under this Agreement or (iii) release all or substantially all of (x) the Collateral under all of the Security Documents (except as expressly provided in the Credit Documents) or (y) the Guarantors under the Guaranties (except as expressly provided in the Credit Documents), in either case supporting the Loans hereunder in which such participant is participating. Each participant shall be entitled to the benefits of Section 5.04 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 13.04(b); provided that (i) a participant shall not be entitled to receive any greater payment under Sections 5.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation to such participant is made with the prior written consent of the Borrower (which consent shall not be unreasonably withheld) and (ii) a participant shall not be entitled to the benefits of Section 5.04 unless participant agrees, for the benefit of the Borrower, to comply with Sections 5.04(c) and (d) as though it were a Lender by providing such required documentation to the Borrower. To the extent permitted by Requirements of Law , each participant also shall be entitled to the benefits of Section 13.02 as though it were a Lender; provided that such participant agrees in writing to be subject to Sections 13.02(b) and 13.06 as though it were a Lender. Each Lender shall, acting for this purpose as an agent of the Borrower, maintain at one of its offices a register for the recordation of the names and addresses of its participants, and the amount and terms of its participations; provided that no Lender shall be required to disclose or share the information contained in such register with the Borrower or any other Person, except as required by applicable Requirements of Law . Each Lender that sells a participation shall, acting solely for this purpose as an agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each
-120-
Participants interest in the Loans or under this Agreement. The entries in the participant register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the participant register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as the Administrative Agent) shall have no responsibility for maintaining a participant register.
(b) Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may (x) assign all or a portion of its Loan Commitment and related outstanding Obligations (or, if its Loan Commitment has terminated, outstanding Obligations) hereunder to (i)(A) its parent company and/or any affiliate of such Lender which is at least 50% owned by such Lender or its parent company or (B) to one or more other Lenders or any affiliate of any such other Lender which is at least 50% owned by such other Lender or its parent company ( provided that any fund that invests in loans and is managed or advised by the same investment advisor of another fund which is a Lender (or by an Affiliate of such investment advisor) shall be treated as an affiliate of such other Lender for the purposes of this sub-clause (x)(i)(B)), or (ii) in the case of any Lender that is a fund that invests in loans, any other fund that invests in loans and is managed or advised by the same investment advisor of any Lender or by an Affiliate of such investment advisor or (y) assign all, or if less than all, a portion equal to at least $1,000,000 in the aggregate for the assigning Lender or assigning Lenders, of such Loan Commitments and related outstanding Obligations (or, if the Loan Commitment has terminated, outstanding Obligations) hereunder to one or more Eligible Transferees (treating any fund that invests in loans and any other fund that invests in loans and is managed or advised by the same investment advisor of such fund or by an Affiliate of such investment advisor as a single Eligible Transferee), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Assumption Agreement, provided that (i) at such time, Schedule I shall be deemed modified to reflect the Loan Commitments and/or outstanding Loans, as the case may be, of such new Lender and of the existing Lenders, (ii) upon the surrender of the relevant Notes by the assigning Lender (or, upon such assigning Lenders indemnifying the Borrower for any lost Note pursuant to a customary indemnification agreement) new Notes will be issued, at the Borrowers expense, to such new Lender and to the assigning Lender upon the request of such new Lender or assigning Lender, such new Notes to be in conformity with the requirements of Section 2.05 (with appropriate modifications) to the extent needed to reflect the revised Loan Commitments and/or outstanding Loans, as the case may be, (iii) the consent of the Administrative Agent and, so long as no Default or Event of Default then exists, the Borrower, shall be required in connection with any such assignment pursuant to clause (y) above (such consent, in any case, not to be unreasonably withheld, delayed or conditioned), (iv) unless waived by the Administrative Agent, the Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $3,500; provided that such fee shall not be payable in the case of an assignment by any Lender pursuant to clause (x) above and (v) no such transfer or assignment will be effective until recorded by the Administrative Agent on the Register pursuant to Section 13.15. To the extent of any assignment pursuant to this Section 13.04(b), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Loan Commitment and outstanding Loans. At the time of each assignment pursuant to this Section 13.04(b) to a Person which is not already a Lender hereunder, the respective assignee Lender shall, to the extent legally entitled to do so,
-121-
provide to the Borrower the appropriate Internal Revenue Service Forms and any other documentation described in Sections 5.04(c) and (d). To the extent that an assignment of all or any portion of a Lenders Loan Commitment and related outstanding Obligations pursuant to this Section 13.04(b) would, at the time of such assignment, result in increased costs under Section 5.04 from those being charged by the respective assigning Lender prior to such assignment, then the Borrower shall not be obligated to pay such increased costs to such assignee Lender (although the Borrower, in accordance with and pursuant to the other provisions of this Agreement, shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank and, with prior notification to the Administrative Agent (but without the consent of the Administrative Agent or the Borrower), any Lender which is a fund may pledge all or any portion of its Loans and Notes to its trustee or to a collateral agent providing credit or credit support to such Lender in support of its obligations to such trustee, such collateral agent or a holder of such obligations, as the case may be. No pledge pursuant to this clause (c) shall release the transferor Lender from any of its obligations hereunder.
(d) Any Lender which assigns all of its Loan Commitment and/or Loans hereunder in accordance with Section 13.04(b) shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 5.04, 12.06, 13.01 and 13.06), which shall survive as to such assigning Lender.
13.05. No Waiver; Remedies Cumulative . No failure or delay on the part of the Administrative Agent, the Collateral Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower or any other Credit Party and the Administrative Agent, the Collateral Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein or in any other Credit Document expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Administrative Agent, the Collateral Agent or any Lender would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent, the Collateral Agent or any Lender to any other or further action in any circumstances without notice or demand.
13.06. Payments Pro Rata . (a) Except as otherwise provided in this Agreement, the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Obligations hereunder, the Administrative Agent shall distribute such payment to the Lenders entitled thereto (other than any Lender that has consented in writing to waive its pro rata share of any such payment) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received.
-122-
(b) Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or bankers lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the respective Credit Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lenders, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the provisions of the preceding Sections 13.06(a) and (b) shall be subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.
13.07. Calculations; Computations . (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by Holdings to the Lenders); provided that, (i) compliance with Section 9.16 and Sections 10.03(ix), 10.04(xv), 10.05(xviii) and 10.07 shall utilize GAAP and policies in conformity with those used to prepare the audited financial statements of Holdings for its fiscal year ended December 31, 2015, (ii) notwithstanding anything to the contrary contained herein, all financial statements to be delivered hereunder shall be prepared, and all financial covenants contained herein or in any other Credit Document shall be calculated, in each case, without giving effect to any election under FASB ASC 825 (or any similar accounting principle permitting a Person to value its financial liabilities at the fair value thereof), (iii) to the extent expressly provided herein, certain calculations shall be made on a Pro Forma Basis and (iv) for purposes of calculating the financial ratios, financial covenants and all related definitions, the financial results of Unrestricted Subsidiaries shall be ignored.
(b) All computations of interest and other Fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or Fees are payable.
13.08. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL . (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN ANY MORTGAGE, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
-123-
SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, EACH PARTY HERETO HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER HOLDINGS OR THE BORROWER, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER HOLDINGS OR THE BORROWER. EACH OF HOLDINGS AND THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO HOLDINGS OR THE BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN, HOWEVER, SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST HOLDINGS OR THE BORROWER IN ANY OTHER JURISDICTION.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
-124-
13.09. Counterparts . This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent.
13.10. Effectiveness . This Agreement shall become effective on the date (the Effective Date ) on which (i) Holdings, the Borrower, the Administrative Agent and each of the Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered the same to the Administrative Agent at the Notice Office or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written or telex notice (actually received) at such office that the same has been signed and mailed to it and (ii) the conditions contained in Section 6 are met to the satisfaction of the Agents. Unless the Administrative Agent has received actual notice from any Lender that the conditions described in clause (ii) of the preceding sentence have not been met to its satisfaction, upon the satisfaction of the condition described in clause (i) of the immediately preceding sentence and upon the Administrative Agents good faith determination that the conditions described in clause (ii) of the immediately preceding sentence have been met, then the Effective Date shall have deemed to have occurred. The Administrative Agent will give Holdings, the Borrower and each Lender prompt written notice of the occurrence of the Effective Date.
13.11. Headings Descriptive . The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
13.12. Amendment or Waiver; etc. (a) Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the respective Credit Parties party hereto or thereto and the Required Lenders (although additional parties may be added to (and annexes may be modified to reflect such additions), and Subsidiaries of the Borrower may be released from, the Subsidiaries Guaranty and the Security Documents in accordance with the provisions hereof and thereof without the consent of the other Credit Parties party thereto or the Required Lenders), provided that no such change, waiver, discharge or termination shall, without the consent of each Lender (other than a Defaulting Lender) (with Obligations being directly affected in the case of following clause (i)), (i) reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with the waiver of applicability of any post-default increase in interest rates), or reduce (or forgive) the principal amount thereof (it being understood that any amendment or modification to the financial definitions in this Agreement or to Section 13.07(a) shall not constitute a reduction in the rate of interest or Fees for the purposes of this clause (i)), (ii) release all or substantially all of (x) the Collateral (except as expressly provided in the Credit Documents) under all the Security Documents or (y) the Guarantors under the Guaranties (except as expressly provided in the Credit Documents), (iii) amend, modify or waive any provision of this Section 13.12(a) (except for technical amendments with respect to additional extensions of credit pursuant to this Agreement which afford the protections to such additional extensions of credit of the type provided to the Loan Commitments on the Effective Date), (iv) reduce the majority voting threshold specified in the definition of Required Lenders (it being understood that, with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the Loan Commitments are included on the Effective Date) or (v) consent to the assignment or
-125-
transfer by Holdings or the Borrower of any of its rights and obligations under this Agreement; provided further , that no such change, waiver, discharge or termination shall (1) increase or extend the Loan Commitment of any Lender over the amount thereof then in effect without the consent of such Lender (it being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default or of a mandatory reduction in the Total Loan Commitment shall not constitute an increase of the Loan Commitment of any Lender, and that an increase in the available portion of the Loan Commitment of any Lender shall not constitute an increase of the Loan Commitment of such Lender), (2) without the consent of the Administrative Agent, amend, modify or waive any provision of Section 12 or any other provision as same relates to the rights or obligations of the Administrative Agent or (3) without the consent of Collateral Agent, amend, modify or waive any provision relating to the rights or obligations of the Collateral Agent.
13.13. Survival . All indemnities set forth herein including, without limitation, in Sections 5.04, 12.06 and 13.01 shall survive the execution, delivery and termination of this Agreement and the Notes and the making and repayment of the Obligations.
13.14. Domicile of Loans . Each Lender may transfer and carry its Loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender. Notwithstanding anything to the contrary contained herein, to the extent that a transfer of Loans pursuant to this Section 13.14 would, at the time of such transfer, result in increased costs under Section 5.04 from those being charged by the respective Lender prior to such transfer, then the Borrower shall not be obligated to pay such increased costs (although the Borrower shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective transfer).
13.15. Register . The Borrower hereby designates the Administrative Agent to serve as its agent, the name and address of each Lender, solely for purposes of this Section 13.15, to maintain a register (the Register ) on which it will record the Loan Commitment from time to time of each of the Lenders, the Loans made by each of the Lenders and each Lenders rights in respect of the principal amount (and stated interest) of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrowers obligations in respect of such Loans. With respect to any Lender, the transfer of the Loan Commitment of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Loan Commitment shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Loan Commitment and Loans and prior to such recordation all amounts owing to the transferor with respect to such Loan Commitment and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Loan Commitment and Loans shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 13.04(b). Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Loan Commitment or a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note (if any) evidencing such Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender at the request of any such
-126-
Lender. The Borrower agrees to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this Section 13.15.
13.16. Confidentiality . (a) Subject to the provisions of clause (b) of this Section 13.16, each Lender agrees that it will not disclose without the prior consent of Holdings (other than to its employees, auditors, advisors or counsel, agents or other representatives or to another Lender if such Lender or such Lenders holding or parent company in its sole discretion determines that any such party should have access to such information, provided such Persons shall be subject to the provisions of this Section 13.16 to the same extent as such Lender) any information with respect to Holdings or any of its Subsidiaries which is now or in the future furnished pursuant to this Agreement or any other Credit Document, provided that any Lender may disclose any such information (i) as has become generally available to the public other than by virtue of a breach of this Section 13.16(a) by the respective Lender, (ii) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors, (iii) as may be required or appropriate in respect to any summons or subpoena or in connection with any litigation, (iv) in order to comply with any Requirement of Law or Order applicable to such Lender, (v) to the Administrative Agent or the Collateral Agent, (vi) to any direct or indirect contractual counterparty in any swap, hedge or similar agreement (or to any such contractual counterpartys professional advisor), so long as such contractual counterparty (or such professional advisor) agrees to be bound by the provisions of this Section 13.16 and (vii) to any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Notes or Commitments or any interest therein by such Lender, provided that such prospective transferee agrees to be bound by the confidentiality provisions contained in this Section 13.16.
(b) Each of Holdings and the Borrower hereby acknowledges and agrees that each Lender may share with any of its affiliates, and such affiliates may share with such Lender, any information related to Holdings or any of its Subsidiaries (including, without limitation, any non-public customer information regarding the creditworthiness of Holdings and its Subsidiaries), provided such Persons shall be subject to the provisions of this Section 13.16 to the same extent as such Lender.
(c) Notwithstanding anything to the contrary contained in clause (a) or (b) above in this Section 13.16, the Administrative Agent, each Lender, Holdings and the Borrower hereby authorize Administrative Agent and Borrower to publish the name of the Administrative Agent, such Lender, Holdings and the Borrower, the existence of the financing arrangements referenced under this Agreement, the primary purpose and/or structure of those arrangements, the title and role of each party to this Agreement and the total amount of the financing evidenced hereby in any tombstone, comparable advertisement or press release which the Administrative Agent or the Borrower (with the approval of the Administrative Agent) elects to submit for publication ( Press Release ). With respect to any of the foregoing, the Administrative Agent and Borrower shall provide each other with an opportunity to review and confer with the Administrative Agent or Borrower, as applicable, regarding the contents of any Press Release prior to its submission for publication.
-127-
13.17. Patriot Act . Each Lender subject to the USA PATRIOT Improvement and Reauthorization Act (Title 111 of Pub. L. 109-177 (signed into law March 9, 2009)) (the Patriot Act ) hereby notifies Holdings and the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Holdings, the Borrower and the other Credit Parties and other information that will allow such Lender to identify Holdings, the Borrower and the other Credit Parties in accordance with the Patriot Act.
13.18. OTHER LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENT; ETC . (a) EACH LENDER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT LIENS SHALL BE CREATED ON THE COLLATERAL PURSUANT TO THE SENIOR SECURED NOTES SECURITY DOCUMENTS, WHICH LIENS SHALL BE REQUIRED TO BE SUBORDINATED AND JUNIOR TO THE LIENS CREATED PURSUANT TO THE CREDIT DOCUMENTS IN ACCORDANCE WITH THE TO TERMS AND CONDITIONS OF THE INTERCREDITOR AGREEMENT. PURSUANT TO THE EXPRESS TERMS OF THE INTERCREDITOR AGREEMENT, IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND ANY OF THE CREDIT DOCUMENTS, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.
(b) EACH LENDER AUTHORIZES AND INSTRUCTS THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT TO ENTER INTO THE INTERCREDITOR AGREEMENT ON BEHALF OF THE LENDERS, AND TO TAKE ALL ACTIONS (AND EXECUTE ALL DOCUMENTS) REQUIRED (OR DEEMED ADVISABLE) BY IT IN ACCORDANCE WITH THE TERMS OF THE INTERCREDITOR AGREEMENT.
(c) THE PROVISIONS OF THIS SECTION 13.18 ARE NOT INTENDED TO SUMMARIZE ALL RELEVANT PROVISIONS OF THE INTERCREDITOR AGREEMENT, THE FORM OF WHICH IS ATTACHED AS AN EXHIBIT TO THIS AGREEMENT. REFERENCE MUST BE MADE TO THE INTERCREDITOR AGREEMENT ITSELF TO UNDERSTAND ALL TERMS AND CONDITIONS THEREOF. EACH LENDER IS RESPONSIBLE FOR MAKING ITS OWN ANALYSIS AND REVIEW OF THE INTERCREDITOR AGREEMENT AND THE TERMS AND PROVISIONS THEREOF, AND NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION TO ANY LENDER AS TO THE SUFFICIENCY OR ADVISABILITY OF THE PROVISIONS CONTAINED IN THE INTERCREDITOR AGREEMENT.
13.19. No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document), the Borrower and each other Credit Party acknowledges and agrees, and acknowledges its Affiliates understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Joint Lead Arrangers and the Book Running Manager are arms-length commercial transactions between the Borrower, each other Credit Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Joint Lead Arrangers and the Book Running
-128-
Managers, on the other hand, (B) each of the Borrower and each other Credit Party has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower and each other Credit Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents; (ii) (A) the Administrative Agent, the Joint Lead Arrangers and the Book Running Managers are and have been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Credit Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, any Joint Lead Arranger nor the Book Running Manager has any obligation to the Borrower, any other Credit Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; and (iii) the Administrative Agent, the Joint Lead Arrangers and the Book Running Managers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Credit Parties and their respective Affiliates, and neither the Administrative Agent, any Joint Lead Arranger nor the Book Running Manager has any obligation to disclose any of such interests to the Borrower, any other Credit Party or any of their respective Affiliates. To the fullest extent permitted by law, each of the Borrower and the other Credit Parties hereby waives and releases any claims that it may have against the Administrative Agent, the Joint Lead Arrangers and the Book Running Managers with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
SECTION 14. Holdings Guaranty .
14.01. Guaranty . In order to induce the Administrative Agent, the Collateral Agent and the Lenders to enter into this Agreement and to extend credit hereunder and in recognition of the direct benefits to be received by Holdings from the proceeds of the Loans, Holdings hereby agrees with the Guaranteed Creditors as follows: Holdings hereby unconditionally and irrevocably guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, acceleration or otherwise, of any and all of the Guaranteed Obligations of the Borrower to the Guaranteed Creditors. If any or all of the Guaranteed Obligations of the Borrower to the Guaranteed Creditors becomes due and payable hereunder, Holdings, unconditionally and irrevocably, promises to pay such indebtedness to the Administrative Agent and/or the other Guaranteed Creditors, or order, on demand, together with any and all expenses which may be incurred by the Administrative Agent and the other Guaranteed Creditors in collecting any of the Guaranteed Obligations. If claim is ever made upon any Guaranteed Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including the Borrower), then and in such event Holdings agrees that any such judgment, decree, order, settlement or compromise shall be binding upon Holdings, notwithstanding any revocation of this Holdings Guaranty or other instrument evidencing any liability of the Borrower, and Holdings shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
-129-
14.02. Bankruptcy . Additionally, Holdings unconditionally and irrevocably guarantees the payment of any and all of the Guaranteed Obligations to the Guaranteed Creditors whether or not due or payable by the Borrower upon the occurrence of any of the events specified in Section 11.05, and irrevocably and unconditionally promises to pay such indebtedness to the Guaranteed Creditors, or order, on demand, in lawful money of the United States.
14.03. Nature of Liability . The liability of Holdings hereunder is primary, absolute and unconditional, exclusive and independent of any security for or other guaranty of the Guaranteed Obligations, whether executed by any other guarantor or by any other party, and the liability of Holdings hereunder shall not be affected or impaired by (a) any direction as to application of payment by the Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Guaranteed Obligations, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, or (e) any payment made to any Guaranteed Creditor on the Guaranteed Obligations which any such Guaranteed Creditor repays to the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and Holdings waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, or (f) any action or inaction by the Guaranteed Creditors as contemplated in Section 14.05, or (g) any invalidity, irregularity or enforceability of all or any part of the Guaranteed Obligations or of any security therefor.
14.04. Independent Obligation . The obligations of Holdings hereunder are independent of the obligations of any other guarantor, any other party or the Borrower, and a separate action or actions may be brought and prosecuted against Holdings whether or not action is brought against any other guarantor, any other party or the Borrower and whether or not any other guarantor, any other party or the Borrower be joined in any such action or actions. Holdings waives, to the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to Holdings.
14.05. Authorization . Holdings authorizes the Guaranteed Creditors without notice or demand (except as shall be required by applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including any increase or decrease in the principal amount thereof or the rate of interest or fees thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and this Holdings Guaranty shall apply to the Guaranteed Obligations as so changed, extended, renewed or altered;
-130-
(b) take and hold security for the payment of the Guaranteed Obligations and sell, exchange, release, impair, surrender, realize upon or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset there against;
(c) exercise or refrain from exercising any rights against the Borrower, any other Credit Party or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the Borrower, other Credit Parties or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to its creditors other than the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Guaranteed Creditors regardless of what liability or liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default under, this Agreement, any other Credit Document, any Interest Rate Protection Agreement or any Other Hedging Agreement or any of the instruments or agreements referred to herein or therein, or otherwise amend, modify or supplement this Agreement, any other Credit Document, any Interest Rate Protection Agreement or any Other Hedging Agreement or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of Holdings from its liabilities under this Holdings Guaranty.
14.06. Reliance . It is not necessary for any Guaranteed Creditor to inquire into the capacity or powers of Holdings or any of its Subsidiaries or the officers, directors, partners or agents acting or purporting to act on their behalf, and any Guaranteed Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
14.07. Subordination . Any indebtedness of the Borrower now or hereafter owing to Holdings is hereby subordinated to the Guaranteed Obligations owing to the Guaranteed Creditors; and if the Administrative Agent so requests at a time when an Event of Default exists, all such indebtedness of the Borrower to Holdings shall be collected, enforced and received by Holdings for the benefit of the Guaranteed Creditors and be paid over to the Administrative Agent on behalf of the Guaranteed Creditors on account of the Guaranteed Obligations to the Guaranteed Creditors, but without affecting or impairing in any manner the liability of Holdings under the other provisions of this Holdings Guaranty. Prior to the transfer by Holdings of any note or negotiable instrument evidencing any such indebtedness of the Borrower to Holdings,
-131-
Holdings shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, Holdings hereby agrees with the Guaranteed Creditors that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Holdings Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash.
14.08. Waiver . (a) Holdings waives any right (except as shall be required by applicable statute and cannot be waived) to require any Guaranteed Creditor to (i) proceed against the Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from the Borrower, any other guarantor or any other party or (iii) pursue any other remedy in any Guaranteed Creditors power whatsoever. Holdings waives any defense based on or arising out of any defense of the Borrower, any other guarantor or any other party, other than payment of the Guaranteed Obligations to the extent of such payment, based on or arising out of the disability of the Borrower, Holdings, any other guarantor or any other party, or the validity, legality or unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than payment of the Guaranteed Obligations to the extent of such payment. The Guaranteed Creditors may, at their election, foreclose on any security held by the Administrative Agent, the Collateral Agent or any other Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Guaranteed Creditors may have against the Borrower or any other party, or any security, without affecting or impairing in any way the liability of Holdings hereunder except to the extent the Guaranteed Obligations have been paid. Holdings waives any defense arising out of any such election by the Guaranteed Creditors, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of Holdings against the Borrower or any other party or any security.
(b) Holdings waives all presentments, demands for performance, protests and notices, including without limitation notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Holdings Guaranty, and notices of the existence, creation or incurring of new or additional Guaranteed Obligations. Holdings assumes all responsibility for being and keeping itself informed of the Borrowers financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which Holdings assumes and incurs hereunder, and agrees that neither the Administrative Agent nor any of the other Guaranteed Creditors shall have any duty to advise Holdings of information known to them regarding such circumstances or risks.
(c) Until such time as the Guaranteed Obligations have been paid in full in cash, Holdings hereby waives all rights of subrogation which it may at any time otherwise have as a result of this Holdings Guaranty (whether contractual, under Section 509 of the Bankruptcy Code, or otherwise) to the claims of the Guaranteed Creditors against the Borrower or any other guarantor of the Guaranteed Obligations and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from the Borrower or any other guarantor which it may at any time otherwise have as a result of this Holdings Guaranty.
-132-
(d) Holdings hereby acknowledges and affirms that it understands that to the extent the Guaranteed Obligations are secured by Real Property located in California, Holdings shall be liable for the full amount of the liability hereunder notwithstanding the foreclosure on such Real Property by trustee sale or any other reason impairing Holdings or any Guaranteed Creditors right to proceed against the Borrower or any other guarantor of the Guaranteed Obligations. In accordance with Section 2856 of the California Code of Civil Procedure, Holdings hereby waives until such time as the Guaranteed Obligations have been paid in full in cash:
(i) all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available to Holdings by reason of Sections 1432, 2787 to 2855, inclusive, 2899 and 3433 of the California Code of Civil Procedure;
(ii) all rights and defenses that Holdings may have because the Guaranteed Obligations are secured by Real Property located in California, meaning, among other things, that: (A) the Guaranteed Creditors may collect from Holdings without first foreclosing on any real or personal property collateral pledged by the Borrower or any other Credit Party, and (B) if the Guaranteed Creditors foreclose on any Real Property collateral pledged by the Borrower or any other Credit Party, (1) the amount of the Guaranteed Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (2) the Guaranteed Creditors may collect from Holdings even if the Guaranteed Creditors, by foreclosing on the Real Property collateral, have destroyed any right Holdings may have to collect from the Borrower, it being understood that this is an unconditional and irrevocable waiver of any rights and defenses Holdings may have because the Guaranteed Obligations are secured by Real Property (including, without limitation, any rights or defenses based upon Sections 580a, 580d or 726 of the California Code of Civil Procedure); and
(iii) all rights and defenses arising out of an election of remedies by the Guaranteed Creditors, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for the Guaranteed Obligations, has destroyed Holdings rights of subrogation and reimbursement against the Borrower by the operation of Section 580d of the California Code of Civil Procedure or otherwise.
(e) Holdings warrants and agrees that each of the waivers set forth above is made with full knowledge of its significance and consequences and that if any of such waivers are determined to be contrary to any applicable law of public policy, such waivers shall be effective only to the maximum extent permitted by law.
14.09. Payments . All payments made by Holdings pursuant to this Section 14 shall be made in Dollars and will be made without setoff, counterclaim or other defense, and shall be subject to the provisions of Sections 5.03 and 5.04 and Section 7.4 of the Security Agreement.
-133-
14.10. Maximum Liability . It is the desire and intent of Holdings and the Guaranteed Creditors that this Holdings Guaranty shall be enforced against Holdings to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. To effectuate the foregoing intention, Holdings and each Guaranteed Creditor (by its acceptance of the benefits of this Holdings Guaranty) hereby irrevocably agrees that the Guaranteed Obligations guaranteed by Holdings shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of Holdings that are relevant under such laws.
* * *
-134-
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.
Address:
CURO FINANCIAL TECHNOLOGIES | ||
CORP., as a Guarantor | ||
By: |
/s/ Donald F. Gayhardt Jr. |
|
Name: | Donald F. Gayhardt Jr. | |
Title: | President & Chief Executive Officer | |
CURO INTERMEDIATE HOLDINGS | ||
CORP., as Borrower | ||
By: |
/s/ Donald F. Gayhardt Jr. |
|
Name: | Donald F. Gayhardt Jr. | |
Title: | President & Chief Executive Officer |
[Signature Page to Credit Agreement]
VICTORY PARK MANAGEMENT LLC, |
||
Administrative Agent |
||
By: |
/s/ Scott R. Zemnick |
|
Name: Scott R. Zemnick |
||
Title: Authorized Signatory |
[Signature Page to Credit Agreement]
LENDERS: | VPC Specialty Finance Fund I, L.P. | |||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory | |||||
VPC Investor Fund B, L.P. | ||||||
By: |
/s/ Scott R. Zemnick |
|||||
Name: | Scott R. Zemnick | |||||
Title: | Authorized Signatory |
Credit Agreement
TABLE OF CONTENTS
Page | ||||||
SECTION 1. |
Definitions and Accounting Terms | 1 | ||||
1.01. |
Defined Terms | 1 | ||||
1.02. |
Rules of Construction | 39 | ||||
SECTION 2. |
Amount and Terms of Credit | 39 | ||||
2.01. |
The Commitments | 39 | ||||
2.02. |
Minimum Amount of Each Borrowing | 40 | ||||
2.03. |
Notice of Borrowing | 40 | ||||
2.04. |
Disbursement of Funds | 40 | ||||
2.05. |
Notes | 41 | ||||
2.06. |
[Reserved] | 41 | ||||
2.07. |
Pro Rata Borrowings | 41 | ||||
2.08. |
Interest | 41 | ||||
2.09. |
Interest Periods | 42 | ||||
2.10. |
[Reserved] | 42 | ||||
2.11. |
[Reserved] | 42 | ||||
2.12. |
Change of Lending Office | 42 | ||||
2.13. |
[Reserved] | 42 | ||||
2.14. |
Application of Proceeds | 42 | ||||
2.15. |
Controlled Accounts | 43 | ||||
2.16. |
Conditions to Each Release of Funds | 43 | ||||
SECTION 3. |
[RESERVED] | 44 | ||||
SECTION 4. |
Fees; Reductions of Commitment | 44 | ||||
4.01. |
Fees | 44 | ||||
4.02. |
Voluntary Termination of Unutilized Loan Commitments | 44 | ||||
4.03. |
Mandatory Reduction or Termination of Commitments | 45 | ||||
SECTION 5. |
Prepayments; Payments; Taxes | 45 | ||||
5.01. |
Voluntary Prepayments | 45 | ||||
5.02. |
Mandatory Repayments | 46 | ||||
5.03. |
Method and Place of Payment | 46 | ||||
5.04. |
Net Payments | 46 | ||||
SECTION 6. |
Conditions Precedent to the Effective Date and to Credit Events on the Effective Date | 50 | ||||
6.01. |
Effective Date; Notes | 50 | ||||
6.02. |
Officers Certificate | 50 | ||||
6.03. |
Opinions of Counsel | 50 |
Credit Agreement
(i)
Page | ||||||
6.04. | Company Documents; Proceedings; etc. | 50 | ||||
6.05. | Shareholders Agreements; Management Agreements; Tax Sharing Agreements; Existing Indebtedness Agreements; Existing Affiliate Agreements | 51 | ||||
6.06. | [Reserved] | 51 | ||||
6.07. | Adverse Change, Approvals | 51 | ||||
6.08. | Litigation; Regulatory Actions | 52 | ||||
6.09. | Financial Statements; Pro Forma Balance Sheet; Projections | 52 | ||||
6.10. | Subsidiaries Guaranty | 52 | ||||
6.11. | Pledge Agreement | 52 | ||||
6.12. | Security Agreement | 52 | ||||
6.13. | Solvency Certificate; Insurance Certificates | 53 | ||||
6.14. | Fees, etc. | 53 | ||||
6.15. | Patriot Act | 53 | ||||
6.16. | Intercreditor Agreement | 53 | ||||
6.17. | Control Agreements | 54 | ||||
6.18. | [Reserved] | 54 | ||||
6.19. | Borrowing Base | 54 | ||||
6.20. | Regulatory Trigger Event | 54 | ||||
6.21. | SPV Loan Agreement | 54 | ||||
6.22. | Searches | 54 | ||||
6.23. | Material Adverse Change | 54 | ||||
6.24. | Regulatory | 54 | ||||
6.25. | Payments | 54 | ||||
6.26. | Build Out | 54 | ||||
6.27. | Borrowing Base | 55 | ||||
SECTION 7. | Conditions Precedent to All Credit Events | 55 | ||||
7.01. | No Default; Representations and Warranties | 55 | ||||
7.02. | Notice of Borrowing | 55 | ||||
7.03. | Facility Availability | 56 | ||||
7.04. | Senior Participation Agreement | 56 | ||||
7.05. | Initial Loan Fee | 56 | ||||
SECTION 8. | Representations, Warranties and Agreements | 56 | ||||
8.01. | Company Status | 56 | ||||
8.02. | Power and Authority | 56 | ||||
8.03. | No Violation | 57 | ||||
8.04. | Approvals | 57 | ||||
8.05. | Financial Statements; Financial Condition; Undisclosed Liabilities; Projections | 57 | ||||
8.06. | Litigation; Regulatory Actions | 59 | ||||
8.07. | True and Complete Disclosure | 59 | ||||
8.08. | Use of Proceeds; Margin Regulations | 59 | ||||
8.09. | Tax Returns and Payments | 60 | ||||
8.10. | Compliance with ERISA | 60 |
Credit Agreement
(ii)
Page | ||||||
8.11. | Security Documents | 61 | ||||
8.12. | Properties | 62 | ||||
8.13. | Capitalization | 62 | ||||
8.14. | Subsidiaries | 63 | ||||
8.15. | Compliance with Statutes, etc. | 63 | ||||
8.16. | Investment Company Act; etc. | 63 | ||||
8.17. | Anti-Terrorism Law | 64 | ||||
8.18. | Environmental Matters | 64 | ||||
8.19. | Employment and Labor Relations | 65 | ||||
8.20. | Intellectual Property, etc. | 65 | ||||
8.21. | Indebtedness | 66 | ||||
8.22. | Insurance | 66 | ||||
8.23. | Subordination, etc. | 66 | ||||
8.24. | Representations and Warranties as to Receivables | 66 | ||||
SECTION 9. | Affirmative Covenants | 67 | ||||
9.01. | Information Covenants | 67 | ||||
9.02. | Books, Records and Inspections; Meetings | 71 | ||||
9.03. | Maintenance of Property; Insurance | 72 | ||||
9.04. | Existence; Franchises; etc. | 73 | ||||
9.05. | Compliance with Statutes, etc. | 74 | ||||
9.06. | Compliance with Environmental Laws | 74 | ||||
9.07. | ERISA | 75 | ||||
9.08. | End of Fiscal Years; Fiscal Quarters | 76 | ||||
9.09. | Performance of Obligations | 76 | ||||
9.10. | Payment of Taxes | 76 | ||||
9.11. | Use of Proceeds | 77 | ||||
9.12. | Additional Security; Further Assurances; etc. | 77 | ||||
9.13. | Ownership of Subsidiaries; etc. | 78 | ||||
9.14. | Contributions | 78 | ||||
9.15. | Maintenance of Corporate Separateness | 79 | ||||
9.16. | Permitted Acquisitions | 79 | ||||
9.17. | Foreign Subsidiaries Security | 80 | ||||
9.18. | Cash Management System | 81 | ||||
9.19. | Operations | 81 | ||||
9.20. | Credit Policy Notice | 82 | ||||
9.21. | Board Observation Rights | 82 | ||||
9.22. | Post-Closing Covenants | 82 | ||||
9.23. | Financing of Additional Eligible Receivables | 84 | ||||
SECTION 10. | Negative Covenants | 84 | ||||
10.01. | Liens | 84 | ||||
10.02. | Consolidation, Merger, Purchase or Sale of Assets, etc. | 87 | ||||
10.03. | Dividends | 90 | ||||
10.04. | Indebtedness | 92 | ||||
10.05. | Advances, Investments and Loans | 95 |
Credit Agreement
(iii)
Page | ||||
10.06. Transactions with Affiliates |
98 | |||
10.07. Financial Covenants |
100 | |||
10.08. [Reserved] |
100 | |||
10.09. Modifications of Certificate of Incorporation, By-Laws, Certain Indebtedness and Certain Other Agreements, Payments on Certain Indebtedness, etc. |
100 | |||
10.10. Limitation on Certain Restrictions on Subsidiaries |
102 | |||
10.11. Limitation on Issuance of Equity Interests |
103 | |||
10.12. Business; etc. |
103 | |||
10.13. Limitation on Creation of Subsidiaries |
104 | |||
10.14. Anti-Terrorism Law; Anti-Money Laundering |
105 | |||
10.15. Embargoed Person |
105 | |||
10.16. Right of First Refusal |
105 | |||
10.17. Indenture Amendments |
106 | |||
SECTION 11. Events of Default | 106 | |||
11.01. Payments |
107 | |||
11.02. Representations, etc. |
107 | |||
11.03. Covenants |
107 | |||
11.04. Default Under Other Agreements |
107 | |||
11.05. Bankruptcy, etc. |
108 | |||
11.06. ERISA |
108 | |||
11.07. Security Documents |
109 | |||
11.08. Guaranties |
109 | |||
11.09. Judgments |
109 | |||
11.10. Change of Control |
109 | |||
11.11. Intercreditor Agreement |
109 | |||
11.12. Regulatory Trigger Event |
109 | |||
11.13. Collateral Performance |
109 | |||
11.14. Suspension of Activities |
110 | |||
11.15. Key Person Event |
110 | |||
11.16. Backup Servicing Agreement |
110 | |||
11.17. Minimum Liquidity |
110 | |||
SECTION 12. The Administrative Agent | 110 | |||
12.01. Appointment |
110 | |||
12.02. Nature of Duties |
111 | |||
12.03. Lack of Reliance on the Administrative Agent |
111 | |||
12.04. Certain Rights of the Administrative Agent |
111 | |||
12.05. Reliance |
112 | |||
12.06. Indemnification |
112 | |||
12.07. The Administrative Agent in its Individual Capacity |
112 | |||
12.08. [RESERVED] |
112 | |||
12.09. Resignation by the Administrative Agent |
112 | |||
12.10. Collateral Matters. |
113 | |||
12.11. Delivery of Information |
114 |
Credit Agreement
(iv)
Page | ||||
SECTION 13. Miscellaneous | 114 | |||
13.01. Expenses; Indemnity; Damage Waiver |
114 | |||
13.02. Right of Setoff |
117 | |||
13.03. Notices; etc. |
118 | |||
13.04. Benefit of Agreement; Assignments; Participations |
119 | |||
13.05. No Waiver; Remedies Cumulative |
122 | |||
13.06. Payments Pro Rata |
122 | |||
13.07. Calculations; Computations |
123 | |||
13.08. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL |
123 | |||
13.09. Counterparts |
125 | |||
13.10. Effectiveness |
125 | |||
13.11. Headings Descriptive |
125 | |||
13.12. Amendment or Waiver; etc. |
125 | |||
13.13. Survival |
126 | |||
13.14. Domicile of Loans |
126 | |||
13.15. Register |
126 | |||
13.16. Confidentiality |
127 | |||
13.17. Patriot Act |
128 | |||
13.18. OTHER LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENT; ETC. |
128 | |||
13.19. No Advisory or Fiduciary Responsibility |
128 | |||
SECTION 14. Holdings Guaranty | 129 | |||
14.01. Guaranty |
129 | |||
14.02. Bankruptcy |
130 | |||
14.03. Nature of Liability |
130 | |||
14.04. Independent Obligation |
130 | |||
14.05. Authorization |
130 | |||
14.06. Reliance |
131 | |||
14.07. Subordination |
131 | |||
14.08. Waiver |
132 | |||
14.09. Payments |
133 | |||
14.10. Maximum Liability |
134 |
Credit Agreement
(v)
Page | ||||
SCHEDULE I | Commitments | |||
SCHEDULE II | Lender Addresses | |||
SCHEDULE III | Plans | |||
SCHEDULE IV | Real Property | |||
SCHEDULE V | Subsidiaries | |||
SCHEDULE VI | Existing Indebtedness | |||
SCHEDULE VII | Insurance | |||
SCHEDULE VIII | Existing Liens | |||
SCHEDULE IX | Existing Investments | |||
SCHEDULE X | [Reserved] | |||
SCHEDULE XI | Existing Affiliate Transactions | |||
SCHEDULE XII | Licenses and other Governmental Approvals | |||
SCHEDULE XIII | Certain Financial Statements | |||
SCHEDULE XIV | Leaseholds Subject to Landlord Waivers | |||
EXHIBIT A | Form of Notice of Borrowing | |||
EXHIBIT B | Form of Note | |||
EXHIBIT C | Credit Policy | |||
EXHIBIT D | Form of Section 5.04(b)(ii) Certificate | |||
EXHIBIT E | Form of Intercreditor Agreement | |||
EXHIBIT F | Form of Officers Certificate | |||
EXHIBIT G | Form of Subsidiaries Guaranty | |||
EXHIBIT H | Form of Pledge Agreement | |||
EXHIBIT I | Form of Security Agreement | |||
EXHIBIT J | Form of Solvency Certificate | |||
EXHIBIT K | Form of Compliance Certificate | |||
EXHIBIT L | Form of Assignment and Assumption Agreement | |||
EXHIBIT M | Form of Intercompany Note | |||
EXHIBIT N | Form of Shareholder Subordinated Note | |||
EXHIBIT O | Monthly Statement | |||
EXHIBIT P | Form of Borrowing Base Certificate | |||
EXHIBIT Q | Form of Funds Release Request | |||
EXHIBIT R-1 | U.S. Tax Compliance Certificate | |||
EXHIBIT R-2 | U.S. Tax Compliance Certificate | |||
EXHIBIT R-3 | U.S. Tax Compliance Certificate | |||
EXHIBIT R-4 | U.S. Tax Compliance Certificate |
(vi)
SCHEDULE I
COMMITMENTS
Lender |
Loan
Commitment |
|
VPC Specialty Finance Fund I, L.P. |
[****] | |
VPC Investor Fund B, L.P. |
[****] | |
|
||
TOTAL: |
[****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
SCHEDULE II
LENDER ADDRESSES
Lender |
Address |
|
VPC Specialty Finance Fund I, L.P. and |
c/o Victory Park Management, LLC |
|
VPC Investor Fund B, L.P. |
227 W. Monroe Street, Suite 3900 |
|
Chicago, Illinois 60606 |
||
Telephone: (312) 705-2786 |
||
Facsimile: (312) 701-0794 |
||
Attention: Scott R. Zemnick, General |
||
Counsel |
||
E-mail: szemnick@vpcadvisors.com |
||
with a copy (for informational purposes only) to: |
||
Katten Muchin Rosenman LLP |
||
525 West Monroe Street |
||
Chicago, Illinois 60661 |
||
Telephone: (312) 902-5297 and (312) 902-5495 |
||
Facsimile: (312) 577-8964 and (312) 577-8854 |
||
Attention: Mark R. Grossmann, Esq. and Scott |
||
E. Lyons, Esq. |
||
E-mail: mg@kattenlaw.com and scott.lyons@kattenlaw.com |
SCHEDULE III
PLANS
1. | Tiger Financial Management 401k Plan |
2. | Tiger Financial Management LLC Medical Plan |
3. | Tiger Financial Management Dental Plan |
4. | Tiger Financial Management Vision Plan |
5. | Tiger Financial Management Medical Flexible Spending Plan |
6. | Tiger Financial Management Dependent Care Spending Plan |
7. | Tiger Financial Management Group Life Plan |
8. | Tiger Financial Management Group LTD |
9. | Tiger Financial Management Voluntary Life Plan |
10. | Tiger Financial Management Voluntary Accident Plan |
11. | Tiger Financial Management Voluntary STD Plan |
SCHEDULE IV
REAL PROPERTY
(a) Owned Real Property:
None.
(b) | Leased Real Property: |
See attached
Address |
City |
ST/PRV |
Zip Code |
Country |
||||
9781 Magnolia Ave | Riverside | CA | 92503 | United States | ||||
4915 Moreno Ave | Montclair | CA | 91763 | United States | ||||
10404 Venice Blvd | Culver City | CA | 90232 | United States | ||||
6740 Reseda Blvd | Reseda | CA | 91335 | United States | ||||
2710 S Maryland Pkwy, Suite A | Las Vegas | NV | 89109 | United States | ||||
8847 Imperial Hwy | Downey | CA | 90242 | United States | ||||
857 W Rosecrans Ave | Gardena | CA | 90247 | United States | ||||
13010 Harbor Blvd | Garden Grove | CA | 90247 | United States | ||||
1841 W Northern Ave | Phoenix | AZ | 85021 | United States | ||||
4921 W Sahara Ave | Las Vegas | NV | 89146 | United States | ||||
904 S Gaffey St | San Pedro | CA | 90731 | United States | ||||
4040 N 40th St | Phoenix | AZ | 85018 | United States | ||||
1242 W Main St | Mesa | AZ | 85201 | United States | ||||
7116 NE Fourth Plain Rd | Vancouver | WA | 98661 | United States | ||||
1532 N Jones Blvd | Las Vegas | NV | 89121 | United States | ||||
10972 Beach Blvd | Stanton | CA | 90680 | United States | ||||
3475 E Flamingo, Suite 300 | Las Vegas | NV | 89121 | United States | ||||
1331 E 63rd St | Kansas City | MO | 64110 | United States | ||||
8701 E Washington Blvd | Pico Rivera | CA | 90660 | United States | ||||
11221 E 23rd St | Independence | MO | 64052 | United States | ||||
2351 N Alvernon, Suite 100 | Tucson | AZ | 85712 | United States | ||||
12131 SE Powell Blvd | Portland | OR | 97266 | United States | ||||
265 S Wadsworth Blvd | Lakewood | CO | 80226 | United States | ||||
1551 E Indian School Rd | Phoenix | AZ | 85014 | United States | ||||
19026 E Burnside St | Portland | OR | 97233 | United States | ||||
3501 W Glendale Ave | Phoenix | AZ | 85051 | United States | ||||
101 S Brookhurst St | Anaheim | CA | 92804 | United States | ||||
3849 SE Powell Blvd | Portland | OR | 97202 | United States | ||||
270 E Baseline St, Suite A | San Bernardino | CA | 92410 | United States | ||||
11000 Lower Azusa Rd | El Monte | CA | 91732 | United States | ||||
25 N Lamb Blvd | Las Vegas | NV | 89110 | United States | ||||
5819 W Camelback Rd | Phoenix | AZ | 85031 | United States | ||||
6115 W Flamingo Rd | Las Vegas | NV | 89103 | United States | ||||
7202 E McDowell Rd | Scottsdale | AZ | 85257 | United States | ||||
3947 Main St | Kansas City | MO | 64111 | United States | ||||
6501 E Evans Ave | Denver | CO | 80224 | United States | ||||
2801 W Washington, Suite 110 | Las Vegas | NV | 89107 | United States | ||||
2201 Amidon St | Wichita | KS | 67204 | United States | ||||
701 N West St | Wichita | KS | 67203 | United States | ||||
10309 SE Mill Plain Blvd, Suite A | Vancouver | WA | 98664 | United States | ||||
10223 Sepulveda Blvd, Suite C-D | Mission Hills | CA | 91345 | United States | ||||
4850 E Harry St | Wichita | KS | 67218 | United States | ||||
1215 S Country Club Dr | Mesa | AZ | 85210 | United States | ||||
3447 E Cesar Chavez Ave | Los Angeles | CA | 90063 | United States | ||||
8247 Laurel Canyon Blvd | N Hollywood | CA | 91605 | United States | ||||
3520 E Bell Rd | Phoenix | AZ | 85032 | United States | ||||
5102 W Olive Ave, Suite 103 | Glendale | AZ | 85302 | United States | ||||
4241 S Nellis Blvd | Las Vegas | NV | 89121 | United States | ||||
4199 S Ft Apache, Suite D | Las Vegas | NV | 89147 | United States | ||||
6300 E 21st St N | Wichita | KS | 67208 | United States | ||||
430 E 30th Ave | Hutchinson | KS | 67502 | United States |
7865 W Sahara Ave, Suite 102-103 |
Las Vegas | NV | 89117 | United States | ||||
1050 W Pawnee St |
Wichita | KS | 67213 | United States | ||||
1048 W Pawnee St |
Wichita | KS | 67213 | United States | ||||
1960 W Baseline Rd, Suite 101 |
Mesa | AZ | 85202 | United States | ||||
4343 N Rancho Dr, Suite 150 |
Las Vegas | NV | 89130 | United States | ||||
5676 S Eastern Ave |
Las Vegas | NV | 89119 | United States | ||||
1956 E Southern Ave |
Mesa | AZ | 85204 | United States | ||||
7204 Canoga Ave |
Canoga Park | CA | 91303 | United States | ||||
3133 E Douglas Ave |
Wichita | KS | 67211 | United States | ||||
7460 W Cheyenne Ave, Suite 110 |
Las Vegas | NV | 89129 | United States | ||||
5067 E Owens Ave |
Las Vegas | NV | 89110 | United States | ||||
100 N Raymond Ave |
Fullerton | CA | 92831 | United States | ||||
1895 S Federal Blvd |
Denver | CO | 80219 | United States | ||||
1220 W Crawford St |
Salina | KS | 67401 | United States | ||||
1221 Main St |
Pasadena | TX | 77506 | United States | ||||
5506 Bellaire Blvd, Suite A |
Houston | TX | 77081 | United States | ||||
2812 N Main St |
Ft Worth | TX | 76106 | United States | ||||
454 W Florence Ave, Suite 102-103 |
Los Angeles | CA | 90003 | United States | ||||
11830 Bellaire Blvd, Suite A |
Houston | TX | 77072 | United States | ||||
1160 Edgebrook Dr |
Houston | TX | 77034 | United States | ||||
883 Federal Rd, Suite A |
Houston | TX | 77015 | United States | ||||
8602 S Braeswood Blvd |
Houston | TX | 77031 | United States | ||||
800 E Seminary Dr |
Ft Worth | TX | 76115 | United States | ||||
6902 Harrisburg Blvd |
Houston | TX | 77011 | United States | ||||
1503 N Story, Suite 100 |
Dallas | TX | 75061 | United States | ||||
13482 Northwest Hwy |
Houston | TX | 77022 | United States | ||||
2601 S Hampton Rd |
Dallas | TX | 75224 | United States | ||||
3501 Gus Thomasson, Suite 102 |
Mesquite | TX | 75150 | United States | ||||
3422 W Walnut St |
Garland | TX | 75042 | United States | ||||
8569 Long Point Rd |
Houston | TX | 77055 | United States | ||||
1445 E Kiest Blvd |
Dallas | TX | 75216 | United States | ||||
860 S 11th St, Suite 105 |
Beaumont | TX | 77701 | United States | ||||
690 E Prater Way |
Sparks | NV | 89431 | United States | ||||
815 E Pioneer Pkwy |
Arlington | TX | 76010 | United States | ||||
4209 E Lancaster Ave |
Ft Worth | TX | 76103 | United States | ||||
1212 S Belt Hwy |
St Joseph | MO | 64507 | United States | ||||
7007 Bandera Rd, Suite 24 |
Leon Valley | TX | 78238 | United States | ||||
1360 W Cheyenne Ave, Suite 101 |
N Las Vegas | NV | 89032 | United States | ||||
1701 Babcock Rd |
San Antonio | TX | 78229 | United States | ||||
2949 S National Ave |
Springfield | MO | 65804 | United States | ||||
3802 S Gessner, Suite A |
Houston | TX | 77063 | United States | ||||
3706 NW Hwy |
Dallas | TX | 75220 | United States | ||||
1501 Eastern Blvd |
Montgomery | AL | 36117 | United States | ||||
10201 Lake June Rd |
Dallas | TX | 75217 | United States | ||||
7434 Airline Dr |
Houston | TX | 77076 | United States | ||||
2027 SW Fairlawn Rd |
Topeka | KS | 66604 | United States | ||||
321 Palisades Blvd |
Birmingham | AL | 35209 | United States | ||||
2332 Civic Center Dr |
N Las Vegas | NV | 89030 | United States | ||||
2647 Culebra Rd |
San Antonio | TX | 78228 | United States | ||||
6401 Airport Blvd, Suite B |
Mobile | AL | 36608 | United States | ||||
3410 Hwy 69 N |
Northport | AL | 35473 | United States | ||||
5532 Manchaca Rd |
Austin | TX | 78745 | United States | ||||
4009 S Padre Island Dr |
Corpus Christi | TX | 78401 | United States |
10884 W Bellfort St |
Houston | TX | 77099 | United States | ||||
400 W University Dr |
Denton | TX | 76201 | United States | ||||
1924 S Business 77 |
Harlingen | TX | 78550 | United States | ||||
5900 Brainerd Rd |
Chattanooga | TN | 37411 | United States | ||||
848 E Sibley Blvd |
Dolton | IL | 60419 | United States | ||||
7201 Balboa Blvd |
Van Nuys | CA | 91406 | United States | ||||
11100 S Cicero Ave |
Alsip | IL | 60803 | United States | ||||
1601 W Warm Springs Rd |
Henderson | NV | 89014 | United States | ||||
423 N New Braunsfels, Suite 2-3 |
San Antonio | TX | 78202 | United States | ||||
8701 S Cottage Grove Ave |
Chicago | IL | 60619 | United States | ||||
1103 Fair Ave, Suite 1 |
San Antonio | TX | 78210 | United States | ||||
4403 Chapman Hwy |
Knoxville | TN | 37920 | United States | ||||
120 Gallatin Pike S, Suite B |
Madison | TN | 37115 | United States | ||||
2401 Nolensville Pike |
Nashville | TN | 37211 | United States | ||||
4800 W Addison St |
Chicago | IL | 60641 | United States | ||||
5445 South St |
Lakewood | CA | 90713 | United States | ||||
7855 Van Nuys Blvd |
Panorama City | CA | 91402 | United States | ||||
13722 Sherman Way |
Van Nuys | CA | 91405 | United States | ||||
5701 Charlotte Pike |
Nashville | TN | 37209 | United States | ||||
1931 N Mannheim Rd |
Melrose Park | IL | 60160 | United States | ||||
120 W Baseline Rd |
Rialto | CA | 92376 | United States | ||||
1552 W 119th St |
Chicago | IL | 60643 | United States | ||||
932 Ann St |
Montgomery | AL | 36107 | United States | ||||
229 W Anaheim St |
Wilmington | CA | 90744 | United States | ||||
5002 Harding Pl |
Nashville | TN | 37211 | United States | ||||
1801 W 6th St |
Los Angeles | CA | 90057 | United States | ||||
106 Knox Rd |
Knoxville | TN | 37918 | United States | ||||
380 Broadway, Suite 103 |
El Cajon | CA | 92021 | United States | ||||
3615 McFarland Blvd, Suite 109 |
Tuscaloosa | AL | 35405 | United States | ||||
9240 Hwy 49 |
Gulfport | MS | 39503 | United States | ||||
13545 Florence Ave |
Whittier | CA | 90605 | United States | ||||
1521 N 10th St |
McAllen | TX | 78501 | United States | ||||
7120 San Bernardo Ave |
Laredo | TX | 78041 | United States | ||||
2119 E Saunders St |
Laredo | TX | 78041 | United States | ||||
695 S Sam Houston Blvd |
San Benito | TX | 78586 | United States | ||||
4298 University Dr NW |
Huntsville | AL | 35816 | United States | ||||
4217 W Waco Dr |
Waco | TX | 76710 | United States | ||||
4648 S Cicero Ave |
Chicago | IL | 60638 | United States | ||||
1218 N Lake St, Suite 120 |
Aurora | IL | 60506 | United States | ||||
2201 N Frazier St |
Conroe | TX | 77301 | United States | ||||
1698 Memorial Blvd |
Murfreesboro | TN | 37129 | United States | ||||
2785 Belle Chasse Hwy |
Gretna | LA | 70056 | United States | ||||
808 25th St NW |
Cleveland | TN | 37311 | United States | ||||
1655 Fort Campbell Blvd |
Clarksville | TN | 37042 | United States | ||||
3100 Dickerson Pike |
Nashville | TN | 37207 | United States | ||||
13263 Van Nuys Blvd |
Pacoima | CA | 91311 | United States | ||||
2102 Goliad Rd, Suite 1 |
San Antonio | TX | 78223 | United States | ||||
972 Bandera Rd |
San Antonio | TX | 78228 | United States | ||||
10828 Florida Blvd |
Baton Rouge | LA | 70815 | United States | ||||
501 S Conway Ave |
Mission | TX | 78572 | United States | ||||
1029 West Ave I |
Lancaster | CA | 92411 | United States | ||||
2955 E Texas St |
Bossier City | LA | 71111 | United States | ||||
123 Gause Blvd W |
Slidell | LA | 70460 | United States |
25010 Alessandro Blvd |
Moreno Valley | CA | 92553 | United States | ||||
6702 S Congress Ave |
Austin | TX | 78745 | United States | ||||
9616 N Lamar Blvd, Suite 199 |
Austin | TX | 78753 | United States | ||||
11643-B Research Blvd |
Austin | TX | 78759 | United States | ||||
2818 S Lamar Blvd |
Austin | TX | 78704 | United States | ||||
907-B IH 35 |
Round Rock | TX | 78664 | United States | ||||
510 N Bell Blvd, Suite 104 |
Cedar Park | TX | 78613 | United States | ||||
7201 Cameron Rd |
Austin | TX | 78752 | United States | ||||
2030 E Oltorf St, Suite 102B |
Austin | TX | 78741 | United States | ||||
3840 Airport Blvd |
Austin | TX | 78722 | United States | ||||
706 E Hopkins St |
San Marcos | TX | 78666 | United States | ||||
3706 Guadalupe St, Suite D |
Austin | TX | 78705 | United States | ||||
2008 W Parmer Ln |
Austin | TX | 78727 | United States | ||||
11217 Leopard St, Suite 1 |
Corpus Christi | TX | 78410 | United States | ||||
4701 Ayers St, Suite 600-10 |
Corpus Christi | TX | 78415 | United States | ||||
3710 Leopard St |
Corpus Christi | TX | 78408 | United States | ||||
5110 Fredericksburg Rd |
San Antonio | TX | 78229 | United States | ||||
12804 Nacogdoches Rd |
San Antonio | TX | 78217 | United States | ||||
2905 West Ave |
San Antonio | TX | 78201 | United States | ||||
1304 SW Military Dr |
San Antonio | TX | 78221 | United States | ||||
8542 Blanco Rd |
San Antonio | TX | 78216 | United States | ||||
3927 W Commerce St |
San Antonio | TX | 78207 | United States | ||||
1005 Pat Booker Rd |
Universal City | TX | 78148 | United States | ||||
406 Old Hwy 90 W |
San Antonio | TX | 78237 | United States | ||||
6040 Ingram Rd |
San Antonio | TX | 78238 | United States | ||||
10602 Perrin Beitel Rd |
San Antonio | TX | 78217 | United States | ||||
5510 Walzem Rd |
San Antonio | TX | 78218 | United States | ||||
2006 Veterans Blvd |
Del Rio | TX | 78840 | United States | ||||
5129-A West Ave |
San Antonio | TX | 78213 | United States | ||||
4515-2 Fredericksburg Rd |
Balcones Heights | TX | 78201 | United States | ||||
2514 White Blvd |
Austin | TX | 78741 | United States | ||||
1204-A Hwy 123 |
San Marcos | TX | 78666 | United States | ||||
11300-C Pollyanna |
Austin | TX | 78753 | United States | ||||
1103A N IH-35 |
Austin | TX | 78702 | United States | ||||
3601 W William Cannon, Suite 400 |
Austin | TX | 78749 | United States | ||||
1505-C Wells Branch Pkwy |
Pflugerville | TX | 78660 | United States | ||||
15300 S IH-35, Suite 390 |
Buda | TX | 78610 | United States | ||||
7112 Ed Bluestein Blvd, Suite 177 |
Austin | TX | 78723 | United States | ||||
1909 E William Cannon, Suite 101 |
Austin | TX | 78744 | United States | ||||
8606 Research Blvd |
Austin | TX | 78758 | United States | ||||
2237 E Riverside Dr, Suite 101-D |
Austin | TX | 78741 | United States | ||||
3010 Nogalitos St |
San Antonio | TX | 78225 | United States | ||||
10650 Culebra Rd, Suite 128 |
San Antonio | TX | 78251 | United States | ||||
1107 S WW White Rd |
San Antonio | TX | 78220 | United States | ||||
5886 DeZavala Rd, Suite 103 |
San Antonio | TX | 78249 | United States | ||||
1107 San Pedro Ave, Suite 101 |
San Antonio | TX | 78212 | United States | ||||
931 S General McMullen Dr |
San Antonio | TX | 78237 | United States | ||||
6851 W Military Dr, Suite 101 |
San Antonio | TX | 78227 | United States | ||||
3138 SE Military Dr, Suite 101 |
San Antonio | TX | 78235 | United States | ||||
2337 SW Military Dr |
San Antonio | TX | 78224 | United States | ||||
8770 State Hwy 151, Suite 105 |
San Antonio | TX | 78245 | United States | ||||
6338 Old Pearsall Rd, Suite 101 |
San Antonio | TX | 78242 | United States | ||||
1021 Hwy 39 Bypass |
Meridian | MS | 39301 | United States |
6686 El Cajon Blvd, Suite F | San Diego | CA | 92115 | United States | ||||
9360 Mansfield Rd | Shreveport | LA | 71118 | United States | ||||
8320 FM 78, Suite 3 | Converse | TX | 78109 | United States | ||||
1729 NW Topeka Blvd | Topeka | KS | 66608 | United States | ||||
3555 W Slauson Ave | Los Angeles | CA | 90043 | United States | ||||
123 E Vernon Ave | Los Angeles | CA | 90011 | United States | ||||
11401 S Figueroa St | Los Angeles | CA | 90061 | United States | ||||
740 W Compton Blvd | Compton | CA | 90220 | United States | ||||
1502 Austin Hwy, Suite 101 | San Antonio | TX | 78218 | United States | ||||
2137 Jane St, Unit 1 | Downsview | ON | M3M 1A2 | Canada | ||||
2363 Finch Ave W | Weston | ON | M9M 2W8 | Canada | ||||
2687 Kipling Ave, Unit 4 | Etobicoke | ON | M9V 5G6 | Canada | ||||
1876 Kennedy Rd | Scarborough | ON | M1P 2L8 | Canada | ||||
6020 Hurontario St, Unit 6 | Mississauga | ON | L5R 4B3 | Canada | ||||
1733 Eglinton Ave E, Unit 5 | Scarborough | ON | M4A 1J8 | Canada | ||||
1180 Simcoe St N, Unit 7 | Oshawa | ON | L1G 4W8 | Canada | ||||
346 King St W | Oshawa | ON | L1G 6J2 | Canada | ||||
644 Yonge St | Toronto | ON | M4Y 1Z8 | Canada | ||||
10 Gillingham Dr, Unit 103 | Brampton | ON | L6X 5A5 | Canada | ||||
1403 Dundas St E, Unit B | Mississauga | ON | L4X 1L3 | Canada | ||||
2394 Eglinton Ave E | Scarborough | ON | M1K 2P3 | Canada | ||||
3024 Hurontario St, Unit G11 | Mississauga | ON | L5B 4M4 | Canada | ||||
4500 Kingston Rd | Scarborough | ON | M1E 2N9 | Canada | ||||
3182 Eglinton Ave E | Scarborough | ON | M1J 2H5 | Canada | ||||
2966 Danforth Ave | Scarborough | ON | M4C 1M6 | Canada | ||||
1839 Finch Ave W, Unit 7 | Toronto | ON | M3N 2V2 | Canada | ||||
1682 Jane St | Toronto | ON | M9N 2S2 | Canada | ||||
61 King St E | Hamilton | ON | L8N 1A5 | Canada | ||||
1396 Main St E | Hamilton | ON | L8K 1C1 | Canada | ||||
171 Bank St, Unit 124 | Ottawa | ON | K2P 1W5 | Canada | ||||
275 Montreal Rd | Ottawa | ON | K1L 6C2 | Canada | ||||
2301 Tecumseh Rd E | Windsor | ON | N8W 1E6 | Canada | ||||
596 Ouellette Ave | Windsor | ON | N9A 1B7 | Canada | ||||
1530 Albion Rd, Unit 100 | Toronto | ON | M9V 1B4 | Canada | ||||
135 Wyse Rd, Unit 1-2 | Dartmouth | NS | B3A 4K9 | Canada | ||||
4080 Highway 7, Unit 1 | Woodbridge | ON | L4L 8Z2 | Canada | ||||
550 Hespeler Rd, Unit 1 | Cambridge | ON | N1R 6J8 | Canada | ||||
357 1/2 Yonge St | Toronto | ON | M5B 1S1 | Canada | ||||
69 Davis Dr | Newmarket | ON | L3Y 2M9 | Canada | ||||
2057 Royal Windsor Dr | Mississauga | ON | L5J 1K5 | Canada | ||||
756 Yonge St | Toronto | ON | M4Y 2B6 | Canada | ||||
1414 Lasalle Blvd, Unit 101 | Sudbury | ON | P3A 1Z6 | Canada | ||||
2535 Bank St | Ottawa | ON | K1V 8R9 | Canada | ||||
4396 King St E, Unit 1 | Kitchener | ON | N2G 3W6 | Canada | ||||
2200 Queen St E, Unit 6 | Brampton | ON | L6S 4G9 | Canada | ||||
3932 Keele St | Toronto | ON | M3J 1N8 | Canada | ||||
1384 Wellington Rd S, Unit 4 | London | ON | N6E 1M3 | Canada | ||||
5487 Dundas St W, Unit 5 | Etobicoke | ON | M9B 1B5 | Canada | ||||
1541 Merivale Rd, Unit B | Ottawa | ON | K2G 5W1 | Canada | ||||
372 Queen St E | Brampton | ON | L6V 1C3 | Canada | ||||
1450 Kingston Rd, Unit 10 | Pickering | ON | L1V 1C1 | Canada | ||||
2131 Lawrence Ave E, Unit 101 | Scarborough | ON | M1R 5G4 | Canada | ||||
9555 Yonge St, Unit 25 | Richmond Hill | ON | L4C 9M5 | Canada |
15525 118th Ave | Edmonton | AB | T5V 1C5 | Canada | ||||
1650 Bath Rd | Kingston | ON | K7M 4X6 | Canada | ||||
311 Henderson Hwy | Winnipeg | MB | R2L 1M4 | Canada | ||||
17th Avenue SE, Unit 3504 A | Calgary | AB | T2A 0R7 | Canada | ||||
1353 McPhillips St Unit 1 | Winnipeg | MB | R2X 3A6 | Canada | ||||
9847 63rd Ave, Unit 4 | Edmonton | AB | T6E 0G7 | Canada | ||||
11803 125th St NW | Edmonton | AB | T5L 0S1 | Canada | ||||
7165 Chebucto Rd | Halifax | NS | B3L 1N5 | Canada | ||||
14339 MacLeod Trail S | Calgary | AB | T2Y 1M7 | Canada | ||||
9626 165 Ave | Edmonton | AB | T5Z 3L3 | Canada | ||||
1299 Oxford St E | London | ON | N5Y 4W5 | Canada | ||||
10007 170th St NW | Edmonton | AB | T5P 4R5 | Canada | ||||
113 Rideau St | Ottawa | ON | K1N 5X1 | Canada | ||||
158 Hwy, Unit 8 | Stoney Creek | ON | L8G 3V2 | Canada | ||||
7460 82nd Ave NW | Edmonton | AB | T6B 0G2 | Canada | ||||
62 Overlea Blvd, Unit 4B | Toronto | ON | M4H 1C4 | Canada | ||||
4604 MacLeod Trail SW | Calgary | AB | T2G 0A8 | Canada | ||||
748 Guelph Line | Burlington | ON | L7R 3N5 | Canada | ||||
1321 Archibald St | Winnipeg | MB | R2J 3A4 | Canada | ||||
471 Hazeldean Rd | Ottawa | ON | K2L 4B8 | Canada | ||||
13737 127th St NW | Edmonton | AB | T6V 1A8 | Canada | ||||
75 Ellesmere Rd, Unit B2 | Scarborough | ON | M1R 4B7 | Canada | ||||
2712 Keele St | Toronto | ON | M3M 2G1 | Canada | ||||
883 St Clair Ave W | Toronto | ON | M6C 1C4 | Canada | ||||
1795 St Clair Ave W | Toronto | ON | M6N 1J7 | Canada | ||||
3111 Dufferin St, Unit A | Toronto | ON | M6A 2S7 | Canada | ||||
11736 34th St NW | Edmonton | AB | T5W 1Z1 | Canada | ||||
2071 Steeles Ave W, Unit H1 | Toronto | ON | M3J 3N3 | Canada | ||||
2280 Islington Ave | Toronto | ON | M9W 3W8 | Canada | ||||
2250 50th Ave, Unit 1C | Red Deer | AB | T4R 1W5 | Canada | ||||
12 222 16th Ave NE | Calgary | AB | T2E 1J8 | Canada | ||||
647 Portage Ave, Unit 1 | Winnipeg | MB | R3B 2G4 | Canada | ||||
13737 72nd Ave, Unit 100 | Surrey | BC | V3W 2P2 | Canada | ||||
7287 Knight St | Vancouver | BC | V5P 2W9 | Canada | ||||
33 10556 King George Blvd | Surrey | BC | V3T 2X3 | Canada | ||||
20221 Fraser Hwy | Langley | BC | V3A 4E6 | Canada | ||||
8386 120 St, 103B | Surrey | BC | V3W 3N4 | Canada | ||||
740 Columbia St | Westminster | BC | V3M 1B4 | Canada | ||||
324 Guelph St | Georgetown | ON | L7G 4B5 | Canada | ||||
250 King George Rd, Unit 4 | Brantford | ON | N3R 5L5 | Canada | ||||
347 Bayfield St, Unit 2A | Barrie | ON | L4M 3C3 | Canada | ||||
4490 Fairview St, Unit D102-3 | Burlington | ON | L7L 5P9 | Canada | ||||
221 Woodlawn Rd W, Unit B7 | Guelph | ON | N1H 8P4 | Canada | ||||
3245 Finch Ave E | Scarborough | ON | M1W 4C1 | Canada | ||||
965 Talbot St, Unit D | St. Thomas | ON | N5P 1E8 | Canada | ||||
260 Geneva St | St. Catharines | ON | L2N 2E8 | Canada | ||||
451 Paul St | Dieppe | NB | E1A 6W8 | Canada | ||||
6758 Lundys Ln, Unit 2 | Niagara Falls | ON | L2G 1V5 | Canada | ||||
687 Queen St W | Toronto | ON | M6J 1E6 | Canada | ||||
44 Mapleview Dr W, Unit 2 | Barrie | ON | L4N 6L4 | Canada | ||||
525 Highland Rd W, Unit 2 | Kitchener | ON | N2M 5K1 | Canada | ||||
970 Upper James St | Hamilton | ON | L9C 3A5 | Canada | ||||
212A Queen St E | Brampton | ON | L6V 1B7 | Canada |
736A Queenston Rd | Hamilton | ON | L8G 1A4 | Canada | ||||||
576 Ritson Rd S | Oshawa | ON | L1H 5K7 | Canada | ||||||
13552 97 St NW | Edmonton | AB | T5E 4E2 | Canada | ||||||
15640 Stony Plain Rd | Edmonton | AB | T5P 3Z4 | Canada | ||||||
6060 Memorial Dr NE, Unit 18 | Calgary | AB | T2A 5Z5 | Canada | ||||||
371 Wellington Rd S, Unit A | London | ON | N6C 4P9 | Canada | ||||||
644 Portland St, Unit 4 | Dartmouth | NS | B2W 2M3 | Canada | ||||||
6219 Centre St NW, Unit 10A | Calgary | AB | T2K 0V2 | Canada | ||||||
158 Dundas St | London | ON | N6A 1G1 | Canada | ||||||
1015 Granville St | Vancouver | BC | V6Z 1L4 | Canada | ||||||
1248 Robson St | Vancouver | BC | V6E 1C1 | Canada | ||||||
5010 4th St NE, Unit 26 | Calgary | AB | T2K 5X8 | Canada | ||||||
3703 17th Ave SE | Calgary | AB | T2A 0S1 | Canada | ||||||
100 6061 No 3 Road | Richmond | BC | V6Y 2B2 | Canada | ||||||
1192 Burrard St | Vancouver | BC | V6Z 1Y7 | Canada | ||||||
13040 50th Street NW | Edmonton | AB | T5A 4V9 | Canada | ||||||
7475 Tecumseh Rd E | Windsor | ON | N8T 1G2 | Canada | ||||||
9250 MacLeod Trail SE, Bay 18 | Calgary | AB | T2J 0P5 | Canada | ||||||
3 Harwood Ave S, Unit 1-2 | Ajax | ON | L1S 2C1 | Canada | ||||||
1593 Bank St | Ottawa | ON | K1H 7Z3 | Canada | ||||||
304 Dunlop St W, Units 11-13 | Barrie | ON | L4N 7N2 | Canada | ||||||
101 1050 Terminal Ave N | Nanaimo | BC | V9S 4K4 | Canada | ||||||
101 1483 Douglas St | Victoria | BC | V8W 2G1 | Canada | ||||||
844 Niagara St, Unit A, Bldg C | Welland | ON | L3C 1M3 | Canada | ||||||
3214 Douglas St, Unit 202 | Victoria | BC | V8Z 3K6 | Canada | ||||||
2490 Main St | Vancouver | BC | V5T 3E2 | Canada | ||||||
1248 London Rd | Sarnia | ON | N7S 1P5 | Canada | ||||||
997 St Laurent Blvd | Ottawa | ON | K1K 3B1 | Canada | ||||||
2390 East Hastings St | Vancouver | BC | V5L 1V5 | Canada | ||||||
2659 Dundas St W | Toronto | ON | M6P 1X9 | Canada | ||||||
1771 Queen St E | Brampton | ON | L6T 4S3 | Canada | ||||||
276 Rexdale Blvd | Etobicoke | ON | M9W 1R2 | Canada | ||||||
3095 Robie St | Halifax | NS | B3K 4P7 | Canada | ||||||
1375 Huron Church Rd | Windsor | ON | N9C 2B4 | Canada | ||||||
475 Albert St | Regina | SK | S4R 2P1 | Canada | ||||||
1080 Memorial Ave | Thunder Bay | ON | P7B 4A3 | Canada | ||||||
820 Red River Rd | Thunder Bay | ON | P7B 1K2 | Canada | ||||||
947 Lansdowne St W | Peterborough | ON | K9J 1Z5 | Canada | ||||||
52 Elm St | Sudbury | ON | P3C 1S7 | Canada | ||||||
851 Danforth Ave | Toronto | ON | M4J 1L2 | Canada | ||||||
2720 Mayor Magrath Dr S | Lethbridge | AB | T1K 7J5 | Canada | ||||||
460 Main St W | Hamilton | ON | L8P 1K5 | Canada | ||||||
3202 Dunmore Rd SE | Medicine Hat | AB | T1B 2X2 | Canada | ||||||
78 Gordon St | Guelph | ON | N1H 4H4 | Canada | ||||||
677 Princess St | Kingston | ON | K7L 1E6 | Canada | ||||||
22444 Lougheed Hwy | Maple Ridge | BC | V2X 2T6 | Canada | ||||||
2115 22nd St W | Saskatoon | SK | S7M 0V2 | Canada | ||||||
5587 Yonge St | North York | ON | M2N 5S4 | Canada | ||||||
1303 3 Ave S | Lethbridge | AB | T1J 0K4 | Canada | ||||||
33258 S Fraser Way | Abbotsford | BC | V2S 2B3 | Canada | ||||||
357 Great Northern Rd | Sault Ste. Marie | ON | P6B 4Z8 | Canada | ||||||
2000 St Joseph Blvd | Orleans | ON | K1C 1E6 | Canada | ||||||
2090 Harvey Ave | Kelowna | BC | V1Y 8P8 | Canada |
1501 Idylwyld Dr | Saskatoon | SK | S7L 1A9 | Canada | ||||
808 Sackville Dr | Lower Sackville | NS | B4E 1R7 | Canada | ||||
550 Arthur St W | Thunder Bay | ON | P7E 5R4 | Canada | ||||
11802 Jasper Ave NW | Edmonton | AB | T5K 0N7 | Canada | ||||
2017 Robertson Rd | Ottawa | ON | K2H 5Y7 | Canada | ||||
1315 Richmond Rd | Ottawa | ON | K2B 8J7 | Canada | ||||
101 Victoria Avenue, Unit 25 | Regina | SK | S4N 0N3 | Canada | ||||
7686 Hurontario St | Brampton | ON | L6Y 5B5 | Canada | ||||
2031 Cassells St | North Bay | ON | P1B 4E1 | Canada | ||||
3601 Lawrence Ave E, Unit 2 | Scarborough | ON | M1G 1P5 | Canada | ||||
360 Norwich Ave, Unit 5 | Woodstock | ON | N4S 3W2 | Canada | ||||
789 Fortune Dr, Unit 20 | Kamloops | BC | V2B 2L3 | Canada | ||||
6912 Kingsway | Burnaby | BC | V5E 1E6 | Canada | ||||
35 Front St S | Orillia | ON | L3V 4S1 | Canada | ||||
1549 Dundas St E | Whitby | ON | L1N 2K6 | Canada | ||||
1 Hespeler Rd, Unit B01001A | Cambridge | ON | N1R 8L4 | Canada | ||||
120 45863 Yale Rd | Chilliwack | BC | V2P 2N6 | Canada | ||||
303 51st St E | Saskatoon | SK | S7K 8G2 | Canada | ||||
196 Dalhousie St, Unit 1 | Brantford | ON | N3S 3T7 | Canada | ||||
735 The Queensway | Etobicoke | ON | M8Z 1M8 | Canada | ||||
6614 127 Ave NW | Edmonton | AB | T5C 1P9 | Canada | ||||
581 Ryan Road, Unit 2 | Courtenay | BC | V9N 3R5 | Canada | ||||
274 N Front St | Belleville | ON | K8P 3C4 | Canada | ||||
5852 Trans-Canada Hwy | Duncan | BC | V9L 3S1 | Canada | ||||
210 15th St W | Prince Albert | SK | S6V 3P8 | Canada | ||||
905 37 St SW | Calgary | AB | T3C 1S4 | Canada | ||||
1575 Eglinton Ave W | Toronto | ON | M6E 2G9 | Canada | ||||
5890 Main St | Niagara Falls | ON | L2G 5Z8 | Canada | ||||
12405 107 Ave | Edmonton | AB | T5M 0Z2 | Canada | ||||
239 Scarlett Rd | Toronto | ON | M6N 4K8 | Canada | ||||
648 King St W | Kitchener | ON | N2G 1E1 | Canada | ||||
400 Steeles Ave E, Unit 6 | Brampton | ON | L6W 3R2 | Canada | ||||
525 Grand Ave W | Chatham | ON | N7L 1C5 | Canada | ||||
6172 Bathurst St | Toronto | ON | M2R 2A2 | Canada | ||||
72 Lakeshore Dr | North Bay | ON | P1A 2A6 | Canada | ||||
906 Marine Dr | Vancouver | BC | V7P 1R9 | Canada | ||||
10737 Yonge St, Unit 1 | Richmond Hill | ON | L4C 9M9 | Canada | ||||
320 Speers Rd | Oakville | ON | L6K 3R9 | Canada | ||||
1735 Kipling Ave | Toronto | ON | M9R 2Y8 | Canada | ||||
3104 27th St, Unit 4 | Vernon | BC | V1T 4M6 | Canada | ||||
1475 Prairie Ave, Suite 2130 | Port Coquitlam | BC | V3B 1T3 | Canada | ||||
410 Brixton Rd | Brixton | LD | SW97AW | United Kingdom | ||||
232 Kilburn High Rd | Kilburn | LD | NW6 4JP | United Kingdom | ||||
119 Peckham High St | Peckham | LD | SE15 5SL | United Kingdom | ||||
8-10 Cranbrook Rd | Ilford | LD | IG1 4DJ | United Kingdom | ||||
269-271 Walworth Ave | Walworth | LD | SE17 1RL | United Kingdom | ||||
60 Uxbridge Rd | Shepherds Bush | LD | W12 8LP | United Kingdom | ||||
135A High Street N | East Ham | LD | E6 1HZ | United Kingdom | ||||
19 The Broadway High Rd | Wood Green | LD | N22 6DS | United Kingdom | ||||
48 Kingsland High St | Dalston | LD | E8 2JP | United Kingdom | ||||
100B Bull St | Birmingham | W Mid | B4 7AA | United Kingdom | ||||
49 Upper Parliament St | Nottingham | NG | NG1 2AB | United Kingdom | ||||
3-5 The Bridge | Walsall | W Mid | WS1 1LG | United Kingdom |
105a Commercial Rd | Portsmouth | Ham | PO1 1BQ | United Kingdom | ||||
530 High Rd | Wembley | LD | HA9 7BS | United Kingdom | ||||
83 Above Bar St | Southampton | Ham | So14 7FG | United Kingdom | ||||
175 North End | Croydon | Sur | CR0 1TP | United Kingdom | ||||
135 Commercial St | Newport | Gwent | NP20 1LY | United Kingdom | ||||
3527 N Ridge Rd | Wichita | KS | 67205 | United States | ||||
3531 N Ridge Rd, 2nd Floor | Wichita | KS | 67205 | United States | ||||
3611 N Ridge Rd, Suite 101 & 103 | Wichita | KS | 67206 | United States | ||||
3607 N Ridge Rd, Suite 106 | Wichita | KS | 67205 | United States | ||||
8400 E 32nd St N | Wichita | KS | 67226 | United States | ||||
30-34 Houndsgate | Nottingham | BX | NG1 7AB | United Kingdom | ||||
14 Low St | Keighley | BX | BD21 3PN | United Kingdom | ||||
400 Carlingview Dr | Toronto | ON | M9W 5X9 | Canada | ||||
3615 N Ridge Rd | Wichita | KS | 67205 | United States | ||||
31 Wellington St | Leeds | BX | LS1 4DL | United Kingdom | ||||
7330 W 33rd Street N | Wichita | KS | 67205 | United States | ||||
440 N Wells Street, Suite 800 | Chicago | IL | 60654 | United States |
- closed location, under lease
SCHEDULE V
SUBSIDIARIES
Entity |
Owner |
Percent Owned |
Class of Capital Stock |
|||||
Curo Intermediate Holdings Corp. |
Curo Financial Technologies Corp. |
100 | % |
Common Stock |
||||
A Speedy Cash Car Title Loans, LLC |
Curo Intermediate Holdings Corp. |
100 | % |
LLC interests |
||||
Advance Group, Inc. |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
Attain Finance, LLC |
Curo Intermediate Holdings Corp. |
100 | % |
LLC interests |
||||
Attain Finance Canada, Inc. |
Attain Finance, LLC |
100 | % |
Common Stock |
||||
Cash Money Cheque Cashing, Inc. |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
Cash Colorado, LLC |
Curo Intermediate Holdings Corp. |
100 | % |
LLC interests |
||||
Concord Finance, Inc. |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
Evergreen Financial Investments, Inc. |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
FMMR Investments, Inc. |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
Galt Ventures, LLC |
Curo Intermediate Holdings Corp. |
100 | % |
LLC interests |
||||
LendDirect Corp. |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
Principal Investments, Inc. |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
SC Aurum, LLC |
Curo Intermediate Holdings Corp. |
100 | % |
LLC interests |
||||
SCHC Financial Canada, Inc.* |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
SCIL Texas, LLC |
Curo Intermediate Holdings Corp. |
100 | % |
LLC interests |
||||
SCIL, Inc. |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
||||
Speedy Cash |
Curo Intermediate Holdings Corp. |
100 | % |
Common Stock |
Speedy Cash Illinois, Inc. |
Curo Intermediate Holdings Corp. | 100 | % | Common Stock | ||||
SC Texas MB, Inc. |
Curo Intermediate Holdings Corp. | 100 | % | Common Stock | ||||
The Money Store, L.P. |
SC Texas MB, Inc. | 100 | % | LLC interests | ||||
The Money Store, L.P. |
Curo Intermediate Holdings Corp. | 100 | % | LLC interests | ||||
SRC Transatlantic Limited* |
Curo Intermediate Holdings Corp. | 100 | % | LLC interests | ||||
Wage Day Advance Limited |
Curo Intermediate Holdings Corp. | 100 | % | LLC interests | ||||
Curo Management LLC |
Curo Intermediate Holdings Corp. | 100 | % | LLC interests | ||||
Todd Car Title, Inc. |
Curo Intermediate Holdings Corp. | 100 | % | Common Stock | ||||
Todd Financial, Inc. |
Curo Intermediate Holdings Corp. | 100 | % | Common Stock | ||||
CFTC Finance, Inc. |
Curo Intermediate Holdings Corp. | 100 | % | Common Stock |
SCHEDULE VI
EXISTING INDEBTEDNESS
Type of Debt |
Borrower |
Trustee/Lender |
Principal
Amount |
Loan Party Guarantors |
||||||
Subordinated Notes due 2017 | Curo Financial Intermediat e Holdings Corp. | Wilmington Trust, National Association | $ | 440,000,000 | (all US subsidiaries) | |||||
Senior Cash Pay Notes due 2017 | Curo Financial Technologi es, Corp. | Wilmington Trust, National Association | $ | 125,000,000 | None. | |||||
Subordinated Note | Cash Money Acquisition Inc. | J.P. Genova Family Trust | $ | 7,500,000 | None. |
SCHEDULE VII
INSURANCE
Insurer |
Policy Number |
Coverage Type |
Coverage Amount (Deductible) |
Expiration Date | ||||
Freedom Specialty Insurance Company | PHF 1600014 | D&O Fiduciary | Max agg limit of liability for all Liability Coverage Sections $7M | 6/27/2017 | ||||
Underwriter at Lloyds | ANV 101669 A | E&O Excess | Excess D&O Liability $10M | 6/27/2017 | ||||
Argonaut Insurance Co. | MLX 7601047 -2 | E&O Excess | Excess D&O Liability $5M | 6/27/2017 | ||||
RSUI Indemnity Co. | NHS 668091 | E&O Excess | Excess D&O Liability $10M | 6/27/2017 | ||||
CNA Insurance Group | 5088168 064 | Property & Liability | Business Property, Inland Marine, General Liability, Employee Benefits Liability & Stop Gap Liability | |||||
Federal Insurance Co. | 7981 82 10 | Excess Liability | Excess of umbrella | |||||
CNA Insurance Group | C509965 2286 | Crime | Employee Theft $175K/$50K Deductible | |||||
Underwriters at Lloyds | RT15A MA023 | Wind and Hail | Wind including storm surge, hail | |||||
Rockhill Insurance Company | RADP00 101802 | Earthquake | Earthquake at Locations in AZ, CA, NV, and OR | |||||
Hartford Insurance Co. of the Midwest | 8705635 0582015 | Flood (1 Store) | Flood on Business Personal Property | |||||
IronShore Specialty Ins Co | 2585200 | Pollution/ Mold & Mildew | Premium based on total square footage of all properties combined. | 6/27/2017 |
CNA Insurance Group | WP 59 527 5500 | Foreign / International DIC Policy | Property, General Liability, Employee Benefit Liability, Auto, Workers Comp, Foreign AD&D, Kidnap & Ransom | |||||
Trumbull Insurance Co. | 37 WN S29200 | Workers Compensation | Workers Compensation and Employers Liability | |||||
CNA Insurance Group | CP 2920042 73 | Property | Property (Boiler & Machinery) & Business Interruption (USD) | |||||
CNA Insurance Group | CGL 2920043 23 | General Liability | General Liability (USD) | |||||
AIG Insurance Company of Canada | 02 643 94 84 | E&O (LendDirect) | Accident/Sickness, General & Life Ins. Product Specific (CAD 4875) | 11/25/2016 | ||||
AIG Insurance Company of Canada | 01-819-10-73 | E&O (Cash Money) | 9/2/2017 |
SCHEDULE VIII
EXISTING LIENS
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
U.S. Bank Equipment Finance | TIGER FINANCIAL MANAGEMENT, L.L.C. 1 | FOR INFORMATIONAL PURPOSES ONLY: 1 MFP3635X BB1862186 | Nevada | 2012004203-1 | ||||
U.S. Bank Equipment Finance | TIGER FINANCIAL MANAGEMENT, L.L.C. | FOR INFORMATIONAL PURPOSES ONLY: 1 WC4260 MAE516305 | Nevada | 2012017043-6 | ||||
ImageQUEST, Inc. | Tiger Financial Management, L.L.C. | Various Xerox Copier Systems AND ALL PRODUCTS, PROCEEDS AND ATTACHMENTS. THIS UCC-1 IS FILED PURSUANT TO SECTION 9-505 OF THE UNIFORM COMMERCIAL CODE FOR INFORMATIONAL PURPOSES ONLY. THIS TRANSACTION IS INTENDED BY THE LESSEE AND LESSOR TO BE A LEASE | Nevada | 2012023586-4 | ||||
U.S. BANK EQUIPMENT FINANCE | TIGER FINANCIAL MANAGEMENT, L.L.C. |
Specific printers, with various serial numbers listed as well. See UCC-1 financing statement for full list. |
Nevada | 2012023773-1 |
1 | FN: Tiger Financial Management, L.L.C. is the previous name of Curo Management LLC. |
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
General Electric Capital Corporation | TIGER FINANCIAL MANAGEMENT, L.L.C. | All Equipment, described herein or otherwise, leased to or financed for the Debtor by Secured Party under that certain Total Image Management Agreement No. 7681504-002 including all accessories, accessions, replacements, additions, substitutions, add-ons and upgrades thereto, and any proceeds therefrom. | Nevada | 2012027892-7 | ||||
U.S. Bank Equipment Finance, a division of U.S. Bank National Association | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC5330 AE9207399; 1 COPIERS WC5330 AE9119459; 1 COPIERS WC5330 AE9207231; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING; INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2012031747-6 |
- 2 -
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
U.S. Bank Equipment Finance, a division of U.S. Bank National Association | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC5330 PT AE9879724BLK; 1 COPIERS WC5330PT AE9881028BLK; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2013004546-9 | ||||
U.S. Bank Equipment Finance, a division of U.S. Bank National Association | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC5330 PT AE9882570; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES DESCRIPTION INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2013005038-3 |
- 3 -
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
U.S. Bank Equipment Finance, a division of U.S. Bank National Association | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS X531A AE9886340; 1 COPIERS X531A AE9886320; 1 COPIERS X31A AE9886066; 1 COPIERS X531A AE9886029; 1 COPIERS X531A AE9886890; 1 COPIERS X531A AE9884090; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2013009303-0 |
- 4 -
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
U.S. Bank Equipment Finance, a division of U.S. Bank National Association | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS 3325 LA6280019; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2013009525-0 | ||||
U.S. Bank Equipment Finance, a division of U.S. Bank National Association | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC5335PT AE9885827; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2013012609-3 |
- 5 -
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
U.S. Bank Equipment Finance, a division of U.S. Bank National Association | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS X531A AE9882598BLK; 1 COPIERS X531A AE9889609BLK; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2013014192-0 |
- 6 -
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
U.S. Bank Equipment Finance, a division of U.S. Bank National Association | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC5335PT AE9885779; TOGETHER ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2013016427-1 | ||||
U.S. BANK EQUIPMENT FINANCE | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC7855 MX4319504; 1 COPIERS-CPC WC7855 MX4319504C; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, | Nevada | 2013019066-8 | ||||
WITHOUT LIMITATION, INSURANCE RECOVERIES: |
- 7 -
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
U.S. BANK EQUIPMENT FINANCE | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC5330PT AE9898367BLK; 1 PRINTERS HP GO1 CNCCF750BZBLK; 1 PRINTERS HP 601 CNCCF750B5BLK; 1 PRINTERS HP 601 CNCCF758B8BLK; 1 PRINTERS HP 601 CNCCF750DPBLK; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | Nevada | 2013030395-0 |
- 8 -
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE NO. | ||||
U.S. BANK EQUIPMENT FINANCE | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC5330PT AE9896772BLK; 1 PRINTERS HP 601 CNCCF750CPBLK; 1 | Nevada | 2013030397-4 | ||||
PRINTERS HP 601 CNCCF750D5BLK; 1 PRINTERS HP 601 CNCCF750GDBLK; 1 PRINTERS HP 601 CNCCF750CRBLK; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: | ||||||||
U.S. BANK EQUIPMENT FINANCE | TIGER FINANCIAL MANAGEMENT, L.L.C. | 1 COPIERS WC5530PT AE9895855BLK; 1 COPIERS WC5530PT AE9894757BLK; TOGETHER WITH ALL REPLACEMENTS, PARTS, REPAIRS, ADDITIONS, ACCESSIONS AND ACCESSORIES INCORPORATED | Nevada | 2013031805-2 | ||||
THEREIN OR AFFIXED OR ATTACHED THERETO AND ANY AND ALL PROCEEDS OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, INSURANCE RECOVERIES: |
- 9 -
DEBTOR |
SECURED PARTY |
COLLATERAL DESCRIPTION |
JURISDICTION |
UCC FILE
NO. |
||||
Travelers Express Company, Inc. | THE MONEY STORE L.P. | FURNITURE, FIXTURES, EQUIPMENT, INVENTORY, ACCOUNTS (INCLUDING DEPOSIT ACCOUNTS AND ACCOUNTS RECEIVABLE), INSURANCE INSTRUMENTS AND DOCUMENTS, BOOKS AND RECORDS, CONTRACT RIGHTS AND GENERAL INTANGIBLES THAT TRUSTEE HAS OR MAY ACQUIRE AN INTEREST IN, AND ACCESSIONS AND PROCEEDS THEREOF. | Texas |
03-
0017447975
Terminated
|
- 10 -
SCHEDULE IX
EXISTING INVESTMENTS
None.
SCHEDULE X
[RESERVED]
SCHEDULE XI
EXISTING AFFILIATE TRANSACTIONS
The company employs the services of Ad Astra Recovery Services, Inc. (Ad Astra), which is a related party through common ownership. Ad Astra provides third party collection activities for our U.S. operations. Generally, once delinquent loans are over 60 days past due, they are referred to Ad Astra for collections. Ad Astra earns a commission fee equal to 30% of any amounts successfully recovered. Payments collected by Ad Astra on our behalf and commissions payable to Ad Astra are net settled on a one month lag. The net amount receivable from Ad Astra at December 31, 2015 was $0.2 million, and the amount payable to Ad Astra at December 31, 2014 was $0.1 million. These amounts are included in Prepaid expenses and other in the Consolidated Balance Sheets. The commission expense paid to Ad Astra for the years ended December 31, 2015, 2014 and 2013 was $10.6 million, $8.9 million and $7.0 million, respectively, and is included in Other store operating expenses in the Consolidated Statements of Income.
The company entered into several operating agreements for their corporate office, collection office, and stores in which they operate, with several real estate entities that are related through common ownership.
As of December 31, 2015 and 2014 the company had a payable to their parent company, Speedy Group Holdings Corp. of $11.9 million and $3.2 million, respectively, primarily related to tax benefits that the Parent company has contributed to the consolidated tax return position and dividends declared, partially offset by corporate expenses that are initially paid by SCHC. The intercompany payble/receivable accountis settled on a periodic basis.
SCHEDULE XII
LICENSES AND OTHER GOVERNMENTAL APPROVALS
(a) | Post Closing Notification |
None.
(b) | Material Governmental Approvals and Licenses: See attached. |
REGULATORY APPROVALS REQUIRD POST-CLOSING: NONE
Entity |
Title |
Status |
State |
License
|
Address |
Type |
City |
State |
Zip |
Contact |
Notes | |||||||||||
A Speedy Cash Car Title Loans, LLC | Domicil Registration | Active | NV | C912-2001 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||||
A Speedy Cash Car Title Loans, LLC | Foreign Registration | Active | AZ | R-1498573-8 | GENERAL USA | State License | AZ-Secretary of State - Corporation Commision | |||||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SF0904074 | 1841 W. Northern Ave | State License | Phoenix | AZ | 85021 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0103800 | 4040 N. 40th St | State License | Phoenix | AZ | 85018 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0103799 | 1242 W. Main St | State License | Mesa | AZ | 85201 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0105383 | 2351 N. Alvernon Way, #100 | State License | Tucson | AZ | 85712 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0106338 | 1551 E. Indian School Rd. | State License | Phoenix | AZ | 85014 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0110207 | 1215 S. Country Club Dr | State License | Mesa | AZ | 85210 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0110872 | 3520 E. Bell Rd | State License | Phoenix | AZ | 85032 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0110200 | 5102 W. Olive Ave | State License | Glendale | AZ | 85302 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0110197 | 1960 W. Baseline Rd | State License | Mesa | AZ | 85202 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0112645 | 1956 E. Southern Ave #101 | State License | Mesa | AZ | 85204 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Sales & Finance License | Active | AZ | SFBR0116375 | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | AZ-Dpt of Financial Institutions | ||||||||||||
A Speedy Cash Car Title Loans, LLC | State Business License | Active | NV | NV20011186050 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | NV-Secretary of State | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11001 | 2710A S. Maryland Pkwy | State License | Las Vegas | NV | 89109 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11002 | 4921 W. Sahara | State License | Las Vegas | NV | 89146 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11003 | 1532 N. Jones Blvd | State License | Las Vegas | NV | 89108 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11004 | 7460 W. Cheyenne Ave #110 | State License | Las Vegas | NV | 89129 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11005 | 5067 E. Owens Ave | State License | Las Vegas | NV | 89110 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11006 | 690 E Prater Way | State License | Sparks | NV | 89431 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11102 | 1360 W Cheyenne Ave, Suite101 | State License | North Las Vegas | NV | 89030 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTHB11127 | 2332 Civic Center Drive | State License | North Las Vegas | NV | 89030 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTHB11196 | 1601 W Warm Springs Rd | State License | Henderson | NV | 89014 | NV-Financial Institutions Division | ||||||||||||
Advance Group, Inc | Consumer Use Tax Permit | Active | NV | 1001289803-007 | 690 E Prater Way | State License | Sparks | NV | 89431 | NV-Department of Taxation | ||||||||||||
Advance Group, Inc | Consumer Use Tax Permit | Active | NV | 1001289803-008 | 1360 W Cheyenne Ave, Suite101 | State License | North Las Vegas | NV | 89030 | NV-Department of Taxation | ||||||||||||
Advance Group, Inc | Consumer Use Tax Permit | Active | NV | 1001289803-005 | 7460 W. Cheyenne Ave #110 | State License | Las Vegas | NV | 89129 | NV-Department of Taxation | ||||||||||||
Advance Group, Inc | Consumer Use Tax Permit | Active | NV | 1001289803-006 | 5067 E. Owens Ave | State License | Las Vegas | NV | 89110 | NV-Department of Taxation | ||||||||||||
Advance Group, Inc | Consumer Use Tax Permit | Active | NV | 1003198864-002 | 4199 S. Ft. Apache Rd #D | State License | Las Vegas | NV | 89147 | NV-Department of Taxation | ||||||||||||
Advance Group, Inc | Consumer Use Tax Permit | Active | NV | 1001289803-009 | 2332 Civic Center Drive | State License | North Las Vegas | NV | 89030 | NV-Department of Taxation | ||||||||||||
Advance Group, Inc | Consumer Use Tax Permit | Active | NV | 1001289803-010 | 1601 W Warm Springs Rd | State License | Henderson | NV | 89014 | NV-Department of Taxation | ||||||||||||
Advance Group, Inc | Device Registration | Active | NV | RAPICASH | 7460 W. Cheyenne Ave #110 | State License | Las Vegas | NV | 89129 | NV-Dept of Agriculture | ||||||||||||
Advance Group, Inc | Device Registration | Active | NV | RAPICASH | 5067 E. Owens Ave | State License | Las Vegas | NV | 89110 | NV-Dept of Agriculture | ||||||||||||
Advance Group, Inc | Device Registration | Active | NV | RAPICASH | 1532 N. Jones Blvd | State License | Las Vegas | NV | 89108 | NV-Dept of Agriculture | ||||||||||||
Advance Group, Inc | Device Registration | Active | NV | 96-B05047 | 690 E Prater Way | State License | Sparks | NV | 89431 | NV-Dept of Agriculture | ||||||||||||
Advance Group, Inc | Device Registration | Active | NV | RAPICASH | 2710A S. Maryland Pkwy | State License | Las Vegas | NV | 89109 | NV-Dept of Agriculture | ||||||||||||
Advance Group, Inc | Device Registration | Active | NV | RAPICASH | 4921 W. Sahara | State License | Las Vegas | NV | 89146 | NV-Dept of Agriculture | ||||||||||||
Advance Group, Inc | Device Registration | Active | NV | RAPICASH | 1360 W Cheyenne Ave, Suite101 | State License | North Las Vegas | NV | 89030 | NV-Dept of Agriculture | ||||||||||||
Advance Group, Inc | Device Registration | Active | NV | RAPICASH | 2332 Civic Center Drive | State License | North Las Vegas | NV | 89030 | NV-Dept of Agriculture | ||||||||||||
Advance Group, Inc | Domicil Registration | Active | NV | C11137-1999 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||||
Advance Group, Inc | State Business License | Active | NV | NV19991252559 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||||
Attain Finance AZ, Inc | State Business License | Active | NV | NV20101790046 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||||
Attain Finance, LLC | Domicil Registration | Active | NV | E0499842009-4 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | AL | 620-756 | GENERAL USA | State License | AL-Secretary of State | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | AZ | R20103163 | GENERAL USA | State License | AZ-Secretary of State - Corporation Commision | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | CO | 20121212297 | GENERAL USA | State License | CO-Secretary of State | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | IL | 04290763 | GENERAL USA | State License | ||||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | KS | 4460234 | GENERAL USA | State License | KS-Secretary of State | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | LA | 41684244Q | GENERAL USA | State License | LA-SOS | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | MO | FL1100843 | GENERAL USA | State License | MO-Secretary of State | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | MS | 1062545 | GENERAL USA | State License | MS-Secretary of State | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | OR | 729565-93 | GENERAL USA | State License | OR-Secretary of State - Corporation Division | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | TN | 717166 | GENERAL USA | State License | TN-Department of State | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | TX | 801351452 | GENERAL USA | State License | TX-Secretary of State - Legal Support Unit | |||||||||||||||
Attain Finance, LLC | Foreign Registration | Active | WA | 1883245 | GENERAL USA | State License | WA-Secretary of State - Corporations Division | |||||||||||||||
Attain Finance, LLC | Franchise & Excise Tax | Active | TN | 321841905 | GENERAL USA | State License | TN-REVENUE-DEPT | |||||||||||||||
Attain Finance, LLC | Master License - Tax Registration | Active | WA | 602066706 | GENERAL USA | State License | WA-Department of Licensing | |||||||||||||||
Attain Finance, LLC | Money Transmitter | Initial Pending | TN | GENERAL USA | State License | TN (Tennesse) -Department of Financial Institutions | ||||||||||||||||
Attain Finance, LLC | Money Transmitter License | Active | IL | MT.0000268 | GENERAL USA | State License | IL-Dept of Financial and Profesional Regulation | |||||||||||||||
Attain Finance, LLC | Money Transmitter License | Active | KS | MT-0000022 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||||
Attain Finance, LLC | Money Transmitter License | Active | NV | MT10058 | GENERAL USA | State License | NV-Financial Institutions Division | |||||||||||||||
Attain Finance, LLC | Money Transmitter License | Active | OR | MTX-30130 | GENERAL USA | State License | OR-Department of Finance & Corporate Securities | |||||||||||||||
Attain Finance, LLC | Money Transmitter License | Active | WA | 550-MT-58004 | GENERAL USA | State License | WA-Department of Financial Institutions | |||||||||||||||
Attain Finance, LLC | Sale of Checks Law | Active | MO | MO-17-6289 | GENERAL USA | State License | MO-Division of Finance | |||||||||||||||
Attain Finance, LLC | State Business License | Active | NV | NV20091449316 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||||
Cash Colorado, LLC | 539 Regulatory License - Motor Vehicle Dealer (Retail) | Active | AL | 03-05047-17 | 1501 Eastern Blvd | State License | Montgomery | AL | 36117 | AL-REVENUE-DEPT | ||||||||||||
Cash Colorado, LLC | 539 Regulatory License - Motor Vehicle Dealer (Retail) | Active | AL | 03-05047-17 | 321 Palisades Blvd | State License | Birmingham | AL | 35209 | AL-REVENUE-DEPT | ||||||||||||
Cash Colorado, LLC | 539 Regulatory License - Motor Vehicle Dealer (Retail) | Active | AL | 03-05047-17 | 6401 Airport Blvd, Suite B | State License | Mobile | AL | 36608 | AL-REVENUE-DEPT | ||||||||||||
Cash Colorado, LLC | 539 Regulatory License - Motor Vehicle Dealer (Retail) | Active | AL | 03-05047-17 | 3410 Hwy 69 N | State License | Northport | AL | 35473 | AL-REVENUE-DEPT | ||||||||||||
Cash Colorado, LLC | 539 Regulatory License - Motor Vehicle Dealer (Retail) | Active | AL | 03-05047-17 | 4298 University Dr NW | State License | Huntsville | AL | 35816 | AL-REVENUE-DEPT | ||||||||||||
Cash Colorado, LLC | 539 Regulatory License - Motor Vehicle Dealer (Retail) | Active | AL | 03-05047-17 | 3615 McFarland Blvd. East, Suite 109 | State License | Tuscaloosa | AL | 35405 | AL-REVENUE-DEPT | ||||||||||||
Cash Colorado, LLC | 539 Regulatory License - Motor Vehicle Dealer (Retail) | Active | AL | 03-05047-17 | 932 Ann St. | State License | Montgomery | AL | 36107 | AL-REVENUE-DEPT | ||||||||||||
Cash Colorado, LLC | Deferred Presentment License | Active | AL | DP 21200 | 1501 Eastern Blvd | State License | Montgomery | AL | 36117 | AL-State Banking Department | ||||||||||||
Cash Colorado, LLC | Deferred Presentment License | Active | AL | DP 21200.001 | 321 Palisades Blvd | State License | Birmingham | AL | 35209 | AL-State Banking Department | ||||||||||||
Cash Colorado, LLC | Deferred Presentment License | Active | AL | DP 21200.002 | 6401 Airport Blvd, Suite B | State License | Mobile | AL | 36608 | AL-State Banking Department | ||||||||||||
Cash Colorado, LLC | Deferred Presentment License | Active | AL | DP 21200.003 | 3410 Hwy 69 N | State License | Northport | AL | 35473 | AL-State Banking Department | ||||||||||||
Cash Colorado, LLC | Deferred Presentment License | Active | AL | DP 21200.004 | 932 Ann St. | State License | Montgomery | AL | 36107 | AL-State Banking Department | ||||||||||||
Cash Colorado, LLC | Deferred Presentment License | Active | AL | DP 21200.006 | 4298 University Dr NW | State License | Huntsville | AL | 35816 | AL-State Banking Department | ||||||||||||
Cash Colorado, LLC | Deferred Presentment License | Active | AL | DP 21200.005 | 3615 McFarland Blvd. East, Suite 109 | State License | Tuscaloosa | AL | 35405 | AL-State Banking Department | ||||||||||||
Cash Colorado, LLC | Deferred Presentment License | Active | AL | DP 21200.007 | AL INTERNET STORE | State License | AL | AL-State Banking Department | ||||||||||||||
Cash Colorado, LLC | Device Permit | Active | CO | 338-46520-15 | 265 S. Wadsworth Blvd | State License | Lakewood | CO | 80226 | CO-Department of Agriculture | ||||||||||||
Cash Colorado, LLC | Device Permit | Active | CO | 338-46521-15 | 6501 E. Evans Ave | State License | Denver | CO | 80224 | CO-Department of Agriculture | ||||||||||||
Cash Colorado, LLC | Device Permit | Active | CO | 338-46425-15 | 1895 S. Federal Blvd | State License | Denver | CO | 80219 | CO-Department of Agriculture | ||||||||||||
Cash Colorado, LLC | Device Registration | Active | AL | 400587 | 1501 Eastern Blvd | State License | Montgomery | AL | 36117 | AL-Dpt Agriculture - Weights and Measures | ||||||||||||
Cash Colorado, LLC | Device Registration | Active | AL | 400588 | 321 Palisades Blvd | State License | Birmingham | AL | 35209 | AL-Dpt Agriculture - Weights and Measures | ||||||||||||
Cash Colorado, LLC | Device Registration | Active | AL | 400586 | 6401 Airport Blvd, Suite B | State License | Mobile | AL | 36608 | AL-Dpt Agriculture - Weights and Measures | ||||||||||||
Cash Colorado, LLC | Device Registration | Active | AL | 404978 | 3410 Hwy 69 N | State License | Northport | AL | 35473 | AL-Dpt Agriculture - Weights and Measures | ||||||||||||
Cash Colorado, LLC | Device Registration | Active | AL | 406130 | 932 Ann St. | State License | Montgomery | AL | 36107 | AL-Dpt Agriculture - Weights and Measures | ||||||||||||
Cash Colorado, LLC | Device Registration | Active | AL | 406570 | 3615 McFarland Blvd. East, Suite 109 | State License | Tuscaloosa | AL | 35405 | AL-Dpt Agriculture - Weights and Measures | ||||||||||||
Cash Colorado, LLC | Device Registration | Active | AL | 406732 | 4298 University Dr NW | State License | Huntsville | AL | 35816 | AL-Dpt Agriculture - Weights and Measures | ||||||||||||
Cash Colorado, LLC | Domicil Registration | Active | NV | NV20031359972 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||||
Cash Colorado, LLC | Foreign Registration | Active | AL | 618-906 | GENERAL USA | State License | AL-Secretary of State | |||||||||||||||
Cash Colorado, LLC | Foreign Registration | Active | CO | 20031261310 | GENERAL USA | State License | CO-Secretary of State | |||||||||||||||
Cash Colorado, LLC | Foreign Registration | Active | ID | W90368 | GENERAL USA | State License | ID-Secretary of State | |||||||||||||||
Cash Colorado, LLC | Non-Dealer Designated Agent MVT 5-1E (ETAPS) | Active | AL | 03-01241-00 | 1501 Eastern Blvd | State License | Montgomery | AL | 36117 | AL-REVENUE-DEPT |
Cash Colorado, LLC | Non-Dealer Designated Agent MVT 5-1E (ETAPS) | Active | AL | 01-02446-00 | 321 Palisades Blvd | State License | Birmingham | AL | 35209 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Non-Dealer Designated Agent MVT 5-1E (ETAPS) | Active | AL | 02-01325-00 | 6401 Airport Blvd, Suite B | State License | Mobile | AL | 36608 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Non-Dealer Designated Agent MVT 5-1E (ETAPS) | Active | AL | 63-00749-00 | 3410 Hwy 69 N | State License | Northport | AL | 35473 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Non-Dealer Designated Agent MVT 5-1E (ETAPS) | Active | AL | 47-00862-00 | 4298 University Dr NW | State License | Huntsville | AL | 35816 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Non-Dealer Designated Agent MVT 5-1E (ETAPS) | Active | AL | 63-00759-00 | 3615 McFarland Blvd. East, Suite 109 | State License | Tuscaloosa | AL | 35405 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Non-Dealer Designated Agent MVT 5-1E (ETAPS) | Active | AL | 03-01248-00 | 932 Ann St. | State License | Montgomery | AL | 36107 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Pawn Shop License | Active | AL | 21201 | 1501 Eastern Blvd | State License | Montgomery | AL | 36117 | AL-State Banking Department | ||||||||||
Cash Colorado, LLC | Pawn Shop License | Active | AL | 21201.001 | 321 Palisades Blvd | State License | Birmingham | AL | 35209 | AL-State Banking Department | ||||||||||
Cash Colorado, LLC | Pawn Shop License | Active | AL | 21201.002 | 6401 Airport Blvd, Suite B | State License | Mobile | AL | 36608 | AL-State Banking Department | ||||||||||
Cash Colorado, LLC | Pawn Shop License | Active | AL | 21201.003 | 3410 Hwy 69 N | State License | Northport | AL | 35473 | AL-State Banking Department | ||||||||||
Cash Colorado, LLC | Pawn Shop License | Active | AL | 21201.004 | 932 Ann St. | State License | Montgomery | AL | 36107 | AL-State Banking Department | ||||||||||
Cash Colorado, LLC | Pawn Shop License | Active | AL | 21201.006 | 4298 University Dr NW | State License | Huntsville | AL | 35816 | AL-State Banking Department | ||||||||||
Cash Colorado, LLC | Pawn Shop License | Active | AL | 21201.005 | 3615 McFarland Blvd. East, Suite 109 | State License | Tuscaloosa | AL | 35405 | AL-State Banking Department | ||||||||||
Cash Colorado, LLC | Sales Tax Registration | Active | AL | R007480197 | 1501 Eastern Blvd | State License | Montgomery | AL | 36117 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Sales Tax Registration | Active | AL | R007480197 | 321 Palisades Blvd | State License | Birmingham | AL | 35209 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Sales Tax Registration | Active | AL | R007480197 | 6401 Airport Blvd, Suite B | State License | Mobile | AL | 36608 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Sales Tax Registration | Active | AL | R007480197 | 3410 Hwy 69 N | State License | Northport | AL | 35473 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Sales Tax Registration | Active | AL | R007480197 | 4298 University Dr NW | State License | Huntsville | AL | 35816 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Sales Tax Registration | Active | AL | R007480197 | 3615 McFarland Blvd. East, Suite 109 | State License | Tuscaloosa | AL | 35405 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | Sales Tax Registration | Active | AL | R007480197 | 932 Ann St. | State License | Montgomery | AL | 36107 | AL-REVENUE-DEPT | ||||||||||
Cash Colorado, LLC | State business License | Active | NV | NV20031359972 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Cash Colorado, LLC | Supervised Lenders License | Active | CO | 990233 | 265 S. Wadsworth Blvd | State License | Lakewood | CO | 80226 | CO-Dept of Law | ||||||||||
Cash Colorado, LLC | Supervised Lenders License | Active | CO | 990233-001 | 6501 E. Evans Ave | State License | Denver | CO | 80224 | CO-Dept of Law | ||||||||||
Cash Colorado, LLC | Supervised Lenders License | Active | CO | 990233-003 | 1895 S. Federal Blvd | State License | Denver | CO | 80219 | CO-Dept of Law | ||||||||||
Cash Colorado, LLC | Supervised Lenders License | Active | CO | 990233-002 | COLORADO INTERNET STORE | State License | CO | CO-Dept of Law | ||||||||||||
Cash Money Cheque Cashing, Inc. | Provincial Payday Lender License | Active | ON | Ontario | 3104 27th Street, Unit 4 | State License | Vernon | BC | V1T 4M6 | |||||||||||
CDM Development, LLC | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
CDM Development, LLC | Foreign Registration | Active | AZ | Number not issued | GENERAL USA | State License | AZ-Secretary of State - Corporation Commision | |||||||||||||
CDM Development, LLC | Foreign Registration | Active | CO | Number not issued | GENERAL USA | State License | ||||||||||||||
CDM Development, LLC | Foreign Registration | Active | KS | 4252482 | GENERAL USA | State License | ||||||||||||||
CDM Development, LLC | Foreign Registration | Active | OR | 555582-91 | GENERAL USA | State License | ||||||||||||||
CDM Development, LLC | Foreign Registration | Active | TX | 801053899 | GENERAL USA | State License | ||||||||||||||
CDM Development, LLC | State Business License | Active | NV | NV20031120985 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
CDM Development, LLC | State of Arizona Transaction Privilage Use Tax | Active | AZ | No number issued | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | AZ-State Banking Department | ||||||||||
CFTC Finance, Inc. | Domicil Registration | Active | DE | 6045927 | GENERAL USA | State License | DE-Secretary of State | |||||||||||||
CFTC Finance, Inc. | Foreign Registration | Active | KS | 5035480 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | KS-Secretary of State | ||||||||||
CFTC Finance, Inc. | Foreign Registration | Active | TX | 802510164 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | TX-Secretary of State - Legal Support Unit | ||||||||||
Concord Finance, Inc | Check Casher License | Active | LA | 003178 | 2955 E. Texas Ave | State License | Bossier City | LA | 71111 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Check Casher License | Active | LA | 003176 | 2785 Belle Chasse Highway | State License | Gretna | LA | 70056 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Check Casher License | Active | LA | 003160 | 10828 Florida Blvd | State License | Baton Rouge | LA | 70815 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Check Casher License | Active | LA | 003177 | 123 Gause Boulevard West | State License | Slidell | LA | 70460 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Check Casher License | Active | LA | 003233 | 9360 Mansfield Rd. | State License | Shreveport | LA | 71118 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Check Casher License | Active | MS | CC/002441/2015 | 9240 Highway 49 (Suite:101/102) | State License | Gulfport | MS | 39501 | MS-Department of Banking and Consumer Finance | ||||||||||
Concord Finance, Inc | Check Casher License | Active | MS | CC/002610/2015 | 1021 Mississippi Hwy 39 (Suite: A & B) | State License | Meridian | MS | 39301 | MS-Department of Banking and Consumer Finance | ||||||||||
Concord Finance, Inc | Consumer Installment Loan License | Active | MO | 510-16-4638 | 1331 E. 63rd St | State License | Kansas City | MO | 64110 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Consumer Installment Loan License | Active | MO | 510-16-4636 | 11221 E. 23rd St | State License | Independence | MO | 64052 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Consumer Installment Loan License | Active | MO | 510-16-4639 | 3947 Main St | State License | Kansas City | MO | 64111 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Consumer Installment Loan License | Active | MO | 510-17-5776 | 1212 S Belt Hwy | State License | St Joseph | MO | 64507 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Consumer Installment Loan License | Active | MO | 510-16-5945 | 2949 S National Ave | State License | Springfield | MO | 65807 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Corporate and Franchise Tax | Active | MS | 1327-6710 | GENERAL USA | State License | MS-REVENUE-DEPT | |||||||||||||
Concord Finance, Inc | Deferred Presentment Services | Active | TN | 113882-101 | 5900 Brainerd Rd. | State License | Chattanooga | TN | 37411 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882 | TN INTERNET STORE | State License | TN | TN (Tennesse) -Department of Financial Institutions | ||||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-103 | 4403 Chapman Highway | State License | Knoxville | TN | 37920 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-104 | 120 Gallatin Pike S. | State License | Madison | TN | 37115 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-102 | 2401 Nolensville Pike | State License | Nashville | TN | 37211 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-105 | 5701 Charlotte Pike | State License | Nashville | TN | 37209 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-106 | 5002 Harding Place | State License | Nashville | TN | 37211 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-107 | 106 Knox Road | State License | Knoxville | TN | 37918 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-108 | 1698 Memorial Blvd | State License | Murfreesboro | TN | 37129 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-110 | 1655 Fort Campbell Blvd. | State License | Clarksville | TN | 37042 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-109 | 808 25th St. NW | State License | Cleveland | TN | 37311 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Deferred Presentment Services - Branch | Active | TN | 113882-111 | 3100 Dickerson Pike | State License | Nashville | TN | 37207 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Device Registration | Active | MS | Permit Not Required | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | MS - Dept of Agriculture and Commerce | ||||||||||
Concord Finance, Inc | Device Registration | Active | MS | Permit Not Required | 1021 Mississippi Hwy 39 (Suite: A & B) | State License | Meridian | MS | 39301 | MS - Dept of Agriculture and Commerce | ||||||||||
Concord Finance, Inc | Device Registration | Active | MS | Permit Not Required | 9240 Highway 49 (Suite:101/102) | State License | Gulfport | MS | 39501 | MS - Dept of Agriculture and Commerce | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 5900 Brainerd Rd. | State License | Chattanooga | TN | 37411 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 120 Gallatin Pike S. | State License | Madison | TN | 37115 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 2401 Nolensville Pike | State License | Nashville | TN | 37211 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 5701 Charlotte Pike | State License | Nashville | TN | 37209 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 5002 Harding Place | State License | Nashville | TN | 37211 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 106 Knox Road | State License | Knoxville | TN | 37918 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 1698 Memorial Blvd | State License | Murfreesboro | TN | 37129 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 1655 Fort Campbell Blvd. | State License | Clarksville | TN | 37042 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 808 25th St. NW | State License | Cleveland | TN | 37311 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Device Registration | Active | TN | Permit Not Required | 3100 Dickerson Pike | State License | Nashville | TN | 37207 | TN-Dpt of Weights and Measures | ||||||||||
Concord Finance, Inc | Domicil Registration | Active | NV | C12543-2002 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-101 | 5900 Brainerd Rd. | State License | Chattanooga | TN | 37411 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-102 | 4403 Chapman Highway | State License | Knoxville | TN | 37920 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-103 | 120 Gallatin Pike S. | State License | Madison | TN | 37115 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-104 | 2401 Nolensville Pike | State License | Nashville | TN | 37211 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-105 | 5701 Charlotte Pike | State License | Nashville | TN | 37209 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-106 | 5002 Harding Place | State License | Nashville | TN | 37211 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-107 | 106 Knox Road | State License | Knoxville | TN | 37918 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-108 | 1698 Memorial Blvd | State License | Murfreesboro | TN | 37129 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-109 | 808 25th St. NW | State License | Cleveland | TN | 37311 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-110 | 1655 Fort Campbell Blvd. | State License | Clarksville | TN | 37042 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Branch | Active | TN | 124797-111 | 3100 Dickerson Pike | State License | Nashville | TN | 37207 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Flex Credit Loan License - Headquarters | Active | TN | 124797 (926892) | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Foreign Registration | Active | KS | 3778776 | GENERAL USA | State License | KS-Secretary of State | |||||||||||||
Concord Finance, Inc | Foreign Registration | Active | LA | Number not issued | GENERAL USA | State License | LA-SOS | |||||||||||||
Concord Finance, Inc | Foreign Registration | Active | MO | F00514513 | GENERAL USA | State License | MO-Secretary of State | |||||||||||||
Concord Finance, Inc | Foreign Registration | Active | MS | Number not issued | GENERAL USA | State License | MS-Secretary of State | |||||||||||||
Concord Finance, Inc | Foreign Registration | Active | TN | 672702 | TN INTERNET STORE | State License | TN | TN-Department of State | ||||||||||||
Concord Finance, Inc | Franchise & Excise Tax | Active | TN | 321390205 | GENERAL USA | State License | TN-REVENUE-DEPT | |||||||||||||
Concord Finance, Inc | Licensed Lender - Payday | Active | LA | 1238583-957816 | 2955 E. Texas Ave | State License | Bossier City | LA | 71111 | LA-Office of Financial Institutions |
Concord Finance, Inc | Licensed Lender - Payday | Active | LA | 1238566-947320 | 2785 Belle Chasse Highway | State License | Gretna | LA | 70056 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Payday | Active | LA | 1218092-914441 | 10828 Florida Blvd | State License | Baton Rouge | LA | 70815 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Payday | Active | LA | 1238586-958484 | 123 Gause Boulevard West | State License | Slidell | LA | 70460 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Payday | Active | LA | 1264694-989810 | 9360 Mansfield Rd. | State License | Shreveport | LA | 71118 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Payday - Non Lending Main Location | Active | LA | (NMLS ID: 926892) | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Title | Active | LA | 1238583-957816 | 2955 E. Texas Ave | State License | Bossier City | LA | 71111 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Title | Active | LA | 1238566-947320 | 2785 Belle Chasse Highway | State License | Gretna | LA | 70056 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Title | Active | LA | 1218092-914441 | 10828 Florida Blvd | State License | Baton Rouge | LA | 70815 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Title | Active | LA | 1238586-958484 | 123 Gause Boulevard West | State License | Slidell | LA | 70460 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | Licensed Lender - Title | Active | LA | 1264694-989810 | 9360 Mansfield Rd. | State License | Shreveport | LA | 71118 | LA-Office of Financial Institutions | ||||||||||
Concord Finance, Inc | MS Credit Availability Act License | Active | MS | 002903 | 9240 Highway 49 (Suite:101/102) | State License | Gulfport | MS | 39501 | MS-Department of Banking and Consumer Finance | ||||||||||
Concord Finance, Inc | MS Credit Availability Act License | Active | MS | 002901 | 1021 Mississippi Hwy 39 (Suite: A & B) | State License | Meridian | MS | 39301 | MS-Department of Banking and Consumer Finance | ||||||||||
Concord Finance, Inc | Revenue Account: Income & Franchise Tax | Active | LA | 1546734-001 | GENERAL USA | State License | LA-REVENUE-DEPT | |||||||||||||
Concord Finance, Inc | Small Small Loan Company | Active | MO | 500-15-2708 | 1331 E. 63rd St | State License | Kansas City | MO | 64110 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Small Small Loan Company | Active | MO | 500-13-2857 | 11221 E. 23rd St | State License | Independence | MO | 64052 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Small Small Loan Company | Active | MO | 500-15-3789 | 3947 Main St | State License | Kansas City | MO | 64111 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Small Small Loan Company | Active | MO | 500-13-3777 | 2600 Independence Blvd | State License | Kansas City | MO | 64124 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Small Small Loan Company | Active | MO | 500-13-5777 | 1212 S Belt Hwy | State License | St Joseph | MO | 64507 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | Small Small Loan Company | Active | MO | 500-13-5946 | 2949 S National Ave | State License | Springfield | MO | 65807 | MO-Division of Finance | ||||||||||
Concord Finance, Inc | State business License | Active | NV | NV20021318790 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505362236 | 106 Knox Road | State License | Knoxville | TN | 37918 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505119802 | 5900 Brainerd Rd. | State License | Chattanooga | TN | 37411 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505506769 | 2401 Nolensville Pike | State License | Nashville | TN | 37211 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505506803 | 4403 Chapman Highway | State License | Knoxville | TN | 37920 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505490919 | 5002 Harding Place | State License | Nashville | TN | 37211 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505506796 | 5701 Charlotte Pike | State License | Nashville | TN | 37209 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505697723 | 1655 Fort Campbell Blvd. | State License | Clarksville | TN | 37042 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505580689 | 808 25th St. NW | State License | Cleveland | TN | 37311 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505788376 | 1698 Memorial Blvd | State License | Murfreesboro | TN | 37129 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505697723 | 1655 Fort Campbell Blvd. | State License | Clarksville | TN | 37042 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 505580689 | 808 25th St. NW | State License | Cleveland | TN | 37311 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (City) | Active | TN | 506217392 | 3100 Dickerson Pike | State License | Nashville | TN | 37207 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173226923 | 4403 Chapman Highway | State License | Knoxville | TN | 37920 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173106231 | 5900 Brainerd Rd. | State License | Chattanooga | TN | 37411 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173641742 | 120 Gallatin Pike S. | State License | Madison | TN | 37115 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173203162 | 2401 Nolensville Pike | State License | Nashville | TN | 37211 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173632896 | 5002 Harding Place | State License | Nashville | TN | 37211 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173328840 | 5701 Charlotte Pike | State License | Nashville | TN | 37209 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173756520 | 1698 Memorial Blvd | State License | Murfreesboro | TN | 37129 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173756520 | 1698 Memorial Blvd | State License | Murfreesboro | TN | 37129 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 174065373 | 1655 Fort Campbell Blvd. | State License | Clarksville | TN | 37042 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 174065382 | 808 25th St. NW | State License | Cleveland | TN | 37311 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 174036332 | 3100 Dickerson Pike | State License | Nashville | TN | 37207 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173462892 | 5002 Harding Place | State License | Nashville | TN | 37211 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | State Business Tax (County) | Active | TN | 173632887 | 106 Knox Road | State License | Knoxville | TN | 37918 | TN-REVENUE-DEPT | ||||||||||
Concord Finance, Inc | Title Pledge | Active | MS | 002440 | 9240 Highway 49 (Suite:101/102) | State License | Gulfport | MS | 39501 | MS-Department of Banking and Consumer Finance | ||||||||||
Concord Finance, Inc | Title Pledge | Active | MS | 002613 | 1021 Mississippi Hwy 39 (Suite: A & B) | State License | Meridian | MS | 39301 | MS-Department of Banking and Consumer Finance | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2423 | 5900 Brainerd Rd. | State License | Chattanooga | TN | 37411 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2426 | 4403 Chapman Highway | State License | Knoxville | TN | 37920 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2425 | 120 Gallatin Pike S. | State License | Madison | TN | 37115 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2427 | 2401 Nolensville Pike | State License | Nashville | TN | 37211 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2432 | 5701 Charlotte Pike | State License | Nashville | TN | 37209 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2490 | 5002 Harding Place | State License | Nashville | TN | 37211 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2491 | 106 Knox Road | State License | Knoxville | TN | 37918 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2534 | 1698 Memorial Blvd | State License | Murfreesboro | TN | 37129 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2604 | 1655 Fort Campbell Blvd. | State License | Clarksville | TN | 37042 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2535 | 808 25th St. NW | State License | Cleveland | TN | 37311 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Concord Finance, Inc | Title Pledge | Active | TN | 2610 | 3100 Dickerson Pike | State License | Nashville | TN | 37207 | TN (Tennesse) -Department of Financial Institutions | ||||||||||
Curo Financial Technologies Corp. | Domicil Registration | Active | DE | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Curo Financial Technologies Corp. | Foreign Registration | Active | MO | F00979132 | GENERAL USA | State License | MO-Secretary of State | |||||||||||||
Curo Group Holdings Corp | Domicil Registration | Active | DE | 5285765 | GENERAL USA | State License | DE-Secretary of State | |||||||||||||
Curo Group Holdings Corp | Foreign Registration | Active | CA | C3813771 | State License | CA-Secretary of State | ||||||||||||||
Curo Group Holdings Corp | Foreign Registration | Active | KS | 4934576 | State License | KS-Secretary of State | ||||||||||||||
Curo Group Holdings Corp | Witholdings Tax | Active | KS | 90-0934597 | GENERAL USA | State License | KS-REVENUE-DEPT | |||||||||||||
Curo Intermediate Holdings Corp | Domicil Registration | Active | DE | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Curo Intermediate Holdings Corp | Foreign Registration | Active | MO | F01113129 | GENERAL USA | State License | MO-Secretary of State | |||||||||||||
Curo Intermediate Holdings Corp | Revenue Account: Income & Franchise Tax | Active | LA | 1946172-001-200 | GENERAL USA | State License | LA-REVENUE-DEPT | |||||||||||||
Curo Management LLC | Consumer Use Tax Permit | Active | NV | 1002198038 | GENERAL USA | State License | NV-Department of Taxation | |||||||||||||
Curo Management LLC | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Curo Management LLC | Foreign Registration | Active | AL | Number not issued | GENERAL USA | State License | AL-Secretary of State | |||||||||||||
Curo Management LLC | Foreign Registration | Active | AZ | R20956621 | GENERAL USA | State License | AZ-Secretary of State - Corporation Commision | |||||||||||||
Curo Management LLC | Foreign Registration | Active | CA | Number not issued | GENERAL USA | State License | ||||||||||||||
Curo Management LLC | Foreign Registration | Active | CO | Number not issued | GENERAL USA | State License | ||||||||||||||
Curo Management LLC | Foreign Registration | Active | IL | 04208226 | GENERAL USA | State License | ||||||||||||||
Curo Management LLC | Foreign Registration | Active | KS | Number not issued | GENERAL USA | State License | KS-Secretary of State | |||||||||||||
Curo Management LLC | Foreign Registration | Active | LA | 41505431Q | GENERAL USA | State License | LA-SOS | |||||||||||||
Curo Management LLC | Foreign Registration | Active | MO | FL0541050 | GENERAL USA | State License | MO-Secretary of State | |||||||||||||
Curo Management LLC | Foreign Registration | Active | MS | 1041213 | GENERAL USA | State License | MS-Secretary of State | |||||||||||||
Curo Management LLC | Foreign Registration | Active | OR | Number not issued | GENERAL USA | State License | ||||||||||||||
Curo Management LLC | Foreign Registration | Active | TN | 707556 | GENERAL USA | State License | ||||||||||||||
Curo Management LLC | Foreign Registration | Active | TX | 800805796 | GENERAL USA | State License | ||||||||||||||
Curo Management LLC | Foreign Registration | Active | WA | Number not issued | GENERAL USA | State License | ||||||||||||||
Curo Management LLC | Franchise & Excise Tax | Active | TN | 321747973 | GENERAL USA | State License | TN-REVENUE-DEPT | |||||||||||||
Curo Management LLC | State Business License | Active | NV | NV20021159392 | 2710A S. Maryland Pkwy | State License | Las Vegas | NV | 89109 | NV-Secretary of State | ||||||||||
Curo Management LLC | State Transaction Privilage License | Active | AZ | No number issued | GENERAL USA | State License | AZ-Dpt of Revenue | |||||||||||||
Curo Management LLC | Use Tax | Active | CA | SU OHA 101-680336 | GENERAL USA | State License | CA-Board of Equalization | |||||||||||||
Curo Management LLC | Witholding Tax | Active | AL | WTH-R007303441 | GENERAL USA | State License | AL-REVENUE-DEPT | |||||||||||||
Curo Management LLC | Witholdings Tax | Active | LA | 1440112001 | GENERAL USA | State License | LA-REVENUE-DEPT | |||||||||||||
Curo Management LLC | Witholdings Tax/Franchise Tax | Active | MS | 1302-2904(Witholding) | GENERAL USA | State License | MS-REVENUE-DEPT | |||||||||||||
CURO Receivables Finance I, LLC | Sales & Finance License | Active | AZ | SF 0938518 | GENERAL USA | State License | AZ-Dpt of Financial Institutions | |||||||||||||
CURO Receivables Finance I, LLC | Supervised Lenders License | Initial Pending | CO | TBD | GENERAL USA | State License | CO-Dept of Law | |||||||||||||
CURO Receivables Holdings I, LLC | Sales & Finance License | Active | AZ | SF 0938907 | GENERAL USA | State License | AZ-Dpt of Financial Institutions | |||||||||||||
CURO Receivables Holdings I, LLC | Supervised Lenders License | Initial Pending | CO | TBD | GENERAL USA | State License | CO-Dept of Law | |||||||||||||
CURO Receivables Holdings I, LLC | Small Loan License | Initial Pending | NM | TBD | GENERAL USA | State License | NM-Office of Public Regulation Commision | |||||||||||||
CURO Receivables Holdings I, LLC | MS Credit Availability Act License | Initial Pending | MS | TBD | GENERAL USA | State License | MS-Department of Banking and Consumer Finance |
CURO Receivables Holdings I, LLC | Supervised Lender License | Initial Pending | SC | TBD | GENERAL USA | State License | SC-Board of Financial Institutions | |||||||||||||
CURO Receivables Holdings I, LLC | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Initial Pending | NV | TBD | GENERAL USA | State License | NV-Financial Institutions Division | |||||||||||||
CURO Receivables Holdings I, LLC | Consumer Installment Loan License | Initial Pending | IL | TBD | GENERAL USA | State License | IL-Dept of Financial and Profesional Regulation | |||||||||||||
Evergreen Financial Investments, Inc | Check Casher Branch License | Active | WA | 530-CC-22968-85100 | 7116 N.E. Fourth Plain Rd | State License | Vancouver | WA | 98661 | WA-Department of Financial Institutions | ||||||||||
Evergreen Financial Investments, Inc | Check Casher Branch License | Active | WA | 530-CC-22968-28742 | 10309 SE Mill Plain Blvd #A | State License | Vancouver | WA | 98664 | WA-Department of Financial Institutions | ||||||||||
Evergreen Financial Investments, Inc | Check Casher Branch License | Active | WA | 530-CC-46856-46856 | WASHINGTON INTERNET STORE | State License | WA | WA-Department of Financial Institutions | ||||||||||||
Evergreen Financial Investments, Inc | Check Casher License (Main) | Active | WA | 530-CC-22968 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | WA-Department of Financial Institutions | ||||||||||
Evergreen Financial Investments, Inc | Check Cashing License | Active | OR | CC-0147 | 12131 S.E. Powell Blvd | State License | Portland | OR | 97266 | OR-Department of Finance & Corporate Securities | ||||||||||
Evergreen Financial Investments, Inc | Check Cashing License | Active | OR | CC-0148 | 19026 E. Burnside St. | State License | Portland (Gresham) | OR | 97233 | OR-Department of Finance & Corporate Securities | ||||||||||
Evergreen Financial Investments, Inc | Check Cashing License | Active | OR | CC-0149 | 3849 S.E. Powell Blvd | State License | Portland | OR | 97202 | OR-Department of Finance & Corporate Securities | ||||||||||
Evergreen Financial Investments, Inc | Domicil Registration | Active | NV | C28559-2001 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Evergreen Financial Investments, Inc | Foreign Registration | Active | OR | 122369-98 | GENERAL USA | State License | ||||||||||||||
Evergreen Financial Investments, Inc | Foreign Registration | Active | WA | Number not issued | GENERAL USA | State License | ||||||||||||||
Evergreen Financial Investments, Inc | General Business License | Active | WA | 602 163 616 001 0002 | 10309 SE Mill Plain Blvd #A | State License | Vancouver | WA | 98664 | WA-REVENUE-DEPT | ||||||||||
Evergreen Financial Investments, Inc | General Business License | Active | WA | 602 163 616 001 0001 | 7116 N.E. Fourth Plain Rd | State License | Vancouver | WA | 98661 | WA-REVENUE-DEPT | ||||||||||
Evergreen Financial Investments, Inc | Master License | Active | WA | 602 163 616 001 0001 | GENERAL USA | State License | WA-Secretary of State - Corporations Division | |||||||||||||
Evergreen Financial Investments, Inc | Payday/Title Loan Branch Registration | Active | OR | 0267-001-S (acc#CF2670) | 12131 S.E. Powell Blvd | State License | Portland | OR | 97266 | OR-Department of Consumer and Business | ||||||||||
Evergreen Financial Investments, Inc | Payday/Title Loan Branch Registration | Active | OR | 0267-002-S | 19026 E. Burnside St. | State License | Portland (Gresham) | OR | 97233 | OR-Department of Consumer and Business | ||||||||||
Evergreen Financial Investments, Inc | Payday/Title Loan Branch Registration | Active | OR | 0267-003-S | 3849 S.E. Powell Blvd | State License | Portland | OR | 97202 | OR-Department of Consumer and Business | ||||||||||
Evergreen Financial Investments, Inc | Payday/Title Loan Registration | Active | OR | 0267 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | OR-Department of Consumer and Business | ||||||||||
Evergreen Financial Investments, Inc | Scale License | Active | OR | AG-L1025618A | 12131 S.E. Powell Blvd | State License | Portland | OR | 97266 | OR-Department of Agriculture | ||||||||||
Evergreen Financial Investments, Inc | Scale License | Active | OR | AG-L1025620A | 19026 E. Burnside St. | State License | Portland (Gresham) | OR | 97233 | OR-Department of Agriculture | ||||||||||
Evergreen Financial Investments, Inc | Scale License | Active | OR | AG-L1025619A | 3849 S.E. Powell Blvd | State License | Portland | OR | 97202 | OR-Department of Agriculture | ||||||||||
Evergreen Financial Investments, Inc | Scale License | Active | WA | 602 163 616 001 0002 | 10309 SE Mill Plain Blvd #A | State License | Vancouver | WA | 98664 | WA-REVENUE-DEPT | ||||||||||
Evergreen Financial Investments, Inc | Scale License | Active | WA | 602 163 616 001 0001 | 7116 N.E. Fourth Plain Rd | State License | Vancouver | WA | 98661 | Wa-Department of Agriculture | ||||||||||
Evergreen Financial Investments, Inc | Small Loan Endorsement | Active | WA | 530-SL-22968-85100 | 7116 N.E. Fourth Plain Rd | State License | Vancouver | WA | 98661 | WA-Department of Financial Institutions | ||||||||||
Evergreen Financial Investments, Inc | Small Loan Endorsement | Active | WA | 530-CC-22968-28742 | 10309 SE Mill Plain Blvd #A | State License | Vancouver | WA | 98664 | WA-Department of Financial Institutions | ||||||||||
Evergreen Financial Investments, Inc | Small Loan Endorsement | Active | WA | 530-SL-22968-46856 | WASHINGTON INTERNET STORE | State License | WA | WA-Department of Financial Institutions | ||||||||||||
Evergreen Financial Investments, Inc | Small Loan Endorsement (Main) | Active | WA | 530-SL-22968 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | WA-Department of Financial Institutions | ||||||||||
Evergreen Financial Investments, Inc | State Business License | Active | NV | NV20011461738 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
FMMR Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH10323 | 4241 S. Nellis Blvd | State License | Las Vegas | NV | 89117 | NV-Financial Institutions Division | ||||||||||
FMMR Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH10324 | 4199 S. Ft. Apache Rd #D | State License | Las Vegas | NV | 89147 | NV-Financial Institutions Division | ||||||||||
FMMR Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH10325 | 7865 W. Sahara Ave, #102/103 | State License | Las Vegas | NV | 89117 | NV-Financial Institutions Division | ||||||||||
FMMR Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH10326 | 4343 N. Rancho Dr # 150 | State License | Las Vegas | NV | 89130 | NV-Financial Institutions Division | ||||||||||
FMMR Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH10327 | 5676 S. Eastern Ave | State License | Las Vegas | NV | 89119 | NV-Financial Institutions Division | ||||||||||
FMMR Investments, Inc | Consumer Use Tax Permit | Active | NV | 1003198864-005 | 5676 S. Eastern Ave | State License | Las Vegas | NV | 89119 | NV-Department of Taxation | ||||||||||
FMMR Investments, Inc | Consumer Use Tax Permit | Active | NV | 1003198864-001 | 4241 S. Nellis Blvd | State License | Las Vegas | NV | 89117 | NV-Department of Taxation | ||||||||||
FMMR Investments, Inc | Consumer Use Tax Permit | Active | NV | 1003198864-004 | 4343 N. Rancho Dr # 150 | State License | Las Vegas | NV | 89130 | NV-Department of Taxation | ||||||||||
FMMR Investments, Inc | Consumer Use Tax Permit | Active | NV | 1003198864-003 | 7865 W. Sahara Ave, #102/103 | State License | Las Vegas | NV | 89117 | NV-Department of Taxation | ||||||||||
FMMR Investments, Inc | Consumer Use Tax Permit | Active | NV | 1003198864 | GENERAL USA | State License | NV-Department of Taxation | |||||||||||||
FMMR Investments, Inc | Device Registration | Active | NV | RAPICASH | 4241 S. Nellis Blvd | State License | Las Vegas | NV | 89117 | NV-Dept of Agriculture | ||||||||||
FMMR Investments, Inc | Device Registration | Active | NV | RAPICASH | 4199 S. Ft. Apache Rd #D | State License | Las Vegas | NV | 89147 | NV-Dept of Agriculture | ||||||||||
FMMR Investments, Inc | Device Registration | Active | NV | RAPICASH | 7865 W. Sahara Ave, #102/103 | State License | Las Vegas | NV | 89117 | NV-Dept of Agriculture | ||||||||||
FMMR Investments, Inc | Device Registration | Active | NV | RAPICASH | 5676 S. Eastern Ave | State License | Las Vegas | NV | 89119 | NV-Dept of Agriculture | ||||||||||
FMMR Investments, Inc | Device Registration | Active | NV | RAPICASH | 4343 N. Rancho Dr # 150 | State License | Las Vegas | NV | 89130 | NV-Dept of Agriculture | ||||||||||
FMMR Investments, Inc | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
FMMR Investments, Inc | State Business License | Active | NV | 1003198864 | 4241 S. Nellis Blvd | State License | Las Vegas | NV | 89117 | NV-Secretary of State | ||||||||||
Galt Ventures, LLC | Business Booster Loans | Active | CA | Not Required | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | CA - Dept of Business Oversight | ||||||||||
Galt Ventures, LLC | Check Casher Permit | Active | CA | 1445001 | 9781 Magnolia Ave | State License | Riverside | CA | 92503 | CA-Dept of Justice | ||||||||||
Galt Ventures, LLC | Check Casher Permit | Active | CA | 1445002 | 4915 Moreno Ave | State License | Montclair | CA | 91763 | CA-Dept of Justice | ||||||||||
Galt Ventures, LLC | Check Casher Permit | Active | CA | 1445003 | 11000 Lower Azusa Rd | State License | El Monte | CA | 91731 | CA-Dept of Justice | ||||||||||
Galt Ventures, LLC | Check Casher Permit | Active | CA | 1445004 | 3447 E. Cesar E. Chavez Ave | State License | Los Angeles | CA | 90063 | CA-Dept of Justice | ||||||||||
Galt Ventures, LLC | Check Casher Permit | Active | CA | 1445005 | 8247 Laurel Canyon Blvd | State License | N. Hollywood | CA | 91605 | CA-Dept of Justice | ||||||||||
Galt Ventures, LLC | Check Casher Permit | Active | CA | 1445006 | 454 W Florence Ave | State License | Los Angeles | CA | 90003 | CA-Dept of Justice | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | GENERAL USA | State License | KS-REVENUE-DEPT | |||||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 004-481185922F-01 | 2027 SW Fairlawn | State License | Topeka | KS | 66604 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | 701 N. West St | State License | Wichita | KS | 67203 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | 4850 E. Harry St | State License | Wichita | KS | 67218 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | 6300 E. 21st St N | State License | Wichita | KS | 67208 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | 430 E. 30th Ave | State License | Hutchinson | KS | 67502 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | 1050 W. Pawnee St | State License | Wichita | KS | 67213 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | 3133 E. Douglas Ave | State License | Wichita | KS | 67211 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | 1220 W. Crawford St. | State License | Salina | KS | 67401 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Consumer Use Tax Registration | Active | KS | 006-481185922F-01 | 1729 NW Topeka Blvd | State License | Topeka | KS | 66608 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Dealer Lender License | Active | KS | D-1899 | 2201 Amidon Ave | State License | Wichita | KS | 67204 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Dealer Lender License | Active | KS | D-1905 | 430 E. 30th Ave | State License | Hutchinson | KS | 67502 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Dealer Lender License | Active | KS | D-1921 | 1220 W. Crawford St. | State License | Salina | KS | 67401 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Dealer Lender License | Active | KS | D-1910 | 2027 SW Fairlawn | State License | Topeka | KS | 66604 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Deferred Deposit Permit | Active | CA | 100-4059 | 9781 Magnolia Ave | State License | Riverside | CA | 92503 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Deferred Deposit Permit | Active | CA | 100-4064 | 4915 Moreno Ave | State License | Montclair | CA | 91763 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Deferred Deposit Permit | Active | CA | 100-4063 | 11000 Lower Azusa Rd | State License | El Monte | CA | 91731 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Deferred Deposit Permit | Active | CA | 100-4062 | 3447 E. Cesar E. Chavez Ave | State License | Los Angeles | CA | 90063 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Deferred Deposit Permit | Active | CA | 100-4061 | 8247 Laurel Canyon Blvd | State License | N. Hollywood | CA | 91605 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Deferred Deposit Permit | Active | CA | 100-4060 | 454 W Florence Ave | State License | Los Angeles | CA | 90003 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Deferred Deposit Permit | Active | CA | 100-4103 | CALIFORNIA INTERNET STORE | State License | CA | CA-Department of Business Oversight | ||||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35304 | 4040 N. 40th St | State License | Phoenix | AZ | 85018 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35307 | 1551 E. Indian School Rd. | State License | Phoenix | AZ | 85014 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35310 | 1956 E. Southern Ave #101 | State License | Mesa | AZ | 85204 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35303 | 1841 W. Northern Ave | State License | Phoenix | AZ | 85021 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35306 | 2351 N. Alvernon Way, #100 | State License | Tucson | AZ | 85712 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35309 | 1960 W. Baseline Rd | State License | Mesa | AZ | 85202 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35305 | 1242 W. Main St | State License | Mesa | AZ | 85201 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35308 | 3520 E. Bell Rd | State License | Phoenix | AZ | 85032 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Device License | Active | AZ | 35151 | 1215 S. Country Club Dr | State License | Mesa | AZ | 85210 | AZ-Department of Weights & Measures | ||||||||||
Galt Ventures, LLC | Domicil Registration | Active | KS | Number not issued | GENERAL USA | State License | KS-Secretary of State | |||||||||||||
Galt Ventures, LLC | Finance Lender License | Active | CA | 603H775 | 3447 E. Cesar E. Chavez Ave | State License | Los Angeles | CA | 90063 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Finance Lender License | Active | CA | 603H774 | 4915 Moreno Ave | State License | Montclair | CA | 91763 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Finance Lender License | Active | CA | 603H773 | 11000 Lower Azusa Rd | State License | El Monte | CA | 91731 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Finance Lender License | Active | CA | 603H772 | 8247 Laurel Canyon Blvd | State License | N. Hollywood | CA | 91605 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Finance Lender License | Active | CA | 603H771 | 454 W Florence Ave | State License | Los Angeles | CA | 90003 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Finance Lender License | Active | CA | 603H769 | 9781 Magnolia Ave | State License | Riverside | CA | 92503 | CA-Department of Business Oversight | ||||||||||
Galt Ventures, LLC | Finance Lender License | Active | CA | 603H770 | CALIFORNIA INTERNET STORE | State License | CA | CA-Department of Business Oversight | ||||||||||||
Galt Ventures, LLC | Foreign Registration | Active | AZ | Number not issued | GENERAL USA | State License | AZ-Secretary of State - Corporation Commision | |||||||||||||
Galt Ventures, LLC | Foreign Registration | Active | CA | 200901710111 | GENERAL USA | State License | ||||||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 701 N. West St | State License | Wichita | KS | 67203 | KS-REVENUE-DEPT |
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 4850 E. Harry St | State License | Wichita | KS | 67218 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 6300 E. 21st St N | State License | Wichita | KS | 67208 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 430 E. 30th Ave | State License | Hutchinson | KS | 67502 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 1050 W. Pawnee St | State License | Wichita | KS | 67213 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 3133 E. Douglas Ave | State License | Wichita | KS | 67211 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 1220 W. Crawford St. | State License | Salina | KS | 67401 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 2027 SW Fairlawn | State License | Topeka | KS | 66604 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 2201 Amidon Ave | State License | Wichita | KS | 67204 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Retailers Sales Tax Registration | Active | KS | 004-481185922F-01 | 1729 NW Topeka Blvd | State License | Topeka | KS | 66608 | KS-REVENUE-DEPT | ||||||||||
Galt Ventures, LLC | Sellers Permit | Active | CA | 102363122 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | CA-Board of Equalization | ||||||||||
Galt Ventures, LLC | Sellers Permit-Branch | Active | CA | 9781 Magnolia Ave | State License | Riverside | CA | 92503 | CA-Board of Equalization | |||||||||||
Galt Ventures, LLC | Sellers Permit-Branch | Active | CA | 4915 Moreno Ave | State License | Montclair | CA | 91763 | CA-Board of Equalization | |||||||||||
Galt Ventures, LLC | Sellers Permit-Branch | Active | CA | 11000 Lower Azusa Rd | State License | El Monte | CA | 91731 | CA-Board of Equalization | |||||||||||
Galt Ventures, LLC | Sellers Permit-Branch | Active | CA | 3447 E. Cesar E. Chavez Ave | State License | Los Angeles | CA | 90063 | CA-Board of Equalization | |||||||||||
Galt Ventures, LLC | Sellers Permit-Branch | Active | CA | 8247 Laurel Canyon Blvd | State License | N. Hollywood | CA | 91605 | CA-Board of Equalization | |||||||||||
Galt Ventures, LLC | Sellers Permit-Branch | Active | CA | 454 W Florence Ave | State License | Los Angeles | CA | 90003 | CA-Board of Equalization | |||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | SL.0000279 | 2201 Amidon Ave | State License | Wichita | KS | 67204 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | SL 0000279 -BR.001 | 701 N. West St | State License | Wichita | KS | 67203 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | Sl 0000279 -BR.002 | 4850 E. Harry St | State License | Wichita | KS | 67218 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | Sl 0000279 -BR.003 | 6300 E. 21st St N | State License | Wichita | KS | 67208 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | Sl 0000279 -BR.004 | 430 E. 30th Ave | State License | Hutchinson | KS | 67502 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | Sl 0000279 -BR.005 | 1050 W. Pawnee St | State License | Wichita | KS | 67213 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | Sl 0000279 -BR.006 | 3133 E. Douglas Ave | State License | Wichita | KS | 67211 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | Sl 0000279 -BR.007 | 1220 W. Crawford St. | State License | Salina | KS | 67401 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | Sl 0000279 -BR.008 | KANSAS INTERNET STORE | State License | KS | Kansas (KS) Office of the State Banking Commissioner | ||||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | Sl 0000279 -BR.009 | 2027 SW Fairlawn | State License | Topeka | KS | 66604 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
Galt Ventures, LLC | Supervised Loan License | Active | KS | SL.0000279- BR.010 | 1729 NW Topeka Blvd | State License | Topeka | KS | 66608 | Kansas (KS) Office of the State Banking Commissioner | ||||||||||
LendDirect Corp | Domicil Registration | Active | AB | Alberta | GENERAL CANADA | State License | AB | |||||||||||||
LendDirect Corp | Insurance Agent License | Active | AB | 93-10956222-2015 | GENERAL CANADA | State License | AB | Alberta Insurance Council | ||||||||||||
LendDirect Corp | Insurance Agent License | Initial Pending | MB | TBD | GENERAL CANADA | State License | AB | |||||||||||||
LendDirect Corp | Insurance Agent License | Initial Pending | SK | TBD | GENERAL CANADA | State License | AB | |||||||||||||
LendDirect Corp | Loan Finance License | Initial Pending | SK | TBD | GENERAL CANADA | State License | AB | |||||||||||||
LendDirect Corp | Provincial Registration | Active | BC | British Columbia | 3104 27th Street, Unit 4 | State License | Vernon | BC | V1T 4M6 | |||||||||||
LendDirect Corp | Provincial Registration | Active | MB | 7344555 | 3104 27th Street, Unit 4 | State License | Vernon | BC | V1T 4M6 | |||||||||||
LendDirect Corp | Provincial Registration | Active | ON | Ontario | 3104 27th Street, Unit 4 | State License | Vernon | BC | V1T 4M6 | |||||||||||
LendDirect Corp | Provincial Registration | Active | SK | Sasketchewan | 3104 27th Street, Unit 4 | State License | Vernon | BC | V1T 4M6 | |||||||||||
Principal Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11013 | 3475 E. Flamingo Rd. # 300 | State License | Las Vegas | NV | 89121 | NV-Financial Institutions Division | ||||||||||
Principal Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11014 | 25 N. Lamb Blvd | State License | Las Vegas | NV | 89110 | NV-Financial Institutions Division | ||||||||||
Principal Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11015 | 6115 W. Flamingo Rd | State License | Las Vegas | NV | 89103 | NV-Financial Institutions Division | ||||||||||
Principal Investments, Inc | Chk Cash/Def Dep/Shrt Term Lns/Title Lns | Active | NV | CDTH11016 | 2801 W. Washington Ave Suite 110 | State License | Las Vegas | NV | 89107 | NV-Financial Institutions Division | ||||||||||
Principal Investments, Inc | Consumer Use Tax Permit | Active | NV | 1001542231-005 | 25 N. Lamb Blvd | State License | Las Vegas | NV | 89110 | NV-Department of Taxation | ||||||||||
Principal Investments, Inc | Device Registration | Active | NV | RAPICASH | 25 N. Lamb Blvd | State License | Las Vegas | NV | 89110 | NV-Dept of Agriculture | ||||||||||
Principal Investments, Inc | Device Registration | Active | NV | RAPICASH | 2801 W. Washington Ave Suite 110 | State License | Las Vegas | NV | 89107 | NV-Dept of Agriculture | ||||||||||
Principal Investments, Inc | Device Registration | Active | NV | RAPICASH | 3475 E. Flamingo Rd. # 300 | State License | Las Vegas | NV | 89121 | NV-Dept of Agriculture | ||||||||||
Principal Investments, Inc | Device Registration | Active | NV | RAPICASH | 6115 W. Flamingo Rd | State License | Las Vegas | NV | 89103 | NV-Dept of Agriculture | ||||||||||
Principal Investments, Inc | Domicil Registration | Active | NV | NV20021438989 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Principal Investments, Inc | State Business License | Active | NV | NV20021438989 | 3475 E. Flamingo Rd. # 300 | State License | Las Vegas | NV | 89121 | NV-Secretary of State | ||||||||||
SC Aurum, LLC | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
SC Aurum, LLC | State Business License | Active | NV | NV20091440130 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
SC Texas MB, Inc. | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
SC Texas MB, Inc. | State Business License | Active | NV | No number issued | State License | NV-Secretary of State | ||||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61704 (Main) | 1221 Main St | State License | Pasadena | TX | 77506 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61727 | 5506-A Bellaire Blvd | State License | Houston | TX | 77081 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61726 | 2812 N Main St | State License | Fort Worth | TX | 76106 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61725 | 11830 Bellaire Blvd suite A 145 | State License | Houston | TX | 77072 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61722 | 1160 Edgebrook Dr | State License | Houston | TX | 77034 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61721 | 883 Federal Rd Ste A | State License | Houston | TX | 77015 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61717 | 8602 S Braeswood Blvd | State License | Houston | TX | 77031 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61713 | 6902 Harrisburg Blvd | State License | Houston | TX | 77011 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61712 | 1503 N Story Rd #100 | State License | Irving | TX | 75061 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61709 | 13482 Northwest Hwy, Ste 100 | State License | Houston | TX | 77040 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61708 | 2601 Hampton Rd | State License | Dallas | TX | 75224 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61703 | 3501 Gus Thomasson, Suite 102 | State License | Mesquite | TX | 75150 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61702 | 3422 W Walnut | State License | Garland | TX | 75042 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61714 | 8569 Long Point | State License | Houston | TX | 77055 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61718 | 1441-45 E Kiest Blvd | State License | Dallas | TX | 75216 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61723 | 860 11th St | State License | Beaumont | TX | 77701 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61715 | 815 E Pioneer Parkway | State License | Arlington | TX | 76010 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61724 | 4209 E Lancaster | State License | Fort Worth | TX | 76103 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61707 | 7007 Bandera Rd, Ste 24 | State License | Leon Valley | TX | 78238 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61706 | 1701 Babcock | State License | San Antonio | TX | 78229 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61705 | 3802 S Gressner | State License | Houston | TX | 77063 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61711 | 3706 W Northwest Hwy | State License | Dallas | TX | 75220 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61720 | 10201 Lake June Rd | State License | Dallas | TX | 75217 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61719 | 7434 Airline Dr | State License | Houston | TX | 77076 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61701 | 2647 Culebra Rd | State License | San Antonio | TX | 78228 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61710 | 3611 N. Ridge Rd. | State License | Wichita | KS | 67205 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-61716 | 800 E Seminary Dr | State License | Fort Worth | TX | 76115 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-62997 | 5532 Manchaca Rd | State License | Austin | TX | 78745 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-63596 | 4009 S Padre Island Drive | State License | Corpus Christi | TX | 78411 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-63597 | 400 W University Dr | State License | Denton | TX | 76201 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-63598 | 10884 West Bellfort St. | State License | Houston | TX | 77099 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-64978 | 1924 South Business 77 | State License | Harlingen | TX | 78550 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-65849 | 423 New Braunfels | State License | San Antonio | TX | 78202 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-65850 | 1103 Fair Ave | State License | San Antonio | TX | 78223 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151734 | 1521 N 10th | State License | McAllen | TX | 78041 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151737 | 2119 E Saunders | State License | Laredo | TX | 78041 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151738 | 521 S. Conway Ave | State License | Mission | TX | 78572 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151735 | 695 S Sam Houston | State License | San Benito | TX | 78586 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151736 | 7120 San Bernardo Ave | State License | Laredo | TX | 78041 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151732 | 4217 W. Waco Drive | State License | Waco | TX | 76710 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151733 | 2201 N. Frazier | State License | Conroe | TX | 77303 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151730 | 2102 Goliad Rd, Ste.1 | State License | San Antonio | TX | 78223 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-151731 | 972 Bandera Rd | State License | San Antonio | TX | 78228 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-152299 | 8320 FM 78, Suite 3 | State License | Converse | TX | 78109 | TX-Office of Consumer Credit Commissioner |
SCIL Texas, LLC | Credit Access Business | Active | TX | 16419-153712 | 1502 Austin Highway, Suite 101 | State License | San Antonio | TX | 78218 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0577722 | 1701 Babcock | State License | San Antonio | TX | 78229 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0578032 | 3802 S Gressner | State License | Houston | TX | 77063 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0578037 | 7007 Bandera Rd, Ste 24 | State License | Leon Valley | TX | 78238 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522540 | 1221 Main St | State License | Pasadena | TX | 77506 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522542 | 5506-A Bellaire Blvd | State License | Houston | TX | 77081 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522543 | 2812 N Main St | State License | Fort Worth | TX | 76106 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522545 | 11830 Bellaire Blvd suite A 145 | State License | Houston | TX | 77072 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522552 | 883 Federal Rd Ste A | State License | Houston | TX | 77015 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522551 | 8602 S Braeswood Blvd | State License | Houston | TX | 77031 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522544 | 800 E Seminary Dr | State License | Fort Worth | TX | 76115 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522554 | 6902 Harrisburg Blvd | State License | Houston | TX | 77011 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522556 | 1503 N Story Rd #100 | State License | Irving | TX | 75061 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522558 | 13482 Northwest Hwy, Ste 100 | State License | Houston | TX | 77040 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522560 | 2601 Hampton Rd | State License | Dallas | TX | 75224 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522562 | 3501 Gus Thomasson, Suite 102 | State License | Mesquite | TX | 75150 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522563 | 8569 Long Point | State License | Houston | TX | 77055 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522564 | 1441-45 E Kiest Blvd | State License | Dallas | TX | 75216 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522565 | 860 11th St | State License | Beaumont | TX | 77701 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522567 | 815 E Pioneer Parkway | State License | Arlington | TX | 76010 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522548 | 1160 Edgebrook Dr | State License | Houston | TX | 77034 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0522823 | 3422 W Walnut | State License | Garland | TX | 75042 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0583345 | 10201 Lake June Rd | State License | Dallas | TX | 75217 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0583351 | 3706 W Northwest Hwy | State License | Dallas | TX | 75220 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0600301 | 7434 Airline Dr | State License | Houston | TX | 77076 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0611113 | 2647 Culebra Rd | State License | San Antonio | TX | 78228 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0620592 | 5532 Manchaca Rd | State License | Austin | TX | 78745 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0624040 | 4009 S Padre Island Drive | State License | Corpus Christi | TX | 78411 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0625106 | 10884 West Bellfort St. | State License | Houston | TX | 77099 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0626469 | 400 W University Dr | State License | Denton | TX | 76201 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0665341 | 1924 South Business 77 | State License | Harlingen | TX | 78550 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0672323 | 423 New Braunfels | State License | San Antonio | TX | 78202 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0672321 | 1103 Fair Ave | State License | San Antonio | TX | 78223 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0696658 | 1521 N 10th | State License | McAllen | TX | 78041 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0696664 | 2119 E Saunders | State License | Laredo | TX | 78041 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0706215 | 521 S. Conway Ave | State License | Mission | TX | 78572 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0696671 | 695 S Sam Houston | State License | San Benito | TX | 78586 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0696668 | 7120 San Bernardo Ave | State License | Laredo | TX | 78041 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0702070 | 4217 W. Waco Drive | State License | Waco | TX | 76710 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0702071 | 2201 N. Frazier | State License | Conroe | TX | 77303 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0706213 | 2102 Goliad Rd, Ste.1 | State License | San Antonio | TX | 78223 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0706217 | 972 Bandera Rd | State License | San Antonio | TX | 78228 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0719842 | 8320 FM 78, Suite 3 | State License | Converse | TX | 78109 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Device Registration | Active | TX | 0723605 | 1502 Austin Highway, Suite 101 | State License | San Antonio | TX | 78218 | TX-Department of Agriculture | ||||||||||
SCIL Texas, LLC | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
SCIL Texas, LLC | Foreign Registration | Active | TX | 800805812 | GENERAL USA | State License | ||||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101900 | 5532 Manchaca Rd | State License | Austin | TX | 78745 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101873 | 1221 Main St | State License | Pasadena | TX | 77506 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101874 | 5506-A Bellaire Blvd | State License | Houston | TX | 77081 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101875 | 2812 N Main St | State License | Fort Worth | TX | 76106 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101876 | 11830 Bellaire Blvd suite A 145 | State License | Houston | TX | 77072 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101877 | 1160 Edgebrook Dr | State License | Houston | TX | 77034 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101878 | 883 Federal Rd Ste A | State License | Houston | TX | 77015 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101879 | 8602 S Braeswood Blvd | State License | Houston | TX | 77031 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101880 | 800 E Seminary Dr | State License | Fort Worth | TX | 76115 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101881 | 6902 Harrisburg Blvd | State License | Houston | TX | 77011 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101882 | 1503 N Story Rd #100 | State License | Irving | TX | 75061 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101883 | 13482 Northwest Hwy, Ste 100 | State License | Houston | TX | 77040 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101884 | 2601 Hampton Rd | State License | Dallas | TX | 75224 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101885 | 3501 Gus Thomasson, Suite 102 | State License | Mesquite | TX | 75150 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101886 | 3422 W Walnut | State License | Garland | TX | 75042 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101887 | 8569 Long Point | State License | Houston | TX | 77055 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101888 | 1441-45 E Kiest Blvd | State License | Dallas | TX | 75216 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101890 | 860 11th St | State License | Beaumont | TX | 77701 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101892 | 815 E Pioneer Parkway | State License | Arlington | TX | 76010 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101893 | 7007 Bandera Rd, Ste 24 | State License | Leon Valley | TX | 78238 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101894 | 1701 Babcock | State License | San Antonio | TX | 78229 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101895 | 3802 S Gressner | State License | Houston | TX | 77063 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101896 | 3706 W Northwest Hwy | State License | Dallas | TX | 75220 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101897 | 10201 Lake June Rd | State License | Dallas | TX | 75217 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101898 | 7434 Airline Dr | State License | Houston | TX | 77076 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0101899 | 2647 Culebra Rd | State License | San Antonio | TX | 78228 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0102584 | 4009 S Padre Island Drive | State License | Corpus Christi | TX | 78411 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0102706 | 10884 West Bellfort St. | State License | Houston | TX | 77099 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0102707 | 400 W University Dr | State License | Denton | TX | 76201 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0102981 | 1924 South Business 77 | State License | Harlingen | TX | 78550 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0103646 | 423 New Braunfels | State License | San Antonio | TX | 78202 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0103647 | 1103 Fair Ave | State License | San Antonio | TX | 78223 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104374 | 1521 N 10th | State License | McAllen | TX | 78041 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104372 | 2119 E Saunders | State License | Laredo | TX | 78041 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104623 | 521 S. Conway Ave | State License | Mission | TX | 78572 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104373 | 695 S Sam Houston | State License | San Benito | TX | 78586 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104371 | 7120 San Bernardo Ave | State License | Laredo | TX | 78041 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104605 | 4217 W. Waco Drive | State License | Waco | TX | 76710 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104543 | 2201 N. Frazier | State License | Conroe | TX | 77303 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104606 | 2102 Goliad Rd, Ste.1 | State License | San Antonio | TX | 78223 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104607 | 972 Bandera Rd | State License | San Antonio | TX | 78228 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104752 | 8320 FM 78, Suite 3 | State License | Converse | TX | 78109 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 0104803 | 1502 Austin Highway, Suite 101 | State License | San Antonio | TX | 78218 | TX-Office of Consumer Credit Commissioner | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00044 | 1502 Austin Highway, Suite 101 | State License | San Antonio | TX | 78218 | |||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00021 | 1701 Babcock | State License | San Antonio | TX | 78229 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00022 | 3802 S Gressner | State License | Houston | TX | 77063 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00023 | 3706 W Northwest Hwy | State License | Dallas | TX | 75220 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00001 | 1221 Main St | State License | Pasadena | TX | 77506 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00002 | 5506-A Bellaire Blvd | State License | Houston | TX | 77081 | TX-Comptroller of Public Accounts |
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00003 | 11830 Bellaire Blvd suite A 145 | State License | Houston | TX | 77072 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00004 | 1160 Edgebrook Dr | State License | Houston | TX | 77034 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00005 | 883 Federal Rd Ste A | State License | Houston | TX | 77015 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00006 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00007 | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00008 | 2812 N Main St | State License | Fort Worth | TX | 76106 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00009 | 1503 N Story Rd #100 | State License | Irving | TX | 75061 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00010 | 3501 Gus Thomasson, Suite 102 | State License | Mesquite | TX | 75150 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00011 | 2601 Hampton Rd | State License | Dallas | TX | 75224 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00012 | 6902 Harrisburg Blvd | State License | Houston | TX | 77011 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00014 | 8602 S Braeswood Blvd | State License | Houston | TX | 77031 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00015 | 800 E Seminary Dr | State License | Fort Worth | TX | 76115 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00016 | 3422 W Walnut | State License | Garland | TX | 75042 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00017 | 8569 Long Point | State License | Houston | TX | 77055 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00018 | 815 E Pioneer Parkway | State License | Arlington | TX | 76010 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00019 | 4209 E Lancaster | State License | Fort Worth | TX | 76103 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00020 | 7007 Bandera Rd, Ste 24 | State License | Leon Valley | TX | 78238 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00024 | 10201 Lake June Rd | State License | Dallas | TX | 75217 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00011 | 13482 Northwest Hwy, Ste 100 | State License | Houston | TX | 77040 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00016 | 1441-45 E Kiest Blvd | State License | Dallas | TX | 75216 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00017 | 860 11th St | State License | Beaumont | TX | 77701 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 2-20307-4595-7.00025 | 7434 Airline Dr | State License | Houston | TX | 77076 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00026 | 2647 Culebra Rd | State License | San Antonio | TX | 78228 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00027 | 5532 Manchaca Rd | State License | Austin | TX | 78745 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00028 | 4009 S Padre Island Drive | State License | Corpus Christi | TX | 78411 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00029 | 10884 West Bellfort St. | State License | Houston | TX | 77099 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7.00030 | 400 W University Dr | State License | Denton | TX | 76201 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7 | 1924 South Business 77 | State License | Harlingen | TX | 78550 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7 | 423 New Braunfels | State License | San Antonio | TX | 78202 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7 | 1103 Fair Ave | State License | San Antonio | TX | 78223 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7-00037 | 1521 N 10th | State License | McAllen | TX | 78041 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7-00036 | 2119 E Saunders | State License | Laredo | TX | 78041 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7 | 521 S. Conway Ave | State License | Mission | TX | 78572 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7-00035 | 695 S Sam Houston | State License | San Benito | TX | 78586 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7-00034 | 7120 San Bernardo Ave | State License | Laredo | TX | 78041 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7 | 4217 W. Waco Drive | State License | Waco | TX | 76710 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7 | 2201 N. Frazier | State License | Conroe | TX | 77303 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7 | 2102 Goliad Rd, Ste.1 | State License | San Antonio | TX | 78223 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7 | 972 Bandera Rd | State License | San Antonio | TX | 78228 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | Sales and Use Tax Permit | Active | TX | 3-20307-4595-7-00043 | 8320 FM 78, Suite 3 | State License | Converse | TX | 78109 | TX-Comptroller of Public Accounts | ||||||||||
SCIL Texas, LLC | State Business License | Active | NV | NV20071609769 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | NV-Secretary of State | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 5506-A Bellaire Blvd | State License | Houston | TX | 77081 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 1160 Edgebrook Dr | State License | Houston | TX | 77034 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 883 Federal Rd Ste A | State License | Houston | TX | 77015 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 4209 E Lancaster | State License | Fort Worth | TX | 76103 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 11830 Bellaire Blvd suite A 145 | State License | Houston | TX | 77072 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 3501 Gus Thomasson, Suite 102 | State License | Mesquite | TX | 75150 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 6902 Harrisburg Blvd | State License | Houston | TX | 77011 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 1503 N Story Rd #100 | State License | Irving | TX | 75061 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 2812 N Main St | State License | Fort Worth | TX | 76106 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 3611 N. Ridge Rd. | State License | Wichita | KS | 67205 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 3802 S Gressner | State License | Houston | TX | 77063 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 7007 Bandera Rd, Ste 24 | State License | Leon Valley | TX | 78238 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 3706 W Northwest Hwy | State License | Dallas | TX | 75220 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 1701 Babcock | State License | San Antonio | TX | 78229 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 10201 Lake June Rd | State License | Dallas | TX | 75217 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 7434 Airline Dr | State License | Houston | TX | 77076 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 8602 S Braeswood Blvd | State License | Houston | TX | 77031 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 800 E Seminary Dr | State License | Fort Worth | TX | 76115 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 13482 Northwest Hwy, Ste 100 | State License | Houston | TX | 77040 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 2601 Hampton Rd | State License | Dallas | TX | 75224 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 3422 W Walnut | State License | Garland | TX | 75042 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 8569 Long Point | State License | Houston | TX | 77055 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 1441-45 E Kiest Blvd | State License | Dallas | TX | 75216 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 860 11th St | State License | Beaumont | TX | 77701 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 815 E Pioneer Parkway | State License | Arlington | TX | 76010 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 2647 Culebra Rd | State License | San Antonio | TX | 78228 | TX-Department of Banking | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 5532 Manchaca Rd | State License | Austin | TX | 78745 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 4009 S Padre Island Drive | State License | Corpus Christi | TX | 78411 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 10884 West Bellfort St. | State License | Houston | TX | 77099 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 400 W University Dr | State License | Denton | TX | 76201 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 1924 South Business 77 | State License | Harlingen | TX | 78550 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 423 New Braunfels | State License | San Antonio | TX | 78202 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 1103 Fair Ave | State License | San Antonio | TX | 78223 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 1521 N 10th | State License | McAllen | TX | 78041 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 2119 E Saunders | State License | Laredo | TX | 78041 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 521 S. Conway Ave | State License | Mission | TX | 78572 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 695 S Sam Houston | State License | San Benito | TX | 78586 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 7120 San Bernardo Ave | State License | Laredo | TX | 78041 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 4217 W. Waco Drive | State License | Waco | TX | 76710 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 2201 N. Frazier | State License | Conroe | TX | 77303 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 2102 Goliad Rd, Ste.1 | State License | San Antonio | TX | 78223 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 972 Bandera Rd | State License | San Antonio | TX | 78228 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 2007-0054 | 8320 FM 78, Suite 3 | State License | Converse | TX | 78109 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO | Active | TX | 20070054 | 1502 Austin Highway, Suite 101 | State License | San Antonio | TX | 78218 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL Texas, LLC | Texas CSO (Main) | Active | TX | 2007-0054 | 1221 Main St | State License | Pasadena | TX | 77506 | TX-Secretary of State - Legal Support Unit | ||||||||||
SCIL, Inc | Business License | Active | AK | 919487 | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | AK-Dpt of Commerce | ||||||||||
SCIL, Inc | Check Casher License | Active | MS | 000413 | MISSISSIPPI INTERNET STORE | State License | MS | MS-Department of Banking and Consumer Finance | ||||||||||||
SCIL, Inc | Consumer Credit Notification | Active | UT | UTAH INTERNET STORE | State License | UT | UT-Department of Financial Institutions | |||||||||||||
SCIL, Inc | Consumer Installment Loan License | Active | MO | 510-14-5696 | MISSOURI INTERNET STORE | State License | MO | MO-Division of Finance | ||||||||||||
SCIL, Inc | Consumer Use Tax Permit | Active | NV | 1008131318 | GENERAL USA | State License | NV-Department of Taxation | |||||||||||||
SCIL, Inc | Corporate Excise Finance Tax | Active | OH | No number issued | GENERAL USA | State License | OH-REVENUE-DEPT | |||||||||||||
SCIL, Inc | Credit Services Organization | Active | OH | CS.900174.000 | OHIO INTERNET | State License | OH | OH-BANKING-DEPT37 | ||||||||||||
SCIL, Inc | Deferred Deposit Advance | Active | AK | 60 | AK INTERNET STORE | State License | AK | AK-Dpt of Commerce | ||||||||||||
SCIL, Inc | Deferred Deposit License | Active | OK | DDL00731 | OK INTERNET STORE | State License | OK | OK-Department of Consumer Credit |
SCIL, Inc | Deferred Presentment License | Active | ND | DP1101984 | NORTH DAKOTA INTERNET | State License | ND | ND-Department of Financial Institutions | ||||||||||||
SCIL, Inc | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | AK | 117813 | GENERAL USA | State License | AK-Dept. of Commerce | |||||||||||||
SCIL, Inc | Foreign Registration | Active | AL | Number not issued | GENERAL USA | State License | AL-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | AZ | F1394365-2 | GENERAL USA | State License | AZ-Secretary of State - Corporation Commision | |||||||||||||
SCIL, Inc | Foreign Registration | Active | CO | 20071525543 | GENERAL USA | State License | CO-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | IA | 379090 | GENERAL USA | State License | IA-SOS | |||||||||||||
SCIL, Inc | Foreign Registration | Active | ID | C179728 | GENERAL USA | State License | ID-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | IL | 6609-402-2 | GENERAL USA | State License | IL-SOS | |||||||||||||
SCIL, Inc | Foreign Registration | Active | KS | 4235420 | GENERAL USA | State License | KS-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | KY | 0712973 | GENERAL USA | State License | KY-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | LA | Number not issued | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | LA-SOS | ||||||||||
SCIL, Inc | Foreign Registration | Active | MO | F00857642 | GENERAL USA | State License | MO-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | MS | Number not issued | GENERAL USA | State License | MS-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | MT | F-0555026-369344 | GENERAL USA | State License | MT-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | ND | 9777800 | GENERAL USA | State License | ND-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | NM | 4073060 | NM INTERNET STORE | State License | NM | NM-SOS | ||||||||||||
SCIL, Inc | Foreign Registration | Active | OH | 2101486 | State License | OH-Secretary of State | ||||||||||||||
SCIL, Inc | Foreign Registration | Active | OK | 2312193675 | OK INTERNET STORE | State License | OK | OK-Secretary of State | ||||||||||||
SCIL, Inc | Foreign Registration | Active | SC | Number not issued | GENERAL USA | State License | SC-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | SD | FB032893 | GENERAL USA | State License | SD-Secretary of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | TN | 658272 | GENERAL USA | State License | TN-Department of State | |||||||||||||
SCIL, Inc | Foreign Registration | Active | UT | 6852539-0143 | GENERAL USA | State License | UT-Department of Commerce - Corporations Division | |||||||||||||
SCIL, Inc | Foreign Registration | Active | VA | F2021568 | GENERAL USA | State License | VA-State Corporation Commission | |||||||||||||
SCIL, Inc | Foreign Registration | Active | WI | S081748 | WISCONSIN INTERNET STORE | State License | WI | WI-SOS | ||||||||||||
SCIL, Inc | Foreign Registration | Active | WY | 2008-000559109 | GENERAL USA | State License | WY-Secretary of State | |||||||||||||
SCIL, Inc | Franchise & Excise Tax | Active | TN | 321242179 | GENERAL USA | State License | TN-REVENUE-DEPT | |||||||||||||
SCIL, Inc | Licensed Lender Main Office | Active | LA | 1084960-952758 | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | |||||||||||
SCIL, Inc | Loan Company License | Active | WI | 2623 | WISCONSIN INTERNET STORE | State License | WI | WI-Department of Fiancial institutions | ||||||||||||
SCIL, Inc | Max Rate Certification/Credit Grantor | Active | SC | CLL-115563 | GENERAL USA | State License | SC-Department of Consumer Affairs | |||||||||||||
SCIL, Inc | Money Lender License | Active | SD | MYL.2810 | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | SD-Division of Banking | ||||||||||
SCIL, Inc | MS Credit Availability Act License | Active | MS | 002904 | MISSISSIPPI INTERNET STORE | State License | MS | MS-Department of Banking and Consumer Finance | ||||||||||||
SCIL, Inc | PayDay Lender License | Active | WI | 101-PDL | WISCONSIN INTERNET STORE | State License | WI | WI-Department of Fiancial institutions | ||||||||||||
SCIL, Inc | Payday Loan License | Active | HI | Not Required | GENERAL USA | State License | HI - Department of Commerce and Consumer Affairs | |||||||||||||
SCIL, Inc | Post-Dated Check License | Active | WY | PDCC-0248 | WYOMING INTERNET STORE | State License | WY | WY-Department of Audit | ||||||||||||
SCIL, Inc | Regulated Lender | Active | ID | RRL-9029 | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | ID-Department of Finance | ||||||||||
SCIL, Inc | Regulated Payday Lender | Active | ID | RPD 7544 | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | ID-Department of Finance | ||||||||||
SCIL, Inc | Small Loan License | Active | NM | 01638 | NM INTERNET STORE | State License | NM | NM-Office of Public Regulation Commision | ||||||||||||
SCIL, Inc | Small Small Loan Company | Active | MO | 500-15-5127 | MISSOURI INTERNET STORE | State License | MO | MO-Division of Finance | ||||||||||||
SCIL, Inc | State Business License | Active | NV | NV20061109831 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | NV-Department of Taxation | ||||||||||
SCIL, Inc | Supervised Lender (2) | Active | SC | S-7,987 and S-7,988 | GENERAL USA | State License | SC-Board of Financial Institutions | |||||||||||||
SCIL, Inc | Supervised Lenders License | Active | CO | 990100 | COLORADO INTERNET STORE | State License | CO | CO-Dept of Law | ||||||||||||
SCIL, Inc | Wisconsin Consumer Act Registration | Active | WI | No number issued | WISCONSIN INTERNET STORE | State License | WI | WI-Department of Fiancial institutions | ||||||||||||
SCIL, Inc. | FlexLoc Loans | Active | RI | Not Required | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | RI - Dept of Business Regulation | ||||||||||
Speedy Cash | Business Booster Loans | Active | CA | Not Required | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | CA - Dept of Business Oversight | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831001 | 10404 Venice Blvd | State License | Culver City | CA | 90232 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831002 | 6740 Reseda Blvd | State License | Reseda | CA | 91335 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831003 | 8847 Imperial Hwy Ste A | State License | Downey | CA | 90242 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831004 | 857 W. Rosecrans Ave | State License | Gardena | CA | 90247 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831005 | 13010 Harbor Blvd | State License | Garden Grove | CA | 92843 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831006 | 904 S. Gaffey St | State License | San Pedro | CA | 90731 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831007 | 10972 Beach Blvd | State License | Stanton | CA | 90680 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831008 | 8701 E. Washington Blvd | State License | Pico Rivera | CA | 90660 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831010 | 101 S. Brookhurst St | State License | Anaheim | CA | 92804 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831009 | 270 E. Baseline St | State License | San Bernardino | CA | 92410 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831011 | 10223 Sepulveda Blvd, C&D | State License | Mission Hills | CA | 91345 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831013 | 7204 Canoga Ave | State License | Canoga Park | CA | 91303 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831014 | 100 N. Raymond Ave | State License | Fullerton | CA | 92831 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831015 | 7201 Balboa Blvd | State License | Van Nuys | CA | 91406 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831016 | 5445 South St | State License | Lakewood | CA | 90713 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831018 | 7855 Van Nuys Blvd | State License | Panorama City | CA | 91402 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831017 | 13722 Sherman Way | State License | Van Nuys | CA | 91405 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831026 | 1029 W. Avenue I | State License | Lancaster | CA | 93534 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831021 | 229 W Anaheim St | State License | Wilmington | CA | 90744 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831019 | 120 W. Base Line Rd. | State License | Rialto | CA | 92376 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831020 | 1801 W 6th St | State License | Los Angeles | CA | 90057 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831022 | 380 Broadway, Suite 103 | State License | El Cajon | CA | 92021 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831023 | 13545 Florence Ave | State License | Whittier | CA | 90605 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831024 | 501 W El Segundo Blvd | State License | Los Angeles | CA | 90065 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831025 | 13263 Van Nuys Blvd | State License | Pacoima | CA | 91331 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831027 | 25010 Alessandro Blvd | State License | Moreno Valley | CA | 92553 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831029 | 6686 El Cajon Blvd Suite F | State License | San Diego | CA | 92115 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831031 | 123 E Vernon Ave | State License | Los Angeles | CA | 90011 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831033 | 3555 W Slauson Ave | State License | Los Angeles | CA | 90043 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831030 | 740 W Compton Blvd | State License | Compton | CA | 90221 | CA-Dept of Justice | ||||||||||
Speedy Cash | Check Casher Permit | Active | CA | 1831032 | 11401 S Figueroa St | State License | Los Angeles | CA | 90061 | CA-Dept of Justice | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-0855 | 10404 Venice Blvd | State License | Culver City | CA | 90232 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-0856 | 6740 Reseda Blvd | State License | Reseda | CA | 91335 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-0857 | 8847 Imperial Hwy Ste A | State License | Downey | CA | 90242 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-0854 | 857 W. Rosecrans Ave | State License | Gardena | CA | 90247 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-0859 | 13010 Harbor Blvd | State License | Garden Grove | CA | 92843 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-0858 | 904 S. Gaffey St | State License | San Pedro | CA | 90731 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-0860 | 10972 Beach Blvd | State License | Stanton | CA | 90680 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-0861 | 8701 E. Washington Blvd | State License | Pico Rivera | CA | 90660 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-1902 | 101 S. Brookhurst St | State License | Anaheim | CA | 92804 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-1901 | 270 E. Baseline St | State License | San Bernardino | CA | 92410 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-2900 | 10223 Sepulveda Blvd, C&D | State License | Mission Hills | CA | 91345 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-3601 | 100 N. Raymond Ave | State License | Fullerton | CA | 92831 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-3600 | CALIFORNIA INTERNET STORE | State License | CA | CA-Department of Business Oversight | ||||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-3588 | 7204 Canoga Ave | State License | Canoga Park | CA | 91303 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4499 | 7201 Balboa Blvd | State License | Van Nuys | CA | 91406 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4524 | 5445 South St | State License | Lakewood | CA | 90713 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4566 | 7855 Van Nuys Blvd | State License | Panorama City | CA | 91402 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4542 | 13722 Sherman Way | State License | Van Nuys | CA | 91405 | CA-Dept of Justice | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-40960 | 1029 W. Avenue I | State License | Lancaster | CA | 93534 | CA-Department of Business Oversight |
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4555 | 120 W. Base Line Rd. | State License | Rialto | CA | 92376 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4567 | 229 W Anaheim St | State License | Wilmington | CA | 90744 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4573 | 1801 W 6th St | State License | Los Angeles | CA | 90057 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4580 | 380 Broadway, Suite 103 | State License | El Cajon | CA | 92021 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 100-4649 | 13545 Florence Ave | State License | Whittier | CA | 90605 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-36121 | 501 W El Segundo Blvd | State License | Los Angeles | CA | 90065 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-43801 | 13263 Van Nuys Blvd | State License | Pacoima | CA | 91331 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-43849 | 25010 Alessandro Blvd | State License | Moreno Valley | CA | 92553 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-43850 | 6686 El Cajon Blvd Suite F | State License | San Diego | CA | 92115 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-45000 | 123 E Vernon Ave | State License | Los Angeles | CA | 90011 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-45001 | 3555 W Slauson Ave | State License | Los Angeles | CA | 90043 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-45002 | 740 W Compton Blvd | State License | Compton | CA | 90221 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Deferred Deposit Permit | Active | CA | 10DBO-45004 | 11401 S Figueroa St | State License | Los Angeles | CA | 90061 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F215 | 10404 Venice Blvd | State License | Culver City | CA | 90232 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F225 | 6740 Reseda Blvd | State License | Reseda | CA | 91335 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F216 | 8847 Imperial Hwy Ste A | State License | Downey | CA | 90242 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F217 | 857 W. Rosecrans Ave | State License | Gardena | CA | 90247 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F218 | 13010 Harbor Blvd | State License | Garden Grove | CA | 92843 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F219 | 904 S. Gaffey St | State License | San Pedro | CA | 90731 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F220 | 10972 Beach Blvd | State License | Stanton | CA | 90680 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F221 | 8701 E. Washington Blvd | State License | Pico Rivera | CA | 90660 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F223 | 270 E. Baseline St | State License | San Bernardino | CA | 92410 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F224 | 10223 Sepulveda Blvd, C&D | State License | Mission Hills | CA | 91345 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F580 | 7204 Canoga Ave | State License | Canoga Park | CA | 91303 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F843 | 100 N. Raymond Ave | State License | Fullerton | CA | 92831 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F222 | 101 S. Brookhurst St | State License | Anaheim | CA | 92804 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 F589 | CALIFORNIA INTERNET STORE | State License | CA | CA-Department of Business Oversight | ||||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 K447 | 7201 Balboa Blvd | State License | Van Nuys | CA | 91406 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603K613 | 5445 South St | State License | Lakewood | CA | 90713 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 L078 | 7855 Van Nuys Blvd | State License | Panorama City | CA | 91402 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 K797 | 13722 Sherman Way | State License | Van Nuys | CA | 91405 | CA-Dept of Justice | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO41015 | 1029 W. Avenue I | State License | Lancaster | CA | 93534 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 K984 | 120 W. Base Line Rd. | State License | Rialto | CA | 92376 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 L079 | 229 W Anaheim St | State License | Wilmington | CA | 90744 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 L128 | 1801 W 6th St | State License | Los Angeles | CA | 90057 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 L145 | 380 Broadway, Suite 103 | State License | El Cajon | CA | 92021 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 603 L567 | 13545 Florence Ave | State License | Whittier | CA | 90605 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO36052 | 501 W El Segundo Blvd | State License | Los Angeles | CA | 90065 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO-44050 | 13263 Van Nuys Blvd | State License | Pacoima | CA | 91331 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO43899 | 25010 Alessandro Blvd | State License | Moreno Valley | CA | 92553 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO44386 | 6686 El Cajon Blvd Suite F | State License | San Diego | CA | 92115 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO-45650 | 123 E Vernon Ave | State License | Los Angeles | CA | 90011 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO-45651 | 3555 W Slauson Ave | State License | Los Angeles | CA | 90043 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO-45653 | 740 W Compton Blvd | State License | Compton | CA | 90221 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Finance Lender License | Active | CA | 60DBO-45652 | 11401 S Figueroa St | State License | Los Angeles | CA | 90061 | CA-Department of Business Oversight | ||||||||||
Speedy Cash | Foreign Registration | Active | CA | Number not issued | GENERAL USA | State License | ||||||||||||||
Speedy Cash | Sellers Permit | Active | CA | 101310327 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00028 | 6686 El Cajon Blvd Suite F | State License | San Diego | CA | 92115 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00011 | 10223 Sepulveda Blvd, C&D | State License | Mission Hills | CA | 91345 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00012 | 100 N. Raymond Ave | State License | Fullerton | CA | 92831 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00001 | 10404 Venice Blvd | State License | Culver City | CA | 90232 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00002 | 6740 Reseda Blvd | State License | Reseda | CA | 91335 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00003 | 8847 Imperial Hwy Ste A | State License | Downey | CA | 90242 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00004 | 857 W. Rosecrans Ave | State License | Gardena | CA | 90247 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00005 | 13010 Harbor Blvd | State License | Garden Grove | CA | 92843 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00006 | 904 S. Gaffey St | State License | San Pedro | CA | 90731 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00007 | 10972 Beach Blvd | State License | Stanton | CA | 90680 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00008 | 8701 E. Washington Blvd | State License | Pico Rivera | CA | 90660 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00009 | 101 S. Brookhurst St | State License | Anaheim | CA | 92804 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00010 | 270 E. Baseline St | State License | San Bernardino | CA | 92410 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00013 | 7204 Canoga Ave | State License | Canoga Park | CA | 91303 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00014 | 7201 Balboa Blvd | State License | Van Nuys | CA | 91406 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00015 | 5445 South St | State License | Lakewood | CA | 90713 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00016 | 7855 Van Nuys Blvd | State License | Panorama City | CA | 91402 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00017 | 13722 Sherman Way | State License | Van Nuys | CA | 91405 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00018 | 120 W. Base Line Rd. | State License | Rialto | CA | 92376 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 100-310327-00021 | 229 W Anaheim St | State License | Wilmington | CA | 90744 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00019 | 1801 W 6th St | State License | Los Angeles | CA | 90057 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00020 | 380 Broadway, Suite 103 | State License | El Cajon | CA | 92021 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00022 | 13545 Florence Ave | State License | Whittier | CA | 90605 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00026 | 501 W El Segundo Blvd | State License | Los Angeles | CA | 90065 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00024 | 13263 Van Nuys Blvd | State License | Pacoima | CA | 91331 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00025 | 1029 W. Avenue I | State License | Lancaster | CA | 93534 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00023 | 25010 Alessandro Blvd | State License | Moreno Valley | CA | 92553 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00029 | 123 E Vernon Ave | State License | Los Angeles | CA | 90011 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00030 | 3555 W Slauson Ave | State License | Los Angeles | CA | 90043 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00031 | 740 W Compton Blvd | State License | Compton | CA | 90221 | CA-Board of Equalization | ||||||||||
Speedy Cash | Sellers Permit-Branch | Active | CA | 101-310327-00032 | 11401 S Figueroa St | State License | Los Angeles | CA | 90061 | CA-Board of Equalization | ||||||||||
Speedy Cash | State Business License | Active | NV | NV19981311498 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Speedy Cash Illinois, Inc. | Consumer Installment Loan License | Active | IL | CI 3865 | 848 E. Sibley Blvd. | State License | Dolton | IL | 60419 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | Consumer Installment Loan License | Active | IL | CI 3866 | 11100 S. Cicero Ave | State License | Alsip | IL | 60803 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | Consumer Installment Loan License | Active | IL | CI 3864 | 8701 S. Cottage Grove Ave. | State License | Chicago | IL | 60619 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | Consumer Installment Loan License | Active | IL | CI 3882 | 1552 W 119th St. | State License | Chicago | IL | 60643 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | Consumer Installment Loan License | Active | IL | CI 3883 | 1931 N. Mannheim Rd. | State License | Melrose Park | IL | 60160 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | Consumer Installment Loan License | Active | IL | CI 3960 | 4800 West Addison | State License | Chicago | IL | 60641 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | Consumer Installment Loan License | Active | IL | CI 3957 | 1218 N. Lake St. Suite 120 | State License | Aurora | IL | 60506 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | Consumer Installment Loan License | Active | IL | CI 3979 | 4648 S Cicero Ave | State License | Chicago | IL | 60638 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | Domicil Registration | Active | NV | E0291302012-5 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Speedy Cash Illinois, Inc. | Foreign Registration | Active | IL | 6850-051-6 | GENERAL USA | State License | IL-SOS | |||||||||||||
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1909 | 848 E. Sibley Blvd. | State License | Dolton | IL | 60419 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1908 | 11100 S. Cicero Ave | State License | Alsip | IL | 60803 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1907 | 8701 S. Cottage Grove Ave. | State License | Chicago | IL | 60619 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1916 | 1552 W 119th St. | State License | Chicago | IL | 60643 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1915 | 1931 N. Mannheim Rd. | State License | Melrose Park | IL | 60160 | IL-Dept of Financial and Profesional Regulation |
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1928 | 1218 N. Lake St. Suite 120 | State License | Aurora | IL | 60506 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1930 | 4800 West Addison | State License | Chicago | IL | 60641 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1933 | 3611 N Ridge Rd. | State License | Wichita | KS | 67205 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | PayDay Loan Reform Act License | Active | IL | PL 1935 | 4648 S Cicero Ave | State License | Chicago | IL | 60638 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | State Business License | Active | NV | NV20121337766 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Speedy Cash Illinois, Inc. | TOMA - Money Transfer | Active | IL | PLN9435 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | TOMA - Money Transfer | Active | IL | CIN9450 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | TOMA - Store Value Card | Active | IL | PLN9435 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Speedy Cash Illinois, Inc. | TOMA - Store Value Card | Active | IL | CIN9450 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | IL-Dept of Financial and Profesional Regulation | ||||||||||
Summit Real Estate, LLC | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Summit Real Estate, LLC | Foreign Registration | Active | MO | FL0864274 | GENERAL USA | State License | MO-Secretary of State | |||||||||||||
Summit Real Estate, LLC | State Business License | Active | NV | NV20071282137 | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63948 (Main) | 1107 South W.W. White Road | State License | San Antonio | TX | 78220 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63930 | 9616 N. Lamar #199 | State License | Austin | TX | 78753 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63978 | 11643-B Research Blvd | State License | Austin | TX | 78759 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63963 | 2818 S. Lamar | State License | Austin | TX | 78704 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63970 | 907-B N. IH 35 | State License | Round Rock | TX | 78664 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63937 | 510 N. Bell, Ste. 104 | State License | Cedar Park | TX | 78613 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63962 | 7201 Cameron Road | State License | Austin | TX | 78752 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63969 | 2030 E. Oltorf, #102-B | State License | Austin | TX | 78741 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63945 | 3840 Airport Blvd | State License | Austin | TX | 78722 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63977 | 706 E. Hopkins | State License | San Marcos | TX | 78666 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63987 | 3706 Guadalupe Street, Ste. D | State License | Austin | TX | 78705 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63927 | 2008 W. Parmer Lane | State License | Austin | TX | 78727 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63928 | 6401-B Airport Blvd | State License | Austin | TX | 78752 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63971 | 11217 Leopard Street | State License | Corpus Christi | TX | 78410 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63939 | 4701 Ayers, Ste. 600-10 | State License | Corpus Christi | TX | 78415 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63929 | 3710 Leopard Street | State License | Corpus Christi | TX | 78408 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63947 | 5110 Fredericksburg Road | State License | San Antonio | TX | 78229 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63976 | 12804 Nacogdoches | State License | San Antonio | TX | 78217 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63985 | 2905 West Avenue | State License | San Antonio | TX | 78201 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63986 | 1304 S.W. Military Dr | State License | San Antonio | TX | 78221 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63954 | 8542 Blanco Road | State License | San Antonio | TX | 78216 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63944 | 3927 W Commerce | State License | San Antonio | TX | 78207 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63953 | 1005 Pat Booker Road | State License | Universal City | TX | 78148 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63938 | 406 Old US-90 W | State License | San Antonio | TX | 78237 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63967 | 6040 Ingram Road | State License | San Antonio | TX | 78238 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63965 | 10602 Perrin Beitel | State License | San Antonio | TX | 78217 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63966 | 5510 Walzem Road | State License | San Antonio | TX | 78218 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63972 | 2006 Veterans Blvd. | State License | Del Rio | TX | 78840 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63973 | 5129-A West Avenue | State License | San Antonio | TX | 78213 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63974 | 4515-2 Fredericksburg Road | State License | Balcones Heights | TX | 78201 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63980 | 2514 East Ben White Blvd | State License | Austin | TX | 78741 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63981 | 1204-A Hwy 123 | State License | San Marcos | TX | 78666 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63982 | 11300-C Pollyanna | State License | Austin | TX | 78753 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63932 | 3601 W. William Cannon #400 | State License | Austin | TX | 78749 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63933 | 1505-C Wells Branch Parkway | State License | Pflugerville | TX | 78660 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63934 | 15300 S. IH35, Ste. 390 | State License | Buda | TX | 78610 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63946 | 7112 Ed Bluestein Blvd, Ste. #177 | State License | Austin | TX | 78723 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63941 | 1909 E Wm. Cannon, #101 | State License | Austin | TX | 78744 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63955 | 2237 East Riverside, Ste. 101-D | State License | Austin | TX | 78741 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63949 | 3010 Nogalitos | State License | San Antonio | TX | 78225 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63950 | 10650 Culebra Road, Ste. 128 | State License | San Antonio | TX | 78251 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63957 | 6702 S. Congress | State License | Austin | TX | 78745 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63952 | 5886 De Zavala Road, Ste. 103 | State License | San Antonio | TX | 78249 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63931 | 1107 San Pedro, Ste. 101 | State License | San Antonio | TX | 78212 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63961 | 931 S. General McMullen | State License | San Antonio | TX | 78237 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63984 | 6851 W. Military Drive, Ste. 101 | State License | San Antonio | TX | 78227 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63956 | 3138 S.E. Military Drive, Ste. 101 | State License | San Antonio | TX | 78223 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63968 | 2337 S.W. Military Drive | State License | San Antonio | TX | 78224 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63992 | 8770 State Highway 151, Ste. 107 | State License | San Antonio | TX | 78245 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 17170-63940 | 6338 Old Pearsall Road, Ste 101 | State License | San Antonio | TX | 78242 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663256 | 6702 S. Congress | State License | Austin | TX | 78745 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663259 | 9616 N. Lamar #199 | State License | Austin | TX | 78753 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663271 | 11643-B Research Blvd | State License | Austin | TX | 78759 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663273 | 2818 S. Lamar | State License | Austin | TX | 78704 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663392 | 907-B N. IH 35 | State License | Round Rock | TX | 78664 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663391 | 510 N. Bell, Ste. 104 | State License | Cedar Park | TX | 78613 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663279 | 7201 Cameron Road | State License | Austin | TX | 78752 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663278 | 2030 E. Oltorf, #102-B | State License | Austin | TX | 78741 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663277 | 3840 Airport Blvd | State License | Austin | TX | 78722 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663275 | 706 E. Hopkins | State License | San Marcos | TX | 78666 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663260 | 3706 Guadalupe Street, Ste. D | State License | Austin | TX | 78705 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663255 | 2008 W. Parmer Lane | State License | Austin | TX | 78727 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663254 | 6401-B Airport Blvd | State License | Austin | TX | 78752 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663249 | 11217 Leopard Street | State License | Corpus Christi | TX | 78410 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663239 | 4701 Ayers, Ste. 600-10 | State License | Corpus Christi | TX | 78415 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663235 | 3710 Leopard Street | State License | Corpus Christi | TX | 78408 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663234 | 5110 Fredericksburg Road | State License | San Antonio | TX | 78229 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663233 | 12804 Nacogdoches | State License | San Antonio | TX | 78217 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663232 | 2905 West Avenue | State License | San Antonio | TX | 78201 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663231 | 1304 S.W. Military Dr | State License | San Antonio | TX | 78221 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663228 | 8542 Blanco Road | State License | San Antonio | TX | 78216 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663227 | 3927 W Commerce | State License | San Antonio | TX | 78207 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663226 | 1005 Pat Booker Road | State License | Universal City | TX | 78148 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663224 | 406 Old US-90 W | State License | San Antonio | TX | 78237 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663223 | 6040 Ingram Road | State License | San Antonio | TX | 78238 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663199 | 10602 Perrin Beitel | State License | San Antonio | TX | 78217 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663198 | 5510 Walzem Road | State License | San Antonio | TX | 78218 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663190 | 2006 Veterans Blvd. | State License | Del Rio | TX | 78840 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663192 | 5129-A West Avenue | State License | San Antonio | TX | 78213 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663194 | 4515-2 Fredericksburg Road | State License | Balcones Heights | TX | 78201 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663197 | 2514 East Ben White Blvd | State License | Austin | TX | 78741 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663401 | 1204-A Hwy 123 | State License | San Marcos | TX | 78666 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663408 | 11300-C Pollyanna | State License | Austin | TX | 78753 | TX-Department of Agriculture |
The Money Store, L.P. | Device Registration | Active | TX | 0663450 | 3601 W. William Cannon #400 | State License | Austin | TX | 78749 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663476 | 15300 S. IH35, Ste. 390 | State License | Buda | TX | 78610 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663437 | 7112 Ed Bluestein Blvd, Ste. #177 | State License | Austin | TX | 78723 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663440 | 1909 E Wm. Cannon, #101 | State License | Austin | TX | 78744 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663486 | 2237 East Riverside, Ste. 101-D | State License | Austin | TX | 78741 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663484 | 3010 Nogalitos | State License | San Antonio | TX | 78225 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663488 | 10650 Culebra Road, Ste. 128 | State License | San Antonio | TX | 78251 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663495 | 1107 South W.W. White Road | State License | San Antonio | TX | 78220 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663479 | 5886 De Zavala Road, Ste. 103 | State License | San Antonio | TX | 78249 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663497 | 1107 San Pedro, Ste. 101 | State License | San Antonio | TX | 78212 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663478 | 931 S. General McMullen | State License | San Antonio | TX | 78237 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663501 | 6851 W. Military Drive, Ste. 101 | State License | San Antonio | TX | 78227 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663504 | 3138 S.E. Military Drive, Ste. 101 | State License | San Antonio | TX | 78223 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663508 | 2337 S.W. Military Drive | State License | San Antonio | TX | 78224 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663447 | 8770 State Highway 151, Ste. 107 | State License | San Antonio | TX | 78245 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Device Registration | Active | TX | 0663477 | 6338 Old Pearsall Road, Ste 101 | State License | San Antonio | TX | 78242 | TX-Department of Agriculture | ||||||||||
The Money Store, L.P. | Domicil Registration | Active | TX | 14890710 | GENERAL USA | State License | TX-Secretary of State - Legal Support Unit | |||||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103111 | 8770 State Highway 151, Ste. 107 | State License | San Antonio | TX | 78245 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103112 | 6338 Old Pearsall Road, Ste 101 | State License | San Antonio | TX | 78242 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103095 | 7112 Ed Bluestein Blvd, Ste. #177 | State License | Austin | TX | 78723 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103100 | 3010 Nogalitos | State License | San Antonio | TX | 78225 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0102986 | 6702 S. Congress | State License | Austin | TX | 78745 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0102987 | 9616 N. Lamar #199 | State License | Austin | TX | 78753 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0102992 | 11643-B Research Blvd | State License | Austin | TX | 78759 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0102993 | 2818 S. Lamar | State License | Austin | TX | 78704 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0102995 | 907-B N. IH 35 | State License | Round Rock | TX | 78664 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103005 | 510 N. Bell, Ste. 104 | State License | Cedar Park | TX | 78613 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103006 | 7201 Cameron Road | State License | Austin | TX | 78752 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103007 | 2030 E. Oltorf, #102-B | State License | Austin | TX | 78741 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103008 | 3840 Airport Blvd | State License | Austin | TX | 78722 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103009 | 706 E. Hopkins | State License | San Marcos | TX | 78666 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103010 | 3706 Guadalupe Street, Ste. D | State License | Austin | TX | 78705 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103011 | 2008 W. Parmer Lane | State License | Austin | TX | 78727 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103012 | 6401-B Airport Blvd | State License | Austin | TX | 78752 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103051 | 11217 Leopard Street | State License | Corpus Christi | TX | 78410 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103058 | 4701 Ayers, Ste. 600-10 | State License | Corpus Christi | TX | 78415 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103064 | 3710 Leopard Street | State License | Corpus Christi | TX | 78408 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103065 | 5110 Fredericksburg Road | State License | San Antonio | TX | 78229 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103066 | 12804 Nacogdoches | State License | San Antonio | TX | 78217 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103067 | 2905 West Avenue | State License | San Antonio | TX | 78201 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103068 | 1304 S.W. Military Dr | State License | San Antonio | TX | 78221 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103070 | 8542 Blanco Road | State License | San Antonio | TX | 78216 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103071 | 3927 W Commerce | State License | San Antonio | TX | 78207 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103072 | 1005 Pat Booker Road | State License | Universal City | TX | 78148 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103074 | 406 Old US-90 W | State License | San Antonio | TX | 78237 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103075 | 6040 Ingram Road | State License | San Antonio | TX | 78238 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103078 | 10602 Perrin Beitel | State License | San Antonio | TX | 78217 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103079 | 5510 Walzem Road | State License | San Antonio | TX | 78218 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103080 | 2006 Veterans Blvd. | State License | Del Rio | TX | 78840 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103081 | 5129-A West Avenue | State License | San Antonio | TX | 78213 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103082 | 4515-2 Fredericksburg Road | State License | Balcones Heights | TX | 78201 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103083 | 2514 East Ben White Blvd | State License | Austin | TX | 78741 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103084 | 1204-A Hwy 123 | State License | San Marcos | TX | 78666 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103085 | 11300-C Pollyanna | State License | Austin | TX | 78753 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103088 | 3601 W. William Cannon #400 | State License | Austin | TX | 78749 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103090 | 15300 S. IH35, Ste. 390 | State License | Buda | TX | 78610 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103096 | 1909 E Wm. Cannon, #101 | State License | Austin | TX | 78744 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103099 | 2237 East Riverside, Ste. 101-D | State License | Austin | TX | 78741 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103101 | 10650 Culebra Road, Ste. 128 | State License | San Antonio | TX | 78251 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103103 | 1107 South W.W. White Road | State License | San Antonio | TX | 78220 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103104 | 5886 De Zavala Road, Ste. 103 | State License | San Antonio | TX | 78249 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103105 | 1107 San Pedro, Ste. 101 | State License | San Antonio | TX | 78212 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103106 | 931 S. General McMullen | State License | San Antonio | TX | 78237 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103108 | 6851 W. Military Drive, Ste. 101 | State License | San Antonio | TX | 78227 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103109 | 3138 S.E. Military Drive, Ste. 101 | State License | San Antonio | TX | 78223 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Precious Metal Dealer | Active | TX | 0103110 | 2337 S.W. Military Drive | State License | San Antonio | TX | 78224 | TX-Office of Consumer Credit Commissioner | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00106 | 6702 S. Congress | State License | Austin | TX | 78745 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00166 | 9616 N. Lamar #199 | State License | Austin | TX | 78753 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00129 | 11643-B Research Blvd | State License | Austin | TX | 78759 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00167 | 2818 S. Lamar | State License | Austin | TX | 78704 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00111 | 907-B N. IH 35 | State License | Round Rock | TX | 78664 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00130 | 510 N. Bell, Ste. 104 | State License | Cedar Park | TX | 78613 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00138 | 7201 Cameron Road | State License | Austin | TX | 78752 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00158 | 2030 E. Oltorf, #102-B | State License | Austin | TX | 78741 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00131 | 3840 Airport Blvd | State License | Austin | TX | 78722 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00119 | 706 E. Hopkins | State License | San Marcos | TX | 78666 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00107 | 3706 Guadalupe Street, Ste. D | State License | Austin | TX | 78705 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00115 | 2008 W. Parmer Lane | State License | Austin | TX | 78727 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00152 | 6401-B Airport Blvd | State License | Austin | TX | 78752 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00132 | 11217 Leopard Street | State License | Corpus Christi | TX | 78410 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00112 | 2102-B Baldwin | State License | Corpus Christi | TX | 78405 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00139 | 4701 Ayers, Ste. 600-10 | State License | Corpus Christi | TX | 78415 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00140 | 3710 Leopard Street | State License | Corpus Christi | TX | 78408 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00120 | 5110 Fredericksburg Road | State License | San Antonio | TX | 78229 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00159 | 12804 Nacogdoches | State License | San Antonio | TX | 78217 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00153 | 2905 West Avenue | State License | San Antonio | TX | 78201 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00145 | 1304 S.W. Military Dr | State License | San Antonio | TX | 78221 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00121 | 1739 Fredericksburg Road | State License | San Antonio | TX | 78201 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00169 | 8542 Blanco Road | State License | San Antonio | TX | 78216 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00122 | 3927 W Commerce | State License | San Antonio | TX | 78207 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00108 | 1005 Pat Booker Road | State License | Universal City | TX | 78148 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00147 | 406 Old US-90 W | State License | San Antonio | TX | 78237 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00148 | 6040 Ingram Road | State License | San Antonio | TX | 78238 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00113 | 10602 Perrin Beitel | State License | San Antonio | TX | 78217 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00134 | 5510 Walzem Road | State License | San Antonio | TX | 78218 | TX-Comptroller of Public Accounts |
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00149 | 2006 Veterans Blvd. | State License | Del Rio | TX | 78840 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00123 | 5129-A West Avenue | State License | San Antonio | TX | 78213 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00142 | 4515-2 Fredericksburg Road | State License | Balcones Heights | TX | 78201 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00117 | 2514 East Ben White Blvd | State License | Austin | TX | 78741 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00170 | 1204-A Hwy 123 | State License | San Marcos | TX | 78666 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00135 | 11300-C Pollyanna | State License | Austin | TX | 78753 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00143 | 1103-A N. IH-35 | State License | Austin | TX | 78702 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00160 | 2521 Rutland #150 | State License | Austin | TX | 78758 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00161 | 3601 W. William Cannon #400 | State License | Austin | TX | 78749 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00114 | 1505-C Wells Branch Parkway | State License | Pflugerville | TX | 78660 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00118 | 15300 S. IH35, Ste. 390 | State License | Buda | TX | 78610 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00154 | 615 W. Slaughter Lane, Ste. 108 | State License | Austin | TX | 78748 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00162 | 7112 Ed Bluestein Blvd, Ste. #177 | State License | Austin | TX | 78723 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00136 | 1909 E Wm. Cannon, #101 | State License | Austin | TX | 78744 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00171 | 2205 East 7th Street, #101 | State License | Austin | TX | 78702 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00150 | 8606 Research Blvd | State License | Austin | TX | 78758 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00151 | 2237 East Riverside, Ste. 101-D | State License | Austin | TX | 78741 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00155 | 3010 Nogalitos | State License | San Antonio | TX | 78225 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00163 | 10650 Culebra Road, Ste. 128 | State License | San Antonio | TX | 78251 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00164 | 1107 South W.W. White Road | State License | San Antonio | TX | 78220 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00109 | 5886 De Zavala Road, Ste. 103 | State License | San Antonio | TX | 78249 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00126 | 1107 San Pedro, Ste. 101 | State License | San Antonio | TX | 78212 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00165 | 931 S. General McMullen | State License | San Antonio | TX | 78237 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00156 | 6851 W. Military Drive, Ste. 101 | State License | San Antonio | TX | 78227 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00127 | 3138 S.E. Military Drive, Ste. 101 | State License | San Antonio | TX | 78223 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00157 | 2337 S.W. Military Drive | State License | San Antonio | TX | 78224 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00110 | 8770 State Highway 151, Ste. 107 | State License | San Antonio | TX | 78245 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Sales and Use Tax Permit | Active | TX | 17422197024.00128 | 6338 Old Pearsall Road, Ste 101 | State License | San Antonio | TX | 78242 | TX-Comptroller of Public Accounts | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 1204-A Hwy 123 | State License | San Marcos | TX | 78666 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 11300-C Pollyanna | State License | Austin | TX | 78753 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 3601 W. William Cannon #400 | State License | Austin | TX | 78749 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 1505-C Wells Branch Parkway | State License | Pflugerville | TX | 78660 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 15300 S. IH35, Ste. 390 | State License | Buda | TX | 78610 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 7112 Ed Bluestein Blvd, Ste. #177 | State License | Austin | TX | 78723 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 1909 E Wm. Cannon, #101 | State License | Austin | TX | 78744 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 2237 East Riverside, Ste. 101-D | State License | Austin | TX | 78741 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 3010 Nogalitos | State License | San Antonio | TX | 78225 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 10650 Culebra Road, Ste. 128 | State License | San Antonio | TX | 78251 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 5886 De Zavala Road, Ste. 103 | State License | San Antonio | TX | 78249 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 1107 San Pedro, Ste. 101 | State License | San Antonio | TX | 78212 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 931 S. General McMullen | State License | San Antonio | TX | 78237 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 6851 W. Military Drive, Ste. 101 | State License | San Antonio | TX | 78227 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 3138 S.E. Military Drive, Ste. 101 | State License | San Antonio | TX | 78223 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 2337 S.W. Military Drive | State License | San Antonio | TX | 78224 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 8770 State Highway 151, Ste. 107 | State License | San Antonio | TX | 78245 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 6338 Old Pearsall Road, Ste 101 | State License | San Antonio | TX | 78242 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 6702 S. Congress | State License | Austin | TX | 78745 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 9616 N. Lamar #199 | State License | Austin | TX | 78753 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 11643-B Research Blvd | State License | Austin | TX | 78759 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 2818 S. Lamar | State License | Austin | TX | 78704 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 907-B N. IH 35 | State License | Round Rock | TX | 78664 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 510 N. Bell, Ste. 104 | State License | Cedar Park | TX | 78613 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 7201 Cameron Road | State License | Austin | TX | 78752 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 2030 E. Oltorf, #102-B | State License | Austin | TX | 78741 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 3840 Airport Blvd | State License | Austin | TX | 78722 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 706 E. Hopkins | State License | San Marcos | TX | 78666 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 3706 Guadalupe Street, Ste. D | State License | Austin | TX | 78705 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 2008 W. Parmer Lane | State License | Austin | TX | 78727 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 6401-B Airport Blvd | State License | Austin | TX | 78752 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 11217 Leopard Street | State License | Corpus Christi | TX | 78410 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 4701 Ayers, Ste. 600-10 | State License | Corpus Christi | TX | 78415 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 3710 Leopard Street | State License | Corpus Christi | TX | 78408 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 5110 Fredericksburg Road | State License | San Antonio | TX | 78229 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 12804 Nacogdoches | State License | San Antonio | TX | 78217 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 2905 West Avenue | State License | San Antonio | TX | 78201 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 1304 S.W. Military Dr | State License | San Antonio | TX | 78221 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 8542 Blanco Road | State License | San Antonio | TX | 78216 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 3927 W Commerce | State License | San Antonio | TX | 78207 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 1005 Pat Booker Road | State License | Universal City | TX | 78148 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 406 Old US-90 W | State License | San Antonio | TX | 78237 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 6040 Ingram Road | State License | San Antonio | TX | 78238 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 10602 Perrin Beitel | State License | San Antonio | TX | 78217 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 5510 Walzem Road | State License | San Antonio | TX | 78218 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 2006 Veterans Blvd. | State License | Del Rio | TX | 78840 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 5129-A West Avenue | State License | San Antonio | TX | 78213 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 4515-2 Fredericksburg Road | State License | Balcones Heights | TX | 78201 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO | Active | TX | 2012-0077 | 2514 East Ben White Blvd | State License | Austin | TX | 78741 | TX-Secretary of State - Legal Support Unit | ||||||||||
The Money Store, L.P. | Texas CSO (Main) | Active | TX | 2012-0077 | 1107 South W.W. White Road | State License | San Antonio | TX | 78220 | TX-Secretary of State - Legal Support Unit | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0912379 | 1841 W. Northern Ave | State License | Phoenix | AZ | 85021 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913538 | 4040 N. 40th St | State License | Phoenix | AZ | 85018 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913535 | 1242 W. Main St | State License | Mesa | AZ | 85201 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913539 | 2351 N. Alvernon Way, #100 | State License | Tucson | AZ | 85712 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913540 | 1551 E. Indian School Rd. | State License | Phoenix | AZ | 85014 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913541 | 3501 W. Glendale Ave | State License | Phoenix | AZ | 85051 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913542 | 5819 W. Camelback Rd | State License | Phoenix | AZ | 85031 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913543 | 7202 East McDowell Rd STE A | State License | Scottsdale | AZ | 85257 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913544 | 1215 S. Country Club Dr | State License | Mesa | AZ | 85210 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913545 | 3520 E. Bell Rd | State License | Phoenix | AZ | 85032 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913546 | 5102 W. Olive Ave | State License | Glendale | AZ | 85302 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913547 | 1960 W. Baseline Rd | State License | Mesa | AZ | 85202 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Advance Fee Loan Broker Registration | Active | AZ | ALB-0913548 | 1956 E. Southern Ave #101 | State License | Mesa | AZ | 85204 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CL-0912380 | 1841 W. Northern Ave | State License | Phoenix | AZ | 85021 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116174 | 4040 N. 40th St | State License | Phoenix | AZ | 85018 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116175 | 1242 W. Main St | State License | Mesa | AZ | 85201 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116176 | 2351 N. Alvernon Way, #100 | State License | Tucson | AZ | 85712 | AZ-Dpt of Financial Institutions |
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116177 | 1551 E. Indian School Rd. | State License | Phoenix | AZ | 85014 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116199 | 3501 W. Glendale Ave | State License | Phoenix | AZ | 85051 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116200 | 5819 W. Camelback Rd | State License | Phoenix | AZ | 85031 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116201 | 7202 East McDowell Rd STE A | State License | Scottsdale | AZ | 85257 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116202 | 1215 S. Country Club Dr | State License | Mesa | AZ | 85210 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116203 | 3520 E. Bell Rd | State License | Phoenix | AZ | 85032 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116204 | 5102 W. Olive Ave | State License | Glendale | AZ | 85302 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116205 | 1960 W. Baseline Rd | State License | Mesa | AZ | 85202 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Consumer Lender | Active | AZ | CLBR-0116206 | 1956 E. Southern Ave #101 | State License | Mesa | AZ | 85204 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Todd Car Title, Inc | Foreign Registration | Active | AZ | F-1118807-4 | GENERAL USA | State License | AZ-Secretary of State - Corporation Commision | |||||||||||||
Todd Car Title, Inc | Sales & Finance License | Active | AZ | SF-0906262 | 3501 W. Glendale Ave | State License | Phoenix | AZ | 85051 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Sales & Finance License | Active | AZ | SFBR0107759 | 5819 W. Camelback Rd | State License | Phoenix | AZ | 85031 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | Sales & Finance License | Active | AZ | SFBR0108056 | 7202 East McDowell Rd STE A | State License | Scottsdale | AZ | 85257 | AZ-Dpt of Financial Institutions | ||||||||||
Todd Car Title, Inc | State Business License | Active | NV | NV20041350988 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | NV-Secretary of State | ||||||||||
Todd Financial, Inc | Device License | Active | AZ | 35220 | 5819 W. Camelback Rd | State License | Phoenix | AZ | 85031 | AZ-Department of Weights & Measures | ||||||||||
Todd Financial, Inc | Device License | Active | AZ | 35191 | 3501 W. Glendale Ave | State License | Phoenix | AZ | 85051 | AZ-Department of Weights & Measures | ||||||||||
Todd Financial, Inc | Domicil Registration | Active | NV | Number not issued | GENERAL USA | State License | NV-Secretary of State | |||||||||||||
Todd Financial, Inc | Foreign Registration | Active | AZ | Number not issued | GENERAL USA | State License | AZ-Secretary of State - Corporation Commision | |||||||||||||
Todd Financial, Inc | State Business License | Active | NV | NV20041345427 | 3527 N Ridge Rd | State License | Wichita | KS | 67205 | NV-Secretary of State |
Entity |
Title |
Status |
State |
License Number |
Address |
Type |
City |
State |
Zip |
Country |
Contact |
Notes |
||||||||||||
SCIL Texas, LLC | 2nd Hand Dealer Registration | Active | TX | No number issued | 5532 Manchaca Rd | City License | Austin | TX | 78745 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 3601 W. William Cannon #400 | City License | Austin | TX | 78749 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 11300-C Pollyanna | City License | Austin | TX | 78753 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 2514 East Ben White Blvd | City License | Austin | TX | 78741 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 6401-B Airport Blvd | City License | Austin | TX | 78752 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 2008 W. Parmer Lane | City License | Austin | TX | 78727 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 3706 Guadalupe Street, Ste. D | City License | Austin | TX | 78705 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 1505-C Wells Branch Parkway | City License | Pflugerville | TX | 78660 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 2237 East Riverside, Ste. 101-D | City License | Austin | TX | 78741 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 1909 E Wm. Cannon, #101 | City License | Austin | TX | 78744 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 7112 Ed Bluestein Blvd, Ste. #177 | City License | Austin | TX | 78723 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 15300 S. IH35, Ste. 390 | City License | Buda | TX | 78610 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 6702 S. Congress | City License | Austin | TX | 78745 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 2030 E. Oltorf, #102-B | City License | Austin | TX | 78741 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 3840 Airport Blvd | City License | Austin | TX | 78722 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 2818 S. Lamar | City License | Austin | TX | 78704 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 7201 Cameron Road | City License | Austin | TX | 78752 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 9616 N. Lamar #199 | City License | Austin | TX | 78753 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | 2nd Hand Dealer Registration | Active | TX | No number issued | 11643-B Research Blvd | City License | Austin | TX | 78759 | USA | City of Austin | This is registered, however no permit issued. | ||||||||||||
A Speedy Cash Car Title Loans, LLC | Business License | Active | AZ | 200004787 | 5102 W. Olive Ave | City License | Glendale | AZ | 85302 | USA | City of Glendale | |||||||||||||
Cash Colorado, LLC | Business License | Active | AL | 6718 | 1501 Eastern Blvd | City License | Montgomery | AL | 36117 | USA | City of Montgomery | |||||||||||||
Cash Colorado, LLC | Business License | Active | AL | 6721 | 932 Ann St. | City License | Montgomery | AL | 36107 | USA | City of Montgomery | |||||||||||||
Concord Finance, Inc | Business License | Active | MO | 0494029952 | 3947 Main St | City License | Kansas City | MO | 64111 | USA | Kansas (KS) City | |||||||||||||
Concord Finance, Inc | Business License | Active | MO | 0762465408 | 1331 E. 63rd St | City License | Kansas City | MO | 64110 | USA | Kansas (KS) City | |||||||||||||
Concord Finance, Inc | Business License | Active | MO | 1836207232 | 2600 Independence Blvd | City License | Kansas City | MO | 64124 | USA | Kansas (KS) City | |||||||||||||
Curo Financial Technologies Corp. | Business License | Active | OR | 710882 | 12131 S.E. Powell Blvd | City License | Portland | OR | 97266 | USA | City of Portland | |||||||||||||
Curo Management LLC | Business License | Active | MO | 0817425536 | 1331 E. 63rd St | City License | Kansas City | MO | 64110 | USA | Kansas (KS) City | |||||||||||||
Curo Management LLC | Business License | Active | OR | 705212 | 3527 N Ridge Rd | City License | Wichita | KS | 67205 | USA | Portland Revenu Bureau License & Tax Division | |||||||||||||
Evergreen Financial Investments, Inc | Business License | Active | OR | 16-00002933 | 19026 E. Burnside St. | City License | Portland (Gresham) | OR | 97233 | USA | City of Gresham | |||||||||||||
Galt Ventures, LLC | Business License | Active | AZ | 200004784 | 5102 W. Olive Ave | City License | Glendale | AZ | 85302 | USA | City of Glendale | |||||||||||||
Galt Ventures, LLC | Business License | Active | CA | 20922 | 4915 Moreno Ave | City License | Montclair | CA | 91763 | USA | City of Montclair | |||||||||||||
Speedy Cash | Business License | Active | CA | 25859 | 8701 E. Washington Blvd | City License | Pico Rivera | CA | 90660 | USA | City of Pico Rivera | |||||||||||||
Cash Colorado, LLC | Business License - Check Cashing/Title Loans | Active | AL | 8763 | 3615 McFarland Blvd. East, Suite 109 | City License | Tuscaloosa | AL | 35405 | USA | City of Tuscaloosa | |||||||||||||
Cash Colorado, LLC | Business License - Gold Included | Active | AL | 14659 (acct9346581) | 1501 Eastern Blvd | City License | Montgomery | AL | 36117 | USA | City of Montgomery | |||||||||||||
Cash Colorado, LLC | Business License - Gold Included | Active | AL | 12268 acct# 9354694 | 932 Ann St. | City License | Montgomery | AL | 36107 | USA | City of Montgomery | |||||||||||||
Cash Colorado, LLC | Business License - Loans | Active | AL | 214020 - 012314 | 321 Palisades Blvd | City License | Birmingham | AL | 35209 | USA | City of Birmingham | |||||||||||||
Speedy Cash | Business License - Misc. Business | Active | CA | 20078024 | 5445 South St | City License | Lakewood | CA | 90713 | USA | ||||||||||||||
Cash Colorado, LLC | Business License - Non Mortgage Loans | Active | AL | 8764 | 3615 McFarland Blvd. East, Suite 109 | City License | Tuscaloosa | AL | 35405 | USA | City of Tuscaloosa | |||||||||||||
Cash Colorado, LLC | Business License - Pawnshop | Active | AL | 8765 | 3615 McFarland Blvd. East, Suite 109 | City License | Tuscaloosa | AL | 35405 | USA | City of Tuscaloosa | |||||||||||||
Todd Financial, Inc | Business License - Payday | Active | AZ | 0926802 | 7202 East McDowell Rd STE A | City License | Scottsdale | AZ | 85257 | USA | City of Scottsdale | |||||||||||||
Speedy Cash | Business License - Retail Services | Active | CA | 20078030 | 5445 South St | City License | Lakewood | CA | 90713 | USA | ||||||||||||||
Todd Car Title, Inc | Business License - Title Loans | Active | AZ | 0926801 | 7202 East McDowell Rd STE A | City License | Scottsdale | AZ | 85257 | USA | City of Scottsdale | |||||||||||||
Curo Management LLC | Business License - Witholding | Active | AL | 214543 | GENERAL USA | City License | USA | City of Birmingham | ||||||||||||||||
Concord Finance, Inc | Business License (Gold Included) | Active | MO | BL10-14390 | 1212 S Belt Hwy | City License | St Joseph | MO | 64507 | USA | St Joseph | |||||||||||||
Foresome Real Estate, LLC | Business Registration | Active | CA | 57768 | 270 E. Baseline St | City License | San Bernardino | CA | 92410 | USA | City of San Bernardino | |||||||||||||
Speedy Cash | Business Registration | Active | CA | 226030 | 8847 Imperial Hwy Ste A | City License | Downey | CA | 90242 | USA | City of Downey | |||||||||||||
The Money Store, L.P. | Business Registration | Active | TX | 2556 | 4515-2 Fredericksburg Road | City License | Balcones Heights | TX | 78201 | USA | City of Balcones Heights | |||||||||||||
Advance Group, Inc | Business Registration Certificate - Check Cashing | Active | NV | 068420 | 690 E Prater Way | City License | Sparks | NV | 89431 | USA | City of Sparks | |||||||||||||
Speedy Cash | Business Registration Certificate - Check Cashing | Active | CA | 14703 | 10972 Beach Blvd | City License | Stanton | CA | 90680 | USA | City of Stanton | |||||||||||||
Speedy Cash | Business Registration Certificate - Check Cashing | Active | CA | 907409 | 270 E. Baseline St | City License | San Bernardino | CA | 92410 | USA | City of San Bernardino | |||||||||||||
Galt Ventures, LLC | Business Tax Certificate | Active | CA | BL00069896 | 9781 Magnolia Ave | City License | Riverside | CA | 92503 | USA | City of Riverside | |||||||||||||
Speedy Cash | Business Tax Certificate | Active | CA | BUS2004-01223 | 101 S. Brookhurst St | City License | Anaheim | CA | 92804 | USA | City of Anaheim-Business License Division | |||||||||||||
Cash Colorado, LLC | Business Tax Certificate - Gold Included | Active | AL | 239628 | 4298 University Dr NW | City License | Huntsville | AL | 35816 | USA | City of Huntsville | |||||||||||||
Galt Ventures, LLC | Business Tax License | Active | CA | 025992 | 11000 Lower Azusa Rd | City License | El Monte | CA | 91731 | USA | City of El Monte | |||||||||||||
Speedy Cash | Business Tax License | Active | CA | 556557 | 100 N. Raymond Ave | City License | Fullerton | CA | 92831 | USA | City of Fullerton | |||||||||||||
Speedy Cash | Check Cashing Business Tax Certificate | Active | CA | 164242 | 13010 Harbor Blvd | City License | Garden Grove | CA | 92843 | USA | City of Garden Grove | |||||||||||||
Concord Finance, Inc | City - Business Tax License | Active | TN | Acct 52143 | 4403 Chapman Highway | City License | Knoxville | TN | 37920 | USA | City of Knoxville | |||||||||||||
Advance Group, Inc | City Business License | Active | NV | 2015303070 | 1601 W Warm Springs Rd | City License | Henderson | NV | 89014 | USA | City of Henderson | |||||||||||||
Concord Finance, Inc | City Business License | Active | MO | BUS2010-00754 | 2949 S National Ave | City License | Springfield | MO | 65807 | USA | City of Springfeild | |||||||||||||
Curo Management LLC | City Business License | Active | IL | 2437909 | 200 W. Hubbard St., Suite 800 | City License | Chicago | IL | 60654 | USA | Chicago | |||||||||||||
Speedy Cash | City Business License | Active | CA | 15003235 | 740 W Compton Blvd | City License | Compton | CA | 90221 | USA | City of Compton | |||||||||||||
Speedy Cash | City Business License | Active | CA | 022197 | 380 Broadway, Suite 103 | City License | El Cajon | CA | 92021 | USA | City of El Cajon | |||||||||||||
Speedy Cash | City Business License | Active | CA | 1310054 | 120 W. Base Line Rd. | City License | Rialto | CA | 92376 | USA | City of Rialto | |||||||||||||
Speedy Cash Illinois, Inc. | City Business License | Active | IL | 2304005 | 4648 S Cicero Ave | City License | Chicago | IL | 60638 | USA | Chicago | |||||||||||||
Speedy Cash Illinois, Inc. | City Business License | Active | IL | 2247077 | 1552 W 119th St. | City License | Chicago | IL | 60643 | USA | Chicago | |||||||||||||
Speedy Cash Illinois, Inc. | City Business License | Active | IL | 2222251 | 8701 S. Cottage Grove Ave. | City License | Chicago | IL | 60619 | USA | Chicago | |||||||||||||
Speedy Cash Illinois, Inc. | City Business License | Active | IL | 398 | 1931 N. Mannheim Rd. | City License | Melrose Park | IL | 60160 | USA | ||||||||||||||
Speedy Cash Illinois, Inc. | City Business License | Active | IL | No Permit Required | 1218 N. Lake St. Suite 120 | City License | Aurora | IL | 60506 | USA | City of Aurora | Not required for our particular business. | ||||||||||||
Speedy Cash Illinois, Inc. | City Business License | Active | IL | 15-975 | 848 E. Sibley Blvd. | City License | Dolton | IL | 60419 | USA | The Village of Dolton | |||||||||||||
Speedy Cash Illinois, Inc. | City Business License | Active | IL | 2293614 | 4800 West Addison | City License | Chicago | IL | 60641 | USA | Chicago | |||||||||||||
Speedy Cash Illinois, Inc. | City Business License | Active | IL | 22271-Control # | 11100 S. Cicero Ave | City License | Alsip | IL | 60803 | USA | The Village of Alsip | |||||||||||||
Concord Finance, Inc | Gold - No License | Active | TN | No Permit Required | 5900 Brainerd Rd. | City License | Chattanooga | TN | 37411 | USA | City of Chattanooga | No application required for Secondhand Dealers, only junk dealers. Article VII Sect 11-26 | ||||||||||||
Concord Finance, Inc | Secondhand Dealer License | Active | TN | No Permit Required | 1655 Fort Campbell Blvd. | City License | Clarksville | TN | 37042 | USA | City fo Clarksville | No license. Must comply with transaction reporting requirements. Chapter 6 Sec 5-601 | ||||||||||||
Concord Finance, Inc | Secondhand Dealer License | Active | TN | No Permit Required | 808 25th St. NW | City License | Cleveland | TN | 37311 | USA | City of Cleveland | No license required. Must report transactions on LeadsOnline. | ||||||||||||
SCIL Texas, LLC | City Gold | Active | TX | No Permit Required | 2201 N. Frazier | City License | Conroe | TX | 77303 | USA | City of Conroe | No license required. Must report transactions on LeadsOnline. | ||||||||||||
SCIL Texas, LLC | City License | Active | TX | No Permit Required | 8320 FM 78, Suite 3 | City License | Converse | TX | 78109 | USA | City of Converse | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Cash Colorado, LLC | City License | Active | AL | 16799 | 3410 Hwy 69 N | City License | Northport | AL | 35473 | USA | City of Northport | |||||||||||||
Concord Finance, Inc | City License | Active | TN | 505119802 | 5900 Brainerd Rd. | City License | Chattanooga | TN | 37411 | USA | City of Chattanooga | |||||||||||||
Concord Finance, Inc | City License | Active | TN | 52832 - 189913 | 106 Knox Road | City License | Knoxville | TN | 37918 | USA | City of Knoxville | |||||||||||||
Concord Finance, Inc | City License | Active | TN | 2016-114638 | 1698 Memorial Blvd | City License | Murfreesboro | TN | 37129 | USA | City of Murfreesboro | |||||||||||||
Concord Finance, Inc | City License | Active | TN | 2017 60853 | 808 25th St. NW | City License | Cleveland | TN | 37311 | USA | City of Cleveland | |||||||||||||
Concord Finance, Inc | City License | Active | TN | 178321 | 5002 Harding Place | City License | Nashville | TN | 37211 | USA | City of Nashville | |||||||||||||
Concord Finance, Inc | City License | Active | TN | 175210 | 2401 Nolensville Pike | City License | Nashville | TN | 37211 | USA | City of Nashville | |||||||||||||
Concord Finance, Inc | City License | Active | TN | 176985 | 5701 Charlotte Pike | City License | Nashville | TN | 37209 | USA | City of Nashville | |||||||||||||
Concord Finance, Inc | City License | Active | TN | 104773 | 1655 Fort Campbell Blvd. | City License | Clarksville | TN | 37042 | USA | City fo Clarksville | |||||||||||||
SCIL Texas, LLC | Gold Registration | Active | TX | No Permit Required | 8320 FM 78, Suite 3 | City License | Converse | TX | 78109 | USA | City of Converse | |||||||||||||
SCIL Texas, LLC | Gold - No License | Active | TX | No Permit Required | 3422 W Walnut | City License | Garland | TX | 75042 | USA | City of Garland | |||||||||||||
Cash Colorado, LLC | Gold/Diamond License | Active | CO | No Permit Required | 265 S. Wadsworth Blvd | City License | Lakewood | CO | 80226 | USA | City of Lake Wood | |||||||||||||
SCIL Texas, LLC | City License | Active | TX | 20140924 | 521 S. Conway Ave | City License | Mission | TX | 78572 | USA | City of Mission | |||||||||||||
Speedy Cash | City License | Active | CA | 10026529 | 1029 W. Avenue I | City License | Lancaster | CA | 93534 | USA | CA-Dept of Justice | |||||||||||||
SCIL Texas, LLC | City Gold | Active | TX | No Permit Required | 7120 San Bernardo Ave | City License | Laredo | TX | 78041 | USA | City of Laredo | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Speedy Cash | City License | Active | CA | B2015018611 | 6686 El Cajon Blvd Suite F | City License | San Diego | CA | 92115 | USA | City of San Diego | |||||||||||||
Speedy Cash | City License | Active | CA | 28444 | 25010 Alessandro Blvd | City License | Moreno Valley | CA | 92553 | USA | Moreno Valley | |||||||||||||
Concord Finance, Inc | City License - Consumer Lending | Active | MS | S1372 | 1021 Mississippi Hwy 39 (Suite: A & B) | City License | Meridian | MS | 39301 | USA | City of Meridian | |||||||||||||
Concord Finance, Inc | City License - Title Loans | Active | MS | S1371 | 1021 Mississippi Hwy 39 (Suite: A & B) | City License | Meridian | MS | 39301 | USA | City of Meridian | |||||||||||||
SCIL Texas, LLC | City License (Gold Included) | Active | TX | 024948 | 695 S Sam Houston | City License | San Benito | TX | 78586 | USA | City of San Benito | |||||||||||||
Concord Finance, Inc | City License (Gold Included)(excludes Title Pledge) | Active | MS | 13372 | 9240 Highway 49 (Suite:101/102) | City License | Gulfport | MS | 39501 | USA | City of Gulfport | |||||||||||||
Concord Finance, Inc | City License (Title Pledge) | Active | MS | 13669 | 9240 Highway 49 (Suite:101/102) | City License | Gulfport | MS | 39501 | USA | City of Gulfport | |||||||||||||
Concord Finance, Inc | City Occupational License | Active | LA | 16-00016219 | 2955 E. Texas Ave | City License | Bossier City | LA | 71111 | USA | Bossier City | |||||||||||||
Concord Finance, Inc | City Occupational License | Active | LA | 36164 | 123 Gause Boulevard West | City License | Slidell | LA | 70460 | USA | City of Slidell | |||||||||||||
CDM Development, LLC | City of Phoenix Privilage (Sales) Tax License | Active | AZ | 08004970 | 1551 E. Indian School Rd. | City License | Phoenix | AZ | 85014 | USA | City of Phoenix | |||||||||||||
Galt Ventures, LLC | City of Tucson Business License | Active | AZ | 3006881 | 2351 N. Alvernon Way, #100 | City License | Tucson | AZ | 85712 | USA | City of Tucson | |||||||||||||
Advance Group, Inc | CO12 Check Cashing Services | Active | NV | 89968 | 1360 W Cheyenne Ave, Suite101 | City License | North Las Vegas | NV | 89030 | USA | City of North Las Vegas | |||||||||||||
Advance Group, Inc | CO12 Check Cashing Services | Active | NV | 92797 | 2332 Civic Center Drive | City License | North Las Vegas | NV | 89030 | USA | City of North Las Vegas | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 2016-09 | 3501 Gus Thomasson, Suite 102 | City License | Mesquite | TX | 75150 | USA | ||||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 524866 | 1701 Babcock | City License | San Antonio | TX | 78229 | USA | City of San Antonio | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272358 | 1160 Edgebrook Dr | City License | Houston | TX | 77034 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 524871 | 972 Bandera Rd | City License | San Antonio | TX | 78228 | USA | City of San Antonio | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272281 | 5506-A Bellaire Blvd | City License | Houston | TX | 77081 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272220 | 8569 Long Point | City License | Houston | TX | 77055 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272272 | 10884 West Bellfort St. | City License | Houston | TX | 77099 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272205 | 13482 Northwest Hwy, Ste 100 | City License | Houston | TX | 77040 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272264 | 7434 Airline Dr | City License | Houston | TX | 77076 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272180 | 6902 Harrisburg Blvd | City License | Houston | TX | 77011 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272353 | 11830 Bellaire Blvd suite A 145 | City License | Houston | TX | 77072 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272232 | 3802 S Gressner | City License | Houston | TX | 77063 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | AFE16-02 | 3422 W Walnut | City License | Garland | TX | 75042 | USA | City of Garland | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 15944742 CAB | 815 E Pioneer Parkway | City License | Arlington | TX | 76010 | USA | City of Arlington | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 520294 | 1502 Austin Highway, Suite 101 | City License | San Antonio | TX | 78218 | USA | City of San Antonio | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | A2016000153A | 5532 Manchaca Rd | City License | Austin | TX | 78745 | USA | City of Austin | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 490796 | 423 New Braunfels | City License | San Antonio | TX | 78202 | USA | City of San Antonio | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 15-00008906 | 4009 S Padre Island Drive | City License | Corpus Christi | TX | 78411 | USA | City of Corpus Cristi | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 524869 | 2102 Goliad Rd, Ste.1 | City License | San Antonio | TX | 78223 | USA | City of San Antonio | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 1304-0472 | 400 W University Dr | City License | Denton | TX | 76201 | USA | City of Denton | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | No number issued | 10201 Lake June Rd | City License | Dallas | TX | 75217 | USA | City of Dallas | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | No number issued | 3706 W Northwest Hwy | City License | Dallas | TX | 75220 | USA | City of Dallas | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 497346 | 1103 Fair Ave | City License | San Antonio | TX | 78223 | USA | City of San Antonio | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | No number issued | 1441-45 E Kiest Blvd | City License | Dallas | TX | 75216 | USA | City of Dallas | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 524868 | 2647 Culebra Rd | City License | San Antonio | TX | 78228 | USA | City of San Antonio | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | No number issued | 2601 Hampton Rd | City License | Dallas | TX | 75224 | USA | City of Dallas | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272362 | 883 Federal Rd Ste A | City License | Houston | TX | 77015 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Credit Access Business | Active | TX | 272364 | 8602 S Braeswood Blvd | City License | Houston | TX | 77031 | USA | City of Houston | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523465 | 8770 State Highway 151, Ste. 107 | City License | San Antonio | TX | 78245 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523452 | 10650 Culebra Road, Ste. 128 | City License | San Antonio | TX | 78251 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 524876 | 12804 Nacogdoches | City License | San Antonio | TX | 78217 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523466 | 6338 Old Pearsall Road, Ste 101 | City License | San Antonio | TX | 78242 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 524873 | 5110 Fredericksburg Road | City License | San Antonio | TX | 78229 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523459 | 1107 San Pedro, Ste. 101 | City License | San Antonio | TX | 78212 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 524878 | 1304 S.W. Military Dr | City License | San Antonio | TX | 78221 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523451 | 3010 Nogalitos | City License | San Antonio | TX | 78225 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 524877 | 2905 West Avenue | City License | San Antonio | TX | 78201 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523448 | 10602 Perrin Beitel | City License | San Antonio | TX | 78217 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523449 | 5510 Walzem Road | City License | San Antonio | TX | 78218 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523461 | 6851 W. Military Drive, Ste. 101 | City License | San Antonio | TX | 78227 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523444 | 6040 Ingram Road | City License | San Antonio | TX | 78238 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 524882 | 406 Old US-90 W | City License | San Antonio | TX | 78237 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523463 | 3138 S.E. Military Drive, Ste. 101 | City License | San Antonio | TX | 78223 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 524880 | 8542 Blanco Road | City License | San Antonio | TX | 78216 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523450 | 5129-A West Avenue | City License | San Antonio | TX | 78213 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000170A | 2237 East Riverside, Ste. 101-D | City License | Austin | TX | 78741 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523460 | 931 S. General McMullen | City License | San Antonio | TX | 78237 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523458 | 5886 De Zavala Road, Ste. 103 | City License | San Antonio | TX | 78249 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523464 | 2337 S.W. Military Drive | City License | San Antonio | TX | 78224 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 524881 | 3927 W Commerce | City License | San Antonio | TX | 78207 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000178A | 6702 S. Congress | City License | Austin | TX | 78745 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000189A | 2818 S. Lamar | City License | Austin | TX | 78704 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 15-00008940 | 3710 Leopard Street | City License | Corpus Christi | TX | 78408 | USA | City of Corpus Cristi | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000172A | 1909 E Wm. Cannon, #101 | City License | Austin | TX | 78744 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000186A | 3840 Airport Blvd | City License | Austin | TX | 78722 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 15-00008938 | 4701 Ayers, Ste. 600-10 | City License | Corpus Christi | TX | 78415 | USA | City of Corpus Cristi | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2015000240A | 1505-C Wells Branch Parkway | City License | Pflugerville | TX | 78660 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 15-00008937 | 11217 Leopard Street | City License | Corpus Christi | TX | 78410 | USA | City of Corpus Cristi | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000174A | 9616 N. Lamar #199 | City License | Austin | TX | 78753 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000187A | 2030 E. Oltorf, #102-B | City License | Austin | TX | 78741 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000190A | 11643-B Research Blvd | City License | Austin | TX | 78759 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000188A | 7201 Cameron Road | City License | Austin | TX | 78752 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000181A | 11300-C Pollyanna | City License | Austin | TX | 78753 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000192A | 7112 Ed Bluestein Blvd, Ste. #177 | City License | Austin | TX | 78723 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000179A | 3601 W. William Cannon #400 | City License | Austin | TX | 78749 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000185A | 3706 Guadalupe Street, Ste. D | City License | Austin | TX | 78705 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000183A | 2514 East Ben White Blvd | City License | Austin | TX | 78741 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000182A | 6401-B Airport Blvd | City License | Austin | TX | 78752 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | A2016000184A | 2008 W. Parmer Lane | City License | Austin | TX | 78727 | USA | City of Austin | |||||||||||||
The Money Store, L.P. | Credit Access Business | Active | TX | 523456 | 1107 South W.W. White Road | City License | San Antonio | TX | 78220 | USA | City of San Antonio | |||||||||||||
The Money Store, L.P. | Credit Access Business Registration | Active | TX | 3204 | 1005 Pat Booker Road | City License | Universal City | TX | 78148 | USA | City of Universal City | |||||||||||||
SCIL Texas, LLC | City Gold | Active | TX | No Permit Required | 2119 E Saunders | City License | Laredo | TX | 78041 | USA | City of Laredo | No license required. Must report transactions on LeadsOnline. | ||||||||||||
SCIL Texas, LLC | Gold - Reporting for State Req | Active | TX | No Permit Required | 7007 Bandera Rd, Ste 24 | City License | Leon Valley | TX | 78238 | USA | City of Leon Valley | |||||||||||||
Concord Finance, Inc | No City License - County only | Active | TN | No Permit Required | 120 Gallatin Pike S. | City License | Madison | TN | 37115 | USA | City of Madison | |||||||||||||
SCIL Texas, LLC | City License | Active | TX | No Permit Required | 1521 N 10th | City License | McAllen | TX | 78041 | USA | City of McAllen | |||||||||||||
Concord Finance, Inc | Precious Metal Permit | Active | MS | No Permit Required | 1021 Mississippi Hwy 39 (Suite: A & B) | City License | Meridian | MS | 39301 | USA | City of Meridian | |||||||||||||
SCIL Texas, LLC | Gold - No License | Active | TX | No Permit Required | 3501 Gus Thomasson, Suite 102 | City License | Mesquite | TX | 75150 | USA | City of Mesquite | |||||||||||||
SCIL Texas, LLC | City Gold - Reporting Only | Active | TX | No Permit Required | 521 S. Conway Ave | City License | Mission | TX | 78572 | USA | City of Mission | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Concord Finance, Inc | Secondhand Dealer License | Active | TN | No Permit Required | 1698 Memorial Blvd | City License | Murfreesboro | TN | 37129 | USA | City of Murfreesboro | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Concord Finance, Inc | Secondhand Dealer License | Active | TN | No Permit Required | 5701 Charlotte Pike | City License | Nashville | TN | 37209 | USA | City of Nashville | No license required. Must send daily report to Nashville Police Department | ||||||||||||
Concord Finance, Inc | Secondhand Dealer License | Active | TN | No Permit Required | 2401 Nolensville Pike | City License | Nashville | TN | 37211 | USA | City of Nashville | No license required. Must send daily report to Nashville Police Department | ||||||||||||
Concord Finance, Inc | Secondhand Dealer License | Active | TN | No Permit Required | 5002 Harding Place | City License | Nashville | TN | 37211 | USA | City of Nashville | No license required. Must send daily report to Nashville Police Department | ||||||||||||
SCIL Texas, LLC | Gold License | Active | TX | No Permit Required | 1103 Fair Ave | City License | San Antonio | TX | 78223 | USA | City of San Antonio | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Concord Finance, Inc | Gold Included in City Business License | Active | MO | BL10-14390 | 1212 S Belt Hwy | City License | St Joseph | MO | 64507 | USA | St Joseph | |||||||||||||
Concord Finance, Inc | Gold Included in City License | Active | MO | BUS2010-00754 | 2949 S National Ave | City License | Springfield | MO | 65807 | USA | City of Springfeild | |||||||||||||
Concord Finance, Inc | Gold Included in City License | Active | MS | 13668 | 9240 Highway 49 (Suite:101/102) | City License | Gulfport | MS | 39501 | USA | City of Gulfport | |||||||||||||
SCIL Texas, LLC | Gold License | Active | TX | No Permit Required | 972 Bandera Rd | City License | San Antonio | TX | 78228 | USA | City of San Antonio | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Cash Colorado, LLC | Gold/Auto/Check Exchange | Active | AL | 093713 | 6401 Airport Blvd, Suite B | City License | Mobile | AL | 36608 | USA | City of Mobile | |||||||||||||
SCIL Texas, LLC | Gold License | Active | TX | No Permit Required | 423 New Braunfels | City License | San Antonio | TX | 78202 | USA | City of San Antonio | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Concord Finance, Inc | Gold/Precious Metal License-Purchase Only | Active | MO | 31698 | 11221 E. 23rd St | City License | Independence | MO | 64052 | USA | City of Independence | |||||||||||||
Advance Group, Inc | Gold/Silver License | Active | NV | 068876 | 690 E Prater Way | City License | Sparks | NV | 89431 | USA | City of Sparks Police Departmnet |
Cash Colorado, LLC | Gold/Silver License (Primary Metal) | Active | AL | 214020-013166 | 321 Palisades Blvd | City License | Birmingham | AL | 35209 | USA | City of Birmingham | |||||||||||||
SCIL Texas, LLC | Jewelry and Precious Metals (Used) Dealer Permit | Active | TX | 2009-03 | 860 11th St | City License | Beaumont | TX | 77701 | USA | City of Beaumont | |||||||||||||
Galt Ventures, LLC | LA Business Tax Certificate | Active | CA | 2166199-0001-7, 2166199-0002-5 | 8247 Laurel Canyon Blvd | City License | N. Hollywood | CA | 91605 | USA | City of Los Angeles | |||||||||||||
Galt Ventures, LLC | LA Business Tax Certificate | Active | CA | 2166199-0003-3 | 454 W Florence Ave | City License | Los Angeles | CA | 90003 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0014-6 | 13263 Van Nuys Blvd | City License | Pacoima | CA | 91331 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0006-5 | 10223 Sepulveda Blvd, C&D | City License | Mission Hills | CA | 91345 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0004-9 | 7204 Canoga Ave | City License | Canoga Park | CA | 91303 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0016-2 | 3555 W Slauson Ave | City License | Los Angeles | CA | 90043 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0011-1 | 7855 Van Nuys Blvd | City License | Panorama City | CA | 91402 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0008-1 | 13722 Sherman Way | City License | Van Nuys | CA | 91405 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0007-3 | 7201 Balboa Blvd | City License | Van Nuys | CA | 91406 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0009-0 | 229 W Anaheim St | City License | Wilmington | CA | 90744 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0002-2 | 1801 W 6th St | City License | Los Angeles | CA | 90057 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0001-4 | 10404 Venice Blvd | City License | Culver City | CA | 90232 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0003-1 | 6740 Reseda Blvd | City License | Reseda | CA | 91335 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0010-3 | 857 W. Rosecrans Ave | City License | Gardena | CA | 90247 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0005-7 | 904 S. Gaffey St | City License | San Pedro | CA | 90731 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0017-1 | 123 E Vernon Ave | City License | Los Angeles | CA | 90011 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | LA Business Tax Certificate | Active | CA | 898314-0015-4 | 11401 S Figueroa St | City License | Los Angeles | CA | 90061 | USA | City of Los Angeles | |||||||||||||
Galt Ventures, LLC | Lending Money | Active | CA | 0002166199-0003-3 | 454 W Florence Ave | City License | Los Angeles | CA | 90003 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | Lending Money | Active | CA | 898314-0001-4 | 10404 Venice Blvd | City License | Culver City | CA | 90232 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | Lending Money | Active | CA | 898314-0017-1 | 123 E Vernon Ave | City License | Los Angeles | CA | 90011 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | Lending Money | Active | CA | 898314-0016-2 | 3555 W Slauson Ave | City License | Los Angeles | CA | 90043 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | Lending Money | Active | CA | 898314-0015-4 | 11401 S Figueroa St | City License | Los Angeles | CA | 90061 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | Lending Money | Active | CA | 00008983140002-2 | 1801 W 6th St | City License | Los Angeles | CA | 90057 | USA | City of Los Angeles | |||||||||||||
Speedy Cash | Lending Money | Active | CA | 0000989314-0011-1 | 7855 Van Nuys Blvd | City License | Panorama City | CA | 91402 | USA | City of Los Angeles | |||||||||||||
Concord Finance, Inc | Loans Short Term License | Active | MO | 31697 | 11221 E. 23rd St | City License | Independence | MO | 64052 | USA | City of Independence | |||||||||||||
Advance Group, Inc | Mail Box Center License | Active | NV | G55-00469 | 5067 E. Owens Ave | City License | Las Vegas | NV | 89110 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Mail Box Center License | Active | NV | G55-00468 | 1532 N. Jones Blvd | City License | Las Vegas | NV | 89108 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Mail Box Center License | Active | NV | G55-00474 | 7460 W. Cheyenne Ave #110 | City License | Las Vegas | NV | 89129 | USA | City of Las Vegas | |||||||||||||
FMMR Investments, Inc | Mail Box Center License | Active | NV | G55-00471 | 4343 N. Rancho Dr # 150 | City License | Las Vegas | NV | 89130 | USA | City of Las Vegas | |||||||||||||
Principal Investments, Inc | Mail Box Center License | Active | NV | G55-00472 | 2801 W. Washington Ave Suite 110 | City License | Las Vegas | NV | 89107 | USA | City of Las Vegas | |||||||||||||
Principal Investments, Inc | Mail Box Center License | Active | NV | G55-00470 | 25 N. Lamb Blvd | City License | Las Vegas | NV | 89110 | USA | City of Las Vegas | |||||||||||||
SCIL Texas, LLC | Gold License | Active | TX | No Permit Required | 1701 Babcock | City License | San Antonio | TX | 78229 | USA | City of San Antonio | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Advance Group, Inc | Non-Depository License | Active | NV | N02-00026 | 7460 W. Cheyenne Ave #110 | City License | Las Vegas | NV | 89129 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Non-Depository License | Active | NV | N02-00024 | 5067 E. Owens Ave | City License | Las Vegas | NV | 89110 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Non-Depository License | Active | NV | N02-00023 | 1532 N. Jones Blvd | City License | Las Vegas | NV | 89108 | USA | City of Las Vegas | |||||||||||||
FMMR Investments, Inc | Non-Depository License | Active | NV | N02-00025 | 4343 N. Rancho Dr # 150 | City License | Las Vegas | NV | 89130 | USA | City of Las Vegas | |||||||||||||
Principal Investments, Inc | Non-Depository License | Active | NV | N02-00022 | 2801 W. Washington Ave Suite 110 | City License | Las Vegas | NV | 89107 | USA | City of Las Vegas | |||||||||||||
Principal Investments, Inc | Non-Depository License | Active | NV | N02-00027 | 25 N. Lamb Blvd | City License | Las Vegas | NV | 89110 | USA | City of Las Vegas | |||||||||||||
Concord Finance, Inc | Occupational License Tax | Active | LA | 915838 | 10828 Florida Blvd | City License | Baton Rouge | LA | 70815 | USA | City of Baton Rouge | |||||||||||||
Concord Finance, Inc | Occupational License Tax (City Business License) | Active | LA | 00280187 | 9360 Mansfield Rd. | City License | Shreveport | LA | 71118 | USA | City of Shreveport | |||||||||||||
Cash Colorado, LLC | Occupational Privilege Tax | Active | CO | 274445-030055 | 1895 S. Federal Blvd | City License | Denver | CO | 80219 | USA | City and County of Denver Dpt of Revenue | |||||||||||||
Cash Colorado, LLC | Occupational Privilege Tax | Active | CO | 208263-030065 | 6501 E. Evans Ave | City License | Denver | CO | 80224 | USA | City and County of Denver Dpt of Revenue | |||||||||||||
Curo Management LLC | Occupational Privilege Tax | Active | CO | 216428-030052 | 6501 E. Evans Ave | City License | Denver | CO | 80224 | USA | City and County of Denver Dpt of Revenue | |||||||||||||
Evergreen Financial Investments, Inc | Pay Day Lender License | Active | OR | 10096 | 19026 E. Burnside St. | City License | Portland (Gresham) | OR | 97233 | USA | City of Portland | |||||||||||||
Evergreen Financial Investments, Inc | Pay Day Lender License | Active | OR | 10114 | 3849 S.E. Powell Blvd | City License | Portland | OR | 97202 | USA | City of Portland | |||||||||||||
Evergreen Financial Investments, Inc | Pay Day Lender License | Active | OR | 10095 | 12131 S.E. Powell Blvd | City License | Portland | OR | 97266 | USA | City of Portland | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | 26759 | 4850 E. Harry St | City License | Wichita | KS | 67218 | USA | City of Wichita | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | PMDS 201500273 | 2027 SW Fairlawn | City License | Topeka | KS | 66604 | USA | City of Topeka | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | PMDS 201500272 | 1729 NW Topeka Blvd | City License | Topeka | KS | 66608 | USA | City of Topeka | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | 26920 | 2201 Amidon Ave | City License | Wichita | KS | 67204 | USA | City of Wichita | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | 26760 | 701 N. West St | City License | Wichita | KS | 67203 | USA | City of Wichita | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | 035571 | 3133 E. Douglas Ave | City License | Wichita | KS | 67211 | USA | City of Wichita | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | 26919 | 6300 E. 21st St N | City License | Wichita | KS | 67208 | USA | City of Wichita | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | 167106 | 430 E. 30th Ave | City License | Hutchinson | KS | 67502 | USA | City of Hutchinson | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | 4728 | 1220 W. Crawford St. | City License | Salina | KS | 67401 | USA | City of Salina | |||||||||||||
Galt Ventures, LLC | Precious Metal Dealer | Active | KS | 26761 | 1050 W. Pawnee St | City License | Wichita | KS | 67213 | USA | City of Wichita | |||||||||||||
SC Aurum, LLC | Precious Metal Dealer | Active | KS | 37662 | 3611 N Ridge Rd. | City License | Wichita | KS | 67205 | USA | City of Wichita | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 1378 | 1924 South Business 77 | City License | Harlingen | TX | 78550 | USA | City of Harlingen | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254246 | 10884 West Bellfort St. | City License | Houston | TX | 77099 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254241 | 7434 Airline Dr | City License | Houston | TX | 77076 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254238 | 3802 S Gressner | City License | Houston | TX | 77063 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 10421 | 1221 Main St | City License | Pasadena | TX | 77506 | USA | City of Pasedena | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254207 | 8569 Long Point | City License | Houston | TX | 77055 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254234 | 13482 Northwest Hwy, Ste 100 | City License | Houston | TX | 77040 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254200 | 883 Federal Rd Ste A | City License | Houston | TX | 77015 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254223 | 11830 Bellaire Blvd suite A 145 | City License | Houston | TX | 77072 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254228 | 8602 S Braeswood Blvd | City License | Houston | TX | 77031 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254232 | 6902 Harrisburg Blvd | City License | Houston | TX | 77011 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254219 | 5506-A Bellaire Blvd | City License | Houston | TX | 77081 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Precious Metal Dealer | Active | TX | 254196 | 1160 Edgebrook Dr | City License | Houston | TX | 77034 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Gold License | Active | TX | No Permit Required | 2102 Goliad Rd, Ste.1 | City License | San Antonio | TX | 78223 | USA | City of San Antonio | No license required. Must report transactions on LeadsOnline. | ||||||||||||
SCIL Texas, LLC | Precious Metals & Jewelry Dealer License | Active | TX | 260 | 1521 N 10th | City License | McAllen | TX | 78041 | USA | City of McAllen | |||||||||||||
SCIL Texas, LLC | Precious Metals Dealer (Included in City License) | Active | TX | Business license | 695 S Sam Houston | City License | San Benito | TX | 78586 | USA | City of San Benito | |||||||||||||
SCIL Texas, LLC | Regulated Property Dealer | Active | TX | 1143836 | 1441-45 E Kiest Blvd | City License | Dallas | TX | 75216 | USA | City of Dallas | |||||||||||||
SCIL Texas, LLC | Regulated Property Dealer | Active | TX | 1143861 | 2601 Hampton Rd | City License | Dallas | TX | 75224 | USA | City of Dallas | |||||||||||||
SCIL Texas, LLC | Regulated Property Dealer | Active | TX | 1155013 | 3706 W Northwest Hwy | City License | Dallas | TX | 75220 | USA | City of Dallas | |||||||||||||
SCIL Texas, LLC | Regulated Property Dealer | Active | TX | 1157939 | 10201 Lake June Rd | City License | Dallas | TX | 75217 | USA | City of Dallas | |||||||||||||
Principal Investments, Inc | S26-Secondhand Dealer Class III | Active | NV | S26-00024 | 2801 W. Washington Ave Suite 110 | City License | Las Vegas | NV | 89107 | USA | City of Las Vegas | |||||||||||||
Principal Investments, Inc | S26-Secondhand Dealer Class III | Active | NV | S26-00023 | 25 N. Lamb Blvd | City License | Las Vegas | NV | 89110 | USA | City of Las Vegas | |||||||||||||
Concord Finance, Inc | Sales and Use Tax Registration | Active | LA | 00042642 | 9360 Mansfield Rd. | City License | Shreveport | LA | 71118 | USA | City of Shreveport | |||||||||||||
Cash Colorado, LLC | Second Hand Dealer License | Active | CO | 1037982 | 1895 S. Federal Blvd | City License | Denver | CO | 80219 | USA | City and County of Denver Dpt of Revenue | |||||||||||||
Cash Colorado, LLC | Second Hand Dealer License | Active | CO | 1037963 | 6501 E. Evans Ave | City License | Denver | CO | 80224 | USA | City and County of Denver Dpt of Revenue | |||||||||||||
Galt Ventures, LLC | Secondhand Antique Dealer | Active | AZ | 10001408 | 4040 N. 40th St | City License | Phoenix | AZ | 85018 | USA | City of Phoenix | |||||||||||||
Galt Ventures, LLC | Secondhand Antique Dealer | Active | AZ | 10006039 | 1841 W. Northern Ave | City License | Phoenix | AZ | 85021 | USA | City of Phoenix | |||||||||||||
Galt Ventures, LLC | Secondhand Antique Dealer | Active | AZ | 10001450 | 3520 E. Bell Rd | City License | Phoenix | AZ | 85032 | USA | City of Phoenix | |||||||||||||
Galt Ventures, LLC | Secondhand Antique Dealer | Active | AZ | 10001582 | 1551 E. Indian School Rd. | City License | Phoenix | AZ | 85014 | USA | City of Phoenix | |||||||||||||
Todd Financial, Inc | Secondhand Antique Dealer | Active | AZ | 10006028 | 3501 W. Glendale Ave | City License | Phoenix | AZ | 85051 | USA | City of Phoenix | |||||||||||||
Todd Financial, Inc | Secondhand Antique Dealer | Active | AZ | 10005987 | 5819 W. Camelback Rd | City License | Phoenix | AZ | 85031 | USA | City of Phoenix | |||||||||||||
Galt Ventures, LLC | Secondhand Dealer - Included in City License | Active | AZ | 3006881 | 2351 N. Alvernon Way, #100 | City License | Tucson | AZ | 85712 | USA | City of Tucson | |||||||||||||
Advance Group, Inc | Secondhand Dealer Class III | Active | NV | S26-00027 | 1532 N. Jones Blvd | City License | Las Vegas | NV | 89108 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Secondhand Dealer Class III | Active | NV | S26-00026 | 5067 E. Owens Ave | City License | Las Vegas | NV | 89110 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Secondhand Dealer Class III | Active | NV | S26-00025 | 7460 W. Cheyenne Ave #110 | City License | Las Vegas | NV | 89129 | USA | City of Las Vegas | |||||||||||||
FMMR Investments, Inc | Secondhand Dealer Class IIISecondhand Dealer License | Active | NV | S26-00055 | 4343 N. Rancho Dr # 150 | City License | Las Vegas | NV | 89130 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Secondhand Dealer License | Active | NV | 92799 | 1360 W Cheyenne Ave, Suite101 | City License | North Las Vegas | NV | 89030 | USA | City of North Las Vegas | |||||||||||||
Advance Group, Inc | Secondhand Dealer License | Active | NV | 92796 | 2332 Civic Center Drive | City License | North Las Vegas | NV | 89030 | USA | City of North Las Vegas | |||||||||||||
SCIL Texas, LLC | Gold License | Active | TX | No Permit Required | 2647 Culebra Rd | City License | San Antonio | TX | 78228 | USA | City of San Antonio | No license required. Must report transactions on LeadsOnline. | ||||||||||||
SCIL Texas, LLC | Gold License | Active | TX | No Permit Required | 1502 Austin Highway, Suite 101 | City License | San Antonio | TX | 78218 | USA | City of San Antonio | No license required. Must report transactions on LeadsOnline. | ||||||||||||
The Money Store, L.P. | Gold License | Active | TX | No Permit Required | 1005 Pat Booker Road | City License | Universal City | TX | 78148 | USA | City of Universal City | No license required. Must report transactions on LeadsOnline. | ||||||||||||
SCIL Texas, LLC | Gold License | Active | TX | No Permit Required | 4217 W. Waco Drive | City License | Waco | TX | 76710 | USA | City of Waco | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Concord Finance, Inc | Secondhand Dealer License | Active | TN | No number issued | 120 Gallatin Pike S. | City License | Madison | TN | 37115 | USA | City of Nashville | This is registered, however no permit issued. | ||||||||||||
SCIL Texas, LLC | City License | Active | TX | No Permit Required | 4217 W. Waco Drive | City License | Waco | TX | 76710 | USA | City of Waco | No license required. Must report transactions on LeadsOnline. | ||||||||||||
Evergreen Financial Investments, Inc | Secondhand Dealer License | Active | WA | 00966 | 7116 N.E. Fourth Plain Rd | City License | Vancouver | WA | 98661 | USA | City of Vancouver | |||||||||||||
Evergreen Financial Investments, Inc | Secondhand Dealer License | Active | WA | 00965 | 10309 SE Mill Plain Blvd #A | City License | Vancouver | WA | 98664 | USA | City of Vancouver | |||||||||||||
Galt Ventures, LLC | Secondhand Dealer License | Active | AZ | 00113469 | 1215 S. Country Club Dr | City License | Mesa | AZ | 85210 | USA | City of Mesa | |||||||||||||
Galt Ventures, LLC | Secondhand Dealer License | Active | AZ | 00113471 | 1960 W. Baseline Rd | City License | Mesa | AZ | 85202 | USA | City of Mesa | |||||||||||||
Galt Ventures, LLC | Secondhand Dealer License | Active | AZ | 00113470 | 1956 E. Southern Ave #101 | City License | Mesa | AZ | 85204 | USA | City of Mesa | |||||||||||||
Galt Ventures, LLC | Secondhand Dealer License | Active | AZ | 00113468 | 1242 W. Main St | City License | Mesa | AZ | 85201 | USA | City of Mesa | |||||||||||||
Evergreen Financial Investments, Inc | Secondhand Dealer Permit | Active | OR | 1953576 | 12131 S.E. Powell Blvd | City License | Portland | OR | 97266 | USA | City of Portland | |||||||||||||
Evergreen Financial Investments, Inc | Secondhand Dealer Permit | Active | OR | 2055185 | 3849 S.E. Powell Blvd | City License | Portland | OR | 97202 | USA | City of Portland | |||||||||||||
Evergreen Financial Investments, Inc | Secondhand Dealer Permit | Active | OR | 17-00002933 | 19026 E. Burnside St. | City License | Portland (Gresham) | OR | 97233 | USA | City of Portland | |||||||||||||
SCIL Texas, LLC | Secondhand Dealer Permit | Active | TX | No license issued | 4009 S Padre Island Drive | City License | Corpus Christi | TX | 78411 | USA | City of Corpus Cristi | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | Secondhand Dealer Permit | Active | TX | No license issued | 4701 Ayers, Ste. 600-10 | City License | Corpus Christi | TX | 78415 | USA | City of Corpus Cristi | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | Secondhand Dealer Permit | Active | TX | No license issued | 3710 Leopard Street | City License | Corpus Christi | TX | 78408 | USA | City of Corpus Cristi | This is registered, however no permit issued. | ||||||||||||
The Money Store, L.P. | Secondhand Dealer Permit | Active | TX | No license issued | 11217 Leopard Street | City License | Corpus Christi | TX | 78410 | USA | City of Corpus Cristi | This is registered, however no permit issued. | ||||||||||||
SCIL Texas, LLC | Secondhand Dealer, Class A | Active | TX | 006967-34 | 800 E Seminary Dr | City License | Fort Worth | TX | 76115 | USA | City of Fort Worth | |||||||||||||
SCIL Texas, LLC | Secondhand Dealer, Class A | Active | TX | 006936-34 | 2812 N Main St | City License | Fort Worth | TX | 76106 | USA | City of Fort Worth | |||||||||||||
Concord Finance, Inc | Short Term Loan Business | Active | MO | LIC-9-15-10048407 | 3947 Main St | City License | Kansas City | MO | 64111 | USA | Kansas (KS) City | |||||||||||||
Concord Finance, Inc | Short Term Loan Business | Active | MO | LIC-9-15-10047993 | 1331 E. 63rd St | City License | Kansas City | MO | 64110 | USA | Kansas (KS) City | |||||||||||||
Concord Finance, Inc | Short Term Loan Business | Active | MO | LIC-9-15-10047995 | 2600 Independence Blvd | City License | Kansas City | MO | 64124 | USA | Kansas (KS) City | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 09037010 | 6902 Harrisburg Blvd | City License | Houston | TX | 77011 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 11015199 | 7434 Airline Dr | City License | Houston | TX | 77076 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 08028270 | 1160 Edgebrook Dr | City License | Houston | TX | 77034 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 08028317 | 8602 S Braeswood Blvd | City License | Houston | TX | 77031 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 07084075 | 5506-A Bellaire Blvd | City License | Houston | TX | 77081 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 07084080 | 5506-A Bellaire Blvd | City License | Houston | TX | 77081 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 08069732 | 6902 Harrisburg Blvd | City License | Houston | TX | 77011 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 11336 | 1221 Main St | City License | Pasadena | TX | 77506 | USA | City of Pasedena | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 09018846 | 8569 Long Point | City License | Houston | TX | 77055 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 08028303 | 8602 S Braeswood Blvd | City License | Houston | TX | 77031 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 08101649 | 13482 Northwest Hwy, Ste 100 | City License | Houston | TX | 77040 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 12069664 | 10884 West Bellfort St. | City License | Houston | TX | 77099 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 10035178 | 3802 S Gressner | City License | Houston | TX | 77063 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 09018810 | 8569 Long Point | City License | Houston | TX | 77055 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 07106828 | 1160 Edgebrook Dr | City License | Houston | TX | 77034 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 10109559 | 7434 Airline Dr | City License | Houston | TX | 77076 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 09018852 | 8569 Long Point | City License | Houston | TX | 77055 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 13026372 | 10884 West Bellfort St. | City License | Houston | TX | 77099 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 10035191 | 3802 S Gressner | City License | Houston | TX | 77063 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 10035186 | 3802 S Gressner | City License | Houston | TX | 77063 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 10035189 | 3802 S Gressner | City License | Houston | TX | 77063 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 07084049 | 5506-A Bellaire Blvd | City License | Houston | TX | 77081 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 07106752 | 883 Federal Rd Ste A | City License | Houston | TX | 77015 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 08028275 | 1160 Edgebrook Dr | City License | Houston | TX | 77034 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 07106852 | 11830 Bellaire Blvd suite A 145 | City License | Houston | TX | 77072 | USA | City of Houston | |||||||||||||
SCIL Texas, LLC | Sign Permit | Active | TX | 08069706 | 6902 Harrisburg Blvd | City License | Houston | TX | 77011 | USA | City of Houston | |||||||||||||
Todd Car Title, Inc | Transaction Privilege and Use Tax Return | Active | AZ | 0926801 | 7202 East McDowell Rd STE A | City License | Scottsdale | AZ | 85257 | City of Scottsdale | ||||||||||||||
Todd Financial, Inc | Transaction Privilege and Use Tax Return | Active | AZ | 0926802 | 7202 East McDowell Rd STE A | City License | Scottsdale | AZ | 85257 | City of Scottsdale | ||||||||||||||
CDM Development, LLC | Transaction Privilege Tax | Active | AZ | 00235400 | 1242 W. Main St | City License | Mesa | AZ | 85201 | USA | City of Mesa | |||||||||||||
Galt Ventures, LLC | Transaction Privilege Tax | Active | AZ | 00235230 | 1960 W. Baseline Rd | City License | Mesa | AZ | 85202 | USA | City of Mesa | |||||||||||||
Galt Ventures, LLC | Transaction Privilege Tax | Active | AZ | 00235233 | 1956 E. Southern Ave #101 | City License | Mesa | AZ | 85204 | USA | City of Mesa | |||||||||||||
Galt Ventures, LLC | Transaction Privilege Tax | Active | AZ | 00235227 | 1242 W. Main St | City License | Mesa | AZ | 85201 | USA | City of Mesa | |||||||||||||
Galt Ventures, LLC | Transaction Privilege Tax | Active | AZ | 00235229 | 1215 S. Country Club Dr | City License | Mesa | AZ | 85210 | USA | City of Mesa | |||||||||||||
Advance Group, Inc | W006 Wire Service | Active | NV | 89969 | 1360 W Cheyenne Ave, Suite101 | City License | North Las Vegas | NV | 89030 | USA | City of North Las Vegas | |||||||||||||
Advance Group, Inc | W006 Wire Service | Active | NV | 92798 | 2332 Civic Center Drive | City License | North Las Vegas | NV | 89030 | USA | City of North Las Vegas | |||||||||||||
Advance Group, Inc | Wire Transfer | Active | NV | W10-00220-L-104104 | 1532 N. Jones Blvd | City License | Las Vegas | NV | 89108 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Wire Transfer | Active | NV | W10-00147 | 7460 W. Cheyenne Ave #110 | City License | Las Vegas | NV | 89129 | USA | City of Las Vegas | |||||||||||||
Advance Group, Inc | Wire Transfer | Active | NV | W10-00140 | 5067 E. Owens Ave | City License | Las Vegas | NV | 89110 | USA | City of Las Vegas | |||||||||||||
FMMR Investments, Inc | Wire Transfer | Active | NV | W10-00116 | 4343 N. Rancho Dr # 150 | City License | Las Vegas | NV | 89130 | USA | City of Las Vegas | |||||||||||||
Principal Investments, Inc | Wire Transfer | Active | NV | W10-00215-L-118928 | 25 N. Lamb Blvd | City License | Las Vegas | NV | 89110 | USA | City of Las Vegas | |||||||||||||
Principal Investments, Inc | Wire Transfer | Active | NV | W10-00101 | 2801 W. Washington Ave Suite 110 | City License | Las Vegas | NV | 89107 | USA | City of Las Vegas |
Entity |
Title |
Status |
State |
Number 1 |
LAddress |
Type |
LCity |
LState |
LZip |
Country |
Contact |
Notes | ||||||||||||
Advance Group, Inc | Wire Transfer | Active | NV | 2000094-905 | 4921 W. Sahara | County License | Las Vegas | NV | 89146 | USA | Clark County | |||||||||||||
Advance Group, Inc | Check Cashing/Deferred Deposit | Active | NV | 1000075-198 | 2710A S. Maryland Pkwy | County License | Las Vegas | NV | 89109 | USA | Clark County | |||||||||||||
Advance Group, Inc | Finance Company License | Active | NV | 2000089-365 | 4921 W. Sahara | County License | Las Vegas | NV | 89146 | USA | Clark County | |||||||||||||
Advance Group, Inc | Real Property & Special Taxes | Active | NV | 140-31-803-008 | 4921 W. Sahara | County License | Las Vegas | NV | 89146 | USA | Clark County | |||||||||||||
Advance Group, Inc | Check Cashing/Deferred Deposit | Active | NV | 2000098-198 | 4921 W. Sahara | County License | Las Vegas | NV | 89146 | USA | Clark County | |||||||||||||
Advance Group, Inc | Finance Company License | Active | NV | 2000097-365 | 2710A S. Maryland Pkwy | County License | Las Vegas | NV | 89109 | USA | Clark County | |||||||||||||
Advance Group, Inc | Wire Transfer | Active | NV | 2000095-905 | 2710A S. Maryland Pkwy | County License | Las Vegas | NV | 89109 | USA | Clark County | |||||||||||||
Advance Group, Inc | Secondhand Dealer Class II | Active | NV | 2000141-735 | 2710A S. Maryland Pkwy | County License | Las Vegas | NV | 89109 | USA | Clark County | |||||||||||||
Advance Group, Inc | Secondhand Dealer Class II | Active | NV | 2000142-735 | 4921 W. Sahara | County License | Las Vegas | NV | 89146 | USA | Clark County | |||||||||||||
Cash Colorado, LLC | Sales Tax Registration | Active | AL | 00042903 | 1501 Eastern Blvd | County License | Montgomery | AL | 36117 | USA | Montgomery County | |||||||||||||
Cash Colorado, LLC | Occupational License | Active | AL | 0001174 | 1501 Eastern Blvd | County License | Montgomery | AL | 36117 | USA | Montgomery County | |||||||||||||
Cash Colorado, LLC | Tax License Application | Active | AL | 139795-ST, ECU, EST, CU | 321 Palisades Blvd | County License | Birmingham | AL | 35209 | USA | Jefferson County | |||||||||||||
Cash Colorado, LLC | Money Lender/Junk Dealer/Pawnbroker | Active | AL | 2016-008065 | 6401 Airport Blvd, Suite B | County License | Mobile | AL | 36608 | USA | Mobile County | |||||||||||||
Cash Colorado, LLC | Junk Dealer License | Active | AL | 0001174 | 1501 Eastern Blvd | County License | Montgomery | AL | 36117 | USA | Montgomery County | |||||||||||||
Cash Colorado, LLC | Junk Dealer License | Active | AL | 16005678 | 321 Palisades Blvd | County License | Birmingham | AL | 35209 | USA | Jefferson County | |||||||||||||
Cash Colorado, LLC | Junk Dealer/ Money Lender License | Active | AL | 0591 | 3410 Hwy 69 N | County License | Northport | AL | 35473 | USA | Tuscaloosa County | |||||||||||||
Cash Colorado, LLC | County Business License | Active | AL | 16013848 | 321 Palisades Blvd | County License | Birmingham | AL | 35209 | USA | Jefferson County | |||||||||||||
Cash Colorado, LLC | Money Lender License | Active | AL | 16005678 | 321 Palisades Blvd | County License | Birmingham | AL | 35209 | USA | Jefferson County | |||||||||||||
Cash Colorado, LLC | Occupational License (Junk Dealer, Pawn & Personal Loans) | Active | AL | 0001171 | 932 Ann St. | County License | Montgomery | AL | 36107 | USA | Montgomery County | |||||||||||||
Cash Colorado, LLC | County License (Money Lend/Pawn/Junk) | Active | AL | 4535 | 4298 University Dr NW | County License | Huntsville | AL | 35816 | USA | Madison County | |||||||||||||
Cash Colorado, LLC | Junk Dealer License | Active | AL | 0590 | 3615 McFarland Blvd. East, Suite 109 | County License | Tuscaloosa | AL | 35405 | USA | Tuscaloosa County | |||||||||||||
Cash Colorado, LLC | County Business License | Active | AL | 0590 | 3615 McFarland Blvd. East, Suite 109 | County License | Tuscaloosa | AL | 35405 | USA | Tuscaloosa County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 073952 | 5900 Brainerd Rd. | County License | Chattanooga | TN | 37411 | USA | Hamilton County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 0318406 | 4403 Chapman Highway | County License | Knoxville | TN | 37920 | USA | Knox County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 175588 | 120 Gallatin Pike S. | County License | Madison | TN | 37115 | USA | Davidson County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 175210 | 2401 Nolensville Pike | County License | Nashville | TN | 37211 | USA | Davidson County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 176985 | 5701 Charlotte Pike | County License | Nashville | TN | 37209 | USA | Davidson County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 178321 | 5002 Harding Place | County License | Nashville | TN | 37211 | USA | Davidson County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 0318479 | 106 Knox Road | County License | Knoxville | TN | 37918 | USA | Knox County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 0553880 | 1698 Memorial Blvd | County License | Murfreesboro | TN | 37129 | USA | Rutherford County | |||||||||||||
Concord Finance, Inc | Tangible Personal Property Tax | Active | TN | 159003 | 120 Gallatin Pike S. | County License | Madison | TN | 37115 | USA | Davidson County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 0201887 | 1655 Fort Campbell Blvd. | County License | Clarksville | TN | 37042 | USA | Montgomery County | |||||||||||||
Concord Finance, Inc | County Business License | Active | TN | 0104376 | 808 25th St. NW | County License | Cleveland | TN | 37311 | USA | Bradley County | |||||||||||||
Concord Finance, Inc | County License (City license in same app) | Active | TN | 185228 | 3100 Dickerson Pike | County License | Nashville | TN | 37207 | USA | City of Nashville | |||||||||||||
Concord Finance, Inc | Occupational License Tax | Active | LA | 25360710 | 2785 Belle Chasse Highway | County License | Gretna | LA | 70056 | USA | Jefferson County | |||||||||||||
Evergreen Financial Investments, Inc | Alarm Permit | Active | OR | 92908/92909 | 19026 E. Burnside St. | County License | Portland (Gresham) | OR | 97233 | USA | Multnomah County | |||||||||||||
FMMR Investments, Inc | Wire Transfer | Active | NV | 2000036-905 | 4241 S. Nellis Blvd | County License | Las Vegas | NV | 89117 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Wire Transfer | Active | NV | 2000035-905 | 4199 S. Ft. Apache Rd #D | County License | Las Vegas | NV | 89147 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Wire Transfer | Active | NV | 2000030-905 | 7865 W. Sahara Ave, #102/103 | County License | Las Vegas | NV | 89117 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Check Cashing/Deferred Deposit | Active | NV | 2000132-198 | 4199 S. Ft. Apache Rd #D | County License | Las Vegas | NV | 89147 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Check Cashing/Deferred Deposit | Active | NV | 2000131-198 | 4241 S. Nellis Blvd | County License | Las Vegas | NV | 89117 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Wire Transfer | Active | NV | 2000038-905 | 5676 S. Eastern Ave | County License | Las Vegas | NV | 89119 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Finance Company License | Active | NV | 2000125-365 | 5676 S. Eastern Ave | County License | Las Vegas | NV | 89119 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Check Cashing/Deferred Deposit | Active | NV | 2000142-198 | 5676 S. Eastern Ave | County License | Las Vegas | NV | 89119 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Finance Company License | Active | NV | 2000117-365 | 4199 S. Ft. Apache Rd #D | County License | Las Vegas | NV | 89147 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Finance Company License | Active | NV | 2000123-365 | 7865 W. Sahara Ave, #102/103 | County License | Las Vegas | NV | 89117 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Check Cashing/Deferred Deposit | Active | NV | 2000123-198 | 7865 W. Sahara Ave, #102/103 | County License | Las Vegas | NV | 89117 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Finance Company License | Active | NV | 2000116-365 | 4241 S. Nellis Blvd | County License | Las Vegas | NV | 89117 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Secondhand Dealer Class II | Active | NV | 2000143-735 | 4241 S. Nellis Blvd | County License | Las Vegas | NV | 89117 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Secondhand Dealer Class II | Active | NV | 2000144-735 | 4199 S. Ft. Apache Rd #D | County License | Las Vegas | NV | 89147 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Secondhand Dealer Class II | Active | NV | 2000145-735 | 7865 W. Sahara Ave, #102/103 | County License | Las Vegas | NV | 89117 | USA | Clark County | |||||||||||||
FMMR Investments, Inc | Secondhand Dealer Class II | Active | NV | 2000147-735 | 5676 S. Eastern Ave | County License | Las Vegas | NV | 89119 | USA | Clark County | |||||||||||||
Principal Investments, Inc | Finance Company License | Active | NV | 2000021-365 | 3475 E. Flamingo Rd. # 300 | County License | Las Vegas | NV | 89121 | USA | Clark County | |||||||||||||
Principal Investments, Inc | Check Cashing/Deferred Deposit | Active | NV | 2000030-198 | 3475 E. Flamingo Rd. # 300 | County License | Las Vegas | NV | 89121 | USA | Clark County | |||||||||||||
Principal Investments, Inc | Check Cashing/Deferred Deposit | Active | NV | 2000087-198 | 6115 W. Flamingo Rd | County License | Las Vegas | NV | 89103 | USA | Clark County | |||||||||||||
Principal Investments, Inc | Finance Company License | Active | NV | 2000083-365 | 6115 W. Flamingo Rd | County License | Las Vegas | NV | 89103 | USA | Clark County | |||||||||||||
Principal Investments, Inc | Wire Transfer | Active | NV | 2000096-905 | 3475 E. Flamingo Rd. # 300 | County License | Las Vegas | NV | 89121 | USA | Clark County | |||||||||||||
Principal Investments, Inc | Wire Transfer | Active | NV | 2000097-905 | 6115 W. Flamingo Rd | County License | Las Vegas | NV | 89103 | USA | Clark County | |||||||||||||
Principal Investments, Inc | Secondhand Dealer Class II | Active | NV | 2000140-735 | 3475 E. Flamingo Rd. # 300 | County License | Las Vegas | NV | 89121 | USA | Clark County | |||||||||||||
Principal Investments, Inc | Secondhand Dealer Class II | Active | NV | 2000138-735 | 6115 W. Flamingo Rd | County License | Las Vegas | NV | 89103 | USA | Clark County |
SCHEDULE XIII
CERTAIN FINANCIAL STATEMENTS
Annual: December 31, 2015
Third quarter 2016: September 30, 2016
SCHEDULE XIV
[RESERVED]
SCHEDULE XV
CASH MANAGEMENT SYSTEM
Loan Party |
Bank |
Account Number |
Account purpose |
|||
Attain Finance LLC | Axiom Bank |
[****] |
Load Fund-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
ACH Fund-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
Pool Fund-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
Revenue-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
Reserve-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
Bill Pay-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
Chargeback-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
Visa Settlement-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
MC Settlement-Attain | |||
Attain Finance LLC | Axiom Bank |
[****] |
Overdraft-Attain | |||
Attain Finance LLC | Metropolitan Commercial Bank |
[****] |
Cardholder Pooled Funds - Attain | |||
Attain Finance LLC | Metropolitan Commercial Bank |
[****] |
Reserve - Attain | |||
Attain Finance LLC | Metropolitan Commercial Bank |
[****] |
Settlement - Attain | |||
Attain Finance LLC | Metropolitan Commercial Bank |
[****] |
Operating - Attain | |||
Attain Finance LLC | Metropolitan Commercial Bank |
[****] |
Adjustments - Attain | |||
Attain Finance LLC | Metropolitan Commercial Bank |
[****] |
Revenue - Attain | |||
CFTC Finance, Inc. | Wells Fargo |
[****] |
CFTC Finance Inc | |||
Concord Finance, Inc. | Wells Fargo |
[****] |
Concord Concentration | |||
Curo Group Holdings Corp | Wells Fargo |
[****] |
Curo Group Holdings | |||
Curo Intermediate Holdings Corp. | Wells Fargo |
[****] |
Curo Intermediate Holdings | |||
Curo Management, LLC | Wells Fargo |
[****] |
Curo Payroll | |||
Curo Management, LLC | Wells Fargo |
[****] |
Curo Concentration | |||
Curo Management, LLC | Wells Fargo |
[****] |
Curo Payables | |||
Curo Management, LLC | Wells Fargo |
[****] |
Curo HCA | |||
Curo Management, LLC | Wells Fargo |
[****] |
Bill Pay Account | |||
Curo Management, LLC | Wells Fargo |
[****] |
Money Order Account | |||
Curo Management, LLC | Wells Fargo |
[****] |
MoneyGram Account | |||
Curo Management, LLC | Wells Fargo |
[****] |
Credit Card Account | |||
Curo Management, LLC | Wells Fargo |
[****] |
Miscellaneous Account | |||
Curo Management, LLC | Wells Fargo |
[****] |
ACH Account | |||
Curo Management, LLC | Wells Fargo |
[****] |
Store Depository Account | |||
SC Aurum, LLC | Wells Fargo |
[****] |
SC Aurum | |||
SCIL Texas, LLC | Wells Fargo |
[****] |
SCIL TX Concentration | |||
SCIL, Inc | Wells Fargo |
[****] |
SCIL Concentration | |||
Speedy Cash, Inc. | Wells Fargo |
[****] |
Speedy Cash Illinois - | |||
Operating Acct | ||||||
The Money Store, LP | Wells Fargo |
[****] |
Speedy Cash Inc - | |||
Auction Proceeds |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
EXHIBIT A-1
,
FORM OF NOTICE OF BORROWING
Victory Park Management, LLC, as Administrative Agent
(the Administrative Agent ) for the Lenders
party to the Credit Agreement referred to below
227 W. Monroe Street, Suite 3900
Chicago, Illinois 60606
Telephone: | (312) 705-2786 | |
Facsimile: | (312) 701-0794 | |
Attention: | Scott R. Zemnick, General Counsel |
E-mail:szemnick@vpcadvisors.com
Ladies and Gentlemen:
The undersigned, Curo Intermediate Holdings Corp. (the Borrower ), refers to the Credit Agreement, dated as of November 17, 2016 (as amended, restated, modified and/or supplemented from time to time, the Credit Agreement , the capitalized terms defined therein being used herein as therein defined), among Speedy Cash Holdings Corp., the Borrower, the lenders from time to time party thereto (each, a Lender and collectively, the Lenders ), and you, as Administrative Agent for such Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.03(a) of the Credit Agreement, that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the Proposed Borrowing ) as required by Section 2.03(a) of the Credit Agreement:
(i) | The Business Day of the Proposed Borrowing is , . 1 |
(ii) | The aggregate principal amount of the Proposed Borrowing is $ . |
The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit Agreement and in the other Credit Documents are and will be true and correct in all material respects (or all respects to the extent that such representations and warranties are qualified by materiality or Material Adverse Effect), before and after giving effect to the Proposed Borrowing and to the application of the proceeds thereof, as though made on such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects (or all respects, as the case may be) as of such earlier date; and
1 | Shall be a Business Day at least fifteen (15) days after the date hereof, provided that (in each case) any such notice shall be deemed to have been given on a certain day only if given before 1:00 P.M. (New York time) on such day. |
(B) no Default or Event of Default has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds thereof.
Very truly yours, | ||
CURO INTERMEDIATE HOLDINGS CORP. |
||
By: |
|
|
Name: | ||
Title: |
- 2 -
EXHIBIT A-2
[Reserved].
3
EXHIBIT B-1 | ||
FORM OF NOTE | ||
$__________________ | New York, New York | |
________ __, _____ |
FOR VALUE RECEIVED, CURO INTERMEDIATE HOLDINGS CORP., a Delaware corporation (the Borrower ), hereby promises to pay to [Lender Name] or its registered assigns (the Lender ), in lawful money of the United States of America in immediately available funds, at the Payment Office (as defined in the Agreement referred to below) initially located at 227 W. Monroe Street, Suite 3900, Chicago, Illinois 60606 on the Maturity Date (as defined in the Agreement) the principal sum of DOLLARS ($ ) or, if less, the unpaid principal amount of all Loans (as defined in the Agreement)
made by the Lender pursuant to the Agreement, payable at such times and in such amounts as are specified in the Agreement.
The Borrower also promises to pay interest on the unpaid principal amount of each Loan made by the Lender in like money at said office from the date hereof until paid at the rates and at the times provided in Section 2.08 of the Agreement.
This Note is one of the Notes referred to in the Credit Agreement, dated as of November 17, 2016, among Curo Financial Technologies Corp., as Holdings ), the Borrower, the lenders from time to time party thereto (including the Lender), and Victory Park Management, LLC, as Administrative Agent (as amended, restated, modified and/or supplemented from time to time, the Agreement ) and is entitled to the benefits thereof and of the other Credit Documents (as defined in the Agreement). This Note is secured by the Security Documents (as defined in the Agreement) and is entitled to the benefits of the Guaranties (as defined in the Agreement). As provided in the Agreement, this Note is subject to voluntary prepayment and mandatory repayment prior to the Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur and be continuing, the principal of and accrued interest on this Note may be declared to be due and payable in the manner and with the effect provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Note.
4
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
CURO INTERMEDIATE HOLDINGS CORP. | ||
By: |
|
|
Name: | ||
Title: |
5
EXHIBIT B-2
[Reserved].
6
EXHIBIT C
CREDIT POLICY
(on file electronically with the Administrative Agent)
7
EXHIBIT D
FORM OF SECTION 5.04(b)(ii)
CERTIFICATE
(not included in signed agreement)
EXHIBIT E-1
FORM OF OPINION OF WILLKIE FARR & GALLAGHER LLP, COUNSEL TO THE
CREDIT PARTIES
See attached.
8
787 Seventh, Avenue New York, NY 10019-6099 Tel: 212 728 8000 Fax: 212 728 8111 |
November 17, 2016
Victory Park Management, as Agent
227 W. Monroe Street, Suite
Chicago, Illinois 60606
The Lenders (as defined below) signatory to the Credit Agreement on the date hereof
Re: Curo Intermediate-Credit Agreement
Ladies and Gentlemen:
We have acted as special New York counsel to Curo Financial Technologies Corp., a Delaware corporation ( Holdings ), Curo Intermediate Holdings Corp., a Delaware corporation (the Borrower and together with Holdings, the Delaware Loan Parties and each a Delaware Loan Party ), the entities listed on Schedule I hereto (the Non-Delaware Loan Parties and, together with the Delaware Loan Parties, the Loan Parties )), in connection with that certain Short-Term Credit Agreement, dated as of the date hereof (the Credit Agreement ), among Holdings, the Borrower, the other Loan Parties party thereto, as guarantors, the lenders from time to time party thereto (the Lenders ) and Victory Park Management, LLC, as administrative agent (in such capacity, the Agent ). This opinion is being delivered to you pursuant to Section 6.03 of the Credit Agreement.
Capitalized terms not otherwise defined in this opinion are used as defined in the Credit Agreement. As used herein, the term NYUCC refers to the Uniform Commercial Code as in effect in the State of New York on the date hereof.
In connection with this opinion, we have examined (and only examined) copies
of:
I. | the Credit Agreement, |
2. | the Guaranty, dated as of the date hereof, |
3. | the Security Agreement, dated as of the date hereof, |
4. | the Pledge Agreement, dated as of the date hereof, |
N EW Y ORK W ASHINGTON H OUSTON P ARIS L ONDON F RANKFURT B RUSSELS M ILAN R OME
in alliance with Dickson Minto W.S., London and Edinburgh
Victory Park Management, LLC
November 17, 2016
Page 2
5. | the Trademark Security Agreement, dated as of the date hereof, made by Borrower, The Money Store, L.P., a Texas limited partnership, Attain Finance, LLC, a Nevada limited liability company, and Curo Management LLC, a Nevada limited liability company, in favor of the Agent for the benefit of the Secured Parties (the Trademark Security Agreement ), |
6. | the Deposit Account Control Agreement, dated as of the date hereof, by and among the Borrower, the Agent and Wells Fargo Bank, National Association (the Account Control Agreement ), |
7. | the Servicing Agreement, dated as of the date hereof, by and among the Borrower, and Curo Management LLC (the Servicing Agreement ), |
8. | the Notes, dated as of the date hereof, executed by the Borrower and payable to the order of the Agent, |
9. | the certificate of incorporation of each Delaware Loan Party, each certified as being in effect on the date hereof by its officers and certified by the Secretary of State of the State of Delaware on November 8, 2016 (the Charters ), |
10. | the bylaws of each Delaware Loan Party, each certified as being in effect on the date hereof by its officers, |
11. | written consents of the board of directors of each Delaware Loan Party with respect to the Loan Documents (as defined below) (the Resolutions ), |
12. | certificates of the Secretary of State of the State of Delaware as of a recent date as to the existence and good standing of the Delaware Loan Parties (the Good Standing Certificates ), |
13. | certificates of the duly authorized officers of the Loan Parties certifying as to certain matters related to the Investment Company Act of 1940, as amended (the 1940 Act ), and |
14. | copies of UCC-1 financing statements attached hereto as Exhibit A, each naming the Agent as secured party and a Delaware Loan Party as debtor, to be filed with the Secretary of State of the State of Delaware (the Financing Statements ). |
The documents referred to in the foregoing clauses (1) through (8) above are hereinafter collectively referred to as the Loan Document s and the documents referred to in the foregoing clauses (3) through (5) above are hereinafter collectively referred to as the Security Documents.
In our examination, we have assumed, with your consent and without any investigation:
(i) the genuineness of all signatures of all parties;
Victory Park Management, LLC
November 17, 2016
Page 3
(ii) | the authenticity of all company records, agreements (including, without limitation, the Loan Documents), documents, instruments and certificates submitted to us as originals, the conformity to original documents and agreements of all documents and agreements submitted to us as conformed, certified or photostatic copies thereof and the authenticity of the originals of such conformed, certified or photostatic copies; |
(iii) | that the Agent, the Lenders and all other parties to the Loan Documents (other than the Delaware Loan Parties) have the requisite power and authority to enter into the Loan Documents to which they are a party and to consummate the transactions contemplated thereby; |
(iv) | the legal right and power of all parties (other than the Delaware Loan Parties as to Applicable Laws (as defined below)) under all applicable laws and regulations to enter into, execute and deliver the Loan Documents and all agreements and documents relating to the Loan Documents to which they are a party and to consummate the transactions contemplated thereby; |
(v) | the due authorization of the Loan Documents and the transactions contemplated thereby by all parties thereto (other than the Delaware Loan Parties) and the due execution and delivery of the Loan Documents by all parties thereto (other than the Delaware Loan Parties); |
(vi) | the absence or satisfaction of any requirement of consent, approval or authorization by any Person or by any Governmental Authority (other than, as to any Governmental Approval, the Loan Parties) or, if required, such consent, approval or authorization has been obtained with respect to all parties to the Loan Documents; |
(vii) | that the Loan Documents are legal, valid and binding obligations of the parties thereto (other than the Loan Parties), enforceable against such Persons (other than, subject to the assumptions, limitations and qualifications contained herein, the Loan Parties) in accordance with their respective terms, except to the extent limited by the effects of applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors rights generally; |
(viii) | that the execution, delivery, performance and consummation of the transactions contemplated by the Loan Documents will not violate, conflict with or cause or result in a default under (A) any partys (other than the Delaware Loan Parties) organizational or formation documents, operating agreement or similar governing documents, (B) any agreement, indenture, lease, instrument or other undertaking to which any party is a party or which is binding upon any partys property or assets or (C) any law, treaty, rule or regulation (other than the Applicable Laws as to the Loan Parties) or determination of an arbitrator, court or other Governmental Authority, in each case applicable to or binding upon any party or its property; |
Victory Park Management, LLC
November 17, 2016
Page 4
(ix) | that the proceeds of the Loans to be made on the date hereof have been disbursed in accordance with the Credit Agreement and that each of the Loan Parties has received (directly or indirectly) the agreed to and stated consideration for the incurrence of the obligations applicable to it under the terms of the Loan Documents and has received value (as such term is used in the NYUCC); |
(x) | the accuracy and completeness of all statements and documents reviewed by us, and the accuracy and completeness of all representations, warranties, schedules and exhibits contained in the Loan Documents and any other document or certificates in connection therewith, with respect to the factual matters set forth therein, and that there are no other agreements, side letters or understandings with respect to the subject matter of the Loan Documents that would affect the opinions stated herein; and |
(xi) | each of the Loan Parties has, or with respect to after-acquired prope1iy will have, rights in the Collateral or the power to transfer rights in the Collateral, and we express no opinion as to the nature or extent of any Loan Pa1iys rights in any of the Collateral and we note that with respect to any after-acquired property, the security interest will not attach until the applicable Loan Party, as applicable, acquires such rights or power. |
As to questions of fact material to such opm1ons, we have relied solely and without investigation upon representations of the Loan Parties and their respective officers made in or pursuant to the Loan Documents or in certificates provided to us and of public officials.
As used herein, the term Applicable Laws means (a) the federal laws of the United States of America (the Federal Laws ) and the laws of the State of New York in effect on the date hereof, in each case, that New York counsel exercising customary due diligence would reasonably recognize as being applicable to companies in the transactions contemplated by the Loan Documents and (b) based solely upon our review of recent compilations of statutes (and not any rules or regulations thereunder or judicial interpretations thereof) of the State of Delaware, the General Corporation Law of the State of Delaware, as in effect on the date hereof, and, solely for the purposes of our opinion in paragraph 7 below, and only to the extent provided for therein, the Delaware Uniform Commercial Code (the DUCC ). The term Governmental Approval means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any Governmental Authority pursuant to the Applicable Laws.
The opinions expressed herein are based on and limited to the Applicable Laws and we express no opinion as to any other Jaws and we expressly note that we are not admitted or licensed to practice in the State of Delaware.
Based upon the foregoing and subject to the assumptions, limitations, qualifications and exceptions set forth below, we are of the opinion that:
Victory Park Management, LLC
November 17, 2016
Page 5
1. | Each of the Delaware Loan Parties is a corporation validly existing and in good standing under the laws of the State of Delaware, based solely on our review of the Charters and the Good Standing Cetiificates. |
2. | Each of the Delaware Loan Parties has the requisite corporate power and authority to execute and deliver each Loan Document to which it is a party, to perform its respective obligations under each such Loan Document and to grant the security interests under the Security Documents. The execution and delivery by each of the Delaware Loan Parties of the Loan Documents to which it is a party, the performance by each of the Delaware Loan Parties of its respective obligations under each such Loan Document and the grant of the security interests under the Security Documents have been duly authorized by all necessary corporate action of such Person. |
3. | Each of the Loan Documents to which a Delaware Loan Party is a party has been duly executed and delivered on behalf of such Person. Each of the Loan Documents to which any Loan Party is a party constitutes a legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its terms. |
4. | The execution, delivery and performance by each Loan Party of the Loan Documents to which such Person is a party and the grant of the security interests under the Security Documents do not and will not (i) in the case of each of Delaware Loan Party, violate its respective Charter or bylaws or (ii) violate any provision of the Applicable Laws binding on such Loan Party. |
5. | The execution, delivery and performance by each Loan Party of the Loan Documents to which such Loan Party is a party and the grant of the security interests under the Security Documents do not and will not require any Governmental Approval, except (i) filings necessary to perfect, or to continue the perfection of, security interests in the Collateral, (ii) routine corporate filings required to be made after the date hereof to maintain good standing and to maintain or renew licenses and permits required for the Loan Parties to operate the respective businesses in the ordinary course of business, (iii) with respect to securities constituting Collateral, any action required in respect of a disposition of such securities pursuant to the Security Documents by Jaws affecting the offering and sale of securities generally and (iv) Governmental Approvals for Collateral as to which perfection is not governed by Article 8 or Article 9 of the Uniform Commercial Code. |
6. | The Security Documents create the security interests such agreements respectively purport to create in favor of the Agent for the benefit of the Secured Parties in those items and types of Collateral specified therein in which a security interest may be created under Article 9 of the NYUCC (the Article Collateral ). |
7. |
Based solely upon a review of the DUCC (and not any regulations or rules thereunder or judicial interpretations thereof and without any investigation or review of any other statutory provisions, regulations or rules or judicial decisions that may affect UCC financing statements or the perfection of a security interest in the State of Delaware) |
Victory Park Management, LLC
November 17, 2016
Page 6
contained in a recent compilation of the CCH Secured Transactions Reports, each Financing Statement is in proper form for filing under the DUCC and, to the extent that (i) the DUCC governs the perfection of a security interest in the Article 9 Collateral granted by each Delaware Loan Party, as applicable, under the Security Documents, as to which we express no opinion, and (ii) a security interest in the Article 9 Collateral granted by each Delaware Loan Party, as applicable, can be perfected by filing a financing statement in the Office of the Secretary of State of the State of Delaware, the filing of each Financing Statement is duly filed with the Office of the Secretary of State of the State of Delaware, will result in the perfection of a security interest in favor of the Agent for the benefit of the Secured Parties in such portion of the Article 9 Collateral owned by each Delaware Loan Party or in which such Delaware Loan Party has rights, as applicable, that can be perfected by such a filing.
8. | The security interests created in favor of the Agent in the Capital Stock listed on Schedule I hereto (the Capital Stock ), will be perfected by the Agent taking possession in the State of New York of the certificates evidencing such Capital Stock, together with assignments executed in blank and, if the Agent obtains such perfected security interest without notice of an adverse claim (as defined in Section 8-105 of the NYUCC), the Agent will obtain such security interest free of any such adverse claim (as defined in Section 8-102 of the NYUCC). |
9. | None of the Loan Parties is, or immediately after the funding of the Loans on the date hereof will be, required to register as an investment company within the meaning of the 1940 Act. |
10. | The making of the Loans to be made on the date hereof under the Credit Agreement and the application of the proceeds thereof as provided in the Credit Agreement do not violate Regulations T, U or X of the Board of Governors of the Federal Reserve Board. |
The foregoing opinions are subject to the following assumptions, qualifications and exceptions:
(1) | We wish to point out that Sections 9-301 through 9-307 of the NYUCC (and similar provisions of the DUCC) provide certain rules for the perfection of security interests in multiple state transactions. Such rules provide that the law of jurisdictions other than those covered in the opinions expressed herein may govern the perfection of the security interests created by the Loan Documents and the effect of perfection or non-perfection. |
(2) | We note that the validity, perfection and enforceability of a security interest in after acquired property, money, or ce1iain securities or instruments are subject to limitations under the Bankruptcy Code (including Section 552), and we express no opinion with respect thereto. We also note that the security interest in the proceeds of any Collateral may be subject to Section 9-315 of the NYUCC. In addition, no opinion is expressed with respect to (i) the validity or enforceability of any provision of the Loan Documents purporting to give a security interest in a claim or right with respect to any insurance policy, other than health-care-insurance receivables (as defined in the NYUCC), (ii) the |
Victory Park Management, LLC
November 17, 2016
Page 7
validity or enforceability of those provisions of the Loan Documents relating to the creation or existence of security interests in tort claims (other than commercial tort claims which are specifically identified in the Security Agreement) or (iii) except as expressly set forth in opinion paragraph 8 above, the perfection of any security interests or other interests in, or rights with respect to, property or other collateral that may not be perfected by the filing of a Uniform Commercial Code financing statement in the State of Delaware. |
(3) | We call to your attention that in many cases where the NYUCC renders anti-assignment provisions contained in agreements, instruments or other documentation creating or evidencing collateral ineffective for the purposes of the creation, attachment or perfection of a security interest, the security interest is not enforceable against the account debtor or other Person obligated under such agreement, instrument or other documentation without such Persons consent. |
(4) | No opinion is given as to what law governs perfection or, except as set forth in the opinion in paragraph 8 above, the priority of the security interests granted in the Collateral covered by this letter or as to the effectiveness of any security interest or pledge of a contract or other asset which contains a prohibition of such pledge of a security interest except to the extent such prohibition is expressly overridden pursuant to NYUCC. |
(5) | The opinions set forth above are subject to (i) provisions of Section 9-615 of the NYUCC which limit the ability of a secured party to collect a deficiency from a debtor or obligor (including guarantors) in the event a sale of collateral is not conducted in a commercially reasonable manner or in the event of certain dispositions to the secured party or a Person related to a secured party, (ii) provisions of Section 9-602 of the NYUCC which limits any provision in any Loan Document which purports to define whether any disposition constitutes a commercially reasonable disposition and (iii) provisions of Section 9-602 of the NYUCC which limits any provision in any Loan Document which purports to waive certain rights of any Borrower or any other obligor or duties of any secured party. We note that sales by the Agent, any Lender or any other secured party under the Loan Documents of Collateral constituting securities under applicable Federal or state securities laws require compliance with such laws or an exemption therefrom. |
(6) | For purposes of Section 9-503(a)(l) of the DUCC, we assume that the Charter of each Delaware Loan Party constitutes the public organic record of such debtors jurisdiction which purports to state, amend, restate or correct such debtors name and which indicates the correct name of such debtor; in addition, we assume that each Financing Statement correctly sets fort the mailing address of the secured party and the applicable debtor and the name of the secured party. |
Victory Park Management, LLC
November 17, 2016
Page 8
(7) | The opinions expressed above are qualified (i) by the effects of applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors rights generally, (ii) insofar as the remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and the discretion of the court before which any enforcement thereof may be brought and (iii) insofar as enforcement proceedings may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity), including principles of commercial reasonableness and an implied covenant of good faith and fair dealing. Such principles of equity are of general application, and in applying such principles, a court, among other things, might not allow a creditor to accelerate the maturity of a debt, to realize upon any security for the payment of such debt upon the occurrence of a default deemed immaterial, or to exercise any right of set-off with respect to debt which is neither matured nor accelerated, or might decline to order the Loan Parties to specifically perform covenants. Insofar as provisions provide for indemnification, the enforcement thereof may be limited by public policy considerations or other applicable law. Such opinions are further subject to the qualification that certain remedial provisions of the Loan Documents are or may be unenforceable in whole or in part under the Jaws of the State of New York, but the inclusion of such provisions does not affect the validity of any Loan Document in which any such provision is included, and such Loan Document contain adequate provisions for enforcing payment of the obligations thereunder and for the practical realization of the rights and benefits afforded thereby. |
(8) | We express no opinion as to the effect of the law of any jurisdiction other than the State of New York that limits the rates of interest legally chargeable or collectible in which any Lender or the Agent (or assignee of or participant in any of the rights and/or obligations of any Lender or the Agent under the Loan Documents) may be located and in which enforcement of the Loan Documents may be sought. |
(9) | We express no opinion as to (i) whether any Person has title to any Collateral or, except as set forth in opinion paragraphs 7 and 8 above, whether any security interest therein is perfected, (ii) except as set forth in Opinion paragraph 8 above, the priority of any security interest, (iii) any provisions of the Loan Documents insofar as they relate to (a) the subject matter jurisdiction of the federal courts to adjudicate any controversy relating to the Loan Documents, (b) the waiver of defenses and the waiver of inconvenient forum and the advance waiver of claims, defense and rights granted under applicable law, (c) the waiver to the right to a jury trial or of notice, opportunity for a hearing, evidentiary requests, statutes of limitation or other procedural rights, (d) the waiver of objection of venue set forth in the Loan Documents with respect to proceedings in federal courts, (e) the establishment of a contractual rate of interest after judgment, (f) adjustments of payments among Lenders or rights of set-off, recoupments or counterclaims, (g) obligations to make any agreement in the future, (h) severability, (i) determinations whether any particular sale of Collateral is commercially reasonable, U) any provisions for liquidated damages, (k) provisions for default interest, late charges or other economic remedies to the extent such provisions are deemed to constitute a penalty, (I) in any event and without limiting the other laws excluded above from the coverage of this opinion, |
Victory Park Management, LLC
November 17, 2016
Page 9
securities laws (except as set forth in opinion paragraph 10 above), commodities laws, blue sky laws, broker dealer regulations, the Investment Company Act (except as set fm1h in opinion paragraph 9 above), zoning laws, tax laws, antitrust or trade regulation laws, energy, utilities, national security, anti-terrorism, anti-money laundering, municipal, antifraud laws, the Dodd Frank Act, the Commodities Exchange Act, the small business investment company act and the insurance law and regulation of New York or any other state, (m) exclusivity, election or accumulation of rights or remedies, (n) any provisions purporting to obligate any Loan Party to cause any Person (other than a Subsidiary of any Loan Party) to take or omit to take any action and grants of powers of attorney or proxies to the Agent or any Lender, (o) limitations on the effectiveness of oral amendments, modifications, consents and waivers, (p) except to the limited extent set fot1h in opinion paragraph 6, the creation, continuation or renewal of any security interest or other lien, (q) exculpation or exoneration clauses, indemnity clauses and clauses relating to releases or waivers of unmatured claims or rights or (r) provisions evidencing liabilities or other obligations inherently vague, indeterminate or indefinite, or (iii) the effect of any federal or state fraudulent conveyance or transfer law, including Section 548 of the Bankruptcy Code, as amended, on the opinions set forth above. |
(10) | No opinion is given as to any Article 9 Collateral constituting as-extracted collateral located in the State of Delaware, timber to be cut located in the State of Delaware, fixtures located in the State of Delaware or goods that are or are to become fixtures located in the State of Delaware. |
(11) | No opinion is given as to any obligation of any Loan Party in respect of any swap or security based swap constituting an Obligation if such Loan Pm1y is not an eligible contract participant as defined in the Dodd Frank Act. |
(12) | We note that subsequent filings or recordings under the DUCC, as applicable, may be necessary to preserve and maintain the perfection of the security interest referred to in opinion paragraph 7 above, including without limitation filings required by Sections 9-301, 9-315(d), 9-316,9-507,9-508 and 9-515 of the DUCC. |
(13) | For purposes of our opinion set f011h in opinion paragraph 8 above, we have assumed, without independent investigation, that each applicable pledged Capital Stock is a cet1ificated security in registered form within the meaning of Section 8-102 of the NYUCC and is registered on the books of the issuer in the name of the applicable Loan Party. |
This opinion letter is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated. This opinion letter may not be quoted, distributed or disclosed, without our prior written consent, except (a) to your counsel, your auditors and bank examiners, (b) to any state or Federal governmental or other regulatory authority, (c) pursuant to legal process of any court or governmental or regulatory authority or (d) to actual or prospective successors, participants and assignees, in each case in accordance with the Credit Agreement and subject to the express terms of the last two paragraphs of this opinion.
Victory Park Management, LLC
November 17, 2016
Page 10
This opinion letter speaks only as of the date hereof and is limited to present law, statutes, regulations and administrative and judicial interpretations. We undertake no responsibility or obligation to update or supplement this opinion letter after the date hereof, including without limitation with respect to any action which may be required in the future to create a valid lien on after-acquired property or to perfect or continue the perfection of any security interest, including after a change in the name, identity, corporate structure or location of any Loan Party, and including whether or not changes in facts or laws come to our attention after the date hereof. Further, we accept and undertake no responsibility or obligation to you, any Loan Party or any affiliates of either thereof for the filing of any financing statements or any such continuation statements or any amendments with respect to any of the financing statements referred to herein, or as to the filing of any other documents, to perfect or maintain the perfection of any security interest.
No person or entity may rely or claim reliance upon this opinion letter other than you and your permitted actual successors and assigns in accordance with the Credit Agreement, provided that in any event any reliance by a permitted successor or assign must be as of the stated date of this opinion and must also be actual and reasonable under the circumstances existing at the time of the succession or assignment, including with respect to any changes in laws or facts or other developments known or reasonably knowable by such successor or assignee at such time, and in no event shall any permitted successor or assign have any greater rights with respect hereto than the original addressees hereof on the date hereof.
Very truly yours, |
/s/ Willkie Farr & Gallagher LLP |
18649769
EXHIBIT A
FINANCING STATEMENTS
See Attached.
UCC FINANCING STATEMENT FOLLOW INSTRUCTIONS A. NAME & PHONE OF CONTACT AT FILER (optional) B. E-MAIL CONTACT AT FILER (optional) C. SEND ACKNOWLEDGMENT TO: (Name and Address) THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 1. DEBTORS NAME: Provide only one Debtor name (1a or 1b) (use exact, full name; do not omit, modify, or abbreviate any part of the Debtors name); if any part of the Individual Debtors name will not fit in line 1b, leave all of item 1 blank, check here [GRAPHIC APPEARS HERE] and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad) 1a. ORGANIZATIONS NAME OR CURO Financial Tecgnologies Corp. 1b. INDIVIDUALS SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX 1c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 3527 North Ridge Road Wichita KS 67205 USA 2. DEBTORS NAME: Provide only one Debtor name (2a or 2b) (use exact, full name; do not omit, modify, or abbreviate any part of the Debtors name); if any part of the Individual Debtors name will not fit in line 2b, leave all of item 2 blank, check here [GRAPHIC APPEARS HERE] and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad) 2a. ORGANIZATIONS NAME OR 2b. INDIVIDUALS SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX 2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 3. SECURED PARTYS NAME (or NAME of ASSIGNEE of ASSIGNOR SECURED PARTY): Provide only one Secured Party name (3a or 3b) 3a. ORGANIZATIONS NAME OR Victory Park Management, LLC 3b. INDIVIDUALS SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX 3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 227 W. Monroe Street, Suite 3900 Chicago IL 60606 USA 4. COLLATERAL: This financing statement covers the following collateral: All assets of Debtor whether now existing or hereafter from time to time acquired and any proceeds thereof. 5. Check only if applicable and check only one box: Collateral is held in a Trust (see UCC1Ad, item 17 and Instructions) being administered by a Decedents Personal Representative 6a. Check only if applicable and check only one box: 6b. Check only if applicable and check only one box: Public-Finance Transaction Manufactured-Home Transaction A Debtor is a Transmitting Utility Agricultural Lien Non-UCC Filing 7. ALTERNATIVE DESIGNATION (if applicable): Lessee/Lessor Consignee/Consignor Seller/Buyer Bailee/Bailor Licensee/Licensor 8. OPTIONAL FILER REFERENCE DATA: W.D. 102588/00010File with the Delaware Secretary of State FILING OFFICE COPY UCC FINANCING STATEMENT (Form UCC1) (Rev. 04/20/11) International Association of Commercial Administrators (IACA)
UCC FINANCING STATEMENT FOLLOW INSTRUCTIONS A. NAME & PHONE OF CONTACT AT FILER (optional) B. E-MAIL CONTACT AT FILER (optional) C. SEND ACKNOWLEDGMENT TO: (Name and Address) THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY 1. DEBTORS NAME: Provide only one Debtor name (1a or 1b) (use exact, full name; do not omit, modify, or abbreviate any part of the Debtors name); if any part of the Individual Debtors name will not fit in line 1b, leave all of item 1 blank, check here [GRAPHIC APPEARS HERE] and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad) 1a. ORGANIZATIONS NAME OR CURO Intermediate Holdings Corp. 1b. INDIVIDUALS SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX 1c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 3527 North Ridge Road Wichita KS 67205 USA 2. DEBTORS NAME: Provide only one Debtor name (2a or 2b) (use exact, full name; do not omit, modify, or abbreviate any part of the Debtors name); if any part of the Individual Debtors name will not fit in line 2b, leave all of item 2 blank, check here [GRAPHIC APPEARS HERE] and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad) 2a. ORGANIZATIONS NAME OR 2b. INDIVIDUALS SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX 2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 3. SECURED PARTYS NAME (or NAME of ASSIGNEE of ASSIGNOR SECURED PARTY): Provide only one Secured Party name (3a or 3b) 3a. ORGANIZATIONS NAME OR Victory Park Management, LLC 3b. INDIVIDUALS SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX 3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 227 W. Monroe Street, Suite 3900 Chicago IL 60606 USA 4. COLLATERAL: This financing statement covers the following collateral: All assets of Debtor whether now existing or hereafter from time to time acquired and any proceeds thereof. 5. Check only if applicable and check only one box: Collateral is held in a Trust (see UCC1Ad, item 17 and Instructions) being administered by a Decedents Personal Representative 6a. Check only if applicable and check only one box: 6b. Check only if applicable and check only one box: Public-Finance Transaction Manufactured-Home Transaction A Debtor is a Transmitting Utility Agricultural Lien Non-UCC Filing 7. ALTERNATIVE DESIGNATION (if applicable): Lessee/Lessor Consignee/Consignor Seller/Buyer Bailee/Bailor Licensee/Licensor 8. OPTIONAL FILER REFERENCE DATA: W.D. 102588/00010File with the Delaware Secretary of State FILING OFFICE COPY UCC FINANCING STATEMENT (Form UCC1) (Rev. 04/20/11) International Association of Commercial Administrators (IACA)
SCHEDULE I
NON-DELAWARE LOAN PARTIES
1. | A Speedy Cash Car Title Loans, LLC |
2. | Advance Group, Inc. |
3. | Attain Finance, LLC |
4. | Cash Colorado, LLC |
5. | Concord Finance, Inc. |
6. | Evergreen Financial Investments, Inc. |
7. | FMMR Investments, Inc. |
8. | Galt Ventures, LLC |
9. | LendDirect Corp. |
10. | Principal Investments, Inc. |
11. | SC Aurum, LLC |
12. | SCIL Texas, LLC |
13. | SCIL, Inc. |
14. | Speedy Cash |
15. | Speedy Cash Illinois, Inc. |
16. | SC Texas MB, Inc. |
17. | The Money Store, L.P. |
18. | The Money Store, L.P. |
19. | Curo Management LLC |
20. | Todd Car Title, Inc. |
21. | Todd Financial, Inc. |
SCHEDULE II
CAPITAL STOCK
Holding Entity |
Name of
Issuing Corporation |
Type of
Shares |
Number
of Shares |
Certificate
No. |
Percentage
Owned |
|||||||
Curo Financial Technologies Corp. |
Speedy Cash
Intermediate Holdings Corp. |
Common
stock |
100
shares |
1 | 100 | % | ||||||
Curo Intermediate Holdings Corp. |
Advance Group,
Inc. |
Common
stock |
760
shares |
1-SC | 100 | % | ||||||
Curo Intermediate Holdings Corp. |
Concord Finance,
Inc. |
Common
stock |
2,500
shares |
1-SC | 100 | % | ||||||
Curo Intermediate Holdings Corp. |
Evergreen
Financial Investments, Inc. |
Common
stock |
2,500
shares |
1-SC | 100 | % | ||||||
Curo Intermediate Holdings Corp. |
FMMR
Investments, Inc. |
Common
stock |
400
shares |
1-SC | 100 | % | ||||||
Curo Intermediate Holdings Corp. |
Principal
Investments, Inc. |
Common
stock |
760
shares |
1-SC | 100 | % | ||||||
Curo Intermediate Holdings Corp. |
SCIL, Inc. |
Common
stock |
300
shares |
1-SC | 100 | % | ||||||
Curo Intermediate Holdings Corp. |
Todd Car Title, Inc. |
Common
stock |
2,124
shares |
1-SC | 100 | % | ||||||
Curo Intermediate Holdings Corp. |
Todd Financial,
Inc. |
Common
stock |
2,124
shares |
1-SC | 100 | % |
Holding Entity |
Name of Issuing Limited |
Type of Interest |
||||||
Liability Company |
||||||||
Curo Intermediate | Attain Finance, LLC | Membership interests | ||||||
Holdings Corp. | ||||||||
Curo Intermediate | SC Aurum, LLC | Membership interests | ||||||
Holdings Corp. |
EXHIBIT E-2
[ Reserved ].
9
EXHIBIT E-3
[ Reserved ].
10
EXHIBIT F
FORM OF OFFICERS CERTIFICATE
I, I, [ ] , the duly qualified and elected [ ] of each undersigned entity (the Subject Parties ), do hereby certify in such capacity and on behalf of each of the Subject Parties
that:
Attached hereto as Exhibit A is a true, complete and correct copy of the certificate or articles of incorporation, certificate of formation or articles of organization of each of the Subject Parties, as applicable (each, a Charter Document and collectively, the Charter Documents ), certified as such by the Secretary of State or Commonwealth or Department of State of the state of incorporation or formation, as applicable, of the applicable Subject Party (the Secretary of State ). Such Charter Documents are in full force and effect on the date hereof and have not otherwise been amended, modified or rescinded, and no proceedings for the amendment, modification or rescission thereof are pending or contemplated. No amendment or other document relating to or affecting the Charter Documents has been filed in the office of the Secretary of State since the date of such certification and no action has been taken by any of the Subject Parties, their shareholders, directors, or officers in contemplation of the filing of any such amendment or other document or in contemplation of the liquidation or dissolution of any Subject Party.
Attached hereto as Exhibit B is a true, complete and correct copy of the bylaws or operating agreements, as applicable, of each of the Subject Parties as in full force and effect on the date hereof (the Operating Documents ). Such Operating Documents have not been amended, modified or rescinded, and no proceeding for the amendment, modification or rescission thereof are pending or contemplated.
Attached hereto as Exhibit C is a true copy of resolutions of the board of directors of such Subject Party adopted by unanimous written consent relating to the Commitment Agreement and related transactions. Such resolutions (i) constitute all resolutions of each such Subject Party related to the Commitment Agreement and each of the Documents to which such Subject Party is a party in connection with the foregoing (the Transaction Documents) and (ii) have not been amended or revoked and are in full force and effect on the date hereof. Each of the Transaction Documents to which such Subject Party is a party was approved by the board of directors of such Subject Party.
11
Each of the officers of the Subject Parties identified on Exhibit D hereto have been duly elected to the office or offices set forth opposite his or her respective name, each such person is duly qualified and acting in such capacities as officers of the Subject Parties as of the date hereof and the signatures appearing opposite their respective names are the true and genuine signatures of such officers or a true facsimile thereof. Each such officer is authorized to execute and deliver the Credit Agreement and the other Documents to which each such Subject Party is a party, and to otherwise act under the resolutions attached hereto as Exhibit C.
12
EXHIBIT G
FORM OF SUBSIDIARY GUARANTY
See attached.
13
Execution Version
SUBSIDIARIES GUARANTY
among
CERTAIN SUBSIDIARIES OF CURO INTERMEDIATE HOLDINGS CORP.
and
VICTORY PARK MANAGEMENT, LLC,
as ADMINISTRATIVE AGENT
Dated as of November 17, 2016
TABLE OF CONTENTS
(i)
SUBSIDIARIES GUARANTY
SUBSIDIARIES GUARANTY (as amended, modified, restated and/or supplemented from time to time, this Guaranty ), dated as of November 17, 2016, made by and among each of the undersigned guarantors (each, a Guarantor and, together with any other entity that becomes a guarantor hereunder pursuant to Section 22 hereof, collectively, the Guarantors ) in favor of VICTORY PARK MANAGEMENT, LLC, as Administrative Agent (together with any successor administrative agent, the Administrative Agent ), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. (the Borrower ), the lenders from time to time party thereto (the Lenders ) and the Administrative Agent have entered into a Short-Term Credit Agreement, dated as of November 17, 2016 (as amended, modified, restated and/or supplemented from time to time, the Credit Agreement ), providing for the making of Loans to the Borrower, all as contemplated therein (the Lenders, the Administrative Agent and the Collateral Agent are herein called the Lender Creditors );
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements and/or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lenders or affiliates successors and assigns, if any, collectively, the Other Creditors and, together with the Lender Creditors, the Secured Creditors , with each such Interest Rate Protection Agreement and/or Other Hedging Agreement with an Other Creditor being herein called a Secured Hedging Agreement );
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the Borrower;
WHEREAS, it is a condition precedent to the making of Loans to the Borrower for the account of the Borrower under the Credit Agreement and to the Other Creditors entering into Secured Hedging Agreements that each Guarantor shall have executed and delivered to the Administrative Agent this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans by the Borrower for the account of the Borrower under the Credit Agreement and the entering into by the Borrower of Secured Hedging Agreements and, accordingly, desires to execute this Guaranty in order to satisfy the condition described in the preceding paragraph and to induce the Lenders to make Loans to the Borrower for the account of the Borrower and the Other Creditors to enter into Secured Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Guarantor, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby makes the following representations and warranties to the Administrative Agent for the benefit of the Secured Creditors and hereby covenants and agrees with each other Guarantor and the Administrative Agent for the benefit of the Secured Creditors as follows:
- 1 -
1. GUARANTY . (a) Each Guarantor, jointly and severally, irrevocably, absolutely and unconditionally guarantees as a primary obligor and not merely as surety:
(i) to the Lender Creditors the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of (x) the principal of, premium, if any, and interest on the Notes issued by, and the Loans made to, the Borrower under the Credit Agreement and (y) all other obligations (including, without limitation, obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness owing by the Borrower to the Lender Creditors under each Credit Document to which the Borrower is a party (including, without limitation, indemnities, Fees and interest thereon (including, without limitation, any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in the Credit Agreement, whether or not such interest is an allowed claim in any such proceeding)), whether now existing or hereafter incurred under, arising out of or in connection with each such Credit Document and the due performance and compliance by the Borrower with all of the terms, conditions, covenants and agreements contained in all such Credit Documents (all such principal, premium, interest, liabilities, indebtedness and obligations under this clause (i), except to the extent consisting of obligations or liabilities with respect to Secured Hedging Agreements, being herein collectively called, the Credit Document Obligations ); and
(ii) to each Other Creditor the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations (including, without limitation, obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness (including, without limitation, any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in the respective Secured Hedging Agreements, whether or not such interest is an allowed claim in any such proceeding) owing by the Borrower under each Secured Hedging Agreement, whether now in existence or hereafter arising, and the due performance and compliance by the Borrower with all of the terms, conditions, covenants and agreements contained therein (all such obligations, liabilities and indebtedness being herein collectively called, the Other Obligations , and together with the Credit Document Obligations are herein collectively called the Guaranteed Obligations ).
Each Guarantor understands, agrees and confirms that the Secured Creditors may enforce this Guaranty up to the full amount of the Guaranteed Obligations against such Guarantor without proceeding against any other Guarantor or the Borrower, or against any security for the Guaranteed Obligations, or under any other guaranty covering all or a portion of the Guaranteed Obligations. This Guaranty is a guaranty of prompt payment and performance and not of collection.
- 2 -
(b) Additionally, each Guarantor, jointly and severally, unconditionally, absolutely and irrevocably, guarantees the payment of any and all Guaranteed Obligations whether or not due or payable by the Borrower upon the occurrence in respect of the Borrower of any of the events specified in Section 11.05 of the Credit Agreement, and unconditionally, absolutely and irrevocably, jointly and severally, promises to pay such Guaranteed Obligations to the Secured Creditors, or order, on demand.
2. LIABILITY OF GUARANTORS ABSOLUTE . The liability of each Guarantor hereunder is primary, absolute, joint and several, and unconditional and is exclusive and independent of any security for or other guaranty of the indebtedness of the Borrower whether executed by such Guarantor, any other Guarantor, any other guarantor or by any other party, and the liability of each Guarantor hereunder shall not be affected or impaired by any circumstance or occurrence whatsoever, including, without limitation: (a) any direction as to application of payment by the Borrower, (b) any other continuing or other guaranty, undertaking or maximum liability of a Guarantor or of any other party as to the Guaranteed Obligations, (c) any payment on or in reduction of any such other guaranty or undertaking, (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, (e) the failure of the Guarantor to receive any benefit from or as a result of its execution, delivery and performance of this Guaranty, (f) any payment made to any Secured Creditor on the indebtedness which any Secured Creditor repays the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each Guarantor waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, (g) any action or inaction by the Secured Creditors as contemplated in Section 5 hereof or (h) any invalidity, rescission, irregularity or unenforceability of all or any part of the Guaranteed Obligations or of any security therefor.
3. OBLIGATIONS OF GUARANTORS INDEPENDENT . The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, any other guarantor or the Borrower, and a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, any other guarantor or the Borrower and whether or not any other Guarantor, any other guarantor or the Borrower be joined in any such action or actions. Each Guarantor waives (to the fullest extent permitted by applicable law) the benefits of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to each Guarantor.
4. WAIVERS BY GUARANTORS . (a) Each Guarantor hereby waives (to the fullest extent permitted by applicable law) notice of acceptance of this Guaranty and notice of the existence, creation or incurrence of any new or additional liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, demand for performance, protest, notice of dishonor or nonpayment of any such liabilities, suit or taking of other action by the Administrative Agent or any other Secured Creditor against, and any other notice to, any party liable thereon (including such Guarantor, any other Guarantor, any other guarantor or the Borrower) and each Guarantor further hereby waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice or proof of reliance by any Secured Creditor upon this Guaranty, and the Guaranteed Obligations shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended, modified, supplemented or waived, in reliance upon this Guaranty.
- 3 -
(b) Each Guarantor waives any right to require the Secured Creditors to: (i) proceed against the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party; (ii) proceed against or exhaust any security held from the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party; or (iii) pursue any other remedy in the Secured Creditors power whatsoever. Each Guarantor waives any defense based on or arising out of any defense of the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party other than the indefeasible payment in full in cash of the Guaranteed Obligations, including, without limitation, any defense based on or arising out of the disability of the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party, or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than the indefeasible payment in full in cash of the Guaranteed Obligations. The Secured Creditors may, at their election upon the occurrence and during the continuation of an Event of Default, foreclose on any collateral serving as security held by the Administrative Agent, the Collateral Agent or the other Secured Creditors by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Secured Creditors may have against the Borrower, or any other party, or any security, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Guaranteed Obligations have been indefeasibly paid in full in cash. Each Guarantor waives any defense arising out of any such election by the Secured Creditors, even though such election operates to impair or extinguish any right of reimbursement, contribution, indemnification or subrogation or other right or remedy of such Guarantor against the Borrower, any other guarantor of the Guaranteed Obligations or any other party or any security.
(c) Each Guarantor has knowledge and assumes all responsibility for being and keeping itself informed of the Borrowers and each other Guarantors financial condition, affairs and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder, and has adequate means to obtain from the Borrower and each other Guarantor on an ongoing basis information relating thereto and the Borrowers and each other Guarantors ability to pay and perform its respective Guaranteed Obligations, and agrees to assume the responsibility for keeping, and to keep, so informed for so long as this Guaranty is in effect. Each Guarantor acknowledges and agrees that (x) the Secured Creditors shall have no obligation to investigate the financial condition or affairs of the Borrower or any other Guarantor for the benefit of such Guarantor nor to advise such Guarantor of any fact respecting, or any change in, the financial condition, assets or affairs of the Borrower or any other Guarantor that might become known to any Secured Creditor at any time, whether or not such Secured Creditor knows or believes or has reason to know or believe that any such fact or change is unknown to such Guarantor, or might (or does) increase the risk of such Guarantor as guarantor hereunder, or might (or would) affect the willingness of such Guarantor to continue as a guarantor of the Guaranteed Obligations hereunder and (y) the Secured Creditors shall have no duty to advise any Guarantor of information known to them regarding any of the aforementioned circumstances or risks.
- 4 -
(d) Each Guarantor hereby acknowledges and affirms that it understands that to the extent the Guaranteed Obligations are secured by Real Property located in the State of California, such Guarantor shall be liable for the full amount of the liability hereunder notwithstanding foreclosure on such Real Property by trustee sale or any other reason impairing such Guarantors or any Secured Creditors right to proceed against the Borrower or any other guarantor of the Guaranteed Obligations.
(e) Each Guarantor hereby waives (to the fullest extent permitted by applicable law) all rights and benefits under Section 580a, 580b, 580d and 726 of the California Code of Civil Procedure. Each Guarantor hereby further waives (to the fullest extent permitted by applicable law), without limiting the generality of the foregoing or any other provision hereof, all rights and benefits which might otherwise be available to such Guarantor under Sections 2809, 2810, 2815, 2819, 2821, 2839, 2845, 2847, 2848, 2849, 2850, 2899 and 3433 of the California Civil Code.
(f) Until the Guaranteed Obligations have been paid in full in cash, each Guarantor waives its rights of subrogation and reimbursement and any other rights and defenses available to such Guarantor by reason of Sections 2787 to 2855, inclusive, of the California Civil Code, including, without limitation, (1) any defenses such Guarantor may have to this Guaranty by reason of an election of remedies by the Secured Creditors and (2) any rights or defenses such Guarantor may have by reason of protection afforded to the Borrower pursuant to the antideficiency or other laws of California limiting or discharging the Borrowers indebtedness, including, without limitation, Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure. In furtherance of such provisions, each Guarantor hereby waives all rights and defenses arising out of an election of remedies by the Secured Creditors, even though that election of remedies, such as a nonjudicial foreclosure, destroys such Guarantors rights of subrogation and reimbursement against the Borrower by the operation of Section 580d of the California Code of Civil Procedure or otherwise.
(g) Each Guarantor hereby acknowledges and agrees that no Secured Creditor nor any other Person shall be under any obligation (a) to marshal any assets in favor of such Guarantor or in payment of any or all of the liabilities of the Borrower under the Credit Documents or the obligation of such Guarantor hereunder or (b) to pursue any other remedy that such Guarantor may or may not be able to pursue itself any right to which such Guarantor hereby waives.
(h) Each Guarantor warrants and agrees that each of the waivers set forth in Section 3 and in this Section 4 is made with full knowledge of its significance and consequences and that if any of such waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective only to the maximum extent permitted by applicable law.
5. RIGHTS OF SECURED CREDITORS. Subject to Sections 4 and 13 hereof, any Secured Creditor may (except as shall be required by applicable statute and cannot be waived) at any time and from time to time without the consent of, or notice to, any Guarantor, without incurring responsibility to such Guarantor, without impairing or releasing the obligations or liabilities of such Guarantor hereunder, upon or without any terms or conditions and in whole or in part:
- 5 -
(a) change the manner, place or terms of payment of, and/or change, increase or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including, without limitation, any increase or decrease in the rate of interest thereon or the principal amount thereof), any security therefor, or any liability incurred directly or indirectly in respect thereof, and the guaranty herein made shall apply to the Guaranteed Obligations as so changed, extended, increased, accelerated, renewed or altered;
(b) take and hold security for the payment of the Guaranteed Obligations and upon the occurrence and during the continuation of an Event of Default, sell, exchange, release, surrender, impair, realize upon or otherwise deal with in any manner and in any order any property or other collateral by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the Borrower, any other Credit Party, any Subsidiary thereof, any other guarantor of the Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, Guarantors, other guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to creditors of the Borrower other than the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Secured Creditors regardless of what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default under, any of the Secured Hedging Agreements, the Credit Documents or any of the instruments or agreements referred to therein, or otherwise amend, modify or supplement any of the Secured Hedging Agreements, the Credit Documents or any of such other instruments or agreements;
(h) act or fail to act in any manner which may deprive such Guarantor of its right to subrogation against the Borrower to recover full indemnity for any payments made pursuant to this Guaranty; and/or
(i) take any other action or omit to take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of such Guarantor from its liabilities under this Guaranty (including, without limitation, any action or omission whatsoever that might otherwise vary the risk of such Guarantor or constitute a legal or equitable defense to or discharge of the liabilities of a guarantor or surety or that might otherwise limit recourse against such Guarantor).
- 6 -
No invalidity, illegality, irregularity or unenforceability of all or any part of the Guaranteed Obligations, the Credit Documents or any other agreement or instrument relating to the Guaranteed Obligations or of any security or guarantee therefor shall affect, impair or be a defense to this Guaranty, and this Guaranty shall be primary, absolute and unconditional notwithstanding the occurrence of any event or the existence of any other circumstances which might constitute a legal or equitable discharge of a surety or guarantor except payment in full in cash of the Guaranteed Obligations.
6. CONTINUING GUARANTY . This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Secured Creditor in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Secured Creditor would otherwise have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Secured Creditor to any other or further action in any circumstances without notice or demand. It is not necessary for any Secured Creditor to inquire into the capacity or powers of the Borrower or the officers, directors, partners or agents acting or purporting to act on its or their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
7. SUBORDINATION OF INDEBTEDNESS HELD BY GUARANTORS . Any indebtedness of the Borrower now or hereafter held by any Guarantor is hereby subordinated to the indebtedness of the Borrower to the Secured Creditors; and such indebtedness of the Borrower to any Guarantor, if the Administrative Agent or the Collateral Agent, after an Event of Default has occurred and is continuing, so requests, shall be collected, enforced and received by such Guarantor as trustee for the Secured Creditors and be paid over to the Secured Creditors on account of the indebtedness of the Borrower to the Secured Creditors, but without affecting or impairing in any manner the liability of such Guarantor under the other provisions of this Guaranty. Prior to the transfer by any Guarantor of any note or negotiable instrument evidencing any indebtedness of the Borrower to such Guarantor, such Guarantor shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, each Guarantor hereby agrees with the Secured Creditors that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash; provided , that if any amount shall be paid to such Guarantor on account of such subrogation rights at any time prior to the irrevocable payment in full in cash of all the Guaranteed Obligations, such amount shall be held in trust for the benefit of the Secured Creditors and shall forthwith be paid to the Secured Creditors to be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Credit Documents or, if the Credit Documents do not provide for the application of such amount, to be held by the Secured Creditors as collateral security for any Guaranteed Obligations thereafter existing.
- 7 -
8. GUARANTY ENFORCEABLE BY ADMINISTRATIVE AGENT OR COLLATERAL AGENT . Notwithstanding anything to the contrary contained elsewhere in this Guaranty, the Secured Creditors agree (by their acceptance of the benefits of this Guaranty) that this Guaranty may be enforced only by the action of the Administrative Agent or the Collateral Agent, in each case acting upon the instructions of the Required Lenders (or, after the date on which all Credit Document Obligations have been paid in full, the holders of at least a majority of the outstanding Other Obligations) and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Guaranty or to realize upon the security to be granted by the Security Documents, it being understood and agreed that such rights and remedies may be exercised by the Administrative Agent or the Collateral Agent or, after all the Credit Document Obligations have been paid in full, by the holders of at least a majority of the outstanding Other Obligations, as the case may be, for the benefit of the Secured Creditors upon the terms of this Guaranty and the Security Documents. The Secured Creditors further agree that this Guaranty may not be enforced against any director, officer, employee, partner, member or stockholder of any Guarantor (except to the extent such partner, member or stockholder is also a Guarantor hereunder). It is understood and agreed that the agreement in this Section 8 is among and solely for the benefit of the Secured Creditors and that, if the Required Lenders (or, after the date on which all Credit Document Obligations have been paid in full, the holders of at least a majority of the outstanding Other Obligations) so agree (without requiring the consent of Holdings, the Borrower or any Guarantor), this Guaranty may be directly enforced by any Secured Creditor.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GUARANTORS . In order to induce the Lenders to make Loans to and for the account of the Borrower pursuant to the Credit Agreement, and in order to induce the Other Creditors to execute, deliver and perform the Secured Hedging Agreements to which they are a party, each Guarantor represents, warrants and covenants that:
(a) such Guarantor (i) is a duly organized and validly existing Company in good standing under the laws of the jurisdiction of its organization, (ii) has the Company power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the nature of its business requires such qualification, except for failures to be so qualified which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect;
(b) such Guarantor has the Company power and authority to execute, deliver and perform the terms and provisions of this Guaranty and each other Document to which it is a party and has taken all necessary Company action to authorize the execution, delivery and performance by it of this Guaranty and each such other Document;
- 8 -
(c) such Guarantor has duly executed and delivered this Guaranty and each other Document to which it is a party, and this Guaranty and each such other Document constitutes the legal, valid and binding obligation of such Guarantor enforceable in accordance with its terms, except to the extent that the enforceability hereof or thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors rights and by equitable principles (regardless of whether enforcement is sought in equity or at law);
(d) neither the execution, delivery or performance by such Guarantor of this Guaranty or any other Document to which it is a party, nor compliance by it with the terms and provisions hereof and thereof, will (i) contravene any provision of any applicable Requirements of Law, (ii) conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents and, subject to the terms of the Intercreditor Agreement, the Senior Secured Notes Security Documents) upon any of the property or assets of such Guarantor or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement, or any other material agreement, contract or instrument to which such Guarantor or any of its Subsidiaries is a party or by which it or any of its property or assets is bound or to which it may be subject or (iii) violate any provision of the Organizational Documents of such Guarantor or any of its Subsidiaries;
(e) no order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made prior to the date when required and which remain in full force and effect), or exemption by, any Governmental Authority is required to authorize, or is required in connection with, (i) the execution, delivery and performance of this Guaranty by such Guarantor or any other Document to which such Guarantor is a party or (ii) the legality, validity, binding effect or enforceability of this Guaranty or any other Document to which such Guarantor is a Party;
(f) there are no actions, suits or proceedings pending or, to such Guarantors knowledge, threatened (i) with respect to this Guaranty or any other Document to which such Guarantor is a party or (ii) with respect to such Guarantor or any of its Subsidiaries that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;
(g) until the termination of the Total Loan Commitment and all Secured Hedging Agreements and until such time as no Note remains outstanding and all Guaranteed Obligations have been paid in full (other than indemnities described in Section 13.01 of the Credit Agreement and analogous provisions in the Security Documents which are not then due and payable), such Guarantor will comply, and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in Sections 9 and 10 of the Credit Agreement, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that no violation of any provision, covenant or agreement contained in Sections 9 and 10 of the Credit Agreement, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries; and
- 9 -
(h) an executed (or conformed) copy of each of the Credit Documents and the Secured Hedging Agreements has been made available to a senior officer of such Guarantor and such officer is familiar with the contents thereof.
10. EXPENSES . The Guarantors hereby jointly and severally agree to pay all reasonable out-of-pocket costs and expenses of the Collateral Agent, the Administrative Agent and each other Secured Creditor in connection with the enforcement of this Guaranty and the protection of the Secured Creditors rights hereunder and any amendment, waiver or consent relating hereto (including, in each case, without limitation, the reasonable fees and disbursements of counsel (including in-house counsel) employed by the Collateral Agent, the Administrative Agent and each other Secured Creditor).
11. BENEFIT AND BINDING EFFECT . This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Secured Creditors and their successors and assigns.
12. AMENDMENTS; WAIVERS . Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby (it being understood that the addition or release of any Guarantor hereunder shall not constitute a change, waiver, discharge or termination affecting any Guarantor other than the Guarantor so added or released) and with the written consent of either (x) the Required Lenders (or, to the extent required by Section 13.12 of the Credit Agreement, with the written consent of each Lender) at all times prior to the time at which all Credit Document Obligations have been paid in full or (y) the holders of at least a majority of the outstanding Other Obligations at all times after the time at which all Credit Document Obligations have been paid in full; provided , that any change, waiver, modification or variance affecting the rights and benefits of a single Class (as defined below) of Secured Creditors (and not all Secured Creditors in a like or similar manner) shall also require the written consent of the Requisite Creditors (as defined below) of such Class of Secured Creditors. For the purpose of this Guaranty, the term Class shall mean each class of Secured Creditors, i.e., whether (x) the Lender Creditors as holders of the Credit Document Obligations or (y) the Other Creditors as the holders of the Other Obligations. For the purpose of this Guaranty, the term Requisite Creditors of any Class shall mean (x) with respect to the Credit Document Obligations, the Required Lenders (or, to the extent required by Section 13.12 of the Credit Agreement, each Lender) and (y) with respect to the Other Obligations, the holders of at least a majority of all Other Obligations outstanding from time to time under the Secured Hedging Agreements.
13. SET OFF . In addition to any rights now or hereafter granted under applicable law (including, without limitation, Section 151 of the New York Debtor and Creditor Law) and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default (such term to mean and include any Event of Default as defined in the Credit Agreement and any payment default under any Secured Hedging Agreement continuing after any applicable grace period), each Secured Creditor is hereby authorized, at any time or from time to time, without notice to any Guarantor or to any other Person, any such notice being expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Secured Creditor to or for the credit or the account of such Guarantor, against and on account of
- 10 -
the obligations and liabilities of such Guarantor to such Secured Creditor under this Guaranty, irrespective of whether or not such Secured Creditor shall have made any demand hereunder and although said obligations, liabilities, deposits or claims, or any of them, shall be contingent or unmatured. Notwithstanding anything to the contrary contained in this Guaranty, at any time that the Guaranteed Obligations shall be secured by any Real Property located in the State of California, no Secured Creditor shall exercise any right of set-off, lien or counterclaim or take any court or administrative action or institute any proceedings to enforce any provision of this Guaranty without the prior consent of the Administrative Agent or the Required Lenders or, to the extent required by Section 13.12 of the Credit Agreement, all of the Lenders, if such setoff or action or proceeding would or might (pursuant to Sections 580a, 580b, 580d and 726 of the California Code of Civil Procedure or Section 2924 of the California Civil Code, if applicable, or otherwise) affect or impair the validity, priority, or enforceability of the liens granted to the Collateral Agent pursuant to the Security Documents or the enforceability of the Guaranteed Obligations hereunder, and any attempted exercise by any Secured Creditor or the Administrative Agent of any such right without obtaining such consent of the Required Lenders or the Administrative Agent shall be null and void. It is understood and agreed that the foregoing sentence of this Section 13 is for the sole benefit of the Secured Creditors and may be amended, modified or waived in any respect by the Required Lenders (without any requirement of prior notice to or consent by any Credit Party or any other Person) and does not constitute a waiver of any rights against any Credit Party or against any Collateral. Each Secured Creditor (by its acceptance of the benefits hereof) acknowledges and agrees that the provisions of this Section 13 are subject to the sharing provisions set forth in Section 13.06 of the Credit Agreement.
14. NOTICE . Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier, except that notices and communications to the Administrative Agent or any Guarantor shall not be effective until received by the Administrative Agent or such Guarantor, as the case may be. All notices and other communications shall be in writing and addressed to such party at (i) in the case of any Lender Creditor, as provided in the Credit Agreement, (ii) in the case of any Guarantor, as provided in the Security Agreement, and (iii) in the case of any Other Creditor, at such address as such Other Creditor shall have specified in writing to the Guarantors; or in any case at such other address as any of the Persons listed above may hereafter notify the others in writing.
15. REINSTATEMENT . If any claim is ever made upon any Secured Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including, without limitation, the Borrower), then and in such event each Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon such Guarantor, notwithstanding any revocation hereof or the cancellation of any Note, any Secured Hedging Agreement or any other instrument evidencing any liability of the Borrower, and such Guarantor shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
- 11 -
16. CONSENT TO JURISDICTION; SERVICE OF PROCESS; AND WAIVER OF TRIAL BY JURY . (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this Guaranty or any other Credit Document to which any Guarantor is a party shall be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, in each case located within the County of New York, and, by execution and delivery of this Guaranty, each Guarantor hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. Each Guarantor hereby further irrevocably waives any claim that any such courts lack personal jurisdiction over such Guarantor, and agrees not to plead or claim, in any legal action or proceeding with respect to this Guaranty or any other Credit Document to which such Guarantor is a party brought in any of the aforesaid courts, that any such court lacks personal jurisdiction over such Guarantor. Each Guarantor further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to each Guarantor at its address set forth in Section 14 hereof, such service to become effective 30 days after such mailing. Each Guarantor hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder or under any other Credit Document to which such Guarantor is a party that such service of process was in any way invalid or ineffective. Nothing herein, however, shall affect the right of any of the Secured Creditors to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the fullest extent permitted by applicable law) any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Guaranty or any other Credit Document to which such Guarantor is a party brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that such action or proceeding brought in any such court has been brought in an inconvenient forum.
(c) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
17. RELEASE OF LIABILITY OF GUARANTOR UPON SALE OR DISSOLUTION . In the event that all of the capital stock or other equity interests of one or more Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of
- 12 -
Section 10.02 of the Credit Agreement (or such sale, other disposition or liquidation has been approved in writing by the Required Lenders (or all the Lenders if required by Section 13.12 of the Credit Agreement)) and the proceeds of such sale, disposition or liquidation are applied in accordance with the provisions of the Credit Agreement, to the extent applicable, such Guarantor shall, upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to Holdings or another Subsidiary thereof), be released from this Guaranty automatically and without further action and this Guaranty shall, as to each such Guarantor or Guarantors, terminate, and have no further force or effect (it being understood and agreed that the sale of one or more Persons that own, directly or indirectly, all of the capital stock or other equity interests of any Guarantor shall be deemed to be a sale of such Guarantor for the purposes of this Section 17).
18. CONTRIBUTION . At any time a payment in respect of the Guaranteed Obligations is made under this Guaranty, the right of contribution of each Guarantor against each other Guarantor shall be determined as provided in the immediately following sentence, with the right of contribution of each Guarantor to be revised and restated as of each date on which a payment (a Relevant Payment ) is made on the Guaranteed Obligations under this Guaranty. At any time that a Relevant Payment is made by a Guarantor that results in the aggregate payments made by such Guarantor in respect of the Guaranteed Obligations to and including the date of the Relevant Payment exceeding such Guarantors Contribution Percentage (as defined below) of the aggregate payments made by all Guarantors in respect of the Guaranteed Obligations to and including the date of the Relevant Payment (such excess, the Aggregate Excess Amount ), each such Guarantor shall have a right of contribution against each other Guarantor who has made payments in respect of the Guaranteed Obligations to and including the date of the Relevant Payment in an aggregate amount less than such other Guarantors Contribution Percentage of the aggregate payments made to and including the date of the Relevant Payment by all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of such deficit, the Aggregate Deficit Amount ) in an amount equal to (x) a fraction the numerator of which is the Aggregate Excess Amount of such Guarantor and the denominator of which is the Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate Deficit Amount of such other Guarantor. A Guarantors right of contribution pursuant to the preceding sentences shall arise at the time of each computation, subject to adjustment to the time of each computation; provided that no Guarantor may take any action to enforce such right until the Guaranteed Obligations have been irrevocably paid in full in cash and the Total Loan Commitment has been terminated, it being expressly recognized and agreed by all parties hereto that any Guarantors right of contribution arising pursuant to this Section 18 against any other Guarantor shall be expressly junior and subordinate to such other Guarantors obligations and liabilities in respect of the Guaranteed Obligations and any other obligations owing under this Guaranty. As used in this Section 18: (i) each Guarantors Contribution Percentage shall mean the percentage obtained by dividing (x) the Adjusted Net Worth (as defined below) of such Guarantor by (y) the aggregate Adjusted Net Worth of all Guarantors; (ii) the Adjusted Net Worth of each Guarantor shall mean the greater of (x) the Net Worth (as defined below) of such Guarantor and (y) zero; and (iii) the Net Worth of each Guarantor shall mean the amount by which the fair saleable value of such Guarantors assets on the date of any Relevant Payment exceeds its existing debts and other liabilities (including contingent liabilities, but without giving effect to any Guaranteed Obligations arising under this Guaranty or any guaranteed obligations arising under any guaranty of the Senior Secured Notes) on such date. Notwithstanding anything to the
- 13 -
contrary contained above, any Guarantor that is released from this Guaranty pursuant to Section 17 hereof shall thereafter have no contribution obligations, or rights, pursuant to this Section 18, and at the time of any such release, if the released Guarantor had an Aggregate Excess Amount or an Aggregate Deficit Amount, same shall be deemed reduced to $0, and the contribution rights and obligations of the remaining Guarantors shall be recalculated on the respective date of release (as otherwise provided above) based on the payments made hereunder by the remaining Guarantors. All parties hereto recognize and agree that, except for any right of contribution arising pursuant to this Section 18, each Guarantor who makes any payment in respect of the Guaranteed Obligations shall have no right of contribution or subrogation against any other Guarantor in respect of such payment until all of the Guaranteed Obligations have been irrevocably paid in full in cash. Each of the Guarantors recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution. In this connection, each Guarantor has the right to waive its contribution right against any Guarantor to the extent that after giving effect to such waiver such Guarantor would remain solvent, in the determination of the Required Lenders.
19. LIMITATION ON GUARANTEED OBLIGATIONS . Each Guarantor and each Secured Creditor (by its acceptance of the benefits of this Guaranty) hereby confirms that it is its intention that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act of any similar Federal or state law. To effectuate the foregoing intention, each Guarantor and each Secured Creditor (by its acceptance of the benefits of this Guaranty) hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
20. COUNTERPARTS . This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent.
21. PAYMENTS . All payments made by any Guarantor hereunder will be made without setoff, counterclaim or other defense and on the same basis as payments are made by the Borrower under Sections 5.03 and 5.04 of the Credit Agreement and Section 7.4 of the Security Agreement.
22. ADDITIONAL GUARANTORS . It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Guaranty after the date hereof pursuant to the Credit Agreement shall become a Guarantor hereunder by (x) executing and delivering a counterpart hereof to the Administrative Agent or executing a joinder agreement and delivering same to the Administrative Agent, in each case as may be requested by (and in form and substance reasonably satisfactory to) the Administrative Agent and (y) taking all actions as specified in this Guaranty as would have been taken by such Guarantor had it been an original party to this Guaranty, in each case with all documents and actions required to be taken above to be taken to the reasonable satisfaction of the Administrative Agent.
- 14 -
23. HEADINGS DESCRIPTIVE . The headings of the several Sections of this Guaranty are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Guaranty.
* * *
- 15 -
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.
GUARANTORS: | TODD FINANCIAL, INC. | |
TODD CAR TITLE, INC. | ||
CURO MANAGEMENT LLC | ||
FMMR INVESTMENTS, INC. | ||
EVERGREEN FINANCIAL INVESTMENTS, INC. | ||
PRINCIPAL INVESTMENTS, INC. | ||
SPEEDY CASH | ||
ADVANCE GROUP, INC. | ||
CONCORD FINANCE, INC. | ||
SCIL, INC. | ||
CASH COLORADO, LLC | ||
GALT VENTURES, LLC | ||
A SPEEDY CASH CAR TITLE LOANS, LLC | ||
SCIL TEXAS, LLC | ||
SC AURUM, LLC | ||
ATTAIN FINANCE, LLC | ||
SPEEDY CASH ILLINOIS, INC. | ||
SC TEXAS MB, INC. | ||
THE MONEY STORE, L.P. | ||
By: /s/ Donald F. Gayhardt Jr. | ||
Name: Donald F. Gayhardt Jr. | ||
Title: President & Chief Executive Officer |
[Signature Page to Subsidiaries Guaranty]
Accepted and Agreed to:
VICTORY PARK MANAGEMENT, LLC
as Administrative Agent
By: /s/ Scott R. Zemnick
Name: Scott R. Zemnick
Title: Authorized Signatory
[Signature page to Subsidiary Guaranty]
EXHIBIT H
FORM OF PLEDGE AGREEMENT
See attached.
14
EXECUTION VERSION
PLEDGE AGREEMENT
among
CURO FINANCIAL TECHNOLOGIES CORP.,
CURO INTERMEDIATE HOLDINGS CORP.,
CERTAIN SUBSIDIARIES OF CURO INTERMEDIATE HOLDINGS CORP.
and
VICTORY PARK MANAGEMENT, LLC, as COLLATERAL AGENT
Dated as of November 17, 2016
TABLE OF CONTENTS
Page | ||||||||
1. | SECURITY FOR OBLIGATIONS | 2 | ||||||
2. | DEFINITIONS | 3 | ||||||
3. | PLEDGE OF SECURITIES, ETC. | 6 | ||||||
3.1. | Pledge | 6 | ||||||
3.2. | Procedures | 9 | ||||||
3.3. | Subsequently Acquired Collateral | 11 | ||||||
3.4. | Transfer Taxes | 11 | ||||||
3.5. | Certain Representations and Warranties Regarding the Collateral | 11 | ||||||
4. | APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. | 12 | ||||||
5. | VOTING, ETC., WHILE NO EVENT OF DEFAULT | 12 | ||||||
6. | DIVIDENDS AND OTHER DISTRIBUTIONS | 12 | ||||||
7. | REMEDIES IN CASE OF AN EVENT OF DEFAULT | 13 | ||||||
8. | REMEDIES, CUMULATIVE, ETC. | 14 | ||||||
9. | APPLICATION OF PROCEEDS | 14 | ||||||
10. | PURCHASERS OF COLLATERAL | 15 | ||||||
11. | INDEMNITY | 15 |
12. | PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER | 15 | ||||
13. | FURTHER ASSURANCES; POWER-OF-ATTORNEY | 16 | ||||
14. | THE PLEDGEE AS COLLATERAL AGENT | 17 | ||||
15. | TRANSFER BY THE PLEDGORS | 17 | ||||
16. | REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS | 17 | ||||
17. | LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION); JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS; CHANGES THERETO; ETC. | 19 | ||||
18. | PLEDGORS OBLIGATIONS ABSOLUTE, ETC. | 20 |
i
19. |
SALE OF COLLATERAL WITHOUT REGISTRATION |
21 | ||||
20. |
TERMINATION; RELEASE |
21 | ||||
21. |
NOTICES, ETC. |
22 | ||||
22. |
WAIVER; AMENDMENT |
23 | ||||
23. |
SUCCESSORS AND ASSIGNS |
23 | ||||
24. |
HEADINGS DESCRIPTIVE |
24 | ||||
25. |
GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL |
24 | ||||
26. |
PLEDGORS DUTIES |
25 | ||||
27. |
COUNTERPARTS |
25 | ||||
28. |
SEVERABILITY |
25 | ||||
29. |
RECOURSE |
25 | ||||
30. |
ADDITIONAL PLEDGORS |
25 | ||||
31. |
LIMITED OBLIGATIONS |
25 | ||||
32. |
RELEASE OF PLEDGORS |
26 |
ii
PLEDGE AGREEMENT
PLEDGE AGREEMENT (as amended, modified, restated and/or supplemented from time to time, this Agreement ), dated as of November 17, 2016, among each of the undersigned pledgors (each, a Pledgor and, together with any other entity that becomes a pledgor hereunder pursuant to Section 30 hereof, the Pledgors ) and Victory Park Management, LLC, as collateral agent (together with any successor collateral agent, the Pledgee ), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
WHEREAS, Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. (the Borrower ), the lenders from time to time party thereto (the Lenders ), and Victory Park Management, LLC, as administrative agent (in such capacity and together with any successor administrative agent, the Administrative Agent ), have entered into a Short-Term Credit Agreement, dated as of November 17, 2016 (as amended, modified, restated and/or supplemented from time to time, the Credit Agreement ), providing for the making of Loans to and for the account of, the Borrower, all as contemplated therein (the Lenders, the Administrative Agent and the Pledgee are herein called the Lender Creditors );
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lenders or affiliates successors and assigns, if any, collectively, the Other Creditors and, together with the Lender Creditors, the Secured Creditors , with each such Interest Rate Protection Agreement and/or Other Hedging Agreement with an Other Creditor being herein called a Secured Hedging Agreement );
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and severally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, it is a condition precedent to the making of Loans to the Borrower for the account of the Borrower under the Credit Agreement and to the Other Creditors entering into Secured Hedging Agreements that each Pledgor shall have executed and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor will obtain benefits from the incurrence of Loans by the Borrower for the account of the Borrower under the Credit Agreement and the entering into by the Borrower of Secured Hedging Agreements and, accordingly, desires to execute this Agreement in order to satisfy the condition described in the preceding paragraph and to induce
the Lenders to make Loans to the Borrower for the account of the Borrower and the Other Creditors to enter into Secured Hedging Agreements with the Borrower;
1
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby makes the following representations and warranties to the Pledgee for the benefit of the Secured Creditors and hereby covenants and agrees with the Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. (a) This Agreement is made by each Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, principal, premium, interest (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Pledgor or any Subsidiary thereof at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding), whether now existing or hereafter incurred under, arising out of, or in connection with, each Credit Document to which such Pledgor is a party (including, in the case of each Pledgor that is a Guarantor, all such obligations, liabilities and indebtedness of such Pledgor under its Guaranty) and the due performance and compliance by such Pledgor with all of the terms, conditions and agreements contained in each such Credit Document (all such obligations, liabilities and indebtedness under this clause (i), except to the extent consisting of obligations, liabilities or indebtedness with respect to the Secured Hedging Agreements being herein collectively called, the Credit Document Obligations );
(ii) the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Pledgor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding) owing by such Pledgor to the Other Creditors now existing or hereafter incurred under, arising out of or in connection with each Secured Hedging Agreement, whether such Secured Hedging Agreement is now in existence or hereinafter arising (including, in the case of a Pledgor that is a Guarantor, all obligations, liabilities and indebtedness of such Pledgor under its Guaranty in respect of each Secured Hedging Agreement), and the due performance and compliance by such Pledgor with all of the terms, conditions and agreements contained in each Secured Hedging Agreement (all such obligations, liabilities and indebtedness under this clause (ii) being herein collectively called, the Other Obligations );
2
(iii) any and all sums advanced by the Pledgee in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of such Pledgor referred to in clauses (i) and (ii) above, after an Event of Default shall have occurred and be continuing, the expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Pledgee of its rights hereunder, together with reasonable attorneys fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, indebtedness, sums and expenses set forth in clauses (i) through (v)of this Section 1 being herein collectively called, the Obligations, it being acknowledged and agreed that the Obligations shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.
(b) Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the Intercreditor Agreement at any time the Intercreditor Agreement is in effect. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control at any time the Intercreditor Agreement is in effect.
2. DEFINITIONS. (a) Unless otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement shall be used herein as therein defined. Reference to singular terms shall include the plural and vice versa.
(b) The following capitalized terms used herein shall have the definitions
specified below:
Administrative Agent shall have the meaning set forth in the recitals hereto.
Adverse Claim shall have the meaning given such term in Section 8-102(a)(l) of
the UCC.
Agreement shall have the meaning set forth in the first paragraph hereof.
Borrower shall have the meaning set forth in the recitals hereto.
Certificated Security shall have the meaning given such term in Section 8-102(a)(4) of the UCC.
Clearing Corporation shall have the meaning given such term in Section 8-102(a)(5) of the UCC.
3
Collateral shall have the meaning set forth in Section 3.1 hereof.
Collateral Accounts shall mean any and all accounts established and maintained by the Pledgee in the name of any Pledgor to which Collateral may be credited.
Credit Agreement shall have the meaning set forth in the recitals hereto.
Credit Document Obligations shall have the meaning set forth in Section 1(i) hereof.
Domestic Corporation shall have the meaning set forth in the definition of Stock.
Event of Default shall mean any Event of Default under, and as defined in, the Credit Agreement and shall in any event include, without limitation, any payment default on any of the Obligations after the expiration of any applicable grace period.
Exempted Foreign Entity shall mean any Foreign Corporation and any limited liability company organized under the laws of a jurisdiction other than the United States or any State thereof or the District of Columbia that, in any such case, is treated as a corporation or an association taxable as a corporation for U.S. federal income tax purposes.
Financial Asset shall have the meaning given such term in Section 8-102(a)(9) of the UCC.
Foreign Corporation shall have the meaning set forth in the definition of Stock .
Holdings shall have the meaning set forth in the recitals hereto. Indemnitees shall have the meaning set forth in Section 11 hereof.
Instrument shall have the meaning given such term in Section 9-102(a)(47) of the UCC.
Investment Property shall have the meaning given such term m Section 9-102(a)(49) of the UCC.
Lender Creditors shall have the meaning set forth in the recitals hereto.
Lenders shall have the meaning set forth in the recitals hereto.
Limited Liability Company Assets shall mean all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all limited liability company capital and interest in other limited liability companies), at any time owned by any Pledgor or represented by any Limited Liability Company Interest.
4
Limited Liability Company Interests shall mean the entire limited liability company membership interest at any time owned by any Pledgor in any limited liability company.
Location of any Pledgor has the meaning given such term in Section 9-307 of the UCC.
Non-Voting Equity Interests shall mean all Equity Interests of any Person that are not Voting Equity Interests.
Notes shall mean (x) all intercompany notes at any time issued to each Pledgor and (y) all other promissory notes from time to time issued to, or held by, each Pledgor.
Obligations shall have the meaning set forth in Section 1 hereof. Other Creditors shall have the meaning set forth in the recitals hereto.
Other Obligations shall have the meaning set forth in Section 1(ii) hereof.
Partnership Assets shall mean all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all partnership capital and interest in other partnerships), at any time owned by any Pledgor or represented by any Partnership Interest.
Partnership Interest shall mean the entire general partnership interest or limited partnership interest at any time owned by any Pledgor in any general partnership or limited partnership.
Pledged Notes shall mean all Notes at any time pledged or required to be pledged hereunder.
Pledgee shall have the meaning set forth in the first paragraph hereof.
Pledgor shall have the meaning set forth in the first paragraph hereof.
Proceeds shall have the meaning given such term in Section 9-102(a)(64) of the UCC.
Registered Organization shall have the meaning given such term in Section 9-102(a)(70) of the UCC.
Required Secured Creditors shall have the meaning provided in the Security Agreement.
Secured Creditors shall have the meaning set forth in the recitals hereto.
Secured Debt Agreements shall mean and include (x) this Agreement, (y) the other Credit Documents and (z) the Secured Hedging Agreements.
5
Secured Hedging Agreements shall have the meaning set forth in the recitals hereto.
Securities Account shall have the meaning given such term in Section 8-501(a) of the UCC.
Securities Act shall mean the Securities Act of 1933, as amended, as in effect from time to time.
Securities Intermediary shall have the meaning given such term in Section 8-102(14) of the UCC.
Security and Securities shall have the meaning given such term in Section 8-102(a)(l 5) of the UCC and shall in any event also include all Stock and all Notes.
Security Entitlement shall have the meaning given such term in Section 8-102(a)(17) of the UCC.
Stock shall mean (x) with respect to corporations incorporated under the laws of the United States or any State thereof or the District of Columbia (each, a Domestic Corporation ), all of the issued and outstanding shares of capital stock of any Domestic Corporation at any time owned by any Pledger and (y) with respect to corporations not Domestic Corporations (each, a Foreign Corporation ), all of the issued and outstanding shares of capital stock of any Foreign Corporation at any time owned by any Pledger.
Termination Date shall have the meaning set forth in Section 20 hereof.
UCC shall mean the Uniform Commercial Code as in effect in the State of New York from time to time; provided that all references herein to specific Sections or subsections of the UCC are references to such Sections or subsections, as the case may be, of the Uniform Commercial Code as in effect in the State of New York on the date hereof.
Uncertificated Security shall have the meaning given such term in Section 8-102(a)(l 8) of the UCC.
Voting Equity Interests of any Person shall mean all classes of Equity Interests of such Person entitled to vote.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge . To secure the Obligations now or hereafter owed or to be performed by such Pledger, each Pledgor does hereby grant, pledge and assign to the Pledgee for the benefit of the Secured Creditors, and does hereby create a continuing security interest in favor of the Pledgee for the benefit of the Secured Creditors in and a lien on, all of its right, title and interest in and to the following, whether now existing or hereafter from time to time acquired (collectively, the Collateral ):
6
(a) each of the Collateral Accounts (to the extent a security interest therein is not created pursuant to the Security Agreement), including any and all assets of whatever type or kind deposited by such Pledgor in any such Collateral Account, whether now owned or hereafter acquired, existing or arising, including, without limitation, all Financial Assets, Investment Property, monies, checks, drafts, Instruments, Securities or interests therein of any type or nature deposited or required by the Credit Agreement or any other Secured Debt Agreement to be deposited in such Collateral Account, and all investments and all certificates and other Instruments (including depository receipts, if any) from time to time representing or evidencing the same, and all dividends, interest, distributions, cash and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing;
(b) all Securities owned or held by such Pledgor from time to time and all options and warrants owned by such Pledgor from time to time to purchase Securities;
(c) all Limited Liability Company Interests owned by such Pledgor from time to time and all of its right, title and interest in each limited liability company to which each such Limited Liability Company Interest relates, whether now existing or hereafter acquired, including, without limitation, to the fullest extent permitted under the terms and provisions of the documents and agreements governing such Limited Liability Company Interests and applicable law:
(i) all its capital therein and its interest in all profits, income, surpluses, losses, Limited Liability Company Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Limited Liability Company Interests;
(ii) all other payments due or to become due to such Pledgor in respect of Limited Liability Company Interests, whether under any limited liability company agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(iii) all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any limited liability company agreement or operating agreement, or at law or otherwise in respect of such Limited Liability Company Interests;
(iv) all present and future claims, if any, of such Pledgor against any such limited liability company for monies loaned or advanced, for services rendered or otherwise;
(v) all of such Pledgors rights under any limited liability company agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Limited Liability Company Interests, including any power to terminate, cancel or modify any such limited liability company agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in
7
the name of any of such Pledgor in respect of such Limited Liability Company Interests and any such limited liability company, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Limited Liability Company Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and
(vi) all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;
(d) all Partnership Interests owned by such Pledgor from time to time and all of its right, title and interest in each partnership to which each such Partnership Interest relates, whether now existing or hereafter acquired, including, without limitation, to the fullest extent permitted under the terms and provisions of the documents and agreements governing such Partnership Interests and applicable law:
(i) all its capital therein and its interest in all profits, income, surpluses, losses, Partnership Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Partnership Interests;
(ii) all other payments due or to become due to such Pledgor in respect of Partnership Interests, whether under any partnership agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(iii) all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any partnership agreement or operating agreement, or at law or otherwise in respect of such Partnership Interests;
(iv) all present and future claims, if any, of such Pledgor against any such partnership for monies loaned or advanced, for services rendered or otherwise;
(v) all of such Pledgors rights under any partnership agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Partnership Interests, including any power to terminate, cancel or modify any partnership agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of such Pledgor in respect of such Partnership Interests and any such partnership, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together
8
with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Partnership Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and
(vi) all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;
(e) all Financial Assets and Investment Property owned by such Pledgor from time to time;
(f) all Security Entitlements owned by such Pledgor from time to time in any and all of the foregoing; and
(g) all Proceeds of any and all of the foregoing;
provided that (x) except in the circumstances and to the extent provided by Section 9.17 of the Credit Agreement (in which case this clause (x) shall no longer be applicable), no Pledgor shall be required at any time to pledge hereunder more than 65% of the total combined voting power of all classes of Voting Equity Interests of any direct Exempted Foreign Entity and (y) each Pledgor shall be required to pledge hereunder 100% of the Non-Voting Equity Interests of each direct Exempted Foreign Entity at any time and from time to time acquired by such Pledgor, which Non-Voting Equity Interests shall not be subject to the limitations described in preceding clause (x).
3.2. Procedures . (a) To the extent that any Pledgor at any time or from time to time owns, acquires or obtains any right, title or interest in any Collateral, such Collateral shall automatically (and without the taking of any action by such Pledgor) be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto, such Pledgor shall (to the extent provided below) take the following actions as set forth below (as promptly as practicable and, in any event, within 10 Business Days after it obtains such Collateral) for the benefit of the Pledgee and the other Secured Creditors:
(i) with respect to a Certificated Security (other than a Certificated Security credited on the books of a Clearing Corporation or Securities Intermediary), such Pledgor shall physically deliver such Certificated Security to the Pledgee, endorsed in blank;
(ii) with respect to an Uncertificated Security (other than an Uncertificated Security credited on the books of a Clearing Corporation or Securities Intermediary), such Pledgor shall cause the issuer of such Uncertificated Security to duly authorize, execute, and deliver to the Pledgee, an agreement for the benefit of the Pledgee and the other Secured Creditors substantially in the form of Annex H hereto (appropriately completed to the reasonable satisfaction of the Pledgee and with such modifications, if any, as shall
9
be reasonably satisfactory to the Pledgee) pursuant to which such issuer agrees to comply with any and all instructions originated by the Pledgee without further consent by the registered owner and not to comply with instructions regarding such Uncertificated Security (and any Partnership Interests and Limited Liability Company Interests issued by such issuer) originated by any other Person other than a court of competent jurisdiction (it being understood that the Pledgee only will give such instructions to any issuer upon the occurrence and during the continuance of an Event of Default);
(iii) with respect to a Certificated Security, Uncertificated Security, Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary (including a Federal Reserve Bank, Participants Trust Company or The Depository Trust Company), such Pledgor shall promptly notify the Pledgee thereof and shall promptly take (x) all actions required (i) to comply with the applicable rules of such Clearing Corporation or Securities Intermediary and (ii) to perfect the security interest of the Pledgee under applicable law (including, in any event, under Sections 9-314(a), (b) and (c), 9-106 and 8-106(d) of the UCC) and (y) such other actions as the Pledgee deems reasonably necessary or desirable to effect the foregoing;
(iv) with respect to a Partnership Interest or a Limited Liability Company Interest (other than a Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary), (1) if such Partnership Interest or Limited Liability Company Interest is represented by a certificate and is a Security for purposes of the UCC, such Pledgor shall follow the procedure set forth in Section 3.2(a)(i) hereof, and (2) if such Partnership Interest or Limited Liability Company Interest is not represented by a certificate or is not a Security for purposes of the UCC, such Pledgor shall follow the procedure set forth in Section 3.2(a)(ii) hereof;
(v) with respect to any Note, physical delivery of such Note to the Pledgee, endorsed in blank; and
(vi) with respect to cash proceeds from any of the Collateral described in Section 3.1 hereof, (i) establishment by the Pledgee of a cash account (unless such an account is already in existence) in the name of such Pledgor over which the Pledgee shall have control within the meaning of the UCC and at any time any Default or Event of Default is in existence no withdrawals or transfers may be made therefrom by any Person except with the prior written consent of the Pledgee and (ii) deposit of such cash in such cash account.
(b) In addition to the actions required to be taken pursuant to Section 3.2(a) hereof, each Pledgor shall take the following additional actions with respect to the Collateral:
10
(i) with respect to all Collateral of such Pledgor whereby or with respect to which the Pledgee may obtain control thereof within the meaning of Section 8-106 of the UCC (or under any provision of the UCC as same may be amended or supplemented from time to time, or under the laws of any relevant State other than the State of New York), such Pledgor shall take all actions as may be reasonably necessary or as reasonably requested from time to time by the Pledgee so that control of such Collateral is obtained and at all times held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate financing statements (on appropriate forms) under the Uniform Commercial Code as in effect in the various relevant States, covering all Collateral hereunder (with the form of such financing statements to be reasonably satisfactory to the Pledgee), to be filed in the relevant filing offices so that at all times the Pledgees security interest in all Investment Property and other Collateral which can be perfected by the filing of such financing statements (in each case to the maximum extent perfection by filing may be obtained under the laws of the relevant States, including, without limitation, Section 9-312(a) of the UCC) is so perfected.
3.3. Subsequently Acquired Collateral . If any Pledgor shall acquire (by purchase, stock dividend, distribution or otherwise) any additional Collateral at any time or from time to time after the date hereof, (i) such Collateral shall automatically (and without any further action being required to be taken) be subject to the pledge and security interests created pursuant to Section 3.1 hereof and, furthermore, such Pledgor will thereafter take (or cause to be taken) all action (as promptly as practicable and, in any event, within 10 Business Days after it obtains such Collateral) with respect to such Collateral in accordance with the procedures set forth in Section 3.2 hereof, and will promptly thereafter deliver to the Pledgee (i) a certificate executed by an authorized officer of such Pledgor describing such Collateral and certifying that the same has been duly pledged in favor of the Pledgee (for the benefit of the Secured Creditors) hereunder and (ii) supplements to Annexes A through G hereto as are necessary to cause such Annexes to be complete and accurate at such time. Without limiting the foregoing, each Pledgor shall be required to pledge hereunder the Equity Interests of any Exempted Foreign Entity at any time and from time to time after the date hereof acquired by such Pledgor, provided that (x) except in the circumstances and to the extent provided by Section 9.17 of the Credit Agreement, no Pledgor shall be required at any time to pledge hereunder more than 65% of the total combined voting power of all classes of Voting Equity Interests of any direct Exempted Foreign Entity and (y) each Pledgor shall be required to pledge hereunder 100% of the Non-Voting Equity Interests of each direct Exempted Foreign Entity at any time and from time to time acquired by such Pledgor.
3.4. Transfer Taxes . Each pledge of Collateral under Section 3.1 or Section 3.3 hereof shall be accompanied by any transfer tax stamps required in connection with the pledge of such Collateral.
3.5. Certain Representations and Warranties Regarding the Collateral . Each Pledgor represents and warrants that on the date hereof: (i) each Subsidiary of such Pledgor, and the direct ownership thereof, is listed in Annex B hereto; (ii) the Stock (and any warrants or options to purchase Stock) held by such Pledgor consists of the number and type of shares of the stock (or warrants or options to purchase any stock) of the corporations as described in Annex C hereto; (iii) such Stock referenced in clause (ii) of this paragraph constitutes that percentage of
11
the issued and outstanding capital stock of the issuing corporation as is set forth in Annex C hereto; (iv) the Notes held by such Pledgor consist of the promissory notes described in Annex D hereto where such Pledgor is listed as the lender; (v) the Limited Liability Company Interests held by such Pledgor consist of the number and type of interests of the Persons described in Annex E hereto; (vi) each such Limited Liability Company Interest referenced in clause (v) of this paragraph constitutes that percentage of the issued and outstanding equity interest of the issuing Person as set forth in Annex E hereto; (vii) the Partnership Interests held by such Pledgor consist of the number and type of interests of the Persons described in Annex F hereto; (viii) each such Partnership Interest referenced in clause (vii) of this paragraph constitutes that percentage or portion of the entire Partnership Interest of the partnership as set forth in Annex F hereto; (ix) the exact address of each chief executive office of such Pledgor is listed on Annex G hereto; (x) the Pledgor has complied with the respective procedure set forth in Section 3.2(a) hereof with respect to each item of Collateral described in Annexes C through F hereto; and (xi) on the date hereof, such Pledgor owns no other Securities, Stock, Notes, Limited Liability Company Interests or Partnership Interests other than those listed in Annexes C through F hereof.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have the right to appoint one or more sub-agents for the purpose of retaining physical possession of the Collateral, which may be held (in the discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have occurred and be continuing an Event of Default, each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral owned by it, and to give consents, waivers or ratifications in respect thereof; provided that, in each case, no vote shall be cast or any consent, waiver or ratification given or any action taken or omitted to be taken which would violate, result in a breach of any covenant contained in, or be inconsistent with any of the terms of any Secured Debt Agreement, or which could reasonably be expected to have the effect of impairing the value of the Collateral or any part thereof or the position or interests of the Pledgee or any other Secured Creditor in the Collateral, unless expressly permitted by the terms of the Secured Debt Agreements. All such rights of each Pledgor to vote and to give consents, waivers and ratifications shall cease in case an Event of Default has occurred and is continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there shall have occurred and be continuing an Event of Default, all cash dividends, cash distributions, cash Proceeds and other cash amounts payable in respect of the Collateral shall be paid to the respective Pledgor. The Pledgee shall be entitled to receive directly, and to retain as part of the Collateral:
(a) all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property paid or distributed by way of dividend or otherwise in respect of the Collateral;
12
(b) all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash (although such cash may be paid directly to the respective Pledgor so long as no Event of Default then exists)) paid or distributed in respect of the Collateral by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar rearrangement; and
(c) all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash (although such cash may be paid directly to the respective Pledgor so long as no Event of Default then exists)) which may be paid in respect of the Collateral by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate or other reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the Pledgees right to receive the proceeds of the Collateral in any form in accordance with Section 3 of this Agreement. All dividends, distributions or other payments which are received by any Pledgor contrary to the provisions of this Section 6 or Section 7 hereof shall be received in trust for the benefit of the Pledgee, shall be segregated from other property or funds of such Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT. If there shall have occurred and be continuing an Event of Default, then and in every such case, the Pledgee shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Agreement, any other Secured Debt Agreement or by law) for the protection and enforcement of its rights in respect of the Collateral, and the Pledgee shall be entitled to exercise all the rights and remedies of a secured party under the UCC as in effect in any relevant jurisdiction and also shall be entitled, without limitation, to exercise the following rights, which each Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral otherwise payable under Section 6 hereof to the respective Pledgor;
(b) to transfer all or any part of the Collateral into the Pledgees name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in accordance with its terms, and take any other lawful action to collect upon any Pledged Note (including, without limitation, to make any demand for payment thereon);
(d) to vote (and exercise all rights and powers in respect of voting) all or any part of the Collateral (whether or not transferred into the name of the Pledgee) and give all consents, waivers and ratifications in respect of the Collateral and otherwise act with respect thereto as though it were the outright owner thereof (each Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with full power of substitution to do so);
(e) at any time and from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, without demand of performance, advertisement or, notice of intention to sell or of
13
the time or place of sale or adjournment thereof or to redeem or otherwise purchase or dispose (all of which are hereby waived by each Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Pledgee in its absolute discretion may determine, provided at least 10 days written notice of the time and place of any such sale shall be given to the respective Pledgor. The Pledgee shall not be obligated to make any such sale of Collateral regardless of whether any such notice of sale has theretofore been given. Each Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security or the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured Creditors may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Pledgee nor any other Secured Creditor shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and
(f) to set off any and all Collateral against any and all Obligations, and to withdraw any and all cash or other Collateral from any and all Collateral Accounts and to apply such cash and other Collateral to the payment of any and all Obligations.
8. REMEDIES, CUMULATIVE, ETC. Each and every right, power and remedy of the Pledgee provided for in this Agreement or in any other Secured Debt Agreement, or now or hereafter existing at law or in equity or by statute shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Pledgee or any other Secured Creditor of any one or more of the rights, powers or remedies provided for in this Agreement or any other Secured Debt Agreement or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee or any other Secured Creditor of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee or any other Secured Creditor to exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on any Pledgor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee or any other Secured Creditor to any other or further action in any circumstances without notice or demand. The Secured Creditors agree that this Agreement may be enforced only by the action of the Pledgee, in each case, acting upon the instructions of the Required Secured Creditors, and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Pledgee for the benefit of the Secured Creditors upon the terms of this Agreement and the Security Agreement.
9. APPLICATION OF PROCEEDS. (a) All monies collected by the Pledgee upon any sale or other disposition of the Collateral pursuant to the terms of this Agreement, together with all other monies received by the Pledgee hereunder or upon any distribution of (or on account of) Collateral (whether or not characterized as such) in connection with any case, proceeding or other action of the type described in Section 11.05 of the Credit Agreement, shall be applied in the manner provided in the Security Agreement.
14
(b) It is understood and agreed that each Pledgor shall remain jointly and severally liable with respect to its Obligations to the extent of any deficiency between the amount of the proceeds of the Collateral pledged by it hereunder and the aggregate amount of such Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the Pledgee or the officer making such sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Pledgee or such officer or be answerable in any way for the misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to indemnify, reimburse and hold harmless the Pledgee and each other Secured Creditor and their respective successors, assigns, employees, agents and affiliates (individually, an Indemnitee , and collectively, the Indemnitees ) from and against any and all obligations, damages, injuries, penalties, claims, demands, losses, judgments and liabilities (including, without limitation, liabilities for penalties) of whatsoever kind or nature, and (ii) to reimburse each Indemnitee for all reasonable costs, expenses and disbursements, including reasonable attorneys, agents and professional advisors fees and expenses, in each case arising out of or resulting from this Agreement or the exercise by any Indemnitee of any right or remedy granted to it hereunder or under any other Secured Debt Agreement (but excluding any obligations, damages, injuries, penalties, claims, demands, losses, judgments and liabilities (including, without limitation, liabilities for penalties) or expenses of whatsoever kind or nature to the extent incurred or arising by reason of gross negligence or willful misconduct of such Indemnitee (as determined by a court of competent jurisdiction in a final and non-appealable decision)). In no event shall the Pledgee hereunder be liable, in the absence of gross negligence or willful misconduct on its part (as determined by a court of competent jurisdiction in a final and non-appealable decision), for any matter or thing in connection with this Agreement other than to account for monies or other property actually received by it in accordance with the terms hereof. If and to the extent that the obligations of any Pledgor under this Section 11 are unenforceable for any reason, such Pledgor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law. The indemnity obligations of each Pledgor contained in this Section 11 shall continue in full force and effect notwithstanding the full payment of all the Notes issued under the Credit Agreement, the termination of all Secured Hedging Agreements, and the payment of all other Obligations and notwithstanding the discharge thereof.
12. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER. (a) Nothing herein shall be construed to make the Pledgee or any other Secured Creditor liable as a member of any limited liability company or as a partner of any partnership and neither the Pledgee nor any other Secured Creditor by virtue of this Agreement or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited liability company or as a partner in any partnership. The parties hereto expressly agree that, unless the Pledgee shall become the absolute owner of Collateral consisting of a Limited Liability Company Interest or a Partnership Interest pursuant hereto, this Agreement shall not be construed as creating a partnership or joint venture among the Pledgee, any other Secured Creditor, any Pledgor and/or any other Person.
15
(b) Except as provided in the last sentence of paragraph (a) of this Section 12, the Pledgee, by accepting this Agreement, did not intend to become a member of any limited liability company or a partner of any partnership or otherwise be deemed to be a co-venturer with respect to any Pledgor, any limited liability company, partnership and/or any other Person either before or after an Event of Default shall have occurred. The Pledgee shall have only those powers set forth herein and the Secured Creditors shall assume none of the duties, obligations or liabilities of a member of any limited liability company or as a partner of any partnership or any Pledgor except as provided in the last sentence of paragraph (a) of this Section 12.
(c) The Pledgee and the other Secured Creditors shall not be obligated to perform or discharge any obligation of any Pledgor as a result of the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all the rights, powers, privileges and authority so created, shall not at any time or in any event obligate the Pledgee or any other Secured Creditor to appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or to take any action hereunder or thereunder, or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees that it will join with the Pledgee in executing and, at such Pledgors own expense, file and refile under the UCC or other applicable law such financing statements, continuation statements and other documents, in form reasonably acceptable to the Pledgee, in such offices as the Pledgee (acting on its own or on the instructions of the Required Secured Creditors) may reasonably deem necessary or appropriate and wherever required or permitted by law in order to perfect and preserve the Pledgees security interest in the Collateral hereunder and hereby authorizes the Pledgee to file financing statements and amendments thereto relative to all or any part of the Collateral (including, without limitation, financing statements which list the Collateral specifically and/or all assets as collateral without the signature of such Pledgor where permitted by law), and agrees to do such further acts and things and to execute and deliver to the Pledgee such additional conveyances, assignments, agreements and instruments as the Pledgee may reasonably require or deem advisable to carry into effect the purposes of this Agreement or to further assure and confirm unto the Pledgee its rights, powers and remedies hereunder or thereunder.
(b) Each Pledgor hereby constitutes and appoints the Pledgee its true and lawful attorney-in-fact, irrevocably, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time after the occurrence and during the continuance of an Event of Default, in the Pledgees discretion, to act, require, demand, receive and give acquittance for any and all monies and claims for monies due or to become due to such Pledgor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings and to execute any instrument which the Pledgee may deem reasonably necessary or advisable to accomplish the purposes of this Agreement, which appointment as attorney is coupled with an interest.
16
14. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood, acknowledged and agreed by each Secured Creditor that by accepting the benefits of this Agreement each such Secured Creditor acknowledges and agrees that the obligations of the Pledgee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Section 12 of the Credit Agreement. The Pledgee shall act hereunder on the terms and conditions set forth herein and in Section 12 of the Credit Agreement which shall inure to the benefit of the Pledgee, and shall be binding upon all Pledgors and all Secured Creditors, in connection with this Agreement and the other Security Documents. Without limiting the generality of the foregoing, (i) the Pledgee shall not be subject to any fiduciary or other implied duties, regardless of whether an Event of Default has occurred and is continuing and (ii) the Pledgee shall not have any duty to take any discretionary action or exercise any discretionary powers. Notwithstanding anything to the contrary in this Agreement, in no event shall the Pledgee be responsible for, or have any duty or obligation with respect to, the recording, filing, registering, perfection, protection or maintenance of the security interests or Liens intended to be created by this Agreement (including the preparation, filing or continuation of any Uniform Commercial Code financing or continuation statements or similar documents or instruments), nor shall the Pledgee be responsible for, and the Pledgee makes no representation regarding, the validity, enforceability, effectiveness or priority of this Agreement or the security interests or Liens intended to be created hereby.
15. TRANSFER BY THE PLEDGORS. Except as permitted (i) prior to the date all Credit Document Obligations have been paid in full and all Loan Commitments under the Credit Agreement have been terminated, pursuant to the Credit Agreement, and (ii) thereafter, pursuant to the other Secured Debt Agreements, no Pledgor will sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein.
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. (a) Each Pledgor represents, warrants and covenants as to itself and each of its Subsidiaries that:
(i) it is the legal, beneficial and record owner of, and has good and marketable title to, all of its Collateral consisting of one or more Securities, Partnership Interests and Limited Liability Company Interests and that it has sufficient interest in all of its Collateral in which a security interest is purported to be created hereunder for such security interest to attach (subject, in each case, to no pledge, lien, mortgage, hypothecation, security interest, charge, option, Adverse Claim or other encumbrance whatsoever, except the liens and security interests created by this Agreement and, subject to the terms of the Intercreditor Agreement, those created by the Senior Secured Notes Security Documents;
17
(ii) it has full power, authority and legal right to pledge all the Collateral pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and delivered by such Pledgor and constitutes a legal, valid and binding obligation of such Pledgor enforceable against such Pledgor in accordance with its terms, except to the extent that the enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no consent of any other party (including, without limitation, any stockholder, partner, member or creditor of such Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any Governmental Authority is required to be obtained by such Pledgor in connection with (a) the execution, delivery or performance of this Agreement by such Pledgor, (b) the validity or enforceability of this Agreement against such Pledgor (except as set forth in clause (iii) above),
(c) the perfection or enforceability of the Pledgees security interest in such Pledgors Collateral or (d) except for compliance with or as may be required by applicable securities laws, the exercise by the Pledgee of any of its rights or remedies provided herein;
(v) neither the execution, delivery or performance by such Pledgor of this Agreement or any other Secured Debt Agreement to which it is a party, nor compliance by it with the terms and provisions hereof and thereof nor the consummation of the transactions contemplated therein: (i) will contravene any provision of any applicable Requirements of Law or Governmental Authority, domestic or foreign, applicable to such Pledgor; (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents and, subject to the terms of the Intercreditor Agreement, the Senior Secured Notes Security Documents) upon any of the properties or assets of such Pledgor or any of its Subsidiaries pursuant to the terms of any indenture, lease, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or other instrument to which such Pledgor or any of its Subsidiaries is a party or is otherwise bound, or by which it or any of its properties or assets is bound or to which it may be subject; or (iii) will violate any provision of the Organizational Documents of such Pledgor or any of its Subsidiaries;
(vi) all of such Pledgors Collateral (consisting of Securities, Limited Liability Company Interests and Partnership Interests) has been duly and validly issued, is fully paid and non-assessable and is subject to no options to purchase or similar rights;
18
(vii) each of such Pledgors Pledged Notes constitutes, or when executed by the obligor thereof will constitute, the legal, valid and binding obligation of such obligor, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether enforcement is sought in equity or at law);
(viii) the pledge, collateral assignment and delivery to the Pledgee of such Pledgors Collateral consisting of Certificated Securities and Pledged Notes pursuant to this Agreement creates a valid and perfected first priority security interest in such Certificated Securities and Pledged Notes, and the proceeds thereof, subject to no prior Lien or encumbrance or to any agreement purporting to grant to any third party a Lien or encumbrance on the property or assets of such Pledgor which would include the Securities (other than, subject to the terms of the Intercreditor Agreement, the Liens under the Senior Secured Notes Security Documents) and the Pledgee is entitled to all the rights, priorities and benefits afforded by the UCC or other relevant law as enacted in any relevant jurisdiction to perfect security interests in respect of such Collateral; and
(ix) control (as defined in Section 8-106 of the UCC) has been obtained by the Pledgee over all of such Pledgors Collateral consisting of Securities (including, without limitation, Notes which are Securities) with respect to which such control may be obtained pursuant to Section 8-106 of the UCC, except to the extent that the obligation of the applicable Pledgor to provide the Pledgee with control of such Collateral has not yet arisen under this Agreement; provided that in the case of the Pledgee obtaining control over Collateral consisting of a Security Entitlement, such Pledgor shall have taken all steps in its control so that the Pledgee obtains control over such Security Entitlement.
(b) Each Pledgor covenants and agrees that it will defend the Pledgees right, title and security interest in and to such Pledgors Collateral and the proceeds thereof against the claims and demands of all persons whomsoever; and each Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee by such Pledgor as Collateral hereunder and will likewise defend the right thereto and security interest therein of the Pledgee and the other Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no action which would violate any of the terms of any Secured Debt Agreement.
17. LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION); JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS; CHANGES THERETO; ETC. The exact legal name of each Pledgor, the type of organization of such Pledgor, whether or not such Pledgor is a Registered Organization, the jurisdiction of organization of such Pledgor, such Pledgors Location, the organizational identification number (if any) of each Pledgor and the Federal Employer
19
Identification Number (if any) is listed on Annex A hereto for such Pledgor. No Pledgor shall change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its jurisdiction of organization, its Location, its organizational identification number (if any), or its Federal Employer Identification Number (if any) except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Secured Debt Agreements and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) any Pledgor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, outside the United States or a State thereof) if (i) it shall have given to the Collateral Agent not less than 5 days prior written notice of each change to the information listed on Annex A (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Annex A which shall correct all information contained therein for such Pledgor, and (ii) in connection with the respective change or changes, it shall have taken all action reasonably necessary or as reasonably requested by the Collateral Agent to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect. In addition, to the extent that any Pledgor does not have an organizational identification number on the date hereof and later obtains one, such Pledgor shall promptly thereafter deliver a notification to the Collateral Agent of such organizational identification number and shall take all actions reasonably necessary or as reasonably requested by the Collateral Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.
18. PLEDGORS OBLIGATIONS ABSOLUTE, ETC. The obligations of each Pledgor under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever (other than termination of this Agreement pursuant to Section 20 hereof), including, without limitation:
(a) any renewal, extension, amendment or modification of, or addition or supplement to or deletion from any Secured Debt Agreement (other than this Agreement in accordance with its terms), or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof;
(b) any waiver, consent, extension, indulgence or other action or inaction under or in respect of any such agreement or instrument including, without limitation, this Agreement (other than a waiver, consent or extension with respect to this Agreement in accordance with its terms);
(c) any furnishing of any additional security to the Pledgee or its assignee or any acceptance thereof or any release of any security by the Pledgee or its assignee;
(d) any limitation on any partys liability or obligations under any such instrument or agreement or any invalidity or unenforceability, in whole or in part, of any such instrument or agreement or any term thereof; or
20
(e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to any Pledgor or any Subsidiary of any Pledgor, or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding, whether or not such Pledgor shall have notice or knowledge of any of the foregoing.
19. SALE OF COLLATERAL WITHOUT REGISTRATION. If at any time when the Pledgee shall determine to exercise its right to sell all or any part of the Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests pursuant to Section 7 hereof, and such Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act, as then in effect, the Pledgee may, in its sole and absolute discretion, sell such Collateral or part thereof by private sale in such manner and under such circumstances as the Pledgee may deem necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Pledgee, in its sole and absolute discretion (i) may proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Collateral or part thereof shall have been filed under such Securities Act, (ii) may approach and negotiate with a single possible purchaser to effect such sale, and (iii) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of such Collateral or part thereof. In the event of any such sale, the Pledgee shall incur no responsibility or liability for selling all or any part of the Collateral at a price which the Pledgee, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until the registration as aforesaid.
20. TERMINATION; RELEASE. (a) On the Termination Date (as defined below), this Agreement shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 11 hereof shall survive any such termination) and the Pledgee, at the written request and sole expense of such Pledgor, will execute and deliver to such Pledgor a proper instrument or instruments (including UCC termination statements) acknowledging the satisfaction and termination of this Agreement (including, without limitation, UCC termination statements and instruments of satisfaction, discharge and/or reconveyance), and will duly release from the security interest created hereby and assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Pledgee and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement, together with any moneys at the time held by the Pledgee or any of its sub-agents hereunder and, with respect to any Collateral consisting of an Uncertificated Security, a Partnership Interest or a Limited Liability Company Interest (other than an Uncertificated Security, Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary), a termination of the agreement relating thereto executed and delivered by the issuer of such Uncertificated Security pursuant to Section 3.2(a)(ii) or by the respective partnership or limited liability company pursuant to Section 3.2(a)(iv)(2). As used in this Agreement, Termination Date shall mean the date upon which the Total Loan Commitment under the Credit Agreement has been terminated and all Secured Hedging Agreements entitled to the benefits of this Agreement have been terminated, no or Note (as defined in the Credit Agreement) is outstanding (and all Loans have been paid in
21
full), and all other Obligations (other than indemnities described in Section 11 hereof and described in Section 13.01 of the Credit Agreement, and any other indemnities set forth in any other Security Documents, in each case which are not then due and payable) then due and payable have been paid in full.
(b) In the event that any part of the Collateral is sold or otherwise disposed of (to a Person other than a Credit Party) (x) at any time prior to the time at which all Credit Document Obligations have been paid in full and the Total Loan Commitment under the Credit Agreement have been terminated, in connection with a sale or disposition permitted by Section 10.02 of the Credit Agreement or is otherwise released at the direction of the Required Lenders {or all the Lenders if required by Section 13.12 of the Credit Agreement) or (y) at any time thereafter, to the extent permitted by the other Secured Debt Agreements, and in the case of clauses (x) and (y), the proceeds of such sale or disposition (or from such release) are applied in accordance with the terms of the Credit Agreement or such other Secured Debt Agreement, as the case may be, to the extent required to be so applied, the Pledgee, at the written request and sole expense of such Pledgor, will duly release from the security interest created hereby (and will execute and deliver such documentation, including termination or partial release statements and the like in connection therewith) and assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or released and as may be in the possession of the Pledgee (or, in the case of Collateral held by any sub-agent designated pursuant to Section 4 hereof, such sub-agent) and has not theretofore been released pursuant to this Agreement.
(c) At any time that any Pledgor desires that Collateral be released as provided in the foregoing Section 20(a) or (b), it shall deliver to the Pledgee (and the relevant sub-agent, if any, designated pursuant to Section 4 hereof) a certificate signed by an Authorized Officer of such Pledgor certifying that the release of the respective Collateral is permitted pursuant to the Credit Documents, including Section 20(a) or (b) hereof.
(d) The Pledgee shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in good faith believes to be in accordance with) this Section 20.
21. NOTICES, ETC. Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier, except that notices and communications to the Pledgee or any Pledgor shall not be effective until received by the Pledgee or such Pledgor, as the case may be. All notices and other communications shall be in writing and addressed as follows:
(a) if to any Pledgor, at its address set forth in the Security Agreement;
(b) if to the Pledgee, at:
22
Victory Park Management, LLC
227 W. Monroe Street, Suite 3900
Chicago, Illinois 60606
Telephone: (312) 705-2786
Facsimile: (312) 701-0794
Attention: Scott R. Zemnick, General Counsel
E-mail: szemnick@vpcadvisors.com
with a copy (for informational purposes only) to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
Telephone: (312) 902-5297 and (312) 902-5495
Facsimile: (312) 577-8964 and (312) 577-8854
Attention: Mark R. Grossmann, Esq. and Scott E. Lyons, Esq.
E-mail: mg@kattenlaw.com and scott.lyons@kattenlaw.com
(c) if to any Lender Creditor, either (x) to the Administrative Agent, at the address of the Administrative Agent specified in the Credit Agreement, or (y) at such address as such Lender Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other Creditor shall have specified in writing to the Pledgors and the Pledgee;
or at such other address or addressed to such other individual as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
22. WAIVER; AMENDMENT. Except as provided in Sections 30 and 32 hereof, none of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever except in accordance with the requirements specified in the Security Agreement.
23. SUCCESSORS AND ASSIGNS. This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or termination as set forth in Section 20 hereof, (ii) be binding upon each Pledgor, its successors and assigns; provided , however , that no Pledgor shall assign any of its rights or obligations hereunder without the prior written consent of the Pledgee (with the prior written consent of the Required Secured Creditors) or as may otherwise be permitted by the Secured Debt Agreements, and (iii) inure, together with the rights and remedies of the Pledgee hereunder, to the benefit of the Pledgee, the other Secured Creditors and their respective successors, transferees and assigns. All agreements, statements, representations and warranties made by each Pledgor herein or in any certificate or other instrument delivered by such Pledgor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Secured Debt Agreements regardless of any investigation made by the Secured Creditors or on their behalf.
23
24. HEADINGS DESCRIPTIVE. The headings of the several Sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
25. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH PARTY. EACH PLEDGOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH PLEDGOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 21 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN, HOWEVER, SHALL AFFECT THE RIGHT OF THE PLEDGEE UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
24
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
26. PLEDGORS DUTIES. It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Pledgor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Pledgee shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, except for the safekeeping of Collateral actually in Pledgor s possession, nor shall the Pledgee be required or obligated in any manner to perform or fulfill any of the obligations of any Pledgor under or with respect to any Collateral.
27. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with each Pledgor and the Pledgee.
28. SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or . unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
29. RECOURSE. This Agreement is made with full recourse to each Pledgor and pursuant to and upon all the representations, warranties, covenants and agreements on the part of such Pledgor contained herein and in the other Secured Debt Agreements and otherwise in writing in connection herewith or therewith.
30. ADDITIONAL PLEDGORS. It is understood and agreed that any Subsidiary of Holdings that is required to become a party to this Agreement after the date hereof pursuant to the requirements of the Credit Agreement or any other Credit Document, shall become a Pledgor hereunder by (x) executing a counterpart hereof and delivering same to the Pledgee or executing a joinder agreement and delivering same to the Pledgee, in each case as may be required by (and in form and substance reasonably satisfactory to) the Pledgee, (y) delivering supplements to Annexes A through G, hereto as are necessary to cause such annexes to be complete and accurate with respect to such additional Pledgor on such date and (z) taking all actions as specified in this Agreement as would have been taken by such Pledgor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Pledgee and with all documents and actions required above to be taken to the reasonable satisfaction of the Pledgee.
31. LIMITED OBLIGATIONS. It is the desire and intent of each Pledgor and the Secured Creditors that this Agreement shall be enforced against each Pledgor to the fullest extent permissible under the laws applied in each jurisdiction in which enforcement is sought.
25
Notwithstanding anything to the contrary contained herein, in furtherance of the foregoing, it is noted that the obligations of each Pledgor constituting a Guarantor have been limited as provided in the respective Guaranty.
32. RELEASE OF PLEDGORS. If at any time all of the Equity Interests of any Pledgor owned by the Borrower or any of its Subsidiaries are sold (to a Person other than a Credit Party) in a transaction permitted pursuant to the Credit Agreement (and which does not violate the terms of any other Secured Debt Agreement then in effect), then, such Pledgor shall be released as a Pledgor pursuant to this Agreement without any further action hereunder (it being understood that the sale of all of the Equity Interests in any Person that owns, directly or indirectly, all of the Equity Interests in any Pledgor shall be deemed to be a sale of all of the Equity Interests in such Pledgor for purposes of this Section), and the Pledgee is authorized and directed, at the sole expense of the Borrower, to execute and deliver such instruments of release as are reasonably satisfactory to it. At any time that the Borrower desires that a Pledgor be released from this Agreement as provided in this Section 32, the Borrower shall deliver to the Pledgee a certificate signed by an Authorized Officer of the Borrower stating that the release of such Pledgor is permitted pursuant to this Section 32. The Pledgee shall have no liability whatsoever to any other Secured Creditor as a result of the release of any Pledgor by it in accordance with, or which it believes in good faith to be in accordance with, this Section 32.
* * * *
26
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.
PLEDGORS | CURO FINANCIAL TECHNOLOGIES CORP. | |||||
CURO INTERMEDIATE HOLDINGS CORP. | ||||||
TODD FINANCIAL, INC. | ||||||
TODD CAR TITLE, INC. | ||||||
CURO MANAGEMENT LLC | ||||||
FMMR INVESTMENTS, INC. | ||||||
EVERGREEN FINANCIAL INVESTMENTS, INC. | ||||||
PRINCIPAL INVESTMENTS, INC. | ||||||
SPEEDY CASH | ||||||
ADVANCE GROUP, INC. | ||||||
CONCORD FINANCE, INC. | ||||||
SCIL,INC. | ||||||
CASH COLORADO, LLC | ||||||
GALT VENTURES, LLC | ||||||
A SPEEDY CASH CAR TITLE LOANS, LLC | ||||||
SCIL TEXAS, LLC | ||||||
SC AURUM, LLC ATTAIN FINANCE, LLC SPEEDY CASH ILLINOIS, INC. SC TEXAS MB, INC. THE MONEY STORE, L.P. |
||||||
By: |
/s/ Donald F. Gayhardt Jr. |
|||||
Name: Donald F. Gayhardt Jr. | ||||||
Title: President & Chief Executive Officer |
[Signature Page to Pledge Agreement]
Accepted and Agreed to:
VICTORY PARK MANAGEMENT, LLC,
as Collateral Agent and Pledgee
By: |
/s/ Scott R. Zemnick |
|
Name: Scott R. Zemnick | ||
Title: Authorized Signatory |
[Signature page to Pledge Agreement]
SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION
(AND WHETHER A REGISTERED ORGANIZATION), JURISDICTION
OF ORGANIZATION, LOCATION, ORGANIZATIONAL IDENTIFICATION
NUMBERS AND FEDERAL EMPLOYER IDENTIFICATION NUMBERS
Exact Legal Name of Each Assignor |
Type of
|
Registered
|
Jurisdiction
|
Assignors
|
Assignors
Organization
|
Assignors
Employer Identification
Number (or, if
|
||||||
Curo Financial Technologies Corp. | Corporation | Yes | Delaware |
3527 North Ridge Road, Wichita, Kansas 67205 |
Delaware: 4568552 |
[****] |
||||||
Curo Intermediate Holdings Corp. | Corporation | Yes | Delaware |
3527 North Ridge Road, Wichita, Kansas 67205 |
Delaware: 4575800 |
[****] |
||||||
Todd Financial, Inc. | Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: C315-2004 |
[****] |
||||||
Curo Management LLC |
Limited Liability Company | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: LLC15783- 2002 |
[****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
FMMR Investments, Inc. |
Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0147582006-4 |
[****] |
||||||
Evergreen Financial Investments, Inc. | Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: C28559- 2001 |
[****] |
||||||
Principal Investments, Inc. |
Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: C24603- 2002 |
[****] |
||||||
Todd Car Title, Inc. |
Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: C603-2004 |
[****] |
||||||
Speedy Cash | Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: C20087- 1998 |
[****] |
||||||
Advance Group, Inc. |
Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: C11137- 1999 |
[****] |
||||||
Concord Finance, Inc. | Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: C12543- 2002 |
[****] |
||||||
SCIL, Inc. | Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0482792006-5 |
[****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
Cash Colorado, LLC | Limited Liability Company | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: C12636- 2003 | [****] | ||||||
Galt Ventures, LLC | Limited Liability Company | Yes | Kansas |
3527 North Ridge Road, Wichita, Kansas 67205 |
Kansas: 4234100 | [****] | ||||||
A Speedy Cash Car Title Loans, LLC | Limited Liability Company | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
C912-2001 | [****] | ||||||
SCIL Texas, LLC | Limited Liability Company | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
E0039112007-9 | [****] | ||||||
Attain Finance, LLC | Limited Liability Company | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0499842009-4 | [****] | ||||||
SC Aurum, LLC | Limited Liability Company | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0492782009-9 | [****] | ||||||
Speedy Cash Illinois, Inc. | Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0291302012- 5 | [****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
SC Texas MB, Inc. | Corporation | Yes | Nevada |
3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0376982012- 7 |
[****] |
||||||
The Money Store, L.P. | Limited partnership | Yes | Texas |
3527 North Ridge Road, Wichita, Kansas 67205 |
Texas: 7422197024 |
[****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
SCHEDULE OF SUBSIDIARIES
Entity |
Owner |
Percent Owned |
Class of Capital Stock |
|||
Curo Intermediate Holdings Corp. |
Curo Financial Technologies Corp. |
100% |
Common Stock |
|||
A Speedy Cash Car Title Loans, LLC |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
Advance Group, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
Attain Finance, LLC |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
Attain Finance Canada, Inc. |
Attain Finance, LLC |
100% |
Common Stock |
|||
Cash Money Cheque Cashing, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
Cash Colorado, LLC |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
Concord Finance, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
Evergreen Financial Investments, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
FMMR Investments, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
Galt Ventures, LLC |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
LendDirect Corp. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
Principal Investments, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
SC Aurum, LLC |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
SCHC Financial Canada, Inc.* |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
SCIL Texas, LLC |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
SCIL, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
Speedy Cash |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
Speedy Cash Illinois, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
SC Texas MB, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
The Money Store, L.P. |
SC Texas MB, Inc. |
100% |
LLC interests |
|||
The Money Store, L.P. |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
SRC Transatlantic Limited* |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
Wage Day Advance Limited |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
Curo Management LLC |
Curo Intermediate Holdings Corp. |
100% |
LLC interests |
|||
Todd Car Title, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
Todd Financial, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
|||
CFTC Finance, Inc. |
Curo Intermediate Holdings Corp. |
100% |
Common Stock |
SCHEDULE OF STOCK
1. | Curo Financial Technologies Corp. |
Name of Issuing Corporation |
Type of Shares |
Number of Shares |
Certificate No. |
Percentage
Owned |
Sub-clause
of
of Pledge Agreement |
|||||
Speedy Cash Intermediate Holdings Corp. |
Common stock | 100 shares | 1 | 100% | 3.2(a)(i) |
2. | Curo Intermediate Holdings Corp. |
Name of Issuing Corporation |
Type of Shares |
Number of Shares |
Certificate No. |
Percentage
Owned |
Sub-clause
of
of Pledge Agreement |
|||||
Advance Group, Inc. | Common stock | 760 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Concord Finance, Inc. | Common stock | 2,500 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Evergreen Financial Investments, Inc. | Common stock | 2,500 shares | 1-SC | 100% | 3.2(a)(i) | |||||
FMMR Investments, Inc. | Common stock | 400 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Principal Investments, Inc. | Common stock | 760 shares | 1-SC | 100% | 3.2(a)(i) | |||||
SCIL, Inc. | Common stock | 300 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Todd Car Title, Inc. | Common stock | 2,124 shares | 1-SC | 100% | 3.2(a)(i) |
Todd Financial, Inc. | Common stock | 2,124 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Speedy Cash | Common stock | 80 shares | 1-SC | 100% | 3.2(a)(i) | |||||
SC Texas MB, Inc. | Common Stock | 100 shares | 1 | 100% | 3.2(a)(i) | |||||
Cash Money Cheque Cashing Inc. | Common Stock | 14,163,695 | SC-2 | 100% | 3.2(a)(i) | |||||
LendDirect Corp. | Class A | 1,000 | A-1 | 100% | 3.2(a)(i) | |||||
SRC Transatlantic Limited | Ordinary shares | 15,210,065 | 100% | 3.2(a)(i) |
3. | Attain Finance, LLC |
Name of Issuing Corporation |
Type of Shares |
Number of Shares |
Certificate No. |
Percentage Owned |
Sub-clause of
of Pledge Agreement |
|||||
Attain Finance Canada, Inc. | Common stock | 100 shares | A-1 | 100% | 3.2(a)(i) |
SCHEDULE OF NOTES
1. Curo Intermediate Holdings Corp. 1
Amount |
Maturity Date |
Obligor |
Sub-clause of Section 3.2(a) of Pledge Agreement |
|||
$55,000,000 | November 30, 2016 |
Cash Money Acquisition Inc. |
3.2(a)(v) |
1 | NTD: this note is being replaced with equivalent notes that may or may not be finalized by the closing date. |
SCHEDULE OF LIMITED LIABILITY COMPANY INTERESTS
1. Curo Intermediate Holdings Corp.
Name of Issuing Limited Liability Company |
Type of Interest |
Percentage Owned |
Sub-clause of Section 3.2(a) of Pledge Agreement |
|||
A Speedy Cash Car Title Loans, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
Cash Colorado, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
Galt Ventures, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
SCIL Texas, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
Curo Management LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
Attain Finance, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
SC Aurum, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
The Money Store, L.P. |
Limited partnership |
100% | 3.2(a)(ii) | |||
SCHEDULE OF PARTNERSHIP INTERESTS
1. Curo Intermediate Holdings Corp.
Name of Issuing Limited Liability Company |
Type of Interest |
Percentage Owned |
Sub-clause of Section 3.2(a) of Pledge Agreement |
|||
The Money Store, L.P. |
Limited partnership |
100% | 3.2(a)(ii) |
SCHEDULE OF CHIEF EXECUTIVE OFFICES
Name of Pledgor |
Address(es) of Chief Executive Office |
|
All Pledgors and Assignors |
3527 North Ridge Road, Wichita, Kansas 67205 |
EXHIBIT I
FORM OF SECURITY AGREEMENT
See attached.
15
SECURITY AGREEMENT
Among
CURO FINANCIAL TECHNOLOGIES CORP.,
CURO INTERMEDIATE HOLDINGS CORP.
CERTAIN SUBSIDIARIES OF CURO INTERMEDIATE HOLDINGS CORP.
and
VICTORY PARK MANAGEMENT, LLC,
as COLLATERAL AGENT
Dated as of November 17, 2016
Security Agreement
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of November 17, 2016 made by each of the undersigned assignors (each, an Assignor and, together with any other entity that becomes an assignor hereunder pursuant to Section 10.12 hereof, the Assignors ) in favor of Victory Park Management, LLC, as collateral agent (together with any successor collateral agent, the Collateral Agent ), for the benefit of the Secured Creditors (as defined below). Certain capitalized terms as used herein are defined in Article IX hereof. Except as otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. (the Borrower ), the lenders from time to time party thereto (the Lenders ), and Victory Park Management, LLC, as administrative agent (in such capacity together with any successor administrative agent, the Administrative Agent ), have entered into a Short-Term Credit Agreement, dated as of November 17, 2016 (as amended, modified, restated and/or supplemented from time to time, the Credit Agreement ), providing for the making of Loans to and for the account of, the Borrower, all as contemplated therein (the Lenders, the Administrative Agent and the Collateral Agent are herein called the Lender Creditors );
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements and/or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lenders or affiliates successors and assigns, if any, collectively, the Other Creditors and, together with the Lender Creditors, the Secured Creditors , with each such Interest Rate Protection Agreement and/or Other Hedging Agreement with an Other Creditor being herein called a Secured Hedging Agreement );
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and severally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, it is a condition precedent to the making of Loans to the Borrower for the account of the Borrower under the Credit Agreement and to the Other Creditors entering into Secured Hedging Agreements that each Assignor shall have executed and delivered to the Collateral Agent this Agreement; and
WHEREAS, each Assignor will obtain benefits from the incurrence of Loans by the Borrower for the account of the Borrower under the Credit Agreement and the entering into by the Borrower of Secured Hedging Agreements and, accordingly, desires to execute this Agreement in order to satisfy the condition described in the preceding paragraph and to induce
the Lenders to make Loans to the Borrower for the account of the Borrower and the Other Creditors to enter into Secured Hedging Agreements with the Borrower;
1 | Security Agreement |
NOW, THEREFORE, in consideration of the benefits accruing to each Assignor, the receipt and sufficiency of which are hereby acknowledged, each Assignor hereby makes the following representations and warranties to the Collateral Agent for the benefit of the Secured Creditors and hereby covenants and agrees with the Collateral Agent for the benefit of the Secured Creditors as follows:
ARTICLE I.
SECURITY INTERESTS
1.1. Grant of Security Interests . (a) security for the prompt and complete payment and performance when due of all of its Obligations, each Assignor does hereby assign and transfer unto the Collateral Agent, and does hereby pledge and grant to the Collateral Agent, for the benefit of the Secured Creditors, a continuing security interest in and a lien on all of the right, title and interest of such Assignor in, to and under all of the following personal property and fixtures (and all rights therein) of such Assignor, or in which or to which such Assignor has any rights, in each case whether now existing or hereafter from time to time acquired:
(i) | each and every Account; |
(ii) | all cash; |
(iii) | the Cash Collateral Account and all monies, securities, Instruments and other investments deposited or required to be deposited in the Cash Collateral Account; |
(iv) | all Chattel Paper (including, without limitation, all Tangible Chattel Paper and all Electronic Chattel Paper); |
(v) | all Commercial Tort Claims; |
(vi) | all computer programs of such Assignor and all intellectual property rights therein and all other proprietary information of such Assignor, including but not limited to Domain Names and Trade Secret Rights; |
(vii) | all Contracts, together with all Contract Rights arising thereunder; |
(viii) | all Copyrights; |
(ix) | all Equipment; |
(x) | all Deposit Accounts and all other demand, deposit, time, savings, cash management, passbook and similar accounts maintained by such Assignor with any Person and all monies, securities, Instruments and other investments deposited or required to be deposited in any of the foregoing; |
2 | Security Agreement |
(xi) | all Documents; |
(xii) | all General Intangibles; |
(xiii) | all Goods; |
(xiv) | all Instruments; |
(xv) | all Inventory; |
(xvi) | all Investment Property; |
(xvii) | all Letter-of-Credit Rights (whether or not the respective letter of credit is evidenced by a writing); |
(xviii) | all Marks, together with the registrations and right to all renewals thereof, the goodwill of the business of such Assignor symbolized by the Marks and all causes of action arising prior to or after the date hereof for infringement of any of the Marks or unfair competition regarding the same; |
(xix) | all Patents, together with all causes of action arising prior to or after the date hereof for infringement of any of the Patents or unfair competition regarding the same; |
(xx) | all Permits; |
(xxi) | all Software and all Software licensing rights, all writings, plans, specifications and schematics, all engineering drawings, customer lists, goodwill and licenses, and all recorded data of any kind or nature, regardless of the medium of recording; |
(xxii) | all Supporting Obligations; and |
(xxiii) | all Proceeds and products of any and all of the foregoing (all of the above, the Collateral). |
(b) The security interest of the Collateral Agent under this Agreement extends to all Collateral which any Assignor may acquire, or with respect to which any Assignor may obtain rights, at any time during the term of this Agreement. Notwithstanding anything to the contrary contained herein, the term Collateral shall not include, and the security interest granted under this Agreement shall not attach to: (A) any lease, license, Permit, contract or agreement to which any Assignor is a party to the extent (but only to the extent) that the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Assignor therein or (ii) a breach or termination pursuant to the terms of, or a default under, any such lease, license, Permit or agreement (other than, in either case, (x) to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor
3 | Security Agreement |
provision or provisions) of any relevant jurisdiction or any other applicable law (including any Bankruptcy Code) or principles of equity or (y) to the extent that the other party has consented to the assignment thereof pursuant to the terms hereof or pursuant to an assignment for security purposes generally or such prohibition otherwise no longer exists), (B) leasehold interests in real property with respect to which any Assignor is a tenant or subtenant to the extent that a security interest therein cannot be perfected solely by filing a UCC-1 financing statement (or similar instrument) under the UCC of any applicable jurisdiction, (C) any trademark applications filed on an intent-to-use basis (until the issuance of a registration or the filing of a statement of use for such application), (D) except in the circumstances and to the extent provided by Section 9.17 of the Credit Agreement, the Voting Equity Interests (as defined in the Pledge Agreement) of any Exempted Foreign Entity (as defined in the Pledge Agreement) in excess of 65% of the total combined voting power of all classes of Voting Equity Interests of any Exempted Foreign Entity, (E) motor vehicles covered by certificates of title or ownership to the extent that a security interest therein cannot be perfected solely by filing a UCC-1 financing statement (or similar instrument) under the UCC of any applicable jurisdiction, (F) property or assets owned by an Assignor that are subject to a Permitted Lien described in Section 10.01(vi) or (vii) of the Credit Agreement for so long as such Permitted Lien is in effect and the Indebtedness secured thereby otherwise prohibits any other Liens thereon, but only for so long as such prohibition exists and is effective and valid, (G) Excluded Deposit Accounts and (H) Proceeds and products from any and all of the assets described in the foregoing clauses (A) through (G), unless such Proceeds and products would otherwise constitute Collateral securing the Obligations in the absence of this sentence.
Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the Intercreditor Agreement at any time the Intercreditor Agreement is in effect. In the event of any conflict between the terms the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control at any time the Intercreditor Agreement is in effect.
1.2. Power of Attorney . Each Assignor hereby constitutes and appoints the Collateral Agent its true and lawful attorney, irrevocably, with full power after the occurrence of and during the continuance of an Event of Default (in the name of such Assignor or otherwise) to act, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys due or to become due to such Assignor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Collateral Agent may deem to be necessary or advisable to protect the interests of the Secured Creditors, which appointment as attorney is coupled with an interest.
ARTICLE II.
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows:
4 | Security Agreement |
2.1. Necessary Filings . All filings, registrations, recordings and other actions necessary or appropriate to create, preserve and perfect the security interest granted by such Assignor to the Collateral Agent hereby in respect of the Collateral have been (or, within 15 days after the date hereof (or 90 days after the date hereof in the case of Deposit Accounts, as such date may be extended in accordance with Section 3.9 hereof), will be) accomplished and the security interest granted to the Collateral Agent pursuant to this Agreement in and to the Collateral creates a valid and, together with all such filings, registrations, recordings and other actions, a perfected security interest therein prior to the rights of all other Persons therein and subject to no other Liens (other than Permitted Liens) and is entitled to all the rights, priorities and benefits afforded by the Uniform Commercial Code or other relevant law as enacted in any relevant jurisdiction to perfected security interests, in each case to the extent that the Collateral consists of the type of property in which a security interest may be perfected by possession or control (within the meaning of the UCC as in effect on the date hereof in the State of New York), by filing a financing statement under the Uniform Commercial Code as enacted in any relevant jurisdiction or by a filing of a Grant of Security Interest in the respective form attached hereto in the United States Patent and Trademark Office or in the United States Copyright Office.
2.2. No Liens . Such Assignor is, and as to all Collateral acquired by it from time to time after the date hereof such Assignor will be, the owner of all Collateral free from any Lien or other right, title or interest of any Person (other than Permitted Liens), and such Assignor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements . As of the date hereof, there is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Collateral (other than financing statements filed in respect of Permitted Liens), and so long as the Termination Date has not occurred, such Assignor will not execute or authorize to be filed in any public office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interests granted hereby by such Assignor or in connection with Permitted Liens.
2.4. Chief Executive Office, Record Locations . The chief executive office of such Assignor is, on the date of this Agreement, located at the address indicated on Annex A hereto for such Assignor. During the period of the four calendar months preceding the date of this Agreement, the chief executive office of such Assignor has not been located at any address other than that indicated on Annex A in accordance with the immediately preceding sentence, in each case unless each such other address is also indicated on Annex A hereto for such Assignor.
2.5. Location of Inventory and Equipment . All Inventory and Equipment held on the date hereof, or held at any time during the four calendar months prior to the date hereof, by each Assignor is located at one of the locations shown on Annex B hereto for such Assignor.
5 | Security Agreement |
2.6. Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; Location; Organizational Identification Numbers; Federal Employer Identification Number; Changes Thereto; etc . The exact legal name of each Assignor, the type of organization of such Assignor, whether or not such Assignor is a Registered Organization, the jurisdiction of organization of such Assignor, such Assignors Location, the organizational identification number (if any) of such Assignor and the Federal Employer Identification Number (if any), is listed on Annex C hereto for such Assignor. Such Assignor shall not change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its jurisdiction of organization, its Location, its organizational identification number (if any), or its Federal Employer Identification Number (if any) from that used on Annex C hereto, except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Secured Debt Agreements and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) such Assignor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, outside the United States or a State thereof) if (i) it shall have given to the Collateral Agent not less than 5 days prior written notice of each change to the information listed on Annex C (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Annex C which shall correct all information contained therein for such Assignor, and (ii) in connection with each change or changes, it shall have taken all action reasonably requested by the Collateral Agent to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect. In addition, to the extent that such Assignor does not have an organizational identification number on the date hereof and later obtains one, such Assignor shall promptly thereafter notify the Collateral Agent of such organizational identification number and shall take all actions reasonably satisfactory to the Collateral Agent to the extent necessary to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.
2.7. Trade Names; Etc . Such Assignor has or operates in any jurisdiction under, or in the preceding five years has had or has operated in any jurisdiction under, no trade names, fictitious names or other names except its legal name as specified in Annex C and such other trade or fictitious names as are listed on Annex D hereto for such Assignor. Such Assignor shall not assume or operate in any jurisdiction under any new trade, fictitious or other name until (i) it shall have given to the Collateral Agent not less than 15 days written notice of its intention so to do, clearly describing such new name and the jurisdictions in which such new name will be used and providing such other information in connection therewith as the Collateral Agent may reasonably request and (ii) with respect to such new name, it shall have taken all action reasonably requested by the Collateral Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.
2.8. Certain Significant Transactions . During the one year period preceding the date of this Agreement, except in connection with the Transaction, no Person shall have merged, amalgamated or consolidated with or into any Assignor, and no Person shall have liquidated into, or transferred all or substantially all of its assets to, any Assignor, in each case except as described in Annex E hereto. With respect to any transactions so described in Annex E hereto, the respective Assignor shall have furnished such information with respect to the Person (and the assets of the Person and locations thereof) which merged with or into, amalgamated with or consolidated with such Assignor, or was liquidated into or transferred all or substantially all of
6 | Security Agreement |
its assets to such Assignor, and shall have furnished to the Collateral Agent such UCC lien searches as may have been requested with respect to such Person and its assets, to establish that no security interest (excluding Permitted Liens) continues perfected on the date hereof with respect to any Person described above (or the assets transferred to the respective Assignor by such Person), including without limitation pursuant to Section 9-316(a)(3) of the UCC.
2.9. Non-UCC Property . The aggregate fair market value (as determined by the Assignors in good faith) of all property of the Assignors of the types described in clauses (1), (2) and (3) of Section 9-311(a) of the UCC and constituting Collateral does not exceed $1,000,000. If the aggregate value of all such property at any time owned by all Assignors and constituting Collateral exceeds $1,000,000, the Assignors shall provide prompt written notice thereof to the Collateral Agent and, upon the request of the Collateral Agent, the Assignors shall promptly (and in any event within 30 days of acquiring knowledge thereof) take such actions (at their own cost and expense) as may be required under the respective United States, State or other laws referenced in Section 9-311(a) of the UCC to perfect the security interests granted herein in any Collateral where the filing of a financing statement does not perfect the security interest in such property in accordance with the provisions of Section 9-311(a) of the UCC.
2.10. As-Extracted Collateral; Timber-to-be-Cut . On the date hereof, such Assignor does not own, or expect to acquire, any property which constitutes, or would constitute, As-Extracted Collateral or Timber-to-be-Cut. If at any time after the date of this Agreement such Assignor owns, acquires or obtains rights to any As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall furnish the Collateral Agent with prompt written notice thereof (which notice shall describe in reasonable detail the As-Extracted Collateral and/or Timber-to-be-Cut and the locations thereof) and shall take all actions as may be deemed reasonably necessary or desirable by the Collateral Agent to perfect the security interest of the Collateral Agent therein.
2.11. Collateral in the Possession of a Bailee . If any Inventory or other Goods are at any time in the possession of a bailee, such Assignor shall promptly notify the Collateral Agent thereof and, if requested by the Collateral Agent, shall use its commercially reasonable efforts to promptly obtain an acknowledgment from such bailee, in form and substance reasonably satisfactory to the Collateral Agent, that the bailee holds such Collateral for the benefit of the Collateral Agent and shall act upon the instructions of the Collateral Agent, without the further consent of such Assignor. The Collateral Agent agrees with such Assignor that the Collateral Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the respective Assignor with respect to any such bailee.
2.12. Recourse . This Agreement is made with full recourse to each Assignor and pursuant to and upon all the warranties, representations, covenants and agreements on the part of such Assignor contained herein, in the Secured Debt Agreements and otherwise in writing in connection herewith or therewith.
7 | Security Agreement |
ARTICLE III.
SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT
RIGHTS;INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL
3.1. Additional Representations and Warranties . As of the time when each of its Accounts arises, each Assignor shall be deemed to have represented and warranted that each such Account, and all records, papers and documents relating thereto (if any) are genuine and what they purport to be, and that all papers and documents (if any) relating thereto (i) will, to the knowledge of such Assignor, represent the genuine, legal, valid and binding obligation of the account debtor evidencing indebtedness unpaid and owed by the respective account debtor arising out of the performance of labor or services or the sale or lease and delivery of the merchandise listed therein, or both, (ii) will be the only original writings evidencing and embodying such obligation of the account debtor named therein (other than copies created for general accounting purposes), (iii) will, to the knowledge of such Assignor, evidence true and valid obligations, enforceable in accordance with their respective terms, and (iv) will be in compliance and will conform in all material respects with all applicable federal, state and local laws and applicable laws of any relevant foreign jurisdiction.
3.2. Maintenance of Records . Each Assignor will keep and maintain at its own cost and expense accurate records of its Accounts and Contracts, including, but not limited to, originals of all documentation (including each Contract) with respect thereto, records of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and such Assignor will make the same available on such Assignors premises to the Collateral Agent for inspection, at such Assignors own cost and expense, at any and all reasonable times, but not more than two (2) such inspections per calendar year, upon prior notice to such Assignor and otherwise in accordance with the Credit Agreement. Upon the occurrence and during the continuance of an Event of Default and at the request of the Collateral Agent, such Assignor shall, at its own cost and expense, deliver all tangible evidence of its Accounts and Contract Rights (including, without limitation, all documents evidencing the Accounts and all Contracts) and such books and records to the Collateral Agent or to its representatives (copies of which evidence and books and records may be retained by such Assignor). Upon the occurrence and during the continuance of an Event of Default and if the Collateral Agent so directs, such Assignor shall legend, in form and manner satisfactory to the Collateral Agent, the Accounts and the Contracts, as well as books, records and documents (if any) of such Assignor evidencing or pertaining to such Accounts and Contracts with an appropriate reference to the fact that such Accounts and Contracts have been assigned to the Collateral Agent and that the Collateral Agent has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties; etc . Upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all payments on account of the Accounts and Contracts to be made directly to the Cash Collateral Account, (y) that the Collateral Agent may, at its option, directly notify the obligors with respect to any Accounts and/or under any Contracts to make payments with respect thereto as provided in the preceding clause (x), and (z) that the Collateral Agent may enforce collection of any such Accounts and Contracts and may adjust, settle or compromise the amount of payment thereof, in the same manner and to the same extent as such
8 | Security Agreement |
Assignor. Without notice to or assent by any Assignor, the Collateral Agent may, upon the occurrence and during the continuance of an Event of Default, apply any or all amounts then in, or thereafter deposited in, the Cash Collateral Account toward the payment of the Obligations in the manner provided in Section 7.4 of this Agreement. The reasonable costs and expenses of collection (including reasonable attorneys fees), whether incurred by an Assignor or the Collateral Agent, shall be borne solely by the relevant Assignor. The Collateral Agent shall deliver a copy of each notice referred to in the preceding clause (y) to the relevant Assignor, provided that (x) the failure by the Collateral Agent to so notify such Assignor shall not affect the effectiveness of such notice or the other rights of the Collateral Agent created by this Section 3.3 and (y) no such notice shall be required if an Event of Default of the type described in Section 11.05 of the Credit Agreement has occurred and is continuing.
3.4. Modification of Terms; etc . Except in accordance with such Assignors ordinary course of business and consistent with reasonable business judgment or as permitted by Section 3.5 hereof, no Assignor shall rescind or cancel any indebtedness evidenced by any Account or under any Contract, or modify any material term thereof or make any material adjustment with respect thereto, or extend or renew the same, or compromise or settle any material dispute, claim, suit or legal proceeding relating thereto, or sell any Account or Contract, or interest therein, without the prior written consent of the Collateral Agent. No Assignor will do anything to impair the rights of the Collateral Agent in the Accounts or Contracts.
3.5. Collection . Each Assignor shall endeavor in accordance with reasonable business practices to cause to be collected from the account debtor named in each of its Accounts or obligor under any Contract, as and when due (including, without limitation, amounts which are delinquent, such amounts to be collected in accordance with generally accepted lawful collection procedures) any and all amounts owing under or on account of such Account or Contract, and apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balance of such Account or under such Contract. Except as otherwise directed by the Collateral Agent after the occurrence and during the continuation of an Event of Default, any Assignor may allow in the ordinary course of business as adjustments to amounts owing under its Accounts and Contracts (i) an extension or renewal of the time or times of payment, or settlement for less than the total unpaid balance, which such Assignor finds appropriate in accordance with reasonable business judgment and (ii) a refund or credit due as a result of returned or damaged merchandise or improperly performed services or for other reasons which such Assignor finds appropriate in accordance with reasonable business judgment. The reasonable costs and expenses (including, without limitation, reasonable attorneys fees) of collection, whether incurred by an Assignor or the Collateral Agent, shall be borne solely by the relevant Assignor.
3.6. Instruments . If any Assignor owns or acquires any Instrument in excess of $500,000 constituting Collateral (other than (x) checks and other payment instruments received and collected in the ordinary course of business and (y) any Instrument subject to pledge pursuant to the Pledge Agreement), such Assignor will within 30 days notify the Collateral Agent thereof in writing, and upon request by the Collateral Agent will promptly deliver such Instrument to the Collateral Agent appropriately endorsed to the order of the Collateral Agent.
9 | Security Agreement |
3.7. Assignors Remain Liable Under Accounts . Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Accounts to observe and perform all of the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to such Accounts. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Account pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by them or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.8. Assignors Remain Liable Under Contracts . Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Contracts to observe and perform all of the conditions and obligations to be observed and performed by them thereunder, all in accordance with and pursuant to the terms and provisions of each Contract. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Contract by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Contract pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any performance by any party under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.9. Deposit Accounts; Etc . Subject to Section 9.18 of the Credit Agreement: (a) No Assignor maintains, or at any time after the date of this Agreement shall establish or maintain, any demand, time, savings, passbook or similar account, except for such accounts maintained with a bank (as defined in Section 9-102 of the UCC) whose jurisdiction (determined in accordance with Section 9-304 of the UCC) is within a State of the United States. No Assignor maintains, or at any time after the date of this Agreement shall establish or maintain, any Deposit Account except in accordance with the provisions of Section 9.18 of the Credit Agreement. Annex F hereto accurately sets forth, as of the date of this Agreement, for each Assignor, each Deposit Account that is a Concentration Account maintained by such Assignor (including a description thereof and the respective account number), the name of the respective bank with which such Deposit Account is maintained, and the jurisdiction of the respective bank with respect to such Deposit Account. For each Deposit Account that is a Concentration Account (other than (x) any Concentration Account maintained with the Collateral Agent and (y) any Debit Card Program Account), the respective Assignor shall cause the bank with which such Deposit Account is maintained to execute and deliver to the Collateral Agent, within 90 days after the date of this Agreement (as such date may be extended by the Collateral Agent in its sole discretion) or, if later, at the time of the establishment of the respective Deposit Account, a control agreement in the form of Annex G hereto (appropriately completed), with such changes thereto, or in such other form, as may be reasonably acceptable to the Collateral Agent.
10 | Security Agreement |
If any bank with which a Deposit Account that is a Concentration Account is maintained refuses to, or does not, enter into such a control agreement, then the respective Assignor shall promptly (and in any event within 90 days after the date of this Agreement (as such date may be extended by the Collateral Agent in its sole discretion) or, if later, 90 days after the establishment of such account (as such date may be extended by the Collateral Agent in its sole discretion)) close the respective Deposit Account and transfer all balances therein to the Cash Collateral Account or another Concentration Account meeting the requirements of this Section 3.9. If any bank with which a Deposit Account that is a Concentration Account is maintained refuses to subordinate its claims with respect to such Deposit Account to the Collateral Agents security interest therein on terms reasonably satisfactory to the Collateral Agent, then the Collateral Agent, at its option, may (x) require that such Deposit Account be terminated in accordance with the immediately preceding sentence or (y) agree to a control agreement without such subordination, provided that in such event the Collateral Agent may at any time, at its option, subsequently require that such Deposit Account be terminated (within 90 days after notice from the Collateral Agent (as such date may be extended by the Collateral Agent in its sole discretion)) in accordance with the requirements of the immediately preceding sentence.
(b) Subject to the terms of Section 9.18 of the Credit Agreement: after the date of this Agreement, no Assignor shall establish any new demand, time, savings, passbook or similar account, except for (x) Deposit Accounts that are established and maintained with banks and meeting the requirements of preceding clause (a) and (y) Excluded Deposit Accounts. At the time any such Deposit Account that is a Concentration Account is established, the appropriate control agreement shall be entered into in accordance with the requirements of preceding clause (a) and the respective Assignor shall furnish to the Collateral Agent a supplement to Annex F hereto containing the relevant information with respect to the respective Deposit Account and the bank with which same is established.
3.10. Letter-of-Credit Rights . If any Assignor is at any time a beneficiary under a letter of credit with a stated amount of $1,000,000 or more, such Assignor shall promptly notify the Collateral Agent thereof and, at the request of the Collateral Agent, such Assignor shall, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, use its commercially reasonable efforts to (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under such letter of credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of such letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be applied as provided in this Agreement after the occurrence and during the continuance of an Event of Default.
3.11. Commercial Tort Claims . All Commercial Tort Claims of each Assignor in existence on the date of this Agreement are described in Annex H hereto. If any Assignor shall at any time after the date of this Agreement acquire a Commercial Tort Claim in an amount (taking the greater of the aggregate claimed damages thereunder or the reasonably estimated value thereof) of $1,000,000 or more, such Assignor shall promptly notify the Collateral Agent thereof in a writing signed by such Assignor and describing the details thereof and shall grant to the Collateral Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent.
11 | Security Agreement |
3.12. Chattel Paper . Upon the request of the Collateral Agent made at any time or from time to time, each Assignor shall promptly furnish to the Collateral Agent a list of all Electronic Chattel Paper held or owned by such Assignor. Furthermore, if requested by the Collateral Agent, each Assignor shall promptly take all actions which are reasonably practicable so that the Collateral Agent has control of all Electronic Chattel Paper in accordance with the requirements of Section 9-105 of the UCC. Each Assignor will promptly (and in any event within 30 days) following any reasonable request by the Collateral Agent, deliver all of its Tangible Chattel Paper to the Collateral Agent.
3.13. Further Actions . Each Assignor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps, including any and all actions as may be reasonably necessary or required under the Federal Assignment of Claims Act, relating to its Accounts, Contracts, Instruments and other property or rights covered by the security interest hereby granted, as the Collateral Agent may reasonably require and not otherwise inconsistent with the provisions of Section 1.1(b).
ARTICLE IV.
SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES
4.1. Additional Representations and Warranties . Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use the registered Marks and Domain Names listed in Annex I hereto for such Assignor and that said listed Marks and Domain Names include all United States marks and applications for United States marks registered in the United States Patent and Trademark Office and all Domain Names that such Assignor owns or uses in connection with its business as of the date hereof. Each Assignor represents and warrants that it owns, is licensed to use or otherwise has the right to use, all Marks and Domain Names that it uses. Each Assignor further warrants that it has no knowledge of any third party claim received by it that any aspect of such Assignors present or contemplated business operations infringes or will infringe any trademark, service mark or trade name of any other Person other than as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use all U.S. trademark registrations and applications and Domain Name registrations listed in Annex I hereto and that said registrations are valid, subsisting, have not been canceled and that such Assignor is not aware of any third-party claim that any of said registrations is invalid or unenforceable, and is not aware that there is any reason that any of said registrations is invalid or unenforceable, and is not aware that there is any reason that any of said applications will not mature into registrations. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of an Event of Default, any document which may be required by the United States Patent and Trademark Office or similar registrar in order to effect an absolute assignment of all right, title and interest in each Mark and/or Domain Name, and record the same.
12 | Security Agreement |
4.2. Licenses and Assignments . Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Mark or Domain Name absent prior written approval of the Collateral Agent.
4.3. Infringements . Each Assignor agrees, promptly upon learning thereof, to notify the Collateral Agent in writing of the name and address of, and to furnish such pertinent information that may be available with respect to, any party who such Assignor believes is, or may be, infringing or diluting or otherwise violating any of such Assignors rights in and to any Mark or Domain Name in any manner that could reasonably be expected to have a Material Adverse Effect, or with respect to any party claiming that such Assignors use of any Mark or Domain Name material to such Assignors business violates in any material respect any property right of that party. Each Assignor further agrees to prosecute diligently in accordance with reasonable business practices any Person infringing any Mark or Domain Name in any manner that could reasonably be expected to have a Material Adverse Effect.
4.4. Preservation of Marks and Domain Names . Each Assignor agrees to use its Marks and Domain Names which are material to such Assignors business in interstate commerce during the time in which this Agreement is in effect and to take all such other actions as are reasonably necessary to preserve such Marks as trademarks or service marks under the laws of the United States (other than any such Marks which are no longer used or useful in its business or operations).
4.5. Maintenance of Registration . Each Assignor shall, at its own expense, diligently process all documents reasonably required to maintain all Mark and/or Domain Name registrations, including but not limited to affidavits of use and applications for renewals of registration in the United States Patent and Trademark Office for all of its material registered Marks, and shall pay all fees and disbursements in connection therewith and shall not abandon any such filing of affidavit of use or any such application of renewal prior to the exhaustion of all administrative and judicial remedies without prior written consent of the Collateral Agent (other than with respect to registrations and applications deemed by such Assignor in its reasonable business judgment to be no longer prudent to pursue).
4.6. Future Registered Marks and Domain Names . If any Mark registration is issued hereafter to any Assignor as a result of any application now or hereafter pending before the United States Patent and Trademark Office or any Domain Name is registered by Assignor, within 30 days of receipt of such certificate or similar indicia of ownership, such Assignor shall deliver to the Collateral Agent a copy of such registration certificate or similar indicia of ownership, and a grant of a security interest in such Mark and/or Domain Name, to the Collateral Agent and at the expense of such Assignor, confirming the grant of a security interest in such Mark and/or Domain Name to the Collateral Agent hereunder, the form of such security to be substantially in the form of Annex L hereto or in such other form as may be reasonably satisfactory to the Collateral Agent.
4.7. Remedies . If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title and interest of such Assignor in and to each of the Marks and Domain Names, together with all trademark rights and rights of protection to the same, vested in
13 | Security Agreement |
the Collateral Agent for the benefit of the Secured Creditors, in which event such rights, title and interest shall immediately vest, in the Collateral Agent for the benefit of the Secured Creditors, and the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged and notarized and record said absolute assignment with the applicable agency or registrar; (ii) take and use or sell the Marks or Domain Names and the goodwill of such Assignors business symbolized by the Marks or Domain Names and the right to carry on the business and use the assets of such Assignor in connection with which the Marks or Domain Names have been used; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from using the Marks or Domain Names in any manner whatsoever, directly or indirectly, and such Assignor shall execute such further documents that the Collateral Agent may reasonably request to further confirm this and to transfer ownership of the Marks or Domain Names and registrations and any pending trademark applications in the United States Patent and Trademark Office or applicable Domain Name registrar to the Collateral Agent.
ARTICLE V.
SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties . Each Assignor represents and warrants that it is the true and lawful owner of all rights in (i) all Trade Secret Rights, (ii) the Patents listed in Annex J hereto for such Assignor and that said Patents include all the United States patents and applications for United States patents that such Assignor owns as of the date hereof and (iii) the Copyrights listed in Annex K hereto for such Assignor and that said Copyrights include all the United States copyrights registered with the United States Copyright Office and applications to United States copyrights that such Assignor owns as of the date hereof. Each Assignor further warrants that it has no knowledge of any third party claim that any aspect of such Assignors present or contemplated business operations infringes or will infringe any patent of any other Person or such Assignor has misappropriated any Trade Secret or proprietary information which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of any Event of Default, any document which may be required by the United States Patent and Trademark Office or the United States Copyright Office in order to effect an absolute assignment of all right, title and interest in each Patent or Copyright, and to record the same.
5.2. Licenses and Assignments . Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Patent or Copyright absent prior written approval of the Collateral Agent.
5.3. Infringements . Each Assignor agrees, promptly upon learning thereof, to furnish the Collateral Agent in writing with all pertinent information available to such Assignor with respect to any infringement, contributing infringement or active inducement to infringe or other violation of such Assignors rights in any Patent or Copyright or to any claim that the practice of any Patent or use of any Copyright violates any property right of a third party, or with respect to any misappropriation of any Trade Secret Right or any claim that practice of any Trade Secret Right violates any property right of a third party, in each case, in any manner which, either
14 | Security Agreement |
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor further agrees, absent direction of the Collateral Agent to the contrary, to diligently prosecute, in accordance with its reasonable business judgment, any Person infringing any Patent or Copyright or any Person misappropriating any Trade Secret Right, in each case to the extent that such infringement or misappropriation, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
5.4. Maintenance of Patents or Copyrights . At its own expense, each Assignor shall make timely payment of all post-issuance fees required to maintain in force its rights under each Patent or Copyright, absent prior written consent of the Collateral Agent to the contrary (other than any such Patents or Copyrights which are no longer used or are deemed by such Assignor in its reasonable business judgment to no longer be useful in its business or operations).
5.5. Prosecution of Patent or Copyright Applications . At its own expense, each Assignor shall diligently prosecute all material applications for (i) United States Patents listed in Annex J hereto and (ii) Copyrights listed on Annex K hereto, in each case for such Assignor and shall not abandon any such application prior to exhaustion of all administrative and judicial remedies (other than applications that are deemed by such Assignor in its reasonable business judgment to no longer be necessary in the conduct of the Assignors business), absent written consent of the Collateral Agent.
5.6. Other Patents and Copyrights . Within 30 days of the acquisition or issuance of a United States Patent, registration of a Copyright, or acquisition of a registered Copyright, or of filing of an application for a United States Patent or Copyright, the relevant Assignor shall deliver to the Collateral Agent a copy of said Copyright or Patent, or certificate or registration of, or application therefor, as the case may be, with a grant of a security interest as to such Patent or Copyright, as the case may be, to the Collateral Agent and at the sole expense of such Assignor, confirming the grant of a security interest, the form of such grant of a security interest to be substantially in the form of Annex M or N hereto, as appropriate, or in such other form as may be reasonably satisfactory to the Collateral Agent.
5.7. Remedies . If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title, and interest of such Assignor in each of the Patents and Copyrights vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such right, title, and interest shall immediately vest in the Collateral Agent for the benefit of the Secured Creditors, in which case the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 5.1 hereof to execute, cause to be acknowledged and notarized and to record said absolute assignment with the applicable agency; (ii) take and practice or sell the Patents and Copyrights; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from practicing the Patents and using the Copyrights directly or indirectly, and such Assignor shall execute such further documents as the Collateral Agent may reasonably request further to confirm this and to transfer ownership of the Patents and Copyrights to the Collateral Agent for the benefit of the Secured Creditors.
15 | Security Agreement |
ARTICLE VI.
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agents Security . Except as otherwise permitted by the Secured Debt Agreements, each Assignor will do nothing to impair the rights of the Collateral Agent in the Collateral. Each Assignor will at all times maintain insurance, at such Assignors own expense to the extent and in the manner provided in the Secured Debt Agreements. Except to the extent otherwise permitted to be retained by such Assignor or applied by such Assignor pursuant to the terms of the Secured Debt Agreements, the Collateral Agent shall, at the time any proceeds of such insurance are distributed to the Secured Creditors, apply such proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Assignor to pay the Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-Negotiable . To the extent practicable, each Assignor agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued with respect to any of its Inventory, such Assignor shall request that such warehouse receipt or receipt in the nature thereof shall not be negotiable (as such term is used in Section 7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction or under other relevant law).
6.3. Additional Information . Each Assignor will, at its own expense, from time to time upon the reasonable request of the Collateral Agent, promptly (and in any event within 10 Business Days after its receipt of the respective request) furnish to the Collateral Agent such information with respect to the Collateral (including the identity of the Collateral or such components thereof as may have been requested by the Collateral Agent, the value and location of such Collateral, etc.) as may be requested by the Collateral Agent. Without limiting the forgoing, each Assignor agrees that it shall promptly (and in any event within 10 Business Days after its receipt of the respective request) furnish to the Collateral Agent such updated Annexes hereto as may from time to time be reasonably requested by the Collateral Agent.
6.4. Further Actions . Each Assignor will, at its own expense and upon the reasonable request of the Collateral Agent, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such lists, descriptions and designations of its Collateral, warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to the Collateral and other property or rights covered by the security interest hereby granted, which the Collateral Agent deems reasonably appropriate or advisable to perfect, preserve or protect its security interest in the Collateral and not otherwise inconsistent with the provisions of Section 1.1(b).
16 | Security Agreement |
6.5. Financing Statements . Each Assignor agrees to execute and deliver to the Collateral Agent such financing statements, in form reasonably acceptable to the Collateral Agent, as the Collateral Agent may from time to time reasonably request or as are reasonably necessary or desirable in the opinion of the Collateral Agent to establish and maintain a valid, enforceable, perfected security interest in the Collateral as provided herein and the other rights and security contemplated hereby. Each Assignor will pay any applicable filing fees, recordation taxes and related expenses relating to its Collateral. Each Assignor hereby authorizes the Collateral Agent to file any such financing statements without the signature of such Assignor where permitted by law (and such authorization includes describing the Collateral as all assets of such Assignor).
ARTICLE VII.
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default . Each Assignor agrees that, if any Event of Default shall have occurred and be continuing, then and in every such case, the Collateral Agent, in addition to any rights now or hereafter existing under applicable law and under the other provisions of this Agreement, shall have all rights as a secured creditor under any UCC, and such additional rights and remedies to which a secured creditor is entitled under the laws in effect in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from such Assignor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon such Assignors premises where any of the Collateral is located and remove the same and use in connection with such removal any and all services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or other obligation (including, without limitation, the Accounts and the Contracts) constituting the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Collateral Agent and may exercise any and all remedies of such Assignor in respect of such Collateral;
(iii) instruct all banks which have entered into a control agreement with the Collateral Agent to transfer all monies, securities and instruments held by such depositary bank to the Cash Collateral Account;
(iv) sell, assign or otherwise liquidate any or all of the Collateral or any part thereof in accordance with Section 7.2 hereof, or direct such Assignor to sell, assign or otherwise liquidate any or all of the Collateral or any part thereof, and, in each case, take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by directing such Assignor in writing to deliver the same to the Collateral Agent at any reasonable place or places designated by the Collateral Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places so designated by the Collateral Agent and there delivered to the Collateral Agent;
17 | Security Agreement |
(y) store and keep any Collateral so delivered to the Collateral Agent at such place or places pending further action by the Collateral Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide such security and maintenance services as shall be reasonably necessary to protect the same and to preserve and maintain it in good condition;
(vi) license or sublicense, whether on an exclusive or nonexclusive basis, any Marks, Domain Names, Patents or Copyrights included in the Collateral for such term and on such conditions and in such manner as the Collateral Agent shall in its sole judgment determine;
(vii) apply any monies constituting Collateral or proceeds thereof in accordance with the provisions of Section 7.4; and
(viii) take any other action as specified in clauses (1) through (5), inclusive, of Section 9-607(a) of the UCC;
it being understood that each Assignors obligation so to deliver the Collateral is of the essence of this Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by such Assignor of said obligation. By accepting the benefits of this Agreement and each other Security Document, the Secured Creditors expressly acknowledge and agree that this Agreement and each other Security Document may be enforced only by the action of the Collateral Agent acting upon the instructions of the Required Secured Creditors and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit of the Secured Creditors upon the terms of this Agreement and the other Security Documents.
7.2. Remedies; Disposition of the Collateral . If any Event of Default shall have occurred and be continuing, then any Collateral repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and any other Collateral whether or not so repossessed by the Collateral Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Collateral Agent may, in compliance with any mandatory requirements of applicable law, determine to be commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Collateral Agent or after any overhaul or repair at the expense of the relevant Assignor which the Collateral Agent shall determine to be commercially reasonable. Any such sale, lease or other disposition may be effected by means of a public disposition or private disposition, effected in accordance with the applicable requirements (in each case if and to the extent applicable) of Sections 9-610 through 9-613 of the UCC and/or such other mandatory requirements of applicable law as may apply to the respective disposition. The Collateral Agent may, without notice or publication, adjourn any public or private disposition or cause the same to be adjourned
18 | Security Agreement |
from time to time by announcement at the time and place fixed for the disposition, and such disposition may be made at any time or place to which the disposition may be so adjourned. To the extent permitted by any such requirement of law, the Collateral Agent may bid for and become the purchaser (and may pay all or any portion of the purchase price by crediting Obligations against the purchase price) of the Collateral or any item thereof, offered for disposition in accordance with this Section 7.2 without accountability to the relevant Assignor. If, under applicable law, the Collateral Agent shall be permitted to make disposition of the Collateral within a period of time which does not permit the giving of notice to the relevant Assignor as hereinabove specified, the Collateral Agent need give such Assignor only such notice of disposition as shall be required by such applicable law. Each Assignor agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such disposition or dispositions of all or any portion of the Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Assignors expense.
7.3. Waiver of Claims . Except as otherwise provided in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENTS TAKING POSSESSION OR THE COLLATERAL AGENTS DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Assignor hereby further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession or any such disposition except any damages which are the direct result of the Collateral Agents gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision);
(ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agents rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Assignor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the relevant Assignor therein and thereto, and shall be a perpetual bar both at law and in equity against such Assignor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Assignor.
19 | Security Agreement |
7.4. Application of Proceeds . (a) All moneys and other property and assets collected or received by the Administrative Agent, the Collateral Agent or any other Secured Creditor (or, to the extent the Pledge Agreement, any other Security Document or any Guaranty requires proceeds of collateral or other amounts received under such other Credit Document to be applied in accordance with the provisions of this Agreement, the pledgee or collateral agent or other agent under such other Credit Document) (x) upon any sale or other disposition of the Collateral, together with all other moneys received by the Collateral Agent hereunder and under the other Security Documents, (y) after the acceleration of the Credit Document Obligations pursuant the Credit Agreement or (z) upon any distribution (whether or not characterized as such) in connection with any case, proceeding or other action of the type described in Section 11.05 of the Credit Agreement (the amounts described in preceding clauses (x), (y) and (z) are referred to herein as a Distribution ), shall be applied as follows:
(i) first , to the payment of all amounts owing the Collateral Agent of the type described in clauses (iii), (iv) and (v) of the definition of Obligations;
(ii) second , to the extent proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Primary Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor receiving an amount equal to its outstanding Primary Obligations or, if the proceeds are insufficient to pay in full all such Primary Obligations, its Pro Rata Share of the amount remaining to be distributed;
(iii) third , to the extent proceeds remain after the application pursuant to the preceding clauses (i) and (ii), an amount equal to the outstanding Secondary Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor receiving an amount equal to its outstanding Secondary Obligations or, if the proceeds are insufficient to pay in full all such Secondary Obligations, its Pro Rata Share of the amount remaining to be distributed; and
(iv) fourth , to the extent proceeds remain after the application pursuant to the preceding clauses (i) through (iii), inclusive, and following the termination of this Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor or to whomever may be lawfully entitled to receive such surplus.
(b) For purposes of this Agreement, (x) Pro Rata Share shall mean, when calculating a Secured Creditors portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Secured Creditors Primary Obligations or Secondary Obligations, as the case may be, and the denominator of which is the then outstanding amount of all Primary Obligations or Secondary Obligations, as the case may be, (y) Primary Obligations shall mean (i) in the case of the Credit Document Obligations, all principal of, premium, fees and interest on, all Loans, all unpaid drawings and all Fees and (ii) in the case of the Other Obligations, all amounts due under each Secured Hedging Agreement (other than indemnities, fees (including, without limitation, attorneys fees) and similar obligations and liabilities) and (z) Secondary Obligations shall mean all Obligations other than Primary Obligations.
20 | Security Agreement |
(c) When payments to Secured Creditors are based upon their respective Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall be applied (for purposes of making determinations under this Section 7.4 only) (i) first , to their Primary Obligations and (ii) second , to their relevant Secondary Obligations. If any payment to any Secured Creditor of its Pro Rata Share of any Distribution would result in overpayment to such Secured Creditor, such excess amount shall instead be distributed in respect of the unpaid Primary Obligations or Secondary Obligations, as the case may be, of the other Secured Creditors, with each Secured Creditor whose Primary Obligations or Secondary Obligations, as the case may be, have not been paid in full to receive an amount equal to such excess amount multiplied by a fraction the numerator of which is the unpaid Primary Obligations or Secondary Obligations, as the case may be, of such Secured Creditor and the denominator of which is the unpaid Primary Obligations or Secondary Obligations, as the case may be, of all Secured Creditors entitled to such Distribution.
(d) [Reserved].
(e) All payments required to be made hereunder shall be made (x) if to the Lender Creditors, to the Administrative Agent for the account of the Lender Creditors and (y) if to the Other Creditors, to the trustee, paying agent or other similar representative (each, a Representative ) for the Other Creditors or, in the absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the Administrative Agent and (ii) the Representative or, in the absence of such a Representative, upon the Other Creditors for a determination (which the Administrative Agent, each Representative and the Other Creditors agree (or shall agree) to provide upon request of the Collateral Agent) of the outstanding Primary Obligations and Secondary Obligations owed to the Lender Creditors or the Other Creditors, as the case may be. Unless it has received written notice from a Lender Creditor or an Other Creditor to the contrary, the Administrative Agent and each Representative, in furnishing information pursuant to the preceding sentence, and the Collateral Agent, in acting hereunder, shall be entitled to assume that no Secondary Obligations are outstanding. Unless it has written notice from an Other Creditor to the contrary, the Collateral Agent, in acting hereunder, shall be entitled to assume that no Secured Hedging Agreements are in existence.
(g) It is understood that the Assignors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate amount of the Obligations.
(h) If any Secured Creditor collects or receives any Distribution to which it is not entitled under Section 7.4(a) hereof, such Secured Creditor shall hold the same in trust for the Secured Creditors and shall forthwith deliver the same to the Administrative Agent or the Collateral Agent, for the account of the Secured Creditors, to be applied in accordance with Section 7.4(a) hereof.
21 | Security Agreement |
7.5. Remedies Cumulative . Each and every right, power, and remedy hereby specifically given to the Collateral Agent shall be in addition to every other right, power and remedy specifically given to the Collateral Agent under this Agreement, the other Secured Debt Agreements or now or hereafter existing at law, in equity or by statute and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Collateral Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission of the Collateral Agent in the exercise of any such right, power or remedy and no renewal or extension of any of the Obligations shall impair any such right, power or remedy or shall be construed to be a waiver of any Default or Event of Default or an acquiescence thereof. No notice to or demand on any Assignor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Collateral Agent to any other or further action in any circumstances without notice or demand. In the event that the Collateral Agent shall bring any suit to enforce any of its rights hereunder and shall be entitled to judgment, then in such suit the Collateral Agent may recover reasonable expenses, including reasonable attorneys fees, and the amounts thereof shall be included in such judgment.
7.6. Discontinuance of Proceedings . In case the Collateral Agent shall have instituted any proceeding to enforce any right, power or remedy under this Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case the relevant Assignor, the Collateral Agent and each holder of any of the Obligations shall be restored to their former positions and rights hereunder with respect to the Collateral subject to the security interest created under this Agreement, and all rights, remedies and powers of the Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VIII.
INDEMNITY
8.1. Indemnity . (a) Each Assignor jointly and severally agrees to indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor and their respective successors, assigns, employees, affiliates and agents (hereinafter in this Section 8.1 referred to individually, as Indemnitee , and collectively, as Indemnitees ) harmless from any and all liabilities, obligations, damages, injuries, penalties, claims, demands, actions, suits, judgments and any and all costs, expenses or disbursements (including reasonable attorneys fees and expenses) (for the purposes of this Section 8.1 the foregoing are collectively called expenses ) of whatsoever kind and nature imposed on, asserted against or incurred by any of the Indemnitees in any way relating to or arising out of this Agreement, any other Secured Debt Agreement or any other document executed in connection herewith or therewith or in any other way connected with the administration of the transactions contemplated hereby or thereby or the enforcement of any of the terms of, or the preservation of any rights under any thereof, or in any way relating to or arising out of the manufacture, ownership, ordering, purchase, delivery, control, acceptance, lease, financing, possession, operation, condition, sale, return or other disposition, or use of the Collateral (including, without limitation, latent or other defects, whether or not discoverable), the violation of the laws of any country, state or other governmental body or unit, any tort (including, without limitation, claims arising or imposed
22 | Security Agreement |
under the doctrine of strict liability, or for or on account of injury to or the death of any Person (including any Indemnitee), or property damage), or contract claim; provided that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent caused by the gross negligence or willful misconduct of such Indemnitee (as determined by a court of competent jurisdiction in a final and non-appealable decision). Each Assignor agrees that upon written notice by any Indemnitee of the assertion of such a liability, obligation, damage, injury, penalty, claim, demand, action, suit or judgment, the relevant Assignor shall assume full responsibility for the defense thereof. Each Indemnitee agrees to use its best efforts to promptly notify the relevant Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each Assignor agrees, jointly and severally, to pay or reimburse the Collateral Agent for any and all reasonable fees (including reasonable attorneys fees and expenses), costs and expenses of whatever kind or nature incurred in connection with the creation, preservation or protection of the Collateral Agents Liens on, and security interest in, the Collateral, including, without limitation, all fees and taxes in connection with the recording or filing of instruments and documents in public offices, payment or discharge of any taxes or Liens upon or in respect of the Collateral, premiums for insurance with respect to the Collateral and all other fees, costs and expenses in connection with protecting, maintaining or preserving the Collateral and the Collateral Agents interest therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b) hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold each Indemnitee harmless from and against any loss, costs, damages and expenses (including reasonable attorneys fees and expenses) which such Indemnitee may suffer, expend or incur in consequence of or growing out of any misrepresentation by any Assignor in this Agreement, any other Secured Debt Agreement or in any writing contemplated by or made or delivered pursuant to or in connection with this Agreement or any other Secured Debt Agreement.
(d) If and to the extent that the obligations of any Assignor under this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival . Any amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Obligations secured by the Collateral. The indemnity obligations of each Assignor contained in this Article VIII shall continue in full force and effect notwithstanding the full payment of all of the other Obligations and notwithstanding the full payment of all the Loans made under the Credit Agreement, the termination of all Secured Hedging Agreements and the payment of all other Obligations and notwithstanding the discharge thereof and the occurrence of the Termination Date.
23 | Security Agreement |
ARTICLE IX.
DEFINITIONS
The following terms shall have the meanings herein specified. Such definitions shall be equally applicable to the singular and plural forms of the terms defined.
Account shall mean any account as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, and in any event shall include but shall not be limited to, all rights to payment of any monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State.
Administrative Agent shall have the meaning provided in the recitals of this Agreement.
Agreement shall mean this Security Agreement, as the same may be amended, modified, restated and/or supplemented from time to time in accordance with its terms.
As-Extracted Collateral shall mean as- extracted collateral as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Assignor shall have the meaning provided in the first paragraph of this Agreement.
Bankruptcy Code shall have the meaning provided in the Credit Agreement.
Borrower shall have the meaning provided in the recitals of this Agreement.
Cash Collateral Account shall mean a non-interest bearing cash collateral account maintained with, and in the sole dominion and control of, the Collateral Agent for the benefit of the Secured Creditors.
Chattel Paper shall mean chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York. Without limiting the foregoing, the term Chattel Paper shall in any event include all Tangible Chattel Paper and all Electronic Chattel Paper.
Class shall have the meaning provided in Section 10.2 of this Agreement.
Collateral shall have the meaning provided in Section 1.1(a) of this Agreement.
24 | Security Agreement |
Collateral Agent shall have the meaning provided in the first paragraph of this Agreement.
Commercial Tort Claims shall mean commercial tort claims as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Concentration Account shall mean each of those accounts referenced in Section 9.18 of the Credit Agreement and Annex F hereto and designated as a Concentration Account thereon, along with any replacement accounts in respect thereof established in accordance with the terms of Section 9.18 of the Credit Agreement and Section 3.9 hereof.
Contract Rights shall mean all rights of any Assignor under each Contract, including, without limitation, (i) any and all rights to receive and demand payments under any or all Contracts, (ii) any and all rights to receive and compel performance under any or all Contracts and (iii) any and all other rights, interests and claims now existing or in the future arising in connection with any or all Contracts.
Contracts shall mean all contracts between any Assignor and one or more additional parties (including, without limitation, any Interest Rate Protection Agreements, Other Hedging Agreements, licensing agreements and any partnership agreements, joint venture agreements and limited liability company agreements).
Copyrights shall mean any United States or foreign copyright now or hereafter owned by any Assignor, including any registrations of any copyrights in the United States Copyright Office or any foreign equivalent office, as well as any application for a copyright registration now or hereafter made with the United States Copyright Office or any foreign equivalent office by any Assignor.
Credit Agreement shall have the meaning provided in the recitals of this Agreement.
Credit Document Obligations shall have the meaning provided in the definition of Obligations in this Article IX.
Deposit Accounts shall mean all deposit accounts as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Distribution shall have the meaning provided in Section 7.4(a) of this Agreement.
Documents shall mean documents as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Domain Names shall mean all Internet domain names and associated URL addresses in or to which any Assignor now or hereafter has any right, title or interest.
Electronic Chattel Paper shall mean electronic chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
25 | Security Agreement |
Equipment shall mean any equipment as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, and in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by any Assignor and any and all additions, substitutions and replacements of any of the foregoing and all accessions thereto, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.
Event of Default shall mean any Event of Default under, and as defined in, the Credit Agreement and shall in any event include, without limitation, any payment default on any of the Obligations after the expiration of any applicable grace period.
Excluded Deposit Accounts shall mean Deposit Accounts of any Assignor exclusively used for payroll, payroll taxes and other employee wage and benefit payments.
General Intangibles shall mean general intangibles as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Goods shall mean goods as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Holdings shall have the meaning provided in the recitals hereto.
Indemnitee shall have the meaning provided in Section 8.1(a) of this Agreement.
Instrument shall mean instruments as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Inventory shall mean merchandise, inventory and goods, and all additions, substitutions and replacements thereof and all accessions thereto, wherever located, together with all goods, supplies, incidentals, packaging materials, labels, materials and any other items used or usable in manufacturing, processing, packaging or shipping same, in all stages of production from raw materials through work in process to finished goods, and all products and proceeds of whatever sort and wherever located any portion thereof which may be returned, rejected, reclaimed or repossessed by the Collateral Agent from any Assignors customers, and shall specifically include all inventory as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Investment Property shall mean investment property as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Lender Creditors shall have the meaning provided in the recitals of this Agreement.
Lenders shall have the meaning provided in the recitals of this Agreement.
Letter-of-Credit Rights shall mean letter-of-credit rights as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
26 | Security Agreement |
Location of any Assignor, shall mean such Assignors location as determined pursuant to Section 9-307 of the UCC.
Marks shall mean all right, title and interest in and to any trademarks, service marks and trade names now held or hereafter acquired by any Assignor, including any registration or application for registration of any trademarks and service marks now held or hereafter acquired by any Assignor, which are registered or filed in the United States Patent and Trademark Office or the equivalent thereof in any state of the United States or any equivalent foreign office or agency, as well as any unregistered trademarks and service marks used by an Assignor and any trade dress including logos, designs, fictitious business names and other business identifiers used by any Assignor.
Obligations shall mean and include, as to any Assignor, all of the following:
(i) the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, principal, premium, interest (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Assignor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding), fees, costs and indemnities) of such Assignor to the Lender Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with, each Credit Document to which such Assignor is a party (including, without limitation, in the event such Assignor is a Guarantor, all such obligations, liabilities and indebtedness of such Assignor under its Guaranty) and the due performance and compliance by such Assignor with all of the terms, conditions and agreements contained in each such Credit Document (all such obligations, liabilities and indebtedness under this clause (i), except to the extent consisting of obligations or indebtedness with respect to Secured Hedging Agreements, being herein collectively called, the Credit Document Obligations );
(ii) the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Assignor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding) owing by such Assignor to the Other Creditors, now existing or hereafter incurred under, arising out of or in connection with any Secured Hedging Agreement, whether such Secured Hedging Agreement is now in existence or hereinafter arising (including, without limitation, in the case of a Assignor that is a Guarantor, all obligations, liabilities and indebtedness of such Assignor under its Guaranty in respect of the Secured Hedging Agreements), and the due performance and compliance by such Assignor with all of the terms, conditions and agreements contained in each such Secured Hedging Agreement (all such obligations, liabilities and indebtedness under this clause (ii) being herein collectively called, the Other Obligations );
27 | Security Agreement |
(iii) any and all sums advanced by the Collateral Agent in order to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations, or liabilities of such Assignor referred to in clauses (i) and (ii) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with reasonable attorneys fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 8.1 of this Agreement;
it being acknowledged and agreed that the Obligations shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.
Other Creditors shall have the meaning provided in the recitals of this Agreement.
Other Obligations shall have the meaning provided in the definition of Obligations in this Article IX.
Patents shall mean any patent in or to which any Assignor now or hereafter has any right, title or interest therein, and any divisions, continuations (including, but not limited to, continuations-in-parts) and improvements thereof, as well as any application for a patent now or hereafter made by any Assignor.
Permits shall mean, to the extent permitted to be assigned by the terms thereof or by applicable law, all licenses, permits, rights, orders, variances, franchises or authorizations of or from any governmental authority or agency.
Primary Obligations shall have the meaning provided in Section 7.4(b) of this Agreement.
Pro Rata Share shall have the meaning provided in Section 7.4(b) of this Agreement.
Proceeds shall mean all proceeds as such term is defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof and, in any event, shall also include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Collateral Agent or any Assignor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to any Assignor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any person acting under color of governmental authority) and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.
Registered Organization shall have the meaning provided in the Uniform Commercial Code as in effect in the State of New York.
28 | Security Agreement |
Representative shall have the meaning provided in Section 7.4(e) of this Agreement.
Required Secured Creditors shall mean (i) at any time when any Credit Document Obligations are outstanding or any Loan Commitments under the Credit Agreement exist, the Required Lenders (or, to the extent provided in Section 13.12 of the Credit Agreement, each of the Lenders) and (ii) at any time after all of the Credit Document Obligations have been paid in full and all Loan Commitments under the Credit Agreement have been terminated and no further Loan Commitments may be provided thereunder, the holders of a majority of the Other Obligations.
Requisite Creditors shall have the meaning provided in Section 10.2 of this Agreement.
Secondary Obligations shall have the meaning provided in Section 7.4(b) of this Agreement.
Secured Creditors shall have the meaning provided in the recitals of this Agreement.
Secured Debt Agreements shall mean and include this Agreement, the other Credit Documents and each Secured Hedging Agreement.
Secured Hedging Agreement shall have the meaning provided in the recitals to this Agreement.
Software shall mean software as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Supporting Obligations shall mean any supporting obligation as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor, or in which any Assignor has any rights, and, in any event, shall include, but shall not be limited to all of such Assignors rights in any Letter-of-Credit Right or secondary obligation that supports the payment or performance of, and all security for, any Account, Chattel Paper, Document, General Intangible, Instrument or Investment Property.
Tangible Chattel Paper shall mean tangible chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Termination Date shall have the meaning provided in Section 10.8(a) of this Agreement.
Timber-to-be-Cut shall mean timber-to-be-cut as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Trade Secret Rights shall mean the rights of an Assignor in any Trade Secret it holds.
Trade Secrets shall mean any secretly held existing engineering or other data, information, production procedures and other know-how relating to the design manufacture, assembly, installation, use, operation, marketing, sale and/or servicing of any products or business of an Assignor worldwide whether written or not.
29 | Security Agreement |
UCC shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.
ARTICLE X.
MISCELLANEOUS
10.1. Notices . Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier, except that notices and communications to the Collateral Agent or any Assignor shall not be effective until received by the Collateral Agent or such Assignor, as the case may be. All notices and other communications shall be in writing and addressed as follows:
(a) | if to any Assignor, c/o: |
Curo Financial Technologies Corp.
3527 N. Ridge Rd.
Wichita, KS 67205
Attention: Vin Thomas
E-Mail: vinthomas@curo.com
(b) | if to the Collateral Agent, at: |
Victory Park Management, LLC
227 W. Monroe Street, Suite 3900
Chicago, Illinois 60606
Telephone: | (312) 705-2786 | |||
Facsimile: | (312) 701-0794 | |||
Attention: | Scott R. Zemnick, General Counsel | |||
E-mail: | szemnick@vpcadvisors.com |
with a copy (for informational purposes only) to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
Telephone: (312) 902-5297 and (312) 902-5495
Facsimile: (312) 577-8964 and (312) 577-8854
Attention: Mark R. Grossmann, Esq. and Scott E. Lyons, Esq.
E-mail: mg@kattenlaw.com and scott.lyons@kattenlaw.com
(c) if to any Lender Creditor (other than the Collateral Agent), at such address as such Lender Creditor shall have specified in the Credit Agreement;
30 | Security Agreement |
(d) if to any Other Creditor, at such address as such Other Creditor shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address or addressed to such other individual as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
10.2. Waiver; Amendment . Except as provided in Sections 10.8 and 10.12 hereof (or as provided in the other Security Documents), none of the terms and conditions of this Agreement or any other Security Document may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Assignor directly affected thereby (it being understood that the addition or release of any Assignor hereunder shall not constitute a change, waiver, discharge or termination affecting any Assignor other than the Assignor so added or released) and the Collateral Agent (with the written consent of the Required Secured Creditors); provided , however , that any change, waiver, modification or variance affecting the rights and benefits of a single Class of Secured Creditors (and not all Secured Creditors in a like or similar manner) also shall require the written consent of the Requisite Creditors of such affected Class. For the purpose of this Agreement, the term Class shall mean each class of Secured Creditors, i.e. , whether (x) the Lender Creditors as holders of the Credit Document Obligations or (y) the Other Creditors as the holders of the Other Obligations. For the purpose of this Agreement, the term Requisite Creditors of any Class shall mean each of (x) with respect to the Credit Document Obligations, the Required Lenders (or, to the extent provided in Section 13.12 of the Credit Agreement, each of the Lenders), and (y) with respect to the Other Obligations, the holders of at least a majority of all Other Obligations outstanding from time to time.
10.3. Obligations Absolute . The obligations of each Assignor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Assignor; (b) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement or any other Secured Debt Agreement; or (c) any amendment to or modification of any Secured Debt Agreement or any security for any of the Obligations; whether or not such Assignor shall have notice or knowledge of any of the foregoing.
10.4. Successors and Assigns . This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or termination as set forth in Section 10.8 hereof, (ii) be binding upon each Assignor, its successors and assigns; provided, however, that no Assignor shall assign any of its rights or obligations hereunder without the prior written consent of the Collateral Agent (with the prior written consent of the Required Secured Creditors) or as otherwise permitted by the Secured Debt Agreements, and (iii) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent, the other Secured Creditors and their respective successors, transferees and assigns. All agreements, statements, representations and warranties made by each Assignor herein or in any certificate or other instrument delivered by such Assignor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Secured Debt Agreements regardless of any investigation made by the Secured Creditors or on their behalf.
31 | Security Agreement |
10.5. Headings Descriptive . The headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
10.6. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL . (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH ASSIGNOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH ASSIGNOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH ASSIGNOR. EACH ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH ASSIGNOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN, HOWEVER, SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY ASSIGNOR IN ANY OTHER JURISDICTION.
(b) EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
32 | Security Agreement |
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.7. Assignors Duties . It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Assignor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Collateral Agent shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Collateral Agent be required or obligated in any manner to perform or fulfill any of the obligations of any Assignor under or with respect to any Collateral.
10.8. Termination; Release . (a) After the Termination Date, this Agreement shall terminate ( provided that all indemnities set forth herein including, without limitation in Section 8.1 hereof, shall survive such termination) and the Collateral Agent, at the written request and expense of the respective Assignor, will promptly execute and deliver to such Assignor a proper instrument or instruments (including Uniform Commercial Code termination statements on form UCC-3) acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Collateral Agent and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement. As used in this Agreement, Termination Date shall mean the date upon which the Total Loan Commitment under the Credit Agreement has been terminated and all Secured Hedging Agreements have been terminated, no Note under the Credit Agreement is outstanding and all Loans thereunder have been repaid in full and all Obligations then due and payable have been paid in full.
(b) In the event that any part of the Collateral is sold or otherwise disposed of (to a Person other than a Credit Party) (x) at any time prior to the time at which all Credit Document Obligations have been paid in full and the Total Loan Commitment in connection with a sale or disposition permitted by Section 10.02 of the Credit Agreement or is otherwise released at the direction of the Required Lenders (or all the Lenders if required by Section 13.12 of the Credit Agreement) or (y) at any time thereafter, to the extent permitted by the other Secured Debt Agreements, and in the case of clauses (x) and (y), the proceeds of such sale or disposition (or from such release) are applied in accordance with the terms of the Credit Agreement or such other Secured Debt Agreement, as the case may be, to the extent required to be so applied, the Collateral Agent, at the request and expense of such Assignor, will duly release from the security interest created hereby (and will execute and deliver such documentation, including termination or partial release statements and the like in connection therewith) and assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or otherwise disposed of, or released, and as may be in the possession of the Collateral Agent and has not theretofore been released pursuant to this Agreement. Furthermore, upon the release of any Subsidiary Guarantor from the Subsidiaries Guaranty in accordance with the provisions thereof, such Assignor (and the Collateral at such time assigned by the respective Assignor pursuant hereto) shall be released from this Agreement.
33 | Security Agreement |
(c) At any time that an Assignor desires that the Collateral Agent take any action to acknowledge or give effect to any release of Collateral pursuant to the foregoing Section 10.8(a) or (b), such Assignor shall deliver to the Collateral Agent a certificate signed by an Authorized Officer of such Assignor stating that the release of the respective Collateral is permitted pursuant to such Section 10.8(a) or (b). At any time that the Borrower or the respective Assignor desires that a Subsidiary of the Borrower which has been released from the Subsidiaries Guaranty be released hereunder as provided in the last sentence of Section 10.8(b) hereof, it shall deliver to the Collateral Agent a certificate signed by an Authorized Officer of the Borrower and the respective Assignor stating that the release of the respective Assignor (and its Collateral) is permitted pursuant to such Section 10.8(b). If reasonably requested by the Collateral Agent (although the Collateral Agent shall have no obligation to make such request), the relevant Assignor shall furnish appropriate legal opinions (from counsel, reasonably acceptable to the Collateral Agent) to the effect set forth in this Section 10.8(c).
(d) The Collateral Agent shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in good faith believes to be in accordance with) this Section 10.8.
10.9. Counterparts . This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Collateral Agent.
10.10. Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
10.11. The Collateral Agent and the other Secured Creditors . The Collateral Agent will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed that the obligations of the Collateral Agent as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Section 12 of the Credit Agreement. The Collateral Agent shall act hereunder on the terms and conditions set forth herein and in Section 12 of the Credit Agreement.
10.12. Additional Assignors . It is understood and agreed that any Subsidiary Guarantor that desires to become an Assignor hereunder, or is required to execute a counterpart of this Agreement after the date hereof pursuant to the requirements of the Credit Agreement or any other Credit Document, shall become an Assignor hereunder by (x) executing a counterpart hereof and delivering same to the Collateral Agent or by executing a joinder agreement and delivering same to the Collateral Agent, in each case as may be requested by (and in form and substance reasonably satisfactory to) the Collateral Agent, (y) delivering supplements to Annexes A through F, inclusive, and H through K, inclusive, hereto as are necessary to cause such Annexes to be complete and accurate with respect to such additional Assignor on such date
34 | Security Agreement |
and (z) taking all actions as specified in this Agreement as would have been taken by such Assignor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Collateral Agent and with all documents and actions required above to be taken to the reasonable satisfaction of the Collateral Agent.
[Remainder of this page intentionally left blank; signature page follows]
35 | Security Agreement |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
ASSIGNORS | CURO FINANCIAL TECHNOLOGIES CORP. | |
CURO INTERMEDIATE HOLDINGS CORP. | ||
TODD FINANCIAL, INC. | ||
TODD CAR TITLE, INC. | ||
CURO MANAGEMENT LLC | ||
FMMR INVESTMENTS, INC. | ||
EVERGREEN FINANCIAL | ||
INVESTMENTS, INC. | ||
PRINCIPAL INVESTMENTS, INC. | ||
SPEEDY CASH | ||
ADVANCE GROUP, INC. | ||
CONCORD FINANCE, INC. | ||
SCIL,INC. | ||
CASH COLORADO, LLC | ||
GALT VENTURES, LLC | ||
A SPEEDY CASH CAR TITLE LOANS, LLC | ||
SCIL TEXAS, LLC | ||
SC AURUM, LLC | ||
ATTAIN FINANCE, LLC | ||
SPEEDY CASH ILLINOIS, INC. | ||
SC TEXAS MB, INC. | ||
THE MONEY STORE, L.P. | ||
By: /s/ Donald F. Gayhardt Jr. | ||
Name: Donald F. Gayhardt Jr. | ||
Title: President & Chief Executive Office |
[Signature Page to Security Agreement]
Accepted and Agreed to: |
VICTORY PARK MANAGEMENT, LLC as Collateral Agent |
By: |
/s/ Scott R. Zemnick |
|
Name: | Scott R. Zemnick | |
Title: | Authorized Signatory |
[Signature Page to Security Agreement]
ANNEX G
to
SECURITY AGREEMENT
Form of Control Agreement Regarding Deposit Accounts
AGREEMENT (as amended, modified, restated and/or supplemented from time to time, this Agreement), dated as of , , among the undersigned assignor (the Assignor) , not in its individual capacity but solely as Collateral Agent (the Collateral Agent), and (the Deposit Account Bank), as the bank (as defined in Section 9-102 of the UCC as in effect on the date hereof in the State of (the UCC )) with which one or more deposit accounts (as defined in Section 9-102 of the UCC) are maintained by the Assignor (with all such deposit accounts now or at any time in the future maintained by the Assignor with the Deposit Account Bank being herein called the Deposit Accounts ).
W I T N E S S E T H :
WHEREAS, the Assignor, various other assignors and the Collateral Agent have entered into a Security Agreement, dated as of November 17, 2016 (as amended, amended and restated, modified or supplemented from time to time, the Security Agreement ), under which, among other things, in order to secure the payment of the Obligations (as defined in the Security Agreement), the Assignor has granted a security interest to the Collateral Agent for the benefit of the Secured Creditors (as defined in the Security Agreement) in all of the right, title and interest of the Assignor in and into any and all deposit accounts (as defined in Section 9-102 of the UCC) and in all monies, securities, instruments and other investments deposited therein from time to time (collectively, herein called the Collateral ); and
WHEREAS, the Assignor desires that the Deposit Account Bank enter into this Agreement in order to establish control (as defined in Section 9-104 of the UCC) in each Deposit Account at any time or from time to time maintained with the Deposit Account Bank, and to provide for the rights of the parties under this Agreement with respect to such Deposit Accounts;
NOW THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Assignors Dealings with Deposit Accounts; Notice of Exclusive Control . Until the Deposit Account Bank shall have received from the Collateral Agent a Notice of Exclusive Control (as defined below), the Assignor shall be entitled to present items drawn on and otherwise to withdraw or direct the disposition of funds from the Deposit Accounts and give instructions in respect of the Deposit Accounts; provided , however , that the Assignor may not, and the Deposit Account Bank agrees that it shall not permit the Assignor to, without the Collateral Agents prior written consent, close any Deposit Account. If the Collateral Agent shall give to the Deposit Account Bank a notice of the Collateral Agents exclusive control of the Deposit Accounts in
accordance with Section 7.1 of the Security Agreement, which notice states that it is a Notice of Exclusive Control (a Notice of Exclusive Control ), only the Collateral Agent shall be entitled to withdraw funds from the Deposit Accounts, to give any instructions in respect of the Deposit Accounts and any funds held therein or credited thereto or otherwise to deal with the Deposit Accounts.
2. Collateral Agents Right to Give Instructions as to Deposit Accounts . (a) The Collateral Agent shall be entitled, for purposes of this Agreement, at any time after a Notice of Exclusive Control has been delivered to the Deposit Account Bank in accordance with the terms of this Agreement, to give the Deposit Account Bank instructions as to the withdrawal or disposition of any funds from time to time credited to any Deposit Account, or as to any other matters relating to any Deposit Account or any other Collateral, without consent from the Assignor. The Assignor hereby irrevocably authorizes and instructs the Deposit Account Bank, and the Deposit Account Bank hereby agrees, to comply with any such instructions from the Collateral Agent without any further consent from the Assignor. Such instructions may include the giving of stop payment orders for any items being presented to any Deposit Account for payment. The Deposit Account Bank shall be fully entitled to rely on, and shall comply with, such instructions from the Collateral Agent even if such instructions are contrary to any instructions or demands that the Assignor may give to the Deposit Account Bank. In case of any conflict between instructions received by the Deposit Account Bank from the Collateral Agent and the Assignor, the instructions from the Collateral Agent shall prevail.
(b) It is understood and agreed that the Deposit Account Banks duty to comply with instructions from the Collateral Agent regarding the Deposit Accounts is absolute, and the Deposit Account Bank shall be under no duty or obligation, nor shall it have the authority, to inquire or determine whether or not such instructions are in accordance with the Security Agreement or any other Credit Document (as defined in the Credit Agreement referred to in the Security Agreement), nor seek confirmation thereof from the Assignor or any other Person.
3. Assignors Exculpation and Indemnification of Depository Bank . The Assignor hereby irrevocably authorizes and instructs the Deposit Account Bank to follow instructions from the Collateral Agent regarding the Deposit Accounts even if the result of following such instructions from the Collateral Agent is that the Deposit Account Bank dishonors items presented for payment from any Deposit Account. The Assignor further confirms that the Deposit Account Bank shall have no liability to the Assignor for wrongful dishonor of such items in following such instructions from the Collateral Agent. The Deposit Account Bank shall have no duty to inquire or determine whether the Assignors obligations to the Collateral Agent are in default or whether the Collateral Agent is entitled, under any separate agreement between the Assignor and the Collateral Agent, to give any such instructions. The Assignor further agrees to be responsible for the Deposit Account Banks customary charges and to indemnify the Deposit Account Bank from and to hold the Deposit Account Bank harmless against any loss, cost or expense that the Deposit Account Bank may sustain or incur in acting upon instructions which the Deposit Account Bank believes in good faith to be instructions from the Collateral Agent.
4. Subordination of Security Interests; Deposit Account Banks Recourse to Deposit Accounts . The Deposit Account Bank hereby subordinates any claims and security interests it may have against, or with respect to, any Deposit Account at any time established or maintained with it by the Assignor (including any amounts, investments, instruments or other Collateral from time to time on deposit therein) to the security interests of the Collateral Agent (for the benefit of the Secured Creditors) therein, and agrees that no amounts shall be charged by it to, or withheld or set-off or otherwise recouped by it from, any Deposit Account of the Assignor or any amounts, investments, instruments or other Collateral from time to time on deposit therein; provided that the Deposit Account Bank may, however, from time to time debit the Deposit Accounts for any of its customary charges in maintaining the Deposit Accounts or for reimbursement for the reversal of any provisional credits granted by the Deposit Account Bank to any Deposit Account, to the extent, in each case, that the Assignor has not separately paid or reimbursed the Deposit Account Bank therefor.
5. Representations, Warranties and Covenants of Deposit Account Bank . The Deposit Account Bank represents and warrants to the Collateral Agent that:
(a) The Deposit Account Bank constitutes a bank (as defined in Section 9- 102 of the UCC), that the jurisdiction (determined in accordance with Section 9-304 of the UCC) of the Deposit Account Bank for purposes of each Deposit Account maintained by the Assignor with the Deposit Account Bank shall be one or more States within the United States.
(b) The Deposit Account Bank shall not permit any Assignor to establish any demand, time, savings, passbook or other account with it which does not constitute a deposit account (as defined in Section 9-102 of the UCC).
(c) The account agreements between the Deposit Account Bank and the Assignor relating to the establishment and general operation of the Deposit Accounts provide, whether specifically or generally, that the laws of 1 govern secured transactions relating to the Deposit Accounts and that the Deposit Account Banks jurisdiction for purposes of Section 9-304 of the UCC in respect of the Deposit Accounts is . 2 The Deposit Account Bank will not, without the Collateral Agents prior written consent, amend any such account agreement so that the Deposit Account Banks jurisdiction for purposes of Section 9-304 of the UCC is other than a jurisdiction permitted pursuant to preceding clause (a). All account agreements in respect of each Deposit Account in existence on the date hereof are listed on Annex A hereto and copies of all such account agreements have been furnished to the Collateral Agent. The Deposit Account Bank will promptly furnish to the Collateral Agent a copy of the account agreement for each Deposit Account hereafter established by the Deposit Account Bank for the Assignor.
(d) The Deposit Account Bank has not entered and will not enter, into any agreement with any other Person by which the Deposit Account Bank is obligated to comply with instructions from such other Person as to the disposition of funds from any Deposit Account or other dealings with any Deposit Account or other of the Collateral.
1 | Inserted jurisdiction(s) must be consistent with requirements of preceding clause (a). |
2 | See footnote 1. |
(e) On the date hereof the Deposit Account Bank maintains no Deposit Accounts for the Assignor other than the Deposit Accounts specifically identified in Annex A hereto.
(f) Any items or funds received by the Deposit Account Bank for the Assignors account will be credited to said Deposit Accounts specified in paragraph (e) above or to any other Deposit Accounts hereafter established by the Deposit Account Bank for the Assignor in accordance with this Agreement.
(g) The Deposit Account Bank will promptly notify the Collateral Agent of each Deposit Account hereafter established by the Deposit Account Bank for the Assignor (which notice shall specify the account number of such Deposit Account and the location at which the Deposit Account is maintained), and each such new Deposit Account shall be subject to the terms of this Agreement in all respects.
6. Deposit Account Statements and Information . The Deposit Account Bank agrees, and is hereby authorized and instructed by the Assignor, to furnish to the Collateral Agent, at its address indicated below, copies of all account statements and other information relating to each Deposit Account that the Deposit Account Bank sends to the Assignor and to disclose to the Collateral Agent all information requested by the Collateral Agent regarding any Deposit Account.
7. Conflicting Agreements . This Agreement shall have control over any conflicting agreement between the Deposit Account Bank and the Assignor.
8. Merger or Consolidation of Deposit Account Bank . Without the execution or filing of any paper or any further act on the part of any of the parties hereto, any bank into which the Deposit Account Bank may be merged or with which it may be consolidated, or any bank resulting from any merger to which the Deposit Account Bank shall be a party, shall be the successor of the Deposit Account Bank hereunder and shall be bound by all provisions hereof which are binding upon the Deposit Account Bank and shall be deemed to affirm as to itself all representations and warranties of the Deposit Account Bank contained herein.
9. Notices . (a) All notices and other communications provided for in this Agreement shall be in writing (including facsimile) and sent to the intended recipient at its address or telex or facsimile number set forth below:
If to the Collateral Agent, at:
|
||||
Victory Park Management, LLC | ||||
227 W. Monroe Street, Suite 3900 | ||||
Chicago, Illinois 60606 | ||||
Telephone: | (312) 705-2786 | |||
Facsimile: | (312) 701-0794 | |||
Attention: | Scott R. Zemnick, General Counsel | |||
E-mail: | szemnick@vpcadvisors.com |
with a copy (for informational purposes only) to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
Telephone: (312) 902-5297 and (312) 902-5495
Facsimile: (312) 577-8964 and (312) 577-8854
Attention: Mark R. Grossmann, Esq. and Scott E. Lyons, Esq.
E-mail: mg@kattenlaw.com and scott.lyons@kattenlaw.com
If to the Assignor, at:
______________________
______________________
______________________
If to the Deposit Account Bank, at:
______________________
______________________
______________________
or, as to any party, to such other address or telex or facsimile number as such party may designate from time to time by notice to the other parties.
(b) Except as otherwise provided herein, all notices and other communications hereunder shall be delivered by hand or by commercial overnight courier (delivery charges prepaid), or mailed, postage prepaid, or telexed or faxed, addressed as aforesaid, and shall be effective (i) three business days after being deposited in the mail (if mailed), (ii) when delivered (if delivered by hand or courier) and (iii) or when transmitted with receipt confirmed (if telexed or faxed); provided that notices to the Collateral Agent shall not be effective until actually received by it.
10. Amendment . This Agreement may not be amended, modified or supplemented except in writing executed and delivered by all the parties hereto.
11. Binding Agreement . This Agreement shall bind the parties hereto and their successors and assign and shall inure to the benefit of the parties hereto and their successors and assigns. Without limiting the provisions of the immediately preceding sentence, the Collateral Agent at any time or from time to time may designate in writing to the Deposit Account Bank a successor Collateral Agent (at such time, if any, as such entity becomes the Collateral Agent under the Security Agreement, or at any time thereafter) who shall thereafter succeed to the rights of the existing Collateral Agent hereunder and shall be entitled to all of the rights and benefits provided hereunder.
12. Continuing Obligations . The rights and powers granted herein to the Collateral Agent have been granted in order to protect and further perfect its security interests in the Deposit Accounts and other Collateral and are powers coupled with an interest and will be affected neither by any purported revocation by the Assignor of this Agreement or the rights granted to the Collateral Agent hereunder or by the bankruptcy, insolvency, conservatorship or receivership of the Assignor or the Deposit Account Bank or by the lapse of time. The rights of the Collateral Agent hereunder and in respect of the Deposit Accounts and the other Collateral, and the obligations of the Assignor and Deposit Account Bank hereunder, shall continue in effect until the security interests of Collateral Agent in the Deposit Accounts and such other Collateral have been terminated and the Collateral Agent has notified the Deposit Account Bank of such termination in writing
13. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
14. Counterparts . This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing and delivering one or more counterparts.
[Remainder of this page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first written above.
Assignor : |
||
[NAME OF ASSIGNOR] |
||
By: |
|
|
Name: |
||
Title: |
||
Collateral Agent : |
||
VICTORY PARK MANAGEMENT, LLC |
||
By: |
|
|
Name: |
||
Title: |
||
Deposit Account Bank : |
||
[NAME OF DEPOSIT ACCOUNT BANK] |
||
By: |
|
|
Name: |
||
Title: |
ANNEX A
Existing Account Agreements
SCHEDULE OF CHIEF EXECUTIVE OFFICES
Name of Assignor |
Address(es) of Chief Executive Office |
|
All Pledgors and Assignors | 3527 North Ridge Road, Wichita, Kansas | |
67205 |
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
(See attached)
- 2 -
Lease ID |
Address |
City |
ST/PRV | Zip Code |
Country |
Notes |
||||||
0001 | 9781 Magnolia Ave | Riverside | CA | 92503 | United States | |||||||
0002 | 4915 Moreno Ave | Montclair | CA | 91763 | United States | |||||||
0003 | 10404 Venice Blvd | Culver City | CA | 90232 | United States | |||||||
0004 | 6740 Reseda Blvd | Reseda | CA | 91335 | United States | |||||||
0005 | 2710 S Maryland Pkwy, Suite A | Las Vegas | NV | 89109 | United States | |||||||
0006 | 8847 Imperial Hwy | Downey | CA | 90242 | United States | |||||||
0007 | 857 W Rosecrans Ave | Gardena | CA | 90247 | United States | |||||||
0008 | 13010 Harbor Blvd | Garden Grove | CA | 90247 | United States | |||||||
0009 | 1841 W Northern Ave | Phoenix | AZ | 85021 | United States | |||||||
0010 | 4921 W Sahara Ave | Las Vegas | NV | 89146 | United States | |||||||
0011 | 904 S Gaffey St | San Pedro | CA | 90731 | United States | |||||||
0012 | 4040 N 40th St | Phoenix | AZ | 85018 | United States | |||||||
0013 | 1242 W Main St | Mesa | AZ | 85201 | United States | |||||||
0014 | 7116 NE Fourth Plain Rd | Vancouver | WA | 98661 | United States | |||||||
0015 | 1532 N Jones Blvd | Las Vegas | NV | 89121 | United States | |||||||
0016 | 10972 Beach Blvd | Stanton | CA | 90680 | United States | |||||||
0017 | 3475 E Flamingo, Suite 300 | Las Vegas | NV | 89121 | United States | |||||||
0018 | 1331 E 63rd St | Kansas City | MO | 64110 | United States | |||||||
0019 | 8701 E Washington Blvd | Pico Rivera | CA | 90660 | United States | |||||||
0020 | 11221 E 23rd St | Independence | MO | 64052 | United States | |||||||
0021 | 2351 N Alvernon, Suite 100 | Tucson | AZ | 85712 | United States | |||||||
0022 | 12131 SE Powell Blvd | Portland | OR | 97266 | United States | |||||||
0023 | 265 S Wadsworth Blvd | Lakewood | CO | 80226 | United States | |||||||
0024 | 1551 E Indian School Rd | Phoenix | AZ | 85014 | United States | |||||||
0025 | 19026 E Burnside St | Portland | OR | 97233 | United States | |||||||
0026 | 3501 W Glendale Ave | Phoenix | AZ | 85051 | United States | |||||||
0027 | 101 S Brookhurst St | Anaheim | CA | 92804 | United States | |||||||
0028 | 3849 SE Powell Blvd | Portland | OR | 97202 | United States | |||||||
0029 | 270 E Baseline St, Suite A | San Bernardino | CA | 92410 | United States | |||||||
0030 | 11000 Lower Azusa Rd | El Monte | CA | 91732 | United States | |||||||
0031 | 25 N Lamb Blvd | Las Vegas | NV | 89110 | United States | |||||||
0032 | 5819 W Camelback Rd | Phoenix | AZ | 85031 | United States | |||||||
0033 | 6115 W Flamingo Rd | Las Vegas | NV | 89103 | United States | |||||||
0034 | 7202 E McDowell Rd | Scottsdale | AZ | 85257 | United States | |||||||
0035 | 3947 Main St | Kansas City | MO | 64111 | United States | |||||||
0036 | 6501 E Evans Ave | Denver | CO | 80224 | United States | |||||||
0038 | 2801 W Washington, Suite 110 | Las Vegas | NV | 89107 | United States | |||||||
0039 | 2201 Amidon St | Wichita | KS | 67204 | United States | |||||||
0040 | 701 N West St | Wichita | KS | 67203 | United States | |||||||
0041 | 10309 SE Mill Plain Blvd, Suite A | Vancouver | WA | 98664 | United States | |||||||
0042 | 10223 Sepulveda Blvd, Suite C-D | Mission Hills | CA | 91345 | United States | |||||||
0043 | 4850 E Harry St | Wichita | KS | 67218 | United States | |||||||
0044 | 1215 S Country Club Dr | Mesa | AZ | 85210 | United States | |||||||
0045 | 3447 E Cesar Chavez Ave | Los Angeles | CA | 90063 | United States | |||||||
0046 | 8247 Laurel Canyon Blvd | N Hollywood | CA | 91605 | United States | |||||||
0047 | 3520 E Bell Rd | Phoenix | AZ | 85032 | United States |
0048 | 5102 W Olive Ave, Suite 103 | Glendale | AZ | 85302 | United States | |||||||
0049 | 4241 S Nellis Blvd | Las Vegas | NV | 89121 | United States | |||||||
0050 | 4199 S Ft Apache, Suite D | Las Vegas | NV | 89147 | United States | |||||||
0051* | 6300 E 21st St N | Wichita | KS | 67208 | United States | * Operating entity owns the building but leases the ground | ||||||
0052 | 430 E 30th Ave | Hutchinson | KS | 67502 | United States | |||||||
0053 | 7865 W Sahara Ave, Suite 102-103 | Las Vegas | NV | 89117 | United States | |||||||
0054 | 1050 W Pawnee St | Wichita | KS | 67213 | United States | |||||||
0054L2* | 1048 W Pawnee St | Wichita | KS | 67213 | United States | *Vacant building used for storage and parking for adjacent store | ||||||
0055 | 1960 W Baseline Rd, Suite 101 | Mesa | AZ | 85202 | United States | |||||||
0056 | 4343 N Rancho Dr, Suite 150 | Las Vegas | NV | 89130 | United States | |||||||
0057 | 5676 S Eastern Ave | Las Vegas | NV | 89119 | United States | |||||||
0058 | 1956 E Southern Ave | Mesa | AZ | 85204 | United States | |||||||
0059 | 7204 Canoga Ave | Canoga Park | CA | 91303 | United States | |||||||
0060 | 3133 E Douglas Ave | Wichita | KS | 67211 | United States | |||||||
0061 | 7460 W Cheyenne Ave, Suite 110 | Las Vegas | NV | 89129 | United States | |||||||
0062 | 5067 E Owens Ave | Las Vegas | NV | 89110 | United States | |||||||
0063 | 100 N Raymond Ave | Fullerton | CA | 92831 | United States | |||||||
0064 | 1895 S Federal Blvd | Denver | CO | 80219 | United States | |||||||
0065 | 1220 W Crawford St | Salina | KS | 67401 | United States | |||||||
0066 | 1221 Main St | Pasadena | TX | 77506 | United States | |||||||
0067 | 5506 Bellaire Blvd, Suite A | Houston | TX | 77081 | United States | |||||||
0068 | 2812 N Main St | Ft Worth | TX | 76106 | United States | |||||||
0069 | 454 W Florence Ave, Suite 102-103 | Los Angeles | CA | 90003 | United States | |||||||
0070 | 11830 Bellaire Blvd, Suite A | Houston | TX | 77072 | United States | |||||||
0071 | 1160 Edgebrook Dr | Houston | TX | 77034 | United States | |||||||
0072 | 883 Federal Rd, Suite A | Houston | TX | 77015 | United States | |||||||
0073 | 8602 S Braeswood Blvd | Houston | TX | 77031 | United States | |||||||
0074 | 800 E Seminary Dr | Ft Worth | TX | 76115 | United States | |||||||
0075 | 6902 Harrisburg Blvd | Houston | TX | 77011 | United States | |||||||
0076 | 1503 N Story, Suite 100 | Dallas | TX | 75061 | United States | |||||||
0077 | 13482 Northwest Hwy | Houston | TX | 77022 | United States | |||||||
0078 | 2601 S Hampton Rd | Dallas | TX | 75224 | United States | |||||||
0079 | 3501 Gus Thomasson, Suite 102 | Mesquite | TX | 75150 | United States | |||||||
0080 | 3422 W Walnut St | Garland | TX | 75042 | United States | |||||||
0081 | 8569 Long Point Rd | Houston | TX | 77055 | United States | |||||||
0082 | 1445 E Kiest Blvd | Dallas | TX | 75216 | United States | |||||||
0083 | 860 S 11th St, Suite 105 | Beaumont | TX | 77701 | United States | |||||||
0084 | 690 E Prater Way | Sparks | NV | 89431 | United States | |||||||
0085 | 815 E Pioneer Pkwy | Arlington | TX | 76010 | United States | |||||||
0100 | 4209 E Lancaster Ave | Ft Worth | TX | 76103 | United States | |||||||
0101 | 1212 S Belt Hwy | St Joseph | MO | 64507 | United States | |||||||
0102 | 7007 Bandera Rd, Suite 24 | Leon Valley | TX | 78238 | United States | |||||||
0103 | 1360 W Cheyenne Ave, Suite 101 | N Las Vegas | NV | 89032 | United States | |||||||
0104 | 1701 Babcock Rd | San Antonio | TX | 78229 | United States | |||||||
0105 | 2949 S National Ave | Springfield | MO | 65804 | United States | |||||||
0106 | 3802 S Gessner, Suite A | Houston | TX | 77063 | United States | |||||||
0107 | 3706 NW Hwy | Dallas | TX | 75220 | United States | |||||||
0108 | 1501 Eastern Blvd | Montgomery | AL | 36117 | United States |
0109 | 10201 Lake June Rd | Dallas | TX | 75217 | United States | |||||||
0110 | 7434 Airline Dr | Houston | TX | 77076 | United States | |||||||
0111 | 2027 SW Fairlawn Rd | Topeka | KS | 66604 | United States | |||||||
0112 | 321 Palisades Blvd | Birmingham | AL | 35209 | United States | |||||||
0113 | 2332 Civic Center Dr | N Las Vegas | NV | 89030 | United States | |||||||
0114 | 2647 Culebra Rd | San Antonio | TX | 78228 | United States | |||||||
0115 | 6401 Airport Blvd, Suite B | Mobile | AL | 36608 | United States | |||||||
0116 | 3410 Hwy 69 N | Northport | AL | 35473 | United States | |||||||
0117 | 5532 Manchaca Rd | Austin | TX | 78745 | United States | |||||||
0118 | 4009 S Padre Island Dr | Corpus Christi | TX | 78401 | United States | |||||||
0119 | 10884 W Bellfort St | Houston | TX | 77099 | United States | |||||||
0120 | 400 W University Dr | Denton | TX | 76201 | United States | |||||||
0121 | 1924 S Business 77 | Harlingen | TX | 78550 | United States | |||||||
0122 | 5900 Brainerd Rd | Chattanooga | TN | 37411 | United States | |||||||
0123 | 848 E Sibley Blvd | Dolton | IL | 60419 | United States | |||||||
0124 | 7201 Balboa Blvd | Van Nuys | CA | 91406 | United States | |||||||
0125 | 11100 S Cicero Ave | Alsip | IL | 60803 | United States | |||||||
0126 | 1601 W Warm Springs Rd | Henderson | NV | 89014 | United States | |||||||
0127 | 423 N New Braunsfels, Suite 2-3 | San Antonio | TX | 78202 | United States | |||||||
0128 | 8701 S Cottage Grove Ave | Chicago | IL | 60619 | United States | |||||||
0129 | 1103 Fair Ave, Suite 1 | San Antonio | TX | 78210 | United States | |||||||
0130 | 4403 Chapman Hwy | Knoxville | TN | 37920 | United States | |||||||
0131 | 120 Gallatin Pike S, Suite B | Madison | TN | 37115 | United States | |||||||
0132 | 2401 Nolensville Pike | Nashville | TN | 37211 | United States | |||||||
0133 | 4800 W Addison St | Chicago | IL | 60641 | United States | |||||||
0134 | 5445 South St | Lakewood | CA | 90713 | United States | |||||||
0135 | 7855 Van Nuys Blvd | Panorama City | CA | 91402 | United States | |||||||
0136 | 13722 Sherman Way | Van Nuys | CA | 91405 | United States | |||||||
0137 | 5701 Charlotte Pike | Nashville | TN | 37209 | United States | |||||||
0138 | 1931 N Mannheim Rd | Melrose Park | IL | 60160 | United States | |||||||
0139 | 120 W Baseline Rd | Rialto | CA | 92376 | United States | |||||||
0140 | 1552 W 119th St | Chicago | IL | 60643 | United States | |||||||
0141 | 932 Ann St | Montgomery | AL | 36107 | United States | |||||||
0142 | 229 W Anaheim St | Wilmington | CA | 90744 | United States | |||||||
0143 | 5002 Harding Pl | Nashville | TN | 37211 | United States | |||||||
0144 | 1801 W 6th St | Los Angeles | CA | 90057 | United States | |||||||
0145 | 106 Knox Rd | Knoxville | TN | 37918 | United States | |||||||
0146 | 380 Broadway, Suite 103 | El Cajon | CA | 92021 | United States | |||||||
0147 | 3615 McFarland Blvd, Suite 109 | Tuscaloosa | AL | 35405 | United States | |||||||
0148 | 9240 Hwy 49 | Gulfport | MS | 39503 | United States | |||||||
0149 | 13545 Florence Ave | Whittier | CA | 90605 | United States | |||||||
0175 | 1521 N 10th St | McAllen | TX | 78501 | United States | |||||||
0176 | 7120 San Bernardo Ave | Laredo | TX | 78041 | United States | |||||||
0177 | 2119 E Saunders St | Laredo | TX | 78041 | United States | |||||||
0178 | 695 S Sam Houston Blvd | San Benito | TX | 78586 | United States | |||||||
0179 | 4298 University Dr NW | Huntsville | AL | 35816 | United States | |||||||
0180 | 4217 W Waco Dr | Waco | TX | 76710 | United States | |||||||
0181 | 4648 S Cicero Ave | Chicago | IL | 60638 | United States |
0182 | 1218 N Lake St, Suite 120 | Aurora | IL | 60506 | United States | |||||||
0184 | 2201 N Frazier St | Conroe | TX | 77301 | United States | |||||||
0185 | 1698 Memorial Blvd | Murfreesboro | TN | 37129 | United States | |||||||
0186 | 2785 Belle Chasse Hwy | Gretna | LA | 70056 | United States | |||||||
0187 | 808 25th St NW | Cleveland | TN | 37311 | United States | |||||||
0188 | 1655 Fort Campbell Blvd | Clarksville | TN | 37042 | United States | |||||||
0189 | 3100 Dickerson Pike | Nashville | TN | 37207 | United States | |||||||
0190 | 13263 Van Nuys Blvd | Pacoima | CA | 91311 | United States | |||||||
0191 | 2102 Goliad Rd, Suite 1 | San Antonio | TX | 78223 | United States | |||||||
0192 | 972 Bandera Rd | San Antonio | TX | 78228 | United States | |||||||
0193 | 10828 Florida Blvd | Baton Rouge | LA | 70815 | United States | |||||||
0194 | 501 S Conway Ave | Mission | TX | 78572 | United States | |||||||
0195 | 1029 West Ave I | Lancaster | CA | 92411 | United States | |||||||
0196 | 2955 E Texas St | Bossier City | LA | 71111 | United States | |||||||
0197 | 123 Gause Blvd W | Slidell | LA | 70460 | United States | |||||||
0198 | 25010 Alessandro Blvd | Moreno Valley | CA | 92553 | United States | |||||||
0201 | 6702 S Congress Ave | Austin | TX | 78745 | United States | |||||||
0202 | 9616 N Lamar Blvd, Suite 199 | Austin | TX | 78753 | United States | |||||||
0203 | 11643-B Research Blvd | Austin | TX | 78759 | United States | |||||||
0204 | 2818 S Lamar Blvd | Austin | TX | 78704 | United States | |||||||
0205 | 907-B IH 35 | Round Rock | TX | 78664 | United States | |||||||
0206 | 510 N Bell Blvd, Suite 104 | Cedar Park | TX | 78613 | United States | |||||||
0207 | 7201 Cameron Rd | Austin | TX | 78752 | United States | |||||||
0208 | 2030 E Oltorf St, Suite 102B | Austin | TX | 78741 | United States | |||||||
0209 | 3840 Airport Blvd | Austin | TX | 78722 | United States | |||||||
0211 | 706 E Hopkins St | San Marcos | TX | 78666 | United States | |||||||
0212 | 3706 Guadalupe St, Suite D | Austin | TX | 78705 | United States | |||||||
0214 | 2008 W Parmer Ln | Austin | TX | 78727 | United States | |||||||
0222 | 11217 Leopard St, Suite 1 | Corpus Christi | TX | 78410 | United States | |||||||
0225 | 4701 Ayers St, Suite 600-10 | Corpus Christi | TX | 78415 | United States | |||||||
0226 | 3710 Leopard St | Corpus Christi | TX | 78408 | United States | |||||||
0231 | 5110 Fredericksburg Rd | San Antonio | TX | 78229 | United States | |||||||
0232 | 12804 Nacogdoches Rd | San Antonio | TX | 78217 | United States | |||||||
0233 | 2905 West Ave | San Antonio | TX | 78201 | United States | |||||||
0234 | 1304 SW Military Dr | San Antonio | TX | 78221 | United States | |||||||
0236 | 8542 Blanco Rd | San Antonio | TX | 78216 | United States | |||||||
0237 | 3927 W Commerce St | San Antonio | TX | 78207 | United States | |||||||
0238 | 1005 Pat Booker Rd | Universal City | TX | 78148 | United States | |||||||
0241 | 406 Old Hwy 90 W | San Antonio | TX | 78237 | United States | |||||||
0242 | 6040 Ingram Rd | San Antonio | TX | 78238 | United States | |||||||
0245 | 10602 Perrin Beitel Rd | San Antonio | TX | 78217 | United States | |||||||
0246 | 5510 Walzem Rd | San Antonio | TX | 78218 | United States | |||||||
0247 | 2006 Veterans Blvd | Del Rio | TX | 78840 | United States | |||||||
0248 | 5129-A West Ave | San Antonio | TX | 78213 | United States | |||||||
0249 | 4515-2 Fredericksburg Rd | Heights | TX | 78201 | United States | |||||||
0250 | 2514 White Blvd | Austin | TX | 78741 | United States | |||||||
0251 | 1204-A Hwy 123 | San Marcos | TX | 78666 | United States | |||||||
0253 | 11300-C Pollyanna | Austin | TX | 78753 | United States |
0256 | 1103A N IH-35 | Austin | TX | 78702 | United States | |||||||
0258 | 3601 W William Cannon, Suite 400 | Austin | TX | 78749 | United States | |||||||
0259 | 1505-C Wells Branch Pkwy | Pflugerville | TX | 78660 | United States | |||||||
0261 | 15300 S IH-35, Suite 390 | Buda | TX | 78610 | United States | |||||||
0263 | 7112 Ed Bluestein Blvd, Suite 177 | Austin | TX | 78723 | United States | |||||||
0264 | 1909 E William Cannon, Suite 101 | Austin | TX | 78744 | United States | |||||||
0266 | 8606 Research Blvd | Austin | TX | 78758 | United States | |||||||
0267 | 2237 E Riverside Dr, Suite 101-D | Austin | TX | 78741 | United States | |||||||
0270 | 3010 Nogalitos St | San Antonio | TX | 78225 | United States | |||||||
0271 | 10650 Culebra Rd, Suite 128 | San Antonio | TX | 78251 | United States | |||||||
0273 | 1107 S WW White Rd | San Antonio | TX | 78220 | United States | |||||||
0276 | 5886 DeZavala Rd, Suite 103 | San Antonio | TX | 78249 | United States | |||||||
0277 | 1107 San Pedro Ave, Suite 101 | San Antonio | TX | 78212 | United States | |||||||
0278 | 931 S General McMullen Dr | San Antonio | TX | 78237 | United States | |||||||
0280 | 6851 W Military Dr, Suite 101 | San Antonio | TX | 78227 | United States | |||||||
0281 | 3138 SE Military Dr, Suite 101 | San Antonio | TX | 78235 | United States | |||||||
0282 | 2337 SW Military Dr | San Antonio | TX | 78224 | United States | |||||||
0283 | 8770 State Hwy 151, Suite 105 | San Antonio | TX | 78245 | United States | |||||||
0284 | 6338 Old Pearsall Rd, Suite 101 | San Antonio | TX | 78242 | United States | |||||||
0300 | 1021 Hwy 39 Bypass | Meridian | MS | 39301 | United States | |||||||
0302 | 6686 El Cajon Blvd, Suite F | San Diego | CA | 92115 | United States | |||||||
0303 | 9360 Mansfield Rd | Shreveport | LA | 71118 | United States | |||||||
0304 | 8320 FM 78, Suite 3 | Converse | TX | 78109 | United States | |||||||
0305 | 1729 NW Topeka Blvd | Topeka | KS | 66608 | United States | |||||||
0306 | 3555 W Slauson Ave | Los Angeles | CA | 90043 | United States | |||||||
0307 | 123 E Vernon Ave | Los Angeles | CA | 90011 | United States | |||||||
0308 | 11401 S Figueroa St | Los Angeles | CA | 90061 | United States | |||||||
0309 | 740 W Compton Blvd | Compton | CA | 90220 | United States | |||||||
0310 | 1502 Austin Hwy, Suite 101 | San Antonio | TX | 78218 | United States | |||||||
1501 | 2137 Jane St, Unit 1 | Downsview | ON | M3M 1A2 | Canada | |||||||
1502 | 2363 Finch Ave W | Weston | ON | M9M 2W8 | Canada | |||||||
1503 | 2687 Kipling Ave, Unit 4 | Etobicoke | ON | M9V 5G6 | Canada | |||||||
1504 | 1876 Kennedy Rd | Scarborough | ON | M1P 2L8 | Canada | |||||||
1505 | 6020 Hurontario St, Unit 6 | Mississauga | ON | L5R 4B3 | Canada | |||||||
1506 | 1733 Eglinton Ave E, Unit 5 | Scarborough | ON | M4A 1J8 | Canada | |||||||
1507 | 1180 Simcoe St N, Unit 7 | Oshawa | ON | L1G 4W8 | Canada | |||||||
1508 | 346 King St W | Oshawa | ON | L1G 6J2 | Canada | |||||||
1510 | 644 Yonge St | Toronto | ON | M4Y 1Z8 | Canada | |||||||
1511 | 10 Gillingham Dr, Unit 103 | Brampton | ON | L6X 5A5 | Canada | |||||||
1512 | 1403 Dundas St E, Unit B | Mississauga | ON | L4X 1L3 | Canada | |||||||
1514 | 2394 Eglinton Ave E | Scarborough | ON | M1K 2P3 | Canada | |||||||
1515 | 3024 Hurontario St, Unit G11 | Mississauga | ON | L5B 4M4 | Canada | |||||||
1516 | 4500 Kingston Rd | Scarborough | ON | M1E 2N9 | Canada | |||||||
1517 | 3182 Eglinton Ave E | Scarborough | ON | M1J 2H5 | Canada | |||||||
1518 | 2966 Danforth Ave | Scarborough | ON | M4C 1M6 | Canada | |||||||
1519 | 1839 Finch Ave W, Unit 7 | Toronto | ON | M3N 2V2 | Canada | |||||||
1520 | 1682 Jane St | Toronto | ON | M9N 2S2 | Canada | |||||||
1522 | 61 King St E | Hamilton | ON | L8N 1A5 | Canada |
1523 | 1396 Main St E | Hamilton | ON | L8K 1C1 | Canada | |||||||
1524 | 171 Bank St, Unit 124 | Ottawa | ON | K2P 1W5 | Canada | |||||||
1525 | 275 Montreal Rd | Ottawa | ON | K1L 6C2 | Canada | |||||||
1526 | 2301 Tecumseh Rd E | Windsor | ON | N8W 1E6 | Canada | |||||||
1527 | 596 Ouellette Ave | Windsor | ON | N9A 1B7 | Canada | |||||||
1530 | 1530 Albion Rd, Unit 100 | Toronto | ON | M9V 1B4 | Canada | |||||||
1531 | 135 Wyse Rd, Unit 1-2 | Dartmouth | NS | B3A 4K9 | Canada | |||||||
1533 | 4080 Highway 7, Unit 1 | Woodbridge | ON | L4L 8Z2 | Canada | |||||||
1534 | 550 Hespeler Rd, Unit 1 | Cambridge | ON | N1R 6J8 | Canada | |||||||
1535 | 357 1/2 Yonge St | Toronto | ON | M5B 1S1 | Canada | |||||||
1536 | 69 Davis Dr | Newmarket | ON | L3Y 2M9 | Canada | |||||||
1537 | 2057 Royal Windsor Dr | Mississauga | ON | L5J 1K5 | Canada | |||||||
1538 | 756 Yonge St | Toronto | ON | M4Y 2B6 | Canada | |||||||
1539 | 1414 Lasalle Blvd, Unit 101 | Sudbury | ON | P3A 1Z6 | Canada | |||||||
1540 | 2535 Bank St | Ottawa | ON | K1V 8R9 | Canada | |||||||
1541 | 4396 King St E, Unit 1 | Kitchener | ON | N2G 3W6 | Canada | |||||||
1542 | 2200 Queen St E, Unit 6 | Brampton | ON | L6S 4G9 | Canada | |||||||
1543 | 3932 Keele St | Toronto | ON | M3J 1N8 | Canada | |||||||
1544 | 1384 Wellington Rd S, Unit 4 | London | ON | N6E 1M3 | Canada | |||||||
1545 | 5487 Dundas St W, Unit 5 | Etobicoke | ON | M9B 1B5 | Canada | |||||||
1546 | 1541 Merivale Rd, Unit B | Ottawa | ON | K2G 5W1 | Canada | |||||||
1547 | 372 Queen St E | Brampton | ON | L6V 1C3 | Canada | |||||||
1548 | 1450 Kingston Rd, Unit 10 | Pickering | ON | L1V 1C1 | Canada | |||||||
1549 | 2131 Lawrence Ave E, Unit 101 | Scarborough | ON | M1R 5G4 | Canada | |||||||
1550 | 9555 Yonge St, Unit 25 | Richmond Hill | ON | L4C 9M5 | Canada | |||||||
1551 | 15525 118th Ave | Edmonton | AB | T5V 1C5 | Canada | |||||||
1553 | 1650 Bath Rd | Kingston | ON | K7M 4X6 | Canada | |||||||
1554 | 311 Henderson Hwy | Winnipeg | MB | R2L 1M4 | Canada | |||||||
1556 | 17th Avenue SE, Unit 3504 A | Calgary | AB | T2A 0R7 | Canada | |||||||
1557 | 1353 McPhillips St Unit 1 | Winnipeg | MB | R2X 3A6 | Canada | |||||||
1558 | 9847 63rd Ave, Unit 4 | Edmonton | AB | T6E 0G7 | Canada | |||||||
1560 | 11803 125th St NW | Edmonton | AB | T5L 0S1 | Canada | |||||||
1561 | 7165 Chebucto Rd | Halifax | NS | B3L 1N5 | Canada | |||||||
1563 | 14339 MacLeod Trail S | Calgary | AB | T2Y 1M7 | Canada | |||||||
1564 | 9626 165 Ave | Edmonton | AB | T5Z 3L3 | Canada | |||||||
1565 | 1299 Oxford St E | London | ON | N5Y 4W5 | Canada | |||||||
1566 | 10007 170th St NW | Edmonton | AB | T5P 4R5 | Canada | |||||||
1567 | 113 Rideau St | Ottawa | ON | K1N 5X1 | Canada | |||||||
1568 | 158 Hwy, Unit 8 | Stoney Creek | ON | L8G 3V2 | Canada | |||||||
1569 | 7460 82nd Ave NW | Edmonton | AB | T6B 0G2 | Canada | |||||||
1570 | 62 Overlea Blvd, Unit 4B | Toronto | ON | M4H 1C4 | Canada | |||||||
1571 | 4604 MacLeod Trail SW | Calgary | AB | T2G 0A8 | Canada | |||||||
1572 | 748 Guelph Line | Burlington | ON | L7R 3N5 | Canada | |||||||
1573 | 1321 Archibald St | Winnipeg | MB | R2J 3A4 | Canada | |||||||
1574 | 471 Hazeldean Rd | Ottawa | ON | K2L 4B8 | Canada | |||||||
1575 | 13737 127th St NW | Edmonton | AB | T6V 1A8 | Canada | |||||||
1576 | 75 Ellesmere Rd, Unit B2 | Scarborough | ON | M1R 4B7 | Canada | |||||||
1577 | 2712 Keele St | Toronto | ON | M3M 2G1 | Canada |
1578 | 883 St Clair Ave W | Toronto | ON | M6C 1C4 | Canada | |||||||
1579 | 1795 St Clair Ave W | Toronto | ON | M6N 1J7 | Canada | |||||||
1581 | 3111 Dufferin St, Unit A | Toronto | ON | M6A 2S7 | Canada | |||||||
1582 | 11736 34th St NW | Edmonton | AB | T5W 1Z1 | Canada | |||||||
1583 | 2071 Steeles Ave W, Unit H1 | Toronto | ON | M3J 3N3 | Canada | |||||||
1584 | 2280 Islington Ave | Toronto | ON | M9W 3W8 | Canada | |||||||
1585 | 2250 50th Ave, Unit 1C | Red Deer | AB | T4R 1W5 | Canada | |||||||
1586 | 12 222 16th Ave NE | Calgary | AB | T2E 1J8 | Canada | |||||||
1589 | 647 Portage Ave, Unit 1 | Winnipeg | MB | R3B 2G4 | Canada | |||||||
1590 | 13737 72nd Ave, Unit 100 | Surrey | BC | V3W 2P2 | Canada | |||||||
1591 | 7287 Knight St | Vancouver | BC | V5P 2W9 | Canada | |||||||
1592 | 33 10556 King George Blvd | Surrey | BC | V3T 2X3 | Canada | |||||||
1593 | 20221 Fraser Hwy | Langley | BC | V3A 4E6 | Canada | |||||||
1595 | 8386 120 St, 103B | Surrey | BC | V3W 3N4 | Canada | |||||||
1596 | 740 Columbia St | Westminster | BC | V3M 1B4 | Canada | |||||||
1597 | 324 Guelph St | Georgetown | ON | L7G 4B5 | Canada | |||||||
1598 | 250 King George Rd, Unit 4 | Brantford | ON | N3R 5L5 | Canada | |||||||
1599 | 347 Bayfield St, Unit 2A | Barrie | ON | L4M 3C3 | Canada | |||||||
1600 | 4490 Fairview St, Unit D102-3 | Burlington | ON | L7L 5P9 | Canada | |||||||
1601 | 221 Woodlawn Rd W, Unit B7 | Guelph | ON | N1H 8P4 | Canada | |||||||
1602 | 3245 Finch Ave E | Scarborough | ON | M1W 4C1 | Canada | |||||||
1603 | 965 Talbot St, Unit D | St. Thomas | ON | N5P 1E8 | Canada | |||||||
1604 | 260 Geneva St | St. Catharines | ON | L2N 2E8 | Canada | |||||||
1605 | 451 Paul St | Dieppe | NB | E1A 6W8 | Canada | |||||||
1606 | 6758 Lundys Ln, Unit 2 | Niagara Falls | ON | L2G 1V5 | Canada | |||||||
1607 | 687 Queen St W | Toronto | ON | M6J 1E6 | Canada | |||||||
1608 | 44 Mapleview Dr W, Unit 2 | Barrie | ON | L4N 6L4 | Canada | |||||||
1609 | 525 Highland Rd W, Unit 2 | Kitchener | ON | N2M 5K1 | Canada | |||||||
1610 | 970 Upper James St | Hamilton | ON | L9C 3A5 | Canada | |||||||
1611 | 212A Queen St E | Brampton | ON | L6V 1B7 | Canada | |||||||
1612 | 736A Queenston Rd | Hamilton | ON | L8G 1A4 | Canada | |||||||
1613 | 576 Ritson Rd S | Oshawa | ON | L1H 5K7 | Canada | |||||||
1614 | 13552 97 St NW | Edmonton | AB | T5E 4E2 | Canada | |||||||
1615 | 15640 Stony Plain Rd | Edmonton | AB | T5P 3Z4 | Canada | |||||||
1618 | 6060 Memorial Dr NE, Unit 18 | Calgary | AB | T2A 5Z5 | Canada | |||||||
1619 | 371 Wellington Rd S, Unit A | London | ON | N6C 4P9 | Canada | |||||||
1620 | 644 Portland St, Unit 4 | Dartmouth | NS | B2W 2M3 | Canada | |||||||
1621 | 6219 Centre St NW, Unit 10A | Calgary | AB | T2K 0V2 | Canada | |||||||
1622 | 158 Dundas St | London | ON | N6A 1G1 | Canada | |||||||
1623 | 1015 Granville St | Vancouver | BC | V6Z 1L4 | Canada | |||||||
1624 | 1248 Robson St | Vancouver | BC | V6E 1C1 | Canada | |||||||
1625 | 5010 4th St NE, Unit 26 | Calgary | AB | T2K 5X8 | Canada | |||||||
1626 | 3703 17th Ave SE | Calgary | AB | T2A 0S1 | Canada | |||||||
1627 | 100 6061 No 3 Road | Richmond | BC | V6Y 2B2 | Canada | |||||||
1628 | 1192 Burrard St | Vancouver | BC | V6Z 1Y7 | Canada | |||||||
1629 | 13040 50th Street NW | Edmonton | AB | T5A 4V9 | Canada | |||||||
1630 | 7475 Tecumseh Rd E | Windsor | ON | N8T 1G2 | Canada | |||||||
1631 | 9250 MacLeod Trail SE, Bay 18 | Calgary | AB | T2J 0P5 | Canada |
1632 | 3 Harwood Ave S, Unit 1-2 | Ajax | ON | L1S 2C1 | Canada | |||||||
1633 | 1593 Bank St | Ottawa | ON | K1H 7Z3 | Canada | |||||||
1634 | 304 Dunlop St W, Units 11-13 | Barrie | ON | L4N 7N2 | Canada | |||||||
1635 | 101 1050 Terminal Ave N | Nanaimo | BC | V9S 4K4 | Canada | |||||||
1636 | 101 1483 Douglas St | Victoria | BC | V8W 2G1 | Canada | |||||||
1637 | 844 Niagara St, Unit A, Bldg C | Welland | ON | L3C 1M3 | Canada | |||||||
1638 | 3214 Douglas St, Unit 202 | Victoria | BC | V8Z 3K6 | Canada | |||||||
1639 | 2490 Main St | Vancouver | BC | V5T 3E2 | Canada | |||||||
1640 | 1248 London Rd | Sarnia | ON | N7S 1P5 | Canada | |||||||
1641 | 997 St Laurent Blvd | Ottawa | ON | K1K 3B1 | Canada | |||||||
1643 | 2390 East Hastings St | Vancouver | BC | V5L 1V5 | Canada | |||||||
1644 | 2659 Dundas St W | Toronto | ON | M6P 1X9 | Canada | |||||||
1645 | 1771 Queen St E | Brampton | ON | L6T 4S3 | Canada | |||||||
1646 | 276 Rexdale Blvd | Etobicoke | ON | M9W 1R2 | Canada | |||||||
1647 | 3095 Robie St | Halifax | NS | B3K 4P7 | Canada | |||||||
1648 | 1375 Huron Church Rd | Windsor | ON | N9C 2B4 | Canada | |||||||
1649 | 475 Albert St | Regina | SK | S4R 2P1 | Canada | |||||||
1650 | 1080 Memorial Ave | Thunder Bay | ON | P7B 4A3 | Canada | |||||||
1651 | 820 Red River Rd | Thunder Bay | ON | P7B 1K2 | Canada | |||||||
1652 | 947 Lansdowne St W | Peterborough | ON | K9J 1Z5 | Canada | |||||||
1653 | 52 Elm St | Sudbury | ON | P3C 1S7 | Canada | |||||||
1654 | 851 Danforth Ave | Toronto | ON | M4J 1L2 | Canada | |||||||
1655 | 2720 Mayor Magrath Dr S | Lethbridge | AB | T1K 7J5 | Canada | |||||||
1656 | 460 Main St W | Hamilton | ON | L8P 1K5 | Canada | |||||||
1657 | 3202 Dunmore Rd SE | Medicine Hat | AB | T1B 2X2 | Canada | |||||||
1658 | 78 Gordon St | Guelph | ON | N1H 4H4 | Canada | |||||||
1659 | 677 Princess St | Kingston | ON | K7L 1E6 | Canada | |||||||
1660 | 22444 Lougheed Hwy | Maple Ridge | BC | V2X 2T6 | Canada | |||||||
1661 | 2115 22nd St W | Saskatoon | SK | S7M 0V2 | Canada | |||||||
1662 | 5587 Yonge St | North York | ON | M2N 5S4 | Canada | |||||||
1663 | 1303 3 Ave S | Lethbridge | AB | T1J 0K4 | Canada | |||||||
1664 | 33258 S Fraser Way | Abbotsford | BC | V2S 2B3 | Canada | |||||||
1665 | 357 Great Northern Rd | Sault Ste. Marie | ON | P6B 4Z8 | Canada | |||||||
1666 | 2000 St Joseph Blvd | Orleans | ON | K1C 1E6 | Canada | |||||||
1667 | 2090 Harvey Ave | Kelowna | BC | V1Y 8P8 | Canada | |||||||
1668 | 1501 Idylwyld Dr | Saskatoon | SK | S7L 1A9 | Canada | |||||||
1669 | 808 Sackville Dr | Lower Sackville | NS | B4E 1R7 | Canada | |||||||
1670 | 550 Arthur St W | Thunder Bay | ON | P7E 5R4 | Canada | |||||||
1671 | 11802 Jasper Ave NW | Edmonton | AB | T5K 0N7 | Canada | |||||||
1672 | 2017 Robertson Rd | Ottawa | ON | K2H 5Y7 | Canada | |||||||
1673 | 1315 Richmond Rd | Ottawa | ON | K2B 8J7 | Canada | |||||||
1674 | 101 Victoria Avenue, Unit 25 | Regina | SK | S4N 0N3 | Canada | |||||||
1675 | 7686 Hurontario St | Brampton | ON | L6Y 5B5 | Canada | |||||||
1676 | 2031 Cassells St | North Bay | ON | P1B 4E1 | Canada | |||||||
1677 | 3601 Lawrence Ave E, Unit 2 | Scarborough | ON | M1G 1P5 | Canada | |||||||
1678 | 360 Norwich Ave, Unit 5 | Woodstock | ON | N4S 3W2 | Canada | |||||||
1679 | 789 Fortune Dr, Unit 20 | Kamloops | BC | V2B 2L3 | Canada | |||||||
1680 | 6912 Kingsway | Burnaby | BC | V5E 1E6 | Canada |
1681 | 35 Front St S | Orillia | ON | L3V 4S1 | Canada | |||||||
1682 | 1549 Dundas St E | Whitby | ON | L1N 2K6 | Canada | |||||||
1683 | 1 Hespeler Rd, Unit B01001A | Cambridge | ON | N1R 8L4 | Canada | |||||||
1684 | 120 45863 Yale Rd | Chilliwack | BC | V2P 2N6 | Canada | |||||||
1686 | 303 51st St E | Saskatoon | SK | S7K 8G2 | Canada | |||||||
1687 | 196 Dalhousie St, Unit 1 | Brantford | ON | N3S 3T7 | Canada | |||||||
1688 | 735 The Queensway | Etobicoke | ON | M8Z 1M8 | Canada | |||||||
1689 | 6614 127 Ave NW | Edmonton | AB | T5C 1P9 | Canada | |||||||
1690 | 581 Ryan Road, Unit 2 | Courtenay | BC | V9N 3R5 | Canada | |||||||
1691 | 274 N Front St | Belleville | ON | K8P 3C4 | Canada | |||||||
1692 | 5852 Trans-Canada Hwy | Duncan | BC | V9L 3S1 | Canada | |||||||
1693 | 210 15th St W | Prince Albert | SK | S6V 3P8 | Canada | |||||||
1694 | 905 37 St SW | Calgary | AB | T3C 1S4 | Canada | |||||||
1695 | 1575 Eglinton Ave W | Toronto | ON | M6E 2G9 | Canada | |||||||
1696 | 5890 Main St | Niagara Falls | ON | L2G 5Z8 | Canada | |||||||
1697 | 12405 107 Ave | Edmonton | AB | T5M 0Z2 | Canada | |||||||
1698 | 239 Scarlett Rd | Toronto | ON | M6N 4K8 | Canada | |||||||
1699 | 648 King St W | Kitchener | ON | N2G 1E1 | Canada | |||||||
1700 | 400 Steeles Ave E, Unit 6 | Brampton | ON | L6W 3R2 | Canada | |||||||
1701 | 525 Grand Ave W | Chatham | ON | N7L 1C5 | Canada | |||||||
1703 | 6172 Bathurst St | Toronto | ON | M2R 2A2 | Canada | |||||||
1704 | 72 Lakeshore Dr | North Bay | ON | P1A 2A6 | Canada | |||||||
1705 | 906 Marine Dr | Vancouver | BC | V7P 1R9 | Canada | |||||||
1706 | 10737 Yonge St, Unit 1 | Richmond Hill | ON | L4C 9M9 | Canada | |||||||
1707 | 320 Speers Rd | Oakville | ON | L6K 3R9 | Canada | |||||||
1708 | 1735 Kipling Ave | Toronto | ON | M9R 2Y8 | Canada | |||||||
1709 | 3104 27th St, Unit 4 | Vernon | BC | V1T 4M6 | Canada | |||||||
1710 | 1475 Prairie Ave, Suite 2130 | Port Coquitlam | BC | V3B 1T3 | Canada | |||||||
2500 | 410 Brixton Rd | Brixton | LD | SW97AW | United Kingdom | |||||||
2501 | 232 Kilburn High Rd | Kilburn | LD | NW6 4JP | United Kingdom | |||||||
2502 | 119 Peckham High St | Peckham | LD | SE15 5SL | United Kingdom | |||||||
2503 | 8-10 Cranbrook Rd | Ilford | LD | IG1 4DJ | United Kingdom | |||||||
2504 | 269-271 Walworth Ave | Walworth | LD | SE17 1RL | United Kingdom | |||||||
2505 | 60 Uxbridge Rd | Shepherds Bush | LD | W12 8LP | United Kingdom | |||||||
2506 | 135A High Street N | East Ham | LD | E6 1HZ | United Kingdom | |||||||
2507 | 19 The Broadway High Rd | Wood Green | LD | N22 6DS | United Kingdom | |||||||
2511 | 48 Kingsland High St | Dalston | LD | E8 2JP | United Kingdom | |||||||
2512 | 100B Bull St | Birmingham | W Mid | B4 7AA | United Kingdom | |||||||
2513 | 49 Upper Parliament St | Nottingham | NG | NG1 2AB | United Kingdom | |||||||
2519 | 3-5 The Bridge | Walsall | W Mid | WS1 1LG | United Kingdom | |||||||
2520 | 105a Commercial Rd | Portsmouth | Ham | PO1 1BQ | United Kingdom | |||||||
2521 | 530 High Rd | Wembley | LD | HA9 7BS | United Kingdom | |||||||
2522 | 83 Above Bar St | Southampton | Ham | So14 7FG | United Kingdom | |||||||
2523 | 175 North End | Croydon | Sur | CR0 1TP | United Kingdom | |||||||
2524 | 135 Commercial St | Newport | Gwent | NP20 1LY | United Kingdom | |||||||
9001 | 3527 N Ridge Rd | Wichita | KS | 67205 | United States | |||||||
9002 | 3531 N Ridge Rd, 2nd Floor | Wichita | KS | 67205 | United States | |||||||
9003 | 3611 N Ridge Rd, Suite 101 & 103 | Wichita | KS | 67206 | United States |
9004 | 3607 N Ridge Rd, Suite 106 | Wichita | KS | 67205 | United States | |||||||
9005 | 8400 E 32nd St N | Wichita | KS | 67226 | United States | |||||||
9008 | 30-34 Houndsgate | Nottingham | BX | NG1 7AB | United Kingdom | |||||||
9011 | 14 Low St | Keighley | BX | BD21 3PN | United Kingdom | |||||||
9012 | 400 Carlingview Dr | Toronto | ON | M9W 5X9 | Canada | |||||||
9013 | 3615 N Ridge Rd | Wichita | KS | 67205 | United States | |||||||
9014 | 31 Wellington St | Leeds | BX | LS1 4DL | United Kingdom | |||||||
9015 | 7330 W 33rd Street N | Wichita | KS | 67205 | United States | |||||||
9016 | 440 N Wells Street, Suite 800 | Chicago | IL | 60654 | United States |
|
- closed location, under lease |
SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION
(AND WHETHER A REGISTERED ORGANIZATION), JURISDICTION OF
ORGANIZATION, LOCATION, ORGANIZATIONAL IDENTIFICATION
NUMBERS AND FEDERAL EMPLOYER IDENTIFICATION NUMBERS
Assignors | ||||||||||||
Exact Legal Name of Each Assignor |
Type of
|
Registered
|
Jurisdiction
|
Assignors Location (for purposes
|
Assignors Organization Identification Number (or, if it has none, so indicate) |
Federal
|
||||||
Curo Financial Technologies Corp. | Corporation | Yes | Delaware | 3527 North Ridge Road, Wichita, Kansas 67205 | Delaware: 4568552 |
[****] |
||||||
Curo Intermediate Holdings Corp. | Corporation | Yes | Delaware | 3527 North Ridge Road, Wichita, Kansas 67205 | Delaware: 4575800 |
[****] |
||||||
Todd Financial, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C315-2004 |
[****] |
||||||
Curo Management LLC | Limited Liability Company | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: LLC15783- 2002 |
[****] |
||||||
FMMR Investments, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: E01475820 06-4 |
[****] |
||||||
Evergreen Financial Investments, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C28559- 2001 |
[****] |
||||||
Principal Investments, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C24603- 2002 |
[****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
- 3 -
Todd Car Title, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C603-2004 | [****] | ||||||
Speedy Cash | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C20087- 1998 | [****] | ||||||
Advance Group, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C11137- 1999 | [****] | ||||||
Concord Finance, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C12543- 2002 | [****] | ||||||
SCIL, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: E04827920 06-5 | [****] | ||||||
Cash Colorado, LLC | Limited Liability Company | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C12636- 2003 | [****] | ||||||
Galt Ventures, LLC | Limited Liability Company | Yes | Kansas | 3527 North Ridge Road, Wichita, Kansas 67205 | Kansas: 4234100 | [****] | ||||||
A Speedy Cash Car Title Loans, LLC | Limited Liability Company | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | C912-2001 | [****] | ||||||
SCIL Texas, LLC | Limited Liability Company | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | E00391120 07-9 | [****] | ||||||
Attain Finance, LLC | Limited Liability Company | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: E04998420 09-4 | [****] | ||||||
SC Aurum, LLC | Limited Liability Company | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: E04927820 09-9 | [****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
- 4 -
Speedy Cash Illinois, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: E0 291302012-5 | [****] | ||||||
SC Texas MB, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: E0376982012-7 | [****] | ||||||
The Money Store, L.P. | Limited partnership | Yes | Texas | 3527 North Ridge Road, Wichita, Kansas 67205 | Texas: 7422197024 | [****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
- 5 -
SCHEDULE OF TRADE AND FICTITIOUS NAMES
Name of Assignor |
Trade and/or Fictitious Names |
|
Curo Intermediate Holdings Corp. | Speedy Cash | |
Curo Intermediate Holdings Corp. | Rapid Cash | |
Attain Finance, LLC | OPT+ |
- 6 -
DESCRIPTION OF CERTAIN SIGNIFICANT TRANSACTIONS OCCURRING WITHIN
ONE YEAR PRIOR TO THE DATE OF THE SECURITY AGREEMENT
None.
- 7 -
Schedule of Deposit Accounts that are Concentration Accounts
Loan Party |
Bank |
Account
Number |
Account purpose | |||
Attain Finance LLC | Axiom Bank | [****] | Load Fund-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | ACH Fund-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Pool Fund-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Revenue-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Reserve-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Bill Pay-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Chargeback-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Visa Settlement-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | MC Settlement-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Overdraft-Attain | |||
Attain Finance LLC |
Metropolitan Commercial
Bank |
[****] |
Cardholder Pooled Funds -
Attain |
|||
Attain Finance LLC |
Metropolitan Commercial
Bank |
[****] | Reserve - Attain | |||
Attain Finance LLC |
Metropolitan Commercial
Bank |
[****] | Settlement - Attain | |||
Attain Finance LLC |
Metropolitan Commercial
Bank |
[****] | Operating - Attain | |||
Attain Finance LLC |
Metropolitan Commercial
Bank |
[****] | Adjustments - Attain | |||
Attain Finance LLC |
Metropolitan Commercial
Bank |
[****] | Revenue - Attain | |||
CFTC Finance, Inc. | Wells Fargo | [****] | CFTC Finance Inc | |||
Concord Finance, Inc. | Wells Fargo | [****] | Concord Concentration | |||
Curo Group Holdings Corp | Wells Fargo | [****] | Curo Group Holdings | |||
Curo Intermediate Holdings Corp. | Wells Fargo | [****] |
Curo Intermediate
Holdings |
|||
Curo Management, LLC | Wells Fargo | [****] | Curo Payroll | |||
Curo Management, LLC | Wells Fargo | [****] | Curo Concentration | |||
Curo Management, LLC | Wells Fargo | [****] | Curo Payables | |||
Curo Management, LLC | Wells Fargo | [****] | Curo HCA | |||
Curo Management, LLC | Wells Fargo | [****] | Bill Pay Account | |||
Curo Management, LLC | Wells Fargo | [****] | Money Order Account | |||
Curo Management, LLC | Wells Fargo | [****] | MoneyGram Account | |||
Curo Management, LLC | Wells Fargo | [****] | Credit Card Account | |||
Curo Management, LLC | Wells Fargo | [****] | Miscellaneous Account | |||
Curo Management, LLC | Wells Fargo | [****] | ACH Account | |||
Curo Management, LLC | Wells Fargo | [****] | Store Depository Account | |||
SC Aurum, LLC | Wells Fargo | [****] | SC Aurum | |||
SCIL Texas, LLC | Wells Fargo | [****] | SCIL TX Concentration | |||
SCIL, Inc | Wells Fargo | [****] | SCIL Concentration | |||
Speedy Cash, Inc. | Wells Fargo | [****] |
Speedy Cash Illinois -
Operating Acct |
|||
The Money Store, LP | Wells Fargo | [****] |
Speedy Cash Inc - Auction
Proceeds |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
- 8 -
EXHIBIT J
FORM OF SOLVENCY CERTIFICATE
See attached.
16
Execution Version
SOLVENCY CERTIFICATE
November 17, 2016
THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:
1. I, Donald F. Gayhardt Jr., in my capacity as an officer of Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. ( Borrower ), A Speedy Cash Car Title Loans, LLC ( Speedy Car Title ), Advance Group, Inc. ( Advance ), Cash Colorado, LLC ( Cash Colorado ), Concord Finance, Inc., ( Concord ), FMMR Investments, Inc. ( FMMR ), Galt Ventures, LLC ( Galt ), Principal Investments, Inc., ( Principal ), SCIL, Inc. ( SCIL ), Speedy Cash ( Speedy Cash ), Speedy Cash Illinois, Inc. ( Speedy Cash Illinois ) and Todd Car Title, Inc. ( Todd Car Title and together with Speedy Car Title, Advance, Cash Colorado, Concord, FMMR, Galt, Principal, SCIL, Speedy Cash and Speedy Cash Illinois, the Originators ) hereby give this certificate not individually but solely in my capacity as President & Chief Executive Officer of each of Holdings, the Borrower, and the Originators in connection with the execution, delivery and performance by the Borrower of that certain Short-Term Credit Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement ), by and among Holdings, Borrower, Victory Park Management, LLC, as agent for Lenders, and the financial institutions from time to time party thereto as Lenders, and each of the other Credit Documents. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Credit Agreement.
2. I am familiar with the business and financial affairs of Holdings, Borrower and the Originators, including, without limiting the generality of the foregoing, the transactions contemplated by the Loan Agreement and the other Credit Documents.
3. Based upon my review and examination of the business and financial affairs of Holdings, the Borrower, and the Originators on a consolidated basis, after giving effect to the transactions contemplated by the Credit Documents (including, without limitation, the making of Loans to be made on the Closing Date), Holdings, Borrower, and the Originators are, on a consolidated basis, solvent.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
The foregoing certifications are made and delivered as of the date set forth above.
/s/ Donald F. Gayhardt Jr. |
Name: Donald F. Gayhardt Jr. |
Title: President & Chief Executive Officer |
[Signature Page to Solvency Certificate]
EXHIBIT K
COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered to you pursuant to Section 9.01(g) of the Credit Agreement, dated as of November 17, 2016 (as amended, supplemented or modified from time to time, the Credit Agreement ), among Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. (the Borrower ), the lenders from time to time party thereto and Victory Park Management, LLC, as Administrative Agent. Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined.
1. I am the duly elected, qualified and acting of Holdings [insert title of the respective Authorized Officer].
2. I have reviewed and am familiar with the contents of this Compliance Certificate. I am providing this Compliance Certificate solely in my capacity as an officer of Holdings. The matters set forth herein are true to the best of my knowledge after due inquiry.
3. [No Default or Event of Default has occurred and is continuing]. 1
4. Attached hereto as ANNEX 1 are the computations showing (in reasonable detail) compliance with the provisions of Sections 10.02(iv), 10.03(v), 10.03(vii), 10.03(x), 10.04(iv), 10.04(vii), 10.04(ix), 10.04(xvi), 10.04(xvii), 10.04(xviii), 10.05(v), 10.05(xviii), 10.05(xx) and 10.07.
5. Attached hereto as ANNEX 2 are the computations showing the amount of the Available Basket Amount at the end of the period covered by such financial statements, and all sources and uses of proceeds relating to the calculations thereof changing during the period covered by such statements.
6. [There have been no changes to Annexes C through F, and Annexes I through K, in each case of the Security Agreement and Annexes A through F of the Pledge Agreement, in each case since the Effective Date or, if later, since the date of the most recent certificate delivered pursuant to this Section 9.01(g)]. 2
7. Set forth as ANNEX 3 in reasonable detail are any material and adverse changes to the state or federal statutes, regulations, orders or restrictions relating to usury, consumer lending, check cashing, debt collection, credit reporting or similar consumer finance activities in each case to the extent applicable to Holdings or any of its Subsidiaries in the states in which Holdings or any of its Subsidiaries engage in such activities to the extent that Holdings or any of
1 | If a Default has occurred and is continuing the certificate shall specify the nature and extent thereof |
2 | if there have been any such changes, list in reasonable detail such changes (but, in each case with respect to this clause (iii), only to the extent that such changes are required to be reported to the Collateral Agent pursuant to the terms of such Security Documents) and whether Holdings and the other Credit Parties have otherwise taken all actions required to be taken by them pursuant to such Security Documents in connections with any such changes |
1
its Subsidiaries has knowledge of any such changes after conducting a reasonable and good faith inquiry
[Remainder of page intentionally left blank]
2
IN WITNESS WHEREOF, I have executed this Compliance Certificate this day of 2016.
CURO INTERMEDIATE HOLDINGS CORP. | ||
By: | ||
Name: | ||
Title: |
3
ANNEX 1
Covenant Calculations
The information described herein is as of , (the Computation Date ) 3 and pertains to (i) in the case of items I.A, I.B, I.C and I.D below, the respective amount outstanding as of the Computation Date, and (ii) in the case of items I.E., below, the period from , to , (the Test Period )
3 | Insert the last day of the respective fiscal quarter or year covered by the financial statements which are required to be accompanied by this Compliance Certificate. |
4 | Dividends to Holdings to redeem Holdings Stock |
5 | Aggregate amount in the last twelve-month period. |
6 | Aggregate amount since the Effective Date. |
7 | Dividends to payoff fractional shares in convertible equity of Holdings |
8 | Aggregate amount since the Effective Date. |
9 | Aggregate amount since the Effective Date |
4
(iii) 10.04(ix)
|
$ | (no maximum) | ||
(iv) 10.04(xvi) |
$ | $15,000,000 | ||
(iv) 10.04(xvii) |
$ | $10,000,000 | ||
D. Investments (Section 10.05) | ||||
Section |
||||
(i) 10.05(v) |
$ | $500,000 | ||
(ii) 10.05(xviii) |
$ | (see 10.05(xviii) for leverage | ||
and liquidity calculations | ||||
determining maximum | ||||
amount) | ||||
(iii) 10.05(xx) |
$ | $10,000,000 | ||
E. Financial Covenants (Section 10.07) |
||||
(i) 10.07(a) |
% |
Trailing Excess Yield 10 |
||
calculated as of the last day of | ||||
each fiscal month shall not be | ||||
less than 225% | ||||
(ii) 10.07(b) |
% | Trailing Net Loss Rate 11 | ||
calculated as of the last day of | ||||
each fiscal month shall not be | ||||
greater than 10% |
10 | Trailing Excess Yield means, as of any date of determination, the average, for each of the three immediately preceding completed fiscal months, of the rate, (x) expressed as a percentage equal to a fraction, (a) the numerator of which is the sum of Collections constituting principal with respect to all Curo Receivables for such fiscal month, and (b) the denominator of which is the aggregate principal balance of all Curo Receivables at the opening of such fiscal month and (y) multiplied by 12 |
11 | Trailing Net Loss Rate means, as of any date of determination, the average, for each of the three immediately preceding completed fiscal months, of the rate, (x) expressed as a percentage equal to a fraction, (a) the numerator of which is the Net Loss with respect to all Curo Receivables for such fiscal month, and (b) the denominator of which is the aggregate principal balance of all Curo Receivables at the opening of such fiscal month and (y) multiplied by 12. |
5
ANNEX 2 | ||||||
Available Amount | ||||||
Available Amount Calculations: | ||||||
a. | (I) 50% of the Modified Consolidated Net Income for the period (taken as one accounting period) beginning on the first day of the first fiscal quarter of Holdings occurring after the Effective Date and ending on the last day of the most recently ended fiscal quarter of Holdings for which financial statements are available at the date of determination (or, if such Modified Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus | $ | . | |||
b. | (II) 100% of the aggregate net cash proceeds received by Holdings from the issuance or sale of its Equity Interests (not prohibited by the terms of Section 10.11(a)) subsequent to the Effective Date (other than an issuance or sale to a Subsidiary of Holdings) and 100% of any cash capital contribution received by Holdings from its shareholders subsequent to the Effective Date, provided that any amounts described in sub-clause (b) of Section 10.03(v), Section 10.03(vi), Section 10.05(xvii) and Section 10.09(iv)(b) shall be excluded from this sub-clause (II), plus | $ | . | |||
c. | (III) the amount by which the principal amount of any Indebtedness of Holdings or any of its Subsidiaries is reduced upon the conversion or exchange (other than by any Subsidiary of Holdings) subsequent to the Effective Date of any such Indebtedness that is convertible or exchangeable for Equity Interests (the issuance of which are not prohibited by the terms of Section 10.11(a)) of Holdings (less the amount of any cash, or the fair value of any other property, distributed by Holdings or any of its Subsidiaries upon such conversion or exchange); provided , however , that the foregoing amount shall not exceed: the net cash proceeds received by Holdings or any of its Subsidiaries from the sale of such Indebtedness (excluding net cash proceeds from sales to any Subsidiary of Holdings), plus | $ | . | |||
d. | the amount equal to the sum of (x) the net reduction in the Restricted Investments made by Holdings or any of its Subsidiaries in any Person (other than a Subsidiary of Holdings) resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds realized on the sale or other disposition of such Investment and proceeds representing the return of capital (excluding any such amounts to the extent included in the calculation of Modified Consolidated Net Income), | $ | . |
1
in each case realized by Holdings or any of its Subsidiaries, and (y) in the event that any Unrestricted Subsidiary of Holdings is re-designated as a Subsidiary, the portion (proportionate to Holdings Equity Interest in such Subsidiary) of the Fair Market Value of the net assets of such Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Subsidiary; provided , however , that the foregoing sum under this clause d will not exceed, in the case of any such Person, the amount of Restricted Investments previously made by Holdings or any of its Subsidiaries in such Person or Unrestricted Subsidiary, | ||||||
e. | 100% of any cash dividends received by the Borrower or any Subsidiary Guarantor after the Effective Date from an Unrestricted Subsidiary, to the extent such dividends were not otherwise included in the calculation of Consolidated Net Income for such period, plus | $ | . | |||
f. | 40,000,000, minus | $ | . | |||
g. | B) the sum of (I) the aggregate amount of Investments made pursuant to Section 10.05(xviii) since the Effective Date, plus (II) the aggregate amount of Dividends paid pursuant to Section 10.03(x) since the Effective Date plus (III) the aggregate amount of prepayments, redemptions, repurchases or acquisitions of any Indebtedness made pursuant to Section 10.09(iv)(c) since the Effective Date | $ | . | |||
TOTAL: | $ | . |
2
ANNEX 3
Material Adverse changes in Law
1
EXHIBIT L
FORM OF ASSIGNMENT
AND
ASSUMPTION AGREEMENT 13
This Assignment and Assumption Agreement (this Assignment ), is dated as of the Effective Date set forth below and is entered into by and between [the] [each] Assignor identified in item [1][2] below ([the] [each, an] Assignor ) and [the] [each] Assignee identified in item 2 below ([the] [each, an] Assignee ). [It is understood and agreed that the rights and obligations of such [Assignees][and Assignors] hereunder are several and not joint.] Capitalized terms used herein but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, restated, supplemented and/or otherwise modified from time to time, the Credit Agreement ). The Standard Terms and Conditions for Assignment and Assumption Agreement set forth in Annex 1 hereto (the Standard Terms and Conditions ) are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full.
For an agreed consideration, [the] [each] Assignor hereby irrevocably sells and assigns to [the] [each] Assignee, and [the] [each] Assignee hereby irrevocably purchases and assumes from [the][each] Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, the interest in and to all of [the] [each] Assignors rights and obligations under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the [respective] Assignors outstanding rights and obligations under the respective Tranches identified below ([the] [each, an] Assigned Interest ). [Each] [Such] sale and assignment is without recourse to [the] [any] Assignor and, except as expressly provided in this Assignment, without representation or warranty by [the] [any] Assignor.
[1. |
Assignor: |
|||
2. |
Assignee: |
] 14 | ||
[1][3]. Credit Agreement: | Credit Agreement, dated as of November 17, 2016, among Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. (the Borrower ), the lenders from time to time party thereto, and Victory Park Management, LLC, as Administrative Agent. |
13 | This Form of Assignment and Assumption Agreement should be used by Lenders for an assignment to a single Assignee or to funds managed by the same or related investment managers. |
14 | If the form is used for a single Assignor and Assignee, items 1 and 2 should list the Assignor and the Assignee, respectively. In the case of an assignment to funds managed by the same or related investment managers, or an assignment by multiple Assignors, the Assignors and the Assignee(s) should be listed in the table under bracketed item 2 below. |
2
[2. | Assigned Interest: 15 |
Assignor |
Assignee |
Aggregate Amount of Total Loan Commitment |
Amount of Loan Commitment |
|||
[Name of Assignor] |
[Name of Assignee] |
|
|
|||
[Name of Assignor] |
[Name of Assignee] |
|
|
15 | Insert this chart if this Form of Assignment and Assumption Agreement is being used for assignments to funds managed by the same or related investment managers or for an assignment by multiple Assignors. Insert additional rows as needed. |
3
Exhibit O
Form of Monthly Statement
(See attached)
4
AVAILABILITY STATEMENT
CURO Receivables Finance I, LLC
Commitment Amount: |
$ | [ | ] | |||||||||||
Reporting Period Ending: |
[ | ] | ||||||||||||
Part I: Availability Calculation |
3 |
Total |
||||||||||||
1a. Gross Prin Receivables Ending Balance: |
[ ] | |||||||||||||
Accrued and Payable Interest |
[ ] | |||||||||||||
1b. Gross Receivables Ending Balance: |
[ ] | |||||||||||||
|
||||||||||||||
2. Less Additional Items: |
||||||||||||||
a) Unearned Fees |
[ ] | |||||||||||||
b) Other |
| |||||||||||||
|
||||||||||||||
TOTAL ADDITIONAL ITEMS |
[ ] | |||||||||||||
|
||||||||||||||
3. Total Receivables, Net of Additional Items |
[ ] |
|||||||||||||
|
||||||||||||||
4. Less Ineligibles (from Part II): |
||||||||||||||
a) Ineligible Receivables |
[ ] | |||||||||||||
b) Concentration Ineligibles |
[ ] | |||||||||||||
|
||||||||||||||
TOTAL INELIGIBLES |
[ ] | |||||||||||||
|
||||||||||||||
5. Total Eligible Receivables |
[ ] | |||||||||||||
|
||||||||||||||
6. Advance Rate, including any CPI adjustment: |
[ ] % | |||||||||||||
7. Total Advance Availabilty |
[ ] | |||||||||||||
7b. Minimum Availability Reserve |
[ ] | |||||||||||||
7c. Regulatory Reserve |
[ ] | |||||||||||||
|
||||||||||||||
8. Total Cash Availability |
[ ] | |||||||||||||
8b. Max Commitment |
[ ] | |||||||||||||
9. Estimated Funding on Closing |
[ ] | |||||||||||||
|
||||||||||||||
10. Additional Cash Available at End of Period |
[ ] | |||||||||||||
|
AVAILABILITY STATEMENT (cont.)
Appendix A
A. Ineligible Receivables
Ineligibles |
||||
1. | Accounts 30 or more days delinquent or charged-off. | |||
2. |
Accounts to employees, dealers, affiliates (other than their employees) or shareholders other than on an arms length basis. |
|||
3. | Accounts with respect to which customer is not a natural person domiciled in the United States. | |||
4. | Accounts not denominated in U.S. Dollars. | |||
5. | Accounts involved in litigation or subject to legal proceedings. | |||
6. | Accounts with a balloon payment and/or non-amortizing accounts. | |||
7. | Accounts with original terms in excess of 48 months. | |||
8. | Accounts acquired that are not in compliance with Borrowers or Guarantors Credit Policy. | |||
9. | Accounts that violate applicable consumer protection or usury laws. | |||
10. | Accounts where customer has missed the first payment date. | |||
11. | Accounts with respect to which any obligations of the obligor or any affiliates remains outstanding. | |||
12. |
Accounts that are subject to assignment or confidentiality restrictions. |
| ||
13. |
Loans made to residents in states where Company was not licensed as required by applicable state law when such loan was made. |
| ||
14. | Accounts that are single-pay accounts. | |||
15. | Accounts that are open-ended or are able to roll. | |||
16. | Unsecured Accounts with a principal amount greater than $25,000. | |||
17. | Accounts that have been modified | |||
18. | Accounts where the Borrower acts or acted as a credit services organization or credit access business | |||
19. | Accounts originated in ineligible states | | ||
Exclusion List | ||||
|
||||
TOTAL INELIGIBLE RECEIVABLES |
||||
|
Appendix B
B. Excess Concentration Amounts
Current | Maximum | Overage | %Utilized | |||||||||||||||
1. |
Accounts where the original term is greater than 9 months in excess of 75% of all eligible accounts. |
|||||||||||||||||
2. |
Title accounts in excess of 55% of all eligible accounts. |
|||||||||||||||||
3. |
Second-Lien title Accounts in excess of 35% of all eligible accounts. |
|||||||||||||||||
4. |
Title Accounts with the lowest interest rate until the weighted average rate of all eligible title accounts is at or above 95%. |
|||||||||||||||||
5. |
Accounts constituting unsecured accounts with the lowest interest rate until the weighted average interest rate is at or above 200%. |
|||||||||||||||||
6. |
Accounts with the lowest FICO score until the weighted average FICO score is at or above 575. |
|||||||||||||||||
7. |
Accounts with the longest original term until the weighted average original term is at or below 30 months. |
|||||||||||||||||
8. |
Accounts with the highest original principal balance until the average original balance is at or below $800. |
|||||||||||||||||
9. |
Accounts where the applicable obligors have monthly income less than $2,000 in excess of 30% of the principal receivables balance. |
|||||||||||||||||
10. |
Aggregate online accounts in excess of 30% of the principal balance of all eligible accounts. |
|||||||||||||||||
11. |
Aggregate accounts originated in California in excess of 60% of the principal balance of all eligible accounts. |
|||||||||||||||||
|
|
|
|
|
|
|||||||||||||
TOTAL CONCENTRATION INELIGIBLES |
||||||||||||||||||
|
|
|
|
|
|
Exhibit O
Form of Borrowing Base Certificate
See attached.
5
AVAILABILITY STATEMENT
CURO Receivables Finance I, LLC
Commitment Amount: |
$ | [ | ] | |||||||||||
Reporting Period Ending: |
[ | ] | ||||||||||||
Part I: Availability Calculation |
||||||||||||||
3 | Total | |||||||||||||
|
||||||||||||||
1a. Gross Prin Receivables Ending Balance: |
[ ] | |||||||||||||
Accrued and Payable Interest |
[ ] | |||||||||||||
1b. Gross Receivables Ending Balance: |
[ ] | |||||||||||||
|
||||||||||||||
2. Less Additional Items: |
||||||||||||||
a) Unearned Fees |
[ ] | |||||||||||||
b) Other |
| |||||||||||||
|
||||||||||||||
TOTAL ADDITIONAL ITEMS |
[ ] | |||||||||||||
|
||||||||||||||
3. Total Receivables, Net of Additional Items |
[ ] | |||||||||||||
|
||||||||||||||
4. Less Ineligibles (from Part II): |
||||||||||||||
a) Ineligible Receivables |
[ ] | |||||||||||||
b) Concentration Ineligibles |
[ ] | |||||||||||||
|
||||||||||||||
TOTAL INELIGIBLES |
[ ] | |||||||||||||
|
||||||||||||||
5. Total Eligible Receivables |
[ ] | |||||||||||||
|
||||||||||||||
6. Advance Rate, including any CPI adjustment: |
|
[ ]% | ||||||||||||
7. Total Advance Availabilty |
[ ] | |||||||||||||
7b. Minimum Availability Reserve |
[ ] | |||||||||||||
7c. Regulatory Reserve |
[ ] | |||||||||||||
|
||||||||||||||
8. Total Cash Availability |
[ ] | |||||||||||||
8b. Max Commitment |
[ ] | |||||||||||||
9. Estimated Funding on Closing |
[ ] | |||||||||||||
|
||||||||||||||
10. Additional Cash Available at End of Period |
[ ] | |||||||||||||
|
AVAILABILITY STATEMENT (cont.)
Appendix A
A. | Ineligible Receivables | Ineligibles | ||
1. | Accounts 30 or more days delinquent or charged-off. | |||
2. |
Accounts to employees, dealers, affiliates (other than their employees) or shareholders other than on an arms length basis. |
|||
3. | Accounts with respect to which customer is not a natural person domiciled in the United States. | |||
4. | Accounts not denominated in U.S. Dollars. | |||
5. | Accounts involved in litigation or subject to legal proceedings. | |||
6. | Accounts with a balloon payment and/or non-amortizing accounts. | |||
7. | Accounts with original terms in excess of 48 months. | |||
8. | Accounts acquired that are not in compliance with Borrowers or Guarantors Credit Policy. | |||
9. | Accounts that violate applicable consumer protection or usury laws. | |||
10. | Accounts where customer has missed the first payment date. | |||
11. | Accounts with respect to which any obligations of the obligor or any affiliates remains outstanding. | |||
12. |
Accounts that are subject to assignment or confidentiality restrictions. |
| ||
13. |
Loans made to residents in states where Company was not licensed as required by applicable state law when such loan was made. |
| ||
14. | Accounts that are single-pay accounts. | |||
15. | Accounts that are open-ended or are able to roll. | |||
16. | Unsecured Accounts with a principal amount greater than $25,000. | |||
17. | Accounts that have been modified | |||
18. | Accounts where the Borrower acts or acted as a credit services organization or credit access business | |||
19. | Accounts originated in ineligible states | |||
Exclusion List | | |||
|
||||
TOTAL INELIGIBLE RECEIVABLES |
||||
|
Appendix B
B. Excess Concentration Amounts
Current | Maximum | Overage | %Utilized | |||||||||||||||
1. |
Accounts where the original term is greater than 9 months in excess of 75% of all eligible accounts. |
|||||||||||||||||
2. |
Title accounts in excess of 55% of all eligible accounts. |
|||||||||||||||||
3. |
Second-Lien title Accounts in excess of 35% of all eligible accounts. |
|||||||||||||||||
4. |
Title Accounts with the lowest interest rate until the weighted average rate of all eligible title accounts is at or above 95%. |
|||||||||||||||||
5. |
Accounts constituting unsecured accounts with the lowest interest rate until the weighted average interest rate is at or above 200%. |
|||||||||||||||||
6. |
Accounts with the lowest FICO score until the weighted average FICO score is at or above 575. |
|||||||||||||||||
7. |
Accounts with the longest original term until the weighted average original term is at or below 30 months. |
|||||||||||||||||
8. |
Accounts with the highest original principal balance until the average original balance is at or below $800. |
|||||||||||||||||
9. |
Accounts where the applicable obligors have monthly income less than $2,000 in excess of 30% of the principal receivables balance. |
|||||||||||||||||
10. |
Aggregate online accounts in excess of 30% of the principal balance of all eligible accounts. |
|||||||||||||||||
11. |
Aggregate accounts originated in California in excess of 60% of the principal balance of all eligible accounts. |
|||||||||||||||||
|
|
|
|
|
|
|||||||||||||
TOTAL CONCENTRATION INELIGIBLES |
||||||||||||||||||
|
|
|
|
|
|
Exhibit Q
Form of Funds Release Request
Reference is made to the Credit Agreement, dated as of November [_], 2016 (as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, the Credit Agreement ), among CURO Receivables Finance I, LLC (the Borrower ), the other Borrowers party thereto from time to time, Victory Park Management, LLC, as agent for Lenders and Holders (the Agent ), and the financial institutions from time to time party thereto as Lenders (collectively, the Lenders ). Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Credit Agreement.
Pursuant to Section 6.22 of the Credit Agreement, the Borrower desires that the Agent release funds in the Collection Account to the Borrower to purchase additional Eligible Receivables in accordance with the applicable terms and conditions of the Credit Agreement on [mm/dd/yy] (the Release Date ):
1. Amount Requested: $[ , , ]
The Borrower hereby certifies that:
(i) as of the date hereof and with regards to the Facility:
1. Facility Availability: $[ , , ]
(ii) as of the Release Date, Borrower has satisfied each of the conditions specified in Sections 2.1 and 2.7 of the Credit Agreement;
(iii) as of the Release Date, the representations and warranties, including financial covenants set forth in Section 6.4 of the Credit Agreement, made by Borrower under the Credit Agreement is accurate in all material respects (without duplication of any materiality qualifiers contained therein);
(iv) as of the Release Date, after giving effect to the requested release of funds from the Collection Account on the Release Date, no event has occurred and is continuing or would result from the consummation of the borrowing contemplated hereby that would constitute an Event of Default or a Default;
(v) as of the Release Date, the requested amount is in increments of One Million Dollars ($1,000,000);
6
(vi) as of the Release Date, after giving effect to the requested release of funds from the Collection Account on the Release Date, the aggregate outstanding principal amount of the Loans would not exceed the Commitments including the Loan Commitments;
(vii) after giving effect to the requested release of funds from the Collection Account and the purchase by the Borrower of additional Eligible Receivables on such Release Date, no Borrowing Base Deficiency shall exist;
(viii) as of the Release Date, a Regulatory Trigger Event with regards to any Credit Party shall not have occurred;
(ix) as of the Release Date, Borrower and Guarantors shall have paid or reimbursed the Agent and the Lenders for all costs and expenses required to be paid or reimbursed by them on or prior to the Release Date, subject to the limitations set forth in Section 10.7 of the Credit Agreement;
(x) as of the Release Date, the Control Agreements shall be executed, delivered and in full force and effect; and
(xi) as of the Release Date, the Reinvestment Criteria shall be satisfied.
Date: [mm/dd/yy] | CURO Receivables Finance I, LLC |
By: |
|
|||
Name: | ||||
Title: |
7
EXHIBIT R-1
FORM OF
UNITED STATES TAX COMPLIANCE CERTIFICATE 1
(For Non-U.S. Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to that certain Credit Agreement (the Credit Agreement ) dated as of November 17, 2016, among CURO FINANCIAL TECHNOLOGIES CORP., a Delaware corporation, CURO INTERMEDIATE HOLDINGS CORP., a Delaware corporation (the Borrower ), the lenders and issuing banks from time to time party thereto and VICTORY PARK MANAGEMENT, LLC, as Administrative Agent. Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 5.04 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the Code ), (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigneds conduct of a United States trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. person status on Internal Revenue Service Form W- 8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate or the applicable Form W-8 changes, or if a lapse in time or change in circumstances renders the information on this certificate or the applicable Form W-8 obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and deliver promptly to the Borrower and the Administrative Agent an updated certificate, applicable Form W-8 or other appropriate documentation (including any new documentation reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent of its legal ineligibility to do so in writing, and (2) the undersigned shall furnish the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned or at such times as are reasonably requested by the Borrower or the Administrative Agent.
[Remainder of Page Intentionally Left Blank]
R-1-1
[LENDER] | ||||
By |
|
|||
Name: |
|
|||
Title: |
|
|||
[Address] |
Dated: , 20[ ]
R-1-2
EXHIBIT R-2
FORM OF
UNITED STATES TAX COMPLIANCE CERTIFICATE 2
(For Non-U.S. Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to that certain Credit Agreement (the Credit Agreement ) dated as of November 17, 2016, among CURO FINANCIAL TECHNOLOGIES CORP., a Delaware corporation, CURO INTERMEDIATE HOLDINGS CORP., a Delaware corporation (the Borrower ), the lenders and issuing banks from time to time party thereto and VICTORY PARK MANAGEMENT, LLC, as Administrative Agent. Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 5.04 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any note(s) evidencing such Loan(s)), (iii) neither the undersigned nor any of its direct or indirect partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the Code ), (iv) neither the undersigned nor any of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigneds or its direct or indirect partners/members conduct of a United States trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with Internal Revenue Service Form W-8IMY accompanied by one of the following forms from each of its direct or indirect partners/members claiming the portfolio interest exemption: (i) an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, or (ii) an Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, from each of such partners/members beneficial owners that is claiming the portfolio interest exemption, provided that, for the avoidance of doubt, the foregoing shall not limit the obligation of the Lender to provide, in the case of a partner/member not claiming the portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including appropriate underlying certificates from each interest holder of such partner/member), in each case establishing such partner/members available exemption from U.S. federal withholding tax. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate or the applicable Form W-8 changes, or if a lapse in time or change in circumstances renders the information on this certificate or the applicable Form W-8 obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform the Borrower and the Administrative Agent in writing and deliver promptly to the Borrower and the Administrative Agent an updated certificate, applicable Form W-8 or other appropriate documentation (including any new
R-2-1
documentation reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent of its legal ineligibility to do so in writing, (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned or at such times as are reasonably requested by either the Borrower or the Administrative Agent.
[Remainder of Page Intentionally Left Blank]
R-2-2
[Lender] | ||||
By |
|
|||
Name: |
|
|||
Title: |
|
|||
[Address] |
Dated: , 20[ ]
R-2-3
EXHIBIT R-3
FORM OF
UNITED STATES TAX COMPLIANCE CERTIFICATE 3
(For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)
Reference is made to that certain Credit Agreement (the Credit Agreement ) dated as of November 17, 2016, among CURO FINANCIAL TECHNOLOGIES CORP., a Delaware corporation, CURO INTERMEDIATE HOLDINGS CORP., a Delaware corporation (the Borrower ), the lenders and issuing banks from time to time party thereto and VICTORY PARK MANAGEMENT, LLC, as Administrative Agent. Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 5.04 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the Code ), (iii) it is not a ten percent shareholder of the Borrower within the meaning of Code Section 871(h)(3)(B), (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) no payments in connection with any Loan Document are effectively connected with the undersigneds conduct of a United States trade or business.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate or the applicable Form W-8 changes, or if a lapse in time or change in circumstances renders the information on this certificate or the applicable Form W-8 obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform such Lender in writing and deliver promptly to such Lender an updated certificate, applicable Form W-8 or other appropriate documentation (including any new documentation reasonably requested by such Lender) or promptly notify such Lender in writing of its legal ineligibility to do so, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned or at such times as are reasonably requested by such Lender.
[Remainder of Page Intentionally Left Blank]
R-3-1
[PARTICIPANT] | ||||
By |
|
|||
Name: |
|
|||
Title: |
|
|||
[Address] |
Dated: , 20[ ]
R-3-2
EXHIBIT R-4
FORM OF
UNITED STATES TAX COMPLIANCE CERTIFICATE 4
(For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to that certain Credit Agreement (the Credit Agreement ) dated as of November 17, 2016, among CURO FINANCIAL TECHNOLOGIES CORP., a Delaware corporation, CURO INTERMEDIATE HOLDINGS CORP., a Delaware corporation (the Borrower ), the lenders and issuing banks from time to time party thereto and VICTORY PARK MANAGEMENT, LLC, as Administrative Agent. Capitalized terms used herein but not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement.
Pursuant to the provisions of Section 5.04 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) neither the undersigned nor any of its direct or indirect partners/members is a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the Code ), (iv) neither the undersigned nor any of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Code Section 871(h)(3)(B), (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) no payments in connection with any Loan Document are effectively connected with the undersigneds or its direct or indirect partners/members conduct of a United States trade or business.
The undersigned has furnished its participating Lender with Internal Revenue Service Form W-8IMY accompanied by one of the following forms from each of its direct or indirect partners/members claiming the portfolio interest exemption: (i) an Internal Revenue Service Form W-8BEN or W-8BEN-E or (ii) an Internal Revenue Service Form W-8IMY accompanied by an Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, from each of such partners/members beneficial owners that is claiming the portfolio interest exemption, provided ; that, for the avoidance of doubt, the foregoing shall not limit the obligation of the undersigned to provide, in the case of a partner/member not claiming the portfolio interest exemption, a Form W-8ECI, Form W-9 or Form W-8IMY (including appropriate underlying certificates from each interest holder of such partner/member), in each case establishing such partner/members available exemption from U.S. federal withholding tax. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate or the applicable Form W-8 changes, or if a lapse in time or change in circumstances renders the information on this certificate or the applicable Form W-8 obsolete, expired or inaccurate in any material respect, the undersigned shall promptly so inform such Lender in writing and deliver promptly to such Lender an updated certificate, applicable Form W-8 or other appropriate documentation (including any new documentation reasonably requested by such Lender) or promptly notify such Lender in writing of its legal ineligibility to do so, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in
R-3-3
which each payment is to be made to the undersigned or at such times as are reasonably requested by such Lender.
[Remainder of Page Intentionally Left Blank]
R-3-4
[P ARTICIPANT ] | ||||
By |
|
|||
Name: |
|
|||
Title: |
|
|||
[Address] |
Dated: , 20[ ]
R-3-5
Exhibit 10.28
CREDIT SERVICES AGREEMENT
(OHIO ONLINE)
THIS CREDIT SERVICES AGREEMENT (this Agreement ) is made and entered into as of November 3, 2015, by and between NCP FINANCE OHIO, LLC, an Ohio limited liability company ( Lender ), and SCIL, INC. ( CSO ).
WHEREAS, the parties desire to enter into this Agreement for the purpose of setting forth the terms and conditions which will govern certain credit services to be provided by CSO in connection with the brokering of Loans (as defined below).
NOW, THEREFORE, in consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and CSO agree as follows:
1. Definitions . Except as may be explicitly stated otherwise herein, the following terms shall have the following meanings ascribed to them below:
Advertising Materials means all materials and methods used by CSO in the performance of its marketing and promotion obligations under this Agreement, including, without limitation, brochures, letters, print advertisements, Internet advertisements, television and radio communications and other advertising, promotional and similar materials.
Borrowers mean those persons who are borrowers with respect to the Loans.
CSO Program means the credit services program of CSO for providing credit services to Borrowers resident in the state of Ohio, including issuing guaranties on behalf of Borrowers to enhance their credit, and brokering Loans between Lender and Borrowers pursuant to this Agreement and the Program Guidelines.
GLBA means the Gramm-Leach-Bliley Act of 1999, any successor federal statute thereto and all rules and regulations promulgated thereunder, as any of the same may be amended from time to time.
Loan Program means the lending program of Lender for the origination and consummation of Loans pursuant to this Agreement.
Loans means consumer loans with an interest rate not to exceed 25% per annum made by Lender to Borrowers resident in the state of Ohio pursuant to this Agreement and the Program Guidelines.
Materials means the Advertising Materials and/or the Program Materials.
Money Laundering and Anti-Terrorism Rules means, without limitation, federal states, rules, regulations and executive orders related to money laundering and anti-terrorism, including, without limitation, the Bank Secrecy Act, the USA PATRIOT Act of 2001, and rules and regulations promulgated by the United States Department of Treasury, the Office of Foreign Asset Control, and each other federal agency or office.
Program Guidelines means those guidelines established pursuant to Section 6 below for the administration of the CSO Program and the Loan Program.
Program Materials means all promissory notes, documents, and materials and methods used in connection with the performance of the parties obligations under this Agreement, including without limitation, applications, disclosures and agreements required by the Rules, promissory notes, privacy policies, collection materials and the like, but excluding Advertising Materials.
Proprietary Rights means any copyright, patent, trademark, proprietary information or trade secret owned by a party hereto.
Red Flag Rules means the identity theft provisions in the federal Fair Credit Reporting Act and the Federal Trade Commissions identity theft rules set forth in 16 C.F.R. Part 681, as each of the same may be amended from time to time.
Regulatory Authority means any local, state, or federal regulatory authority having jurisdiction or exercising regulatory or similar oversight with respect to Lender, CSO, or Third Party Service Providers (except that nothing herein shall be deemed to constitute an acknowledgement by any party hereto that any Regulatory Authority has jurisdiction or exercises regulatory or similar oversight with respect to the Loans, the CSO Program and/or the Loan Program or any party hereto with respect to the performance of their respective obligations hereunder).
Rules means all local, state, and federal statutes, regulations, or ordinances applicable to the acts of Lender, CSO, or a Third Party Service Provider as they relate to the CSO Program and/or the Loan Program; any order, decision, injunction, or similar pronouncement of any court, tribunal, or arbitration panel issued with respect to Lender, CSO, or a Third Party Service Provider in connection with this Agreement, the CSO Program and/or the Loan Program; and any regulations, policy statements, and any similar pronouncement of a Regulatory Authority applicable to the acts of Lender, CSO, or a Third Party Service Provider as they relate to this Agreement or the CSO Program and/or the Loan Program, if any.
Third Party Service Provider means any contractor or service provider directly or indirectly retained by Lender or CSO, who provides or renders services in connection with the CSO Program and/or the Loan Program.
Other terms defined herein have the meanings so given to them. Each reference in this Agreement to a definition is a reference to a definition contained in this Agreement, unless the context expressly provides otherwise. Whenever the context requires, references in this Agreement to the singular number shall include the plural, and the plural number shall include the singular. Words denoting gender shall include the masculine, feminine and neuter.
2
2. General Description of the CSO Program and the Loan Program .
a. CSO Program . The parties agree that CSOs responsibility under the CSO Program shall be to act as a credit services organization on behalf of consumers in accordance with the Ohio Credit Services Organization Act (Ohio Revised Code Chapter 4712) (the CSOA ), and as such CSO shall have the right to charge a Borrower a fee (a CSO Fee ) for brokering a Loan on behalf of such Borrower. CSO shall not share with Lender, and Lender shall not accept, any portion of any CSO Fee obtained from a Borrower. The credit services CSO provides to each Borrower shall be governed by a credit services information statement (each a CSO Disclosure Statement ), a credit services contract between CSO and each Borrower (each a CSO Contract ), and a notice of cancellation to be provided by CSO to each Borrower that may be executed and delivered by each Borrower to CSO (each a CSO Notice of Cancellation ). CSO, in CSOs sole discretion, shall be solely responsible for determining the amount of the CSO Fee, the disclosures set forth in the CSO Disclosure Statement, the terms and conditions of each CSO Contract, the disclosures contained in the CSO Notice of Cancellation and whether or not it is appropriate to offer any particular consumer the opportunity to apply for a Loan. Nothing herein shall be deemed to commit CSO to broker any particular level or number of applicants for Loans, and CSO makes no representation as to the number of Loan applications CSO will submit to Lender on behalf of prospective Borrowers. Furthermore, nothing herein shall be deemed to require CSO to submit to Lender the application of any prospective Borrower to whom CSO has determined not to provide credit services.
b. Loan Program . The parties agree that the Loan Program shall consist of the origination, funding, and collection of Loans, from time to time in accordance with the Program Guidelines, to Borrowers who are residents of the State of Ohio. The parties agree that Lender shall have sole responsibility for establishing credit and underwriting criteria for the Loans, making the decisions as to whether or not to make Loans to prospective Borrowers, funding the Loans, and managing the Loan Program in accordance with Lenders express obligations under this Agreement and the Program Guidelines. Nothing herein shall be deemed to commit Lender to originate or fund any particular level or number of Loans, and Lender makes no representation as to the amount of funding it will be able to raise for the Loans.
c. CSO and Lender intend to comply with all applicable Rules and to operate independently of each other in their respective capacities as a credit services organization and a lender.
d. The parties shall endeavor to begin the CSO Program and the Loan Program and commence making the Loans hereunder as soon as practical.
3. Duties and Responsibilities of Lender . Lender shall perform and discharge the following duties and responsibilities:
a. Develop (and from time to time as it determines appropriate, modify) credit and underwriting criteria determined by Lender, in Lenders sole discretion, to be reasonable and prudent for the Loan Program and the Loans.
3
b. Make a determination, in Lenders sole discretion, as to whether or not to extend a Loan to a prospective Borrower (which determination shall be made on a case by case basis pursuant to scoring systems or other criteria or models established by Lender).
c. Extend credit to Borrowers in the form of Loans and fund the Loans.
d. Disburse the proceeds of Loans to Borrowers.
e. Manage the Loan Program and the portfolio of Loans in accordance with Lenders express obligations under this Agreement and under the Program Guidelines using commercially reasonable standards of care, skill and attention.
f. Generate adverse action notices and other communications that may be required under the Rules to persons who apply for but are denied a Loan.
4. Duties and Responsibilities of CSO . CSO shall perform certain arranging functions and credit services in connection with this Agreement under the Loan Program, as provided in this Agreement and in the Program Guidelines, and CSO hereby agrees to perform and discharge the following duties and responsibilities at its own cost and expense:
a. Market and promote the Loans and solicit potential Borrowers in the manner set out in Section 7 below.
b. Post a conspicuous notice on CSOs website that identifies Lender as the lender of the Loans and provide such other information as Lender and CSO may mutually agree from time to time, with each party acting in good faith and in a commercially reasonable manner.
c. Provide certain disclosures and agreements to each Borrower, including a CSO Disclosure Statement, a CSO Contract and a Notice of Cancellation in the manner described in the Program Guidelines.
d. Oversee the application process for Loans, solicit applications, and assist potential Borrowers in completing applications.
e. Review and confirm the identities of prospective Borrowers and comply in all respects with applicable federal and state customer identification and know your customer laws and regulations, including, without limitation, the Money Laundering and Anti-Terrorism Rules.
f. Transmit Loan applications to Lender in accordance with the Program Guidelines.
g. Comply with all registration, bonding and other requirements of the CSOA and any regulations promulgated thereunder, and with state and federal laws and regulations.
h. Comply with all record-keeping rules and requirements of Ohio law concerning Borrowers information.
4
i. Develop (and from time to time as it determines appropriate, modify) its credit and underwriting criteria for CSOs credit services in CSOs sole discretion to be appropriate, reasonable and prudent for the CSO Program and for the issuance of CSOs Credit Enhancement/Guaranty on behalf of a Borrower in favor of Lender.
5. Guaranty . Pursuant to each CSO Contract, and regardless of whether the CSO Contract is cancelled, CSO agrees to, and hereby does, unconditionally guaranty, on behalf of the Borrower, and for the benefit of Lender, the prompt payment of all amounts due under each Loan to Lender as set forth in the Guaranty Agreement between CSO and Lender.
6. Program Guidelines . Lender and CSO will mutually agree upon the Program Guidelines in writing and will comply with such Program Guidelines, as the same may be amended from time to time by written agreement of the parties. The parties may modify the then current Program Guidelines only by means of a written agreement signed by duly authorized representatives of both parties. Both parties agree to act in good faith and in a commercially reasonable manner in connection with the establishment and modification, if any, of the Program Guidelines. The parties agree to perform their duties and responsibilities under this Agreement in accordance with the provisions of the Program Guidelines, as they may be modified from time to time.
7. Program Materials; Advertising Materials; Trade Names and Trademarks . The parties shall each be responsible for preparing their own respective Program Materials; provided, however, prior to the use of any Program Materials prepared by one party, the other party shall be entitled to review such Program Materials in the manner described below. Each party agrees that it will not use any Program Materials unless such Program Materials have been reviewed in advance by the other party hereto. CSO shall be responsible for the development of proposed Advertising Materials concerning advertising and marketing of Loans and solicitation of potential Borrowers. All Advertising Materials shall comply with the Rules. The form and content of all Advertising Materials shall be subject to the prior review of Lender in the manner described below. The nature of the Advertising Materials, the scope of their dissemination, and the total expenditures to be made on Advertising Materials for the CSO Program shall be determined by CSO in its reasonable discretion, and CSO shall pay all expenses concerning the production, use, and dissemination of Advertising Materials. Notwithstanding anything herein to the contrary, each party agrees that it will respond in writing to any request from the other party for review of any Advertising Materials or Program Materials within five (5) business days following such other partys receipt of such Materials and any such Materials shall be deemed without objection by such other party upon the earlier to occur of (a) the actual notification of review without objection of such Materials, or (b) upon the expiration of the above-described five (5) business day period if the party whose review is being sought fails to timely respond within such five (5) business day period. If either party objects to any proposed Program Materials or Advertising Materials within the required time frame, such party will detail its reasons for such disapproval in such partys written objection notice to the other party and the parties will use reasonable commercial efforts to address any such objections. Either party hereto may at any time retract or modify any notice previously given by it with respect to any Program Materials or Advertising Materials if such action is necessary in order to remain in
compliance with the Rules; provided, however, no party shall retract or modify a notice if there has been no intervening change in the Rules which would require such retraction or modification. Lender and CSO each acknowledge that Program Materials or Advertising Materials may contain trade names, trademarks, or service marks of the other party, and each party shall have no authority to use any such names or marks of the other party separate and apart from their use in the Program Materials or Advertising Materials. The parties shall use Program Materials and Advertising Materials only for the purpose of implementing the provisions of this Agreement and shall not use Program Materials or Advertising Materials in any manner that would violate the Rules or any provision of the Program Guidelines.
8. Loan Terms and Charges; CSO Terms and Fees . All underwriting criteria, Loan terms and all interest, fees, and other charges associated with the Loans, exclusive of any CSO Fees, and shall be established by Lender. Lender shall have the right to modify any underwriting criteria, Loan term, interest rate, fee, or other charge (exclusive of any CSO Fees), from time to time, at its discretion, including, without limitation, if Lender reasonably determines that any such modification is necessary in order to remain in compliance with the Rules. The terms and conditions of the CSO Disclosure Statements, the CSO Contracts, the CSO Notices of Cancellation and the amount of any CSO Fees shall be established by CSO and shall comply with the Rules. CSO shall have the right to modify any CSO Disclosure Statements, CSO Contracts, CSO Notices of Cancellation and the amount of any CSO Fees, from time to time, at its discretion, including, without limitation, if CSO reasonably determines that such modification is necessary in order to remain in compliance with the Rules. In the event either party hereto becomes aware that any underwriting criteria, Loan terms, interest, fee or other charge associated with any Loan, any terms and conditions of the CSO Disclosure Statements, the CSO Contracts, the CSO Notices of Cancellation, CSOs activities as a third party debt collector in the event Loans are assigned to CSO upon default, or the amount of any CSO Fee is not in compliance with any Rule, the party becoming aware of the same shall notify the other party of such non-compliance and each party hereto agrees to cooperate in good faith with each other, and to diligently take commercially reasonable steps, as may be necessary in order to promptly correct any such non-compliance.
9. Third Party Service Providers . The parties will provide the other party any reasonably requested information regarding any Third Party Service Provider who such party retains, directly or indirectly, to assist it in performing its duties hereunder or to otherwise participate in the CSO Program and/or the Loan Program. All such Third Party Service Providers must obtain any and all licenses and registrations required under applicable Ohio or federal law to perform its duties hereunder or to otherwise participate in the CSO Program and/or the Loan Program. Each party reserves the right to require the other party to terminate the services of any Third Party Service Provider to whom such party reasonably objects. A party may condition its willingness to permit a Third Party Service Provider upon obtaining a written commitment from such Third Party Service Provider to comply with the terms of this Agreement and the Program Guidelines, to submit to audits and inspections by either party hereto, and to indemnify the parties hereto upon such terms and conditions as the parties hereto may reasonably require. CSO shall be responsible for supervising any Third Party Service Providers retained by CSO and shall be responsible for any failures of such Third Party Service Providers to comply with this Agreement and applicable law. Lender shall be responsible for supervising any Third Party Service Providers retained by Lender and shall be responsible for any failures of such Third Party Service Providers to comply with this Agreement and applicable law.
6
10. CSOs Representations and Warranties . CSO makes the following warranties and representations to Lender, all of which shall survive the execution and termination of this Agreement for any reason:
a. This Agreement is valid, binding and enforceable against CSO in accordance with its terms, and CSO has received all necessary corporate approvals to enter into this Agreement and to perform its obligations hereunder. Except for CSOs bond and license described below, CSO is not required to obtain the approval of, or be licensed by, any Regulatory Authority to lawfully perform its obligations hereunder.
b. CSO is a corporation duly formed, validly existing, and in good standing under the laws of the State of Nevada and is authorized, registered, and licensed to do business in Ohio and in each other state in which the nature of its activities makes such authorization, registration, or licensing necessary or required. CSO is licensed and bonded as required for credit services organization under the CSOA and will remain so licensed and bonded throughout the term of this Agreement.
c. CSO has the full corporate power and authority to execute and deliver this Agreement and perform all of its obligations hereunder.
d. The provisions of this Agreement and the performance of each of CSOs obligations hereunder do not conflict with CSOs Certificate of Incorporation, Bylaws or any agreement, contract, lease, or obligation to which CSO is a party or by which CSO is bound.
e. The President of CSO has approved the terms and conditions of this Agreement and has determined that entering into this Agreement is in the best interests of CSO.
f. This Agreement, the Program Guidelines and the provisions of each of them comply with and are enforceable under the Rules, and the operation of each of the CSO Program and the Loan Program in accordance with this Agreement and the Program Guidelines will not violate any of the Rules.
g. Neither CSO nor any principal thereof has been or is the subject of any of the following:
i. Criminal conviction (other than misdemeanor traffic offenses);
ii. IRS lien;
iii. Enforcement agreement, memorandum of understanding, cease and desist order, administrative penalty, or similar agreement concerning lending matters that has the effect of permanently precluding CSO or its principals from engaging in consumer financial services;
7
iv. Administrative or enforcement proceeding or material investigation commenced by the Securities Exchange Commission, state securities regulatory authority, Federal Trade Commission, or any other state or federal Regulatory Authority (excluding routine examinations conducted by a Regulatory Authority and excluding communications received in the ordinary course of business from any Regulatory Authority such as communications concerning consumer complaints or communications related to immaterial issues) that has the effect of permanently precluding CSO or its principals from engaging in consumer financial services; or
v. Restraining order, decree, injunction, or judgment in any proceeding or lawsuit concluding CSO engaged in fraud or materially deceptive practices on the part of CSO or any principal thereof.
For purposes of this Section 10(g) the term principal of CSO shall include (i) any person directly or indirectly owning a ten percent or more equity interest of CSO, (ii) any officer, member or director of CSO and (iii) any other person having the power or authority to control CSOs business.
11. Lenders Representations and Warranties . Lender makes the following warranties and representations to CSO, all of which shall survive the execution and termination of this Agreement for any reason:
a. This Agreement is valid, binding and enforceable against Lender in accordance with its terms and Lender has received all necessary organizational approvals to enter into this Agreement and to perform its obligations hereunder. Except for Lenders registration described below, Lender is not required to obtain the approval of, or be licensed by, any Regulatory Authority to lawfully perform its obligations hereunder.
b. Lender is a limited liability company duly formed, validly existing, and in full force and effect under the laws of the State of Ohio and is authorized and registered to do business in Ohio and in each other state in which the nature of its activities makes such authorization, registration, or licensing necessary or required. Lender is registered under the Ohio Second Mortgage Loan Law (Ohio Revised Code §§ 1321.51-.60) and will remain so registered throughout the term of this Agreement.
c. Lender is not affiliated with CSO or any affiliate of CSO.
d. Lender has the full organizational power and authority to execute and deliver this Agreement and perform all of its obligations hereunder.
e. The provisions of this Agreement and the performance of each of Lenders obligations hereunder do not conflict with Lenders Articles of Organization, Operating Agreement, or any agreement, contract, lease, or obligation to which Lender is a party or by which Lender is bound.
8
f. Neither Lender nor any principal thereof has been or is the subject of any of the following:
i. Criminal conviction (other than misdemeanor traffic offenses);
ii. IRS lien;
iii. Enforcement agreement, memorandum of understanding, cease and desist order, administrative penalty, or similar agreement concerning lending matters;
iv. Administrative or enforcement proceeding or material investigation commenced by the Securities Exchange Commission, state securities regulatory authority, Federal Trade Commission, or any other state or federal Regulatory Authority (excluding routine examinations conducted by a Regulatory Authority and excluding communications received in the ordinary course of business from any Regulatory Authority such as communications concerning consumer complaints or communications related to immaterial issues); or
v. Restraining order, decree, injunction, or judgment in any proceeding or lawsuit alleging fraud or deceptive practices or illegal activity on the part of Lender or any principal thereof.
For purposes of this Section 11(f) the term principal of Lender shall include (i) any person directly or indirectly owning a ten percent or more equity interest of Lender, (ii) any officer, member or director of Lender and (iii) any other person having the power or authority to control Lenders business.
12. Ownership of Customer Information . Each party shall take all steps necessary and appropriate to maintain the confidentiality of Loan applicant and Borrower names, addresses, and telephone numbers and all account and other nonpublic personal information (as used in and defined by the GLBA), including payment information, regarding Borrowers and Loan applicants who have been declined and all records, data, and information pertaining to the foregoing (collectively, Customer Information ). Lender and CSO jointly and severally shall own all Customer Information; the parities may uses Customer Information consistent with the Program Guidelines and the privacy policies of each of CSO and Lender set forth in the documents described in the Program Guidelines. Notwithstanding the foregoing, without the need for obtaining Lenders consent, CSO shall be free to use Customer Information for purposes of marketing, offering, selling, brokering, underwriting and providing other products and services, including, without limitation, other products and services that may be offered to consumers by CSO, any Third Party Service Provider of CSO or any other lenders through the distribution channels of CSO and any Third Party Service Provider of CSO, provided that, in all cases, however, any use by CSO of any such Customer Information shall comply with (i) all applicable Rules, (ii) the requirements of the Program Guidelines, and (iii) the above-described privacy policies of both CSO and Lender and in the event any such Customer Information is used in connection with marketing, offering, selling, brokering, underwriting or providing loans made by any party other than CSO, Lender agrees that such other lender may jointly own such Customer Information with CSO and Lender, so long as such other lender has a privacy policy no less restrictive than Lenders privacy policy described in the Program Guidelines and agrees in writing to comply with such privacy policy and the privacy policies of CSO and Lender. In addition, notwithstanding that Lender has an ownership interest in the Customer Information,
9
Lender agrees that it will not use the Customer Information to market any other products or services to the Borrowers or to Loan applicants who have been declined without the prior written consent of CSO; provided that nothing herein shall prevent Lender from making a loan to one or more Customers whose loan applications are processed and approved independently through Lenders business arrangements with other credit services organizations. Without limiting the foregoing, each of CSO and Lender shall adopt and maintain reasonable procedures relating to administrative, technical, and physical safeguards to: (a) ensure the security and confidentiality of any Customer Information that such party receives; (b) protect against any anticipated threats or hazards to the security or integrity of any Customer Information that such party receives; (c) protect against the unauthorized access to or use of any Customer Information that such party has in its possession which could result in substantial harm or inconvenience to any Borrower or Loan applicant; (d) ensure the proper disposal of any Customer Information that such party has in its possession; and (e) utilize a safeguards program that is compliant with 16 C.F.R. Part 314. Notwithstanding anything herein to the contrary, CSO shall be the sole owner of all CSO Disclosure Statements and all CSO Contracts and any information contained therein. The rights and obligations of the parties under this Section 12 shall indefinitely survive the termination of this Agreement.
13. Term. The term of this Agreement shall be for a period of one (1) year commencing as of the date hereof; provided, however, that either party hereto may terminate this Agreement prior to the expiration of its term pursuant to the provisions of this Section 13 and Section 14 below. This Agreement shall be renewed automatically for successive one-year terms unless the party not wishing to renew provides the other party with ninety (90) days advance written notice of non-renewal. Each party hereto shall have the right to terminate this Agreement immediately upon written notice to the other party hereto, if (i) the terminating party determines in its reasonable discretion that the activities of the parties under this Agreement or the CSO Program and/or the Loan Program contravene, conflict with, are prohibited by, are improper under or are not permitted under any of the Rules; (ii) any Regulatory Authority having jurisdiction over the CSO Program and/or the Loan Program, CSO or Lender requires the terminating party to terminate this Agreement; (iii) the terminating party determines in its reasonable discretion that continued operation of the CSO Program and/or the Loan Program may materially adversely affect the ongoing operations of the terminating party or those of the terminating partys affiliates; and in the event of a termination of this Agreement pursuant to this clause (iii), the terminating party shall provide the other party hereto with a written explanation of the basis for such termination, or (iv) the terminating party determines in its reasonable discretion that continued operation of the CSO Program and/or the Loan Program may materially adversely affect the relationship between the terminating party or any of its affiliates and any Regulatory Authority having jurisdiction over any of them.
In addition, if Lender modifies any Loan term, interest rate, fee, or other charge, or if Lender materially modifies any underwriting criteria for the Loans, CSO may terminate this Agreement upon thirty (30) days prior written notice to Lender if CSO determines in its reasonable discretion that such modification by Lender would render it economically infeasible for CSO to continue to perform its duties and responsibilities hereunder or that such modification would cause any aspect of the CSO Program and/or the Loan Program to be in violation of any Rule.
10
Notwithstanding termination of this Agreement, the parties obligations with respect to outstanding Loans shall remain in effect for so long as such Loans remain outstanding.
14. Termination Upon Default .
a. Either party hereto shall have the right to terminate this Agreement upon occurrence of one or more of the following events:
i. failure by the other party to observe or perform that partys obligations to the other hereunder or to comply with any provision of this Agreement, so long as the failure or nonperformance is not due to the actions of the terminating party;
ii. in the event any financial information, representation, warranty, statement or certificate furnished to either party by the other party in connection with this Agreement, or any separate material statement or document delivered or to be delivered hereunder by either party hereto to the other party, is materially false, misleading, or inaccurate as of the date made or delivered; or
iii. in the event a party hereto (or an affiliate of such party) defaults under any other agreement executed between the parties hereto (and/or any of their respective affiliates) and such default continues beyond any applicable notice and cure period provided for such default under such other agreement.
b. The Agreement may be terminated pursuant to Section 14(a)(i) above only if the default continues for a period of thirty (30) days after the defaulting party receives written notice from the other party specifying the default in the case of a non-monetary default, or ten (10) days after the default in the case of a failure to pay any amount when due hereunder.
c. In addition to any other right to terminate this Agreement, a party may terminate this Agreement if the other party hereto, or such other partys principals (as defined in Section 10 or Section 11 above, as the case may be) is the subject of any of the following or if any of the following occurs with respect to such other party or such other partys principals: insolvency, inability to pay its debts as they become due, the filing of a voluntary bankruptcy petition, the filing of an involuntary bankruptcy petition which is not dismissed within thirty (30) days after filing thereof, dissolution or termination of its existence as a going concern, or the appointment of a receiver for any part of its property.
15. Indemnification .
a . CSOs Indemnification Obligations .
i. Except to the extent of Damages (as defined in Section 15(d)) expressly excluded under this Agreement, CSO hereby agrees to defend, indemnify and hold harmless, Lender and its affiliates, and their respective directors, officers, employees, shareholders, members, lenders, partners, attorneys and agents (herein, the Lender Indemnified Parties ), from and against any and all Damages suffered or incurred by the Lender Indemnified Parties (or any of them) relating to, accruing or arising or alleged to have accrued or arisen in whole or in part out of or in consequence of any and all of the
11
following: (A) any actual or alleged injury (physical or otherwise) to any actual or prospective Borrower, to any actual or prospective customer of CSO, or to any employee of CSO actually or allegedly caused in whole or in part by CSO or any CSO Indemnified Party (as defined in Section 15(b)(i) ); (B) any transaction (whether one or more) arising out of, relating to and or pursuant to this Agreement, the Program Guidelines, the CSO Program or the Loan Program; (C) any act or omission (whether one or more) of CSO or its employees, agents or representatives related to this Agreement, the Program Guidelines, the CSO Program or the Loan Program; (D) any act or omission (whether one or more) of any Third Party Service Provider retained by CSO in connection with this Agreement, the Program Guidelines, the CSO Program or the Loan Program; (E) the inaccuracy of any warranty or representation made by any Third Party Service Provider retained by CSO in connection with this Agreement, the Program Guidelines, the CSO Program or the Loan Program; (F) the breach of any obligation owed by any Third Party Service Provider retained by CSO in connection with this Agreement, the Program Guidelines, the CSO Program or the Loan Program; (G) any breach by CSO (or its employees, agents or representatives) of its obligations under or related to this Agreement, the Program Guidelines, the CSO Program or the Loan Program; (H) the breach or inaccuracy of any representation or warranty of CSO set forth in this Agreement or any other document or agreement executed in connection herewith; (I) any claim, allegation or determination (including any settlement, judgment or ruling with respect thereto) that the Loans or the activities, practices, and/or procedures of the parties hereunder, under the Program Guidelines or related to the CSO Program or the Loan Program contravene, conflict with, are prohibited by, are improper under or are not permitted under any of the Rules (including, without limitation, usury laws, consumer protection laws, racketeering laws (including the Federal Racketeering Influenced and Corrupt Organizations Act), and the Federal Truth in Lending Act and rules and regulations related thereto) or are fraudulent or unconscionable; (J) any other claim, allegation or investigation asserted by or on behalf of a Borrower, a prospective Borrower or a Regulatory Authority with respect to the Loans or the activities, practices, and/or procedures of the parties under this Agreement or the Program Guidelines or related to the CSO Program or the Loan Program; (K) any examination or audit conducted by a Regulatory Authority as provided in Section 19; (L) any burglary, robbery, fraud or theft at any of CSOs locations or on any of CSOs premises; (M) any marketing or administration of the Loans by persons other than Lender and its employees (including loss, theft or misuse of Loan proceeds, Loan payments and drafts and instruments issued or received in connection therewith); and (N) any claim relating to the reporting of inaccurate, incomplete or untimely information to a consumer reporting agency or credit bureau.
ii. The obligations of CSO to defend, indemnify and hold harmless Lender and the Lender Indemnified Parties under this Section 15(a) shall extend, without limitation, to liability for Lenders negligence; provided, however, that nothing herein shall be construed to require CSO to indemnify the Lender Indemnified Parties (or any of them) for Damages suffered by any of them directly or indirectly related to, resulting from or arising out of any of the following: (A) burglary, robbery, fraud or theft from or at any premises of the Lender, (B) the marketing or administration of the Loans by any person other than CSO, its employees or any Third Party Service Provider engaged by it; (C) Lenders alleged or actual violation of federal or state securities laws or laws
12
pertaining to the formation, organization and operation of entities; (D) claims brought by the employees or shareholders of any Lender Indemnified Party; (E) a decline in the value of the ownership interests of Lender, its partners and affiliates; (F) adverse publicity or customer relations problems encountered or suffered by any Lender Indemnified Party unrelated to the Loan Program or the CSO Program; (G) the loss of non-Loan related business, or profits related thereto; (H) lost management time related to attending hearings and meetings with respect to matters which are the subject of indemnification under this Section 15; (I) any Lender Breach (hereinafter defined); or (J) the fraud or willful misconduct of Lender. The term Lender Breach shall mean the breach by Lender of any of its obligations expressly set forth herein; provided, however, any breach by Lender arising out of or related to the failure of Lender to comply with the Rules shall not be deemed a Lender Breach unless and until Lender fails to comply with its obligations under the last sentence of Section 8 hereof.
iii. CSOs indemnification obligations under this Section 15(a) shall include the payment of all costs of defense, if any, including without limitation, all reasonable and necessary attorneys fees, court costs, accounting fees, class action costs and expert fees, subject to CSOs reimbursement rights under Section 15(c) . Except as otherwise provided in this Section 15, the obligations of CSO to defend, indemnify and/or hold the Lender Indemnified Parties harmless under this Section 15 shall extend without limitation to the payment of all costs of defense for the actual or alleged omissions, negligence, gross negligence, and intentional acts of Lender, including Lenders sole or concurrent negligence. It is contemplated that CSOs defense obligations under this Section 15(a) may be, but shall not necessarily be, broader than its indemnification obligations hereunder.
b. Lenders Indemnification Obligations.
i. Except to the extent of Damages expressly excluded under this Agreement or Damages for which CSO otherwise is obligated to defend, indemnify and/or hold harmless the Lender Indemnified Parties as set forth above, Lender hereby agrees to defend, indemnify and hold harmless, CSO and its members and affiliates, and their respective directors, officers, employees, shareholders, members, lenders, partners, attorneys and agents (herein, the CSO Indemnified Parties ), from and against any and all Damages suffered or incurred by the CSO Indemnified Parties (or any of them) relating to, accruing or arising or alleged to have accrued or arisen in whole or in part out of or in consequence of any and all of the following: (A) any Lender Breach or the inaccuracy of any warranty or representation of Lender set forth in this Agreement; (B) the willful act or omission of Lender or its employees, agents or representatives; (C) any act or omission (whether one or more) of any Third Party Service Provider retained by Lender without the consent of CSO; (D) the inaccuracy of any warranty or representation made for the benefit of CSO by any Third Party Service Provider retained by Lender without the consent of CSO; (E) the breach of any obligation owed to CSO by any Third Party Service Provider retained by Lender without the consent of CSO; and (F) any burglary, robbery or theft by Lender or any of its affiliates (or any of their respective employees).
13
ii. Nothing herein shall be construed to require Lender to indemnify, defend or hold harmless the CSO Indemnified Parties (or any of them) for Damages suffered by any of them directly or indirectly related to, resulting from or arising out of any of the following: (A) any breach by CSO of its representations, warranties, covenants or obligations under this Agreement; (B) the breach of any obligation of a Third Party Service Provider retained by CSO; (C) the negligence or willful misconduct of CSO; any CSO Indemnified Party or any Third Party Service Provider retained by CSO; (D) burglary, robbery, fraud or theft at or from any premises of the CSO or any CSO Indemnified Party; (E) marketing or administration of the Loans by persons other than Lender or its employees; (F) any claim, investigation or allegation made by any regulatory or governmental authority or agency arising from or relating to the activities of CSO; (G) any claim (including any settlement, judgment or ruling with respect to such claim) that CSO or Lender has violated any of the Rules (including the Federal Racketeering Influenced and Corrupt Organizations Act) or is liable for fraud or unconscionable actions; (H) any claim that any CSO Indemnified Party allegedly or actually violated any federal or state securities laws or laws related to the formation, organization and operation of entities; (I) a decline in the value of the ownership interests of any CSO Indemnified Party; (J) any claims brought by any owner or employee of any CSO Indemnified Party; (K) adverse publicity or customer relations problems suffered by any CSO Indemnified Party; (L) the loss of non-Loan related business, or profits related thereto by any CSO Indemnified Party; (M) non-monetary sanctions imposed by any court or Regulatory Authority; and (N) lost management time related to attending hearings and meetings with respect to matters which are the subject of indemnification under this Section 15.
iii. Lenders indemnification obligations under this Section 15(b) shall include the payment of all costs of defense, if any, including without limitation, all reasonable and necessary attorneys fees, court costs, accounting fees, class action costs and expert fees, subject to Lenders reimbursement rights under Section 15(c).
c. Obligation to Refund Advanced Damages . In the event that either party hereto reimburses the other party hereto for Damages pursuant to the indemnification provisions of this Section 15, in advance of the final disposition of the underlying claim, and if it is ultimately determined by settlement or pursuant to the dispute resolution provisions hereof that such Damages directly arose out of an occurrence that did not require such indemnification under Section 15(a) or Section 15(b), as applicable, then the reimbursed party agrees to repay to the other party any such Damages for which it received advanced reimbursement to which it was not entitled hereunder. All Damages required to be repaid under this Section 15(c) shall be repaid within 5 business days following the above-described ultimate determination.
d. Additional Definitions. The Lender Indemnified Parties and the CSO Indemnified Parties sometimes are referred to herein as the Indemnified Parties or individually as an Indemnified Party, and Indemnifying Party may refer to CSO or Lender, in their capacities as indemnitors hereunder. Damages means any and all claims, demands, liabilities, losses, penalties, fines, judgments, damages, settlements, out-of-pocket costs, and expenses (including, without limitation, legal fees, court costs, accounting fees, disbursements and class action costs).
14
e. Notice . An Indemnified Party promptly shall notify the Indemnifying Party, in writing, of any suit or threat of suit of which that party becomes aware which may give rise to a right to indemnification under this Agreement (but in any event within 30 days of the discovery of such claim), and any Indemnified Party seeking inde mnifi cation hereunder promptly shall notify the Indemnifying Party, in writing, of any indemnified loss; provided, however, that the failure of an Indemnified Party alleging a right of indemnity hereunder to provide prompt notice to the Indemnifying Party shall relieve the Indemnifying Party of its obligations hereunder only if and to the extent that the Indemnifying Party can prove that such failure to provide prompt notice actually and materially prejudiced its rights. The Indemnified Party shall provide to the Indemnifying Party, as promptly as practicable after the delivery of such notice, all information and documentation reasonably requested by the Indemnifying Party to support and verify the claim asserted.
f. Defense and Counsel. At its sole cost and expense, the Indemnifying Party may employ counsel chosen by the Indemnifying Party, provided that such counsel shall be reasonably acceptable to the Indemnified Party. The Indemnified Party shall have the right, at its own expense, to employ counsel separate from counsel employed by the Indemnifying Party in any such action and to participate therein; provided, however, that the Indemnifying Party shall be responsible for reasonable attorneys fees and legal expenses related to the separate counsel retained by the Indemnified Party if the Indemnified Party reasonably concludes that the ability of the Inde mnifi ed Party to prevail in the defense of any claim is or will be materially improved if separate counsel represents the Indemnified Party or if separate counsel is appropriate because of legal ethics considerations. An Indemnifying Party shall not be liable for the settlement of any claim entered into without its prior written consent, which consent shall not be unreasonably withheld or delayed. The Indemnifying Party shall not agree to a settlement of any claim that provides for any relief other than the payment of monetary damages by the Indemnifying Party without the applicable Indemnified Partys prior written consent, which shall not be unreasonably delayed or withheld; provided that an Indemnified Partys withholding of or delaying consent shall not be deemed unreasonable if the proposed settlement arrangement allocates liability or financial obligations directly to the Indemnified Party. If the Indemnifying Party chooses to so defend, all parties hereto shall cooperate in the defense thereof and shall furnish such records, information and testimony, and shall attend such conferences, discovery proceedings, hearings, trials and appeals as reasonably may be request in connection therewith, all at the Indemnifying Partys sole cost and expense.
g . Joint Defense Agreement . The parties agree that, if both parties are named as defendants in the same lawsuit, arbitration or other proceeding arising out of or related to this Agreement, the CSO Program and/or the Loan Program, the parties may enter into a joint defense agreement reasonably acceptable to the parties; provided, however, that any such joint defense agreement shall not preclude any party from asserting any counterclaims, cross-actions or third-party claims to which it may be entitled to assert .
15
h. Survival . This Section 15 shall survive and shall continue to be binding on the parties notwithstanding any termination, cancellation or expiration of this Agreement.
i. Each party expressly agrees, warrants and represents that it has read the terms of this Section 15 , understands same and that the terms of this Section 15 are clear, conspicuous and unequivocal.
16. Expenses . Except as expressly provided to the contrary in this Agreement, each party shall be responsible for all expenses incurred by it in the performance of its obligations under this Agreement, including any expenses incurred by it in performing its respective duties set forth in Section 3 or Section 4 above, as the case may be.
17. Scope of Relationship . The parties agree that the relationship established by this Agreement is non-exclusive. Without limiting the foregoing and subject to the provisions of Section 12 and Section 18 of this Agreement, each party hereto is expressly permitted, without the need for obtaining any further consent or approval from the other party hereto, to market, offer, sell, broker, underwrite and/or provide other products and services, including, without limitation, any other loan products and services and specifically including, without limitation, any loan products and services similar in scope and nature to the Loans and the related services contemplated by the Program Guidelines, through any of their respective distribution channels and the distribution channels of their respective Third Party Service Providers, including, without limitation, any of such distribution channels through which Loans are offered pursuant to this Agreement.
18. Confidentiality; Red Flag and Other Obligations.
a. Confidentiality . In performing their obligations pursuant to this Agreement, each party may have access to and receive disclosure of certain confidential information about the other party or parties, including, without limitation, the names and addresses of a partys customers or members, marketing plans and objectives, research and test results, and other information which is confidential and the property of the party disclosing the information ( Confidential Information ). The parties agree that the term Confidential Information shall include this Agreement, the Program Guidelines, and the Program Materials, as the same may be amended and modified from time to time. Confidential Information of a party hereto shall not include information in the public domain or that is independently developed by the other party hereto. Lender and CSO agree that Confidential Information shall be used by each party solely in the performance of its obligations under this Agreement. Each party shall receive Confidential Information in confidence and shall not disclose Confidential Information to any third party, except as may be permitted hereunder or under the Program Documents, or as may be necessary to perform its obligations hereunder, or as may be otherwise agreed in writing by the party furnishing the information, or as required by the Rules or any Regulatory Authority. In the event that either party (the Restricted Party ) is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, such party will provide the other party with prompt notice of such request(s) so that the other party may seek an appropriate protective order or other appropriate remedy and/or waive the Restricted Partys compliance with the
16
provisions of this Agreement. In the event that the other party does not seek such a protective order or other remedy, or such protective order or other remedy is not obtained, or the other party grants a waiver hereunder, the Restricted Party may furnish that portion (and only that portion) of the Confidential Information which the Restricted Party is legally compelled to disclose and will exercise such efforts to obtain reasonable assurance that confidential treatment will be accorded any Confidential Information so furnished as a Restricted Party would reasonably exercise in assuring the confidentiality of any of its own confidential information. Notwithstanding anything herein to the contrary, and except as provided in Section 17 above, nothing herein shall prohibit either party hereto from entering into agreements with any other party that include program guidelines and program materials that may or may not be the same as, or substantially similar to, the Program Guidelines and Program Materials. Upon request or upon any expiration or termination of this Agreement, each party hereto shall return to the other party or destroy (as the latter may instruct) all of the latters Confidential Information in the formers possession which is in any written or other recorded form, including data stored in any computer medium; provided, however, that each party may retain the Confidential Information of the other party (but subject to the requirements of this Section 18 ) to the extent that such party needs access to such information to continue to perform any of its obligations hereunder or to broker or service Loans or otherwise perform obligations owed by each party to the other party. Notwithstanding the foregoing, to the extent there are any inconsistencies between this Section 18 and Section 12 above, the provisions of Section 12 above shall control.
b. Red Flag and Other Obligations . Lender and CSO shall comply with their respective obligations under the Red Flag Rules and the Money Laundering and Anti-Terrorism Rules.
19. Regulatory Examinations and Audits . Each party agrees to submit to any examination which may be required by any Regulatory Authority with audit and examination authority over the other party, to the fullest extent that such Regulatory Authority may require and to the fullest extent provided by law. Each party (either directly or by the use of accountants or other agents or representatives) may audit, inspect, and review the other partys files, records, and books with respect to the Loans, compliance with the CSO Program and/or the Loan Program and its business operations. Each party agrees to submit such information as the other party may from time to time reasonably request in order to ascertain the submitting partys compliance with the requirements of this Agreement and compliance with the CSO Program and/or the Loan Program. Each party agrees to submit to operational audits and audits of such partys electronic data processing functions, as the other party may reasonably request from time to time. The auditing party will promptly submit the results of such audits to the audited party. Any such audit shall be performed at the auditing partys sole cost and expense. The parties acknowledge and agree that, as and to the extent provided by law, Lender shall be responsible to Borrowers, prospective Borrowers, and Regulatory Authorities having jurisdiction over Lender, the CSO Program and/or the Loan Program for compliance with the Rules as they may apply to the Loans and the Program Materials, but subject to the full performance by CSO of its obligations hereunder and the accuracy of CSOs warranties and representations set forth herein concerning compliance with the Rules. CSO acknowledges that in discharging its compliance obligations under the Rules Lender shall rely on the full performance by CSO of its duties and obligations hereunder and the accuracy of CSOs warranties and representations set forth herein.
17
20. Relationship of Parties; No Authority to Bind . Lender and CSO agree that (a) Lender and CSO are independent contractors to each other in performing their respective obligations hereunder, (b) Lender shall not hold any ownership in CSO or possess a leasehold interest in CSOs offices or any personal property located therein, except that Lender shall be the exclusive owner of all Loan Documents (as defined below), (c) no Lender employees shall work in the CSO offices (except for Lender auditors who may examine CSOs practices from time to time for compliance with the Program Guidelines), and (d) other than as may be necessary to generally effectuate CSOs performance of its duties under this Agreement, Lender shall exercise no authority or control over CSOs employees or methods of operation. Nothing in this Agreement or in the working relationship established and developed hereunder shall be deemed or is intended to be deemed, nor shall it cause, Lender and CSO to be treated as partners, joint venturers, joint associates for profit or otherwise be deemed to create a relationship of agent and principal, and in no event shall CSO be deemed or be entitled or permitted to act as an agent of Lender. Neither party shall have any authority to bind the other party to any agreement. Except as expressly set forth in this Agreement to the contrary, no actions or failure to act on the part of either party hereto shall be construed to imply the existence of any authority not expressly granted herein. CSO is not authorized to, and shall not make or amend any contract, incur any debt or liability, or extend any credit or enter into any obligation on behalf of Lender; modify or amend any document evidencing a Loan (a Loan Document ), extend the time for making any payment which may become due under any Loan; or waive any of Lenders rights or privileges under any agreement made by Lender. CSO understands and agrees that CSOs name shall not appear on any Loan Document as the maker of a Loan. CSO further understands and agrees that CSO shall not have any participation in the credit decision to make or provide a Loan, a Loan renewal or a Loan refinance or any participation in any act pertaining to the funding of a Loan, a Loan renewal or a Loan refinance, except as and if directed by Lender under the Program Guidelines. Notwithstanding any delegation of duties pursuant to the immediately preceding sentence, credit and funding decisions at all times shall be made by Lender, in its sole and absolute discretion. CSO shall refer to Lender any inquiries concerning the accuracy, interpretation, or legal effect of any Loan Document. CSO shall not negotiate the terms of any Loan Document on behalf of Lender. Lender shall be deemed to have received and reviewed the Loan Documents and supporting materials only after the Loan Documents and materials have been previously received at Lenders offices or, if designated by Lender, by Processor. CSO shall not represent to anyone that CSO has the authority or power to do any of the foregoing and shall make no representations concerning Lenders transactions. In no event may CSO act as Lenders agent or represent to others that it may act as Lenders agent. In the event that either party reasonably determines that any provision of this Agreement requires an act that applicable Rules disallow in order for CSO and Lender to operate lawfully as an independent credit services organization and lender, respectively, or otherwise causes a material risk of violating applicable Rules, then the parties shall promptly and in good faith attempt to agree to a modification so as to reduce or eliminate such risk of not conforming to applicable Rules. Lender shall not have any authority or control over any of the property interests or employees of CSO, nor shall Lender have any authority or control over any of the property interests or employees of those affiliates of CSO that own and operate stores at which or other portals through which potential Borrowers are offered the opportunity to complete and submit applications for Loans. CSO has and at all times shall retain the full authority to determine which potential Borrowers are offered the opportunity to complete and submit applications for Loans. As used herein, the term Loan Document shall not include any agreements that CSO or any affiliate of CSO may enter into directly with any party that governs the agreement of CSO or an affiliate of CSO to attempt to broker a Loan on behalf of any Borrower or any party who applies for, but is denied, a Loan.
18
21. Governing Law; Arbitration; Consent to Jurisdiction .
a. Governing Law and Jurisdiction . This Agreement shall be construed and performed in accordance with the laws of the State of Ohio, without reference to Ohio choice of law or conflicts of law. All Parties agree that any arbitration or litigation related to this Agreement or any dispute between the Parties will be conducted in Montgomery County, Ohio, unless the Parties mutually agree on another location. Each Party consents to subject matter jurisdiction, personal jurisdiction and venue in Montgomery County, Ohio.
b. Arbitration . Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration administered by the American Arbitration Association (the AAA) under its Commercial Arbitration Rules, and any temporary or final judgment or award rendered by the arbitrator(s) may be entered in any state or federal court in Montgomery County, Ohio. All Parties expressly waive their right to a jury trial for any such claim.
c. Injunctive and Other Relief . This agreement to arbitrate includes claims for injunctive relief, and the Parties agree that the AAA has the jurisdiction and authority to grant temporary or preliminary injunctive relief pursuant to Rule 38 of the AAA Commercial Arbitration Rules, but also subject to Rule 65(A) and (B) of the Ohio Rules of Civil Procedure.
The Parties agree that the arbitrator(s) shall not have the power to award punitive or exemplary damages for any claim or controversy.
d. Fees and Expenses . The Parties agree that the AAA Commercial Arbitration Rules govern the award of attorney fees and expenses, and hereby expressly permit the AAA arbitrator or panel to award reasonable and necessary attorney fees and expenses in their discretion to the prevailing party in their discretion.
e. Confidentiality . At the request of either Party, the arbitration proceedings and any award or judgment will be conducted in the utmost confidentiality; in such case all documents, testimony and records shall be received, heard and maintained by the arbitrator or panel in confidence, available for inspection only by the parties and their respective attorneys and experts, who agree to maintain such information in confidence.
f. Joinder . Where applicable, all disputes hereunder shall be joined in or consolidated with the related proceeding(s), if any, among Lender, CSO and any affiliated entities.
19
22. Severability . If any provision of this Agreement is held to be improper, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such improper, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the improper, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such improper, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in its terms to such improper, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
23. Successors and Third Parties . This Agreement and the rights and obligations hereunder shall bind and inure to the benefit of the parties hereto and their successors and assigns. Except as expressly provided herein with respect to Third Party Service Providers, the obligations, rights and benefits hereunder are specific to the parties hereto and shall not be delegated or assigned without the prior written consent of the other party, which shall not be unreasonably withheld. As a condition to an assignment of any obligations, rights or benefits hereunder, the assignee of such obligations, rights and benefits must agree to be bound by the terms of this Agreement pursuant to an assignment document executed by such assignee, in form and substance reasonably satisfactory to both Lender and CSO. Nothing in this Agreement is intended to create or grant any right, privilege, or other benefit to or for any person or entity other than the parties hereto. Notwithstanding anything in this Agreement to the contrary, the parties acknowledge that Lender can freely assign its rights in and with respect to the Loans (including, without limitation, its rights under Section 5 hereof) without CSOs prior written consent, provided that the assignee satisfies the conditions set forth in this Section 23.
24. CSO Quarterly Certificate .
a. CSO shall furnish to Lender, upon request, a quarterly compliance certificate affirming its current and previous compliance with each of the following covenants during the applicable calendar quarter:
i. CSO is now and was at all relevant times a duly licensed credit services organization under CSOA;
ii. CSO is now and was at all relevant times and in all material respects in compliance with all Rules and the Program Guidelines and Loan terms;
iii. CSO is not now assisting, nor has it ever assisted any person or entity to procure any loan in Ohio as to which the contractual rate of simple interest per annum was greater than maximum interest rate authorized under Ohio law;
iv. CSO has not engaged and is not now engaged in any discriminatory practice for the purpose of discouraging any Borrower (or prospective Borrower) in any aspect of the credit process or rejecting any Borrower (or prospective Borrower) for credit services on any basis prohibited by the Rules;
v. CSO has been and will remain in compliance in all respects with the GLBA, other applicable federal and state privacy Rules, and this Agreement, as each of them pertains to Customer Information; and
20
vi. CSO has not violated and will not violate any term of this Agreement pertaining to the use and/or protection of Lenders Confidential Information.
b. CSO has and will continue to timely furnish all information required herein, which information has and will be in all material respects, truthful and accurate.
c. Any failure or inability on the part of CSO timely and truthfully to issue such compliance certificate shall be an event of default hereunder on the part of CSO.
d. Such other matters as Lender may reasonably request.
25. Notices . All notices, requests, and approvals required or permitted by this Agreement shall be in writing and addressed/directed to the other party at the address below or at such other address of which the notifying party hereafter receives notice in conformity with this Section 25 . All such notices, requests, and approvals shall be deemed given upon the earlier of actual receipt thereof:
To Lender: |
NCP Finance Ohio, LLC |
|
205 Sugar Camp Circle, Dept. SPD |
||
Dayton, OH 45409 |
||
Fax No.: 937.586.9474 |
||
Attention: CEO |
||
To CSO: |
||
SCIL, Inc. |
||
3527 North Ridge Road |
||
Wichita, Kansas 67205 |
||
Attention: Donald Gayhardt, CEO, |
||
With a copy to: |
Vin Thomas |
|
Chief Legal Officer |
||
Speedy Group Holdings Corp. |
||
3527 North Ridge Road |
||
Wichita, Kansas 67205 |
26. Proprietary Rights . No right, title or interest in, to or under any Proprietary Rights of any party are created or assigned or otherwise transferred to the other party pursuant to this Agreement. Nothing in this Agreement constitutes a work for hire agreement, and nothing in this Agreement constitutes an agreement by a party to assign or otherwise convey title to any Proprietary Rights to the other party. Each party will retain full ownership of and title to all equipment, materials, hardware, software, inventions, innovations and other tangible and intangible property provided by or developed by such Party in connection with this Agreement.
27. Waiver . Neither party hereto shall be deemed to have waived any of its rights, powers or remedies hereunder except in an express writing signed by an authorized agent or representative of the party to be charged with such waiver.
21
28. Counterparts . This Agreement may be executed and delivered by the parties hereto in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. In proving this Agreement in any judicial proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Delivery of a signature hereto by facsimile transmission or by e-mail transmission of a document in the form of an Adobe portable digital file (PDF) shall be as effective as delivery of a manually executed counterpart hereof, and any such facsimile or PDF signature shall be treated as an original signature to this Agreement.
29. Specific Performance . Certain rights which are subject to this Agreement are unique and are of such a nature as to be inherently difficult or impossible to value monetarily. In the event of a breach of this Agreement by either party hereto, an action at law for damages or other remedies at law would be inadequate to protect the unique rights and interests of the parties. Accordingly, the parties may seek to enforce the terms of this Agreement, and the terms of this Agreement shall be enforceable, in a court of competent jurisdiction by a decree of specific performance or injunction, subject to the arbitration provisions of Section 21(b). Such remedies shall, however, be cumulative and not be exclusive and shall be in addition to any other remedy which the parties may have.
30. Further Assurances . From time to time, the parties will execute and deliver to the other such additional documents and will provide such additional information as either may reasonably require carrying out the terms of this Agreement.
31. Amendments and Modifications; Entire Agreement . This Agreement may be amended or modified only by a writing signed by duly authorized representatives of each party and dated subsequent to the date hereof. This Agreement, and the documents executed and delivered pursuant hereto, constitute the entire agreement of the parties and shall supersede and merge all prior communications, representations, or agreements, either oral or written, between the parties hereto and thereto with respect to the subject matter hereof and thereof, except where survival of prior written agreements is expressly provided for herein or therein.
32. Headings. The headings contained in this Agreement are included for convenience only and shall not form any part of this Agreement.
[SIGNATURE PAGE FOLLOWS.]
22
IN WITNESS WHEREOF, this Agreement is executed by the parties authorized officers and representatives and shall be effective as of the date first above written.
LENDER: | CSO: | |||||||
NCP FINANCE OHIO, LLC | SCIL, Inc. | |||||||
By: |
/s/ Stephen McAllister |
By: |
/s/ Don Gayhardt |
|||||
Its: |
CEO |
Don Gayhardt, Chief Executive Officer and President |
23
EXHIBIT 10.29
EXECUTION COPY
$2,000,000
CURO Financial Technologies Corp.
12.000% Senior Secured Notes due 2022
PURCHASE AGREEMENT
February 1, 2017
Mike McKnight
c/o CURO Financial Technologies Corp.,
3527 North Ridge Road,
Wichita, KS 67205
Ladies and Gentlemen:
CURO Financial Technologies Corp., a corporation organized under the laws of Delaware (the Company), proposes to issue and sell to Jefferies LLC and Stephens Inc. (together the Initial Purchasers) $464,000,000 aggregate principal amount of 12.000% Senior Secured Notes due 2022 (the Senior Notes) in accordance with the terms and conditions set forth in the Purchase Agreement, dated as of the date hereof, by and among the Company, the Companys direct and indirect domestic subsidiaries set forth on Schedule I hereto (the Guarantors) and the Initial Purchasers (the Purchase Agreement). The Company proposes to issue and sell to you (the Investor), concurrently with the issuance and sale to the Initial Purchasers pursuant to the Purchase Agreement, $2,000,000 principal amount of Senior Notes. The Companys obligations with respect to the Senior Notes will be unconditionally guaranteed (the Guarantees and, together with the Senior Notes, the Securities) on a senior secured basis by the Guarantors. The Senior Notes are to be issued under an indenture (the Indenture), to be dated as of the Closing Date (as defined below), by and among the Company, the Guarantors and TMI Trust Company, as trustee and collateral agent (the Trustee). The use of the neuter in this Agreement shall include the feminine and masculine wherever appropriate. Certain terms used herein are defined in Section 16 hereof.
The sale of the Securities to the Investor will be made without registration of the Securities under the Act in reliance upon exemptions from the registration requirements of the Act.
In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum, dated January 31, 2017 (as amended or supplemented at the date thereof, including any and all exhibits thereto, the Preliminary Memorandum), and a final offering memorandum, dated February 1, 2017 (as amended or supplemented at the Applicable
Time (as such term is defined in the Purchase Agreement), including any and all exhibits thereto, the Final Memorandum). Each of the Preliminary Memorandum and the Final Memorandum sets forth certain information concerning the Company, the Guarantors and the Securities. The Company hereby confirms that it has authorized the use of the Disclosure Package, the Preliminary Memorandum and the Final Memorandum, and any amendment or supplement thereto, in connection with the offer and sale of the Securities by the Initial Purchasers.
1. Representations and Warranties of the Company . The Company represents and warrant to the Investor as set forth below in this Section 1.
(a) None of the Company or the Guarantors, or any Affiliates thereof, or any person acting on their behalf has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of the Securities under the Act.
(b) None of the Company or the Guarantors, or any Affiliates thereof, or any person acting on their behalf has: (i) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Act) in connection with any offer or sale of the Securities or (ii) engaged in any directed selling efforts (within the meaning of Regulation S under the Act) with respect to the Securities; and each of the Company, the Guarantors, and any Affiliates thereof, and each person acting on their behalf has complied with the offering restrictions requirement of Regulation S under the Act.
(c) Subject to compliance by you with the representations, warranties and procedures set forth in Section 4 hereof, no registration of the Securities under the Act is required for the offer and sale of the Securities to or by the Initial Purchasers in the manner contemplated in the Purchase Agreement.
(d) Each of the Company and the Guarantors and each of their subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct its business as presently conducted.
(e) This Agreement has been duly authorized, executed and delivered by the Company; the Indenture has been duly authorized and, assuming due authorization, execution and delivery thereof by the Trustee, when executed and delivered by each of the Company and the Guarantors, will constitute a legal, valid, binding instrument enforceable against each of the Company and the Guarantors in accordance with its terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors rights generally from time to time in effect and to general principles of equity); and the Securities have been duly authorized, and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers, will have been duly executed and delivered by the Company and the Guarantors and will constitute the legal, valid and binding obligations of each of the Company and the Guarantors entitled to the
- 2 -
benefits of the Indenture (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors rights generally from time to time in effect and to general principles of equity).
(f) No consent, approval, authorization, filing with or order of any court or governmental agency or body is required in connection with the transactions contemplated herein or in the Indenture, except such as may be required under the blue sky laws of any jurisdiction in which the Securities are offered and sold, and except such consents, approvals, authorizations, filings or orders obtained or made on or prior to the date hereof.
(g) None of the execution and delivery of the Indenture or this Agreement, the issuance and sale of the Securities, or the consummation of any other of the transactions herein or therein contemplated, or the fulfillment of the terms hereof or thereof will conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, (i) the charter or by-laws or comparable constituting documents of the Company or any of its subsidiaries; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company or any of its subsidiaries is a party or bound or to which its or their property is subject, except as would not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business (a Material Adverse Effect); or (iii) any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its subsidiaries or any of its or their properties, except as would not reasonably be expected to have a Material Adverse Effect.
(h) No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries or its or their property is pending or, to the knowledge of the Company, threatened that could reasonably be expected to have a material adverse effect on the performance of this Agreement or the Indenture, or the consummation of any of the transactions contemplated hereby or thereby.
(i) The Company has delivered the Disclosure Package to the Investor. A copy of the Disclosure Package is attached hereto as Exhibit A .
(j) The Preliminary Memorandum, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. At the Applicable Time, on the Closing Date and on any settlement date, the Final Memorandum did not and will not (and any amendment or supplement thereto, at the date thereof, at the Closing Date and on any settlement date will not) contain any untrue statement of a material fact or omit to state any material fact necessary to make the
- 3 -
statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty as to the information contained in or omitted from the Preliminary Memorandum or the Final Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Initial Purchaser or the representative thereof, specifically for inclusion therein, it being understood and agreed that the only such information furnished by or on behalf of any Initial Purchaser consists of the information described as such in Section 13 of the Purchase Agreement. The Disclosure Package, as of the Applicable Time, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Disclosure Package based upon and in conformity with written information furnished to the Company by any Initial Purchaser through any representative thereof specifically for use therein, it being understood and agreed that the only such information furnished by or on behalf of any Initial Purchaser consists of the information described in Section 13 of the Purchase Agreement.
2. Purchase and Sale . Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to the Investor, and the investor agrees to purchase from the Company, at a purchase price of 98.155% of the principal amount thereof, plus accrued interest, if any, from February 1, 2017 to the Closing Date, $2,000,000 principal amount of Senior Notes.
3. Delivery and Payment . Delivery of and payment for the Securities shall be made concurrently with the delivery and payment contemplated by the Purchase Agreement (such date and time of delivery and payment for the Securities being herein called the Closing Date). Delivery of the Securities shall be made to the Investor against payment by the Investor of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the account specified by the Company. Delivery of the Securities shall be made through the facilities of The Depository Trust Company.
4. Representations and Warranties of the Investor
(a) Offering Exemption . The Investor understands that the Securities have not been registered under the Act, nor qualified under any state securities laws, and that they are being offered and sold pursuant to an exemption from such registration and qualification based in part upon the representations of the Investor contained herein.
(b) Knowledge of Offer . The Investor is familiar with the business and operations of the Company and has been given the opportunity to obtain from the Company all information that it has requested regarding its business plans and prospects.
(c) Knowledge and Experience; Ability to Bear Economic Risks . The Investor has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment contemplated by this Agreement; the Investor is able to bear the economic risk of its investment in the Company (including a complete loss of its investment).
- 4 -
(d) Limitations on Disposition . The Investor recognizes that no public market exists for the Securities and no representation has been made to the Investor that such public market will exist in the future. The Investor understands that the Investor must bear the economic risk of this investment indefinitely unless its Securities are registered pursuant to the Act or an exemption from such registration is available, and unless the disposition of Securities is qualified under applicable state securities laws or an exemption from such qualification is available, and that the Company has no obligation or present intention of so registering the Securities. The Investor further understands that there is no assurance that any exemption from the Act will be available, or, if available, that such exemption will allow the Investor to transfer any or all of the Securities, in the amounts, or at the time the Investor might propose.
(e) Investment Purpose . The Investor is acquiring the Securities solely for its own account for investment and not with a view toward the resale, transfer, or distribution thereof, nor with any present intention of distributing the Securities. No other person has any right with respect to or interest in the Securities to be purchased by the Investor, nor has the Investor agreed to give any person any such interest or right in the future.
(f) Capacity . The Investor is an Accredited Investor (as such term is defined in Regulation D of the Act) and has full power and legal right to execute and deliver this Agreement and to perform its obligations hereunder.
5. Conditions to the Obligations of the Initial Purchasers . The obligations of the Investor to purchase the Securities shall be subject to consummation of the issuance and sale of Securities to the Initial Purchasers pursuant to the Purchase Agreement.
6. Termination . This Agreement shall be subject to termination by the Investor by notice given to the Company prior to delivery of and payment for the Securities if at any time prior to such time the Purchase Agreement is terminated in accordance with its terms.
7. Representations and Indemnities to Survive . The respective agreements, representations, warranties and other statements of the Company and the Investor set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Investor or the Company.
8. Notices . Notices given pursuant to any provision of this Agreement shall be addressed as follows: (i) if to the Company, the Guarantors or the Investor, to: CURO Financial Technologies Corp., 3527 North Ridge Road, Wichita, KS 67205, Attention: Vin Thomas, Chief Legal Officer, with a copy to: Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019, Attention: Neil W. Townsend, Esq. and Cristopher Greer, Esq., and (ii) if to the Initial Purchasers, to: Jefferies LLC, 520 Madison Avenue, New York, NY 10022, Attention: General Counsel (or in any case to such other address as the person to be notified may have requested in writing).
- 5 -
9. Successors . This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and no other person will have any right or obligation hereunder.
10. Jurisdiction . The Company agrees that any suit, action or proceeding against the Company brought by the Investor, the directors, officers, employees and agents of the Investor, or by any person who controls the Investor, arising out of or based upon this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The Company hereby expressly and irrevocably (i) submits to the non-exclusive jurisdiction of the federal and state courts sitting in the Borough of Manhattan in the City of New York in any suit or proceeding arising out of or relating to this Agreement or the Transactions (as such term is defined in the Purchase Agreement).
11. Integration . This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Investor with respect to the subject matter hereof.
12. Applicable Law . This Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York. The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement
13. Waiver of Jury Trial . The Company hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
14. Counterparts . This Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.
15. Headings . The section headings used herein are for convenience only and shall not affect the construction hereof.
16. Definitions . The terms that follow, when used in this Agreement, shall have the meanings indicated.
Act shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.
Affiliate shall have the meaning specified in Rule 501(b) of Regulation D under the Act.
Disclosure Package shall mean (i) the Preliminary Memorandum, as amended or supplemented at the Applicable Time and (ii) the Pricing Supplement (as such terms are defined in the Purchase Agreement).
Execution Time shall mean the date and time that the Purchase Agreement is executed and delivered by the parties thereto.
- 6 -
Very truly yours,
CURO Financial Technologies Corp. |
||
By: | /s/ Don Gayhardt | |
Name: Don Gayhardt Title: Chief Executive Officer and President |
[Signature Page to Place Placement Purchase Agreement]
Accepted and Agreed to: |
/s/ Mike McKnight |
Mike McKnight |
[Signature Page to Private Placement Purchase Agreement]
Schedule I
Guarantors
CURO Intermediate Holdings Corp.
A Speedy Cash Car Title Loans, LLC
Avio Credit, Inc.
Advance Group, Inc.
Attain Finance, LLC
Cash Colorado, LLC
Concord Finance, Inc.
Evergreen Financial Investments, Inc.
FMMR Investments, Inc.
Galt Ventures, LLC
Principal Investments, Inc.
SCIL Texas, LLC
SC Aurum, LLC
SCIL, Inc.
Speedy Cash
Speedy Cash Illinois, Inc.
SC Texas MB, Inc.
The Money Store, L.P.
CURO Management LLC
Todd Car Title, Inc.
Todd Financial, Inc.
EXHIBIT A
DISCLOSURE PACKAGE
EXHIBIT 10.30
EXECUTION COPY
$4,000,000
CURO Financial Technologies Corp.
12.000% Senior Secured Notes due 2022
PURCHASE AGREEMENT
February 1, 2017
Doug Rippel
c/o CURO Financial Technologies Corp.,
3527 North Ridge Road,
Wichita, KS 67205
Ladies and Gentlemen:
CURO Financial Technologies Corp., a corporation organized under the laws of Delaware (the Company), proposes to issue and sell to Jefferies LLC and Stephens Inc. (together the Initial Purchasers) $464,000,000 aggregate principal amount of 12.000% Senior Secured Notes due 2022 (the Senior Notes) in accordance with the terms and conditions set forth in the Purchase Agreement, dated as of the date hereof, by and among the Company, the Companys direct and indirect domestic subsidiaries set forth on Schedule I hereto (the Guarantors) and the Initial Purchasers (the Purchase Agreement). The Company proposes to issue and sell to you (the Investor), concurrently with the issuance and sale to the Initial Purchasers pursuant to the Purchase Agreement, $4,000,000 principal amount of Senior Notes. The Companys obligations with respect to the Senior Notes will be unconditionally guaranteed (the Guarantees and, together with the Senior Notes, the Securities) on a senior secured basis by the Guarantors. The Senior Notes are to be issued under an indenture (the Indenture), to be dated as of the Closing Date (as defined below), by and among the Company, the Guarantors and TMI Trust Company, as trustee and collateral agent (the Trustee). The use of the neuter in this Agreement shall include the feminine and masculine wherever appropriate. Certain terms used herein are defined in Section 16 hereof.
The sale of the Securities to the Investor will be made without registration of the Securities under the Act in reliance upon exemptions from the registration requirements of the Act.
In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum, dated January 31, 2017 (as amended or supplemented at the date thereof, including any and all exhibits thereto, the Preliminary Memorandum), and a final offering memorandum, dated February 1, 2017 (as amended or supplemented at the Applicable
Time (as such term is defined in the Purchase Agreement), including any and all exhibits thereto, the Final Memorandum). Each of the Preliminary Memorandum and the Final Memorandum sets forth certain information concerning the Company, the Guarantors and the Securities. The Company hereby confirms that it has authorized the use of the Disclosure Package, the Preliminary Memorandum and the Final Memorandum, and any amendment or supplement thereto, in connection with the offer and sale of the Securities by the Initial Purchasers.
1. Representations and Warranties of the Company . The Company represents and warrant to the Investor as set forth below in this Section 1.
(a) None of the Company or the Guarantors, or any Affiliates thereof, or any person acting on their behalf has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of the Securities under the Act.
(b) None of the Company or the Guarantors, or any Affiliates thereof, or any person acting on their behalf has: (i) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Act) in connection with any offer or sale of the Securities or (ii) engaged in any directed selling efforts (within the meaning of Regulation S under the Act) with respect to the Securities; and each of the Company, the Guarantors, and any Affiliates thereof, and each person acting on their behalf has complied with the offering restrictions requirement of Regulation S under the Act.
(c) Subject to compliance by you with the representations, warranties and procedures set forth in Section 4 hereof, no registration of the Securities under the Act is required for the offer and sale of the Securities to or by the Initial Purchasers in the manner contemplated in the Purchase Agreement.
(d) Each of the Company and the Guarantors and each of their subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct its business as presently conducted.
(e) This Agreement has been duly authorized, executed and delivered by the Company; the Indenture has been duly authorized and, assuming due authorization, execution and delivery thereof by the Trustee, when executed and delivered by each of the Company and the Guarantors, will constitute a legal, valid, binding instrument enforceable against each of the Company and the Guarantors in accordance with its terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors rights generally from time to time in effect and to general principles of equity); and the Securities have been duly authorized, and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers, will have been duly executed and delivered by the Company and the Guarantors and will constitute the legal, valid and binding obligations of each of the Company and the Guarantors entitled to the benefits of the Indenture (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors rights generally from time to time in effect and to general principles of equity).
- 2 -
(f) No consent, approval, authorization, filing with or order of any court or governmental agency or body is required in connection with the transactions contemplated herein or in the Indenture, except such as may be required under the blue sky laws of any jurisdiction in which the Securities are offered and sold, and except such consents, approvals, authorizations, filings or orders obtained or made on or prior to the date hereof.
(g) None of the execution and delivery of the Indenture or this Agreement, the issuance and sale of the Securities, or the consummation of any other of the transactions herein or therein contemplated, or the fulfillment of the terms hereof or thereof will conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, (i) the charter or by-laws or comparable constituting documents of the Company or any of its subsidiaries; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company or any of its subsidiaries is a party or bound or to which its or their property is subject, except as would not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business (a Material Adverse Effect); or (iii) any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its subsidiaries or any of its or their properties, except as would not reasonably be expected to have a Material Adverse Effect.
(h) No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries or its or their property is pending or, to the knowledge of the Company, threatened that could reasonably be expected to have a material adverse effect on the performance of this Agreement or the Indenture, or the consummation of any of the transactions contemplated hereby or thereby.
(i) The Company has delivered the Disclosure Package to the Investor. A copy of the Disclosure Package is attached hereto as Exhibit A .
(j) The Preliminary Memorandum, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. At the Applicable Time, on the Closing Date and on any settlement date, the Final Memorandum did not and will not (and any amendment or supplement thereto, at the date thereof, at the Closing Date and on any settlement date will not) contain any untrue statement of a material fact or omit to state any material fact necessary to make the
- 3 -
statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty as to the information contained in or omitted from the Preliminary Memorandum or the Final Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Initial Purchaser or the representative thereof, specifically for inclusion therein, it being understood and agreed that the only such information furnished by or on behalf of any Initial Purchaser consists of the information described as such in Section 13 of the Purchase Agreement. The Disclosure Package, as of the Applicable Time, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Disclosure Package based upon and in conformity with written information furnished to the Company by any Initial Purchaser through any representative thereof specifically for use therein, it being understood and agreed that the only such information furnished by or on behalf of any Initial Purchaser consists of the information described in Section 13 of the Purchase Agreement.
2. Purchase and Sale . Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to the Investor, and the investor agrees to purchase from the Company, at a purchase price of 98.155% of the principal amount thereof, plus accrued interest, if any, from February 1, 2017 to the Closing Date, $4,000,000 principal amount of Senior Notes.
3. Delivery and Payment . Delivery of and payment for the Securities shall be made concurrently with the delivery and payment contemplated by the Purchase Agreement (such date and time of delivery and payment for the Securities being herein called the Closing Date). Delivery of the Securities shall be made to the Investor against payment by the Investor of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the account specified by the Company. Delivery of the Securities shall be made through the facilities of The Depository Trust Company.
4. Representations and Warranties of the Investor
(a) Offering Exemption . The Investor understands that the Securities have not been registered under the Act, nor qualified under any state securities laws, and that they are being offered and sold pursuant to an exemption from such registration and qualification based in part upon the representations of the Investor contained herein.
(b) Knowledge of Offer . The Investor is familiar with the business and operations of the Company and has been given the opportunity to obtain from the Company all information that it has requested regarding its business plans and prospects.
(c) Knowledge and Experience; Ability to Bear Economic Risks . The Investor has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment contemplated by this Agreement; the Investor is able to bear the economic risk of its investment in the Company (including a complete loss of its investment).
- 4 -
(d) Limitations on Disposition . The Investor recognizes that no public market exists for the Securities and no representation has been made to the Investor that such public market will exist in the future. The Investor understands that the Investor must bear the economic risk of this investment indefinitely unless its Securities are registered pursuant to the Act or an exemption from such registration is available, and unless the disposition of Securities is qualified under applicable state securities laws or an exemption from such qualification is available, and that the Company has no obligation or present intention of so registering the Securities. The Investor further understands that there is no assurance that any exemption from the Act will be available, or, if available, that such exemption will allow the Investor to transfer any or all of the Securities, in the amounts, or at the time the Investor might propose.
(e) Investment Purpose . The Investor is acquiring the Securities solely for its own account for investment and not with a view toward the resale, transfer, or distribution thereof, nor with any present intention of distributing the Securities. No other person has any right with respect to or interest in the Securities to be purchased by the Investor, nor has the Investor agreed to give any person any such interest or right in the future.
(f) Capacity . The Investor is an Accredited Investor (as such term is defined in Regulation D of the Act) and has full power and legal right to execute and deliver this Agreement and to perform its obligations hereunder.
5. Conditions to the Obligations of the Initial Purchasers . The obligations of the Investor to purchase the Securities shall be subject to consummation of the issuance and sale of Securities to the Initial Purchasers pursuant to the Purchase Agreement.
6. Termination . This Agreement shall be subject to termination by the Investor by notice given to the Company prior to delivery of and payment for the Securities if at any time prior to such time the Purchase Agreement is terminated in accordance with its terms.
7. Representations and Indemnities to Survive . The respective agreements, representations, warranties and other statements of the Company and the Investor set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Investor or the Company.
8. Notices . Notices given pursuant to any provision of this Agreement shall be addressed as follows: (i) if to the Company, the Guarantors or the Investor, to: CURO Financial Technologies Corp., 3527 North Ridge Road, Wichita, KS 67205, Attention: Vin Thomas, Chief Legal Officer, with a copy to: Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019, Attention: Neil W. Townsend, Esq. and Cristopher Greer, Esq., and (ii) if to the Initial Purchasers, to: Jefferies LLC, 520 Madison Avenue, New York, NY 10022, Attention: General Counsel (or in any case to such other address as the person to be notified may have requested in writing).
- 5 -
9. Successors . This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and no other person will have any right or obligation hereunder.
10. Jurisdiction . The Company agrees that any suit, action or proceeding against the Company brought by the Investor, the directors, officers, employees and agents of the Investor, or by any person who controls the Investor, arising out of or based upon this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The Company hereby expressly and irrevocably (i) submits to the non-exclusive jurisdiction of the federal and state courts sitting in the Borough of Manhattan in the City of New York in any suit or proceeding arising out of or relating to this Agreement or the Transactions (as such term is defined in the Purchase Agreement).
11. Integration . This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Investor with respect to the subject matter hereof.
12. Applicable Law . This Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York. The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement
13. Waiver of Jury Trial . The Company hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
14. Counterparts . This Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.
15. Headings . The section headings used herein are for convenience only and shall not affect the construction hereof.
16. Definitions . The terms that follow, when used in this Agreement, shall have the meanings indicated.
Act shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.
Affiliate shall have the meaning specified in Rule 501(b) of Regulation D under the Act.
Disclosure Package shall mean (i) the Preliminary Memorandum, as amended or supplemented at the Applicable Time and (ii) the Pricing Supplement (as such terms are defined in the Purchase Agreement).
Execution Time shall mean the date and time that the Purchase Agreement is executed and delivered by the parties thereto.
- 6 -
Very truly yours,
CURO Financial Technologies Corp. |
||
By: | /s/ Don Gayhardt | |
Name: Don Gayhardt Title: Chief Executive Officer and President |
[Signature Page to Place Placement Purchase Agreement]
Accepted and Agreed to:
DOUGLAS R. RIPPEL TRUST |
||
By: | /s/ Doug Rippel | |
Name: Doug Rippel Title: Authorized Signatory |
[Signature Page to Private Placement Purchase Agreement]
Schedule I
Guarantors
CURO Intermediate Holdings Corp.
A Speedy Cash Car Title Loans, LLC
Avio Credit, Inc.
Advance Group, Inc.
Attain Finance, LLC
Cash Colorado, LLC
Concord Finance, Inc.
Evergreen Financial Investments, Inc.
FMMR Investments, Inc.
Galt Ventures, LLC
Principal Investments, Inc.
SCIL Texas, LLC
SC Aurum, LLC
SCIL, Inc.
Speedy Cash
Speedy Cash Illinois, Inc.
SC Texas MB, Inc.
The Money Store, L.P.
CURO Management LLC
Todd Car Title, Inc.
Todd Financial, Inc.
EXHIBIT A
DISCLOSURE PACKAGE
Exhibit 10.32
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Cash Colorado, LLC , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and\
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Cash Colorado, LLC |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.33
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Concord Finance, Inc. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq .; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties . Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records. Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Concord Finance, Inc. |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer |
David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.34
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Evergreen Financial Investments, Inc. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq .
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Evergreen Financial Investment, Inc. |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.35
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between FMMR Investments, Inc. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq .); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq .
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT | AGENCY | |||
FMMR Investments, Inc. | Ad Astra Recovery Service, Inc. | |||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.36
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Galt Ventures, LLC , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Galt Ventures, LLC |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.37
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Principal Investments, Inc. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, un-collectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Principal Investments, Inc. |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.38
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between SCIL, Inc. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties . Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
SCIL, Inc. |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.39
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between SCIL Texas , LLC with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT SCIL
Texas, LLC |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.40
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Speedy Cash , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Speedy Cash |
AGENCY
Ad Astra Recovery Service, Inc. |
|
/s/ Donald Gayhardt |
/s/ David Newman |
|
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.41
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Speedy Cash Illinois, Inc. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABIlITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Speedy Cash Illinois, Inc. |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.42
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between The Money Store, L.P. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
- 5 -
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
The Money Store, L.P. |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.43
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Todd Car Title, Inc. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, un-collectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
- 7 -
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) in connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Todd Car Title, Inc. |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.44
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Todd Financial, Inc. , with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with
- 3 -
Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) To Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) in connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT | AGENCY | |||
Todd Financial, Inc. | Ad Astra Recovery Service, Inc. | |||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.45
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between A Speedy Cash Car Title Loans, LLC, with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc., with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with
- 3 -
Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
- 11 -
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) in connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT | AGENCY | |||
A Speedy Cash Car Title Loans, LLC | Ad Astra Recovery Service, Inc. | |||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.46
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Advance Group, Inc., with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc., with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties, and individually as a Party, as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representativ2s, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Account s referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) in connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Advance Group, Inc. , |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer | David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.47
COLLECTION AGENCY AGREEMENT
This Collection Agency Agreement (this Agreement ) is made as of November 25, 2014 (the Effective Date ), by and between Attain Finance, LLC, with its principal office at 3527 North Ridge Road, Wichita, Kansas 67205 (hereinafter referred to as Client ) and Ad Astra Recovery Service, Inc. , with its principal office at 3611 North Ridge Road, Suite 104, Wichita, Kansas 67205 (hereinafter referred to as Agency ). Client and Agency are collectively referred to herein as Parties , and individually as a Party , as required by context.
WHEREAS, Client requires, from time to time, collection services on certain delinquent accounts, and
WHEREAS, Agency is engaged in the business of performing collection services for third parties, and
WHEREAS, Client wishes to retain Agency for the purpose of collecting debts owed to Client by an obligor, i.e. the individual or entity legally liable to Client for payment of the balance on an account, and Agency agrees to be so engaged in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. REFERRAL OF ACCOUNTS FOR COLLECTION. From time to time and in its sole discretion, Client shall refer legally due and owing unpaid credit accounts ( Referred Accounts ) to Agency for collection of the outstanding balance due and Agency agrees to provide the collection services described in this Agreement on such Referred Accounts (the Services ). Unless otherwise agreed to by the Parties in writing, those Referred Accounts placed by Client with Agency and the Services performed by Agency shall be governed by the terms and conditions of this Agreement.
2. RIGHTS AND DUTIES OF CLIENT.
A. Accounts Referred . Client has the discretion to determine the number and types of accounts referred to Agency pursuant to this Agreement. Nothing in this Agreement shall be deemed or construed to mean that Agency has a right to receive a given volume level of accounts referred to Agency over any period of time.
B. Non-Exclusive Nature of Agreement . Agency understands and agrees that the relationship between Client and Agency is not an exclusive relationship and that Client shall have the right to retain other collection agencies to provide the same services for Client as are described herein. Client is not obligated to and makes no commitment of any kind to Agency as to any minimum number or dollar amount of accounts to be referred to Agency under this Agreement. However, once an account is referred to Agency, Client will cease all further attempts on such Referred Account and Client warrants that it shall not refer and no other collection agencies shall attempt to collect any Referred Account while the Referred Account has been placed with Agency.
- 1 -
C. Account Information . Upon referral of an account to Agency for collection, Client will provide Agency with the following information relative to each Referred Account: the applicable creditor name and the required obligor information, including the obligors name, address, phone number(s) and place of employment; the Referred Account number and balance owing; pertinent account history, account memos and documentation ( Account Information ). Thereafter, Client shall provide, in a timely manner, all reasonably necessary assistance, information, and documents that Agency may need to respond to obligor validation requests or discovery inquiries relating to a Referred Account. Client further agrees to provide Agency with information concerning all direct payments, adjustments, and disputes on a Referred Account within a timely manner, not to exceed thirty (30) days.
D. Bankrupt Referred Account . Client shall promptly notify Agency if it receives notification, whether oral or written, of a bankruptcy of an obligor on a Referred Account.
E. Recall of Accounts . Client may recall, by written or verbal notice, any Account previously referred to Agency at Clients sole discretion and at any time and for any reason (a Withdrawn Account ). When an account is recalled, Agency shall promptly, and within no more than three (3) business days of issuance of the recall notice, deliver all Account Information and media pertaining to the Withdrawn Account that Client may have provided to Agency. If litigation has been initiated on a Withdrawn Account but not brought to judgment, Agency will cooperate in obtaining documentation needed to substitute legal counsel. If recall occurs after a judgment has been obtained on a Withdrawn Account, Agency will provide Client with all relevant information pertaining to the judgment and will require its attorney on the Referred Account to execute a substitution of attorney if requested by Client. Client agrees to pay any reasonable outstanding legal fees and costs related to a Withdrawn Account at the time a Withdrawn Account is recalled. Notwithstanding Clients recall of any Referred Account, Agency shall retain the right to receive a Contingent Fee on any payment, settlement, insurance account or judgment earned on a Withdrawn Account, in accordance with the terms in Section 4.D, below, unless other arrangements are made with Client. This section is not a provision for cancelling this Agreement. Client agrees to pay any out of pocket costs, which are commercially reasonable and incurred by the Agency for legal or ancillary services performed on the account.
In addition, if Agency cancels a Referred Account and returns it to Client, Client shall not resubmit such account to Agency without prior written notice.
3. RIGHTS AND DUTIES OF AGENCY.
A. Legal Compliance . Agency shall comply with and abide by all federal, state and local laws and regulations regarding collection agencies and/or governing the collection of debt and consumer credit reporting in the performance of the Services,
- 2 -
including, but not limited, to (i) the Fair Debt Collection Practices Act ( FDCPA ) (16 USC 1601 et seq.); (ii) the Fair Credit Reporting Act ( FCRA ) (15 USC 1681 et seq .); (iii) the FACT Act; (iv) the Equal Credit Opportunity Act (16 USC 1691 et seq .); (v) the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq . administered by the Federal Communication Commission; (vi) the Telephone Sales Rule, 16 C.F.R. § 310.1 et seq .; (vii) the Gramm-Leach-Bliley Act, as amended; (viii) Electronic Funds Transfer Act, 12 USC § 226 et. seq.; (ix) any rules promulgated by the Consumer Financial Protection Bureau ( CFPB ) or any other federal entity and required by Client; and (x) any comparable state or local versions of the foregoing (collectively, the Collection Laws ).
B. Performance Standards . Services shall be performed by Agency in accordance with the terms and conditions of this Agreement, including the minimum requirements of Client for Services, as set forth in Exhibit 1 attached hereto and incorporated by reference ( Service Level Agreement and Performance Standards ).
C. Agencys Policies and Procedures . Upon execution of this Agreement and thereafter, upon request of Client, Agency shall provide to Client, complete and current copies of Agencys training materials, internal controls, and all policies and procedures governing or applicable to the Services to be performed hereunder (collectively, Agencys Policies and Procedures ), specifically, but not limited to, those listed on Exhibit 1 attached hereto, as well as any internal reports or reports or findings or results of any examinations or audits received by any third party concerning Agencys compliance with such Agencys Policies and Procedures; subject to any limitations on disclosure imposed by law. Agency also agrees to adopt and implement such other and further policies, procedures, and training as reasonably requested by Client from time-to-time in order to comply with Clients third party vendor management oversight responsibilities.
D. Agency Personnel . Services shall be performed only by Agency personnel who have been adequately trained and certified by Agency to provide Services in conformance with the terms of this Agreement, including but not limited to training on all Collection Laws, Clients Performance Standards, and the Agencys Policies and Procedures for the Services (each, an Agent and collectively, the Agents ). The Agents shall perform the Services under the direction, supervision and control of Agency management subject to Clients oversight consistent with its third party vendor management responsibilities. Additionally, Agency shall provide from time to time, upon reasonable request of Client, certification records of Agency personnel in accordance with this Section 3D.
E. Monitoring and Self Correction . Because Collection Laws contain subjective legal standards that prohibit conduct that rises to the level of deceit or harassment, Agency agrees to monitor its Agents, employees and vendors to ensure that their conduct is at all times lawful, honest, courteous and business-like. Whenever Agency self-identifies any issues relating to or determines that it is not in compliance with Collection Laws, Clients Service Level Agreement and Performance Standards, or the Agencys Policies and Procedures, it will advise Client and shall immediately correct the conduct or condition that is causing the Agency not to be in compliance with
- 3 -
Collection Laws, Clients Performance Standards, or Agencys Policies and Procedures, whether such noncompliance is attributable to a process, procedure or the conduct of an individual Agent or employee of the Agency.
F. Safeguards . Throughout the term of this Agreement, Agency shall implement and maintain appropriate safeguards, as that term is used in § 314.4(d) of the FTC Safeguard Rule, 16 C.F.R. § 314 (the FTC Rule ), for all customer information, as that term is defined in §314.2(b) of the FTC Rule, owned by Client and delivered to Service Provider pursuant to this Agreement. In addition, Agency shall implement and enforce appropriate policies to comply with the FTC Red Flags rule.
G. Communications with Obligors . Agency shall send an initial disclosure letter that conforms to all applicable state and federal laws including the debt validation requirements of the FDCPA, and contains any required state or local disclosures. Agency shall fully and timely comply with all Collection Law requirements governing oral or written communications with obligors.
H. No Delegation . Agency shall not assign or delegate any portion of the performance of the Services under this Agreement to any third party over which Agency does not have direct control and supervision without the express written consent of Client. Notwithstanding the foregoing, Agency may use its own employees or contractors retained by Agency to perform the collection services on Referred Accounts.
I. Trust Account . Agency shall maintain a trust account at an FDIC-insured financial institution in trust for Client into which it shall deposit within two (2) business days of receipt, all payments it receives on Referred Accounts (the Trust Account ), subject to later remittance to Client in accordance with Section 5, below. Agency shall provide Client with the bank location of the Trust Account, and upon demand, provide Client with account records, statements and deposit receipts. However, for security reasons Agency shall not be required to disclose the Trust Account number to Client. Agency shall immediately notify Client of any changes in the location of the Trust Account. Agency shall not co-mingle funds of its other customers in the Trust Account. Client hereby authorizes Agency to act as Clients attorney-in-fact for the sole purpose of accepting funds in payment of debts due Client which have been referred to Agency for collection, including endorsements of checks, money orders, and drafts payable to Client, or jointly to Client and Agency, for deposit into Agencys Trust Account.
J. Settlements . Client authorizes Agency to settle any Referred Accounts, within its reasonable discretion and in good faith to maximize recovery of the balance owing on the Referred Account, without written authorization by Client. Agency agrees to accept payments from obligors via check, debit, credit, recurring ACH, money order, or cash. Agency further agrees to permit obligors to make payment directly to Client on Referred Accounts at any time, provided such any such Referred Account is not in litigation, and subject to the reporting requirements as set forth in numbered paragraphs 2C, 4B herein, and Exhibit 1 contained herein.
- 4 -
K. Legal Action . Agency will not initiate any form of legal action on a Referred Account unless Client has approved in writing the third party engaged, and its respective process to be used, in each market. Client reserves the right to interview any third party before a Referred Account is placed with such third party for legal action, and to approve reasonable criteria for bringing such action. All Referred Accounts upon which Agency initiates permitted legal action will be subject to the Contingent Fee gross proceeds, as set forth in Section 4.A, below. Client will be responsible for all legal fees and court costs in connection with Referred Accounts upon which legal action has been authorized by Client. Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. This provision shall not require Client to pay legal fees Agency may incur in connection with the defense of any claims asserted against Agency by an obligor or an alleged obligor.
L. Third Parties. Client has the right to review copies of any agreements, contracts, third party due diligence or any other work Agency has on third party retained by Agency and which Agency shall provide to Client upon Clients reasonable request. Client reserves the right to reject the use of any third party at any time in its sole discretion. Agency shall always inform Client of the retention of any third party before work is performed on behalf of the Client.
M. Quarterly status meetings . Agency agrees that it shall meet quarterly with Client to formulate a strategy on accounts, staffing and adequacy of resources to ensure proper servicing of the Clients business. This shall include completing a quarterly plan as mutually agreed upon by the parties.
N. Bankrupt Referred Account . Upon receipt of information that the obligor on a Referred Account has filed for bankruptcy or receivership, Agency shall immediately cease all efforts to collect on the Referred Account. Agency shall promptly transmit to Client all relevant information regarding the obligors bankruptcy. If Agency receives written notice of the obligors bankruptcy, Agency shall promptly transmit such notice to Client. If notice of a bankruptcy filing is provided verbally by the obligor or a third party, Agency shall attempt to obtain information regarding the jurisdiction in which the case has been filed and the case number assigned to the obligor. If bankruptcy information cannot be provided, Agency shall request the name and telephone number of the obligors attorney and shall request from the attorney a copy of the filed Voluntary Petition or the §341 Notice.
O. Credit Bureau Reporting . Agency agrees that any credit bureau reporting will be done in full compliance with the FCRA and all applicable statutes and regulations and Agencys policies and procedures related to same. All credit reporting shall be in compliance with the Furnisher Rule 12 CFR § 1022.40 et seq.
P. Records . Agency shall maintain records for all Referred Accounts, which shall contain at least the following information: date of referral, balance owing, records of all collection activity, all payments made on the Referred Account and Contingent Fee deducted. The foregoing information shall be provided upon reasonable request to Client
- 5 -
at any time during normal business hours. The information set out in this section must be retained by Agency in a form that will accommodate an audit pursuant to Section 14. In addition, the information shall be retained by Agency for the longer of (i) seven (7) years from the date of recall of a Referred Account by Client or closure for whatever reason (paid in full, settled, uncollectable, etc.) by Agency or (ii) any period required by law.
Q. Customer Disputes . Agency agrees to maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts. Agency agrees to provide access to Client to copies of any written complaint received from the obligor concerning the Agencys handling of a Referred Account as well as the response made or action taken by Agency. Client reserves the right to recall any Referred Account as a result of a customer complaint.
R. Cooperation . Notwithstanding and in addition to the rights and duties set forth in this Agreement, Agency agrees to provide any documentation, records, or evidence in its possession reasonably requested in writing by Client regarding all Referred Accounts, including affidavits, whether or not the Account is still placed with the Agency. This duty shall survive the termination of this Agreement.
S. Status Reports . In addition to the monthly Reconciliation Statements, Agency shall provide Client with status reports in a mutually agreed upon format and on time frame agreed to by the Parties. Such status reports shall contain sufficient information for Client to determine the number of Referred Accounts being worked by Agency, when the file was placed with Agency, and the dollar amounts collected in the current reporting period.
4. COMPENSATION. As its sole compensation for performing the Services under this Agreement Agency shall earn and be paid a Contingent Fee (as defined and calculated herein) for any money collected on a Referred Account of Client.
A. Contingent Fee . For the purposes of this Agreement, the Contingent Fee shall be thirty percent (30%) of the gross amount of money collected by Agency on a Referred Account of Client, which Agency is authorized to calculate on the recovered proceeds, and withhold from the money collected on any Referred Account as payment for its services under this Agreement. Pursuant to Section 3.H, above, any collection costs recovered, whether obtained in or out of court judgment shall not be included in the calculation of gross proceeds and Client shall be reimbursed first for all court costs from any recovered proceeds from the Referred Account prior to calculation of the Contingent Fee. Any interest awarded by a court or collected by Agency shall be included in the gross amount of money collected for purposes of calculating the Contingent Fee. The right of Agency to receive the Contingent Fee will apply, regardless of the collection activity conducted as of the date of payment, including whether the Referred Account has been placed with and reviewed by Agencys attorney(s), a demand letter from the attorney has been sent or a statement of claim has been filed. Notwithstanding the foregoing, the amount of the Contingent Fee is subject to renegotiation throughout the term of the Agreement. Any changes to the amount of Contingent Fee agreed upon in this Agreement may only be modified by a written agreement signed by both Parties.
- 6 -
B. Direct Payments Made to Client . Agency shall be entitled to receive the Contingent Fee provided for in Section 4.A on all money received on a Referred Account, whether paid to the Agency or to the Client. Client will use reasonable efforts to monitor any payments and/or settlements actually received directly from the obligor in connection with a Referred Account (a Direct Payment ). Client shall notify the Agency on a regular basis of all Direct Payments, or if the Agency becomes aware of such payment, the Agency will notify Client. Client shall promptly pay to Agency via ACH or wire transfer to the Agency account listed in Schedule A attached hereto ( Agency Account ), the Contingent Fee due and payable on any Direct Payment. In the event Client fails to pay to Agency the Contingent Fee due and payable on any payments made directly to Client within seven (7) days of collection, Agency shall be entitled to calculate and invoice Client for said Contingent Fee. Client will provide Agency with a report of all Direct Payments on a monthly basis (a Direct Payment Statement ), which shall indicate (i) the Referred Account numbers for which Client received a Direct Payment of money, (ii) the amounts received, (iii) the Contingent Fee due and payable, and (iv) the confirmation of payment of the Contingent fee to Agency. The Direct Payment Statement will be submitted to Agency pursuant to the provisions for notice in this Agreement.
C. Reporting of NSF Checks . Agency shall report to Client, in the next scheduled report, any check returned to Agency due to insufficient funds. In the event that Agency has tendered to Client an Invoice (as defined herein) for any portion of the Contingent Fee due to Agency in connection with any dishonored check, Agency next monthly Invoice shall designate a corresponding reduction to reflect the obligors failure to pay on the Referred Account.
D. Payments on Withdrawn Accounts . If a Referred Account is recalled and withdrawn by Client prior to completion of collection by Agency (pursuant to the terms herein), Agency shall be entitled to and shall be paid a Contingent Fee on any payments received by Agency or by Client within thirty (30) days following the date of the recall of the Referred Account.
5. REMITTANCE OF COLLECTED FUNDS; INVOICE AND PAYMENT OF CONTINGENT FEE. Agency shall be responsible for collection of all payments made on a Referred Account and for remitting the gross proceeds and reporting to Client on all Referred Accounts as follows: Collections made by Agency on Delinquent Accounts will be deposited promptly into a trust account maintained in a reputable bank. Such collections held in trust by Agency, shall be the property of Client and not available for any other use by Agency. All collections made by Agency on Clients accounts will be remitted net of Agency Commission by the 7th day of each calendar month. Remittance advice will be sent to Client no later than the 7th day of the for the previous months collections. The remittance advice shall contain a list of the Consumers name, account number, amount collected, and whether the payment was made directly to Agency or Client, and fee due Agency. Client agrees to remit monies due Agency within seven (7) days of receipt of remittance/invoice.
6. REPRESENTATIONS AND WARRANTIES OF CLIENT. Client represents and warrants to Agency as follows:
- 7 -
A. All Referred Accounts placed with Agency hereunder are lawfully due and owing, that they are owned by the Client (or its affiliates and customers) and that the Referred Accounts are not subject to any claim of fraud or otherwise wholly or partially invalid due to payment or settlement by the obligor or any other claim or defense.
B. Information and data on the Referred Accounts is accurate to the best of Clients information and knowledge.
C. Client is not aware of any disputes regarding the Referred Accounts, including any bankruptcy filing or expiration of the applicable statute of limitations.
7. REPRESENTATIONS AND WARRANTIES OF AGENCY. Agency, for itself and its Agents, represents and warrant to Client as follows:
A. Agency holds or shall obtain all state, local or other debt collection-related licenses as may be required for Agency or its employees to perform the Services hereunder (the Licenses ), and, Agency has obtained any and all regulatory or governmental approvals necessary to provide the Services. Additionally, Agency shall not perform Services in any state or locality for which Client does not have a License or for which registration is otherwise required in order for Agency Agents to lawfully perform the Services in that state or locality. Agency agrees to promptly provide to Client a current list of all Licenses, including expiration dates, as reasonably requested from time to time. Agency agrees to notify client within three (3) business days of any regulatory or administrative action, threatened or actual, with respect to suspension, cease and desist, or revocation of any license.
B. Agency is financially solvent and agrees to produce financial records evidencing such to the Client as reasonably requested. Agency agrees to use accounting principles in accordance with GAAP in its financial records.
C. Agency and its Agents shall comply with all applicable Collection Laws and shall utilize only acceptable legal means, methods and procedures at all times in collecting the balances on Referred Accounts.
D. The Agencys Policies and Procedures comply with all objectives and procedures for a compliance program as set forth by the CFPB, including but not limited to all requirements for management oversight, a Compliance Management System, compliance programs and responding to consumer complaints and disputes made to either credit reporting agencies or directly to Agency.
E. Agency has a compliance management system in place, and has a designated compliance officer or other person responsible for insuring that Agency performs Services in compliance with all Collection Laws. Such compliance officer shall report directly to Agencys Board of Directors.
F. Agency shall not allow any Agency Agents to perform the Services unless and until it has performed a background check on each such Agency employee and the Agency employee has met the required background check standard. Agency also agrees to devote the necessary resources, capital and human, to maintain its Compliance Management System and compliance with all applicable Collection Laws.
- 8 -
G. All Agency Agents shall be trained on and shall comply with the FDCPA and applicable Laws and shall have received acceptable passing levels as mutually agreed upon by the parties. Agency also agrees to perform background checks on its employees and agents on no less than an annual basis and provide Client with a certification, along with supporting documentation, of compliance with this provision.
H. Agency shall comply in all material respects with all laws applicable to Agency, as well as with all of the Service Level Agreement and Performance Standards as set forth in Exhibit 1 hereto, as may be amended from time to time.
I. Agency shall maintain records of any disputes, threats of lawsuits or actual lawsuits involving any Referred Accounts or in the event that Agency is subject to examination or investigation by the CFPB. Agency shall provide periodic reports to Client of any such action.
J. Agency further agrees to comply with all laws related to the confidentiality and protection of private data, and understands that information submitted to it by Client is confidential, and that its duties to protect such data shall survive the termination of this Agreement.
K. Agency shall refrain from any practices that may reasonably be expected to reflect adversely upon the reputation of Client.
L. No part of the Services or the Infrastructure of Agency will infringe on any third-party intellectual property rights.
M. Agency has and will continue to take all necessary precautions and security measures so as to prevent any unauthorized access to Client Data (as defined herein), to Clients Systems and databases or to any other information supplied or made accessible by Client or Clients customer(s) to Agency.
N. Agency shall not add any convenience fee or surcharge to any payments made by an obligor.
8. VERIFICATION OF DEBT. Client acknowledges that in connection with the collection of delinquent consumer debts, the FDCPA requires Agency to provide an obligor with verification of the underlying obligation if that request is made to Agency in writing by an obligor within thirty (30) days of Agencys initial communication with the obligor. The law prohibits Agency from collecting on any obligation once a verification request is made to Agency from the obligor until such time as said verification has been mailed by Agency to the obligor. Client acknowledges that in any situation in which it does not provide Agency with the requested verification, Agency can no longer legally attempt to collect the Referred Account. In such case, Client acknowledges that the Agency will return the Referred Account to Client upon request.
- 9 -
9. TERMINATION OF AGREEMENT. This Agreement shall be effective upon execution by each of Client and Agency and will continue in effect until terminated as provided herein.
A. Termination without Cause . This Agreement may be terminated without cause by either Agency or Client, upon giving the other Party thirty (30) days written notice prior to the stated date of termination.
B. Termination by Client with Cause . Upon the occurrence of a Termination Event (as defined below) Client shall have the right to terminate this Agreement immediately by providing written notice of termination to Agency. A Termination Event shall have occurred as to Client if:
i. Agency dissolves, closes for business, terminates its existence, fails to pay debts or make remittances to Client as they become due, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian, or makes an assignment for the benefit of creditors;
ii. Agency is acquired by or merges into another Agency by which Client does not wish to be represented following such merger or acquisition;
iii. Agency fails to perform any legal obligation or duty owed to Client or violates any of the terms or covenant set forth in this Agreement, including but not limited to Agencys failure to comply with any Collection Laws, Clients Performance Standards, or the Agencys Policies and Procedures;
iv. Any third party obtains an adverse decision against Agency regarding the improper handling of client funds;
v. Agency or any of its members, employees or agents commits an act amounting to dishonesty or breach of trust with respect to Client or any Referred Account during the term of this Agreement;
vi. Disciplinary or disbarment proceedings are initiated against Agency or Agencys attorney; or
vii. Client identifies any material issues, in its sole determination, in any Audit performed by Client pursuant to Section 14.
C. Termination by Agency with Cause . Upon the occurrence of a Termination Event (as defined below), Agency shall have the right to terminate this Agreement immediately by providing written notice of termination to Client. A Termination Event shall have occurred as to Agency if:
i. Client dissolves, closes for business, terminates its existence, files for bankruptcy (either voluntarily or involuntarily), applies for the appointment of a receiver or custodian or makes an assignment for the benefit of creditors; or
- 10 -
ii. Client fails to perform any material provision of this Agreement within thirty (30) days after having been provided a written description of its breach by Agency.
10. RETURN OF ACCOUNTS AND REQUIRED INFORMATION. Upon termination of this Agreement, with or without cause, Agency agrees to use its best efforts to cooperate with Client in such termination. Specifically, but not limited to, Agency shall return to Client all Referred Accounts, along with all Account Information and a current status report of all such Referred Accounts, within thirty (30) business days after the date of termination. If requested by Client, after this thirty (30) business day period, Agency shall provide Client with any additional information and/or status reports regarding the returned accounts that may be requested by Client, provided such request is reasonable. Within thirty (30) days following the date that Agency has returned all accounts and provided all status reports and information reasonably required by Client, Client shall remit to Agency any Contingent Fees earned by Agency pursuant to this Agreement but not previously paid. Notwithstanding the foregoing, Client agrees that Agency does not need to return to Client upon termination any non-bankruptcy account that meets the following parameters: (i) accounts with payment activity within the last ninety (90) days, (ii) accounts where legal action has been initiated and a statement of claim, proceeding supplemental, debtor exam or other legal document has been filed with the court, or (iii) any accounts with arbitration claims or with post-dated checks.
A. Retained Rights . Termination of this Agreement by either Party will not affect the collection enforcement or validity of any accrued obligations owing between the Parties as to any Referred Account. Notwithstanding the foregoing and termination for cause, Agency shall retain the right to receive the Contingent Fee on paying accounts, settlements, insurance accounts or judgments, as well as the right to recover any court costs advanced on said accounts.
B. No Additional Compensation . Notwithstanding any other provision of this Agreement, the obligation of Agency to return Referred Accounts, provide current status reports of all such accounts or information reasonably required by Client shall be without right to any additional Contingent Fee, administrative fees or other compensation of any kind or type whatsoever after such termination date, including, without limitation, in quantum meruit , for any Services rendered prior to termination (except on recoveries received and remitted to Client pursuant to this Agreement prior to termination) whether or not said Services result in or contribute to recoveries received after termination.
11. INDEMNIFICATION.
A. By Agency . Agency hereby agrees to indemnify, defend and to hold Client, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all claims, damages, costs, losses or liabilities, including, without limitation, reasonable attorneys fees and expenses ( Losses ) to the extent such Losses arise out of or are primarily related to (i) a breach by Agency of this Agreement including, but not limited to, Agencys failure to comply with all relevant Collection Laws, or (ii) any negligent or wrongful acts, errors, or omissions of Agency or its employees or agents in
- 11 -
performing any obligation or duty it has under this Agreement; provided however, that Agency shall have no obligation to indemnify or hold Client harmless due to or arising out of an error in any information furnished by Client to Agency concerning a Referred Account.
B. By Client . Client agrees to indemnify, defend and hold Agency, its officers, directors, employees, agents, attorneys, subsidiaries, affiliated companies, parent companies, representatives, and successors and assigns, harmless from and against all Losses to the extent such Losses arise out of or are primarily related to (i) the negligent or wrongful acts, errors, or omissions of Client or its employees, agents affiliates, assigns or any creditor or prior account holder, or the employees or agents of any of them, in connection with this Agreement, including but not limited to errors or omissions in connection with information furnished by Client to Agency concerning a Referred Account, or (ii) any collection effort by Client or any other collection agency as to a Referred Account.
C. Notice . Client and Agency agree to notify the other party within three (3) business days of any claim, counterclaim, cross-claim, CFPB, FTC or other federal or state regulatory inquiry or complaint, or any other inquiry or complaint asserted against the other in connection with a Referred Account or group of Referred Accounts.
D. Defense . Each Party will assume its own proper responsibility in connection with any claims made by a third party against Client and/or Agency. Agency is an independent contractor and is solely responsible for the employment, acts and omissions, control and direction of its employees and agents. If the acts of the employees or agents of Agency are the proximate cause of any action brought against Client, Agency will assume full responsibility for the defense of said action and payment of any resulting judgment. If the acts of Client or employees etc. are the proximate cause of any action brought against Agency by third party, then Client will assume full responsibility for the defense of said action and payment of any judgment. The Party providing indemnification has sole discretion in its choice of counsel and may direct the litigation at its discretion.
E. Survival . The Parties agree that these provisions shall apply even in the event one or both Parties deem the cause of action at issue to be frivolous or otherwise unsupported by law. The indemnification obligations provided for in this section shall survive the termination of this Agreement.
12. LIMITATION OF LIABILITY. Except to the extent caused by the negligence, breach of this Agreement, or willful misconduct of Agency, Agency shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Client of the possibility of such damages. Except to the extent as specifically set forth in this Agreement, Client shall not be liable for any lost profits, consequential, exemplary, incidental, indirect, or special damages even if advised by Agency of the possibility of such damages. The provisions of this section shall survive termination of this Agreement or any Amendment hereto.
- 12 -
13. INSURANCE. Prior to the commencement of any work, during the term of this Agreement and for a period of three (3) years following termination of this Agreement, Agency shall acquire and maintain sufficient insurance or bond to adequately protect Agency and Client: (a) from any and all claims by Agency employees, agents or subcontractors, for personal injury (including death) whether or not such claims are under applicable workers compensation laws; and (b) from any and all claims for injury (including death), loss, or damage to any person or property which may arise or result from any allegedly tortious act or omission by Agency or any person employed by or under contract with Agency. In addition, Agency shall take out and maintain sufficient insurance to satisfy any and all claims by or against Client for damages resulting from professional errors and omissions by Agency that are not in compliance with accepted professional standards, applicable law or the provisions of this Agreement. All such insurance policies shall identify Client as an additional insured or beneficiary of such policy or bond. Agency shall ensure that Client receives a copy of said certificate showing coverage limitations and expiration date (and any renewal or extension thereof) and shall endeavor to have the insurance carrier or underwriter, to the extent allowable, provide Client with advance written notice no later than ten (10) days prior to any material alterations to or cancellation of such policy or bond. Client shall not be required to make any payments under this Agreement prior to receiving acceptable certificates of insurance.
14. AUDIT. Each Party shall maintain accurate records pertaining to the Referred Accounts that are subject to this Agreement. During the term of this Agreement, Client or its designees shall have the right, at any time, to conduct unscheduled on-site operation standards audits and to examine all of Agencys records concerning the Clients Referred Accounts and the collection thereof, to audit the Trust Account (including deposit receipts) and to measure or evaluate Agencys performance and professionalism (an Audit ). Such examinations shall be conducted during normal working hours, with commercially reasonable notice, at the main office or any branch office of Agency. Agency shall provide access to all collection records on the Referred Accounts, reasonable workspace, heat or air conditioning, adequate lighting and use of on-site photocopying equipment and telephones. Agency shall photocopy, or allow Client to photocopy, any documents selected by Client, which relate to Agencys performance under this Agreement. Client shall reimburse Agency for all expenses reasonably incurred by Agency in connection with such Audits. In addition, subject to password protocols and other reasonable security measures of Agency, Agency shall also provide Client with remote, electronic access to Agencys collection system used to perform Services on all Referred Accounts, which Client shall be permitted to access at any time, in its discretion, for purposes of remote auditing. In addition to the rights to audit Agency, Client shall also have the right to verify the balances on Referred Accounts by sending letters to the obligors on Referred Accounts.
In addition, Agency agrees to an independent audit of its performance on an annual basis by a third-party auditor mutually agreed upon between the Parties (the Independent Audit ). All costs and fees associated with the Independent Audit shall be the sole responsibility of Client.
15. CONFIDENTIALITY. The Parties agree that any and all Confidential Information (as defined herein) shall be used solely for the purposes of the lawful performance of this Agreement and shall not be used or disclosed to any third party except as authorized herein or by the Parties in writing.
- 13 -
A. Definition . As used in this Agreement, Confidential Information shall include (i) all information regarding a Referred Account or the obligor, (ii) each Partys proprietary information, trade secrets or other business information that is either identified as or should otherwise be reasonably understood to be of a confidential nature, as may be disclosed to the other Party in connection with the performance of this Agreement, and (iii) this Agreement and the nature, terms and conditions of this Agreement. In addition, Agency understands that it will be exposed to certain valuable and confidential information that is the exclusive property of Client or its affiliated Clients, including Consumer Financial Information (as defined in Section 15, below) of obligors and related parties. Agency will be given access to this information solely for the purposes of effectively collecting the Referred Accounts. Agency shall not disclose to any third party any information disclosed by Client or acquired by Agency in the performance of services nor shall it permit any third party access to such information. Agency agrees to keep confidential all information herein and/or related to Client, its investors/clients, a debt owner and the Referred Account obligors, including but not limited to the Privacy Provisions of the Gramm-Leach-Bliley Act of 1999 for which Client or the Agency obtain or develop as a result of collecting Accounts. All such additional information is deemed Confidential Information under this Agreement and shall be used solely by Agency as necessary for the performance of Services under this Agreement.
B. Limited Use . Each Party agrees it shall not, without the prior written consent of the other Party or as permitted by the terms and conditions of this Agreement, do any of the following: (i) disclose any Confidential Information to any third party; (ii) permit any third party access to such Confidential Information; or (iii) use Confidential Information for any purpose other than collecting debt on the Referred Accounts referred to Agency by Client.
C. Exceptions . The confidentiality obligations imposed on the Parties by this section shall not apply to Confidential Information which, through no fault of a Party: (i) is required to be disclosed in order to comply with applicable laws and regulations, court orders or other process of law, (ii) is required to be made to any tax, banking or other regulatory authority, or legal or financial advisor of either Party, (iii) is made in connection with the sale or other transfer of any Account by a Party or its successors or assigns, (iv) is made to such Partys current or prospective lenders or investors, (v) was already known to that Party prior to disclosure of the same Confidential Information by the other Party or is independently discovered by the Party, (vi) subsequently becomes available to the public at large without a breach of this Agreement, or (vii) is supplied in the normal course of Agencys business under permissible use requirements.
D. Return of Confidential Information . At any time upon the request of Client, Agency shall return all Confidential Information concerning a Referred Account in its possession to Client. Upon termination of this Agreement, both Parties shall return the Confidential Information of the other Party to the Party to which the Confidential Information belongs.
- 14 -
E. Enforcement . In the event of any breach of the obligations under this Section, the Parties acknowledge that the Party adversely affected by the breach would have no adequate remedy at law to protect its Confidential Information, since the harm caused by such a breach could not be easily measured and compensated for in damages, and that in addition to such remedies as may be available, a Party may obtain injunctive relief including, but not limited to, specific performance.
F. Confidentiality of Agreement . Client and Agency agree that this Agreement and its terms are strictly confidential and shall not be disclosed to any person, firm, corporation, or other entity, orally or in writing, except as may be necessary to comply with applicable laws and regulations, court orders or other process of law, confer with a financial advisor, tax preparer, or lawyer regarding the subject matter of this Agreement, or to enforce this Agreement.
G. Survival . The provisions of this section shall survive the expiration or any termination of this Agreement or any Addendum hereto.
16. PRIVACY OF CONSUMER FINANCIAL INFORMATION. The Parties acknowledge that the Federal Privacy of Consumer Financial Information Regulation (12 CFR Part 40), as amended from time to time (the Privacy Regulation ), issued pursuant to Section 504 of the Gramm-Leach-Bliley Act (15 U.S.C.6 801 et seq .) ( GLBA ) governs disclosures of non-public personal information about consumers.
A. Nonpublic Personal Information . Agency controls access to the network on which any Nonpublic Personal Information ( Nonpublic Personal Information as defined in the Privacy Regulation) released to the Agency by Client is stored, through the compliance with and utilization of its information security measures that restrict access to such Nonpublic Personal Information.
B. Agency hereby agrees that it shall:
i. Comply with the GLBA and shall not reuse or disclose any Nonpublic Personal Information to the extent prohibited by the GLBA;
ii. Not disclose or use any Nonpublic Personal Information that it obtains from Client except to carry out the purposes for which Client provided such Nonpublic Personal Information, or as otherwise permitted by the Privacy Regulation and other applicable laws;
iii. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client to any other entity, except as in compliance with GLBA;
iv. Not disclose any Nonpublic Personal Information disclosed to the Agency by Client except as follows:
(1) Clients affiliates, and any creditor whom Client represents, with the prior consent of the Client;
- 15 -
(2) To an unaffiliated third party, in the ordinary course of business in order to carry out the activity for which the information was disclosed to the Agency, pursuant to one of the following exceptions to the Privacy Regulation:
(a) As necessary to effect, administer or enforce a transaction that a consumer requests or authorizes;
(b) In connection with servicing or processing a financial product or service that a consumer requests or authorizes, or maintaining or servicing the consumers account with the Client or a creditor whose account(s) were forwarded to Agency for collection services by Client;
(c) With the consent or at the direction of the consumer; or
(d) To protect the confidentiality or security of Clients records pertaining to the consumer, service, product or transaction; to protect against or prevent actual or potential fraud, unauthorized transactions, claims or other liability; for required institutional risk control; for resolving consumer disputes or inquiries; to persons holding a legal or beneficial interest relating to the consumer, or acting in a fiduciary or representative capacity on behalf of the consumer; to provide information to insurance rate advisory organizations, guaranty funds or agencies, or the Clients attorneys, accountants and auditors; to the extent specifically permitted or required under other provisions of law, to law enforcement agencies, a state insurance authority, self-regulatory organizations or for an investigation on a matter related to public safety; to a consumer reporting agency in accordance with the Fair Credit Reporting Act; to comply with federal, state or local laws, rules and other applicable legal requirements, or a properly authorized civil, criminal or regulatory investigation, or subpoena or summons; or to respond to judicial process or government regulatory authorities having jurisdiction over Agency for examination, compliance or other purposes as authorized by law.
C. All capitalized terms used in this section and not otherwise defined shall have the meanings set forth in the Privacy Regulation.
17. NO EXCLUSIVITY. This is not an exclusive agreement. It is expressly understood and agreed by the Parties hereto that Client may choose to use the Services of Agency or not, at Clients sole election, and that Client is under no obligation to refer accounts to Agency and has no obligations to Agency except as set forth in the Agreement. It is further understood and agreed that Agency may solicit potential clients and recruit new business on its own and may perform collections services for other clients.
- 16 -
18. INDEPENDENT CONTRACTOR. Agency and Client understand, acknowledge and agree that Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Both Parties acknowledge that Client is retaining Agency as an independent contractor, as that term is defined by applicable state and federal law, including the Internal Revenue Code, for the exclusive purpose of collecting, on a contingency basis, delinquent balances outstanding on accounts owned by Client and referred to Agency hereunder. Client is not selling any accounts, or any underlying debt on the Referred Accounts, to Agency by virtue of this Agreement. Nothing in this Agreement, directly or indirectly, shall be deemed or construed as creating an employee/employer, agency, partnership, or joint venture relationship between Agency and Client. In that regard, the legal relationship of Client and Agency is limited to the terms and conditions of this Agreement, which includes any amendment hereto. Each party shall have the obligation to supervise, manage, contract, direct, procure, perform or cause to be performed, all work to be performed under this Agreement and shall be liable for all acts or omissions of its employees and agents in performing their respective obligations hereunder. No audit of Agency by Client or its designees for the purpose of determining Agencys compliance with the terms and conditions of this Agreement shall be deemed or construed to mean that Client or its customers are in any way managing the operational activities of Agency. Agency understands and agrees that it has complete control over the operation and decision making of its business.
19. SECTION 23035(I) NOTICE. Notwithstanding anything in this Agreement to the contrary, to the extent this Agreement or the referral of accounts is deemed to constitute a sale or transfer of debt, pursuant to Section 23035 (i) of the Financial Code of California, this Agreement constitutes a written agreement and disclosure that any debt on checks held or transferred pursuant to a deferred deposit is made pursuant to Section 23035 of the Financial Code of California and is not subject to provisions of Section 1719 of the Civil Code of California, and neither Party may be required to pay treble damages if the check or the checks are dishonored.
20. ENTIRE AGREEMENT. The Parties acknowledge and agree that this Agreement constitutes the entire Agreement between them and shall supersede all prior agreements, understandings, writings, proposals, representations and communications, oral or written, with respect to the subject matter hereof.
21. FURTHER ASSURANCES. Each party agrees to execute such other documents as may be necessary to implement or perform this Agreement.
22. SEVERABILITY. If any provision of this Agreement is construed to be invalid, illegal or unenforceable, for any reason, then the remaining provisions of this Agreement shall remain enforceable. Additionally, any failure by Client to enforce Agencys strict performance of any provision of this Agreement will not constitute a waiver of its right to subsequently enforce such provision or any other provision of this Agreement.
23. AMENDMENTS. This Agreement cannot be modified or amended except with the written consent of both parties. Such modification shall be in the form of an amendment, letter of understanding or written addendum to the Agreement.
- 17 -
24. ASSIGNMENT. Except as otherwise permitted herein, neither Party may assign this Agreement without the prior written consent of the other Party, which such consent shall not to be unreasonably withheld, except in the instance of a merger, reorganization, consolidation or sale of all or substantially all of Partys assets in any such case no prior written consent or consent of any kind is required. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any assignment in contravention of this provision shall be void.
25. GOVERNING LAW AND VENUE. This Agreement and any dispute or controversy arising hereunder or otherwise between the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of Kansas, without reference to rules governing choice of law. The Parties agree that any legal proceeding of any nature brought by either Party against the other party to enforce any right or obligation under this Agreement, or arising out of any matter pertaining to this Agreement, shall be submitted for trial, without a jury, before the federal or state courts located in Wichita, Kansas. The Parties further agree that the federal and state courts located in Wichita Kansas shall have exclusive jurisdiction and the Parties further agree to waive any dispute or defense regarding such jurisdiction, including any claims of forum non-conveniens .
26. NOTICES. All notices and consents required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if and when delivered (i) personally, (ii) by certified mail, return receipt requested and postage prepaid, or (iii) by nationally recognized express courier service, delivery charges prepaid, to the following addresses:
If to Agency:
7330 W. 33rd St N. Ste. 118
Wichita, Kansas 67205
Attention : Mr. David Newman, President
Telephone: 866-616-4239
If to Client:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Mr. Don Gayhardt, Chief Executive Officer
Telephone: 316-425-1199
With a copy to:
3527 North Ridge Rd.
Wichita, Kansas 67205
Attention : Legal Department
Telephone: 316-425-1410
or to such other address as either Party may furnish to the other Party in writing in accordance with this section.
- 18 -
27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which, when taken together, shall be one and the same document. Each Party may rely upon a pdf counterpart of this Agreement signed by the other Party with the same effect as if such Party had received an original counterpart signed by such other Party.
- 19 -
IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement in duplicate on the date above written.
CLIENT
Attain Finance, LLC |
AGENCY
Ad Astra Recovery Service, Inc. |
|||
/s/ Donald Gayhardt |
/s/ David Newman |
|||
Donald Gayhardt, Chief Executive Officer |
David Newman, President |
- 20 -
Exhibit 1
Service Level Agreement and Performance Standards
The following constitutes the minimum training, reporting and other standards required of Agency in connection with the performance of Services for Client.
1. | POLICIES AND PROCEDURES. |
Agency shall maintain the following policies and procedures, including, but not limited to:
| Security |
| Compliance Management |
| Mail Handling |
| Payment Processing |
| Performance Management |
| Call Monitoring and Recording |
| Collections Strategy |
| Licensing |
| Complaint Management |
2. | BACKGROUND CHECK STANDARDS. |
| Agencys background check standards shall be substantially and materially similar to Clients background check standards. |
3. | TRAINING STANDARDS. |
A. | Client Procedures |
Training shall be provided for all new hires and continuous/annual training for all current employees assigned to work on Clients Referred Accounts. Training must include the following for the line of business stated above:
| Employee Handbook |
| Acceptable Use Policy |
| Security Awareness |
| Fair Debt Collection Practices Act |
| Telephone Consumer Protection Act |
| GLBA/Privacy and Protection |
| Submitting Suspicious Activity Reports Procedure |
| Electronic Funds Transfer Act/Regulation E |
| Skip Tracing |
| American Collection Association Code of Ethics Policy |
| Confidentiality and Non-Disclosure of Clients Referred Accounts |
| State Laws governing collections |
| ID Theft/Fraud Awareness |
- 21 -
| Unfair, Deceptive or Abusive Act or Practice (UDAAP) |
| Fair Credit Reporting Act/Regulation |
| Bankruptcy |
| Debt Counseling/Financial Hardship |
Ongoing training or additional line-of-business specific documents will be provided to Agency as needed or determined by Client. Agency will be responsible for compliance of all communicated work standards and account handling.
B. | Testing on FDCPA and State Laws |
All Agency collectors and collection managers working on Clients Referred Accounts are required to be trained and tested on the FDCPA and state laws at hire and on an annual basis. Agency will provide proof of such testing and applicable scores at the request of Client, and shall achieve acceptable passing score as determined by Client. Failure to achieve a passing score shall disqualify an applicant or existing Agency collector or collection manager from continuing to work on any Clients Referred Accounts; provided that, nothing herein shall prohibit the retaking of any test by an employee who has failed a test and the re-instatement of such employee to performing Clients Referred Accounts after receiving a passing score.
C. | Training and Communication Log |
Agency is required to maintain a training and communication log. Agency shall provide a copy of such training and communication log to Client as reasonably requested from time to time.
4. | QUALITY ASSURANCE AND CALL MONITORING. |
A. | Call Logs and Recordings |
Agency is required to record all calls made or received by Agencys automated telephone dialing system, and to provide access to Client to call recordings and call logs.
B. | Call Monitoring |
Agency is required to perform monthly call monitoring for agents working Clients Referred Accounts as follows:
| Agency will monitor calls using Clients call monitoring program. |
| Agency will provide call monitoring forms to Client upon request. |
| Agency will comply with line of business specific standards, as provided by Client, which may include, but not be limited to, expected quality score levels, increased monitoring for low performing individuals and quality performance improvement plans. |
5. PERSONNEL RECORDS. Agency will retain all personnel records of employees who work Clients Referred Accounts a minimum of seven (7) years. This will include but is not limited to training records, applications, background checks, and disciplinary records. Agency will retain all personnel records, including training documents stated below, and will provide to Client upon request.
- 22 -
6. | PHYSICAL AND DATA SECURITY. |
A. | Required Security Controls |
Agency will establish and adhere to specific security controls including environment, physical, network, operating system, application, and data controls.
B. | Clean Desk Policy |
Agency will enforce a clean desk policy in line with Client expectations, to convey a professional image when Clients and other visitors tour offices, and to reduce the threat of a security breach because passwords and other confidential information are kept in a secured and locked area.
| Agency will enforce policies to provide a no paper environment, including no use of writing instruments and paper by collection representatives. |
| All paper from collector workstations will be placed in appropriate shredding or destruction receptacles at the end of each day. |
| All paper from manager workstations will be appropriately secured or shred at the end of each day. |
C. | Cell Phone Usage |
Client considers cell phones a security risk. Agency will enforce the following cell phone policies: Cell phone use during scheduled work time at an agents desk is prohibited. This restriction includes receiving and placing calls, and text messaging. Cell phones are to be kept in a purse or in a desk drawer out of sight. Agents shall be advised that the failure to follow these guidelines regarding the use of cell phone may result in disciplinary action up to and including termination of employment, as facilitated by Agency.
Cell phones may be used away from workstations during authorized breaks.
D. | Document and Data Destruction |
During the term of the Agreement, Agency will maintain records and shall have in place and use industry-acceptable methods and procedures to properly retain and safeguard data, to manage proper tracking and protocols for timely destruction, to timely destroy data and to maintain proper records and certificates of destruction for periodic review/audit by Client.
E. | Disaster Recovery/Continuity of Business |
Agency will provide Client with a copy of its Disaster Recovery/Continuity of Business plan.
- 23 -
7. | COMPLIANCE WITH LAW AND INDUSTRY STANDARDS. |
A. | Information Security Requirements |
Agency hereby agrees that it shall comply with all reuse, re-disclosure and other customer information handling, processing, security, and protection requirements that are specifically required of a non-affiliated third-party processor or servicer (or subcontractor) under the Federal Trade Commissions Privacy of Consumer Financial Information Final Rule (16 CFR 313), implementing Title V of the Gramm-Leach-Bliley Act, Public Law 106-102 (the GLBA Requirements ) and other applicable federal and state consumer privacy laws, rules, and regulations.
B. | Industry Data Security Standards |
Agency further agrees that it shall comply with industry data security standards, including specifically those set forth in the Payment Card Industry Data Security Standard ( PCI DSS ), available at www.pcisecuritystandards.org ), and that it shall make its operations available for review, if necessary, in the course of Clients own PCI DSS assessments.
C. | Security Audits |
During the term of this Agreement and thereafter, for as long as Agency retains Client Customer Information, Client, the Clients clients, Agency representatives and agents will be entitled to conduct audits of Agencys relevant operations, facilities, systems, etc. to confirm that Agency has complied with the Information Security Program Requirements (the Security Audits ). Any Security Audit shall be scheduled and conducted during normal business hours and shall not unreasonably interfere with Agencys business activities.
In the event that any Security Audit results in the discovery of material security risks to Client Customer Information, or violations of applicable federal and state consumer privacy laws, rules, and regulations, Agency shall (i) respond to Client in writing with Agencys plan to promptly take reasonable measures and corrective actions necessary to effectively eliminate the risk or cure the violation, at no cost to Client, and (ii) allow Client and the Clients clients to review any system and transaction logs related thereto which pertain to Clients information or data potentially compromised. Agency shall have five (5) business days to cure such security risk or violation, unless the parties mutually agree in writing to a longer period of time for such cure.
Clients right, and the right of the Clients clients, Agency representatives and agents, to conduct a Security Audit, and any exercise of such right, shall not in any way diminish or affect Agencys duties and liabilities under this Agreement.
D. | Security Incidents |
Agency shall report to Client all known or suspected Security Incidents. Security Incident means any unauthorized action by a known or unknown person which, if attempted, threatened, or successfully completed, should reasonably be considered one of the following: an attack, penetration, denial of service, disclosure of confidential or other sensitive information, misuse of system access, unauthorized access or intrusion (hacking), virus intrusion, scan of Agencys systems or networks, or any other activity that could affect Agencys systems or data, or the security, confidentiality or integrity of the Client information received, stored, processed, or maintained by Agency. Security Incident shall also include any contact by a law enforcement agency with Agency regarding any Client information. For purposes hereof, Agency shall include any of Agencys employees, agents, contractors or third parties (including, without limitation, any vendors used by Agency for the provision of services to be provided by Agency to Client) that have access (either authorized or unauthorized) to Client information.
- 24 -
If a Security Incident occurs, Agency shall immediately notify Client at telephone number (316) 425-1370 and e-mail to humanresources@speedyinc.com, and provide the following information: nature and impact of the Security Incident; actions already taken by Agency; Agencys assessment of immediate risk; and corrective measures to be taken, evaluation of alternatives, and next steps. Agency shall continue providing (i) appropriate status reports to Client regarding the resolution of the Security Incident and prevention of future such Security Incidents, and (ii) cooperation, as reasonably requested by Client, in order to further investigate and resolve the Security Incident. Client may require that the Services provided by Agency to Client be suspended, connectivity with Agency be terminated, or other appropriate action be taken pending such resolution.
E. | Reporting Changes in Services |
In order for the Client to maintain and improve its existing information security policies, procedures, and controls, Agency shall promptly report to the Client any of the following changes to the Services being provided by Agency to the Client pursuant to the Agreement: (1) changes and enhancements to networks used in connection with the Services, (2) use of new technologies in connection with the Services, (3) adoption of new products or newer versions/releases used in connection with the Services, (4) use of new development tools and environments used in connection with the Services, (5) changes to physical location of service facilities used in connection with the Services, and ( 6) change of vendors used in connection with the Services.
8. KEY PERFORMANCE INDICATORS. To be finalized by the parties using best efforts within thirty (30) days of execution of this Agreement.
- 25 -
Schedule A
(to be attached)
(not included in signed agreement)
Exhibit 10.48
EXECUTION VERSION
GUARANTY AND SECURITY AGREEMENT
Dated as of November 17, 2016
by
CURO RECEIVABLES FINANCE I, LLC,
as the Borrower Agent,
and
EACH OTHER GRANTOR
FROM TIME TO TIME PARTY HERETO
in favor of
VICTORY PARK MANAGEMENT, LLC,
as Agent
TABLE OF CONTENTS
Page | ||||||
ARTICLE I DEFINED TERMS |
1 | |||||
Section 1.1 |
Definitions | 1 | ||||
Section 1.2 |
Certain Other Terms | 5 | ||||
ARTICLE II GUARANTY |
6 | |||||
Section 2.1 |
Guaranty | 6 | ||||
Section 2.2 |
Limitation of Guaranty | 6 | ||||
Section 2.3 |
Contribution | 6 | ||||
Section 2.4 |
Authorization; Other Agreements | 7 | ||||
Section 2.5 |
Guaranty Absolute and Unconditional | 7 | ||||
Section 2.6 |
Waivers | 8 | ||||
Section 2.7 |
Reliance | 9 | ||||
ARTICLE III GRANT OF SECURITY INTEREST |
9 | |||||
Section 3.1 |
Collateral | 9 | ||||
Section 3.2 |
Grant of Security Interest in Collateral | 10 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES |
10 | |||||
Section 4.1 |
Title; No Other Liens | 10 | ||||
Section 4.2 |
Perfection and Priority | 10 | ||||
Section 4.3 |
Pledged Collateral | 11 | ||||
Section 4.4 |
Instruments and Tangible Chattel Paper Formerly Accounts | 12 | ||||
Section 4.5 |
Intellectual Property | 12 | ||||
Section 4.6 |
Commercial Tort Claims | 12 | ||||
Section 4.7 |
Specific Collateral | 12 | ||||
Section 4.8 |
Enforcement | 12 | ||||
Section 4.9 |
Stock | 13 | ||||
ARTICLE V COVENANTS |
13 | |||||
Section 5.1 |
Maintenance of Perfected Security Interest; Further Documentation and Consents | 13 | ||||
Section 5.2 |
Pledged Collateral | 14 | ||||
Section 5.3 |
Intentionally Omitted | 15 | ||||
Section 5.4 |
Commodity Contracts | 15 | ||||
Section 5.5 |
Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper | 15 | ||||
Section 5.6 |
Intellectual Property | 16 | ||||
Section 5.7 |
Notices | 17 | ||||
Section 5.8 |
Notice of Commercial Tort Claims | 17 | ||||
Section 5.9 |
Controlled Securities Account | 18 |
i
TABLE OF CONTENTS
(continued)
Page | ||||||
ARTICLE VI REMEDIAL PROVISIONS |
18 | |||||
Section 6.1 |
Code and Other Remedies | 18 | ||||
Section 6.2 |
Accounts and Payments in Respect of General Intangibles | 21 | ||||
Section 6.3 |
Pledged Collateral | 22 | ||||
Section 6.4 |
Proceeds to be Turned over to and Held by Agent | 23 | ||||
Section 6.5 |
Sale of Pledged Collateral | 23 | ||||
Section 6.6 |
Deficiency | 24 | ||||
ARTICLE VII AGENT |
24 | |||||
Section 7.1 |
Agents Appointment as Attorney-in-Fact | 24 | ||||
Section 7.2 |
Authorization to File Financing Statements | 26 | ||||
Section 7.3 |
Authority of Agent | 26 | ||||
Section 7.4 |
Duty; Obligations and Liabilities | 26 | ||||
ARTICLE VIII MISCELLANEOUS |
27 | |||||
Section 8.1 |
Reinstatement | 27 | ||||
Section 8.2 |
Release of Collateral | 27 | ||||
Section 8.3 |
Independent Obligations | 28 | ||||
Section 8.4 |
No Waiver by Course of Conduct | 28 | ||||
Section 8.5 |
Amendments in Writing | 28 | ||||
Section 8.6 |
Additional Grantors; Additional Pledged Collateral | 28 | ||||
Section 8.7 |
Notices | 29 | ||||
Section 8.8 |
Successors and Assigns | 29 | ||||
Section 8.9 |
Counterparts | 29 | ||||
Section 8.10 |
Severability | 29 | ||||
Section 8.11 |
Governing Law | 29 | ||||
Section 8.12 |
Waiver of Jury Trial | 29 |
ii
ANNEXES AND SCHEDULES
Annex 1 |
Form of Pledge Amendment |
|
Annex 2 |
Form of Joinder Agreement |
|
Annex 3 |
Form of Intellectual Property Security Agreement |
|
Schedule 1 |
Commercial Tort Claims |
|
Schedule 2 |
Filings |
|
Schedule 3 |
Pledged Collateral |
|
Schedule 4 |
Intellectual Property |
iii
GUARANTY AND SECURITY AGREEMENT, dated as of November 17, 2016, by CURO Receivables Finance I, LLC, a Delaware limited liability company (the Borrower Agent ), CURO Receivables Holdings I, LLC, a Delaware limited liability company ( SPV Guarantor ) and each of the other entities listed on the signature pages hereof or that becomes a party hereto pursuant to Section 8.6 (together with the Borrower Agent and the SPV Guarantor, the Grantors and each, a Grantor ), in favor of Victory Park Management, LLC ( VPC ), as agent (in such capacity, together with its successors and permitted assigns, Agent ) for the Lenders and Holders (as defined in the Loan Agreement referred to below).
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement dated as of the date hereof (as the same may be amended, restated, supplemented or otherwise modified from time to time, the Loan Agreement ) by and among the Borrower Agent, the other Borrowers party thereto from time to time, VPC, as agent for Lenders and Holders, and the financial institutions from time to time party thereto as Lenders, the Lenders have severally agreed to make extensions of credit to the Borrowers upon the terms and subject to the conditions set forth therein;
WHEREAS, each Grantor (other than the Borrower Agent) has agreed to guaranty the Obligations (as defined in the Loan Agreement) and/or to grant a security interest in its portion of the Collateral;
WHEREAS, each Grantor will derive substantial direct and indirect benefits from the making of the extensions of credit under the Loan Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrowers under the Loan Agreement that the Grantors shall have executed and delivered this Agreement to Agent.
NOW, THEREFORE, in consideration of the premises and to induce the Lenders and Agent to enter into the Loan Agreement and to induce the Lenders to make their respective extensions of credit to the Borrowers thereunder, each Grantor hereby agrees with Agent as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions .
(a) Capitalized terms used herein without definition are used as defined in the Loan Agreement.
(b) The following terms have the meanings given to them in the UCC and terms used herein without definition that are defined in the UCC have the meanings given to them in the UCC (such meanings to be equally applicable to both the singular and plural forms of the terms defined): account , account debtor , as-extracted collateral , certificated security , chattel paper , commercial tort claim , commodity contract , deposit account ,
electronic chattel paper , equipment , farm products , fixture , general intangible , goods , health-care-insurance receivable , instruments , inventory , investment property , letter-of-credit right , proceeds , record , securities account , security , supporting obligation and tangible chattel paper .
(c) The following terms shall have the following meanings:
Agreement means this Guaranty and Security Agreement.
Applicable IP Office means the United States Patent and Trademark Office or the United States Copyright Office.
Cash Collateral Account means a deposit account or securities account subject, in each instance, to a Control Agreement.
Collateral has the meaning specified in Section 3.1 .
Controlled Securities Account means each securities account (including all financial assets held therein and all certificates and instruments, if any, representing or evidencing such financial assets) that is the subject of an effective Control Agreement.
Copyrights means all rights, title and interests (and all related IP Ancillary Rights) arising under any Requirement of Law in copyrights and all mask work, database and design rights, whether or not registered or published, all registrations and recordations thereof and all applications in connection therewith.
Excluded Property means, collectively, (i) any permit or license or any Contractual Obligation entered into by any Grantor (A) that prohibits or requires the consent of any Person other than a Borrower, Guarantor and their Affiliates which has not been obtained as a condition to the creation by such Grantor of a Lien on any right, title or interest in such permit, license or Contractual Obligation or any Stock related thereto or (B) to the extent that any Requirement of Law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC or any other Requirement of Law, (ii) Property owned by any Grantor that is subject to a purchase money Lien, a capital lease or similar arrangement permitted under the Loan Agreement if the Contractual Obligation pursuant to which such Lien is granted (or in the document providing for such capital lease) prohibits or requires the consent of any Person other than a Borrower, Guarantor and their Affiliates which has not been obtained as a condition to the creation of any other Lien on such equipment or creates a right of termination in favor of any other party thereto, (iii) any intent to use Trademark applications for which a statement of use has not been filed (but only until such statement is filed with the United States Patent and Trademark Office), and (iv) Property released from the Lien of the Agent pursuant to the Loan Agreement, including without limitation any amounts payable to the Borrowers pursuant to Section 2.4, clause Seventh, of the Loan Agreement; provided , however , Excluded Property shall not include any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Property).
2
Fraudulent Transfer Laws has the meaning set forth in Section 2.2 .
Guaranteed Obligations has the meaning set forth in Section 2.1 .
Guarantor means each Grantor other than the Borrower Agent.
Guaranty means the guaranty of the Guaranteed Obligations made by the Guarantors as set forth in this Agreement.
Internet Domain Name means all right, title and interest (and all related IP Ancillary Rights) arising under any Requirement of Law in or relating to Internet domain names.
Intellectual Property means all rights, title and interests in intellectual property arising under any Requirement of Law and all related IP Ancillary Rights related thereto, including all Copyrights, Patents, Software, Trademarks, Internet Domain Names, Trade Secrets and IP Licenses.
IP Ancillary Rights means, with respect to any Intellectual Property, as applicable, all foreign counterparts to, and all divisionals, reversions, continuations, continuations-in-part, reissues, reexaminations, renewals and extensions of, such Intellectual Property and all income, royalties, proceeds and Liabilities at any time due or payable or asserted under or with respect to any of the foregoing or otherwise with respect to such Intellectual Property, including all rights to sue or recover at law or in equity for any past, present or future infringement, misappropriation, dilution, violation or other impairment thereof, and, in each case, all rights to obtain any other IP Ancillary Right.
IP License means all Contractual Obligations (and all related IP Ancillary Rights), whether written or oral, granting any right, title and interest in any Intellectual Property.
Liabilities means all claims, actions, suits, judgments, damages, losses, liability, obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes, commissions, charges, disbursements and expenses (including those incurred upon any appeal or in connection with the preparation for and/or response to any subpoena or request for document production relating thereto), in each case of any kind or nature (including interest accrued thereon or as a result thereto and fees, charges and disbursements of financial, legal and other advisors and consultants), whether joint or several, whether or not indirect, contingent, consequential, actual, punitive, treble or otherwise.
Material Intellectual Property means Intellectual Property that is owned by or licensed to a Grantor and material to the conduct of any Grantors business.
Patents means all rights, title and interests (and all related IP Ancillary Rights) arising under any Requirement of Law in letters patent and applications therefor.
Pledged Certificated Stock means all certificated securities and any other Stock of any Person evidenced by a certificate, instrument or other similar document (as defined in the UCC), in each case owned by any Grantor from time to time, including all Stock listed on Schedule 3 . Pledged Certificated Stock excludes any Excluded Property and any cash equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.9 hereof.
3
Pledged Collateral means, collectively, the Pledged Stock and the Pledged Debt Instruments.
Pledged Debt Instruments means all right, title and interest of any Grantor in instruments evidencing any Debt owed to such Grantor or other obligations owed to such Grantor, and any distribution of property made on, in respect of or in exchange for the foregoing from time to time, including all Debt described on Schedule 3 , issued by the obligors named therein. Pledged Debt Instruments excludes any cash equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.9 hereof.
Pledged Investment Property means any investment property of any Grantor, and any distribution of property made on, in respect of or in exchange for the foregoing from time to time, other than any Pledged Stock or Pledged Debt Instruments. Pledged Investment Property excludes any cash equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.9 hereof.
Pledged Stock means all Pledged Certificated Stock and all Pledged Uncertificated Stock.
Pledged Uncertificated Stock means any Stock or Stock equivalent of any Person that is not Pledged Certificated Stock, including all right, title and interest of any Grantor as a limited or general partner in any partnership not constituting Pledged Certificated Stock or as a member of any limited liability company, all right, title and interest of any Grantor in, to and under any organization document of any partnership or limited liability company to which it is a party, including in each case those interests set forth on Schedule 3 , to the extent such interests are not certificated. Pledged Uncertificated Stock excludes any Excluded Property and any cash equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.9 hereof.
Related Persons means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, trustee, representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor and other consultants and agents of or to such Person or any of its Affiliates.
Secured Obligations means all the Obligations and all other obligations and liabilities of the Grantors under this Agreement.
Secured Party means Agent, the Lenders, the Holders, and each other holder of any Obligation.
Software means (a) all computer programs, including source code and object code versions, (b) all data, databases and compilations of data, whether machine readable or otherwise, and (c) all documentation, training materials and configurations related to any of the foregoing.
4
Trade Secrets means all right, title and interest (and all related IP Ancillary Rights) arising under any Requirement of Law in trade secrets.
Trademark means all rights, title and interests (and all related IP Ancillary Rights) arising under any Requirement of Law in trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers and, in each case, all goodwill associated therewith, all registrations and recordations thereof and all applications in connection therewith.
UCC means the Uniform Commercial Code as from time to time in effect in the State of New York; provided , however , that, in the event that, by reason of mandatory provisions of any applicable Requirement of Law, any of the attachment, perfection or priority of Agents or any other Secured Partys security interest in any Collateral is governed by the Uniform Commercial Code of a jurisdiction other than the State of New York, UCC shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of the definitions related to or otherwise used in such provisions.
Vehicles means all vehicles (i) subject to a perfected security interest obtained in accordance with all applicable federal and state laws pursuant to an enforceable consumer loan agreement between an obligor and a Grantor, and (ii) in any Grantors constructive or actual possession obtained by Grantor in accordance with all applicable federal and state laws.
Section 1.2 Certain Other Terms .
(a) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. References herein to an Annex, Schedule, Article, Section or clause refer to the appropriate Annex or Schedule to, or Article, Section or clause in this Agreement. Where the context requires, provisions relating to any Collateral when used in relation to a Grantor shall refer to such Grantors Collateral or any relevant part thereof.
(b) Other Interpretive Provisions .
(i) Defined Terms . Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto.
(ii) The Agreement . The words hereof, herein, hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(iii) Certain Common Terms . The term including is not limiting and means including without limitation.
(iv) Performance; Time . Whenever any performance obligation hereunder (other than a payment obligation) shall be stated to be due or required to be satisfied on a day other than a Business Day, such performance shall be made or satisfied on the next succeeding Business Day. In the computation of periods of time from a
5
specified date to a later specified date, the word from means from and including; the words to and until each mean to but excluding, and the word through means to and including. If any provision of this Agreement refers to any action taken or to be taken by any Person, or which such Person is prohibited from taking, such provision shall be interpreted to encompass any and all means, direct or indirect, of taking, or not taking, such action.
(v) Contracts . Unless otherwise expressly provided herein, references to agreements and other contractual instruments, including this Agreement and the other Credit Documents, shall be deemed to include all subsequent amendments, thereto, restatements and substitutions thereof and other modifications and supplements thereto which are in effect from time to time, but only to the extent such amendments and other modifications are not prohibited by the terms of any Credit Document.
(vi) Laws . References to any statute or regulation are to be construed as including all statutory and regulatory provisions related thereto or consolidating, amending, replacing, supplementing or interpreting the statute or regulation.
ARTICLE II
GUARANTY
Section 2.1 Guaranty . To induce the Lenders to make the Loans, each Guarantor hereby, jointly and severally, absolutely, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, the full and punctual payment when due, whether at stated maturity or earlier, by reason of acceleration, mandatory prepayment or otherwise in accordance with any Credit Document, of all the Obligations of each Borrower whether existing on the date hereof or hereinafter incurred or created (the Guaranteed Obligations ). This Guaranty by each Guarantor hereunder constitutes a guaranty of payment and not of collection.
Section 2.2 Limitation of Guaranty . Any term or provision of this Guaranty or any other Credit Document to the contrary notwithstanding, the maximum aggregate amount for which any Guarantor shall be liable hereunder shall not exceed the maximum amount for which such Guarantor can be liable without rendering this Guaranty or any other Credit Document, as it relates to such Guarantor, subject to avoidance under applicable Requirements of Law relating to fraudulent conveyance or fraudulent transfer (including the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act and Section 548 of title 11 of the United States Code or any applicable provisions of comparable Requirements of Law) (collectively, Fraudulent Transfer Laws ). Any analysis of the provisions of this Guaranty for purposes of Fraudulent Transfer Laws shall take into account the right of contribution established in Section 2.3 and, for purposes of such analysis, give effect to any discharge of intercompany debt as a result of any payment made under the Guaranty.
Section 2.3 Contribution . To the extent that any Guarantor shall be required hereunder to pay any portion of any Guaranteed Obligation exceeding the greater of (a) the amount of the value actually received by such Guarantor and its Subsidiaries from the Loans and other Obligations and (b) the amount such Guarantor would otherwise have paid if such
6
Guarantor had paid the aggregate amount of the Guaranteed Obligations (excluding the amount thereof repaid by a Borrower that received the benefit of the funds advanced that constituted Guaranteed Obligations) in the same proportion as such Guarantors net worth on the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors on such date, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such excess, pro rata, based on the respective net worth of such other Guarantors on such date.
Section 2.4 Authorization; Other Agreements . The Secured Parties are hereby authorized, without notice to or demand upon any Guarantor and without discharging or otherwise affecting the obligations of any Guarantor hereunder and without incurring any liability hereunder, from time to time, to do each of the following:
(a) (i) subject to compliance, if applicable, with the Loan Agreement, modify, amend, supplement or otherwise change, (ii) accelerate or otherwise change the time of payment or (iii) waive or otherwise consent to noncompliance with, any Guaranteed Obligation or any Credit Document;
(b) apply to the Guaranteed Obligations any sums by whomever paid or however realized to any Guaranteed Obligation in such order as provided in the Credit Documents;
(c) refund at any time any payment received by any Secured Party in respect of any Guaranteed Obligation;
(d) subject to compliance with the applicable provisions of this Agreement, the Loan Agreement and the other Credit Documents, (i) sell, exchange, enforce, waive, substitute, liquidate, terminate, release, abandon, fail to perfect, subordinate, accept, substitute, surrender, exchange, affect, impair or otherwise alter or release any Collateral for any Guaranteed Obligation or any other guaranty therefor in any manner, (ii) receive, take and hold additional Collateral to secure any Guaranteed Obligation, (iii) add, release or substitute any one or more other Guarantors, makers or endorsers of any Guaranteed Obligation or any part thereof and (iv) otherwise deal in any manner with a Borrower or any other Guarantor, maker or endorser of any Guaranteed Obligation or any part thereof; and
(e) subject to compliance with the applicable provisions of this Agreement, the Loan Agreement and the other Credit Documents, settle, release, compromise, collect or otherwise liquidate the Guaranteed Obligations.
Section 2.5 Guaranty Absolute and Unconditional . Each Guarantor hereby waives to the fullest extent permitted by law and agrees not to assert any defense (other than defense of payment), whether arising in connection with or in respect of any of the following or otherwise, and hereby agrees that its obligations under this Guaranty are irrevocable, absolute and unconditional and shall not be discharged as a result of or otherwise affected by any of the following (which may not be pleaded and evidence of which may not be introduced in any proceeding with respect to this Guaranty, in each case except as otherwise agreed in writing by Agent):
7
(a) the invalidity or unenforceability of any obligation of a Borrower or any other Guarantor under any Credit Document or any other agreement or instrument relating thereto (including any amendment, consent or waiver thereto), or any security for, or other guaranty of, any Guaranteed Obligation or any part thereof, or the lack of perfection or continuing perfection or failure of priority of any security for the Guaranteed Obligations or any part thereof;
(b) the absence of (i) any attempt to collect any Guaranteed Obligation or any part thereof from a Borrower or any other Guarantor or other action to enforce the same or (ii) any action to enforce any Credit Document or any Lien thereunder;
(c) the failure by any Person to take any steps to perfect and maintain any Lien on, or to preserve any rights with respect to, any Collateral;
(d) any workout, insolvency, bankruptcy proceeding, reorganization, arrangement, liquidation or dissolution by or against a Borrower, any other Guarantor or any of a Borrowers other Subsidiaries or any procedure, agreement, order, stipulation, election, action or omission thereunder, including any discharge or disallowance of, or bar or stay against collecting, any Guaranteed Obligation (or any interest thereon) in or as a result of any such proceeding;
(e) any foreclosure, whether or not through judicial sale, and any other sale or other disposition of any Collateral or any election following the occurrence and during the continuance of an Event of Default by any Secured Party to proceed separately against any Collateral in accordance with such Secured Partys rights under any applicable Requirement of Law; or
(f) any other defense (other than a defense of payment), setoff, counterclaim or any other circumstance that might otherwise constitute a legal or equitable discharge of a Borrower, any other Guarantor or any other Subsidiary of a Borrower, in each case other than the payment in full of the Guaranteed Obligations and termination of all Commitments (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted and letters of credit which have been cash collateralized).
Section 2.6 Waivers . Each Guarantor hereby unconditionally and irrevocably waives to the fullest extent permitted by law and agrees not to assert any claim, defense, setoff or counterclaim based on diligence, promptness, presentment, requirements for any demand or notice hereunder including any of the following: (a) any demand for payment or performance and protest and notice of protest; (b) any notice of acceptance; (c) any presentment, demand, protest or further notice or other requirements of any kind with respect to any Guaranteed Obligation (including any accrued but unpaid interest thereon) becoming immediately due and payable; and (d) any other notice in respect of any Guaranteed Obligation or any part thereof, and any defense (other than a defense of payment in full of the Guaranteed Obligations and termination of all Commitments (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted)) arising by reason of any disability or other defense of a Borrower or any other Guarantor. Each Guarantor further unconditionally and irrevocably agrees not to (x) enforce or otherwise exercise any right of subrogation or any right
8
of reimbursement or contribution or similar right against a Borrower or any other Guarantor by reason of any Credit Document or any payment made thereunder or (y) assert any claim, defense, setoff or counterclaim it may have against any other Grantor or set off any of its obligations to such other Grantor against obligations of such Grantor to such Guarantor until payment in full of the Obligations and termination of all Commitments (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted). No obligation of any Guarantor hereunder shall be discharged other than by payment in full of the Guaranteed Obligations and termination of all Commitments (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted) or by complete performance.
Section 2. 7 Reliance . Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of each Borrower, each other Guarantor and any other guarantor, maker or endorser of any Guaranteed Obligation or any part thereof, and of all other circumstances bearing upon the risk of nonpayment of any Guaranteed Obligation or any part thereof that diligent inquiry would reveal, and each Guarantor hereby agrees that no Secured Party shall have any duty to advise any Guarantor of information known to it regarding such condition or any such circumstances. In the event any Secured Party, in its sole discretion, undertakes at any time or from time to time to provide any such information to any Guarantor, such Secured Party shall be under no obligation to (a) undertake any investigation not a part of its regular business routine, (b) disclose any information that such Secured Party, pursuant to accepted or reasonable commercial finance or banking practices, wishes to maintain confidential or (c) make any future disclosures of such information or any other information to any Guarantor.
ARTICLE III
GRANT OF SECURITY INTEREST
Section 3.1 Collateral . For the purposes of this Agreement, but subject to the proviso to Section 3.1 below, all personal property of the Grantors, including without limitation, the following personal property of the Grantors, whether presently owned or existing or hereafter acquired or coming into existence and wherever located, and all additions and accessions thereto and all substitutions and replacements thereof, and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer thereof and of insurance covering the same and of any tort claims in connection therewith is collectively referred to as the Collateral :
(a) all accounts, chattel paper, deposit accounts, documents (as defined in the UCC), equipment, general intangibles, instruments, inventory, investment property, letter of credit rights and any supporting obligations related to any of the foregoing;
(b) the commercial tort claims described on Schedule 1 and on any supplement thereto received by Agent pursuant to Section 5.8 ;
(c) all books and records pertaining to the other property described in this Section 3.1 ;
9
(d) all property of such Grantor held by any Secured Party, including all property of every description, in the custody of or in transit to such Secured Party for any purpose, including safekeeping, collection or pledge, for the account of such Grantor or as to which such Grantor may have any right or interest, including but not limited to cash;
(e) all other goods (including but not limited to fixtures) and personal property of such Grantor, whether tangible or intangible and wherever located; and
(f) to the extent not otherwise included, all proceeds of the foregoing;
provided , that notwithstanding anything to the contrary in this Agreement or any other Credit Document, Collateral shall not include any Excluded Property.
Section 3.2 Grant of Security Interest in Collateral . Each Grantor, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations, hereby grants to Agent for the benefit of the Secured Parties a Lien on and security interest in, all of its right, title and interest in, to and under its respective Collateral of such Grantor; provided , however , notwithstanding the foregoing, no Lien or security interest is hereby granted on any Excluded Property; provided , further , that if and when any property of the type described in Section 3.1 shall cease to be Excluded Property, a Lien on and security interest in such property shall be granted therein pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders and Agent to enter into the Credit Documents, each Grantor hereby represents and warrants each of the following to Agent, the Lenders, the Holders and the other Secured Parties:
Section 4.1 Title; No Other Liens . Except for the Lien granted to Agent pursuant to this Agreement and other Permitted Liens, such Grantor owns each item of the Collateral free and clear of any and all Liens. Such Grantor (a) is the record and beneficial owner of the Collateral pledged by it hereunder constituting instruments or certificates and (b) has rights in or the power to transfer each other item of Collateral in which a Lien is granted by it hereunder, free and clear of any other Lien other than the Liens granted to Agent pursuant to this Agreement and other Permitted Liens.
Section 4.2 Perfection and Priority . The security interest granted pursuant to this Agreement, to the extend a security interest can be granted by a security agreement governed by New York law, constitutes a valid and continuing perfected security interest in favor of Agent for the benefit of the Secured Parties in all Collateral in which perfection can be achieved by the filings and other actions of the type described in Section 4.2, subject, for the following Collateral (to the extent any such item is Collateral and such steps are required herein), to the occurrence of the following: (a) in the case of all Collateral in which a security interest may be perfected by filing a financing statement under the UCC, the completion of the filings and other actions specified on Schedule 2 (which, in the case of all filings and other documents referred to on such
10
schedule, have been delivered to Agent in completed and duly authorized form), (b) with respect to any deposit account, the execution of Control Agreements, (c) in the case of all Copyrights, Trademarks and Patents for which UCC filings are insufficient, all appropriate filings having been made with the United States Copyright Office or the United States Patent and Trademark Office, as applicable; provided , however , that additional filings may be required to perfect such security interest in any Copyrights, Trademarks and Patents acquired after the date hereof; (d) in the case of letter-of-credit rights that are not supporting obligations of Collateral, the execution of a Contractual Obligation granting control to Agent over such letter-of-credit rights, (e) in the case of electronic chattel paper, the completion of all steps necessary to grant control to Agent over such electronic chattel paper and (f) in the case of Vehicles, the actions required under subsection 5.1(e) . Such security interest shall be prior to all other Liens on the Collateral except for Permitted Liens having priority over Agents Lien by operation of law upon (i) in the case of all Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property, the delivery thereof to Agent of such Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property consisting of instruments and certificates, in each case properly endorsed for transfer to Agent or in blank, (ii) in the case of all Pledged Investment Property not in certificated form, the execution of Control Agreements with respect to such investment property and (iii) in the case of all other instruments and tangible chattel paper that are not Pledged Certificated Stock, Pledged Debt Instruments or Pledged Investment Property, the delivery thereof to Agent of such instruments and tangible chattel paper. Except as set forth in this Section 4.2 , all actions by each Grantor necessary or desirable to protect and perfect the Lien granted hereunder on the Collateral have been duly taken. Notwithstanding anything to the contrary herein, neither Borrower Agent nor any Grantor shall be required to make any filings outside the United States to perfect the Agents Lien on or security interest in any Copyrights, Patents or Trademarks.
Section 4.3 Pledged Collateral.
(a) The Pledged Stock pledged by such Grantor hereunder (i) is listed on Schedule 3 and constitutes that percentage of the issued and outstanding equity of all classes of each issuer thereof as set forth on Schedule 3, (ii) has been duly authorized, validly issued and is fully paid and nonassessable (other than Pledged Stock in limited liability companies and partnerships) and (iii) constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms.
(b) As of the Closing Date, all Pledged Collateral (other than Pledged Uncertificated Stock) and all Pledged Investment Property consisting of instruments and certificates has been delivered to Agent in accordance with subsection 5.2(a) .
(c) Subject to the terms of Section 6.3 , upon the occurrence and during the continuance of an Event of Default, Agent shall be entitled to exercise all of the rights of the Grantor granting the security interest in any Pledged Stock, and a transferee or assignee of such Pledged Stock shall become a holder of such Pledged Stock to the same extent as such Grantor and be entitled to participate in the management of the issuer of such Pledged Stock and, unless otherwise provided under applicable Requirements of Law, upon the transfer of the entire interest of such Grantor, such Grantor shall, by operation of law, cease to be a holder of such Pledged Stock; provided , that the Agent may elect at its sole and absolute discretion to permit such Grantor to continue voting such Pledged Stock.
11
Section 4.4 Instruments and Tangible Chattel Paper Formerly Accounts . No amount payable to such Grantor under or in connection with any account is evidenced by any document, instrument or tangible chattel paper that (a) has not been delivered to Agent, properly endorsed for transfer, to the extent delivery is required by subsection 5.5(a) or (b) is not subject to the Custodian Agreement.
Section 4.5 Intellectual Property . On the Closing Date, all registered Material Intellectual Property owned by such Grantor is listed on Schedule 4 and is in full force and effect, subsisting, unexpired and, to the knowledge of such Grantor, valid and enforceable, no Material Intellectual Property owned by such Grantor has been abandoned. No breach or default of any material IP License shall be caused by any of the following, and none of the following shall limit or impair the ownership, use, validity or enforceability of, or any rights of such Grantor in, any Material Intellectual Property: (i) the consummation of the transactions contemplated by any Credit Document or (ii) any holding, decision, judgment or order rendered by any Governmental Authority. Except as set forth on Schedule 4, and except as could not reasonably be expected to result in a material adverse effect on the business or operations of a Grantor or the Collateral, there are no pending (or, to the knowledge of such Grantor, threatened) actions, investigations, suits, proceedings, audits, claims, demands, orders or disputes challenging the ownership, use, validity, enforceability of, or such Grantors rights in, any Material Intellectual Property owned by such Grantor. To such Grantors knowledge, no Person has been or is infringing, misappropriating, diluting, violating or otherwise impairing any Intellectual Property owned by such Grantor. Such Grantor, and to such Grantors knowledge each other party thereto, is not in material breach or default of any material IP License.
Section 4.6 Commercial Tort Claims . The only commercial tort claims of any Grantor existing on the Closing Date with a value in excess of $100,000 (regardless of whether the amount, defendant or other material facts can be determined and regardless of whether such commercial tort claim has been asserted, threatened or has otherwise been made known to the obligee thereof or whether litigation has been commenced for such claims) are those listed on Schedule 1 , which sets forth such information separately for each Grantor.
Section 4.7 Specific Collateral . None of the Collateral is or is proceeds or products of farm products, as-extracted collateral, health-care-insurance receivables or timber to be cut.
Section 4.8 Enforcement . No Permit, notice to or filing with any Governmental Authority or any other Person or any consent from any Person is required for the exercise by Agent of its rights (including voting rights) provided for in this Agreement or the enforcement of remedies in respect of the Collateral pursuant to this Agreement, including the transfer of any Collateral, except (a) as may be required in connection with the disposition of any portion of the Pledged Collateral by laws affecting the offering and sale of securities generally, (b) any approvals that may be required to be obtained from any bailees or landlords to collect the Collateral, (c) other notice required by non-waivable provisions of the UCC or (d) as may be required under the Bankruptcy Code.
12
Section 4.9 Stock . No Pledged Stock is a security for purposes of Article 8 of the UCC unless, to the extent such Pledged Stock is pledged hereunder, a certificate representing such equity or membership interest and corresponding assignment separate from certificate has been delivered to Agent.
ARTICLE V
COVENANTS
Each Grantor agrees with Agent to the following, as long as any Obligation or Commitment remains outstanding (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted):
Section 5.1 Maintenance of Perfected Security Interest; Further Documentation and Consents .
(a) Generally . Such Grantor shall not use or knowingly permit any Collateral to be used in material violation of any provision of any Credit Document.
(b) Except as otherwise permitted in the Credit Documents or to the extent perfection actions are not required with respect to this Agreement or the Loan Agreement, such Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 4.2 and shall use commercially reasonable efforts to defend such security interest and such priority against the material claims and demands of all Persons (except to the extent that the Agent and the Borrower Agent agree that the cost of such defense is excessive in relation to the benefit to the Lenders and Holders of the security interest and priority), in each case, other than assets of such Grantor subject to a disposition permitted by Section 7.6 of the Loan Agreement.
(c) Such Grantor shall furnish to Agent from time to time statements and schedules further identifying and describing the Collateral and such other documents in connection with the Collateral as Agent may reasonably request, all in reasonable detail and in form and substance reasonably satisfactory to Agent.
(d) At any time and from time to time, upon the written request of Agent, such Grantor shall, for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, (i) promptly and duly execute and deliver, and have recorded, such further documents, including an authorization to file (or, as applicable, the filing) of any financing statement or amendment under the UCC (or other filings under similar Requirements of Law) in effect in any jurisdiction with respect to the security interest created hereby and (ii) take such further action as Agent may reasonably request.
(e) At Agents discretion, each Grantor shall arrange, at Grantors sole expense, for Agents first priority security interest to be noted on the documentation evidencing the Collateral as of the date hereof and from time to time and, in the case of Vehicles, the certificate of title of each Vehicle that is also Collateral as of the date hereof and from time to time and shall file any other necessary documentation in each jurisdiction that Agent shall deem advisable to perfect its security interests in any Collateral or any Vehicle, each as of the date hereof and from time to time.
13
(f) To ensure that a Lien and security interest is granted on any of the Excluded Property set forth in clause (ii) of the definition of Excluded Property , such Grantor shall use its best efforts to obtain any required consents from any Person other than a Borrower and its Affiliates with respect to any permit or license or any Contractual Obligation with such Person entered into by such Grantor that requires such consent as a condition to the creation by such Grantor of a Lien on any right, title or interest in such permit, license or Contractual Obligation or any Stock or Stock equivalent related thereto.
(g) Such Grantor shall not take any action which would result in any of the Pledged Stock being characterized as securities for purposes of Article 8 of the UCC. Notwithstanding the foregoing, the Grantor shall provide prompt notice to Agent in the event that any Pledged Stock changes, or could reasonably be expected to change, their characterization as securities for purposes of Article 8 of the UCC. In the event that any Pledged Stock becomes a security for purposes of Article 8 or 9 of the UCC, then Grantor agrees to comply with instructions originated by Agent with respect to such Pledged Stock without further consent of the Company and acknowledges that it is the intention of this Agreement to grant control to Agent within the meaning of Articles 8 and 9 of the UCC, to the extent the same may be applicable to the Pledged Stock
Section 5.2 Pledged Collateral .
(a) Delivery of Pledged Collateral . Such Grantor shall (i) deliver to Agent, in suitable form for transfer and in form and substance reasonably satisfactory to Agent, (A) all Collateral consisting of Pledged Certificated Stock, (B) all Collateral consisting of Pledged Debt Instruments and (C) all certificates and instruments evidencing Collateral consisting of Pledged Investment Property and (ii) maintain all other Collateral consisting of Pledged Investment Property in a Controlled Securities Account.
(b) Event of Default . During the continuance of an Event of Default, Agent shall have the right, at any time in its discretion and upon notice to the applicable Grantor, to (i) transfer to or to register in its name or in the name of its nominees any Collateral consisting of Pledged Collateral or any Pledged Investment Property and (ii) exchange any certificate or instrument representing or evidencing any Collateral consisting of Pledged Collateral or any Pledged Investment Property for certificates or instruments of smaller or larger denominations.
(c) Cash Distributions with respect to Pledged Collateral . Except as provided in Article VI and subject to the limitations set forth in the Loan Agreement, such Grantor shall be entitled to receive all cash distributions paid in respect of the Collateral consisting of Pledged Collateral.
(d) Voting Rights . Except as provided in Article VI , such Grantor shall be entitled to exercise all voting, consent and corporate, partnership, limited liability company and similar rights with respect to the Collateral consisting of Pledged Collateral; provided , however , that no vote shall be cast, consent given or right exercised or other action taken by such Grantor that would result in any violation of any provision of any Credit Document.
14
Section 5.3 Intentionally Omitted .
Section 5.4 Commodity Contracts . Such Grantor shall not have any commodity contract unless subject to a Control Agreement.
Section 5.5 Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper .
(a) All Receivables of Borrowers shall be assigned to Agent and stamped with the following legend (or such legend shall be embedded in the contract evidencing the Receivables) to evidence the assignment to Agent (provided, that with respect to Receivables in existence on the Closing Date, the Borrowers shall stamp such legend on such Receivables on or prior to sixty (60) days after the Closing Date):
The within instrument or agreement is pledged as collateral to Victory Park Management, LLC, as agent for various financial institutions.
Grantors shall (a) deliver to the Custodian under the Custodian Agreement, as the bailee and designee of Agent, the Collateral consisting of Receivables and all documents, general intangibles and instruments relating to such Collateral, (b) upon request of Agent following the occurrence of an Event of Default, deliver to Agent or its designee all such Collateral; and (c) execute and deliver to Agent, for the benefit of the Lenders and the Holders, such assignments, endorsements and allonges to promissory notes in form reasonably satisfactory to Agent, and such additional agreements, documents or instruments as Agent may, from time to time, reasonably require to evidence, perfect and continue to perfect Agents liens and security interests granted hereunder. For purposes of this Agreement, the parties hereto agree that, until Agent shall otherwise direct or designate, the Custodian under the Custodian Agreement shall be deemed to be the designee of Agent and Agent shall have the right, at any time and from time to time, to direct or redirect the delivery of all or any of the foregoing items to any other designee. Agent may in its sole but reasonable discretion record or file any such document, instrument or agreement, including, without limitation, this Agreement, as it may from time to time deem desirable.
(b) Such Grantor shall not grant control (within the meaning of such term under Article 9-106 of the UCC) over any investment property to any Person other than Agent.
(c) If such Grantor is or becomes the beneficiary of a letter of credit that is (i) not a supporting obligation of any Collateral and (ii) in excess of $25,000, such Grantor shall promptly, and in any event within two (2) Business Days after becoming a beneficiary, notify Agent thereof and use its commercially reasonable efforts to enter into a Contractual Obligation with Agent, the issuer of such letter of credit or any nominated person with respect to the letter-of-credit rights under such letter of credit. Such Contractual Obligation shall collaterally assign such letter-of-credit rights to Agent and such collateral assignment shall be sufficient to grant control for the purposes of Section 9-107 of the UCC (or any similar section under any equivalent UCC). Such Contractual Obligation shall also direct all payments thereunder to a Cash Collateral Account. The provisions of the Contractual Obligation shall be in form and substance reasonably satisfactory to Agent.
15
(d) If any amount payable under or in connection with any Collateral owned by such Grantor shall be or become evidenced by electronic chattel paper, such Grantor shall, take all steps necessary to grant Agent control of all such electronic chattel paper for the purposes of Section 9-105 of the UCC (or any similar section under any equivalent UCC) and all transferable records as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.
Section 5.6 Intellectual Property .
(a) Within 30 days after any change to Schedule 4 for such Grantor, such Grantor shall provide Agent notification thereof and the short form intellectual property agreements and assignments as described in this Section 5.6 and any other documents that Agent reasonably requests with respect thereto.
(b) To the extent deemed appropriate in such Grantors reasonable business judgment, such Grantor shall (and shall cause all its licensees to) (i) (1) continue to use each Trademark included in the Material Intellectual Property owned by such Grantor in order to maintain such Trademark in full force and effect with respect to each material class of goods for which such Trademark is currently used, free from any claim of abandonment for non-use, (2) maintain at least the same standards of quality of products and services offered under such Trademark as are currently maintained, (3) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law, (4) not adopt or use any other Trademark that is confusingly similar or a colorable imitation of such Trademark unless Agent shall obtain a perfected security interest in such other Trademark pursuant to this Agreement and (ii) not knowingly do any act or knowingly omit to do any act whereby (w) such Trademark (or any goodwill associated therewith) would or could reasonably be expected to become destroyed, invalidated, impaired or harmed in any way, (x) any Patent included in the Material Intellectual Property owned by such Grantor would or could reasonably be expected to become forfeited, misused, unenforceable, abandoned or dedicated to the public, (y) any portion of the Copyrights included in the Material Intellectual Property owned by such Grantor would or could reasonably be expected to become invalidated, otherwise impaired or fall into the public domain or (z) any Trade Secret that is Material Intellectual Property owned by such Grantor would or could reasonably be expected to become publicly available or otherwise unprotectable.
(c) Such Grantor shall notify Agent immediately (but in any event, within twenty (20) business days) if it knows that any application or registration relating to any Material Intellectual Property owned by such Grantor would or could reasonably be expected to become forfeited, misused, unenforceable, abandoned or dedicated to the public, or of any materially adverse determination or development regarding the validity or enforceability or such Grantors ownership of any Material Intellectual Property (including the institution of, or any such determination or development in, any proceeding relating to the foregoing in any Applicable IP Office). Such Grantor shall take all actions that are necessary or reasonably requested by Agent, subject such Grantors reasonable business judgment, (i) that are deemed appropriate in such Grantors reasonable business judgment to maintain and pursue each application (and to obtain the relevant registration or recordation) and (ii) to maintain each registration and recordation included in the Material Intellectual Property.
16
(d) Such Grantor shall not knowingly do any act or knowingly omit to do any act to infringe, misappropriate, dilute, violate or otherwise impair the Intellectual Property of any other Person, except to the extent that such infringement, misappropriation, dilution, violation or other impairment would not reasonably be expected to result in a material adverse change in the business, operations, property (including the Collateral) or financial condition of any Borrower or any Guarantor. In the event that any Material Intellectual Property owned by such Grantor is or has been infringed, misappropriated, violated, diluted or otherwise impaired by a third party and such Grant knows of such infringement, misappropriation, violation, dilution or other impairment, such Grantor shall take such action as it reasonably deems appropriate under the circumstances in response thereto, including promptly bringing suit and recovering all damages therefor.
(e) Such Grantor shall execute and deliver to Agent in form and substance reasonably acceptable to Agent and suitable for (i) filing in the Applicable IP Office the short-form intellectual property security agreements in the form attached hereto as Annex 3 for all Copyrights, Trademarks, Patents owned by such Grantor and IP Licenses of the foregoing that such Grantor is a party to and (ii) recording with the appropriate Internet domain name registrar, a duly executed form of assignment for all Internet Domain Names of such Grantor (together with appropriate supporting documentation as may be requested by Agent).
Section 5.7 Notices . Such Grantor shall promptly (but in any event, within twenty (20) business days) notify Agent in writing of its acquisition of any interest hereafter in property that is of a type where a security interest or lien must be or may be registered, recorded or filed under, or notice thereof given under, any federal statute or regulation.
Section 5.8 Notice of Commercial Tort Claims . Such Grantor agrees that, if it shall acquire any interest in any commercial tort claim with a value in excess of $100,000 (whether from another Person or because such commercial tort claim shall have come into existence), (i) such Grantor shall, promptly following such acquisition, deliver to Agent, in each case in form and substance reasonably satisfactory to Agent, a notice of the existence and nature of such commercial tort claim and a supplement to Schedule 1 containing a specific description of such commercial tort claim, (ii) Section 3.1 shall apply to such commercial tort claim and (iii) upon the reasonable request of Agent, such Grantor shall execute and deliver to Agent, in each case in form and substance reasonably satisfactory to Agent, any document, and take all other action, deemed by Agent to be reasonably necessary or appropriate for Agent to obtain, for the benefit of the Secured Parties, a perfected security interest having at least the priority set forth in Section 4.2 in all such commercial tort claims. Any supplement to Schedule 1 delivered pursuant to this Section 5.8 shall, after the receipt thereof by Agent, become part of Schedule 1 for all purposes hereunder other than in respect of representations and warranties made prior to the date of such receipt.
17
Section 5.9 Controlled Securities Account . Each Grantor shall deposit all of its cash equivalents in securities accounts that are Controlled Securities Accounts except for cash equivalents the aggregate value of which does not exceed $5,000.
ARTICLE VI
REMEDIAL PROVISIONS
Section 6.1 Code and Other Remedies .
(a) UCC Remedies . During the continuance of an Event of Default, Agent may exercise, in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to any Secured Obligation, all rights and remedies of a secured party under the UCC or any other applicable law.
(b) Disposition of Collateral . Without limiting the generality of the foregoing, Agent may, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), after the occurrence of and during the continuance of any Event of Default (personally or through its agents or attorneys), (i) enter upon the premises where any Collateral is located, without any obligation to pay rent, through self-help, without judicial process, without first obtaining a final judgment or giving any Grantor or any other Person notice or opportunity for a hearing on Agents claim or action except as may be required by applicable Requirements of Law, (ii) collect, receive, appropriate and realize upon any Collateral and (iii) sell, assign, convey, transfer, grant option or options to purchase and deliver any Collateral (enter into Contractual Obligations to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, brokers board or office of any Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Agent shall have the right, upon any such public sale or sales and, to the extent permitted by the UCC and other applicable Requirements of Law, upon any such private sale, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption of any Grantor, which right or equity is hereby waived and released.
(c) Management of the Collateral . Each Grantor further agrees, that, upon the occurrence and during the continuance of any Event of Default, (i) at Agents request, it shall assemble the Collateral and make it available to Agent at places that Agent shall reasonably select, whether at such Grantors premises or elsewhere, (ii) without limiting the foregoing, Agent also has the right to require that each Grantor store and keep any Collateral pending further action by Agent and, while any such Collateral is so stored or kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain such Collateral in good condition, (iii) until Agent is able to sell, assign, convey or transfer any Collateral, Agent shall have the right to hold or use such Collateral to the extent that it deems appropriate for the purpose of preserving the Collateral or its value or for any other purpose deemed appropriate by Agent and (iv) Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of any Collateral and to enforce any of Agents remedies
18
(for the benefit of the Secured Parties), with respect to such appointment without prior notice or hearing as to such appointment. Agent shall not have any obligation to any Grantor to maintain or preserve the rights of any Grantor as against third parties with respect to any Collateral while such Collateral is in the possession of Agent.
(d) Application of Proceeds . Agent shall apply the cash proceeds of any action taken by it pursuant to this Section 6.1 , after deducting all reasonable and documented out-of-pocket costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any Collateral or in any way relating to the Collateral or the rights of Agent and any other Secured Party hereunder, including reasonable and documented attorneys fees and disbursements, and, in each case, subject to the limitations on reimbursement of costs and expenses in Section 10.7 of the Loan Agreement, to the payment in whole or in part of the Secured Obligations, as set forth in the Loan Agreement, and only after such application and after the payment by Agent of any other amount required by any Requirement of Law, need Agent account for the surplus, if any, to any Grantor.
(e) Direct Obligation . Neither Agent nor any other Secured Party shall be required to make any demand upon, or pursue or exhaust any right or remedy against, any Grantor or any other Person with respect to the payment of the Obligations or to pursue or exhaust any right or remedy with respect to any Collateral therefor or any direct or indirect guaranty thereof. All of the rights and remedies of Agent and any other Secured Party under any Credit Document shall be cumulative, may be exercised individually or concurrently and not exclusive of any other rights or remedies provided by any Requirement of Law. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against Agent or any other Secured Party, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or defenses it may have as a surety, now or hereafter existing, arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of any Collateral shall be required by applicable Requirements of Law, to the extent permitted by applicable Requirements of Law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.
(f) Commercially Reasonable . To the extent that applicable Requirements of Law impose duties on Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for Agent to do any of the following:
(i) fail to incur significant costs, expenses or other Liabilities reasonably deemed as such by Agent to prepare any Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition;
(ii) fail to obtain permits, or other consents, for access to any Collateral to sell or for the collection or sale of any Collateral, or, if not required by other Requirements of Law, fail to obtain permits or other consents for the collection or disposition of any Collateral;
19
(iii) fail to exercise remedies against account debtors or other Persons obligated on any Collateral or to remove Liens on any Collateral or to remove any adverse claims against any Collateral;
(iv) advertise dispositions of any Collateral through publications or media of general circulation, whether or not such Collateral is of a specialized nature, or to contact other Persons, whether or not in the same business as any Grantor, for expressions of interest in acquiring any such Collateral;
(v) exercise collection remedies against account debtors and other Persons obligated on any Collateral, directly or through the use of collection agencies or other collection specialists, hire one or more professional auctioneers to assist in the disposition of any Collateral, whether or not such Collateral is of a specialized nature, or, to the extent deemed appropriate by Agent, obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any Collateral, or utilize Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets to dispose of any Collateral;
(vi) dispose of assets in wholesale rather than retail markets;
(vii) disclaim disposition warranties, such as title, possession or quiet enjoyment; or
(viii) purchase insurance or credit enhancements to insure Agent against risks of loss, collection or disposition of any Collateral or to provide to Agent a guaranteed return from the collection or disposition of any Collateral.
Each Grantor acknowledges that the purpose of this Section 6.1 is to provide a non-exhaustive list of actions or omissions that are commercially reasonable when exercising remedies against any Collateral and that other actions or omissions by any Secured Party shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 6.1 . Without limitation upon the foregoing, nothing contained in this Section 6.1 shall be construed to grant any rights to any Grantor or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by applicable Requirements of Law in the absence of this Section 6.1 .
(g) IP Licenses . For the purpose of enabling Agent to exercise rights and remedies under this Section 6.1 during the continuance of an Event of Default (including in order to take possession of, collect, receive, assemble, process, appropriate, remove, realize upon, sell, assign, convey, transfer or grant options to purchase any Collateral) at such time as Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to Agent, for the benefit of the Secured Parties, (i) a nonexclusive, worldwide license (exercisable without payment of royalty or other compensation to such Grantor), including in such license the right to sublicense, to use and practice any Intellectual Property (with respect to Trademarks, subject to reasonable quality control in favor of such Grantor) now owned or hereafter acquired by such Grantor and access to all media in which any of the licensed items may be recorded or stored and
20
to all Software used for the compilation or printout thereof (except in each case, for all IP Licenses, only to perform actions subject any limitations imposed by such IP Licenses, including obtaining any required third party consents) and (ii) an irrevocable license (without payment of rent or other compensation to such Grantor) to use, operate and occupy all real Property owned, operated, leased, subleased or otherwise occupied by such Grantor.
Section 6.2 Accounts and Payments in Respect of General Intangibles .
(a) In addition to, and not in substitution for, any similar requirement in the Loan Agreement, if required by Agent at any time during the continuance of an Event of Default, any payment of accounts or payment in respect of general intangibles, when collected by any Grantor, shall be promptly (and, in any event, within two (2) Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to Agent) in a Cash Collateral Account, subject to withdrawal by Agent as provided in Section 6.4 . Until so turned over, when such Event of Default is continuing, such payment shall be held by such Grantor for Agent, segregated from other funds of such Grantor.
(b) At any time during the continuance of an Event of Default:
(i) each Grantor shall, upon Agents request, deliver to Agent all original and other documents evidencing, and relating to, the Contractual Obligations and transactions that gave rise to any account or any payment in respect of general intangibles, including all original orders, invoices and shipping receipts and notify account debtors that the accounts or general intangibles have been collaterally assigned to Agent and that payments in respect thereof shall be made directly to Agent;
(ii) In accordance with the Custodian Agreement, Agent may, without notice, at any time during the continuance of an Event of Default, limit or terminate the authority of a Grantor to collect its accounts or amounts due under general intangibles or any thereof and, in its own name or in the name of others, communicate with account debtors to verify with them to Agents satisfaction the existence, amount and terms of any account or amounts due under any general intangible. In addition, Agent may at any time enforce such Grantors rights against such account debtors and obligors of general intangibles; and
(iii) each Grantor shall take all actions, deliver all documents and provide all information necessary or reasonably requested by Agent to ensure any Internet Domain Name is registered.
(c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each account and each payment in respect of general intangibles to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. No Secured Party shall have any obligation or liability under any agreement giving rise to an account or a payment in respect of a general intangible by reason of or arising out of any Credit Document or the receipt by any Secured Party of any payment relating thereto, nor shall any Secured Party be obligated in any manner to perform any obligation of any Grantor under or pursuant to any agreement giving rise
21
to an account or a payment in respect of a general intangible, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.
Section 6.3 Pledged Collateral .
(a) Voting Rights . During the continuance of an Event of Default, upon notice by Agent to the relevant Grantor or Grantors, Agent or its nominee may exercise (A) any voting, consent, corporate and other right pertaining to the Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right of conversion, exchange and subscription and any other right, privilege or option pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion any Pledged Collateral upon the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental change in the corporate or equivalent structure of any issuer of Pledged Stock, the right to deposit and deliver any Pledged Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as Agent may determine), all without liability except to account for property actually received by it; provided , however , that Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.
(b) Proxies . In order to permit Agent, during the continuance of an Event of Default, to exercise the voting and other consensual rights that it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions that it may be entitled to receive hereunder, if an Event of Default has occurred and is continuing, (i) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to Agent all such proxies, dividend payment orders and other instruments as Agent may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, such Grantor hereby grants to Agent an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or members, as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person (including the issuer of such Pledged Collateral or any officer or agent thereof) during the continuance of an Event of Default and which proxy shall only terminate upon the payment in full of the Secured Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).
(c) Authorization of Issuers . Each Grantor hereby expressly and irrevocably authorizes and instructs, without any further instructions from such Grantor, each issuer of any Pledged Collateral pledged hereunder by such Grantor to (i) comply with any instruction received by it from Agent in writing that states that an Event of Default is continuing and is otherwise in accordance with the terms of this Agreement and each Grantor agrees that such
22
issuer shall be fully protected from Liabilities to such Grantor in so complying and (ii) if any Event of Default is continuing, unless otherwise expressly permitted hereby or the Loan Agreement, pay any dividend or make any other payment with respect to the Pledged Collateral directly to Agent. Agent hereby agrees that it shall not give any such instructions unless an Event of Default has occurred and is continuing.
Section 6.4 Proceeds to be Turned over to and Held by Agent . During the continuance of an Event of Default, unless otherwise provided in the Loan Agreement or this Agreement, all proceeds of any Collateral received by any Grantor hereunder in cash or cash equivalents shall be held by such Grantor in trust for Agent and the other Secured Parties, segregated from other funds of such Grantor, and shall, promptly upon receipt by any Grantor, be turned over to Agent in the exact form received (with any necessary endorsement). All such proceeds of Collateral and any other proceeds of any Collateral received by Agent in cash or cash equivalents shall be held by Agent in a Cash Collateral Account. All proceeds being held by Agent in a Cash Collateral Account (or by such Grantor in trust for Agent) shall continue to be held as collateral security for the Secured Obligations and shall not constitute payment thereof until applied as provided in the Loan Agreement.
Section 6.5 Sale of Pledged Collateral .
(a) Each Grantor recognizes that Agent may be unable to effect a public sale of any Pledged Collateral by reason of certain prohibitions contained in the Securities Act of 1933 and applicable state or foreign securities laws or otherwise or may determine that a public sale is impracticable, not desirable or not commercially reasonable and, accordingly, may resort to one or more private sales thereof to a restricted group of purchasers that shall be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. Agent shall be under no obligation to delay a sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Act of 1933 or under applicable state securities laws even if such issuer would agree to do so.
(b) Each Grantor agrees that if an Event of Default is continuing it shall use its best efforts to do or cause to be done all such other acts requested in writing by Agent as may be necessary to make such sale or sales of any portion of the Pledged Collateral pursuant to Section 6.1 and this Section 6.5 valid and binding and in compliance with all applicable Requirements of Law. Each Grantor further agrees that a breach of any covenant contained herein will cause irreparable injury to Agent and other Secured Parties, that Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained herein shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defense against an action for specific performance of such covenants except for a defense of performance, that no Event of Default is continuing under the Loan Agreement or payment in full of the Obligations and termination of all Commitments (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted). Each Grantor agrees not to enforce or exercise its rights of contribution or subrogation upon the sale or disposition of all or any portion of the Pledged Collateral by Agent to the extent provided for in Section 2.6 .
23
Section 6.6 Deficiency . Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of any Collateral are insufficient to pay the Secured Obligations in full.
ARTICLE VII
AGENT
Section 7.1 Agents Appointment as Attorney-in-Fact .
(a) Each Grantor hereby irrevocably constitutes and appoints Agent and any Related Person thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of the Credit Documents, to take any appropriate action and to execute any document or instrument that may be necessary or desirable to accomplish the purposes of the Credit Documents, and, without limiting the generality of the foregoing, each Grantor hereby gives Agent and its Related Persons the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any of the following after an Event of Default has occurred and is continuing:
(i) in the name of such Grantor, in its own name or otherwise, take possession of and indorse and collect any Collateral consisting of a check, draft, note, acceptance or other instrument for the payment of moneys due under any account or general intangible or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Agent for the purpose of collecting any such moneys due under any Collateral consisting of an account or general intangible or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property owned by or licensed to such Grantor and constituting Collateral, execute, deliver and have recorded any document that Agent may request to evidence, effect, publicize or record Agents security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens (other than Permitted Liens) levied or placed on or threatened against any Collateral, effect any repair or pay any insurance called for by the terms of the Loan Agreement (including all or any part of the premiums therefor and the costs thereof);
(iv) execute, in connection with any sale provided for in Section 6.1 or 6.5 , any document to effect or otherwise necessary or appropriate in relation to evidence the sale of any Collateral; or
24
(v) (A) direct any party liable for any payment under any Collateral to make payment of any moneys due or to become due thereunder directly to Agent or as Agent shall direct, (B) ask or demand for, and collect and receive payment of and receipt for, any moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) sign and indorse any invoice, freight or express bill, bill of lading, storage or warehouse receipt, draft against debtors, assignment, verification, notice and other document in connection with any Collateral, (D) commence and prosecute any suit, action or proceeding at law or in equity in any court of competent jurisdiction to collect any Collateral and to enforce any other right in respect of any Collateral, (E) defend any actions, suits, proceedings, audits, claims, demands, orders or disputes brought against such Grantor with respect to any Collateral, (F) settle, compromise or adjust any such actions, suits, proceedings, audits, claims, demands, orders or disputes and, in connection therewith, give such discharges or releases as Agent may deem appropriate, (G) assign Collateral consisting of Intellectual Property owned by such Grantor or any IP Licenses of such Grantor throughout the world on such terms and conditions and in such manner as Agent shall in its sole discretion determine, including the execution and filing of any document necessary to effectuate or record such assignment and (H) generally, sell, assign, convey, transfer or grant a Lien on, make any Contractual Obligation with respect to and otherwise deal with, any Collateral as fully and completely as though Agent were the absolute owner thereof for all purposes and do, at Agents option, at any time or from time to time, all acts and things that Agent deems necessary to protect, preserve or realize upon any Collateral and the Secured Parties security interests therein and to effect the intent of the Credit Documents, all as fully and effectively as such Grantor might do. Notwithstanding anything to the contrary herein, the Agent shall not assign or otherwise dispose of any Trademark owned by any Grantor without assigning the assets and goodwill of the business associated therewith and any such assignment shall be null and void.
(vi) If any Grantor fails to perform or comply with any Contractual Obligation contained herein, Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such Contractual Obligation.
Anything in this Section 7.1(a) to the contrary notwithstanding, the Agent agrees that it will not exercise any rights under the power of attorney and proxy provided for in this Section 7.1(a) unless an Event of Default shall have occurred and be continuing.
(b) The reasonable and documented out of pocket costs and expenses of Agent, in each case subject to the limitations set forth in Section 10.7 of the Loan Agreement, incurred in connection with actions undertaken as provided in this Section 7.1 , together with interest thereon at the default rate set forth in the Loan Agreement, from the date of payment by Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to Agent promptly (but in no event later than thirty (30) days) following written demand therefore by Agent to such Grantor.
(c) During the effectiveness of this Agreement, each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue of this Section 7.1 . All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.
25
Section 7.2 Authorization to File Financing Statements . Each Grantor authorizes Agent and its Related Persons, at any time and from time to time, to file or record financing statements, amendments thereto, and other filing or recording documents or instruments with respect to any Collateral in such form and in such offices as Agent reasonably determines appropriate to perfect, or continue or maintain perfection of, the security interests of Agent under this Agreement, and such financing statements and amendments may describe the Collateral covered thereby as all assets of the debtor, all assets of the debtor whether now existing or hereafter arising or words of similar import. A copy of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. Such Grantor also hereby ratifies its authorization for Agent to have filed any initial financing statement or amendment thereto under the UCC (or other similar laws) in effect in any jurisdiction if filed prior to the date hereof. Each Grantor hereby (i) waives any right under the UCC or any other Requirement of Law to receive notice and/or copies of any filed or recorded financing statements, amendments thereto, continuations thereof or termination statements and (ii) releases and excuses each Secured Party from any obligation under the UCC or any other Requirement of Law to provide notice or a copy of any such filed or recorded documents.
Section 7.3 Authority of Agent . Each Grantor acknowledges that the rights and responsibilities of Agent under this Agreement with respect to any action taken by Agent or the exercise or non-exercise by Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between Agent and the other Secured Parties, be governed by the Loan Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between Agent and any Grantor, Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation or entitlement to make any inquiry respecting such authority.
Section 7.4 Duty; Obligations and Liabilities .
(a) Duty of Agent . Agents sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as Agent deals with similar property for its own account. The powers conferred on Agent hereunder are solely to protect Agents interest in the Collateral and shall not impose any duty upon Agent to exercise any such powers. Agent shall be accountable only for amounts that it receives as a result of the exercise of such powers, and neither it nor any of its Related Persons shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct as determined by a court of competent jurisdiction. In addition, Agent shall not be liable or responsible for any loss or damage to any Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehousemen, carrier, forwarding agency, consignee or other bailee if such Person has been selected by Agent in good faith.
26
(b) Obligations and Liabilities with respect to Collateral . No Secured Party and no Related Person thereof shall be liable for failure to demand, collect or realize upon any Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to any Collateral. The powers conferred on Agent hereunder shall not impose any duty upon any other Secured Party to exercise any such powers. The other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their respective officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct as determined by a court of competent jurisdiction.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Reinstatement . Each Grantor agrees that, if any payment made by any Grantor or other Person and applied to the Secured Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of any Collateral are required to be returned by any Secured Party to such Grantor, its estate, trustee, receiver or any other party, including any Grantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force and effect, as fully as if such payment had never been made. If, prior to any of the foregoing, (a) any Lien or other Collateral securing such Grantors liability hereunder shall have been released or terminated by virtue of the foregoing or (b) any provision of the Guaranty hereunder shall have been terminated, cancelled or surrendered, such Lien, other Collateral or provision shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of any such Grantor in respect of any Lien or other Collateral securing such obligation or the amount of such payment.
Section 8.2 Release of Collateral .
(a) At the time provided in Section 10.18 or 11.10 of the Loan Agreement, the Collateral shall be released from the Lien created hereby and this Agreement and all guarantees and other obligations (other than those expressly stated to survive such termination) of Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors. Each Grantor is hereby authorized to file UCC amendments, termination statements and such other documents as may be necessary or appropriate at such time evidencing the termination of the Liens so released. At the request of any Grantor following any such termination, Agent shall promptly deliver to such Grantor any Collateral of such Grantor held by Agent hereunder and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.
27
(b) If Agent shall be directed or permitted pursuant to Section 10.18 or 11.10 of the Loan Agreement to release any Lien or any Collateral, such Collateral shall be released from the Lien created hereby to the extent provided under, and subject to the terms and conditions set forth in such Section 10.18 or Section 11.10 , as the case may be. In connection therewith, Agent, at the request of any Grantor, shall execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such release.
Section 8.3 Independent Obligations . The obligations of each Grantor hereunder are independent of and separate from the Secured Obligations and the Guaranteed Obligations. If any Secured Obligation or Guaranteed Obligation is not paid when due, or during the continuance of any Event of Default, Agent may, at its sole election, proceed directly and at once, without notice, against any Grantor and any Collateral to collect and recover the full amount of any Secured Obligation or Guaranteed Obligation then due, without first proceeding against any other Grantor or any other Collateral and without first joining any other Grantor in any proceeding.
Section 8.4 No Waiver by Course of Conduct . No Secured Party shall by any act (except by a written instrument pursuant to Section 8.5 ), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Secured Party would otherwise have on any future occasion.
Section 8.5 Amendments in Writing . None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 10.2 of the Loan Agreement; provided , however , that annexes to this Agreement may be supplemented (but no existing provisions may be modified and no Collateral may be released) through Pledge Amendments and Joinder Agreements, in substantially the form of Annex 1 and Annex 2, respectively, in each case duly executed by Agent and each Grantor directly affected thereby and (ii) the Schedules hereto may be supplemented by the Grantors as provided herein.
Section 8.6 Additional Grantors; Additional Pledged Collateral .
(a) Joinder Agreements . If, at the option of a Borrower or as required by the Loan Agreement, a Borrower shall cause any Subsidiary that is not a Grantor to become a Grantor hereunder, such Subsidiary shall execute and deliver to Agent a Joinder Agreement substantially in the form of Annex 2 and shall thereafter for all purposes be a party hereto and have the same rights, benefits and obligations as a Grantor party hereto on the Closing Date.
(b) Pledge Amendments . To the extent any Pledged Collateral has not been delivered as of the Closing Date, such Grantor shall deliver a pledge amendment duly executed by the Grantor in substantially the form of Annex 1 (each, a Pledge Amendment ). Such Grantor authorizes Agent to attach each Pledge Amendment to this Agreement.
28
Section 8.7 Notices . All notices, requests and demands to or upon Agent or any Grantor hereunder shall be effected in the manner provided for in Section 10.4 of the Loan Agreement; provided , however , that any such notice, request or demand to or upon any Grantor shall be addressed to the Borrowers notice address set forth in such Section 10.4 .
Section 8.8 Successors and Assigns . This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of each Secured Party and their successors and assigns; provided , however , that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of Agent.
Section 8.9 Counterparts . This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Agreement by facsimile transmission or by Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.
Section 8.10 Severability . Any provision of this Agreement being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of this Agreement or any part of such provision in any other jurisdiction.
Section 8.11 Governing Law . This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.
Section 8.12 Waiver of Jury Trial . THE PARTIES HERETO, TO THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY OR THEREBY. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE. EACH GRANTOR AGREES TO BE BOUND BY THE PROVISIONS OF SECTION 10.10 THE LOAN AGREEMENT.
[Signature Pages Follow]
29
IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty and Security Agreement to be duly executed and delivered as of the date above written.
CURO RECEIVABLES FINANCE I, LLC as a Grantor |
||
By: |
/s/ Donald F. Gayhardt Jr. |
|
Name: Donald F. Gayhardt Jr. | ||
Title: President & Chief Executive Officer |
CURO RECEIVABLES HOLDINGS I, LLC as a Grantor |
||
By: |
/s/ Donald F. Gayhardt Jr. |
|
Name: Donald F. Gayhardt Jr. | ||
Title: President & Chief Executive Officer |
ACCEPTED AND AGREED as of the date first above written: |
||
VICTORY PARK MANAGEMENT, LLC, as Agent |
||
By: |
/s/ Scott R. Zemnick |
|
Name: Scott R. Zemnick | ||
Title: Authorized Signatory |
[Signature Page to Guaranty and Security Agreement]
ANNEX 1
TO
GUARANTY AND SECURITY AGREEMENT 1
FORM OF PLEDGE AMENDMENT
This Pledge Amendment, dated as of , 20 , is delivered pursuant to Section 8.6 of the Guaranty and Security Agreement, dated as of November 17, 2016 by Curo Receivables Finance I, LLC, as the Borrower Agent, and CURO Receivables Holdings I, LLC, as a Grantor, the undersigned Grantor and the other Persons from time to time party thereto as Grantors in favor of Victory Park Management, LLC, as Agent for the Secured Parties referred to therein (as such agreement may be amended, restated, supplemented or otherwise modified from time to time, the Guaranty and Security Agreement ). Capitalized terms used herein without definition are used as defined in the Guaranty and Security Agreement.
The undersigned hereby agrees that this Pledge Amendment may be attached to the Guaranty and Security Agreement and that the Pledged Collateral listed on Annex 1-A to this Pledge Amendment shall be and become part of the Collateral referred to in the Guaranty and Security Agreement and shall secure all Obligations of the undersigned.
The undersigned hereby represents and warrants that each of the representations and warranties contained in Sections 4.1 , 4.2 , 4.3 and 4.8 of the Guaranty and Security Agreement is true and correct and as of the date hereof as if made on and as of such date (except to the extent that such representation or warranty expressly relates to an earlier date or period, in which event such representation and warranty shall be true and correct as of such earlier date or period).
[GRANTOR] | ||
By: |
|
|
Name: | ||
Title: |
To be used for pledge of Additional Pledged Collateral by existing Grantor.
A1-1
Annex 1-A
PLEDGED STOCK
ISSUER |
CLASS |
CERTIFICATE NO(S). |
PAR VALUE |
NO. OF SHARES, UNITS OR INTERESTS |
PLEDGED DEBT INSTRUMENTS
ISSUER |
DESCRIPTION OF DEBT |
CERTIFICATE NO(S). |
FINAL MATURITY |
PRINCIPAL AMOUNT |
A1-2
ACKNOWLEDGED AND AGREED as of the date first above written: |
||
VICTORY PARK MANAGEMENT, LLC, as Agent |
||
By: |
|
|
Name: | ||
Title: |
A1-3
ANNEX 2
TO
GUARANTY AND SECURITY AGREEMENT
FORM OF JOINDER AGREEMENT
This JOINDER AGREEMENT, dated as of , 20 , is delivered pursuant to Section 8.6 of the Guaranty and Security Agreement, dated as of November 17, 2016, by CURO Receivables Finance I, LLC, as the Borrower Agent, and CURO Receivables Holdings I, LLC, each as a Grantor and the other Persons from time to time party thereto as Grantors in favor of Victory Park Management, LLC, as Agent for the Secured Parties referred to therein (as such agreement may be amended, restated, supplemented or otherwise modified from time to time, the Guaranty and Security Agreement ). Capitalized terms used herein without definition are used as defined in the Guaranty and Security Agreement.
By executing and delivering this Joinder Agreement, the undersigned, as provided in Section 8.6 of the Guaranty and Security Agreement, hereby becomes a party to the Guaranty and Security Agreement as a Grantor thereunder with the same force and effect as if originally named as a Grantor therein and, without limiting the generality of the foregoing, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of the undersigned, hereby grants to Agent for the benefit of the Secured Parties a security interest in, all of its right, title and interest in, to and under the Collateral of the undersigned; provided , however , notwithstanding the foregoing, no security interest is hereby granted in, and the Collateral shall not include, any Excluded Property. The undersigned hereby agrees to be bound as a Grantor for the purposes of the Guaranty and Security Agreement and expressly assumes all obligations and liabilities of a Grantor thereunder.
The undersigned shall supplement as applicable the information set forth in Schedules 1 , 2 , 3 and 4 to the Guaranty and Security Agreement and Schedules III , 4.2 , 4.16 , 4.17 and 4.23 to the Loan Agreement. By acknowledging and agreeing to this Joinder Agreement, the undersigned hereby agree that this Joinder Agreement may be attached to the Guaranty and Security Agreement and that the additional Collateral referenced above shall be and become part of the Collateral referred to in the Guaranty and Security Agreement and shall secure all Secured Obligations of the undersigned.
The undersigned hereby represents and warrants that the representations and warranties of the undersigned contained in Article IV of the Guaranty and Security Agreement applicable to it are true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as the date hereof as if made on and as of such date except to the extent that such representation or warranty expressly relates to an earlier date or period (in which event such representations and warranties were true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such earlier date or period).
A2-1
IN WITNESS WHEREOF, THE UNDERSIGNED HAS CAUSED THIS JOINDER AGREEMENT TO BE DULY EXECUTED AND DELIVERED AS OF THE DATE FIRST ABOVE WRITTEN.
[ADDITIONAL GRANTOR] | ||
By: |
|
|
Name: | ||
Title: |
A2-2
ACKNOWLEDGED AND AGREED as of the date first above written: |
||
[EACH OTHER GRANTOR] | ||
By: |
|
|
Name: | ||
Title: |
VICTORY PARK MANAGEMENT, LLC, as Agent |
||
By: |
|
|
Name: | ||
Title: |
A2-3
ANNEX 3
TO
GUARANTY AND SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT 1
THIS [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT, dated as of , 20 , is made by each of the entities listed on the signature pages hereof (each a Grantor and, collectively, the Grantors ), in favor of Victory Park Management, LLC (VPC), as agent (in such capacity, together with its successors and permitted assigns, Agent ) for the Secured Parties (as defined in the Loan Agreement referred to below).
W I T N E S S E T H:
WHEREAS, pursuant to the Loan Agreement, dated as of November 17, 2016 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the Loan Agreement ), by and among the Borrowers, the Lenders from time to time party thereto and VPC, as Agent, the Lenders have severally agreed to make extensions of credit to the Borrowers upon the terms and subject to the conditions set forth therein;
WHEREAS, each Grantor has agreed, pursuant to a Guaranty and Security Agreement of even date herewith in favor of Agent (as such agreement may be amended, restated, supplemented or otherwise modified from time to time, the Guaranty and Security Agreement ), to guarantee the Obligations (as defined in the Loan Agreement) of each Borrower; and
WHEREAS, all of the Grantors are party to the Guaranty and Security Agreement pursuant to which the Grantors are required to execute and deliver this [Copyright] [Patent] [Trademark] Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Lenders and Agent to enter into the Loan Agreement and to induce the Lenders to make extensions of credit to the Borrowers thereunder, each Grantor hereby agrees with Agent as follows:
Section 1. Defined Terms . Capitalized terms used herein without definition are used as defined in the Guaranty and Security Agreement.
Section 2. Grant of Security Interest in [Copyright] [Trademark] [Patent] Collateral . Each Grantor, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of such Grantor, hereby grants to Agent for the benefit of the Secured Parties a Lien on and security interest in, all of its right, title and interest in, to and under the following Collateral of such Grantor (the [Copyright] [Patent] [Trademark] Collateral ):
1 | Separate agreements should be executed relating to each Grantors respective Copyrights, Patents, and Trademarks. |
A3-1
(a) [all of its Copyrights and all IP Licenses providing for the grant by or to such Grantor of any right under any Copyright, including, without limitation, those referred to on Schedule 1 hereto;
(b) all renewals, reversions and extensions of the foregoing; and
(c) all income, royalties, proceeds and Liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, violation or other impairment thereof.]
or
(d) [all of its Patents and all IP Licenses providing for the grant by or to such Grantor of any right under any Patent, including, without limitation, those referred to on Schedule 1 hereto;
(e) all reissues, reexaminations, continuations, continuations-in-part, divisionals and extensions of the foregoing; and
(f) all income, royalties, proceeds and Liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, violation or other impairment thereof.]
or
(g) [all of its Trademarks and all IP Licenses providing for the grant by or to such Grantor of any right under any Trademark, including, without limitation, those referred to on Schedule 1 hereto;
(h) all renewals and extensions of the foregoing;
(i) all goodwill of the business connected with the use of, and symbolized by, each such Trademark; and
(j) all income, royalties, proceeds and Liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]
(k) Notwithstanding the foregoing, no security interest or Lien on any Trademark shall be deemed granted in, nor shall any such security interest or Lien attach to, any Trademark application filed on an intent to use basis until such time, as any, as a statement of use or affidavit alleging use is filed with the United States Patent and Trademark Office.
A3-2
Section 3. Guaranty and Security Agreement . The security interest granted pursuant to this [Copyright] [Patent] [Trademark] Security Agreement is granted in conjunction with the security interest granted to Agent pursuant to the Guaranty and Security Agreement and each Grantor hereby acknowledges and agrees that the rights and remedies of Agent with respect to the security interest in the [Copyright] [Patent] [Trademark] Collateral made and granted hereby are more fully set forth in the Guaranty and Security Agreement. In the event of any conflict between the provisions of this [Copyright] [Patent] [Trademark] Security Agreement and the Guaranty and Security Agreement, the Guaranty and Security Agreement shall govern.
Section 4. Grantor Remains Liable . Each Grantor hereby agrees that, anything herein to the contrary notwithstanding, such Grantor shall assume full and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions in connection with their [Copyrights] [Patents] [Trademarks] and IP Licenses subject to a security interest hereunder.
Section 5. Counterparts . This [Copyright] [Patent] [Trademark] Security Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.
Section 6. Governing Law . This [Copyright] [Patent] [Trademark] Security Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.
[SIGNATURE PAGES FOLLOW]
A3-3
IN WITNESS WHEREOF, each Grantor has caused this [Copyright] [Patent] [Trademark] Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.
[GRANTOR] | ||
as Grantor | ||
By: |
|
|
Name: | ||
Title: |
ACCEPTED AND AGREED as of the date first above written: |
||
VICTORY PARK MANAGEMENT, LLC, as Agent | ||
By: |
|
|
Name: | ||
Title: |
[SIGNATURE PAGE TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]
A3-4
SCHEDULE I
TO
[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT
[Copyright] [Patent] [Trademark] Registrations
1. | REGISTERED [COPYRIGHTS] [PATENTS] [TRADEMARKS] |
[Include Registration Number and Date]
2. | [COPYRIGHT] [PATENT] [TRADEMARK] APPLICATIONS |
[Include Application Number and Date]
3. | IP LICENSES |
[Include complete legal description of agreement (name of agreement, parties and date)]
Schedule 1
Commercial Tort Claims
None.
Schedule 2
Filings
Type of Filing |
Entity |
Applicable Collateral Document |
Jurisdiction |
|||
UCC-1 |
CURO Receivables Holdings I, LLC |
Guaranty and Security Agreement |
Delaware Secretary of State |
|||
UCC-1 |
CURO Receivables Finance I, LLC |
Loan Agreement |
Delaware Secretary of State |
Schedule 3
Pledged Collateral
Grantor |
Pledged Stock |
Jurisdiction of Pledged Stock Entity |
||
CURO Receivables Holdings |
CURO Receivables Finance I, LLC | Delaware | ||
I, LLC |
(100%) | |||
Schedule 4
Intellectual Property
Trademark | Serial No. |
Registration No. |
Registration Date |
|||
None | N/A | N/A | N/A |
Exhibit 10.49
EXECUTION VERSION
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
THIS AMENDED AND RESTATED INTERCREDITOR AGREEMENT (this Intercreditor Agreement ), dated as of November 17, 2016, is by and among VICTORY PARK MANAGEMENT, LLC, as collateral agent for the First Lien Lenders defined below (in such capacity, First Lien Agent as hereinafter further defined), and WILMINGTON TRUST, NATIONAL ASSOCIATION (as successor by merger to Wilmington Trust FSB), as collateral agent under the Indenture (as hereinafter defined) for the other Second Lien Creditors defined below (together with its successors and assigns, in such capacity, Second Lien Agent as hereinafter further defined).
R E C I T A L S:
A. First Lien Administrative Agent (as hereafter defined) and the other First Lien Lenders have entered into one or more financing arrangements with Borrower (as hereinafter defined), pursuant to which the First Lien Lenders have made and may, upon certain terms and conditions, continue to make loans and provide other financial accommodations to Borrower secured by liens on and security interests in substantially all of the assets and properties of Borrower and the other Obligors (as defined herein).
B. Borrower, the other Obligors named therein and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), as trustee and collateral agent, have entered into the Indenture, pursuant to which Borrower has issued, and the Noteholders have purchased, the Notes (as hereinafter defined), which Notes are secured by liens on and security interests in substantially all of the assets and properties of Borrower and the other Obligors.
C. Jefferies Finance LLC (the Original First Lien Agent ) and Second Lien Agent have entered into that certain Intercreditor Agreement dated as of May 12, 2011, (as amended by (i) the First Amendment thereto, dated as of September 9, 2011, (ii) the Second Amendment thereto, dated as of May 17, 2012, and (iii) as amended by the Third Amendment thereto dated as of February 8, 2013, the Original Intercreditor Agreement )
D. The First Lien Agent, the Borrowers and the other Obligors have entered into the First Lien Credit Agreements (as defined below) and, pursuant to Section 4.3(a) of the Original Intercreditor Agreement, the First Lien Credit Agreements shall be treated as a replacement for the Credit Agreement, dated as of May 12, 2011, by and among the Borrower, the other Obligors, the Original First Lien Administrative Agent and certain other lenders party thereto.
E. First Lien Agent, on behalf of the First Lien Lenders, and Second Lien Agent, on behalf of itself and the other Second Lien Creditors, enter into this Amended and Restated Intercreditor Agreement to (i) confirm the relative priorities of the Liens (as defined herein) of First Lien Agent, on behalf of itself and the First Lien Lenders, and Second Lien Agent, on behalf of itself and the other Second Lien Creditors, in the assets and properties of Borrower and the other Obligors, and (ii) provide for the orderly sharing among them, in accordance with such priorities, of the proceeds of such assets and properties upon any foreclosure thereon or other disposition thereof.
Intercreditor and Subordination Agreement
In consideration of the mutual benefits accruing to First Lien Agent, the First Lien Lenders, Second Lien Agent and the other Second Lien Creditors hereunder and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree to amend and restate the Original Intercreditor Agreement and the Original Intercreditor Agreement is hereby amended and restated as follows:
1. DEFINITIONS
As used above and in this Intercreditor Agreement, the following terms shall have the meanings ascribed to them below:
1.1 Agreements shall mean, collectively, the First Lien Loan Agreements and the Indenture Documents.
1.2 Banking Services shall mean each and any of the following bank services provided to Borrower or any other Obligor by any Cash Management Creditor (as hereafter defined): (a) commercial credit cards, (b) stored value cards and (c) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts, netting and interstate depository network services).
1.3 Banking Services Obligations of Borrower and the other Obligors shall mean any and all obligations of Borrower or the other Obligors, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.
1.4 Borrower shall mean Curo Intermediate Holdings Corp., a Delaware corporation, and its successors and assigns, including, without limitation, any receiver, trustee or debtor-in-possession on its behalf or on behalf of any of its successors or assigns.
1.5 Cash Management Creditor shall mean any First Lien Lender party to either First Lien Credit Agreement or any Affiliate (as defined in the First Lien Credit Agreement) thereof that provides Banking Services to Borrower or any other Obligor.
1.6 Collateral shall mean all assets and properties of any kind whatsoever, real or personal, tangible or intangible and wherever located, whether now owned or hereafter acquired, of Borrower or any other Obligor in which a security interest is granted (or purported to be granted) under any of the Agreements.
Intercreditor and Subordination Agreement
2
1.7 Creditors shall mean, collectively, First Lien Agent, the First Lien Lenders, Second Lien Agent, Trustee and the other Second Lien Creditors, and their respective successors and assigns, being sometimes referred to herein individually as a Creditor.
1.8 Default shall mean a Default or an Event of Default or similar term, as such terms are defined in the First Lien Credit Agreement, and a Default or an Event of Default or similar term, as such terms are defined in the Indenture, so long as any such Agreement is in effect.
1.9 Enforcement Action shall mean the exercise of any rights and remedies in respect of Collateral securing the First Lien Obligations or the Second Lien Obligations by the applicable Creditor or Creditors including, without limitation, (a) any action by any Creditor to foreclose on the Lien of such Person in any Collateral, (b) any action by any Creditor to take possession of, sell or otherwise realize (judicially or non-judicially) upon any Collateral (including, without limitation, by setoff or notification of account debtors), and/or (c) the commencement by any Creditor of any legal proceedings against Borrower or any other Obligor or with respect to any Collateral to facilitate the actions described in clauses (a) and (b) above.
1.10 First Lien Administrative Agent shall mean Victory Park Management, LLC, in its capacity as administrative agent for the First Lien Lenders, and its successors and assigns acting in a similar capacity under any First Lien Credit Agreement.
1.11 First Lien Agent shall mean Victory Park Management, LLC, in its capacity as collateral agent for the First Lien Lenders under the First Lien Credit Agreement, and its successors and assigns acting in a similar capacity under the First Lien Credit Agreement.
1.12 First Lien Credit Agreements shall mean (i) the Short Term Credit Agreement, dated as of November 17, 2016, by and among Borrower, Curo Financial Technologies Corp., a Delaware corporation ( Holdings ), First Lien Administrative Agent and certain other First Lien Lenders party thereto, and (ii) the Revolving Credit Agreement, dated as of November 17, 2016, by and among Borrower, Holdings, First Lien Administrative Agent and certain other First Lien Lenders party thereto, for both as the same now exists or may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated from time to time in accordance with the terms of this Intercreditor Agreement.
1.13 First Lien Default shall mean a Default under the First Lien Credit Agreement.
1.14 First Lien Lenders shall mean, collectively, (i) First Lien Administrative Agent, (ii) Victory Park Management, LLC, in its capacity as a lender under the First Lien Credit Agreements and each of the other lenders (including issuing lenders of letters of credit) now or hereafter party to either of the First Lien Credit Agreements from time to time, (iii) all Hedging Creditors (as hereafter defined), (iv) all Cash Management Creditors, and (v) in each case in respect of preceding clauses (i) through (iv), their respective successors and assigns (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the First Lien Obligations at any time and from time to time).
Intercreditor and Subordination Agreement
3
1.15 First Lien Loan Agreements shall mean, collectively, (i) the First Lien Credit Agreements, (ii) all agreements, confirmations and other documents entered into or evidencing any Hedging Transaction, (iii) all agreements and other documents entered into or evidencing any Banking Services and (iv) all other agreements, documents, notes, guaranties, collateral documents and instruments at any time executed and/or delivered by Borrower or any other Obligor with, to or in favor of First Lien Agent and/or the First Lien Lenders in connection therewith or related thereto, including all Credit Documents or any similar term as defined in the First Lien Credit Agreements, as applicable, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated from time to time.
1.16 First Lien Obligations shall mean any and all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower or any other Obligor (including, without limitation, Hedging Obligations and Banking Services Obligations) to First Lien Agent and the First Lien Lenders evidenced by or arising under any of the First Lien Loan Agreements, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including (without limitation) principal, premium, interest, reimbursement, obligations, charges, fees, obligations to post cash collateral, costs, indemnities and expenses (including, without limitation, attorneys and consultant fees and expenses), however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of any of the First Lien Loan Agreements or after the commencement of any Insolvency Proceeding with respect to Borrower or any other Obligor (and including, without limitation, the payment of interest, fees and expenses which would accrue and become due but for the commencement of such Insolvency Proceeding at the applicable rate provided for in the respective First Loan Agreements, whether or not such interest, fees or expenses is allowed or allowable in whole or in part in any such Insolvency Proceeding), and in each case, whether or not allowed or allowable in an Insolvency Proceeding, provided that, for purposes of this Intercreditor Agreement, the term First Lien Obligations shall not include the principal amount of loans, the face amount of letter of credit accommodations, Fledging Obligations and Banking Services Obligations in excess of the Maximum First Lien Obligations. The foregoing limitation shall not apply to, and the term First Lien Obligations shall include, obligations consisting of interest and fees, costs or expenses (except for that portion of interest and fees attributable to the portion of the First Lien Obligations that exceeds the Maximum First Lien Obligations), in each case whether or not charged by First Lien Administrative Agent and/or the other First Lien Lenders to any loan account of Borrower maintained by First Lien Administrative Agent pursuant to either of the First Lien Credit Agreements.
1.17 Hedging Creditor shall mean any First Lien Lender party to either of the First Lien Credit Agreements or any Affiliate (as defined in the applicable First Lien Credit Agreement) thereof, including any First Lien Lender party to either of the First Lien Credit Agreements or any Affiliate thereof at the time that the respective Hedging Transaction was entered into (even if the respective First Lien Lender subsequently ceases to be a First Lien Lender under either of the First Lien Credit Agreements for any reason).
Intercreditor and Subordination Agreement
4
1.18 Hedging Obligations of Borrower or any other Obligor shall mean any and all obligations of such Obligor, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Hedging Transactions, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Hedging Transactions.
1.19 Hedging Transaction shall mean any transaction (including an agreement with respect thereto) now existing or hereafter entered by Borrower or any other Obligor with a Hedging Creditor which is an interest rate protection agreement, interest rate, swap, cap, collar or floor agreement, foreign currency exchange agreements or other interest rate or currency management device used to manage interest rate risk or exchange rate risk.
1.20 Indenture shall mean the Indenture, dated as of May 12, 2011, among Borrower, the other Obligors named therein, the Second Lien Agent and Trustee, as the same now exists or may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated in accordance with the terms of this Intercreditor Agreement.
1.21 Indenture Documents shall mean the Indenture, the Notes and all agreements, documents, collateral documents, guaranties and instruments at any time executed and/or delivered by Borrower or any other Obligor with, to or in favor of the Second Lien Creditors in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated.
1.22 Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect (including the U.S. Bankruptcy Code), or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of with respect to any Person or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, (b) any liquidation, dissolution, reorganization or winding up of such Person whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (c) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other similar arrangement in respect of such Persons creditors generally or any substantial portion of its creditors undertaken under any law.
1.23 Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).
Intercreditor and Subordination Agreement
5
1.24 Maximum First Lien Obligations shall mean the sum of the aggregate outstanding principal amount of loans and letter of credit accommodations made or issued pursuant to the First Lien Credit Agreements not to exceed the amount permitted to be incurred pursuant to clauses (1) through (16) of the definition of Permitted Debt contained in the Indenture (as in effect on the date hereof).
plus (B) the aggregate amount of exposure that the First Lien Lenders have in respect of Banking Services Obligations then provided or outstanding,
plus (C) the Swap Termination Value of any Hedging Obligations,
minus (D) the aggregate principal amount of all mandatory prepayments under the First Lien Credit Agreements from asset sale proceeds resulting in permanent reductions of the available commitments thereunder.
1.25 Noteholders shall mean holders of the Notes at any time and from time to time and their respective successors and assigns (including any other creditor or group of creditors that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Second Lien Obligations under the Indenture Documents at any time from time to time).
1.26 Notes shall mean Borrowers 10.75% Senior Secured Notes due 2018, issued pursuant to the Indenture, as the same may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated in accordance with the terms of this Intercreditor Agreement.
1.27 Obligors shall mean, individually and collectively, any Person liable on or in respect of the Second Lien Obligations or the First Lien Obligations, and each of their successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession on behalf of such person or on behalf of any such successor or assign.
1.28 Official Body shall mean any national, Federal, state, local or other government or political subdivision or any agency, authority, board, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
1.29 Order of Payment shall mean, in connection with the application, payment or distribution of proceeds of any Collateral pursuant to all applicable terms hereof (including, without limitation, any proceeds of any Collateral pursuant to any Enforcement Action, together with all other proceeds received by any Creditor (including all funds received in respect of post-petition interest or fees and expenses) as a result of any such Enforcement Action or as a result of any distribution of or in respect of any Collateral (whether or not expressly
Intercreditor and Subordination Agreement
6
characterized as such) upon or in any Insolvency Proceeding with respect to Borrower or any other Obligor, or the application of any Collateral (or proceeds thereof) to the payment thereof or any distribution of Collateral (or proceeds thereof) upon the liquidation or dissolution of Borrower or any other Obligor), the following order for such application: (i) first , ratably to pay all First Lien Obligations in such order as specified in the relevant First Lien Loan Agreements until all First Lien Obligations have been paid in full in cash (including amounts paid to be held by First Lien Agent and/or the First Lien Lenders as cash collateral in such amounts as First Lien Agent determines is reasonably necessary to secure the First Lien Lenders in connection with (x) any issued and outstanding letters of credit under either of the First Lien Credit Agreements but not in any event in an amount greater than 105% of the aggregate undrawn face amount of such letters of credit constituting First Lien Obligations, and (y) any Hedging Obligations and Banking Services Obligations); (ii) second , ratably to pay any obligations in respect of any expense reimbursements and indemnities then due and payable to Trustee and Second Lien Agent in respect of the Second Lien Obligations, until paid in full; (iii) third , ratably to pay interest and fees due and payable in respect of the Second Lien Obligations, until paid in full; (iv) fourth , ratably to pay principal and premium, if any, of the Second Lien Obligations, until paid in full; (v) fifth , to the ratable payment of all other obligations, liabilities and indebtedness in respect of the First Lien Loan Agreements and the Obligations (as defined in the applicable First Lien Credit Agreement) then due and payable; and (vi) sixth , to the ratable payment of all other obligations, liabilities and indebtedness in respect of the Indenture Documents and the Second Lien Obligations then due and payable.
1.30 Person or person shall mean any individual, sole proprietorship, partnership, corporation (including without limitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock company, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof.
1.31 Release Event means (i) prior to the occurrence of an Insolvency Proceeding by or against Borrower or any other Obligor, upon the occurrence and during the continuance of an Event of Default under the First Lien Loan Agreements, the taking of any Enforcement Action with respect to all or any portion of the Collateral or (ii) after the occurrence of an Insolvency Proceeding by or against Borrower or any other Obligor, the taking of any Enforcement Action described in clauses (a) and (b) of the definition of such term by any Creditor or the entry of an order of a Bankruptcy Court pursuant to Section 362 of the U.S. Bankruptcy Code vacating the automatic stay and authorizing any Creditor to take any Enforcement Action.
1.32 Required Lenders shall mean the Required Lenders or any similar term as defined in the First Lien Credit Agreement.
Intercreditor and Subordination Agreement
7
1.33 Second Lien Agent shall mean Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), in its capacity as collateral agent for itself and the other Second Lien Creditors under the Indenture, and its successors and assigns and each other Person acting in a similar capacity under any Indenture.
1.34 Second Lien Creditors shall mean, collectively, Second Lien Agent, Trustee and the Noteholders, and their respective successors and assigns (including any other creditor or group of creditors that at any time succeeds to or refinances, replaces or substitutes for all or a portion of the Second Lien Obligations at any time for time to time).
1.35 Second Lien Default shall mean a Default under the Indenture.
1.36 Second Lien Obligations shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower or any other Obligor to the Second Lien Creditors evidenced by or arising under the Indenture Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including, without limitation, principal, interest, premium, if any, charges, fees, costs, indemnities and expenses (including, without limitation, attorneys and consultant fees and expenses), however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Indenture Documents or after the commencement of any Insolvency Proceeding with respect to Borrower or any other Obligor (and including, without limitation, the payment of interest which would accrue and become due but for the commencement of such Insolvency Proceeding, whether or not such interest is allowed or allowable in whole or in part in any such Insolvency Proceeding), and in each case, whether or not allowed or allowable in an Insolvency Proceeding, provided that for purposes of this Intercreditor Agreement, the term Second Lien Obligations shall not include (i) the principal amount of Notes in excess of $440,000,000.00 plus any interest thereon that may have accrued and been added to principal, (ii) interest accruing at rates in excess of the rates permitted by this Intercreditor Agreement or (iii) interest, premium, if any, fees, costs or expenses attributable to the portion of the principal that exceeds the maximum amount provided for in clause (i) above.
1.37 Standstill Period shall have the meaning specified in Section 2.10 hereof.
1.38 Swap Termination Value shall mean, as of any date of determination, in respect of any one or more Hedging Transactions, after taking into account the effect of any legally enforceable netting agreement relating to such Hedging Transactions, (a) for any date on or after the date such Hedging Transactions have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount determined as the mark to market value for such Hedging Transaction, as determined pursuant to the terms of the documents governing such Hedging Transaction, or if none is specified, then based upon one or more readily available quotations provided by a dealer in Hedging Transactions (which may include First Lien Agent or any First Lien Lender) .
Intercreditor and Subordination Agreement
8
1.39 Trustee shall mean Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB), in its capacity as Trustee under the Indenture and its successors and assigns including each other Person acting in a similar capacity under any Indenture.
1.40 UCC shall mean the Uniform Commercial Code, as amended and in effect in any applicable jurisdiction.
1.41 U.S. Bankruptcy Code shall mean Title 11 of the United States Code entitled Bankruptcy, as now and hereafter in effect, any successor statute.
1.42 All terms defined in the UCC as in effect in the State of New York, unless otherwise defined herein shall have the meanings set forth therein. All references to any term in the plural shall include the singular and all references to any term in the singular shall include the plural.
2. PAYMENTS; SECURITY INTERESTS; PRIORITIES; REMEDIES
2.1 First Lien Agent and the First Lien Lenders hereby acknowledge that Second Lien Agent, for its own benefit and for the benefit of the other Second Lien Creditors, has been granted Liens upon all of the Collateral pursuant to the Indenture Documents to secure the Second Lien Obligations. Second Lien Agent on behalf of itself and the other Second Lien Creditors hereby acknowledges that First Lien Agent, for the benefit of the First Lien Lenders, has been granted Liens upon all of the Collateral pursuant to the First Lien Loan Agreements to secure the First Lien Obligations.
2.2 (a) Notwithstanding the date, order or time of attachment, or the date, order, time or manner of perfection, or the date, order or time of filing or recordation of any document or instrument, or other method of perfecting a Lien in favor of each Creditor in any Collateral, and notwithstanding any conflicting terms or conditions which may be contained in any of the Agreements and notwithstanding any provision of the UCC or any other applicable law or any other circumstance whatsoever (including any non-perfection or non-validity or unenforceability of any Lien purporting to secure the First Lien Obligations or the Second Lien Obligations), any Lien securing First Lien Obligations now or hereafter held by or on behalf First Lien Agent or First Lien Lender or any agent or trustee therefore, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, will have priority over and be senior in all respects to the Liens securing the Second Lien Obligations (and the Liens securing the Second Lien Obligations will be junior and subordinate to the Liens securing the First Lien Obligations). All Liens on the Collateral securing any First Lien Obligations shall be and remain senior in all respects and prior to all Liens on the Collateral securing any Second Lien Obligations for all purposes, whether or not such Lien securing any First Lien Obligations are subordinated to any Lien securing any other obligation of any Obligor or any other Person. The parties hereto acknowledge and agree that it is their intent that the First Lien Obligations (and the security therefor) constitute a separate and distinct class (and separate and distinct claims) from the Second Lien Obligations (and the security therefor).
Intercreditor and Subordination Agreement
9
(b) Each of First Lien Agent, for itself and on behalf of the other First Lien Lenders, and Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that it will not, and hereby waives any right to, contest or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding), the priority, perfection, validity or enforceability of any Lien in the Collateral of First Lien Agent or Second Lien Agent, as the case may be; provided that nothing in this Intercreditor Agreement shall be construed to prevent or impair the rights of First Lien Agent or any other First Lien Lender to enforce this Intercreditor Agreement.
(c) The parties hereto agree that, so long as the First Lien Obligations have not been paid in full in cash, none of Borrower nor any other Obligor shall, nor shall any such Person permit any of its subsidiaries to, (i) unless waived in writing by First Lien Agent, grant or permit any additional Liens on any asset to secure the Second Lien Obligations unless it has granted, or concurrently therewith grants, a Lien on such asset to secure the First Lien Obligations or (ii) unless waived in writing by Second Lien Agent or otherwise permitted by the Indenture, grant or permit any additional Liens on any asset to secure any First Lien Obligations unless it has granted, or concurrently therewith grants, a Lien on such asset to secure the Second Lien Obligations, with each such Lien to be subject to the provisions of this Intercreditor Agreement. To the extent that the provisions of this paragraph (c) are not complied with for any reason, without limiting any other right or remedy available to First Lien Agent or the other First Lien Lenders or the Second Lien Creditors, Second Lien Agent agrees, for itself and on behalf of the other Second Lien Creditors, that any amounts received by or distributed to any Second Lien Creditors pursuant to or as a result of any Lien granted in contravention of this Section 2.2(c) shall be subject to Section 2.4 hereof.
(d) The parties hereto acknowledge and agree that it is their intention that the Collateral securing the First Lien Obligations and the Second Lien Obligations be identical. In furtherance of the foregoing, the parties hereto agree:
(i) to cooperate in good faith in order to determine, upon any reasonable request by First Lien Agent or Second Lien Agent, the specific assets included in the Collateral, the steps required to be taken to perfect the Liens of First Lien Agent or Second Lien Agent thereon and the identity of the respective parties obligated under the First Lien Loan Agreements and the Indenture Documents in respect of the First Lien Obligations and the Second Lien Obligations, respectively;
(ii) that, except to the extent otherwise agreed to by First Lien Agent, the documents, agreements and instruments creating or evidencing the Collateral securing the Second Lien Obligations and the Liens of Second Lien Agent shall be in all respects in the same form as the documents, agreements and instruments creating or evidencing the Collateral securing the First Lien Obligations and the Liens of First Lien Agent, other than with respect to the first priority and second priority nature of the Liens created or evidenced thereunder, the identity of the secured parties that are parties thereto or secured thereby and other matters contemplated by this Intercreditor Agreement; and
Intercreditor and Subordination Agreement
10
(iii) that it will not obtain control (as defined in the UCC in effect in the State of New York) of any deposit account or securities account maintained by Borrower or any other Obligor (other than a deposit account maintained with First Lien Agent) or file any UCC financing statement against Borrower or any other Obligor after the date hereof without giving Second Lien Agent or First Lien Agent, as the case may be, prior written notice of its intention to do so.
2.3 The priorities of the Liens provided in Section 2.2 hereof shall not be altered or otherwise affected by (a) any amendment, modification, supplement, extension, renewal, restatement, replacement or refinancing of the First Lien Obligations or the Second Lien Obligations, nor (b) any action or inaction which any of the Creditors may take or fail to take in respect of the Collateral.
2.4 Subject to Section 2.2 hereof and Section 2.9 hereof, prior to the payment in full in cash of the First Lien Obligations, all Collateral and all proceeds of the Collateral received by the Second Lien Agent or any of the other Second Lien Creditors (including, without limitation, any proceeds of any Collateral pursuant to any Enforcement Action, together with all other proceeds received by any Creditor (including all funds received in respect of post-petition interest or fees and expenses) as a result of any such Enforcement Action or as a result of any distribution of or in respect of any Collateral (whether or not expressly characterized as such) upon or in any Insolvency Proceeding with respect to Borrower or any other Obligor, or the application of any Collateral (or proceeds thereof) to the payment thereof or any distribution of Collateral (or proceeds thereof) upon the liquidation or dissolution of Borrower or any other Obligor) shall be segregated from the other funds and property of Second Lien Agent or such Second Lien Creditor, as the case may be, and received and held in trust by Second Lien Agent or such Second Lien Creditor, as the case may be, as trustee, and shall be forthwith paid over, in the funds and currency received, to First Lien Agent for application to the First Lien Obligations; the foregoing turnover provision shall apply to all Collateral and all proceeds of Collateral (including all cash removed from any Obligors premises or accounts) received by or on behalf of Second Lien Agent or any other Second Lien Creditor in connection with any Enforcement Action taken by Second Lien Agent or any other Second Lien Creditor following the expiration of the Standstill Period notwithstanding anything to the contrary in Section 2.2 hereof. All proceeds of the Collateral received by First Lien Agent or the First Lien Lenders after the First Lien Obligations have been paid in full in cash shall be forthwith paid over, in the funds and currency received, to Second Lien Agent for application to the Second Lien Obligations (unless otherwise required by law).
2.5 The foregoing provisions of this Intercreditor Agreement are intended solely to govern the respective Lien priorities as between the Creditors and shall not impose on any Creditor any obligations in respect of the disposition of proceeds of any Collateral which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or governmental authority or any applicable law.
Intercreditor and Subordination Agreement
11
2.6 In the event that First Lien Agent, the First Lien Lenders, Second Lien Agent or the other Second Lien Creditors shall, in the exercise of their rights under their Agreements or otherwise, receive possession or control of any books and records of Borrower or any other Obligor which contain information identifying or pertaining to any Collateral in which First Lien Agent, the First Lien Lenders, Second Lien Agent or the other Second Lien Creditors (as the case may be) has been granted a Lien, such Person shall notify such other Person that they have received such books and records and shall, as promptly as practicable thereafter, make available to such other Person (at the expense of Borrower and the other Obligors) such books and records for inspection and duplication.
2.7 Subject to the terms and conditions set forth in this Intercreditor Agreement, First Lien Agent and the First Lien Lenders shall have the exclusive right to manage, perform and enforce the terms of the First Lien Loan Agreements with respect to the Collateral, to exercise and enforce all privileges and rights thereunder according to their discretion and the exercise of their business judgment, including, without limitation, the exclusive right to take or retake control or possession of such Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate such Collateral and to appoint an agent in connection with the foregoing, and to incur expenses in connection with such sale, lease or other disposition and to exercise all of the rights and remedies of a secured creditor under the UCC of any applicable jurisdiction or other applicable law (including, without limitation, the U.S. Bankruptcy Code). In exercising rights and remedies with respect to the Collateral, First Lien Agent and the other First Lien Lender may enforce the provisions of the First Lien Loan Agreements and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their discretion. In furtherance of the foregoing, Second Lien Agent, for itself and on behalf of the Second Lien Creditors, agrees that, subject to the terms and conditions of this Intercreditor Agreement (including, without limitation, Section 2.10 hereof), neither Second Lien Agent nor any other Second Lien Creditor will (i) enforce or exercise, or seek to enforce or exercise, any rights or remedies with respect to any Collateral (including, without limitation, the exercise of any right of set-off or under any lockbox agreement, control account agreement, landlord waiver or bailees letter or similar agreement or arrangement to which Second Lien Agent or any Second Lien Creditor is a party) or institute or commence, or join with any Person in commencing, any action or proceeding with respect to such rights or remedies (including any action of foreclosure, enforcement, collection or execution and any Insolvency Proceeding), (ii) contest, protest or object to any foreclosure action or proceeding brought by First Lien Agent or any other enforcement or exercise by any First Lien Lender of any rights or remedies relating to the Collateral so long as Liens of the Second Lien Creditors attach to the proceeds thereof, subject to the relative priorities provided for in this Intercreditor Agreement, or (iii) object to the forbearance by any First Lien Lender from commencing or pursuing any foreclosure action or proceeding or any other enforcement or exercise of any rights or remedies. In connection with taking any Enforcement Action against the Collateral (including without limitation any public or private sale under the UCC), First Lien Agent shall give Second Lien Agent such reasonable notice of such sale as may be required under the applicable UCC; provided , however , that, subject to Section 3.5 hereof, 10 days notice shall be deemed in all respects to be commercially reasonable notice.
Intercreditor and Subordination Agreement
12
2.8 Notwithstanding anything to the contrary contained in any of the Agreements, but subject to Section 2.9 below and Section 2.10 below, prior to the time when First Lien Agent and the First Lien Lenders shall have received payment in full of all First Lien Obligations in cash, whether or not an Insolvency Proceeding has been commenced by or against Borrower or any other Obligor, during the continuance of a Release Event, only the First Lien Lenders shall have the right to restrict or permit, or approve or disapprove, the sale, transfer or other disposition of, or otherwise deal with, the Collateral or to take and continue any Enforcement Action with respect to the Collateral.
2.9 (a) Prior to the existence of a Release Event, upon any release, sale or disposition of Collateral permitted pursuant to the terms of the First Lien Loan Agreements and the Indenture Documents that results in the release of the Lien of First Lien Agent and the First Lien Lenders in any Collateral, the Liens of Second Lien Agent and the other Second Lien Creditors shall be automatically and unconditionally released with no further consent or action of any Person. Second Lien Agent shall, at the expense of the Obligors, promptly execute and deliver such release documents as First Lien Agent may upon written request reasonably require in connection with any such release, sale or disposition of Collateral.
(b) Second Lien Agent shall, at any time during the continuance of a Release Event, at the expense of the Obligors:
(i) upon the written request of First Lien Agent with respect to the Collateral identified in such request as set forth below (which request shall specify the proposed terms of the sale and the type and amount of consideration to be received in connection therewith), subject to clause (ii) below, release or otherwise terminate its Liens on such Collateral, to the extent such Collateral is to be sold or otherwise disposed of either by First Lien Agent or its agents;
(ii) deliver such release documents as First Lien Agent may reasonably require in connection therewith; provided , that ,
(A) First Lien Agent shall promptly apply any such proceeds as specified in the Order of Payment until the First Lien Obligations have been paid in full in cash,
(B) if any such sale or disposition results in a surplus after application of the proceeds in the Order of Payment to the First Lien Obligations, such surplus shall be paid to Second Lien Agent for the prompt application to the Second Lien Obligations as specified in the Order of Payment until the Second Lien Obligations have been paid in full in cash;
Intercreditor and Subordination Agreement
13
(C) if any surplus shall remain after the application to the Second Lien Obligations pursuant to preceding clause (B), such surplus shall be applied to the remaining obligations, liabilities and indebtedness in the Order of Payment as provided in clauses (v) and (vi) of the definition thereof; and
(D) if the closing of the sale or disposition of such Collateral is not consummated, First Lien Agent shall promptly return all release documents to the Second Lien Agent for the benefit of the Second Lien Creditors.
(c) Second Lien Agent and the other Second Lien Creditors shall be deemed, in all cases, to have consented under the Agreements to which such Second Lien Agent and the other Second Lien Creditors are a party to such sale or other disposition of Collateral described in Sections 2.9(a) and (b) above. In furtherance of the foregoing, Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, hereby irrevocably constitutes and appoints First Lien Agent and any officer or agent of First Lien Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Second Lien Agent or such other Second Lien Creditor or in First Lien Agents own name, from time to time in First Lien Agents discretion, for the purpose of carrying out the terms of this clause (c) and clauses (b)(i) and (ii) above, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of such clauses, including any endorsements or other instruments of transfer or release.
2.10 Except as specifically provided in Section 2.11 below, notwithstanding any rights or remedies available to Second Lien Agent or the other Second Lien Creditors under any of the Indenture Documents, applicable law or otherwise, prior to the time that First Lien Agent and the First Lien Lenders shall have received the payment in full of all First Lien Obligations in cash, neither Second Lien Agent nor any of the other Second Lien Creditors shall, directly or indirectly, take any Enforcement Action with respect to any of the Collateral; provided , however , commencing on the 151st day after receipt by First Lien Agent of Second Lien Agents written declaration of a Second Lien Default which constitutes an Event of Default and written demand by Second Lien Agent to Borrower for the accelerated payment of all Second Lien Obligations (unless Borrower or any other Obligor is subject to an Insolvency Proceeding by reason of which such declaration and the making of such demand is stayed, in which case, commencing on the date of the commencement of such Insolvency Proceeding) (the Standstill Period ), then Second Lien Agent or the other Second Lien Creditors may take action to enforce their Liens on the Collateral, but only so long as First Lien Agent and/or the First Lien Lenders are not pursuing in a commercially reasonable manner the exercise of their enforcement rights or remedies against, or diligently attempting to vacate (in a commercially reasonable manner) any stay of enforcement of their Liens on, all or a material portion of the Collateral (including, without limitation, commencement of any action to foreclose its Liens on all or any material portion of the Collateral, notification of account debtors to make payments to First Lien Agent, any action to take possession of all or any material portion of the Collateral or commencement of any legal proceedings or actions against or with respect to all or any material
Intercreditor and Subordination Agreement
14
portion of the Collateral) and with any determination of which Collateral to proceed against, and in what order, to be made by First Lien Agent or such First Lien Lenders in their reasonable judgment); provided that (x) any Collateral or any proceeds of Collateral received by Second Lien Agent or such other Second Lien Creditor, as the case may be, in connection with the enforcement of such Lien shall be applied in accordance with the Order of Payment and (y) First Lien Agent or any other First Lien Lenders may at any time take over such enforcement proceedings from Second Lien Agent or the other Second Lien Creditors so long as First Lien Agent or such the First Lien Lenders, as the case may be, pursue enforcement proceedings with respect to all or a material portion of the Collateral in a commercially reasonable manner, with any determination of which Collateral to proceed against, and in what order, to be made by First Lien Agent or such First Lien Lenders in their reasonable judgment, and provided further that Second Lien Agent or the other Second Lien Creditors, as the case may be, shall only be able to recoup (from amounts realized by First Lien Agent or any First Lien Lender(s) in any enforcement proceeding with respect to the Collateral (whether initiated by First Lien Agent or First Lien Lender(s) or taken over by them as contemplated above) any expenses incurred by them in accordance with the priorities set forth in the Order of Payment. In any sale or other disposition of any of the Collateral by Second Lien Agent and/or the other Second Lien Creditors, Second Lien Agent and/or the other Second Lien Creditors shall conduct such sale or disposition in a commercially reasonable manner. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all rights and remedies of a secured creditor under the Uniform Commercial Code of any applicable jurisdiction and of a secured creditor under the bankruptcy laws of any applicable jurisdiction.
2.11 Section 2.10 above shall not be construed to in any way limit or impair the right of: (a) any First Lien Creditor to bid for or purchase Collateral at any private or judicial foreclosure upon such Collateral initiated by any other Creditor, (b) any Second Lien Creditor to cash bid for or purchase for cash Collateral at any private or judicial foreclosure upon such Collateral initiated by any other Creditor, (c) to join (but not control) any foreclosure or other judicial lien enforcement proceeding with respect to the Collateral initiated by First Lien Agent, so long as it does not delay or interfere in any material respect with the exercise by First Lien Agent or the First Lien Lenders of their rights as provided in this Intercreditor Agreement, and (d) the Second Lien Creditors right to receive any remaining proceeds of Collateral after satisfaction and payment in full in cash of all First Lien Obligations.
2.12 If the First Lien Lenders should honor a request by Borrower for a loan, advance or other financial accommodation under the First Lien Loan Agreements, whether or not the First Lien Lenders have knowledge that the honoring of such request would result in an event of default, or act, condition or event which with notice or passage of time or both would constitute an event of default under the Indenture Documents, in no event shall First Lien Agent or the First Lien Lenders have any liability to Second Lien Agent or the other Second Lien Creditors as a result of such breach, and without limiting the generality of the foregoing, Second Lien Agent and the other Second Lien Creditors agree that neither First Lien Agent nor the First Lien Lenders shall have any liability for tortious interference with contractual relations or for
Intercreditor and Subordination Agreement
15
inducement by First Lien Agent or the First Lien Lenders of Borrower to breach of contract or otherwise, provided , that, the First Lien Lenders agree that the aggregate principal amount of the First Lien Obligations outstanding at any one time (but not interest, costs, expenses or other charges payable by Borrower or any other Obligor to First Lien Agent and/or the First Lien Lenders or charged by First Lien Agent and/or the First Lien Lenders to any loan account of Borrower or any other Obligor maintained by First Lien Agent and/or the First Lien Lenders pursuant to the terms of the First Lien Credit Agreement) shall not exceed the Maximum First Lien Obligations. Nothing contained in this Section 2.12 shall limit or waive any right that Second Lien Agent or the other Second Lien Creditors have to enforce any of the provisions (other than with respect to the matters covered by this Intercreditor Agreement) of the Indenture Documents against Borrower or any other Obligor.
2.13 (a) First Lien Agent and the First Lien Lenders shall not:
(i) make any amendment to the maturity date of any portion of the First Lien Obligations under either of the First Lien Credit Agreements to a date later than the latest maturity date of any portion of the Second Lien Obligations as extended from time to time pursuant to the terms of the Indenture Documents;
(ii) increase the Applicable Margin or similar component of the interest rate under either of the First Lien Credit Agreements by more than 300 basis points (excluding increases resulting from the accrual of interest at any default rate); or
(iii) add to the Collateral securing the First Lien Obligations except as permitted by this Intercreditor Agreement.
(b) Second Lien Agent and the other Second Lien Creditors shall not
agree to:
(i) make any amendment of the Indenture Documents that would shorten the due dates of any principal or interest payments of the Second Lien Obligations;
(ii) make any amendment of the Indenture Documents to the extent such amendment adds or modifies any representation, warranty, or covenant under the Indenture Documents to be more restrictive on Borrower, any other Obligor or any of their respective subsidiaries, or adds or modifies any default or event of default under the Indenture Documents to be more restrictive on Borrower, any other Obligor or any of their respective Subsidiaries; further, in no event shall any financial covenant maintenance tests (whether stated as a covenant, a default or otherwise) be added to the Indenture Documents;
(iii) increase the interest rate under the Indenture Documents by more than 300 basis points (excluding increases resulting from the accrual of interest at the default rate or interest paid-in-kind); or
Intercreditor and Subordination Agreement
16
(iv) add to the Collateral securing the Second Lien Obligations except as permitted by this Intercreditor Agreement.
(c) In the event First Lien Agent or the First Lien Lenders and the relevant Obligor(s) enter into any amendment, waiver or consent in respect of any of the First Lien Loan Agreements that are security or collateral documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of any such First Lien Loan Agreement or changing in any manner the rights of First Lien Agent, the First Lien Lenders, Borrower or any other Obligor thereunder, then such amendment, waiver or consent shall apply automatically to any comparable provision of the Indenture Documents without the consent of Second Lien Agent or the other Second Lien Creditors and without any action by Second Lien Agent, Borrower or any other Obligor, provided , that (A) no such amendment, waiver or consent shall have the effect of (i) removing assets subject to the Lien of the Indenture Documents, except to the extent that a release of such Lien is permitted by this Intercreditor Agreement or the Indenture Documents, (ii) adversely affecting the rights or duties of Second Lien Agent without its consent, or (iii) permitting other liens on the Collateral not permitted under the terms of the Indenture Documents or Section 4.5 hereof and (B) notice of such amendment, waiver or consent shall have been given to Second Lien Agent (although the failure to give any such notice shall in no way affect the effectiveness of any such amendment, waiver or consent).
2.14 Each Creditor shall give to the other Creditors concurrently with the giving thereof to Borrower (i) a copy of any written notice by such Creditor of an event of default under its respective Agreements with Borrower, or written notice of demand of payment from Borrower, and (ii) a copy of any written notice sent by such Creditor to Borrower at any time a Default under such Creditors Agreements with Borrower exists stating such Creditors intention to exercise any of its enforcement rights or remedies, including written notice pertaining to any foreclosure on any of the Collateral or other judicial or non-judicial remedy in respect thereof to the extent permitted hereunder, and any legal process served or filed in connection therewith; provided, that, the failure of any party to give notice as required hereby shall not affect the relative priorities of Creditors respective Liens as provided herein or the validity or effectiveness of any such notice as against Borrower or any other Obligor. Second Lien Agent shall provide a copy of any notice received pursuant to this Section to the Noteholders in accordance with its obligations under the Indenture.
2.15 In the event that any Second Lien Default shall have occurred solely as a result of a First Lien Default, and if such First Lien Default shall have been cured by Borrower or any other Obligor or waived by First Lien Agent or the First Lien Lenders (as applicable), then (i) such Second Lien Default shall be deemed to be automatically cured by Borrower or such other Obligor or waived by Second Lien Agent and the other Second Lien Creditors, as the case may be, and (ii) and any period under Section 2.10 hereof commenced and then existence shall terminate for all purposes hereunder and Second Lien Agent and the other Second Lien Creditors shall cease any remedial actions commenced and then continuing in connection with such Second Lien Default.
Intercreditor and Subordination Agreement
17
3. SECOND LIEN CREDITOR PURCHASE OPTION
3.1 Following the occurrence of (i) written notice by First Lien Agent or the First Lien Lenders of their intent to accelerate the payment of the First Lien Obligations or to commence any Enforcement Action with respect to any Collateral (or acceleration or the actual commencement of any such Enforcement Action), (ii) the commencement of any Insolvency Proceeding, or (iii) a payment default under the First Lien Loan Agreements which has not been cured or waived by the applicable creditors within 30 days of the occurrence thereof, any Second Lien Creditor shall have the option at any time within 90 days after such occurrence upon five
(5) business days prior written notice from Second Lien Agent (on behalf of any such Second Lien Creditors) to First Lien Agent to purchase all (but not less than all) of the First Lien Obligations (including any unfunded commitments thereunder and participations in letters of credit) from the First Lien Lenders. Such notice from Second Lien Agent (on behalf of any such Second Lien Creditors) to First Lien Agent shall be irrevocable. In order to effectuate the foregoing, First Lien Agent shall estimate, upon the written request of Second Lien Creditors upon the exercise of such election, the amount in cash that would be necessary to so purchase such First Lien Obligations (assuming the date of the purchase is the date the election was made). The First Lien Obligations shall be purchased among the Second Lien Creditors (other than the Trustee and the Second Lien Agent) giving notice to Second Lien Agent of their intent (which notice shall be irrevocable) to exercise the purchase option hereunder based on the amounts specified therein.
3.2 On the date specified by Second Lien Creditors in such notice (which shall not be less than five (5) business days, nor more than thirty (30) days, after the receipt by First Lien Agent of the notice from Second Lien Agent of certain Second Lien Creditors election to exercise such option), the First Lien Lenders shall sell to such Second Lien Creditors electing to purchase, and the Second Lien Creditors electing to purchase shall purchase from the First Lien Lenders, the First Lien Obligations all in accordance with the terms and conditions to be agreed upon directly among the First Lien Agent and such Second Lien Creditors that have elected to purchase the First Lien Obligations . The First Lien Lenders hereby represent and warrant that, as of the date hereof, no approval of any court or other regulatory or governmental authority is required for such sale.
3.3 Upon the date of such purchase and sale, the Second Lien Creditors exercising the purchase option in this Section 3 shall (i) pay to the First Lien Lenders as the purchase price therefor the full amount of all the First Lien Obligations then outstanding and unpaid (including principal, premium, interest, fees and expenses, including reasonable attorneys fees and legal expenses but excluding any early termination fee payable pursuant to the First Lien Credit Agreement, which amount may be different from the estimate calculated in Section 3.1 above), (ii) furnish cash collateral or back-stop letters of credit to the First Lien Lenders in such amounts as the First Lien Lenders determine is reasonably necessary to secure the First Lien Lenders in connection with (A) any issued and outstanding letters of credit constituting First Lien Obligations provided by First Lien Agent or the First Lien Lenders (or letters of credit that First Lien Agent or the First Lien Lenders have arranged to be provided by
Intercreditor and Subordination Agreement
18
third parties pursuant to the financing arrangements of the First Lien Lenders with Borrower or any other Obligor constituting First Lien Obligations) to Borrower or any other Obligor (but not in any event in an amount greater than 105% of the aggregate undrawn face amount of such letters of credit), and (B) Hedging Obligations and Banking Services Obligations in an amount not to exceed 100% of the Swap Termination Value or Banking Services Obligations, as applicable, and (iii) agree to reimburse First Lien Agent and the First Lien Lenders for any loss, cost, damage or expense (including reasonable attorneys fees and legal expenses) in connection with any commissions, fees, costs or expenses related to any issued and outstanding letters of credit constituting First Lien Obligations as described above and any checks or other payments provisionally credited to the First Lien Obligations, and/or as to which First Lien Agent or the First Lien Lenders have not yet received final payment. Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account of First Lien Agent (on behalf of the First Lien Lenders) as First Lien Agent may designate in writing to such Second Lien Creditors for such purpose. Interest shall be calculated to but excluding the business day on which such purchase and sale shall occur if the amounts so paid by such Second Lien Creditors to the bank account designated by First Lien Agent are received in such bank account prior to 12:00 Noon, New York City time, and interest shall be calculated to and including such business day if the amounts so paid by such Second Lien Creditors to the bank account designated by First Lien Agent are received in such bank account later than 12:00 Noon, New York City time.
3.4 Such purchase shall be expressly made without representation or warranty of any kind by the First Lien Lenders as to the First Lien Obligations or otherwise and without recourse to the First Lien Lenders, except that the First Lien Lenders shall represent and warrant: (i) the amount of the First Lien Obligations being purchased, (ii) that the First Lien Lenders own the First Lien Obligations free and clear of any Liens or encumbrances and (iii) the First Lien Lenders have the right to assign the First Lien Obligations and the assignment is duly authorized. All purchase or assignment documentation (including any cash collateral arrangements and back-stop letters of credit) in connection with the exercise of the Second Lien Creditors rights under this Section 3 shall be in form and substance reasonably satisfactory to First Lien Agent.
3.5 In the event that any one or more of the Second Lien Creditors exercises the purchase option set forth in this Section 3 , First Lien Agent shall take such action with respect to the Collateral (including in an Insolvency Proceeding) as may be reasonably requested in good faith and in writing by such Second Lien Creditors until the closing of such purchase. Notwithstanding anything to the contrary provided herein, the First Lien Lenders may take any Enforcement Actions they deem reasonable unless and until the Second Lien Creditors have notified First Lien Agent of their irrevocable option to purchase the First Lien Obligations.
4. MISCELLANEOUS
4.1 Representations .
Intercreditor and Subordination Agreement
19
(a) Second Lien Agent on behalf of itself and each other Second Lien Creditor represents and warrants to First Lien Agent and the First Lien Lenders that the execution, delivery and performance of this Intercreditor Agreement by Second Lien Agent on behalf of the other Second Lien Creditors are within the powers of Second Lien Agent and have been duly authorized by Second Lien Agent pursuant to the terms of the Indenture.
(b) First Lien Agent on behalf of itself and each other First Lien Lender represents and warrants to Second Lien Agent and the other Second Lien Creditors that the execution, delivery and performance of this Intercreditor Agreement by First Lien Agent on behalf of the First Lien Lenders are within the powers of First Lien Agent and have been duly authorized by First Lien Agent pursuant to the terms of the First Lien Credit Agreement.
(c) Second Lien Agent and First Lien Agent acknowledge and agree that neither has made any representation or warranty with respect to the execution, validity, legality, completeness, collectibility or enforceability of any other First Lien Loan Agreement or any other Indenture Document. Except as otherwise provided in this Intercreditor Agreement First Lien Agent will be entitled to manage and supervise its extensions of credit to any Obligor in accordance with law and their usual practices, modified from time to time as it deems appropriate.
4.2 Amendments . Any waiver, permit, consent or approval by any Creditor of or under any provision, condition or covenant to this Intercreditor Agreement must be in writing and shall be effective only to the extent it is set forth in writing and as to the specific facts or circumstances covered thereby. Any amendment of this Intercreditor Agreement must be in writing and signed by First Lien Agent and Second Lien Agent.
4.3 Successors and Assigns .
(a) This Intercreditor Agreement is a continuing agreement and shall (i) remain in full force and effect until the earlier of (A) repayment in full in cash of all First Lien Obligations (but, for this purpose, determined without giving effect to the proviso to the first sentence of the definition of First Lien Obligations contained herein) or (B) the repayment in full of all Second Lien Obligations (but, for this purpose, determined without giving effect to the proviso to the definition of Second Lien Obligations contained herein), (ii) be binding upon the parties and their successors and assigns, and (iii) inure to the benefit of and be enforceable by the parties and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii), any Creditor may assign or otherwise transfer all or any portion of the First Lien Obligations or the Second Lien Obligations, as applicable, to any other Person in the manner contemplated in the First Lien Loan Agreements and the Indenture Documents, and such other Person shall thereupon become vested with all the rights and obligations in respect thereof granted to such person herein or otherwise. In addition and without limiting the generality of the foregoing, if at any time in connection with or after the payment in full in cash of the First Lien Obligations, any of the Obligors enters into any replacement of either of the First Lien Credit Agreements secured by all or a portion of the Collateral on a first-priority basis,
Intercreditor and Subordination Agreement
20
then no such prior payment in full in cash of the First Lien Obligations shall be deemed to have occurred for all purposes of this Intercreditor Agreement, the First Lien Credit Agreements and the Indenture Documents, and the obligations under such replacement First Lien Credit Agreement shall automatically be treated as First Lien Obligations for all purposes of this Intercreditor Agreement, including for purposes of the Lien priority and rights in respect of the Collateral (or such portion thereof) set forth therein.
(b) To the extent provided in their respective Agreements, each of the Creditors reserves the right to grant participations in, or otherwise sell, assign, transfer or negotiate all or any part of, or any interest in, the First Lien Obligations or the Second Lien Obligations, as the case may be; provided , that , no Creditor shall be obligated to give any notices to or otherwise in any manner deal directly with any participant in the First Lien Obligations or the Second Lien Obligations, as the case may be, and no participant shall be entitled to any rights or benefits under this Intercreditor Agreement except through the Creditor with which it is a participant and any sale of a participation in the First Lien Obligations shall be expressly made subject to the provisions of this Intercreditor Agreement (including, without limitation, Section 3 ).
(c) This Intercreditor Agreement is the Intercreditor Agreement referred to in the Indenture Documents and the First Lien Loan Agreements. If this Intercreditor Agreement or all or any portion of any partys rights or obligations hereunder are assigned or otherwise transferred to any other Person or if the First Lien Loan Agreements or Indenture Documents are otherwise refinanced or replaced with another Person, both such other Person and the other existing parties shall execute and deliver an agreement containing terms substantially identical to those contained in this Intercreditor Agreement.
4.4 Insolvency . This Intercreditor Agreement shall be applicable both before and after the filing of any petition by or against Borrower or any other Obligor under the U.S. Bankruptcy Code or in any other Insolvency Proceeding and all converted or succeeding cases in respect thereof, and all references herein to Borrower or any other Obligor shall be deemed to apply to the trustee (or similar Person) for Borrower or any other Obligor and Borrower or any other Obligor as debtor-in-possession (or any other similar designation). The relative rights of the First Lien Lenders and the Second Lien Creditors in or to any distributions from or in respect of any Collateral or proceeds of Collateral, shall continue after the filing thereof on the same basis as prior to the date of the petition, subject to any court order approving the financing of, or use of cash collateral by, Borrower or any other Obligor as debtor-in-possession (or any other similar designation). Without limiting the generality of the foregoing, this Intercreditor Agreement is intended to constitute and shall be deemed to constitute a subordination agreement within the meaning of Section 510(a) of the U.S. Bankruptcy Code and is intended to be and shall be interpreted to be enforceable to the maximum extent permitted pursuant to applicable nonbankruptcy law.
4.5 Bankruptcy Financing and Other Matters .
Intercreditor and Subordination Agreement
21
(a) If Borrower or any other Obligor shall become subject to a case under the U.S. Bankruptcy Code and if as debtor(s)-in-possession move for approval of financing (a DIP Financing ) to be provided in good faith by one or more lenders (the DIP Lender ) under Section 364 of the U.S. Bankruptcy Code or the use of cash collateral with the consent of First Lien Agent or the Required Lenders under Section 363 of the U.S. Bankruptcy Code, Second Lien Agent and the other Second Lien Creditors agree that no objection nor any request for adequate protection or any other relief in connection therewith (except as otherwise permitted below) will be raised by Second Lien Agent or the other Second Lien Creditors to any such financing or use of cash collateral (nor will Second Lien Agent or any Second Lien Creditor join with or support any third Person opposing, objecting to or contesting any such financing or use of cash collateral) and, to the extent the Liens securing the First Lien Obligations are subordinated to or pari passu with such financing, the Liens of Second Lien Agent and the other Second Lien Creditors on the Collateral shall be deemed to be subordinated without any further action on the part of any Person, to the Liens securing such financing (and all obligations relating thereto), and the Liens securing the Second Lien Obligations shall have the same priority with respect to the Collateral relative to the Liens securing the First Lien Obligations as if such financing had not occurred, so long as (i) First Lien Agent or the Required Lenders do not oppose or object to such use of cash collateral or such financing, (ii) Second Lien Agent and the other Second Lien Creditors retain (solely as adequate protection (or its equivalent) for the interests of the Second Lien Creditors) a Lien on the Collateral (including proceeds thereof arising after the commencement of such proceeding) which will be subordinated to the Liens securing such financing (and all obligations relating thereto), and such Lien shall have the same priority with respect to the Collateral relative to the Liens securing the First Lien Obligations as if such financing had not occurred, (iii) if First Lien Agent and the other First Lien Lenders receive a replacement Lien on post-petition assets of any Obligor, Second Lien Agent and the other Second Lien Creditors may request a replacement Lien on the same post-petition assets which will be subordinated to the Liens securing such financing (and all obligations relating thereto), and such Lien shall have the same priority with respect to the Collateral relative to the Liens securing the First Lien Obligations as if such financing had not occurred, (iv) the aggregate principal amount of loans and letter of credit accommodations, Hedging Obligations and Banking Services Obligations outstanding under such post-petition financing, together with the aggregate principal amount of the pre-petition First Lien Obligations, shall not exceed an amount equal to the Maximum First Lien Obligations, and (v) Second Lien Agent and the other Second Lien Creditors may oppose or object to such use of cash collateral or such financing on the same basis as an unsecured creditor, so long as such opposition or objection is not based on Second Lien Agent and the other Second Lien Creditors status as secured creditors and Second Lien Agent and the other Second Lien Creditors have acknowledged such unsecured status and that a portion of their Second Lien Obligations claim is unsecured.
(b) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that, in the event of any Insolvency Proceeding, neither Second Lien Agent nor the other Second Lien Creditors will oppose or object to any sale or other disposition of any Collateral free and clear of the Liens securing the Second Lien Obligations or other claims under Section 363 of the U.S. Bankruptcy Code, or any comparable provision of any other
Intercreditor and Subordination Agreement
22
bankruptcy law, if the First Lien Lenders (or the requisite percentage thereof), or a representative authorized by the First Lien Lenders, shall consent to such disposition; provided , however , that the proceeds of such disposition to be applied to the First Lien Obligations or the Second Lien Obligations are applied in accordance with the Order of Payment and Second Lien Agent, on behalf of itself and the other Second Lien Creditors, may raise any objections to any such disposition of Collateral that could be raised by any creditor of Borrower or any other Obligor whose claims were not secured by any Liens on the Collateral and such objections are not based on the Second Lien Creditors status as secured creditors, and Second Lien Agent and the other Second Lien Creditors have acknowledged that such objections are not being made by them as secured creditors (and that a portion of their Second Lien Obligations claim is unsecured.
(c) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that no Second Lien Creditor shall contest, or support any other person in contesting, (i) any request by First Lien Agent or any other First Lien Lender for adequate protection or (ii) any objection, based on a claim of a lack of adequate protection, by First Lien Agent or any other First Lien Lender to any motion, relief, action or proceeding. Notwithstanding the immediately preceding sentence, if, in connection with any DIP Financing or use of cash collateral, (A) any First Lien Lender is granted adequate protection in the form of a Lien on additional collateral, Second Lien Agent may, for itself and on behalf of the other Second Lien Creditors, seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the Liens of First Lien Agent and the First Lien Lenders and Liens of the DIP Lender on the same basis as the other Liens of Second Lien Agent and the other Second Lien Creditors are subordinated to the Liens of First Lien Agent and the First Lien Lenders under this Intercreditor Agreement, (B) any First Lien Lender is granted adequate protection in the form of a 507(b) claim, Second Lien Agent may, for itself and on behalf of the other Second Lien Creditors, seek or request adequate protection in the form of a 507(b) claim that is junior in priority to the First Lien Lenders administrative claim on at least the same basis as the Liens of Second Lien Agent and the other Second Lien Creditors are subordinated to the Liens of First Lien Agent and the First Lien Lenders under this Intercreditor Agreement, or (C) any Second Lien Creditor is granted adequate protection in the form of a Lien on additional collateral, First Lien Agent shall, for itself and on behalf of the other First Lien Lenders, be granted adequate protection in the form of a Lien on such additional collateral that is senior to such Lien of the Second Lien Creditors as security for the First Lien Obligations.
(d) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that until the First Lien Obligations have been paid in full in cash, no Second Lien Creditor shall, without the prior written consent of First Lien Agent, seek or request relief from or modification of the automatic stay or any other stay in any Insolvency Proceeding in respect of any part of the Collateral, any proceeds thereof or any Lien of the Second Lien Creditors.
(e) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that no Second Lien Creditor shall oppose or seek to challenge any claim by First Lien Agent or any other First Lien Lender for allowance in any Insolvency Proceeding
Intercreditor and Subordination Agreement
23
of First Lien Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the Liens of the First Lien Lenders (it being understood and agreed that such value shall be determined without regard to the existence of the Liens of the Second Lien Creditors on the Collateral). Regardless of whether any such claim for post-petition interest, fees or expenses is allowed or allowable, and without limiting the generality of the other provisions of this Intercreditor Agreement, this Intercreditor Agreement expressly is intended to include and does include the rule of explicitness in that this Intercreditor Agreement expressly entitles the First Lien Lenders, and is intended to provide the First Lien Lenders with the right, to receive payment of all post-petition interest, fees or expenses through distributions made pursuant to the provisions of this Intercreditor Agreement even though such interest, fees and expenses are not allowed or allowable against the bankruptcy estate of Borrower or any other Obligor under Section 502(b)(2) or Section 506(b) of the U.S. Bankruptcy Code or under any other provision of the U.S Bankruptcy Code or any other bankruptcy law.
(f) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, waives any claim any Second Lien Creditor may hereafter have against any First Lien Lender arising out of (i) the election by any First Lien Lender of the application of Section 1111(b)(2) of the U.S. Bankruptcy Code or any comparable provision of any other bankruptcy law, or (ii) any use of cash collateral or financing arrangement, or any grant of a security interest in the Collateral, in any Insolvency Proceeding so long as such action is otherwise permitted under this Intercreditor Agreement.
(g) Each of First Lien Agent, on behalf of the First Lien Lenders, and Second Lien Agent, on behalf of the Second Lien Creditors, agrees that, without the written consent of the other, it will not seek to vote with the other as a single class in connection with any plan of reorganization in any Insolvency Proceeding
(h) Nothing contained herein shall prohibit or in any way limit First Lien Agent or any First Lien Lender from objecting on any basis in any Insolvency Proceeding or otherwise to any action taken by Second Lien Agent or any other Second Lien Creditor, including the seeking by Second Lien Agent or any other Second Lien Creditor of adequate protection or the assertion by Second Lien Agent or any other Second Lien Creditors of any of its rights and remedies under the Indenture Documents or otherwise.
(i) If, in any Insolvency Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan, both on account of First Lien Obligations and on account of Second Lien Obligations, then, to the extent the debt obligations distributed on account of the First Lien Obligations and on account of the Second Lien Obligations are secured by Liens upon the same property, the provisions of this Intercreditor Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.
Intercreditor and Subordination Agreement
24
(j) If First Lien Agent or any First Lien Lender is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of Borrower or any other Obligor any amount (a Recovery ), then the First Lien Obligations shall be reinstated to the extent of such Recovery and First Lien Agent and the First Lien Lenders shall be entitled to a reinstatement of First Lien Obligations with respect to all such recovered amounts. If this Intercreditor Agreement shall have been terminated prior to such Recovery, this Intercreditor Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement. Any amounts received by Second Lien Agent or any Second Lien Creditor on account of the Second Lien Obligations after the termination of this Intercreditor Agreement shall, in the event of a reinstatement of this Intercreditor Agreement pursuant to this clause (j), be held in trust for and paid over to First Lien Agent for the benefit of the First Lien Lenders, for application to the reinstated First Lien Obligations. This clause (j) shall survive termination of this Intercreditor Agreement.
4.6 Bailee for Perfection . Each Creditor hereby appoints the other Creditor as agent for the purposes of perfecting the other Creditors Liens in and on any of the Collateral in the possession or under the control of such Creditor or its representatives, including, without limitation, Liens on Borrowers and the other Obligors deposit accounts maintained by First Lien Agent and investment property and instruments in the possession or under the control of the First Lien Agent; provided , that , the Creditor in the possession or control of any Collateral shall not have any duty or liability to protect or preserve any rights pertaining to any of the Collateral and, except for gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction, the non-possessing or non-controlling Creditor hereby waives and releases the other Creditor from, all claims and liabilities arising pursuant to the possessing or controlling Creditors role as bailee with respect to the Collateral, so long as the possessing or controlling Creditor shall use the same degree of care with respect thereto as the possessing or controlling Creditor uses for similar property pledged to the possessing or controlling Creditor as collateral for indebtedness of others to the possessing or controlling Creditor. Prior to the date on which First Lien Agent and the First Lien Lenders shall have received final payment in full in cash of all of the First Lien Obligations and the First Lien Loan Agreements have been terminated, any Collateral in the possession or under the control of Second Lien Agent or the Second Lien Creditor shall be forthwith delivered to First Lien Agent, except as otherwise may be required by applicable law or court order. After First Lien Agent and the First Lien Lenders shall have received final payment in full in cash of all of the First Lien Obligations and the loan commitments under the First Lien Loan Agreements have been terminated, First Lien Agent shall deliver (i) the remainder of the Collateral, if any in their possession to Second Lien Agent, except as may otherwise be required by applicable law or court order and (ii) a written notice prepared by Second Lien Agent (at Borrower expense) to each landlord that has executed a landlords waiver and each bailee that has executed a bailee waiver stating that Second Lien Agent is entitled to exercise the rights and take the actions set forth in such landlords waiver or bailee waiver.
Intercreditor and Subordination Agreement
25
4.7 Notices . All notices, requests and demands to or upon the respective parties hereto shall be in writing and shall be deemed duly given, made or received: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next business day, one (1) business day after sending; and if mailed by certified mail, return receipt requested five (5) days after mailing to the parties at their addresses set forth below (or to such other addresses as the parties may designate in accordance with the provisions of this Section):
Either of the above Creditors may change the address(es) to which all notices, requests and other communications are to be sent by giving written notice of such address change to the other Creditor in conformity with this Section 4.7 , but such change shall not be effective until notice of such change has been received by the other Creditor.
Intercreditor and Subordination Agreement
26
4.8 Counterparts . This Intercreditor Agreement may be executed in any number of counterparts, each of which shall be an original with the same force and effect as if the signatures thereto and hereto were upon the same instrument.
4.9 Governing Law . The validity, construction and effect of this Intercreditor Agreement shall be governed by the internal laws of the State of New York (without giving effect to principles of conflicts of law).
4.10 Consent to Jurisdiction; Waiver of Jury Trial . EACH PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT SITTING IN THE STATE OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS INTERCREDITOR AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH CREDITOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS INTERCREDITOR AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS INTERCREDITOR AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
4.11 Complete Agreement . This written Intercreditor Agreement is intended by the parties as a final expression of their agreement and is intended as a complete statement of the terms and conditions of their agreement with respect to the subject matter hereof.
4.12 No Third Parties Benefited . Except as expressly provided in Sections 4.2 and 4.3 hereof and consents which are deemed to have been given under Section 2.9 hereof, this Intercreditor Agreement is solely for the benefit of the Creditors and their respective successors, participants and assigns, and no other person shall have any right, benefit, priority or interest under, or because of the existence of, this Intercreditor Agreement.
4.13 Disclosures; Non-Reliance . Each Creditor (other than the Second Lien Agent) has the means to, and shall in the future remain, fully informed as to the financial condition and other affairs of Borrower and the other Obligors and no Creditor shall have any obligation or duty to disclose any such information to any other Creditor. Except as expressly set forth in this Intercreditor Agreement, the parties hereto have not otherwise made to each other nor do they hereby make to each other any warranties, express or implied, nor do they assume any liability to each other with respect to: (a) the enforceability, validity, value or collectability of any of the Second Lien Obligations or the First Lien Obligations or any guarantee or security which may have been granted to any of them in connection therewith, (b) Borrowers or any other Obligors title to or right to transfer any of the Collateral, or (c) any other matter except as expressly set forth in this Intercreditor Agreement.
Intercreditor and Subordination Agreement
27
4.14 Term . This Intercreditor Agreement is a continuing agreement and shall remain in full force and effect until the satisfaction in full of all First Lien Obligations and Second Lien Obligations and the termination of the financing arrangements between First Lien Agent, the First Lien Lenders, Second Lien Agent, the other Second Lien Creditors, Borrower and the other Obligors. Notwithstanding the foregoing if, in any insolvency Proceeding or otherwise, all or part of any payment with respect to the First Lien Obligations previously made shall be rescinded for any reason whatsoever, then the First Lien Obligations shall be reinstated to the extent of the amount so rescinded and, if theretofore terminated, this Intercreditor Agreement shall be reinstated in full force and effect and such prior termination shall not diminish, release, discharge, impair or otherwise affect the Lien priorities and the relative rights and obligations of the First Lien Lenders and the Second Lien Creditors provided for herein.
4.15 Lien Subordination . Except as otherwise provided in this Intercreditor Agreement, nothing in this Intercreditor Agreement shall prohibit the receipt by Second Lien Agent or any other Second Lien Creditor of the required payments of principal, premium, interest, fees and other amounts due under the Indenture Documents so long as such receipt is not the direct or indirect result of the enforcement or exercise by Second Lien Agent or any other Second Lien Creditor of rights or remedies as a secured creditor or enforcement in contravention of this Intercreditor Agreement. In the event Second Lien Agent or any other Second Lien Creditor becomes a judgment lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subordinated to the Liens securing First Lien Obligations on the same basis as the other Liens securing the Second Lien Obligations are so subordinated to such First Lien Obligations under this Intercreditor Agreement. Nothing in this Intercreditor Agreement impairs or otherwise adversely affects any rights or remedies First Lien Agent or the other First Lien Lenders may have with respect to the Collateral.
4.16 Legend . Each of First Lien Agent on behalf of the First Lien Lenders and Second Lien Agent on behalf of the Second Lien Creditors agrees that each First Lien Loan Agreement and each Indenture Document, as applicable, constituting a collateral or security document, shall include the following language (or language to similar effect approved by both First Lien Agent and Second Lien Agent):
Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the Amended and Restated Intercreditor Agreement dated as of November 17, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the Intercreditor Agreement ), among Victory Park Management, LLC, in its capacity as collateral agent for, and acting on behalf of, the First Lien Lenders identified therein and Wilmington Trust FSB, in its capacity as collateral agent for, and acting on
Intercreditor and Subordination Agreement
28
behalf of, itself and the other Second Lien Creditors identified therein, at any time that the Intercreditor Agreement is in effect. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control at any time the Intercreditor Agreement is in effect.
4.17 Rights as Unsecured Creditors . Notwithstanding anything to the contrary contained herein, the Second Lien Creditors may, in accordance with the Indenture Documents and applicable law, enforce rights and exercise remedies against Borrower and any other Obligor as unsecured creditors unless any such action is otherwise expressly or impliedly inconsistent with the terms of this Intercreditor Agreement. Notwithstanding the foregoing, nothing herein shall prevent any Second Lien Creditor from raising any objection to any sale pursuant to Section 363 of the Bankruptcy Code which could be raised solely by, or on behalf of, an unsecured creditor as permitted by Section .5(b) hereof, it being understood that the Second Lien Creditors agree that they will be deemed to have consented, pursuant to Section 363 (0(2) of the Bankruptcy Code, to any sale supported by any of the First Lien Lenders, and no Second Lien Creditor shall raise any objection pursuant to Section 363 (0(3) of the Bankruptcy Code to any such sale.
4.18 Amendment and Restatement . This Intercreditor Agreement amends and restates the Original Intercreditor Agreement in its entirety effective as of the date hereof.
4.19 Conflicts . In the event of any conflict between the provisions of this Intercreditor Agreement and the provisions of any Indenture Document or any First Lien Loan Agreement, the provisions of this Intercreditor Agreement shall govern. With respect to Second Lien Agent and the other Second Lien Creditors and the obligations of Second Lien Agent under the Indenture Documents only, in the event of a conflict between this Intercreditor Agreement and the Indenture Documents, the terms of the Indenture shall govern and control.
[signature pages follow]
Intercreditor and Subordination Agreement
29
IN WITNESS WHEREOF, the parties have caused this Intercreditor Agreement to be duly executed as of the day and year first above written.
FIRST LIEN AGENT: | ||
VICTORY PARK MANAGEMENT, LLC, for itself as First Lien Agent and as Collateral |
||
Agent for the First Lien Lenders | ||
By: |
/s/ Scott R. Zemnick |
|
Name: Scott R. Zemnick | ||
Title: Authorized Signatory |
SECOND LIEN AGENT: |
||
WILMINGTON TRUST, NATIONAL |
||
ASSOCIATION , as Collateral Agent under the |
||
Indenture, for itself and the other Second Lien |
||
Creditors |
By: |
/s/ Jane Schweiger |
|
Name: Jane Schweiger | ||
Title: Vice President |
[Signature page to Intercreditor and Subordination Agreement]
Each of the undersigned hereby acknowledges and agrees to the foregoing terms and provisions. By its signature below, each of the undersigned agrees that it will, together with its successors and assigns, be bound by the provisions hereof.
Each of the undersigned agrees that any Creditor holding or otherwise controlling Collateral (the Controlling Creditor) does so as bailee (under the UCC) for and on behalf of the other Creditors which have a Lien on such Collateral, and each Controlling Creditor is hereby authorized to and may turn over to Second Lien Agent (if First Lien Agent or any First Lien Lender is the Controlling Creditor) or to First Lien Agent (if Second Lien Agent or any Second Lien Creditor is the Controlling Creditor) upon request therefore any such Collateral, after all obligations and indebtedness of the undersigned to such Controlling Creditor shall have been fully paid and performed.
Each of the undersigned acknowledges and agrees that: (i) although it may sign this Intercreditor Agreement it is not a party hereto and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Intercreditor Agreement (except for a consent which is deemed to have been given by the Second Lien Creditors under Section 2.9 ), and (ii) it will execute and deliver such additional documents and take such additional action as may be necessary or desirable in the reasonable opinion of any of the Creditors to effectuate the provisions and purposes of the foregoing Intercreditor Agreement.
[signature page follows]
CURO FINANCIAL TECHNOLOGIES CORP. | ||
CURO INTERMEDIATE HOLDINGS CORP. | ||
TODD FINANCIAL, INC. | ||
TODD CAR TITLE, INC. | ||
CURO MANAGEMENT LLC | ||
FMMR INVESTMENTS, INC. | ||
EVERGREEN FINANCIAL INVESTMENTS, | ||
INC. | ||
PRINCIPAL INVESTMENTS, INC. | ||
SPEEDY CASH | ||
ADVANCE GROUP, INC. | ||
CONCORD FINANCE, INC. | ||
SCIL, INC. | ||
CASH COLORADO, LLC | ||
GALT VENTURES, LLC | ||
A SPEEDY CASH CAR TITLE LOANS, LLC SCIL TEXAS, LLC |
||
SC AURUM, LLC ATTAIN FINANCE, LLC SPEEDY CASH ILLINOIS, INC. SC TEXAS MB, INC. |
||
THE MONEY STORE, L.P. |
By: |
/s/ Donald F. Gayhardt Jr. |
|
Name: Donald F. Gayhardt Jr. | ||
Title: President & Chief Executive Officer |
[Signature Page to lntercreditor and Subordination Agreement]
Exhibit 10.50
SECURITY AGREEMENT
Among
CURO FINANCIAL TECHNOLOGIES CORP.,
CURO INTERMEDIATE HOLDINGS CORP.
CERTAIN SUBSIDIARIES OF CURO INTERMEDIATE HOLDINGS CORP.
and
VICTORY PARK MANAGEMENT, LLC,
as COLLATERAL AGENT
Dated as of November 17, 2016
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of November 17, 2016 made by each of the undersigned assignors (each, an Assignor and, together with any other entity that becomes an assignor hereunder pursuant to Section 10.12 hereof, the Assignors ) in favor of Victory Park Management, LLC, as collateral agent (together with any successor collateral agent, the Collateral Agent ), for the benefit of the Secured Creditors (as defined below). Certain capitalized terms as used herein are defined in Article IX hereof. Except as otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. (the Borrower ), the lenders from time to time party thereto (the Lenders ), and Victory Park Management, LLC, as administrative agent (in such capacity together with any successor administrative agent, the Administrative Agent ), have entered into a Short-Term Credit Agreement, dated as of November 17, 2016 (as amended, modified, restated and/or supplemented from time to time, the Credit Agreement ), providing for the making of Loans to and for the account of, the Borrower, all as contemplated therein (the Lenders, the Administrative Agent and the Collateral Agent are herein called the Lender Creditors );
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements and/or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lenders or affiliates successors and assigns, if any, collectively, the Other Creditors and, together with the Lender Creditors, the Secured Creditors , with each such Interest Rate Protection Agreement and/or Other Hedging Agreement with an Other Creditor being herein called a Secured Hedging Agreement );
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and severally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, it is a condition precedent to the making of Loans to the Borrower for the account of the Borrower under the Credit Agreement and to the Other Creditors entering into Secured Hedging Agreements that each Assignor shall have executed and delivered to the Collateral Agent this Agreement; and
WHEREAS, each Assignor will obtain benefits from the incurrence of Loans by the Borrower for the account of the Borrower under the Credit Agreement and the entering into by the Borrower of Secured Hedging Agreements and, accordingly, desires to execute this Agreement in order to satisfy the condition described in the preceding paragraph and to induce the Lenders to make Loans to the Borrower for the account of the Borrower and the Other Creditors to enter into Secured Hedging Agreements with the Borrower;
- 1 -
NOW, THEREFORE, in consideration of the benefits accruing to each Assignor, the receipt and sufficiency of which are hereby acknowledged, each Assignor hereby makes the following representations and warranties to the Collateral Agent for the benefit of the Secured Creditors and hereby covenants and agrees with the Collateral Agent for the benefit of the Secured Creditors as follows:
ARTICLE I.
SECURITY INTERESTS
1.1. Grant of Security Interests . (a) security for the prompt and complete payment and performance when due of all of its Obligations, each Assignor does hereby assign and transfer unto the Collateral Agent, and does hereby pledge and grant to the Collateral Agent, for the benefit of the Secured Creditors, a continuing security interest in and a lien on all of the right, title and interest of such Assignor in, to and under all of the following personal property and fixtures (and all rights therein) of such Assignor, or in which or to which such Assignor has any rights, in each case whether now existing or hereafter from time to time acquired:
(i) | each and every Account; |
(ii) | all cash; |
(iii) | the Cash Collateral Account and all monies, securities, Instruments and other investments deposited or required to be deposited in the Cash Collateral Account; |
(iv) | all Chattel Paper (including, without limitation, all Tangible Chattel Paper and all Electronic Chattel Paper); |
(v) | all Commercial Tort Claims; |
(vi) | all computer programs of such Assignor and all intellectual property rights therein and all other proprietary information of such Assignor, including but not limited to Domain Names and Trade Secret Rights; |
(vii) | all Contracts, together with all Contract Rights arising thereunder; |
(viii) | all Copyrights; |
(ix) | all Equipment; |
(x) | all Deposit Accounts and all other demand, deposit, time, savings, cash management, passbook and similar accounts maintained by such Assignor with any Person and all monies, securities, Instruments and other investments deposited or required to be deposited in any of the foregoing; |
- 2 -
(xi) | all Documents; |
(xii) | all General Intangibles; |
(xiii) | all Goods; |
(xiv) | all Instruments; |
(xv) | all Inventory; |
(xvi) | all Investment Property; |
(xvii) | all Letter-of-Credit Rights (whether or not the respective letter of credit is evidenced by a writing); |
(xviii) | all Marks, together with the registrations and right to all renewals thereof, the goodwill of the business of such Assignor symbolized by the Marks and all causes of action arising prior to or after the date hereof for infringement of any of the Marks or unfair competition regarding the same; |
(xix) | all Patents, together with all causes of action arising prior to or after the date hereof for infringement of any of the Patents or unfair competition regarding the same; |
(xx) | all Permits; |
(xxi) | all Software and all Software licensing rights, all writings, plans, specifications and schematics, all engineering drawings, customer lists, goodwill and licenses, and all recorded data of any kind or nature, regardless of the medium of recording; |
(xxii) | all Supporting Obligations; and |
(xxiii) | all Proceeds and products of any and all of the foregoing (all of the above, the Collateral ). |
(b) The security interest of the Collateral Agent under this Agreement extends to all Collateral which any Assignor may acquire, or with respect to which any Assignor may obtain rights, at any time during the term of this Agreement. Notwithstanding anything to the contrary contained herein, the term Collateral shall not include, and the security interest granted under this Agreement shall not attach to: (A) any lease, license, Permit, contract or agreement to which any Assignor is a party to the extent (but only to the extent) that the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Assignor therein or (ii) a breach or termination pursuant to the terms of, or a default under, any such lease, license, Permit or agreement (other than, in either case, (x) to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor
- 3 -
provision or provisions) of any relevant jurisdiction or any other applicable law (including any Bankruptcy Code) or principles of equity or (y) to the extent that the other party has consented to the assignment thereof pursuant to the terms hereof or pursuant to an assignment for security purposes generally or such prohibition otherwise no longer exists), (B) leasehold interests in real property with respect to which any Assignor is a tenant or subtenant to the extent that a security interest therein cannot be perfected solely by filing a UCC-1 financing statement (or similar instrument) under the UCC of any applicable jurisdiction, (C) any trademark applications filed on an intent-to-use basis (until the issuance of a registration or the filing of a statement of use for such application), (D) except in the circumstances and to the extent provided by Section 9.17 of the Credit Agreement, the Voting Equity Interests (as defined in the Pledge Agreement) of any Exempted Foreign Entity (as defined in the Pledge Agreement) in excess of 65% of the total combined voting power of all classes of Voting Equity Interests of any Exempted Foreign Entity, (E) motor vehicles covered by certificates of title or ownership to the extent that a security interest therein cannot be perfected solely by filing a UCC-1 financing statement (or similar instrument) under the UCC of any applicable jurisdiction, (F) property or assets owned by an Assignor that are subject to a Permitted Lien described in Section 10.01(vi) or (vii) of the Credit Agreement for so long as such Permitted Lien is in effect and the Indebtedness secured thereby otherwise prohibits any other Liens thereon, but only for so long as such prohibition exists and is effective and valid, (G) Excluded Deposit Accounts and (H) Proceeds and products from any and all of the assets described in the foregoing clauses (A) through (G), unless such Proceeds and products would otherwise constitute Collateral securing the Obligations in the absence of this sentence.
Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the Intercreditor Agreement at any time the Intercreditor Agreement is in effect. In the event of any conflict between the terms the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control at any time the Intercreditor Agreement is in effect.
1.2. Power of Attorney . Each Assignor hereby constitutes and appoints the Collateral Agent its true and lawful attorney, irrevocably, with full power after the occurrence of and during the continuance of an Event of Default (in the name of such Assignor or otherwise) to act, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys due or to become due to such Assignor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Collateral Agent may deem to be necessary or advisable to protect the interests of the Secured Creditors, which appointment as attorney is coupled with an interest.
- 4 -
ARTICLE II.
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows:
2.1. Necessary Filings . All filings, registrations, recordings and other actions necessary or appropriate to create, preserve and perfect the security interest granted by such Assignor to the Collateral Agent hereby in respect of the Collateral have been (or, within 15 days after the date hereof (or 90 days after the date hereof in the case of Deposit Accounts, as such date may be extended in accordance with Section 3.9 hereof), will be) accomplished and the security interest granted to the Collateral Agent pursuant to this Agreement in and to the Collateral creates a valid and, together with all such filings, registrations, recordings and other actions, a perfected security interest therein prior to the rights of all other Persons therein and subject to no other Liens (other than Permitted Liens) and is entitled to all the rights, priorities and benefits afforded by the Uniform Commercial Code or other relevant law as enacted in any relevant jurisdiction to perfected security interests, in each case to the extent that the Collateral consists of the type of property in which a security interest may be perfected by possession or control (within the meaning of the UCC as in effect on the date hereof in the State of New York), by filing a financing statement under the Uniform Commercial Code as enacted in any relevant jurisdiction or by a filing of a Grant of Security Interest in the respective form attached hereto in the United States Patent and Trademark Office or in the United States Copyright Office.
2.2. No Liens . Such Assignor is, and as to all Collateral acquired by it from time to time after the date hereof such Assignor will be, the owner of all Collateral free from any Lien or other right, title or interest of any Person (other than Permitted Liens), and such Assignor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements . As of the date hereof, there is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Collateral (other than financing statements filed in respect of Permitted Liens), and so long as the Termination Date has not occurred, such Assignor will not execute or authorize to be filed in any public office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interests granted hereby by such Assignor or in connection with Permitted Liens.
2.4. Chief Executive Office, Record Locations . The chief executive office of such Assignor is, on the date of this Agreement, located at the address indicated on Annex A hereto for such Assignor. During the period of the four calendar months preceding the date of this Agreement, the chief executive office of such Assignor has not been located at any address other than that indicated on Annex A in accordance with the immediately preceding sentence, in each case unless each such other address is also indicated on Annex A hereto for such Assignor.
2.5. Location of Inventory and Equipment . All Inventory and Equipment held on the date hereof, or held at any time during the four calendar months prior to the date hereof, by each Assignor is located at one of the locations shown on Annex B hereto for such Assignor.
- 5 -
2.6. Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; Location; Organizational Identification Numbers; Federal Employer Identification Number; Changes Thereto; etc . The exact legal name of each Assignor, the type of organization of such Assignor, whether or not such Assignor is a Registered Organization, the jurisdiction of organization of such Assignor, such Assignors Location, the organizational identification number (if any) of such Assignor and the Federal Employer Identification Number (if any), is listed on Annex C hereto for such Assignor. Such Assignor shall not change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its jurisdiction of organization, its Location, its organizational identification number (if any), or its Federal Employer Identification Number (if any) from that used on Annex C hereto, except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Secured Debt Agreements and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) such Assignor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, outside the United States or a State thereof) if (i) it shall have given to the Collateral Agent not less than 5 days prior written notice of each change to the information listed on Annex C (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Annex C which shall correct all information contained therein for such Assignor, and (ii) in connection with each change or changes, it shall have taken all action reasonably requested by the Collateral Agent to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect. In addition, to the extent that such Assignor does not have an organizational identification number on the date hereof and later obtains one, such Assignor shall promptly thereafter notify the Collateral Agent of such organizational identification number and shall take all actions reasonably satisfactory to the Collateral Agent to the extent necessary to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.
2.7. Trade Names; Etc . Such Assignor has or operates in any jurisdiction under, or in the preceding five years has had or has operated in any jurisdiction under, no trade names, fictitious names or other names except its legal name as specified in Annex C and such other trade or fictitious names as are listed on Annex D hereto for such Assignor. Such Assignor shall not assume or operate in any jurisdiction under any new trade, fictitious or other name until (i) it shall have given to the Collateral Agent not less than 15 days written notice of its intention so to do, clearly describing such new name and the jurisdictions in which such new name will be used and providing such other information in connection therewith as the Collateral Agent may reasonably request and (ii) with respect to such new name, it shall have taken all action reasonably requested by the Collateral Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.
2.8. Certain Significant Transactions . During the one year period preceding the date of this Agreement, except in connection with the Transaction, no Person shall have merged, amalgamated or consolidated with or into any Assignor, and no Person shall have liquidated into, or transferred all or substantially all of its assets to, any Assignor, in each case except as described in Annex E hereto. With respect to any transactions so described in Annex E hereto, the respective Assignor shall have furnished such information with respect to the Person (and the assets of the Person and locations thereof) which merged with or into, amalgamated with or consolidated with such Assignor, or was liquidated into or transferred all or substantially all of
- 6 -
its assets to such Assignor, and shall have furnished to the Collateral Agent such UCC lien searches as may have been requested with respect to such Person and its assets, to establish that no security interest (excluding Permitted Liens) continues perfected on the date hereof with respect to any Person described above (or the assets transferred to the respective Assignor by such Person), including without limitation pursuant to Section 9-316(a)(3) of the UCC.
2.9. Non-UCC Property . The aggregate fair market value (as determined by the Assignors in good faith) of all property of the Assignors of the types described in clauses (1), (2) and (3) of Section 9-311(a) of the UCC and constituting Collateral does not exceed $1,000,000. If the aggregate value of all such property at any time owned by all Assignors and constituting Collateral exceeds $1,000,000, the Assignors shall provide prompt written notice thereof to the Collateral Agent and, upon the request of the Collateral Agent, the Assignors shall promptly (and in any event within 30 days of acquiring knowledge thereof) take such actions (at their own cost and expense) as may be required under the respective United States, State or other laws referenced in Section 9-311(a) of the UCC to perfect the security interests granted herein in any Collateral where the filing of a financing statement does not perfect the security interest in such property in accordance with the provisions of Section 9-311(a) of the UCC.
2.10. As-Extracted Collateral; Timber-to-be-Cut . On the date hereof, such Assignor does not own, or expect to acquire, any property which constitutes, or would constitute, As-Extracted Collateral or Timber-to-be-Cut. If at any time after the date of this Agreement such Assignor owns, acquires or obtains rights to any As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall furnish the Collateral Agent with prompt written notice thereof (which notice shall describe in reasonable detail the As-Extracted Collateral and/or Timber-to-be-Cut and the locations thereof) and shall take all actions as may be deemed reasonably necessary or desirable by the Collateral Agent to perfect the security interest of the Collateral Agent therein.
2.11. Collateral in the Possession of a Bailee . If any Inventory or other Goods are at any time in the possession of a bailee, such Assignor shall promptly notify the Collateral Agent thereof and, if requested by the Collateral Agent, shall use its commercially reasonable efforts to promptly obtain an acknowledgment from such bailee, in form and substance reasonably satisfactory to the Collateral Agent, that the bailee holds such Collateral for the benefit of the Collateral Agent and shall act upon the instructions of the Collateral Agent, without the further consent of such Assignor. The Collateral Agent agrees with such Assignor that the Collateral Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the respective Assignor with respect to any such bailee.
2.12. Recourse . This Agreement is made with full recourse to each Assignor and pursuant to and upon all the warranties, representations, covenants and agreements on the part of such Assignor contained herein, in the Secured Debt Agreements and otherwise in writing in connection herewith or therewith.
- 7 -
ARTICLE III.
SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;
INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL
3.1. Additional Representations and Warranties . As of the time when each of its Accounts arises, each Assignor shall be deemed to have represented and warranted that each such Account, and all records, papers and documents relating thereto (if any) are genuine and what they purport to be, and that all papers and documents (if any) relating thereto (i) will, to the knowledge of such Assignor, represent the genuine, legal, valid and binding obligation of the account debtor evidencing indebtedness unpaid and owed by the respective account debtor arising out of the performance of labor or services or the sale or lease and delivery of the merchandise listed therein, or both, (ii) will be the only original writings evidencing and embodying such obligation of the account debtor named therein (other than copies created for general accounting purposes), (iii) will, to the knowledge of such Assignor, evidence true and valid obligations, enforceable in accordance with their respective terms, and (iv) will be in compliance and will conform in all material respects with all applicable federal, state and local laws and applicable laws of any relevant foreign jurisdiction.
3.2. Maintenance of Records . Each Assignor will keep and maintain at its own cost and expense accurate records of its Accounts and Contracts, including, but not limited to, originals of all documentation (including each Contract) with respect thereto, records of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and such Assignor will make the same available on such Assignors premises to the Collateral Agent for inspection, at such Assignors own cost and expense, at any and all reasonable times, but not more than two (2) such inspections per calendar year, upon prior notice to such Assignor and otherwise in accordance with the Credit Agreement. Upon the occurrence and during the continuance of an Event of Default and at the request of the Collateral Agent, such Assignor shall, at its own cost and expense, deliver all tangible evidence of its Accounts and Contract Rights (including, without limitation, all documents evidencing the Accounts and all Contracts) and such books and records to the Collateral Agent or to its representatives (copies of which evidence and books and records may be retained by such Assignor). Upon the occurrence and during the continuance of an Event of Default and if the Collateral Agent so directs, such Assignor shall legend, in form and manner satisfactory to the Collateral Agent, the Accounts and the Contracts, as well as books, records and documents (if any) of such Assignor evidencing or pertaining to such Accounts and Contracts with an appropriate reference to the fact that such Accounts and Contracts have been assigned to the Collateral Agent and that the Collateral Agent has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties; etc . Upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all payments on account of the Accounts and Contracts to be made directly to the Cash Collateral Account, (y) that the Collateral Agent may, at its option, directly notify the obligors with respect to any Accounts and/or under any Contracts to make payments with respect thereto as provided in the preceding clause (x), and (z) that the Collateral Agent may enforce collection of any such Accounts and Contracts and may adjust, settle or compromise the amount of payment thereof, in the same manner and to the same extent as such
- 8 -
Assignor. Without notice to or assent by any Assignor, the Collateral Agent may, upon the occurrence and during the continuance of an Event of Default, apply any or all amounts then in, or thereafter deposited in, the Cash Collateral Account toward the payment of the Obligations in the manner provided in Section 7.4 of this Agreement. The reasonable costs and expenses of collection (including reasonable attorneys fees), whether incurred by an Assignor or the Collateral Agent, shall be borne solely by the relevant Assignor. The Collateral Agent shall deliver a copy of each notice referred to in the preceding clause (y) to the relevant Assignor, provided that (x) the failure by the Collateral Agent to so notify such Assignor shall not affect the effectiveness of such notice or the other rights of the Collateral Agent created by this Section 3.3 and (y) no such notice shall be required if an Event of Default of the type described in Section 11.05 of the Credit Agreement has occurred and is continuing.
3.4. Modification of Terms; etc . Except in accordance with such Assignors ordinary course of business and consistent with reasonable business judgment or as permitted by Section 3.5 hereof, no Assignor shall rescind or cancel any indebtedness evidenced by any Account or under any Contract, or modify any material term thereof or make any material adjustment with respect thereto, or extend or renew the same, or compromise or settle any material dispute, claim, suit or legal proceeding relating thereto, or sell any Account or Contract, or interest therein, without the prior written consent of the Collateral Agent. No Assignor will do anything to impair the rights of the Collateral Agent in the Accounts or Contracts.
3.5. Collection . Each Assignor shall endeavor in accordance with reasonable business practices to cause to be collected from the account debtor named in each of its Accounts or obligor under any Contract, as and when due (including, without limitation, amounts which are delinquent, such amounts to be collected in accordance with generally accepted lawful collection procedures) any and all amounts owing under or on account of such Account or Contract, and apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balance of such Account or under such Contract. Except as otherwise directed by the Collateral Agent after the occurrence and during the continuation of an Event of Default, any Assignor may allow in the ordinary course of business as adjustments to amounts owing under its Accounts and Contracts (i) an extension or renewal of the time or times of payment, or settlement for less than the total unpaid balance, which such Assignor finds appropriate in accordance with reasonable business judgment and (ii) a refund or credit due as a result of returned or damaged merchandise or improperly performed services or for other reasons which such Assignor finds appropriate in accordance with reasonable business judgment. The reasonable costs and expenses (including, without limitation, reasonable attorneys fees) of collection, whether incurred by an Assignor or the Collateral Agent, shall be borne solely by the relevant Assignor.
3.6. Instruments . If any Assignor owns or acquires any Instrument in excess of $500,000 constituting Collateral (other than (x) checks and other payment instruments received and collected in the ordinary course of business and (y) any Instrument subject to pledge pursuant to the Pledge Agreement), such Assignor will within 30 days notify the Collateral Agent thereof in writing, and upon request by the Collateral Agent will promptly deliver such Instrument to the Collateral Agent appropriately endorsed to the order of the Collateral Agent.
- 9 -
3.7. Assignors Remain Liable Under Accounts . Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Accounts to observe and perform all of the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to such Accounts. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Account pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by them or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.8. Assignors Remain Liable Under Contracts . Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Contracts to observe and perform all of the conditions and obligations to be observed and performed by them thereunder, all in accordance with and pursuant to the terms and provisions of each Contract. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Contract by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Contract pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any performance by any party under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.9. Deposit Accounts; Etc . Subject to Section 9.18 of the Credit Agreement: (a) No Assignor maintains, or at any time after the date of this Agreement shall establish or maintain, any demand, time, savings, passbook or similar account, except for such accounts maintained with a bank (as defined in Section 9-102 of the UCC) whose jurisdiction (determined in accordance with Section 9-304 of the UCC) is within a State of the United States. No Assignor maintains, or at any time after the date of this Agreement shall establish or maintain, any Deposit Account except in accordance with the provisions of Section 9.18 of the Credit Agreement. Annex F hereto accurately sets forth, as of the date of this Agreement, for each Assignor, each Deposit Account that is a Concentration Account maintained by such Assignor (including a description thereof and the respective account number), the name of the respective bank with which such Deposit Account is maintained, and the jurisdiction of the respective bank with respect to such Deposit Account. For each Deposit Account that is a Concentration Account (other than (x) any Concentration Account maintained with the Collateral Agent and (y) any Debit Card Program Account), the respective Assignor shall cause the bank with which such Deposit Account is maintained to execute and deliver to the Collateral Agent, within 90 days after the date of this Agreement (as such date may be extended by the Collateral Agent in its sole discretion) or, if later, at the time of the establishment of the respective Deposit Account, a control agreement in the form of Annex G hereto (appropriately completed), with such changes thereto, or in such other form, as may be reasonably acceptable to the Collateral Agent.
- 10 -
If any bank with which a Deposit Account that is a Concentration Account is maintained refuses to, or does not, enter into such a control agreement, then the respective Assignor shall promptly (and in any event within 90 days after the date of this Agreement (as such date may be extended by the Collateral Agent in its sole discretion) or, if later, 90 days after the establishment of such account (as such date may be extended by the Collateral Agent in its sole discretion)) close the respective Deposit Account and transfer all balances therein to the Cash Collateral Account or another Concentration Account meeting the requirements of this Section 3.9. If any bank with which a Deposit Account that is a Concentration Account is maintained refuses to subordinate its claims with respect to such Deposit Account to the Collateral Agents security interest therein on terms reasonably satisfactory to the Collateral Agent, then the Collateral Agent, at its option, may (x) require that such Deposit Account be terminated in accordance with the immediately preceding sentence or (y) agree to a control agreement without such subordination, provided that in such event the Collateral Agent may at any time, at its option, subsequently require that such Deposit Account be terminated (within 90 days after notice from the Collateral Agent (as such date may be extended by the Collateral Agent in its sole discretion)) in accordance with the requirements of the immediately preceding sentence.
(b) Subject to the terms of Section 9.18 of the Credit Agreement: after the date of this Agreement, no Assignor shall establish any new demand, time, savings, passbook or similar account, except for (x) Deposit Accounts that are established and maintained with banks and meeting the requirements of preceding clause (a) and (y) Excluded Deposit Accounts. At the time any such Deposit Account that is a Concentration Account is established, the appropriate control agreement shall be entered into in accordance with the requirements of preceding clause (a) and the respective Assignor shall furnish to the Collateral Agent a supplement to Annex F hereto containing the relevant information with respect to the respective Deposit Account and the bank with which same is established.
3.10. Letter-of-Credit Rights . If any Assignor is at any time a beneficiary under a letter of credit with a stated amount of $1,000,000 or more, such Assignor shall promptly notify the Collateral Agent thereof and, at the request of the Collateral Agent, such Assignor shall, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, use its commercially reasonable efforts to (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under such letter of credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of such letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be applied as provided in this Agreement after the occurrence and during the continuance of an Event of Default.
3.11. Commercial Tort Claims . All Commercial Tort Claims of each Assignor in existence on the date of this Agreement are described in Annex H hereto. If any Assignor shall at any time after the date of this Agreement acquire a Commercial Tort Claim in an amount (taking the greater of the aggregate claimed damages thereunder or the reasonably estimated value thereof) of $1,000,000 or more, such Assignor shall promptly notify the Collateral Agent thereof in a writing signed by such Assignor and describing the details thereof and shall grant to the Collateral Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent.
- 11 -
3.12. Chattel Paper . Upon the request of the Collateral Agent made at any time or from time to time, each Assignor shall promptly furnish to the Collateral Agent a list of all Electronic Chattel Paper held or owned by such Assignor. Furthermore, if requested by the Collateral Agent, each Assignor shall promptly take all actions which are reasonably practicable so that the Collateral Agent has control of all Electronic Chattel Paper in accordance with the requirements of Section 9-105 of the UCC. Each Assignor will promptly (and in any event within 30 days) following any reasonable request by the Collateral Agent, deliver all of its Tangible Chattel Paper to the Collateral Agent.
3.13. Further Actions . Each Assignor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps, including any and all actions as may be reasonably necessary or required under the Federal Assignment of Claims Act, relating to its Accounts, Contracts, Instruments and other property or rights covered by the security interest hereby granted, as the Collateral Agent may reasonably require and not otherwise inconsistent with the provisions of Section 1.1(b).
ARTICLE IV.
SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES
4.1. Additional Representations and Warranties . Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use the registered Marks and Domain Names listed in Annex I hereto for such Assignor and that said listed Marks and Domain Names include all United States marks and applications for United States marks registered in the United States Patent and Trademark Office and all Domain Names that such Assignor owns or uses in connection with its business as of the date hereof. Each Assignor represents and warrants that it owns, is licensed to use or otherwise has the right to use, all Marks and Domain Names that it uses. Each Assignor further warrants that it has no knowledge of any third party claim received by it that aspect of such Assignors present or contemplated business operations infringes or will infringe any trademark, service mark or trade name of any other Person other than as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use all U.S. trademark registrations and applications and Domain Name registrations listed in Annex I hereto and that said registrations are valid, subsisting, have not been canceled and that such Assignor is not aware of any third-party claim that any of said registrations is invalid or unenforceable, and is not aware that there is any reason that any of said registrations is invalid or unenforceable, and is not aware that there is any reason that any of said applications will not mature into registrations. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of an Event of Default, any document which may be required by the United States Patent and Trademark Office or similar registrar in order to effect an absolute assignment of all right, title and interest in each Mark and/or Domain Name, and record the same.
- 12 -
4.2. Licenses and Assignments . Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Mark or Domain Name absent prior written approval of the Collateral Agent.
4.3. Infringements . Each Assignor agrees, promptly upon learning thereof, to notify the Collateral Agent in writing of the name and address of, and to furnish such pertinent information that may be available with respect to, any party who such Assignor believes is, or may be, infringing or diluting or otherwise violating any of such Assignors rights in and to any Mark or Domain Name in any manner that could reasonably be expected to have a Material Adverse Effect, or with respect to any party claiming that such Assignors use of any Mark or Domain Name material to such Assignors business violates in any material respect any property right of that party. Each Assignor further agrees to prosecute diligently in accordance with reasonable business practices any Person infringing any Mark or Domain Name in any manner that could reasonably be expected to have a Material Adverse Effect.
4.4. Preservation of Marks and Domain Names . Each Assignor agrees to use its Marks and Domain Names which are material to such Assignors business in interstate commerce during the time in which this Agreement is in effect and to take all such other actions as are reasonably necessary to preserve such Marks as trademarks or service marks under the laws of the United States (other than any such Marks which are no longer used or useful in its business or operations).
4.5. Maintenance of Registration . Each Assignor shall, at its own expense, diligently process all documents reasonably required to maintain all Mark and/or Domain Name registrations, including but not limited to affidavits of use and applications for renewals of registration in the United States Patent and Trademark Office for all of its material registered Marks, and shall pay all fees and disbursements in connection therewith and shall not abandon any such filing of affidavit of use or any such application of renewal prior to the exhaustion of all administrative and judicial remedies without prior written consent of the Collateral Agent (other than with respect to registrations and applications deemed by such Assignor in its reasonable business judgment to be no longer prudent to pursue).
4.6. Future Registered Marks and Domain Names . If any Mark registration is issued hereafter to any Assignor as a result of any application now or hereafter pending before the United States Patent and Trademark Office or any Domain Name is registered by Assignor, within 30 days of receipt of such certificate or similar indicia of ownership, such Assignor shall deliver to the Collateral Agent a copy of such registration certificate or similar indicia of ownership, and a grant of a security interest in such Mark and/or Domain Name, to the Collateral Agent and at the expense of such Assignor, confirming the grant of a security interest in such Mark and/or Domain Name to the Collateral Agent hereunder, the form of such security to be substantially in the form of Annex L hereto or in such other form as may be reasonably satisfactory to the Collateral Agent.
4.7. Remedies . If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title and interest of such Assignor in and to each of the Marks and Domain Names, together with all trademark rights and rights of protection to the same, vested in
- 13 -
the Collateral Agent for the benefit of the Secured Creditors, in which event such rights, title and interest shall immediately vest, in the Collateral Agent for the benefit of the Secured Creditors, and the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged and notarized and record said absolute assignment with the applicable agency or registrar; (ii) take and use or sell the Marks or Domain Names and the goodwill of such Assignors business symbolized by the Marks or Domain Names and the right to carry on the business and use the assets of such Assignor in connection with which the Marks or Domain Names have been used; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from using the Marks or Domain Names in any manner whatsoever, directly or indirectly, and such Assignor shall execute such further documents that the Collateral Agent may reasonably request to further confirm this and to transfer ownership of the Marks or Domain Names and registrations and any pending trademark applications in the United States Patent and Trademark Office or applicable Domain Name registrar to the Collateral Agent.
ARTICLE V.
SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties . Each Assignor represents and warrants that it is the true and lawful owner of all rights in (i) all Trade Secret Rights, (ii) the Patents listed in Annex J hereto for such Assignor and that said Patents include all the United States patents and applications for United States patents that such Assignor owns as of the date hereof and (iii) the Copyrights listed in Annex K hereto for such Assignor and that said Copyrights include all the United States copyrights registered with the United States Copyright Office and applications to United States copyrights that such Assignor owns as of the date hereof. Each Assignor further warrants that it has no knowledge of any third party claim that any aspect of such Assignors present or contemplated business operations infringes or will infringe any patent of any other Person or such Assignor has misappropriated any Trade Secret or proprietary information which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of any Event of Default, any document which may be required by the United States Patent and Trademark Office or the United States Copyright Office in order to effect an absolute assignment of all right, title and interest in each Patent or Copyright, and to record the same.
5.2. Licenses and Assignments . Except as otherwise permitted by the Secured Debt Agreements, each Assignor hereby agrees not to divest itself of any right under any Patent or Copyright absent prior written approval of the Collateral Agent.
5.3. Infringements . Each Assignor agrees, promptly upon learning thereof, to furnish the Collateral Agent in writing with all pertinent information available to such Assignor with respect to any infringement, contributing infringement or active inducement to infringe or other violation of such Assignors rights in any Patent or Copyright or to any claim that the practice of any Patent or use of any Copyright violates any property right of a third party, or with respect to any misappropriation of any Trade Secret Right or any claim that practice of any Trade Secret Right violates any property right of a third party, in each case, in any manner which, either
- 14 -
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor further agrees, absent direction of the Collateral Agent to the contrary, to diligently prosecute, in accordance with its reasonable business judgment, any Person infringing any Patent or Copyright or any Person misappropriating any Trade Secret Right, in each case to the extent that such infringement or misappropriation, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
5.4. Maintenance of Patents or Copyrights . At its own expense, each Assignor shall make timely payment of all post-issuance fees required to maintain in force its rights under each Patent or Copyright, absent prior written consent of the Collateral Agent to the contrary (other than any such Patents or Copyrights which are no longer used or are deemed by such Assignor in its reasonable business judgment to no longer be useful in its business or operations).
5.5. Prosecution of Patent or Copyright Applications . At its own expense, each Assignor shall diligently prosecute all material applications for (i) United States Patents listed in Annex J hereto and (ii) Copyrights listed on Annex K hereto, in each case for such Assignor and shall not abandon any such application prior to exhaustion of all administrative and judicial remedies (other than applications that are deemed by such Assignor in its reasonable business judgment to no longer be necessary in the conduct of the Assignors business), absent written consent of the Collateral Agent.
5.6. Other Patents and Copyrights . Within 30 days of the acquisition or issuance of a United States Patent, registration of a Copyright, or acquisition of a registered Copyright, or of filing of an application for a United States Patent or Copyright, the relevant Assignor shall deliver to the Collateral Agent a copy of said Copyright or Patent, or certificate or registration of, or application therefor, as the case may be, with a grant of a security interest as to such Patent or Copyright, as the case may be, to the Collateral Agent and at the sole expense of such Assignor, confirming the grant of a security interest, the form of such grant of a security interest to be substantially in the form of Annex M or N hereto, as appropriate, or in such other form as may be reasonably satisfactory to the Collateral Agent.
5.7. Remedies . If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title, and interest of such Assignor in each of the Patents and Copyrights vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such right, title, and interest shall immediately vest in the Collateral Agent for the benefit of the Secured Creditors, in which case the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 5.1 hereof to execute, cause to be acknowledged and notarized and to record said absolute assignment with the applicable agency; (ii) take and practice or sell the Patents and Copyrights; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from practicing the Patents and using the Copyrights directly or indirectly, and such Assignor shall execute such further documents as the Collateral Agent may reasonably request further to confirm this and to transfer ownership of the Patents and Copyrights to the Collateral Agent for the benefit of the Secured Creditors.
- 15 -
ARTICLE VI.
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agents Security . Except as otherwise permitted by the Secured Debt Agreements, each Assignor will do nothing to impair the rights of the Collateral Agent in the Collateral. Each Assignor will at all times maintain insurance, at such Assignors own expense to the extent and in the manner provided in the Secured Debt Agreements. Except to the extent otherwise permitted to be retained by such Assignor or applied by such Assignor pursuant to the terms of the Secured Debt Agreements, the Collateral Agent shall, at the time any proceeds of such insurance are distributed to the Secured Creditors, apply such proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Assignor to pay the Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-Negotiable . To the extent practicable, each Assignor agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued with respect to any of its Inventory, such Assignor shall request that such warehouse receipt or receipt in the nature thereof shall not be negotiable (as such term is used in Section 7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction or under other relevant law).
6.3. Additional Information . Each Assignor will, at its own expense, from time to time upon the reasonable request of the Collateral Agent, promptly (and in any event within 10 Business Days after its receipt of the respective request) furnish to the Collateral Agent such information with respect to the Collateral (including the identity of the Collateral or such components thereof as may have been requested by the Collateral Agent, the value and location of such Collateral, etc.) as may be requested by the Collateral Agent. Without limiting the forgoing, each Assignor agrees that it shall promptly (and in any event within 10 Business Days after its receipt of the respective request) furnish to the Collateral Agent such updated Annexes hereto as may from time to time be reasonably requested by the Collateral Agent.
6.4. Further Actions . Each Assignor will, at its own expense and upon the reasonable request of the Collateral Agent, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such lists, descriptions and designations of its Collateral, warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to the Collateral and other property or rights covered by the security interest hereby granted, which the Collateral Agent deems reasonably appropriate or advisable to perfect, preserve or protect its security interest in the Collateral and not otherwise inconsistent with the provisions of Section 1.1(b).
- 16 -
6.5. Financing Statements . Each Assignor agrees to execute and deliver to the Collateral Agent such financing statements, in form reasonably acceptable to the Collateral Agent, as the Collateral Agent may from time to time reasonably request or as are reasonably necessary or desirable in the opinion of the Collateral Agent to establish and maintain a valid, enforceable, perfected security interest in the Collateral as provided herein and the other rights and security contemplated hereby. Each Assignor will pay any applicable filing fees, recordation taxes and related expenses relating to its Collateral. Each Assignor hereby authorizes the Collateral Agent to file any such financing statements without the signature of such Assignor where permitted by law (and such authorization includes describing the Collateral as all assets of such Assignor).
ARTICLE VII.
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default . Each Assignor agrees that, if any Event of Default shall have occurred and be continuing, then and in every such case, the Collateral Agent, in addition to any rights now or hereafter existing under applicable law and under the other provisions of this Agreement, shall have all rights as a secured creditor under any UCC, and such additional rights and remedies to which a secured creditor is entitled under the laws in effect in all relevant jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from such Assignor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon such Assignors premises where any of the Collateral is located and remove the same and use in connection with such removal any and all services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or other obligation (including, without limitation, the Accounts and the Contracts) constituting the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Collateral Agent and may exercise any and all remedies of such Assignor in respect of such Collateral;
(iii) instruct all banks which have entered into a control agreement with the Collateral Agent to transfer all monies, securities and instruments held by such depositary bank to the Cash Collateral Account;
(iv) sell, assign or otherwise liquidate any or all of the Collateral or any part thereof in accordance with Section 7.2 hereof, or direct such Assignor to sell, assign or otherwise liquidate any or all of the Collateral or any part thereof, and, in each case, take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by directing such Assignor in writing to deliver the same to the Collateral Agent at any reasonable place or places designated by the Collateral Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places so designated by the Collateral Agent and there delivered to the Collateral Agent;
- 17 -
(y) store and keep any Collateral so delivered to the Collateral Agent at such place or places pending further action by the Collateral Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide such security and maintenance services as shall be reasonably necessary to protect the same and to preserve and maintain it in good condition;
(vi) license or sublicense, whether on an exclusive or nonexclusive basis, any Marks, Domain Names, Patents or Copyrights included in the Collateral for such term and on such conditions and in such manner as the Collateral Agent shall in its sole judgment determine;
(vii) apply any monies constituting Collateral or proceeds thereof in accordance with the provisions of Section 7.4; and
(viii) take any other action as specified in clauses (1) through (5), inclusive, of Section 9-607(a) of the UCC;
it being understood that each Assignors obligation so to deliver the Collateral is of the essence of this Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by such Assignor of said obligation. By accepting the benefits of this Agreement and each other Security Document, the Secured Creditors expressly acknowledge and agree that this Agreement and each other Security Document may be enforced only by the action of the Collateral Agent acting upon the instructions of the Required Secured Creditors and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit of the Secured Creditors upon the terms of this Agreement and the other Security Documents.
7.2. Remedies; Disposition of the Collateral . If any Event of Default shall have occurred and be continuing, then any Collateral repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and any other Collateral whether or not so repossessed by the Collateral Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Collateral Agent may, in compliance with any mandatory requirements of applicable law, determine to be commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Collateral Agent or after any overhaul or repair at the expense of the relevant Assignor which the Collateral Agent shall determine to be commercially reasonable. Any such sale, lease or other disposition may be effected by means of a public disposition or private disposition, effected in accordance with the applicable requirements (in each case if and to the extent applicable) of Sections 9-610 through 9-613 of the UCC and/or such other mandatory requirements of applicable law as may apply to the respective disposition. The Collateral Agent may, without notice or publication, adjourn any public or private disposition or cause the same to be adjourned
- 18 -
from time to time by announcement at the time and place fixed for the disposition, and such disposition may be made at any time or place to which the disposition may be so adjourned. To the extent permitted by any such requirement of law, the Collateral Agent may bid for and become the purchaser (and may pay all or any portion of the purchase price by crediting Obligations against the purchase price) of the Collateral or any item thereof, offered for disposition in accordance with this Section 7.2 without accountability to the relevant Assignor. If, under applicable law, the Collateral Agent shall be permitted to make disposition of the Collateral within a period of time which does not permit the giving of notice to the relevant Assignor as hereinabove specified, the Collateral Agent need give such Assignor only such notice of disposition as shall be required by such applicable law. Each Assignor agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such disposition or dispositions of all or any portion of the Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Assignors expense.
7.3. Waiver of Claims . Except as otherwise provided in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENTS TAKING POSSESSION OR THE COLLATERAL AGENTS DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Assignor hereby further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession or any such disposition except any damages which are the direct result of the Collateral Agents gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision);
(ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agents rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Assignor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the relevant Assignor therein and thereto, and shall be a perpetual bar both at law and in equity against such Assignor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Assignor.
- 19 -
7.4. Application of Proceeds . (a) All moneys and other property and assets collected or received by the Administrative Agent, the Collateral Agent or any other Secured Creditor (or, to the extent the Pledge Agreement, any other Security Document or any Guaranty requires proceeds of collateral or other amounts received under such other Credit Document to be applied in accordance with the provisions of this Agreement, the pledgee or collateral agent or other agent under such other Credit Document) (x) upon any sale or other disposition of the Collateral, together with all other moneys received by the Collateral Agent hereunder and under the other Security Documents, (y) after the acceleration of the Credit Document Obligations pursuant the Credit Agreement or (z) upon any distribution (whether or not characterized as such) in connection with any case, proceeding or other action of the type described in Section 11.05 of the Credit Agreement (the amounts described in preceding clauses (x), (y) and (z) are referred to herein as a Distribution ), shall be applied as follows:
(i) first , to the payment of all amounts owing the Collateral Agent of the type described in clauses (iii), (iv) and (v) of the definition of Obligations;
(ii) second , to the extent proceeds remain after the application pursuant to the preceding clause (i), an amount equal to the outstanding Primary Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor receiving an amount equal to its outstanding Primary Obligations or, if the proceeds are insufficient to pay in full all such Primary Obligations, its Pro Rata Share of the amount remaining to be distributed;
(iii) third , to the extent proceeds remain after the application pursuant to the preceding clauses (i) and (ii), an amount equal to the outstanding Secondary Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor receiving an amount equal to its outstanding Secondary Obligations or, if the proceeds are insufficient to pay in full all such Secondary Obligations, its Pro Rata Share of the amount remaining to be distributed; and
(iv) fourth , to the extent proceeds remain after the application pursuant to the preceding clauses (i) through (iii), inclusive, and following the termination of this Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor or to whomever may be lawfully entitled to receive such surplus.
(b) For purposes of this Agreement, (x) Pro Rata Share shall mean, when calculating a Secured Creditors portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Secured Creditors Primary Obligations or Secondary Obligations, as the case may be, and the denominator of which is the then outstanding amount of all Primary Obligations or Secondary Obligations, as the case may be, (y) Primary Obligations shall mean (i) in the case of the Credit Document Obligations, all principal of, premium, fees and interest on, all Loans, all unpaid drawings and all Fees and (ii) in the case of the Other Obligations, all amounts due under each Secured Hedging Agreement (other than indemnities, fees (including, without limitation, attorneys fees) and similar obligations and liabilities) and (z) Secondary Obligations shall mean all Obligations other than Primary Obligations.
- 20 -
(c) When payments to Secured Creditors are based upon their respective Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall be applied (for purposes of making determinations under this Section 7.4 only) (i) first , to their Primary Obligations and (ii) second , to their relevant Secondary Obligations. If any payment to any Secured Creditor of its Pro Rata Share of any Distribution would result in overpayment to such Secured Creditor, such excess amount shall instead be distributed in respect of the unpaid Primary Obligations or Secondary Obligations, as the case may be, of the other Secured Creditors, with each Secured Creditor whose Primary Obligations or Secondary Obligations, as the case may be, have not been paid in full to receive an amount equal to such excess amount multiplied by a fraction the numerator of which is the unpaid Primary Obligations or Secondary Obligations, as the case may be, of such Secured Creditor and the denominator of which is the unpaid Primary Obligations or Secondary Obligations, as the case may be, of all Secured Creditors entitled to such Distribution.
(d) [Reserved].
(e) All payments required to be made hereunder shall be made (x) if to the Lender Creditors, to the Administrative Agent for the account of the Lender Creditors and (y) if to the Other Creditors, to the trustee, paying agent or other similar representative (each, a Representative ) for the Other Creditors or, in the absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the Administrative Agent and (ii) the Representative or, in the absence of such a Representative, upon the Other Creditors for a determination (which the Administrative Agent, each Representative and the Other Creditors agree (or shall agree) to provide upon request of the Collateral Agent) of the outstanding Primary Obligations and Secondary Obligations owed to the Lender Creditors or the Other Creditors, as the case may be. Unless it has received written notice from a Lender Creditor or an Other Creditor to the contrary, the Administrative Agent and each Representative, in furnishing information pursuant to the preceding sentence, and the Collateral Agent, in acting hereunder, shall be entitled to assume that no Secondary Obligations are outstanding. Unless it has written notice from an Other Creditor to the contrary, the Collateral Agent, in acting hereunder, shall be entitled to assume that no Secured Hedging Agreements are in existence.
(g) It is understood that the Assignors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate amount of the Obligations.
(h) If any Secured Creditor collects or receives any Distribution to which it is not entitled under Section 7.4(a) hereof, such Secured Creditor shall hold the same in trust for the Secured Creditors and shall forthwith deliver the same to the Administrative Agent or the Collateral Agent, for the account of the Secured Creditors, to be applied in accordance with Section 7.4(a) hereof.
- 21 -
7.5. Remedies Cumulative . Each and every right, power, and remedy hereby specifically given to the Collateral Agent shall be in addition to every other right, power and remedy specifically given to the Collateral Agent under this Agreement, the other Secured Debt Agreements or now or hereafter existing at law, in equity or by statute and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Collateral Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission of the Collateral Agent in the exercise of any such right, power or remedy and no renewal or extension of any of the Obligations shall impair any such right, power or remedy or shall be construed to be a waiver of any Default or Event of Default or an acquiescence thereof. No notice to or demand on any Assignor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Collateral Agent to any other or further action in any circumstances without notice or demand. In the event that the Collateral Agent shall bring any suit to enforce any of its rights hereunder and shall be entitled to judgment, then in such suit the Collateral Agent may recover reasonable expenses, including reasonable attorneys fees, and the amounts thereof shall be included in such judgment.
7.6. Discontinuance of Proceedings . In case the Collateral Agent shall have instituted any proceeding to enforce any right, power or remedy under this Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case the relevant Assignor, the Collateral Agent and each holder of any of the Obligations shall be restored to their former positions and rights hereunder with respect to the Collateral subject to the security interest created under this Agreement, and all rights, remedies and powers of the Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VIII.
INDEMNITY
8.1. Indemnity . (a) Each Assignor jointly and severally agrees to indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor and their respective successors, assigns, employees, affiliates and agents (hereinafter in this Section 8.1 referred to individually, as Indemnitee , and collectively, as Indemnitees ) harmless from any and all liabilities, obligations, damages, injuries, penalties, claims, demands, actions, suits, judgments and any and all costs, expenses or disbursements (including reasonable attorneys fees and expenses) (for the purposes of this Section 8.1 the foregoing are collectively called expenses ) of whatsoever kind and nature imposed on, asserted against or incurred by any of the Indemnitees in any way relating to or arising out of this Agreement, any other Secured Debt Agreement or any other document executed in connection herewith or therewith or in any other way connected with the administration of the transactions contemplated hereby or thereby or the enforcement of any of the terms of, or the preservation of any rights under any thereof, or in any way relating to or arising out of the manufacture, ownership, ordering, purchase, delivery, control, acceptance, lease, financing, possession, operation, condition, sale, return or other disposition, or use of the Collateral (including, without limitation, latent or other defects, whether or not discoverable), the violation of the laws of any country, state or other governmental body or unit, any tort (including, without limitation, claims arising or imposed
- 22 -
under the doctrine of strict liability, or for or on account of injury to or the death of any Person (including any Indemnitee), or property damage), or contract claim; provided that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent caused by the gross negligence or willful misconduct of such Indemnitee (as determined by a court of competent jurisdiction in a final and non-appealable decision). Each Assignor agrees that upon written notice by any Indemnitee of the assertion of such a liability, obligation, damage, injury, penalty, claim, demand, action, suit or judgment, the relevant Assignor shall assume full responsibility for the defense thereof. Each Indemnitee agrees to use its best efforts to promptly notify the relevant Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each Assignor agrees, jointly and severally, to pay or reimburse the Collateral Agent for any and all reasonable fees (including reasonable attorneys fees and expenses), costs and expenses of whatever kind or nature incurred in connection with the creation, preservation or protection of the Collateral Agents Liens on, and security interest in, the Collateral, including, without limitation, all fees and taxes in connection with the recording or filing of instruments and documents in public offices, payment or discharge of any taxes or Liens upon or in respect of the Collateral, premiums for insurance with respect to the Collateral and all other fees, costs and expenses in connection with protecting, maintaining or preserving the Collateral and the Collateral Agents interest therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions, suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b) hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold each Indemnitee harmless from and against any loss, costs, damages and expenses (including reasonable attorneys fees and expenses) which such Indemnitee may suffer, expend or incur in consequence of or growing out of any misrepresentation by any Assignor in this Agreement, any other Secured Debt Agreement or in any writing contemplated by or made or delivered pursuant to or in connection with this Agreement or any other Secured Debt Agreement.
(d) If and to the extent that the obligations of any Assignor under this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival . Any amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Obligations secured by the Collateral. The indemnity obligations of each Assignor contained in this Article VIII shall continue in full force and effect notwithstanding the full payment of all of the other Obligations and notwithstanding the full payment of all the Loans made under the Credit Agreement, the termination of all Secured Hedging Agreements and the payment of all other Obligations and notwithstanding the discharge thereof and the occurrence of the Termination Date.
- 23 -
ARTICLE IX.
DEFINITIONS
The following terms shall have the meanings herein specified. Such definitions shall be equally applicable to the singular and plural forms of the terms defined.
Account shall mean any account as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, and in any event shall include but shall not be limited to, all rights to payment of any monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State.
Administrative Agent shall have the meaning provided in the recitals of this Agreement.
Agreement shall mean this Security Agreement, as the same may be amended, modified, restated and/or supplemented from time to time in accordance with its terms.
As-Extracted Collateral shall mean as-extracted collateral as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Assignor shall have the meaning provided in the first paragraph of this Agreement.
Bankruptcy Code shall have the meaning provided in the Credit Agreement.
Borrower shall have the meaning provided in the recitals of this Agreement.
Cash Collateral Account shall mean a non-interest bearing cash collateral account maintained with, and in the sole dominion and control of, the Collateral Agent for the benefit of the Secured Creditors.
Chattel Paper shall mean chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York. Without limiting the foregoing, the term Chattel Paper shall in any event include all Tangible Chattel Paper and all Electronic Chattel Paper.
Class shall have the meaning provided in Section 10.2 of this Agreement.
Collateral shall have the meaning provided in Section 1.1(a) of this Agreement.
- 24 -
Collateral Agent shall have the meaning provided in the first paragraph of this Agreement.
Commercial Tort Claims shall mean commercial tort claims as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Concentration Account shall mean each of those accounts referenced in Section 9.18 of the Credit Agreement and Annex F hereto and designated as a Concentration Account thereon, along with any replacement accounts in respect thereof established in accordance with the terms of Section 9.18 of the Credit Agreement and Section 3.9 hereof.
Contract Rights shall mean all rights of any Assignor under each Contract, including, without limitation, (i) any and all rights to receive and demand payments under any or all Contracts, (ii) any and all rights to receive and compel performance under any or all Contracts and (iii) any and all other rights, interests and claims now existing or in the future arising in connection with any or all Contracts.
Contracts shall mean all contracts between any Assignor and one or more additional parties (including, without limitation, any Interest Rate Protection Agreements, Other Hedging Agreements, licensing agreements and any partnership agreements, joint venture agreements and limited liability company agreements).
Copyrights shall mean any United States or foreign copyright now or hereafter owned by any Assignor, including any registrations of any copyrights in the United States Copyright Office or any foreign equivalent office, as well as any application for a copyright registration now or hereafter made with the United States Copyright Office or any foreign equivalent office by any Assignor.
Credit Agreement shall have the meaning provided in the recitals of this Agreement.
Credit Document Obligations shall have the meaning provided in the definition of Obligations in this Article IX.
Deposit Accounts shall mean all deposit accounts as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Distribution shall have the meaning provided in Section 7.4(a) of this Agreement.
Documents shall mean documents as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Domain Names shall mean all Internet domain names and associated URL addresses in or to which any Assignor now or hereafter has any right, title or interest.
Electronic Chattel Paper shall mean electronic chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
- 25 -
Equipment shall mean any equipment as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, and in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by any Assignor and any and all additions, substitutions and replacements of any of the foregoing and all accessions thereto, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.
Event of Default shall mean any Event of Default under, and as defined in, the Credit Agreement and shall in any event include, without limitation, any payment default on any of the Obligations after the expiration of any applicable grace period.
Excluded Deposit Accounts shall mean Deposit Accounts of any Assignor exclusively used for payroll, payroll taxes and other employee wage and benefit payments.
General Intangibles shall mean general intangibles as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Goods shall mean goods as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Holdings shall have the meaning provided in the recitals hereto.
Indemnitee shall have the meaning provided in Section 8.1(a) of this Agreement.
Instrument shall mean instruments as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Inventory shall mean merchandise, inventory and goods, and all additions, substitutions and replacements thereof and all accessions thereto, wherever located, together with all goods, supplies, incidentals, packaging materials, labels, materials and any other items used or usable in manufacturing, processing, packaging or shipping same, in all stages of production from raw materials through work in process to finished goods, and all products and proceeds of whatever sort and wherever located any portion thereof which may be returned, rejected, reclaimed or repossessed by the Collateral Agent from any Assignors customers, and shall specifically include all inventory as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Investment Property shall mean investment property as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Lender Creditors shall have the meaning provided in the recitals of this Agreement.
Lenders shall have the meaning provided in the recitals of this Agreement.
Letter-of-Credit Rights shall mean letter-of-credit rights as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
- 26 -
Location of any Assignor, shall mean such Assignors location as determined pursuant to Section 9-307 of the UCC.
Marks shall mean all right, title and interest in and to any trademarks, service marks and trade names now held or hereafter acquired by any Assignor, including any registration or application for registration of any trademarks and service marks now held or hereafter acquired by any Assignor, which are registered or filed in the United States Patent and Trademark Office or the equivalent thereof in any state of the United States or any equivalent foreign office or agency, as well as any unregistered trademarks and service marks used by an Assignor and any trade dress including logos, designs, fictitious business names and other business identifiers used by any Assignor.
Obligations shall mean and include, as to any Assignor, all of the following:
(i) the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, principal, premium, interest (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Assignor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding), fees, costs and indemnities) of such Assignor to the Lender Creditors, whether now existing or hereafter incurred under, arising out of, or in connection with, each Credit Document to which such Assignor is a party (including, without limitation, in the event such Assignor is a Guarantor, all such obligations, liabilities and indebtedness of such Assignor under its Guaranty) and the due performance and compliance by such Assignor with all of the terms, conditions and agreements contained in each such Credit Document (all such obligations, liabilities and indebtedness under this clause (i), except to the extent consisting of obligations or indebtedness with respect to Secured Hedging Agreements, being herein collectively called, the Credit Document Obligations );
(ii) the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Assignor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding) owing by such Assignor to the Other Creditors, now existing or hereafter incurred under, arising out of or in connection with any Secured Hedging Agreement, whether such Secured Hedging Agreement is now in existence or hereinafter arising (including, without limitation, in the case of a Assignor that is a Guarantor, all obligations, liabilities and indebtedness of such Assignor under its Guaranty in respect of the Secured Hedging Agreements), and the due performance and compliance by such Assignor with all of the terms, conditions and agreements contained in each such Secured Hedging Agreement (all such obligations, liabilities and indebtedness under this clause (ii) being herein collectively called, the Other Obligations );
- 27 -
(iii) any and all sums advanced by the Collateral Agent in order to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations, or liabilities of such Assignor referred to in clauses (i) and (ii) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with reasonable attorneys fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 8.1 of this Agreement;
it being acknowledged and agreed that the Obligations shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.
Other Creditors shall have the meaning provided in the recitals of this Agreement.
Other Obligations shall have the meaning provided in the definition of Obligations in this Article IX.
Patents shall mean any patent in or to which any Assignor now or hereafter has any right, title or interest therein, and any divisions, continuations (including, but not limited to, continuations-in-parts) and improvements thereof, as well as any application for a patent now or hereafter made by any Assignor.
Permits shall mean, to the extent permitted to be assigned by the terms thereof or by applicable law, all licenses, permits, rights, orders, variances, franchises or authorizations of or from any governmental authority or agency.
Primary Obligations shall have the meaning provided in Section 7.4(b) of this Agreement.
Pro Rata Share shall have the meaning provided in Section 7.4(b) of this Agreement.
Proceeds shall mean all proceeds as such term is defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof and, in any event, shall also include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Collateral Agent or any Assignor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to any Assignor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any person acting under color of governmental authority) and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.
Registered Organization shall have the meaning provided in the Uniform Commercial Code as in effect in the State of New York.
- 28 -
Representative shall have the meaning provided in Section 7.4(e) of this Agreement.
Required Secured Creditors shall mean (i) at any time when any Credit Document Obligations are outstanding or any Loan Commitments under the Credit Agreement exist, the Required Lenders (or, to the extent provided in Section 13.12 of the Credit Agreement, each of the Lenders) and (ii) at any time after all of the Credit Document Obligations have been paid in full and all Loan Commitments under the Credit Agreement have been terminated and no further Loan Commitments may be provided thereunder, the holders of a majority of the Other Obligations.
Requisite Creditors shall have the meaning provided in Section 10.2 of this Agreement.
Secondary Obligations shall have the meaning provided in Section 7.4(b) of this Agreement.
Secured Creditors shall have the meaning provided in the recitals of this Agreement.
Secured Debt Agreements shall mean and include this Agreement, the other Credit Documents and each Secured Hedging Agreement.
Secured Hedging Agreement shall have the meaning provided in the recitals to this Agreement.
Software shall mean software as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Supporting Obligations shall mean any supporting obligation as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor, or in which any Assignor has any rights, and, in any event, shall include, but shall not be limited to all of such Assignors rights in any Letter-of-Credit Right or secondary obligation that supports the payment or performance of, and all security for, any Account, Chattel Paper, Document, General Intangible, Instrument or Investment Property.
Tangible Chattel Paper shall mean tangible chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Termination Date shall have the meaning provided in Section 10.8(a) of this Agreement.
Timber-to-be-Cut shall mean timber-to-be-cut as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Trade Secret Rights shall mean the rights of an Assignor in any Trade Secret it holds.
Trade Secrets shall mean any secretly held existing engineering or other data, information, production procedures and other know-how relating to the design manufacture, assembly, installation, use, operation, marketing, sale and/or servicing of any products or business of an Assignor worldwide whether written or not.
- 29 -
UCC shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.
ARTICLE X.
MISCELLANEOUS
10.1. Notices . Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier, except that notices and communications to the Collateral Agent or any Assignor shall not be effective until received by the Collateral Agent or such Assignor, as the case may be. All notices and other communications shall be in writing and addressed as follows:
(a) if to any Assignor, c/o:
Curo Financial Technologies Corp.
3527 N. Ridge Rd.
Wichita, KS 67205
Attention: Vin Thomas
E-Mail: vinthomas@curo.com
(b) if to the Collateral Agent, at:
Victory Park Management, LLC
227 W. Monroe Street, Suite 3900
Chicago, Illinois 60606
Telephone: (312) 705-2786
Facsimile: (312) 701-0794
Attention: Scott R. Zemnick, General Counsel
E-mail: szemnick@vpcadvisors.com
with a copy (for informational purposes only) to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
Telephone: (312) 902-5297 and (312) 902-5495
Facsimile: (312) 577-8964 and (312) 577-8854
Attention: Mark R. Grossmann, Esq. and Scott E. Lyons, Esq.
E-mail: mg@kattenlaw.com and scott.lyons@kattenlaw.com
(c) if to any Lender Creditor (other than the Collateral Agent), at such address as such Lender Creditor shall have specified in the Credit Agreement;
- 30 -
(d) if to any Other Creditor, at such address as such Other Creditor shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address or addressed to such other individual as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
10.2. Waiver; Amendment . Except as provided in Sections 10.8 and 10.12 hereof (or as provided in the other Security Documents), none of the terms and conditions of this Agreement or any other Security Document may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Assignor directly affected thereby (it being understood that the addition or release of any Assignor hereunder shall not constitute a change, waiver, discharge or termination affecting any Assignor other than the Assignor so added or released) and the Collateral Agent (with the written consent of the Required Secured Creditors); provided , however , that any change, waiver, modification or variance affecting the rights and benefits of a single Class of Secured Creditors (and not all Secured Creditors in a like or similar manner) also shall require the written consent of the Requisite Creditors of such affected Class. For the purpose of this Agreement, the term Class shall mean each class of Secured Creditors, i.e. , whether (x) the Lender Creditors as holders of the Credit Document Obligations or (y) the Other Creditors as the holders of the Other Obligations. For the purpose of this Agreement, the term Requisite Creditors of any Class shall mean each of (x) with respect to the Credit Document Obligations, the Required Lenders (or, to the extent provided in Section 13.12 of the Credit Agreement, each of the Lenders), and (y) with respect to the Other Obligations, the holders of at least a majority of all Other Obligations outstanding from time to time.
10.3. Obligations Absolute . The obligations of each Assignor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Assignor; (b) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement or any other Secured Debt Agreement; or (c) any amendment to or modification of any Secured Debt Agreement or any security for any of the Obligations; whether or not such Assignor shall have notice or knowledge of any of the foregoing.
10.4. Successors and Assigns . This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or termination as set forth in Section 10.8 hereof, (ii) be binding upon each Assignor, its successors and assigns; provided, however, that no Assignor shall assign any of its rights or obligations hereunder without the prior written consent of the Collateral Agent (with the prior written consent of the Required Secured Creditors) or as otherwise permitted by the Secured Debt Agreements, and (iii) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent, the other Secured Creditors and their respective successors, transferees and assigns. All agreements, statements, representations and warranties made by each Assignor herein or in any certificate or other instrument delivered by such Assignor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Secured Debt Agreements regardless of any investigation made by the Secured Creditors or on their behalf.
- 31 -
10.5. Headings Descriptive . The headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
10.6. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL . (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH ASSIGNOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH ASSIGNOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH ASSIGNOR. EACH ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH ASSIGNOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN, HOWEVER, SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY ASSIGNOR IN ANY OTHER JURISDICTION.
(b) EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
- 32 -
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.7. Assignors Duties . It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Assignor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Collateral Agent shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Collateral Agent be required or obligated in any manner to perform or fulfill any of the obligations of any Assignor under or with respect to any Collateral.
10.8. Termination; Release . (a) After the Termination Date, this Agreement shall terminate ( provided that all indemnities set forth herein including, without limitation in Section 8.1 hereof, shall survive such termination) and the Collateral Agent, at the written request and expense of the respective Assignor, will promptly execute and deliver to such Assignor a proper instrument or instruments (including Uniform Commercial Code termination statements on form UCC-3) acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Collateral Agent and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement. As used in this Agreement, Termination Date shall mean the date upon which the Total Loan Commitment under the Credit Agreement has been terminated and all Secured Hedging Agreements have been terminated, no Note under the Credit Agreement is outstanding and all Loans thereunder have been repaid in full and all Obligations then due and payable have been paid in full.
(b) In the event that any part of the Collateral is sold or otherwise disposed of (to a Person other than a Credit Party) (x) at any time prior to the time at which all Credit Document Obligations have been paid in full and the Total Loan Commitment in connection with a sale or disposition permitted by Section 10.02 of the Credit Agreement or is otherwise released at the direction of the Required Lenders (or all the Lenders if required by Section 13.12 of the Credit Agreement) or (y) at any time thereafter, to the extent permitted by the other Secured Debt Agreements, and in the case of clauses (x) and (y), the proceeds of such sale or disposition (or from such release) are applied in accordance with the terms of the Credit Agreement or such other Secured Debt Agreement, as the case may be, to the extent required to be so applied, the Collateral Agent, at the request and expense of such Assignor, will duly release from the security interest created hereby (and will execute and deliver such documentation, including termination or partial release statements and the like in connection therewith) and assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or otherwise disposed of, or released, and as may be in the possession of the Collateral Agent and has not theretofore been released pursuant to this Agreement. Furthermore, upon the release of any Subsidiary Guarantor from the Subsidiaries Guaranty in accordance with the provisions thereof, such Assignor (and the Collateral at such time assigned by the respective Assignor pursuant hereto) shall be released from this Agreement.
- 33 -
(c) At any time that an Assignor desires that the Collateral Agent take any action to acknowledge or give effect to any release of Collateral pursuant to the foregoing Section 10.8(a) or (b), such Assignor shall deliver to the Collateral Agent a certificate signed by an Authorized Officer of such Assignor stating that the release of the respective Collateral is permitted pursuant to such Section 10.8(a) or (b). At any time that the Borrower or the respective Assignor desires that a Subsidiary of the Borrower which has been released from the Subsidiaries Guaranty be released hereunder as provided in the last sentence of Section 10.8(b) hereof, it shall deliver to the Collateral Agent a certificate signed by an Authorized Officer of the Borrower and the respective Assignor stating that the release of the respective Assignor (and its Collateral) is permitted pursuant to such Section 10.8(b). If reasonably requested by the Collateral Agent (although the Collateral Agent shall have no obligation to make such request), the relevant Assignor shall furnish appropriate legal opinions (from counsel, reasonably acceptable to the Collateral Agent) to the effect set forth in this Section 10.8(c).
(d) The Collateral Agent shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in good faith believes to be in accordance with) this Section 10.8.
10.9. Counterparts . This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Collateral Agent.
10.10. Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
10.11. The Collateral Agent and the other Secured Creditors . The Collateral Agent will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed that the obligations of the Collateral Agent as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Section 12 of the Credit Agreement. The Collateral Agent shall act hereunder on the terms and conditions set forth herein and in Section 12 of the Credit Agreement.
10.12. Additional Assignors . It is understood and agreed that any Subsidiary Guarantor that desires to become an Assignor hereunder, or is required to execute a counterpart of this Agreement after the date hereof pursuant to the requirements of the Credit Agreement or any other Credit Document, shall become an Assignor hereunder by (x) executing a counterpart hereof and delivering same to the Collateral Agent or by executing a joinder agreement and delivering same to the Collateral Agent, in each case as may be requested by (and in form and substance reasonably satisfactory to) the Collateral Agent, (y) delivering supplements to Annexes A through F, inclusive, and H through K, inclusive, hereto as are necessary to cause such Annexes to be complete and accurate with respect to such additional Assignor on such date
- 34 -
and (z) taking all actions as specified in this Agreement as would have been taken by such Assignor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Collateral Agent and with all documents and actions required above to be taken to the reasonable satisfaction of the Collateral Agent.
[Remainder of this page intentionally left blank; signature page follows]
- 35 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
ASSIGNORS | CURO FINANCIAL TECHNOLOGIES CORP. | |||||||
CURO INTERMEDIATE HOLDINGS CORP. | ||||||||
TODD FINANCIAL, INC. | ||||||||
TODD CAR TITLE, INC. | ||||||||
CURO MANAGEMENT LLC | ||||||||
FMMR INVESTMENTS, INC. | ||||||||
EVERGREEN FINANCIAL INVESTMENTS, INC. | ||||||||
PRINCIPAL INVESTMENTS, INC. | ||||||||
SPEEDY CASH | ||||||||
ADVANCE GROUP, INC. | ||||||||
CONCORD FINANCE, INC. | ||||||||
SCIL, INC. | ||||||||
CASH COLORADO, LLC | ||||||||
GALT VENTURES, LLC | ||||||||
A SPEEDY CASH CAR TITLE LOANS, LLC | ||||||||
SCIL TEXAS, LLC | ||||||||
SC AURUM, LLC | ||||||||
ATTAIN FINANCE, LLC | ||||||||
SPEEDY CASH ILLINOIS, INC. | ||||||||
SC TEXAS MB, INC. | ||||||||
THE MONEY STORE, L.P. | ||||||||
By: | /s/ Donald F. Gayhardt | |||||||
Name: Donald F. Gayhardt Jr. | ||||||||
Title: President & Chief Executive Officer |
[Signature Page to Security Agreement]
Accepted and Agreed to:
VICTORY PARK MANAGEMENT, LLC as Collateral Agent |
||
By: | /s/ Scott R. Zemnick | |
Name: Scott R. Zemnick | ||
Title: Authorized Signatory |
[Signature Page to Security Agreement]
ANNEX G
to
SECURITY AGREEMENT
Form of Control Agreement Regarding Deposit Accounts
AGREEMENT (as amended, modified, restated and/or supplemented from time to time, this Agreement), dated as of _______, ______, among the undersigned assignor (the Assignor) _____________, not in its individual capacity but solely as Collateral Agent (the Collateral Agent), and ____________ (the Deposit Account Bank), as the bank (as defined in Section 9-102 of the UCC as in effect on the date hereof in the State of _________________ (the UCC )) with which one or more deposit accounts (as defined in Section 9-102 of the UCC) are maintained by the Assignor (with all such deposit accounts now or at any time in the future maintained by the Assignor with the Deposit Account Bank being herein called the Deposit Accounts ).
W I T N E S S E T H :
WHEREAS, the Assignor, various other assignors and the Collateral Agent have entered into a Security Agreement, dated as of November 17, 2016 (as amended, amended and restated, modified or supplemented from time to time, the Security Agreement ), under which, among other things, in order to secure the payment of the Obligations (as defined in the Security Agreement), the Assignor has granted a security interest to the Collateral Agent for the benefit of the Secured Creditors (as defined in the Security Agreement) in all of the right, title and interest of the Assignor in and into any and all deposit accounts (as defined in Section 9-102 of the UCC) and in all monies, securities, instruments and other investments deposited therein from time to time (collectively, herein called the Collateral ); and
WHEREAS, the Assignor desires that the Deposit Account Bank enter into this Agreement in order to establish control (as defined in Section 9-104 of the UCC) in each Deposit Account at any time or from time to time maintained with the Deposit Account Bank, and to provide for the rights of the parties under this Agreement with respect to such Deposit Accounts;
NOW THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Assignors Dealings with Deposit Accounts; Notice of Exclusive Control . Until the Deposit Account Bank shall have received from the Collateral Agent a Notice of Exclusive Control (as defined below), the Assignor shall be entitled to present items drawn on and otherwise to withdraw or direct the disposition of funds from the Deposit Accounts and give instructions in respect of the Deposit Accounts; provided , however , that the Assignor may not, and the Deposit Account Bank agrees that it shall not permit the Assignor to, without the Collateral Agents prior written consent, close any Deposit Account. If the Collateral Agent shall give to the Deposit Account Bank a notice of the Collateral Agents exclusive control of the Deposit Accounts in
accordance with Section 7.1 of the Security Agreement, which notice states that it is a Notice of Exclusive Control (a Notice of Exclusive Control ), only the Collateral Agent shall be entitled to withdraw funds from the Deposit Accounts, to give any instructions in respect of the Deposit Accounts and any funds held therein or credited thereto or otherwise to deal with the Deposit Accounts.
2. Collateral Agents Right to Give Instructions as to Deposit Accounts . (a) The Collateral Agent shall be entitled, for purposes of this Agreement, at any time after a Notice of Exclusive Control has been delivered to the Deposit Account Bank in accordance with the terms of this Agreement, to give the Deposit Account Bank instructions as to the withdrawal or disposition of any funds from time to time credited to any Deposit Account, or as to any other matters relating to any Deposit Account or any other Collateral, without consent from the Assignor. The Assignor hereby irrevocably authorizes and instructs the Deposit Account Bank, and the Deposit Account Bank hereby agrees, to comply with any such instructions from the Collateral Agent without any further consent from the Assignor. Such instructions may include the giving of stop payment orders for any items being presented to any Deposit Account for payment. The Deposit Account Bank shall be fully entitled to rely on, and shall comply with, such instructions from the Collateral Agent even if such instructions are contrary to any instructions or demands that the Assignor may give to the Deposit Account Bank. In case of any conflict between instructions received by the Deposit Account Bank from the Collateral Agent and the Assignor, the instructions from the Collateral Agent shall prevail.
(b) It is understood and agreed that the Deposit Account Banks duty to comply with instructions from the Collateral Agent regarding the Deposit Accounts is absolute, and the Deposit Account Bank shall be under no duty or obligation, nor shall it have the authority, to inquire or determine whether or not such instructions are in accordance with the Security Agreement or any other Credit Document (as defined in the Credit Agreement referred to in the Security Agreement), nor seek confirmation thereof from the Assignor or any other Person.
3. Assignors Exculpation and Indemnification of Depository Bank . The Assignor hereby irrevocably authorizes and instructs the Deposit Account Bank to follow instructions from the Collateral Agent regarding the Deposit Accounts even if the result of following such instructions from the Collateral Agent is that the Deposit Account Bank dishonors items presented for payment from any Deposit Account. The Assignor further confirms that the Deposit Account Bank shall have no liability to the Assignor for wrongful dishonor of such items in following such instructions from the Collateral Agent. The Deposit Account Bank shall have no duty to inquire or determine whether the Assignors obligations to the Collateral Agent are in default or whether the Collateral Agent is entitled, under any separate agreement between the Assignor and the Collateral Agent, to give any such instructions. The Assignor further agrees to be responsible for the Deposit Account Banks customary charges and to indemnify the Deposit Account Bank from and to hold the Deposit Account Bank harmless against any loss, cost or expense that the Deposit Account Bank may sustain or incur in acting upon instructions which the Deposit Account Bank believes in good faith to be instructions from the Collateral Agent.
4. Subordination of Security Interests; Deposit Account Banks Recourse to Deposit Accounts . The Deposit Account Bank hereby subordinates any claims and security interests it may have against, or with respect to, any Deposit Account at any time established or maintained with it by the Assignor (including any amounts, investments, instruments or other Collateral from time to time on deposit therein) to the security interests of the Collateral Agent (for the benefit of the Secured Creditors) therein, and agrees that no amounts shall be charged by it to, or withheld or set-off or otherwise recouped by it from, any Deposit Account of the Assignor or any amounts, investments, instruments or other Collateral from time to time on deposit therein; provided that the Deposit Account Bank may, however, from time to time debit the Deposit Accounts for any of its customary charges in maintaining the Deposit Accounts or for reimbursement for the reversal of any provisional credits granted by the Deposit Account Bank to any Deposit Account, to the extent, in each case, that the Assignor has not separately paid or reimbursed the Deposit Account Bank therefor.
5. Representations, Warranties and Covenants of Deposit Account Bank . The Deposit Account Bank represents and warrants to the Collateral Agent that:
(a) The Deposit Account Bank constitutes a bank (as defined in Section 9- 102 of the UCC), that the jurisdiction (determined in accordance with Section 9-304 of the UCC) of the Deposit Account Bank for purposes of each Deposit Account maintained by the Assignor with the Deposit Account Bank shall be one or more States within the United States.
(b) The Deposit Account Bank shall not permit any Assignor to establish any demand, time, savings, passbook or other account with it which does not constitute a deposit account (as defined in Section 9-102 of the UCC).
(c) The account agreements between the Deposit Account Bank and the Assignor relating to the establishment and general operation of the Deposit Accounts provide, whether specifically or generally, that the laws of ___________ 1 govern secured transactions relating to the Deposit Accounts and that the Deposit Account Banks jurisdiction for purposes of Section 9-304 of the UCC in respect of the Deposit Accounts is ________. 2 The Deposit Account Bank will not, without the Collateral Agents prior written consent, amend any such account agreement so that the Deposit Account Banks jurisdiction for purposes of Section 9-304 of the UCC is other than a jurisdiction permitted pursuant to preceding clause (a). All account agreements in respect of each Deposit Account in existence on the date hereof are listed on Annex A hereto and copies of all such account agreements have been furnished to the Collateral Agent. The Deposit Account Bank will promptly furnish to the Collateral Agent a copy of the account agreement for each Deposit Account hereafter established by the Deposit Account Bank for the Assignor.
(d) The Deposit Account Bank has not entered and will not enter, into any agreement with any other Person by which the Deposit Account Bank is obligated to comply with instructions from such other Person as to the disposition of funds from any Deposit Account or other dealings with any Deposit Account or other of the Collateral.
1 | Inserted jurisdiction(s) must be consistent with requirements of preceding clause (a). |
2 | See footnote 1. |
(e) On the date hereof the Deposit Account Bank maintains no Deposit Accounts for the Assignor other than the Deposit Accounts specifically identified in Annex A hereto.
(f) Any items or funds received by the Deposit Account Bank for the Assignors account will be credited to said Deposit Accounts specified in paragraph (e) above or to any other Deposit Accounts hereafter established by the Deposit Account Bank for the Assignor in accordance with this Agreement.
(g) The Deposit Account Bank will promptly notify the Collateral Agent of each Deposit Account hereafter established by the Deposit Account Bank for the Assignor (which notice shall specify the account number of such Deposit Account and the location at which the Deposit Account is maintained), and each such new Deposit Account shall be subject to the terms of this Agreement in all respects.
6. Deposit Account Statements and Information . The Deposit Account Bank agrees, and is hereby authorized and instructed by the Assignor, to furnish to the Collateral Agent, at its address indicated below, copies of all account statements and other information relating to each Deposit Account that the Deposit Account Bank sends to the Assignor and to disclose to the Collateral Agent all information requested by the Collateral Agent regarding any Deposit Account.
7. Conflicting Agreements . This Agreement shall have control over any conflicting agreement between the Deposit Account Bank and the Assignor.
8. Merger or Consolidation of Deposit Account Bank . Without the execution or filing of any paper or any further act on the part of any of the parties hereto, any bank into which the Deposit Account Bank may be merged or with which it may be consolidated, or any bank resulting from any merger to which the Deposit Account Bank shall be a party, shall be the successor of the Deposit Account Bank hereunder and shall be bound by all provisions hereof which are binding upon the Deposit Account Bank and shall be deemed to affirm as to itself all representations and warranties of the Deposit Account Bank contained herein.
9. Notices . (a) All notices and other communications provided for in this Agreement shall be in writing (including facsimile) and sent to the intended recipient at its address or telex or facsimile number set forth below:
If to the Collateral Agent, at:
Victory Park Management, LLC
227 W. Monroe Street, Suite 3900
Chicago, Illinois 60606
Telephone: (312) 705-2786
Facsimile: (312) 701-0794
Attention: Scott R. Zemnick, General Counsel
E-mail: szemnick@vpcadvisors.com
with a copy (for informational purposes only) to:
Katten Muchin Rosenman LLP 525 West Monroe Street |
Chicago, Illinois 60661 |
Telephone: (312) 902-5297 and (312) 902-5495 |
Facsimile: (312) 577-8964 and (312) 577-8854 |
Attention: Mark R. Grossmann, Esq. and Scott E. Lyons, Esq. |
E-mail: mg@kattenlaw.com ands cott.lyons@kattenlaw.com |
If to the Assignor, at: |
|
|
|
If to the Deposit Account Bank, at: |
|
|
|
or, as to any party, to such other address or telex or facsimile number as such party may designate from time to time by notice to the other parties.
(b) Except as otherwise provided herein, all notices and other communications hereunder shall be delivered by hand or by commercial overnight courier (delivery charges prepaid), or mailed, postage prepaid, or telexed or faxed, addressed as aforesaid, and shall be effective (i) three business days after being deposited in the mail (if mailed), (ii) when delivered (if delivered by hand or courier) and (iii) or when transmitted with receipt confirmed (if telexed or faxed); provided that notices to the Collateral Agent shall not be effective until actually received by it.
10. Amendment . This Agreement may not be amended, modified or supplemented except in writing executed and delivered by all the parties hereto.
11. Binding Agreement . This Agreement shall bind the parties hereto and their successors and assign and shall inure to the benefit of the parties hereto and their successors and assigns. Without limiting the provisions of the immediately preceding sentence, the Collateral Agent at any time or from time to time may designate in writing to the Deposit Account Bank a successor Collateral Agent (at such time, if any, as such entity becomes the Collateral Agent under the Security Agreement, or at any time thereafter) who shall thereafter succeed to the rights of the existing Collateral Agent hereunder and shall be entitled to all of the rights and benefits provided hereunder.
12. Continuing Obligations . The rights and powers granted herein to the Collateral Agent have been granted in order to protect and further perfect its security interests in the Deposit Accounts and other Collateral and are powers coupled with an interest and will be affected neither by any purported revocation by the Assignor of this Agreement or the rights granted to the Collateral Agent hereunder or by the bankruptcy, insolvency, conservatorship or receivership of the Assignor or the Deposit Account Bank or by the lapse of time. The rights of the Collateral Agent hereunder and in respect of the Deposit Accounts and the other Collateral, and the obligations of the Assignor and Deposit Account Bank hereunder, shall continue in effect until the security interests of Collateral Agent in the Deposit Accounts and such other Collateral have been terminated and the Collateral Agent has notified the Deposit Account Bank of such termination in writing
13. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
14. Counterparts . This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing and delivering one or more counterparts.
[Remainder of this page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first written above.
Assignor : |
||
[NAME OF ASSIGNOR] |
||
By: |
|
|
Name: | ||
Title: | ||
Collateral Agent : |
||
VICTORY PARK MANAGEMENT, LLC | ||
By: |
|
|
Name: | ||
Title: | ||
Deposit Account Bank : |
||
[NAME OF DEPOSIT ACCOUNT BANK] | ||
By: |
|
|
Name: | ||
Title: |
ANNEX A
Existing Account Agreements
SCHEDULE OF CHIEF EXECUTIVE OFFICES
Name of Assignor | Address(es) of Chief Executive Office | |
All Pledgors and Assignors | 3527 North Ridge Road, Wichita, Kansas | |
67205 |
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
(See attached)
- 2 -
Lease ID |
Address |
City |
ST/PRV |
Zip Code |
Country |
Notes |
||||||
0001 | 9781 Magnolia Ave | Riverside | CA | 92503 | United States | |||||||
0002 | 4915 Moreno Ave | Montclair | CA | 91763 | United States | |||||||
0003 | 10404 Venice Blvd | Culver City | CA | 90232 | United States | |||||||
0004 | 6740 Reseda Blvd | Reseda | CA | 91335 | United States | |||||||
0005 |
2710 S Maryland Pkwy, Suite A |
Las Vegas | NV | 89109 | United States | |||||||
0006 | 8847 Imperial Hwy | Downey | CA | 90242 | United States | |||||||
0007 | 857 W Rosecrans Ave | Gardena | CA | 90247 | United States | |||||||
0008 | 13010 Harbor Blvd | Garden Grove | CA | 90247 | United States | |||||||
0009 | 1841 W Northern Ave | Phoenix | AZ | 85021 | United States | |||||||
0010 | 4921 W Sahara Ave | Las Vegas | NV | 89146 | United States | |||||||
0011 | 904 S Gaffey St | San Pedro | CA | 90731 | United States | |||||||
0012 | 4040 N 40th St | Phoenix | AZ | 85018 | United States | |||||||
0013 | 1242 W Main St | Mesa | AZ | 85201 | United States | |||||||
0014 | 7116 NE Fourth Plain Rd | Vancouver | WA | 98661 | United States | |||||||
0015 | 1532 N Jones Blvd | Las Vegas | NV | 89121 | United States | |||||||
0016 | 10972 Beach Blvd | Stanton | CA | 90680 | United States | |||||||
0017 | 3475 E Flamingo, Suite 300 | Las Vegas | NV | 89121 | United States | |||||||
0018 | 1331 E 63rd St | Kansas City | MO | 64110 | United States | |||||||
0019 | 8701 E Washington Blvd | Pico Rivera | CA | 90660 | United States | |||||||
0020 | 11221 E 23rd St | Independence | MO | 64052 | United States | |||||||
0021 | 2351 N Alvernon, Suite 100 | Tucson | AZ | 85712 | United States | |||||||
0022 | 12131 SE Powell Blvd | Portland | OR | 97266 | United States | |||||||
0023 | 265 S Wadsworth Blvd | Lakewood | CO | 80226 | United States | |||||||
0024 | 1551 E Indian School Rd | Phoenix | AZ | 85014 | United States | |||||||
0025 | 19026 E Burnside St | Portland | OR | 97233 | United States | |||||||
0026 | 3501 W Glendale Ave | Phoenix | AZ | 85051 | United States | |||||||
0027 | 101 S Brookhurst St | Anaheim | CA | 92804 | United States | |||||||
0028 | 3849 SE Powell Blvd | Portland | OR | 97202 | United States | |||||||
0029 | 270 E Baseline St, Suite A | San Bernardino | CA | 92410 | United States | |||||||
0030 | 11000 Lower Azusa Rd | El Monte | CA | 91732 | United States | |||||||
0031 | 25 N Lamb Blvd | Las Vegas | NV | 89110 | United States | |||||||
0032 | 5819 W Camelback Rd | Phoenix | AZ | 85031 | United States | |||||||
0033 | 6115 W Flamingo Rd | Las Vegas | NV | 89103 | United States | |||||||
0034 | 7202 E McDowell Rd | Scottsdale | AZ | 85257 | United States | |||||||
0035 | 3947 Main St | Kansas City | MO | 64111 | United States | |||||||
0036 | 6501 E Evans Ave | Denver | CO | 80224 | United States | |||||||
0038 |
2801 W Washington, Suite 110 |
Las Vegas | NV | 89107 | United States | |||||||
0039 | 2201 Amidon St | Wichita | KS | 67204 | United States | |||||||
0040 | 701 N West St | Wichita | KS | 67203 | United States | |||||||
0041 | 10309 SE Mill Plain Blvd, Suite A | Vancouver | WA | 98664 | United States | |||||||
0042 |
10223 Sepulveda Blvd, Suite C-D |
Mission Hills | CA | 91345 | United States | |||||||
0043 | 4850 E Harry St | Wichita | KS | 67218 | United States | |||||||
0044 | 1215 S Country Club Dr | Mesa | AZ | 85210 | United States | |||||||
0045 | 3447 E Cesar Chavez Ave | Los Angeles | CA | 90063 | United States | |||||||
0046 | 8247 Laurel Canyon Blvd | N Hollywood | CA | 91605 | United States | |||||||
0047 | 3520 E Bell Rd | Phoenix | AZ | 85032 | United States |
0048 | 5102 W Olive Ave, Suite 103 | Glendale | AZ | 85302 | United States | |||||||
0049 | 4241 S Nellis Blvd | Las Vegas | NV | 89121 | United States | |||||||
0050 | 4199 S Ft Apache, Suite D | Las Vegas | NV | 89147 | United States | |||||||
0051* | 6300 E 21st St N | Wichita | KS | 67208 | United States | * Operating entity owns the building but leases the ground | ||||||
0052 | 430 E 30th Ave | Hutchinson | KS | 67502 | United States | |||||||
0053 | 7865 W Sahara Ave, Suite 102-103 | Las Vegas | NV | 89117 | United States | |||||||
0054 | 1050 W Pawnee St | Wichita | KS | 67213 | United States | |||||||
0054L2* | 1048 W Pawnee St | Wichita | KS | 67213 | United States | *Vacant building used for storage and parking for adjacent store | ||||||
0055 | 1960 W Baseline Rd, Suite 101 | Mesa | AZ | 85202 | United States | |||||||
0056 | 4343 N Rancho Dr, Suite 150 | Las Vegas | NV | 89130 | United States | |||||||
0057 | 5676 S Eastern Ave | Las Vegas | NV | 89119 | United States | |||||||
0058 | 1956 E Southern Ave | Mesa | AZ | 85204 | United States | |||||||
0059 | 7204 Canoga Ave | Canoga Park | CA | 91303 | United States | |||||||
0060 | 3133 E Douglas Ave | Wichita | KS | 67211 | United States | |||||||
0061 | 7460 W Cheyenne Ave, Suite 110 | Las Vegas | NV | 89129 | United States | |||||||
0062 | 5067 E Owens Ave | Las Vegas | NV | 89110 | United States | |||||||
0063 | 100 N Raymond Ave | Fullerton | CA | 92831 | United States | |||||||
0064 | 1895 S Federal Blvd | Denver | CO | 80219 | United States | |||||||
0065 | 1220 W Crawford St | Salina | KS | 67401 | United States | |||||||
0066 | 1221 Main St | Pasadena | TX | 77506 | United States | |||||||
0067 | 5506 Bellaire Blvd, Suite A | Houston | TX | 77081 | United States | |||||||
0068 | 2812 N Main St | Ft Worth | TX | 76106 | United States | |||||||
0069 | 454 W Florence Ave, Suite 102-103 | Los Angeles | CA | 90003 | United States | |||||||
0070 | 11830 Bellaire Blvd, Suite A | Houston | TX | 77072 | United States | |||||||
0071 | 1160 Edgebrook Dr | Houston | TX | 77034 | United States | |||||||
0072 | 883 Federal Rd, Suite A | Houston | TX | 77015 | United States | |||||||
0073 | 8602 S Braeswood Blvd | Houston | TX | 77031 | United States | |||||||
0074 | 800 E Seminary Dr | Ft Worth | TX | 76115 | United States | |||||||
0075 | 6902 Harrisburg Blvd | Houston | TX | 77011 | United States | |||||||
0076 | 1503 N Story, Suite 100 | Dallas | TX | 75061 | United States | |||||||
0077 | 13482 Northwest Hwy | Houston | TX | 77022 | United States | |||||||
0078 | 2601 S Hampton Rd | Dallas | TX | 75224 | United States | |||||||
0079 | 3501 Gus Thomasson, Suite 102 | Mesquite | TX | 75150 | United States | |||||||
0080 | 3422 W Walnut St | Garland | TX | 75042 | United States | |||||||
0081 | 8569 Long Point Rd | Houston | TX | 77055 | United States | |||||||
0082 | 1445 E Kiest Blvd | Dallas | TX | 75216 | United States | |||||||
0083 | 860 S 11th St, Suite 105 | Beaumont | TX | 77701 | United States | |||||||
0084 | 690 E Prater Way | Sparks | NV | 89431 | United States | |||||||
0085 | 815 E Pioneer Pkwy | Arlington | TX | 76010 | United States | |||||||
0100 | 4209 E Lancaster Ave | Ft Worth | TX | 76103 | United States | |||||||
0101 | 1212 S Belt Hwy | St Joseph | MO | 64507 | United States | |||||||
0102 | 7007 Bandera Rd, Suite 24 | Leon Valley | TX | 78238 | United States | |||||||
0103 | 1360 W Cheyenne Ave, Suite 101 | N Las Vegas | NV | 89032 | United States | |||||||
0104 | 1701 Babcock Rd | San Antonio | TX | 78229 | United States | |||||||
0105 | 2949 S National Ave | Springfield | MO | 65804 | United States | |||||||
0106 | 3802 S Gessner, Suite A | Houston | TX | 77063 | United States | |||||||
0107 | 3706 NW Hwy | Dallas | TX | 75220 | United States | |||||||
0108 | 1501 Eastern Blvd | Montgomery | AL | 36117 | United States |
0109 | 10201 Lake June Rd | Dallas | TX | 75217 | United States | |||||
0110 | 7434 Airline Dr | Houston | TX | 77076 | United States | |||||
0111 | 2027 SW Fairlawn Rd | Topeka | KS | 66604 | United States | |||||
0112 | 321 Palisades Blvd | Birmingham | AL | 35209 | United States | |||||
0113 | 2332 Civic Center Dr | N Las Vegas | NV | 89030 | United States | |||||
0114 | 2647 Culebra Rd | San Antonio | TX | 78228 | United States | |||||
0115 | 6401 Airport Blvd, Suite B | Mobile | AL | 36608 | United States | |||||
0116 | 3410 Hwy 69 N | Northport | AL | 35473 | United States | |||||
0117 | 5532 Manchaca Rd | Austin | TX | 78745 | United States | |||||
0118 | 4009 S Padre Island Dr | Corpus Christi | TX | 78401 | United States | |||||
0119 | 10884 W Bellfort St | Houston | TX | 77099 | United States | |||||
0120 | 400 W University Dr | Denton | TX | 76201 | United States | |||||
0121 | 1924 S Business 77 | Harlingen | TX | 78550 | United States | |||||
0122 | 5900 Brainerd Rd | Chattanooga | TN | 37411 | United States | |||||
0123 | 848 E Sibley Blvd | Dolton | IL | 60419 | United States | |||||
0124 | 7201 Balboa Blvd | Van Nuys | CA | 91406 | United States | |||||
0125 | 11100 S Cicero Ave | Alsip | IL | 60803 | United States | |||||
0126 | 1601 W Warm Springs Rd | Henderson | NV | 89014 | United States | |||||
0127 | 423 N New Braunsfels, Suite 2-3 | San Antonio | TX | 78202 | United States | |||||
0128 | 8701 S Cottage Grove Ave | Chicago | IL | 60619 | United States | |||||
0129 | 1103 Fair Ave, Suite 1 | San Antonio | TX | 78210 | United States | |||||
0130 | 4403 Chapman Hwy | Knoxville | TN | 37920 | United States | |||||
0131 | 120 Gallatin Pike S, Suite B | Madison | TN | 37115 | United States | |||||
0132 | 2401 Nolensville Pike | Nashville | TN | 37211 | United States | |||||
0133 | 4800 W Addison St | Chicago | IL | 60641 | United States | |||||
0134 | 5445 South St | Lakewood | CA | 90713 | United States | |||||
0135 | 7855 Van Nuys Blvd | Panorama City | CA | 91402 | United States | |||||
0136 | 13722 Sherman Way | Van Nuys | CA | 91405 | United States | |||||
0137 | 5701 Charlotte Pike | Nashville | TN | 37209 | United States | |||||
0138 | 1931 N Mannheim Rd | Melrose Park | IL | 60160 | United States | |||||
0139 | 120 W Baseline Rd | Rialto | CA | 92376 | United States | |||||
0140 | 1552 W 119th St | Chicago | IL | 60643 | United States | |||||
0141 | 932 Ann St | Montgomery | AL | 36107 | United States | |||||
0142 | 229 W Anaheim St | Wilmington | CA | 90744 | United States | |||||
0143 | 5002 Harding Pl | Nashville | TN | 37211 | United States | |||||
0144 | 1801 W 6th St | Los Angeles | CA | 90057 | United States | |||||
0145 | 106 Knox Rd | Knoxville | TN | 37918 | United States | |||||
0146 | 380 Broadway, Suite 103 | El Cajon | CA | 92021 | United States | |||||
0147 | 3615 McFarland Blvd, Suite 109 | Tuscaloosa | AL | 35405 | United States | |||||
0148 | 9240 Hwy 49 | Gulfport | MS | 39503 | United States | |||||
0149 | 13545 Florence Ave | Whittier | CA | 90605 | United States | |||||
0175 | 1521 N 10th St | McAllen | TX | 78501 | United States | |||||
0176 | 7120 San Bernardo Ave | Laredo | TX | 78041 | United States | |||||
0177 | 2119 E Saunders St | Laredo | TX | 78041 | United States | |||||
0178 | 695 S Sam Houston Blvd | San Benito | TX | 78586 | United States | |||||
0179 | 4298 University Dr NW | Huntsville | AL | 35816 | United States | |||||
0180 | 4217 W Waco Dr | Waco | TX | 76710 | United States | |||||
0181 | 4648 S Cicero Ave | Chicago | IL | 60638 | United States |
0182 | 1218 N Lake St, Suite 120 | Aurora | IL | 60506 | United States | |||||
0184 | 2201 N Frazier St | Conroe | TX | 77301 | United States | |||||
0185 | 1698 Memorial Blvd | Murfreesboro | TN | 37129 | United States | |||||
0186 | 2785 Belle Chasse Hwy | Gretna | LA | 70056 | United States | |||||
0187 | 808 25th St NW | Cleveland | TN | 37311 | United States | |||||
0188 | 1655 Fort Campbell Blvd | Clarksville | TN | 37042 | United States | |||||
0189 | 3100 Dickerson Pike | Nashville | TN | 37207 | United States | |||||
0190 | 13263 Van Nuys Blvd | Pacoima | CA | 91311 | United States | |||||
0191 | 2102 Goliad Rd, Suite 1 | San Antonio | TX | 78223 | United States | |||||
0192 | 972 Bandera Rd | San Antonio | TX | 78228 | United States | |||||
0193 | 10828 Florida Blvd | Baton Rouge | LA | 70815 | United States | |||||
0194 | 501 S Conway Ave | Mission | TX | 78572 | United States | |||||
0195 | 1029 West Ave I | Lancaster | CA | 92411 | United States | |||||
0196 | 2955 E Texas St | Bossier City | LA | 71111 | United States | |||||
0197 | 123 Gause Blvd W | Slidell | LA | 70460 | United States | |||||
0198 | 25010 Alessandro Blvd | Moreno Valley | CA | 92553 | United States | |||||
0201 | 6702 S Congress Ave | Austin | TX | 78745 | United States | |||||
0202 | 9616 N Lamar Blvd, Suite 199 | Austin | TX | 78753 | United States | |||||
0203 | 11643-B Research Blvd | Austin | TX | 78759 | United States | |||||
0204 | 2818 S Lamar Blvd | Austin | TX | 78704 | United States | |||||
0205 | 907-B IH 35 | Round Rock | TX | 78664 | United States | |||||
0206 | 510 N Bell Blvd, Suite 104 | Cedar Park | TX | 78613 | United States | |||||
0207 | 7201 Cameron Rd | Austin | TX | 78752 | United States | |||||
0208 | 2030 E Oltorf St, Suite 102B | Austin | TX | 78741 | United States | |||||
0209 | 3840 Airport Blvd | Austin | TX | 78722 | United States | |||||
0211 | 706 E Hopkins St | San Marcos | TX | 78666 | United States | |||||
0212 | 3706 Guadalupe St, Suite D | Austin | TX | 78705 | United States | |||||
0214 | 2008 W Parmer Ln | Austin | TX | 78727 | United States | |||||
0222 | 11217 Leopard St, Suite 1 | Corpus Christi | TX | 78410 | United States | |||||
0225 | 4701 Ayers St, Suite 600-10 | Corpus Christi | TX | 78415 | United States | |||||
0226 | 3710 Leopard St | Corpus Christi | TX | 78408 | United States | |||||
0231 | 5110 Fredericksburg Rd | San Antonio | TX | 78229 | United States | |||||
0232 | 12804 Nacogdoches Rd | San Antonio | TX | 78217 | United States | |||||
0233 | 2905 West Ave | San Antonio | TX | 78201 | United States | |||||
0234 | 1304 SW Military Dr | San Antonio | TX | 78221 | United States | |||||
0236 | 8542 Blanco Rd | San Antonio | TX | 78216 | United States | |||||
0237 | 3927 W Commerce St | San Antonio | TX | 78207 | United States | |||||
0238 | 1005 Pat Booker Rd | Universal City | TX | 78148 | United States | |||||
0241 | 406 Old Hwy 90 W | San Antonio | TX | 78237 | United States | |||||
0242 | 6040 Ingram Rd | San Antonio | TX | 78238 | United States | |||||
0245 | 10602 Perrin Beitel Rd | San Antonio | TX | 78217 | United States | |||||
0246 | 5510 Walzem Rd | San Antonio | TX | 78218 | United States | |||||
0247 | 2006 Veterans Blvd | Del Rio | TX | 78840 | United States | |||||
0248 | 5129-A West Ave | San Antonio | TX | 78213 | United States | |||||
0249 | 4515-2 Fredericksburg Rd | Heights | TX | 78201 | United States | |||||
0250 | 2514 White Blvd | Austin | TX | 78741 | United States | |||||
0251 | 1204-A Hwy 123 | San Marcos | TX | 78666 | United States | |||||
0253 | 11300-C Pollyanna | Austin | TX | 78753 | United States |
0256 | 1103A N IH-35 | Austin | TX | 78702 | United States | |||||
0258 | 3601 W William Cannon, Suite 400 | Austin | TX | 78749 | United States | |||||
0259 | 1505-C Wells Branch Pkwy | Pflugerville | TX | 78660 | United States | |||||
0261 | 15300 S IH-35, Suite 390 | Buda | TX | 78610 | United States | |||||
0263 | 7112 Ed Bluestein Blvd, Suite 177 | Austin | TX | 78723 | United States | |||||
0264 | 1909 E William Cannon, Suite 101 | Austin | TX | 78744 | United States | |||||
0266 | 8606 Research Blvd | Austin | TX | 78758 | United States | |||||
0267 | 2237 E Riverside Dr, Suite 101-D | Austin | TX | 78741 | United States | |||||
0270 | 3010 Nogalitos St | San Antonio | TX | 78225 | United States | |||||
0271 | 10650 Culebra Rd, Suite 128 | San Antonio | TX | 78251 | United States | |||||
0273 | 1107 S WW White Rd | San Antonio | TX | 78220 | United States | |||||
0276 | 5886 DeZavala Rd, Suite 103 | San Antonio | TX | 78249 | United States | |||||
0277 | 1107 San Pedro Ave, Suite 101 | San Antonio | TX | 78212 | United States | |||||
0278 | 931 S General McMullen Dr | San Antonio | TX | 78237 | United States | |||||
0280 | 6851 W Military Dr, Suite 101 | San Antonio | TX | 78227 | United States | |||||
0281 | 3138 SE Military Dr, Suite 101 | San Antonio | TX | 78235 | United States | |||||
0282 | 2337 SW Military Dr | San Antonio | TX | 78224 | United States | |||||
0283 | 8770 State Hwy 151, Suite 105 | San Antonio | TX | 78245 | United States | |||||
0284 | 6338 Old Pearsall Rd, Suite 101 | San Antonio | TX | 78242 | United States | |||||
0300 | 1021 Hwy 39 Bypass | Meridian | MS | 39301 | United States | |||||
0302 | 6686 El Cajon Blvd, Suite F | San Diego | CA | 92115 | United States | |||||
0303 | 9360 Mansfield Rd | Shreveport | LA | 71118 | United States | |||||
0304 | 8320 FM 78, Suite 3 | Converse | TX | 78109 | United States | |||||
0305 | 1729 NW Topeka Blvd | Topeka | KS | 66608 | United States | |||||
0306 | 3555 W Slauson Ave | Los Angeles | CA | 90043 | United States | |||||
0307 | 123 E Vernon Ave | Los Angeles | CA | 90011 | United States | |||||
0308 | 11401 S Figueroa St | Los Angeles | CA | 90061 | United States | |||||
0309 | 740 W Compton Blvd | Compton | CA | 90220 | United States | |||||
0310 | 1502 Austin Hwy, Suite 101 | San Antonio | TX | 78218 | United States | |||||
1501 | 2137 Jane St, Unit 1 | Downsview | ON | M3M 1A2 | Canada | |||||
1502 | 2363 Finch Ave W | Weston | ON | M9M 2W8 | Canada | |||||
1503 | 2687 Kipling Ave, Unit 4 | Etobicoke | ON | M9V 5G6 | Canada | |||||
1504 | 1876 Kennedy Rd | Scarborough | ON | M1P 2L8 | Canada | |||||
1505 | 6020 Hurontario St, Unit 6 | Mississauga | ON | L5R 4B3 | Canada | |||||
1506 | 1733 Eglinton Ave E, Unit 5 | Scarborough | ON | M4A 1J8 | Canada | |||||
1507 | 1180 Simcoe St N, Unit 7 | Oshawa | ON | L1G 4W8 | Canada | |||||
1508 | 346 King St W | Oshawa | ON | L1G 6J2 | Canada | |||||
1510 | 644 Yonge St | Toronto | ON | M4Y 1Z8 | Canada | |||||
1511 | 10 Gillingham Dr, Unit 103 | Brampton | ON | L6X 5A5 | Canada | |||||
1512 | 1403 Dundas St E, Unit B | Mississauga | ON | L4X 1L3 | Canada | |||||
1514 | 2394 Eglinton Ave E | Scarborough | ON | M1K 2P3 | Canada | |||||
1515 | 3024 Hurontario St, Unit G11 | Mississauga | ON | L5B 4M4 | Canada | |||||
1516 | 4500 Kingston Rd | Scarborough | ON | M1E 2N9 | Canada | |||||
1517 | 3182 Eglinton Ave E | Scarborough | ON | M1J 2H5 | Canada | |||||
1518 | 2966 Danforth Ave | Scarborough | ON | M4C 1M6 | Canada | |||||
1519 | 1839 Finch Ave W, Unit 7 | Toronto | ON | M3N 2V2 | Canada | |||||
1520 | 1682 Jane St | Toronto | ON | M9N 2S2 | Canada | |||||
1522 | 61 King St E | Hamilton | ON | L8N 1A5 | Canada |
1523 | 1396 Main St E | Hamilton | ON | L8K 1C1 | Canada | |||||
1524 | 171 Bank St, Unit 124 | Ottawa | ON | K2P 1W5 | Canada | |||||
1525 | 275 Montreal Rd | Ottawa | ON | K1L 6C2 | Canada | |||||
1526 | 2301 Tecumseh Rd E | Windsor | ON | N8W 1E6 | Canada | |||||
1527 | 596 Ouellette Ave | Windsor | ON | N9A 1B7 | Canada | |||||
1530 | 1530 Albion Rd, Unit 100 | Toronto | ON | M9V 1B4 | Canada | |||||
1531 | 135 Wyse Rd, Unit 1-2 | Dartmouth | NS | B3A 4K9 | Canada | |||||
1533 | 4080 Highway 7, Unit 1 | Woodbridge | ON | L4L 8Z2 | Canada | |||||
1534 | 550 Hespeler Rd, Unit 1 | Cambridge | ON | N1R 6J8 | Canada | |||||
1535 | 357 1/2 Yonge St | Toronto | ON | M5B 1S1 | Canada | |||||
1536 | 69 Davis Dr | Newmarket | ON | L3Y 2M9 | Canada | |||||
1537 | 2057 Royal Windsor Dr | Mississauga | ON | L5J 1K5 | Canada | |||||
1538 | 756 Yonge St | Toronto | ON | M4Y 2B6 | Canada | |||||
1539 | 1414 Lasalle Blvd, Unit 101 | Sudbury | ON | P3A 1Z6 | Canada | |||||
1540 | 2535 Bank St | Ottawa | ON | K1V 8R9 | Canada | |||||
1541 | 4396 King St E, Unit 1 | Kitchener | ON | N2G 3W6 | Canada | |||||
1542 | 2200 Queen St E, Unit 6 | Brampton | ON | L6S 4G9 | Canada | |||||
1543 | 3932 Keele St | Toronto | ON | M3J 1N8 | Canada | |||||
1544 | 1384 Wellington Rd S, Unit 4 | London | ON | N6E 1M3 | Canada | |||||
1545 | 5487 Dundas St W, Unit 5 | Etobicoke | ON | M9B 1B5 | Canada | |||||
1546 | 1541 Merivale Rd, Unit B | Ottawa | ON | K2G 5W1 | Canada | |||||
1547 | 372 Queen St E | Brampton | ON | L6V 1C3 | Canada | |||||
1548 | 1450 Kingston Rd, Unit 10 | Pickering | ON | L1V 1C1 | Canada | |||||
1549 | 2131 Lawrence Ave E, Unit 101 | Scarborough | ON | M1R 5G4 | Canada | |||||
1550 | 9555 Yonge St, Unit 25 | Richmond Hill | ON | L4C 9M5 | Canada | |||||
1551 | 15525 118th Ave | Edmonton | AB | T5V 1C5 | Canada | |||||
1553 | 1650 Bath Rd | Kingston | ON | K7M 4X6 | Canada | |||||
1554 | 311 Henderson Hwy | Winnipeg | MB | R2L 1M4 | Canada | |||||
1556 | 17th Avenue SE, Unit 3504 A | Calgary | AB | T2A 0R7 | Canada | |||||
1557 | 1353 McPhillips St Unit 1 | Winnipeg | MB | R2X 3A6 | Canada | |||||
1558 | 9847 63rd Ave, Unit 4 | Edmonton | AB | T6E 0G7 | Canada | |||||
1560 | 11803 125th St NW | Edmonton | AB | T5L 0S1 | Canada | |||||
1561 | 7165 Chebucto Rd | Halifax | NS | B3L 1N5 | Canada | |||||
1563 | 14339 MacLeod Trail S | Calgary | AB | T2Y 1M7 | Canada | |||||
1564 | 9626 165 Ave | Edmonton | AB | T5Z 3L3 | Canada | |||||
1565 | 1299 Oxford St E | London | ON | N5Y 4W5 | Canada | |||||
1566 | 10007 170th St NW | Edmonton | AB | T5P 4R5 | Canada | |||||
1567 | 113 Rideau St | Ottawa | ON | K1N 5X1 | Canada | |||||
1568 | 158 Hwy, Unit 8 | Stoney Creek | ON | L8G 3V2 | Canada | |||||
1569 | 7460 82nd Ave NW | Edmonton | AB | T6B 0G2 | Canada | |||||
1570 | 62 Overlea Blvd, Unit 4B | Toronto | ON | M4H 1C4 | Canada | |||||
1571 | 4604 MacLeod Trail SW | Calgary | AB | T2G 0A8 | Canada | |||||
1572 | 748 Guelph Line | Burlington | ON | L7R 3N5 | Canada | |||||
1573 | 1321 Archibald St | Winnipeg | MB | R2J 3A4 | Canada | |||||
1574 | 471 Hazeldean Rd | Ottawa | ON | K2L 4B8 | Canada | |||||
1575 | 13737 127th St NW | Edmonton | AB | T6V 1A8 | Canada | |||||
1576 | 75 Ellesmere Rd, Unit B2 | Scarborough | ON | M1R 4B7 | Canada | |||||
1577 | 2712 Keele St | Toronto | ON | M3M 2G1 | Canada |
1578 | 883 St Clair Ave W | Toronto | ON | M6C 1C4 | Canada | |||||
1579 | 1795 St Clair Ave W | Toronto | ON | M6N 1J7 | Canada | |||||
1581 | 3111 Dufferin St, Unit A | Toronto | ON | M6A 2S7 | Canada | |||||
1582 | 11736 34th St NW | Edmonton | AB | T5W 1Z1 | Canada | |||||
1583 | 2071 Steeles Ave W, Unit H1 | Toronto | ON | M3J 3N3 | Canada | |||||
1584 | 2280 Islington Ave | Toronto | ON | M9W 3W8 | Canada | |||||
1585 | 2250 50th Ave, Unit 1C | Red Deer | AB | T4R 1W5 | Canada | |||||
1586 | 12 222 16th Ave NE | Calgary | AB | T2E 1J8 | Canada | |||||
1589 | 647 Portage Ave, Unit 1 | Winnipeg | MB | R3B 2G4 | Canada | |||||
1590 | 13737 72nd Ave, Unit 100 | Surrey | BC | V3W 2P2 | Canada | |||||
1591 | 7287 Knight St | Vancouver | BC | V5P 2W9 | Canada | |||||
1592 | 33 10556 King George Blvd | Surrey | BC | V3T 2X3 | Canada | |||||
1593 | 20221 Fraser Hwy | Langley | BC | V3A 4E6 | Canada | |||||
1595 | 8386 120 St, 103B | Surrey | BC | V3W 3N4 | Canada | |||||
1596 | 740 Columbia St | Westminster | BC | V3M 1B4 | Canada | |||||
1597 | 324 Guelph St | Georgetown | ON | L7G 4B5 | Canada | |||||
1598 | 250 King George Rd, Unit 4 | Brantford | ON | N3R 5L5 | Canada | |||||
1599 | 347 Bayfield St, Unit 2A | Barrie | ON | L4M 3C3 | Canada | |||||
1600 | 4490 Fairview St, Unit D102-3 | Burlington | ON | L7L 5P9 | Canada | |||||
1601 | 221 Woodlawn Rd W, Unit B7 | Guelph | ON | N1H 8P4 | Canada | |||||
1602 | 3245 Finch Ave E | Scarborough | ON | M1W 4C1 | Canada | |||||
1603 | 965 Talbot St, Unit D | St. Thomas | ON | N5P 1E8 | Canada | |||||
1604 | 260 Geneva St | St. Catharines | ON | L2N 2E8 | Canada | |||||
1605 | 451 Paul St | Dieppe | NB | E1A 6W8 | Canada | |||||
1606 | 6758 Lundys Ln, Unit 2 | Niagara Falls | ON | L2G 1V5 | Canada | |||||
1607 | 687 Queen St W | Toronto | ON | M6J 1E6 | Canada | |||||
1608 | 44 Mapleview Dr W, Unit 2 | Barrie | ON | L4N 6L4 | Canada | |||||
1609 | 525 Highland Rd W, Unit 2 | Kitchener | ON | N2M 5K1 | Canada | |||||
1610 | 970 Upper James St | Hamilton | ON | L9C 3A5 | Canada | |||||
1611 | 212A Queen St E | Brampton | ON | L6V 1B7 | Canada | |||||
1612 | 736A Queenston Rd | Hamilton | ON | L8G 1A4 | Canada | |||||
1613 | 576 Ritson Rd S | Oshawa | ON | L1H 5K7 | Canada | |||||
1614 | 13552 97 St NW | Edmonton | AB | T5E 4E2 | Canada | |||||
1615 | 15640 Stony Plain Rd | Edmonton | AB | T5P 3Z4 | Canada | |||||
1618 | 6060 Memorial Dr NE, Unit 18 | Calgary | AB | T2A 5Z5 | Canada | |||||
1619 | 371 Wellington Rd S, Unit A | London | ON | N6C 4P9 | Canada | |||||
1620 | 644 Portland St, Unit 4 | Dartmouth | NS | B2W 2M3 | Canada | |||||
1621 | 6219 Centre St NW, Unit 10A | Calgary | AB | T2K 0V2 | Canada | |||||
1622 | 158 Dundas St | London | ON | N6A 1G1 | Canada | |||||
1623 | 1015 Granville St | Vancouver | BC | V6Z 1L4 | Canada | |||||
1624 | 1248 Robson St | Vancouver | BC | V6E 1C1 | Canada | |||||
1625 | 5010 4th St NE, Unit 26 | Calgary | AB | T2K 5X8 | Canada | |||||
1626 | 3703 17th Ave SE | Calgary | AB | T2A 0S1 | Canada | |||||
1627 | 100 6061 No 3 Road | Richmond | BC | V6Y 2B2 | Canada | |||||
1628 | 1192 Burrard St | Vancouver | BC | V6Z 1Y7 | Canada | |||||
1629 | 13040 50th Street NW | Edmonton | AB | T5A 4V9 | Canada | |||||
1630 | 7475 Tecumseh Rd E | Windsor | ON | N8T 1G2 | Canada | |||||
1631 | 9250 MacLeod Trail SE, Bay 18 | Calgary | AB | T2J 0P5 | Canada |
1632 | 3 Harwood Ave S, Unit 1-2 | Ajax | ON | L1S 2C1 | Canada | |||||
1633 | 1593 Bank St | Ottawa | ON | K1H 7Z3 | Canada | |||||
1634 | 304 Dunlop St W, Units 11-13 | Barrie | ON | L4N 7N2 | Canada | |||||
1635 | 101 1050 Terminal Ave N | Nanaimo | BC | V9S 4K4 | Canada | |||||
1636 | 101 1483 Douglas St | Victoria | BC | V8W 2G1 | Canada | |||||
1637 | 844 Niagara St, Unit A, Bldg C | Welland | ON | L3C 1M3 | Canada | |||||
1638 | 3214 Douglas St, Unit 202 | Victoria | BC | V8Z 3K6 | Canada | |||||
1639 | 2490 Main St | Vancouver | BC | V5T 3E2 | Canada | |||||
1640 | 1248 London Rd | Sarnia | ON | N7S 1P5 | Canada | |||||
1641 | 997 St Laurent Blvd | Ottawa | ON | K1K 3B1 | Canada | |||||
1643 | 2390 East Hastings St | Vancouver | BC | V5L 1V5 | Canada | |||||
1644 | 2659 Dundas St W | Toronto | ON | M6P 1X9 | Canada | |||||
1645 | 1771 Queen St E | Brampton | ON | L6T 4S3 | Canada | |||||
1646 | 276 Rexdale Blvd | Etobicoke | ON | M9W 1R2 | Canada | |||||
1647 | 3095 Robie St | Halifax | NS | B3K 4P7 | Canada | |||||
1648 | 1375 Huron Church Rd | Windsor | ON | N9C 2B4 | Canada | |||||
1649 | 475 Albert St | Regina | SK | S4R 2P1 | Canada | |||||
1650 | 1080 Memorial Ave | Thunder Bay | ON | P7B 4A3 | Canada | |||||
1651 | 820 Red River Rd | Thunder Bay | ON | P7B 1K2 | Canada | |||||
1652 | 947 Lansdowne St W | Peterborough | ON | K9J 1Z5 | Canada | |||||
1653 | 52 Elm St | Sudbury | ON | P3C 1S7 | Canada | |||||
1654 | 851 Danforth Ave | Toronto | ON | M4J 1L2 | Canada | |||||
1655 | 2720 Mayor Magrath Dr S | Lethbridge | AB | T1K 7J5 | Canada | |||||
1656 | 460 Main St W | Hamilton | ON | L8P 1K5 | Canada | |||||
1657 | 3202 Dunmore Rd SE | Medicine Hat | AB | T1B 2X2 | Canada | |||||
1658 | 78 Gordon St | Guelph | ON | N1H 4H4 | Canada | |||||
1659 | 677 Princess St | Kingston | ON | K7L 1E6 | Canada | |||||
1660 | 22444 Lougheed Hwy | Maple Ridge | BC | V2X 2T6 | Canada | |||||
1661 | 2115 22nd St W | Saskatoon | SK | S7M 0V2 | Canada | |||||
1662 | 5587 Yonge St | North York | ON | M2N 5S4 | Canada | |||||
1663 | 1303 3 Ave S | Lethbridge | AB | T1J 0K4 | Canada | |||||
1664 | 33258 S Fraser Way | Abbotsford | BC | V2S 2B3 | Canada | |||||
1665 | 357 Great Northern Rd | Sault Ste. Marie | ON | P6B 4Z8 | Canada | |||||
1666 | 2000 St Joseph Blvd | Orleans | ON | K1C 1E6 | Canada | |||||
1667 | 2090 Harvey Ave | Kelowna | BC | V1Y 8P8 | Canada | |||||
1668 | 1501 Idylwyld Dr | Saskatoon | SK | S7L 1A9 | Canada | |||||
1669 | 808 Sackville Dr | Lower Sackville | NS | B4E 1R7 | Canada | |||||
1670 | 550 Arthur St W | Thunder Bay | ON | P7E 5R4 | Canada | |||||
1671 | 11802 Jasper Ave NW | Edmonton | AB | T5K 0N7 | Canada | |||||
1672 | 2017 Robertson Rd | Ottawa | ON | K2H 5Y7 | Canada | |||||
1673 | 1315 Richmond Rd | Ottawa | ON | K2B 8J7 | Canada | |||||
1674 | 101 Victoria Avenue, Unit 25 | Regina | SK | S4N 0N3 | Canada | |||||
1675 | 7686 Hurontario St | Brampton | ON | L6Y 5B5 | Canada | |||||
1676 | 2031 Cassells St | North Bay | ON | P1B 4E1 | Canada | |||||
1677 | 3601 Lawrence Ave E, Unit 2 | Scarborough | ON | M1G 1P5 | Canada | |||||
1678 | 360 Norwich Ave, Unit 5 | Woodstock | ON | N4S 3W2 | Canada | |||||
1679 | 789 Fortune Dr, Unit 20 | Kamloops | BC | V2B 2L3 | Canada | |||||
1680 | 6912 Kingsway | Burnaby | BC | V5E 1E6 | Canada |
1681 | 35 Front St S | Orillia | ON | L3V 4S1 | Canada | |||||
1682 | 1549 Dundas St E | Whitby | ON | L1N 2K6 | Canada | |||||
1683 | 1 Hespeler Rd, Unit B01001A | Cambridge | ON | N1R 8L4 | Canada | |||||
1684 | 120 45863 Yale Rd | Chilliwack | BC | V2P 2N6 | Canada | |||||
1686 | 303 51st St E | Saskatoon | SK | S7K 8G2 | Canada | |||||
1687 | 196 Dalhousie St, Unit 1 | Brantford | ON | N3S 3T7 | Canada | |||||
1688 | 735 The Queensway | Etobicoke | ON | M8Z 1M8 | Canada | |||||
1689 | 6614 127 Ave NW | Edmonton | AB | T5C 1P9 | Canada | |||||
1690 | 581 Ryan Road, Unit 2 | Courtenay | BC | V9N 3R5 | Canada | |||||
1691 | 274 N Front St | Belleville | ON | K8P 3C4 | Canada | |||||
1692 | 5852 Trans-Canada Hwy | Duncan | BC | V9L 3S1 | Canada | |||||
1693 | 210 15th St W | Prince Albert | SK | S6V 3P8 | Canada | |||||
1694 | 905 37 St SW | Calgary | AB | T3C 1S4 | Canada | |||||
1695 | 1575 Eglinton Ave W | Toronto | ON | M6E 2G9 | Canada | |||||
1696 | 5890 Main St | Niagara Falls | ON | L2G 5Z8 | Canada | |||||
1697 | 12405 107 Ave | Edmonton | AB | T5M 0Z2 | Canada | |||||
1698 | 239 Scarlett Rd | Toronto | ON | M6N 4K8 | Canada | |||||
1699 | 648 King St W | Kitchener | ON | N2G 1E1 | Canada | |||||
1700 | 400 Steeles Ave E, Unit 6 | Brampton | ON | L6W 3R2 | Canada | |||||
1701 | 525 Grand Ave W | Chatham | ON | N7L 1C5 | Canada | |||||
1703 | 6172 Bathurst St | Toronto | ON | M2R 2A2 | Canada | |||||
1704 | 72 Lakeshore Dr | North Bay | ON | P1A 2A6 | Canada | |||||
1705 | 906 Marine Dr | Vancouver | BC | V7P 1R9 | Canada | |||||
1706 | 10737 Yonge St, Unit 1 | Richmond Hill | ON | L4C 9M9 | Canada | |||||
1707 | 320 Speers Rd | Oakville | ON | L6K 3R9 | Canada | |||||
1708 | 1735 Kipling Ave | Toronto | ON | M9R 2Y8 | Canada | |||||
1709 | 3104 27th St, Unit 4 | Vernon | BC | V1T 4M6 | Canada | |||||
1710 | 1475 Prairie Ave, Suite 2130 | Port Coquitlam | BC | V3B 1T3 | Canada | |||||
2500 | 410 Brixton Rd | Brixton | LD | SW97AW | United Kingdom | |||||
2501 | 232 Kilburn High Rd | Kilburn | LD | NW6 4JP | United Kingdom | |||||
2502 | 119 Peckham High St | Peckham | LD | SE15 5SL | United Kingdom | |||||
2503 | 8-10 Cranbrook Rd | Ilford | LD | IG1 4DJ | United Kingdom | |||||
2504 | 269-271 Walworth Ave | Walworth | LD | SE17 1RL | United Kingdom | |||||
2505 | 60 Uxbridge Rd | Shepherds Bush | LD | W12 8LP | United Kingdom | |||||
2506 | 135A High Street N | East Ham | LD | E6 1HZ | United Kingdom | |||||
2507 | 19 The Broadway High Rd | Wood Green | LD | N22 6DS | United Kingdom | |||||
2511 | 48 Kingsland High St | Dalston | LD | E8 2JP | United Kingdom | |||||
2512 | 100B Bull St | Birmingham | W Mid | B4 7AA | United Kingdom | |||||
2513 | 49 Upper Parliament St | Nottingham | NG | NG1 2AB | United Kingdom | |||||
2519 | 3-5 The Bridge | Walsall | W Mid | WS1 1LG | United Kingdom | |||||
2520 | 105a Commercial Rd | Portsmouth | Ham | PO1 1BQ | United Kingdom | |||||
2521 | 530 High Rd | Wembley | LD | HA9 7BS | United Kingdom | |||||
2522 | 83 Above Bar St | Southampton | Ham | So14 7FG | United Kingdom | |||||
2523 | 175 North End | Croydon | Sur | CR0 1TP | United Kingdom | |||||
2524 | 135 Commercial St | Newport | Gwent | NP20 1LY | United Kingdom | |||||
9001 | 3527 N Ridge Rd | Wichita | KS | 67205 | United States | |||||
9002 | 3531 N Ridge Rd, 2nd Floor | Wichita | KS | 67205 | United States | |||||
9003 | 3611 N Ridge Rd, Suite 101 & 103 | Wichita | KS | 67206 | United States |
9004 | 3607 N Ridge Rd, Suite 106 | Wichita | KS | 67205 | United States | |||||
9005 | 8400 E 32nd St N | Wichita | KS | 67226 | United States | |||||
9008 | 30-34 Houndsgate | Nottingham | BX | NG1 7AB | United Kingdom | |||||
9011 | 14 Low St | Keighley | BX | BD21 3PN | United Kingdom | |||||
9012 | 400 Carlingview Dr | Toronto | ON | M9W 5X9 | Canada | |||||
9013 | 3615 N Ridge Rd | Wichita | KS | 67205 | United States | |||||
9014 | 31 Wellington St | Leeds | BX | LS1 4DL | United Kingdom | |||||
9015 | 7330 W 33rd Street N | Wichita | KS | 67205 | United States | |||||
9016 | 440 N Wells Street, Suite 800 | Chicago | IL | 60654 | United States |
- closed location, under lease
SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION
(AND WHETHER A REGISTERED ORGANIZATION), JURISDICTION OF
ORGANIZATION, LOCATION, ORGANIZATIONAL IDENTIFICATION
NUMBERS AND FEDERAL EMPLOYER IDENTIFICATION NUMBERS
Exact Legal Name of Each Assignor |
Type of Organization (or, if the Assignor is an Individual, so indicate) |
Registered Organization? (Yes/No ) |
Jurisdiction of Organization |
Assignors Location (for purposes of NY UCC § 9-307) |
Assignors Organization
Identification
(or, if it has none, so indicate) |
Assignors Federal Employer Identification Number (or, if it has none, so indicate) |
||||||
Curo | Corporation | Yes | Delaware | 3527 North | Delaware: | [****] | ||||||
Financial | Ridge Road, | 4568552 | ||||||||||
Technologies | Wichita, | |||||||||||
Corp. | Kansas 67205 | |||||||||||
Curo | Corporation | Yes | Delaware | 3527 North | Delaware: | [****] | ||||||
Intermediate | Ridge Road, | 4575800 | ||||||||||
Holdings | Wichita, | |||||||||||
Corp. | Kansas 67205 | |||||||||||
Todd | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Financial, Inc. | Ridge Road, | C315-2004 | ||||||||||
Wichita, | ||||||||||||
Kansas 67205 | ||||||||||||
Curo | Limited | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Management | Liability | Ridge Road, | LLC15783-2002 | |||||||||
LLC | Company | Wichita, | ||||||||||
Kansas 67205 | ||||||||||||
FMMR | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Investments, | Ridge Road, | E0147582006-4 | ||||||||||
Inc. | Wichita, | |||||||||||
Kansas 67205 | ||||||||||||
Evergreen | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Financial | Ridge Road, | C28559-2001 | ||||||||||
Investments, | Wichita, | |||||||||||
Inc. | Kansas 67205 | |||||||||||
Principal | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Investments, | Ridge Road, | C24603-2002 | ||||||||||
Inc. | Wichita, | |||||||||||
Kansas 67205 |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
- 3 -
Todd Car | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Title, Inc. | Ridge Road, | C603-2004 | ||||||||||
Wichita, | ||||||||||||
Kansas 67205 | ||||||||||||
Speedy Cash | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Ridge Road, | C20087-1998 | |||||||||||
Wichita, | ||||||||||||
Kansas 67205 | ||||||||||||
Advance | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Group, Inc. | Ridge Road, | C11137-1999 | ||||||||||
Wichita, | ||||||||||||
Kansas 67205 | ||||||||||||
Concord | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Finance, Inc. | Ridge Road, | C12543-2002 | ||||||||||
Wichita, | ||||||||||||
Kansas 67205 | ||||||||||||
SCIL, Inc. | Corporation | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Ridge Road, | E0482792006-5 | |||||||||||
Wichita, | ||||||||||||
Kansas 67205 | ||||||||||||
Cash | Limited | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Colorado, | Liability | Ridge Road, | C12636-2003 | |||||||||
LLC | Company | Wichita, | ||||||||||
Kansas 67205 | ||||||||||||
Galt Ventures, | Limited | Yes | Kansas | 3527 North | Kansas: 4234100 | [****] | ||||||
LLC | Liability | Ridge Road, | ||||||||||
Company | Wichita, | |||||||||||
Kansas 67205 | ||||||||||||
A Speedy | Limited | Yes | Nevada | 3527 North | C912-2001 | [****] | ||||||
Cash Car Title | Liability | Ridge Road, | ||||||||||
Loans, LLC | Company | Wichita, | ||||||||||
Kansas 67205 | ||||||||||||
SCIL Texas, | Limited | Yes | Nevada | 3527 North | E0039112007-9 | [****] | ||||||
LLC | Liability | Ridge Road, | ||||||||||
Company | Wichita, | |||||||||||
Kansas 67205 | ||||||||||||
Attain | Limited | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
Finance, LLC | Liability | Ridge Road, | E0499842009-4 | |||||||||
Company | Wichita, | |||||||||||
Kansas 67205 | ||||||||||||
SC Aurum, | Limited | Yes | Nevada | 3527 North | Nevada: | [****] | ||||||
LLC | Liability | Ridge Road, | E0492782009-9 | |||||||||
Company | Wichita, | |||||||||||
Kansas 67205 |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
- 4 -
Speedy Cash | Corporation | Yes | Nevada | 3527 North | Nevada: E0 |
[****] |
||||||
Illinois, Inc. | Ridge Road, | 291302012-5 | ||||||||||
Wichita, | ||||||||||||
Kansas 67205 | ||||||||||||
SC Texas | Corporation | Yes | Nevada | 3527 North | Nevada: |
[****] |
||||||
MB, Inc. | Ridge Road, | E0376982012-7 | ||||||||||
Wichita, | ||||||||||||
Kansas 67205 | ||||||||||||
The Money | Limited | Yes | Texas | 3527 North | Texas: | [****] | ||||||
Store, L.P. | partnership | Ridge Road, | 7422197024 | |||||||||
Wichita, | ||||||||||||
Kansas 67205 |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
- 5 -
SCHEDULE OF TRADE AND FICTITIOUS NAMES
Name of Assignor |
Trade and/or Fictitious Names |
|
Curo Intermediate Holdings Corp. | Speedy Cash | |
Curo Intermediate Holdings Corp. | Rapid Cash | |
Attain Finance, LLC | OPT+ |
- 6 -
DESCRIPTION OF CERTAIN SIGNIFICANT TRANSACTIONS OCCURRING WITHIN
ONE YEAR PRIOR TO THE DATE OF THE SECURITY AGREEMENT
None.
- 7 -
Schedule of Deposit Accounts that are Concentration Accounts
Loan Party |
Bank |
Account Number |
Account purpose |
|||
Attain Finance LLC | Axiom Bank | [****] | Load Fund-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | ACH Fund-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Pool Fund-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Revenue-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Reserve-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Bill Pay-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Chargeback-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Visa Settlement-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | MC Settlement-Attain | |||
Attain Finance LLC | Axiom Bank | [****] | Overdraft-Attain | |||
Attain Finance LLC | Metropolitan Commercial | [****] | Cardholder Pooled Funds | |||
Bank | - Attain | |||||
Attain Finance LLC | Metropolitan Commercial | [****] | Reserve - Attain | |||
Bank | ||||||
Attain Finance LLC | Metropolitan Commercial | [****] | Settlement - Attain | |||
Bank | ||||||
Attain Finance LLC | Metropolitan Commercial | [****] | Operating - Attain | |||
Bank | ||||||
Attain Finance LLC | Metropolitan Commercial | [****] | Adjustments - Attain | |||
Bank | ||||||
Attain Finance LLC | Metropolitan Commercial | [****] | Revenue - Attain | |||
Bank | ||||||
CFTC Finance, Inc. | Wells Fargo | [****] | CFTC Finance Inc | |||
Concord Finance, Inc. | Wells Fargo | [****] | Concord Concentration | |||
Curo Group Holdings | Wells Fargo | [****] | Curo Group Holdings | |||
Corp | ||||||
Curo Intermediate | Wells Fargo | [****] | Curo Intermediate | |||
Holdings Corp. | Holdings | |||||
Curo Management, LLC | Wells Fargo | [****] | Curo Payroll | |||
Curo Management, LLC | Wells Fargo | [****] | Curo Concentration | |||
Curo Management, LLC | Wells Fargo | [****] | Curo Payables | |||
Curo Management, LLC | Wells Fargo | [****] | Curo HCA | |||
Curo Management, LLC | Wells Fargo | [****] | Bill Pay Account | |||
Curo Management, LLC | Wells Fargo | [****] | Money Order Account | |||
Curo Management, LLC | Wells Fargo | [****] | MoneyGram Account | |||
Curo Management, LLC | Wells Fargo | [****] | Credit Card Account | |||
Curo Management, LLC | Wells Fargo | [****] | Miscellaneous Account | |||
Curo Management, LLC | Wells Fargo | [****] | ACH Account | |||
Curo Management, LLC | Wells Fargo | [****] | Store Depository Account | |||
SC Aurum, LLC | Wells Fargo | [****] | SC Aurum | |||
SCIL Texas, LLC | Wells Fargo | [****] | SCIL TX Concentration | |||
SCIL, Inc | Wells Fargo | [****] | SCIL Concentration | |||
Speedy Cash, Inc. | Wells Fargo | [****] | Speedy Cash Illinois - | |||
Operating Acct | ||||||
The Money Store, LP | Wells Fargo | [****] | Speedy Cash Inc - | |||
Auction Proceeds |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
- 8 -
Exhibit 10.51
EXECUTION VERSION
PLEDGE AGREEMENT
among
CURO FINANCIAL TECHNOLOGIES CORP.,
CURO INTERMEDIATE HOLDINGS CORP.,
CERTAIN SUBSIDIARIES OF CURO INTERMEDIATE HOLDINGS CORP.
and
VICTORY PARK MANAGEMENT, LLC, as COLLATERAL AGENT
Dated as of November 17, 2016
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
TABLE OF CONTENTS
i
19. | SALE OF COLLATERAL WITHOUT REGISTRATION | 21 | ||||
20. | TERMINATION; RELEASE | 21 | ||||
21. | NOTICES, ETC | 22 | ||||
22. | WAIVER; AMENDMENT | 23 | ||||
23. | SUCCESSORS AND ASSIGNS | 23 | ||||
24. | HEADINGS DESCRIPTIVE | 24 | ||||
25. | GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL | 24 | ||||
26. | PLEDGORS DUTIES | 25 | ||||
27. | COUNTERPARTS | 25 | ||||
28. | SEVERABILITY | 25 | ||||
29. | RECOURSE | 25 | ||||
30. | ADDITIONAL PLEDGORS | 25 | ||||
31. | LIMITED OBLIGATIONS | 25 | ||||
32. | RELEASE OF PLEDGORS | 26 |
ii
PLEDGE AGREEMENT
PLEDGE AGREEMENT (as amended, modified, restated and/or supplemented from time to time, this Agreement ), dated as of November 17, 2016, among each of the undersigned pledgors (each, a Pledgor and, together with any other entity that becomes a pledgor hereunder pursuant to Section 30 hereof, the Pledgors ) and Victory Park Management, LLC, as collateral agent (together with any successor collateral agent, the Pledgee ), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
WHEREAS, Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. (the Borrower ), the lenders from time to time party thereto (the Lenders ), and Victory Park Management, LLC, as administrative agent (in such capacity and together with any successor administrative agent, the Administrative Agent ), have entered into a Short-Term Credit Agreement, dated as of November 17, 2016 (as amended, modified, restated and/or supplemented from time to time, the Credit Agreement ), providing for the making of Loans to and for the account of, the Borrower, all as contemplated therein (the Lenders, the Administrative Agent and the Pledgee are herein called the Lender Creditors );
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lenders or affiliates successors and assigns, if any, collectively, the Other Creditors and, together with the Lender Creditors, the Secured Creditors , with each such Interest Rate Protection Agreement and/or Other Hedging Agreement with an Other Creditor being herein called a Secured Hedging Agreement );
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and severally guaranteed to the Secured Creditors the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, it is a condition precedent to the making of Loans to the Borrower for the account of the Borrower under the Credit Agreement and to the Other Creditors entering into Secured Hedging Agreements that each Pledgor shall have executed and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor will obtain benefits from the incurrence of Loans by the Borrower for the account of the Borrower under the Credit Agreement and the entering into by the Borrower of Secured Hedging Agreements and, accordingly, desires to execute this Agreement in order to satisfy the condition described in the preceding paragraph and to induce the Lenders to make Loans to the Borrower for the account of the Borrower and the Other Creditors to enter into Secured Hedging Agreements with the Borrower;
1
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby makes the following representations and warranties to the Pledgee for the benefit of the Secured Creditors and hereby covenants and agrees with the Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. (a) This Agreement is made by each Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, principal, premium, interest (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Pledgor or any Subsidiary thereof at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding), whether now existing or hereafter incurred under, arising out of, or in connection with, each Credit Document to which such Pledgor is a party (including, in the case of each Pledgor that is a Guarantor, all such obligations, liabilities and indebtedness of such Pledgor under its Guaranty) and the due performance and compliance by such Pledgor with all of the terms, conditions and agreements contained in each such Credit Document (all such obligations, liabilities and indebtedness under this clause (i), except to the extent consisting of obligations, liabilities or indebtedness with respect to the Secured Hedging Agreements being herein collectively called, the Credit Document Obligations );
(ii) the full and prompt payment when due (whether at stated maturity, by acceleration or otherwise) of all obligations, liabilities and indebtedness (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Pledgor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding) owing by such Pledgor to the Other Creditors now existing or hereafter incurred under, arising out of or in connection with each Secured Hedging Agreement, whether such Secured Hedging Agreement is now in existence or hereinafter arising (including, in the case of a Pledgor that is a Guarantor, all obligations, liabilities and indebtedness of such Pledgor under its Guaranty in respect of each Secured Hedging Agreement), and the due performance and compliance by such Pledgor with all of the terms, conditions and agreements contained in each Secured Hedging Agreement (all such obligations, liabilities and indebtedness under this clause (ii) being herein collectively called, the Other Obligations );
2
(iii) any and all sums advanced by the Pledgee in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of such Pledgor referred to in clauses (i) and (ii) above, after an Event of Default shall have occurred and be continuing, the expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Pledgee of its rights hereunder, together with reasonable attorneys fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, indebtedness, sums and expenses set forth in clauses (i) through (v) of this Section 1 being herein collectively called, the Obligations, it being acknowledged and agreed that the Obligations shall include extensions of credit of the types described above, whether outstanding on the date of this Agreement or extended from time to time after the date of this Agreement.
(b) Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the Intercreditor Agreement at any time the Intercreditor Agreement is in effect. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control at any time the Intercreditor Agreement is in effect.
2. DEFINITIONS. (a) Unless otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement shall be used herein as therein defined. Reference to singular terms shall include the plural and vice versa.
(b) The following capitalized terms used herein shall have the definitions specified below:
Administrative Agent shall have the meaning set forth in the recitals hereto.
Adverse Claim shall have the meaning given such term in Section 8-102(a)(l) of the UCC.
Agreement shall have the meaning set forth in the first paragraph hereof.
Borrower shall have the meaning set forth in the recitals hereto.
Certificated Security shall have the meaning given such term in Section 8-102(a)(4) of the UCC.
Clearing Corporation shall have the meaning given such term in Section 8-102(a)(5) of the UCC.
3
Collateral shall have the meaning set forth in Section 3.1 hereof.
Collateral Accounts shall mean any and all accounts established and maintained by the Pledgee in the name of any Pledgor to which Collateral may be credited.
Credit Agreement shall have the meaning set forth in the recitals hereto.
Credit Document Obligations shall have the meaning set forth in Section 1(i) hereof.
Domestic Corporation shall have the meaning set forth in the definition of Stock.
Event of Default shall mean any Event of Default under, and as defined in, the Credit Agreement and shall in any event include, without limitation, any payment default on any of the Obligations after the expiration of any applicable grace period.
Exempted Foreign Entity shall mean any Foreign Corporation and any limited liability company organized under the laws of a jurisdiction other than the United States or any State thereof or the District of Columbia that, in any such case, is treated as a corporation or an association taxable as a corporation for U.S. federal income tax purposes.
Financial Asset shall have the meaning given such term in Section 8-102(a)(9) of the UCC.
Foreign Corporation shall have the meaning set forth in the definition of Stock .
Holdings shall have the meaning set forth in the recitals hereto. Indemnitees shall have the meaning set forth in Section 11 hereof.
Instrument shall have the meaning given such term in Section 9-102(a)(47) of the UCC.
Investment Property shall have the meaning given such term m Section 9-102(a)(49) of the UCC.
Lender Creditors shall have the meaning set forth in the recitals hereto.
Lenders shall have the meaning set forth in the recitals hereto.
Limited Liability Company Assets shall mean all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all limited liability company capital and interest in other limited liability companies), at any time owned by any Pledgor or represented by any Limited Liability Company Interest.
4
Limited Liability Company Interests shall mean the entire limited liability company membership interest at any time owned by any Pledgor in any limited liability company.
Location of any Pledgor has the meaning given such term in Section 9-307 of the UCC.
Non-Voting Equity Interests shall mean all Equity Interests of any Person that are not Voting Equity Interests.
Notes shall mean (x) all intercompany notes at any time issued to each Pledgor and (y) all other promissory notes from time to time issued to, or held by, each Pledgor.
Obligations shall have the meaning set forth in Section 1 hereof. Other Creditors shall have the meaning set forth in the recitals hereto.
Other Obligations shall have the meaning set forth in Section 1(ii) hereof.
Partnership Assets shall mean all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all partnership capital and interest in other partnerships), at any time owned by any Pledgor or represented by any Partnership Interest.
Partnership Interest shall mean the entire general partnership interest or limited partnership interest at any time owned by any Pledgor in any general partnership or limited partnership.
Pledged Notes shall mean all Notes at any time pledged or required to be pledged hereunder.
Pledgee shall have the meaning set forth in the first paragraph hereof.
Pledgor shall have the meaning set forth in the first paragraph hereof.
Proceeds shall have the meaning given such term in Section 9-102(a)(64) of the UCC.
Registered Organization shall have the meaning given such term in Section 9-102(a)(70) of the UCC.
Required Secured Creditors shall have the meaning provided in the Security Agreement.
Secured Creditors shall have the meaning set forth in the recitals hereto.
Secured Debt Agreements shall mean and include (x) this Agreement, (y) the other Credit Documents and (z) the Secured Hedging Agreements.
5
Secured Hedging Agreements shall have the meaning set forth in the recitals hereto.
Securities Account shall have the meaning given such term in Section 8-501(a) of the UCC.
Securities Act shall mean the Securities Act of 1933, as amended, as in effect from time to time.
Securities Intermediary shall have the meaning given such term in Section 8-102(14) of the UCC.
Security and Securities shall have the meaning given such term in Section 8-102(a)(l 5) of the UCC and shall in any event also include all Stock and all Notes.
Security Entitlement shall have the meaning given such term in Section 8-102(a)(17) of the UCC.
Stock shall mean (x) with respect to corporations incorporated under the laws of the United States or any State thereof or the District of Columbia (each, a Domestic Corporation ), all of the issued and outstanding shares of capital stock of any Domestic Corporation at any time owned by any Pledger and (y) with respect to corporations not Domestic Corporations (each, a Foreign Corporation ), all of the issued and outstanding shares of capital stock of any Foreign Corporation at any time owned by any Pledger.
Termination Date shall have the meaning set forth in Section 20 hereof.
UCC shall mean the Uniform Commercial Code as in effect in the State of New York from time to time; provided that all references herein to specific Sections or subsections of the UCC are references to such Sections or subsections, as the case may be, of the Uniform Commercial Code as in effect in the State of New York on the date hereof.
Uncertificated Security shall have the meaning given such term in Section 8-102(a)(l 8) of the UCC.
Voting Equity Interests of any Person shall mean all classes of Equity Interests of such Person entitled to vote.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge . To secure the Obligations now or hereafter owed or to be performed by such Pledger, each Pledgor does hereby grant, pledge and assign to the Pledgee for the benefit of the Secured Creditors, and does hereby create a continuing security interest in favor of the Pledgee for the benefit of the Secured Creditors in and a lien on, all of its right, title and interest in and to the following, whether now existing or hereafter from time to time acquired (collectively, the Collateral ):
6
(a) each of the Collateral Accounts (to the extent a security interest therein is not created pursuant to the Security Agreement), including any and all assets of whatever type or kind deposited by such Pledgor in any such Collateral Account, whether now owned or hereafter acquired, existing or arising, including, without limitation, all Financial Assets, Investment Property, monies, checks, drafts, Instruments, Securities or interests therein of any type or nature deposited or required by the Credit Agreement or any other Secured Debt Agreement to be deposited in such Collateral Account, and all investments and all certificates and other Instruments (including depository receipts, if any) from time to time representing or evidencing the same, and all dividends, interest, distributions, cash and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing;
(b) all Securities owned or held by such Pledgor from time to time and all options and warrants owned by such Pledgor from time to time to purchase Securities;
(c) all Limited Liability Company Interests owned by such Pledgor from time to time and all of its right, title and interest in each limited liability company to which each such Limited Liability Company Interest relates, whether now existing or hereafter acquired, including, without limitation, to the fullest extent permitted under the terms and provisions of the documents and agreements governing such Limited Liability Company Interests and applicable law:
(i) all its capital therein and its interest in all profits, income, surpluses, losses, Limited Liability Company Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Limited Liability Company Interests;
(ii) all other payments due or to become due to such Pledgor in respect of Limited Liability Company Interests, whether under any limited liability company agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(iii) all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any limited liability company agreement or operating agreement, or at law or otherwise in respect of such Limited Liability Company Interests;
(iv) all present and future claims, if any, of such Pledgor against any such limited liability company for monies loaned or advanced, for services rendered or otherwise;
(v) all of such Pledgors rights under any limited liability company agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Limited Liability Company Interests, including any power to terminate, cancel or modify any such limited liability company agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in
7
the name of any of such Pledgor in respect of such Limited Liability Company Interests and any such limited liability company, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Limited Liability Company Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and
(vi) all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;
(d) all Partnership Interests owned by such Pledgor from time to time and all of its right, title and interest in each partnership to which each such Partnership Interest relates, whether now existing or hereafter acquired, including, without limitation, to the fullest extent permitted under the terms and provisions of the documents and agreements governing such Partnership Interests and applicable law:
(i) all its capital therein and its interest in all profits, income, surpluses, losses, Partnership Assets and other distributions to which such Pledgor shall at any time be entitled in respect of such Partnership Interests;
(ii) all other payments due or to become due to such Pledgor in respect of Partnership Interests, whether under any partnership agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(iii) all of its claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under any partnership agreement or operating agreement, or at law or otherwise in respect of such Partnership Interests;
(iv) all present and future claims, if any, of such Pledgor against any such partnership for monies loaned or advanced, for services rendered or otherwise;
(v) all of such Pledgors rights under any partnership agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Partnership Interests, including any power to terminate, cancel or modify any partnership agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of such Pledgor in respect of such Partnership Interests and any such partnership, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Partnership Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and
8
(vi) all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof;
(e) all Financial Assets and Investment Property owned by such Pledgor from time to time;
(f) all Security Entitlements owned by such Pledgor from time to time in any and all of the foregoing; and
(g) all Proceeds of any and all of the foregoing;
provided that (x) except in the circumstances and to the extent provided by Section 9.17 of the Credit Agreement (in which case this clause (x) shall no longer be applicable), no Pledgor shall be required at any time to pledge hereunder more than 65% of the total combined voting power of all classes of Voting Equity Interests of any direct Exempted Foreign Entity and (y) each Pledgor shall be required to pledge hereunder 100% of the Non-Voting Equity Interests of each direct Exempted Foreign Entity at any time and from time to time acquired by such Pledgor, which Non-Voting Equity Interests shall not be subject to the limitations described in preceding clause (x).
3.2. Procedures . (a) To the extent that any Pledgor at any time or from time to time owns, acquires or obtains any right, title or interest in any Collateral, such Collateral shall automatically (and without the taking of any action by such Pledgor) be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto, such Pledgor shall (to the extent provided below) take the following actions as set forth below (as promptly as practicable and, in any event, within 10 Business Days after it obtains such Collateral) for the benefit of the Pledgee and the other Secured Creditors:
(i) with respect to a Certificated Security (other than a Certificated Security credited on the books of a Clearing Corporation or Securities Intermediary), such Pledgor shall physically deliver such Certificated Security to the Pledgee, endorsed in blank;
(ii) with respect to an Uncertificated Security (other than an Uncertificated Security credited on the books of a Clearing Corporation or Securities Intermediary), such Pledgor shall cause the issuer of such Uncertificated Security to duly authorize, execute, and deliver to the Pledgee, an agreement for the benefit of the Pledgee and the other Secured Creditors substantially in the form of Annex H hereto (appropriately completed to the reasonable satisfaction of the Pledgee and with such modifications, if any, as shall
9
be reasonably satisfactory to the Pledgee) pursuant to which such issuer agrees to comply with any and all instructions originated by the Pledgee without further consent by the registered owner and not to comply with instructions regarding such Uncertificated Security (and any Partnership Interests and Limited Liability Company Interests issued by such issuer) originated by any other Person other than a court of competent jurisdiction (it being understood that the Pledgee only will give such instructions to any issuer upon the occurrence and during the continuance of an Event of Default);
(iii) with respect to a Certificated Security, Uncertificated Security, Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary (including a Federal Reserve Bank, Participants Trust Company or The Depository Trust Company), such Pledgor shall promptly notify the Pledgee thereof and shall promptly take (x) all actions required (i) to comply with the applicable rules of such Clearing Corporation or Securities Intermediary and (ii) to perfect the security interest of the Pledgee under applicable law (including, in any event, under Sections 9- 314(a), (b) and (c), 9-106 and 8-106(d) of the UCC) and (y) such other actions as the Pledgee deems reasonably necessary or desirable to effect the foregoing;
(iv) with respect to a Partnership Interest or a Limited Liability Company Interest (other than a Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary), (1) if such Partnership Interest or Limited Liability Company Interest is represented by a certificate and is a Security for purposes of the UCC, such Pledgor shall follow the procedure set forth in Section 3.2(a)(i) hereof, and (2) if such Partnership Interest or Limited Liability Company Interest is not represented by a certificate or is not a Security for purposes of the UCC, such Pledgor shall follow the procedure set forth in Section 3.2(a)(ii) hereof;
(v) with respect to any Note, physical delivery of such Note to the Pledgee, endorsed in blank; and
(vi) with respect to cash proceeds from any of the Collateral described in Section 3.1 hereof, (i) establishment by the Pledgee of a cash account (unless such an account is already in existence) in the name of such Pledgor over which the Pledgee shall have control within the meaning of the UCC and at any time any Default or Event of Default is in existence no withdrawals or transfers may be made therefrom by any Person except with the prior written consent of the Pledgee and (ii) deposit of such cash in such cash account.
(b) In addition to the actions required to be taken pursuant to Section 3.2(a) hereof, each Pledgor shall take the following additional actions with respect to the Collateral:
10
(i) with respect to all Collateral of such Pledgor whereby or with respect to which the Pledgee may obtain control thereof within the meaning of Section 8-106 of the UCC (or under any provision of the UCC as same may be amended or supplemented from time to time, or under the laws of any relevant State other than the State of New York), such Pledgor shall take all actions as may be reasonably necessary or as reasonably requested from time to time by the Pledgee so that control of such Collateral is obtained and at all times held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate financing statements (on appropriate forms) under the Uniform Commercial Code as in effect in the various relevant States, covering all Collateral hereunder (with the form of such financing statements to be reasonably satisfactory to the Pledgee), to be filed in the relevant filing offices so that at all times the Pledgees security interest in all Investment Property and other Collateral which can be perfected by the filing of such financing statements (in each case to the maximum extent perfection by filing may be obtained under the laws of the relevant States, including, without limitation, Section 9-312(a) of the UCC) is so perfected.
3.3. Subsequently Acquired Collateral . If any Pledgor shall acquire (by purchase, stock dividend, distribution or otherwise) any additional Collateral at any time or from time to time after the date hereof, (i) such Collateral shall automatically (and without any further action being required to be taken) be subject to the pledge and security interests created pursuant to Section 3.1 hereof and, furthermore, such Pledgor will thereafter take (or cause to be taken) all action (as promptly as practicable and, in any event, within 10 Business Days after it obtains such Collateral) with respect to such Collateral in accordance with the procedures set forth in Section 3.2 hereof, and will promptly thereafter deliver to the Pledgee (i) a certificate executed by an authorized officer of such Pledgor describing such Collateral and certifying that the same has been duly pledged in favor of the Pledgee (for the benefit of the Secured Creditors) hereunder and (ii) supplements to Annexes A through G hereto as are necessary to cause such Annexes to be complete and accurate at such time. Without limiting the foregoing, each Pledgor shall be required to pledge hereunder the Equity Interests of any Exempted Foreign Entity at any time and from time to time after the date hereof acquired by such Pledgor, provided that (x) except in the circumstances and to the extent provided by Section 9.17 of the Credit Agreement, no Pledgor shall be required at any time to pledge hereunder more than 65% of the total combined voting power of all classes of Voting Equity Interests of any direct Exempted Foreign Entity and (y) each Pledgor shall be required to pledge hereunder 100% of the Non-Voting Equity Interests of each direct Exempted Foreign Entity at any time and from time to time acquired by such Pledgor.
3.4. Transfer Taxes . Each pledge of Collateral under Section 3.1 or Section 3.3 hereof shall be accompanied by any transfer tax stamps required in connection with the pledge of such Collateral.
3.5. Certain Representations and Warranties Regarding the Collateral . Each Pledgor represents and warrants that on the date hereof: (i) each Subsidiary of such Pledgor, and the direct ownership thereof, is listed in Annex B hereto; (ii) the Stock (and any warrants or options to purchase Stock) held by such Pledgor consists of the number and type of shares of the stock (or warrants or options to purchase any stock) of the corporations as described in Annex C hereto; (iii) such Stock referenced in clause (ii) of this paragraph constitutes that percentage of
11
the issued and outstanding capital stock of the issuing corporation as is set forth in Annex C hereto; (iv) the Notes held by such Pledgor consist of the promissory notes described in Annex D hereto where such Pledgor is listed as the lender; (v) the Limited Liability Company Interests held by such Pledgor consist of the number and type of interests of the Persons described in Annex E hereto; (vi) each such Limited Liability Company Interest referenced in clause (v) of this paragraph constitutes that percentage of the issued and outstanding equity interest of the issuing Person as set forth in Annex E hereto; (vii) the Partnership Interests held by such Pledgor consist of the number and type of interests of the Persons described in Annex F hereto; (viii) each such Partnership Interest referenced in clause (vii) of this paragraph constitutes that percentage or portion of the entire Partnership Interest of the partnership as set forth in Annex F hereto; (ix) the exact address of each chief executive office of such Pledgor is listed on Annex G hereto; (x) the Pledgor has complied with the respective procedure set forth in Section 3.2(a) hereof with respect to each item of Collateral described in Annexes C through F hereto; and (xi) on the date hereof, such Pledgor owns no other Securities, Stock, Notes, Limited Liability Company Interests or Partnership Interests other than those listed in Annexes C through F hereof.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have the right to appoint one or more sub-agents for the purpose of retaining physical possession of the Collateral, which may be held (in the discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there shall have occurred and be continuing an Event of Default, each Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral owned by it, and to give consents, waivers or ratifications in respect thereof; provided that, in each case, no vote shall be cast or any consent, waiver or ratification given or any action taken or omitted to be taken which would violate, result in a breach of any covenant contained in, or be inconsistent with any of the terms of any Secured Debt Agreement, or which could reasonably be expected to have the effect of impairing the value of the Collateral or any part thereof or the position or interests of the Pledgee or any other Secured Creditor in the Collateral, unless expressly permitted by the terms of the Secured Debt Agreements. All such rights of each Pledgor to vote and to give consents, waivers and ratifications shall cease in case an Event of Default has occurred and is continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there shall have occurred and be continuing an Event of Default, all cash dividends, cash distributions, cash Proceeds and other cash amounts payable in respect of the Collateral shall be paid to the respective Pledgor. The Pledgee shall be entitled to receive directly, and to retain as part of the Collateral:
(a) all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property paid or distributed by way of dividend or otherwise in respect of the Collateral;
12
(b) all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash (although such cash may be paid directly to the respective Pledgor so long as no Event of Default then exists)) paid or distributed in respect of the Collateral by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar rearrangement; and
(c) all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash (although such cash may be paid directly to the respective Pledgor so long as no Event of Default then exists)) which may be paid in respect of the Collateral by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate or other reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the Pledgees right to receive the proceeds of the Collateral in any form in accordance with Section 3 of this Agreement. All dividends, distributions or other payments which are received by any Pledgor contrary to the provisions of this Section 6 or Section 7 hereof shall be received in trust for the benefit of the Pledgee, shall be segregated from other property or funds of such Pledgor and shall be forthwith paid over to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT. If there shall have occurred and be continuing an Event of Default, then and in every such case, the Pledgee shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Agreement, any other Secured Debt Agreement or by law) for the protection and enforcement of its rights in respect of the Collateral, and the Pledgee shall be entitled to exercise all the rights and remedies of a secured party under the UCC as in effect in any relevant jurisdiction and also shall be entitled, without limitation, to exercise the following rights, which each Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral otherwise payable under Section 6 hereof to the respective Pledgor;
(b) to transfer all or any part of the Collateral into the Pledgees name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in accordance with its terms, and take any other lawful action to collect upon any Pledged Note (including, without limitation, to make any demand for payment thereon);
(d) to vote (and exercise all rights and powers in respect of voting) all or any part of the Collateral (whether or not transferred into the name of the Pledgee) and give all consents, waivers and ratifications in respect of the Collateral and otherwise act with respect thereto as though it were the outright owner thereof (each Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with full power of substitution to do so);
13
(e) at any time and from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, without demand of performance, advertisement or, notice of intention to sell or of the time or place of sale or adjournment thereof or to redeem or otherwise purchase or dispose (all of which are hereby waived by each Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Pledgee in its absolute discretion may determine, provided at least 10 days written notice of the time and place of any such sale shall be given to the respective Pledgor. The Pledgee shall not be obligated to make any such sale of Collateral regardless of whether any such notice of sale has theretofore been given. Each Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security or the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured Creditors may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Pledgee nor any other Secured Creditor shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and
(f) to set off any and all Collateral against any and all Obligations, and to withdraw any and all cash or other Collateral from any and all Collateral Accounts and to apply such cash and other Collateral to the payment of any and all Obligations.
8. REMEDIES, CUMULATIVE, ETC. Each and every right, power and remedy of the Pledgee provided for in this Agreement or in any other Secured Debt Agreement, or now or hereafter existing at law or in equity or by statute shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Pledgee or any other Secured Creditor of any one or more of the rights, powers or remedies provided for in this Agreement or any other Secured Debt Agreement or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee or any other Secured Creditor of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee or any other Secured Creditor to exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on any Pledgor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee or any other Secured Creditor to any other or further action in any circumstances without notice or demand. The Secured Creditors agree that this Agreement may be enforced only by the action of the Pledgee, in each case, acting upon the instructions of the Required Secured Creditors, and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Pledgee for the benefit of the Secured Creditors upon the terms of this Agreement and the Security Agreement.
9. APPLICATION OF PROCEEDS. (a) All monies collected by the Pledgee upon any sale or other disposition of the Collateral pursuant to the terms of this Agreement, together with all other monies received by the Pledgee hereunder or upon any distribution of (or on account of) Collateral (whether or not characterized as such) in connection with any case, proceeding or other action of the type described in Section 11.05 of the Credit Agreement, shall be applied in the manner provided in the Security Agreement.
14
(b) It is understood and agreed that each Pledgor shall remain jointly and severally liable with respect to its Obligations to the extent of any deficiency between the amount of the proceeds of the Collateral pledged by it hereunder and the aggregate amount of such Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the Pledgee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the Pledgee or the officer making such sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Pledgee or such officer or be answerable in any way for the misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to indemnify, reimburse and hold harmless the Pledgee and each other Secured Creditor and their respective successors, assigns, employees, agents and affiliates (individually, an Indemnitee , and collectively, the Indemnitees ) from and against any and all obligations, damages, injuries, penalties, claims, demands, losses, judgments and liabilities (including, without limitation, liabilities for penalties) of whatsoever kind or nature, and (ii) to reimburse each Indemnitee for all reasonable costs, expenses and disbursements, including reasonable attorneys, agents and professional advisors fees and expenses, in each case arising out of or resulting from this Agreement or the exercise by any Indemnitee of any right or remedy granted to it hereunder or under any other Secured Debt Agreement (but excluding any obligations, damages, injuries, penalties, claims, demands, losses, judgments and liabilities (including, without limitation, liabilities for penalties) or expenses of whatsoever kind or nature to the extent incurred or arising by reason of gross negligence or willful misconduct of such Indemnitee (as determined by a court of competent jurisdiction in a final and non-appealable decision)). In no event shall the Pledgee hereunder be liable, in the absence of gross negligence or willful misconduct on its part (as determined by a court of competent jurisdiction in a final and non-appealable decision), for any matter or thing in connection with this Agreement other than to account for monies or other property actually received by it in accordance with the terms hereof. If and to the extent that the obligations of any Pledgor under this Section 11 are unenforceable for any reason, such Pledgor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law. The indemnity obligations of each Pledgor contained in this Section 11 shall continue in full force and effect notwithstanding the full payment of all the Notes issued under the Credit Agreement, the termination of all Secured Hedging Agreements, and the payment of all other Obligations and notwithstanding the discharge thereof.
12. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER. (a) Nothing herein shall be construed to make the Pledgee or any other Secured Creditor liable as a member of any limited liability company or as a partner of any partnership and neither the Pledgee nor any other Secured Creditor by virtue of this Agreement or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited liability company or as a partner in any partnership. The parties hereto expressly agree that, unless the Pledgee shall become the absolute owner of Collateral consisting of a Limited Liability Company Interest or a Partnership Interest pursuant hereto, this Agreement shall not be construed as creating a partnership or joint venture among the Pledgee, any other Secured Creditor, any Pledgor and/or any other Person.
15
(b) Except as provided in the last sentence of paragraph (a) of this Section 12, the Pledgee, by accepting this Agreement, did not intend to become a member of any limited liability company or a partner of any partnership or otherwise be deemed to be a co-venturer with respect to any Pledgor, any limited liability company, partnership and/or any other Person either before or after an Event of Default shall have occurred. The Pledgee shall have only those powers set forth herein and the Secured Creditors shall assume none of the duties, obligations or liabilities of a member of any limited liability company or as a partner of any partnership or any Pledgor except as provided in the last sentence of paragraph (a) of this Section 12.
(c) The Pledgee and the other Secured Creditors shall not be obligated to perform or discharge any obligation of any Pledgor as a result of the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all the rights, powers, privileges and authority so created, shall not at any time or in any event obligate the Pledgee or any other Secured Creditor to appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or to take any action hereunder or thereunder, or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees that it will join with the Pledgee in executing and, at such Pledgors own expense, file and refile under the UCC or other applicable law such financing statements, continuation statements and other documents, in form reasonably acceptable to the Pledgee, in such offices as the Pledgee (acting on its own or on the instructions of the Required Secured Creditors) may reasonably deem necessary or appropriate and wherever required or permitted by law in order to perfect and preserve the Pledgees security interest in the Collateral hereunder and hereby authorizes the Pledgee to file financing statements and amendments thereto relative to all or any part of the Collateral (including, without limitation, financing statements which list the Collateral specifically and/or all assets as collateral without the signature of such Pledgor where permitted by law), and agrees to do such further acts and things and to execute and deliver to the Pledgee such additional conveyances, assignments, agreements and instruments as the Pledgee may reasonably require or deem advisable to carry into effect the purposes of this Agreement or to further assure and confirm unto the Pledgee its rights, powers and remedies hereunder or thereunder.
(b) Each Pledgor hereby constitutes and appoints the Pledgee its true and lawful attorney-in-fact, irrevocably, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time after the occurrence and during the continuance of an Event of Default, in the Pledgees discretion, to act, require, demand, receive and give acquittance for any and all monies and claims for monies due or to become due to such Pledgor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings and to execute any instrument which the Pledgee may deem reasonably necessary or advisable to accomplish the purposes of this Agreement, which appointment as attorney is coupled with an interest.
16
14. THE PLEDGEE AS COLLATERAL AGENT. The Pledgee will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood, acknowledged and agreed by each Secured Creditor that by accepting the benefits of this Agreement each such Secured Creditor acknowledges and agrees that the obligations of the Pledgee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in Section 12 of the Credit Agreement. The Pledgee shall act hereunder on the terms and conditions set forth herein and in Section 12 of the Credit Agreement which shall inure to the benefit of the Pledgee, and shall be binding upon all Pledgors and all Secured Creditors, in connection with this Agreement and the other Security Documents. Without limiting the generality of the foregoing, (i) the Pledgee shall not be subject to any fiduciary or other implied duties, regardless of whether an Event of Default has occurred and is continuing and (ii) the Pledgee shall not have any duty to take any discretionary action or exercise any discretionary powers. Notwithstanding anything to the contrary in this Agreement, in no event shall the Pledgee be responsible for, or have any duty or obligation with respect to, the recording, filing, registering, perfection, protection or maintenance of the security interests or Liens intended to be created by this Agreement (including the preparation, filing or continuation of any Uniform Commercial Code financing or continuation statements or similar documents or instruments), nor shall the Pledgee be responsible for, and the Pledgee makes no representation regarding, the validity, enforceability, effectiveness or priority of this Agreement or the security interests or Liens intended to be created hereby.
15. TRANSFER BY THE PLEDGORS. Except as permitted (i) prior to the date all Credit Document Obligations have been paid in full and all Loan Commitments under the Credit Agreement have been terminated, pursuant to the Credit Agreement, and (ii) thereafter, pursuant to the other Secured Debt Agreements, no Pledgor will sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein.
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. (a) Each Pledgor represents, warrants and covenants as to itself and each of its Subsidiaries that:
(i) it is the legal, beneficial and record owner of, and has good and marketable title to, all of its Collateral consisting of one or more Securities, Partnership Interests and Limited Liability Company Interests and that it has sufficient interest in all of its Collateral in which a security interest is purported to be created hereunder for such security interest to attach (subject, in each case, to no pledge, lien, mortgage, hypothecation, security interest, charge, option, Adverse Claim or other encumbrance whatsoever,except the liens and security interests created by this Agreement and, subject to the terms of the Intercreditor Agreement, those created by the Senior Secured Notes Security Documents;
17
(ii) it has full power, authority and legal right to pledge all the Collateral pledged by it pursuant to this Agreement;
(iii) this Agreement has been duly authorized, executed and delivered by such Pledgor and constitutes a legal, valid and binding obligation of such Pledgor enforceable against such Pledgor in accordance with its terms, except to the extent that the enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made, no consent of any other party (including, without limitation, any stockholder, partner, member or creditor of such Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any Governmental Authority is required to be obtained by such Pledgor in connection with (a) the execution, delivery or performance of this Agreement by such Pledgor, (b) the validity or enforceability of this Agreement against such Pledgor (except as set forth in clause (iii) above), (c) the perfection or enforceability of the Pledgees security interest in such Pledgors Collateral or (d) except for compliance with or as may be required by applicable securities laws, the exercise by the Pledgee of any of its rights or remedies provided herein;
(v) neither the execution, delivery or performance by such Pledgor of this Agreement or any other Secured Debt Agreement to which it is a party, nor compliance by it with the terms and provisions hereof and thereof nor the consummation of the transactions contemplated therein: (i) will contravene any provision of any applicable Requirements of Law or Governmental Authority, domestic or foreign, applicable to such Pledgor; (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents and, subject to the terms of the Intercreditor Agreement, the Senior Secured Notes Security Documents) upon any of the properties or assets of such Pledgor or any of its Subsidiaries pursuant to the terms of any indenture, lease, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or other instrument to which such Pledgor or any of its Subsidiaries is a party or is otherwise bound, or by which it or any of its properties or assets is bound or to which it may be subject; or (iii) will violate any provision of the Organizational Documents of such Pledgor or any of its Subsidiaries;
(vi) all of such Pledgors Collateral (consisting of Securities, Limited Liability Company Interests and Partnership Interests) has been duly and validly issued, is fully paid and non-assessable and is subject to no options to purchase or similar rights;
18
(vii) each of such Pledgors Pledged Notes constitutes, or when executed by the obligor thereof will constitute, the legal, valid and binding obligation of such obligor, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors rights generally and by general equitable principles (regardless of whether enforcement is sought in equity or at law);
(viii) the pledge, collateral assignment and delivery to the Pledgee of such Pledgors Collateral consisting of Certificated Securities and Pledged Notes pursuant to this Agreement creates a valid and perfected first priority security interest in such Certificated Securities and Pledged Notes, and the proceeds thereof, subject to no prior Lien or encumbrance or to any agreement purporting to grant to any third party a Lien or encumbrance on the property or assets of such Pledgor which would include the Securities (other than, subject to the terms of the Intercreditor Agreement, the Liens under the Senior Secured Notes Security Documents) and the Pledgee is entitled to all the rights, priorities and benefits afforded by the UCC or other relevant law as enacted in any relevant jurisdiction to perfect security interests in respect of such Collateral; and
(ix) control (as defined in Section 8-106 of the UCC) has been obtained by the Pledgee over all of such Pledgors Collateral consisting of Securities (including, without limitation, Notes which are Securities) with respect to which such control may be obtained pursuant to Section 8-106 of the UCC, except to the extent that the obligation of the applicable Pledgor to provide the Pledgee with control of such Collateral has not yet arisen under this Agreement; provided that in the case of the Pledgee obtaining control over Collateral consisting of a Security Entitlement, such Pledgor shall have taken all steps in its control so that the Pledgee obtains control over such Security Entitlement.
(b) Each Pledgor covenants and agrees that it will defend the Pledgees right, title and security interest in and to such Pledgors Collateral and the proceeds thereof against the claims and demands of all persons whomsoever; and each Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee by such Pledgor as Collateral hereunder and will likewise defend the right thereto and security interest therein of the Pledgee and the other Secured Creditors.
(c) Each Pledgor covenants and agrees that it will take no action which would violate any of the terms of any Secured Debt Agreement.
17. LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION); JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS; CHANGES THERETO; ETC. The exact legal name of each Pledgor, the type of organization of such Pledgor, whether or not such Pledgor is a Registered Organization, the jurisdiction of organization of such Pledgor, such Pledgors Location, the organizational identification number (if any) of each Pledgor and the Federal Employer
19
Identification Number (if any) is listed on Annex A hereto for such Pledgor. No Pledgor shall change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its jurisdiction of organization, its Location, its organizational identification number (if any), or its Federal Employer Identification Number (if any) except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Secured Debt Agreements and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) any Pledgor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, outside the United States or a State thereof) if (i) it shall have given to the Collateral Agent not less than 5 days prior written notice of each change to the information listed on Annex A (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Annex A which shall correct all information contained therein for such Pledgor, and (ii) in connection with the respective change or changes, it shall have taken all action reasonably necessary or as reasonably requested by the Collateral Agent to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect. In addition, to the extent that any Pledgor does not have an organizational identification number on the date hereof and later obtains one, such Pledgor shall promptly thereafter deliver a notification to the Collateral Agent of such organizational identification number and shall take all actions reasonably necessary or as reasonably requested by the Collateral Agent to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.
18. PLEDGORS OBLIGATIONS ABSOLUTE, ETC. The obligations of each Pledgor under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever (other than termination of this Agreement pursuant to Section 20 hereof), including, without limitation:
(a) any renewal, extension, amendment or modification of, or addition or supplement to or deletion from any Secured Debt Agreement (other than this Agreement in accordance with its terms), or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof;
(b) any waiver, consent, extension, indulgence or other action or inaction under or in respect of any such agreement or instrument including, without limitation, this Agreement (other than a waiver, consent or extension with respect to this Agreement in accordance with its terms);
(c) any furnishing of any additional security to the Pledgee or it assignee or any acceptance thereof or any release of any security by the Pledgee or its assignee;
(d) any limitation on any partys liability or obligations under any such instrument or agreement or any invalidity or unenforceability, in whole or in part, of any such instrument or agreement or any term thereof; or
20
(e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to any Pledgor or any Subsidiary of any Pledgor, or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding, whether or not such Pledgor shall have notice or knowledge of any of the foregoing.
19. SALE OF COLLATERAL WITHOUT REGISTRATION. If at any time when the Pledgee shall determine to exercise its right to sell all or any part of the Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests pursuant to Section 7 hereof, and such Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act, as then in effect, the Pledgee may, in its sole and absolute discretion, sell such Collateral or part thereof by private sale in such manner and under such circumstances as the Pledgee may deem necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Pledgee, in its sole and absolute discretion (i) may proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Collateral or part thereof shall have been filed under such Securities Act, (ii) may approach and negotiate with a single possible purchaser to effect such sale, and (iii) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of such Collateral or part thereof. In the event of any such sale, the Pledgee shall incur no responsibility or liability for selling all or any part of the Collateral at a price which the Pledgee, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until the registration as aforesaid.
20. TERMINATION; RELEASE. (a) On the Termination Date (as defined below), this Agreement shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 11 hereof shall survive any such termination) and the Pledgee, at the written request and sole expense of such Pledgor, will execute and deliver to such Pledgor a proper instrument or instruments (including UCC termination statements) acknowledging the satisfaction and termination of this Agreement (including, without limitation, UCC termination statements and instruments of satisfaction, discharge and/or reconveyance), and will duly release from the security interest created hereby and assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Pledgee and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement, together with any moneys at the time held by the Pledgee or any of its sub-agents hereunder and, with respect to any Collateral consisting of an Uncertificated Security, a Partnership Interest or a Limited Liability Company Interest (other than an Uncertificated Security, Partnership Interest or Limited Liability Company Interest credited on the books of a Clearing Corporation or Securities Intermediary), a termination of the agreement relating thereto executed and delivered by the issuer of such Uncertificated Security pursuant to Section 3.2(a)(ii) or by the respective partnership or limited liability company pursuant to Section 3.2(a)(iv)(2). As used in this Agreement, Termination Date shall mean the date upon which the Total Loan Commitment under the Credit Agreement has been terminated and all Secured Hedging Agreements entitled to the benefits of this Agreement have been terminated, no or Note (as defined in the Credit Agreement) is outstanding (and all Loans have been paid in full), and all other Obligations (other than indemnities described in Section 11 hereof and described in Section 13.01 of the Credit Agreement, and any other indemnities set forth in any other Security Documents, in each case which are not then due and payable) then due and payable have been paid in full.
21
(b) In the event that any part of the Collateral is sold or otherwise disposed of (to a Person other than a Credit Party) (x) at any time prior to the time at which all Credit Document Obligations have been paid in full and the Total Loan Commitment under the Credit Agreement have been terminated, in connection with a sale or disposition permitted by Section 10.02 of the Credit Agreement or is otherwise released at the direction of the Required Lenders {or all the Lenders if required by Section 13.12 of the Credit Agreement) or (y) at any time thereafter, to the extent permitted by the other Secured Debt Agreements, and in the case of clauses (x) and (y), the proceeds of such sale or disposition (or from such release) are applied in accordance with the terms of the Credit Agreement or such other Secured Debt Agreement, as the case may be, to the extent required to be so applied, the Pledgee, at the written request and sole expense of such Pledgor, will duly release from the security interest created hereby (and will execute and deliver such documentation, including termination or partial release statements and the like in connection therewith) and assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or released and as may be in the possession of the Pledgee (or, in the case of Collateral held by any sub-agent designated pursuant to Section 4 hereof, such sub-agent) and has not theretofore been released pursuant to this Agreement.
(c) At any time that any Pledgor desires that Collateral be released as provided in the foregoing Section 20(a) or (b), it shall deliver to the Pledgee (and the relevant sub-agent, if any, designated pursuant to Section 4 hereof) a certificate signed by an Authorized Officer of such Pledgor certifying that the release of the respective Collateral is permitted pursuant to the Credit Documents, including Section 20(a) or (b) hereof.
(d) The Pledgee shall have no liability whatsoever to any other Secured Creditor as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in good faith believes to be in accordance with) this Section 20.
21. NOTICES, ETC. Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier, except that notices and communications to the Pledgee or any Pledgor shall not be effective until received by the Pledgee or such Pledgor, as the case may be. All notices and other communications shall be in writing and addressed as follows:
(a) if to any Pledgor, at its address set forth in the Security Agreement;
(b) if to the Pledgee, at:
22
Victory Park Management, LLC 227 W. Monroe Street, Suite 3900 |
||
Chicago, Illinois 60606 | ||
Telephone: | (312) 705-2786 | |
Facsimile: | (312) 701-0794 | |
Attention: | Scott R. Zemnick, General Counsel | |
E-mail: | szemnick@vpcadvisors.com |
with a copy (for informational purposes only) to:
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
Telephone: (312) 902-5297 and (312) 902-5495
Facsimile: (312) 577-8964 and (312) 577-8854
Attention: Mark R. Grossmann, Esq. and Scott E. Lyons, Esq.
E-mail: mg@kattenlaw.com and scott.lyons@kattenlaw.com
(c) if to any Lender Creditor, either (x) to the Administrative Agent, at the address of the Administrative Agent specified in the Credit Agreement, or (y) at such address as such Lender Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other Creditor shall have specified in writing to the Pledgors and the Pledgee;
or at such other address or addressed to such other individual as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
22. WAIVER; AMENDMENT. Except as provided in Sections 30 and 32 hereof, none of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever except in accordance with the requirements specified in the Security Agreement.
23. SUCCESSORS AND ASSIGNS. This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or termination as set forth in Section 20 hereof, (ii) be binding upon each Pledgor, its successors and assigns; provided , however , that no Pledgor shall assign any of its rights or obligations hereunder without the prior written consent of the Pledgee (with the prior written consent of the Required Secured Creditors) or as may otherwise be permitted by the Secured Debt Agreements, and (iii) inure, together with the rights and remedies of the Pledgee hereunder, to the benefit of the Pledgee, the other Secured Creditors and their respective successors, transferees and assigns. All agreements, statements, representations and warranties made by each Pledgor herein or in any certificate or other instrument delivered by such Pledgor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Creditors and shall survive the execution and delivery of this Agreement and the other Secured Debt Agreements regardless of any investigation made by the Secured Creditors or on their behalf.
23
24. HEADINGS DESCRIPTIVE. The headings of the several Sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
25. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH PARTY. EACH PLEDGOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH PLEDGOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 21 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN, HOWEVER, SHALL AFFECT THE RIGHT OF THE PLEDGEE UNDER THIS AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
24
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
26. PLEDGORS DUTIES. It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Pledgor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Pledgee shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, except for the safekeeping of Collateral actually in Pledgor s possession, nor shall the Pledgee be required or obligated in any manner to perform or fulfill any of the obligations of any Pledgor under or with respect to any Collateral.
27. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with each Pledgor and the Pledgee.
28. SEVERABILITY. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or . unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
29. RECOURSE. This Agreement is made with full recourse to each Pledgor and pursuant to and upon all the representations, warranties, covenants and agreements on the part of such Pledgor contained herein and in the other Secured Debt Agreements and otherwise in writing in connection herewith or therewith.
30. ADDITIONAL PLEDGORS. It is understood and agreed that any Subsidiary of Holdings that is required to become a party to this Agreement after the date hereof pursuant to the requirements of the Credit Agreement or any other Credit Document, shall become a Pledgor hereunder by (x) executing a counterpart hereof and delivering same to the Pledgee or executing a joinder agreement and delivering same to the Pledgee, in each case as may be required by (and in form and substance reasonably satisfactory to) the Pledgee, (y) delivering supplements to Annexes A through G, hereto as are necessary to cause such annexes to be complete and accurate with respect to such additional Pledgor on such date and (z) taking all actions as specified in this Agreement as would have been taken by such Pledgor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Pledgee and with all documents and actions required above to be taken to the reasonable satisfaction of the Pledgee.
31. LIMITED OBLIGATIONS. It is the desire and intent of each Pledgor and the Secured Creditors that this Agreement shall be enforced against each Pledgor to the fullest extent permissible under the laws applied in each jurisdiction in which enforcement is sought. Notwithstanding anything to the contrary contained herein, in furtherance of the foregoing, it is noted that the obligations of each Pledgor constituting a Guarantor have been limited as provided in the respective Guaranty.
25
32. RELEASE OF PLEDGORS. If at any time all of the Equity Interests of any Pledgor owned by the Borrower or any of its Subsidiaries are sold (to a Person other than a Credit Party) in a transaction permitted pursuant to the Credit Agreement (and which does not violate the terms of any other Secured Debt Agreement then in effect), then, such Pledgor shall be released as a Pledgor pursuant to this Agreement without any further action hereunder (it being understood that the sale of all of the Equity Interests in any Person that owns, directly or indirectly, all of the Equity Interests in any Pledgor shall be deemed to be a sale of all of the Equity Interests in such Pledgor for purposes of this Section), and the Pledgee is authorized and directed, at the sole expense of the Borrower, to execute and deliver such instruments of release as are reasonably satisfactory to it. At any time that the Borrower desires that a Pledgor be released from this Agreement as provided in this Section 32, the Borrower shall deliver to the Pledgee a certificate signed by an Authorized Officer of the Borrower stating that the release of such Pledgor is permitted pursuant to this Section 32. The Pledgee shall have no liability whatsoever to any other Secured Creditor as a result of the release of any Pledgor by it in accordance with, or which it believes in good faith to be in accordance with, this Section 32.
* * *
26
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.
PLEDGORS | CURO FINANCIAL TECHNOLOGIES CORP. | |
CURO INTERMEDIATE HOLDINGS CORP. | ||
TODD FINANCIAL, INC. | ||
TODD CAR TITLE, INC. | ||
CURO MANAGEMENT LLC | ||
FMMR INVESTMENTS, INC. | ||
EVERGREEN FINANCIAL INVESTMENTS, | ||
INC. | ||
PRINCIPAL INVESTMENTS, INC. | ||
SPEEDY CASH | ||
ADVANCE GROUP, INC. | ||
CONCORD FINANCE, INC. | ||
SCIL, INC. | ||
CASH COLORADO, LLC | ||
GALT VENTURES, LLC | ||
A SPEEDY CASH CAR TITLE LOANS, LLC | ||
SCIL TEXAS, LLC | ||
SC AURUM, LLC | ||
ATTAIN FINANCE, LLC | ||
SPEEDY CASH ILLINOIS, INC. | ||
SC TEXAS MB, INC. | ||
THE MONEY STORE, L.P. | ||
By: /s/ Donald F. Gayhardt Jr. | ||
Name: Donald F. Gayhardt Jr. |
||
Title: President & Chief Executive Officer |
[Signature Page to Pledge Agreement]
Accepted and Agreed to:
VICTORY PARK MANAGEMENT, LLC, as Collateral Agent and Pledgee |
By: /s/ Scott R. Zemnick
Name: Scott R. Zemnick
Title: Authorized Signatory
[Signature Page to Pledge Agreement]
SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION
(AND WHETHER A REGISTERED ORGANIZATION), JURISDICTION
OF ORGANIZATION, LOCATION, ORGANIZATIONAL IDENTIFICATION
NUMBERS AND FEDERAL EMPLOYER IDENTIFICATION NUMBERS
Exact Legal Name of
|
Type of
|
Registered Organization? (Yes/No) |
Jurisdiction of Organization |
Assignors Location
|
Assignors
|
Assignors Federal
|
||||||
Curo Financial Technologies Corp. |
Corporation | Yes | Delaware | 3527 North Ridge Road, Wichita, Kansas 67205 | Delaware: 4568552 | [****] | ||||||
Curo Intermediate Holdings Corp. |
Corporation | Yes | Delaware | 3527 North Ridge Road, Wichita, Kansas 67205 | Delaware: 4575800 | [****] | ||||||
Todd Financial, Inc. |
Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C315-2004 | [****] | ||||||
Curo Management LLC |
Limited Liability Company |
Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: LLC15783- 2002 | [****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
FMMR Investments, Inc. |
Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0147582006-4 |
[****] | ||||||
Evergreen Financial Investments, Inc. |
Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C28559- 2001 |
[****] |
||||||
Principal Investments, Inc. |
Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C24603- 2002 |
[****] |
||||||
Todd Car Title, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C603-2004 |
[****] |
||||||
Speedy Cash | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C20087- 1998 |
[****] |
||||||
Advance Group, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C11137- 1999 |
[****] |
||||||
Concord Finance, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C12543- 2002 |
[****] |
||||||
SCIL, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, |
Nevada: E0482792006-5 |
[****] |
||||||
Wichita, Kansas 67205 |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
Cash Colorado, LLC |
Limited Liability Company |
Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: C12636- 2003 | [****] | ||||||
Galt Ventures, LLC |
Limited Liability Company |
Yes | Kansas | 3527 North Ridge Road, Wichita, Kansas 67205 | Kansas: 4234100 |
[****] |
||||||
A Speedy Cash Car Title Loans, LLC |
Limited Liability Company |
Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | C912-2001 |
[****] |
||||||
SCIL Texas, LLC |
Limited Liability Company |
Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | E0039112007-9 |
[****] |
||||||
Attain Finance, LLC |
Limited Liability Company |
Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0499842009-4 |
[****] |
||||||
SC Aurum, LLC |
Limited Liability Company |
Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 |
Nevada: E0492782009-9 |
[****] |
||||||
Speedy Cash Illinois, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: E0291302012-5 |
[****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
SC Texas MB, Inc. | Corporation | Yes | Nevada | 3527 North Ridge Road, Wichita, Kansas 67205 | Nevada: E0376982012- 7 | [****] | ||||||
The Money Store, L.P. |
Limited partnership |
Yes | Texas | 3527 North Ridge Road, Wichita, Kansas 67205 | Texas: 7422197024 | [****] |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
SCHEDULE OF SUBSIDIARIES
Entity |
Owner |
Percent Owned |
Class of Capital Stock |
|||
Curo Intermediate Holdings Corp. | Curo Financial Technologies Corp. | 100% | Common Stock | |||
A Speedy Cash Car Title Loans, LLC | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
Advance Group, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
Attain Finance, LLC | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
Attain Finance Canada, Inc. | Attain Finance, LLC | 100% | Common Stock | |||
Cash Money Cheque Cashing, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
Cash Colorado, LLC | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
Concord Finance, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
Evergreen Financial Investments, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
FMMR Investments, Inc. |
Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
Galt Ventures, LLC | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
LendDirect Corp. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
Principal Investments, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
SC Aurum, LLC | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
SCHC Financial Canada, Inc.* | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
SCIL Texas, LLC | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
SCIL, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
Speedy Cash | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
Speedy Cash Illinois, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
SC Texas MB, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock |
The Money Store, L.P. | SC Texas MB, Inc. | 100% | LLC interests | |||
The Money Store, L.P. | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
SRC Transatlantic Limited* | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
Wage Day Advance Limited | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
Curo Management LLC | Curo Intermediate Holdings Corp. | 100% | LLC interests | |||
Todd Car Title, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
Todd Financial, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock | |||
CFTC Finance, Inc. | Curo Intermediate Holdings Corp. | 100% | Common Stock |
SCHEDULE OF STOCK
1. Curo Financial Technologies Corp.
Name of Issuing Corporation |
Type of Shares |
Number of Shares |
Certificate No. |
Percentage Owned |
Sub-clause
of
of Pledge Agreement |
|||||
Speedy Cash Intermediate Holdings Corp. |
Common stock |
100 shares | 1 | 100% | 3.2(a)(i) |
2. Curo Intermediate Holdings Corp.
Name of Issuing Corporation |
Type of Shares |
Number of Shares |
Certificate No. |
Percentage Owned |
Sub-clause
of
|
|||||
Advance Group, Inc. |
Common stock |
760 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Concord Finance, Inc. |
Common stock |
2,500 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Evergreen Financial Investments, Inc. |
Common stock |
2,500 shares | 1-SC | 100% | 3.2(a)(i) | |||||
FMMR Investments, Inc. |
Common stock |
400 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Principal Investments, Inc. |
Common stock |
760 shares | 1-SC | 100% | 3.2(a)(i) | |||||
SCIL, Inc. |
Common stock |
300 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Todd Car Title, Inc. |
Common stock |
2,124 shares | 1-SC | 100% | 3.2(a)(i) |
Todd Financial, Inc. |
Common stock |
2,124 shares | 1-SC | 100% | 3.2(a)(i) | |||||
Speedy Cash |
Common stock |
80 shares | 1-SC | 100% | 3.2(a)(i) | |||||
SC Texas MB, Inc. |
Common Stock |
100 shares | 1 | 100% | 3.2(a)(i) | |||||
Cash Money Cheque Cashing Inc. |
Common Stock |
14,163,695 | SC-2 | 100% | 3.2(a)(i) | |||||
LendDirect Corp. |
Class A | 1,000 | A-1 | 100% | 3.2(a)(i) | |||||
SRC Transatlantic Limited |
Ordinary shares |
15,210,065 | 100% | 3.2(a)(i) |
3. Attain Finance, LLC
Name of Issuing Corporation |
Type of Shares |
Number of Shares |
Certificate No. |
Percentage Owned |
Sub-clause
of
of Pledge Agreement |
|||||
Attain Finance Canada, Inc. |
Common stock |
100 shares | A-1 | 100% | 3.2(a)(i) |
SCHEDULE OF NOTES
1. Curo Intermediate Holdings Corp. 1
Amount |
Maturity Date |
Obligor |
Sub-clause of Section 3.2(a) of Pledge Agreement |
|||
$55,000,000 | November 30, 2016 | Cash Money Acquisition Inc. | 3.2(a)(v) |
1 | NTD: this note is being replaced with equivalent notes that may or may not be finalized by the closing date. |
SCHEDULE OF LIMITED LIABILITY COMPANY INTERESTS
1. Curo Intermediate Holdings Corp.
Name of Issuing Limited Liability Company |
Type of Interest |
Percentage Owned |
Sub-clause of Section 3.2(a) of Pledge Agreement |
|||
A Speedy Cash Car Title Loans, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
Cash Colorado, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
Galt Ventures, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
SCIL Texas, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
Curo Management LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
Attain Finance, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
SC Aurum, LLC |
Membership interests |
100% | 3.2(a)(ii) | |||
The Money Store, L.P. |
Limited partnership |
100% | 3.2(a)(ii) |
SCHEDULE OF PARTNERSHIP INTERESTS
1. Curo Intermediate Holdings Corp.
Name of Issuing Limited Liability Company |
Type of Interest |
Percentage Owned |
Sub-clause of Section 3.2(a) of Pledge Agreement |
|||
The Money Store, L.P. |
Limited partnership |
100% | 3.2(a)(ii) |
SCHEDULE OF CHIEF EXECUTIVE OFFICES
Name of Pledgor |
Address(es) of Chief Executive Office |
|
All Pledgors and Assignors | 3527 North Ridge Road, Wichita, Kansas 67205 |
Exhibit 10.52
Execution Version
SUBSIDIARIES GUARANTY
among
CERTAIN SUBSIDIARIES OF CURO INTERMEDIATE HOLDINGS CORP.
and
VICTORY PARK MANAGEMENT, LLC,
as ADMINISTRATIVE AGENT
Dated as of November 17, 2016
TABLE OF CONTENTS
Page | ||||||
1. |
GUARANTY | 2 | ||||
2. |
LIABILITY OF GUARANTORS ABSOLUTE | 3 | ||||
3. |
OBLIGATIONS OF GUARANTORS INDEPENDENT | 3 | ||||
4. |
WAIVERS BY GUARANTORS | 3 | ||||
5. |
RIGHTS OF SECURED CREDITORS | 5 | ||||
6. |
CONTINUING GUARANTY | 7 | ||||
7. |
SUBORDINATION OF INDEBTEDNESS HELD BY GUARANTORS | 7 | ||||
8. |
GUARANTY ENFORCEABLE BY ADMINISTRATIVE AGENT OR COLLATERAL AGENT | 8 | ||||
9. |
REPRESENTATIONS, WARRANTIES AND COVENANTS OF GUARANTORS | 8 | ||||
10. |
EXPENSES | 10 | ||||
11. |
BENEFIT AND BINDING EFFECT | 10 | ||||
12. |
AMENDMENTS; WAIVERS | 10 | ||||
13. |
SET OFF | 10 | ||||
14. |
NOTICE | 11 | ||||
15. |
REINSTATEMENT | 11 | ||||
16. |
CONSENT TO JURISDICTION; SERVICE OF PROCESS; AND WAIVER OF TRIAL BY JURY | 12 | ||||
17. |
RELEASE OF LIABILITY OF GUARANTOR UPON SALE OR DISSOLUTION | 13 | ||||
18. |
CONTRIBUTION | 13 | ||||
19. |
LIMITATION ON GUARANTEED OBLIGATIONS | 14 | ||||
20. |
COUNTERPARTS | 14 | ||||
21. |
PAYMENTS | 14 | ||||
22. |
ADDITIONAL GUARANTORS | 14 | ||||
23. |
HEADINGS DESCRIPTIVE | 15 |
(i)
SUBSIDIARIES GUARANTY
SUBSIDIARIES GUARANTY (as amended, modified, restated and/or supplemented from time to time, this Guaranty ), dated as of November 17, 2016, made by and among each of the undersigned guarantors (each, a Guarantor and, together with any other entity that becomes a guarantor hereunder pursuant to Section 22 hereof, collectively, the Guarantors ) in favor of VICTORY PARK MANAGEMENT, LLC, as Administrative Agent (together with any successor administrative agent, the Administrative Agent ), for the benefit of the Secured Creditors (as defined below). Except as otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Curo Financial Technologies Corp. ( Holdings ), Curo Intermediate Holdings Corp. (the Borrower ), the lenders from time to time party thereto (the Lenders ) and the Administrative Agent have entered into a Short-Term Credit Agreement, dated as of November 17, 2016 (as amended, modified, restated and/or supplemented from time to time, the Credit Agreement ), providing for the making of Loans to the Borrower, all as contemplated therein (the Lenders, the Administrative Agent and the Collateral Agent are herein called the Lender Creditors );
WHEREAS, the Borrower may at any time and from time to time enter into one or more Interest Rate Protection Agreements and/or Other Hedging Agreements with one or more Lenders or any affiliate thereof (each such Lender or affiliate, even if the respective Lender subsequently ceases to be a Lender under the Credit Agreement for any reason, together with such Lenders or affiliates successors and assigns, if any, collectively, the Other Creditors and, together with the Lender Creditors, the Secured Creditors , with each such Interest Rate Protection Agreement and/or Other Hedging Agreement with an Other Creditor being herein called a Secured Hedging Agreement );
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the Borrower;
WHEREAS, it is a condition precedent to the making of Loans to the Borrower for the account of the Borrower under the Credit Agreement and to the Other Creditors entering into Secured Hedging Agreements that each Guarantor shall have executed and delivered to the Administrative Agent this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans by the Borrower for the account of the Borrower under the Credit Agreement and the entering into by the Borrower of Secured Hedging Agreements and, accordingly, desires to execute this Guaranty in order to satisfy the condition described in the preceding paragraph and to induce the Lenders to make Loans to the Borrower for the account of the Borrower and the Other Creditors to enter into Secured Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Guarantor, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby makes the following representations and warranties to the Administrative Agent for the benefit of the Secured Creditors and hereby covenants and agrees with each other Guarantor and the Administrative Agent for the benefit of the Secured Creditors as follows:
- 1 -
1. GUARANTY . (a) Each Guarantor, jointly and severally, irrevocably, absolutely and unconditionally guarantees as a primary obligor and not merely as surety:
(i) to the Lender Creditors the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of (x) the principal of, premium, if any, and interest on the Notes issued by, and the Loans made to, the Borrower under the Credit Agreement and (y) all other obligations (including, without limitation, obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness owing by the Borrower to the Lender Creditors under each Credit Document to which the Borrower is a party (including, without limitation, indemnities, Fees and interest thereon (including, without limitation, any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in the Credit Agreement, whether or not such interest is an allowed claim in any such proceeding)), whether now existing or hereafter incurred under, arising out of or in connection with each such Credit Document and the due performance and compliance by the Borrower with all of the terms, conditions, covenants and agreements contained in all such Credit Documents (all such principal, premium, interest, liabilities, indebtedness and obligations under this clause (i), except to the extent consisting of obligations or liabilities with respect to Secured Hedging Agreements, being herein collectively called, the Credit Document Obligations ); and
(ii) to each Other Creditor the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations (including, without limitation, obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness (including, without limitation, any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in the respective Secured Hedging Agreements, whether or not such interest is an allowed claim in any such proceeding) owing by the Borrower under each Secured Hedging Agreement, whether now in existence or hereafter arising, and the due performance and compliance by the Borrower with all of the terms, conditions, covenants and agreements contained therein (all such obligations, liabilities and indebtedness being herein collectively called, the Other Obligations , and together with the Credit Document Obligations are herein collectively called the Guaranteed Obligations ).
Each Guarantor understands, agrees and confirms that the Secured Creditors may enforce this Guaranty up to the full amount of the Guaranteed Obligations against such Guarantor without proceeding against any other Guarantor or the Borrower, or against any security for the Guaranteed Obligations, or under any other guaranty covering all or a portion of the Guaranteed Obligations. This Guaranty is a guaranty of prompt payment and performance and not of collection.
- 2 -
(b) Additionally, each Guarantor, jointly and severally, unconditionally, absolutely and irrevocably, guarantees the payment of any and all Guaranteed Obligations whether or not due or payable by the Borrower upon the occurrence in respect of the Borrower of any of the events specified in Section 11.05 of the Credit Agreement, and unconditionally, absolutely and irrevocably, jointly and severally, promises to pay such Guaranteed Obligations to the Secured Creditors, or order, on demand.
2. LIABILITY OF GUARANTORS ABSOLUTE . The liability of each Guarantor hereunder is primary, absolute, joint and several, and unconditional and is exclusive and independent of any security for or other guaranty of the indebtedness of the Borrower whether executed by such Guarantor, any other Guarantor, any other guarantor or by any other party, and the liability of each Guarantor hereunder shall not be affected or impaired by any circumstance or occurrence whatsoever, including, without limitation: (a) any direction as to application of payment by the Borrower, (b) any other continuing or other guaranty, undertaking or maximum liability of a Guarantor or of any other party as to the Guaranteed Obligations, (c) any payment on or in reduction of any such other guaranty or undertaking, (d) any dissolution, termination or increase, decrease or change in personnel by the Borrower, (e) the failure of the Guarantor to receive any benefit from or as a result of its execution, delivery and performance of this Guaranty, (f) any payment made to any Secured Creditor on the indebtedness which any Secured Creditor repays the Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each Guarantor waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, (g) any action or inaction by the Secured Creditors as contemplated in Section 5 hereof or (h) any invalidity, rescission, irregularity or unenforceability of all or any part of the Guaranteed Obligations or of any security therefor.
3. OBLIGATIONS OF GUARANTORS INDEPENDENT . The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, any other guarantor or the Borrower, and a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, any other guarantor or the Borrower and whether or not any other Guarantor, any other guarantor or the Borrower be joined in any such action or actions. Each Guarantor waives (to the fullest extent permitted by applicable law) the benefits of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to each Guarantor.
4. WAIVERS BY GUARANTORS . (a) Each Guarantor hereby waives (to the fullest extent permitted by applicable law) notice of acceptance of this Guaranty and notice of the existence, creation or incurrence of any new or additional liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, demand for performance, protest, notice of dishonor or nonpayment of any such liabilities, suit or taking of other action by the Administrative Agent or any other Secured Creditor against, and any other notice to, any party liable thereon (including such Guarantor, any other Guarantor, any other guarantor or the Borrower) and each Guarantor further hereby waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice or proof of reliance by any Secured Creditor upon this Guaranty, and the Guaranteed Obligations shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended, modified, supplemented or waived, in reliance upon this Guaranty.
- 3 -
(b) Each Guarantor waives any right to require the Secured Creditors to: (i) proceed against the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party; (ii) proceed against or exhaust any security held from the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party; or (iii) pursue any other remedy in the Secured Creditors power whatsoever. Each Guarantor waives any defense based on or arising out of any defense of the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party other than the indefeasible payment in full in cash of the Guaranteed Obligations, including, without limitation, any defense based on or arising out of the disability of the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other party, or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower other than the indefeasible payment in full in cash of the Guaranteed Obligations. The Secured Creditors may, at their election upon the occurrence and during the continuation of an Event of Default, foreclose on any collateral serving as security held by the Administrative Agent, the Collateral Agent or the other Secured Creditors by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Secured Creditors may have against the Borrower, or any other party, or any security, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Guaranteed Obligations have been indefeasibly paid in full in cash. Each Guarantor waives any defense arising out of any such election by the Secured Creditors, even though such election operates to impair or extinguish any right of reimbursement, contribution, indemnification or subrogation or other right or remedy of such Guarantor against the Borrower, any other guarantor of the Guaranteed Obligations or any other party or any security.
(c) Each Guarantor has knowledge and assumes all responsibility for being and keeping itself informed of the Borrowers and each other Guarantors financial condition, affairs and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder, and has adequate means to obtain from the Borrower and each other Guarantor on an ongoing basis information relating thereto and the Borrowers and each other Guarantors ability to pay and perform its respective Guaranteed Obligations, and agrees to assume the responsibility for keeping, and to keep, so informed for so long as this Guaranty is in effect. Each Guarantor acknowledges and agrees that (x) the Secured Creditors shall have no obligation to investigate the financial condition or affairs of the Borrower or any other Guarantor for the benefit of such Guarantor nor to advise such Guarantor of any fact respecting, or any change in, the financial condition, assets or affairs of the Borrower or any other Guarantor that might become known to any Secured Creditor at any time, whether or not such Secured Creditor knows or believes or has reason to know or believe that any such fact or change is unknown to such Guarantor, or might (or does) increase the risk of such Guarantor as guarantor hereunder, or might (or would) affect the willingness of such Guarantor to continue as a guarantor of the Guaranteed Obligations hereunder and (y) the Secured Creditors shall have no duty to advise any Guarantor of information known to them regarding any of the aforementioned circumstances or risks.
- 4 -
(d) Each Guarantor hereby acknowledges and affirms that it understands that to the extent the Guaranteed Obligations are secured by Real Property located in the State of California, such Guarantor shall be liable for the full amount of the liability hereunder notwithstanding foreclosure on such Real Property by trustee sale or any other reason impairing such Guarantors or any Secured Creditors right to proceed against the Borrower or any other guarantor of the Guaranteed Obligations.
(e) Each Guarantor hereby waives (to the fullest extent permitted by applicable law) all rights and benefits under Section 580a, 580b, 580d and 726 of the California Code of Civil Procedure. Each Guarantor hereby further waives (to the fullest extent permitted by applicable law), without limiting the generality of the foregoing or any other provision hereof, all rights and benefits which might otherwise be available to such Guarantor under Sections 2809, 2810, 2815, 2819, 2821, 2839, 2845, 2847, 2848, 2849, 2850, 2899 and 3433 of the California Civil Code.
(f) Until the Guaranteed Obligations have been paid in full in cash, each Guarantor waives its rights of subrogation and reimbursement and any other rights and defenses available to such Guarantor by reason of Sections 2787 to 2855, inclusive, of the California Civil Code, including, without limitation, (1) any defenses such Guarantor may have to this Guaranty by reason of an election of remedies by the Secured Creditors and (2) any rights or defenses such Guarantor may have by reason of protection afforded to the Borrower pursuant to the antideficiency or other laws of California limiting or discharging the Borrowers indebtedness, including, without limitation, Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure. In furtherance of such provisions, each Guarantor hereby waives all rights and defenses arising out of an election of remedies by the Secured Creditors, even though that election of remedies, such as a nonjudicial foreclosure, destroys such Guarantors rights of subrogation and reimbursement against the Borrower by the operation of Section 580d of the California Code of Civil Procedure or otherwise.
(g) Each Guarantor hereby acknowledges and agrees that no Secured Creditor nor any other Person shall be under any obligation (a) to marshal any assets in favor of such Guarantor or in payment of any or all of the liabilities of the Borrower under the Credit Documents or the obligation of such Guarantor hereunder or (b) to pursue any other remedy that such Guarantor may or may not be able to pursue itself any right to which such Guarantor hereby waives.
(h) Each Guarantor warrants and agrees that each of the waivers set forth in Section 3 and in this Section 4 is made with full knowledge of its significance and consequences and that if any of such waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective only to the maximum extent permitted by applicable law.
5. RIGHTS OF SECURED CREDITORS. Subject to Sections 4 and 13 hereof, any Secured Creditor may (except as shall be required by applicable statute and cannot be waived) at any time and from time to time without the consent of, or notice to, any Guarantor, without incurring responsibility to such Guarantor, without impairing or releasing the obligations or liabilities of such Guarantor hereunder, upon or without any terms or conditions and in whole or in part:
- 5 -
(a) change the manner, place or terms of payment of, and/or change, increase or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including, without limitation, any increase or decrease in the rate of interest thereon or the principal amount thereof), any security therefor, or any liability incurred directly or indirectly in respect thereof, and the guaranty herein made shall apply to the Guaranteed Obligations as so changed, extended, increased, accelerated, renewed or altered;
(b) take and hold security for the payment of the Guaranteed Obligations and upon the occurrence and during the continuation of an Event of Default, sell, exchange, release, surrender, impair, realize upon or otherwise deal with in any manner and in any order any property or other collateral by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the Borrower, any other Credit Party, any Subsidiary thereof, any other guarantor of the Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, Guarantors, other guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to creditors of the Borrower other than the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Secured Creditors regardless of what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default under, any of the Secured Hedging Agreements, the Credit Documents or any of the instruments or agreements referred to therein, or otherwise amend, modify or supplement any of the Secured Hedging Agreements, the Credit Documents or any of such other instruments or agreements;
(h) act or fail to act in any manner which may deprive such Guarantor of its right to subrogation against the Borrower to recover full indemnity for any payments made pursuant to this Guaranty; and/or
(i) take any other action or omit to take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of such Guarantor from its liabilities under this Guaranty (including, without limitation, any action or omission whatsoever that might otherwise vary the risk of such Guarantor or constitute a legal or equitable defense to or discharge of the liabilities of a guarantor or surety or that might otherwise limit recourse against such Guarantor).
- 6 -
No invalidity, illegality, irregularity or unenforceability of all or any part of the Guaranteed Obligations, the Credit Documents or any other agreement or instrument relating to the Guaranteed Obligations or of any security or guarantee therefor shall affect, impair or be a defense to this Guaranty, and this Guaranty shall be primary, absolute and unconditional notwithstanding the occurrence of any event or the existence of any other circumstances which might constitute a legal or equitable discharge of a surety or guarantor except payment in full in cash of the Guaranteed Obligations.
6. CONTINUING GUARANTY . This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Secured Creditor in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Secured Creditor would otherwise have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Secured Creditor to any other or further action in any circumstances without notice or demand. It is not necessary for any Secured Creditor to inquire into the capacity or powers of the Borrower or the officers, directors, partners or agents acting or purporting to act on its or their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.
7. SUBORDINATION OF INDEBTEDNESS HELD BY GUARANTORS . Any indebtedness of the Borrower now or hereafter held by any Guarantor is hereby subordinated to the indebtedness of the Borrower to the Secured Creditors; and such indebtedness of the Borrower to any Guarantor, if the Administrative Agent or the Collateral Agent, after an Event of Default has occurred and is continuing, so requests, shall be collected, enforced and received by such Guarantor as trustee for the Secured Creditors and be paid over to the Secured Creditors on account of the indebtedness of the Borrower to the Secured Creditors, but without affecting or impairing in any manner the liability of such Guarantor under the other provisions of this Guaranty. Prior to the transfer by any Guarantor of any note or negotiable instrument evidencing any indebtedness of the Borrower to such Guarantor, such Guarantor shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, each Guarantor hereby agrees with the Secured Creditors that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash; provided , that if any amount shall be paid to such Guarantor on account of such subrogation rights at any time prior to the irrevocable payment in full in cash of all the Guaranteed Obligations, such amount shall be held in trust for the benefit of the Secured Creditors and shall forthwith be paid to the Secured Creditors to be credited and applied upon the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Credit Documents or, if the Credit Documents do not provide for the application of such amount, to be held by the Secured Creditors as collateral security for any Guaranteed Obligations thereafter existing.
- 7 -
8. GUARANTY ENFORCEABLE BY ADMINISTRATIVE AGENT OR COLLATERAL AGENT . Notwithstanding anything to the contrary contained elsewhere in this Guaranty, the Secured Creditors agree (by their acceptance of the benefits of this Guaranty) that this Guaranty may be enforced only by the action of the Administrative Agent or the Collateral Agent, in each case acting upon the instructions of the Required Lenders (or, after the date on which all Credit Document Obligations have been paid in full, the holders of at least a majority of the outstanding Other Obligations) and that no other Secured Creditor shall have any right individually to seek to enforce or to enforce this Guaranty or to realize upon the security to be granted by the Security Documents, it being understood and agreed that such rights and remedies may be exercised by the Administrative Agent or the Collateral Agent or, after all the Credit Document Obligations have been paid in full, by the holders of at least a majority of the outstanding Other Obligations, as the case may be, for the benefit of the Secured Creditors upon the terms of this Guaranty and the Security Documents. The Secured Creditors further agree that this Guaranty may not be enforced against any director, officer, employee, partner, member or stockholder of any Guarantor (except to the extent such partner, member or stockholder is also a Guarantor hereunder). It is understood and agreed that the agreement in this Section 8 is among and solely for the benefit of the Secured Creditors and that, if the Required Lenders (or, after the date on which all Credit Document Obligations have been paid in full, the holders of at least a majority of the outstanding Other Obligations) so agree (without requiring the consent of Holdings, the Borrower or any Guarantor), this Guaranty may be directly enforced by any Secured Creditor.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GUARANTORS . In order to induce the Lenders to make Loans to and for the account of the Borrower pursuant to the Credit Agreement, and in order to induce the Other Creditors to execute, deliver and perform the Secured Hedging Agreements to which they are a party, each Guarantor represents, warrants and covenants that:
(a) such Guarantor (i) is a duly organized and validly existing Company in good standing under the laws of the jurisdiction of its organization, (ii) has the Company power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the nature of its business requires such qualification, except for failures to be so qualified which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect;
(b) such Guarantor has the Company power and authority to execute, deliver and perform the terms and provisions of this Guaranty and each other Document to which it is a party and has taken all necessary Company action to authorize the execution, delivery and performance by it of this Guaranty and each such other Document;
- 8 -
(c) such Guarantor has duly executed and delivered this Guaranty and each other Document to which it is a party, and this Guaranty and each such other Document constitutes the legal, valid and binding obligation of such Guarantor enforceable in accordance with its terms, except to the extent that the enforceability hereof or thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors rights and by equitable principles (regardless of whether enforcement is sought in equity or at law);
(d) neither the execution, delivery or performance by such Guarantor of this Guaranty or any other Document to which it is a party, nor compliance by it with the terms and provisions hereof and thereof, will (i) contravene any provision of any applicable Requirements of Law, (ii) conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents and, subject to the terms of the Intercreditor Agreement, the Senior Secured Notes Security Documents) upon any of the property or assets of such Guarantor or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement, or any other material agreement, contract or instrument to which such Guarantor or any of its Subsidiaries is a party or by which it or any of its property or assets is bound or to which it may be subject or (iii) violate any provision of the Organizational Documents of such Guarantor or any of its Subsidiaries;
(e) no order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made prior to the date when required and which remain in full force and effect), or exemption by, any Governmental Authority is required to authorize, or is required in connection with, (i) the execution, delivery and performance of this Guaranty by such Guarantor or any other Document to which such Guarantor is a party or (ii) the legality, validity, binding effect or enforceability of this Guaranty or any other Document to which such Guarantor is a Party;
(f) there are no actions, suits or proceedings pending or, to such Guarantors knowledge, threatened (i) with respect to this Guaranty or any other Document to which such Guarantor is a party or (ii) with respect to such Guarantor or any of its Subsidiaries that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;
(g) until the termination of the Total Loan Commitment and all Secured Hedging Agreements and until such time as no Note remains outstanding and all Guaranteed Obligations have been paid in full (other than indemnities described in Section 13.01 of the Credit Agreement and analogous provisions in the Security Documents which are not then due and payable), such Guarantor will comply, and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in Sections 9 and 10 of the Credit Agreement, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that no violation of any provision, covenant or agreement contained in Sections 9 and 10 of the Credit Agreement, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries; and
- 9 -
(h) an executed (or conformed) copy of each of the Credit Documents and the Secured Hedging Agreements has been made available to a senior officer of such Guarantor and such officer is familiar with the contents thereof.
10. EXPENSES . The Guarantors hereby jointly and severally agree to pay all reasonable out-of-pocket costs and expenses of the Collateral Agent, the Administrative Agent and each other Secured Creditor in connection with the enforcement of this Guaranty and the protection of the Secured Creditors rights hereunder and any amendment, waiver or consent relating hereto (including, in each case, without limitation, the reasonable fees and disbursements of counsel (including in-house counsel) employed by the Collateral Agent, the Administrative Agent and each other Secured Creditor).
11. BENEFIT AND BINDING EFFECT . This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Secured Creditors and their successors and assigns.
12. AMENDMENTS; WAIVERS . Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby (it being understood that the addition or release of any Guarantor hereunder shall not constitute a change, waiver, discharge or termination affecting any Guarantor other than the Guarantor so added or released) and with the written consent of either (x) the Required Lenders (or, to the extent required by Section 13.12 of the Credit Agreement, with the written consent of each Lender) at all times prior to the time at which all Credit Document Obligations have been paid in full or (y) the holders of at least a majority of the outstanding Other Obligations at all times after the time at which all Credit Document Obligations have been paid in full; provided , that any change, waiver, modification or variance affecting the rights and benefits of a single Class (as defined below) of Secured Creditors (and not all Secured Creditors in a like or similar manner) shall also require the written consent of the Requisite Creditors (as defined below) of such Class of Secured Creditors. For the purpose of this Guaranty, the term Class shall mean each class of Secured Creditors, i.e., whether (x) the Lender Creditors as holders of the Credit Document Obligations or (y) the Other Creditors as the holders of the Other Obligations. For the purpose of this Guaranty, the term Requisite Creditors of any Class shall mean (x) with respect to the Credit Document Obligations, the Required Lenders (or, to the extent required by Section 13.12 of the Credit Agreement, each Lender) and (y) with respect to the Other Obligations, the holders of at least a majority of all Other Obligations outstanding from time to time under the Secured Hedging Agreements.
13. SET OFF . In addition to any rights now or hereafter granted under applicable law (including, without limitation, Section 151 of the New York Debtor and Creditor Law) and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default (such term to mean and include any Event of Default as defined in the Credit Agreement and any payment default under any Secured Hedging Agreement continuing after any applicable grace period), each Secured Creditor is hereby authorized, at any time or from time to time, without notice to any Guarantor or to any other Person, any such notice being expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Secured Creditor to or for the credit or the account of such Guarantor, against and on account of
- 10 -
the obligations and liabilities of such Guarantor to such Secured Creditor under this Guaranty, irrespective of whether or not such Secured Creditor shall have made any demand hereunder and although said obligations, liabilities, deposits or claims, or any of them, shall be contingent or unmatured. Notwithstanding anything to the contrary contained in this Guaranty, at any time that the Guaranteed Obligations shall be secured by any Real Property located in the State of California, no Secured Creditor shall exercise any right of set-off, lien or counterclaim or take any court or administrative action or institute any proceedings to enforce any provision of this Guaranty without the prior consent of the Administrative Agent or the Required Lenders or, to the extent required by Section 13.12 of the Credit Agreement, all of the Lenders, if such setoff or action or proceeding would or might (pursuant to Sections 580a, 580b, 580d and 726 of the California Code of Civil Procedure or Section 2924 of the California Civil Code, if applicable, or otherwise) affect or impair the validity, priority, or enforceability of the liens granted to the Collateral Agent pursuant to the Security Documents or the enforceability of the Guaranteed Obligations hereunder, and any attempted exercise by any Secured Creditor or the Administrative Agent of any such right without obtaining such consent of the Required Lenders or the Administrative Agent shall be null and void. It is understood and agreed that the foregoing sentence of this Section 13 is for the sole benefit of the Secured Creditors and may be amended, modified or waived in any respect by the Required Lenders (without any requirement of prior notice to or consent by any Credit Party or any other Person) and does not constitute a waiver of any rights against any Credit Party or against any Collateral. Each Secured Creditor (by its acceptance of the benefits hereof) acknowledges and agrees that the provisions of this Section 13 are subject to the sharing provisions set forth in Section 13.06 of the Credit Agreement.
14. NOTICE . Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier, except that notices and communications to the Administrative Agent or any Guarantor shall not be effective until received by the Administrative Agent or such Guarantor, as the case may be. All notices and other communications shall be in writing and addressed to such party at (i) in the case of any Lender Creditor, as provided in the Credit Agreement, (ii) in the case of any Guarantor, as provided in the Security Agreement, and (iii) in the case of any Other Creditor, at such address as such Other Creditor shall have specified in writing to the Guarantors; or in any case at such other address as any of the Persons listed above may hereafter notify the others in writing.
15. REINSTATEMENT . If any claim is ever made upon any Secured Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including, without limitation, the Borrower), then and in such event each Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon such Guarantor, notwithstanding any revocation hereof or the cancellation of any Note, any Secured Hedging Agreement or any other instrument evidencing any liability of the Borrower, and such Guarantor shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.
- 11 -
16. CONSENT TO JURISDICTION; SERVICE OF PROCESS; AND WAIVER OF TRIAL BY JURY . (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this Guaranty or any other Credit Document to which any Guarantor is a party shall be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, in each case located within the County of New York, and, by execution and delivery of this Guaranty, each Guarantor hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. Each Guarantor hereby further irrevocably waives any claim that any such courts lack personal jurisdiction over such Guarantor, and agrees not to plead or claim, in any legal action or proceeding with respect to this Guaranty or any other Credit Document to which such Guarantor is a party brought in any of the aforesaid courts, that any such court lacks personal jurisdiction over such Guarantor. Each Guarantor further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to each Guarantor at its address set forth in Section 14 hereof, such service to become effective 30 days after such mailing. Each Guarantor hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder or under any other Credit Document to which such Guarantor is a party that such service of process was in any way invalid or ineffective. Nothing herein, however, shall affect the right of any of the Secured Creditors to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the fullest extent permitted by applicable law) any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Guaranty or any other Credit Document to which such Guarantor is a party brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that such action or proceeding brought in any such court has been brought in an inconvenient forum.
(c) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
- 12 -
17. RELEASE OF LIABILITY OF GUARANTOR UPON SALE OR DISSOLUTION . In the event that all of the capital stock or other equity interests of one or more Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of Section 10.02 of the Credit Agreement (or such sale, other disposition or liquidation has been approved in writing by the Required Lenders (or all the Lenders if required by Section 13.12 of the Credit Agreement)) and the proceeds of such sale, disposition or liquidation are applied in accordance with the provisions of the Credit Agreement, to the extent applicable, such Guarantor shall, upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to Holdings or another Subsidiary thereof), be released from this Guaranty automatically and without further action and this Guaranty shall, as to each such Guarantor or Guarantors, terminate, and have no further force or effect (it being understood and agreed that the sale of one or more Persons that own, directly or indirectly, all of the capital stock or other equity interests of any Guarantor shall be deemed to be a sale of such Guarantor for the purposes of this Section 17).
18. CONTRIBUTION . At any time a payment in respect of the Guaranteed Obligations is made under this Guaranty, the right of contribution of each Guarantor against each other Guarantor shall be determined as provided in the immediately following sentence, with the right of contribution of each Guarantor to be revised and restated as of each date on which a payment (a Relevant Payment ) is made on the Guaranteed Obligations under this Guaranty. At any time that a Relevant Payment is made by a Guarantor that results in the aggregate payments made by such Guarantor in respect of the Guaranteed Obligations to and including the date of the Relevant Payment exceeding such Guarantors Contribution Percentage (as defined below) of the aggregate payments made by all Guarantors in respect of the Guaranteed Obligations to and including the date of the Relevant Payment (such excess, the Aggregate Excess Amount ), each such Guarantor shall have a right of contribution against each other Guarantor who has made payments in respect of the Guaranteed Obligations to and including the date of the Relevant Payment in an aggregate amount less than such other Guarantors Contribution Percentage of the aggregate payments made to and including the date of the Relevant Payment by all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of such deficit, the Aggregate Deficit Amount ) in an amount equal to (x) a fraction the numerator of which is the Aggregate Excess Amount of such Guarantor and the denominator of which is the Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate Deficit Amount of such other Guarantor. A Guarantors right of contribution pursuant to the preceding sentences shall arise at the time of each computation, subject to adjustment to the time of each computation; provided that no Guarantor may take any action to enforce such right until the Guaranteed Obligations have been irrevocably paid in full in cash and the Total Loan Commitment has been terminated, it being expressly recognized and agreed by all parties hereto that any Guarantors right of contribution arising pursuant to this Section 18 against any other Guarantor shall be expressly junior and subordinate to such other Guarantors obligations and liabilities in respect of the Guaranteed Obligations and any other obligations owing under this Guaranty. As used in this Section 18: (i) each Guarantors Contribution Percentage shall mean the percentage obtained by dividing (x) the Adjusted Net Worth (as defined below) of such Guarantor by (y) the aggregate Adjusted Net Worth of all Guarantors; (ii) the Adjusted Net Worth of each Guarantor shall mean the greater of (x) the Net Worth (as defined below) of such Guarantor and (y) zero; and (iii) the Net Worth of each Guarantor shall mean the amount by which the fair saleable value of such Guarantors assets on the date of any Relevant Payment exceeds its existing debts and other liabilities (including contingent liabilities, but without giving effect to any Guaranteed Obligations arising under this Guaranty or any guaranteed obligations arising under any guaranty of the Senior Secured Notes) on such date. Notwithstanding anything to the
- 13 -
contrary contained above, any Guarantor that is released from this Guaranty pursuant to Section 17 hereof shall thereafter have no contribution obligations, or rights, pursuant to this Section 18, and at the time of any such release, if the released Guarantor had an Aggregate Excess Amount or an Aggregate Deficit Amount, same shall be deemed reduced to $0, and the contribution rights and obligations of the remaining Guarantors shall be recalculated on the respective date of release (as otherwise provided above) based on the payments made hereunder by the remaining Guarantors. All parties hereto recognize and agree that, except for any right of contribution arising pursuant to this Section 18, each Guarantor who makes any payment in respect of the Guaranteed Obligations shall have no right of contribution or subrogation against any other Guarantor in respect of such payment until all of the Guaranteed Obligations have been irrevocably paid in full in cash. Each of the Guarantors recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution. In this connection, each Guarantor has the right to waive its contribution right against any Guarantor to the extent that after giving effect to such waiver such Guarantor would remain solvent, in the determination of the Required Lenders.
19. LIMITATION ON GUARANTEED OBLIGATIONS . Each Guarantor and each Secured Creditor (by its acceptance of the benefits of this Guaranty) hereby confirms that it is its intention that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act of any similar Federal or state law. To effectuate the foregoing intention, each Guarantor and each Secured Creditor (by its acceptance of the benefits of this Guaranty) hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance.
20. COUNTERPARTS . This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Administrative Agent.
21. PAYMENTS . All payments made by any Guarantor hereunder will be made without setoff, counterclaim or other defense and on the same basis as payments are made by the Borrower under Sections 5.03 and 5.04 of the Credit Agreement and Section 7.4 of the Security Agreement.
22. ADDITIONAL GUARANTORS . It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Guaranty after the date hereof pursuant to the Credit Agreement shall become a Guarantor hereunder by (x) executing and delivering a counterpart hereof to the Administrative Agent or executing a joinder agreement and delivering same to the Administrative Agent, in each case as may be requested by (and in form and substance reasonably satisfactory to) the Administrative Agent and (y) taking all actions as specified in this Guaranty as would have been taken by such Guarantor had it been an original party to this Guaranty, in each case with all documents and actions required to be taken above to be taken to the reasonable satisfaction of the Administrative Agent.
- 14 -
23. HEADINGS DESCRIPTIVE . The headings of the several Sections of this Guaranty are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Guaranty.
* * *
- 15 -
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.
GUARANTORS: | TODD FINANCIAL, INC. | |||||||
TODD CAR TITLE, INC. | ||||||||
CURO MANAGEMENT LLC | ||||||||
FMMR INVESTMENTS, INC. | ||||||||
EVERGREEN FINANCIAL INVESTMENTS, INC. | ||||||||
PRINCIPAL INVESTMENTS, INC. | ||||||||
SPEEDY CASH | ||||||||
ADVANCE GROUP, INC. | ||||||||
CONCORD FINANCE, INC. | ||||||||
SCIL, INC. | ||||||||
CASH COLORADO, LLC | ||||||||
GALT VENTURES, LLC | ||||||||
A SPEEDY CASH CAR TITLE LOANS, LLC | ||||||||
SCIL TEXAS, LLC | ||||||||
SC AURUM, LLC | ||||||||
ATTAIN FINANCE, LLC | ||||||||
SPEEDY CASH ILLINOIS, INC. | ||||||||
SC TEXAS MB, INC. | ||||||||
THE MONEY STORE, L. P. | ||||||||
By: |
/s/ Donald F. Gayhardt Jr. |
|||||||
Name: Donald F. Gayhardt Jr. | ||||||||
Title: President & Chief Executive Officer |
[Signature Page to Subsidiaries Guaranty]
Accepted and Agreed to:
VICTORY PARK MANAGEMENT, LLC as Administrative Agent |
||
By: |
/s/ Scott R. Zemnick |
|
Name: Scott R. Zemnick Title: Authorized Signatory |
[Signature page to Subsidiary Guaranty]
Exhibit 10.53
Execution Version
REVOLVING LOAN AGREEMENT
dated as of September 1, 2017
among
CURO FINANCIAL TECHNOLOGIES CORP.
and
CURO INTERMEDIATE HOLDINGS CORP.
as the Borrower,
CERTAIN SUBSIDIARIES OF CURO FINANCIAL TECHNOLOGIES CORP. as Guarantors,
The Lenders Party Hereto,
and
BAY COAST BANK,
as Administrative Agent, Collateral Agent and Issuing Bank
$25,000,000 Senior Secured Demand Revolving Loan Facility
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
Table of Contents
Page | ||||||
ARTICLE I DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION | 1 | |||||
Section 1.01 |
Certain Defined Terms |
1 | ||||
Section 1.02 |
Computation of Time Periods |
32 | ||||
Section 1.03 |
Accounting Terms |
32 | ||||
Section 1.04 |
Principles of Construction |
33 | ||||
ARTICLE II AMOUNTS AND TERMS OF THE LOANS; OBLIGATIONS PAYABLE ON DEMAND | 33 | |||||
Section 2.01 |
Commitments |
33 | ||||
Section 2.02 |
Borrowing Mechanics for Loans |
33 | ||||
Section 2.03 |
Loans and Other Obligations Payable ON DEMAND |
34 | ||||
Section 2.04 |
Joint and Several Obligations |
34 | ||||
Section 2.05 |
Pro Rata Shares; Availability of Funds |
34 | ||||
Section 2.06 |
Use of Proceeds |
38 | ||||
Section 2.07 |
Evidence of Indebtedness; Register; Notes |
38 | ||||
Section 2.08 |
Interest on Loans |
38 | ||||
Section 2.09 |
Conversion/Continuation |
39 | ||||
Section 2.10 |
Default Interest; Late Fees |
41 | ||||
Section 2.11 |
Facility Fee |
41 | ||||
Section 2.12 |
Voluntary Prepayments/Commitment Reductions of Loans |
42 | ||||
Section 2.13 |
[Reserved] |
43 | ||||
Section 2.14 |
Application of Prepayments/Reductions |
43 | ||||
Section 2.15 |
General Provisions Regarding Payments |
44 | ||||
Section 2.16 |
Ratable Sharing |
44 | ||||
Section 2.17 |
Making or Maintaining LIBOR Rate Loans |
45 | ||||
Section 2.18 |
Increased Costs; Capital Adequacy |
46 | ||||
Section 2.19 |
Taxes; Withholding, Etc. |
47 | ||||
Section 2.20 |
Obligation to Mitigate |
48 | ||||
ARTICLE III CONDITIONS PRECEDENT | 53 | |||||
Section 3.01 |
Conditions Precedent to Closing |
53 | ||||
Section 3.02 |
Conditions to each Credit Extension |
54 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES | 55 | |||||
Section 4.01 |
Loan Parties Representations and Warranties |
55 | ||||
ARTICLE V COVENANTS | 59 | |||||
Section 5.01 |
Affirmative Covenants |
59 | ||||
Section 5.02 |
Negative Covenants |
64 | ||||
Section 5.03 |
Financial Covenants |
64 |
i
ARTICLE VI EVENTS OF DEFAULT | 64 | |||||
Section 6.01 |
Events of Default |
64 | ||||
ARTICLE VII GUARANTEE | 67 | |||||
Section 7.01 |
The Guarantee |
67 | ||||
Section 7.02 |
Obligations Unconditional |
67 | ||||
Section 7.03 |
Reinstatement |
68 | ||||
Section 7.04 |
Subordination and Subrogation |
68 | ||||
Section 7.05 |
Remedies |
68 | ||||
Section 7.06 |
Continuing Guarantee |
69 | ||||
Section 7.07 |
General Limitation on Guarantee Obligations |
69 | ||||
Section 7.08 |
Contribution by Guarantors |
69 | ||||
Section 7.09 |
Additional Guarantors |
70 | ||||
Section 7.10 |
Keepwell |
70 | ||||
ARTICLE VIII AGENTS | 71 | |||||
Section 8.01 |
Authorization and Authority |
71 | ||||
Section 8.02 |
Agent Individually |
71 | ||||
Section 8.03 |
Duties of Agents; Exculpatory Provisions |
71 | ||||
Section 8.04 |
Reliance by Agent |
72 | ||||
Section 8.05 |
Delegation of Duties |
72 | ||||
Section 8.06 |
Resignation of Agent |
72 | ||||
Section 8.07 |
Non-Reliance on Agent |
73 | ||||
Section 8.08 |
Collateral and Guarantee Matters |
74 | ||||
Section 8.09 |
Right to Indemnity |
75 | ||||
Section 8.10 |
Withholding Taxes |
75 | ||||
Section 8.11 |
Administrative Agent May File Proofs of Claim |
76 | ||||
ARTICLE IX MISCELLANEOUS | 76 | |||||
Section 9.01 |
Amendments, Etc. |
76 | ||||
Section 9.02 |
Notices, Etc. |
77 | ||||
Section 9.03 |
No Waiver; Remedies |
78 | ||||
Section 9.04 |
Costs, Expenses and Indemnification |
79 | ||||
Section 9.05 |
Successors and Assigns; Participations |
80 | ||||
Section 9.06 |
Governing Law; Submission to Jurisdiction |
83 | ||||
Section 9.07 |
Severability |
84 | ||||
Section 9.08 |
Counterparts; Integration; Effectiveness |
85 | ||||
Section 9.09 |
Survival |
85 | ||||
Section 9.10 |
Confidentiality |
85 | ||||
Section 9.11 |
No Fiduciary Relationship |
86 | ||||
Section 9.12 |
Right of Setoff |
86 | ||||
Section 9.13 |
Payments Set Aside |
86 | ||||
Section 9.14 |
Obligations Several; Independent Nature of Lenders Rights |
87 | ||||
Section 9.15 |
PATRIOT Act |
87 | ||||
Section 9.16 |
Headings Descriptive |
87 | ||||
Section 9.17 |
Entire Agreement |
87 |
ii
SCHEDULES
|
||
Schedule 1.01(a) | Commitments | |
Schedule 4.01(a) | Jurisdiction of Organization | |
Schedule 4.01(b) | Equity Interests and Ownership |
EXHIBITS
|
||
Exhibit A-1 | Borrowing Request | |
Exhibit A-2 | Conversion/Continuation Notice | |
Exhibit A-3 | Issuance Notice | |
Exhibit B | Demand Revolving Loan Note | |
Exhibit C | Compliance Certificate | |
Exhibit D | Security Agreement | |
Exhibit E | Counterpart Agreement | |
Exhibit F | Intercreditor Agreement | |
Exhibit G | Assignment Agreement | |
Exhibit H | Administrative Questionnaire | |
Exhibit I | Collateral Loan Receivable Report |
iii
REVOLVING LOAN AGREEMENT
This REVOLVING LOAN AGREEMENT is entered into as of September 1, 2017 among CURO FINANCIAL TECHNOLOGIES CORP., a Delaware corporation ( CFTC ) and CURO INTERMEDIATE HOLDINGS CORP., a Delaware corporation ( Holdings ) (CFTC and Holdings collectively the Borrower ), each Guarantor from time to time party hereto, each Lender from time to time party hereto, and BAY COAST BANK, as administrative agent, collateral agent and Issuing Bank.
The Borrower desires to arrange a revolving credit facility, with all advances payable on demand, and the Lenders are willing to provide such facility on the terms and conditions set forth herein. Now, therefore, in consideration of the mutual agreements, provisions and covenants contained herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION
Section 1.01 Certain Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
Accession Agreement has the meaning set forth in the Senior Notes Indenture (as in effect on the date hereof).
Additional Secured Obligations means (a) all Cash Management Obligations, (b) all obligations arising under Interest Rate Protection Agreements and (c) all costs and expenses incurred in connection with enforcement and collection of the foregoing, including the reasonable fees, charges and disbursements of counsel, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under the Bankruptcy Code or other applicable Law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that Additional Secured Obligations of a Loan Party shall exclude any Excluded Swap Obligations with respect to such Loan Party.
Additional Notes has the meaning set forth in the Senior Notes Indenture (as in effect on the date hereof).
Adjusted LIBOR Rate means, for any Interest Rate Determination Date with respect to an Interest Period for a LIBOR Rate Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/100 of 1.00%) (i) LIBOR by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement;
Administrative Agent means Bay Coast Bank, in its capacity as administrative agent hereunder, or any successor in such capacity.
Adverse Proceeding means any action, suit, proceeding, hearing (in each case, whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of the Borrower or any of its Subsidiaries) at Law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of the Borrower or any of its Subsidiaries, threatened against or affecting the Borrower or any of its Restricted Subsidiaries or any property of the Borrower or any of its Restricted Subsidiaries.
Affected Lender has the meaning set forth in Section 2.18(b).
Affected Loans has the meaning set forth in Section 2.18(b).
Affiliate means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing.
Agent means, collectively, the Administrative Agent and the Collateral Agent.
Aggregate Amounts Due has the meaning set forth in Section 2.17 .
Agreement means this Revolving Loan Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time.
Applicable Margin means five percent (5%) per annum.
Applicable Reserve Requirement means, at any time, for any LIBOR Rate Loan, the maximum rate, expressed as a decimal, at which reserves (including any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against Eurocurrency liabilities (as such term is defined in Regulation D) under regulations issued from time to time by the Board or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted LIBOR Rate or any other interest rate of a Loan is to be determined, or (ii) any category of extensions of credit or other assets which include LIBOR Rate Loans. A LIBOR Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on LIBOR Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.
2
Asset Sale means:
(1) the sale, lease, transfer, conveyance or other disposition of any assets; provided that the sale, lease, transfer, conveyance or other disposition of all or substantially all of the assets of CFTC and its Restricted Subsidiaries taken as a whole, or CFTC and its Restricted Subsidiaries, taken as a whole, as applicable, will be governed by the provisions of Section 5.14 and/or the provisions of Section 6.0 of the Senior Notes Indenture and not by the provisions of Section 5.10 of the Senior Notes Indenture;
(2) the issue or sale by the CFTC or any of its Restricted Subsidiaries of Equity Interests of any of CFTCs Restricted Subsidiaries; and
(3) an Event of Loss. In the case of clauses (1), (2) or (3), whether in a single transaction or a series of related transactions:
(A) that have a Fair Market Value in excess of $2.5 million; or
(B) for Net Proceeds in excess of $2.5 million.
Notwithstanding the foregoing, none of the following will be deemed to be an Asset Sale:
(4) a transfer of assets to CFTC or any Restricted Subsidiary of CFTC (other than a Receivables Entity);
(5) an issuance of Equity Interests by a Restricted Subsidiary of CFTC to CFTC or to a Restricted Subsidiary of CFTC;
(6) for purposes of Section 5.10 of the Senior Notes Indenture only, a Restricted Payment that is permitted by Section 5.07 of the Senior Notes Indenture or a Permitted Investment;
(7) the Incurrence of Permitted Liens and the disposition of assets subject to such Liens by or on behalf of the Person holding such Liens;
(8) the sale, transfer or other disposition of accounts in accordance with industry practice in connection with the compromise or collection thereof;
(9) any disposition of cash or Cash Equivalents;
(10) the lease, assignment or sub-lease of any property in the ordinary course of business;
(11) any surrender or waiver of contract rights or the settlement, release or surrender of contract rights or other litigation claims in the ordinary course of business;
(12) sales of assets that have become worn out, obsolete or damaged or otherwise unsuitable for use in connection with the business of CFTC or any of its Restricted Subsidiaries;
3
(14) the license of patents, trademarks, copyrights, software applications and know-how to Restricted Subsidiaries of CFTC and to third Persons in the ordinary course of business;
(15) the sale, transfer or other disposition of precious metals in the ordinary course of business;
(16) dispositions of motor vehicles securing consumer loans made by CFTC and its Restricted Subsidiaries in the ordinary course of business;
(17) sales of loans receivable and related assets of the type specified in the definition of Qualified Receivables Transaction to a Receivables Entity; and (14) transfers of loans receivable and related assets of the type specified in the definition of Qualified Receivables Transaction by a Receivables Entity in a Qualified Receivables Transaction.
Assignment Agreement means an Assignment and Assumption Agreement substantially in the form of Exhibit G , with such amendments or modifications as may be approved by the Administrative Agent.
Assignment Effective Date has the meaning specified in Section 9.05(b) .
Bankruptcy Code means the Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and certified as 11 U.S.C. Section 101 et seq .
Base Rate means, at any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% per annum and (c) LIBOR for an Interest Period of one month plus 1.00% per annum; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or LIBOR.
Base Rate Loan means a Loan that bears interest at a rate based on the Base Rate.
Board means the Board of Governors of the Federal Reserve System (or any successor).
Borrower has the meaning specified in the preamble hereto.
Borrowing Request means a notice substantially in the form of Exhibit A-1 .
Business Day means (i) a day which is not a Saturday or Sunday or a legal holiday and on which banks are not required or permitted by Law or other governmental action to close in Boston, Massachusetts or Wichita, Kansas and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted LIBOR Rate or any LIBOR Rate Loans, the term Business Day means a day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.
4
Capital Lease Obligations of any Person means the obligations of such Person to pay rent or other amounts under a lease of (or other Indebtedness arrangements conveying the right to use) real or personal property which are required to be classified and accounted for as a capital lease or capitalized on a balance sheet of such Person determined in accordance with GAAP and the amount of such obligations shall be the capitalized amount thereof in accordance with GAAP and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease or other arrangement prior to the first date upon which such lease or other arrangement may be terminated by the lessee without payment of a penalty; provided that any obligations of CFTC and its Restricted Subsidiaries either existing on the date of this Agreement or created prior to the recharacterization described below (i) that were not included on the consolidated balance sheet of CFTC as capital lease obligations and (ii) that are subsequently recharacterized as capital lease obligations due to a change in accounting treatment or otherwise, shall for all purposes of this Agreement (including, without limitation, the calculation of Consolidated Net Income and Consolidated Cash Flow) not be treated as Capital Lease Obligations or Indebtedness.
Capital Stock of any Person means any and all shares, interests, participations or other equivalents (however designated) of such Persons capital stock, including preferred stock, whether now outstanding or issued after the Closing Date.
Cash Equivalents means:
(1) marketable direct obligations issued by, or unconditionally Guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition;
(2) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers acceptances having maturities of one year or less from the date of acquisition issued by any lender to CFTC or any of its Subsidiaries or by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $250,000,000;
(3) commercial paper of an issuer rated at least A-1 by Standard & Poors Ratings Group (S&P) or P-1 by Moodys Investors Service, Inc. (Moodys), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within one year from the date of acquisition;
(4) repurchase obligations of any financial institution satisfying the requirements of clause (2) of this definition, having a term of not more than 30 days, with respect to securities issued or fully Guaranteed or insured by the United States government;
(5) securities with maturities of one year or less from the date of acquisition issued or fully Guaranteed by any state of the United States, by any political subdivision or taxing authority of any such state or by any foreign government, the securities of which state, political subdivision, taxing authority or foreign government (as the case may be) have one of the two highest rating obtainable from either S&P or Moodys;
5
(6) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any financial institution satisfying the requirements of clause (2) of this definition;
(7) money market, mutual or similar funds that invest at least 95% of their assets in assets satisfying the requirements of clauses (1) through (6) of this definition;
(8) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moodys and (iii) have portfolio assets of at least $1,000,000,000; and
(9) with respect to Foreign Subsidiaries only, any Investments outside of the United States that are functional foreign equivalents in all material respects to the Cash Equivalents described in clauses (1) through (5) above.
Cash Management Obligations means, with respect to any Person, all obligations of such Person in respect of overdrafts and liabilities owed to any other Person that arise from treasury, depositary or cash management services, including in connection with any automated clearing house transfers of funds, or any similar transactions.
Casualty means any casualty, loss, damage, destruction or other similar loss with respect to real or personal property or improvements.
Certificated Securities has the meaning specified in the Pledge Agreement.
Change of Control means the occurrence of any of the following:
(1) the direct or indirect sale, conveyance, transfer, lease or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of CFTC and its Subsidiaries, taken as a whole, to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders;
(2) the adoption of a plan relating to the liquidation or dissolution of CFTC;
(3) the consummation of any transaction (including any merger or consolidation) the result of which is that any person (as defined above) other than the Permitted Holders, becomes the beneficial owner (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (3) such person shall be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the Voting Stock of CFTC; or
(4) the consummation of the first transaction (including any merger or consolidation), the result of which is that any person (as defined above) other than the Permitted Holders becomes the beneficial owner (as defined above), directly or indirectly, of more of the Voting Stock of CFTC than is at that time beneficially owned by the Permitted Holders in the aggregate (except that for purposes of this clause (4) such Permitted Holders shall
6
be deemed to have beneficial ownership of all shares of Voting Stock that such Permitted Holders have the right to acquire, whether such right is exercisable immediately or only after the passage of time); provided , that such transaction shall not constitute a Change of Control unless such person then owns, directly or indirectly, in the aggregate, more than 35% of the Voting Stock of CFTC.
Change in Law means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law, regardless of the date enacted, adopted or issued.
Closing Date means the date on which the conditions specified in Section 3.01 are satisfied or waived in accordance with this Agreement.
Code means the U.S. Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, any successor statute thereto, and the regulations promulgated thereunder.
Collateral means, collectively, all of the property (including Equity Interests) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations.
Collateral Agent means Bay Coast Bank, in its capacity as collateral agent hereunder, or any successor in such capacity.
Collateral Documents means the Security Agreement and all other instruments, documents and agreements delivered by any Loan Party pursuant to this Agreement or any of the other Facility Documents in order to grant to the Collateral Agent, for the benefit of the Secured Parties, a Lien on any assets or property of that Loan Party as security for the Obligations, including UCC financing statements and amendments thereto and filings with the U.S. Patent and Trademark Office and the U.S. Copyright Office.
Commitment means the commitment of a Lender to make or otherwise fund a Loan and to acquire participations in Letters of Credit hereunder, and Commitments means such commitments of all Lenders in the aggregate. The amount of each Lenders Commitment, if any, is set forth opposite such Lenders name on Schedule 1.01(a) or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Commitments as of the Closing Date is $25,000,000.
7
Commitment Period means the period from the Closing Date to but excluding the Commitment Termination Date.
Commitment Termination Date means the earliest to occur of (i) June 30, 2018, (ii) the date the Commitments are permanently reduced to zero pursuant to Section 2.13(b) , (iii) the date of the termination of the Commitments pursuant to Section 6.01 including upon any demand for payment.
Commodity Exchange Act means the Commodity Exchange Act (7 U.S.C. § 1 et seq .) and any successor thereto.
Compliance Certificate means a Compliance Certificate substantially in the form of Exhibit C .
Confidential Information means all information received from the Borrower or any Affiliate of the Borrower on any of their respective businesses, other than any such information that is available to an Agent or a Lender on a non-confidential basis prior to disclosure by the Borrower or any of its Affiliates, provided that, in the case of information received from the Borrower or any of its Affiliates after the date hereof, such information is clearly identified as confidential at the time of delivery. A Person required to maintain the confidentiality of Confidential Information as provided in this Agreement is a Confidential Person . Any Confidential Person shall be considered to have complied with its obligation to do so if such Confidential Person has exercised the same degree of care to maintain the confidentiality of such Confidential Information as such Confidential Person would accord to its own confidential information.
Consolidated Cash Flow means, with respect to any Person for any period, the Consolidated Net Income of such Person and its Restricted Subsidiaries for such period plus :
(1) an amount equal to any extraordinary or non-recurring loss, to the extent that such losses were deducted in computing such Consolidated Net Income; plus
(2) an amount equal to any net loss realized in connection with an Asset Sale, the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness by such Person or its Restricted Subsidiaries, to the extent such losses were deducted in computing such Consolidated Net Income; plus
(3) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus
(4) Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period; plus
(5) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) to the extent deducted in computing such Consolidated Net Income; plus
8
(6) without duplication of the application of clause (4) of the definition of Consolidated Net Income, write offs, write downs or impairment of goodwill or other intangible assets, unrealized mark to market losses, and other non cash charges and expenses (excluding any such other non cash charge or expense to the extent that it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent deducted in computing such Consolidated Net Income; plus
(7) any fees or expenses relating to a Qualified Receivables Transaction, to the extent such fees or expenses are deducted in computing Consolidated Net Income; plus
(8) any one-time, non-recurring expenses or charges related to any Equity Offering, Permitted Investment, acquisition, recapitalization or Indebtedness permitted to be incurred under this Agreement (including a refinancing thereof), whether or not successful, including (i) such fees, expenses or charges related to the offering of the Senior Notes and the Agreement and (ii) any amendment or other modification of the Senior Notes Indenture, in each case, deducted in computing Consolidated Net Income; minus
(9) all non-cash items to the extent that such non-cash items increased Consolidated Net Income for such period (excluding the recognition of deferred revenue or any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period and any items for which cash was received in a prior period). Notwithstanding the foregoing, the provision for taxes based on income or profits of, and the depreciation and amortization and other non-cash charges of, a Restricted Subsidiary of a Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in the same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person.
Consolidated Interest Coverage Ratio means the ratio as of the last day of any Fiscal Quarter of (a) Consolidated Cash Flow for the four-Fiscal Quarter period ending on such date as of such day to (b) Consolidated Interest Expense for the four-Fiscal Quarter period ending on such date.
Consolidated Interest Expense with respect to any Person for any period, the sum of, without duplication:
(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges Incurred in respect of letter of credit or bankers acceptance financings, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations); provided that the amortization or write-off of capitalized financing or debt issuance costs shall be excluded; plus
(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus
9
(3) any interest expense on Indebtedness of another Person to the extent that such Indebtedness is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on the assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon).
Consolidated Net Income means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided that:
(1) solely for the purpose of Section 5.07 of the Senior Notes Indenture, the Net Income of any Person that is not a Restricted Subsidiary of such Person, or that is accounted for by the equity method of accounting shall be included, but only to the extent of the amount of dividends or distributions that have been distributed in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, unless such restriction has been legally waived;
(3) the cumulative effect of a change in accounting principles shall be excluded;
(4) the effect of any non-cash impairment charges or write-ups, write-downs or write-offs of assets or liabilities of Foreign Subsidiaries resulting from the application of GAAP and the amortization of intangibles of Foreign Subsidiaries arising from the application of GAAP, including pursuant to ASC 805, Business Combinations, ASC 350, Intangibles-Goodwill and Other, or ASC 360, Property, Plant and Equipment, as applicable, shall be excluded; and
(5) Consolidated Net Income shall not be reduced by any fees and expenses paid or payable in respect of the offering contemplated by the Senior Notes Indenture, the application of the use of proceeds therefrom and related transactions.
Consolidated Total Debt means, as of any date of determination, an amount equal to the aggregate principal amount of Indebtedness of CFTC and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of purchase accounting in connection with any acquisition permitted under the Senior Notes Indenture), with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of the term Consolidated Total Leverage Ratio.
10
Consolidated Total Leverage Ratio means, with respect to any specified Person, as of any date of determination, the ratio of (i) the Consolidated Total Debt to (ii) Consolidated Cash Flow of such Person for the most recently ended four fiscal quarters for which internal financial statements are available. In the event that the CFTC or any of its Restricted Subsidiaries Incurs or redeems any Indebtedness (other than revolving credit borrowings) or issues or redeems Preferred Stock subsequent to the commencement of the period for which the Consolidated Total Leverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Consolidated Total Leverage Ratio is made (the Calculation Date), the Consolidated Total Leverage Ratio shall be calculated giving pro forma effect to such Incurrence or redemption of Indebtedness, or such issuance or redemption of Preferred Stock (including the application of any proceeds therefrom), as if the same had occurred at the beginning of the applicable four quarter reference period. In addition, for purposes of making the computation referred to above:
(1) acquisitions that have been made by CFTC or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four quarter reference period and Consolidated Cash Flow for such reference period shall be calculated to include the Consolidated Cash Flow of the acquired entities (adjusted to exclude (A) the cost of any compensation, remuneration or other benefit paid or provided to any employee, consultant, Affiliate or equity owner of the acquired entities to the extent such costs are eliminated and not replaced and (B) the amount of any reduction in general, administrative or overhead costs of the acquired entities, in each case, as determined in good faith by an officer of CFTC);
(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded;
(3) any Person that is a Restricted Subsidiary of CFTC on the Calculation Date will be deemed to have been a Restricted Subsidiary of CFTC at all times during such four quarter period;
(4) any Person that is not a Restricted Subsidiary of CFTC on the Calculation Date will be deemed not to have been a Restricted Subsidiary of CFTC at any time during such four quarter period; and (5) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).
Contractual Obligation means, as applied to any Person, any provision of any security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.
Contributing Guarantors has the meaning set forth in Section 7.08 .
11
Conversion/Continuation Date means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.
Conversion/Continuation Notice means a Conversion/Continuation Notice substantially in the form of Exhibit A-2 .
Counterpart Agreement means a Counterpart Agreement substantially in the form of Exhibit E delivered by a Loan Party pursuant to Section 5.01(i) .
Credit Date means the date of a Credit Extension.
Credit Extension means the making of a Loan or the issuing or renewal of a Letter of Credit.
Credit Facility means one or more debt facilities, including this Agreement, or other financing arrangements (including commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit, bankers acceptances or other indebtedness, including any notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case, as amended, extended, renewed, restated, supplemented, replaced (whether or not upon termination and whether with the original lenders, institutional investors or otherwise), refinanced (including through the issuance of debt securities), restructured or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement (and related document) governing Indebtedness incurred to refinance, in whole or in part, the borrowings and commitments then outstanding or permitted to be outstanding under such Credit Facility or a successor Credit Facility, whether by the same or any other agent, lender or group of lenders (or institutional investors).
CSO Obligations means obligations to purchase, or other Guarantees of, consumer loans the making of which were facilitated by CFTC or a Restricted Subsidiary of CFTC acting as a credit services organization or other similar service provider.
Currency Hedging Obligations means the obligations of any Person pursuant to an arrangement designed to protect such Person against fluctuations in currency exchange rates.
Default means any event which is, or after notice or the passage of time or both would become, an Event of Default.
Defaulting Lender means any Lender that has (a) failed to fund any portion of its Commitment within one Business Day of the date required to be funded by it hereunder, unless the subject of a good faith dispute, (b) notified the Borrower, the Administrative Agent or any Lender in writing, or has otherwise indicated through a public statement, that it does not intend to comply with its funding obligations generally under agreements in which it commits to extend credit, (c) failed, within three (3) Business Days after receipt of a written request from the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Commitments, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless the subject of a good faith dispute or
12
(e) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, custodian, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that (i) the Administrative Agent and the Borrower may declare (A) by joint notice to the Lenders that a Defaulting Lender is no longer a Defaulting Lender or (B) that a Lender is not a Defaulting Lender if in the case of both clauses (A) and (B) the Administrative Agent and the Borrower each determines, in its sole respective discretion, that (x) the circumstances that resulted in such Lender becoming a Defaulting Lender no longer apply or (y) it is satisfied that such Lender will continue to perform its funding obligations hereunder and (ii) a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of Voting Stock or any other equity interest in such Lender or a parent company thereof by a Governmental Authority or an instrumentality thereof.
Default Rate has the meaning set forth in Section 2.11 .
Demand Revolving Loan Note means a promissory note substantially in the form of Exhibit B-1 , as it may be amended, restated, supplemented or otherwise modified from time to time.
Disqualified Stock means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock convertible or exchangeable solely at the option of CFTC or a Subsidiary of CFTC; provided that any such conversion or exchange will be deemed an Incurrence of Indebtedness or Disqualified Stock, as applicable); or
(3) is redeemable at the option of the holder thereof, in whole or in part, in the case of each of clauses (1), (2) and (3), on or prior to the 91st day after the Stated Maturity of the Senior Notes; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an asset sale or change of control occurring on or prior to the 91st day after the Stated Maturity of the Notes will not constitute Disqualified Stock if the terms of such Capital Stock provide that such Person may not repurchase or redeem any such Capital Stock pursuant to such provisions prior to CFTCs purchase of the Senior Notes as are required to be purchased pursuant to Sections 5.10 and 5.14 of the Senior Notes Indenture.
13
Dollars and $ mean the lawful currency of the United States of America.
Domestic Subsidiary has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof).
Eligible Assignee means any Person other than a natural Person that is (i) a Lender or an Affiliate of any Lender, or (ii) a commercial bank, insurance company, investment or mutual fund or other entity that is an accredited investor (as defined in Regulation D under the Securities Act) and which extends credit or buys loans in the ordinary course of business; provided that in no event shall any Defaulting Lender, Loan Party or any Affiliate thereof or any direct competitor of any Loan Party or any subsidiary of a Loan Party which has been previously identified by CFTC in writing to the Administrative Agent be an Eligible Assignee.
Eligible Collateral shall mean the cash, loans receivable (net) and property and equipment (net) of the Loan Parties as reported on the consolidated balance sheet of CFTC.
Eligible Collateral Value means an amount equal to the fair market value of the Eligible Collateral as of such date of determination (as determined by mutual agreement by the Administrative Agent and the Borrower).
Employee Benefit Plan means any employee benefit plan as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, the Borrower, or any of its ERISA Affiliates or with respect to which the Borrower, or any of its respective ERISA Affiliates has or could reasonably be expected to have liability, contingent or otherwise, under ERISA.
Environmental Claim means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order, decree or directive (conditional or otherwise) by any Governmental Authority or any other Person, arising (i) pursuant to any Environmental Law, (ii) in connection with any actual or alleged violation of, or liability pursuant to, any Environmental Law, including any Governmental Authorizations issued pursuant to Environmental Law, (iii) in connection with any Hazardous Material, including the presence or Release of, or exposure to, any Hazardous Materials and any abatement, removal, remedial, corrective or other response action related to Hazardous Materials or (iv) in connection with any actual or alleged damage, injury, threat or harm to natural resources, the environment or, as such relate to exposure to Hazardous Materials, health or safety.
Environmental Laws means any and all current or future foreign or domestic, federal, state or local Laws (including any common law), statutes, ordinances, orders, rules, regulations, judgments or any other requirements of Governmental Authorities relating to or imposing liability or standards of conduct with respect to (i) the protection of the environment, (ii) the generation, use, storage, transportation or disposal of, or exposure to, Hazardous Materials; or (iii) occupational safety and health as such relate to exposure to Hazardous Materials, industrial hygiene, the protection of human health or welfare as such relate to exposure to Hazardous Materials, in any manner applicable to the Borrower or any of its Subsidiaries or any of their facilities.
14
Equity Interests means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
Equity Offering means a sale for cash of either (1) common equity securities or units including or representing common equity securities of CFTC (other than to a Subsidiary of CFTC) or (2) common equity securities or units including or representing common equity securities of a Parent Entity (other than to a Subsidiary of CFTC) to the extent that the net proceeds therefrom are contributed to the common equity capital of CFTC.
ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time, the regulations promulgated thereunder and any successor thereto.
ERISA Affiliate means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which that Person is a member; and (iii) with respect to any provisions relating to Section 412 of the Code, any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member.
ERISA Event means (i) a reportable event within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30 day notice to the PBGC has been waived by regulation); (ii) a determination that any Pension Plan is, or is expected to be, in at risk status (as defined in Section 430 of the Code or Section 303 of ERISA); (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) a determination that any Multiemployer Plan is, or is expected to be in critical or endangered status under Section 432 of the Code or Section 305 of ERISA; (v) the withdrawal by the Borrower or any of its ERISA Affiliates from any Pension Plan with two or more contributing sponsors in which the Borrower or its ERISA Affiliates was a substantial employer as defined in Section 4001(a)(2) of ERISA or the termination of any such Pension Plan resulting in liability to the Borrower, or any of its ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (vi) the institution by the PBGC of proceedings to terminate any Pension Plan or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer any Pension Plan; (vii) the imposition of liability on the Borrower or any of its ERISA Affiliates pursuant to Section 4062(e) ERISA; (viii) the withdrawal of the Borrower or any of its ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, (ix) the receipt by the Borrower or any of its ERISA Affiliates of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA or (x) the imposition of a Lien pursuant to Section 430(k) of the Code or Section 303(k) of ERISA. For purposes of clause (viii) of the preceding sentence, no complete or partial withdrawal from a Multiemployer Plan shall be deemed to have occurred unless and until the Borrower or any of its ERISA Affiliates receives written notice thereof from such Multiemployer Plan.
15
Events of Default has the meaning specified in Section 6.01 .
Event of Loss means, with respect to any property or asset, any (i) loss or destruction of, or damage to, such property or asset or (ii) any condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property or asset, or confiscation or requisition of the use of such property or asset.
Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, any successor statute thereto, and any regulations promulgated thereunder.
Excluded Assets has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof).
Excluded Swap Obligation means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a Lien to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act (or the application or official interpretation thereof) by virtue of such Guarantors failure for any reason to constitute an eligible contract participant as defined in the Commodity Exchange Act (determined after giving effect to Section 7.10 and any other keepwell, support or other agreement for the benefit of such Guarantor and any and all Guarantees of such Guarantors Swap Obligations by other Loan Parties) at the time the Guaranty of such Guarantor, or grant by such Guarantor of a Lien, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a Swap Master Agreement governing more than one Swap Contract, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swap Contracts for which such Guaranty or Lien is or becomes excluded in accordance with the first sentence of this definition.
Excluded Taxes means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by overall net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), (b) Other Connection Taxes, (c) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.20(b) , amounts with respect to such Taxes were payable either to such Lenders assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (d) Taxes attributable to such Recipients failure or inability to comply with Section 2.20(c) and (e) any U.S. federal withholding Taxes imposed under FATCA.
16
Facility Documents means, collectively, this Agreement, the Notes, if any, the Security Documents, and each other agreement or instrument executed or delivered in connection herewith or therewith (including each other agreement, instrument or document that creates a Lien in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Obligations) that is designated by the parties thereto as a Facility Document.
Facility Fee has the meaning set forth in Section 2.12 .
Fair Market Value means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of CFTC, as applicable; provided, however , that with respect to any such value less than $5.0 million, only the good faith determination of CFTCs senior management shall be required.
Fair Share has the meaning set forth in Section 7.08 .
Fair Share Contribution Amount has the meaning set forth in Section 7.08 .
FATCA shall mean Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any applicable intergovernmental agreements with respect thereto.
Federal Funds Rate means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1.00%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Administrative Agent, in its capacity as a Lender, on such day on such transactions as determined by the Administrative Agent.
Financial Officer Certification means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer of the Borrower that such financial statements fairly present, in all material respects, the financial condition of the Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.
First Priority Claims has the meaning set forth in the Senior Notes Indenture in effect as of the date hereof.
Fiscal Quarter means each fiscal quarter of the Borrower.
Fiscal Year means the year ending each December 31.
17
Foreign Lender means a Lender that is not a U.S. Person.
Foreign Subsidiary has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof).
Funding Guarantors has the meaning set forth in Section 7.08 .
GAAP means generally accepted accounting principles in the United States as in effect on the Closing Date, consistently applied.
Governmental Act means any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority.
Governmental Authority means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
Governmental Authorization means any permit, license, authorization, certification, registration, approval, plan, directive, consent order or consent decree of or from any Governmental Authority.
Grantor means an Assignor as defined in the Security Agreement.
Guarantee means, with respect to any Person, any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.
The term Guarantee used as a verb has a corresponding meaning.
Guaranteed Indebtedness of any Person means, without duplication, all Indebtedness of any other Person referred to in the definition of Indebtedness and all dividends of other Persons for the payment of which, in either case, such Person is directly or indirectly responsible or liable as obligor, guarantor or otherwise.
18
Guaranteed Obligations has the meaning specified in Section 7.01 .
Guarantors has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof); provided that the Borrower shall also be a Guarantor with respect to Additional Secured Obligations owing by any Loan Party or any of its Subsidiaries and any Swap Obligation of a Specified Loan Party (determined before giving effect to Sections 7.01 and 7.10 ) under the Guaranty.
Guaranty means, collectively, the Guarantee made by the Guarantors pursuant to Article VII in favor of the Secured Parties, together with each other guaranty delivered pursuant to Section 7.09 .
Hazardous Materials means any pollutant, contaminant, chemical, waste, material or substance, exposure to which or Release of which is prohibited, limited or regulated by any Governmental Authority, including petroleum, petroleum products, asbestos, urea formaldehyde, regulated radioactive materials, polychlorinated biphenyls and toxic mold.
Hedging Obligation of any Person means (i) any Currency Hedging Obligation designed to protect the Borrower or any of its Restricted Subsidiaries from fluctuations in currency exchange rates and not to speculate on such fluctuations and (ii) any obligations of such Person pursuant to any Permitted Interest Rate Protection Agreement.
Historical Financial Statements means as of the Closing Date, (i) the unqualified audited financial statements of CFTC and its Subsidiaries for the fiscal year ending December 31, 2016, consisting of a balance sheet and the related consolidated statements of income, stockholders equity and cash flows for such Fiscal Year, and (ii) the unaudited financial statement of CFTC and its Subsidiaries as of June 30, 2017, consisting of a balance sheet and the related consolidated statements of income, stockholders equity and cash flows for the six month period ending on such date, and, in the case of clauses (i) and (ii), certified by the chief financial officer of the Borrower that they fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.
Immaterial Subsidiary has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof).
Incur means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise), assume (pursuant to a merger, consolidation, acquisition or other transaction), Guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person (and Incurrence and Incurred shall have meanings correlative to the foregoing); provided , however , that a change in GAAP that results in an obligation of such Person that exists at such time becoming Indebtedness shall not be deemed an Incurrence of such Indebtedness. Indebtedness otherwise Incurred by a Person before it becomes a Subsidiary of CFTC will be deemed to have been Incurred at the time it becomes such a Subsidiary.
19
Indebtedness means, with respect to any Person, without duplication:
(1) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, excluding any trade payables and other accrued current liabilities incurred in the ordinary course of business, but including, without limitation, all obligations of such Person in connection with any letters of credit and acceptances issued under letter of credit facilities, acceptance facilities or other similar facilities, now or hereafter outstanding;
(2) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments;
(3) all indebtedness referred to in clauses (1) and (2) above of other Persons, the payment of which is secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; provided that the amount of such Indebtedness will be the lesser of (A) the fair market value of such property at such date of determination and (B) the amount of such Indebtedness;
(4) all Guaranteed Indebtedness of such Person;
(5) all obligations under Interest Rate Protection Agreements of such Person;
(6) the net amount owing under all Currency Hedging Obligations of such Person; and
(7) all Capital Lease Obligations of such Person.
Notwithstanding anything in this Agreement to the contrary, the calculation of Indebtedness shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159, The Fair Value Option for Financial Assets and Financial Liabilities, or any successor thereto (including pursuant to the Accounting Standards Codification), to value any Indebtedness of the Borrower or any Restricted Subsidiary at fair value, as defined therein. For the avoidance of doubt, Indebtedness does not include any liability for United States federal, state, local, foreign or other taxes owed or owing by the Borrower or any of its Restricted Subsidiaries.
Indemnified Taxes means (a) Taxes other than Excluded Taxes imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Facility Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
Indemnitee has the meaning specified in Section 9.04(b) .
Intercreditor Agreement means the intercreditor agreement, dated as of the date of this Indenture, between the Collateral Agent and the Senior Note Collateral Agent, substantially in the form of Exhibit F , as it may be amended, restated, supplemented and/or otherwise modified from time to time.
20
Interest Payment Date means with respect to (i) any Loan that is a Base Rate Loan, the last Business Day of each calendar month of each year, commencing on the first such date to occur after the Closing Date and the final maturity date of such Loan; and (ii) any Loan that is a LIBOR Rate Loan, the last day of each Interest Period applicable to such Loan.
Interest Period means, in connection with a LIBOR Rate Loan, an interest period of one month (i) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, in the case of immediately successive Interest Periods, commencing on the day on which the immediately preceding Interest Period expires; provided that (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c), of this definition, end on the last Business Day of a calendar month; and (c) no Interest Period with respect to any portion of the Loans shall extend beyond the Commitment Termination Date.
Interest Rate Determination Date means, with respect to any Interest Period, the date that is two (2) Business Days prior to the first day of such Interest Period.
Interest Rate Hedging Obligations shall mean Hedging Obligations as defined in the Senior Notes Indenture.
Interest Rate Protection Agreement means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement designed to protect the Borrower or any of its Restricted Subsidiaries against fluctuations in interest rates or for the purpose of fixing, hedging or swapping interest rates.
Investments means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of direct or indirect loans (including Guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commissions, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that an acquisition of assets, Equity Interests or other securities by CFTC or a Restricted Subsidiary of CFTC for consideration consisting of common equity securities of CFTC or such Restricted Subsidiary shall not be deemed to be an Investment. If CFTC or any Restricted Subsidiary of CFTC sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of CFTC such that after giving effect to any such sale or disposition, such Person is no longer a direct or indirect Restricted Subsidiary of CFTC, CFTC will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Equity Interests of such Restricted Subsidiary not sold or disposed of. For purposes of the definition of Unrestricted Subsidiary and Section 5.07 of the Senior Notes Indenture:
21
(1) Investments shall include the portion (proportionate to CFTCs equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of CFTC at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided that upon a redesignation of such Subsidiary as a Restricted Subsidiary, CFTC will be deemed to continue to have a permanent Investment in an Unrestricted Subsidiary in an amount (if positive) equal to: (a) CFTCs Investment in such Subsidiary at the time of such redesignation; less (b) the portion (proportionate to CFTCs equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary of CFTC will be valued at its Fair Market Value at the time of such transfer. The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash by CFTC or a Restricted Subsidiary of CFTC in respect of such Investment.
Issuance Notice means a notice substantially in the form of Exhibit A-3 .
Issuing Bank means Bay Coast Bank as Issuing Bank hereunder, together with its permitted successors and assigns in such capacity.
Law means all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
Lender means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement.
Lender Appointment Period has the meaning specified in Section 8.06 .
Letter of Credit means a commercial or standby letter of credit issued or to be issued by the Issuing Bank pursuant to this Agreement.
Letter of Credit Commitment means the obligation of the Issuing Bank to issue, and of the Lenders to participate in, Letters of Credit pursuant to Section 2.05 .
Letter of Credit Sublimit means $5,000,000.
Letter of Credit Usage means, as at any date of determination, the sum of (i) the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all Letters of Credit then outstanding, and (ii) the aggregate amount of all drawings under Letters of Credit honored by the Issuing Bank and not theretofore reimbursed by or on behalf of the Borrower.
22
LIBOR means,
(a) for any interest rate calculation with respect to a LIBOR Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars for a period equal to the applicable Interest Period which appears on Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of 1.00%). If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page), then LIBOR shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period.
(b) for any interest rate calculation with respect to a Base Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a period equal to one month (commencing on the date of determination of such interest rate) which appears on the Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) on such date of determination, or, if such date is not a Business Day, then the immediately preceding Business Day (rounded upward, if necessary, to the nearest 1/100th of 1.00%). If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page) then LIBOR for such Base Rate Loan shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) on such date of determination for a period equal to one month commencing on such date of determination.
Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error. Notwithstanding anything in this Agreement to the contrary, if LIBOR determined as provided above would be less than zero percent (0.0%), then LIBOR shall be deemed to be zero percent (0.0%).
LIBOR Rate Loan means a Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate.
Lien means any mortgage, lien (statutory or other), pledge, security interest, encumbrance, claim, hypothecation, assignment for security, deposit arrangement or preference or other security agreement of any kind or nature whatsoever.
Loan means a revolving loan made by a Lender to the Borrower pursuant to Section 2.01 .
Loan Party means each of the Borrower and Guarantors.
Margin Stock as defined in Regulation U of the Board of Governors as in effect from time to time.
23
Material Adverse Effect means a material adverse effect on (a) the ability of any Loan Party to perform any of its respective obligations under any of the Facility Documents, (b) the legality, validity or enforceability of any provision of this Agreement or any other Facility Document, (c) the business, financial condition or results of operations of the Loan Parties, taken as a whole, or (d) the ability of Collateral Agent (on behalf of itself and the Secured Parties) to exercise its remedies at the times and in the manner contemplated by the Collateral Document.
Multiemployer Plan means any Employee Benefit Plan which is a multiemployer plan as defined in Section 3(37) or Section 4001(a)(3) of ERISA.
Net Income means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends, excluding, however, (1) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (A) any Asset Sale or (B) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries and (2) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss).
Non-Public Information means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.
Net Proceeds means the aggregate cash proceeds received by CFTC or any of its Restricted Subsidiaries in respect of any Asset Sale (including any cash received upon the sale or other disposition of any non cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including legal, accounting and investment banking fees and sales commissions) and any relocation expenses Incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness (other than any Credit Facility or Pari Passu Indebtedness) secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.
Note means a Demand Revolving Loan Note.
Officers Certificate means a certificate signed by any two officers of the Loan Parties.
Obligations means all obligations (including without limitation Interest Rate Hedging Obligations) of every nature of each Loan Party from time to time owed to the Secured Parties under any Facility Document whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Loan Party, would have accrued on any Obligation, whether or not a claim is allowed against such Loan Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, fees, expenses, indemnification or otherwise; provided that Obligations of a Loan Party shall exclude any Excluded Swap Obligations with respect to such Loan Party.
Opinion of Counsel means a written opinion from legal counsel who is acceptable to the Administrative Agent. The counsel may be an employee of or counsel to the Borrower.
24
Organizational Documents means, as applicable, for any Person, such Persons articles or certificate of incorporation, by-laws, memorandum and articles of association, partnership agreement, trust agreement, certificate of limited partnership, articles of organization, certificate of formation, shareholder agreement, voting trust agreement, operating agreement, subscription agreement, limited liability company agreement and/or analogous documents, as amended, modified or supplemented from time to time.
Other Connection Taxes means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or enforced any Facility Document).
Other Taxes means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Facility Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
Parent Entity means any direct or indirect parent of CFTC.
Pari Passu Indebtedness means any Indebtedness (other than any Indebtedness evidenced by an a Additional Note or related Senior Notes Guarantee) (1) that is permitted to be incurred under Section 5.09 of the Senior Notes Indenture and (2) that is secured on a pari passu basis with the Senior Notes and the Senior Notes Guarantees, as applicable, by a Permitted Lien described in clause (16) of the definition thereof; provided that (i) such Indebtedness is so designated as Pari Passu Indebtedness in an OfficersCertificate delivered to the Administrative Agent and (ii) an authorized representative of the holders of such Indebtedness shall have executed and delivered a supplement to the Intercreditor Agreement and an Accession Agreement.
Participant Register has the meaning set forth in Section 9.05(g)(iv) .
PBGC means the Pension Benefit Guaranty Corporation or any successor thereto.
Pension Plan means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 or Section 430 of the Code or Section 302 or Title IV of ERISA.
Permitted Holders has the meaning set forth in the Senior Notes Indenture in effect as of the date hereof.
Permitted Investments means:
(1) any Investment in CFTC or a Restricted Subsidiary of CFTC (other than a Receivables Entity);
(2) any Investment in cash or Cash Equivalents or the Senior Notes;
25
(3) any Investment by CFTC or any Restricted Subsidiary of CFTC in a Person, if as a result of such Investment (A) such Person becomes a Restricted Subsidiary of CFTC (other than a Receivables Entity) or (B) such Person is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, CFTC or a Restricted Subsidiary of CFTC (other than a Receivables Entity);
(4) any Investment existing on the date of the Senior Notes Indenture or made pursuant to binding commitments in effect on the date of the Senior Notes Indenture or an Investment consisting of any extension, modification or renewal of any Investment existing on the date of theSenior Notes Indenture; provided that the amount of any such Investment may be increased (x) as required by the terms of such Investment as in existence on the date of theSenior Notes Indenture or (y) as otherwise permitted under the Senior Notes Indenture;
(5) any Restricted Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 5.10 of the Senior Notes Indenture;
(6) Hedging Obligations that are Incurred by CFTC or any of its Restricted Subsidiaries for the purpose of fixing or hedging (A) interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of the Senior Notes Indenture to be outstanding or (B) currency exchange risk in connection with existing financial obligations and not for purposes of speculation;
(7) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers compensation, performance and other similar deposits;
(8) loans and advances to officers, directors and employees of CFTC and its Restricted Subsidiaries in the ordinary course of business not to exceed $2.0 million in the aggregate at any one time outstanding;
(9) any Investment consisting of a Guarantee permitted by Section 5.09 of the Senior Notes Indenture;
(10) Investments consisting of non-cash consideration received in the form of securities, notes or similar obligations in connection with dispositions of assets permitted pursuant to the Senior Notes Indenture;
(11) Investments received in settlement of bona fide disputes or as distributions in bankruptcy, insolvency, foreclosure or similar proceedings;
(12) advances to customers or suppliers in the ordinary course of business;
(13) Investments consisting of purchases and acquisitions of supplies, materials and equipment or purchases or contract rights or licenses of intellectual property, in each case in the ordinary course of business;
(14) receivables owing to CFTC or any of its Restricted Subsidiaries if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;
26
(15) CSO Obligations of CFTC and its Restricted Subsidiaries;
(16) Investments consisting of obligations of officers and employees to CFTC or its Restricted Subsidiaries in connection with such officers and employees acquisition of Equity Interests in CFTC (other than Disqualified Stock) so long as no cash is actually advanced by CFTC or any of its Restricted Subsidiaries in connection with the acquisition of such obligations);
(17) Investments in a Receivables Entity, or any Investment by a Receivables Entity in any other Person, in each case, in connection with a Qualified Receivables Transaction, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Transaction or any related Indebtedness; provided , however , that any Investment in a Receivables Entity is in the form of a purchase money note, contribution of additional receivables or an equity interest; and
(18) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (18) that are at the time outstanding, not to exceed $5.0 million.
Permitted Liens has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof).
Person means any individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, association, estate, organization, joint venture or other entity, or a government or any agency or political subdivision or agency thereof.
Platform has the meaning set forth in Section 5.01(a)(xi) .
Pledge Agreement means the Pledge Agreement, dated as of the date of this Agreement, among the Borrower and the Guarantors in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.
Preferred Stock as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.
Prime Rate means, at any time, the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by the Administrative Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.
Principal Office means, for each of the Administrative Agent and the Issuing Bank, its Principal Office which in the case of the Administrative Agent, may include such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to the Borrower, the Administrative Agent and each Lender.
27
Pro Rata Share means with respect to all payments, computations and other matters relating to the Commitment or Loans of any Lender or any Letters of Credit issued or participations purchased therein by any Lender, as the context requires, the percentage obtained by dividing (x) the Revolving Exposure of that Lender by (y) the aggregate Revolving Exposure of all Lenders.
Qualified ECP Guarantor means, at any time, each Loan Party with total assets exceeding $10,000,000 or that qualifies at such time as an eligible contract participant under the Commodity Exchange Act and can cause another Person to qualify as an eligible contract participant at such time under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
Qualified Receivables Transaction means any transaction or series of transactions that may be entered into by CFTC or any of the Restricted Subsidiaries pursuant to which CFTC or any of the Restricted Subsidiaries may sell, convey or otherwise transfer to:
(1) a Receivables Entity (in the case of a transfer by CFTC or any of the Restricted Subsidiaries); or
(2) any other Person (in the case of a transfer by a Receivables Entity), or may grant a security interest in, any loans receivable (whether now existing or arising in the future) of CFTC or any of the Restricted Subsidiaries, and any assets related thereto, including all collateral securing such loans receivable, all contracts and all Guarantees or other obligations in respect of such loans receivable, proceeds of such loans receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving loans receivable; provided , however , that the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the chief financial officer of CFTC).
Recipient means (a) the Administrative Agent and (b) any Lender, as applicable.
Receivables Entity has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof).
Register has the meaning specified in Section 2.08(b) .
Regulation D means Regulation D of the Board, as in effect from time to time.
Regulation FD means Regulation FD as promulgated by the SEC under the Securities Act and Exchange Act.
Regulation T means Regulation T issued by the Board.
Regulation U means Regulation U issued by the Board.
Regulation X means Regulation X issued by the Board.
28
Reimbursement Date has the meaning set forth in Section 2.05(d).
Related Parties means, with respect to any Person, such Persons Affiliates and the partners, directors, trustees, officers, employees, shareholders, controlling Persons, counsel, representatives, attorneys-in-fact, agents and advisors of such Person and of such Persons Affiliates and each of their heirs, successors and assigns.
Release means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.
Required Lenders means, as of any date of determination, Lenders holding more than 50% of the sum of the aggregate Revolving Exposure of all Lenders; provided that Required Lenders shall always include at least two (2) Lenders if there are two or more Lenders.
Restricted Investment means an Investment other than a Permitted Investment.
Restricted Payment has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof).
Restricted Subsidiary means, with respect to any Person, any Subsidiary of such Person that is not an Unrestricted Subsidiary.
Responsible Officer of a Person means its chairman of the board (if an officer), its chief executive officer, its president, any of its vice presidents, its chief financial officer, its chief legal officer, its controller, its treasurer or its assistant treasurer, or, with respect to 3.01(a)(ii) and (iii), its secretary or its assistant secretary (or in each case its equivalent and whether or not the Person performing such duties is so designated) or any authorized designee thereof.
Revolving Exposure means, with respect to any Lender as of any date of determination, (a) prior to the termination of the Commitments, that Lenders Commitment; and (b) after the termination of the Commitments, the sum of (a) the aggregate outstanding principal amount of the Loans of that Lender, (b) in the case of the Issuing Bank, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by the Issuing Bank (net of any participations by Lenders in such Letters of Credit), and (c) the aggregate amount of all participations by that Lender in any outstanding Letters of Credit or any unreimbursed drawing under any Letter of Credit.
SEC means the United States Securities and Exchange Commission and any successor Governmental Authority performing a similar function.
Secured Parties has the meaning set forth in the Security Agreement.
Securities Act means the Securities Act of 1933, as amended from time to time, and any successor statute.
29
Security Agreement means the Security Agreement, dated as of the date of this Agreement, among the Borrower and the Guarantors in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.
Security Agreement Joinder has the meaning specified in the Security Agreement.
Senior Notes means CFTCs 12.000% Senior Secured Notes due 2022 issued under the Senior Notes Indenture.
Senior Notes Collateral Agent means CMT Trust Company, as Collateral Agent under the Senior Notes Collateral Documents.
Senior Notes Collateral Documents means the Collateral Documents as defined in the Senior Notes Indenture.
Senior Notes Guarantee shall mean the Notes Guarantees as defined in the Senior Notes Indenture (as in effect as of the date hereof).
Senior Notes Indenture means that certain Indenture, dated as of February 15, 2017 entered into by CFTC, the guarantors party thereto, and TMI Trust Company, as Trustee and Collateral Agent in connection with the issuance of the Senior Notes, together with all instruments and other agreements entered into by the Borrower and such guarantors in connection therewith.
Set-off Party has the meaning specified in Section 9.12 .
Solvent means, with respect to the Borrower and any of its Subsidiaries on a consolidated basis, that as of the date of determination, both (i) (a) the sum of the Borrower and its Subsidiaries debt (including contingent liabilities) does not exceed the present fair saleable value of the Borrower and its Subsidiaries present assets; (b) the Borrower and its Subsidiaries capital is not unreasonably small in relation to its business as contemplated on the Closing Date or with respect to any transaction contemplated to be undertaken after the Closing Date; and (c) such Person has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Person is solvent within the meaning given that term and similar terms under the Bankruptcy Code and applicable Laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).
Specified Loan Party means any Loan Party that is not then an eligible contract participant under the Commodity Exchange Act (determined prior to giving effect to Section 7.10).
30
Stated Maturity when used with respect to any security or any installment of interest thereon, means the date specified in such security as the fixed date on which the principal of such security or such installment of interest is due and payable.
Subsidiary of any Person means:
(1) any corporation of which more than 50% of the outstanding shares of Capital Stock having ordinary voting power for the election of directors is owned directly or indirectly by such Person; and
(2) any partnership, limited liability company, association, joint venture, business trust or other entity in which such Person, directly or indirectly, has at least a majority ownership interest entitled to vote at the election of directors, managers or trustees thereof (or other person performing similar functions) and, except as otherwise indicated herein, references to Subsidiaries shall refer to Subsidiaries of the Borrower.
Swap Agreement means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, repurchase transactions, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a Swap Master Agreement ), including any such obligations or liabilities under any Swap Master Agreement.
Swap Master Agreement has the meaning set forth in the definition of Swap Agreement.
Swap Obligations means with respect to any Guarantor any obligation to pay or perform under any agreement, contract or transaction that constitutes a swap within the meaning of Section 1a(47) of the Commodity Exchange Act.
Tax means any present or future tax, levy, impost, duty, assessment, deduction or withholding or similar charges in the nature of a tax (and interest, fines, penalties and additions related thereto) imposed by any Governmental Authority.
Total Utilization means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Loans (other than Loans made for the purpose of reimbursing the Issuing Bank for any amount drawn under any Letter of Credit, but not yet so applied), and (ii) the Letter of Credit Usage.
31
Transactions means the borrowing of Loans by the Borrower under this Agreement contemplated to be funded on the Closing Date, and the payment of fees and expenses, incurred in connection with the foregoing.
Type means, with respect to a Loan, its character as a Base Rate Loan or a LIBOR Rate Loan.
UCC means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.
Unrestricted Subsidiary has the meaning set forth in the Senior Notes Indenture (as in effect as of the date hereof).
U.S. Lender has the meaning set forth in Section 2.20(c) .
U.S. Person means any Person that is a United States Person as defined in Section 7701(a)(30) of the Code.
Voting Stock of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
Weighted Average Life means, as of any date, with respect to any Indebtedness, the quotient obtained by dividing (1) the sum of the products of the number of years from such date to the dates of each successive scheduled principal payment (including any sinking fund payment requirements) of such Indebtedness multiplied by the amount of such principal payment, by (2) the sum of all such principal payments.
Section 1.02 Computation of Time Periods . In this Agreement in the computation of periods of time from a specified date to a later specified date, the word from means from and including and the words to and until each mean to but excluding; and the word through means to and including.
Section 1.03 Accounting Terms . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis. If at any time any change in GAAP would affect the computation of any provision (including any definition, financial ratio or requirement set forth in any Facility Document), and either the Borrower or Administrative Agent shall so request, Administrative Agent and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to Administrative Agent financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
32
Section 1.04 Principles of Construction . All references to Articles, Sections, Schedules, Exhibits, and Appendices are to Articles, Sections, Schedules, Exhibits, and Appendices in or to this Agreement unless otherwise specified. The words hereof, herein and hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All references to agreements and other contractual instruments shall be deemed to include subsequent amendments, permitted assignments and other modifications thereto, but only to the extent such amendments, assignments and other modifications are not prohibited by the terms of any Facility Document. Furthermore, any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any Law or regulation shall, unless otherwise specified, refer to such Law or regulation as amended, modified or supplemented from time to time.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS AND LETTERS OF CREDIT;
OBLIGATIONS PAYABLE ON DEMAND
Section 2.01 Commitments . During the Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Loans to the Borrower in an aggregate amount up to but not exceeding such Lenders Commitment; provided that after giving effect to the making of any Loans in no event shall the Total Utilization of Commitments exceed the Commitments then in effect; and provided further that in each calendar year, commencing with 2018, there shall be a period of thirty (30) consecutive days when there are no Loans outstanding hereunder. Amounts borrowed pursuant to this Section 2.01 may be repaid and reborrowed during the Commitment Period. Each Lenders Commitment shall expire on the Commitment Termination Date and all Loans and all other amounts owed hereunder with respect to the Loans and the Commitments shall be paid in full no later than such date.
Section 2.02 Borrowing Mechanics for Loans .
(a) (i) Loans that are Base Rate Loans shall be made in an aggregate minimum amount of $500,000 and integral multiples of $500,000 in excess of that amount and (ii) Loans that are LIBOR Rate Loans shall be made in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount.
(b) Whenever the Borrower desires that Lenders make Loans to it, the Borrower shall deliver to the Administrative Agent a fully executed and delivered Borrowing Request no later than 12:00 p.m. (Boston time) (i) at least three (3) Business Days in advance of the proposed Credit Date in the case of a LIBOR Rate Loan and (ii) at least one Business Day in advance of the proposed Credit Date in the case of a Base Rate Loan. Except as otherwise provided herein, a Borrowing Request for a LIBOR Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and the Borrower shall be bound to make a borrowing in accordance therewith.
33
(c) Notice of receipt of each Borrowing Request in respect of Loans, together with the amount of each Lenders Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by the Administrative Agent to each Lender by telefacsimile with reasonable promptness, but (provided the Administrative Agent shall have received such notice by 12:00 p.m. (Boston time)) not later than 2:00 p.m. (Boston time) on the same day as the Administrative Agents receipt of such notice from the Borrower.
(d) Each Lender shall make the amount of its Loan available to the Administrative Agent not later than 12:00 p.m. (Boston time) on the applicable Credit Date by wire transfer of same day funds in Dollars at the Principal Office designated by the Administrative Agent. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, the Administrative Agent shall make the proceeds of such Loans available to the Borrower on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by the Administrative Agent from Lenders to be credited to the account of the Borrower at the Principal Office designated by the Administrative Agent or such other account as may be designated in writing to the Administrative Agent by the Borrower.
Section 2.03 Loans and Other Obligations Payable ON DEMAND . Notwithstanding any other provision hereof or of any other Facility Document, all Loans, all accrued interest thereon and all other Obligations are payable ON DEMAND by the Administrative Agent, on behalf of the Lenders, and such demand may be given at any time and for any reason or for no reason.
Section 2.04 Joint and Several Obligations . All obligations of the Borrower hereunder and under all other Facility Documents are and shall be joint and several obligations of CFTC and Holdings.
Section 2.05 Issuance of Letters of Credit and Purchase of Participations Therein .
(a) Letters of Credit . During the Commitment Period, subject to the terms and conditions hereof, the Issuing Bank agrees to issue Letters of Credit for the account of the Borrower in the aggregate amount up to but not exceeding the Letter of Credit Sublimit; provided that (i) each Letter of Credit shall be denominated in Dollars; (ii) the stated amount of each Letter of Credit shall not be less than $100,000 or such lesser amount as is acceptable to the Issuing Bank; (iii) after giving effect to such issuance, in no event shall the Total Utilization of Commitments exceed the Commitments then in effect; (iv) after giving effect to such issuance, in no event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit then in effect; (v) in no event shall any standby Letter of Credit have an expiration date later than the earlier of (1) five (5) Business Days prior to the Commitment Termination Date and (2) the date which is one year from the date of issuance of such standby Letter of Credit; and (vi) in no event shall any commercial Letter of Credit have an expiration date later than the earlier of (1) the Commitment Termination Date and (2) the date which is 180 days from the date of issuance of such commercial Letter of Credit or be issued if such commercial Letter of Credit is otherwise unacceptable to the Issuing Bank in its reasonable discretion. Subject to the foregoing, the Issuing Bank may agree that a standby Letter of Credit shall automatically be extended for one or more successive periods not to exceed one year each, unless the Issuing Bank elects not to
34
extend for any such additional period; provided that the Issuing Bank shall not extend any such Letter of Credit if it has received written notice that an Event of Default has occurred and is continuing at the time the Issuing Bank must elect to allow such extension; provided further , that in the event there is a Defaulting Lender, the Issuing Bank shall not be required to issue, renew or extend any Letter of Credit to the extent (x) the Defaulting Lenders Pro Rata Share of Letter of Credit Commitment may not be reallocated pursuant to Section 2.22(a) or (y) the Issuing Bank has not otherwise entered into arrangements satisfactory to it and the Borrower to eliminate the Issuing Banks risk with respect to the participation in Letters of Credit of the Defaulting Lender, including by cash collateralizing such Defaulting Lenders Pro Rata Share of the Letter of Credit Usage.
(b) Notice of Issuance . Whenever the Borrower desires the issuance of a Letter of Credit, the Borrower shall deliver to the Administrative Agent an Issuance Notice no later than 12:00 p.m. (Boston time) at least three (3) Business Days, or in each case such shorter period as may be agreed to by the Issuing Bank in any particular instance, in advance of the proposed date of issuance. Upon satisfaction or waiver of the conditions set forth in Section 3.02 , the Issuing Bank shall issue the requested Letter of Credit only in accordance with the Issuing Banks standard operating procedures. Upon the issuance of any Letter of Credit or amendment or modification to a Letter of Credit, the Issuing Bank shall promptly notify each Lender of such issuance, which notice shall be accompanied by a copy of such Letter of Credit or amendment or modification to a Letter of Credit and the amount of such Lenders respective participation in such Letter of Credit pursuant to Section 2.05(e).
(c) Responsibility of the Issuing Bank With Respect to Requests for Drawings and Payments . In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, the Issuing Bank shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. As between the Borrower and the Issuing Bank, the Borrower assumes all risks of the acts and omissions of, or misuse of the Letter of Credit issued by the Issuing Bank by the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Issuing Bank, including any Governmental Acts; none of the above shall affect or impair, or prevent the vesting of, any of the Issuing Banks rights or powers hereunder. Without limiting the foregoing and in furtherance thereof, no action taken or omitted by the Issuing Bank under or in connection with the Letters of Credit or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall give rise to any liability on the part of the Issuing Bank to the Borrower. Notwithstanding anything to the contrary contained in this Section 2.05(c) , the Borrower shall retain any and all rights it may have against the Issuing Bank for any liability arising solely out of the gross negligence or willful misconduct of the Issuing Bank.
35
(d) Reimbursement by the Borrower of Amounts Drawn or Paid Under Letters of Credit . In the event the Issuing Bank has determined to honor a drawing under a Letter of Credit, it shall immediately notify the Borrower and the Administrative Agent, and the Borrower shall reimburse the Issuing Bank on or before the Business Day immediately following the date on which such drawing is honored (the Reimbursement Date ) in an amount in Dollars and in same day funds equal to the amount of such honored drawing; provided that anything contained herein to the contrary notwithstanding, (x) unless the Borrower shall have notified the Administrative Agent and the Issuing Bank prior to 10:00 a.m. (Boston time) on the Reimbursement Date that the Borrower intends to reimburse the Issuing Bank for the amount of such honored drawing with funds other than the proceeds of Loans, the Borrower shall be deemed to have given a timely Borrowing Request to the Administrative Agent requesting Lenders with Commitments to make Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount of such honored drawing and (y) subject to satisfaction or waiver of the conditions specified in Section 3.02, Lenders with Commitments shall, on the Reimbursement Date, make Loans that are Base Rate Loans in the amount of such honored drawing, the proceeds of which shall be applied directly by the Administrative Agent to reimburse the Issuing Bank for the amount of such honored drawing; provided, further, that if for any reason proceeds of Loans are not received by the Issuing Bank on the Reimbursement Date in an amount equal to the amount of such honored drawing, the Borrower shall reimburse the Issuing Bank, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Loans, if any, which are so received. Nothing in this Section 2.05(d) shall be deemed to relieve any Lender from its obligation to make Loans on the terms and conditions set forth herein, and the Borrower shall retain any and all rights it may have against any such Lender resulting from the failure of such lender to make such Loans under this Section 2.05(d) .
(e) Lenders Purchase of Participations in Letters of Credit . Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from the Issuing Bank a participation in such Letter of Credit and any drawings honored thereunder in an amount equal to such Lenders Pro Rata Share of the maximum amount which is or at any time may become available to be drawn thereunder. In the event that the Borrower shall fail for any reason to reimburse the Issuing Bank as provided in Section 2.05(d) , the Issuing Bank shall promptly notify each Lender of the unreimbursed amount of such honored drawing and of such Lenders respective participation therein based on such Lenders Pro Rata Share of the Commitments. Each Lender shall make available to the Issuing Bank an amount equal to its respective participation, in Dollars and in same day funds, at the office of the Issuing Bank specified in such notice, not later than 12:00 p.m. (Boston time) on the first Business Day (under the Laws of the jurisdiction in which such office of the Issuing Bank is located) after the date notified by the Issuing Bank. In the event that any Lender fails to make available to the Issuing Bank on such Business Day the amount of such Lenders participation in such Letter of Credit as provided in this Section 2.05(e) , the Issuing Bank shall be entitled to recover such amount on demand from such Lender together with interest thereon for three (3) Business Days at the rate customarily used by the Issuing Bank for the correction of errors among banks and thereafter at the Base Rate. Nothing in this Section 2.05(e) shall be deemed to prejudice the right of any Lender to recover from the Issuing Bank any amounts made available by such Lender to the Issuing Bank pursuant to this Section in the event that the payment
36
with respect to a Letter of Credit in respect of which payment was made by such Lender constituted gross negligence or willful misconduct on the part of the Issuing Bank. In the event the Issuing Bank shall have been reimbursed by other Lenders pursuant to this Section 2.05(e) for all or any portion of any drawing honored by the Issuing Bank under a Letter of Credit, the Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under this Section 2.05(e) with respect to such honored drawing such Lenders Pro Rata Share of all payments subsequently received by the Issuing Bank from the Borrower in reimbursement of such honored drawing when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth in the Register or at such other address as such Lender may request.
(f) Obligations Absolute . The obligation of the Borrower to reimburse the Issuing Bank for drawings honored under the Letters of Credit issued by it and to repay any Loans made by Lenders pursuant to Section 2.05(d) and the obligations of Lenders under Section 2.05(e) , in each case shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under all circumstances including any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which the Borrower or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), the Issuing Bank, Lender or any other Person or, in the case of a Lender, against the Borrower, whether in connection herewith, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between the Borrower or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by the Issuing Bank under any Letter of Credit against presentation of a draft or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, general affairs, assets, liabilities, operations, management, condition (financial or otherwise), stockholders equity, results of operations or value of any Loan Party; (vi) any breach hereof or any other Facility Document by any party thereto; (vii) the fact that an Event of Default or a Default shall have occurred and be continuing; or (viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; provided that in each case payment by the Issuing Bank under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of the Issuing Bank under the circumstances in question.
(g) Indemnification . Without duplication of any obligation of the Borrower under Section 9.04 , in addition to amounts payable as provided herein, the Borrower hereby agrees to protect, indemnify, pay and save harmless the Issuing Bank from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Issuing Bank may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by the Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct of the Issuing Bank or (2) the wrongful dishonor by the Issuing Bank of a proper demand for payment made under any Letter of Credit issued by it or (ii) the failure of the Issuing Bank to honor a drawing under any such Letter of Credit as a result of any Governmental Act.
37
Section 2.06 Pro Rata Shares; Availability of Funds .
(a) Pro Rata Shares . All Loans shall be made and all participations purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lenders obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lenders obligation to make a Loan requested hereunder or purchase a participation required hereby.
(b) Availability of Funds . Unless the Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to the Administrative Agent the amount of such Lenders Loan requested on such Credit Date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such Credit Date and the Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to the Borrower a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to the Administrative Agent, at the customary rate set by the Administrative Agent for the correction of errors among banks for three (3) Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agents demand therefor, the Administrative Agent shall promptly notify the Borrower and the Borrower shall within five (5) Business Days pay such corresponding amount to the Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to the Administrative Agent, at the rate payable hereunder for Base Rate Loans. Nothing in this Section 2.06(b) shall be deemed to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that the Borrower may have against any Lender as a result of any default by such Lender hereunder.
Section 2.07 Use of Proceeds . The proceeds of the Loans and Letters of Credit shall be applied by the Borrower to short term working capital and seasonal operating needs of the Borrower and its Subsidiaries. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board or any other regulation thereof or to violate the Exchange Act.
Section 2.08 Evidence of Indebtedness; Register; Notes .
(a) Lenders Evidence of Indebtedness . Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of the Borrower to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on the Borrower, absent manifest error; provided that the failure to make any such recordation, or any error in such recordation, shall not affect any Lenders Commitment or the Borrowers Obligations in respect of any Loans; provided, further , that in the event of any inconsistency between the Register and any Lenders records, the recordations in the Register shall govern.
38
(b) Register . The Administrative Agent (or its agent or sub-agent appointed by it), as a non-fiduciary agent of Borrower, shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the Commitment and Loans of each Lender from time to time (the Register ). The Register shall be available for inspection by the Borrower or any Lender (with respect to any entry relating to such Lenders Loans) at any reasonable time and from time to time upon reasonable prior notice. The Administrative Agent shall record, or shall cause to be recorded, in the Register the Commitments and the Loans in accordance with the provisions of Section 9.05 , and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on the Borrower and each Lender, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect any Lenders Commitment or the Borrowers Obligations in respect of any Loan. The Borrower hereby designates the Administrative Agent to serve as the Borrowers agent solely for purposes of maintaining the Register as provided in this Section 2.08 , and the Borrower hereby agrees that, to the extent the Administrative Agent serves in such capacity, the Administrative Agent and its officers, directors, employees, agents, sub-agents and affiliates shall constitute Indemnitees .
(c) Notes . If so requested by any Lender by written notice to the Borrower (with a copy to the Administrative Agent) at least two (2) Business Days prior to the Closing Date, or at any time thereafter, the Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 9.05) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after the Borrowers receipt of such notice) a Note or Notes to evidence such Lenders Loan.
Section 2.09 Interest on Loans .
(a) Except as otherwise set forth herein, the Loans shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows: (i) if a Base Rate Loan, at the Base Rate plus the Applicable Margin or (y) if a LIBOR Rate Loan, at the Adjusted LIBOR Rate plus the Applicable Margin.
(b) The basis for determining the rate of interest with respect to any Loan shall be selected by the Borrower and notified to the Administrative Agent and Lenders pursuant to the applicable Borrowing Request or Conversion/Continuation Notice, as the case may be. If on any day a Loan is outstanding with respect to which a Borrowing Request or Conversion/Continuation Notice has not been delivered to the Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a LIBOR Rate Loan.
(c) In connection with LIBOR Rate Loans there shall be no more than five (5) Interest Periods outstanding at any time. In the event the Borrower fails to specify between a Base Rate Loan or a LIBOR Rate Loan in the applicable Borrowing Request or Conversion/Continuation Notice, such Loan (outstanding as a LIBOR Rate Loan) shall remain as
39
a LIBOR Rate Loan (or if outstanding as a Base Rate Loan shall remain as, or (if not then outstanding) shall be made as, a Base Rate Loan). All LIBOR Rate Loans shall have an Interest Period of one month. As soon as practicable after 10:00 a.m. (Boston time) on each Interest Rate Determination Date, the Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the LIBOR Rate Loans for which an interest rate is then being determined and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to the Borrower and each Lender.
(d) Interest payable pursuant to Section 2.09(a) shall be computed on the basis of a 360-day year, for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a LIBOR Rate Loan, the date of conversion of such LIBOR Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a LIBOR Rate Loan, the date of conversion of such Base Rate Loan to such LIBOR Rate Loan, as the case may be, shall be excluded; provided that if a Loan is repaid on the same day on which it is made, one days interest shall be paid on that Loan.
(e) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to each such payment date; (ii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of such Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in arrears at maturity or demand of such Loan, including final maturity of such Loan; provided that with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date.
(f) The Borrower agrees to pay to the Issuing Bank, with respect to drawings honored under any Letter of Credit, interest on the amount paid by the Issuing Bank in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by or on behalf of the Borrower at a rate equal to (i) for the period from the date such drawing is honored to but excluding the applicable Reimbursement Date, the rate of interest otherwise payable hereunder with respect to Loans that are Base Rate Loans and (ii) thereafter, a rate which is 5.00% per annum in excess of the rate of interest otherwise payable hereunder with respect to Loans that are Base Rate Loans.
(g) Interest payable pursuant to Section 2.09(f) shall be computed on the basis of a 360-day year for the actual number of days elapsed in the period during which it accrues, and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. Promptly upon receipt by the Issuing Bank of any payment of interest pursuant to Section 2.09(f) , the Issuing Bank shall distribute to each Lender, out of the interest received by the Issuing Bank in respect of the period from the date such drawing is honored to but excluding the date on which the Issuing Bank is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of any Loans), the amount that such Lender would have been entitled to receive in respect of the letter
40
of credit fee that would have been payable in respect of such Letter of Credit for such period if no drawing had been honored under such Letter of Credit. In the event the Issuing Bank shall have been reimbursed by Lenders for all or any portion of such honored drawing, the Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under Section 2.05(e) with respect to such honored drawing such Lenders Pro Rata Share of any interest received by the Issuing Bank in respect of that portion of such honored drawing so reimbursed by Lenders for the period from the date on which the Issuing Bank was so reimbursed by Lenders to but excluding the date on which such portion of such honored drawing is reimbursed by the Borrower.
Section 2.10 Conversion/Continuation .
(a) Subject to Section 2.18 and so long as no Default or Event of Default shall have occurred and then be continuing and no demand for payment of any Obligations has been made, the Borrower shall have the option:
(i) to convert at any time all or any part of any Loan equal to $1,000,000 and integral multiples of $500,000 in excess of that amount from one Type of Loan to another Type of Loan; provided that a LIBOR Rate Loan may only be converted on the expiration of the Interest Period applicable to such LIBOR Rate Loan unless the Borrower shall pay all amounts due under Section 2.18 in connection with any such conversion; or
(ii) upon the expiration of any Interest Period applicable to any LIBOR Rate Loan, to continue all or any portion of such Loan equal to $1,000,000 and integral multiples of $500,000 in excess of that amount as a LIBOR Rate Loan.
(b) The Borrower shall deliver a Conversion/Continuation Notice to the Administrative Agent no later than 10:00 a.m. (Boston time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three (3) Business Days in advance of the proposed Conversion/Continuation Date (in the case of a conversion to, or a continuation of, a LIBOR Rate Loan). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any LIBOR Rate Loans, shall be irrevocable on and after the related Interest Rate Determination Date, and the Borrower shall be bound to effect a conversion or continuation in accordance therewith.
Section 2.11 Default Interest; Late Fees . If (a) all or any portion of the principal amount of or interest on any Loan or reimbursement obligation in respect of any Letter of Credit shall not be paid when due (whether at the stated maturity, on demand, by acceleration or otherwise), (b) an Event of Default under Section 6.01(f) shall occur or demand for payment of any Obligation is made or (c) any other Event of Default shall occur and the Administrative Agent so elects, all outstanding Loans and reimbursement obligations (whether or not overdue) shall bear interest, from the date of such nonpayment until such amount is paid in full, at a rate per annum (the Default Rate ) that is equal to (x) in the case of the Loans the rate that would otherwise be applicable thereto pursuant to Section 2.09 plus 5.00% per annum or (y) in the case of reimbursement obligations in respect of Letters of Credit, the rate applicable to Loans that are Base Rate Loans plus 5.00% per annum. If all or a portion of any principal or interest payable on any Loan or reimbursement obligation in respect of any Letter of Credit or any commitment
41
fee or other amount payable hereunder shall not be paid within fifteen (15) days after the date when due (whether at the stated maturity, by acceleration, on demand or otherwise), or request of the Administrative Agent the Borrower shall pay to the Administrative Agent for the benefit of the Lenders a late fee equal to five percent (5%) of such overdue amount. Payment or acceptance of the increased rates of interest or late fees provided for in this Section 2.11 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Administrative Agent or any Lender.
Section 2.12 Fees .
(a) The Borrower agrees to pay to Lenders:
(i) an annual facility fee (the Facility Fee ) equal to (1) the aggregate amount of the Commitments multiplied by 0.50%, payable quarterly on the Closing Date and on each December 31, March 31 and June 30 thereafter; provided that (i) any Facility Fee accrued with respect to any of the Commitments of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall be payable by the Borrower so long as such Facility Fee shall otherwise have been due and payable by the Borrower prior to such time of such Lender becoming a Defaulting Lender and (ii) no Facility Fee shall be payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender. The Facility Fee shall be earned in full on the Closing Date and on the date of any subsequent annual renewal; and
(ii) letter of credit fees equal to (1) the Applicable Margin, times (2) the average aggregate daily maximum amount available to be drawn under all such Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination).
All fees referred to in this Section 2.12(a) shall be paid to the Administrative Agent at its Principal Office and upon receipt, the Administrative Agent shall promptly distribute to each Lender that has Revolving Exposure its Pro Rata Share thereof.
(b) The Borrower agrees to pay directly to the Issuing Bank, for its own account, the following fees:
(i) at any time that there are two (2) or more Lenders, a fronting fee equal to 0.125%, per annum, times the average aggregate daily maximum amount available to be drawn under all Letters of Credit (determined as of the close of business on any date of determination); and
(ii) such documentary and processing charges for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with the Issuing Banks standard schedule for such charges and as in effect at the time of such issuance, amendment, transfer or payment, as the case may be.
(c) All fees referred to in Sections 2.12(a) and (b) shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on the last Business Day of each calendar quarter of each year during the Commitment Period, commencing on the first such date to occur after the Closing Date, and on the Commitment Termination Date.
42
Section 2.13 Voluntary Prepayments/Commitment Reductions of Loans .
(a) Voluntary Prepayments .
(i) Any time and from time to time (1) with respect to Base Rate Loans, the Borrower may prepay any such Loans on any Business Day, without premium or penalty in whole or in part, in an aggregate minimum amount of $500,000 and integral multiples of $500,000 in excess of that amount; and (2) with respect to LIBOR Rate Loans, the Borrower may prepay any such Loans only on the last day of the applicable Interest Period without premium or penalty, unless the Borrower pays any related breakage costs, as specified in Section 2.18(c) in whole or in part in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount.
(ii) All such prepayments shall be made (1) upon not less than one Business Days prior written notice in the case of Base Rate Loans; and (2) upon not less than three (3) Business Days prior written notice in the case of LIBOR Rate Loans;
in each case given to the Administrative Agent by 12:00 p.m. (Boston time) on the date required (and the Administrative Agent shall promptly transmit such original notice by telefacsimile or telephone to each Lender). Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in Section 2.15 .
(b) Voluntary Commitment Reductions .
(i) The Borrower may, upon not less than three (3) Business Days prior written notice confirmed in writing to the Administrative Agent (which original written notice the Administrative Agent shall promptly transmit by telefacsimile or telephone to each Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Commitments in an amount up to the amount by which the Commitments exceed the Total Utilization of Commitments at the time of such proposed termination or reduction; provided that any such partial reduction of the Commitments shall be in an aggregate minimum amount of $2,000,000 and integral multiples of $1,000,000 in excess of that amount.
(ii) The Borrowers notice to the Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Commitments shall be effective on the date specified in the Borrowers notice and shall reduce the Commitments of each Lender proportionately to its Pro Rata Share thereof. Any reduction in the Commitments shall not reduce the amount of the Facility Fee payable under Section 2.12 .
Section 2.14 [Reserved] .
43
Section 2.15 Application of Prepayments/Reductions . Any prepayment of any Loan pursuant to Section 2.13(a) shall be applied as specified by the Borrower in the applicable notice of prepayment; provided that in the event the Borrower fails to specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied as follows:
first , to repay outstanding Base Rate Loans to the full extent thereof; and
second , to repay outstanding LIBOR Rate Loans to the full extent thereof.
Section 2.16 General Provisions Regarding Payments .
(a) All payments by the Borrower of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to the Administrative Agent not later than 12:00 p.m. (Boston time) on the date due at the Principal Office designated by the Administrative Agent for the account of Lenders. For purposes of computing interest and fees, funds received by the Administrative Agent after that time on such due date shall be deemed to have been paid by the Borrower on the next succeeding Business Day.
(b) All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Loans) shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid, and all such payments (and, in any event, any payments in respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be applied to the payment of interest then due and payable before application to principal.
(c) The Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lenders applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including all fees payable with respect thereto, to the extent received by the Administrative Agent.
(d) Notwithstanding the foregoing provisions hereof, if any Conversion/ Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any LIBOR Rate Loans, the Administrative Agent shall give effect thereto in apportioning payments received thereafter.
(e) Subject to the provisos set forth in the definition of Interest Period as they may apply to Loans, whenever any payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder or of the Commitment fees hereunder.
(f) The Borrower hereby authorizes the Administrative Agent to charge the Borrowers accounts with the Administrative Agent in order to cause timely payment to be made to the Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose).
44
(g) The Administrative Agent shall deem any payment by or on behalf of the Borrower hereunder that is not made in same day funds prior to 12:00 p.m. (Boston time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by the Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. The Administrative Agent shall give prompt telephonic notice to the Borrower and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 6.01(a) . Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the Default Rate from the date such amount was due and payable until the date such amount is paid in full.
(h) If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 6.01 , all payments or proceeds received by Agents hereunder in respect of any of the Obligations, shall be applied in accordance with the application arrangements described in the Security Agreement.
Section 2.17 Ratable Sharing . Lenders hereby agree among themselves, that if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or bankers lien, by counterclaim or cross action or by the enforcement of any right under the Facility Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Facility Documents (collectively, the Aggregate Amounts Due to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify the Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of the Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. The Borrower expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of bankers lien, set-off or counterclaim with respect to any and all monies owing by the Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. The provisions of this Section 2.17 shall not be construed to apply to (a) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (b) any payment obtained by any Lender as consideration for the assignment or sale of a participation in any of its Loans or other Obligations owed to it in accordance with the express terms of this Agreement.
45
Section 2.18 Making or Maintaining LIBOR Rate Loans .
(a) Inability to Determine Applicable Interest Rate . In the event that the Required Lenders shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any LIBOR Rate Loans, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted LIBOR Rate, the Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to the Borrower and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, LIBOR Rate Loans until such time as the Administrative Agent notifies the Borrower and Lenders that the circumstances giving rise to such notice no longer exist and (ii) any Borrowing Request or Conversion/Continuation Notice given by the Borrower with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by the Borrower.
(b) Illegality or Impracticability of LIBOR Rate Loans . In the event that on any date any Lender shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that the making, maintaining or continuation of its LIBOR Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any Law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of Law even though the failure to comply therewith would not be unlawful) or (ii) as a result of any Law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new Law, treaty or governmental rule, regulation or order), or any determination of a court or Governmental Authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-Governmental Authority (whether or not having the force of Law), has become impracticable, as a result of contingencies occurring after the date hereof which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an Affected Lender and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to the Borrower and the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each other Lender). If the Administrative Agent receives a notice from (x) any Lender pursuant to clause (i) of the preceding sentence or (y) a notice from Lenders constituting the Required Lenders pursuant to clause (ii) of the preceding sentence, then (1) the obligation of the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) to make Loans as, or to convert Loans to, LIBOR Rate Loans shall be suspended until such notice shall be withdrawn by each Affected Lender, (2) to the extent such determination by the Affected Lender relates to a LIBOR Rate Loan then being requested by the Borrower pursuant to a Borrowing Request or a Conversion/Continuation Notice, the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lenders) obligations to maintain their respective outstanding LIBOR Rate Loans (the Affected Loans ) shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when
46
required by Law and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a LIBOR Rate Loan then being requested by the Borrower pursuant to a Borrowing Request or a Conversion/Continuation Notice, the Borrower shall have the option, subject to the provisions of Section 2.18(c) , to rescind such Borrowing Request or Conversion/Continuation Notice as to all Lenders by giving notice (by telefacsimile) to the Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission the Administrative Agent shall promptly transmit to each other Lender).
(c) Compensation for Breakage or Non Commencement of Interest Periods . The Borrower shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its LIBOR Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or reemployment of such funds and including loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of any LIBOR Rate Loan does not occur on a date specified therefor in a Borrowing Request, or a conversion to or continuation of any LIBOR Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice; (ii) if any prepayment or other principal payment of, or any conversion of, any of its LIBOR Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan; or (iii) if any prepayment of any of its LIBOR Rate Loans is not made on any date specified in a notice of prepayment given by the Borrower.
(d) Booking of LIBOR Rate Loans . Any Lender may make, carry or transfer LIBOR Rate Loans at, to or for the account of any of its branch offices or the office of an Affiliate of such Lender.
(e) Assumptions Concerning Funding of LIBOR Rate Loans . Calculation of all amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall be made as though such Lender had actually funded each of its relevant LIBOR Rate Loans through the purchase of a LIBOR deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted LIBOR Rate in an amount equal to the amount of such LIBOR Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such LIBOR deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided that each Lender may fund each of its LIBOR Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.18 and under Section 2.19 .
Section 2.19 Increased Costs; Capital Adequacy .
(a) Compensation For Increased Costs and Taxes . Subject to the provisions of Section 2.20 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender (which term shall include the Issuing Bank for purposes of this Section 2.19(a) ) shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any Change in Law (i) imposes, modifies or
47
holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to LIBOR Rate Loans that are reflected in the definition of Adjusted LIBOR Rate) or (ii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or acquiring participations in, issuing or maintaining Letters of Credit hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, the Borrower shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to the Borrower (with a copy to the Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(a) , which statement shall be conclusive and binding upon all parties hereto absent manifest error.
(b) Capital Adequacy Adjustment . In the event that any Lender (which term shall include the Issuing Bank for purposes of this Section 2.19(b) ) shall have determined that a Change in Law has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lenders Loans or Commitment or Letters of Credit, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit, to a level below that which such Lender or such controlling corporation could have achieved but for such Change in Law (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five (5) Business Days after receipt by the Borrower from such Lender of the statement referred to in the next sentence, the Borrower shall pay to such Lender such additional amount or amounts as shall compensate such Lender or such controlling corporation on an after tax basis for such reduction. Such Lender shall deliver to the Borrower (with a copy to the Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.19(b) , which statement shall be conclusive and binding upon all parties hereto absent manifest error.
Section 2.20 Taxes; Withholding, Etc .
(a) Payments to Be Free and Clear . All sums payable by or on behalf of any Loan Party hereunder and under other Facility Document shall (except to the extent required by Law) be paid free and clear of, and without any deduction or withholding for or on account of, any Indemnified Tax imposed, levied, collected, withheld or assessed by any Governmental Authority.
48
(b) Withholding of Taxes . If any Loan Party or any other Person is required by Law to make any deduction or withholding for or on account of any Tax from any sum paid or payable by any Loan Party to the Administrative Agent or any Lender (which term shall include the Issuing Bank for purposes of this Section 2.20 (b) ) under any of the Facility Documents: (i) the Borrower shall notify the Administrative Agent of any such requirement or any change in any such requirement as soon as the Borrower becomes aware of it; (ii) the Borrower shall pay any such Tax before the date on which penalties and interest attach thereto, such payment to be made (if the liability to pay is imposed on any Loan Party) for its own account or (if that liability is imposed on the Administrative Agent or such Lender, as the case may be) on behalf of and in the name of the Administrative Agent or such Lender; (iii) in the case of any Indemnified Tax the sum payable by such Loan Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, the Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty (30) days after the due date of payment of any Indemnified Tax which it is required by clause (ii) above to pay, the Borrower shall deliver to the Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority.
(c) Evidence of Exemption From U.S. Withholding Tax . (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Facility Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.
(ii) Without limiting the generality of paragraph (i), each Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Administrative Agent for transmission to the Borrower, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of the Borrower or the Administrative Agent (each in the reasonable exercise of its discretion), (A) two (2) original copies of Internal Revenue Service Form W-8BEN, W-8ECI and/or W-8IMY (or, in each case, any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Code and reasonably requested by the Borrower to establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Facility Documents or (B) if such Lender is not a bank or other Person described in Section 881(c)(3) of the Code, a Certificate re Non Bank Status together with two (2) original copies of Internal Revenue Service Form W-8BEN (or any
49
successor form), properly completed and duly executed by such Lender, and such other documentation required under the Code and reasonably requested by the Borrower to establish that such Lender is not subject to (or is subject to a reduced rate of) deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Facility Documents. Without limiting the generality of paragraph (i), each Lender that is a U.S. Person (a U.S. Lender ) and is not an exempt recipient within the meaning of Treasury Regulation Section 1.6049-4(c) shall deliver to the Administrative Agent and the Borrower on or prior to the Closing Date (or, if later, on or prior to the date on which such Lender becomes a party to this Agreement) two (2) original copies of Internal Revenue Service Form W-9 (or any successor form), properly completed and duly executed by such Lender, certifying that such U.S. Lender is entitled to an exemption from United States backup withholding tax, or otherwise prove that it is entitled to such an exemption.
(iii) FATCA . If a payment made to a Lender under any Facility Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or Administrative Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or Administrative Agent as may be necessary for the Borrower or Administrative Agent to comply with its obligations under FATCA and to determine that such Lender has complied with such Lenders obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this paragraph (iii), FATCA shall include any amendments made to FATCA after the date of this Agreement.
(iv) Each Lender agrees that if any for or certification it previously delivered expires or becomes obsolete or inaccurate in any material respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(d) Payment of Other Taxes . Without limiting the provisions of Section 2.20(b) , the Borrower shall timely pay all Other Taxes to the relevant Governmental Authorities in accordance with applicable Law. The Borrower shall deliver to the Administrative Agent official receipts or other evidence of such payment reasonably satisfactory to the Administrative Agent in respect of any Other Taxes payable hereunder promptly after payment of such Other Taxes.
(e) Indemnified Taxes . The Borrower shall indemnify the Administrative Agent and any Lender (which term shall include Issuing Bank for purposes of this Section 2.20(e) ) for the full amount of Indemnified Taxes for which additional amounts are required to be paid pursuant to Section 2.20(b) , in each case arising in connection with payments made under this Agreement or any other Facility Document (including any such Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.20 ) paid by the Administrative Agent or Lender or any of their respective Affiliates and any reasonable out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified
50
Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability (with supporting documentation as necessary) delivered to such Loan Party shall be conclusive absent manifest error. Such payment shall be due within thirty (30) days of such Loan Partys receipt of such certificate. If the Borrower reasonably believes that any such Indemnified Taxes were not correctly or legally asserted, the Administrative Agent or Lender, as appropriate, will reasonably cooperate with the Borrower in pursuing a refund of such Indemnified Taxes at the Borrowers sole expense.
(f) Repayment . If the Borrower pays any additional amounts or makes an indemnity payment under this Section 2.20 to any Lender or the Administrative Agent, and such Lender or the Administrative Agent determines in its sole discretion exercised in good faith that it has actually received in connection therewith any refund of the underlying Indemnified Taxes, such Lender or the Administrative Agent shall pay to the Borrower an amount equal to such refund which was obtained by such Lender or Administrative Agent (but only to the extent of indemnity payments made, or additional amounts paid by the Borrower under this Section 2.20 with respect to the Indemnified Taxes giving rise to such refund) net of all reasonable out-of-pocket expenses of the Lender or the Administrative Agent with respect to such refund, and without interest (other than any interest paid by the relevant taxation authority); provided, however, that the Borrower, upon the request of the Lender or the Administrative Agent, agrees to repay the amount paid over to the Borrower to any Lender or the Administrative Agent in the event any Lender or the Administrative Agent is required to repay such refund, plus interest and penalties (excluding interest and penalties attributable to the negligence or willful misconduct of such Lender or the Administrative Agent). This paragraph shall not be construed to require any Lender or the Administrative Agent to disclose any Confidential Information to the Borrower or any other Person (including its Tax returns).
(g) Indemnification by Lenders and Issuing Bank . Each Lender and the Issuing Bank shall severally indemnify the Administrative Agent within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lenders failure to comply with the provisions of Section 9.05(g)(iv) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Facility Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Facility Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (g). The agreements in paragraph (g) shall survive the resignation and/or replacement of the Administrative Agent.
(h) Survival . Each partys obligations under this Section 2.20 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Facility Document.
51
Section 2.21 Obligation to Mitigate . Each Lender (which term shall include the Issuing Bank for purposes of this Section 2.21 ) agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Sections 2.18 , 2.19 or 2.20 , it shall, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions, including any Affected Loans, through another office of such Lender or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Sections 2.18 , 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Commitments, Loans or Letters of Credit through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Commitments, Loans or Letters of Credit or the interests of such Lender; provided that such Lender shall not be obligated to utilize such other office pursuant to this Section 2.21 unless the Borrower agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described above. A certificate as to the amount of any such expenses payable by the Borrower pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive absent manifest error.
Section 2.22 Defaulting Lenders . Notwithstanding anything to the contrary contained in this Agreement, if any Letter of Credit Commitment exists at the time a Lender becomes a Defaulting Lender then:
(a) all or any part of such Letter of Credit Commitment shall be reallocated among the non-Defaulting Lenders in accordance with their respective Pro Rata Share of such Letter of Credit Commitment but only to the extent (i) the sum of the non-Defaulting Lenders Pro Rata Shares of the Total Utilization of Commitments plus such Defaulting Lenders Pro Rata Share of Revolving Exposure do not exceed the total of all non-Defaulting Lenders Commitments and (ii) the conditions set forth in Section 3.02 are satisfied at such time;
(b) if the reallocation described in clause (a) above cannot, or can only partially, be effected, the Borrower shall within five (5) Business Days following notice by the Administrative Agent, cash collateralize such Defaulting Lenders Pro Rata Share of the Letter of Credit Commitment (after giving effect to any partial reallocation pursuant to clause (a) above) for so long as such Letter of Credit Commitment is outstanding; and
(c) if the Letter of Credit Commitment of the non-Defaulting Lenders is reallocated pursuant to clause (a) above, then the fees payable to the Lenders pursuant to Section 2.12 shall be adjusted in accordance with such non-Defaulting Lenders Pro Rata Shares.
52
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent to Closing . The effectiveness of this Agreement is subject to the fulfillment or waiver of each of the following conditions precedent:
(a) The Administrative Agent shall have received originals or telecopies (or in pdf or other electronic format) (followed promptly by originals) unless otherwise specified of the following, each properly executed by a Responsible Officer of each applicable Loan Party, and each (unless otherwise specified below) dated the Closing Date and in form and substance reasonably satisfactory to the Administrative Agent:
(i) executed counterparts of this Agreement and the Collateral Documents;
(ii) a certificate from a Responsible Officer of each Loan Party attaching certified copies of (x) the Organizational Documents of such Loan Party (in each case, including any amendments or supplements thereto), (y) the resolutions authorizing and approving the making and performance by such Loan Party of this Agreement and the other Facility Documents and the borrowing and Guarantee, as applicable, of the Loans and (z) (1) documents evidencing all other necessary company action, governmental approvals and third-party consents, if any, with respect to this Agreement and any other Facility Document or (2) stating that no such action, approval or consents are required;
(iii) a certificate from a Responsible Officer of each Loan Party certifying the names and true signatures of each Person authorized to sign the applicable Facility Document to be delivered hereunder;
(iv) a certificate of recent date evidencing the good standing of each Loan Party in its jurisdiction of formation;
(v) opinions of counsel to the Loan Parties addressed to Administrative Agent and the Lenders, in form and substance reasonably satisfactory to the Administrative Agent;
(vi) the results of tax, judgment and Lien searches of recent date on the Loan Parties in the jurisdictions of formation of the Loan Parties;
(vii) all applicable know your customer and other account opening documentation required by Administrative Agent to be provided by the Loan Parties; and
(viii) financing statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Collateral Documents, covering the Collateral described in the Collateral Documents.
53
(b) In order to create in favor of the Collateral Agent, for the benefit of Secured Parties, a valid, perfected first priority security interest in the personal property Collateral (subject only to Liens approved by the Collateral Agent), each Loan Party shall have delivered to the Collateral Agent:
(i) (A) certificates representing the Certificated Securities and all other certificated securities constituting Investment Property as defined and pledged under the Collateral Documents accompanied by undated stock powers executed in blank and (B) proper UCC financing statements in form appropriate for filing under the UCC of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Collateral Documents, covering the Collateral described in the Collateral Documents; and
(ii) If so requested by the Collateral Agent, fully executed intellectual property security agreements, as applicable, in proper form for filing or recording with the United States Patent and Trademark Office and the United States Copyright Office, memorializing and recording the encumbrance of the intellectual property assets listed in Annexes I, J and K to the Security Agreement.
(c) The Collateral Agent shall have received a certificate from the Borrowers insurance broker or other evidence satisfactory to it that all insurance required to be maintained pursuant to Section 5.01(e) is in full force and effect, together with evidence that the Collateral Agent, for the benefit of the Secured Parties, has the benefit of the lender loss payee clause thereunder and/or has been named as additional insured, in each case, to the extent required under Section 5.01(e) .
(d) The Borrower shall have paid all fees required to be paid on or before the Closing Date and fees, charges and disbursements of counsel to any Agent.
Section 3.02 Conditions to each Credit Extension . The obligation of each Lender to make any Loan or the Issuing Bank to issue any Letter of Credit, on any Credit Date (other than any conversion of Loans to the other Type, or a continuation of LIBOR Rate Loans), including the Closing Date, is subject to the fulfillment or waiver of each of the following conditions precedent:
(a) Each of the representations and warranties contained herein and in the other Facility Documents shall be true and correct in all material respects on and as of the Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date.
(b) No event shall have occurred, or would result from the consummation of the applicable Credit Extension or from the application of the proceeds therefrom, which constitutes a Default or an Event of Default.
(c) The Administrative Agent shall have received a Borrowing Request or Issuance Notice, as the case may be, in accordance with the requirements hereof.
54
(d) After making the Credit Extensions requested on such Credit Date, the Total Utilization of Commitments shall not exceed the Commitments then in effect.
(e) On or before the date of issuance of any Letter of Credit, the Administrative Agent shall have received all other information required by the applicable Issuance Notice, and such other documents or information as the Issuing Bank may reasonably require in connection with the issuance of such Letter of Credit.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Loan Parties Representations and Warranties . The Loan Parties represent and warrant as follows:
(a) Organization; Requisite Power and Authority; Qualification . Each of the Borrower and its Subsidiaries (i) is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization as identified on Schedule 4.01(a) , (ii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Facility Documents to which it is a party and to carry out the Transactions contemplated thereby and (iii) is qualified to do business and in good standing in every jurisdiction where any material portion of its assets are located and wherever necessary to carry out its material business and operations, except in the case of subclause (iii), where the failure to be so qualified or so to be in good standing could not reasonably be expected to have a Material Adverse Effect.
(b) Equity Interests and Ownership . The Equity Interests of each of the Borrower and its Subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable. Except as set forth on Schedule 4.01(b) , as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which the Borrower or any of its Subsidiaries is a party requiring, and there is no membership interest or other Equity Interests of the Borrower or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by the Borrower or any of its Subsidiaries of any additional membership interests or other Equity Interests of the Borrower or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest or other Equity Interests of the Borrower or any of its Subsidiaries. Schedule 4.01(b) correctly sets forth the ownership interest of the Borrower and each of its Subsidiaries in their respective Subsidiaries as of the Closing Date.
(c) Due Authorization . The execution, delivery and performance of the Facility Documents have been duly authorized by all necessary action on the part of each Loan Party that is a party thereto.
(d) No Conflict . The execution, delivery and performance by the Loan Parties of the Facility Documents to which they are parties and the consummation of the Transactions do not and will not (i) violate (A) any provision of any Law or any governmental rule or regulation applicable to any such Loan Party, (B) any of the Organizational Documents of any Loan Party
55
or (C) any order, judgment or decree of any court or other agency of government binding on such Loan Party; (ii) result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of such Loan Party; (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of such Loan Party (other than any Liens created under any of the Facility Documents in favor of the Collateral Agent on behalf of the Secured Parties); or (iv) require any approval of stockholders, members or partners or any approval or consent of any Person under any Contractual Obligation of any Loan Party, except for such approvals or consents which have been obtained on or before the Closing Date and disclosed in writing to the Lenders.
(e) Governmental Consents . The execution, delivery and performance by each Loan Party of the Facility Documents to which it is a party and the consummation of the transactions contemplated by the Facility Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to the Collateral Agent for filing and/or recordation, as of the Closing Date or such later date as is permitted under this Agreement or the other Facility Documents.
(f) Binding Obligation . Each Facility Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or limiting creditors rights generally or by equitable principles relating to enforceability.
(g) Historical Financial Statements . The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the date thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments.
(h) No Material Adverse Change . Since December 31, 2016, no event, circumstance or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect.
(i) Adverse Proceedings, Etc . There are no Adverse Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries (i) is in violation of any applicable Laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (ii) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
56
(j) Payment of Taxes . Except as otherwise permitted under Section 5.01(c) , all Tax returns and reports of the Borrower and its Subsidiaries required to be filed by any of them have been timely filed. All Taxes shown on such Tax returns to be due and payable and all assessments, fees, Taxes and other governmental charges upon the Borrower and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. except for Taxes that (i) not being actively contested by the Borrower or such Subsidiary in good faith and by appropriate proceedings and (ii) is not adverse in any material respect to the Lenders; provided that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor.
(k) Properties . The Borrower and each of its Subsidiaries has (A) good, sufficient and legal title to (in the case of fee interests in real property), (B) valid leasehold interests in (in the case of leasehold interests in real or personal property), (C) valid licensed rights in (in the case of licensed interests in intellectual property) and (D) good title to (in the case of all other personal property), all of their respective properties and assets reflected in the Historical Financial Statements referred to in Section 4.01(g) and in the most recent financial statements delivered pursuant to Section 5.01 , in each case except for assets disposed of since the date of such financial statements in the ordinary course of business. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens.
(l) Environmental Matters . In each case, except to the extent not reasonably likely to result in a Material Adverse Effect, (i) the Borrower and each of its Subsidiaries is in compliance with all applicable Environmental Laws, and any past noncompliance has been fully resolved without any pending, on-going or future obligation or cost; (ii) the Borrower and each of its Subsidiaries has obtained and maintained in full force and effect all Governmental Authorizations required pursuant to Environmental Laws for the operation of their respective business; (iii) to the Borrower and each Subsidiarys knowledge, there are and have been no conditions, occurrences, violations of Environmental Law, or presence or Releases of Hazardous Material which could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries; (iv) there are no pending Environmental Claims against the Borrower or any of its Subsidiaries, and neither the Borrower nor any of its Subsidiaries has received any written notification of any alleged violation of, or liability pursuant to, Environmental Law or responsibility for the Release or threatened Release of, or exposure to, any Hazardous Materials; and (v) no Lien imposed pursuant to any Environmental Law has attached to any Collateral and, to the knowledge of any Loan Party, no conditions exist that would reasonably be expected to result in the imposition of such a Lien on any Collateral.
(m) No Defaults . Neither the Borrower nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.
57
(n) Governmental Regulation . Neither the Borrower nor any of its Subsidiaries is a registered investment company or a company controlled by a registered investment company or a principal underwriter of a registered investment company as such terms are defined in the Investment Company Act of 1940.
(o) Margin Stock . Neither the Borrower nor any of its Subsidiaries owns any Margin Stock.
(p) Employee Benefit Plans . No ERISA Event has occurred or is reasonably expected to occur that would result in a Material Adverse Effect.
(q) Solvency . The Loan Parties, taken as a whole, are, and on any date on which this representation and warranty is made, shall be, Solvent.
(r) Compliance with Statutes, Etc . The Borrower and each of its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its assets and property (including compliance with all applicable Environmental Laws), except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
(s) Disclosure . The representations and warranties of the Loan Parties contained in the Facility Documents and in the other documents, certificates or written statements furnished to the Lenders by or on behalf of the Borrower and its Subsidiaries for use in connection with the Transactions contemplated hereby, in each case, as modified or supplemented by other information so furnished, when taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact (known to the Borrower and its Subsidiaries, in the case of any document not furnished by them) necessary in order to make the statements contained therein not misleading in light of the circumstances under which the same were made; provided that, with respect to projected financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed by them to be reasonable at the time delivered, it being understood that any such projected financial information may vary from actual results and such variations could be material.
(t) PATRIOT Act . To the extent applicable, each Loan Party is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the PATRIOT Act. No part of the proceeds of the Loans shall be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(u) First Priority Claims . The outstanding amount of all Obligations, including without limitation the principal of and all interest on Loans and all Additional Secured Obligations, constitute and at all times will constitute First Priority Claims under the Senior Notes Indenture and First Lien Obligations under the Intercreditor Agreement.
58
(v) Collateral . All Obligations are secured by the Collateral under the Collateral Documents (each as defined in the Senior Notes Indenture) and entitled to a senior secured position with respect to such Collateral as First Priority Claims thereunder in accordance with the terms thereof.
(w) No Mandatory Commitment Reduction . The total amount of First Priority Claims has not been required to be reduced pursuant to the provisions of Section 5.09(b)(i) of the Senior Notes Indenture.
ARTICLE V
COVENANTS
Section 5.01 Affirmative Covenants . So long as any Commitment is in effect and any Obligation (other than contingent indemnification and expense reimbursement obligations that are unmatured) hereunder remains unpaid and until cancellation or expiration of all Letters of Credit (other than Letters of Credit that have been cash collateralized or backstopped to the satisfaction of the Issuing Bank), the Loan Parties covenant and agree that each of them shall, and shall cause each of its Subsidiaries to:
(a) Financial Statements and Other Reports . In the case of the Borrower, deliver to the Administrative Agent (which shall furnish to each Lender):
(i) Quarterly Financial Statements . As soon as available, and in any event within 45 days after the end of each of the Fiscal Quarters of each Fiscal Year, the consolidated balance sheets of CFTC and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income, stockholders equity and cash flows of CFTC and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year, all in reasonable detail, together with a Financial Officer Certification;
(ii) Annual Financial Statements . As soon as available, and in any event within 120 days after the end of each Fiscal Year, commencing with the Fiscal Year in which the Closing Date occurs, (A) the audited consolidated balance sheets of CFTC and its Subsidiaries as at the end of such Fiscal Year and the related audited consolidated statements of income, stockholders equity and cash flows of CFTC and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year, in reasonable detail, together with a Financial Officer Certification; and (B) with respect to such consolidated financial statements a report thereon of independent certified public accountants of recognized national standing selected by CFTC, and reasonably satisfactory to the Administrative Agent (which report and/or the accompanying financial statements shall be unqualified (except to the extent (and only to the extent) that such going concern qualification or statement relates to the report and opinion accompanying the financial statements for the fiscal
59
year ending immediately prior to the stated final maturity date of the Commitments or Loans and which qualification or statement is solely a consequence of such impending stated final maturity date under this Agreement or the demand nature of the Loans hereunder), and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of CFTC and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except, with respect to GAAP being applied on a consistent basis, as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards);
(iii) Compliance Certificate . Together with each delivery of financial statements of CFTC and its Subsidiaries pursuant to Section 5.01(a)(i) and (ii) , a duly executed and completed Compliance Certificate;
(iv) Statements of Reconciliation after Change in Accounting Principles . If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of CFTC and its Subsidiaries delivered pursuant to Section 5.01(a)(i) or (ii) shall differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one or more statements of reconciliation for all such prior financial statements in form reasonably satisfactory to the Administrative Agent;
(v) Notice of Default . Promptly upon any Responsible Officer of any Loan Party obtaining knowledge (A) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to any Loan Party with respect thereto; (B) that any Person has given any notice to any Loan Party or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 6.01(d) ; or (C) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of a Responsible Officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action the Borrower (or such Subsidiary) has taken, is taking and proposes to take with respect thereto;
(vi) Notice of Litigation . Promptly upon any Responsible of any Loan Party obtaining actual knowledge of (A) any Adverse Proceeding not previously disclosed in writing by the Borrower to the Lenders or (B) any development in any Adverse Proceeding that, in the case of either clause (A) or (B), if adversely determined could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, or the exercise of rights or performance of obligations under any Facility Document written notice thereof together with such other information as may be reasonably available to the Borrower to enable the Lenders and their counsel to evaluate such matters;
60
(vii) ERISA . (A) With reasonable promptness, upon the occurrence of any ERISA Event, a written notice specifying the nature thereof, what action such the Borrower, its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto; and (B) upon request of the Administrative Agent, with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower, or any of its respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (2) all notices received by the Borrower or any of its respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event;
(viii) Information Regarding Collateral .
(A) the Borrower shall furnish to the Collateral Agent within five (5) Business Days after the end of each month, a collateral loan receivable report for the Loan Parties in the form of Exhibit I hereto;
(B) the Borrower shall furnish to the Collateral Agent prompt written notice of any change (1) in any Loan Partys corporate name, (2) in any Loan Partys identity or corporate structure, (3) in any Loan Partys jurisdiction of organization or (4) in any Loan Partys Federal Taxpayer Identification Number or state organizational identification number. Each Loan Party agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral as contemplated in the Security Documents;
(C) Each Loan Party also agrees promptly to notify (or to have the Borrower notify on its behalf) the Collateral Agent if any material portion of the Collateral is damaged or destroyed; and
(D) Each Loan Party agrees to notify (or to have the Borrower notify on its behalf) the Collateral Agent immediately if the total amount of First Priority Claims permitted under Section 5.09(b)(i) of the Senior Notes Indenture is reduced as a result of any mandatory prepayment (and corresponding commitment reduction) in accordance with the last clause thereof; and
(ix) Certification of Public Information . The Borrower and each Lender acknowledge that certain of the Lenders may be public-side Lenders (Lenders that do not wish to receive material non-public information with respect to the Borrower, its Subsidiaries or their securities) and, if documents or notices required to be delivered pursuant to this Section 5.01(a) or otherwise are being distributed through IntraLinks/IntraAgency, SyndTrak or another relevant website or other information platform (the Platform ), any document or notice that the Borrower has indicated contains Non-Public Information shall not be posted on that portion of the Platform designated for such public-side Lenders. The Borrower agrees to clearly designate all Information provided to the Administrative Agent by or on behalf of the Borrower which is suitable to make available to Public Lenders. If the Borrower has not indicated whether a document or notice delivered pursuant to this Section 5.01(a) contains Non-Public Information, the Administrative Agent reserves the right to post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material non-public information with respect to the Borrower, its Subsidiaries and their securities.
61
(b) Existence . Except as otherwise permitted under Section 5.13 of the Senior Notes Indenture in effect as of the date hereof, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business.
(c) Payment of Taxes and Claims . Pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by Law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (1) adequate reserves or other appropriate provisions as shall be required in conformity with GAAP shall have been made therefor and (2) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim.
(d) Maintenance of Properties . Maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of the Borrower and its Subsidiaries and from time to time shall make or cause to be made all appropriate repairs, renewals and replacements thereof, in each case except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
(e) Insurance . In the case of the Borrower, maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of the Loan Parties and their Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as are customary for such Persons. Each such policy of insurance shall (1) name the Secured Parties, as additional insureds thereunder as their interests may appear, (2) in the case of each property insurance policy, contain a customary loss payable clause or endorsement, reasonably satisfactory in form and substance to the Collateral Agent.
(f) Books and Records; Inspections . Maintain proper books of record and accounts in which full, true and correct entries in conformity in all material respects with GAAP shall be made of all dealings and transactions in relation to its business and activities. Each Loan Party shall, and shall cause each of its Subsidiaries to, up to two (2) times in any fiscal tear or at any time during the continuation of an Event of Default, any authorized representatives designated by the Administrative Agent to visit and inspect any of the properties of any Loan Party and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested (in each case subject to confidentiality restrictions and privileged materials).
62
(g) Compliance with Contractual Obligations and Laws . Comply with the requirements of all Contractual Obligations and all applicable Laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), noncompliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(h) Environmental Compliance . Use and operate all of its Facilities in compliance with all Environmental Laws, keep all necessary Governmental Authorizations required pursuant to any Environmental Laws, and handle all Hazardous Materials in compliance with all Environmental Laws, in each case except where the failure to comply with the terms of this clause could not reasonably be expected to have a Material Adverse Effect.
(i) Subsidiaries .
(i) In the case of the Borrower, in the event that any Person becomes a Domestic Subsidiary of the Borrower after the date hereof, (a) promptly cause such Domestic Subsidiary to become a Guarantor hereunder by executing and delivering to the Administrative Agent a Counterpart Agreement, (b) promptly take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Sections 3.01(a)(ii) , (iii) , (iv) , (v) , (vi) , (vii) and (viii) , (c) and (d) , and (c) promptly cause such Domestic Subsidiary to become a Grantor under the Collateral Documents by executing and delivering to the Collateral Agent a Security Agreement Joinder.
(ii) Promptly send to the Collateral Agent written notice setting forth with respect to any Person that becomes a Subsidiary of the Borrower after the Closing Date (i) the date on which such Person became a Subsidiary of the Borrower and (ii) all of the data required to be set forth in Schedules 4.01(a) and 4.01(b) with respect to all Subsidiaries of the Borrower; and such written notice shall be deemed to supplement Schedule 4.01(a) and 4 .01(b) for all purposes hereof.
(j) Further Assurances . At any time or from time to time upon the request of the Administrative Agent, at the expense of the Loan Parties, promptly execute, acknowledge and deliver such further documents and do such other acts and things as the Administrative Agent or the Collateral Agent may reasonably request in order to effect fully the purposes of the Facility Documents. In furtherance and not in limitation of the foregoing, each Loan Party shall take such actions as the Administrative Agent or the Collateral Agent may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by the assets of the Loan Parties to the extent and in the manner contemplated by the Facility Documents. Upon the exercise by the Administrative Agent or the Collateral Agent of any power, right, privilege or remedy pursuant to this Agreement or the other Facility Documents which required any consent, approval, recording, qualification or authorization of any Governmental Authority, the Borrower will use commercially reasonable efforts to execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent or the Collateral
63
Agent may be reasonably required to obtain from the Borrower or any of its Subsidiaries for such consent, approval, recording, qualification or authorization. If perfecting any Lien on any Collateral that consists of rights that are licensed or leased from a third party requires the consent of such third party pursuant to the terms of an applicable license or lease agreement, and such terms are enforceable under applicable law, the Borrower or the Guarantors, as the case may be, will use all commercially reasonable efforts to obtain such consent with respect to the perfecting of such Lien.
Section 5.02 Negative Covenants . So long as any Commitment is in effect and any Obligation (other than contingent indemnification and expense reimbursement obligations that are unmatured) hereunder remains unpaid and until cancellation or expiration of all Letters of Credit (other than Letters of Credit that have been cash collateralized or backstopped to the satisfaction of the Issuing Bank), the Loan Parties covenant and agree that they will perform and observe all covenants set forth in Article 5 of the Series Notes Indenture as in effect on the date hereof, which covenants together with all applicable defined terms are incorporated herein by reference as if set forth herein in full with all references therein to Holders being deemed to be references to Lenders.
Section 5.03 Financial Covenants . At all times, the Borrower shall:
(1) Consolidated Interest Coverage Ratio . Maintain an Consolidated Interest Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending on or about June 30, 2017, of not less than 1.50:1.00.
(2) Minimum Eligible Collateral Value . Maintain an Eligible Collateral Value as of the last day of any Fiscal Quarter of not less than 200% of the Total Utilization hereunder on such date.
(3) Consolidated Leverage Ratio . Not permit the Consolidated Total Leverage Ratio as of the last day of any Fiscal Year, beginning with the Fiscal Year ending on or about December 31, 2017, to exceed 4.00:1.00.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Events of Default . If any of the following events ( Events of Default ) shall occur:
(a) any Loan Party shall fail to pay (i) when due any of the outstanding principal of the Loans or (ii) within five (5) Business Days after the date when due any amount payable to the Issuing Bank in reimbursement of any drawing under a Letter of Credit, or (iii) within five (5) Business Days after the same become due and payable, accrued interest on the Loans or any fee or any other amount due hereunder; or
(b) any representation or warranty made by or on behalf of any Loan Party herein or in any other Facility Document, certificate, financial statement or other document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or
64
(c) (i) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in Section 2.07, 5.01(a)(i), (ii), (iii), (iv) or (viii), 5.02 or 5.03 of this Agreement; or (ii) the Loan Parties or any of their Restricted Subsidiaries shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Facility Document, and such failure continues for 30 days; or
(d) (i) any Loan Party or any Restricted Subsidiary thereof fails (1) to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of any Indebtedness (other than Indebtedness hereunder) having an aggregate principal amount of more than $1,000,000, or (2) to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity; provided that this clause (d)(i)(2) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder and under the documents providing for such Indebtedness and such Indebtedness is repaid when required under the documents providing for such Indebtedness; (ii) there occurs any event of default under any Swap Agreement as to which a Loan Party is the Defaulting Party (as defined in such Swap Agreement) or any Termination Event (as so defined) under such Swap Agreement as to which such Loan Party is an Affected Party (as so defined) and, in either event, the Swap Agreement termination value exceeds $1,000,000; provided that in the case of clauses (d)(i) and (ii), any such failure referred to in clause (d)(i) or any such event of default or Termination Event referred to in clause (d)(ii), as the case may be, is unremedied and is not validly waived by the holders of such Indebtedness, or the counterparties of such Swap Agreement, as the case may be, in accordance with the terms of the documents governing such Indebtedness or Swap Agreement, as the case may be, prior to any termination of the Commitments or acceleration of the Loans pursuant to this Section 6.01; or (iii) the occurrence of an Event of Default under the Senior Notes Indenture; or
(e) any judgment or order for the payment of money in excess of $1,000,000 shall be rendered against any Loan Party and either (x) enforcement proceedings shall have been commenced by any creditor upon such judgment or order which shall not have been stayed or dismissed within thirty (30) days after the commencement of such proceedings or (y) there shall be any period of forty-five (45) consecutive days during which such judgment remains unpaid and a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or
65
(f) (i) any Loan Party shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against a Loan Party seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian, conservator, liquidator, rehabilitator or other similar official for it or for any substantial part of its property and assets and, in the case of any such proceeding instituted against such Person, such proceeding shall remain undismissed or unstayed for a period of thirty (30) days; or (iii) any Loan Party shall take any corporate or other action (as applicable), to authorize any of the actions set forth above in this Section 6.01(f);
(g) (i) any Loan Party shall deny its obligations under this Agreement or any other Facility Document (to which it is a party), (ii) any Law shall purport to render invalid, or preclude enforcement of, any material provision of this Agreement or any other Facility Document or impair performance of the obligations hereunder or under any other Facility Document of any Loan Party, or (ii) any material provision of any Facility Document, after delivery thereof in accordance with the terms hereof or of any other Facility Document, shall for any reason cease to be valid and binding upon, or enforceable against any Loan Party;
(h) a Change of Control shall have occurred and be continuing; or
(i) the Lenders at any time deem themselves insecure or determine in their sole discretion that a Material Adverse Effect has occurred;
then, (i) upon the occurrence of any Event of Default described in Section 6.01(f), automatically, and (ii) upon the occurrence of any other Event of Default, at the request of (or with the consent of) Required Lenders, and in addition upon any demand for payment of the principal of or interest accrued on any of the Loans, (A) the Commitments, if any, of each Lender having such Commitments and the obligation of the Issuing Bank to issue any Letter of Credit shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Loan Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit) and (III) all other Obligations; (C) the Administrative Agent may cause the Collateral Agent to enforce any and all Liens and security interests created pursuant to Security Documents; (D) the Administrative Agent shall direct the Borrower to pay (and the Borrower hereby agrees upon receipt of such notice, or upon the occurrence of any Event of Default specified in Section 6.01(f) or upon such demand to pay) to the Administrative Agent such additional amounts of cash as reasonably requested by the Issuing Bank, to be held as security for the Borrowers reimbursement Obligations in respect of Letters of Credit then outstanding; and (E) the Administrative Agent and the Collateral Agent may exercise on behalf of themselves, the Lenders, the Issuing Bank and the other Secured Parties all rights and remedies available to the Administrative Agent, the Collateral Agent, the Lenders and the Issuing Bank under the Facility Documents or under applicable Law or in equity.
66
NOTWITHSTANDING THE PROVISIONS OF THIS SECTION 6.01 OR ANY OTHER PROVISION HEREOF OR OF ANY OTHER FACILITY DOCUMENT, THE LOAN PARTIES ACKNOWLEDGE AND AGREE THAT ALL OBLIGATIONS ARE PAYABLE ON DEMAND AND THE ADMINISTRATIVE AGENT MAY MAKE DEMAND FOR PAYMENT OF ANY OR ALL OBLIGATIONS AND MAY TERMINATE THE COMMITMENTS AT ANY TIME WHETHER OR NOT AN EVENT OF DEFAULT HAS OCCURRED.
ARTICLE VII
GUARANTY
Section 7.01 The Guaranty . Each Guarantor, jointly and severally, hereby Guarantees to the Secured Parties and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of all of the Obligations and Additional Secured Obligations hereunder and the other Facility Documents, in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the Guaranteed Obligations ); provided that the Guaranteed Obligations of a Guarantor shall exclude any Excluded Swap Obligations with respect to such Guarantor. Each Guarantor hereby agrees that if the Borrower shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, each Guarantor will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.
Section 7.02 Obligations Unconditional . The obligations of each Guarantor under Section 7.01 are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of the Borrower under this Agreement or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other Guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable Law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 7.02 that the obligations of each Guarantor hereunder shall be absolute and unconditional under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor, which shall remain absolute and unconditional as described above:
(a) at any time or from time to time, without notice to such Guarantor, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of this Agreement or any other agreement or instrument referred to herein shall be done or omitted;
67
(c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be modified, supplemented or amended in any respect, or any right under this Agreement or any other agreement or instrument referred to herein shall be waived or any other Guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; or
(d) any lien or security interest granted in favor of Collateral Agent for the benefit of the Secured Parties as security for any of the Guaranteed Obligations shall fail to be perfected.
Each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Secured Parties exhaust any right, power or remedy or proceed against the Borrower under this Agreement or any other agreement or instrument referred to herein, or against any other Person under any other Guarantee of, or security for, any of the Guaranteed Obligations, and each Guarantor agrees that any consent by the Administrative Agent or the Lenders hereunder shall be effective only in the specific instance and for the specific purpose for which it is given.
Section 7.03 Reinstatement . The obligations of each Guarantor under this Article shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or any Guarantor in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify each Secured Party on demand for all reasonable costs and expenses (including without limitation reasonable and documented fees, charges and disbursements of counsel) incurred by each Secured Party in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar Law.
Section 7.04 Subordination and Subrogation . Unless and until the Guaranteed Obligations have been paid in full, all rights of each Guarantor against the Borrower with respect to the Guarantee in Section 7.01 shall be subordinated to such payment in full and each Guarantor agrees not to assert any right of subrogation and any right to enforce any remedy which any Secured Party now has or may hereafter have against the Borrower, any endorser or any other guarantor of all or any part of the Guaranteed Obligations until the Guaranteed Obligations are paid in full, and each Guarantor hereby subordinates any benefit of, and any right to participate in, any security or Collateral given to Collateral Agent on behalf of the Secured Parties to secure payment of the Guaranteed Obligations or any other liability of the Borrower to Lenders until the Guaranteed Obligations are paid in full.
Section 7.05 Remedies . Each Guarantor agrees that, as between such Guarantor and the Secured Parties, the obligations of the Borrower under this Agreement may be declared to be forthwith due and payable as provided in Article VI (and shall be deemed to have become automatically due and payable in the circumstances provided in Article VI , without notice or other action on the part of any Secured Party and regardless of whether payment of such obligations has then been accelerated) for purposes of Section 7.01 notwithstanding any stay,
68
injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by such Guarantor for purposes of Section 7.01 .
Section 7.06 Continuing Guarantee . The Guarantee in this Article is a continuing Guarantee, and shall remain in full force and effect until (i) final payment in full of all amounts due under this Agreement, (ii) final payment in full of the Guaranteed Obligations and all other amounts payable under any other Facility Document or (iii) with respect to any Person, if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.
Section 7.07 General Limitation on Guarantee Obligations . In any action or proceeding involving any state corporate Law, or any state or Federal bankruptcy, insolvency, reorganization or other Law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 7.01 would otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 7.01 , then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by such Guarantor or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.
Section 7.08 Contribution by Guarantors . All Guarantors desire to allocate among themselves (collectively, the Contributing Guarantors ), in a fair and equitable manner, their obligations arising under this Guarantee. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a Funding Guarantor ) under this Guarantee such that its Aggregate Payments exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantors Aggregate Payments to equal its Fair Share as of such date. Fair Share means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guarantee in respect of the obligations Guaranteed. Fair Share Contribution Amount means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guarantee that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the Code or any comparable applicable provisions of state law; provided that solely for purposes of calculating the Fair Share Contribution Amount with respect to any Contributing Guarantor for purposes of this Section 7.08 , any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. Aggregate Payments means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guarantee (including in respect of this Section 7.08 ),
69
minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.08 . The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 7.08 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.08 .
Section 7.09 Additional Guarantors . If (i) CFTC or any of its Restricted Subsidiaries shall acquire or create another Domestic Subsidiary after the date of this Agreement (other than an Immaterial Subsidiary or a Subsidiary that has been designated as an Unrestricted Subsidiary or a Receivables Entity) or (ii) any Foreign Subsidiary or Immaterial Subsidiary of CFTC guarantees (or otherwise becomes liable for) Indebtedness of CFTC or a Guarantor, then CFTC will cause such Subsidiary to become a Guarantor hereunder and:
(a) execute a Counterpart Agreement substantially in the form of Exhibit E , in accordance with the terms of this Agreement, pursuant to which such Subsidiary shall unconditionally Guarantee, on a senior secured basis, all of CFTCs Obligations on the terms set forth in this Agreement;
(b) execute and deliver to the Collateral Agent such amendments or supplements to the Collateral Documents necessary in order to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected security interest in the Equity Interests of such Subsidiary, subject to Permitted Liens and the Intercreditor Agreement, which are owned by CFTC or a Guarantor and are required to be pledged pursuant to the Collateral Documents;
(c) take such actions as are necessary to grant to the Collateral Agent for the benefit of the Secured Parties a perfected security interest in the assets of such Subsidiary, other than Excluded Assets and subject to Permitted Liens and the Intercreditor Agreement, including the filing of Uniform Commercial Code financing statements, in each case as may be required by the Collateral Documents;
(d) take such further action and execute and deliver such other documents specified in the Collateral Documents or as otherwise may be reasonably requested by the Collateral Agent to give effect to the foregoing; and
(e) deliver to the Collateral Agent an Opinion of Counsel that (i) such Counterpart Agreement and any other documents required to be delivered have been duly authorized, executed and delivered by such Subsidiary and constitute legal, valid, binding and enforceable obligations of such Subsidiary and (ii) the Collateral Documents to which such Subsidiary is a party create a valid perfected Lien on the Collateral covered thereby.
Section 7.10 Keepwell . Each Loan Party that is a Qualified ECP Guarantor at the time the Guarantee or the grant of a Lien under the Facility Documents, in each case, by any Specified Loan Party becomes effective with respect to any Swap Obligation, hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other
70
support to each Specified Loan Party with respect to such Swap Obligation as may be needed by such Specified Loan Party from time to time to honor all of its obligations under the Facility Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP Guarantors obligations and undertakings under this Article VII voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations and undertakings of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the Obligations have been indefeasibly paid and performed in full. Each Loan Party intends this Section to constitute, and this Section shall be deemed to constitute, a Guarantee of the obligations of, and a keepwell, support, or other agreement for the benefit of, each Specified Loan Party for all purposes of the Commodity Exchange Act.
ARTICLE VIII
AGENTS
Section 8.01 Authorization and Authority . Each Lender hereby irrevocably appoints, designates and authorizes Bay Coast Bank as Administrative Agent and as Collateral Agent, in each case, to take such actions on its behalf under the provisions of this Agreement and under each other Facility Document and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement or any other Facility Document, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of Agents and Lenders, and the Borrower shall not have rights as a third party beneficiary or otherwise of any of such provisions
Section 8.02 Agent Individually . Each Lender understands that each Agent, acting in its individual capacity, and its Affiliates are engaged in a wide range of financial services and businesses (including investment management, financing, securities trading, corporate and investment banking and research) (such services and businesses are collectively referred to in this Section 8.02 as Activities ) and may engage in the Activities with or on behalf of the Borrower or its Affiliates. Furthermore, Agents and their respective Affiliates may, in undertaking the Activities, engage in trading in financial products or undertake other investment businesses for its own account or on behalf of others (including the Borrower and its Affiliates and including holding, for its own account or on behalf of others, equity, debt and similar positions in the Borrower or its Affiliates).
Section 8.03 Duties of Agents; Exculpatory Provisions .
(a) An Agents duties hereunder and under any other Facility Document are solely ministerial and administrative in nature and no Agent shall have any duties or obligations except those expressly set forth herein or therein. Without limiting the generality of the foregoing, an Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, but shall be required to act or refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written direction of the Required Lenders, provided that an Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent or any of its Affiliates to liability or that is contrary to this Agreement or applicable Law.
71
(b) No Agent shall be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders or (ii) in the absence of its own gross negligence or willful misconduct. No Agent shall be deemed to have knowledge of any Default or Event of Default or the event or events that give or may give rise to any Default or Event of Default unless and until a Loan Party or any Lender shall have given notice to such Agent describing such Default or Event of Default and such event or events.
(c) No Agent nor any of its Affiliates shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty, representation or other information made or supplied in or in connection with this Agreement or any other Facility Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith or the adequacy, accuracy and/or completeness of the information contained therein, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Facility Document or any other agreement, instrument or document or the perfection or priority of any Lien or security interest created or purported to be created hereby or thereby or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than (but subject to the foregoing clause (ii)) to confirm receipt of items expressly required to be delivered to an Agent.
Section 8.04 Reliance by Agent . Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Section 8.05 Delegation of Duties . An Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Facility Documents by or through any one or more sub-agents appointed by such Agent, and such Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties; provided that in each case that no such delegation to a sub-agent or a Related Party shall release such Agent from any of its obligations hereunder. Each such sub-agent and the Related Parties of such Agent and each such sub-agent shall be entitled to the benefits of all provisions of this Article and Section 9.04 (as though such sub-agents were the Agent hereunder and under the other Facility Documents) as if set forth in full herein with respect thereto.
Section 8.06 Resignation of Agent . An Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right (in consultation with the Borrower) to appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have
72
accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (such 30 day period, the Lender Appointment Period ), then the retiring Agent may on behalf of Lenders appoint a successor Agent meeting the qualifications set forth above. In addition and without any obligation on the part of the retiring Agent to appoint, on behalf of Lenders, a successor Agent, the retiring Agent may at any time upon or after the end of the Lender Appointment Period notify the Borrower and Lenders that no qualifying Person has accepted appointment as successor Agent and the effective date of such retiring Agents resignation which effective date shall be no earlier than three (3) Business Days after the date of such notice. Upon the resignation effective date established in such notice and regardless of whether a successor Agent has been appointed and accepted such appointment, the retiring Agents resignation shall nonetheless become effective and (i) the retiring Agent shall be discharged from its duties and obligations as Agent hereunder and under the other Facility Documents (except in the case of any collateral security held by the Collateral Agent on behalf of the Lenders or the Issuing Bank under the Facility Documents, the retiring Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed) and (ii) all payments, communications and determinations provided to be made by, to or through such Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this paragraph. Upon the acceptance of a successors appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties as Agent of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations as Agent hereunder and/or under the other Facility Documents. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Agents resignation hereunder and under the other Facility Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.
Section 8.07 Non-Reliance on Agent .
(a) Each Lender (including its Related Parties) acknowledges that each Agent has not made any representation or warranty to it, and that no act by any Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent to such Lender as to any matter, including whether any Agent has disclosed material information in its possession. Each Lender (including its Related Parties) confirms to each Agent that it (i) possesses (individually or through its Related Parties) such knowledge and experience in financial and business matters that it is capable, without reliance on any Agent or any of its Related Parties, of evaluating the merits and risks (including tax, legal, regulatory, credit, accounting and other financial matters) of (x) entering into this Agreement, (y) making its portion of the Loans and (z) taking or not taking actions hereunder, (ii) is financially able to bear such risks and (iii) has, independently and without reliance upon any Agent or any of its Related Parties and based upon such documents and information as it has deemed appropriate, determined that entering into this Agreement and making its portion of the Loans is suitable and appropriate for it.
73
(b) Each Lender acknowledges that (i) it is solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with this Agreement and the other Facility Documents, (ii) it has, independently and without reliance upon any Agent or any of its Related Parties, made its own appraisal and investigation of all risks associated with, and its own credit analysis and decision to enter into, this Agreement based on such documents and information as it has deemed appropriate and (iii) it will, independently and without reliance upon any Agent or any of its Related Parties, continue to be solely responsible for making its own appraisal and investigation of all risks arising under or in connection with, and its own credit analysis and decision to take or not take action under, this Agreement and the other Facility Documents based on such documents and information as it shall from time to time deem appropriate, which may include, in each case:
(i) the financial condition, status and capitalization of the Borrower;
(ii) the legality, validity, effectiveness, adequacy or enforceability of this Agreement and the other Facility Documents and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with this Agreement;
(iii) determining compliance or non-compliance with any condition hereunder to the making of a Loan and the form and substance of all evidence delivered in connection with establishing the satisfaction of each such condition; and
(iv) the adequacy, accuracy and/or completeness of any other information delivered by any Agent or by any of their respective Related Parties under or in connection with this Agreement, the other Facility Documents, the Transactions contemplated hereby and thereby or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with this Agreement
Section 8.08 Collateral and Guarantee Matters .
(a) Each Lender hereby further authorizes each Agent, as applicable, on behalf of and for the benefit of the Secured Parties, to be the agent for and representative of the Secured Parties with respect to the Guarantee hereunder, the Security Documents and the other Facility Documents. Without further written consent or authorization from Lenders, Administrative Agent or Collateral Agent, as applicable, shall (and the Lenders hereby authorize and direct the Administrative Agent and Collateral Agent to) execute any documents or instruments necessary to release any Lien encumbering any item of Collateral that is the subject of a sale or other disposition of assets to which the Required Lenders otherwise consented.
(b) Anything contained in any Facility Document to the contrary notwithstanding, the Borrower, Administrative Agent, Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee hereunder, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of a Secured Party in accordance with the terms hereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by Collateral Agent and (ii) in the event of a
74
foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale, Collateral Agent or any Secured Party may be the purchaser of any or all of such Collateral at any such sale and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by Collateral Agent at such sale.
Section 8.09 Right to Indemnity . Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent and Issuing Bank to the extent that such Agent or Issuing Bank shall not have been reimbursed by any Loan Party (and without limiting its obligation to do so), for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent or Issuing Bank in exercising its powers, rights and remedies or performing its duties hereunder or under the other Facility Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Facility Documents; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agents or Issuing Banks gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction. If any indemnity furnished to any Agent or Issuing Bank for any purpose shall, in the opinion of such Agent or Issuing Bank be insufficient or become impaired, such Agent or Issuing Bank may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided that in no event shall this sentence require any Lender to indemnify any Agent or Issuing Bank against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lenders Pro Rata Share thereof; provided, further , that this sentence shall not be deemed to require any Lender to indemnify any Agent or Issuing Bank against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.
Section 8.10 Withholding Taxes . To the extent required by any applicable Law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.
75
Section 8.11 Administrative Agent May File Proofs of Claim . In case of the pendency of any proceeding under the Bankruptcy Code or other applicable Law or any other judicial proceeding relative to the Borrower, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the other Secured Parties (including fees, disbursements and other expenses of counsel) allowed in such judicial proceeding and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same. Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and other Secured Party to make such payments to the Administrative Agent. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or other Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or other Secured Party to authorize the Administrative Agent to vote in respect of the claim of such Person or in any such proceeding.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Amendments, Etc . No amendment or waiver of any provision of this Agreement or any other Facility Document, and no consent to any departure by the Borrower or Guarantor therefrom, shall be effective unless in writing signed by the Required Lenders ( provided that any Defaulting Lender shall be deemed not to be a Lender for purposes of calculating the Required Lenders (including the granting of any consents or waivers) with respect to any of the Facility Documents) and the Borrower and the applicable Loan Parties and acknowledged by Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall, unless in writing and signed by each Lender that would be directly and adversely affected thereby, the Administrative Agent and/or the Collateral Agent, as the case may be, do any of the following: (a) waive any of the conditions specified in Article III , (b) reduce the principal of, or interest on, any Loan, any reimbursement obligation in respect of any Letter of Credit or any other amounts payable hereunder, (c) postpone any date fixed for any payment of principal of, or interest on, any Loan or any other amounts payable hereunder (other than the dates for any mandatory prepayments under Section 2.14 ), (d) increase any Commitment of any Lender over the amount thereof then in effect or extend the outside date for such Commitment or extend the stated expiration date of any Letter of Credit beyond the Commitment Termination Date, (e) release all or substantially all of the value of the Guarantee hereunder or release all or substantially all of the Collateral, (f) change the percentage of the aggregate unpaid principal amount of the Loans or the number of Lenders that shall be required for Lenders or any of them to take any action hereunder or (g) amend the definition of Required Lenders, Pro Rata Share or this Section 9.01 ; provided, further that no amendment, waiver or consent shall (i) unless in writing and signed by the relevant Agent in addition to the Lenders required above to take such action, affect the rights or duties of such Agent under this Agreement or any other Facility Document or (ii) unless in writing and signed by the Issuing Bank, amend, modify, terminate or waive any obligation of Lenders relating to the purchase of participations in Letters of Credit as provided in Section 2.05(e) .
76
In addition, notwithstanding anything else to the contrary contained in this Section 9.01 , (a) if the Administrative Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical nature, in each case, in any provision of the Facility Documents, then the Administrative Agent and the Borrower shall be permitted to amend such provision and (b) the Administrative Agent and the Borrower shall be permitted to amend any provision of any Security Document to better implement the intentions of this Agreement and the other Facility Documents, and in each case, such amendments shall become effective without any further action or consent of any other party to any Facility Document if the same is not objected to in writing by the Required Lenders within five (5) Business Days following receipt of notice thereof.
Section 9.02 Notices, Etc .
(a) Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, to the Borrower, each Agent, and the Issuing Bank at the addresses (or facsimile number) set forth below. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; and notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in such paragraph (b) .
If to the Borrower :
CURO Financial Technologies Corp.
3527 N. Ridge Rd.
Wichita, Kansas 67205
Attention: President and Chief Executive Officer
If to the Administrative Agent, Issuing Bank or Collateral Agent :
Bay Coast Bank
330 Swansea Mall Drive
Swansea, MA 02777
Attention: Carl W. Taber
(b) Notices and other communications to any Agent, the Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by such Agent, the Lenders and the Issuing Bank; provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. Each Agent or
77
the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications; provided, further , that any Borrowing Request or notice of an Event of Default shall be promptly confirmed by facsimile. Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the senders receipt of an acknowledgement from the intended recipient (such as by the return receipt requested function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefore.
(c) Change of Address, Etc . Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.
Section 9.03 No Waiver; Remedies . No failure on the part of any Agent or Lender to exercise, and no delay in exercising, any right, remedy, power or privilege hereunder, or under any other Facility Document shall operate as a waiver thereof nor shall the single or partial exercise, of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Lender or Agent to any other or further action in any circumstances without notice or demand.
78
Section 9.04 Costs, Expenses and Indemnification .
(a) Costs and Expenses . The Borrower agrees to pay and reimburse all reasonable and documented out-of-pocket costs and expenses, if any (including, but not limited to, counsel fees and expenses, consultant fees and due diligence expenses), incurred by each Agent and each of their respective Affiliates in connection with the preparation, negotiation, execution, delivery, administration, modification and supplementation of this Agreement, the Security Documents, the other Facility Documents and Collateral. The Borrower further agrees to pay all reasonable and documented out-of-pocket costs and expenses, if any (including, but not limited to, counsel fees and expenses), incurred by each Agent, Issuing Bank and Lender and each of their respective Affiliates in connection the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Security Documents, the other Facility Documents and the other documents to be delivered hereunder or in respect of the transactions contemplated hereby, including, but not limited to, counsel fees and expenses in connection with the enforcement of rights under this Section 9.04(a) and under any other Facility Document.
(b) Indemnification by the Borrower . The Borrower shall indemnify each Agent, Issuing Bank and Lender and each of their respective Related Parties (each such Person being called an Indemnitee ) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, obligations, penalties, actions, judgments, charges, liabilities and related expenses (including the reasonable and documented fees, charges and disbursements of counsel, which in the absence of any conflicts, may be limited to one counsel and one local counsel in any applicable jurisdiction and additional counsel as necessary due to actual conflicts of interest among such Indemnitees) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any Related Party of the Borrower arising out of, in connection with, or as a result of (i) this Agreement, any other Facility Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the Transactions contemplated hereby or thereby, (ii) the Loans or the use or proposed use of the proceeds therefrom, any claims, investigations, non-compliance, sanction or other actions with respect to such Loan, including any actions by the SEC or any Governmental Authority, (iii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Related Party of the Borrower, and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (A) are determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, or (B) arise from disputes between or among Indemnitees that do not involve an act or omission by the Loan Parties or their Subsidiaries, other than any proceeding against the Administrative Agent, or Collateral.
(c) Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable Law, the Loan Parties shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefore is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, or as a result of, this Agreement, any other Facility Document or any agreement or instrument
79
contemplated hereby, the Transactions contemplated hereby or thereby, the Loans or the use of the proceeds thereof. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Facility Documents or the Transactions contemplated hereby or thereby
(d) Payments . All amounts due under this Section 9.04 shall be payable within ten (10) days of demand by any Lender or Agent, as applicable, unless provided otherwise above.
Section 9.05 Successors and Assigns; Participations .
(a) Generally . This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. Except as permitted by Section 5.02 , No Loan Partys rights or obligations hereunder nor any interest therein may be assigned or delegated by any Loan Party except, with respect to the Guarantors, for assignments to successors on terms and conditions acceptable to the Administrative Agent without the prior written consent of all Lenders (and any purported assignment or delegation without such consent shall be null and void).
(b) Register . The Borrower, the Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register following receipt of a fully executed Assignment Agreement effecting the assignment or transfer thereof, together with the required forms and certificates regarding tax matters and any fees payable in connection with such assignment, in each case, as provided in Section 9.05(d) . Each assignment shall be recorded in the Register promptly following receipt by the Administrative Agent of the fully executed Assignment Agreement and all other necessary documents and approvals, prompt notice thereof shall be provided to the Borrower and a copy of such Assignment Agreement shall be maintained, as applicable. The date of such recordation of a transfer shall be referred to herein as the Assignment Effective Date . Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans.
(c) Right to Assign . Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including all or a portion of its Commitment or Loans owing to it or other Obligations ( provided , that pro rata assignments shall not be required and each assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any applicable Loan and any related Commitments):
(i) to any Person meeting the criteria of clause (i) of the definition of the term of Eligible Assignee upon the giving of notice to the Borrower and the Administrative Agent; and
80
(ii) to any Person meeting the criteria of clause (ii) of the definition of the term of Eligible Assignee upon such Person being consented to by each of the Borrower ( provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) days after having received notice thereof), the Administrative Agent and the Issuing Bank (such consents not to be (x) unreasonably withheld or delayed or (y) in the case of the Borrower, required at any time an Event of Default has occurred and is continuing); provided, further that each such assignment pursuant to this Section 9.05(c)(ii) shall be in an aggregate amount of not less than (A) $2,000,000 (or such lesser amount as may be agreed to by the Borrower and the Administrative Agent or as shall constitute the aggregate amount of the Commitments and Loans of the assigning Lender) with respect to the assignment of the Revolving Commitments and Loans.
(d) Mechanics . Assignments and assumptions of Loans and Commitments by Lenders shall be effected by manual execution and delivery to the Administrative Agent of an Assignment Agreement. Assignments made pursuant to the foregoing provision shall be effective as of the Assignment Effective Date. In connection with all assignments there shall be delivered to the Administrative Agent such forms, certificates or other evidence, if any, with respect to United States federal income Tax withholding matters as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.20(c) , together with payment to the Administrative Agent of a registration and processing fee of $3,500 (except that no such registration and processing fee shall be payable (x) in connection with an assignment by or to Bay Coast Bank or any Affiliate thereof or (y) in the case of an Assignee which is already a Lender or is an Affiliate of a Lender or a Person under common management with a Lender). Furthermore, in connection with all assignments (except in the case of an Assignee which is already a Lender) there shall be delivered to the Administrative Agent a completed Administrative Questionnaire in the form of Exhibit I .
(e) Representations and Warranties of Assignee . Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants as of the Closing Date or as of the Assignment Effective Date that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii) it shall make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 9.05 , the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control).
(f) Effect of Assignment . Subject to the terms and conditions of this Section 9.05 , as of the Assignment Effective Date (i) the assignee thereunder shall have the rights and obligations of a Lender hereunder to the extent of its interest in the Loans and Commitments as reflected in the Register and shall thereafter be a party hereto and a Lender for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof, including under Section 9.09 ) and be released from its obligations hereunder (and, in the case of an assignment covering all or the remaining portion of an assigning Lenders rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date; provided , that anything
81
contained in any of the Facility Documents to the contrary notwithstanding, (x) the Issuing Bank shall continue to have all rights and obligations thereof with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (y) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be modified to reflect any Commitment of such assignee and any Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to the Administrative Agent for cancellation, and thereupon the Borrower shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Commitments and/or outstanding Loans of the assignee and/or the assigning Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply the requirements of this Section 9.05 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 9.05(g) . Any assignment by a Lender pursuant to this Section 9.05 shall not in any way constitute or be deemed to constitute a novation, discharge, rescission, extinguishment or substitution of the Indebtedness hereunder, and any Indebtedness so assigned shall continue to be the same obligation and not a new obligation.
(g) Participations .
(i) Each Lender shall have the right at any time to sell one or more participations to any Eligible Assignee (in such capacity a Participant ) in all or any part of its Commitments, Loans or in any other Obligation.
(ii) The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that would (A) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Commitment Termination Date) in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the Participants participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the Participants participation is not increased as a result thereof), (B) consent to the assignment or transfer by any Loan Party of any of its rights and obligations under this Agreement, (C) amend the definition of Required Lenders or the definition of Pro Rata Share or (D) release all or substantially all of the Guarantors or the Collateral under the Security Documents (except as expressly provided in the Facility Documents) supporting the Loans hereunder in which such Participant is participating.
82
(iii) The Borrower agrees that each Participant shall be entitled to the benefits of Section 2.18 , 2.19 , and 2.20 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to this Section; provided that (x) a Participant shall not be entitled to receive any greater payment under Section 2.18 , 2.19 , or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers prior written consent and (y) a Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.20 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees for the benefit of the Borrower, to comply with Section 2.20 as though it were a Lender; provided , further , that, except as specifically set forth in clauses (x) and (y) of this sentence, nothing herein shall require any notice to the Borrower or any other Person in connection with the sale of any participation. To the extent permitted by law, each Participant shall also be entitled to the benefits of Section 9.12 as though it were a Lender; provided , that such Participant agrees to be subject to Section 2.17 as though it were a Lender.
(iv) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participants interest in the Loans or other obligations under the Facility Documents (the Participant Register ); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a Participants interest in any commitments, loans, letters of credit or its other obligations under any Facility Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(h) Certain Other Assignments and Participations . In addition to any other assignment or participation permitted pursuant to this Section 9.05 any Lender may assign and/or pledge (without the consent of the Borrower or the Administrative Agent) all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including to any Federal Reserve Bank or other central bank as collateral security pursuant to Regulation A of the Board and any operating circular issued by such Federal Reserve Bank or other central bank; provided , that no Lender, as between the Borrower and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge; provided, further , that in no event shall the applicable Federal Reserve Bank or other central bank, pledgee or trustee, be considered to be a Lender or be entitled to require the assigning Lender to take or omit to take any action hereunder.
Section 9.06 Governing Law; Submission to Jurisdiction .
(a) Governing Law . This Agreement and each other Facility Document shall be governed by, and construed in accordance with, the Law of the State of New York.
83
(b) Submission to Jurisdiction . Each Loan Party irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the United States District Court of the District of Massachusetts, and all appropriate appellate courts or, if jurisdiction in such court is lacking, any Massachusetts court of competent jurisdiction sitting in Suffolk County (and all appropriate appellate courts), in any action or proceeding arising out of or relating to this Agreement or any other Facility Document, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Massachusetts court or, to the fullest extent permitted by applicable Law, in such Federal court. Each of the parties hereto agrees that a final nonappealable judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Nothing in this Agreement or in any other Facility Document shall affect any right that a Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Facility Document against the Borrower or the properties of either such party in the courts of any jurisdiction.
(c) Waiver of Venue . Each Loan Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Facility Document in any court referred to in Section 9.06(b) . Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Service of Process . Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 9.02 . Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable Law.
(e) WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FACILITY DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.06(e) .
Section 9.07 Severability . In case any provision in this Agreement shall be held to be invalid, illegal or unenforceable, such provision shall be severable from the rest of this Agreement, and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
84
Section 9.08 Counterparts; Integration; Effectiveness .
(a) This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Article III , this Agreement shall become effective when it shall have been executed by Lenders and when Lenders shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.
(b) Electronic Execution of Assignments . The words execution, signed, signature, and words of like import in any assignment shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, or any other similar state Laws based on the Uniform Electronic Transactions Act.
Section 9.09 Survival . Sections 2.18(c) , 2.19 , 2.20 , 9.05 and 9.12 of this Agreement shall survive the repayment of the Loans and the termination of the Commitments evidenced hereby and all Letters of Credit issued hereunder. In addition, each representation and warranty made, or deemed to be made at the Loans, herein or pursuant hereto shall survive the making of such representation and warranty, and Lenders shall not be deemed to have waived, by reason of making the Loans, any Default or Event of Default that may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that any Lender may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such extension of credit was made.
Section 9.10 Confidentiality . Each Agent and Lender (which term shall for the purposes of this Section 9.10 include the Issuing Bank) agrees to maintain the confidentiality of the Confidential Information, except that Confidential Information may be disclosed (a) to each of their respective Affiliates and to their and their respective Affiliates respective partners, directors, officers, employees, agents, advisors and other representatives who need to know such Confidential Information in relation to the transactions contemplated by this Agreement, (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority), (c) to the extent required by applicable Law or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Facility Document or any action or proceeding relating to this Agreement or any other Facility Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 9.10 , to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party and its obligations, (g) with the consent of the Borrower or (h) to the extent such Confidential Information (x) becomes publicly available other than as a result of a breach of this Section 9.10 or (y) becomes available to any Lender or Agent or any of its Affiliates on a non-confidential basis from a source other than the Borrower.
85
Section 9.11 No Fiduciary Relationship . The Borrower acknowledges that each Agent, each Lender, the Issuing Bank and their respective Affiliates (collectively, solely for purposes of this paragraph, the Lenders ) have no fiduciary relationship with, or fiduciary duty to, the Borrower arising out of or in connection with this Agreement, and the relationship between Lenders and the Borrower is solely that of creditor and debtor. This Agreement does not create a joint venture between the parties. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Facility Document), the Borrower acknowledges and agrees that: (a) the extension of credit and other services regarding this Agreement provided by Lenders are arms-length commercial transactions between the Borrower, on the one hand, and Lenders, on the other hand, and that the Lenders are not acting in an advisory or agency capacity to any Loan Party, (b) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (c) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the Loans and the use of such Loan.
Section 9.12 Right of Setoff . Upon the occurrence of an Event of Default, Lenders and their respective Affiliates (each, a Set-off Party ) are hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to the Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) and any other Indebtedness at any time held or owing by a Set-off Party (including, but not limited to, by any of their branches and agencies wherever located) to or for the credit or the account of the Borrower or any other Loan Party against and on account of the obligations and liabilities of the Borrower or any other Loan Party to the Set-off Party under this Agreement or under any of the other Facility Documents, including, but not limited to, all claims of any nature or description arising out of or connected with this Agreement or any other Facility Document, irrespective of whether or not the relevant Set-off Party shall have made any demand hereunder and although said obligations, liabilities or claims, or any of them, shall be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such Indebtedness. The rights of each Set-off Party under this Section 9.12 are in addition to other rights and remedies (including other rights of setoff) that Lenders or their respective Affiliates may have. Each Lender agrees to notify the Borrower and Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
Section 9.13 Payments Set Aside . To the extent that any payment by or on behalf of the Borrower is made to an Agent or a Lender, or a Lender or an Agent exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Agent or Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any debtor relief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.
86
Section 9.14 Obligations Several; Independent Nature of Lenders Rights . The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Facility Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.
Section 9.15 PATRIOT Act . Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Loan Party that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that shall allow such Lender or the Administrative Agent, as applicable, to identify such Loan Party in accordance with the PATRIOT Act.
Section 9.16 Headings Descriptive . The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
Section 9.17 Entire Agreement . This Agreement and the other Facility Documents constitute the entire agreement between the parties hereto relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, between the parties hereto relating to the subject matter hereof.
87
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers or representatives thereunto duly authorized, as of the date first above written.
BORROWER | ||
CURO FINANCIAL TECHNOLOGIES CORP. | ||
CURO INTERMEDIATE HOLDINGS CORP. as the Borrower |
||
By: | /s/ Roger Dean | |
Name: | Roger Dean | |
Title: | Treasurer |
Signature Page to Revolving Loan Agreement
GUARANTORS
A SPEEDY CASH CAR TITLE LOANS, LLC ADVANCE GROUP, INC. ATTAIN FINANCE, LLC AVIO CREDIT, INC. CASH COLORADO, LLC CONCORD FINANCE, INC. ENNOBLE FINANCE, LLC EVERGREEN FINANCIAL INVESTMENTS, INC. FMMR INVESTMENTS, INC. GALT VENTURES, LLC PRINCIPAL INVESTMENTS, INC. SCIL TEXAS, LLC SC AURUM, LLC SCIL, INC. SPEEDY CASH SPEEDY CASH ILLINOIS, INC. SC TEXAS MB, INC. THE MONEY STORE, L.P. CURO MANAGEMENT LLC TODD CAR TITLE, INC. TODD FINANCIAL, INC. |
||
By: | /s/ Roger Dean | |
Name: | Roger Dean | |
Title: | Treasurer | |
Address for Notices: | ||
3527 N. Ridge Rd., Wichita, Kansas 67205 Attention: President and CEO |
Signature Page to Revolving Loan Agreement
LENDER, ISSUING BANK ADMINISTRATIVE AGENT AND COLLATERAL AGENT |
||
BAY COAST BANK, as Lender, Issuing Bank, Administrative Agent and Collateral Agent |
||
By: | /s/ Carl W. Taber | |
Name: | Carl W. Taber | |
Title: | Executive Vice President |
Signature Page to Revolving Loan Agreement
Schedule 1.01
Commitments
Bay Coast Bank |
$ | 25,000,000 |
Schedule 4.01(a)
Jurisdiction of Organization
Legal Name of Loan Party/Subsidiary |
Jurisdiction of Organization |
|
Curo Financial Technologies Corp. | Delaware | |
Curo Intermediate Holdings Corp. | Delaware | |
Todd Financial, Inc. | Nevada | |
CURO Management LLC | Nevada | |
FMMR Investments, Inc. | Nevada | |
Evergreen Financial Investments, Inc. | Nevada | |
Principal Investments, Inc. | Nevada | |
Todd Car Title, Inc. | Nevada | |
Speedy Cash | Nevada | |
Advance Group, Inc. | Nevada | |
Concord Finance, Inc. | Nevada | |
SCIL, Inc. | Nevada | |
Cash Colorado, LLC | Nevada | |
Galt Ventures, LLC | Kansas | |
A Speedy Cash Car Title Loans, LLC | Nevada | |
SCIL Texas, LLC | Nevada | |
Attain Finance, LLC | Nevada | |
SC Aurum, LLC | Nevada | |
Avio Credit, Inc. | Delaware | |
Speedy Cash Illinois, Inc. | Nevada | |
SC Texas MB, Inc. | Nevada | |
The Money Store, L.P. | Texas | |
Ennoble Finance, LLC | Delaware |
- 2 -
Schedule 4.01(b)
Equity Interests and Ownership
1. | 1. Curo Group Holdings Corp. |
Name of Issuing Corporation |
Type of Shares |
Authorized
Shares |
Number
of Shares Issued |
Certificate
No. |
Percentage
Owned |
Sub-clause
of Section 3.2(a) of Pledge Agreement |
||||||||||||||||||
Curo Financial Technologies Corp. |
Common stock | 3,000 | 100 | 1 | 100 | % | 3.2 | (a)(i) |
2. | Curo Financial Technologies Corp. |
Name of Issuing Corporation |
Type of Shares |
Authorized
Shares |
Number
of Shares Issued |
Certificate
No. |
Percentage
Owned |
Sub-clause
of Section 3.2(a) of Pledge Agreement |
||||||||||||||||||
Curo Intermediate Holdings Corp. |
Common stock | 100 shares | 100 | 1 | 100 | % | 3.2 | (a)(i) |
3. | Curo Intermediate Holdings Corp. |
Name of Issuing Corporation |
Type of Shares |
Authorized
Shares |
Number
of Shares Issued |
Certificate
No. |
Percentage
Owned |
Sub-clause
of Section 3.2(a) of Pledge Agreement |
||||||||||||||||||
Avio Credit, Inc. |
Common stock | 100 shares | 100 | 1 | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
A Speedy Cash Car Title Loans, LLC |
Membership Interest | 100 | % | 3.2 | (a)(i) | |||||||||||||||||||
Advance Group, Inc. |
Common Stock | 2500 shares | 760 | 1-SC | 100 | % | 3.2 | (a)(i) |
- 3 -
Name of Issuing Corporation |
Type of Shares |
Authorized
Shares |
Number
of Shares Issued |
Certificate
No. |
Percentage
Owned |
Sub-clause
of Section 3.2(a) of Pledge Agreement |
||||||||||||||||||
Attain Finance, LLC |
Membership Interest | 1,000 shares | 100 | % | 3.2 | (a)(i) | ||||||||||||||||||
Cash Colorado, LLC |
Membership Interest | 2,500 shares | 100 | % | 3.2 | (a)(i) | ||||||||||||||||||
Concord Finance, Inc. |
Common Stock | 2,500 shares | 2500 | 1-SC | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
CURO Receivables Holdings I, LLC |
Membership Interest | 100 | % | 3.2 | (a)(i) | |||||||||||||||||||
Evergreen Financial Investments, Inc. |
Common stock | 2,500 shares | 2500 | 1-SC | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
FMMR Investments, Inc. |
Common stock | 400 shares | 400 | 1-SC | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
Galt Ventures, LLC |
Membership Interest |
|
10,000
shares |
|
100 | % | 3.2 | (a)(i) | ||||||||||||||||
LendDirect Corp. |
Common Stock | Unlimited | 1350 | A-1/A-3 | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
Principal Investments, Inc. |
Common stock | 760 shares | 760 | 1-SC | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
SC Aurum, LLC |
Membership Interest | 100 | % | 3.2 | (a)(i) | |||||||||||||||||||
SCIL, Inc. |
Common stock | 300 shares | 300 | 1-SC | 100 | % | 3.2 | (a)(i) |
- 4 -
Name of Issuing Corporation |
Type of Shares |
Authorized
Shares |
Number of
Shares Issued |
Certificate
No. |
Percentage
Owned |
Sub-clause
of Section 3.2(a) of Pledge Agreement |
||||||||||||||||||
SCIL Texas, LLC |
Membership Interest | 2,500 shares | 100 | % | 3.2 | (a)(i) | ||||||||||||||||||
Speedy Cash Illinois, Inc. |
Common Stock | 1,000 shares | 100 | 1 | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
SRC Transatlantic Limited |
Common Stock | 8,189,835 | None listed | 100 | % | 3.2 | (a)(i) | |||||||||||||||||
The Money Store, LP |
Common Stock | 13,400 shares | 97 | % | 3.2 | (a)(i) | ||||||||||||||||||
Todd Car Title, Inc. |
Common stock | 2,500 shares | 2124 | 1-SC | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
Todd Financial, Inc. |
Common stock | 2,500 shares | 2124 | 1-SC | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
Speedy Cash |
Common stock | 100 shares | 80 | 1-SC | 100 | % | 3.2 | (a)(i) | ||||||||||||||||
SC Texas MB, Inc. |
Common Stock | 1,000 shares | 1 | 97 | % | 3.2 | (a)(i) |
4. | Attain Finance, LLC |
Name of Issuing Corporation |
Type of Shares |
Authorized
Shares |
Number
of Shares Issued |
Certificate
No. |
Percentage
Owned |
Sub-clause
of
Section 3.2(a) of Pledge Agreement |
||||||||
Attain Finance Canada, Inc. |
Common stock | Unlimited | 135 | A-1/A-3 | 100%; | 3.2(a)(i) |
- 5 -
5. | CURO Receivables Holdings I, LLC |
Name of Issuing Corporation |
Type of Shares |
Authorized
Shares |
Number
of Shares Issued |
Certificate
No. |
Percentage
Owned |
Sub-clause
of Section 3.2(a) of Pledge Agreement |
||||||||||||||||||
CURO Receivables Finance I, LLC |
Membership Interest | 1 | 100 | % | 3.2 | (a)(i) |
6. | SC Texas MB, Inc. |
Name of Issuing Corporation |
Type of Shares |
Authorized
Shares |
Number
of Shares Issued |
Certificate
No. |
Percentage
Owned |
Sub-clause of
Section 3.2(a) of Pledge Agreement |
||||||||||||||||||
The Money Store, L.P. |
Common stock | 13,400 shares | 3 | % | 3.2 | (a)(i) |
- 6 -
EXHIBIT A-1
[FORM OF]
BORROWING REQUEST
Bay Coast Bank
as Administrative Agent and Collateral Agent (the Agent ) for
the Lenders party to the Revolving Loan Agreement referred to below,
Attn:
CC:
[Date]
Ladies and Gentlemen:
The undersigned refers to the Revolving Loan Agreement dated as of August , 2017 (as amended, supplemented or otherwise modified from time to time, the Revolving Loan Agreement ), among CURO Financial Technologies Corp. and CURO Intermediate Holdings Corp. (collectively, the Borrower ), the subsidiaries of the Borrower party thereto, the lenders party thereto (the Lenders ), and you, as Administrative Agent and Collateral Agent for such Lenders. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Revolving Loan Agreement. The Borrower hereby gives you notice pursuant to Section 2.02(b) of the Revolving Loan Agreement that it requests a Borrowing under the Revolving Loan Agreement, and in that connection sets forth below the terms on which such Borrowing is requested to be made:
(A) | Date of Borrowing (which is a Business Day) |
|
||
(B) | Aggregate Amount of Borrowing |
|
||
(C) | Type of Borrowing |
|
||
(D) | The last day of the Interest Period 1 |
|
||
(E) | Funds are requested to be disbursed to the Borrowers account as follows (Account No. [ ]) |
The Borrower hereby represents and warrants to the Agent and the Lenders that, on the date of this Borrowing Request and on the date of the related Borrowing, the conditions to lending specified in Section 3.02 of the Revolving Loan Agreement have been satisfied. The Borrower further represents and warrants to the Agent and the Lenders that, as of the date of this Borrowing Request and on the date of the related Borrowing, the total amount of First Priority Claims has not been and will not be required to be reduced pursuant to the provisions of Section 5.09(b)(i) of the Senior Notes Indenture.
1 | One month. |
A-1-1
EXHIBIT A-1
CURO FINANCIAL TECHNOLOGIES CORP. | ||
CURO INTERMEDIATE HOLDINGS CORP. | ||
By: | ||
Name: | ||
[Responsible Officer] |
A-1-2
EXHIBIT A-2
[FORM OF]
CONVERSION/CONTINUATION NOTICE
Reference is made to the Revolving Loan Agreement, dated as of August , 2017, by and among CURO Financial Technologies Corp. and CURO Intermediate Holdings Corp. (collectively, the Borrower ), certain subsidiaries of the Borrower, the Lenders party thereto, Bay Coast Bank, as Administrative Agent and Collateral Agent (as it may be amended, supplemented or otherwise modified, the Revolving Loan Agreement ). All terms used but not defined herein shall have their respective meanings in the Revolving Loan Agreement.
Pursuant to Section 2.09 of the Revolving Loan Agreement, the Borrower desires to convert or to continue the following Loans, each such conversion and/or continuation to be effective as of [ , 20 ]:
Revolving Loan:
$[ ] | Base Rate Loans to be continued | |
$[ ] | Base Rate Loans to be converted to LIBOR Rate Loans with Interest Period of one month | |
$[ ] | LIBOR Rate Loans to be continued | |
$[ ] | LIBOR Rate Loans 1 to be converted to Base Rate Loans |
1 | LIBOR Rate Loans may only be converted on the expiration of the applicable Interest Period unless the Borrower shall pay all amounts due under Section 2.17 of the Revolving Loan Agreement. |
A-2-1
The Borrower hereby certifies that as of the date hereof, no event has occurred or is continuing or would result from the consummation of the conversion and/or continuation contemplated hereby that would constitute an Event of Default.
Date: [ , 20 ]
CURO FINANCIAL TECHNOLOGIES CORP. | ||
CURO INTERMEDIATE HOLDINGS CORP. |
||
By: | ||
Name: |
||
Title: |
A-2-2
EXHIBIT A-3
[FORM OF]
ISSUANCE NOTICE 3
Reference is made to the Revolving Loan Agreement, dated as of August [ ], 2017, by and among CURO Financial Technologies Corp. and CURO Intermediate Holdings Corp. (collectively, the Borrower ), certain subsidiaries of the Borrower, the Lenders party thereto, and Bay Coast Bank, as Administrative Agent and Collateral Agent for such Lenders (as it may be amended, supplemented or otherwise modified, the Revolving Loan Agreement ). All terms used but not defined herein shall have their respective meanings in the Revolving Loan Agreement.
Pursuant to Section 2.05 of the Revolving Loan Agreement, the Borrower desires a Letter of Credit to be issued in accordance with the terms and conditions of the Revolving Loan Agreement on [ , 20 ] (the Credit Date ) in an aggregate face amount of $[ ].
Attached hereto for each such Letter of Credit are the following:
1. the stated amount of such Letter of Credit;
2. the name and address of the beneficiary;
3. the expiration date; and
4. either (i) the verbatim text of such proposed Letter of Credit, or (ii) a description of the proposed terms and conditions of such Letter of Credit, including a precise description of any documents to be presented by the beneficiary which, if presented by the beneficiary prior to the expiration date of such Letter of Credit, would require the Issuing Bank to make payment under such Letter of Credit.
The Borrower hereby certifies that:
(i) after issuing such Letter of Credit requested on the Credit Date, the Total Utilization of Commitments shall not exceed the Commitments then in effect and the Letter of Credit Usage shall not exceed the Letter of Credit Sublimit; and
(ii) on the date of this Issuance Notice and on the Credit Date, the conditions to lending specified in Section 3.02 of the Revolving Loan Agreement have been satisfied.
3 | Subject to review of Issuing Bank. |
A-3-1
Date: [ , 20 ]
CURO FINANCIAL TECHNOLOGIES CORP. | ||
CURO INTERMEDIATE HOLDINGS CORP. | ||
By: | ||
Name: | ||
Title: |
A-3-2
EXHIBIT B
[FORM OF]
DEMAND REVOLVING LOAN NOTE
$[ ] | ||
, 2017 | Fall River, Massachusetts |
ON DEMAND, FOR VALUE RECEIVED, CURO Financial Technologies Corp., a Delaware corporation and CURO Intermediate Holdings Corp., a Delaware corporation (collectively, Borrower ), jointly and severally promise to pay [NAME OF LENDER] ( Payee ) or its registered assigns, the lesser of (a) $[ ] and (b) the unpaid principal amount of all advances made by Payee to Borrower as Revolving Loans under the Revolving Loan Agreement referred to below.
Borrower also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain the Revolving Loan Agreement, dated as of August , 2017, by and among Borrower, the subsidiaries of Borrower party thereto, the Lenders party thereto, and BAY COAST BANK, as Administrative Agent and Collateral Agent (as it may be amended, supplemented or otherwise modified, the Revolving Loan Agreement ). All terms used but not defined herein shall have their respective meanings in the Revolving Loan Agreement.
The date, amount, Type of Loan, interest rate and Interest Period (if applicable) of each Revolving Loan made by the Lenders to Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof; provided , that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Revolving Loan Agreement or hereunder in respect of the Revolving Loans made by the Lender.
This Note is one of the Revolving Loan Notes in the aggregate principal amount of $[ ] and is issued pursuant to and entitled to the benefits of the Revolving Loan Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the Principal Office of Administrative Agent or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Revolving Loan Agreement. Unless and until an Assignment effecting the assignment or transfer of the obligations evidenced hereby shall have been accepted by Administrative Agent and recorded in the Register, Borrower, each Agent and Lenders shall be entitled to deem and treat Payee as the owner and holder of this Note and the obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided , the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of Borrower hereunder with respect to payments of principal of or interest on this Note.
B-1
This Note is subject to voluntary and mandatory prepayment by Borrower, each as provided in the Revolving Loan Agreement.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE REVOLVING LOAN AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE REVOLVING LOAN AGREEMENT.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF BORROWER AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS NOTE.
Upon demand at any time, including without limitation upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Revolving Loan Agreement.
The terms of this Note are subject to amendment only in the manner provided in the Revolving Loan Agreement.
No reference herein to the Revolving Loan Agreement and no provision of this Note or the Revolving Loan Agreement shall alter or impair the obligations of Borrower, which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed.
Borrower promises to pay all reasonable costs and expenses, including attorneys fees, all as provided in the Revolving Loan Agreement, incurred in the collection and enforcement of this Note. Borrower and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.
[Remainder of page intentionally left blank]
B-2
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.
CURO FINANCIAL TECHNOLOGIES CORP. | ||
CURO INTERMEDIATE HOLDINGS CORP. | ||
By: | ||
Name: | ||
Title: |
B-3
SCHEDULE OF REVOLVING LOANS
This Note evidences Revolving Loans made, continued or converted under the within described Revolving Loan Agreement to Borrower, on the dates, and in the principal amounts, of the Type and bearing interest at the rates set forth below and pursuant to the Revolving Loan Agreement, subject to the continuations, conversions, payments and prepayments of principal set forth below:
Date |
Type of Loan |
Interest Rate |
Amount Paid,
|
Unpaid Principal Amount |
Notation Made By |
B-4
EXHIBIT C
[FORM OF]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:
1. I am the [Chief Financial Officer/Treasurer] of CURO Financial Technologies Corp. and CURO Intermediate Holdings Corp. (collectively, Borrower ).
2. I have reviewed the terms of that certain Revolving Loan Agreement, dated as of August , 2017, by and among Borrower, certain subsidiaries of Borrower, the Lenders party thereto, and Bay Coast Bank, as Administrative Agent and Collateral Agent (as it may be amended, supplemented or otherwise modified, the Revolving Loan Agreement), and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of Borrower and its Subsidiaries during the accounting period covered by the financial statements attached hereto as Annex A . All terms used but not defined herein shall have their respective meanings in the Revolving Loan Agreement.
3. The examination described in paragraph 2 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate [except as set forth in a separate attachment to this Certificate, describing in detail, the nature of the condition or event, the period during which it has existed and the action which Borrower has taken, is taking, or proposes to take with respect to each such condition or event].
4. Set forth on Annex B attached hereto are the detailed information and calculations showing compliance with the financial covenants set forth in Section 5.03 of the Revolving Loan Agreement.
C-1
The foregoing certifications, together with the computations set forth in Annex A and Annex B hereto are made and delivered [ , 20 ] pursuant to Section 5.01(a)(iii) of the Revolving Loan Agreement.
CURO FINANCIAL TECHNOLOGIES CORP. |
||
CURO INTERMEDIATE HOLDINGS CORP. | ||
By: | ||
Name: |
||
[Responsible Officer] |
C-2
ANNEX A TO
COMPLIANCE CERTIFICATE
FINANCIAL STATEMENTS
C-3
EXHIBIT D
SECURITY AGREEMENT
Among
CURO FINANCIAL TECHNOLOGIES CORP.,
CURO INTERMEDIATE HOLDINGS CORP.,
CERTAIN SUBSIDIARIES OF CURO FINANCIAL TECHNOLOGIES CORP.
And
BAY COAST BANK,
as COLLATERAL AGENT
Dated as of September 1, 2017
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of September 1, 2017, made by each of the undersigned assignors (each, an Assignor and, together with any other entity that becomes an assignor hereunder pursuant to Section 10.12 hereof, the Assignors ) in favor of Bay Coast Bank, as collateral agent (together with any successor collateral agent or assign and any co-collateral agents, in such capacity, the Collateral Agent ), for the benefit of the Secured Parties (as defined below). Certain capitalized terms as used herein are defined in Article IX hereof. Except as otherwise defined herein, all capitalized terms used herein and defined in the Loan Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, CURO Financial Technologies Corp. and CURO Intermediate Holdings Corp. (collectively, the Company ), the guarantors from time to time party thereto (the Guarantors ), and the Collateral Agent and Administrative Agent, have entered into a Revolving Loan Agreement, dated as of September 1, 2017 (as amended, modified, restated and/or supplemented from time to time, the Loan Agreement ) providing for a revolving credit facility, with all advances payable on demand, in favor of the Company;
WHEREAS, pursuant to the Loan Agreement, each Guarantor has jointly and severally guaranteed to the Administrative Agent, the Collateral Agent and the Lenders party thereto from time to time (collectively, the Secured Parties ) the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, in order to induce (i) the Lenders to make extensions of credit to the Company pursuant to the terms of the Loan Agreement and (ii) the Collateral Agent to act as collateral agent, the Assignors have agreed to grant to the Collateral Agent a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance and performance of, among other things, their respective Secured Obligations (as defined herein);
WHEREAS, the Intercreditor Agreement governs the relative rights and priorities of the Secured Parties, the Notes Secured Parties (as defined therein), the Pari Passu Indebtedness Secured Parties (as defined therein) and the First Lien Lenders in respect of all of the Collateral; and
WHEREAS, the Assignors will obtain benefits from the extensions of credit pursuant to the Loan Agreement, and, accordingly, the Assignors desire to grant a security interest in the Collateral to the Collateral Agent for its benefit and for the benefit of the Secured Parties under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the benefits accruing to each Assignor, the receipt and sufficiency of which are hereby acknowledged, each Assignor hereby makes the following representations and warranties to the Collateral Agent for the benefit of the Secured Parties and hereby covenants and agrees with the Collateral Agent for the benefit of the Secured Parties as follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests . (a) As security for the prompt and complete payment and performance when due of all of its Secured Obligations, each Assignor does hereby assign and transfer unto the Collateral Agent, and does hereby pledge and grant to the Collateral Agent, for the benefit of the Secured Parties, a continuing security interest in and a lien on all of the right, title and interest of such Assignor in, to and under all of the following personal property and fixtures (and all rights therein) of such Assignor, or in which or to which such Assignor has any rights, in each case whether now existing or hereafter from time to time acquired:
(i) each and every Account;
(ii) all cash;
(iii) the Cash Collateral Account and all monies, securities, Instruments and other investments deposited or required to be deposited in the Cash Collateral Account;
(iv) all Chattel Paper (including, without limitation, all Tangible Chattel Paper and all Electronic Chattel Paper);
(v) all Commercial Tort Claims;
(vi) all computer programs of such Assignor and all intellectual property rights therein and all other proprietary information of such Assignor, including but not limited to Domain Names and Trade Secret Rights;
(vii) all Contracts, together with all Contract Rights arising thereunder;
(viii) all Copyrights;
(ix) all Equipment;
(x) all Deposit Accounts and all other demand, deposit, time, savings, cash management, passbook and similar accounts maintained by such Assignor with any Person and all monies, securities, Instruments and other investments deposited or required to be deposited in any of the foregoing;
(xi) all Documents;
(xii) all General Intangibles;
(xiii) all Goods;
(xiv) all Instruments;
(xv) all Inventory;
2
(xvi) all Investment Property;
(xvii) all Letter-of-Credit Rights (whether or not the respective letter of credit is evidenced by a writing);
(xviii) all Marks, together with the registrations and right to all renewals thereof, the goodwill of the business of such Assignor symbolized by the Marks and all causes of action arising prior to or after the date hereof for infringement of any of the Marks or unfair competition regarding the same;
(xix) all Patents, together with all causes of action arising prior to or after the date hereof for infringement of any of the Patents or unfair competition regarding the same;
(xx) all Permits;
(xxi) all Software and all Software licensing rights, all writings, plans, specifications and schematics, all engineering drawings, customer lists, goodwill and licenses, and all recorded data of any kind or nature, regardless of the medium of recording;
(xxii) all Supporting Obligations; and
(xxiii) all Proceeds and products of any and all of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Assignors from time to time with respect to any of the foregoing
(all of the above, the Collateral ).
(b) The security interest of the Collateral Agent under this Agreement extends to all Collateral which any Assignor may acquire, or with respect to which any Assignor may obtain rights, at any time during the term of this Agreement. Notwithstanding anything to the contrary contained herein, the term Collateral shall not include, and the security interest granted under this Agreement shall not attach to any Excluded Asset.
Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the Intercreditor Agreement at any time the Intercreditor Agreement is in effect. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control at any time the Intercreditor Agreement is in effect. In the event of any conflict or inconsistency between the provisions of the Loan Agreement and this Agreement relating to the duties of the Collateral Agent the provisions of the Loan Agreement shall govern and control.
3
1.2 Power of Attorney . Each Assignor hereby constitutes and appoints the Collateral Agent its true and lawful attorney, irrevocably, with full power after the occurrence of and during the continuance of an Event of Default (in the name of such Assignor or otherwise) to act, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys due or to become due to such Assignor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which is or may be reasonably necessary to protect the interests of the Secured Parties, which appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which representations, warranties and covenants shall survive execution and delivery of this Agreement, as follows:
2.1 Necessary Filings . All filings, registrations, recordings and other actions necessary or appropriate to create, preserve and perfect the security interest granted by such Assignor to the Collateral Agent hereby in respect of the Collateral have been (or, within 15 days after the date hereof (or 90 days after the date hereof in the case of Deposit Accounts, as such date may be extended in accordance with Section 3.9 hereof), will be) accomplished and the security interest granted to the Collateral Agent pursuant to this Agreement in and to the Collateral creates a valid and, together with all such filings, registrations, recordings and other actions, a perfected security interest therein prior to the rights of all other Persons therein and subject to no other Liens (other than Permitted Liens) and is entitled to all the rights, priorities and benefits afforded by the Uniform Commercial Code or other relevant law as enacted in any relevant jurisdiction to perfected security interests, in each case to the extent that the Collateral consists of the type of property in which a security interest may be perfected by possession or control (within the meaning of the UCC as in effect on the date hereof in the State of New York), by filing a financing statement under the Uniform Commercial Code as enacted in any relevant jurisdiction or by a filing of a Grant of Security Interest in the respective form attached hereto in the United States Patent and Trademark Office or in the United States Copyright Office.
2.2 No Liens . Such Assignor is, and as to all Collateral acquired by it from time to time after the date hereof such Assignor will be, the owner of, or has rights in, all Collateral free from any Lien or other right, title or interest of any Person (other than Permitted Liens), and such Assignor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Collateral Agent.
2.3 Other Financing Statements . As of the date hereof, there is no financing statement (or similar statement or instrument of registration under the law of any jurisdiction) covering or purporting to cover any interest of any kind in the Collateral (other than financing statements filed in respect of Permitted Liens), and so long as the Termination Date has not occurred, such Assignor will not execute or authorize to be filed in any public office any financing statement (or similar statement or instrument of registration under the law of any jurisdiction) or statements relating to the Collateral, except financing statements filed or to be filed in respect of and covering the security interests granted hereby by such Assignor or in connection with Permitted Liens.
4
2.4 Chief Executive Office, Record Locations . The chief executive office of such Assignor is, on the date of this Agreement, located at the address indicated on Annex A hereto for such Assignor. During the period of the four calendar months preceding the date of this Agreement, the chief executive office of such Assignor has not been located at any address other than that indicated on Annex A in accordance with the immediately preceding sentence, in each case unless each such other address is also indicated on Annex A hereto for such Assignor.
2.5 Location of Inventory and Equipment . All Inventory and Equipment held on the date hereof, or held at any time during the four calendar months prior to the date hereof, by each Assignor is located at one of the locations shown on Annex B hereto for such Assignor.
2.6 Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; Location; Federal Employer Identification Number; Changes Thereto; etc. . The exact legal name of each Assignor, the type of organization of such Assignor, whether or not such Assignor is a Registered Organization, the jurisdiction of organization of such Assignor, such Assignors Location, the Location of such Assignor and the Federal Employer Identification Number (if any), is listed on Annex C hereto for such Assignor. Such Assignor shall not change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its jurisdiction of organization, its Location or its Federal Employer Identification Number (if any) from that used on Annex C hereto, except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Secured Documents and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) such Assignor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, outside the United States or a State thereof) if (i) it shall have given to the Collateral Agent not less than 5 days prior written notice of each change to the information listed on Annex C (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Annex C which shall correct all information contained therein for such Assignor, and (ii) in connection with each change or changes, it shall have taken all action reasonably necessary to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect. In addition, such Assignor shall take all actions reasonably necessary to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.
2.7 Trade Names; Etc. . Such Assignor has or operates in any jurisdiction under, or in the preceding five years has had or has operated in any jurisdiction under, no trade names, fictitious names or other names except its legal name as specified in Annex C and such other trade or fictitious names as are listed on Annex D hereto for such Assignor. Such Assignor shall not assume or operate in any jurisdiction under any new trade, fictitious or other name until (i) it shall have given to the Collateral Agent not less than 15 days written notice of its intention to do so, clearly describing such new name and the jurisdictions in which such new name will be used and providing such other information in connection therewith as the Collateral Agent may reasonably request and (ii) with respect to such new name, it shall have taken all actions reasonably necessary to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.
5
2.8 Certain Significant Transactions . During the one year period preceding the date of this Agreement, no Person shall have merged, amalgamated or consolidated with or into any Assignor, and no Person shall have liquidated into, or transferred all or substantially all of its assets to, any Assignor, in each case except as described in Annex E hereto. With respect to any transactions so described in Annex E hereto, the respective Assignor shall have furnished such information with respect to the Person (and the assets of the Person and locations thereof) which merged with or into, amalgamated with or consolidated with such Assignor, or was liquidated into or transferred all or substantially all of its assets to such Assignor, and shall have furnished to the Collateral Agent such UCC lien searches as may have been requested with respect to such Person and its assets, to establish that no security interest (excluding Permitted Liens) continues perfected on the date hereof with respect to any Person described above (or the assets transferred to the respective Assignor by such Person), including without limitation pursuant to Section 9-316(a)(3) of the UCC.
2.9 Non-UCC Property . The aggregate fair market value (as determined by the Assignors in good faith) of all property of the Assignors of the types described in clauses (1), (2) and (3) of Section 9-311(a) of the UCC and constituting Collateral does not exceed $1,000,000. If the aggregate value of all such property at any time owned by all Assignors and constituting Collateral exceeds $1,000,000, the Assignors shall provide prompt written notice thereof to the Collateral Agent and the Assignors shall promptly (and in any event within 30 days of acquiring knowledge thereof) take such actions (at their own cost and expense) as may be required under the respective United States, State or other laws referenced in Section 9-311(a) of the UCC to perfect the security interests granted herein in any Collateral where the filing of a financing statement does not perfect the security interest in such property in accordance with the provisions of Section 9-311(a) of the UCC.
2.10 As-Extracted Collateral; Timber-to-be-Cut . On the date hereof, such Assignor does not own, or expect to acquire, any property which constitutes, or would constitute, As-Extracted Collateral or Timber-to-be-Cut. If at any time after the date of this Agreement such Assignor owns, acquires or obtains rights to any As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall furnish the Collateral Agent with prompt written notice thereof (which notice shall describe in reasonable detail the As-Extracted Collateral and/or Timber-to-be-Cut and the locations thereof) and shall take all actions reasonably necessary to perfect the security interest of the Collateral Agent therein.
2.11 Collateral in the Possession of a Bailee . If any Inventory or other Goods are at any time in the possession of a bailee, such Assignor shall promptly notify the Collateral Agent thereof and, if requested by the Collateral Agent, shall use its commercially reasonable efforts to promptly obtain an acknowledgment from such bailee, in form and substance reasonably satisfactory to the Collateral Agent, that the bailee holds such Collateral for the benefit of the Collateral Agent and shall act upon the instructions of the Collateral Agent, without the further consent of such Assignor. The Collateral Agent agrees with such Assignor that the Collateral Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the respective Assignor with respect to any such bailee.
6
2.12 Recourse . This Agreement is made with full recourse to each Assignor and pursuant to and upon all the warranties, representations, covenants and agreements on the part of such Assignor contained herein, in the Secured Documents and otherwise in writing in connection herewith or therewith.
ARTICLE III
SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;
INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL
3.1 Additional Representations and Warranties . As of the time when each of its Accounts arises, each Assignor shall be deemed to have represented and warranted that each such Account, and all of Assignors records, papers and documents relating thereto (if any) are genuine and what they purport to be, and that all papers and documents (if any) relating thereto (i) will, to the knowledge of such Assignor, represent the genuine, legal, valid and binding obligation of the account debtor evidencing indebtedness unpaid and owed by the respective account debtor arising out of the performance of labor or services or the sale, lease, assignment or other disposition and delivery of the property listed therein, or both, (ii) will be the only original writings evidencing and embodying such obligation of the account debtor named therein (other than copies created for general accounting purposes), (iii) will, to the knowledge of such Assignor, evidence true and valid obligations, enforceable in accordance with their respective terms, and (iv) will be in compliance and will conform in all material respects with all applicable federal, state and local laws and applicable laws of any relevant foreign jurisdiction.
3.2 Maintenance of Records . Each Assignor will keep and maintain at its own cost and expense accurate records of its Accounts and Contracts, including, but not limited to, originals of all documentation (including each Contract) with respect thereto, records of all payments received, all credits granted thereon, all merchandise returned and all other dealings therewith, and such Assignor will make the same available on such Assignors premises to the Collateral Agent for inspection, at such Assignors own cost and expense, at any and all reasonable times, but not more than two (2) such inspections per calendar year, upon prior notice to such Assignor. Upon the occurrence and during the continuance of an Event of Default and at the request of the Collateral Agent (acting on the instructions of the Required Lenders in accordance with the Loan Agreement), such Assignor shall, at its own cost and expense, deliver all tangible evidence of its Accounts and Contract Rights (including, without limitation, all documents evidencing the Accounts and all Contracts) and such books and records to the Collateral Agent or to its representatives (copies of which evidence and books and records may be retained by such Assignor). Upon the occurrence and during the continuance of an Event of Default and if the Collateral Agent so directs, such Assignor shall legend, in form and manner satisfactory to the Collateral Agent, the Accounts and the Contracts, as well as books, records and documents (if any) of such Assignor evidencing or pertaining to such Accounts and Contracts with an appropriate reference to the fact that such Accounts and Contracts have been assigned to the Collateral Agent and that the Collateral Agent has a security interest therein.
7
3.3 Direction to Account Debtors; Contracting Parties; etc. . Upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent so directs (acting on the instructions of the Required Lenders in accordance with the Loan Agreement) any Assignor, such Assignor agrees (x) to cause all payments on account of the Accounts and Contracts to be made directly to the Cash Collateral Account, (y) that the Collateral Agent may, but has no obligation to, directly notify the obligors with respect to any Accounts and/or under any Contracts to make payments with respect thereto as provided in the preceding clause (x), and
(z) that the Collateral Agent may enforce collection of any such Accounts and Contracts and may adjust, settle or compromise the amount of payment thereof, in the same manner and to the same extent as such Assignor. Without notice to or assent by any Assignor, the Collateral Agent may, upon the occurrence and during the continuance of an Event of Default, apply any or all amounts then in, or thereafter deposited in, the Cash Collateral Account toward the payment of the Secured Obligations in the manner provided in Section 7.4 of this Agreement. The reasonable costs and expenses of collection (including reasonable attorneys fees), whether incurred by an Assignor or the Collateral Agent, shall be borne solely by the relevant Assignor. The Collateral Agent shall deliver a copy of each notice referred to in the preceding clause (y) to the relevant Assignor, provided that (x) the failure by the Collateral Agent to so notify such Assignor shall not affect the effectiveness of such notice or the other rights of the Collateral Agent created by this Section 3.3 and (y) no such notice shall be required if an Event of Default of the type described in Section 6.01(f) of the Loan Agreement has occurred and is continuing.
3.4 Modification of Terms; etc. . Except in accordance with such Assignors ordinary course of business and consistent with reasonable business judgment or as permitted by Section 3.5 hereof, no Assignor shall rescind or cancel any indebtedness evidenced by any Account or under any Contract, or modify any material term thereof or make any material adjustment with respect thereto, or extend or renew the same, or compromise or settle any material dispute, claim, suit or legal proceeding relating thereto, or sell any Account or Contract, or interest therein, without the prior written consent of the Collateral Agent (acting on the instructions of the Required Lenders in accordance with the Loan Agreement). No Assignor will do anything to impair the rights of the Collateral Agent in the Accounts or Contracts.
3.5 Collection . Each Assignor shall endeavor in accordance with reasonable business practices to cause to be collected from the account debtor named in each of its Accounts or obligor under any Contract, as and when due (including, without limitation, amounts which are delinquent, such amounts to be collected in accordance with generally accepted lawful collection procedures) any and all amounts owing under or on account of such Account or Contract, and apply promptly upon receipt thereof all such amounts as are so collected to the outstanding balance of such Account or under such Contract. Except as otherwise directed by the Collateral Agent after the occurrence and during the continuation of an Event of Default, any Assignor may allow in the ordinary course of business as adjustments to amounts owing under its Accounts and Contracts (i) an extension or renewal of the time or times of payment, or settlement for less than the total unpaid balance, which such Assignor finds appropriate in accordance with reasonable business judgment and (ii) a refund or credit due as a result of returned or damaged merchandise or improperly performed services or for other reasons which such Assignor finds appropriate in accordance with reasonable business judgment. The reasonable costs and expenses (including, without limitation, reasonable attorneys fees) of collection, whether incurred by an Assignor or the Collateral Agent, shall be borne solely by the relevant Assignor.
8
3.6 Instruments . If any Assignor owns or acquires any Instrument in excess of $500,000 constituting Collateral (other than (x) checks and other payment instruments received and collected in the ordinary course of business and (y) any Instrument subject to pledge pursuant to the Pledge Agreement), such Assignor will within 30 days notify the Collateral Agent thereof in writing, and upon request by the Collateral Agent will promptly deliver such Instrument to the Collateral Agent appropriately endorsed to the order of the Collateral Agent.
3.7 Assignors Remain Liable Under Accounts . Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Accounts to observe and perform all of the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to such Accounts. Neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Party of any payment relating to such Account pursuant hereto, nor shall the Collateral Agent or any other Secured Party be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by them or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.8 Assignors Remain Liable Under Contracts . Anything herein to the contrary notwithstanding, the Assignors shall remain liable under each of the Contracts to observe and perform all of the conditions and obligations to be observed and performed by them thereunder, all in accordance with and pursuant to the terms and provisions of each Contract. Neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any Contract by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Party of any payment relating to such Contract pursuant hereto, nor shall the Collateral Agent or any other Secured Party be obligated in any manner to perform any of the obligations of any Assignor under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any performance by any party under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times.
3.9 Deposit Accounts; Etc. . (a) No Assignor maintains, or at any time after the date of this Agreement shall establish or maintain, any demand, time, savings, passbook or similar account, except for such accounts maintained with a bank (as defined in Section 9-102 of the UCC) whose jurisdiction (determined in accordance with Section 9-304 of the UCC) is within a State of the United States. Annex F hereto accurately sets forth, as of the date of this Agreement, for each Assignor, each Deposit Account that is a Concentration Account maintained by such Assignor (including a description thereof and the respective account number), the name
9
of the respective bank with which such Deposit Account is maintained, and the jurisdiction of the respective bank with respect to such Deposit Account. For each Deposit Account that is a Concentration Account (other than (x) any Concentration Account maintained with the Collateral Agent and (y) any Debit Card Program Account), the respective Assignor shall cause the bank with which such Deposit Account is maintained to execute and deliver to the Collateral Agent, within 90 days after the date of this Agreement (as such date may be extended by the First Priority Agent in its sole discretion) or, if later, at the time of the establishment of the respective Deposit Account, a control agreement in the form of Annex G hereto (appropriately completed), with such changes thereto, or in such other form, as may be reasonably satisfactory to the First Priority Agent. If any bank with which a Deposit Account that is a Concentration Account is maintained refuses to, or does not, enter into such a control agreement, then the respective Assignor shall promptly (and in any event within 90 days after the date of this Agreement (as such date may be extended by the First Priority Agent in its sole discretion) or, if later, 90 days after the establishment of such account ) or in such other form, as may be reasonably satisfactory to the First Priority Agent close the respective Deposit Account and transfer all balances therein to the Cash Collateral Account or another Concentration Account meeting the requirements of this Section 3.9 . If any bank with which a Deposit Account that is a Concentration Account is maintained refuses to subordinate its claims with respect to such Deposit Account to the Collateral Agents security interest therein on reasonably satisfactory terms, then the respective Assignor shall terminate such Deposit Account and transfer all balances therein to the Cash Collateral Account or another Concentration Account in accordance with the immediately preceding sentence.
(b) After the date of this Agreement, no Assignor shall establish any new demand, time, savings, passbook or similar account, except for (x) Deposit Accounts that are established and maintained with banks and meeting the requirements of preceding clause (a) and (y) Excluded Accounts. At the time any such Deposit Account that is a Concentration Account is established, the appropriate control agreement shall be entered into in accordance with the requirements of preceding clause (a) and the respective Assignor shall furnish to the Collateral Agent a supplement to Annex F hereto containing the relevant information with respect to the respective Deposit Account and the bank with which same is established.
(c) Notwithstanding anything to the contrary herein, no Assignor shall be required to take any action to cause the Collateral Agent to obtain control ( Control ) in accordance with Section 9-104 or 9-106(c), as the case may be, of the UCC with respect to (i) any Deposit Account or Securities Account of such Assignor, that when taken together with all of the other Deposit Accounts (other than any Excluded Deposit Account) and Securities Accounts of such Assignor and all other Assignors, has an average five day closing balance that does not exceed $500,000 or (ii) any Excluded Deposit Account; provided, that if such Assignor shall cause the First Lien Agent to have Control over any such Deposit Account or Securities Account, such Assignor will ensure that the security interest granted by it in favor of the Collateral Agent hereunder to secure the Secured Obligations is also perfected by Control as contemplated by Section 4.7 of the Intercreditor Agreement.
10
3.10 Letter-of-Credit Rights . If any Assignor is at any time a beneficiary under a letter of credit with a stated amount of $1,000,000 or more, such Assignor shall promptly notify the Collateral Agent thereof and such Assignor shall, pursuant to an agreement, use its commercially reasonable efforts to (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under such letter of credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of such letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be applied as provided in this Agreement after the occurrence and during the continuance of an Event of Default.
3.11 Commercial Tort Claims . All Commercial Tort Claims of each Assignor asserted in a judicial proceeding in existence on the date of this Agreement are described in Annex H hereto. If any Assignor shall at any time after the date of this Agreement acquire a Commercial Tort Claim asserted in a judicial proceeding in an amount (taking the greater of the aggregate claimed damages thereunder or the reasonably estimated value thereof) of $1,000,000 or more, such Assignor shall promptly notify the Collateral Agent thereof in a writing signed by such Assignor and describing the details thereof and shall grant to the Collateral Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement.
3.12 Chattel Paper . Upon the request of the Collateral Agent made at any time or from time to time, each Assignor shall promptly furnish to the Collateral Agent a list of all Electronic Chattel Paper held or owned by such Assignor. Furthermore, each Assignor shall promptly take all actions which are reasonably practicable so that the Collateral Agent has control of all Electronic Chattel Paper with a face amount in excess of $1,000,000 in accordance with the requirements of Section 9-105 of the UCC. Each Assignor will promptly (and in any event within 30 days) following any reasonable request by the Collateral Agent, deliver all of its Tangible Chattel Paper to the Collateral Agent.
3.13 Further Actions . Each Assignor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps, including any and all actions as may be reasonably necessary or required under the Federal Assignment of Claims Act, relating to its Accounts, Contracts, Instruments and other property or rights covered by the security interest hereby granted, as the Collateral Agent may reasonably require, to the extent otherwise required herein, and not otherwise inconsistent with the provisions of Section 1.1(b) .
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES
4.1 Additional Representations and Warranties . Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use the registered Marks and Domain Names listed in Annex I hereto for such Assignor and that said listed Marks and Domain Names include all United States marks and applications for United States marks registered in the United States Patent and Trademark Office and all Domain Names that such Assignor owns or uses in connection with its business as of the date hereof. Each Assignor represents and warrants that it owns, is licensed to use or otherwise has the right to use, all Marks
11
and Domain Names that it uses. Each Assignor further warrants that it has no knowledge of any third party claim received by it that any aspect of such Assignors present or contemplated business operations infringes or will infringe any trademark, service mark or trade name of any other Person other than as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Assignor represents and warrants that it is the true and lawful owner of or otherwise has the right to use all U.S. trademark registrations and applications and Domain Name registrations listed in Annex I hereto and that said registrations are valid, subsisting, have not been canceled and that such Assignor is not aware of any third-party claim that any of said registrations is invalid or unenforceable, and is not aware that there is any reason that any of said registrations is invalid or unenforceable, and is not aware that there is any reason that any of said applications will not mature into registrations. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of an Event of Default, any document which may be required by the United States Patent and Trademark Office or similar registrar in order to effect an absolute assignment of all right, title and interest in each Mark and/or Domain Name, and record the same.
4.2 Licenses and Assignments . Except as otherwise permitted by the Facility Documents, each Assignor hereby agrees not to divest itself of any right under any Mark or Domain Name absent prior written approval of the Collateral Agent (acting on the instructions of the Required Lenders in accordance with the Loan Agreement).
4.3 Infringements . Each Assignor agrees, promptly upon learning thereof, to notify the Collateral Agent in writing of the name and address of, and to furnish such pertinent information that may be available with respect to, any party who such Assignor believes is, or may be, infringing or diluting or otherwise violating any of such Assignors rights in and to any Mark or Domain Name in any manner that could reasonably be expected to have a Material Adverse Effect, or with respect to any party claiming that such Assignors use of any Mark or Domain Name material to such Assignors business violates in any material respect any property right of that party. Each Assignor further agrees to prosecute diligently in accordance with reasonable business practices any Person infringing any Mark or Domain Name in any manner that could reasonably be expected to have a Material Adverse Effect.
4.4 Preservation of Marks and Domain Names . Each Assignor agrees to use its Marks and Domain Names which are material to such Assignors business in interstate commerce during the time in which this Agreement is in effect and to take all such other actions as are reasonably necessary to preserve such Marks as trademarks or service marks under the laws of the United States (other than any such Marks which are no longer used or useful in its business or operations).
4.5 Maintenance of Registration . Each Assignor shall, at its own expense, diligently process all documents reasonably required to maintain all Mark and/or Domain Name registrations, including but not limited to affidavits of use and applications for renewals of registration in the United States Patent and Trademark Office for all of its material registered Marks, and shall pay all fees and disbursements in connection therewith and shall not abandon any such filing of affidavit of use or any such application of renewal prior to the exhaustion of all administrative and judicial remedies without prior written consent of the Collateral Agent (acting on the instructions of the Required Lenders in accordance with the Loan Agreement) (other than with respect to registrations and applications deemed by such Assignor in its reasonable business judgment to be no longer prudent to pursue).
12
4.6 Future Registered Marks and Domain Names . If any Mark registration is issued hereafter to any Assignor as a result of any application now or hereafter pending before the United States Patent and Trademark Office or any Domain Name is registered by Assignor, within 30 days of receipt of such certificate or similar indicia of ownership, such Assignor shall deliver to the Collateral Agent a copy of such registration certificate or similar indicia of ownership, and a grant of a security interest in such Mark and/or Domain Name, to the Collateral Agent and at the expense of such Assignor, confirming the grant of a security interest in such Mark and/or Domain Name to the Collateral Agent hereunder, the form of such security to be substantially in the form of Annex L hereto.
4.7 Remedies . If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title and interest of such Assignor in and to each of the Marks and Domain Names, together with all trademark rights and rights of protection to the same, vested in the Collateral Agent for the benefit of the Secured Parties, in which event such rights, title and interest shall immediately vest, in the Collateral Agent for the benefit of the Secured Parties, and the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged and notarized and record said absolute assignment with the applicable agency or registrar; (ii) take and use or sell the Marks or Domain Names and the goodwill of such Assignors business symbolized by the Marks or Domain Names and the right to carry on the business and use the assets of such Assignor in connection with which the Marks or Domain Names have been used; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from using the Marks or Domain Names in any manner whatsoever, directly or indirectly, and such Assignor shall execute such further documents that the Collateral Agent may reasonably request to further confirm this and to transfer ownership of the Marks or Domain Names and registrations and any pending trademark applications in the United States Patent and Trademark Office or applicable Domain Name registrar to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1 Additional Representations and Warranties . Each Assignor represents and warrants that it is the true and lawful owner of all rights in (i) all Trade Secret Rights, (ii) the Patents listed in Annex J hereto for such Assignor and that said Patents include all the United States patents and applications for United States patents that such Assignor owns as of the date hereof and (iii) the Copyrights listed in Annex K hereto for such Assignor and that said Copyrights include all the United States copyrights registered with the United States Copyright Office and applications to United States copyrights that such Assignor owns as of the date hereof. Each Assignor further warrants that it has no knowledge of any third party claim that any aspect of such Assignors present or contemplated business operations infringes or will infringe any patent of any other Person or such Assignor has misappropriated any Trade Secret or
13
proprietary information which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor hereby grants to the Collateral Agent an absolute power of attorney to sign, upon the occurrence and during the continuance of any Event of Default, any document which may be required by the United States Patent and Trademark Office or the United States Copyright Office in order to effect an absolute assignment of all right, title and interest in each Patent or Copyright, and to record the same.
5.2 Licenses and Assignments . Except as otherwise permitted by the Facility Documents, each Assignor hereby agrees not to divest itself of any right under any Patent or Copyright absent prior written approval of the Collateral Agent (acting on the instructions of the Required Lenders in accordance with the Loan Agreement).
5.3 Infringements . Each Assignor agrees, promptly upon learning thereof, to furnish the Collateral Agent in writing with all pertinent information available to such Assignor with respect to any infringement, contributing infringement or active inducement to infringe or other violation of such Assignors rights in any Patent or Copyright or to any claim that the practice of any Patent or use of any Copyright violates any property right of a third party, or with respect to any misappropriation of any Trade Secret Right or any claim that practice of any Trade Secret Right violates any property right of a third party, in each case, in any manner which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Each Assignor further agrees, absent direction of the Collateral Agent (acting on the instructions of the Required Lenders in accordance with the Loan Agreement) to the contrary, to diligently prosecute, in accordance with its reasonable business judgment, any Person infringing any Patent or Copyright or any Person misappropriating any Trade Secret Right, in each case to the extent that such infringement or misappropriation, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
5.4 Maintenance of Patents or Copyrights . At its own expense, each Assignor shall make timely payment of all post-issuance fees required to maintain in force its rights under each Patent or Copyright, absent prior written consent of the Collateral Agent (acting on the instructions of the Required Lenders in accordance with the Loan Agreement) to the contrary (other than any such Patents or Copyrights which are no longer used or are deemed by such Assignor in its reasonable business judgment to no longer be useful in its business or operations).
5.5 Prosecution of Patent or Copyright Applications . At its own expense, each Assignor shall diligently prosecute all material applications for (i) United States Patents listed in Annex J hereto and (ii) Copyrights listed on Annex K hereto, in each case for such Assignor and shall not abandon any such application prior to exhaustion of all administrative and judicial remedies (other than applications that are deemed by such Assignor in its reasonable business judgment to no longer be necessary in the conduct of the Assignors business), absent written consent of the Collateral Agent (acting on the instructions of the Required Lenders in accordance with the Loan Agreement).
5.6 Other Patents and Copyrights . Within 30 days of the acquisition or issuance of a United States Patent, registration of a Copyright, or acquisition of a registered Copyright, or of filing of an application for a United States Patent or Copyright, the relevant Assignor shall deliver to the Collateral Agent a copy of said Copyright or Patent, or certificate or
14
registration of, or application therefor, as the case may be, with a grant of a security interest as to such Patent or Copyright, as the case may be, to the Collateral Agent and at the sole expense of such Assignor, confirming the grant of a security interest, the form of such grant of a security interest to be substantially in the form of Annex M or N hereto, as appropriate.
5.7 Remedies . If an Event of Default shall occur and be continuing, the Collateral Agent may, by written notice to the relevant Assignor, take any or all of the following actions: (i) declare the entire right, title, and interest of such Assignor in each of the Patents and Copyrights vested in the Collateral Agent for the benefit of the Secured Parties, in which event such right, title, and interest shall immediately vest in the Collateral Agent for the benefit of the Secured Parties, in which case the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 5.1 hereof to execute, cause to be acknowledged and notarized and to record said absolute assignment with the applicable agency; (ii) take and practice or sell the Patents and Copyrights; and (iii) direct such Assignor to refrain, in which event such Assignor shall refrain, from practicing the Patents and using the Copyrights directly or indirectly, and such Assignor shall execute such further documents as the Collateral Agent may reasonably request further to confirm this and, to the extent permitted by applicable law, to transfer ownership of the Patents and Copyrights to the Collateral Agent for the benefit of the Secured Parties.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Collateral Agents Security . Except as otherwise permitted by the Secured Documents, each Assignor will do nothing to impair the rights of the Collateral Agent in the Collateral. Each Assignor will at all times maintain insurance, at such Assignors own expense to the extent and in the manner provided in the Secured Documents. Except to the extent otherwise permitted to be retained by such Assignor or applied by such Assignor pursuant to the terms of the Secured Documents, the Collateral Agent shall, at the time any proceeds of such insurance are distributed to the Secured Parties, apply such proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Assignor to pay the Secured Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to such Assignor.
6.2 Warehouse Receipts Non-Negotiable . To the extent practicable, each Assignor agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued with respect to any of its Inventory, such Assignor shall request that such warehouse receipt or receipt in the nature thereof shall not be negotiable (as such term is used in Section 7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction or under other relevant law).
6.3 Additional Information . Each Assignor will, at its own expense, from time to time upon the reasonable request of the Collateral Agent, promptly (and in any event within 10 Business Days after its receipt of the respective request) furnish to the Collateral Agent such information with respect to the Collateral (including the identity of the Collateral or such components thereof as may have been requested by the Collateral Agent, the value and location
15
of such Collateral, etc.) as may be requested by the Collateral Agent. Without limiting the forgoing, each Assignor agrees that it shall promptly (and in any event within 10 Business Days after its receipt of the respective request) furnish to the Collateral Agent such updated Annexes hereto as may from time to time be reasonably requested by the Collateral Agent; provided , however , that the Collateral Agent shall have no duty to so request unless directed to do so by the the Required Lenders in accordance with the Loan Agreement.
6.4 Further Actions . Each Assignor will, at its own expense and upon the reasonable request of the Collateral Agent, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such lists, descriptions and designations of its Collateral, warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, certificates, reports and other assurances or instruments and take such further steps relating to the Collateral and other property or rights covered by the security interest hereby granted, which are or may be necessary to perfect, preserve or protect its security interest in the Collateral to the extent otherwise required herein and not otherwise inconsistent with the provisions of Section 1.1(b) ; provided , however , that the Collateral Agent shall have no duty to so request unless directed to do so by the Required Lenders in accordance with the Loan Agreement.
6.5 Financing Statements . Each Assignor agrees to execute and deliver to the Collateral Agent such financing statements as the Collateral Agent may from time to time reasonably request or as are reasonably necessary to establish and maintain a valid, enforceable, perfected security interest in the Collateral as provided herein and the other rights and security contemplated hereby. Each Assignor will pay any applicable filing fees, recordation taxes and related expenses relating to its Collateral. Each Assignor hereby authorizes the Collateral Agent to file any such financing statements without the signature of such Assignor where permitted by law (and such authorization includes describing the Collateral as all assets of such Assignor); provided , however , that the Collateral Agent shall have no duty to make any such filings unless directed to do so by the Required Lenders in accordance with the Loan Agreement.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default . Each Assignor agrees that, if any Event of Default shall have occurred and be continuing, then and in every such case, the Collateral Agent, in addition to any rights now or hereafter existing under applicable law and under the other provisions of this Agreement, shall have all rights as a secured creditor under any UCC, and such additional rights and remedies to which a secured creditor is entitled under the laws in effect in all relevant jurisdictions and may (acting on the instructions of the Required Lenders in accordance with the Loan Agreement):
(i) personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from such Assignor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon such Assignors premises where any of the Collateral is located and remove the same and use in connection with such removal any and all services, supplies, aids and other facilities of such Assignor;
16
(ii) instruct the obligor or obligors on any agreement, instrument or other obligation (including, without limitation, the Accounts and the Contracts) constituting the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Collateral Agent and may exercise any and all remedies of such Assignor in respect of such Collateral;
(iii) instruct all banks which have entered into a control agreement with the Collateral Agent to transfer all monies, securities and instruments held by such depositary bank to the Cash Collateral Account;
(iv) sell, assign or otherwise liquidate any or all of the Collateral or any part thereof in accordance with Section 7.2 hereof, or direct such Assignor to sell, assign or otherwise liquidate any or all of the Collateral or any part thereof, and, in each case, take possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by directing such Assignor in writing to deliver the same to the Collateral Agent at any reasonable place or places designated by the Collateral Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places so designated by the Collateral Agent and there delivered to the Collateral Agent;
(y) store and keep any Collateral so delivered to the Collateral Agent at such place or places pending further action by the Collateral Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide such security and maintenance services as shall be reasonably necessary to protect the same and to preserve and maintain it in good condition;
(vi) license or sublicense, whether on an exclusive or nonexclusive basis, any Marks, Domain Names, Patents or Copyrights included in the Collateral for such term and on such conditions and in such manner as the Collateral Agent shall determine (acting on the instructions of the Required Lenders in accordance with the Loan Agreement);
(vii) apply any monies constituting Collateral or proceeds thereof in accordance with the provisions of Section 7.4 ; and
(viii) take any other action as specified in clauses (1) through (5), inclusive, of Section 9-607 of the UCC;
17
it being understood that each Assignors obligation so to deliver the Collateral is of the essence of this Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by such Assignor of said obligation. By accepting the benefits of this Agreement and each other Collateral Document, the Secured Parties expressly acknowledge and agree that this Agreement and each other Collateral Document may be enforced only by the action of the Collateral Agent acting on the instructions of the Required Lenders in accordance with the Loan Agreement and that no other Secured Party shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit of the Secured Parties upon the terms of this Agreement and the other Collateral Documents.
7.2 Remedies; Disposition of the Collateral . If any Event of Default shall have occurred and be continuing, then any Collateral repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and any other Collateral whether or not so repossessed by the Collateral Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as are commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Collateral Agent or after any overhaul or repair at the expense of the relevant Assignor. Any such sale, lease or other disposition may be effected by means of a public disposition or private disposition, effected in accordance with the applicable requirements (in each case if and to the extent applicable) of Sections 9-610 through 9-613 of the UCC and/or such other mandatory requirements of applicable law as may apply to the respective disposition. The Collateral Agent may, without notice or publication, adjourn any public or private disposition or cause the same to be adjourned from time to time by announcement at the time and place fixed for the disposition, and such disposition may be made at any time or place to which the disposition may be so adjourned. To the extent permitted by any such requirement of law, the Collateral Agent may bid for and become the purchaser (and may pay all or any portion of the purchase price by crediting Secured Obligations against the purchase price) of the Collateral or any item thereof, offered for disposition in accordance with this Section 7.2 without accountability to the relevant Assignor. If, under applicable law, the Collateral Agent shall be permitted to make disposition of the Collateral within a period of time which does not permit the giving of notice to the relevant Assignor as hereinabove specified, the Collateral Agent need give such Assignor only such notice of disposition as shall be required by such applicable law. Each Assignor agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such disposition or dispositions of all or any portion of the Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Assignors expense.
7.3 Waiver of Claims . Except as otherwise provided in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENTS TAKING POSSESSION OR THE COLLATERAL AGENTS DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Assignor hereby further waives, to the extent permitted by law:
18
(i) all damages occasioned by such taking of possession or any such disposition except any damages which are the direct result of the Collateral Agents gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision);
(ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agents rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Assignor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the relevant Assignor therein and thereto, and shall be a perpetual bar both at law and in equity against such Assignor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Assignor.
7.4 Application of Proceeds . (a) Subject to the terms of the Intercreditor Agreement, all monies and other property and assets collected or received by the Collateral Agent or any other Secured Party upon any sale or other disposition of the Collateral pursuant to the terms of this Agreement, together with all other monies and other property and assets collected or received by the Collateral Agent hereunder or upon any distribution of (or on account of) Collateral (whether or not characterized as such) in connection with any case, proceeding or other action of the type described in Sections 6.01(f) of the Loan Agreement, shall be applied (1) first , to any amounts owed to the Collateral Agent hereunder and (2) second , to the holders of the Guaranteed Obligations that are then due, on a pro rata basis. Such monies and other property and assets shall be applied in the manner provided in the Section 2.14 of the Loan Agreement.
(b) It is understood that the Assignors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate amount of the Secured Obligations.
(c) If any Secured Party collects or receives any distribution to which it is not entitled under Section 7.4(a) hereof, such Secured Party shall hold the same in trust for the Secured Parties and shall forthwith deliver the same to the Collateral Agent, for the account of the Secured Parties, to be applied in accordance with Section 7.4(a) hereof.
19
7.5 Remedies Cumulative . Each and every right, power and remedy hereby specifically given to the Collateral Agent shall be in addition to every other right, power and remedy specifically given to the Collateral Agent under this Agreement, the other Secured Documents or now or hereafter existing at law, in equity or by statute and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Collateral Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of the exercise of one shall not be deemed a waiver of the right to exercise any other or others. No delay or omission of the Collateral Agent in the exercise of any such right, power or remedy and no renewal or extension of any of the Secured Obligations shall impair any such right, power or remedy or shall be construed to be a waiver of any Default or Event of Default or an acquiescence thereof. No notice to or demand on any Assignor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Collateral Agent to any other or further action in any circumstances without notice or demand. In the event that the Collateral Agent shall bring any suit to enforce any of its rights hereunder and shall be entitled to judgment, then in such suit the Collateral Agent may recover reasonable expenses, including reasonable attorneys fees, and the amounts thereof shall be included in such judgment.
7.6 Discontinuance of Proceedings . In case the Collateral Agent shall have instituted any proceeding to enforce any right, power or remedy under this Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case the relevant Assignor, the Collateral Agent and each holder of any of the Secured Obligations shall be restored to their former positions and rights hereunder with respect to the Collateral subject to the security interest created under this Agreement, and all rights, remedies and powers of the Collateral Agent shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1 Indemnity . Section 9.04(b) of the Loan Agreement (Indemnification by the Borrower) is hereby incorporated by reference as if fully set forth herein mutatis mutandis.
8.2 Indemnity Obligations Secured by Collateral; Survival . Any amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement shall constitute Secured Obligations secured by the Collateral. The indemnity obligations of each Assignor contained in this Article VIII shall continue in full force and effect notwithstanding the full payment of all of the Guaranteed Obligations and notwithstanding the discharge thereof and the occurrence of the Termination Date.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such definitions shall be equally applicable to the singular and plural forms of the terms defined.
20
Account shall mean any account as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, and in any event shall include but shall not be limited to, all rights to payment of any monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State.
Agreement shall mean this Security Agreement, as the same may be amended, modified, restated and/or supplemented from time to time in accordance with its terms.
As-Extracted Collateral shall mean as-extracted collateral as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Assignor shall have the meaning provided in the first paragraph of this Agreement.
Cash Collateral Account shall mean a non-interest bearing cash collateral account established following the occurrence of an Event of Default and maintained with, and in the sole dominion and control of, the Collateral Agent for the benefit of the Secured Parties.
Chattel Paper shall mean chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York. Without limiting the foregoing, the term Chattel Paper shall in any event include all Tangible Chattel Paper and all Electronic Chattel Paper.
Commercial Tort Claims shall mean commercial tort claims as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Concentration Account shall mean each of those accounts listed on Annex F hereto and designated as a Concentration Account thereon, along with any replacement accounts in respect thereof established in accordance with the terms of Section 3.9 hereof.
Contract Rights shall mean all rights of any Assignor under each Contract, including, without limitation, (i) any and all rights to receive and demand payments under any or all Contracts, (ii) any and all rights to receive and compel performance under any or all Contracts and (iii) any and all other rights, interests and claims now existing or in the future arising in connection with any or all Contracts.
Contracts shall mean all contracts between any Assignor and one or more additional parties (including, without limitation, any Interest Rate Protection Agreements, Other Hedging Agreements, licensing agreements and any partnership agreements, joint venture agreements and limited liability company agreements).
21
Copyrights shall mean any United States or foreign copyright now or hereafter owned by any Assignor, including any registrations of any copyrights in the United States Copyright Office or any foreign equivalent office, as well as any application for a copyright registration now or hereafter made with the United States Copyright Office or any foreign equivalent office by any Assignor.
Debit Card Program Accounts shall mean the special purpose deposit accounts established by the Company or one of its Subsidiaries with a sponsoring bank in connection with the Companys general purpose reloadable debit card business, and with the funds on deposit in such accounts to be held therein solely as security against potential losses incurred by such sponsoring bank associated with customer chargeback claims, fraud or closed customer accounts.
Default shall mean a Default or similar term as such defined in the Loan Agreement, so long as such agreement is in effect.
Deposit Accounts shall mean all deposit accounts as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Distribution shall have the meaning provided in Section 7.4(a) of this Agreement.
Documents shall mean documents as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Domain Names shall mean all Internet domain names and associated URL addresses in or to which any Assignor now or hereafter has any right, title or interest.
Electronic Chattel Paper shall mean electronic chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Equipment shall mean any equipment as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, and in any event, shall include, but shall not be limited to, all machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by any Assignor and any and all additions, substitutions and replacements of any of the foregoing and all accessions thereto, wherever located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.
Event of Default shall mean an Event of Default or similar term as such term is defined in the Loan Agreement, so long as any such agreement is in effect.
Excluded Deposit Accounts shall mean any Deposit Account that is an Excluded Asset described in clause (6) of the definition the term of Excluded Assets.
22
First Lien Lenders shall have the meaning provided in the Intercreditor Agreement.
First Lien Agent shall have the meaning provided in the Intercreditor Agreement.
First Priority Agent shall have the meaning provided in the Senior Notes Indenture.
First Priority Collateral Documents shall have the meaning provided in the Senior Notes Indenture.
Guaranteed Obligations shall have the meaning provided in the Loan Agreement.
General Intangibles shall mean general intangibles as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Goods shall mean goods as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Indemnitee shall have the meaning provided in Section 8.1(a) of this Agreement.
Instrument shall mean instruments as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Interest Rate Protection Agreement shall mean any interest rate swap agreement, interest rate cap agreement, interest collar agreement, interest rate hedging agreement or other similar agreement or arrangement.
Inventory shall mean merchandise, inventory and goods, and all additions, substitutions and replacements thereof and all accessions thereto, wherever located, together with all goods, supplies, incidentals, packaging materials, labels, materials and any other items used or usable in manufacturing, processing, packaging or shipping same, in all stages of production from raw materials through work in process to finished goods, and all products and proceeds of whatever sort and wherever located any portion thereof which may be returned, rejected, reclaimed or repossessed by the Collateral Agent from any Assignors customers, and shall specifically include all inventory as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Investment Property shall mean investment property as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Letter-of-Credit Rights shall mean letter-of-credit rights as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
23
Location of any Assignor, shall mean such Assignors location as determined pursuant to Section 9-307 of the UCC.
Marks shall mean all right, title and interest in and to any trademarks, service marks and trade names now held or hereafter acquired by any Assignor, including any registration or application for registration of any trademarks and service marks now held or hereafter acquired by any Assignor, which are registered or filed in the United States Patent and Trademark Office or the equivalent thereof in any state of the United States or any equivalent foreign office or agency, as well as any unregistered trademarks and service marks used by an Assignor and any trade dress including logos, designs, fictitious business names and other business identifiers used by any Assignor.
Material Adverse Effect shall mean (i) a material adverse effect on the business, operations, property, assets, liabilities, condition (financial or otherwise) or operating results of Company and its Restricted Subsidiaries taken as a whole, or (ii) a material adverse effect (x) on the rights or remedies of the Collateral Agent hereunder or under any other Secured Document, (y) on the ability of any Assignor to perform its obligations to the Collateral Agent hereunder or under any other Secured Document or (z) the legality, validity, binding effect or enforceability of this Agreement or any of the other Secured Documents.
Other Hedging Agreements shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar arrangements, or arrangements designed to protect against fluctuations in currency values or commodity prices.
Patents shall mean any patent in or to which any Assignor now or hereafter has any right, title or interest therein, and any divisions, continuations (including, but not limited to, continuations-in-parts) and improvements thereof, as well as any application for a patent now or hereafter made by any Assignor.
Permits shall mean, to the extent permitted to be assigned by the terms thereof or by applicable law, all licenses, permits, rights, orders, variances, franchises or authorizations of or from any governmental authority or agency.
Proceeds shall mean all proceeds as such term is defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof and, in any event, shall also include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Collateral Agent or any Assignor from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to any Assignor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any person acting under color of governmental authority) and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.
Registered Organization shall have the meaning provided in the Uniform Commercial Code as in effect in the State of New York.
Secured Documents shall mean the Loan Agreement, the Pledge Agreement and this Agreement.
24
Secured Obligations shall mean, collectively, the Guaranteed Obligations of each Guarantor.
Securities Accounts shall mean all securities accounts as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Software shall mean software as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Supporting Obligations shall mean any supporting obligation as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York, now or hereafter owned by any Assignor, or in which any Assignor has any rights, and, in any event, shall include, but shall not be limited to all of such Assignors rights in any Letter-of-Credit Right or secondary obligation that supports the payment or performance of, and all security for, any Account, Chattel Paper, Document, General Intangible, Instrument or Investment Property.
Tangible Chattel Paper shall mean tangible chattel paper as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Termination Date shall mean the Commitment Termination Date as defined in the Loan Agreement.
Timber-to-be-Cut shall mean timber-to-be-cut as such term is defined in the Uniform Commercial Code as in effect on the date hereof in the State of New York.
Trade Secret Rights shall mean the rights of an Assignor in any Trade Secret it holds.
Trade Secrets shall mean any secretly held existing engineering or other data, information, production procedures and other know-how relating to the design manufacture, assembly, installation, use, operation, marketing, sale and/or servicing of any products or business of an Assignor worldwide whether written or not.
UCC shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.
ARTICLE X
MISCELLANEOUS
10.1 Notices . Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy, cable or courier service and all such notices and communications shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier, except that notices and communications to the Collateral Agent or any Assignor shall not be effective until received by the Collateral Agent or such Assignor, as the case may be. All notices and other communications shall be in writing and addressed as follows:
25
(a) | if to any Assignor, c/o: |
CURO Financial Technologies Corp.
3527 N. Ridge Rd.
Wichita, KS 67205
Attention: Douglas Rippel
Telephone No.: 800.253.4574
Telecopier No.: 316.722.7751
(b) | if to the Collateral Agent, at: |
Bay Coast Bank, as Collateral Agent
330 Swansea Mall Drive
Swansea, MA 02777
Attention: Carl W. Taber
Telephone No.: 508.675.4377
Telecopier No.: 508.675.4470
or at such other address or addressed to such other individual as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
10.2 Waiver; Amendment . Except as provided in Sections 10.8 and 10.12 hereof (or as provided in the other Collateral Documents), none of the terms and conditions of this Agreement or any other Collateral Document may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by each Assignor directly affected thereby (it being understood that the addition or release of any Assignor hereunder shall not constitute a change, waiver, discharge or termination affecting any Assignor other than the Assignor so added or released) and the Collateral Agent (with the written consent of the Required Lenders in accordance with the Loan Agreement).
10.3 Obligations Absolute . The obligations of each Assignor hereunder shall remain in full force and effect without regard to, and shall not be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Assignor; (b) any exercise or non-exercise, or any waiver of, any right, remedy, power or privilege under or in respect of this Agreement or any other Facility Document; or (c) any amendment to or modification of any Secured Document or any security for any of the Secured Obligations; whether or not such Assignor shall have notice or knowledge of any of the foregoing.
10.4 Successors and Assigns . This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or termination as set forth in Section 10.8 hereof, (ii) be binding upon each Assignor, its successors and assigns; provided , however , that no Assignor shall assign any of its rights or
26
obligations hereunder without the prior written consent of the Collateral Agent (with the prior written consent of the Required Lenders in accordance with the Loan Agreement) or as otherwise permitted by the Secured Documents, and (iii) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent, the other Secured Parties and their respective successors, transferees and assigns. All agreements, statements, representations and warranties made by each Assignor herein or in any certificate or other instrument delivered by such Assignor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of this Agreement and the other Secured Documents regardless of any investigation made by the Secured Parties or on their behalf.
10.5 Headings Descriptive . The headings of the several sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
10.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL . (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER SECURED DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR OF THE UNITED STATES FOR THE DISTRICT OF MASSACHUSETTS, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF SUFFOLK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH ASSIGNOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH ASSIGNOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER SECURED DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH ASSIGNOR. EACH ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH ASSIGNOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER SECURED DOCUMENT THAT SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN, HOWEVER, SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT UNDER THIS AGREEMENT, OR ANY SECURED PARTY, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY ASSIGNOR IN ANY OTHER JURISDICTION.
27
(b) EACH ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER FACILITY DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER SECURED DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.7 Assignors Duties . It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Assignor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Collateral Agent shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, nor shall the Collateral Agent be required or obligated in any manner to perform or fulfill any of the obligations of any Assignor under or with respect to any Collateral.
10.8 Termination; Release . (a) After the Termination Date, this Agreement shall terminate ( provided that all indemnities set forth herein including, without limitation in Section 8.1 hereof, shall survive such termination) and the Collateral Agent, at the written request and expense of the respective Assignor, will promptly execute and deliver to such Assignor a proper instrument or instruments (including Uniform Commercial Code termination statements on form UCC-3) acknowledging the satisfaction and termination of this Agreement, and will duly assign, transfer and deliver to such Assignor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Collateral Agent and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement.
(b) The Liens securing the Collateral may be released from time to time in accordance with Section 8.08 of the Loan Agreement. Furthermore, upon the release of any Guarantor from its Guaranteed Obligations in accordance with the provisions of the Loan Agreement, such Assignor (and the Collateral at such time assigned by the respective Assignor pursuant hereto) shall be released from this Agreement.
(c) The Collateral Agent shall have no liability whatsoever to any other Secured Party as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in good faith believes to be in accordance with) this Section 10.8 .
10.9 Counterparts . This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Company and the Collateral Agent.
28
10.10 Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
10.11 The Collateral Agent and the other Secured Parties . The Collateral Agent will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement. It is expressly understood and agreed that the obligations of the Collateral Agent as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this Agreement, are only those expressly set forth in this Agreement and in the Loan Agreement. The Collateral Agent shall act hereunder on the terms and conditions set forth herein and in the Loan Agreement. The provisions of Article 8.08 of the Loan Agreement shall inure to the benefit of the Collateral Agent, and shall be binding upon all Assignors and all Secured Parties, in connection with this Agreement and the other Collateral Documents. Without limiting the generality of the foregoing, (i) the Collateral Agent shall not be subject to any fiduciary or other implied duties, regardless of whether an Event of Default has occurred and is continuing and (ii) the Collateral Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Collateral Documents that the Collateral Agent is required in writing to exercise by the Required Lenders. Notwithstanding anything to the contrary in this Agreement, in no event shall the Collateral Agent be responsible for, or have any duty or obligation with respect to, the recording, filing registering, perfection, protection or maintenance of the security interests or Liens intended to be created by this Agreement (including the preparation, filing or continuation of any Uniform Commercial Code financing or continuation statements or similar documents or instruments), nor shall the Collateral Agent be responsible for, and the Collateral Agent makes no representation regarding, the validity, enforceability, effectiveness or priority of this Agreement or the security interests or Liens intended to be created hereby.
10.12 Additional Assignors . It is understood and agreed that any Guarantor that desires to become an Assignor hereunder, or is required to execute a counterpart of this Agreement after the date hereof pursuant to the requirements of the Loan Agreement or any other Facility Document, shall become an Assignor hereunder by (x) executing a joinder agreement in the form of Annex O hereto and delivering same to the Collateral Agent, in each case as may be requested by (and in form and substance reasonably satisfactory to) the Collateral Agent, (y) delivering supplements to Annexes A through F, inclusive, and H through K, inclusive, hereto as are necessary to cause such Annexes to be complete and accurate with respect to such additional Assignor on such date and (z) taking all actions as specified in this Agreement as would have been taken by such Assignor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Collateral Agent and with all documents and actions required above to be taken.
29
10.13 Intercreditor Agreement . Without limiting the generality of the final paragraph of Section 1.1(b) : (a) the Liens granted hereunder in favor of the Collateral Agent for the benefit of the Secured Parties in respect of the Collateral and the exercise of any right related thereto thereby shall be subject, in each case, to the terms of the Intercreditor Agreement; and (b) notwithstanding anything to the contrary herein, any provision hereof that requires (or any representation or warranty hereunder to the extent that it would have the effect of requiring) any Assignor to (i) deliver any Collateral to the Collateral Agent, or (ii) provide that the Collateral Agent have control over such Collateral (or, in the case of any representation or warranty hereunder, shall be deemed to be true) by (A) with respect to subclause (i) hereof, the delivery of such Collateral by such Assignor to the First Lien Agent for the benefit of the secured parties under the First Priority Collateral Documents and the Secured Parties pursuant to Section 4.6 of the Intercreditor Agreement, and (B) with respect to subclause (ii) hereof, providing that the First Lien Agent be provided with control with respect to such Collateral of such Assignor for the benefit of the secured parties under the First Priority Collateral Documents and the Secured Parties pursuant to Section 4.7 of the Intercreditor Agreement.
[ Remainder of this page intentionally left blank; signature page follows ]
30
IN WITNESS WHEREOF, each Assignor and the Collateral Agent have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.
CURO FINANCIAL TECHNOLOGIES CORP. CURO INTERMEDIATE HOLDINGS CORP., each as an Assignor |
By:______________________________________ |
Name: |
Title: |
CURO GROUP HOLDINGS CORP. |
A SPEEDY CASH CAR TITLE LOANS, LLC |
ADVANCE GROUP, INC. |
ATTAIN FINANCE, LLC |
AVIO CREDIT, INC. |
CASH COLORADO, LLC |
CONCORD FINANCE, INC. |
ENNOBLE FINANCE, LLC |
EVERGREEN FINANCIAL INVESTMENTS, |
INC. |
FMMR INVESTMENTS, INC. |
GALT VENTURES, LLC |
PRINCIPAL INVESTMENTS, INC. |
SCIL TEXAS, LLC |
SC AURUM, LLC |
SCIL, INC. |
SPEEDY CASH |
SPEEDY CASH ILLINOIS, INC. |
SC TEXAS MB, INC. |
THE MONEY STORE, L.P. |
CURO MANAGEMENT LLC |
TODD CAR TITLE, INC. |
TODD FINANCIAL, INC., each as an Assignor |
By:________________________________ |
Name: |
Title: |
Signature Page to Security Agreement
Accepted and Agreed to: |
BAY COAST BANK, |
as Collateral Agent |
By:______________________________________ |
Name: |
Title: |
Signature Page to Security Agreement
ANNEX A
to
SECURITY AGREEMENT
SCHEDULE OF CHIEF EXECUTIVE OFFICES
Name of Assignor |
Address(es) of Chief Executive Office |
|
All Assignors | 3527 North Ridge Road, Wichita, Kansas | |
67205 |
ANNEX B
to
SECURITY AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
Lease ID |
Address |
City |
ST/PRV |
Zip Code |
Country |
|||||
0001 | 9781 Magnolia Ave | Riverside | CA | 92503 | United States | |||||
0002 | 4915 Moreno Ave | Montclair | CA | 91763 | United States | |||||
0003 | 10404 Venice Blvd | Culver City | CA | 90232 | United States | |||||
0004 | 6740 Reseda Blvd | Reseda | CA | 91335 | United States | |||||
0005 | 2710 S Maryland Pkwy Suite # A | Las Vegas | NV | 89109 | United States | |||||
0006 | 8847 Imperial Hwy | Downey | CA | 90242 | United States | |||||
0007 | 857 W Rosecrans Ave | Gardena | CA | 90247 | United States | |||||
0008 | 13010 Harbor Blvd | Garden Grove | CA | 90247 | United States | |||||
0009 | 1841 W Northern Ave | Phoenix | AZ | 85021 | United States | |||||
0010 | 4921 W Sahara Ave | Las Vegas | NV | 89146 | United States | |||||
0011 | 904 S Gaffey St | San Pedro | CA | 90731 | United States | |||||
0012 | 4040 N 40th St | Phoenix | AZ | 85018 | United States | |||||
0013 | 1242 W Main St | Mesa | AZ | 85201 | United States | |||||
0014 | 7116 NE Fourth Plain Rd | Vancouver | WA | 98661 | United States | |||||
0015 | 1532 N Jones Blvd | Las Vegas | NV | 89121 | United States | |||||
0016 | 10972 Beach Blvd | Stanton | CA | 90680 | United States | |||||
0017 | 3475 E Flamingo Suite # 300 | Las Vegas | NV | 89121 | United States | |||||
0018 | 1331 E 63rd St | Kansas City | MO | 64110 | United States | |||||
0019 | 8701 E Washington Blvd | Pico Rivera | CA | 90660 | United States | |||||
0020 | 11221 E 23rd St | Independence | MO | 64052 | United States | |||||
0021 | 2351 N Alvernon Suite # 100 | Tucson | AZ | 85712 | United States | |||||
0022 | 12131 SE Powell Blvd | Portland | OR | 97266 | United States | |||||
0023 | 265 S Wadsworth Blvd | Lakewood | CO | 80226 | United States | |||||
0024 | 1551 E Indian School Rd | Phoenix | AZ | 85014 | United States | |||||
0025 | 19026 E Burnside St | Portland | OR | 97233 | United States | |||||
0026 | 3501 W Glendale Ave | Phoenix | AZ | 85051 | United States | |||||
0027 | 101 S Brookhurst St | Anaheim | CA | 92804 | United States | |||||
0028 | 3849 SE Powell Blvd | Portland | OR | 97202 | United States | |||||
0029 | 270 E Baseline St Suite # A | San Bernardino | CA | 92410 | United States | |||||
0030 | 11000 Lower Azusa Rd | El Monte | CA | 91732 | United States | |||||
0031 | 25 N Lamb Blvd | Las Vegas | NV | 89110 | United States | |||||
0032 | 5819 W Camelback Rd | Phoenix | AZ | 85031 | United States | |||||
0033 | 6115 W Flamingo Rd | Las Vegas | NV | 89103 | United States | |||||
0034 | 7202 E McDowell Rd | Scottsdale | AZ | 85257 | United States | |||||
0035 | 3947 Main St | Kansas City | MO | 64111 | United States | |||||
0036 | 6501 E Evans Ave | Denver | CO | 80224 | United States | |||||
0038 | 2801 W Washington Suite # 110 | Las Vegas | NV | 89107 | United States | |||||
0039 | 2201 N Amidon Ave | Wichita | KS | 67204 | United States | |||||
0040 | 701 N West St | Wichita | KS | 67203 | United States | |||||
0041 | 10309 SE Mill Plain Blvd Suite # A | Vancouver | WA | 98664 | United States | |||||
0042 | 10223 Sepulveda Blvd., Suite # C & D | Mission Hills | CA | 91345 | United States | |||||
0043 | 4850 E Harry St | Wichita | KS | 67218 | United States | |||||
0044 | 1215 S Country Club Dr | Mesa | AZ | 85210 | United States | |||||
0045 | 3447 E Cesar Chavez | Los Angeles | CA | 90063 | United States | |||||
0046 | 8247 Laurel Canyon Blvd | N Hollywood | CA | 91605 | United States | |||||
0047 | 3520 E Bell Rd | Phoenix | AZ | 85032 | United States | |||||
0048 | 5102 W Olive Ave Suite # 103 | Glendale | AZ | 85302 | United States | |||||
0049 | 4241 S Nellis Blvd | Las Vegas | NV | 89121 | United States | |||||
0050 | 4199 S Ft. Apache Suite # D | Las Vegas | NV | 89147 | United States | |||||
0051 1 | 6300 E 21st St N | Wichita | KS | 67208 | United States | |||||
0052 | 430 E 30th Ave | Hutchinson | KS | 67502 | United States | |||||
0053 | 7865 W Sahara Ave Suite # 102 & 103 | Las Vegas | NV | 89117 | United States |
1 | Operating entity owns the building but leases the ground |
ANNEX B
to
SECURITY AGREEMENT
0054 | 1050 W Pawnee St | Wichita | KS | 67213 | United States | |||||
0054L2 2 | 1048 W Pawnee St | Wichita | KS | 67213 | United States | |||||
0055 | 1960 W Baseline Rd Suite # 101 | Mesa | AZ | 85202 | United States | |||||
0056 | 4343 N Rancho Dr Suite # 150 | Las Vegas | NV | 89130 | United States | |||||
0057 | 5676 S Eastern Ave | Las Vegas | NV | 89119 | United States | |||||
0058 | 1956 E Southern Ave | Mesa | AZ | 85204 | United States | |||||
0059 | 7204 Canoga Ave | Canoga Park | CA | 91303 | United States | |||||
0060 | 3133 E Douglas Ave | Wichita | KS | 67211 | United States | |||||
0061 | 7460 W Cheyenne Ave Suite #110 | Las Vegas | NV | 89129 | United States | |||||
0062 | 5067 E Owens Ave | Las Vegas | NV | 89110 | United States | |||||
0063 | 100 N Raymond Ave | Fullerton | CA | 92831 | United States | |||||
0064 | 1895 S Federal Blvd | Denver | CO | 80219 | United States | |||||
0065 | 1220 W Crawford St | Salina | KS | 67401 | United States | |||||
0066 | 1221 Main St | Pasadena | TX | 77506 | United States | |||||
0067 | 5506 Bellaire Blvd Suite # A | Houston | TX | 77081 | United States | |||||
0068 | 2812 N Main St. | Ft. Worth | TX | 76106 | United States | |||||
0069 | 454 W Florence Ave Suite # 102 & 103 | Los Angeles | CA | 90003 | United States | |||||
0070 | 11830 Bellaire Blvd Suite # A | Houston | TX | 77072 | United States | |||||
0071 | 1160 Edgebrook Dr | Houston | TX | 77034 | United States | |||||
0072 | 883 Federal Rd Suite # A | Houston | TX | 77015 | United States | |||||
0073 | 8602 S Braeswood Blvd | Houston | TX | 77031 | United States | |||||
0074 | 800 E Seminary Dr | Ft. Worth | TX | 76115 | United States | |||||
0075 | 6902 Harrisburg Blvd | Houston | TX | 77011 | United States | |||||
0076 | 1503 N Story Suite # 100 | Dallas | TX | 75061 | United States | |||||
0077 | 13482 Northwest Fwy Suite 100 | Houston | TX | 77022 | United States | |||||
0078 | 2601 S Hampton Rd. | Dallas | TX | 75224 | United States | |||||
0079 | Suite # 102 | Mesquite | TX | 75150 | United States | |||||
0080 | 3422 W. Walnut St | Garland | TX | 75042 | United States | |||||
0081 | 8569 Long Point Rd | Houston | TX | 77055 | United States | |||||
0082 | 1445 E Kiest | Dallas | TX | 75216 | United States | |||||
0083 | 860 S 11th St Suite # 105 | Beaumont | TX | 77701 | United States | |||||
0084 | 690 E Prater Way | Sparks | NV | 89431 | United States | |||||
0085 | 815 E Pioneer Pkwy | Arlington | TX | 76010 | United States | |||||
0100 | 4209 E Lancaster | Ft Worth | TX | 76103 | United States | |||||
0101 | 1212 S Belt Hwy | St Joseph | MO | 64507 | United States | |||||
0102 | 7007 Bandera Rd Suite # 24 | Leon Valley | TX | 78238 | United States | |||||
0103 | 1360 W Cheyenne Suite # 101 | N Las Vegas | NV | 89032 | United States | |||||
0104 | 1701 Babcock Rd | San Antonio | TX | 78229 | United States | |||||
0105 | 2949 S National Ave | Springfield | MO | 65804 | United States | |||||
0106 | 3802 S Gessner Suite # A | Houston | TX | 77063 | United States | |||||
0107 | 3706 Northwest Hwy | Dallas | TX | 75220 | United States | |||||
0108 | 1501 Eastern Blvd | Montgomery | AL | 36117 | United States | |||||
0109 | 10201 Lake June Rd | Dallas | TX | 75217 | United States | |||||
0110 | 7434 Airline Dr | Houston | TX | 77076 | United States | |||||
0111 | 2027 SW Fairlawn Rd | Topeka | KS | 66604 | United States | |||||
0112 | 321 Palisades Blvd | Birmingham | AL | 35209 | United States | |||||
0113 | 2332 Civic Center Dr | N Las Vegas | NV | 89030 | United States | |||||
0114 | 2647 Culebra Rd | San Antonio | TX | 78228 | United States | |||||
0115 | 6401 Airport Blvd Ste B | Mobile | AL | 36608 | United States | |||||
0116 | 3410 Hwy 69 N | Northport | AL | 35473 | United States | |||||
0117 | 5532 Manchaca Rd | Austin | TX | 78745 | United States | |||||
0118 | 4009 S. Padre Island Drive | Corpus Christi | TX | 78401 | United States | |||||
0119 | 10884 West Bellfort St | Houston | TX | 77099 | United States | |||||
0120 | 400 W. University Drive | Denton | TX | 76201 | United States | |||||
0121 | 1924 South Business 77 | Harlingen | TX | 78550 | United States | |||||
0122 | 5900 Brainerd Rd | Chattanooga | TN | 37411 | United States |
2 | Vacant building used for storage and parking for adjacent store |
ANNEX B
to
SECURITY AGREEMENT
0123 | 848 East Sibley Blvd | Dolton | IL | 60419 | United States | |||||
0124 | 7201 Balboa Blvd | Van Nuys | CA | 91406 | United States | |||||
0125 | 11100 S Cicero Ave | Alsip | IL | 60803 | United States | |||||
0126 | 4126301 WNWewarm Springs Rd | Henderson | NV | 89014 | United States | |||||
0127 | Ste 2 & 3 | San Antonio | TX | 78202 | United States | |||||
0128 | 8701 S Cottage Grove Ave | Chicago | IL | 60619 | United States | |||||
0129 | 1103 Fair Avenue, Ste 1 | San Antonio | TX | 78210 | United States | |||||
0130 | 4403 Chapman Highway | Knoxville | TN | 37920 | United States | |||||
0131 | 120 Gallatin Pike S. Unit B | Madison | TN | 37115 | United States | |||||
0132 | 2401 Nolensville Pike | Nashville | TN | 37211 | United States | |||||
0133 | 4800 W Addison St | Chicago | IL | 60641 | United States | |||||
0134 | 5445 South Street | Lakewood | CA | 90713 | United States | |||||
0135 | 7855 Van Nuys Blvd | Panorama City | CA | 91402 | United States | |||||
0136 | 13722 Sherman Way | Van Nuys | CA | 91405 | United States | |||||
0137 | 5701 Charlotte Pike | Nashville | TN | 37209 | United States | |||||
0138 | 1931 N Mannheim Rd | Melrose Park | IL | 60160 | United States | |||||
0139 | 120 W. Baseline Rd | Rialto | CA | 92376 | United States | |||||
0140 | 1552 W 119th St | Chicago | IL | 60643 | United States | |||||
0141 | 932 Ann Street | Montgomery | AL | 36107 | United States | |||||
0142 | 229 W Anaheim Street | Wilmington | CA | 90744 | United States | |||||
0143 | 5002 Harding Place | Nashville | TN | 37211 | United States | |||||
0144 | 1801 W. 6th Street | Los Angeles | CA | 90057 | United States | |||||
0145 | 106 Knox Rd | Knoxville | TN | 37918 | United States | |||||
0146 | 380 Broadway, Ste 103 | El Cajon | CA | 92021 | United States | |||||
0147 | 3615 McFarland Blvd, Ste 109 | Tuscaloosa | AL | 35405 | United States | |||||
0148 | 9240 Highway 49 | Gulfport | MS | 39503 | United States | |||||
0149 | 13545 Florence Ave | Whittier | CA | 90605 | United States | |||||
0175 | 1521 N 10th Street | McAllen | TX | 78501 | United States | |||||
0176 | 7120 San Bernardo Avenue | Laredo | TX | 78041 | United States | |||||
0177 | 2119 E Saunders | Laredo | TX | 78041 | United States | |||||
0178 | 695 S. Sam Houston | San Benito | TX | 78586 | United States | |||||
0179 | 4298 University Drive NW | Huntsville | AL | 35816 | United States | |||||
0180 | 4217 W. Waco Dr | Waco | TX | 76710 | United States | |||||
0181 | 1426148 S. CiceLroakAeve | Chicago | IL | 60638 | United States | |||||
0182 | Ste 120 | Aurora | IL | 60506 | United States | |||||
0184 | 2201 N Frazier | Conroe | TX | 77301 | United States | |||||
0185 | 1698 Memorial Blvd | Murfreesboro | TN | 37129 | United States | |||||
0186 | 2785 Belle Chasse Highway | Gretna | LA | 70056 | United States | |||||
0187 | 808 25th Street NW | Cleveland | TN | 37311 | United States | |||||
0188 | 1655 Fort Campbell Blvd | Clarksville | TN | 37042 | United States | |||||
0189 | 3100 Dickerson Pike | Nashville | TN | 37207 | United States | |||||
0190 | 13263 Van Nuys Blvd | Pacoima | CA | 91311 | United States | |||||
0191 | 2102 Goliad Rd, Ste 1 | San Antonio | TX | 78223 | United States | |||||
0192 | 972 Bandera Rd | San Antonio | TX | 78228 | United States | |||||
0193 | 10828 Florida Blvd | Baton Rouge | LA | 70815 | United States | |||||
0194 | 501 S Conway Ave | Mission | TX | 78572 | United States | |||||
0195 | 1029 West Avenue I | Lancaster | CA | 92411 | United States | |||||
0196 | 2955 E Texas St | Bossier City | LA | 71111 | United States | |||||
0197 | 123 Gause Blvd West | Slidell | LA | 70460 | United States | |||||
0198 | 25010 Alessandro Blvd | Moreno Valley | CA | 92553 | United States | |||||
0201 | 6702 South Congress Avenue | Austin | TX | 78745 | United States | |||||
0202 | 9616 N. Lamar Blvd., Suite 199 | Austin | TX | 78753 | United States | |||||
0203 | 11643-B Research Blvd. | Austin | TX | 78759 | United States | |||||
0204 | 2818 South Lamar Blvd. | Austin | TX | 78704 | United States | |||||
0205 | 907-B IH 35 | Round Rock | TX | 78664 | United States | |||||
0206 | 510 North Bell Blvd., Suite 104 | Cedar Park | TX | 78613 | United States | |||||
0207 | 7201 Cameron Road | Austin | TX | 78752 | United States | |||||
0208 | 2030 East Oltorf #102B | Austin | TX | 78741 | United States |
ANNEX B
to
SECURITY AGREEMENT
0209
|
3840 Airport Blvd. | Austin | TX | 78722 | United States | |||||
0211 | 706 East Hopkins | San Marcos | TX | 78666 | United States | |||||
0212 | 3706 Guadalupe Street, Ste. D | Austin | TX | 78705 | United States | |||||
0214 | 2008 W. Parmer | Austin | TX | 78727 | United States | |||||
0222 | 11217 Leopard Street, Suite 1 | Corpus Christi | TX | 78410 | United States | |||||
0225 | 4701 Ayers, Suite 600-10 | Corpus Christi | TX | 78415 | United States | |||||
0226 | 3710 Leopard Street | Corpus Christi | TX | 78408-3208 | United States | |||||
0231 | 5110 Fredericksburg Road | San Antonio | TX | 78229 | United States | |||||
0232 | 12804 Nacogdoches Road | San Antonio | TX | 78217 | United States | |||||
0233 | 2905 West Avenue | San Antonio | TX | 78201 | United States | |||||
0234 | 1304 S.W. Military Drive | San Antonio | TX | 78221 | United States | |||||
0236 | 8542 Blanco Road | San Antonio | TX | 78216 | United States | |||||
0237 | 3927 West Commerce Street | San Antonio | TX | 78207 | United States | |||||
0238 | 1005 Pat Booker Road | Universal City | TX | 78148 | United States | |||||
0241 | 406 Old Highway 90 West | San Antonio | TX | 78237-1851 | United States | |||||
0242 | 6040 Ingram Road | San Antonio | TX | 78238 | United States | |||||
0245 | 10602 Perrin Beitel Road | San Antonio | TX | 78217 | United States | |||||
0246 | 5510 Walzem Road | San Antonio | TX | 78218-2103 | United States | |||||
0247 | 2006 Veterans Blvd. | Del Rio | TX | 78840 | United States | |||||
0248 | 5129-A West Avenue | San Antonio | TX | 78213 | United States | |||||
0249 | 4515-2 Fredericksburg Road | Balcones Heights | TX | 78201 | United States | |||||
0250 | 2514 White Blvd | Austin | TX | 78741-7163 | United States | |||||
0251 | 1204-A Highway 123 | San Marcos | TX | 78666 | United States | |||||
0253 | 11300-C Pollyanna | Austin | TX | 78753 | United States | |||||
0258 | 3601 W. William Cannon #400 | Austin | TX | 78749 | United States | |||||
0259 | 1505-C Wells Branch Parkway | Pflugerville | TX | 78660 | United States | |||||
0263 | 7112 Ed Bluestein Blvd., Suite 177 | Austin | TX | 78723 | United States | |||||
0264 | 1909 East William Cannon, Suite 101 | Austin | TX | 78744 | United States | |||||
0266 | 8606 Research Blvd. | Austin | TX | 78758 | United States | |||||
0267 | 2237 E. Riverside, Suite 101-D | Austin | TX | 78741 | United States | |||||
0270 | 3010 Nogalitos | San Antonio | TX | 78225 | United States | |||||
0271 | 10650 Culebra Road, Suite 128 | San Antonio | TX | 78251-1320 | United States | |||||
0273 | 1107 South W.W. White Road | San Antonio | TX | 78220 | United States | |||||
0276 | 5886 DeZavala Road, Suite 103 | San Antonio | TX | 78249 | United States | |||||
0277 | 1107 San Pedro, Suite 101 | San Antonio | TX | 78212 | United States | |||||
0278 | 931 S. General McMullen Drive | San Antonio | TX | 78237 | United States | |||||
0280 | 6851 West Military Drive, Suite 101 | San Antonio | TX | 78227 | United States | |||||
0281 | 3138 S.E. Military Drive, Suite 101 | San Antonio | TX | 78235 | United States | |||||
0282 | 2337 S.W. Military Drive | San Antonio | TX | 78224 | United States | |||||
0283 | 8770 State Highway 151, Suite 105 | San Antonio | TX | 78245 | United States | |||||
0284 | 6338 Old Pearsall Road, Suite 101 | San Antonio | TX | 78242 | United States | |||||
0300 | 1021 Highway 39 Bypass | Meridian | MS | 39301 | United States | |||||
0302 | 6686 El Cajon Blvd, Ste F | San Diego | CA | 92115 | United States | |||||
0303 | 9360 Mansfield Road | Shreveport | LA | 71118 | United States | |||||
0304 | 8320 FM 78, STE 3 | Converse | TX | 78109 | United States | |||||
0305 | 1729 NW Topeka Blvd | Topeka | KS | 66608 | United States | |||||
0306 | 3555 W. Slauson Ave | Los Angeles | CA | 90043 | United States | |||||
0307 | 123 E Vernon Ave | Los Angeles | CA | 90011 | United States | |||||
0308 | 11401 S. Figueroa | Los Angeles | CA | 90061 | United States | |||||
0309 | 175402W CompHtownyBlvd | Compton | CA | 90220 | United States | |||||
0310 | Ste #101 | San Antonio | TX | 78218 | United States | |||||
0311 | 4650 S FM 1626 | Kyle | TX | 78640 | United States | |||||
1501 | 2137 Jane St | Downsview | ON | M3M1A2 | Canada | |||||
1502 | 2363 Finch Ave West | Weston | ON | M9M2W8 | Canada | |||||
1503 | 2687 Kipling Ave, Unit 4, | Etobicoke | ON | M9V 5G6 | Canada | |||||
1504 | 1876 Kennedy Rd | Scarborough | ON | M1P 2L8 | Canada | |||||
1505 | 6020 Hurontario St unit 6 | Mississauga | ON | L5R 4B3 | Canada | |||||
1506 | 1733 Eglinton Ave E, Unit 5 | NorthYork | ON | M4A 1J8 | Canada |
ANNEX B
to
SECURITY AGREEMENT
1507 | 1180 Simcoe St North, Unit 7 | Oshawa | ON | L1G 4W8 | Canada | |||||
1508 | 346 King Street West | Oshawa | ON | L1J2J9 | Canada | |||||
1510 | 644 Yonge St | Toronto | ON | M4W 1J5 | Canada | |||||
1511 | 10 Gillingham Dr, Unit 103 | Brampton | ON | L6X 5A5 | Canada | |||||
1512 | 1403 Dundas St East | Mississauga | ON | L4X 1L3 | Canada | |||||
1514 | 2394 Eglinton Ave East, | Scarborough | ON | M1K 2M5 | Canada | |||||
1515 | 3024 Hurontario St, Unit #G11 | Mississauga | ON | L5A 2G9 | Canada | |||||
1516 | 4500 Kingston Rd, Unit 3 | Scarborough | ON | M1E 2N8 | Canada | |||||
1517 | 3182 Eglinton Ave East, | Scarborough | ON | M1J 2H5 | Canada | |||||
1518 | 2966 Danforth Ave, | Scarborough | ON | M4C 1M6 | Canada | |||||
1519 | 1839 Finch Avenue West #54 | Toronto | ON | M3N 2V2 | Canada | |||||
1520 | 1682 Jane Street | Toronto | ON | M9N 1G8 | Canada | |||||
1522 | 61 King St East | Hamilton | ON | L8N 1A5 | Canada | |||||
1523 | 1396 Main St | Hamilton | ON | L8H 2S8 | Canada | |||||
1524 | 171 Bank St, Unit 124 | Ottawa | ON | K2P 1W5 | Canada | |||||
1525 | 275 Monteal Road | Ottawa | ON | K1L 6C2 | Canada | |||||
1526 | 2301 Tecumseh Rd, East Unit 110 | Windsor | ON | N8W 1E6 | Canada | |||||
1527 | 596 Ouellette Avenue | Windsor | ON | N9A 1B7 | Canada | |||||
1530 | 1530 Albion Rd, Unit 100 | Etobicoke | ON | M9V 1B4 | Canada | |||||
1531 | 135 Wyse Road, Unit 1&2 | Dartmouth | NS | B3A 4K9 | Canada | |||||
1533 | 4040-4080, Hwy7, Unit1 | Woodbridge | ON | L4L 8Z2 | Canada | |||||
1534 | 550 Hespeler Rd | Cambridge | ON | N1R 6J8 | Canada | |||||
1535 | 357 1/2 Yonge St | Toronto | ON | M5B 1S1 | Canada | |||||
1536 | 69 Davis Drive | Newmarket | ON | M9W 5X9 | Canada | |||||
1537 | 2057 Royal Windsor Unit 1 | Mississauga | ON | L5J 1K5 | Canada | |||||
1538 | 756 Yonge St | Toronto | ON | M4Y 2B6 | Canada | |||||
1539 | 1414 Lasalle Blvd, Unit 101 | Sudbury | ON | P3A 1Z6 | Canada | |||||
1540 | 2535 Bank St | Ottawa | ON | K1V 8R9 | Canada | |||||
1541 | 4396 King St East, | Kitchener | ON | N2G 3W6 | Canada | |||||
1542 | 2200 Queen St, Unit 6, | Brampton | ON | L6S 4G9 | Canada | |||||
1543 | 3932 Keele St, | NorthYork | ON | M3J 1N8 | Canada | |||||
1544 | 1384 Wellington Rd S, Unit 4 | London | ON | N6E 1M3 | Canada | |||||
1545 | 5487 Dundas St W, Unit 5 | Mississauga | ON | M9B 1B5 | Canada | |||||
1546 | 1541 Merivale Rd, Unit B | Ottawa | ON | K2G 5W1 | Canada | |||||
1547 | 372 Queen St East | Brampton | ON | L6V 1C3 | Canada | |||||
1548 | 1450 Kingston Rd | Pickering | ON | L1V 1C1 | Canada | |||||
1549 | 2131 Lawrence Ave E, #106 | Toronto | ON | M1R 5G4 | Canada | |||||
1550 | 9555 Yonge St, Unit #25 | Richmond Hill | ON | L4C 9M5 | Canada | |||||
1551 | 15523 - 118th Avenue | Edmonton | AB | T5V 1C5 | Canada | |||||
1553 | 1650 Bath Road | Kingston | ON | K7M 4X6 | Canada | |||||
1554 | 311 Henderson Hwy. | Winnipeg | MB | R2L 1M4 | Canada | |||||
1556 | 3504-17th Avenue S.E. | Calgary | AB | R2A 0R7 | Canada | |||||
1557 | 1353 McPhillips St | Winnipeg | MB | R2X 3A6 | Canada | |||||
1558 | 9847 - 63rd Avenue | Edmonton | AB | T6E 0G7 | Canada | |||||
1560 | 11803 - 125th Street | Edmonton | AB | T5L 0S1 | Canada | |||||
1561 | 7165 - 7171 Chebucto Road | Halifax | NS | B3L 1N5 | Canada | |||||
1563 | 14339 MacLeod Trail South | Calgary | AB | T2Y 1M7 | Canada | |||||
1564 | 9626 - 165th Ave | Edmonton | AB | T5Z 3L3 | Canada | |||||
1565 | 1299 Oxford St E | London | ON | N5Y4W5 | Canada | |||||
1566 | 10007 - 170th St | Edmonton | AB | T5P4R5 | Canada | |||||
1567 | 113 Rideau St | Ottawa | ON | K1N 5X1 | Canada | |||||
1568 | 158 Gray Rd, Unit #3 | Stoney Creek | ON | L8G3V2 | Canada | |||||
1569 | 7460 - 82nd Ave | Edmonton | AB | T6B0G2 | Canada | |||||
1570 | 62 Overlea Blvd, Unit 4 | Toronto | ON | M4H1C4 | Canada | |||||
1571 | 4604 MacLeod Trail SW Unit F | Calgary | AB | T2G5E8 | Canada | |||||
1572 | 748 Guelph Line | Burlington | ON | L7R3N5 | Canada | |||||
1573 | 1321 Rue Archibald | Winnipeg | MB | R2J3A4 | Canada | |||||
1574 | 471 Hazeldean Rd, Unit #1 | Kanata | ON | K2L4B8 | Canada |
ANNEX B
to
SECURITY AGREEMENT
1575 | 13737-127th St | Edmonton | AB | T6V 1A8 | Canada | |||||
1576 | 75 Ellesmere Rd Unit B2 | Scarborough | ON | M1R4B7 | Canada | |||||
1577 | 2712 Keele St | Toronto | ON | M3M 2G1 | Canada | |||||
1578 | 883 St. Claire Ave West | Toronto | ON | M6E 1B9 | Canada | |||||
1579 | 1795 St. Clair Avenue West | Toronto | ON | M9N 1J7 | Canada | |||||
1581 | 3111 Dufferin St., Unit A3 | NorthYork | ON | M6A 2S7 | Canada | |||||
1582 | 11736-34th St. E | Edmonton | AB | T5W1Z1 | Canada | |||||
1583 | 2071 Steeles Ave West | Toronto | ON | M3J3N3 | Canada | |||||
1584 | 2280 Islington Ave | Toronto | ON | M9W3W8 | Canada | |||||
1585 | 2250-50th Ave 1B | Red Deer | AB | T4R1W6 | Canada | |||||
1586 | Centre 222, 16th Ave NE 12&13 | Calgary | AB | T2E 1J8 | Canada | |||||
1589 | 647 Portage Ave | Winnipeg | MB | R3B 2G4 | Canada | |||||
1590 | 13737-72nd Ave | Surrey | BC | V3W 2P2 | Canada | |||||
1591 | 7287 Knight St | Vancouver | BC | V5P 2W9 | Canada | |||||
1592 | 10558 King George Hwy | Vancouver | BC | V3T 2X3 | Canada | |||||
1593 | 20221 Fraser Hwy | Langely | BC | V3A 4E4 | Canada | |||||
1595 | 103 B 8386 120th St | Surrey | BC | V3W 3N4 | Canada | |||||
1596 | 740 Columbia St. | New West | BC | V3M 1B3 | Canada | |||||
1597 | 324 Guelph St | Georgetown | ON | L7G 4B5 | Canada | |||||
1598 | 250 King George Rd #4 | Brantford | ON | N3R 5L5 | Canada | |||||
1599 | 347 Bayfield St. Unit 2A | Barrie | ON | L4M 3C3 | Canada | |||||
1600 | 4490 Fairview Ave Unit #102 | Burlington | ON | L7L 5P9 | Canada | |||||
1601 | 221 Woodlawn Rd. W B7 | Guelph | ON | N1H 8P4 | Canada | |||||
1602 | 3245 Finch AveE Unit 1 | Scarborough | ON | M1W 4C1 | Canada | |||||
1603 | 965 Talbot Street, Unit #D | St. Thomas | ON | N5P 1E8 | Canada | |||||
1604 | 260 Geneva Street | St. Catherines | ON | L2N 2E8 | Canada | |||||
1605 | 451 Paul St. | Dieppe | NB | E1A 6W8 | Canada | |||||
1606 | 6734-6758 #2 Lundys Lane | Niagara Falls | ON | L2G 1V5 | Canada | |||||
1607 | 687 Queen Street West | Toronto | ON | M6J 1E6 | Canada | |||||
1608 | 2 - 44 Mapleview Drive West | Barrie | ON | L4N 6L4 | Canada | |||||
1609 | 2 - 525 Highland Road West | Kitchener | ON | N2M 5K1 | Canada | |||||
1610 | 970 Upper James Street | Hamilton | ON | L9C 3A5 | Canada | |||||
1611 | 212A Queen Street East | Brampton | ON | L6V 1B7 | Canada | |||||
1612 | 736a Queenston Road | Hamilton | ON | L8G 1A4 | Canada | |||||
1613 | 576 Ritson Road South | Oshawa | ON | L1H 5K7 | Canada | |||||
1614 | 13552 - 97 Street | Edmonton | AB | T5E 4E2 | Canada | |||||
1615 | 15640 Stony Plain Road | Edmonton | AB | T5P 3Z4 | Canada | |||||
1618 | 6060 Memorial Drive NE #18 | Calgary | AB | T2A 5Z5 | Canada | |||||
1619 | 371 Wellington Rd S Unit A | London | ON | N6C 4P9 | Canada | |||||
1620 | 644 Portland Street | Dartmouth | NS | B2W 2M3 | Canada | |||||
1621 | 6219 Centre Street NW | Calgary | AB | T2K 0V2 | Canada | |||||
1622 | 158 Dundas Street | London | ON | N6A 1G1 | Canada | |||||
1623 | 1015 Granville Street | Vancouver | BC | V6Z 1L4 | Canada | |||||
1624 | 1248 Robson Street | Vancouver | BC | V6E 1C1 | Canada | |||||
1625 | Unit 26 - 5010 4th Street NE | Calgary | AB | T2K 5X8 | Canada | |||||
1626 | 3703 - 17th Avenue SE | Calgary | AB | T2A 0S1 | Canada | |||||
1627 | 100-6061 No.3 Road | Richmond | BC | V6Y 2B2 | Canada | |||||
1628 | 1192 Burrard Street | Vancouver | BC | V6Z 1Y7 | Canada | |||||
1629 | 13040 - 50th Street | Edmonton | AB | T5A 4V9 | Canada | |||||
1630 | 7475 Tecumseh Road, Unit 1 | Windsor | ON | N8T 1G2 | Canada | |||||
1631 | Bay 18- 9250 MacLeod Trail SE | Calgary | AB | T2J 0P5 | Canada | |||||
1632 | 3 Harwood Ave., S Unit 1 & 2 | Ajax | ON | L1S 2C1 | Canada | |||||
1633 | 1593 Bank Street | Ottawa | ON | K1H 7Z3 | Canada | |||||
1634 | 304 Dunlop Street Unit 11-13 | Barrie | ON | L4N 7N2 | Canada | |||||
1635 | 1050 - Terminal A | Nanimo | BC | V9S 4K4 | Canada | |||||
1636 | 101 - 1483 Douglas Street | Victoria | BC | V8W 2G1 | Canada | |||||
1637 | 844 Niagara St., Unit A Building C | Welland | ON | L3C 1M3 | Canada | |||||
1638 | 202 - 3214 Douglas Street | Victoria | BC | V8Z 3K6 | Canada |
ANNEX B
to
SECURITY AGREEMENT
1639 | 2490 Main Street | Vancouver | BC | V5T 3E2 | Canada | |||||
1640 | 1248 London Road | Sarnia | ON | N7S 1P5 | Canada | |||||
1641 | 997 St. Laurent Blvd | Ottawa | ON | K1K 3B1 | Canada | |||||
1643 | 2390 East Hastings Street | Vancouver | BC | V5L 1V6 | Canada | |||||
1644 | 2659 Dundas St., West | Toronto | ON | M6P 1X9 | Canada | |||||
1645 | 1771 Queen Street East | Brampton | ON | L6T 4S3 | Canada | |||||
1646 | 276 Rexdale Road | Etobicoke | ON | M9W 1R2 | Canada | |||||
1647 | 3095 Robie Street | Halifax | NS | B3K 4P7 | Canada | |||||
1648 | 1375 Huron Church Rd | Windsor | ON | N9C 2B4 | Canada | |||||
1649 | 475 Albert St. | Regina | SK | S4R 2P1 | Canada | |||||
1650 | 1080 Memorial Drive Unit 1 | Thunder Bay | ON | P7B 4A3 | Canada | |||||
1651 | 820 Red River Road | Thunder Bay | ON | P7B 1K2 | Canada | |||||
1652 | 947 Lansdowne St., W | Peterborough | ON | K9J1Z5 | Canada | |||||
1653 | 52 Elm St | Sudbury | ON | P3C 1S7 | Canada | |||||
1654 | 851 Danforth Ave. | Toronto | ON | M4J 1L2 | Canada | |||||
1655 | 2720 Mayor Magrath Dr. South | Lethbridge | AB | T1K 7J5 | Canada | |||||
1656 | 460 Main St West | Hamilton | ON | L8P 1K7 | Canada | |||||
1657 | 3202 Dunmore Rd. SE | Medicine Hat | AB | T1B 2X2 | Canada | |||||
1658 | 78 Gordon Street | Guelph | ON | N1H 4H4 | Canada | |||||
1659 | 677 Princess St | Kingston | ON | K7L 1E6 | Canada | |||||
1660 | 22444 Lougheed Hwy | Maple Ridge | BC | V2X 2T6 | Canada | |||||
1661 | 2115- 22nd St West | Saskatoon | SK | S7M 0V2 | Canada | |||||
1662 | 5587 Yonge St | North York | ON | M2N 5S4 | Canada | |||||
1663 | 1303- 3rd Ave S. | Lethbridge | AB | T1J 0K4 | Canada | |||||
1664 | unit 100- 33258 South Fraser Way | Abbotsford | BC | V2S 2B3 | Canada | |||||
1665 | 357 Great Northern Rd. | Sault Ste. Marie | ON | P6B 4Z8 | Canada | |||||
1666 | 2000 St Joseph Blvd. | Orleans | ON | K1C 1E6 | Canada | |||||
1667 | 2090 Harvey Ave Unit 3 | Kelowna | BC | V1Y 8P8 | Canada | |||||
1668 | 1501 Idylwyld Dr. N | Saskatoon | SK | S7L 1A9 | Canada | |||||
1669 | 808 Sackville Dr. | Lower Sackville | NS | B4E 1R8 | Canada | |||||
1670 | 550 Arthur St. West | Thunder Bay | ON | P7E 5R4 | Canada | |||||
1671 | 11802 Jasper Ave NW | Edmonton | AB | T5K 0N7 | Canada | |||||
1672 | 2017 Robertson Rd | Ottawa | ON | K2H 5Y7 | Canada | |||||
1673 | 1315 Richmond Rd. Suite 1 | Ottawa | ON | K2B 7Y4 | Canada | |||||
1674 | 101 Victoria Ave east | Regina | SK | S4N 0N3 | Canada | |||||
1675 | 7686 Hurontario St. | Brampton | ON | L6Y 5B5 | Canada | |||||
1676 | 2031 Cassells St. | North Bay | ON | P1B 4E1 | Canada | |||||
1677 | 3601 Lawrence Ave East, Unit 2 | Toronto | ON | M1G 1P5 | Canada | |||||
1678 | 358 Norwich Ave | Woodstock | ON | N4S 3W2 | Canada | |||||
1679 | 20- 789 Fortune Dr. | Kamloops | BC | V2B 2L3 | Canada | |||||
1680 | 6912 Kingsway | Burnaby | BC | V5E 1E6 | Canada | |||||
1681 | 35 Front St. South | Orillia | ON | L3V 4S1 | Canada | |||||
1682 | 1549 Dundas St. East | Whitby | ON | L1N 2K6 | Canada | |||||
1683 | 1 Hespler Rd. Unit B01001A | Cambridge | ON | N1R 8L4 | Canada | |||||
1684 | 120-45863 Yale Rd | Chilliwack | BC | V2P 2N6 | Canada | |||||
1686 | 139063- 51st St EaSstreet | Saskatoon | SK | S7K 8G2 | Canada | |||||
1687 | unit 1 | Brantford | ON | N3S 3T7 | Canada | |||||
1688 | 735 The Queensway | Toronto | ON | M8Z 1M8 | Canada | |||||
1689 | 6614- 127th ave | Edmonton | AB | T5C 1P9 | Canada | |||||
1690 | 581 Ryan Rd unit B | Courtenay | BC | V9N 3R5 | Canada | |||||
1691 | 274 North Front Street | Belleville | ON | K8P 3C4 | Canada | |||||
1692 | 5852 Trans Canada Hwy | Duncan | BC | V9L 3S1 | Canada | |||||
1693 | 210- 15th St. West | Prince Albert | SK | S6V 3P8 | Canada | |||||
1694 | 905 37th St Southwest | Calgary | AB | T3C 1S5 | Canada | |||||
1695 | 1575 Eglinton Avenue West | Toronto | ON | M6E 2G9 | Canada | |||||
1696 | 5890 Main Street | Niagara Falls | ON | L2G 5Z8 | Canada | |||||
1697 | 12405 107 avenue | Edmonton | AB | T5M 1Z2 | Canada | |||||
1698 | 239 Scarlett Rd | Toronto | ON | M6N 4K8 | Canada |
ANNEX B
to
SECURITY AGREEMENT
1699 | 648 King St West | Kitchener | ON | N2G 1E1 | Canada | |||||
1700 | 400 Steeles Avenue East #6 | Brampton | ON | L6W 3R2 | Canada | |||||
1701 | 525 Grand Avenue West | Chatham | ON | N7L 1C5 | Canada | |||||
1703 | 6172 Bathurst St | Toronto | ON | M2R 2A2 | Canada | |||||
1704 | 72 Lakeshore Drive | North Bay | TBD | P1A 2A6 | Canada | |||||
1705 | 906 Marine Drive | North Vancouver | BC | V7P 1R9 | Canada | |||||
1706 | 10737 Yonge St. Unit 1 | Richmond Hill | ON | L4C 9M9 | Canada | |||||
1707 | 320 Speers Rd | Oakville | ON | L6K 3R9 | Canada | |||||
1708 | 209- 1735 Kipling Avenue | Etobicoke | ON | M9R 2Y8 | Canada | |||||
1709 | 4- 3104 27th St. | Vernon | TBD | V1T 4M6 | Canada | |||||
1710 | 2130- 1475 Prairie Avenue | Port Coquitlam | BC | V3B 1T3 | Canada | |||||
2500 | 410 Brixton Road | Brixton | LD | SW97AW | United Kingdom | |||||
2501 | 232 Kilburn High Rd | Kilburn | LD | NW6 4JP | United Kingdom | |||||
2502 | 119 Peckham High Street | Peckham | LD | SE15 5SL | United Kingdom | |||||
2503 | 8-10 Cranbrook Road | Ilford | LD | IG1 4DJ | United Kingdom | |||||
2504 | 269/271 Walworth Ave | Walworth | LD | SE17 1RL | United Kingdom | |||||
2505 | 60 Uxbridge Rd | Shepherds Bush | LD | W12 8LP | United Kingdom | |||||
2506 | 135A High Street North | East Ham | LD | E6 1HZ | United Kingdom | |||||
2507 | 19 The Broadway High Road | Wood Green | LD | N22 6DS | United Kingdom | |||||
2509 | Unit 38 Hankinson Way | Salford | GM | M6 5JA | United Kingdom | |||||
2511 | 48 Kingsland High Street | Dalston | LD | E8 2JP | United Kingdom | |||||
2512 | 100B Bull Street | Birmingham | W Mid | B4 7AA | United Kingdom | |||||
2513 | 49 Upper Parliament Street | Nottingham | NG | NG12AB | United Kingdom | |||||
2519 | 3-5 The Bridge | Walsall | W Mid | WS1 1LG | United Kingdom | |||||
2520 | 105a Commercial Road | Portsmouth | Ham | PO11BQ | United Kingdom | |||||
2521 | 530 High Road | Wembley | LD | HA9 7BS | United Kingdom | |||||
2522 | 83 Above Bar Street | Southampton | Ham | So14 7FG | United Kingdom | |||||
2523 | 175 North End | Croydon | Sur | CR0 1TP | United Kingdom | |||||
2524 | 135 Commercial Street | Newport | Gwent | NP20 1LY | United Kingdom | |||||
9001 | 3527 N Ridge Rd | Wichita | KS | 67205 | United States | |||||
9002 | 3531 N Ridge Rd 2nd Floor | Wichita | KS | 67205 | United States | |||||
9003 | 3611 N Ridge Rd Suite # 101, 103 | Wichita | KS | 67206 | United States | |||||
9004 | 3607 N Ridge Rd Ste 106 | Wichita | KS | 67205 | United States | |||||
9005 | 8400 E 32nd St N | Wichita | KS | 67226 | United States | |||||
9008 | 30/34 Houndsgate | Nottingham | BX | NG17AB | United Kingdom | |||||
9011 | 14 Low Street | Keighley | BX | BD21 3PN | United Kingdom | |||||
9012 | 400 Carlingview Dr | Toronto | ON | M9W 5X9 | Canada | |||||
9013 | 3615 N Ridge Rd | Wichita | KS | 67205 | United States | |||||
9014 | 31 Wellington Street | Leeds | BX | LS1 4DL | United Kingdom | |||||
9016 |
440 North Wells Street, Suite 800 (main bldg address) 200 W. Hubbard St., Suite 800 (our private entrance) |
Chicago | IL | 60654 | United States |
closed location, under lease |
ANNEX C
to
SECURITY AGREEMENT
SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION
(AND WHETHER A REGISTERED ORGANIZATION), JURISDICTION OF
ORGANIZATION, LOCATION AND FEDERAL EMPLOYER IDENTIFICATION NUMBERS
Exact Legal Name of Each Assignor |
Type of Organization (or, if the Assignor is an Individual, so indicate) |
Registered
Organization? (Yes/No) |
Jurisdiction of
Organization |
Assignors Location (for purposes of NY UCC § 9-307) |
Assignors Federal
Employer Identification Number (or, if it has none, so indicate) |
|||||
Curo Financial Technologies Corp. |
Corporation |
Yes
|
Delaware
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Curo Intermediate Holdings Corp. |
Corporation |
Yes
|
Delaware
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Todd Financial, Inc. |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Curo Management LLC | Limited Liability Company |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
FMMR Investments, Inc. |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
EVERGREEN FINANCIAL INVESTMENTS, INC. |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
ANNEX C
to
SECURITY AGREEMENT
Exact Legal Name of Each Assignor |
Type of Organization (or, if the Assignor is an Individual, so indicate) |
Registered
Organization? (Yes/No) |
Jurisdiction of
Organization |
Assignors Location (for purposes of NY UCC § 9-307) |
Assignors Federal
Employer Identification Number (or, if it has none, so indicate) |
|||||
PRINCIPAL INVESTMENTS, INC. |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Todd Car Title, Inc. |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Speedy Cash |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
ADVANCE GROUP, INC. |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
CONCORD FINANCE, INC. |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
SCIL, Inc. |
Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Cash Colorado, LLC | Limited Liability Company |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
ANNEX C
to
SECURITY AGREEMENT
Exact Legal Name of Each Assignor |
Type of Organization (or, if the Assignor is an Individual, so indicate) |
Registered
Organization? (Yes/No) |
Jurisdiction of
Organization |
Assignors Location (for purposes of NY UCC § 9-307) |
Assignors Federal
Employer Identification Number (or, if it has none, so indicate) |
|||||
Galt Ventures, LLC | Limited Liability Company |
Yes
|
Kansas
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
A Speedy Cash Car Title Loans, LLC |
Limited Liability Company |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
SCIL Texas, LLC | Limited Liability Company |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Attain Finance, LLC | Limited Liability Company |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
SC Aurum, LLC | Limited Liability Company |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Avio Credit, Inc. |
Corporation |
Yes
|
Delaware
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
Speedy Cash Illinois, Inc. | Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
ANNEX C
to
SECURITY AGREEMENT
Exact Legal Name of Each Assignor |
Type of Organization (or, if the Assignor is an Individual, so indicate) |
Registered
Organization? (Yes/No) |
Jurisdiction of
Organization |
Assignors Location (for purposes of NY UCC § 9-307) |
Assignors Federal
Employer Identification Number (or, if it has none, so indicate) |
|||||
SC TEXAS MB, INC. | Corporation |
Yes
|
Nevada
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
|||||
The Money Store, L.P. | Limited partnership |
Yes
|
Texas
|
3527 North Ridge Road, Wichita, Kansas 67205 |
[****]
|
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
ANNEX D
to
SECURITY AGREEMENT
SCHEDULE OF TRADE AND FICTITIOUS NAMES
Current Legal Name |
Trade Names/Assumed Names |
|
Attain Finance, LLC | OPT+ | |
Curo Intermediate Holdings Corp. | Rapid Cash | |
Curo Intermediate Holdings Corp. | Speedy Cash |
ANNEX E
to
SECURITY AGREEMENT
DESCRIPTION OF CERTAIN SIGNIFICANT TRANSACTIONS OCCURRING WITHIN
ONE YEAR PRIOR TO THE DATE OF THE SECURITY AGREEMENT
Name of Assignor |
Description of any Transactions as required by Section 2.8 of the Security Agreement |
|
None. |
ANNEX F
to
SECURITY AGREEMENT
SCHEDULE OF DEPOSIT ACCOUNTS THAT ARE CONCENTRATION ACCOUNTS
Name of Assignor |
Description of Deposit
|
Account Number |
Name of Bank, Address
|
Jurisdiction of Bank
|
||||
Curo | Concentration | [****] | Wells Fargo | Kansas | ||||
Management | account for | Bank, N.A. | ||||||
LLC | Curo and the | |||||||
stores which are | Contact: Laura | |||||||
operated by all | Wheeler, | |||||||
Assignors | Relationship | |||||||
Manager | ||||||||
Wells Fargo | ||||||||
Commercial | ||||||||
Banking 7500 College Blvd. Ste 200 Overland Park, KS 66210 913-234-2904 Laura.m.wheeler@ wellsfargo.com |
[****] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
ANNEX G
to
SECURITY AGREEMENT
FORM OF CONTROL AGREEMENT REGARDING DEPOSIT ACCOUNTS
AGREEMENT (as amended, modified, restated and/or supplemented from time to time, this Agreement), dated as of , , among the undersigned assignor (the Assignor ) , not in its individual capacity but solely as Collateral Agent (the Collateral Agent ), and (the Deposit Account Bank ), as the bank (as defined in Section 9-102 of the UCC as in effect on the date hereof in the State of (the UCC )) with which one or more deposit accounts (as defined in Section 9-102 of the UCC) are maintained by the Assignor (with all such deposit accounts now or at any time in the future maintained by the Assignor with the Deposit Account Bank being herein called the Deposit Accounts ).
W I T N E S S E T H :
WHEREAS, the Assignor, various other assignors and the Collateral Agent have entered into a Security Agreement, dated as of September 1, 2017 (as amended, amended and restated, modified or supplemented from time to time, the Security Agreement ), under which, among other things, in order to secure the payment of the Guaranteed Obligations (as defined in the Security Agreement), the Assignor has granted a security interest to the Collateral Agent for the benefit of the Secured Parties (as defined in the Security Agreement) in all of the right, title and interest of the Assignor in and into any and all deposit accounts (as defined in Section 9-102 of the UCC) and in all monies, securities, instruments and other investments deposited therein from time to time (collectively, herein called the Collateral ); and
WHEREAS, the Assignor desires that the Deposit Account Bank enter into this Agreement in order to establish control (as defined in Section 9-104 of the UCC) in each Deposit Account at any time or from time to time maintained with the Deposit Account Bank, and to provide for the rights of the parties under this Agreement with respect to such Deposit Accounts.
NOW THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Assignors Dealings with Deposit Accounts; Notice of Exclusive Control . Until the Deposit Account Bank shall have received from the Collateral Agent a Notice of Exclusive Control (as defined below), the Assignor shall be entitled to present items drawn on and otherwise to withdraw or direct the disposition of funds from the Deposit Accounts and give instructions in respect of the Deposit Accounts; provided , however , that the Assignor may not, and the Deposit Account Bank agrees that it shall not permit the Assignor to, without the Collateral Agents prior written consent, close any Deposit Account. If the Collateral Agent shall give to the Deposit Account Bank a notice of the Collateral Agents exclusive control of the Deposit Accounts in accordance with Section 7.1 of the Security Agreement, which notice states that it is a Notice of Exclusive Control (a Notice of Exclusive Control ), only the Collateral Agent shall be entitled to withdraw funds from the Deposit Accounts, to give any instructions in respect of the Deposit Accounts and any funds held therein or credited thereto or otherwise to deal with the Deposit Accounts.
ANNEX G
to
SECURITY AGREEMENT
2. Collateral Agents Right to Give Instructions as to Deposit Accounts . (a) The Collateral Agent shall be entitled, for purposes of this Agreement, at any time after a Notice of Exclusive Control has been delivered to the Deposit Account Bank in accordance with the terms of this Agreement, to give the Deposit Account Bank instructions as to the withdrawal or disposition of any funds from time to time credited to any Deposit Account, or as to any other matters relating to any Deposit Account or any other Collateral, without consent from the Assignor. The Assignor hereby irrevocably authorizes and instructs the Deposit Account Bank, and the Deposit Account Bank hereby agrees, to comply with any such instructions from the Collateral Agent without any further consent from the Assignor. Such instructions may include the giving of stop payment orders for any items being presented to any Deposit Account for payment. The Deposit Account Bank shall be fully entitled to rely on, and shall comply with, such instructions from the Collateral Agent even if such instructions are contrary to any instructions or demands that the Assignor may give to the Deposit Account Bank. In case of any conflict between instructions received by the Deposit Account Bank from the Collateral Agent and the Assignor, the instructions from the Collateral Agent shall prevail.
(b) It is understood and agreed that the Deposit Account Banks duty to comply with instructions from the Collateral Agent regarding the Deposit Accounts is absolute, and the Deposit Account Bank shall be under no duty or obligation, nor shall it have the authority, to inquire or determine whether or not such instructions are in accordance with the Security Agreement or any other Facility Document, nor seek confirmation thereof from the Assignor or any other Person.
3. Assignors Exculpation and Indemnification of Depository Bank . The Assignor hereby irrevocably authorizes and instructs the Deposit Account Bank to follow instructions from the Collateral Agent regarding the Deposit Accounts even if the result of following such instructions from the Collateral Agent is that the Deposit Account Bank dishonors items presented for payment from any Deposit Account. The Assignor further confirms that the Deposit Account Bank shall have no liability to the Assignor for wrongful dishonor of such items in following such instructions from the Collateral Agent. The Deposit Account Bank shall have no duty to inquire or determine whether the Assignors obligations to the Collateral Agent are in default or whether the Collateral Agent is entitled, under any separate agreement between the Assignor and the Collateral Agent, to give any such instructions. The Assignor further agrees to be responsible for the Deposit Account Banks customary charges and to indemnify the Deposit Account Bank from and to hold the Deposit Account Bank harmless against any loss, cost or expense that the Deposit Account Bank may sustain or incur in acting upon instructions which the Deposit Account Bank believes in good faith to be instructions from the Collateral Agent.
4. Subordination of Security Interests; Deposit Account Banks Recourse to Deposit Accounts . The Deposit Account Bank hereby subordinates any claims and security interests it may have against, or with respect to, any Deposit Account at any time established or maintained with it by the Assignor (including any amounts, investments, instruments or other
ANNEX G
to
SECURITY AGREEMENT
Collateral from time to time on deposit therein) to the security interests of the Collateral Agent (for the benefit of the Secured Parties) therein, and agrees that no amounts shall be charged by it to, or withheld or set-off or otherwise recouped by it from, any Deposit Account of the Assignor or any amounts, investments, instruments or other Collateral from time to time on deposit therein; provided that the Deposit Account Bank may, however, from time to time debit the Deposit Accounts for any of its customary charges in maintaining the Deposit Accounts or for reimbursement for the reversal of any provisional credits granted by the Deposit Account Bank to any Deposit Account, to the extent, in each case, that the Assignor has not separately paid or reimbursed the Deposit Account Bank therefor.
5. Representations, Warranties and Covenants of Deposit Account Bank . The Deposit Account Bank represents and warrants to the Collateral Agent that:
(a) The Deposit Account Bank constitutes a bank (as defined in Section 9-102 of the UCC), that the jurisdiction (determined in accordance with Section 9-304 of the UCC) of the Deposit Account Bank for purposes of each Deposit Account maintained by the Assignor with the Deposit Account Bank shall be one or more States within the United States.
(b) The Deposit Account Bank shall not permit any Assignor to establish any demand, time, savings, passbook or other account with it which does not constitute a deposit account (as defined in Section 9-102 of the UCC).
(c) The account agreements between the Deposit Account Bank and the Assignor relating to the establishment and general operation of the Deposit Accounts provide, whether specifically or generally, that the laws of 1 govern secured transactions relating to the Deposit Accounts and that the Deposit Account Banks jurisdiction for purposes of Section 9-304 of the UCC in respect of the Deposit Accounts is . 2 The Deposit Account Bank will not, without the Collateral Agents prior written consent, amend any such account agreement so that the Deposit Account Banks jurisdiction for purposes of Section 9-304 of the UCC is other than a jurisdiction permitted pursuant to preceding clause (a). All account agreements in respect of each Deposit Account in existence on the date hereof are listed on Annex A hereto and copies of all such account agreements have been furnished to the Collateral Agent. The Deposit Account Bank will promptly furnish to the Collateral Agent a copy of the account agreement for each Deposit Account hereafter established by the Deposit Account Bank for the Assignor.
(d) The Deposit Account Bank has not entered and will not enter, into any agreement with any other Person by which the Deposit Account Bank is obligated to comply with instructions from such other Person as to the disposition of funds from any Deposit Account or other dealings with any Deposit Account or other of the Collateral.
1 | Inserted jurisdiction(s) must be consistent with requirements of preceding clause (a). |
2 | See footnote 1. |
ANNEX G
to
SECURITY AGREEMENT
(e) On the date hereof the Deposit Account Bank maintains no Deposit Accounts for the Assignor other than the Deposit Accounts specifically identified in Annex A hereto.
(f) Any items or funds received by the Deposit Account Bank for the Assignors account will be credited to said Deposit Accounts specified in paragraph (e) above or to any other Deposit Accounts hereafter established by the Deposit Account Bank for the Assignor in accordance with this Agreement.
(g) The Deposit Account Bank will promptly notify the Collateral Agent of each Deposit Account hereafter established by the Deposit Account Bank for the Assignor (which notice shall specify the account number of such Deposit Account and the location at which the Deposit Account is maintained), and each such new Deposit Account shall be subject to the terms of this Agreement in all respects.
6. Deposit Account Statements and Information . The Deposit Account Bank agrees, and is hereby authorized and instructed by the Assignor, to furnish to the Collateral Agent, at its address indicated below, copies of all account statements and other information relating to each Deposit Account that the Deposit Account Bank sends to the Assignor and to disclose to the Collateral Agent all information requested by the Collateral Agent regarding any Deposit Account.
7. Conflicting Agreements . This Agreement shall have control over any conflicting agreement between the Deposit Account Bank and the Assignor.
8. Merger or Consolidation of Deposit Account Bank . Without the execution or filing of any paper or any further act on the part of any of the parties hereto, any bank into which the Deposit Account Bank may be merged or with which it may be consolidated, or any bank resulting from any merger to which the Deposit Account Bank shall be a party, shall be the successor of the Deposit Account Bank hereunder and shall be bound by all provisions hereof which are binding upon the Deposit Account Bank and shall be deemed to affirm as to itself all representations and warranties of the Deposit Account Bank contained herein.
9. Notices . (a) All notices and other communications provided for in this Agreement shall be in writing (including facsimile) and sent to the intended recipient at its address or telex or facsimile number set forth below:
If to the Collateral Agent, at :
Bay Coast Bank
330 Swansea Mall Drive
Swansea, MA 02777
Attention: Carl W. Taber
Telephone No.: 508.675.4377
Telecopier No.: 508.675.4470
ANNEX G
to
SECURITY AGREEMENT
If to the Assignor, at :
CURO Financial Technologies Corp.
3527 N. Ridge Rd.
Wichita, KS 67205
Attention: Douglas Rippel
Telephone No.: 800.253.4574
Telecopier No.: 316.722.7751
If to the Deposit Account Bank, at :
or, as to any party, to such other address or telex or facsimile number as such party may designate from time to time by notice to the other parties.
(b) Except as otherwise provided herein, all notices and other communications hereunder shall be delivered by hand or by commercial overnight courier (delivery charges prepaid), or mailed, postage prepaid, or telexed or faxed, addressed as aforesaid, and shall be effective (i) three business days after being deposited in the mail (if mailed), (ii) when delivered (if delivered by hand or courier) and (iii) or when transmitted with receipt confirmed (if telexed or faxed); provided that notices to the Collateral Agent shall not be effective until actually received by it.
10. Amendment . This Agreement may not be amended, modified or supplemented except in writing executed and delivered by all the parties hereto.
11. Binding Agreement . This Agreement shall bind the parties hereto and their successors and assigns and shall inure to the benefit of the parties hereto and their successors and assigns. Without limiting the provisions of the immediately preceding sentence, the Collateral Agent at any time or from time to time may designate in writing to the Deposit Account Bank a successor Collateral Agent (at such time, if any, as such entity becomes the Collateral Agent under the Security Agreement, or at any time thereafter) who shall thereafter succeed to the rights of the existing Collateral Agent hereunder and shall be entitled to all of the rights and benefits provided hereunder.
12. Continuing Obligations . The rights and powers granted herein to the Collateral Agent have been granted in order to protect and further perfect its security interests in the Deposit Accounts and other Collateral and are powers coupled with an interest and will be affected neither by any purported revocation by the Assignor of this Agreement or the rights granted to the Collateral Agent hereunder or by the bankruptcy, insolvency, conservatorship or receivership of the Assignor or the Deposit Account Bank or by the lapse of time. The rights of the Collateral Agent hereunder and in respect of the Deposit Accounts and the other Collateral, and the obligations of the Assignor and Deposit Account Bank hereunder, shall continue in effect until the security interests of Collateral Agent in the Deposit Accounts and such other Collateral have been terminated and the Collateral Agent has notified the Deposit Account Bank of such termination in writing.
ANNEX G
to
SECURITY AGREEMENT
13. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
14. Counterparts . This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing and delivering one or more counterparts.
[Remainder of this page intentionally left blank; signature page follows]
ANNEX G
to
SECURITY AGREEMENT
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first written above.
Assignor : | ||
[NAME OF ASSIGNOR], as Assignor | ||
By: | ||
Name: | ||
Title: | ||
Collateral Agent : | ||
BAY COAST BANK, as Collateral Agent | ||
By: | ||
Name: | ||
Title: | ||
Deposit Account Bank : | ||
[NAME OF DEPOSIT ACCOUNT BANK], as Deposit Account Bank |
||
By: | ||
Name: | ||
Title: |
ANNEX G
to
SECURITY AGREEMENT
ANNEX A
Existing Account Agreements
ANNEX H
to
SECURITY AGREEMENT
DESCRIPTION OF COMMERCIAL TORT CLAIMS
|
||
Name of Assignor |
Description of Commercial Tort Claims |
|
None. |
ANNEX I
to
SECURITY AGREEMENT
SCHEDULE OF MARKS AND APPLICATIONS;
INTERNET DOMAIN NAME REGISTRATIONS
1. | Marks and Applications: |
U.S. Applications
Mark |
Application No. |
Filing Date |
Status |
Owner of Record |
||||
CURO | 86/961,161 | April 1, 2016 | Pending ITU | Curo Intermediate | ||||
Holdings Corp. | ||||||||
CURO FINANCIAL | 86/961,178 | April 1, 2016 | Pending | Curo Intermediate | ||||
TECHNOLOGIES CORP. | Holdings Corp. | |||||||
AVIO CREDIT | 87/246,094 | November | Pending ITU | Curo Intermediate | ||||
22, 2016 | Holdings Corp. | |||||||
OPT+ | 86/131,299 | November | Allowed | Attain Finance, LLC | ||||
27, 2013 | ||||||||
NEXTCREDIT | 86/854,115 |
December 18, 2015 |
Pending | Tiger Financial Management, LLC (nka Curo Management LLC) | ||||
NEXTCREDIT | 86/854,112 |
December 18, 2015 |
Pending | Tiger Financial Management, LLC (nka Curo Management LLC) |
U.S. Trademark Registrations
Mark |
Application No. /
|
Application Date/
|
Status |
Owner of Record |
||||
THE MONEY BOX | 73/496,884 1,335,898 | August 27, 1984 May 14, 1985 | Registered | The Money Store, L.P. DBA - The Money Box | ||||
THE MONEY BOX | 76/636,887 3,245,787 |
April 22, 2005 May 29, 2007 |
Registered | The Money Store, L.P. DBA - The Money Box | ||||
|
76/330,440 2,677,082 | October 26, 2001 January 21, 2003 | Registered |
Curo Intermediate Holdings Corp. |
||||
|
78/331,157 2,966,547 |
November 20, 2003 July 12, 2005 |
Registered |
Curo Intermediate Holdings Corp. |
ANNEX I
to
SECURITY AGREEMENT
Mark |
Application No. /
|
Application Date/
|
Status |
Owner of Record |
||||
SPEEDY CASH |
77/467,267 3,563,682 |
May 6, 2008 January 20, 2009 |
Registered |
Curo Intermediate Holdings Corp. |
||||
SELEX |
77/745,919 3,861,696 |
May 27, 2009 October 12, 2010 |
Registered | The Money Store, L.P. DBA - The Money Box | ||||
SELEX |
77/745,926 3,861,697 |
May 27, 2009 October 12, 2010 |
Registered | The Money Store, L.P. DBA - The Money Box | ||||
RAPID CASH |
77/788,511 3,909,800 |
July 23, 2009 January 25, 2011 |
Registered |
Curo Intermediate Holdings Corp. |
||||
|
77/788,517 3,909,801 |
July 23, 2009 January 25, 2011 |
Registered |
Curo Intermediate Holdings Corp. |
||||
YOUR MONEY. YOUR CARD. |
77/891,783 3,924,054 |
December 11, 2009 February 22, 2011 |
Registered | The Money Store, L.P. DBA - The Money Box | ||||
YOUR MONEY. YOUR CARD. |
85/308,777 4,180,536 |
April 29, 2011 July 24, 2012 |
Registered | The Money Store, L.P. DBA - The Money Box | ||||
OPT+ |
77/899,448 4,187,171 |
December 22, 2009 August 7, 2012 |
Registered | Attain Finance, LLC | ||||
SPEEDY ROO |
85/592,251 4,429,482 |
April 9, 2012 November 5, 2013 |
Registered |
Curo Intermediate Holdings Corp. |
||||
ROO |
85/651,453 4,548,213 |
June 14, 2012 June 10, 2014 |
Registered |
Curo Intermediate Holdings Corp. |
2. | Internet Domain Name Registrations: |
Internet Domain Names |
Country |
Registration No. (or other applicable identifier) |
||
adastrarecovery.com | USA | N/A | ||
adastrarecoveryservices.com | USA | N/A | ||
adastrarecoveryservicesinc.com | USA | N/A | ||
cashmoney.credit | Canada | N/A | ||
cashmoney.store | Canada | N/A |
ANNEX I
to
SECURITY AGREEMENT
Internet Domain Names |
Country |
Registration No. (or other applicable identifier) |
||
CashMoney.loan | Canada | N/A | ||
cashmoney.sucks | Canada | N/A | ||
cashmoney.ca | Canada | N/A | ||
cashmoneyfs.ca | Canada | N/A | ||
cmperformancecentre.ca | Canada | N/A | ||
cmperformancecentre.com | Canada | N/A | ||
paydayloaninfo.ca | Canada | N/A | ||
Curofinancialholdings.com | USA | N/A | ||
Curofintech.com | USA | N/A | ||
Curogroupholdingscorp.com | USA | N/A | ||
Curointermediateholdingscorp.com | USA | N/A | ||
curo.com | USA | N/A | ||
speedygroupholdings.com | USA | N/A | ||
speedygroupholdingscorp.com | USA | N/A | ||
curofinancialtechnologies.com | USA | N/A | ||
curofinancialtechnologiescorp.co m | USA | N/A | ||
curoftc.com | USA | N/A | ||
LendDirect.credit | Canada | N/A | ||
Lendirect.ca | Canada | N/A | ||
Lenddirect.ca | Canada | N/A | ||
Avio.credit | USA | N/A | ||
aviocredit.online | USA | N/A | ||
aviocredit.org | USA | N/A | ||
avioloan.com | USA | N/A | ||
avioloans.com | USA | N/A | ||
Myrevive.com | USA | N/A | ||
Myrevivecard.com | USA | N/A | ||
Myrevivesecurecard.com | USA | N/A | ||
Revivecard.com | USA | N/A | ||
Revivesecurecard.com | USA | N/A | ||
tapintocredit.com | USA | N/A | ||
taploan.com | USA | N/A | ||
taploansfast.com | USA | N/A | ||
taploansonline.com | USA | N/A | ||
taploanstoday.com | USA | N/A | ||
vaultloans.com | USA | N/A |
ANNEX I
to
SECURITY AGREEMENT
Internet Domain Names |
Country |
Registration No. (or other applicable identifier) |
||
AvioCredit.com | USA | N/A | ||
achievecardspeedycash.com | USA | N/A | ||
achievespeedycash.com | USA | N/A | ||
Lendingspot.ca | Canada | N/A | ||
Nextcredit.ca | Canada | N/A | ||
Nextcreditloans.ca | Canada | N/A | ||
Nextcreditloans.com | USA | N/A | ||
Nextlend.ca | Canada | N/A | ||
Theloancompany.ca | Canada | N/A | ||
attainfinance.com | USA | N/A | ||
myoptplus.com | USA | N/A | ||
myoptplus.net | USA | N/A | ||
myoptplus.org | USA | N/A | ||
optplusbank.com | USA | N/A | ||
optplusbank.net | USA | N/A | ||
optplusbank.org | USA | N/A | ||
optpluscard.biz | USA | N/A | ||
optpluscard.com | USA | N/A | ||
optpluscard.mobi | USA | N/A | ||
optpluscard.net | USA | N/A | ||
optpluscard.org | USA | N/A | ||
optplusreload.com | USA | N/A | ||
selexcard.com | USA | N/A | ||
selexcard.net | USA | N/A | ||
selexsecure.com | USA | N/A | ||
attainfinance.sucks | USA | N/A | ||
myoptplus.sucks | USA | N/A | ||
optplus.sucks | USA | N/A | ||
optplusbank.sucks | USA | N/A | ||
optpluscard.sucks | USA | N/A | ||
myoptplus.ca | USA | N/A | ||
opuscards.ca | USA | N/A | ||
opuscards.com | USA | N/A | ||
myoptpluscard.ca | Canada | N/A | ||
optplus.ca | Canada | N/A | ||
optplusbank.ca | Canada | N/A |
ANNEX I
to
SECURITY AGREEMENT
Internet Domain Names |
Country |
Registration No. (or other applicable identifier) |
||
optpluscard.ca | Canada | N/A | ||
optplusreload.ca | Canada | N/A | ||
americanspeedycash.org | USA | N/A | ||
Findapaydayloanlocation.com | USA | N/A | ||
Findapaydayloanstore.com | USA | N/A | ||
Learnaboutpaydayloansonline.co m | USA | N/A | ||
Paydayadvancefacts.com | USA | N/A | ||
rapidcash.credit | USA | N/A | ||
rapidcash.store | USA | N/A | ||
Rapidcashlocations.com | USA | N/A | ||
rapidcashmail.com | USA | N/A | ||
Rapidcashstores.com | USA | N/A | ||
speedycash.credit | USA | N/A | ||
speedycash.store | USA | N/A | ||
Speedycashlocations.com | USA | N/A | ||
speedycashonlineloans.com | USA | N/A | ||
Speedycashstores.com | USA | N/A | ||
RapidCash.loan | USA | N/A | ||
SpeedyCash.loan | USA | N/A | ||
speedycash.com | USA | N/A | ||
speedycash.xyz | USA | N/A | ||
1rapidcash.com | USA | N/A | ||
4rapidcash.com | USA | N/A | ||
4rapidcash.net | USA | N/A | ||
americacashmart.com | USA | N/A | ||
americamoneymart.com | USA | N/A | ||
amiericacashmart.com | USA | N/A | ||
expressinstallmentloans.com | USA | N/A | ||
fastmoneynet.com | USA | N/A | ||
fiesta500.com | USA | N/A | ||
fourrapidcash.com | USA | N/A | ||
fourrapidcash.net | USA | N/A | ||
goadvancenow.com | USA | N/A | ||
goldrapidcash.com | USA | N/A | ||
goldrapidcash.net | USA | N/A | ||
goldspeedycash.com | USA | N/A |
ANNEX I
to
SECURITY AGREEMENT
Internet Domain Names |
Country |
Registration No. (or other applicable identifier) |
||
goldspeedycash.net | USA | N/A | ||
goldspeedycash.org | USA | N/A | ||
gotorapidcash.com | USA | N/A | ||
gotospeedycash.com | USA | N/A | ||
helpcashnow.com | USA | N/A | ||
helpgetmecash.com | USA | N/A | ||
helpgetmemoney.com | USA | N/A | ||
helpmegetcash.com | USA | N/A | ||
helpmoneynow.com | USA | N/A | ||
hrbusinesscenter.com | USA | N/A | ||
kscfsa.com | USA | N/A | ||
kscfsa.org | USA | N/A | ||
lovethatrapidcash.com | USA | N/A | ||
lovethatspeedycash.com | USA | N/A | ||
loveyourkangaroo.com | USA | N/A | ||
needcashhelp.com | USA | N/A | ||
neteasycash.com | USA | N/A | ||
netpayrolladvance.com | USA | N/A | ||
netquickcash.com | USA | N/A | ||
nevadarapidcash.com | USA | N/A | ||
oregonrapidcash.com | USA | N/A | ||
quickmoneynet.com | USA | N/A | ||
rapidcash.co | USA | N/A | ||
rapidcash.com | USA | N/A | ||
rapidcash.org | USA | N/A | ||
rapidcash4yourgold.com | USA | N/A | ||
rapidcash4yourgold.net | USA | N/A | ||
rapidcashadvances.com | USA | N/A | ||
rapidcashinc.com | USA | N/A | ||
rapidcashinstallmentloan.com | USA | N/A | ||
rapidcashinstallmentloans.com | USA | N/A | ||
rapid-cashloan.com | USA | N/A | ||
rapid-cash-loan.com | USA | N/A | ||
rapid-cashloans.com | USA | N/A | ||
rapidcashnow.com | USA | N/A | ||
rapidcashpayday.com | USA | N/A |
ANNEX I
to
SECURITY AGREEMENT
Internet Domain Names |
Country |
Registration No. (or other applicable identifier) |
||
rapidcashpaydayloan.com | USA | N/A | ||
rapidcashpaydayloans.com | USA | N/A | ||
rapidmoneynet.com | USA | N/A | ||
speedycash.co | USA | N/A | ||
speedycashadvance.co | USA | N/A | ||
speedycashadvance.org | USA | N/A | ||
speedycashgold.com | USA | N/A | ||
speedycashgold.mobi | USA | N/A | ||
speedycashgold.net | USA | N/A | ||
speedycashgold.org | USA | N/A | ||
speedycashinstallmentloan.com | USA | N/A | ||
speedycashinstallmentloans.com | USA | N/A | ||
speedycashmail.com | USA | N/A | ||
speedycashtitleloan.com | USA | N/A | ||
speedydoc.us | USA | N/A | ||
speedyinc.com | USA | N/A | ||
speedyinc.mobi | USA | N/A | ||
speedyinc.tv | USA | N/A | ||
speedyincapps.com | USA | N/A | ||
speedyrapidcash.com | USA | N/A | ||
srclearning.com | USA | N/A | ||
themoneybox.com | USA | N/A | ||
themoneybox.net | USA | N/A | ||
usacashmart.com | USA | N/A | ||
usacashmarts.com | USA | N/A | ||
usafastmoney.com | USA | N/A | ||
usaloanmarts.com | USA | N/A | ||
usaloansmart.com | USA | N/A | ||
usaloansmarts.com | USA | N/A | ||
usamoneymart.com | USA | N/A | ||
usanetcashadvance.com | USA | N/A | ||
usanetpaydayloan.com | USA | N/A | ||
usaquickmoney.com | USA | N/A | ||
usarapidcash.com | USA | N/A | ||
usarapidcash.net | USA | N/A | ||
uscashmart.com | USA | N/A |
ANNEX I
to
SECURITY AGREEMENT
Internet Domain Names |
Country |
Registration No. (or other applicable identifier) |
||
uscashmarts.com | USA | N/A | ||
usfastmoney.com | USA | N/A | ||
usloanmarts.com | USA | N/A | ||
usloansmart.com | USA | N/A | ||
usloansmarts.com | USA | N/A | ||
usrapidcash.com | USA | N/A | ||
usrapidcash.net | USA | N/A | ||
paydayloan.sucks | USA | N/A | ||
paydayloans.sucks | USA | N/A | ||
rapidcash.sucks | USA | N/A | ||
rapidcashloan.sucks | USA | N/A | ||
rapidcashloans.sucks | USA | N/A | ||
rapidcashpaydayloan.sucks | USA | N/A | ||
rapidcashpaydayloans.sucks | USA | N/A | ||
speedycash.sucks | USA | N/A | ||
speedycashloan.sucks | USA | N/A | ||
speedycashloans.sucks | USA | N/A | ||
speedycashpaydayloan.sucks | USA | N/A | ||
speedycashpaydayloans.sucks | USA | N/A | ||
Advanceplus.loan | UK | N/A | ||
PlatinumAdvance.loan | UK | N/A | ||
Speedycashloans.loan | UK | N/A | ||
Speedycashuk.loan | UK | N/A | ||
Wageday.loan | UK | N/A | ||
WageDayAdvance.loan | UK | N/A | ||
Wagedayadvance.loan | UK | N/A | ||
mycashcentre.co.uk | UK | N/A | ||
mycashcentre.net | UK | N/A | ||
sccashcentre.co.uk | UK | N/A | ||
sccashcentre.com | UK | N/A | ||
sccashcentre.net | UK | N/A | ||
speedycashadvances.co.uk | UK | N/A | ||
speedycashcashcentre.co.uk | UK | N/A | ||
speedycashcashcentre.com | UK | N/A | ||
speedycashcashcentre.net | UK | N/A | ||
speedycashloans.co.uk | UK | N/A |
ANNEX I
to
SECURITY AGREEMENT
Internet Domain Names |
Country |
Registration No. (or other applicable identifier) |
||
speedycashonline.co.uk | UK | N/A | ||
speedycashplus.co | UK | N/A | ||
speedycashplus.mobi | UK | N/A | ||
speedycashsite.co.uk | UK | N/A | ||
speedycashstore.co.uk | UK | N/A | ||
wageday.co.uk | UK | N/A | ||
wagedayadvances.co.uk | UK | N/A | ||
wagedays.co.uk | UK | N/A | ||
yourcashcentre.co.uk | UK | N/A | ||
yourcashcentre.com | UK | N/A | ||
yourcashcentre.net | UK | N/A | ||
speedycashuk.sucks | UK | N/A | ||
wageday.sucks | UK | N/A | ||
wagedayadvance.sucks | UK | N/A | ||
wagedayloan.sucks | UK | N/A | ||
wagedaypaydayloan.sucks | UK | N/A |
ANNEX I
to
SECURITY AGREEMENT
SCHEDULE OF PATENTS
None.
ANNEX K
to
SECURITY AGREEMENT
SCHEDULE OF COPYRIGHTS
NUMBERS REGISTRATION |
PUBLICATION DATE |
COPYRIGHT TITLE |
None.
ANNEX L
to
SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which are hereby acknowledged, [Name of Grantor], a (the Grantor ) with principal offices at , hereby grants to Bay Coast Bank, 330 Swansea Mall Drive, Swansea, Massachusetts 02777 as Collateral Agent under the Security Agreement (the Grantee ), a continuing security interest in (i) all of the Grantors right, title and interest in, to and under to the United States trademarks, trademark registrations and trademark applications (other than any application for registration of a trademark filed with the United States Patent and Trademark Office on an intent-to-use basis) (the Marks ) set forth on Schedule A attached hereto, (ii) all Proceeds (as such term is defined in the Security Agreement referred to below) and products of the Marks, (iii) the goodwill of the businesses with which the Marks are associated and (iv) all causes of action arising prior to or after the date hereof for infringement of any of the Marks or unfair competition regarding the same.
THIS GRANT is made to secure the satisfactory performance and payment of all the Guaranteed Obligations of the Grantor, as such term is defined in the Security Agreement among the Grantor, the other assignors from time to time party thereto and the Grantee, dated as of [ ], 2017 (as amended, modified, restated and/or supplemented from time to time, the Security Agreement ). Upon the occurrence of the Termination Date (as defined in the Security Agreement), the Grantee shall execute, acknowledge, and deliver to the Grantor an instrument in writing releasing the security interest in the Marks acquired under this Grant.
ANNEX L
to
SECURITY AGREEMENT
This Grant has been granted in conjunction with the security interest granted to the Grantee under the Security Agreement. The rights and remedies of the Grantee with respect to the security interest granted herein are as set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this
Grant are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.
[ Remainder of this page intentionally left blank; signature page follows ]
ANNEX L
to
SECURITY AGREEMENT
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the day of , .
[NAME OF GRANTOR], as Grantor |
By | ||
Name: |
||
Title: |
||
[Address] |
||
BAY COAST BANK, as Grantee |
By | ||
Name: |
||
Title: |
||
[Address] |
SCHEDULE A
MARK |
REG. NO. |
REG. DATE |
ANNEX M
to
SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
IN UNITED STATES PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which are hereby acknowledged, [Name of Grantor], a (the Grantor ) with principal offices at , hereby grants to Bay Coast Bank, 330 Swansea Mall Drive, Swansea, Massachusetts 02777 as Collateral Agent under the Security Agreement (the Grantee ), a continuing security interest in (i) all of the Grantors rights, title and interest in, to and under the United States patents (the Patents ) set forth on Schedule A attached hereto, in each case together with (ii) all Proceeds (as such term is defined in the Security Agreement referred to below) and products of the Patents, and (iii) all causes of action arising prior to or after the date hereof for infringement of any of the Patents or unfair competition regarding the same.
THIS GRANT is made to secure the satisfactory performance and payment of all the Guaranteed Obligations, as such term is defined in the Security Agreement among the Grantor, the other assignors from time to time party thereto and the Grantee, dated as of [ ], 2017 (as amended, modified, restated and/or supplemented from time to time, the Security Agreement ). Upon the occurrence of the Termination Date (as defined in the Security Agreement), the Grantee shall execute, acknowledge, and deliver to the Grantor an instrument in writing releasing the security interest in the Patents acquired under this Grant.
ANNEX M
to
SECURITY AGREEMENT
This Grant has been granted in conjunction with the security interest granted to the Grantee under the Security Agreement. The rights and remedies of the Grantee with respect to the security interest granted herein are as set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this
Grant are deemed to conflict with the Security Agreement, the provisions of the Security
Agreement shall govern.
[Remainder of this page intentionally left blank; signature page follows]
ANNEX M
to
SECURITY AGREEMENT
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the day of , .
[NAME OF GRANTOR], as Grantor |
By | ||
Name: | ||
Title: | ||
[Address] | ||
BAY COAST BANK, as Grantee |
By | ||
Name: | ||
Title: | ||
[Address] |
SCHEDULE A
PATENT |
PATENT NO. |
ISSUE DATE |
ANNEX N
to
SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, [Name of Grantor], a (the Grantor ), having its chief executive office at , , is the owner of all right, title and interest in and to the United States copyrights and associated United States copyright registrations and applications for registration set forth in Schedule A attached hereto;
WHEREAS, Bay Coast Bank, 330 Swansea Mall Drive, Swansea, Massachusetts 02777, as Collateral Agent under the Security Agreement (the Grantee ), desires to acquire a security interest in said copyrights and copyright registrations and applications therefor; and
WHEREAS, the Grantor is willing to grant to the Grantee a security interest in and lien upon the copyrights and copyright registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and subject to the terms and conditions of the Security Agreement, dated as of [ ], 2017, made by the Grantor, the other assignors from time to time party thereto and the Grantee (as amended, modified, restated and/or supplemented from time to time, the Security Agreement ), the Grantor hereby assigns to the Grantee as collateral security, and grants to the Grantee a continuing security interest in, to and under the copyrights and copyright registrations and applications therefor set forth in Schedule A attached hereto to secure the satisfactory performance and payment of all the Guaranteed Obligations of the Grantor, as such term is defined in the Security Agreement.
Upon the occurrence of the Termination Date (as defined in the Security Agreement), the Grantee shall execute, acknowledge, and deliver to the Grantor an instrument in writing releasing the security interest in the Copyrights acquired under this Grant.
This Grant has been granted in conjunction with the security interest granted to the Grantee under the Security Agreement. The rights and remedies of the Grantee with respect to the security interest granted herein are as set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this Grant are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.
[Remainder of this page intentionally left blank; signature page follows]
ANNEX N
to
SECURITY AGREEMENT
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the day of , .
[NAME OF GRANTOR], as Grantor |
By | ||
Name: | ||
Title: | ||
[Address] | ||
BAY COAST BANK, as Grantee |
By | ||
Name: | ||
Title: | ||
[Address] |
SCHEDULE A
APPLICATION TITLE |
REGISTRATION NO. |
REGISTRATION DATE |
ANNEX O
to
SECURITY AGREEMENT
[Form of]
SECURITY AGREEMENT JOINDER
This SECURITY AGREEMENT JOINDER (as the same may from time to time be amended, restated, supplemented or otherwise modified, this Agreement ), is made as of the [ ] day of [ , ] by [ ], a [ ] [ ] ( New Assignor ), in favor of BAY COAST BANK, as the collateral agent ( Collateral Agent ), for the benefit of the Secured Parties (as defined in the Security Agreement).
WHEREAS, CURO Financial Technologies Corp., a Delaware corporation, and CURO Intermediate Holdings Corp., a Delaware corporation (collectively, the Company ), entered into a Revolving Loan Agreement, dated as of August [ ], 2017, (as amended, restated, supplemented or otherwise modified from time to time, the Loan Agreement ) providing for a revolving credit facility, with all advances payable on demand, in favor of the Company;
WHEREAS, in connection with the Loan Agreement, certain of the Companys subsidiaries (such subsidiaries, together with the Company, each, a Assignor and, collectively, the Assignors ) entered into that certain Security Agreement, dated as of August [ ], 2017 (as the same may from time to time be amended, restated or otherwise modified, the Security Agreement ), pursuant to which the Assignors granted to the Collateral Agent, for the benefit of the Secured Parties, a security interest in and pledge of substantially all of their assets;
WHEREAS, New Assignor, a subsidiary of the Company, deems it to be in the direct pecuniary and business interests of New Assignor that the Company continue to obtain from the Secured Parties the financial accommodations provided for in the Loan Agreement;
WHEREAS, New Assignor understands that the Lenders are willing to continue to grant such financial accommodations only upon certain terms and conditions, one of which is that New Assignor grant to the Collateral Agent, for the benefit of the Secured Parties, a security interest in and a collateral assignment of New Assignors Collateral, and this Agreement is being executed and delivered in consideration of each financial accommodation granted to the Company by the Secured Parties, and for other valuable consideration;
WHEREAS, pursuant to Section 10.12 of the Security Agreement, New Assignor has agreed that, effective on [ ], [ ] (the Joinder Effective Date ), New Assignor shall become a party to the Security Agreement and shall become a Assignor thereunder; and
WHEREAS, except as specifically defined herein, capitalized terms used herein that are defined in the Security Agreement shall have their respective meanings ascribed to them in the Security Agreement.
NOW, THEREFORE, in consideration of the benefits accruing to New Assignor, the receipt and sufficiency of which are hereby acknowledged, New Assignor hereby makes the following representations and warranties to the Collateral Agent and the Secured Parties, covenants to the Collateral Agent and the Secured Parties, and agrees with the Collateral Agent as follows:
Section 1. Assumption and Joinder . On and after the Joinder Effective Date:
(a) New Assignor hereby irrevocably and unconditionally assumes, agrees to be liable for, and agrees to perform and observe, each and every one of the covenants, rights, promises, agreements, terms, conditions, obligations, appointments, duties and liabilities of a Assignor under the Security Agreement and all of the other Facility Documents (as defined in the Loan Agreement) applicable to it as a Assignor under the Security Agreement;
(b) New Assignor shall become bound by all representations, warranties, covenants, provisions and conditions of the Security Agreement and each other Facility Document applicable to it as an Assignor under the Security Agreement, as if New Assignor had been the original party making such representations, warranties and covenants; and
(c) all references to the term Assignor in the Security Agreement or in any other Facility Document, or in any document or instrument executed and delivered or furnished, or to be executed and delivered or furnished, in connection therewith shall be deemed to be a reference to, and shall include, New Assignor.
Section 2. Grant of Security Interests . In consideration of and as security for the full and complete payment, and performance when due, of all of the Secured Obligations, New Assignor hereby grants to the Collateral Agent, for the benefit of the Secured Parties, a security interest in all of New Assignors Collateral.
Section 3. Representations and Warranties of New Assignor . New Assignor hereby represents and warrants to Collateral Agent and each Secured Party that:
(a) New Assignor has the requisite corporate or other applicable power and authority to enter into this Agreement and to perform its obligations hereunder and under the Security Agreement and any other Facility Document to which it is a party. The execution, delivery and performance of this Agreement by New Assignor and the performance of its obligations under this Agreement, the Security Agreement, and any other Facility Document have been duly authorized by the board of directors or other governing or managing body of New Assignor and no other corporate or other applicable proceedings on the part of New Assignor are necessary to authorize the execution, delivery or performance of this Agreement, the transactions contemplated hereby or the performance of its obligations under this Agreement, the Security Agreement or any other Facility Document. This Agreement has been duly executed and delivered by New Assignor. This Agreement, the Security Agreement and each Facility Document constitutes the legal, valid and binding obligation of New Assignor enforceable against it in accordance with its respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors rights generally and by general principles of equity, whether such enforceability is considered in a proceeding at law or in equity.
(b) Attached hereto as Exhibit A are supplemental schedules to the Security Agreement, which schedules set forth the information required by the Security Agreement with respect to New Assignor.
(c) Each of the representations and warranties set forth in the Security Agreement are true and correct in all material respects on as and as of the date hereof as such representations and warranties apply to New Assignor (except to the extent that any such representations and warranties expressly relate to an earlier date) with the same force and effect as if made on the date hereof.
Section 4. Further Assurances . At any time and from time to time, upon Collateral Agents request and at the sole expense of New Assignor, New Assignor will promptly and duly execute and deliver to Collateral Agent any and all further instruments and documents and take such further action as shall be necessary or as Collateral Agent may reasonably request to effect the purposes of this Agreement including the perfection of the security interest in the New Assignors Collateral to the extent otherwise required by the Security Agreement.
Section 5. Notice . All notices, requests, demands and other communications to New Assignor provided for under the Security Agreement and any other Facility Document shall be addressed to New Assignor at the address specified on the signature page of this Agreement, or at such other address as shall be designated by New Assignor in a written notice to Collateral Agent and the Secured Parties.
Section 6. Binding Nature of Agreement . All provisions of the Security Agreement and the other Facility Documents shall remain in full force and effect and be unaffected hereby. This Agreement shall be binding upon New Assignor and shall inure to the benefit of Collateral Agent and the Secured Parties, and their respective successors and permitted assigns.
Section 7. Miscellaneous . This Agreement may be executed by facsimile signature, that, when so executed and delivered, shall be deemed to be an original.
Section 8. Governing Law . This Agreement shall be construed in accordance with, and governed by, the laws of the State of New York.
[Remainder of page left intentionally blank]
ANNEX O
to
SECURITY AGREEMENT
JURY TRIAL WAIVER . NEW GRANTOR HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG NEW GRANTOR, THE COMPANY, COLLATERAL AGENT AND THE SECURED PARTIES, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Security Agreement Joinder as of the date first written above.
Address: |
|
[NEW ASSIGNOR] | ||||||||
|
By : | |||||||||
|
Name: | |||||||||
Attention: |
|
Title: |
TABLE OF CONTENTS
Page | ||||||
ARTICLE I SECURITY INTERESTS |
2 | |||||
1.1 |
Grant of Security Interests | 2 | ||||
1.2 |
Power of Attorney | 4 | ||||
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS |
4 | |||||
2.1 |
Necessary Filings | 4 | ||||
2.2 |
No Liens | 4 | ||||
2.3 |
Other Financing Statements | 4 | ||||
2.4 |
Chief Executive Office, Record Locations | 5 | ||||
2.5 |
Location of Inventory and Equipment | 5 | ||||
2.6 |
Legal Names; Type of Organization (and Whether a Registered Organization); | |||||
Jurisdiction of Organization; Location; Federal Employer Identification Number; | ||||||
Changes Thereto; etc. | 5 | |||||
2.7 |
Trade Names; Etc. | 5 | ||||
2.8 |
Certain Significant Transactions | 6 | ||||
2.9 |
Non-UCC Property | 6 | ||||
2.10 |
As-Extracted Collateral; Timber-to-be-Cut | 6 | ||||
2.11 |
Collateral in the Possession of a Bailee | 6 | ||||
2.12 |
Recourse | 7 | ||||
ARTICLE III SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL |
7 | |||||
3.1 |
Additional Representations and Warranties | 7 | ||||
3.2 |
Maintenance of Records | 7 | ||||
3.3 |
Direction to Account Debtors; Contracting Parties; etc. | 8 | ||||
3.4 |
Modification of Terms; etc. | 8 | ||||
3.5 |
Collection | 8 | ||||
3.6 |
Instruments | 9 | ||||
3.7 |
Assignors Remain Liable Under Accounts | 9 | ||||
3.8 |
Assignors Remain Liable Under Contracts | 9 | ||||
3.9 |
Deposit Accounts; Etc. | 9 | ||||
3.10 |
Letter-of-Credit Rights | 11 | ||||
3.11 |
Commercial Tort Claims | 11 | ||||
3.12 |
Chattel Paper | 11 | ||||
3.13 |
Further Actions | 11 | ||||
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES |
11 | |||||
4.1 |
Additional Representations and Warranties | 11 | ||||
4.2 |
Licenses and Assignments | 12 |
(i)
4.3 |
Infringements | 12 | ||||
4.4 |
Preservation of Marks and Domain Names | 12 | ||||
4.5 |
Maintenance of Registration | 12 | ||||
4.6 |
Future Registered Marks and Domain Names | 13 | ||||
4.7 |
Remedies | 13 | ||||
ARTICLE V SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS |
13 | |||||
5.1 |
Additional Representations and Warranties | 13 | ||||
5.2 |
Licenses and Assignments | 14 | ||||
5.3 |
Infringements | 14 | ||||
5.4 |
Maintenance of Patents or Copyrights | 14 | ||||
5.5 |
Prosecution of Patent or Copyright Applications | 14 | ||||
5.6 |
Other Patents and Copyrights | 14 | ||||
5.7 |
Remedies | 15 | ||||
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL |
15 | |||||
6.1 |
Protection of Collateral Agents Security | 15 | ||||
6.2 |
Warehouse Receipts Non-Negotiable | 15 | ||||
6.3 |
Additional Information | 15 | ||||
6.4 |
Further Actions | 16 | ||||
6.5 |
Financing Statements | 16 | ||||
ARTICLE VII REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT |
16 | |||||
7.1 |
Remedies; Obtaining the Collateral Upon Default | 16 | ||||
7.2 |
Remedies; Disposition of the Collateral | 18 | ||||
7.3 |
Waiver of Claims | 18 | ||||
7.4 |
Application of Proceeds | 19 | ||||
7.5 |
Remedies Cumulative | 20 | ||||
7.6 |
Discontinuance of Proceedings | 20 | ||||
ARTICLE VIII INDEMNITY |
20 | |||||
8.1 |
Indemnity | 20 | ||||
8.2 |
Indemnity Obligations Secured by Collateral; Survival | 20 | ||||
ARTICLE IX DEFINITIONS |
20 | |||||
ARTICLE X MISCELLANEOUS |
25 | |||||
10.1 |
Notices | 25 | ||||
10.2 |
Waiver; Amendment | 26 | ||||
10.3 |
Obligations Absolute | 26 | ||||
10.4 |
Successors and Assigns | 26 | ||||
10.5 |
Headings Descriptive | 27 | ||||
10.6 |
GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER | |||||
OF JURY TRIAL | 27 | |||||
10.7 |
Assignors Duties | 28 | ||||
10.8 |
Termination; Release | 28 | ||||
10.9 |
Counterparts | 28 |
(ii)
10.10 |
Severability | 29 | ||||
10.11 |
The Collateral Agent and the other Secured Parties | 29 | ||||
10.12 |
Additional Assignors | 29 | ||||
10.13 |
Intercreditor Agreement | 30 |
ANNEX A | Schedule of Chief Executive Offices Address(es) of Chief Executive Office | |
ANNEX B | Schedule of Inventory and Equipment Locations | |
ANNEX C | Schedule of Legal Names, Type of Organization (and Whether a Registered Organization), Jurisdiction of Organization, Location and Federal Employer Identification Numbers | |
ANNEX D | Schedule of Trade and Fictitious Names | |
ANNEX E | Description of Certain Significant Transactions Occurring Within One Year Prior to the Date of the Security Agreement | |
ANNEX F | Schedule of Concentration Accounts | |
ANNEX G | Form of Control Agreement Regarding Deposit Accounts | |
ANNEX H | Schedule of Commercial Tort Claims | |
ANNEX I | Schedule of Marks and Applications; Internet Domain Name Registrations | |
ANNEX J | Schedule of Patents | |
ANNEX K | Schedule of Copyrights | |
ANNEX L | Trademark Security Agreement | |
ANNEX M | Grant of Security Interest in United States Patents | |
ANNEX N | Grant of Security Interest in United States Copyrights | |
ANNEX O | Form of Security Agreement Joinder |
[Remainder of this page intentionally left blank]
(iii)
EXHIBIT E
[FORM OF]
COUNTERPART AGREEMENT
COUNTERPART AGREEMENT dated as of , 20 , by [NAME OF ADDITIONAL GUARANTOR], a (the Additional Guarantor ), in favor of Bay Coast Bank, as administrative agent and collateral agent for the parties defined as Lenders under the Revolving Loan Agreement referred to below (in such capacity, together with its successors in such capacity, the Agent ).
CURO Financial Technologies Corp. and CURO Intermediate Holdings Corp. (collectively, the Borrower ), the subsidiaries of the Borrower party thereto (the Guarantors ), the Lenders party thereto, and the Agent, are parties to a Revolving Loan Agreement dated as of August , 2013 (as modified and supplemented and in effect from time to time, the Revolving Loan Agreement ).
Pursuant to Section 7.09 of the Revolving Loan Agreement, the Additional Guarantor hereby agrees to become a Guarantor for all purposes of the Revolving Loan Agreement and the other Facility Documents (and hereby supplements each of the Schedules to the Revolving Loan Agreement in the manner specified in Appendix A hereto). Without limiting the foregoing, the Additional Guarantor hereby jointly and severally with the other Guarantors, guarantees to each Secured Creditor and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of all Obligations in the same manner and to the same extent as is provided in Section 7.01 of the Revolving Loan Agreement. In addition, the Additional Guarantor hereby makes the representations and warranties set forth in Sections 4.01of the Revolving Loan Agreement, with respect to itself and its obligations under this Agreement, as if each reference in such Sections to the Facility Documents included reference to this Agreement (as supplemented pursuant to the Counterpart Agreement and it being understood that any representations and warranties relating to the Closing Date or the date of a particular agreement shall mean, with respect to such new Guarantor, the date of such Counterpart Agreement.
The Additional Guarantor hereby instructs its counsel to deliver any opinions to the Secured Creditors required to be delivered in connection with the execution and delivery hereof.
[Remainder of page intentionally left blank]
E-1
IN WITNESS WHEREOF , the Additional Guarantor has caused this Counterpart Agreement to be duly executed and delivered as of the day and year first above written.
[NAME OF ADDITIONAL GUARANTOR] | ||
By: | ||
Name: | ||
Title: |
Accepted and agreed: |
||
Bay Coast Bank, as Administrative Agent and |
||
Collateral Agent | ||
By: | ||
Name: | ||
Title: |
E-2
EXHIBIT F
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this Intercreditor Agreement ), dated as of September 1, 2017, is by and among BAY COAST BANK, as agent for the First Lien Lenders defined below (in such capacity, First Lien Agent as hereinafter further defined), and TMI TRUST COMPANY, as collateral agent under (i) the Indenture (as hereinafter defined) for the other Notes Secured Parties (as hereinafter defined) and (ii) each Accession Agreement (as hereinafter defined) entered into after the date hereof for the Pari Passu Indebtedness Secured Parties (as hereinafter defined) identified therein and related Supplement (as hereinafter defined) hereto (together with its successors and assigns, in such capacity, Second Lien Agent as hereinafter further defined).
R E C I T A L S:
A. First Lien Agent and the other First Lien Lenders have entered into one or more financing arrangements with Borrower (as hereinafter defined), pursuant to which the First Lien Lenders have made and may, upon certain terms and conditions, continue to make loans and provide other financial accommodations to Borrower secured by liens on and security interests in substantially all of the assets and properties of Borrower and the other Obligors (as defined herein).
B. The Issuer (as hereinafter defined), the other Obligors named therein and TMI Trust Company, as trustee and collateral agent, have entered into the Indenture, pursuant to which Issuer has issued, and the Noteholders have purchased, the Notes (as hereinafter defined), which Notes are secured by liens on and security interests in substantially all of the assets and properties of the Issuer and the other Obligors.
C. The First Lien Agent, the Borrower and the other Obligors have entered into the First Lien Credit Agreement (as defined below).
D. First Lien Agent, on behalf of itself and the other First Lien Lenders, and Second Lien Agent, on behalf of itself and the other Second Lien Creditors, enter into this Intercreditor Agreement to (i) confirm the relative priorities of the Liens (as defined herein) of First Lien Agent, on behalf of itself and the First Lien Lenders, and Second Lien Agent, on behalf of itself and the other Second Lien Creditors, in the assets and properties of Borrower and the other Obligors, and (ii) provide for the orderly sharing among them, in accordance with such priorities, of the proceeds of such assets and properties upon any foreclosure thereon or other disposition thereof.
In consideration of the mutual benefits accruing to First Lien Agent, the First Lien Lenders, Second Lien Agent and the other Second Lien Creditors hereunder and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows :
1. DEFINITIONS
As used above and in this Intercreditor Agreement, the following terms shall have the meanings ascribed to them below:
1.1 Agreements shall mean, collectively, the First Lien Loan Agreements and the Second Lien Documents.
1.2 Accession Agreement shall mean an accession agreement, if any, to the Second Lien Documents, entered into by the Issuer, the other Obligors, the agent, trustee or other representative for the holders of any Pari Passu Indebtedness and the Second Lien Agent from time to time.
1.3 Banking Services shall mean each and any of the following bank services provided to Borrower or any other Obligor by any Cash Management Creditor (as hereafter defined): (a) commercial credit cards, (b) stored value cards and (c) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts, netting and interstate depository network services).
1.4 Banking Services Obligations of Borrower and the other Obligors shall mean any and all obligations of Borrower or the other Obligors, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.
1.5 Borrower shall collectively mean CURO Financial Technologies Corp., a Delaware corporation, and CURO Intermediate Holdings Corp., a Delaware corporation, jointly and severally, and their successors and assigns, including, without limitation, any receiver, trustee or debtor-in-possession on their behalf or on behalf of any of their successors or assigns.
1.6 Cash Management Creditor shall mean any First Lien Lender party to the First Lien Credit Agreement or any Affiliate (as defined in the First Lien Credit Agreement) thereof that provides Banking Services to Borrower or any other Obligor.
1.7 Collateral shall mean all assets and properties of any kind whatsoever, real or personal, tangible or intangible and wherever located, whether now owned or hereafter acquired, of Borrower or any other Obligor in which a security interest is granted (or purported to be granted) under any of the Agreements.
1.8 Creditors shall mean, collectively, First Lien Agent, the First Lien Lenders, Second Lien Agent, Trustee and the other Second Lien Creditors, and their respective successors and assigns, being sometimes referred to herein individually as a Creditor.
1.9 Default shall mean a Default or an Event of Default or similar term, as such terms are defined in the First Lien Credit Agreement, and a Default or an Event of Default or similar term, as such terms are defined in the Indenture or any Pari Passu Payment Lien Document, so long as any such Agreement is in effect.
2
1.10 Enforcement Action shall mean the exercise of any rights and remedies in respect of Collateral securing the First Lien Obligations or the Second Lien Obligations by the applicable Creditor or Creditors including, without limitation, (a) any action by any Creditor to foreclose on the Lien of such Person in any Collateral, (b) any action by any Creditor to take possession of, sell or otherwise realize (judicially or non-judicially) upon any Collateral (including, without limitation, by setoff or notification of account debtors), and/or (c) the commencement by any Creditor of any legal proceedings against Borrower or any other Obligor or with respect to any Collateral to facilitate the actions described in clauses (a) and (b) above.
1.11 First Lien Agent shall mean, initially, Bay Coast Bank, in its capacity as agent for the First Lien Lenders under the First Lien Credit Agreement, and its successors and assigns acting in a similar capacity under the First Lien Credit Agreement, and shall include any successor First Lien Agent designated pursuant to Section 4.3(a).
1.12 First Lien Credit Agreement shall mean, initially, the Revolving Loan Agreement, dated as of September 1, 2017, by and among the Company, First Lien Agent and certain other First Lien Lenders party thereto, as the same now exists or may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated (in each case, whether or not upon termination and whether with the original lenders, institutional investors or otherwise, including through the issuance of debt securities) from time to time in accordance with the terms of this Intercreditor Agreement, and shall include any replacement First Lien Credit Agreement designated pursuant to Section 4.3(a).
1.13 First Lien Default shall mean a Default under the First Lien Credit Agreement.
1.14 First Lien Lenders shall mean, collectively, (i) First Lien Agent, (ii) Bay Coast Bank, in its capacity as a lender under the First Lien Credit Agreement and each of the other lenders now or hereafter party to the First Lien Credit Agreement from time to time, (iii) all Hedging Creditors (as hereafter defined), (iv) all Cash Management Creditors, and (v) in each case in respect of preceding clauses (i) through (iv), their respective successors and assigns , and shall include any replacement First Lien Lenders designated pursuant to Section 4.3(a).
1.15 First Lien Loan Agreements shall mean, collectively, (i) the First Lien Credit Agreement, (ii) all agreements, confirmations and other documents entered into or evidencing any Hedging Transaction, (iii) all agreements and other documents entered into or evidencing any Banking Services and (iv) all other agreements, documents, notes, guaranties, collateral documents and instruments at any time executed and/or delivered by Borrower or any other Obligor with, to or in favor of First Lien Agent and/or the First Lien Lenders in connection therewith or related thereto, including all Facility Documents or any similar term as defined in the First Lien Credit Agreement, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated from time to time (in each case, whether or not upon termination and whether with the original lenders, institutional investors or otherwise, including through the issuance of debt securities), and shall include any replacement First Lien Loan Agreement designated pursuant to Section 4.3(a).
3
1.16 First Lien Obligations shall mean any and all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower or any other Obligor (including, without limitation, Hedging Obligations and Banking Services Obligations) to First Lien Agent and the First Lien Lenders evidenced by or arising under any of the First Lien Loan Agreements, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including (without limitation) principal, premium, interest, reimbursement, obligations, charges, fees, obligations to post cash collateral, costs, indemnities and expenses (including, without limitation, attorneys and consultant fees and expenses), however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of any of the First Lien Loan Agreements or after the commencement of any Insolvency Proceeding with respect to Borrower or any other Obligor (and including, without limitation, the payment of interest, fees and expenses which would accrue and become due but for the commencement of such Insolvency Proceeding at the applicable rate provided for in the respective First Lien Loan Agreements, whether or not such interest, fees or expenses is allowed or allowable in whole or in part in any such Insolvency Proceeding), and in each case, whether or not allowed or allowable in an Insolvency Proceeding, provided that, for purposes of this Intercreditor Agreement, the term First Lien Obligations shall not include the principal amount of loans, the face amount of letter of credit accommodations, Hedging Obligations and Banking Services Obligations in excess of the Maximum First Lien Obligations. The foregoing limitation shall not apply to, and the term First Lien Obligations shall include, obligations consisting of interest and fees, costs or expenses (except for that portion of interest and fees attributable to the portion of the First Lien Obligations that exceeds the Maximum First Lien Obligations), in each case whether or not charged by First Lien Agent and/or the other First Lien Lenders to any loan account of Borrower maintained by First Lien Agent pursuant to the First Lien Credit Agreement.
1.17 First Priority Claims shall have the meaning set forth in the Indenture.
1.18 Hedging Creditor shall mean any First Lien Lender party to the First Lien Credit Agreement or any Affiliate (as defined in the First Lien Credit Agreement) thereof, including any First Lien Lender party to the First Lien Credit Agreement or any Affiliate thereof at the time that the respective Hedging Transaction was entered into (even if the respective First Lien Lender subsequently ceases to be a First Lien Lender under the First Lien Credit Agreement for any reason).
1.19 Hedging Obligations of Borrower or any other Obligor shall mean any and all obligations of such Obligor, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Hedging Transactions, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Hedging Transactions.
1.20 Hedging Transaction shall mean any transaction (including an agreement with respect thereto) now existing or hereafter entered by Borrower or any other Obligor with a Hedging Creditor which is an interest rate protection agreement, interest rate, swap, cap, collar or floor agreement, foreign currency exchange agreements or other interest rate or currency management device used to manage interest rate risk or exchange rate risk.
4
1.21 Indenture shall mean the Indenture, dated as of February 15, 2017, among the Issuer, the other Obligors named therein, the Second Lien Agent and Trustee, as the same now exists or may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated in accordance with the terms of this Intercreditor Agreement.
1.22 Indenture Documents shall mean the Indenture, the Notes and all agreements, documents, collateral documents, guaranties and instruments at any time executed and/or delivered by the Issuer or any other Obligor with, to or in favor of the Second Lien Creditors in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated (in each case, whether or not upon termination and whether with the original holders, institutional investors or otherwise).
1.23 Indenture Obligations shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by the Issuer or any other Obligor to the Notes Secured Creditors evidenced by or arising under the Indenture Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including, without limitation, principal, interest, premium, if any, charges, fees, costs, indemnities and expenses (including, without limitation, attorneys and consultant fees and expenses), however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Indenture Documents or after the commencement of any Insolvency Proceeding with respect to the Issuer or any other Obligor (and including, without limitation, the payment of interest which would accrue and become due but for the commencement of such Insolvency Proceeding, whether or not such interest is allowed or allowable in whole or in part in any such Insolvency Proceeding), and in each case, whether or not allowed or allowable in an Insolvency Proceeding, provided that for purposes of this Intercreditor Agreement, the term Indenture Obligations shall not include (i) the principal amount of Notes in excess of $470,000,000.00 plus any interest thereon that may have accrued and been added to principal, (ii) interest accruing at rates in excess of the rates permitted by this Intercreditor Agreement or (iii) interest, premium, if any, fees, costs or expenses attributable to the portion of the principal that exceeds the maximum amount provided for in clause (i) above.
1.24 Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect (including the U.S. Bankruptcy Code), or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of with respect to any Person or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, (b) any liquidation, dissolution, reorganization or winding up of such Person whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (c) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other similar arrangement in respect of such Persons creditors generally or any substantial portion of its creditors undertaken under any law.
1.25 Issuer shall mean CURO Financial Technologies Corp., a Delaware corporation, and its successors and assigns, including, without limitation, any receiver, trustee or debtor-in-possession on its behalf or on behalf of any of its successors or assigns.
5
1.26 Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).
1.27 Maximum First Lien Obligations shall mean the aggregate outstanding principal amount of Indebtedness under Credit Facilities (each as defined in the Indenture (as in effect on the date hereof)) incurred pursuant to the First Lien Credit Agreement not to exceed the amount permitted to be incurred pursuant to clauses (1) and (17) of the definition of Permitted Debt contained in the Indenture (as in effect on the date hereof).
plus (A) the aggregate amount of exposure that the First Lien Lenders have in respect of Banking Services Obligations then provided or outstanding that constitute First Priority Claims,
plus (B) the Swap Termination Value of any Hedging Obligations that constitute First Priority Claims.
1.28 Noteholders shall mean holders of the Notes at any time and from time to time and their respective successors and assigns (including any other creditor or group of creditors that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Second Lien Obligations under the Indenture Documents at any time from time to time (in each case, whether or not upon termination and whether with the original holders, institutional investors or otherwise)).
1.29 Notes shall mean the Issuers 12.000% Senior Secured Notes due 2022, issued pursuant to the Indenture, as the same may hereafter be amended, modified, supplemented, extended, replaced, renewed, refinanced or restated in accordance with the terms of this Intercreditor Agreement (in each case, whether or not upon termination and whether with the original holders, institutional investors or otherwise).
1.30 Notes Guarantees shall mean, collectively, the guarantees of the Obligors (other than the Issuer) under the Notes and the Indenture.
1.31 Notes Secured Parties shall mean, collectively, the Second Lien Agent, the Trustee and the holders of the Notes, and their successors and assigns.
1.32 Obligors shall mean, individually and collectively, any Person liable on or in respect of the Second Lien Obligations or the First Lien Obligations, and each of their successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession on behalf of such person or on behalf of any such successor or assign.
1.33 Official Body shall mean any national, Federal, state, local or other government or political subdivision or any agency, authority, board, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
6
1.34 Order of Payment shall mean, in connection with the application, payment or distribution of proceeds of any Collateral pursuant to all applicable terms hereof (including, without limitation, any proceeds of any Collateral pursuant to any Enforcement Action, together with all other proceeds received by any Creditor (including all funds received in respect of post-petition interest or fees and expenses) as a result of any such Enforcement Action or as a result of any distribution of or in respect of any Collateral (whether or not expressly characterized as such) upon or in any Insolvency Proceeding with respect to Borrower or any other Obligor, or the application of any Collateral (or proceeds thereof) to the payment thereof or any distribution of Collateral (or proceeds thereof) upon the liquidation or dissolution of Borrower or any other Obligor), the following order for such application: (i) first , ratably to pay all First Lien Obligations in such order as specified in the relevant First Lien Loan Agreements until all First Lien Obligations have been paid in full in cash (including amounts paid to be held by First Lien Agent and/or the First Lien Lenders as cash collateral in such amounts as First Lien Agent determines is reasonably necessary to secure the First Lien Lenders in connection with (x) any issued and outstanding letters of credit under the First Lien Credit Agreement but not in any event in an amount greater than 105% of the aggregate undrawn face amount of such letters of credit constituting First Lien Obligations, and (y) any Hedging Obligations and Banking Services Obligations); (ii) second , ratably to pay any obligations in respect of any expense reimbursements and indemnities then due and payable to Trustee and Second Lien Agent in respect of the Second Lien Obligations, until paid in full; (iii) third , ratably to pay interest and fees due and payable in respect of the Second Lien Obligations, until paid in full; (iv) fourth , ratably to pay principal and premium, if any, of the Second Lien Obligations, until paid in full; (v) fifth , to the ratable payment of all other obligations, liabilities and indebtedness in respect of the First Lien Loan Agreements and the Obligations (as defined in the First Lien Credit Agreement) then due and payable; and (vi) sixth , to the ratable payment of all other obligations, liabilities and indebtedness in respect of the Second Lien Documents and the Second Lien Obligations then due and payable.
1.35 Pari Passu Indebtedness shall mean any Indebtedness (as defined in the Indenture) (other than any Indebtedness evidenced by an a Additional Note (as defined in the Indenture) or related Notes Guarantee) (1) that is permitted to be incurred under (x) Section 5.09 of the Indenture (as in effect on the date hereof) and (y) the First Lien Credit Agreement and
(2) that is secured on a pari passu basis with the Notes and the Notes Guarantees, as applicable, by a Permitted Lien (as defined in the Indenture (as in effect on the date hereof)) described in clause (16) of the definition thereof; provided that (i) such Indebtedness is so designated as Pari Passu Indebtedness in an Officers Certificate (as defined in the Indenture) delivered to the First Lien Agent and the Second Lien Agent and (ii) an authorized representative of the holders of such Indebtedness shall have executed and delivered a Supplement and an Accession Agreement.
1.36 Pari Passu Indebtedness Secured Parties shall mean, collectively, the agent, the trustee or other representative, if any (and their respective successors and assigns), and the holders of Pari Passu Indebtedness identified in a Supplement and an Accession Agreement.
1.37 Pari Passu Payment Lien Documents shall mean any loan agreement, indenture or other instrument that evidences or governs any Pari Passu Indebtedness and all other related documents identified in a Supplement and an Accession Agreement.
7
1.38 Pari Passu Payment Lien Obligations shall mean all obligations (including interest that accrues after the commencement of an insolvency or bankruptcy case, regardless of whether such interest is an allowed claim under such case) outstanding under the Pari Passu Payment Lien Documents.
1.39 Person or person shall mean any individual, sole proprietorship, partnership, corporation (including without limitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock company, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof.
1.40 Release Event shall mean (i) prior to the occurrence of an Insolvency Proceeding by or against Borrower or any other Obligor, upon the occurrence and during the continuance of an Event of Default under the First Lien Loan Agreements, the taking of any Enforcement Action with respect to all or any portion of the Collateral or (ii) after the occurrence of an Insolvency Proceeding by or against Borrower or any other Obligor, the taking of any Enforcement Action described in clauses (a) and (b) of the definition of such term by any Creditor or the entry of an order of a Bankruptcy Court pursuant to Section 362 of the U.S. Bankruptcy Code vacating the automatic stay and authorizing any Creditor to take any Enforcement Action.
1.41 Required Lenders shall mean the Required Lenders or any similar term as defined in the First Lien Credit Agreement.
1.42 Second Lien Agent shall mean TMI Trust Company, in its capacity as collateral agent for itself and the other Second Lien Creditors under the Indenture, and its successors and assigns and each other Person acting in a similar capacity under any Indenture and each Accession Agreement and related Supplement.
1.43 Second Lien Creditors shall mean, collectively, the Notes Secured Parties and the Pari Passu Indebtedness Secured Parties.
1.44 Second Lien Default shall mean a Default under the Indenture or any Pari Passu Payment Lien Document.
1.45 Second Lien Documents shall mean, collectively, the Indenture Documents and the Pari Passu Payment Lien Documents, if any.
1.46 Second Lien Obligations shall mean, collectively, the Indenture Obligations and the Pari Passu Payment Lien Obligations.
1.47 Standstill Period shall have the meaning specified in Section 2.10 hereof.
8
1.48 Swap Termination Value shall mean, as of any date of determination, in respect of any one or more Hedging Transactions, after taking into account the effect of any legally enforceable netting agreement relating to such Hedging Transactions, (a) for any date on or after the date such Hedging Transactions have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount determined as the mark to market value for such Hedging Transaction, as determined pursuant to the terms of the documents governing such Hedging Transaction, or if none is specified, then based upon one or more readily available quotations provided by a dealer in Hedging Transactions (which may include First Lien Agent or any First Lien Lender) .
1.49 Trustee shall mean TMI Trust Company, in its capacity as Trustee under the Indenture and its successors and assigns including each other Person acting in a similar capacity under any Indenture.
1.50 UCC shall mean the Uniform Commercial Code, as amended and in effect in any applicable jurisdiction.
1.51 U.S. Bankruptcy Code shall mean Title 11 of the United States Code entitled Bankruptcy, as now and hereafter in effect, any successor statute.
1.52 All terms defined in the UCC as in effect in the State of New York, unless otherwise defined herein shall have the meanings set forth therein. All references to any term in the plural shall include the singular and all references to any term in the singular shall include the plural.
2. PAYMENTS; SECURITY INTERESTS; PRIORITIES; REMEDIES
2.1 First Lien Agent and the First Lien Lenders hereby acknowledge that Second Lien Agent, for its own benefit and for the benefit of the other Second Lien Creditors, has been granted Liens upon all of the Collateral pursuant to the Second Lien Documents to secure the Second Lien Obligations. Second Lien Agent on behalf of itself and the other Second Lien Creditors hereby acknowledges that First Lien Agent, for the benefit of the First Lien Lenders, has been granted Liens upon all of the Collateral pursuant to the First Lien Loan Agreements to secure the First Lien Obligations.
2.2 (a) Notwithstanding the date, order or time of attachment, or the date, order, time or manner of perfection, or the date, order or time of filing or recordation of any document or instrument, or other method of perfecting a Lien in favor of each Creditor in any Collateral, and notwithstanding any conflicting terms or conditions which may be contained in any of the Agreements and notwithstanding any provision of the UCC or any other applicable law or any other circumstance whatsoever (including any non-perfection or non-validity or unenforceability of any Lien purporting to secure the First Lien Obligations or the Second Lien Obligations), any Lien securing First Lien Obligations now or hereafter held by or on behalf First Lien Agent or First Lien Lender or any agent or trustee therefore, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, will have priority over and be senior in all respects to the Liens securing the Second Lien Obligations (and the Liens securing the Second Lien Obligations will be junior and subordinate to the Liens securing the First Lien Obligations). All Liens on the Collateral securing any First Lien Obligations shall be and remain senior in all respects and prior to all Liens on the Collateral securing any Second Lien Obligations for all purposes, whether or not such Lien securing any First Lien Obligations are subordinated to any Lien securing any other obligation of any Obligor or any other Person. The parties hereto acknowledge and agree that it is their intent that the First Lien Obligations (and the security therefor) constitute a separate and distinct class (and separate and distinct claims) from the Second Lien Obligations (and the security therefor).
9
(b) Each of First Lien Agent, for itself and on behalf of the other First Lien Lenders, and Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that it will not, and hereby waives any right to, contest or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding), the priority, perfection, validity or enforceability of any Lien in the Collateral of First Lien Agent or Second Lien Agent, as the case may be; provided that nothing in this Intercreditor Agreement shall be construed to prevent or impair the rights of First Lien Agent or any other First Lien Lender to enforce this Intercreditor Agreement.
(c) The parties hereto agree that, so long as the First Lien Obligations have not been paid in full in cash, none of Borrower nor any other Obligor shall, nor shall any such Person permit any of its subsidiaries to, (i) unless waived in writing by First Lien Agent, grant or permit any additional Liens on any asset to secure the Second Lien Obligations unless it has granted, or concurrently therewith grants, a Lien on such asset to secure the First Lien Obligations or (ii) unless waived in writing by Second Lien Agent or otherwise permitted by the Indenture, grant or permit any additional Liens on any asset to secure any First Lien Obligations unless it has granted, or concurrently therewith grants, a Lien on such asset to secure the Second Lien Obligations, with each such Lien to be subject to the provisions of this Intercreditor Agreement. To the extent that the provisions of this paragraph (c) are not complied with for any reason, without limiting any other right or remedy available to First Lien Agent or the other First Lien Lenders or the Second Lien Creditors, Second Lien Agent agrees, for itself and on behalf of the other Second Lien Creditors, that any amounts received by or distributed to any Second Lien Creditors pursuant to or as a result of any Lien granted in contravention of this Section 2.2(c) shall be subject to Section 2.4 hereof.
(d) The parties hereto acknowledge and agree that it is their intention that the Collateral securing the First Lien Obligations and the Second Lien Obligations be identical. In furtherance of the foregoing, the parties hereto agree:
(i) to cooperate in good faith in order to determine, upon any reasonable request by First Lien Agent or Second Lien Agent, the specific assets included in the Collateral, the steps required to be taken to perfect the Liens of First Lien Agent or Second Lien Agent thereon and the identity of the respective parties obligated under the First Lien Loan Agreements and the Second Lien Documents in respect of the First Lien Obligations and the Second Lien Obligations, respectively;
(ii) that, except to the extent otherwise agreed to by First Lien Agent, the documents, agreements and instruments creating or evidencing the Collateral securing the Second Lien Obligations and the Liens of Second Lien Agent shall be in all respects in the same form as the documents, agreements and instruments creating or evidencing the Collateral securing the First Lien Obligations and the Liens of First Lien Agent, other than with respect to the first priority and second priority nature of the Liens created or evidenced thereunder, the identity of the secured parties that are parties thereto or secured thereby and other matters contemplated by this Intercreditor Agreement; and
10
(iii) that it will not obtain control (as defined in the UCC in effect in the State of New York) of any deposit account or securities account maintained by Borrower or any other Obligor (other than a deposit account maintained with First Lien Agent) or file any UCC financing statement against Borrower or any other Obligor after the date hereof without giving Second Lien Agent or First Lien Agent, as the case may be, prior written notice of its intention to do so.
2.3 The priorities of the Liens provided in Section 2.2 hereof shall not be altered or otherwise affected by (a) any amendment, modification, supplement, extension, renewal, restatement, replacement or refinancing of the First Lien Obligations or the Second Lien Obligations, nor (b) any action or inaction which any of the Creditors may take or fail to take in respect of the Collateral.
2.4 Subject to Section 2.2 hereof and Section 2.9 hereof, prior to the payment in full in cash of the First Lien Obligations, all Collateral and all proceeds of the Collateral received by the Second Lien Agent or any of the other Second Lien Creditors (including, without limitation, any proceeds of any Collateral pursuant to any Enforcement Action, together with all other proceeds received by any Creditor (including all funds received in respect of post-petition interest or fees and expenses) as a result of any such Enforcement Action or as a result of any distribution of or in respect of any Collateral (whether or not expressly characterized as such) upon or in any Insolvency Proceeding with respect to Borrower or any other Obligor, or the application of any Collateral (or proceeds thereof) to the payment thereof or any distribution of Collateral (or proceeds thereof) upon the liquidation or dissolution of Borrower or any other Obligor) shall be segregated from the other funds and property of Second Lien Agent or such Second Lien Creditor, as the case may be, and received and held in trust by Second Lien Agent or such Second Lien Creditor, as the case may be, as trustee, and shall be forthwith paid over, in the funds and currency received, to First Lien Agent for application to the First Lien Obligations; the foregoing turnover provision shall apply to all Collateral and all proceeds of Collateral (including all cash removed from any Obligors premises or accounts) received by or on behalf of Second Lien Agent or any other Second Lien Creditor in connection with any Enforcement Action taken by Second Lien Agent or any other Second Lien Creditor following the expiration of the Standstill Period notwithstanding anything to the contrary in Section 2.2 hereof. All proceeds of the Collateral received by First Lien Agent or the First Lien Lenders after the First Lien Obligations have been paid in full in cash shall be forthwith paid over, in the funds and currency received, to Second Lien Agent for application to the Second Lien Obligations (unless otherwise required by law).
2.5 The foregoing provisions of this Intercreditor Agreement are intended solely to govern the respective Lien priorities as between the Creditors and shall not impose on any Creditor any obligations in respect of the disposition of proceeds of any Collateral which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or governmental authority or any applicable law.
11
2.6 In the event that First Lien Agent, the First Lien Lenders, Second Lien Agent or the other Second Lien Creditors shall, in the exercise of their rights under their Agreements or otherwise, receive possession or control of any books and records of Borrower or any other Obligor which contain information identifying or pertaining to any Collateral in which First Lien Agent, the First Lien Lenders, Second Lien Agent or the other Second Lien Creditors (as the case may be) has been granted a Lien, such Person shall notify such other Person that they have received such books and records and shall, as promptly as practicable thereafter, make available to such other Person (at the expense of Borrower and the other Obligors) such books and records for inspection and duplication.
2.7 Subject to the terms and conditions set forth in this Intercreditor Agreement, First Lien Agent and the First Lien Lenders shall have the exclusive right to manage, perform and enforce the terms of the First Lien Loan Agreements with respect to the Collateral, to exercise and enforce all privileges and rights thereunder according to their discretion and the exercise of their business judgment, including, without limitation, the exclusive right to take or retake control or possession of such Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate such Collateral and to appoint an agent in connection with the foregoing, and to incur expenses in connection with such sale, lease or other disposition and to exercise all of the rights and remedies of a secured creditor under the UCC of any applicable jurisdiction or other applicable law (including, without limitation, the U.S. Bankruptcy Code). In exercising rights and remedies with respect to the Collateral, First Lien Agent and the other First Lien Lender may enforce the provisions of the First Lien Loan Agreements and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their discretion. In furtherance of the foregoing, Second Lien Agent, for itself and on behalf of the Second Lien Creditors, agrees that, subject to the terms and conditions of this Intercreditor Agreement (including, without limitation, Section 2.10 hereof), neither Second Lien Agent nor any other Second Lien Creditor will (i) enforce or exercise, or seek to enforce or exercise, any rights or remedies with respect to any Collateral (including, without limitation, the exercise of any right of set-off or under any lockbox agreement, control account agreement, landlord waiver or bailees letter or similar agreement or arrangement to which Second Lien Agent or any Second Lien Creditor is a party) or institute or commence, or join with any Person in commencing, any action or proceeding with respect to such rights or remedies (including any action of foreclosure, enforcement, collection or execution and any Insolvency Proceeding), (ii) contest, protest or object to any foreclosure action or proceeding brought by First Lien Agent or any other enforcement or exercise by any First Lien Lender of any rights or remedies relating to the Collateral so long as Liens of the Second Lien Creditors attach to the proceeds thereof, subject to the relative priorities provided for in this Intercreditor Agreement, or (iii) object to the forbearance by any First Lien Lender from commencing or pursuing any foreclosure action or proceeding or any other enforcement or exercise of any rights or remedies. In connection with taking any Enforcement Action against the Collateral (including without limitation any public or private sale under the UCC), First Lien Agent shall give Second Lien Agent such reasonable notice of such sale as may be required under the applicable UCC; provided , however , that, subject to Section 3.5 hereof, 10 days notice shall be deemed in all respects to be commercially reasonable notice.
12
2.8 Notwithstanding anything to the contrary contained in any of the Agreements, but subject to Section 2.9 below and Section 2.10 below, prior to the time when First Lien Agent and the First Lien Lenders shall have received payment in full of all First Lien Obligations in cash, whether or not an Insolvency Proceeding has been commenced by or against Borrower or any other Obligor, during the continuance of a Release Event, only the First Lien Lenders shall have the right to restrict or permit, or approve or disapprove, the sale, transfer or other disposition of, or otherwise deal with, the Collateral or to take and continue any Enforcement Action with respect to the Collateral.
2.9 (a) Prior to the existence of a Release Event, upon any release, sale or disposition of Collateral permitted pursuant to the terms of the First Lien Loan Agreements and the Second Lien Documents that results in the release of the Lien of First Lien Agent and the First Lien Lenders in any Collateral, the Liens of Second Lien Agent and the other Second Lien Creditors shall be automatically and unconditionally released with no further consent or action of any Person. Second Lien Agent shall, at the expense of the Obligors, promptly execute and deliver such release documents as First Lien Agent may upon written request reasonably require in connection with any such release, sale or disposition of Collateral.
(b) Second Lien Agent shall, at any time during the continuance of a Release Event, at the expense of the Obligors:
(i) upon the written request of First Lien Agent with respect to the Collateral identified in such request as set forth below (which request shall specify the proposed terms of the sale and the type and amount of consideration to be received in connection therewith), subject to clause (ii) below, release or otherwise terminate its Liens on such Collateral, to the extent such Collateral is to be sold or otherwise disposed of either by First Lien Agent or its agents;
(ii) deliver such release documents as First Lien Agent may reasonably require in connection therewith; provided , that ,
(A) First Lien Agent shall promptly apply any such proceeds as specified in the Order of Payment until the First Lien Obligations have been paid in full in cash,
(B) if any such sale or disposition results in a surplus after application of the proceeds in the Order of Payment to the First Lien Obligations, such surplus shall be paid to Second Lien Agent for the prompt application to the Second Lien Obligations as specified in the Order of Payment until the Second Lien Obligations have been paid in full in cash;
(C) if any surplus shall remain after the application to the Second Lien Obligations pursuant to preceding clause (B), such surplus shall be applied to the remaining obligations, liabilities and indebtedness in the Order of Payment as provided in clauses (v) and (vi) of the definition thereof; and
(D) if the closing of the sale or disposition of such Collateral is not consummated, First Lien Agent shall promptly return all release documents to the Second Lien Agent for the benefit of the Second Lien Creditors.
13
(c) Second Lien Agent and the other Second Lien Creditors shall be deemed, in all cases, to have consented under the Agreements to which such Second Lien Agent and the other Second Lien Creditors are a party to such sale or other disposition of Collateral described in Sections 2.9(a) and (b) above. In furtherance of the foregoing, Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, hereby irrevocably constitutes and appoints First Lien Agent and any officer or agent of First Lien Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Second Lien Agent or such other Second Lien Creditor or in First Lien Agents own name, from time to time in First Lien Agents discretion, for the purpose of carrying out the terms of this clause (c) and clauses (b)(i) and (ii) above, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of such clauses, including any endorsements or other instruments of transfer or release.
2.10 Except as specifically provided in Section 2.11 below, notwithstanding any rights or remedies available to Second Lien Agent or the other Second Lien Creditors under any of the Second Lien Documents, applicable law or otherwise, prior to the time that First Lien Agent and the First Lien Lenders shall have received the payment in full of all First Lien Obligations in cash, neither Second Lien Agent nor any of the other Second Lien Creditors shall, directly or indirectly, take any Enforcement Action with respect to any of the Collateral; provided , however , commencing on the 151st day after receipt by First Lien Agent of Second Lien Agents written declaration of a Second Lien Default which constitutes an Event of Default and written demand by Second Lien Agent to Borrower for the accelerated payment of all Second Lien Obligations (unless Borrower or any other Obligor is subject to an Insolvency Proceeding by reason of which such declaration and the making of such demand is stayed, in which case, commencing on the date of the commencement of such Insolvency Proceeding) (the Standstill Period ), then Second Lien Agent or the other Second Lien Creditors may take action to enforce their Liens on the Collateral, but only so long as First Lien Agent and/or the First Lien Lenders are not pursuing in a commercially reasonable manner the exercise of their enforcement rights or remedies against, or diligently attempting to vacate (in a commercially reasonable manner) any stay of enforcement of their Liens on, all or a material portion of the Collateral (including, without limitation, commencement of any action to foreclose its Liens on all or any material portion of the Collateral, notification of account debtors to make payments to First Lien Agent, any action to take possession of all or any material portion of the Collateral or commencement of any legal proceedings or actions against or with respect to all or any material portion of the Collateral) and with any determination of which Collateral to proceed against, and in what order, to be made by First Lien Agent or such First Lien Lenders in their reasonable judgment); provided further that (x) any Collateral or any proceeds of Collateral received by Second Lien Agent or such other Second Lien Creditor, as the case may be, in connection with the enforcement of such Lien shall be applied in accordance with the Order of Payment and (y) First Lien Agent or any other First Lien Lenders may at any time take over such enforcement proceedings from Second Lien Agent or the other Second Lien Creditors so long as First Lien Agent or such the First Lien Lenders, as the case may be, pursue enforcement proceedings with respect to all or a material portion of the Collateral in a commercially reasonable manner, with any determination of which Collateral to proceed against, and in what order, to be made by First Lien Agent or such First Lien Lenders in their reasonable judgment, and provided further that Second Lien Agent or the other Second Lien Creditors, as the case may be, shall only be able to
14
recoup (from amounts realized by First Lien Agent or any First Lien Lender(s) in any enforcement proceeding with respect to the Collateral (whether initiated by First Lien Agent or First Lien Lender(s) or taken over by them as contemplated above) any expenses incurred by them in accordance with the priorities set forth in the Order of Payment. In any sale or other disposition of any of the Collateral by Second Lien Agent and/or the other Second Lien Creditors, Second Lien Agent and/or the other Second Lien Creditors shall conduct such sale or disposition in a commercially reasonable manner. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all rights and remedies of a secured creditor under the Uniform Commercial Code of any applicable jurisdiction and of a secured creditor under the bankruptcy laws of any applicable jurisdiction.
2.11 Section 2.10 above shall not be construed to in any way limit or impair the right of: (a) any First Lien Creditor to bid for or purchase Collateral at any private or judicial foreclosure upon such Collateral initiated by any other Creditor, (b) any Second Lien Creditor to cash bid for or purchase for cash Collateral, in an amount sufficient to pay the First Lien Obligations in full, at any private or judicial foreclosure upon such Collateral initiated by any other Creditor, (c) to join (but not control) any foreclosure or other judicial lien enforcement proceeding with respect to the Collateral initiated by First Lien Agent, so long as it does not delay or interfere in any material respect with the exercise by First Lien Agent or the First Lien Lenders of their rights as provided in this Intercreditor Agreement, and (d) the Second Lien Creditors right to receive any remaining proceeds of Collateral after satisfaction and payment in full in cash of all First Lien Obligations.
2.12 If the First Lien Lenders should honor a request by Borrower for a loan, advance or other financial accommodation under the First Lien Loan Agreements, whether or not the First Lien Lenders have knowledge that the honoring of such request would result in an event of default, or act, condition or event which with notice or passage of time or both would constitute an event of default under the Second Lien Documents, in no event shall First Lien Agent or the First Lien Lenders have any liability to Second Lien Agent or the other Second Lien Creditors as a result of such breach, and without limiting the generality of the foregoing, Second Lien Agent and the other Second Lien Creditors agree that neither First Lien Agent nor the First Lien Lenders shall have any liability for tortious interference with contractual relations or for inducement by First Lien Agent or the First Lien Lenders of Borrower to breach of contract or otherwise, provided, that, the First Lien Lenders agree that the aggregate principal amount of the First Lien Obligations outstanding at any one time (but not interest, costs, expenses or other charges payable by Borrower or any other Obligor to First Lien Agent and/or the First Lien Lenders or charged by First Lien Agent and/or the First Lien Lenders to any loan account of Borrower or any other Obligor maintained by First Lien Agent and/or the First Lien Lenders pursuant to the terms of the First Lien Credit Agreement) shall not exceed the Maximum First Lien Obligations. Nothing contained in this Section 2.12 shall limit or waive any right that Second Lien Agent or the other Second Lien Creditors have to enforce any of the provisions (other than with respect to the matters covered by this Intercreditor Agreement) of the Second Lien Documents against Borrower or any other Obligor.
15
2.13 (a) First Lien Agent and the First Lien Lenders shall not:
(i) make any amendment to the maturity date of any portion of the First Lien Obligations under the First Lien Credit Agreement to a date later than the latest maturity date of any portion of the Second Lien Obligations as extended from time to time pursuant to the terms of the Second Lien Documents; or
(ii) add to the Collateral securing the First Lien Obligations except as permitted by this Intercreditor Agreement.
(b) Second Lien Agent and the other Second Lien Creditors shall not agree to:
(i) make any amendment of the Second Lien Documents that would shorten the due dates of any principal or interest payments of the Second Lien Obligations;
(ii) make any amendment of the Second Lien Documents to the extent such amendment adds or modifies any representation, warranty, or covenant under the Second Lien Documents to be more restrictive on Borrower, any other Obligor or any of their respective subsidiaries, or adds or modifies any default or event of default under the Second Lien Documents to be more restrictive on Borrower, any other Obligor or any of their respective Subsidiaries; further, in no event shall any financial covenant maintenance tests (whether stated as a covenant, a default or otherwise) be added to the Second Lien Documents;
(iii) increase the interest rate under the Second Lien Documents by more than 300 basis points (excluding increases resulting from the accrual of interest at the default rate or interest paid-in-kind); or
(iv) add to the Collateral securing the Second Lien Obligations except as permitted by this Intercreditor Agreement.
(c) In the event First Lien Agent or the First Lien Lenders and the relevant Obligor(s) enter into any amendment, waiver or consent in respect of any of the First Lien Loan Agreements that are security or collateral documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of any such First Lien Loan Agreement or changing in any manner the rights of First Lien Agent, the First Lien Lenders, Borrower or any other Obligor thereunder, then such amendment, waiver or consent shall apply automatically to any comparable provision of the Second Lien Documents without the consent of Second Lien Agent or the other Second Lien Creditors and without any action by Second Lien Agent, Borrower or any other Obligor, provided , that (A) no such amendment, waiver or consent shall have the effect of (i) removing assets subject to the Lien of the Second Lien Documents, except to the extent that a release of such Lien is permitted by this Intercreditor Agreement or the Second Lien Documents, (ii) adversely affecting the rights or duties of Second Lien Agent without its consent, or (iii) permitting other liens on the Collateral not permitted under the terms of the Second Lien Documents or Section 4.5 hereof and (B) notice of such amendment, waiver or consent shall have been given to Second Lien Agent (although the failure to give any such notice shall in no way affect the effectiveness of any such amendment, waiver or consent).
16
2.14 Each Creditor shall give to the other Creditors concurrently with the giving thereof to Borrower (i) a copy of any written notice by such Creditor of an event of default under its respective Agreements with Borrower, or written notice of demand of payment from Borrower, and (ii) a copy of any written notice sent by such Creditor to Borrower at any time a Default under such Creditors Agreements with Borrower exists stating such Creditors intention to exercise any of its enforcement rights or remedies, including written notice pertaining to any foreclosure on any of the Collateral or other judicial or non-judicial remedy in respect thereof to the extent permitted hereunder, and any legal process served or filed in connection therewith; provided, that, the failure of any party to give notice as required hereby shall not affect the relative priorities of Creditors respective Liens as provided herein or the validity or effectiveness of any such notice as against Borrower or any other Obligor. Second Lien Agent shall provide a copy of any notice received pursuant to this Section to the Noteholders in accordance with its obligations under the Indenture.
2.15 In the event that any Second Lien Default shall have occurred solely as a result of a First Lien Default, and if such First Lien Default shall have been cured by Borrower or any other Obligor or waived by First Lien Agent or the First Lien Lenders (as applicable), then (i) such Second Lien Default shall be deemed to be automatically cured by Borrower or such other Obligor or waived by Second Lien Agent and the other Second Lien Creditors, as the case may be, and (ii) and any period under Section 2.10 hereof commenced and then existence shall terminate for all purposes hereunder and Second Lien Agent and the other Second Lien Creditors shall cease any remedial actions commenced and then continuing in connection with such Second Lien Default.
3. SECOND LIEN CREDITOR PURCHASE OPTION
3.1 Following the occurrence of (i) written notice by First Lien Agent or the First Lien Lenders of their intent to accelerate the payment of the First Lien Obligations or to commence any Enforcement Action with respect to any Collateral (or acceleration or the actual commencement of any such Enforcement Action), (ii) the commencement of any Insolvency Proceeding, or (iii) a payment default under the First Lien Loan Agreements which has not been cured or waived by the applicable creditors within 30 days of the occurrence thereof, any Second Lien Creditor shall have the option at any time within 90 days after such occurrence upon five (5) business days prior written notice from Second Lien Agent (on behalf of any such Second Lien Creditors) to First Lien Agent to purchase all (but not less than all) of the First Lien Obligations (including any unfunded commitments thereunder and participations in letters of credit) from the First Lien Lenders. Such notice from Second Lien Agent (on behalf of any such Second Lien Creditors) to First Lien Agent shall be irrevocable. In order to effectuate the foregoing, First Lien Agent shall estimate, upon the written request of Second Lien Creditors upon the exercise of such election, the amount in cash that would be necessary to so purchase such First Lien Obligations (assuming the date of the purchase is the date the election was made). The First Lien Obligations shall be purchased among the Second Lien Creditors (other than the Trustee and the Second Lien Agent) giving notice to Second Lien Agent of their intent (which notice shall be irrevocable) to exercise the purchase option hereunder based on the amounts specified therein.
17
3.2 On the date specified by Second Lien Creditors in such notice (which shall not be less than five (5) business days, nor more than thirty (30) days, after the receipt by First Lien Agent of the notice from Second Lien Agent of certain Second Lien Creditors election to exercise such option), the First Lien Lenders shall sell to such Second Lien Creditors electing to purchase, and the Second Lien Creditors electing to purchase shall purchase from the First Lien Lenders, the First Lien Obligations all in accordance with the terms and conditions to be agreed upon directly among the First Lien Agent and such Second Lien Creditors that have elected to purchase the First Lien Obligations . The First Lien Lenders hereby represent and warrant that, as of the date hereof, no approval of any court or other regulatory or governmental authority is required for such sale.
3.3 Upon the date of such purchase and sale, the Second Lien Creditors exercising the purchase option in this Section 3 shall (i) pay to the First Lien Lenders as the purchase price therefor the full amount of all the First Lien Obligations then outstanding and unpaid (including principal, premium, interest, fees and expenses, including reasonable attorneys fees and legal expenses but excluding any early termination fee payable pursuant to the First Lien Credit Agreement, which amount may be different from the estimate calculated in Section 3.1 above), (ii) furnish cash collateral or back-stop letters of credit to the First Lien Lenders in such amounts as the First Lien Lenders determine is reasonably necessary to secure the First Lien Lenders in connection with (A) any issued and outstanding letters of credit constituting First Lien Obligations provided by First Lien Agent or the First Lien Lenders (or letters of credit that First Lien Agent or the First Lien Lenders have arranged to be provided by third parties pursuant to the financing arrangements of the First Lien Lenders with Borrower or any other Obligor constituting First Lien Obligations) to Borrower or any other Obligor (but not in any event in an amount greater than 105% of the aggregate undrawn face amount of such letters of credit), and (B) Hedging Obligations and Banking Services Obligations in an amount not to exceed 100% of the Swap Termination Value or Banking Services Obligations, as applicable, and (iii) agree to reimburse First Lien Agent and the First Lien Lenders for any loss, cost, damage or expense (including reasonable attorneys fees and legal expenses) in connection with any commissions, fees, costs or expenses related to any issued and outstanding letters of credit constituting First Lien Obligations as described above and any checks or other payments provisionally credited to the First Lien Obligations, and/or as to which First Lien Agent or the First Lien Lenders have not yet received final payment. Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account of First Lien Agent (on behalf of the First Lien Lenders) as First Lien Agent may designate in writing to such Second Lien Creditors for such purpose. Interest shall be calculated to but excluding the business day on which such purchase and sale shall occur if the amounts so paid by such Second Lien Creditors to the bank account designated by First Lien Agent are received in such bank account prior to 12:00 Noon, New York City time, and interest shall be calculated to and including such business day if the amounts so paid by such Second Lien Creditors to the bank account designated by First Lien Agent are received in such bank account later than 12:00 Noon, New York City time.
18
3.4 Such purchase shall be expressly made without representation or warranty of any kind by the First Lien Lenders as to the First Lien Obligations or otherwise and without recourse to the First Lien Lenders, except that the First Lien Lenders shall represent and warrant: (i) the amount of the First Lien Obligations being purchased, (ii) that the First Lien Lenders own the First Lien Obligations free and clear of any Liens or encumbrances and (iii) the First Lien Lenders have the right to assign the First Lien Obligations and the assignment is duly authorized. All purchase or assignment documentation (including any cash collateral arrangements and back-stop letters of credit) in connection with the exercise of the Second Lien Creditors rights under this Section 3 shall be in form and substance reasonably satisfactory to First Lien Agent.
3.5 In the event that any one or more of the Second Lien Creditors exercises the purchase option set forth in this Section 3 , First Lien Agent shall take such action with respect to the Collateral (including in an Insolvency Proceeding) as may be reasonably requested in good faith and in writing by such Second Lien Creditors until the closing of such purchase. Notwithstanding anything to the contrary provided herein, the First Lien Lenders may take any Enforcement Actions they deem reasonable unless and until the Second Lien Creditors have notified First Lien Agent of their irrevocable option to purchase the First Lien Obligations.
4. MISCELLANEOUS
4.1 Representations .
(a) Second Lien Agent on behalf of itself and each other Second Lien Creditor represents and warrants to First Lien Agent and the First Lien Lenders that the execution, delivery and performance of this Intercreditor Agreement by Second Lien Agent on behalf of the other Second Lien Creditors are within the powers of Second Lien Agent and have been duly authorized by Second Lien Agent pursuant to the terms of the Indenture and all other Second Lien Documents.
(b) First Lien Agent on behalf of itself and each other First Lien Lender represents and warrants to Second Lien Agent and the other Second Lien Creditors that the execution, delivery and performance of this Intercreditor Agreement by First Lien Agent on behalf of the First Lien Lenders are within the powers of First Lien Agent and have been duly authorized by First Lien Agent pursuant to the terms of the First Lien Credit Agreement.
(c) Second Lien Agent and First Lien Agent acknowledge and agree that neither has made any representation or warranty with respect to the execution, validity, legality, completeness, collectability or enforceability of any other First Lien Loan Agreement or any other Second Lien Document. Except as otherwise provided in this Intercreditor Agreement First Lien Agent will be entitled to manage and supervise its extensions of credit to any Obligor in accordance with law and their usual practices, modified from time to time as it deems appropriate.
4.2 Amendments . Any waiver, permit, consent or approval by any Creditor of or under any provision, condition or covenant to this Intercreditor Agreement must be in writing and shall be effective only to the extent it is set forth in writing and as to the specific facts or circumstances covered thereby. Any amendment of this Intercreditor Agreement must be in writing and signed by First Lien Agent and Second Lien Agent.
19
4.3 Successors and Assigns .
(a) This Intercreditor Agreement is a continuing agreement and shall (i) remain in full force and effect until the earlier of (A) repayment in full in cash of all First Lien Obligations (but, for this purpose, determined without giving effect to the proviso to the first sentence of the definition of First Lien Obligations contained herein) or (B) the repayment in full of all Second Lien Obligations (but, for this purpose, determined without giving effect to the proviso to the definition of Second Lien Obligations contained herein), (ii) be binding upon the parties and their successors and assigns, and (iii) inure to the benefit of and be enforceable by the parties and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii), any Creditor may assign or otherwise transfer all or any portion of the First Lien Obligations or the Second Lien Obligations, as applicable, to any other Person in the manner contemplated in the First Lien Loan Agreements and the Second Lien Documents, and such other Person shall thereupon become vested with all the rights and obligations in respect thereof granted to such person herein or otherwise. In addition and without limiting the generality of the foregoing, if at any time in connection with or after the payment in full in cash of the First Lien Obligations, any of the Obligors enters into any replacement of the First Lien Credit Agreement (whether or not upon termination and whether with the original lenders, institutional investors or otherwise, including through the issuance of debt securities) secured by all or a portion of the Collateral on a first-priority basis, then (i) no such prior payment in full in cash of the First Lien Obligations shall be deemed to have occurred for all purposes of this Intercreditor Agreement, the First Lien Credit Agreement and the Second Lien Documents and (ii) for all purposes of this Intercreditor Agreement, including for purposes of the Lien priority and rights in respect of the Collateral (or such portion thereof) set forth herein, such replacement First Lien Credit Agreement shall become and be deemed designated the First Lien Credit Agreement, (iii) the administrative agent, trustee or similar representative (or, if no such entity exists, the lender or investor) under such replacement First Lien Credit Agreement shall become and be deemed designated the First Lien Agent, (iv) the lenders, Cash Management Creditors, Hedging Creditors and other creditors under such First Lien Credit Agreement shall become and be deemed designated the First Lien Lenders and (v) the obligations under such replacement First Lien Credit Agreement shall automatically be treated as First Lien Obligations.
(b) To the extent provided in their respective Agreements, each of the Creditors reserves the right to grant participations in, or otherwise sell, assign, transfer or negotiate all or any part of, or any interest in, the First Lien Obligations or the Second Lien Obligations, as the case may be; provided, that, no Creditor shall be obligated to give any notices to or otherwise in any manner deal directly with any participant in the First Lien Obligations or the Second Lien Obligations, as the case may be, and no participant shall be entitled to any rights or benefits under this Intercreditor Agreement except through the Creditor with which it is a participant and any sale of a participation in the First Lien Obligations shall be expressly made subject to the provisions of this Intercreditor Agreement (including, without limitation, Section 3 ).
(c) This Intercreditor Agreement is the Intercreditor Agreement referred to in the Second Lien Documents and the First Lien Loan Agreements. If this Intercreditor Agreement or all or any portion of any partys rights or obligations hereunder are assigned or otherwise transferred to any other Person or if the First Lien Loan Agreements or the Second Lien Documents are otherwise refinanced or replaced with another Person, both such other Person and the other existing parties shall execute and deliver an agreement containing terms substantially identical to those contained in this Intercreditor Agreement.
20
4.4 Insolvency . This Intercreditor Agreement shall be applicable both before and after the filing of any petition by or against Borrower or any other Obligor under the U.S. Bankruptcy Code or in any other Insolvency Proceeding and all converted or succeeding cases in respect thereof, and all references herein to Borrower or any other Obligor shall be deemed to apply to the trustee (or similar Person) for Borrower or any other Obligor and Borrower or any other Obligor as debtor-in-possession (or any other similar designation). The relative rights of the First Lien Lenders and the Second Lien Creditors in or to any distributions from or in respect of any Collateral or proceeds of Collateral, shall continue after the filing thereof on the same basis as prior to the date of the petition, subject to any court order approving the financing of, or use of cash collateral by, Borrower or any other Obligor as debtor-in-possession (or any other similar designation). Without limiting the generality of the foregoing, this Intercreditor Agreement is intended to constitute and shall be deemed to constitute a subordination agreement within the meaning of Section 510(a) of the U.S. Bankruptcy Code and is intended to be and shall be interpreted to be enforceable to the maximum extent permitted pursuant to applicable non-bankruptcy law.
4.5 Bankruptcy Financing and Other Matters .
(a) If Borrower or any other Obligor shall become subject to a case under the U.S. Bankruptcy Code and if as debtor(s)-in-possession move for approval of financing (a DIP Financing ) to be provided in good faith by one or more lenders (the DIP Lender ) under Section 364 of the U.S. Bankruptcy Code or the use of cash collateral with the consent of First Lien Agent or the Required Lenders under Section 363 of the U.S. Bankruptcy Code, Second Lien Agent and the other Second Lien Creditors agree that no objection nor any request for adequate protection or any other relief in connection therewith (except as otherwise permitted below) will be raised by Second Lien Agent or the other Second Lien Creditors to any such financing or use of cash collateral (nor will Second Lien Agent or any Second Lien Creditor join with or support any third Person opposing, objecting to or contesting any such financing or use of cash collateral) and, to the extent the Liens securing the First Lien Obligations are subordinated to or pari passu with such financing, the Liens of Second Lien Agent and the other Second Lien Creditors on the Collateral shall be deemed to be subordinated without any further action on the part of any Person, to the Liens securing such financing (and all obligations relating thereto), and the Liens securing the Second Lien Obligations shall have the same priority with respect to the Collateral relative to the Liens securing the First Lien Obligations as if such financing had not occurred, so long as (i) First Lien Agent or the Required Lenders do not oppose or object to such use of cash collateral or such financing, (ii) Second Lien Agent and the other Second Lien Creditors retain (solely as adequate protection (or its equivalent) for the interests of the Second Lien Creditors) a Lien on the Collateral (including proceeds thereof arising after the commencement of such proceeding) which will be subordinated to the Liens securing such financing (and all obligations relating thereto), and such Lien shall have the same priority with respect to the Collateral relative to the Liens securing the First Lien Obligations as if such financing had not occurred, (iii) if First Lien Agent and the
21
other First Lien Lenders receive a replacement Lien on post-petition assets of any Obligor, Second Lien Agent and the other Second Lien Creditors may request a replacement Lien on the same post-petition assets which will be subordinated to the Liens securing such financing (and all obligations relating thereto), and such Lien shall have the same priority with respect to the Collateral relative to the Liens securing the First Lien Obligations as if such financing had not occurred, (iv) the aggregate principal amount of loans and letter of credit accommodations, Hedging Obligations and Banking Services Obligations outstanding under such post-petition financing, together with the aggregate principal amount of the pre-petition First Lien Obligations, shall not exceed an amount equal to the Maximum First Lien Obligations, and (v) Second Lien Agent and the other Second Lien Creditors may oppose or object to such use of cash collateral or such financing on the same basis as an unsecured creditor, so long as such opposition or objection is not based on Second Lien Agent and the other Second Lien Creditors status as secured creditors and Second Lien Agent and the other Second Lien Creditors have acknowledged such unsecured status and that a portion of their Second Lien Obligations claim is unsecured.
(b) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that, in the event of any Insolvency Proceeding, neither Second Lien Agent nor the other Second Lien Creditors will oppose or object to any sale or other disposition of any Collateral free and clear of the Liens securing the Second Lien Obligations or other claims under Section 363 of the U.S. Bankruptcy Code, or any comparable provision of any other bankruptcy law, if the First Lien Lenders (or the requisite percentage thereof), or a representative authorized by the First Lien Lenders, shall consent to such disposition; provided , however , that the proceeds of such disposition to be applied to the First Lien Obligations or the Second Lien Obligations are applied in accordance with the Order of Payment and Second Lien Agent, on behalf of itself and the other Second Lien Creditors, may raise any objections to any such disposition of Collateral that could be raised by any creditor of Borrower or any other Obligor whose claims were not secured by any Liens on the Collateral and such objections are not based on the Second Lien Creditors status as secured creditors, and Second Lien Agent and the other Second Lien Creditors have acknowledged that such objections are not being made by them as secured creditors and that a portion of their Second Lien Obligations claim is unsecured.
(c) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that no Second Lien Creditor shall contest, or support any other person in contesting, (i) any request by First Lien Agent or any other First Lien Lender for adequate protection or (ii) any objection, based on a claim of a lack of adequate protection, by First Lien Agent or any other First Lien Lender to any motion, relief, action or proceeding. Notwithstanding the immediately preceding sentence, if, in connection with any DIP Financing or use of cash collateral, (A) any First Lien Lender is granted adequate protection in the form of a Lien on additional collateral, Second Lien Agent may, for itself and on behalf of the other Second Lien Creditors, seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the Liens of First Lien Agent and the First Lien Lenders and Liens of the DIP Lender on the same basis as the other Liens of Second Lien Agent and the other Second Lien Creditors are subordinated to the Liens of First Lien Agent and the First Lien Lenders under this Intercreditor Agreement, (B) any First Lien Lender is granted adequate protection in the form of a 507(b) claim, Second Lien Agent may, for itself and on behalf of the other Second Lien Creditors, seek or request adequate protection in the form of a 507(b) claim that is junior in priority to the First Lien Lenders administrative claim on at least the same basis as the Liens of Second Lien Agent and the other Second Lien Creditors are
22
subordinated to the Liens of First Lien Agent and the First Lien Lenders under this Intercreditor Agreement, or (C) any Second Lien Creditor is granted adequate protection in the form of a Lien on additional collateral, First Lien Agent shall, for itself and on behalf of the other First Lien Lenders, be granted adequate protection in the form of a Lien on such additional collateral that is senior to such Lien of the Second Lien Creditors as security for the First Lien Obligations.
(d) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that until the First Lien Obligations have been paid in full in cash, no Second Lien Creditor shall, without the prior written consent of First Lien Agent, seek or request relief from or modification of the automatic stay or any other stay in any Insolvency Proceeding in respect of any part of the Collateral, any proceeds thereof or any Lien of the Second Lien Creditors.
(e) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, agrees that no Second Lien Creditor shall oppose or seek to challenge any claim by First Lien Agent or any other First Lien Lender for allowance in any Insolvency Proceeding of First Lien Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the Liens of the First Lien Lenders (it being understood and agreed that such value shall be determined without regard to the existence of the Liens of the Second Lien Creditors on the Collateral). Regardless of whether any such claim for post-petition interest, fees or expenses is allowed or allowable, and without limiting the generality of the other provisions of this Intercreditor Agreement, this Intercreditor Agreement expressly is intended to include and does include the rule of explicitness in that this Intercreditor Agreement expressly entitles the First Lien Lenders, and is intended to provide the First Lien Lenders with the right, to receive payment of all post-petition interest, fees or expenses through distributions made pursuant to the provisions of this Intercreditor Agreement even though such interest, fees and expenses are not allowed or allowable against the bankruptcy estate of Borrower or any other Obligor under Section 502(b)(2) or Section 506(b) of the U.S. Bankruptcy Code or under any other provision of the U.S Bankruptcy Code or any other bankruptcy law.
(f) Second Lien Agent, for itself and on behalf of the other Second Lien Creditors, waives any claim any Second Lien Creditor may hereafter have against any First Lien Lender arising out of (i) the election by any First Lien Lender of the application of Section 1111(b)(2) of the U.S. Bankruptcy Code or any comparable provision of any other bankruptcy law, or (ii) any use of cash collateral or financing arrangement, or any grant of a security interest in the Collateral, in any Insolvency Proceeding so long as such action is otherwise permitted under this Intercreditor Agreement.
(g) Each of First Lien Agent, on behalf of the First Lien Lenders, and Second Lien Agent, on behalf of the Second Lien Creditors, agrees that, without the written consent of the other, it will not seek to vote with the other as a single class in connection with any plan of reorganization in any Insolvency Proceeding
(h) Nothing contained herein shall prohibit or in any way limit First Lien Agent or any First Lien Lender from objecting on any basis in any Insolvency Proceeding or otherwise to any action taken by Second Lien Agent or any other Second Lien Creditor, including the seeking by Second Lien Agent or any other Second Lien Creditor of adequate protection or the assertion by Second Lien Agent or any other Second Lien Creditors of any of its rights and remedies under the Second Lien Documents or otherwise, except to the extent explicitly permitted hereunder.
23
(i) If, in any Insolvency Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan, both on account of First Lien Obligations and on account of Second Lien Obligations, then, to the extent the debt obligations distributed on account of the First Lien Obligations and on account of the Second Lien Obligations are secured by Liens upon the same property, the provisions of this Intercreditor Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.
(j) If First Lien Agent or any First Lien Lender is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of Borrower or any other Obligor any amount (a Recovery ), then the First Lien Obligations shall be reinstated to the extent of such Recovery and First Lien Agent and the First Lien Lenders shall be entitled to a reinstatement of First Lien Obligations with respect to all such recovered amounts. If this Intercreditor Agreement shall have been terminated prior to such Recovery, this Intercreditor Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement. Any amounts received by Second Lien Agent or any Second Lien Creditor on account of the Second Lien Obligations after the termination of this Intercreditor Agreement shall, in the event of a reinstatement of this Intercreditor Agreement pursuant to this clause (j), be held in trust for and paid over to First Lien Agent for the benefit of the First Lien Lenders, for application to the reinstated First Lien Obligations. This clause (j) shall survive termination of this Intercreditor Agreement.
4.6 Pari Passu Payment Lien Obligations . As a condition to the Issuer or any other Obligor incurring any Pari Passu Indebtedness, (i) a supplement to the Intercreditor Agreement substantially in the form of Annex A hereto (a Supplement ) pursuant to this Section 4.6 , identifying the proposed Pari Passu Indebtedness, the agent or other representative, if any, and the lenders or holders providing such Pari Passu Indebtedness and the documents in connection with such Indebtedness, shall be executed and delivered to each of the First Lien Agent and the Second Lien Agent and (ii) an authorized representative of the lenders or holders of such proposed Pari Passu Indebtedness shall enter into an Accession Agreement, pursuant to which such authorized representative shall agree to be bound by the terms and conditions of this Intercreditor Agreement and the Second Lien Documents.
4.7 Bailee for Perfection . Each Creditor hereby appoints the other Creditor as agent for the purposes of perfecting the other Creditors Liens in and on any of the Collateral in the possession or under the control of such Creditor or its representatives, including, without limitation, Liens on Borrowers and the other Obligors deposit accounts maintained by First Lien Agent and investment property and instruments in the possession or under the control of the First Lien Agent; provided , that, the Creditor in the possession or control of any Collateral shall not have any duty or liability to protect or preserve any rights pertaining to any of the Collateral and, except for gross negligence or willful misconduct as determined pursuant to a final non-
24
appealable order of a court of competent jurisdiction, the non-possessing or non-controlling Creditor hereby waives and releases the other Creditor from, all claims and liabilities arising pursuant to the possessing or controlling Creditors role as bailee with respect to the Collateral, so long as the possessing or controlling Creditor shall use the same degree of care with respect thereto as the possessing or controlling Creditor uses for similar property pledged to the possessing or controlling Creditor as collateral for indebtedness of others to the possessing or controlling Creditor. Prior to the date on which First Lien Agent and the First Lien Lenders shall have received final payment in full in cash of all of the First Lien Obligations and the First Lien Loan Agreements have been terminated, any Collateral in the possession or under the control of Second Lien Agent or the Second Lien Creditor shall be forthwith delivered to First Lien Agent, except as otherwise may be required by applicable law or court order. After First Lien Agent and the First Lien Lenders shall have received final payment in full in cash of all of the First Lien Obligations and the loan commitments under the First Lien Loan Agreements have been terminated, First Lien Agent shall deliver (i) the remainder of the Collateral, if any in their possession to Second Lien Agent, except as may otherwise be required by applicable law or court order and (ii) a written notice prepared by Second Lien Agent (at Borrower expense) to each landlord that has executed a landlords waiver and each bailee that has executed a bailee waiver stating that Second Lien Agent is entitled to exercise the rights and take the actions set forth in such landlords waiver or bailee waiver.
4.8 Notices . All notices, requests and demands to or upon the respective parties hereto shall be in writing and shall be deemed duly given, made or received: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next business day, one (1) business day after sending; and if mailed by certified mail, return receipt requested five (5) days after mailing to the parties at their addresses set forth below (or to such other addresses as the parties may designate in accordance with the provisions of this Section):
25
To Second Lien Agent or the other Second Lien Creditors: |
TMI Trust Company 1100 Abernathy Road NE, Suite 480 |
|||
Atlanta, Georgia 30328 | ||||
Attention: Kathy Knapp, Vice President | ||||
Facsimile No.: (404) 365-7055 | ||||
Telephone No.: (678) 221-5917 |
Either of the above Creditors may change the address(es) to which all notices, requests and other communications are to be sent by giving written notice of such address change to the other Creditor in conformity with this Section 4.8 , but such change shall not be effective until notice of such change has been received by the other Creditor.
4.9 Counterparts . This Intercreditor Agreement may be executed in any number of counterparts, each of which shall be an original with the same force and effect as if the signatures thereto and hereto were upon the same instrument.
4.10 Governing Law . The validity, construction and effect of this Intercreditor Agreement shall be governed by the internal laws of the State of New York (without giving effect to principles of conflicts of law).
4.11 Consent to Jurisdiction; Waiver of Jury Trial . EACH PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT SITTING IN THE STATE OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS INTERCREDITOR AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH CREDITOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS INTERCREDITOR AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS INTERCREDITOR AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
4.12 Complete Agreement . This written Intercreditor Agreement is intended by the parties as a final expression of their agreement and is intended as a complete statement of the terms and conditions of their agreement with respect to the subject matter hereof.
4.13 No Third Parties Benefited . Except as expressly provided in Sections 4.2 and 4.3 hereof and consents which are deemed to have been given under Section 2.9 hereof, this Intercreditor Agreement is solely for the benefit of the Creditors and their respective successors, participants and assigns, and no other person shall have any right, benefit, priority or interest under, or because of the existence of, this Intercreditor Agreement.
26
4.14 Disclosures; Non- Reliance . Each Creditor (other than the Second Lien Agent) has the means to, and shall in the future remain, fully informed as to the financial condition and other affairs of Borrower and the other Obligors and no Creditor shall have any obligation or duty to disclose any such information to any other Creditor. Except as expressly set forth in this Intercreditor Agreement, the parties hereto have not otherwise made to each other nor do they hereby make to each other any warranties, express or implied, nor do they assume any liability to each other with respect to: (a) the enforceability, validity, value or collectability of any of the Second Lien Obligations or the First Lien Obligations or any guarantee or security which may have been granted to any of them in connection therewith, (b) Borrowers or any other Obligors title to or right to transfer any of the Collateral, or (c) any other matter except as expressly set forth in this Intercreditor Agreement.
4.15 Term . This Intercreditor Agreement is a continuing agreement and shall remain in full force and effect until the satisfaction in full of all First Lien Obligations and Second Lien Obligations and the termination of the financing arrangements between First Lien Agent, the First Lien Lenders, Second Lien Agent, the other Second Lien Creditors, Borrower and the other Obligors. Notwithstanding the foregoing if, in any insolvency Proceeding or otherwise, all or part of any payment with respect to the First Lien Obligations previously made shall be rescinded for any reason whatsoever, then the First Lien Obligations shall be reinstated to the extent of the amount so rescinded and, if theretofore terminated, this Intercreditor Agreement shall be reinstated in full force and effect and such prior termination shall not diminish, release, discharge, impair or otherwise affect the Lien priorities and the relative rights and obligations of the First Lien Lenders and the Second Lien Creditors provided for herein.
4.16 Lien Subordination . Except as otherwise provided in this Intercreditor Agreement, nothing in this Intercreditor Agreement shall prohibit the receipt by Second Lien Agent or any other Second Lien Creditor of the required payments of principal, premium, interest, fees and other amounts due under the Second Lien Documents so long as such receipt is not the direct or indirect result of the enforcement or exercise by Second Lien Agent or any other Second Lien Creditor of rights or remedies as a secured creditor or enforcement in contravention of this Intercreditor Agreement. In the event Second Lien Agent or any other Second Lien Creditor becomes a judgment lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subordinated to the Liens securing First Lien Obligations on the same basis as the other Liens securing the Second Lien Obligations are so subordinated to such First Lien Obligations under this Intercreditor Agreement. Nothing in this Intercreditor Agreement impairs or otherwise adversely affects any rights or remedies First Lien Agent or the other First Lien Lenders may have with respect to the Collateral.
4.17 Legend . Each of First Lien Agent on behalf of the First Lien Lenders and Second Lien Agent on behalf of the Second Lien Creditors agrees that each First Lien Loan Agreement and each Second Lien Document, as applicable, constituting a collateral or security document, shall include the following language (or language to similar effect approved by both First Lien Agent and Second Lien Agent):
27
Notwithstanding anything herein to the contrary, the lien and security interest granted pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the Intercreditor Agreement dated as of September 1, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the Intercreditor Agreement ), among Bay Coast Bank, in its capacity as agent for, and acting on behalf of, the First Lien Lenders identified therein and TMI Trust Company, in its capacity as collateral agent for, and acting on behalf of, itself and the other Second Lien Creditors identified therein, at any time that the Intercreditor Agreement is in effect. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control at any time the Intercreditor Agreement is in effect.
4.18 Rights as Unsecured Creditors . Notwithstanding anything to the contrary contained herein, the Second Lien Creditors may, in accordance with the Second Lien Documents and applicable law, enforce rights and exercise remedies against Borrower and any other Obligor as unsecured creditors unless any such action is otherwise expressly or impliedly inconsistent with the terms of this Intercreditor Agreement. Notwithstanding the foregoing, nothing herein shall prevent any Second Lien Creditor from raising any objection to any sale pursuant to Section 363 of the Bankruptcy Code which could be raised solely by, or on behalf of, an unsecured creditor as permitted by Section 4.5(b) hereof, it being understood that the Second Lien Creditors agree that they will be deemed to have consented, pursuant to Section 363 (f)(2) of the Bankruptcy Code, to any sale supported by any of the First Lien Lenders, and no Second Lien Creditor shall raise any objection pursuant to Section 363 (f)(3) of the Bankruptcy Code to any such sale.
4.19 Amendment and Restatement . This Intercreditor Agreement amends and restates the Original Intercreditor Agreement in its entirety effective as of the date hereof.
4.20 Conflicts . In the event of any conflict between the provisions of this Intercreditor Agreement and the provisions of any Second Lien Document or any First Lien Loan Agreement, the provisions of this Intercreditor Agreement shall govern. With respect to Second Lien Agent and the other Second Lien Creditors and the obligations of Second Lien Agent under the Second Lien Documents only, in the event of a conflict between this Intercreditor Agreement and the Second Lien Documents, the terms of the applicable Second Lien Documents shall govern and control.
[signature pages follow]
28
IN WITNESS WHEREOF, the parties have caused this Intercreditor Agreement to be duly executed as of the day and year first above written.
FIRST LIEN AGENT: |
||
BAY COAST BANK, for itself as First Lien Agent and as Collateral Agent for the First Lien Lenders |
By: | ||
Name: |
|
|
Title: | ||
SECOND LIEN AGENT: | ||
TMI TRUST COMPANY, as Collateral Agent under the Indenture, for itself and the other | ||
Second Lien Creditors |
By: | ||
Name: |
|
|
Title: |
Signature Page to Intercreditor Agreement
Each of the undersigned hereby acknowledges and agrees to the foregoing terms and provisions. By its signature below, each of the undersigned agrees that it will, together with its successors and assigns, be bound by the provisions hereof.
Each of the undersigned agrees that any Creditor holding or otherwise controlling Collateral (the Controlling Creditor) does so as bailee (under the UCC) for and on behalf of the other Creditors which have a Lien on such Collateral, and each Controlling Creditor is hereby authorized to and may turn over to Second Lien Agent (if First Lien Agent or any First Lien Lender is the Controlling Creditor) or to First Lien Agent (if Second Lien Agent or any Second Lien Creditor is the Controlling Creditor) any such Collateral upon request therefore, after all obligations and indebtedness of the undersigned to such Controlling Creditor shall have been fully paid and performed.
Each of the undersigned acknowledges and agrees that (i) although it may sign this Intercreditor Agreement it is not a party hereto and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Intercreditor Agreement (except for a consent which is deemed to have been given by the Second Lien Creditors under Section 2.9 ), and (ii) it will execute and deliver such additional documents and take such additional action as may be necessary or desirable in the reasonable opinion of any of the Creditors to effectuate the provisions and purposes of the foregoing Intercreditor Agreement.
CURO GROUP HOLDINGS CORP. |
||
A SPEEDY CASH CAR TITLE LOANS, LLC | ||
ADVANCE GROUP, INC. | ||
ATTAIN FINANCE, LLC |
||
AVIO CREDIT, INC. |
||
CASH COLORADO, LLC |
||
CONCORD FINANCE, INC. |
||
ENNOBLE FINANCE, LLC |
||
EVERGREEN FINANCIAL INVESTMENTS, INC. |
||
FMMR INVESTMENTS, INC. |
||
GALT VENTURES, LLC |
||
PRINCIPAL INVESTMENTS, INC. |
||
SCIL TEXAS, LLC |
||
SC AURUM, LLC |
||
SCIL, INC. |
||
SPEEDY CASH |
||
SPEEDY CASH ILLINOIS, INC. |
||
SC TEXAS MB, INC. |
||
THE MONEY STORE, L.P. |
||
CURO MANAGEMENT LLC |
||
TODD CAR TITLE, INC. |
||
TODD FINANCIAL, INC. |
By: |
|
|
Name: |
||
Title: |
Signature Page to Intercreditor Agreement
ANNEX A
FORM OF SUPPLEMENT TO THE INTERCREDITOR AGREEMENT
This SUPPLEMENT TO THE INTERCREDITOR AGREEMENT (this Supplement ) is made on , 20 by and among: (i) CURO Financial Technologies Corp. (the Issuer ), (ii) [ ] (the Obligors ) and (iii) [ ] (the Pari Passu Lender(s) ).
Reference is hereby made to that certain Intercreditor Agreement, dated as of [ ], 2017 (the Intercreditor Agreement ) between (i) Bay Coast Bank, in its capacity as agent for the benefit of the holders from time to time of the First Lien Obligations, including its successors and assigns from time to time (in such capacity, the First Lien Agent ) and (ii) TMI Trust Company, in its capacity as collateral agent for the benefit of holders from time to time of the Indenture Obligations and the Pari Passu Payment Lien Obligations (as defined below), including its successors and assigns from time to time (in such capacity, the Second Lien Agent ).
W I T N E S S E T H
WHEREAS, the Issuer and the Obligors have acknowledged and agreed to be bound by the terms and provisions of the Intercreditor Agreement; and
WHEREAS, the Issuer and the Obligors have entered into the Pari Passu Payment Lien Documents and it is a condition under the terms of the Intercreditor Agreement to the incurrence of New Indebtedness identified below that this Supplement be executed and delivered to the First Lien Agent and the Second Lien Agent.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. Definitions . All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Intercreditor Agreement. As used in this Agreement, the following terms shall have the following definitions:
Accession Agreement means the Accession Agreement, dated the date hereof, a copy of which is attached hereto as Exhibit B .
[ Agent means [ ], as agent on behalf of the Pari Passu Lender(s).]
Borrowing Date means the date on which the Pari Passu Payment Lien Documents are executed and delivered.
New Indebtedness means any principal and interest payable to the Pari Passu Lenders under the Pari Passu Payment Lien Documents and any other obligations arising under Pari Passu Payment Lien Documents.
Pari Passu Payment Lien Documents means the [ ], dated as of [ ] and any other documents executed and delivered in connection therewith.
SECTION 2. Supplement . This Supplement is supplemental to the Intercreditor Agreement and is the supplement to be delivered pursuant to Section 4.6 of the Intercreditor Agreement in connection with the New Indebtedness. The Pari Passu Lender(s) hereby agree(s) to the terms of the Intercreditor Agreement as if they were a party thereto.
SECTION 3. Pari Passu Indebtedness . The Issuer hereby confirms that the Pari Passu Lender(s), the First Lien Agent, the Second Lien Agent and any other Second Lien Creditors may conclusively rely on the representations set forth in the officers certificate attached hereto as Exhibit A certifying that the New Indebtedness complies with the requirements of the definition of Pari Passu Indebtedness under the Intercreditor Agreement. Each of the Issuer and the Obligors hereby confirm that following the execution and delivery of the Accession Agreement by all the parties thereto, the New Indebtedness identified in this Supplement shall constitute Pari Passu Indebtedness under the Intercreditor Agreement.
SECTION 4. Effectiveness; Ratification . This Supplement shall become effective upon the later of (a) the receipt of this Agreement by the First Lien Agent and the Second Lien Agent and (b) the Borrowing Date, and from and after the date hereof, the Pari Passu Lenders and the Agent shall constitute Pari Passu Indebtedness Secured Parties and Second Lien Creditors under the Intercreditor Agreement.
Any and all references to the Intercreditor Agreement in the First Lien Loan Agreements and the Second Lien Documents shall mean the Intercreditor Agreement, as supplemented hereby. Except as supplemented by this Supplement, the Intercreditor Agreement remains unmodified and in full force and effect and is hereby ratified, approved and confirmed as of the date hereof.
SECTION 5. Appointment of Collateral Agent . The Pari Passu Lender(s), by [its/their] execution and delivery hereof, authorize(s) and appoint(s) TMI Trust Company as the Second Lien Agent, and direct(s) the Second Lien Agent to enter into the Intercreditor Agreement and to perform its obligations and exercise its rights thereunder in accordance therewith.
SECTION 6. Governing Law . This Supplement shall in all respects be governed by the law of the State of New York.
SECTION 7. Third Party Beneficiary . The First Lien Lenders, the Notes Secured Parties and the other Second Lien Creditors are intended third party beneficiaries of this Supplement.
SECTION 8. Disclaimer . The First Lien Agent shall not be responsible for the validity or sufficiency of this Supplement nor of the recitals hereto. The Second Lien Agent shall not be responsible for the validity or sufficiency of this Supplement nor of the recitals hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
32
IN WITNESS WHEREOF, the parties hereto have executed this Supplement as of the date first written above.
CURO FINANCIAL TECHNOLOGIES CORP., as Issuer |
By: | ||
Name: | ||
Title: |
[ ], as Obligor |
By: | ||
Name: | ||
Title: |
[ ], as Pari Passu Lender |
By: | ||
Name: | ||
Title: |
Acknowledged and Agreed: | ||
FIRST LIEN AGENT: | ||
BAY COAST BANK, as First Lien Agent |
By: | ||
Name: | ||
Title: | ||
Date: |
SECOND LIEN AGENT: | ||
TMI TRUST COMPANY as Second Lien Agent |
By: | ||
Name: | ||
Title: | ||
Date: |
EXHIBIT G
[FORM OF]
ASSIGNMENT AGREEMENT
This Assignment Agreement is dated as of the date set forth below (the Effective Date ) and is entered into by and between the Assignor (as defined below) and the Assignee (as defined below). Capitalized terms used in this Assignment Agreement and not otherwise defined herein have the meanings specified in the Revolving Loan Agreement dated as of August , 2017 (the Revolving Loan Agreement ), among CURO FINANCIAL TECHNOLOGIES CORP. and CURO INTERMEDIATE HOLDINGS CORP. (collectively, the Borrower ), the subsidiaries of the Borrower party thereto, the Lenders party thereto, and BAY COAST BANK, as Administrative Agent and Collateral Agent, receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto (the Standard Terms ) are hereby agreed to and incorporated herein by reference and made a part of this Assignment Agreement as if set forth herein in full.
(a) For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and the Revolving Loan Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (a) all the Assignors rights and obligations in its capacity as a Lender under the Revolving Loan Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the facilities identified below (including any letters of credit or swing line loans included in such facilities) and (b) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Revolving Loan Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity, in each case, to the extent related to the rights and obligations sold and assigned pursuant to clause (a) above (the rights and obligations sold and assigned pursuant to clauses (a) and (b) above being referred to herein collectively as the Assigned Interest ). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment Agreement, without representation or warranty by the Assignor.
(b) This Assignment Agreement is being delivered to the Administrative Agent together with (a) if the Assignee is organized under the laws of a jurisdiction outside the United States, the forms specified in Section 2.19(c) of the Revolving Loan Agreement, duly completed and executed by such Assignee, (b) if applicable, a registration and processing fee of $3,500 and (c) if the Assignee is not already a Lender under the Revolving Loan Agreement a completed Administrative Questionnaire in the form of Exhibit I to the Revolving Loan Agreement.
(c) This Assignment Agreement shall be governed by and construed in accordance with the laws of the State of New York.
(d) (a) Date of Assignment:
G-1
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Assignees Address for Notices:
(e) Assignment Effective Date (may not be fewer than 5 Business Days after the execution hereof (unless otherwise determined by the Administrative Agent)):
(e) Assigned Interest:
Percentage Assigned of | ||||||||
aggregate Principal | ||||||||
Amount (as the case may | ||||||||
be) of the respective Loans | ||||||||
or Commitments (set | ||||||||
forth, to at least 8 | ||||||||
decimals, as a percentage | ||||||||
of the aggregate Principal | ||||||||
Principal Amount (or in the | or Amount (as the case | |||||||
Aggregate Amount of all | case of Commitments, | may be) of the respective | ||||||
Lenders Commitments | Aggregate Amount) | Loans or Commitments of | ||||||
and Loans |
Assigned | all Lenders thereunder) | ||||||
$[25,000,000] |
$ | % |
(f) This Assignment Agreement shall become effective when counterparts hereof have been executed on behalf of each of the parties required pursuant to Section 9.05(b) of the Revolving Loan Agreement.
[Signature Page Follows]
G-2
The terms set forth above are hereby agreed to: |
||
, as Assignor |
By: | ||
Name: |
||
Title: |
||
, as Assignee |
By: | ||
Name: |
||
Title: |
G-3
Consented to: | ||
BAY COAST BANK, as Administrative Agent |
||
By: | ||
Name: | ||
Title: |
Consented to: | ||
CURO FINANCIAL TECHNOLOGIES CORP. | ||
CURO INTERMEDIATE HOLDINGS CORP. | ||
By: | ||
Name: | ||
Title: |
G-4
Annex 1
STANDARD TERMS AND CONDITIONS
FOR ASSIGNMENT AGREEMENT
1. Representations and Warranties .
1.1 Assignor . [The] [Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the] [its] Assigned Interest, (ii) [the] [its] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Revolving Loan Agreement or any other Facility Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Revolving Loan Agreement, any other Facility Document or any other instrument or document delivered pursuant thereto (other than this Assignment Agreement) or any collateral thereunder, (iii) the financial condition of the Borrower, any of the Subsidiaries or any of their affiliates or any other Person obligated in respect of any Facility Document or (iv) the performance or observance by the Borrower, any of the Subsidiaries or any of their affiliates or any other Person of any of their respective obligations under any Facility Document.
1.2 Assignee . [The] [Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Revolving Loan Agreement, (ii) confirms that it is (A) a Lender or (B) an Eligible Assignee; (iii) from and after the Effective Date, it shall be bound by the provisions of the Revolving Loan Agreement and, to the extent of [the] [its] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Revolving Loan Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.01(a) thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement and to purchase [the] [its] Assigned Interest on the basis of which it has made such analysis and decision and (v) if it is organized under the laws of a jurisdiction outside the United States, it has attached to this Assignment Agreement any tax documentation required to be delivered by it pursuant to the terms of the Revolving Loan Agreement, duly completed and executed by it; (b) agrees that it will, independently and without reliance upon the Administrative Agent, [the][each] Assignor, or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Revolving Loan Agreement; (c) appoints and authorizes each of the Administrative Agent, the Syndication Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Revolving Loan Agreement and the other Facility Documents as are delegated to or otherwise conferred upon the Administrative Agent, the Syndication Agent or the Collateral Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (d) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Facility Documents are required to be performed by it as a Lender.
G-5
2. Payment . From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the] [each] Assigned Interest (including payments of principal, interest, fees, commissions and other amounts) to [the][each] Assignor for amounts which have accrued to but excluding the Effective Date and to [the] [each] Assignee for amounts which have accrued from and after the Effective Date.
3. Effect of Assignment . Upon the delivery of a fully executed original hereof to the Administrative Agent, as of the Effective Date, (a) [the] [each] Assignee shall be a party to the Revolving Loan Agreement and, to the extent provided in this Assignment Agreement, have the rights and obligations of a Lender thereunder and under the other Facility Documents and (b) [the] [each] Assignor shall, to the extent provided in this Assignment Agreement, relinquish its rights and be released from its obligations under the Revolving Loan Agreement and the other Facility Documents.
4. General Provisions . This Assignment Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment Agreement may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment Agreement by telecopy shall be effective as delivery of a manually executed counterpart of the Assignment Agreement. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
G-6
EXHIBIT H
ADMINISTRATIVE DETAILS REPLY FORMUS DOLLAR ONLY
CONFIDENTIAL
CURO Financial Technologies Corp.
CURO Intermediate Holdings Corp.
$25,000,000.00 Revolver Facility
I. Legal Name of Lender of Record for Signature Page:
II. Domestic Address: | III. Eurodollar Address: | |
|
|
|
|
|
|
|
|
|
|
|
IV. Contact Information:
Credit Contact |
Primary Operations Contact |
Secondary Operations Contact |
||||
|
|
|
||||
Name: |
||||||
|
|
|
||||
Title: |
||||||
|
|
|
||||
Address: |
||||||
|
|
|
||||
Telephone: |
||||||
|
|
|
||||
Facsimile: |
||||||
|
|
|
||||
E Mail Address: |
||||||
|
|
|
||||
IntraLinks E Mail |
||||||
|
|
|
||||
Address: |
||||||
|
|
|
Does Secondary Operations Contact need copy of notices? ___YES ___ NO
H-1
V. Lenders Fed Wire Payment Instructions:
Pay to: |
|
|||
(Bank Name) | ||||
|
||||
(ABA#) |
(City/State) |
|||
|
||||
(Account #) |
(Account Name) |
|||
|
||||
(Attention) |
VI. Lenders TIN:
-
H-2
EXHIBIT I
[FORM OF COLLATERAL LOAN RECEIVABLE REPORT]
To: BayCoast Bank
From: ___________________________________
Date: ___________________________________
Account # |
Borrower
|
Address |
Address |
City |
State |
Zip
|
Telephone
|
Telephone
|
Email
|
Note
|
Interest
|
Loan
|
Loan
|
Principal
|
Available
|
Total
|
Monthly
|
Paid to
|
Next
|
Maturity
|
Collateral
|
Risk
|
I-1
Exhibit 10.54
SPECIAL LIMITED AGENCY AGREEMENT
THIS SPECIAL LIMITED AGENCY AGREEMENT (as amended, modified or restated from time to time, this Agreement ) dated as of August 22, 2017 (the Effective Date ), is made by and between TXCSO, Inc., a Texas corporation ( Lender ) doing business as Barr Funding Company, and SCIL TEXAS, LLC, a Nevada Limited Liability Company and The Money Store, L.P., a Texas limited partnership (jointly and severally, and collectively referred to herein as CSO ).
RECITALS
WHEREAS, pursuant to Section 303.001(b) and Section 342.004(b) of the Texas Financial Code, Lender intends to make Loans (as defined below) in the State of Texas to Borrowers (as defined below) charging annual interest rates not greater than TEN PERCENT (10.00% APR), secured by (1) CSOs Credit Enhancement (as defined below) on behalf of a Borrower, (2) Borrowers personal checks, remotely created checks, automated clearing house debit authorizations, or other electronic debit authorizations (a Debit Authorization ), and/or automobile titles (when applicable).
WHEREAS, CSO is a (1) credit services organization registered under Section 393, et seq ., of the Texas Financial Code, and (2) credit access business, registered under Section 393, et seq. of the Texas Finance Code, CSO intends to provide, in consideration of the payment of certain fees and other charges by a Borrower, assistance or other services relating to obtaining an extension of consumer credit from Lender.
WHEREAS, Lender desires to appoint CSO as its non-exclusive, special, limited agent with authority to advertise, accept loan applications, prepare loan documentation, to collect payments, and to do and perform such other services as may be mutually agreed between Lender and CSO in furtherance of the transactions contemplated by this Agreement.
WHEREAS, the parties desire to enter into this Agreement for the purpose of setting forth the terms and conditions which will govern certain services to be provided by CSO to Lender in connection with the Loans.
NOW, THEREFORE, in consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and CSO agree as follows:
1. Definitions . Except as may be explicitly stated otherwise herein, the following terms shall have the following meanings ascribed to them below:
Advertising Materials means all materials and methods used by CSO in the performance of CSOs marketing and promotion of the Loans, including, without limitation, brochures, letters, print advertisements, internet advertisements, television and radio communications and other advertising, promotional and similar materials.
Applicant means an individual who requests or applies for a Loan under the Loan Program through CSO.
Special Limited Agency Agreement | Page 1 of 30 |
Borrower means an individual obligor with respect to one or more Loans who is a resident of the State of Texas at the time such obligor signs the Loan Documents (as defined below). Borrowers means all such obligors.
Credit Enhancement means the guaranty, letter of credit or other credit enhancement issued by CSO or Principal Guarantor for each Loan in favor of Lender for the Borrower thereunder and, which provides for the unconditional and absolute guarantee of the payment in full of each such Loan of the Guarantied Obligations.
CSO Program means the program of CSO for providing credit services to Borrowers, including issuing CSOs Credit Enhancement on behalf of a Borrower to enhance their credit and the arrangement of Loans between Lender and Borrowers pursuant to this Agreement and the Program Guidelines (as defined below).
Loans means any extension of credit to Borrowers for personal, family, or household purposes with an interest rate not to exceed TEN PERCENT per annum (10.00% APR) made by Lender, with the assistance of CSO, under the Loan Program.
Loan Program means the lending program of Lender for originating and consummating Loans pursuant to this Agreement and the Program Guidelines.
Principal Guarantor means Curo Intermediate Holding Corporation which directly or indirectly owns ONE HUNDRED PERCENT (100.00%) of CSO.
Program means collectively the Loan Program and the CSO Program.
Program Guidelines means those guidelines established from time to time for the administration of the CSO Program and the Loan Program.
Program Materials means all promissory notes, security agreements, documents, agreements, instruments or other writings, as well as materials and methods used in connection with the performance of the parties obligations under this Agreement, including without limitation applications, disclosures and agreements required by the Rules, privacy policies, collection materials, red flag rules and the like, but excluding Advertising Materials.
Regulatory Authority means any local, state, or federal regulatory authority having valid jurisdiction or exercising regulatory or similar oversight with respect to Lender, CSO, or Third Party Service Providers.
Rules means all local, state, and federal statutes, regulations, or ordinances applicable to the acts of Lender, CSO, or a Third Party Service Provider as they relate to the CSO Program and/or the Loan Program; any order, decision, injunction, or similar pronouncement of any court, tribunal, or arbitration panel issued with respect to Lender, CSO, or a Third Party Service Provider
Special Limited Agency Agreement | Page 2 of 30 |
in connection with this Agreement or the Program; and any regulations, policy statements, and any similar pronouncement of a Regulatory Authority applicable to the acts of Lender, CSO, or a Third Party Service Provider as they relate to this Agreement or the Program.
Senior Debt means all debt and obligations of Lender to Senior Lender under the Senior Loan Documents.
Senior Lender means Lenders senior secured lender(s) or an agent designated by such senior secured lender(s).
Senior Loan Documents means all agreements, instruments and documents evidencing, securing, governing, guaranteeing or pertaining to the Senior Debt, certain indebtedness and obligations of Lender to Senior Lender.
Third Party Service Provider means any contractor or service provider directly or indirectly retained by Lender or CSO, who provides or renders services in connection with the CSO Program or the Loan Program.
Other terms defined herein have the meanings so given to them. Each reference in this Agreement to a definition is a reference to a definition contained in this Agreement, unless the context expressly provides otherwise. Whenever the context requires, references in this Agreement to the singular number shall include the plural, and the plural number shall include the singular. Words denoting gender shall include the masculine, feminine and neuter.
2. General Description of the Loan Program and the CSO Program .
a. Independence of CSO and Lender . CSO and Lender intend to comply with any applicable Rules and to operate independently of each other in their respective capacities as a credit service organization and/or a credit access business in the case of CSO and third-party lender in the case of Lender. CSO and Lender contemplate that CSO will provide credit services related to the Loans.
b. Loan Program . The parties agree that the Loan Program shall consist of the origination, funding, and collection of Loans to Borrowers in accordance with the Rules and Program Guidelines. The parties agree that Lender shall have sole responsibility for establishing credit and underwriting criteria for the Loans, making the decisions as to whether or not to make Loans to an Applicant, funding the Loans, and, subject to the timely performance of CSOs obligations hereunder, managing the Loan Program in accordance with the express obligations under this Agreement and the Program Guidelines. Except as expressly provided herein, (i) nothing herein shall be deemed to commit Lender to originate or fund any particular level or number of Loans, and (ii) Lender makes no representation, warranty or covenant as to the amount of funding it will be able to provide for the Loans. Except as expressly provided with respect to the rights and interest of CSO in this Agreement as to the CSO Fees, Lender or its assigns shall be the sole owner of all Loans made pursuant to this Agreement and CSO shall have no right, title or interest in such Loans.
Special Limited Agency Agreement | Page 3 of 30 |
c. CSO Program . The parties agree that CSOs responsibility under the Program shall be to act as a credit services organization and/or a credit access business on behalf of Borrowers in accordance with the Rules and Program Guidelines and as such CSO shall have the right to charge each Borrower a fee (a CSO Fee ) for providing credit services to each such Borrower (including issuing the Credit Enhancement for such Borrower) and arranging for a Loan on behalf of such Borrower. CSO shall not share with Lender, and Lender shall not accept as compensation, any portion of any CSO Fee obtained from a Borrower. If required by applicable Rules, CSO also shall act as a third party debt collector (as defined under Chapter 392 of the Texas Finance Code) on behalf of Lender with respect to the Loans in accordance with the Program Guidelines. The services CSO provides to each Borrower shall be governed by a Credit Services Disclosures, Terms and Conditions (each CSO Disclosure Statement ) and a Credit Services Agreement between CSO and each Borrower (each a CSO Contract ). CSO, in CSOs sole discretion, shall be solely responsible for determining the amount of the CSO Fee, the disclosures set forth in the CSO Disclosure Statement and the terms and conditions of each CSO Contract. CSO shall determine, in its sole discretion, whether or not it is appropriate to offer a Credit Enhancement in connection with an Applicant. Nothing herein shall be deemed to commit CSO to broker any particular level or number of Applicants for Loans, and CSO makes no representation, warranty or covenant as to the number of Loan applications CSO will submit to Lender on behalf of Applicants. Unless otherwise required by the Rules, nothing herein shall be deemed to require CSO to submit to Lender the application of any prospective Borrower to whom CSO has determined not to provide credit services or for whom CSO has determined not to issue a Credit Enhancement.
d. Commencement Date . The parties shall endeavor to begin the Program and commence providing credit services and making Loans hereunder as of the Effective Date or such other date as mutually agreed upon by the parties. The obligations and rights of the parties under this Agreement, including but not limited to the guarantee of CURO Intermediate Holding Corp., extend to and cover the loan portfolios and related assets purchased by Lender from Ivy Funding Eight, LLC.
3. Duties and Responsibilities of Lender . Lender shall perform and discharge the following duties and responsibilities.
a. Develop (and from time to time as it determines appropriate, modify) and deliver to CSO or a Third-Party Service Provider credit and underwriting criteria determined by Lender, in Lenders sole discretion, to be appropriate, reasonable and prudent for the Loan Program and the Loans.
b. Make a determination, in Lenders sole discretion, as to whether or not to extend a Loan to each Applicant which determination shall be made on a case by case basis, pursuant to scoring systems or other criteria or models, established by Lender and in the manner set forth in the Program Guidelines.
Special Limited Agency Agreement | Page 4 of 30 |
c. Extend credit in the form of Loans to Applicants it deems eligible to be Borrowers and fund the Loans in amounts as it determines appropriate to extend credit thereto.
d. Disburse or cause the disbursement of the proceeds of Loans to Borrowers in the manner set out in the Program Guidelines.
e. Manage the Loan Program in accordance with Lenders express obligations under this Agreement and under the Program Guidelines and manage the portfolio of Loans using commercially reasonable standards of care, skill and attention, in each case subject to the timely performance by CSO of CSOs obligations under this Agreement and the Program Guidelines.
f. Promptly deliver to CSO all communications received from Borrowers or Applicants (including, without limitation, information requests and bankruptcy filings).
g. Generate or cause the generation of adverse action notices and other communications that may be required under the Rules for Applicants who apply for but are denied a Loan, subject to CSOs responsibility as Lenders special limited agent to deliver and manage such adverse action notices as described in the Program Guidelines.
4. Duties and Responsibilities of CSO . CSO shall perform and discharge the following duties and responsibilities:
a. Develop (and from time to time as it determines appropriate, modify) its credit and underwriting criteria for CSOs credit services and CSO fees in CSOs sole discretion to be appropriate, reasonable and prudent for the CSO Program and for the issuance of CSOs Credit Enhancement on behalf of a Borrower in favor of Lender.
b. Maintain all licenses and bonds required under applicable Rules during the term of this Agreement.
c. Make a determination, in CSOs sole discretion, as to whether or not to extend credit services and specifically issue a Credit Enhancement on behalf of a prospective Borrower (which determination shall be made on a case by case basis, pursuant to scoring systems or other criteria or models established or utilized by CSO).
d. Do and perform all other activities assigned to or expected of it as set forth herein or in the Program Guidelines relating to the CSO Program, which are incorporated herein by reference.
5. Appointment of CSO as Special Limited Agent . Lender hereby appoints CSO as its special limited agent to perform certain administrative and servicing functions in connection with this Agreement under the Program and retains CSO as its servicer for the Loans, as provided in this Agreement and in the Program Guidelines. CSO hereby accepts the appointment as Lenders special limited agent and agrees to perform and discharge the following duties and responsibilities at its own cost and expense.
Special Limited Agency Agreement | Page 5 of 30 |
a. Market and promote the Program and the Loans and solicit potential Applicants in the manner set forth herein.
b. Provide certain disclosures and agreements to each Borrower, including a CSO Disclosure Statement and a CSO Contract, and such other disclosures and agreement as may be required by the Rules in the manner described in the Program Guidelines or in the Rules.
c. Administer the application process for Loans, solicit applications, and assist potential Borrowers in completing applications in accordance with the Rules.
d. If required, maintain a contract with a Third Party Service Provider or, alternatively, coordinate with or utilize another underwriting system approved by Lender that will receive Loan applications and evaluate such applications and any collateral using Lenders underwriting criteria.
e. To the extent required by the Program Guidelines, transmit Loan applications to Lender and/or a Third Party Service Provider in accordance with the Program Guidelines.
f. Receive evaluations of Loan applications and the resulting Loan approval or denial decisions from Lender and/or Third Party Service Provider and forward such decisions to the applicable Applicants.
g. Prepare and ensure the proper completion and delivery of Loan Documents in accordance with all applicable Rules to Lender, a Third Party Service Provider (if instructed by Lender) and Borrowers.
h. Prepare security documents to permit the perfection of liens on any collateral securing the Loans and file such security documents with the appropriate authority.
i. Receive for Lender from Borrowers payments due to Lender, other than dedicated CSO fees, under the Loans and forward any to Lender, in the manner specified in this Section 5(i), any such payments delivered to CSO by Borrowers. The funds from these payments shall belong to Lender (or the recipient designated by Lender), shall be held in trust by CSO for Lender, and shall be remitted to Lender within ONE (1) business day of receipt by CSO to the bank account designated and controlled by Lender. Any payment on a Loan received by CSO, other than the CSO fee, shall be binding upon Lender with respect to the applicable Borrower. In accordance with this Agreement, CSO, as Lenders special limited agent, shall continue to accept payments and otherwise collect on the Loans as long as any Guarantied Obligations shall be outstanding.
j. Reflect all Loan transactions and track Loan balances on a loan management system and accounting system to be maintained by CSO pursuant to the requirements of this Agreement.
Special Limited Agency Agreement | Page 6 of 30 |
k. Comply with all registration, bonding and other requirements of the Texas Finance Code and other applicable Rules and any regulations promulgated thereunder, and with the Rules, including federal laws and regulations applicable to CSOs credit services, collection and servicing activities with respect to the Loans, to the extent that any such Rules including without limitation, federal statutes or regulations, are applicable to CSOs credit services, collection and servicing activities.
l. Maintain and retain the original of all Program Materials with respect to each Loan (either in paper or electronic format), except that CSO may retain copies of Program Materials (other than any original promissory note which shall be retained by CSO or a person designated by Lender) in connection with a Loan in lieu of the original if Borrower is required to receive the original under applicable Rules or with Lenders prior written consent, for the period required by applicable Rules; provided, however, that in the event that CSO shall no longer be conducting business as a credit services organization and/or a credit access business in Texas, CSO shall deliver to Lender all Program Materials relating to all Loans then owned by Lender. CSO shall provide Lender access to such Program Materials no later than FIVE (5) business days after written request. The records and documentation maintained by CSO pursuant to this Agreement shall be maintained in a secure environment at all times and in compliance with applicable Rules.
6. Defaulted Loans and Credit Enhancement . A Loan shall default upon the occurrence of any of the following: (a) Borrower fails to make any payment when due, (b) Borrower makes any statement or representation in connection with obtaining a Loan which is materially false or misleading when made, (c) Borrower fails to keep any promise or agreement it made to Lender in any promissory note or other document evidencing or relating to a Loan, or (d) the CSO Contract related to such Loan is cancelled for any reason prior to Lender receiving payment in full on such Loan. Pursuant to each CSO Contract, and regardless of whether the CSO Contract is cancelled, CSO agrees to issue on behalf of each CSO approved Borrower, and for the benefit of Lender, a Credit Enhancement for the prompt payment of the amounts due to Lender under each Loan made by Lender under the Loan Program, as described in this paragraph; provided that such Credit Enhancement shall be in a form and substance satisfactory to Lender. A Credit Enhancement issued in respect of a Loan shall provide for the unconditional, irrevocable and absolute guarantee of the related Loan in an amount equal to the sum of (or such lesser amount as may be agreed in writing from time to time by Lender and CSO): (a) the principal amount of the Loan and accrued and unpaid interest thereon, plus (b) to the extent that the same shall be due and owing in connection with a Loan, an NSF fee for items returned by a depository institution equal to the lesser of THIRTY AND NO/100 DOLLARS ($30.00) or the amount permitted by applicable law, plus (c) to the extent that the same shall be due and owing in connection with a Loan, a late fee equal to the greater of SEVEN AND 50/100 DOLLARS ($7.50) or FIVE PERCENT (5.00%) of the delinquent payment for any payment past due for more than the period required by applicable law or for such longer period as may be set forth in the Program Guidelines (Guaranteed Obligations). Upon receipt of a Lender demand, CSO shall promptly pay Lender in full the respective Guarantied Obligations for the defaulted Loan under the Credit Enhancement. The parties agree that CSO may issue a Credit Enhancement covering more than one Loan, in which case Lender shall have all the rights and CSO shall have all the obligations with respect to such Credit Enhancement as the Parties would have if individual guaranties were issued for each Loan. If Lender draws on a Credit Enhancement and is paid in full for all amounts owing on a Loan attributable to the respective Guarantied Obligations, Lenders interest in the related Loan shall be assigned automatically to CSO, without any representation or warranty. With respect to each Borrower to which CSO elects to extend credit services
Special Limited Agency Agreement | Page 7 of 30 |
and which becomes a Borrower of a Loan under the Loan Program, CSO shall create and maintain books and records reflecting that the respective Guarantied Obligations of such Borrower under such Loan are guaranteed by CSO under the Credit Enhancement, including, if applicable, appropriate documentation to substantiate and confirm that multiple Loans are being guaranteed under such Credit Enhancement, which documentation shall be in a form and substance satisfactory to Lender.
7. Settlement . Subject to the terms and conditions of this Agreement, including but not limited to the offset and set-off rights in Section 11(d) below, the parties agree to settle all amounts due from one party to the other pursuant to this Agreement and the Program Guidelines on a daily basis or at such other times as the parties may agree (the date of any such settlement, being the Transaction Date ) . Any payment due from one party to the other under this Agreement and the Program Guidelines shall be made by an automated clearing house transfer with next day settlement on the business day immediately succeeding the Transaction Date. Within TWENTY (20) days after the end of each calendar month, the parties shall prepare a recap and reconciliation of all the settlements made during that month, and if the reconciliation reveals that one party owes the other an amount necessary to correct an inaccuracy in the previous settlement process, that amount shall be paid within TWO (2) business days. The settlement obligations of the parties under this Agreement and the Program Guidelines shall survive the termination of this Agreement and will remain in effect as long as any Loans remain unpaid or any party owes any amount to the other party under this Section 7 . Pursuant to the requirements of this Agreement, CSO shall capture and record all relevant data concerning any Loan transaction and prepare appropriate reports and summaries as may be necessary to effect settlement hereunder, facilitate the review and analysis of all Loan activity, and permit Lender to reflect such Loan transactions on its books and records.
8. Program Guidelines . Lender and CSO will mutually agree upon the Program Guidelines in writing and will comply with such Program Guidelines, as the same may be amended from time to time by written agreement of the parties or as may be modified to insure compliance with the Rules. The parties may modify the then current Program Guidelines only in accordance with this Agreement. Both parties agree to act in good faith and in a commercially reasonable manner in connection with the establishment and modification, if any, of the Program Guidelines. The parties agree to perform their duties and responsibilities under this Agreement in accordance with the provisions of the Program Guidelines as applicable to it, as they may be modified from time to time.
9. Program Materials; Advertising Materials; Trade Names and Trademarks . The parties shall each be responsible for preparing their own respective Program Materials; provided, however, prior to the use of any Program Materials prepared by one party, the other party shall be entitled to review and approve such Program Materials in the manner described below. Each party agrees that it will not use any Program Materials unless such Program Materials have been approved in advance by the other party hereto (which approval shall not be unreasonably withheld, conditioned, or delayed). CSO shall be responsible for the development of proposed Advertising Materials concerning advertising and marketing of Loans and solicitation of potential Borrowers. The form and content of all Advertising Materials shall be subject to the prior review and approval of Lender in the manner described herein. The nature of the Advertising Materials, the scope of their dissemination, and the total expenditures to be made on Advertising Materials for the CSO Program and the Program shall be determined by CSO in its reasonable discretion, and CSO shall pay all expenses concerning the production, use, and dissemination of Advertising
Special Limited Agency Agreement | Page 8 of 30 |
Materials. Notwithstanding anything herein to the contrary, each party agrees that it will respond in writing to any request from the other party for an approval of any Advertising Materials or Program Materials within FIVE (5) business days following such other partys receipt of such materials and any such materials shall be deemed approved by such other party upon the earlier to occur of (a) the actual approval of such materials, or (b) upon the expiration of the above-described FIVE (5) business day period if the party whose approval is being sought fails to timely approve or disapprove such materials within such FIVE (5) business day period. If a party disapproves any proposed Program Materials or Advertising Materials within the required time frame, such party will detail its reasons for such disapproval in such partys written disapproval notice to the other party. A party hereto may at any time retract or modify any approval previously given by it with respect to any Program Materials or Advertising Materials if such action is necessary in order to remain in compliance with the Rules; provided, however, no party shall retract or modify a previously granted approval if there has been no intervening change in the Rules which would require such retraction or modification. CSO shall ensure that all Advertising Materials and the Program Materials shall comply with all applicable Rules. Each of Lender and CSO acknowledges that approved Program Materials and/or Advertising Materials may contain trade names, trademarks, or service marks of CSO and Lender, and Lender or CSO, as the case may be, shall have no authority to use any such names or marks of the other party separate and apart from their use in the Program Materials or Advertising Materials. The parties shall use Program Materials and Advertising Materials only for the purpose of implementing the provisions of this Agreement and shall not use Program Materials or Advertising Materials in any manner that would violate the Rules or any provision of the Program Guidelines.
10. Loan Terms and Charges; CSO Terms and Fees . All underwriting criteria, Loan terms and all interest, fees, and other charges associated with the Loans, exclusive of any CSO Fees, shall be established by Lender and shall be reflected in the Program Guidelines. Notwithstanding the foregoing, however, Lender shall have the right to modify any underwriting criteria, Loan terms, interest rates, fees, or other charges (exclusive of any CSO Fees), from time to time, at its discretion (the Changed Terms ) . Unless otherwise required by applicable Rules, Lender shall provide CSO with not less than THIRTY (30) days prior written notice of the Changed Terms. The terms and conditions of the CSO Disclosure Statements, CSO Contracts and the amount of any CSO Fees shall be established by CSO, shall comply with the Rules and shall be reflected in the Program Guidelines. Notwithstanding the foregoing, however, CSO shall have the right to modify any CSO Disclosure Statements, CSO Contracts and the amount of any CSO Fees, from time to time, at its discretion. In the event that either party hereto becomes aware that any aspect of the Loan Program or CSO Program, including but not limited to underwriting criteria, Loan terms, interest, fees or other charges associated with any Loan, any term or condition of any CSO Disclosure Statement or CSO Contract or the amount of any CSO Fee, or any activity of CSO as a third-party debt collector, is not in compliance with the Rules, the party becoming aware of the same shall notify the other party of such non-compliance and each party hereto agrees to cooperate in good faith with each other, and to diligently take commercially reasonable steps, as may be necessary in order to promptly correct and cure any such non-compliance.
Special Limited Agency Agreement | Page 9 of 30 |
11. Nature of Certain Credit Enhancements.
a. Guaranty by CSO . CSO hereby unconditionally, irrevocably and absolutely guarantees (i) the due and punctual payment and performance of the Guarantied Obligations, and (ii) agrees that this guaranty shall be a continuing guaranty, shall be binding upon CSO, and upon its successors and assigns, and shall remain in full force and effect, and shall not be discharged, impaired or affected by the following, without limitation (1) the existence or continuance of any of the Guarantied Obligations (other than the payment or performance of the Guarantied Obligations in accordance with their terms); (2) the validity or invalidity of any document or agreement evidencing the Guarantied Obligations or any of them; (3) the existence or continuance of any Borrowers obligations with respect to the Guarantied Obligations; (4) any waiver, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the Guarantied Obligations, all of which Lender is hereby expressly authorized to make from time to time without notice to CSO; (5) the acceptance by Lender of any security for, or other guarantors upon, all or any part of the Guarantied Obligations; or (6) any defense (other than the payment or performance of the Guarantied Obligations). CSO will pay and reimburse Lender in full for the amount of any and all Guaranteed Obligations due hereunder pursuant to the terms of this Agreement. Upon final satisfaction of the Guarantied Obligations, Lender shall promptly (and in any event within FIVE (5) business days of such satisfaction) return to CSO any sums held as collateral for the Guarantied Obligations.
b. Principal Guaranty . As a material inducement to enter into this Agreement, Principal Guarantor:
i. Unconditionally, irrevocably and absolutely guarantees (1) the due and punctual payment of all amounts due and payable from CSO to Lender under this Agreement, including but not limited to, all Guarantied Obligations; and (2) the due and punctual performance and observance by CSO of all other obligations, warranties, covenants and duties of CSO set forth in this Agreement (all of which amounts payable and the terms, warranties, agreements, covenants and conditions being herein called the Principals Obligations ).
ii. Agrees that the guaranty set forth in this Section 11(b) shall be a continuing guaranty, shall be binding upon Principal Guarantor, and upon its successors and assigns, and shall remain in full force and effect, and shall not be discharged, impaired or affected by the following without limitation (1) the existence or continuance of any of the Principals Obligations (other than the payment or performance of the Principals Obligations in accordance with their terms); (2) the validity or invalidity of any document or agreement evidencing the Principals Obligations or any of them; (3) the existence or continuance of CSO as a legal entity; (4) any waiver, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the Principals Obligations, all of which Lender or CSO is hereby expressly authorized to make from time to time without notice to Principal Guarantor; (5) the acceptance by Lender of any security for, or other guarantors upon, all or any part of the Principals Obligations; or (6) any defense (other than the payment or performance of the Principals Obligations in accordance with their terms) that Principal Guarantor may or might have to its undertakings, liabilities and obligations hereunder, each and every such defense being hereby waived by Principal Guarantor.
Special Limited Agency Agreement | Page 10 of 30 |
iii. Agrees that Principal Guarantor shall be held liable hereunder and Lender shall have the right to enforce this guaranty against Principal Guarantor for and to the full amount of the Principals Obligations, with or without enforcing or attempting to enforce this guaranty against any other guarantor, without any obligation on the part of Lender, or anyone, at any time, to resort to any collateral, security, property, liens or other rights or remedies whatsoever, and whether or not other proceedings or steps are pending or have been taken or have been concluded to enforce or otherwise realize upon the obligations, properties, estates or security of CSO or any other guarantor; and the payment of any amount or amounts by Principal Guarantor, pursuant to its obligations hereunder, shall not entitle Principal Guarantor, either at law or otherwise, to any right, title or interest (whether by way of subrogation or otherwise) in and to any of the Principals Obligations, unless and until the full amount of the Principals Obligations has been fully paid, all other Principals Obligations have been fully performed and observed in accordance with their terms and the Agreement has been terminated; nor will Principal Guarantor have any other rights, title, or interest pursuant to this Agreement unless specifically designated in this Agreement.
iv. Agrees and acknowledges that the direct or indirect value of the consideration received and to be received by Principal Guarantor in connection herewith is reasonably worth at least as much as the liability and obligations of Principal Guarantor hereunder, and the incurrence of such liability and obligations in return for such consideration may reasonably be expected to benefit Principal Guarantor, directly or indirectly.
c. Pledge of Credit Support for Credit Enhancement . CSO shall pledge and does hereby pledge to Lender that amount of cash having a value equal to a percentage mutually agreed upon in writing between CSO and Lender of the total amount of principal of all Loans outstanding from time to time (such percentage to be modified only upon the mutual agreement of both parties) as collateral for CSOs obligations under its Credit Enhancement. Such pledge shall be in form and substance reasonably acceptable to Lender. On a weekly basis, CSO and Lender shall determine whether the amounts pledged to or held by Lender pursuant to this Section 11(c) shall equal the amount required above. In the event of any shortfall, CSO shall promptly pledge to Lender additional cash in an aggregate amount equal to such shortfall. In the event of any excess and provided that CSO is not in default under any Credit Enhancement or in default under Section 18 hereof, Lender shall promptly release cash in an aggregate amount equal to such excess. In order for Lender to have and maintain a first priority perfected security interest in the cash pledged to Lender pursuant to this section but only to the extent of actual sums due and owing, from time to time to Lender, CSO hereby authorizes Lender to file UCC financing statements and amendments with such governmental offices and in such jurisdictions as Lender may deem appropriate from time to time to perfect and maintain its security interests herein granted in such pledged cash. Stated otherwise for further clarification, CSO shall be entitled to full refund of the pledged cash upon settlement and payment in full of all outstanding Loans, irrespective of Senior
Special Limited Agency Agreement | Page 11 of 30 |
Lenders security interest in such pledged cash, if any. Under no circumstances may a Senior Lender receive more than the Lender would have received, absent some default by Lender or other occurrence, which results in Senior Lender acceding to Lenders position. CSO hereby further agrees to undertake reasonable actions as requested by Lender from time to time in order to perfect, protect or otherwise preserve the security interest herein granted to Lender in such pledged cash. To the extent that CSO pledges to Lender any cash pursuant to this section, then in connection with the pledge of such cash, CSO shall deposit such cash into a bank account as Lender may direct CSO in writing, which account shall be owned and subject to the exclusive control by Lender. In lieu of the pledge required hereby, CSO may provide Lender with a letter of credit issued by a third party or other security having a value equal to the amount of cash that would otherwise be pledged and reasonably acceptable to Lender. At the termination of this Agreement or CSO Program, the sums of the pledged cash, subject to the settlement and payment in full of the amounts due the parties, shall be returned to CSO
d. Offset and Set-off Rights . In the event that (i) CSO is in default under any Credit Enhancement issued in respect of any Loan or (ii) in default under Section 18 hereof, then, without any prior notice to CSO, any such notice being expressly waived by CSO to the extent permitted by applicable law, Lender shall have the right to set-off, offset and apply against any Guarantied Obligations owed by CSO and/or Principal Guarantor to Lender, until paid in full, any and all pledged cash and any other credits, indebtedness or obligations, in each case whether direct or indirect, absolute or contingent, matured or unmatured, owed by Lender to or for the credit or the account of CSO under this Agreement or any other agreement between CSO and Lender; provided that the foregoing set-off, offset and application rights of Lender shall not limit in any manner, and shall be in addition to, any other rights and remedies of Lender provided by this Agreement and by law. Lender agrees promptly to notify CSO after any such set-off, offset and application made by Lender pursuant to the preceding sentence; provided that any failure to give such notice shall not affect the validity of such set-off, offset, appropriation and application.
12. Third Party Service Providers . No party hereto, whether directly or indirectly, shall retain any Third Party Service Provider to assist it in performing its duties hereunder or to otherwise participate in the Loan Program or the CSO Program except with the prior written consent of the other party hereto, which consent shall not be unreasonably withheld. In seeking the approval to retain a Third Party Service Provider, the party requesting such approval shall provide to the other party such information concerning the proposed Third Party Service Provider as such other party may reasonably request. A party may condition its willingness to approve a proposed Third Party Service Provider upon obtaining a written commitment from such Third Party Service Provider to comply with the terms of this Agreement and the Program Guidelines, to submit to audits and inspections by either party hereto, and to indemnify the parties hereto upon such terms and conditions as the parties hereto may reasonably require. CSO shall be responsible for supervising any Third Party Service Providers retained by CSO. Lender shall be responsible for supervising any Third Party Service Providers retained by Lender.
13. Servicing and Accounting System . CSO agrees to develop and maintain, at its sole cost and expense, a comprehensive computerized servicing and accounting system (i) that will accurately and promptly reflect all Loan transactions and track all Loan balances and the related pledged cash, Credit
Special Limited Agency Agreement | Page 12 of 30 |
Enhancements and Guarantied Obligations for all Loans on an individual and aggregate basis, (ii) that will satisfy the information requirements of CSO, Lender, Third Party Service Provider and Regulatory Authorities having jurisdiction over the Loan Program and/or the CSO Program, if any, and (iii) that will provide a mutually agreed web link by which Lender can access such system. CSO shall provide Lender on a daily basis (on each business day) with an electronic file with data concerning all Loans originated hereunder and the related Guaranties to assist Lender in incorporating such information into its internal accounting, record keeping, and audit systems, in form and substance as may be mutually agreed to by parties from time to time. Upon the termination of this Agreement, for any reason, CSO shall continue to provide the accounting and servicing functions described herein for the Loans for the benefit of Lender and maintain the servicing and accounting system described herein for the Loans for the benefit of Lender and maintain the servicing and accounting system described herein for such purpose for TWO (2) years following the later of (a) the date on which this Agreement is terminated, and (b) the date on which the final outstanding Loan has been paid in full by the applicable Borrower or by CSO pursuant to a Credit Enhancement issued by CSO in accordance with the Program Guidelines and Section 6 hereof.
14. CSOs Representations, Warranties and Covenants . CSO makes the following warranties, representations and covenants to Lender which will survive the expiration or termination of this Agreement for any reason:
a. This Agreement is valid, binding and enforceable against CSO in accordance with its terms, and CSO has received all necessary organization approvals to enter into this Agreement and to perform its obligations hereunder.
b. CSO is a Nevada limited liability company, duly formed, validly existing, and is in good standing under the laws of the State of Nevada and its authorized, registered, and licensed to do business in Texas and in each state in which the nature of its activities makes such authorization, registration, or licensing necessary or required. CSO is registered as required for credit services organizations or a credit access business (as the case may be) under Chapter 393 of the Texas Finance Code and will remain so registered throughout the term of this Agreement. CSO has obtained any third party debt collector surety bond required by Chapter 392 of the Texas Finance Code and, if required by Chapter 392, will retain such bond throughout the term of this Agreement.
c. CSO has the full organizational power and authority to execute and deliver this Agreement and perform all of its obligations hereunder.
d. The provisions of this Agreement and the performance of each of CSOs obligations hereunder do not conflict with CSOs articles of organization, by-laws, or any agreement, contract, lease, or obligation to which CSO is a party or by which CSO is bound.
e. The governing authority of CSO has approved the terms and conditions of this Agreement and has determined that entering into this Agreement is in the best interests of CSO.
Special Limited Agency Agreement | Page 13 of 30 |
f. This Agreement, the Program Guidelines and the provisions of each of them comply with and are enforceable under the Rules, and the operation of each of the Loan Program and the CSO Program in accordance with this Agreement and the Program Guidelines will not violate any of the Rules.
g. Neither CSO nor any principal thereof has been or is the subject of any of the following:
i. Criminal conviction (other than misdemeanor traffic offenses);
ii. IRS lien;
iii. Enforcement agreement, memorandum of understanding, cease and desist order, administrative penalty, or similar agreement concerning lending matters that has the effect of permanently precluding CSO or its principals from engaging in consumer financial services;
iv. Administrative or enforcement proceeding or material investigation commenced by the Securities Exchange Commission, state securities regulatory authority, Federal Trade Commission or any other state or federal Regulatory Authority (excluding routine examinations conducted by a Regulatory Authority and excluding communications received in the ordinary course of business from any Regulatory Authority such as communications concerning consumer complaints or communications related to immaterial issues); or
v. Restraining order, decree, injunction or judgment in any proceeding or lawsuit alleging fraud or deceptive practices or illegal activity on the part of CSO or any principal thereof.
For purposes of this Section 14(g) , the word principal of CSO shall include (i) any person directly or indirectly owning a TEN PERCENT (10.00%) or more equity interest of CSO, (ii) any officer or director of CSO, and (iii) any other person having the power or authority to control CSOs business.
h. CSO shall furnish Lender within THIRTY (30) days following the end of each calendar quarter, a compliance certificate affirming its current compliance and earlier compliance with each of the following covenants during the previous quarter:
i. CSO is now and was at all relevant times a duly licensed credit services organization registered under Section 393, et seq ., of the Texas Finance Code (CSO has not originated any loans under the tribal model and/or any offshore or commerce model);
ii. CSO is now and was at all relevant times and in all material respects in compliance with the Loan Program, all applicable Rules and the Program Guidelines;
Special Limited Agency Agreement | Page 14 of 30 |
iii. CSO is not now originating or providing credit services in the origination of, nor has it ever originated or provided credit services in the origination of, any loan at an interest rate greater than TEN PERCENT (10.00%) annual percentage rate as a credit service organization or as the agent of Lender;
iv. At all relevant times, all advertising and promotional materials for the Loans (1) have and continue to prominently identify Lender as the maker of the Loans, (2) have been and continue to be accurate, (3) have not been and are not now misleading, (4) have and continue to be in compliance with all applicable Rules, and (5) have been and continue to be submitted to Lender for prior approval;
v. CSO has not engaged and is not now engaged in any discriminatory practice in violation of the Rules, including without limitation any discriminatory practice for the purpose of discouraging any Applicant in any aspect of the credit process or any purpose prohibited by law;
vi. CSO has used and continues to use only commercially reasonable efforts to collect payments on the Loans at and after maturity thereof on behalf of Lender, and has complied and continues to comply with the federal Fair Debt Collection Practices Act, to the extent applicable, and any other applicable Rules, in the collection process;
vii. CSO has not made and will not make, explicitly or implicitly, any threats of criminal prosecution in connection with debt collection, and CSO has not engaged in, nor will it engage in, any practices that violates any applicable Rules;
viii. CSO has not imposed, nor will it impose, a charge for cashing a check or draft related or conditioned on its CSO services, but may charge a fee for cashing a check or draft as an ancillary financial service. CSO has been and will remain in compliance in all respects with the Gramm Leach-Bliley Act (GLBA) and Federal Trade Commission regulations implementing the GLBA, other applicable federal and state privacy rules, and this Agreement, as it pertains to Applicant and Borrower Information (as later defined);
ix. CSO has not violated and will not violate any term of this Agreement pertaining to the use and/or protection of Lenders Confidential Business Information;
x. CSO shall provide (in reasonable detail) the calculations and supporting documentation as Lender may require to demonstrate compliance with the financial covenants referred to in Section 27 of this Agreement;
xi. CSO has and will continue to timely furnish all information required herein, which information has and will be in all material respects, truthful, accurate and complete.
Special Limited Agency Agreement | Page 15 of 30 |
xii. In the event that CSO commences filing public reports with the SEC, CSO shall permit Lender to participate in any periodic conference calls regularly available to market analysts or investors.
xiii. CSO shall comply with all applicable federal, state and local statutes, regulations and ordinances in its performance of this Agreement, the performance of the credit services, and its operation of the Program.
xiv. CSO shall implement, and shall take measures to maintain, reasonable and appropriate administrative, technical, and physical security safeguards to (1) insure the security and confidentiality of non-public personal information relating to any consumer; (2) protect against anticipated threats or hazards to the security or integrity of non-public personal information; and (3) protect against unauthorized access or use of non-public personal information that could result in substantial harm or inconvenience to any consumer.
Any failure or inability to timely or truthfully issue such compliance certificate shall be a default under this Agreement and shall give rise to Lenders rights and remedies under Section 18.
15. Lenders Representations and Warranties . Lender makes the following warranties and representations to CSO, all of which shall survive the execution and termination of this Agreement for any reason:
a. This Agreement is valid, binding and enforceable against Lender in accordance with its terms, and Lender has received all necessary approvals to enter into this Agreement and to perform its obligations hereunder.
b. Lender is a Texas corporation duly formed, validly existing, and in good standing under the laws of the State of Texas and is authorized to do business in the State of Texas and in each state in which the Loans are being offered and in each state in which the nature of its activities makes such authorization, registration, or licensing necessary or required. Lender is not affiliated with CSO or any affiliate of CSO.
c. Lender has the full organizational power and authority to execute and deliver this Agreement and perform all of its obligations hereunder.
d. The provisions of this Agreement and the performance of each of Lenders obligations hereunder do not conflict with Lenders organizational documents or any agreement, contract, lease, or obligation to which Lender is a party or by which Lender is bound.
e. The governing authority of Lender has approved the terms and conditions of this Agreement and has determined that the entering of this Agreement by Lender is in the best interests of Lender.
Special Limited Agency Agreement | Page 16 of 30 |
f. Neither Lender nor any principal thereof has been or is the subject of any of the following:
i. Criminal conviction (other than misdemeanor traffic offenses);
ii. IRS lien;
iii. Enforcement agreement, memorandum of understanding, cease and desist order, administrative penalty, or similar agreement concerning lending matters that has not been resolved;
iv. Administrative or enforcement proceeding or investigation commenced by the Securities Exchange Commission, state securities regulatory authority, Federal Trade Commission, or any other state or federal Regulatory Authority (excluding routine examinations conducted by a Regulatory Authority and excluding communications received in the ordinary course of business from any Regulatory Authority such as communications concerning consumer complaints or communications related to immaterial issues) that has not been resolved; or
v. Restraining order, decree, injunction, or judgment in any proceeding or lawsuit alleging fraud or deceptive practices or illegal activity on the part of Lender or any principal thereof.
For purposes of this Section 15(f) the word principal of Lender shall include (i) any person directly or indirectly owning a TEN PERCENT (10.00%) or more equity interest of Lender, (ii) any officer or director of Lender, and (iii) any other person having the power or authority to control Lenders business.
16. Ownership of Borrower Information . Each party shall take all steps necessary and appropriate to maintain the confidentiality of any Applicant and Borrower names, addresses, and telephone numbers and all account and other information, including payment information, regarding Borrowers and Applicants who have been declined, and all records, data, and information pertaining to the foregoing (collectively, Borrower Information ) . Lender and CSO jointly and severally shall own all Borrower Information; provided, however, that neither party will use any of such Borrower Information except to the extent permitted by the Program Guidelines and the privacy policies of each of CSO and Lender set forth in the documents described in the Program Guidelines. Notwithstanding the foregoing, without the need for obtaining Lenders consent, CSO may use Borrower Information for purposes of marketing, offering, selling, brokering, underwriting and providing other products and services, including, without limitation, other loan products and services that may be offered to Borrowers by CSO, any Third Party Service Provider of CSO or any other lenders through the distribution channels of CSO and any Third Party Service Provider of CSO, provided that, in all cases, however, any use by CSO of any such Borrower Information shall comply with (a) all applicable Rules, (b) the requirements of the Program Guidelines, and (c) the above-described privacy policies of both CSO and Lender and in the event any such Borrower Information is used in connection with marketing, offering, selling, brokering, underwriting or providing loans made by any party other than CSO, Lender agrees that such other lender may jointly own such Borrower Information with CSO and Lender, so long as such other lender has a privacy policy no less
Special Limited Agency Agreement | Page 17 of 30 |
restrictive than Lenders privacy policy described in the Program Guidelines and agrees in writing to comply with such privacy policy and the privacy policies of CSO and Lender. In addition, notwithstanding that Lender has an ownership interest in Borrower Information, Lender agrees that it will not use Borrower Information to market any other products or services to Borrowers or to Applicants without the prior written consent of CSO. Without limiting the foregoing, each of CSO and Lender shall adopt and maintain reasonable procedures relating to administrative, technical, and physical safeguards to: (a) ensure the security and confidentiality of any Borrower Information that such party receives; (b) protect against any anticipated threats or hazards to the security or integrity of any Borrower Information that such party receives; (c) protect against the unauthorized access to or use of any Borrower Information that such party has in its possession which could result in substantial harm or inconvenience to any Borrower or Applicant; and (d) ensure the proper disposal of any Borrower Information that such party has in its possession. Notwithstanding anything herein to the contrary, CSO shall be the sole owner of all CSO Disclosure Statements and all CSO Contracts and any information contained therein. The rights and obligations of the parties under this Section 16 shall survive the termination of this Agreement for a period of TWO (2) years.
17. Insurance . CSO shall procure and maintain such insurance as described on Exhibit A. Although CSO is not required to assure that such liability policies of insurance, including umbrella policies, name Lender and its successors and assigns as additional insureds under such policies of insurance, CSO agrees to maintain all such coverage throughout the term of this Agreement.
18. Term . The term of this Agreement shall be for a period of TWO (2) years commencing as of the Effective Date; provided, however, that either party may terminate this Agreement prior to the expiration of its term pursuant to the provisions of this Section 18 and Section 19 below. This Agreement shall be renewed automatically for successive one-year terms unless the party not wishing to renew provides the other party with at least NINETY (90) days advance written notice of non-renewal. Each party hereto shall have the right to terminate this Agreement immediately upon written notice to the other party hereto, if (a) the terminating party determines in its reasonable discretion that the activities of the parties under this Agreement, the Loan Program or the CSO Program are illegal under, prohibited by or not permitted under any of the Rules; (b) any Regulatory Authority having jurisdiction over the Program, CSO or Lender requires the terminating party to terminate this Agreement; (c) the terminating party determines in its reasonable discretion that continued operation of the Loan Program or the CSO Program may materially adversely affect the ongoing operations of the terminating party or those of the terminating partys affiliates; and in the event of a termination of this Agreement pursuant to this clause (c), the terminating party shall provide the other party with a written explanation of the basis for such termination, or (d) the terminating party determines in its reasonable discretion that continued operation of the Loan Program or the CSO Program may materially adversely affect the relationship between the terminating party or any of its affiliates and any Regulatory Authority having jurisdiction over any of them. In addition, if Lender modifies any Loan term, interest rate, fee, or other charge pursuant to Section 10 above, or if Lender materially modifies any underwriting criteria for the Loans pursuant to Section 10 above, CSO may terminate this Agreement upon THIRTY (30) days prior written notice to Lender if CSO determines in its reasonable discretion that such modification by Lender would render it economically infeasible for CSO to continue to perform its duties and responsibilities hereunder or that such modification would cause any aspect of the Loan Program or the CSO Program to be in violation of any Rules. Notwithstanding any
Special Limited Agency Agreement | Page 18 of 30 |
termination of this Agreement, each partys respective obligations and covenants hereunder with respect to outstanding Loans and the related pledged cash, Credit Enhancements and Guarantied Obligations shall remain in effect for so long as such Loans remain outstanding.
19. Termination Upon Default .
a. Either party hereto shall have the right to terminate this Agreement upon occurrence of one or more of the following events:
i. Failure by the other party to observe or perform that partys obligations to the other hereunder or to comply with any provision of this Agreement, so long as the failure or nonperformance is not due to the actions of the terminating party;
ii. In the event any Financial Information (as defined below) representation, warranty, statement or certificate furnished to either party by the other in connection with this Agreement, or any separate material statement or document delivered or to be delivered hereunder by either party hereto to the other party, is materially false, misleading, or inaccurate as of the date made or delivered; and
iii. In the event a party hereto (or an affiliate of such party) defaults under any other agreement executed between the parties hereto (and/or any of their respective affiliates) and such default continues beyond any applicable notice and cure period provided for such default under such other agreement.
b. The Agreement may be terminated pursuant to Section 19(a)(i) above only if the default continues for a period of THIRTY (30) days after the defaulting party receives written notice from the other party specifying the default in the case of a non-monetary default, or TEN (10) days after the default in the case of a failure to pay any amount when due hereunder.
c. In addition to any other right to terminate this Agreement, a party may terminate this Agreement if the other party hereto, or such other partys principals is the subject of any of the following or if any of the following occurs with respect to such other party or such other partys principals: insolvency, inability to pay its debts as they become due, the filing of a voluntary bankruptcy petition, the filing of an involuntary bankruptcy petition which is not dismissed within THIRTY (30) days after filing thereof, dissolution or termination of its existence as a going concern, or the appointment of a receiver for any part of its property.
d. In order to preserve the goodwill of each Party with its customers, the Parties shall act in good faith and cooperate in order to ensure a smooth and orderly termination of their relationship and the termination of the Loan origination and marketing program contemplated hereunder. Unless prohibited by applicable Rules, or as otherwise provided in this Agreement, upon Lenders written request CSO shall continue to service outstanding Loans following termination or expiration of this Agreement until all Loans are repaid or charged off in accordance with Lenders collection policies and procedures. Except as otherwise set forth in Section 13
Special Limited Agency Agreement | Page 19 of 30 |
herein, upon the termination or expiration of this Agreement, all rights and benefits herein granted to CSO (but none of the obligations of CSO hereunder) shall revert to Lender, and CSO shall immediately cease using Lender Loan Program and any Lenders properties or materials.
20. Indemnification .
a. Indemnification Obligations . To the furthest extent allowable by law, CSO shall indemnify, defend and hold Lender and its partners and affiliates and their respective directors, officers, employees, shareholders, lenders, partners and agents (herein, the Lender Indemnified Parties ) harmless from and against any and all claims, causes of action, demands, liabilities, losses, penalties, fines, judgments, damages or expenses (including, without limitation, legal fees, fines, court costs, accounting fees and class action costs) (collectively Damages ) whether based on contract, tort, common law, equity, or statute (each, a Claim ) , asserted by or on behalf of any Applicant, Borrower, Regulatory Authority, or other person or entity relating to, arising or alleged to have arisen in whole or in part out of or in consequence of all of the following: (i) any breach by CSO of its obligations under this Agreement or the inaccuracy of any warranty or representation of CSO set forth in this Agreement; (ii) any act or omission (whether one or more) of any Third Party Service Provider retained by CSO, the inaccuracy of any warranty or representation made for the benefit of Lender by any Third Party Service Provider retained by CSO, or the breach of any obligation owed to Lender by any Third Party Service Provider retained by CSO; (iii) any claim or determination that the Loans or the activities of the parties hereunder are illegal under or prohibited by any of the Rules and any other claim asserted by or on behalf of any Applicants, Borrowers or Regulatory Authority with respect to the Loans; (iv) any examination, investigation or audit conducted by a Regulatory Authority; (v) any actual or alleged injury to any Applicant, Borrower and/or actual or prospective customer of CSO or to any employee of CSO actually caused or alleged to have been caused in whole or in part by CSO or any of its employees, agents or representatives; (vi) any transaction (whether one or more) arising out of, relating to, and/or pursuant to this Agreement; (vii) any claim by a Borrower relating to the documentation of a Loan by CSO or Lender and/or (viii) any act or omission (whether one or more) of CSO, and/or its employees, agents, representatives and/or third party service providers in connection with their performance or lack of performance of any duty or activity contemplated by this Agreement. The obligation under this Section 20(a) shall include but not be limited to payment of all reasonable and necessary counsel fees and expert fees THE OBLIGATIONS OF CSO TO INDEMNIFY AND DEFEND INDEMNIFIED PARTIES UNDER THIS SECTION 19(a) SHALL EXTEND WITHOUT LIMITATION TO CLAIMS THAT ALLEGE THE OMISSIONS, NEGLIGENCE, GROSS NEGLIGENCE, AND/OR INTENTIONAL ACTS OF LENDER, EXCEPT THAT CSO SHALL HAVE NO INDEMNIFICATION OBLIGATION CAUSED BY LENDERS GROSS NEGLIGENCE AND/OR INTENTIONAL TORTS, EXCEPT TO THE EXTENT SUCH GROSS NEGLIGENCE OR INTENTIONAL TORT ARISES FROM ACTIONS REASONABLY REQUIRED TO PERFORM LENDER OBLIGATIONS UNDER THIS AGREEMENT.
Additionally, CSOs indemnification obligations under this Section 20(a) shall include the payment of all costs of defense, if any, including without limitation, all reasonable and necessary attorneys fees, court costs, accounting fees, class action costs and expert fees, subject to CSOs
Special Limited Agency Agreement | Page 20 of 30 |
reimbursement rights under Section 20(c) below. Except as otherwise provided in this Section 20(a) , the obligations of CSO to defend, indemnify and hold Lender Indemnified Parties harmless under this Section 20(a) shall extend without limitation to the actual or alleged omissions, negligence, gross negligence, and intentional acts of Lender, including Lenders sole or concurrent negligence.
NOTHING CONTAINED HEREIN SHALL REQUIRE CSO TO DEFEND, INDEMNIFY OR HOLD LENDER INDEMNIFIED PARTIES HARMLESS FROM LENDERS BREACH OF THIS AGREEMENT.
b. Indemnification Procedures . Lender shall promptly notify CSO of any suit or threat of suit of which Lender becomes aware which may give rise to a right to indemnification under this Agreement but in any event within THIRTY (30) days of the discovery of such claim; provided, however, that the failure of Lender alleging a right of indemnity hereunder to provide prompt notice to CSO shall relieve CSO of its obligations hereunder only to the extent that CSO can prove that such failure to provide prompt notice actually and materially prejudiced the rights of CSO. CSO shall promptly reimburse Lender for all Damages incurred by Lender (including Damages incurred in advance of the final disposition of the underlying claim), shall bear all expenses in defending any such claim or matter, and shall be entitled to participate in the settlement or defense of any matter for which Lender seeks indemnity hereunder and, if CSO elects, to take over and control the defense and settlement thereof utilizing counsel of its choice in consultation with Lender (in which case Lender shall have the right to employ separate counsel of its choice, but the fees and expenses of such counsel shall be at the expense of CSO). CSO may not enter into a final settlement of any claim or matter without the prior consent of Lender, which consent shall not be unreasonably withheld or delayed; provided that Lenders withholding of or delaying consent shall not be deemed unreasonable if the proposed settlement arrangement allocates liability or financial obligations directly to Lender. In all cases, Lender and CSO shall cooperate and assist each other in all reasonable respects in the defense and settlement of any such action.
c. Obligation to Refund Advanced Damages . In the event that CSO reimburses Lender for Damages pursuant to the indemnification provisions of this Section 20 , in advance of the final disposition of the underlying claim, and if it is ultimately determined by settlement or pursuant to the dispute resolution provisions hereof that such Damages directly arose out of an occurrence that did not require such indemnification under Section 20(a) , then Lender agrees to repay to the other party any such Damages for which it received advanced reimbursement to which it was not entitled hereunder. All Damages required to be repaid under this Section 20(c) shall be repaid within FIVE (5) business days following the above-described ultimate determination.
d. Survival . This Section 20 shall survive any termination or expiration of this Agreement. Each party expressly agrees, warrants and represents that it has read the terms of this Section 20 , understands the same and that the terms of this Section 20 are clear, conspicuous and unequivocal.
Special Limited Agency Agreement | Page 21 of 30 |
21. Expenses . Except as expressly provided to the contrary in this Agreement, each party shall be responsible for all expenses incurred by it in the performance of its obligations under this Agreement, including any expenses incurred by it in performing its respective duties set forth in this Agreement.
22. Scope of Relationship . The parties agree that the relationship established by this Agreement is non-exclusive. Without limiting the foregoing and subject to the provisions of this Agreement, each party hereto is expressly permitted, without the need for obtaining any further consent or approval from the other party hereto, to market, offer, sell, broker, underwrite and/or provide other products and services, including without limitation, any other loan products and services and specifically including, without limitation, any loan products and services similar in scope and nature to the Loans and the related services contemplated by the Program Guidelines, through any of their respective distribution channels and the distribution channels of their respective Third Party Service Providers, including, without limitation, any of such distribution channels through which Loans are offered pursuant to this Agreement.
23. Confidential Information . In performing their obligations pursuant to this Agreement, each party may have access to and receive disclosure of certain confidential information about the other party or parties, including, without limitation, the names and addresses of a partys Borrowers or members, marketing plans and objectives, research and test results, and other information which is confidential and the property of the party disclosing the information ( Confidential Information ). The parties agree that the term Confidential Information shall include this Agreement, the Program Guidelines, and the Program Materials, as the same may be amended and modified from time to time. Confidential Information shall not include information in the public domain, which is independently developed by any party hereto, or as defined under Section 16 as Borrower Information which may be used only as indicated therein, to the extent that it may conflict with the provisions contained in this Section 22 . Lender and CSO agree that Confidential Information shall be used by each party solely in the performance of its obligations under this Agreement or in connection with activities related to such performance (including, without limitation, activities involving the financing of the Loans by Lender). Each party shall receive Confidential Information in confidence and shall not disclose Confidential Information to any third party, except as may be permitted hereunder or under the Program Documents, or as may be necessary to perform its obligations hereunder, or as may be otherwise agreed in writing by the party furnishing the information, or as required by the Rules or any Regulatory Authority. In the event that either party (the Restricted Party ) is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, such party will provide the other party with prompt notice of such request(s) so that the other party may seek an appropriate protective order or other appropriate remedy and/or waive the Restricted Partys compliance with the provisions of this Agreement. In the event that the other party does not seek such a protective order or other remedy, or such protective order or other remedy is not obtained, or the other party grants a waiver hereunder, the Restricted Party may furnish that portion (and only that portion) of the Confidential Information which the Restricted Party is legally compelled to disclose and will exercise such efforts to obtain reasonable assurance that confidential treatment will be accorded any Confidential Information so furnished as a Restricted Party would reasonably exercise in assuring the confidentiality of any of its own confidential information. Notwithstanding anything herein to the contrary, nothing herein shall prohibit either party hereto from entering into agreements with any other party that include
Special Limited Agency Agreement | Page 22 of 30 |
program guidelines and program materials that may or may not be the same as, or substantially similar to, the Program Guidelines and Program Materials. Upon request or upon any expiration or termination of this Agreement, each party shall return to the other party or destroy (as the latter may instruct) all of the latters Confidential Information in the formers possession which is in any written or other recorded form, including data stored in any computer medium; provided, however, that a party hereto may retain the Confidential Information of the other party (but subject to the requirements of this Section 22) to the extent that such party needs access to such information to continue to perform any of its obligations hereunder or to broker or service Loans or otherwise perform obligations owed by such party to the other party.
24. Regulatory Examinations and Financial Information . Each party agrees to submit to any examination which may be required by any Regulatory Authority with audit and examination authority over the other party, to the fullest extent that such Regulatory Authority may require and to the fullest extent provided by law. Lender (either directly or by the use of accountants or other agents or representatives) may audit, inspect, and review CSOs files, records, and books with respect to the Loans and compliance with the Loan Program and the CSO Program. CSO also agrees to provide Lender with copies of any government or regulator audits of CSO as it relates to those stores and/or loans which Lender funds, during the term of this Agreement. Upon seven (7) days advance written notice, CSO (either directly or by the use of accountants or other agents or representatives) may audit, inspect, and review Lenders files records, and books with respect to the Loans and compliance with the Loan Program and the CSO Program. CSO will pay any and all costs of auditing Lender. CSO agrees to prepare quarterly balance sheets and quarterly statements of income, retained earnings and cash flows for the last TWELVE (12) months together with complete and accurate books, records, and accounts prepared and maintained on a consistent basis and in accordance with generally accepted accounting principles (collectively, the Financial Information). Upon the request by Lender, CSO hereto agrees to deliver to Lender, within THIRTY (30) days of receiving such request, the Financial Information, certified as true and correct by an officer or principal of CSO (such request not to be made more often than one time every calendar quarter). CSO agrees to submit to operational audits and audits of CSOs electronic data processing functions, as the other party may reasonably request from time to time. The auditing party will promptly submit the results of such audits to the audited party. Any such audit shall be performed at CSOs sole cost and expense. Additionally, CSO shall provide to Lender, as soon as available and in any event (i) within NINETY (90) days after the end of each fiscal year, financial statements of CSO (on a consolidated and consolidating basis) to include a balance sheet, income statement, cash flow statement, and Managements Discussion and Analysis of Financial Condition and Results of Operations that describes the financial condition and results of operations of the CSO and its consolidated subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Managements Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the CSO and its subsidiaries), as of the end of such fiscal year, audited by independent certified public accountants of recognized standing satisfactory to Lender, and (ii) promptly from time to time following the occurrence of an event required to be reported on Form 8-K pursuant to Items 1.01, 1.02, 1.03, 2.01, 2.03, 2.04, 2.06, 3.03, 4.01, 4.02, 5.01, 5.02 and 5.03 thereof, the information that would be required to be filed with the SEC on Form 8-K if the CSO were required to file such reports with respect to any of such items.
Special Limited Agency Agreement | Page 23 of 30 |
25. Relationship of Parties; No Authority to Bind . Lender and CSO agree that (a) Lender and CSO are independent contractors to each other in performing their respective obligations hereunder, (b) Lender shall not hold any ownership in CSO or possess a leasehold interest in CSOs offices or any personal property located therein, except that Lender shall be the exclusive owner of all Loans and Loan Documents, (c) no Lender employees shall work in the CSO offices (except for Lender auditors who may examine CSOs practices from time to time for compliance with the Program Guidelines), and (d) other than as may be necessary to generally effectuate CSOs performance of its duties under this Agreement, Lender shall exercise no authority or control over CSOs employees or methods of operation. Nothing in this Agreement or in the working relationship established and developed hereunder shall be deemed or is intended to be deemed, nor shall it cause, Lender and CSO to be treated as partners, joint venturers, joint associates for profit or otherwise be deemed to create a relationship of agent and principal. Neither party shall have any authority to bind the other party to any agreement except to the extent expressly permitted herein. Except as expressly set forth in this Agreement to the contrary, no actions or failure to act by one party on the part of the other party hereto shall be construed to imply the existence of any authority not expressly granted herein. Except as expressly provided herein or in the Program Guidelines, CSO is not authorized to, and shall not (i) make or amend any contract incur any debt or liability, or extend any credit or enter into any obligation on behalf of Lender, other than as specified by this Agreement in its role as CSO with Lender; (ii) modify or amend any document, instrument, promissory note, or security agreement evidencing or relating to a Loan or the related Credit Enhancement (individually, a Loan Document and collectively, the Loan Documents), or extend the time for making any payment which may become due under any Loan; or (iii) waive any of Lenders rights or privileges under any Loan, Loan Document or other agreement made by Lender. CSO understands and agrees the that CSOs name shall not appear on any Loan Document as the maker of a Loan and that CSO shall not have any participation in the credit decision to make or provide a Loan, a Loan renewal or a Loan refinance or any participation in any act pertaining to the funding of a Loan, a Loan renewal or a Loan refinance. CSO shall refer to Lender any inquiries concerning the accuracy, interpretation, or legal effect of any Loan Document. CSO shall not negotiate the terms of any Loan Document on behalf of Lender. Lender shall be deemed to have received and reviewed the Loan Documents and supporting materials only after the Loan Documents and materials have been previously received at Lenders offices or if designated by Lender, by a Third Party Service Provider. CSO shall not represent to anyone that CSO has the authority or power to do any of the foregoing and shall make no representations concerning Lenders transaction except as expressly authorized in writing. Lender shall not have any authority or control over any of the property interests or employees of CSO, nor shall Lender have any authority or control over any of the property interests or employees of those affiliates of CSO that own and operate stores at which Applicants or other potential Borrowers are offered the opportunity to complete and submit applications for Loans. As used herein, the term Loan Document shall not include any agreements that CSO or any affiliate of CSO may enter into directly with any party that governs the agreement of CSO or an affiliate of CSO to attempt to broker a Loan on behalf of any Borrower or any party who applies for, but is denied, a Loan. In each and every instance, the acts that this Agreement authorizes CSO to perform for or on Lenders behalf shall solely constitute CSO a special, limited agent of Lender to perform the duties and services set forth herein. In no event may CSO act as Lenders general agent or represent to others that it may act as Lenders general agent. In the event that either party reasonably determines that any provision of this Agreement requires an act that applicable Rules disallow in order for CSO and Lender to operate lawfully as an independent credit services organization and lender, respectively, or otherwise causes a material risk of violating applicable Rules, then the parties shall promptly and in good faith attempt to agree to a modification so as to reduce or eliminate such risk of not conforming to applicable Rules.
Special Limited Agency Agreement | Page 24 of 30 |
26. Governing Law; Arbitration; Consent to Jurisdiction . This Agreement shall be construed and performed in accordance with the laws of the State of Texas, without reference to Texas choice of law or conflicts rules. At the request of either party, any dispute between the parties relating to this Agreement shall be submitted to binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association, provided, however, that a party seeking specific performance hereunder pursuant to Section 33 below may pursue such remedy in court. Unless otherwise agreed to by both parties, the location for any arbitration proceedings concerning this Agreement shall be in Dallas County, Texas. In the event that a party hereto initiates a lawsuit in court concerning an arbitrable claim, controversy or dispute, such party shall pay the other party for the costs, including attorneys fees that the other party incurs to obtain an order from the court to stay or dismiss the lawsuit or otherwise compel arbitration. The arbitrator shall be authorized to award such relief as is allowed by law. Except as provided below, each party shall be responsible for its own attorneys fees incurred during the course of the arbitration, as well as the costs of any witnesses or other evidence such party produces or causes to be produced. The award of the arbitrator shall include findings of fact and conclusions of law. Except as required by law, such award shall be kept confidential, and shall be final, binding, and conclusive on the parties. Judgment on the award may be entered by any court of competent jurisdiction. The prevailing party in the resolution of any dispute ( Dispute Resolution ) concerning this Agreement, any provision hereof or any actual or alleged breach shall be entitled to its reasonable attorneys fees, including investigation and costs of discovery, and other costs connected with such Dispute Resolution, in addition to all other recovery or relief. The prevailing party shall be that party receiving substantially the relief sought or successfully defending substantially the position maintained in the Dispute Resolution, whether or not brought to final award or judgment. The parties agree that in the event of any litigation hereunder, the exclusive venue and place of jurisdiction for such litigation shall be in the state courts or the federal district courts situated in Dallas County, Texas, and each party hereto specifically consents and submits to the personal jurisdiction of such courts.
27. Financial Covenants . CSO and Principal Guarantor shall comply with all financial covenants contained in any senior debt obligation of such person and shall promptly provide Lender with any notice received from or provided to the holder of such senior debt obligation relating non-compliance with or violation of such covenants.
28. Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
Special Limited Agency Agreement | Page 25 of 30 |
29. Force Majeure . In the event of an act of God or other natural disaster which makes the carrying out of this Agreement impossible, or if a partys performance hereunder is rendered illegal or materially adversely affected by reason of changes in applicable Rules, or if a Lender or CSO is advised in writing by any Regulatory Authority having or asserting jurisdiction over Lender, CSO or the Loans, respectively, that the performance of its obligations under this Agreement is or may be unlawful, then the party unable to perform, or whose performance has been rendered illegal or who has been so advised by a Regulatory Authority, may terminate this Agreement by giving written notice at least ONE HUNDRED EIGHTY (180) days in advance of termination to the other party, unless such changes in the Rules or communication from such Regulatory Authority require earlier termination, in which case termination shall be effective upon such earlier required date.
30. Successors and Third Parties . This Agreement and the rights and obligations hereunder shall bind and inure to the benefit of the parties hereto and their successors and assigns. Except as expressly provided herein with respect to Third Party Service Providers, the obligations, rights and benefits hereunder are specific to the parties hereto and shall not be delegated or assigned without the prior written consent of the other party, which shall not be unreasonably withheld. As a condition to an assignment of any obligations, rights or benefits hereunder, the assignee of such rights and benefits must agree to be bound by the terms of this Agreement pursuant to an assignment document executed by such assignee, in form and substance reasonably satisfactory to both Lender and CSO. Nothing in this Agreement is intended to create or grant any right, privilege, or other benefit to or for any person or entity other than the parties hereto. Notwithstanding anything in this Agreement to the contrary, the parties acknowledge that Lender can freely assign its rights with respect to the Loans and the Loan Documents (including, without limitation, its rights under Section 6 and 11 hereof and its rights to grant a first right and security interest to Senior Lenders under Section 36, subject to CSOs rights and reservations in those sections in which case, Senior Lender will also include the assignees secured lenders) without CSOs prior written consent.
31. Notices . All notices, requests, and approvals required or permitted by this Agreement shall be in writing and addressed/directed to the other party at the address below or at such other address of which the notifying party hereafter receives notice in conformity with this Section 31 . All such notices, requests, and approvals shall be deemed given upon actual receipt thereof:
To Lender: |
TXCSO, Inc. 8 South Michigan Avenue, Suite 1803 Chicago, IL 60603 Attention: Ira Felner, President Email: ifelner@barrfunding.com |
|||
With copy to: |
Arnstein & Lehr, LLP 161 North Clark St., Suite 4200 Chicago, IL 60601 Attention: Bruce H. Balonick Email: BBalonick@arnstein.com |
Special Limited Agency Agreement | Page 26 of 30 |
To CSO: |
SCIL TEXAS, LLC 3527 North Ridge Road Wichita, Kansas 67205 Attention: Roger Dean, EVP & CFO Email: rogerdean@curo.com |
|||
With a Copy to: |
SCIL TEXAS, LLC 3527 North Ridge Road Wichita, Kansas 67205 Attention: Vin Thomas, Chief Legal Officer Email: vinthomas@curo.com |
32. Waiver . Neither party hereto shall be deemed to have waived any of its rights, powers or remedies hereunder except in an express writing signed by an authorized agent or representative of the party to be charged with such waiver.
33. Counterparts . This Agreement may be executed and delivered by the parties hereto in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. In proving this Agreement in any judicial proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Delivery of a signature hereto by an email transmission of an Adobe portable digital file (PDF) shall be as effective as delivery of a manually executed counterpart hereof, and any such PDF signature shall be treated as an original signature hereto.
34. Specific Performance . Certain rights which are subject to this Agreement are unique and are of such a nature as to be inherently difficult or impossible to value monetarily. In the event of a breach of this Agreement by either party hereto, an action at law for damages or other remedies at law would be inadequate to protect the unique rights and interests of the parties. Accordingly, the terms of this Agreement shall be enforceable in a court of equity by a decree of specific performance or injunction. Such remedies shall, however, be cumulative and not be exclusive and shall be in addition to any other remedy which the parties may have.
35. Further Assurances . From time to time, the parties will execute and deliver to the other such additional documents and will provide such additional information as either may reasonably require to carry out the terms of this Agreement.
36. Lien of Senior Lender . Subject to the rights of the CSO contained herein and specifically to the return of the pledged cash upon the discharge of its obligations, CSO acknowledges and agrees that Lender has granted or may hereafter grant a first priority lien and security interest to Senior Lender as security for the Senior Debt in all right, title and interest of Lender in and to (a) the Loans, (b) all documents and instruments executed by a Borrower or CSO in connection with the Loans (including, but not limited to all Credit Enhancements, this Agreement, and all Loan Documents), (c) all collateral securing the Loans (whether granted by a Borrower or CSO); including, without limitation and (d) all proceeds arising
Special Limited Agency Agreement | Page 27 of 30 |
therefrom. CSO further acknowledges and agrees that Senior Lender shall be entitled to exercise all rights of Lender under this Agreement and any Program Documents with respect to the Loans, the Loan Documents and any Credit Enhancements upon notification by Senior Lender in accordance with the exercise of any rights or remedies of the Senior Lender under the Senior Loan Documents which shall terminate immediately upon payment of the Loans or Guarantied Obligations, as such monies are owed Lender. CSO agrees that all liens and whatever other right, title or interest (if any) which CSO may have at any time in any collateral, including but not limited to motor vehicles, as security for the obligations of a Borrower to CSO shall, at all times and in all respects, be subject, junior and subordinate as to priority and in all other respects to all liens and any other right, title or interest of Lender to any such collateral as security for the Loan or Loans to such Borrower, irrespective of the time or order of the creation or perfection of any such lien, right, title or interest and irrespective of any failure by Lender to create or perfect any such lien, right, title or interest. CSO agrees that it will not foreclose or exercise any right or remedy it may have at any time in or with respect to the collateral until such time as the Loan or Loans to a Borrower secured by such collateral have been indefeasibly paid.
NOTICE OF FINAL AGREEMENT
THIS AGREEMENT, AND THE DOCUMENTS EXECUTED AND DELIVERED PURSUANT HERETO, CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES, AND MAY BE AMENDED OR MODIFIED ONLY BY A WRITING SIGNED BY DULY AUTHORIZED REPRESENTATIVES OF EACH PARTY AND DATED SUBSEQUENT TO THE DATE HEREOF. THIS AGREEMENT SHALL SUPERSEDE AND MERGE ALL PRIOR COMMUNICATIONS, REPRESENTATIONS, OR AGREEMENTS, EITHER ORAL OR WRITTEN, BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF, EXCEPT WHERE SURVIVAL OF PRIOR WRITTEN AGREEMENTS IS EXPRESSLY PROVIDED FOR HEREIN. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
NOTICE RELATING TO DEFAULTED LOANS
CSO HEREBY EXPRESSLY ACKNOWLEDGES AND CONSENTS TO THE PROVISION OF SECTION 6 ABOVE, WHICH, IN CERTAIN CIRCUMSTANCES, COULD RESULT IN CSO MAKING PAYMENT TO LENDER IN CONNECTION WITH A LOAN.
EXHIBIT A IS ATTACHED HERETO AND MADE A PART HEREOF.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
Special Limited Agency Agreement | Page 28 of 30 |
IN WITNESS WHEREOF , this Agreement is executed by the authorized officers and representatives of the parties and shall be effective as of the Effective Date.
Lender: TXCSO, INC. | ||
By: | /s/ Ira Felner | |
Name: | Ira Felner | |
Title: | President |
CSO : SCIL TEXAS, LLC | ||
By: | /s/ Roger Dean | |
Name: | Roger Dean | |
Title: and |
EVP and CFO |
The Money Store, L.P. | ||
By: | /s/ Roger Dean | |
Name: | Roger Dean | |
Title: | EVP and CFO |
JOINDER OF PRINCIPAL GUARANTOR
AGREED AND CONSENTED to as of the Effective Date.
PRINCIPAL GUARANTOR: CURO Intermediate Holding Corp.
CURO Intermediate Holding Corp. | ||
By: | /s/ Roger Dean | |
Name: | Roger Dean | |
Title: | EVP and CFO |
Special Limited Agency Agreement | Page 29 of 30 |
EXHIBIT A
1. | CSO shall procure and maintain the following insurance coverage from insurance companies: |
a. | General Liability Insurance Coverage: |
| Occurrence form including bodily injury, property damage, advertising injury and personal injury; forms acceptable to LENDER. |
| Limits of Liability: $1,000,000 aggregate |
b. | Excess / Umbrella Insurance Coverage: |
| Occurrence Form; Coverage and Forms acceptable to LENDER. |
| Limits of Liability: $1,000,000 |
| Retained Limit: $10,000 |
c. | Privacy/Cyber Liability Insurance Coverage: |
| Coverage to include: breach remediation, notification expenses, and ongoing credit monitoring. |
| Limits of Liability: $1,000,000 |
2. | All policies may list LENDER as an additional insured, on an endorsement form. All policies may provide for at least thirty (30) days notice to LENDER of either cancellation or non-renewal. CSO shall be responsible for the payment of all deductibles or retained limits. CSO shall provide LENDER with confirmation that all policies have been obtained upon LENDERS request. |
Special Limited Agency Agreement | Page 30 of 30 |
Exhibit 10.55
SPECIAL LIMITED AGENCY AGREEMENT
THIS SPECIAL LIMITED AGENCY AGREEMENT (as amended, modified or restated from time to time, this Agreement ) dated as of October 6, 2017 (the Effective Date ), is made by and between IVY FUNDING EIGHT, LLC , a Texas Limited Liability Company ( Lender ), and SCIL TEXAS, LLC , a Nevada Limited Liability Company ( CSO ).
RECITALS
WHEREAS, pursuant to Section 303.001(b) and Section 342.004(b) of the Texas Financial Code, Lender intends to make Loans (as defined below) in the State of Texas to Borrowers (as defined below) charging annual interest rates not greater than TEN PERCENT (10.00% APR), secured by (1) CSOs Credit Enhancement (as defined below) on behalf of a Borrower, (2) Borrowers personal checks, remotely created checks, automated clearing house debit authorizations, or other electronic debit authorizations (a Debit Authorization ), and/or automobile titles (when applicable).
WHEREAS, CSO is a (1) credit services organization registered under Section 393, et seq. , of the Texas Financial Code, and (2) credit access business, registered under Section 393, et seq. of the Texas Finance Code, CSO intends to provide, in consideration of the payment of certain fees and other charges by a Borrower, assistance or other services relating to obtaining an extension of consumer credit from Lender.
WHEREAS, Lender desires to appoint CSO as its non-exclusive, special, limited agent with authority to advertise, accept loan applications, prepare loan documentation, to collect payments, and to do and perform such other services as may be mutually agreed between Lender and CSO in furtherance of the transactions contemplated by this Agreement.
WHEREAS, the parties desire to enter into this Agreement for the purpose of setting forth the terms and conditions which will govern certain services to be provided by CSO to Lender in connection with the Loans.
NOW, THEREFORE, in consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and CSO agree as follows:
1. Definitions . Except as may be explicitly stated otherwise herein, the following terms shall have the following meanings ascribed to them below:
Advertising Materials means all materials and methods used by CSO in the performance of CSOs marketing and promotion of the Loans, including, without limitation, brochures, letters, print advertisements, internet advertisements, television and radio communications and other advertising, promotional and similar materials.
Applicant means an individual who requests or applies for a Loan under the Loan Program through CSO.
Borrower means an individual obligor with respect to one or more Loans who is a resident of the State of Texas at the time such obligor signs the Loan Documents (as defined below). Borrowers means all such obligors.
Credit Enhancement means the guaranty, letter of credit or other credit enhancement issued by CSO or Principal Guarantor for each Loan in favor of Lender for the Borrower thereunder and, which provides for the unconditional and absolute guarantee of the payment in full of each such Loan of the Guarantied Obligations.
CSO Program means the program of CSO for providing credit services to Borrowers, including issuing CSOs Credit Enhancement on behalf of a Borrower to enhance their credit and the arrangement of Loans between Lender and Borrowers pursuant to this Agreement and the Program Guidelines (as defined below).
Loans means any extension of credit to Borrowers for personal, family, or household purposes with an interest rate not to exceed TEN PERCENT per annum (10.00% APR) made by Lender, with the assistance of CSO, under the Loan Program.
Loan Program means the lending program of Lender for originating and consummating Loans pursuant to this Agreement and the Program Guidelines.
Principal Guarantor means Curo Intermediate Holding Corporation which directly or indirectly owns ONE HUNDRED PERCENT (100.00%) of CSO.
Program means collectively the Loan Program and the CSO Program.
Program Guidelines means those guidelines established from time to time for the administration of the CSO Program and the Loan Program.
Program Materials means all promissory notes, security agreements, documents, agreements, instruments or other writings, as well as materials and methods used in connection with the performance of the parties obligations under this Agreement, including without limitation applications, disclosures and agreements required by the Rules, privacy policies, collection materials, red flag rules and the like, but excluding Advertising Materials.
Regulatory Authority means any local, state, or federal regulatory authority having valid jurisdiction or exercising regulatory or similar oversight with respect to Lender, CSO, or Third Party Service Providers.
Rules means all local, state, and federal statutes, regulations, or ordinances applicable to the acts of Lender, CSO, or a Third Party Service Provider as they relate to the CSO Program and/or the Loan Program; any order, decision, injunction, or similar pronouncement of any court, tribunal, or arbitration panel issued with respect to Lender, CSO, or a Third Party Service Provider in connection with this Agreement or the Program; and any regulations, policy statements, and any similar pronouncement of a Regulatory Authority applicable to the acts of Lender, CSO, or a Third Party Service Provider as they relate to this Agreement or the Program.
Special Limited Agency Agreement | Page 2 of 29 |
Senior Debt means all debt and obligations of Lender to Senior Lender under the Senior Loan Documents.
Senior Lender means Lenders senior secured lender(s) or an agent designated by such senior secured lender(s).
Senior Loan Documents means all agreements, instruments and documents evidencing, securing, governing, guaranteeing or pertaining to the Senior Debt, certain indebtedness and obligations of Lender to Senior Lender.
Third Party Service Provider means any contractor or service provider directly or indirectly retained by Lender or CSO, who provides or renders services in connection with the CSO Program or the Loan Program.
Other terms defined herein have the meanings so given to them. Each reference in this Agreement to a definition is a reference to a definition contained in this Agreement, unless the context expressly provides otherwise. Whenever the context requires, references in this Agreement to the singular number shall include the plural, and the plural number shall include the singular. Words denoting gender shall include the masculine, feminine and neuter.
2. General Description of the Loan Program and the CSO Program .
a. Independence of CSO and Lender . CSO and Lender intend to comply with any applicable Rules and to operate independently of each other in their respective capacities as a credit service organization and/or a credit access business in the case of CSO and third-party lender in the case of Lender. CSO and Lender contemplate that CSO will provide credit services related to the Loans.
b. Loan Program . The parties agree that the Loan Program shall consist of the origination, funding, and collection of Loans to Borrowers in accordance with the Rules and Program Guidelines. The parties agree that Lender shall have sole responsibility for establishing credit and underwriting criteria for the Loans, making the decisions as to whether or not to make Loans to an Applicant, funding the Loans, and, subject to the timely performance of CSOs obligations hereunder, managing the Loan Program in accordance with the express obligations under this Agreement and the Program Guidelines. Except as expressly provided herein, (i) nothing herein shall be deemed to commit Lender to originate or fund any particular level or number of Loans, and (ii) Lender makes no representation, warranty or covenant as to the amount of funding it will be able to provide for the Loans. Except as expressly provided with respect to the rights and interest of CSO in this Agreement, Lender or its assigns shall be the sole owner of all Loans made pursuant to this Agreement and CSO shall have no right, title or interest in such Loans.
Special Limited Agency Agreement | Page 3 of 29 |
c. CSO Program . The parties agree that CSOs responsibility under the Program shall be to act as a credit services organization and/or a credit access business on behalf of Borrowers in accordance with the Rules and Program Guidelines and as such CSO shall have the right to charge each Borrower a fee (a CSO Fee ) for providing credit services to each such Borrower (including issuing the Credit Enhancement for such Borrower) and arranging for a Loan on behalf of such Borrower. CSO shall not share with Lender, and Lender shall not accept as compensation, any portion of any CSO Fee obtained from a Borrower. If required by applicable Rules, CSO also shall act as a third party debt collector (as defined under Chapter 392 of the Texas Finance Code) on behalf of Lender with respect to the Loans in accordance with the Program Guidelines. The services CSO provides to each Borrower shall be governed by a Credit Services Disclosures, Terms and Conditions (each CSO Disclosure Statement ) and a Credit Services Agreement between CSO and each Borrower (each a CSO Contract ). CSO, in CSOs sole discretion, shall be solely responsible for determining the amount of the CSO Fee, the disclosures set forth in the CSO Disclosure Statement and the terms and conditions of each CSO Contract. CSO shall determine, in its sole discretion, whether or not it is appropriate to offer a Credit Enhancement in connection with an Applicant. Nothing herein shall be deemed to commit CSO to broker any particular level or number of Applicants for Loans, and CSO makes no representation, warranty or covenant as to the number of Loan applications CSO will submit to Lender on behalf of Applicants. Unless otherwise required by the Rules, nothing herein shall be deemed to require CSO to submit to Lender the application of any prospective Borrower to whom CSO has determined not to provide credit services or for whom CSO has determined not to issue a Credit Enhancement.
d. Commencement Date . The parties shall endeavor to begin the Program and commence providing credit services and making Loans hereunder as of the Effective Date or such other date as mutually agreed upon by the parties.
3. Duties and Responsibilities of Lender . Lender shall perform and discharge the following duties and responsibilities.
a. Develop (and from time to time as it determines appropriate, modify) and deliver to CSO or a Third-Party Service Provider credit and underwriting criteria determined by Lender, in Lenders sole discretion, to be appropriate, reasonable and prudent for the Loan Program and the Loans.
b. Make a determination, in Lenders sole discretion, as to whether or not to extend a Loan to each Applicant which determination shall be made on a case by case basis, pursuant to scoring systems or other criteria or models, established by Lender and in the manner set forth in the Program Guidelines.
c. Extend credit in the form of Loans to Applicants it deems eligible to be Borrowers and fund the Loans in amounts as it determines appropriate to extend credit thereto.
Special Limited Agency Agreement | Page 4 of 29 |
d. Disburse or cause the disbursement of the proceeds of Loans to Borrowers in the manner set out in the Program Guidelines.
e. Manage the Loan Program in accordance with Lenders express obligations under this Agreement and under the Program Guidelines and manage the portfolio of Loans using commercially reasonable standards of care, skill and attention, in each case subject to the timely performance by CSO of CSOs obligations under this Agreement and the Program Guidelines.
f. Promptly deliver to CSO all communications received from Borrowers or Applicants (including, without limitation, information requests and bankruptcy filings).
g. Generate or cause the generation of adverse action notices and other communications that may be required under the Rules for Applicants who apply for but are denied a Loan, subject to CSOs responsibility as Lenders special limited agent to deliver and manage such adverse action notices as described in the Program Guidelines.
4. Duties and Responsibilities of CSO . CSO shall perform and discharge the following duties and responsibilities:
a. Develop (and from time to time as it determines appropriate, modify) its credit and underwriting criteria for CSOs credit services and CSO fees in CSOs sole discretion to be appropriate, reasonable and prudent for the CSO Program and for the issuance of CSOs Credit Enhancement on behalf of a Borrower in favor of Lender.
b. Maintain all licenses and bonds required under applicable Rules during the term of this Agreement.
c. Make a determination, in CSOs sole discretion, as to whether or not to extend credit services and specifically issue a Credit Enhancement on behalf of a prospective Borrower (which determination shall be made on a case by case basis, pursuant to scoring systems or other criteria or models established or utilized by CSO).
d. Do and perform all other activities assigned to or expected of it as set forth herein or in the Program Guidelines relating to the CSO Program, which are incorporated herein by reference.
5. Appointment of CSO as Special Limited Agent . Lender hereby appoints CSO as its special limited agent to perform certain administrative and servicing functions in connection with this Agreement under the Program and retains CSO as its servicer for the Loans, as provided in this Agreement and in the Program Guidelines. CSO hereby accepts the appointment as Lenders special limited agent and agrees to perform and discharge the following duties and responsibilities at its own cost and expense.
a. Market and promote the Program and the Loans and solicit potential Applicants in the manner set forth herein.
Special Limited Agency Agreement | Page 5 of 29 |
b. Provide certain disclosures and agreements to each Borrower, including a CSO Disclosure Statement and a CSO Contract, and such other disclosures and agreement as may be required by the Rules in the manner described in the Program Guidelines or in the Rules.
c. Administer the application process for Loans, solicit applications, and assist potential Borrowers in completing applications in accordance with the Rules.
d. If required, maintain a contract with a Third Party Service Provider or, alternatively, coordinate with or utilize another underwriting system approved by Lender that will receive Loan applications and evaluate such applications and any collateral using Lenders underwriting criteria.
e. To the extent required by the Program Guidelines, transmit Loan applications to Lender and/or a Third Party Service Provider in accordance with the Program Guidelines.
f. Receive evaluations of Loan applications and the resulting Loan approval or denial decisions from Lender and/or Third Party Service Provider and forward such decisions to the applicable Applicants.
g. Prepare and ensure the proper completion and delivery of Loan Documents in accordance with all applicable Rules to Lender, a Third Party Service Provider (if instructed by Lender) and Borrowers.
h. Prepare security documents to permit the perfection of liens on any collateral securing the Loans and file such security documents with the appropriate authority.
i. Receive for Lender from Borrowers payments due to Lender, other than dedicated CSO fees, under the Loans and forward any to Lender, in the manner specified in this Section 5(i) , any such payments delivered to CSO by Borrowers. The funds from these payments shall belong to Lender (or the recipient designated by Lender), shall be held in trust by CSO for Lender, and shall be remitted to Lender within ONE (1) business day of receipt by CSO to the bank account designated and controlled by Lender. Any payment on a Loan received by CSO, other than the CSO fee, shall be binding upon Lender with respect to the applicable Borrower. In accordance with this Agreement, CSO, as Lenders special limited agent, shall continue to accept payments and otherwise collect on the Loans as long as any Guarantied Obligations shall be outstanding.
j. Reflect all Loan transactions and track Loan balances on a loan management system and accounting system to be maintained by CSO pursuant to the requirements of this Agreement.
k. Comply with all registration, bonding and other requirements of the Texas Finance Code and other applicable Rules and any regulations promulgated thereunder, and with the Rules, including federal laws and regulations applicable to CSOs credit services, collection and servicing activities with respect to the Loans, to the extent that any such Rules including, federal statutes or regulations, are applicable to CSOs credit services, collection and servicing activities.
Special Limited Agency Agreement | Page 6 of 29 |
l. Maintain and retain the original of all Program Materials with respect to each Loan (either in paper or electronic format), except that CSO may retain copies of Program Materials (other than any original promissory note which shall be retained by CSO or a person designated by Lender) in connection with a Loan in lieu of the original if Borrower is required to receive the original under applicable Rules or with Lenders prior written consent, for the period required by applicable Rules; provided, however, that in the event that CSO shall no longer be conducting business as a credit services organization and/or a credit access business in Texas, CSO shall deliver to Lender all Program Materials relating to all Loans then owned by Lender. CSO shall provide Lender access to such Program Materials no later than FIVE (5) business days after written request. The records and documentation maintained by CSO pursuant to this Agreement shall be maintained in a secure environment at all times and in compliance with applicable Rules.
6. Defaulted Loans and Credit Enhancement . A Loan shall default upon the occurrence of any of the following: (a) Borrower fails to make any payment when due, (b) Borrower makes any statement or representation in connection with obtaining a Loan which is materially false or misleading when made, (c) Borrower fails to keep any promise or agreement it made to Lender in any promissory note or other document evidencing or relating to a Loan, or (d) the CSO Contract related to such Loan is cancelled for any reason prior to Lender receiving payment in full on such Loan. Pursuant to each CSO Contract, and regardless of whether the CSO Contract is cancelled, CSO agrees to issue on behalf of each CSO approved Borrower, and for the benefit of Lender, a Credit Enhancement for the prompt payment of the amounts due to Lender under each Loan made by Lender under the Loan Program, as described in this paragraph; provided that such Credit Enhancement shall be in a form and substance satisfactory to Lender. A Credit Enhancement issued in respect of a Loan shall provide for the unconditional, irrevocable and absolute guarantee of the related Loan in an amount equal to the sum (the Guarantied Obligations ) of (or such lesser amount as may be agreed in writing from time to time by Lender and CSO): (a) the principal amount of the Loan and accrued and unpaid interest thereon, plus (b) to the extent that the same shall be due and owing in connection with a Loan, an NSF fee for items returned by a depository institution equal to the lesser of THIRTY AND NO/100 DOLLARS ($30.00) or the amount permitted by applicable law, plus (c) to the extent that the same shall be due and owing in connection with a Loan, a late fee equal to the greater of SEVEN AND 50/100 DOLLARS ($7.50) or FIVE PERCENT (5.00%) of the delinquent payment for any payment past due for more than the period required by applicable law or for such longer period as may be set forth in the Program Guidelines. Upon receipt of a Lender demand, CSO shall promptly pay Lender in full the respective Guarantied Obligations for the defaulted Loan under the Credit Enhancement. The parties agree that CSO may issue a Credit Enhancement covering more than one Loan, in which case Lender shall have all the rights and CSO shall have all the obligations with respect to such Credit Enhancement as the Parties would have if individual guaranties were issued for each Loan. If Lender draws on a Credit Enhancement and is paid in full for all amounts owing on a Loan attributable to the respective Guarantied Obligations, Lenders interest in the related Loan shall be assigned automatically to CSO, without any representation or warranty. With respect to each Borrower to which CSO elects to extend credit services and which becomes a Borrower
Special Limited Agency Agreement | Page 7 of 29 |
of a Loan under the Loan Program, CSO shall create and maintain books and records reflecting that the respective Guarantied Obligations of such Borrower under such Loan are guaranteed by CSO under the Credit Enhancement, including, if applicable, appropriate documentation to substantiate and confirm that multiple Loans are being guaranteed under such Credit Enhancement, which documentation shall be in a form and substance satisfactory to Lender.
7. Settlement . Subject to the terms and conditions of this Agreement, including the offset and set-off rights in Section 11(d) below, the parties agree to settle all amounts due from one party to the other pursuant to this Agreement and the Program Guidelines on a daily basis or at such other times as the parties may agree (the date of any such settlement, being the Transaction Date ). Any payment due from one party to the other under this Agreement and the Program Guidelines shall be made by an automated clearing house transfer with next day settlement on the business day immediately succeeding the Transaction Date. Within TWENTY (20) days after the end of each calendar month, the parties shall prepare a recap and reconciliation of all the settlements made during that month, and if the reconciliation reveals that one party owes the other an amount necessary to correct an inaccuracy in the previous settlement process, that amount shall be paid within TWO (2) business days. The settlement obligations of the parties under this Agreement and the Program Guidelines shall survive the termination of this Agreement and will remain in effect as long as any Loans remain unpaid or any party owes any amount to the other party under this Section 7 . Pursuant to the requirements of this Agreement, CSO shall capture and record all relevant data concerning any Loan transaction and prepare appropriate reports and summaries as may be necessary to effect settlement hereunder, facilitate the review and analysis of all Loan activity, and permit Lender to reflect such Loan transactions on its books and records.
8. Program Guidelines . Lender and CSO will mutually agree upon the Program Guidelines in writing and will comply with such Program Guidelines, as the same may be amended from time to time by written agreement of the parties or as may be modified to insure compliance with the Rules. The parties may modify the then current Program Guidelines only in accordance with this Agreement. Both parties agree to act in good faith and in a commercially reasonable manner in connection with the establishment and modification, if any, of the Program Guidelines. The parties agree to perform their duties and responsibilities under this Agreement in accordance with the provisions of the Program Guidelines as applicable to it, as they may be modified from time to time.
9. Program Materials; Advertising Materials; Trade Names and Trademarks . The parties shall each be responsible for preparing their own respective Program Materials; provided, however, prior to the use of any Program Materials prepared by one party, the other party shall be entitled to review and approve such Program Materials in the manner described below. Each party agrees that it will not use any Program Materials unless such Program Materials have been approved in advance by the other party hereto (which approval shall not be unreasonably withheld, conditioned, or delayed). CSO shall be responsible for the development of proposed Advertising Materials concerning advertising and marketing of Loans and solicitation of potential Borrowers. The form and content of all Advertising Materials shall be subject to the prior review and approval of Lender in the manner described herein. The nature of the Advertising Materials, the scope of their dissemination, and the total expenditures to be made on Advertising Materials for the CSO Program and the Program shall be determined by CSO in
Special Limited Agency Agreement | Page 8 of 29 |
its reasonable discretion, and CSO shall pay all expenses concerning the production, use, and dissemination of Advertising Materials. Notwithstanding anything herein to the contrary, each party agrees that it will respond in writing to any request from the other party for an approval of any Advertising Materials or Program Materials within FIVE (5) business days following such other partys receipt of such materials and any such materials shall be deemed approved by such other party upon the earlier to occur of (a) the actual approval of such materials, or (b) upon the expiration of the above-described FIVE (5) business day period if the party whose approval is being sought fails to timely approve or disapprove such materials within such FIVE (5) business day period. If a party disapproves any proposed Program Materials or Advertising Materials within the required time frame, such party will detail its reasons for such disapproval in such partys written disapproval notice to the other party. A party hereto may at any time retract or modify any approval previously given by it with respect to any Program Materials or Advertising Materials if such action is necessary in order to remain in compliance with the Rules; provided, however, no party shall retract or modify a previously granted approval if there has been no intervening change in the Rules which would require such retraction or modification. CSO shall ensure that all Advertising Materials and the Program Materials shall comply with all applicable Rules. Each of Lender and CSO acknowledges that approved Program Materials and/or Advertising Materials may contain trade names, trademarks, or service marks of CSO and Lender, and Lender or CSO, as the case may be, shall have no authority to use any such names or marks of the other party separate and apart from their use in the Program Materials or Advertising Materials. The parties shall use Program Materials and Advertising Materials only for the purpose of implementing the provisions of this Agreement and shall not use Program Materials or Advertising Materials in any manner that would violate the Rules or any provision of the Program Guidelines.
10. Loan Terms and Charges; CSO Terms and Fees . All underwriting criteria, Loan terms and all interest, fees, and other charges associated with the Loans, exclusive of any CSO Fees, shall be established by Lender and shall be reflected in the Program Guidelines. Notwithstanding the foregoing, however, Lender shall have the right to modify any underwriting criteria, Loan terms, interest rates, fees, or other charges (exclusive of any CSO Fees), from time to time, at its discretion (the Changed Terms ). Unless otherwise required by applicable Rules, Lender shall provide CSO with not less than THIRTY (30) days prior written notice of the Changed Terms. The terms and conditions of the CSO Disclosure Statements, CSO Contracts and the amount of any CSO Fees shall be established by CSO, shall comply with the Rules and shall be reflected in the Program Guidelines. Notwithstanding the foregoing, however, CSO shall have the right to modify any CSO Disclosure Statements, CSO Contracts and the amount of any CSO Fees, from time to time, at its discretion. In the event that either party hereto becomes aware that any aspect of the Loan Program or CSO Program, including but not limited to underwriting criteria, Loan terms, interest, fees or other charges associated with any Loan, any term or condition of any CSO Disclosure Statement or CSO Contract or the amount of any CSO Fee, or any activity of CSO as a third-party debt collector, is not in compliance with the Rules, the party becoming aware of the same shall notify the other party of such non-compliance and each party hereto agrees to cooperate in good faith with each other, and to diligently take commercially reasonable steps, as may be necessary in order to promptly correct and cure any such non-compliance.
Special Limited Agency Agreement | Page 9 of 29 |
11. Nature of Certain Credit Enhancements .
a. Guaranty by CSO . CSO hereby unconditionally, irrevocably and absolutely guarantees (i) the due and punctual payment and performance of the Guarantied Obligations, and ii) agrees that this guaranty shall be a continuing guaranty, shall be binding upon CSO, and upon its successors and assigns, and shall remain in full force and effect, and shall not be discharged, impaired or affected by (1) the existence or continuance of any of the Guarantied Obligations (other than the payment or performance of the Guarantied Obligations in accordance with their terms; (2) the validity or invalidity of any document or agreement evidencing the Guarantied Obligations or any of them; (3) the existence or continuance of any Borrowers obligations with respect to the Guarantied Obligations; (4) any waiver, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the Guarantied Obligations, all of which Lender is hereby expressly authorized to make from time to time without notice to CSO; (5) the acceptance by Lender of any security for, or other guarantors upon, all or any part of the Guarantied Obligations; or (6) any defense (other than the payment or performance of the Guarantied Obligations). Upon final satisfaction of the Guarantied Obligations, Lender shall promptly (and in any event within FIVE (5) business days of such satisfaction) return to CSO any sums held as collateral for the Guarantied Obligations.
b. Principal Guaranty . As a material inducement to enter into this Agreement, Principal Guarantor:
i. Unconditionally, irrevocably and absolutely guarantees (1) the due and punctual payment of all amounts due and payable from CSO to Lender under this Agreement, including but not limited to, all Guarantied Obligations; and (2) the due and punctual performance and observance by CSO of all other obligations, warranties, covenants and duties of CSO set forth in this Agreement (all of which amounts payable and the terms, warranties, agreements, covenants and conditions being herein called the Principals Obligations ).
ii. Agrees that the guaranty set forth in this Section 11(b) shall be a continuing guaranty, shall be binding upon Principal Guarantor, and upon its successors and assigns, and shall remain in full force and effect, and shall not be discharged, impaired or affected by (1) the existence or continuance of any of the Principals Obligations (other than the payment or performance of the Principals Obligations in accordance with their terms); (2) the validity or invalidity of any document or agreement evidencing the Principals Obligations or any of them; (3) the existence or continuance of CSO as a legal entity; (4) any waiver, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the Principals Obligations, all of which Lender or CSO is hereby expressly authorized to make from time to time without notice to Principal Guarantor; (5) the acceptance by Lender of any security for, or other guarantors upon, all or any part of the Principals Obligations; or (6) any defense (other than the payment or performance of the Principals Obligations in accordance with their terms) that Principal Guarantor may or might have to its undertakings, liabilities and obligations hereunder, each and every such defense being hereby waived by Principal Guarantor.
Special Limited Agency Agreement | Page 10 of 29 |
iii. Agrees that Principal Guarantor shall be held liable hereunder and Lender shall have the right to enforce this guaranty against Principal Guarantor for and to the full amount of the Principals Obligations, with or without enforcing or attempting to enforce this guaranty against any other guarantor, without any obligation on the part of Lender, or anyone, at any time, to resort to any collateral, security, property, liens or other rights or remedies whatsoever, and whether or not other proceedings or steps are pending or have been taken or have been concluded to enforce or otherwise realize upon the obligations, properties, estates or security of CSO or any other guarantor; and the payment of any amount or amounts by Principal Guarantor, pursuant to its obligations hereunder, shall not entitle Principal Guarantor, either at law or otherwise, to any right, title or interest (whether by way of subrogation or otherwise) in and to any of the Principals Obligations, unless and until the full amount of the Principals Obligations has been fully paid, all other Principals Obligations have been fully performed and observed in accordance with their terms and the Agreement has been terminated.
iv. Agrees and acknowledges that the direct or indirect value of the consideration received and to be received by Principal Guarantor in connection herewith is reasonably worth at least as much as the liability and obligations of Principal Guarantor hereunder, and the incurrence of such liability and obligations in return for such consideration may reasonably be expected to benefit Principal Guarantor, directly or indirectly.
c. Pledge of Credit Support for Credit Enhancement . CSO shall pledge and does hereby pledge to Lender that amount of cash having a value equal to [ ( %)] of the total amount of principal of all Loans outstanding from time to time (such percentage to be modified only upon the mutual agreement of both parties) as collateral for CSOs obligations under its Credit Enhancement. Such pledge shall be in form and substance reasonably acceptable to Lender. On a weekly basis, CSO and Lender shall determine whether the amounts pledged to or held by Lender pursuant to this Section 11(c) shall equal the amount required above. In the event of any shortfall, CSO shall promptly pledge to Lender additional cash in an aggregate amount equal to such shortfall. In the event of any excess and provided that CSO is not in default under any Credit Enhancement or in default under Section 18 hereof, Lender shall promptly release cash in an aggregate amount equal to such excess. In order for Lender to have and maintain a first priority perfected security interest in the cash pledged to Lender pursuant to this section but only to the extent of actual sums due and owing, from time to time to Lender, CSO hereby authorizes Lender to file UCC financing statements and amendments with such governmental offices and in such jurisdictions as Lender may deem appropriate from time to time to perfect and maintain its security interests herein granted in such pledged cash. Stated otherwise for further clarification, CSO shall be entitled to full refund of the pledged cash upon settlement and payment in full of all outstanding Loans, irrespective of Senior Lenders security interest in such pledged cash. Under no circumstances may a Senior Lender receive more than the Lender would have received, absent some default by Lender or other occurrence, which results in Senior Lender acceding to Lenders position. CSO hereby further agrees to undertake
Special Limited Agency Agreement | Page 11 of 29 |
reasonable actions as requested by Lender from time to time in order to perfect, protect or otherwise preserve the security interest herein granted to Lender in such pledged cash. To the extent that CSO pledges to Lender any cash pursuant to this section, then in connection with the pledge of such cash, CSO shall deposit such cash into a bank account as Lender may direct CSO in writing, which account shall be owned and subject to the exclusive control by Lender. In lieu of the pledge required hereby, CSO may provide Lender with a letter of credit issued by a third party or other security having a value equal to the amount of cash that would otherwise be pledged and reasonably acceptable to Lender. At the termination of this Agreement or CSO Program, the sums of the pledged cash, subject to the settlement and payment in full of the amounts due the parties, shall be returned to CSO
d. Offset and Set-off Rights . In the event that (i) CSO is in default under any Credit Enhancement issued in respect of any Loan or (ii) in default under Section 18 hereof, then, without any prior notice to CSO, any such notice being expressly waived by CSO to the extent permitted by applicable law, Lender shall have the right to set-off, offset and apply against any Guarantied Obligations owed by CSO and/or Principal Guarantor to Lender, until paid in full, any and all pledged cash and any other credits, indebtedness or obligations, in each case whether direct or indirect, absolute or contingent, matured or unmatured, owed by Lender to or for the credit or the account of CSO under this Agreement or any other agreement between CSO and Lender; provided that the foregoing set-off, offset and application rights of Lender shall not limit in any manner, and shall be in addition to, any other rights and remedies of Lender provided by this Agreement and by law. Lender agrees promptly to notify CSO after any such set-off, offset and application made by Lender pursuant to the preceding sentence; provided that any failure to give such notice shall not affect the validity of such set-off, offset, appropriation and application.
12. Third Party Service Providers . No party hereto, whether directly or indirectly, shall retain any Third Party Service Provider to assist it in performing its duties hereunder or to otherwise participate in the Loan Program or the CSO Program except with the prior written consent of the other party hereto, which consent shall not be unreasonably withheld. In seeking the approval to retain a Third Party Service Provider, the party requesting such approval shall provide to the other party such information concerning the proposed Third Party Service Provider as such other party may reasonably request. A party may condition its willingness to approve a proposed Third Party Service Provider upon obtaining a written commitment from such Third Party Service Provider to comply with the terms of this Agreement and the Program Guidelines, to submit to audits and inspections by either party hereto, and to indemnify the parties hereto upon such terms and conditions as the parties hereto may reasonably require. CSO shall be responsible for supervising any Third Party Service Providers retained by CSO. Lender shall be responsible for supervising any Third Party Service Providers retained by Lender.
13. Servicing and Accounting System . CSO agrees to develop and maintain, at its sole cost and expense, a comprehensive computerized servicing and accounting system (i) that will accurately and promptly reflect all Loan transactions and track all Loan balances and the related pledged cash, Credit Enhancements and Guarantied Obligations for all Loans on an individual and aggregate basis, (ii) that will satisfy the information requirements of CSO, Lender, Third Party Service Provider and Regulatory
Special Limited Agency Agreement | Page 12 of 29 |
Authorities having jurisdiction over the Loan Program and/or the CSO Program, if any, and (iii) that will provide a mutually agreed web link by which Lender can access such system. CSO shall provide Lender on a daily basis (on each business day) with an electronic file with data concerning all Loans originated hereunder and the related Guaranties to assist Lender in incorporating such information into its internal accounting, record keeping, and audit systems, in form and substance as may be mutually agreed to by parties from time to time. Upon the termination of this Agreement, for any reason, CSO shall continue to provide the accounting and servicing functions described herein for the Loans for the benefit of Lender and maintain the servicing and accounting system described herein for the Loans for the benefit of Lender and maintain the servicing and accounting system described herein for such purpose for TWO (2) years following the later of (a) the date on which this Agreement is terminated, and (b) the date on which the final outstanding Loan has been paid in full by the applicable Borrower or by CSO pursuant to a Credit Enhancement issued by CSO in accordance with the Program Guidelines and Section 6 hereof.
14. CSOs Representations, Warranties and Covenants . CSO makes the following warranties, representations and covenants to Lender:
a. This Agreement is valid, binding and enforceable against CSO in accordance with its terms, and CSO has received all necessary organization approvals to enter into this Agreement and to perform its obligations hereunder.
b. CSO is a Nevada limited liability company, duly formed, validly existing, and is in good standing under the laws of the State of Nevada and its authorized, registered, and licensed to do business in Texas and in each state in which the nature of its activities makes such authorization, registration, or licensing necessary or required. CSO is registered as required for credit services organizations or a credit access business (as the case may be) under Chapter 393 of the Texas Finance Code and will remain so registered throughout the term of this Agreement. CSO has obtained any third party debt collector surety bond required by Chapter 392 of the Texas Finance Code and, if required by Chapter 392, will retain such bond throughout the term of this Agreement.
c. CSO has the full organizational power and authority to execute and deliver this Agreement and perform all of its obligations hereunder.
d. The provisions of this Agreement and the performance of each of CSOs obligations hereunder do not conflict with CSOs articles of organization, by-laws, or any agreement, contract, lease, or obligation to which CSO is a party or by which CSO is bound.
e. The governing authority of CSO has approved the terms and conditions of this Agreement and has determined that entering into this Agreement is in the best interests of CSO.
f. This Agreement, the Program Guidelines and the provisions of each of them comply with and are enforceable under the Rules, and the operation of each of the Loan Program and the CSO Program in accordance with this Agreement and the Program Guidelines will not violate any of the Rules.
Special Limited Agency Agreement | Page 13 of 29 |
g. Neither CSO nor any principal thereof has been or is the subject of any of the following:
i. Criminal conviction (other than misdemeanor traffic offenses);
ii. IRS lien;
iii. Enforcement agreement, memorandum of understanding, cease and desist order, administrative penalty, or similar agreement concerning lending matters that has the effect of permanently precluding CSO or its principals from engaging in consumer financial services;
iv. Administrative or enforcement proceeding or material investigation commenced by the Securities Exchange Commission, state securities regulatory authority, Federal Trade Commission or any other state or federal Regulatory Authority (excluding routine examinations conducted by a Regulatory Authority and excluding communications received in the ordinary course of business from any Regulatory Authority such as communications concerning consumer complaints or communications related to immaterial issues); or
v. Restraining order, decree, injunction or judgment in any proceeding or lawsuit alleging fraud or deceptive practices or illegal activity on the part of CSO or any principal thereof.
For purposes of this Section 14(g) , the word principal of CSO shall include (i) any person directly or indirectly owning a TEN PERCENT (10.00%) or more equity interest of CSO, (ii) any officer or director of CSO, and (iii) any other person having the power or authority to control CSOs business.
h. CSO shall furnish Lender (within THIRTY (30) days) following the end of each calendar quarter) a compliance certificate affirming its current compliance and earlier compliance with each of the following covenants during the previous quarter:
i. CSO is now and was at all relevant times a duly licensed credit services organization registered under Section 393, et seq. , of the Texas Finance Code (CSO has not originated any loans under the tribal model and/or any offshore or commerce model);
ii. CSO is now and was at all relevant times and in all material respects in compliance with the Loan Program, all applicable Rules and the Program Guidelines;
iii. CSO is not now originating or providing credit services in the origination of, nor has it ever originated or provided credit services in the origination of, any loan at an interest rate greater than TEN PERCENT (10.00%) annual percentage rate as a credit service organization or as the agent of Lender;
Special Limited Agency Agreement | Page 14 of 29 |
iv. At all relevant times, all advertising and promotional materials for the Loans (1) have and continue to prominently identify Lender as the maker of the Loans, (2) have been and continue to be accurate, (3) have not been and are not now misleading, (4) have and continue to be in compliance with all applicable Rules, and (5) have been and continue to be submitted to Lender for prior approval;
v. CSO has not engaged and is not now engaged in any discriminatory practice in violation of the Rules, including without limitation any discriminatory practice for the purpose of discouraging any Applicant in any aspect of the credit process or any purpose prohibited by law;
vi. CSO has used and continues to use only commercially reasonable efforts to collect payments on the Loans at and after maturity thereof on behalf of Lender, and has complied and continues to comply with the federal Fair Debt Collection Practices Act, to the extent applicable, and any other applicable Rules, in the collection process;
vii. CSO has not made and will not make, explicitly or implicitly, any threats of criminal prosecution in connection with debt collection, and CSO has not engaged in, nor will it engage in, any practices that violates any applicable Rules;
viii. CSO has not imposed, nor will it impose, a charge for cashing a check or draft related or conditioned on its CSO services, but may charge a fee for cashing a check or draft as an ancillary financial service. CSO has been and will remain in compliance in all respects with the Gramm Leach-Bliley Act (GLBA) and Federal Trade Commission regulations implementing the GLBA, other applicable federal and state privacy rules, and this Agreement, as it pertains to Applicant and Borrower Information (as later defined);
ix. CSO has not violated and will not violate any term of this Agreement pertaining to the use and/or protection of Lenders Confidential Business Information;
x. CSO shall provide (in reasonable detail) the calculations and supporting documentation as Lender may require to demonstrate compliance with the financial covenants referred to in Section 26 of this Agreement;
xi. CSO has and will continue to timely furnish all information required herein, which information has and will be in all material respects, truthful, accurate and complete.
xii. In the event that CSO commences filing public reports with the SEC, CSO shall permit Lender to participate in any periodic conference calls regularly available to market analysts or investors.
Special Limited Agency Agreement | Page 15 of 29 |
xiii. CSO shall comply with all applicable federal, state and local statutes, regulations and ordinances in its performance of this Agreement, the performance of the credit services, and its operation of the Program.
xiv. CSO shall implement, and shall take measures to maintain, reasonable and appropriate administrative, technical, and physical security safeguards to (1) insure the security and confidentiality of non-public personal information relating to any consumer; (2) protect against anticipated threats or hazards to the security or integrity of non-public personal information; and (3) protect against unauthorized access or use of non-public personal information that could result in substantial harm or inconvenience to any consumer.
Any failure or inability to timely or truthfully issue such compliance certificate shall be a default under this Agreement and shall give rise to Lenders rights and remedies under Section18 .
15. Lenders Representations and Warranties . Lender makes the following warranties and representations to CSO, all of which shall survive the execution and termination of this Agreement for any reason:
a. This Agreement is valid, binding and enforceable against Lender in accordance with its terms, and Lender has received all necessary approvals to enter into this Agreement and to perform its obligations hereunder.
b. Lender is a [ insert type of entity ] duly formed, validly existing, and in good standing under the laws of the State of [ insert state ] and is authorized and registered to do business in the State of Texas and in each state in which the Loans are being offered and in each state in which the nature of its activities makes such authorization, registration, or licensing necessary or required. Lender is not affiliated with CSO or any affiliate of CSO.
c. Lender has the full organizational power and authority to execute and deliver this Agreement and perform all of its obligations hereunder.
d. The provisions of this Agreement and the performance of each of Lenders obligations hereunder do not conflict with Lenders organizational documents or any agreement, contract, lease, or obligation to which Lender is a party or by which Lender is bound.
e. The governing authority of Lender has approved the terms and conditions of this Agreement and has determined that the entering of this Agreement by Lender is in the best interests of Lender.
f. Neither Lender nor any principal thereof has been or is the subject of any of the following:
i. Criminal conviction (other than misdemeanor traffic offenses);
Special Limited Agency Agreement | Page 16 of 29 |
ii. IRS lien;
iii. Enforcement agreement, memorandum of understanding, cease and desist order, administrative penalty, or similar agreement concerning lending matters that has not been resolved;
iv. Administrative or enforcement proceeding or investigation commenced by the Securities Exchange Commission, state securities regulatory authority, Federal Trade Commission, or any other state or federal Regulatory Authority (excluding routine examinations conducted by a Regulatory Authority and excluding communications received in the ordinary course of business from any Regulatory Authority such as communications concerning consumer complaints or communications related to immaterial issues) that has not been resolved; or
v. Restraining order, decree, injunction, or judgment in any proceeding or lawsuit alleging fraud or deceptive practices or illegal activity on the part of Lender or any principal thereof.
For purposes of this Section 15(f) the word principal of Lender shall include (i) any person directly or indirectly owning a TEN PERCENT (10.00%) or more equity interest of Lender, (ii) any officer or director of Lender, and (iii) any other person having the power or authority to control Lenders business.
16. Ownership of Borrower Information . Each party shall take all steps necessary and appropriate to maintain the confidentiality of any Applicant and Borrower names, addresses, and telephone numbers and all account and other information, including payment information, regarding Borrowers and Applicants who have been declined, and all records, data, and information pertaining to the foregoing (collectively, Borrower Information ). Lender and CSO jointly and severally shall own all Borrower Information; provided, however, that neither party will use any of such Borrower Information except to the extent permitted by the Program Guidelines and the privacy policies of each of CSO and Lender set forth in the documents described in the Program Guidelines. Notwithstanding the foregoing, without the need for obtaining Lenders consent, CSO may use Borrower Information for purposes of marketing, offering, selling, brokering, underwriting and providing other products and services, including, without limitation, other loan products and services that may be offered to Borrowers by CSO, any Third Party Service Provider of CSO or any other lenders through the distribution channels of CSO and any Third Party Service Provider of CSO, provided that, in all cases, however, any use by CSO of any such Borrower Information shall comply with (a) all applicable Rules, (b) the requirements of the Program Guidelines, and (c) the above-described privacy policies of both CSO and Lender and in the event any such Borrower Information is used in connection with marketing, offering, selling, brokering, underwriting or providing loans made by any party other than CSO, Lender agrees that such other lender may jointly own such Borrower Information with CSO and Lender, so long as such other lender has a privacy policy no less restrictive than Lenders privacy policy described in the Program Guidelines and agrees in writing to comply with such privacy policy and the privacy policies of CSO and Lender. In addition, notwithstanding that Lender has an ownership interest in Borrower Information, Lender
Special Limited Agency Agreement | Page 17 of 29 |
agrees that it will not use Borrower Information to market any other products or services to Borrowers or to Applicants without the prior written consent of CSO. Without limiting the foregoing, each of CSO and Lender shall adopt and maintain reasonable procedures relating to administrative, technical, and physical safeguards to: (a) ensure the security and confidentiality of any Borrower Information that such party receives; (b) protect against any anticipated threats or hazards to the security or integrity of any Borrower Information that such party receives; (c) protect against the unauthorized access to or use of any Borrower Information that such party has in its possession which could result in substantial harm or inconvenience to any Borrower or Applicant; and (d) ensure the proper disposal of any Borrower Information that such party has in its possession. Notwithstanding anything herein to the contrary, CSO shall be the sole owner of all CSO Disclosure Statements and all CSO Contracts and any information contained therein. The rights and obligations of the parties under this Section 16 shall survive the termination of this Agreement for a period of TWO (2) years.
17. Term . The term of this Agreement shall be for a period of TWO (2) years commencing as of the Effective Date; provided, however, that either party may terminate this Agreement prior to the expiration of its term pursuant to the provisions of this Section 17 and Section 18 below. This Agreement shall be renewed automatically for successive one-year terms unless the party not wishing to renew provides the other party with at least NINETY (90) days advance written notice of non-renewal. Each party hereto shall have the right to terminate this Agreement immediately upon written notice to the other party hereto, if (a) the terminating party determines in its reasonable discretion that the activities of the parties under this Agreement, the Loan Program or the CSO Program are illegal under, prohibited by or not permitted under any of the Rules; (b) any Regulatory Authority having jurisdiction over the Program, CSO or Lender requires the terminating party to terminate this Agreement; (c) the terminating party determines in its reasonable discretion that continued operation of the Loan Program or the CSO Program may materially adversely affect the ongoing operations of the terminating party or those of the terminating partys affiliates; and in the event of a termination of this Agreement pursuant to this clause (c), the terminating party shall provide the other party with a written explanation of the basis for such termination, or (d) the terminating party determines in its reasonable discretion that continued operation of the Loan Program or the CSO Program may materially adversely affect the relationship between the terminating party or any of its affiliates and any Regulatory Authority having jurisdiction over any of them. In addition, if Lender modifies any Loan term, interest rate, fee, or other charge pursuant to Section 10 above, or if Lender materially modifies any underwriting criteria for the Loans pursuant to Section 10 above, CSO may terminate this Agreement upon THIRTY (30) days prior written notice to Lender if CSO determines in its reasonable discretion that such modification by Lender would render it economically infeasible for CSO to continue to perform its duties and responsibilities hereunder or that such modification would cause any aspect of the Loan Program or the CSO Program to be in violation of any Rules. Notwithstanding any termination of this Agreement, each partys respective obligations and covenants hereunder with respect to outstanding Loans and the related pledged cash, Credit Enhancements and Guarantied Obligations shall remain in effect for so long as such Loans remain outstanding.
Special Limited Agency Agreement | Page 18 of 29 |
18. Termination Upon Default .
a. Either party hereto shall have the right to terminate this Agreement upon occurrence of one or more of the following events:
i. Failure by the other party to observe or perform that partys obligations to the other hereunder or to comply with any provision of this Agreement, so long as the failure or nonperformance is not due to the actions of the terminating party;
ii. In the event any Financial Information (as defined below) representation, warranty, statement or certificate furnished to either party by the other in connection with this Agreement, or any separate material statement or document delivered or to be delivered hereunder by either party hereto to the other party, is materially false, misleading, or inaccurate as of the date made or delivered; and
iii. In the event a party hereto (or an affiliate of such party) defaults under any other agreement executed between the parties hereto (and/or any of their respective affiliates) and such default continues beyond any applicable notice and cure period provided for such default under such other agreement.
b. The Agreement may be terminated pursuant to Section 18(a)(i) above only if the default continues for a period of THIRTY (30) days after the defaulting party receives written notice from the other party specifying the default in the case of a non-monetary default, or TEN (10) days after the default in the case of a failure to pay any amount when due hereunder.
c. In addition to any other right to terminate this Agreement, a party may terminate this Agreement if the other party hereto, or such other partys principals is the subject of any of the following or if any of the following occurs with respect to such other party or such other partys principals: insolvency, inability to pay its debts as they become due, the filing of a voluntary bankruptcy petition, the filing of an involuntary bankruptcy petition which is not dismissed within THIRTY (30) days after filing thereof, dissolution or termination of its existence as a going concern, or the appointment of a receiver for any part of its property.
d. In order to preserve the goodwill of each Party with its customers, the Parties shall act in good faith and cooperate in order to ensure a smooth and orderly termination of their relationship and the termination of the Loan origination and marketing program contemplated hereunder. Unless prohibited by applicable Rules, or as otherwise provided in this Agreement, upon Lenders written request CSO shall continue to service outstanding Loans following termination or expiration of this Agreement until all Loans are repaid or charged off in accordance with Lenders collection policies and procedures. Except as otherwise set forth in Section 13 herein, upon the termination or expiration of this Agreement, all rights and benefits herein granted to CSO (but none of the obligations of CSO hereunder) shall revert to Lender, and CSO shall immediately cease using Lender Loan Program and any Lenders properties or materials.
Special Limited Agency Agreement | Page 19 of 29 |
19. Indemnification .
a. Indemnification Obligations . To the furthest extent allowable by law, CSO shall indemnify, defend and hold Lender and its partners and affiliates and their respective directors, officers, employees, shareholders, lenders, partners and agents (herein, the Lender Indemnified Parties ) harmless from and against any and all claims, causes of action, demands, liabilities, losses, penalties, fines, judgments, damages or expenses (including, without limitation, legal fees, fines, court costs, accounting fees and class action costs) (collectively Damages ) whether based on contract, tort, common law, equity, or statute (each, a Claim ), asserted by or on behalf of any Applicant, Borrower, Regulatory Authority, or other person or entity relating to, arising or alleged to have arisen in whole or in part out of or in consequence of all of the following: (i) any breach by CSO of its obligations under this Agreement or the inaccuracy of any warranty or representation of CSO set forth in this Agreement; (ii) any act or omission (whether one or more) of any Third Party Service Provider retained by CSO, the inaccuracy of any warranty or representation made for the benefit of Lender by any Third Party Service Provider retained by CSO, or the breach of any obligation owed to Lender by any Third Party Service Provider retained by CSO; (iii) any claim or determination that the Loans or the activities of the parties hereunder are illegal under or prohibited by any of the Rules and any other claim asserted by or on behalf of any Applicants, Borrowers or Regulatory Authority with respect to the Loans; (iv) any examination, investigation or audit conducted by a Regulatory Authority; (v) any actual or alleged injury to any Applicant, Borrower and/or actual or prospective customer of CSO or to any employee of CSO actually caused or alleged to have been caused in whole or in part by CSO or any of its employees, agents or representatives; (vi) any transaction (whether one or more) arising out of, relating to, and/or pursuant to this Agreement; (vii) any claim by a Borrower relating to the documentation of a Loan by CSO or Lender and/or (viii) any act or omission (whether one or more) of CSO, and/or its employees, agents, representatives and/or third party service providers in connection with their performance or lack of performance of any duty or activity contemplated by this Agreement. The obligation under this Section 19(a) shall include payment of all reasonable and necessary counsel fees and expert fees.
THE OBLIGATIONS OF CSO TO INDEMNIFY AND DEFEND INDEMNIFIED PARTIES UNDER THIS
SECTION 19(a) SHALL EXTEND WITHOUT LIMITATION TO CLAIMS THAT ALLEGE THE NEGLIGENCE, GROSS NEGLIGENCE, AND/OR INTENTIONAL ACTS OF LENDER, EXCEPT THAT CSO SHALL HAVE NO INDEMNIFICATION OBLIGATION CAUSED BY LENDERS GROSS NEGLIGENCE AND/OR INTENTIONAL TORTS, EXCEPT TO THE EXTENT SUCH GROSS NEGLIGENCE OR INTENTIONAL TORT ARISES FROM ACTIONS REASONABLY REQUIRED TO PERFORM LENDER OBLIGATIONS UNDER THIS AGREEMENT.
Additionally, CSOs indemnification obligations under this Section 19(a) shall include the payment of all costs of defense, if any, including without limitation, all reasonable and necessary attorneys fees, court costs, accounting fees, class action costs and expert fees, subject to CSOs reimbursement rights under Section 19(c) below. Except as otherwise provided in this Section 19(a) , the obligations of CSO to defend, indemnify and hold Lender Indemnified Parties harmless under this Section 19(a) shall extend without limitation to the actual or alleged omissions, negligence, gross negligence, and intentional acts of Lender, including Lenders sole or concurrent negligence.
Special Limited Agency Agreement | Page 20 of 29 |
NOTHING CONTAINED HEREIN SHALL REQUIRE CSO TO DEFEND, INDEMNIFY OR HOLD LENDER INDEMNIFIED PARTIES HARMLESS FROM LENDERS BREACH OF THIS AGREEMENT.
b. Indemnification Procedures . Lender shall promptly notify CSO of any suit or threat of suit of which Lender becomes aware which may give rise to a right to indemnification under this Agreement but in any event within THIRTY (30) days of the discovery of such claim; provided, however, that the failure of Lender alleging a right of indemnity hereunder to provide prompt notice to CSO shall relieve CSO of its obligations hereunder only to the extent that CSO can prove that such failure to provide prompt notice actually and materially prejudiced the rights of CSO. CSO shall promptly reimburse Lender for all Damages incurred by Lender (including Damages incurred in advance of the final disposition of the underlying claim), shall bear all expenses in defending any such claim or matter, and shall be entitled to participate in the settlement or defense of any matter for which Lender seeks indemnity hereunder and, if CSO elects, to take over and control the defense and settlement thereof utilizing counsel of its choice in consultation with Lender (in which case Lender shall have the right to employ separate counsel of its choice, but the fees and expenses of such counsel shall be at the expense of CSO). CSO may not enter into a final settlement of any claim or matter without the prior consent of Lender, which consent shall not be unreasonably withheld or delayed; provided that Lenders withholding of or delaying consent shall not be deemed unreasonable if the proposed settlement arrangement allocates liability or financial obligations directly to Lender. In all cases, Lender and CSO shall cooperate and assist each other in all reasonable respects in the defense and settlement of any such action.
c. Obligation to Refund Advanced Damages . In the event that CSO reimburses Lender for Damages pursuant to the indemnification provisions of this Section 19 , in advance of the final disposition of the underlying claim, and if it is ultimately determined by settlement or pursuant to the dispute resolution provisions hereof that such Damages directly arose out of an occurrence that did not require such indemnification under Section 19(a) , then Lender agrees to repay to the other party any such Damages for which it received advanced reimbursement to which it was not entitled hereunder. All Damages required to be repaid under this Section 19(c) shall be repaid within FIVE (5) business days following the above described ultimate determination.
d. Survival . This Section 19 shall survive any termination or expiration of this Agreement. Each party expressly agrees, warrants and represents that it has read the terms of this Section 19 , understands the same and that the terms of this Section 19 are clear, conspicuous and unequivocal.
20. Expenses . Except as expressly provided to the contrary in this Agreement, each party shall be responsible for all expenses incurred by it in the performance of its obligations under this Agreement, including any expenses incurred by it in performing its respective duties set forth in this Agreement.
Special Limited Agency Agreement | Page 21 of 29 |
21. Scope of Relationship . The parties agree that the relationship established by this Agreement is non-exclusive. Without limiting the foregoing and subject to the provisions of this Agreement, each party hereto is expressly permitted, without the need for obtaining any further consent or approval from the other party hereto, to market, offer, sell, broker, underwrite and/or provide other products and services, including without limitation, any other loan products and services and specifically including, without limitation, any loan products and services similar in scope and nature to the Loans and the related services contemplated by the Program Guidelines, through any of their respective distribution channels and the distribution channels of their respective Third Party Service Providers, including, without limitation, any of such distribution channels through which Loans are offered pursuant to this Agreement.
22. Confidential Information . In performing their obligations pursuant to this Agreement, each party may have access to and receive disclosure of certain confidential information about the other party or parties, including, without limitation, the names and addresses of a partys Borrowers or members, marketing plans and objectives, research and test results, and other information which is confidential and the property of the party disclosing the information ( Confidential Information ). The parties agree that the term Confidential Information shall include this Agreement, the Program Guidelines, and the Program Materials, as the same may be amended and modified from time to time. Confidential Information shall not include information in the public domain, which is independently developed by any party hereto, or as defined under Section 16 as Borrower Information which may be used only as indicated therein, to the extent that it may conflict with the provisions contained in this Section 22 Lender and CSO agree that Confidential Information shall be used by each party solely in the performance of its obligations under this Agreement or in connection with activities related to such performance (including, without limitation, activities involving the financing of the Loans by Lender). Each party shall receive Confidential Information in confidence and shall not disclose Confidential Information to any third party, except as may be permitted hereunder or under the Program Documents, or as may be necessary to perform its obligations hereunder, or as may be otherwise agreed in writing by the party furnishing the information, or as required by the Rules or any Regulatory Authority. In the event that either party (the Restricted Party ) is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, such party will provide the other party with prompt notice of such request(s) so that the other party may seek an appropriate protective order or other appropriate remedy and/or waive the Restricted Partys compliance with the provisions of this Agreement. In the event that the other party does not seek such a protective order or other remedy, or such protective order or other remedy is not obtained, or the other party grants a waiver hereunder, the Restricted Party may furnish that portion (and only that portion) of the Confidential Information which the Restricted Party is legally compelled to disclose and will exercise such efforts to obtain reasonable assurance that confidential treatment will be accorded any Confidential Information so furnished as a Restricted Party would reasonably exercise in assuring the confidentiality of any of its own confidential information. Notwithstanding anything herein to the contrary, nothing herein shall prohibit either party hereto from entering into agreements with any other party that include program guidelines and program materials that may or may not be the same as, or substantially similar to, the Program Guidelines and Program Materials. Upon request or upon any expiration or termination of this
Special Limited Agency Agreement | Page 22 of 29 |
Agreement, each party shall return to the other party or destroy (as the latter may instruct) all of the latters Confidential Information in the formers possession which is in any written or other recorded form, including data stored in any computer medium; provided, however, that a party hereto may retain the Confidential Information of the other party (but subject to the requirements of this Section 22 ) to the extent that such party needs access to such information to continue to perform any of its obligations hereunder or to broker or service Loans or otherwise perform obligations owed by such party to the other party.
23. Regulatory Examinations and Financial Information . Each party agrees to submit to any examination which may be required by any Regulatory Authority with audit and examination authority over the other party, to the fullest extent that such Regulatory Authority may require and to the fullest extent provided by law. Lender (either directly or by the use of accountants or other agents or representatives) may audit, inspect, and review CSOs files, records, and books with respect to the Loans and compliance with the Loan Program and the CSO Program. CSO (either directly or by the use of accountants or other agents or representatives) may audit, inspect, and review Lenders files records, and books with respect to the Loans and compliance with the Loan Program and the CSO Program. CSO agrees to prepare quarterly balance sheets and quarterly statements of income, retained earnings and cash flows for the last TWELVE (12) months together with complete and accurate books, records, and accounts prepared and maintained on a consistent basis and in accordance with generally accepted accounting principles (collectively, the Financial Information ). Upon the request by Lender, CSO hereto agrees to deliver to Lender, within THIRTY (30) days of receiving such request, the Financial Information, certified as true and correct by an officer or principal of CSO (such request not to be made more often than one time every calendar quarter). CSO agrees to submit to operational audits and audits of CSOs electronic data processing functions, as the other party may reasonably request from time to time. The auditing party will promptly submit the results of such audits to the audited party. Any such audit shall be performed at CSOs sole cost and expense. Additionally, CSO shall provide to Lender, as soon as available and in any event (i) within NINETY (90) days after the end of each fiscal year, financial statements of CSO (on a consolidated and consolidating basis) to include a balance sheet, income statement, cash flow statement, and Managements Discussion and Analysis of Financial Condition and Results of Operations that describes the financial condition and results of operations of the CSO and its consolidated subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Managements Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the CSO and its subsidiaries), as of the end of such fiscal year, audited by independent certified public accountants of recognized standing satisfactory to Lender, and (ii) promptly from time to time following the occurrence of an event required to be reported on Form 8-K pursuant to Items 1.01, 1.02, 1.03, 2.01, 2.03, 2.04, 2.06, 3.03, 4.01, 4.02, 5.01, 5.02 and 5.03 thereof, the information that would be required to be filed with the SEC on Form 8-K if the CSO were required to file such reports with respect to any of such items.
24. Relationship of Parties; No Authority to Bind . Lender and CSO agree that (a) Lender and CSO are independent contractors to each other in performing their respective obligations hereunder, (b) Lender shall not hold any ownership in CSO or possess a leasehold interest in CSOs offices or any personal property located therein, except that Lender shall be the exclusive owner of all Loans and Loan
Special Limited Agency Agreement | Page 23 of 29 |
Documents, (c) no Lender employees shall work in the CSO offices (except for Lender auditors who may examine CSOs practices from time to time for compliance with the Program Guidelines), and (d) other than as may be necessary to generally effectuate CSOs performance of its duties under this Agreement, Lender shall exercise no authority or control over CSOs employees or methods of operation. Nothing in this Agreement or in the working relationship established and developed hereunder shall be deemed or is intended to be deemed, nor shall it cause, Lender and CSO to be treated as partners, joint venturers, joint associates for profit or otherwise be deemed to create a relationship of agent and principal. Neither party shall have any authority to bind the other party to any agreement except to the extent expressly permitted herein. Except as expressly set forth in this Agreement to the contrary, no actions or failure to act by one party on the part of the other party hereto shall be construed to imply the existence of any authority not expressly granted herein. Except as expressly provided herein or in the Program Guidelines, CSO is not authorized to, and shall not (i) make or amend any contract incur any debt or liability, or extend any credit or enter into any obligation on behalf of Lender, other than as intended by this Agreement in its role as CSO with Lender; (ii) modify or amend any document, instrument, promissory note, or security agreement evidencing or relating to a Loan or the related Credit Enhancement (individually, a Loan Document and collectively, the Loan Documents ), or extend the time for making any payment which may become due under any Loan; or (iii) waive any of Lenders rights or privileges under any Loan, Loan Document or other agreement made by Lender. CSO understands and agrees the that CSOs name shall not appear on any Loan Document as the maker of a Loan and that CSO shall not have any participation in the credit decision to make or provide a Loan, a Loan renewal or a Loan refinance or any participation in any act pertaining to the funding of a Loan, a Loan renewal or a Loan refinance. CSO shall refer to Lender any inquiries concerning the accuracy, interpretation, or legal effect of any Loan Document. CSO shall not negotiate the terms of any Loan Document on behalf of Lender. Lender shall be deemed to have received and reviewed the Loan Documents and supporting materials only after the Loan Documents and materials have been previously received at Lenders offices or if designated by Lender, by a Third Party Service Provider. CSO shall not represent to anyone that CSO has the authority or power to do any of the foregoing and shall make no representations concerning Lenders transaction except as expressly authorized in writing. Lender shall not have any authority or control over any of the property interests or employees of CSO, nor shall Lender have any authority or control over any of the property interests or employees of those affiliates of CSO that own and operate stores at which Applicants or other potential Borrowers are offered the opportunity to complete and submit applications for Loans. As used herein, the term Loan Document shall not include any agreements that CSO or any affiliate of CSO may enter into directly with any party that governs the agreement of CSO or an affiliate of CSO to attempt to broker a Loan on behalf of any Borrower or any party who applies for, but is denied, a Loan. In each and every instance, the acts that this Agreement authorizes CSO to perform for or on Lenders behalf shall solely constitute CSO a special, limited agent of Lender to perform the duties and services set forth herein. In no event may CSO act as Lenders general agent or represent to others that it may act as Lenders general agent. In the event that either party reasonably determines that any provision of this Agreement requires an act that applicable Rules disallow in order for CSO and Lender to operate lawfully as an independent credit services organization and lender, respectively, or otherwise causes a material risk of violating applicable Rules, then the parties shall promptly and in good faith attempt to agree to a modification so as to reduce or eliminate such risk of not conforming to applicable Rules.
Special Limited Agency Agreement | Page 24 of 29 |
25. Governing Law; Arbitration; Consent to Jurisdiction . This Agreement shall be construed and performed in accordance with the laws of the State of Texas, without reference to Texas choice of law or conflicts rules. At the request of either party, any dispute between the parties relating to this Agreement shall be submitted to binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association, provided, however, that a party seeking specific performance hereunder pursuant to Section 33 below may pursue such remedy in court. Unless otherwise agreed to by both parties, the location for any arbitration proceedings concerning this Agreement shall be in Dallas County, Texas. In the event that a party hereto initiates a lawsuit in court concerning an arbitrable claim, controversy or dispute, such party shall pay the other party for the costs, including attorneys fees that the other party incurs to obtain an order from the court to stay or dismiss the lawsuit or otherwise compel arbitration. The arbitrator shall be authorized to award such relief as is allowed by law. Except as provided below, each party shall be responsible for its own attorneys fees incurred during the course of the arbitration, as well as the costs of any witnesses or other evidence such party produces or causes to be produced. The award of the arbitrator shall include findings of fact and conclusions of law. Except as required by law, such award shall be kept confidential, and shall be final, binding, and conclusive on the parties. Judgment on the award may be entered by any court of competent jurisdiction. The prevailing party in the resolution of any dispute ( Dispute Resolution ) concerning this Agreement, any provision hereof or any actual or alleged breach shall be entitled to its reasonable attorneys fees, including investigation and costs of discovery, and other costs connected with such Dispute Resolution, in addition to all other recovery or relief. The prevailing party shall be that party receiving substantially the relief sought or successfully defending substantially the position maintained in the Dispute Resolution, whether or not brought to final award or judgment. The parties agree that in the event of any litigation hereunder, the exclusive venue and place of jurisdiction for such litigation shall be in the state courts or the federal district courts situated in Dallas County, Texas, and each party hereto specifically consents and submits to the personal jurisdiction of such courts.
26. Financial Covenants . CSO and Principal Guarantor shall comply with all financial covenants contained in any senior debt obligation of such person and shall promptly provide Lender with any notice received from or provided to the holder of such senior debt obligation relating non-compliance with or violation of such covenants.
27. Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
28. Force Majeure . In the event of an act of God or other natural disaster which makes the carrying out of this Agreement impossible, or if a partys performance hereunder is rendered illegal or materially adversely affected by reason of changes in applicable Rules, or if a Lender or CSO is advised in writing by any Regulatory Authority having or asserting jurisdiction over Lender, CSO or the Loans, respectively,
Special Limited Agency Agreement | Page 25 of 29 |
that the performance of its obligations under this Agreement is or may be unlawful, then the party unable to perform, or whose performance has been rendered illegal or who has been so advised by a Regulatory Authority, may terminate this Agreement by giving written notice at least ONE HUNDRED EIGHTY (180) days in advance of termination to the other party, unless such changes in the Rules or communication from such Regulatory Authority require earlier termination, in which case termination shall be effective upon such earlier required date.
29. Successors and Third Parties . This Agreement and the rights and obligations hereunder shall bind and inure to the benefit of the parties hereto and their successors and assigns. Except as expressly provided herein with respect to Third Party Service Providers, the obligations, rights and benefits hereunder are specific to the parties hereto and shall not be delegated or assigned without the prior written consent of the other party, which shall not be unreasonably withheld. As a condition to an assignment of any obligations, rights or benefits hereunder, the assignee of such rights and benefits must agree to be bound by the terms of this Agreement pursuant to an assignment document executed by such assignee, in form and substance reasonably satisfactory to both Lender and CSO. Nothing in this Agreement is intended to create or grant any right, privilege, or other benefit to or for any person or entity other than the parties hereto. Notwithstanding anything in this Agreement to the contrary, the parties acknowledge that Lender can freely assign its rights with respect to the Loans and the Loan Documents (including, without limitation, its rights under Section 6 and 11 hereof and its rights to grant a first right and security interest to Senior Lenders under Section 35 , subject to CSOs rights and reservations in those sections in which case, Senior Lender will also include the assignees secured lenders) without CSOs prior written consent.
30. Notices . All notices, requests, and approvals required or permitted by this Agreement shall be in writing and addressed/directed to the other party at the address below or at such other address of which the notifying party hereafter receives notice in conformity with this Section 30 . All such notices, requests, and approvals shall be deemed given upon actual receipt thereof:
To Lender: |
[Name] [Address] [Address] Attention: Email: |
|
With copy to: |
[Name] [Address] [Address] Attention: Email: |
|
To CSO: |
SCIL TEXAS, LLC 3527 North Ridge Road Wichita, Kansas 67205 Attention: Roger Dean, EVP & CFO Email: rogerdean@curo.com |
Special Limited Agency Agreement | Page 26 of 29 |
With a Copy to: |
SCIL TEXAS, LLC 3527 North Ridge Road Wichita, Kansas 67205 Attention: Vin Thomas, Chief Legal Officer Email: vinthomas@curo.com |
31. Waiver . Neither party hereto shall be deemed to have waived any of its rights, powers or remedies hereunder except in an express writing signed by an authorized agent or representative of the party to be charged with such waiver.
32. Counterparts . This Agreement may be executed and delivered by the parties hereto in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. In proving this Agreement in any judicial proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Delivery of a signature hereto by an email transmission of an Adobe portable digital file (PDF) shall be as effective as delivery of a manually executed counterpart hereof, and any such PDF signature shall be treated as an original signature hereto.
33. Specific Performance . Certain rights which are subject to this Agreement are unique and are of such a nature as to be inherently difficult or impossible to value monetarily. In the event of a breach of this Agreement by either party hereto, an action at law for damages or other remedies at law would be inadequate to protect the unique rights and interests of the parties. Accordingly, the terms of this Agreement shall be enforceable in a court of equity by a decree of specific performance or injunction. Such remedies shall, however, be cumulative and not be exclusive and shall be in addition to any other remedy which the parties may have.
34. Further Assurances . From time to time, the parties will execute and deliver to the other such additional documents and will provide such additional information as either may reasonably require to carry out the terms of this Agreement.
35. Lien of Senior Lender . Subject to the rights of the CSO contained herein and specifically to the return of the pledged cash upon the discharge of its obligations, CSO acknowledges and agrees that Lender has granted a first priority lien and security interest to Senior Lender as security for the Senior Debt in all right, title and interest of Lender in and to (a) the Loans, (b) all documents and instruments executed by a Borrower or CSO in connection with the Loans (including, but not limited to all Credit Enhancements, this Agreement, and all Loan Documents), (c) all collateral securing the Loans (whether granted by a Borrower or CSO); including, without limitation and (d) all proceeds arising therefrom. CSO further acknowledges and agrees that Senior Lender shall be entitled to exercise all rights of Lender under this Agreement and any Program Documents with respect to the Loans, the Loan Documents and any Credit Enhancements upon notification by Senior Lender in accordance with the exercise of any rights or remedies of the Senior Lender under the Senior Loan Documents which shall terminate immediately upon payment of the Loans or Guarantied Obligations, as such monies are owed Lender. CSO agrees that all liens and whatever other right, title or interest (if any) which CSO may have at any time in any collateral, including but not limited to motor vehicles, as security for the obligations of a
Special Limited Agency Agreement | Page 27 of 29 |
Borrower to CSO shall, at all times and in all respects, be subject, junior and subordinate as to priority and in all other respects to all liens and any other right, title or interest of Lender to any such collateral as security for the Loan or Loans to such Borrower, irrespective of the time or order of the creation or perfection of any such lien, right, title or interest and irrespective of any failure by Lender to create or perfect any such lien, right, title or interest. CSO agrees that it will not foreclose or exercise any right or remedy it may have at any time in or with respect to the collateral until such time as the Loan or Loans to a Borrower secured by such collateral have been indefeasibly paid.
NOTICE OF FINAL AGREEMENT
THIS AGREEMENT, AND THE DOCUMENTS EXECUTED AND DELIVERED PURSUANT HERETO, CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES, AND MAY BE AMENDED OR MODIFIED ONLY BY A WRITING SIGNED BY DULY AUTHORIZED REPRESENTATIVES OF EACH PARTY AND DATED SUBSEQUENT TO THE DATE HEREOF. THIS AGREEMENT SHALL SUPERSEDE AND MERGE ALL PRIOR COMMUNICATIONS, REPRESENTATIONS, OR AGREEMENTS, EITHER ORAL OR WRITTEN, BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF, EXCEPT WHERE SURVIVAL OF PRIOR WRITTEN AGREEMENTS IS EXPRESSLY PROVIDED FOR HEREIN. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
NOTICE RELATING TO DEFAULTED LOANS
CSO HEREBY EXPRESSLY ACKNOWLEDGES AND CONSENTS TO THE PROVISION OF SECTION 6 ABOVE, WHICH, IN CERTAIN CIRCUMSTANCES, COULD RESULT IN CSO MAKING PAYMENT TO LENDER IN CONNECTION WITH A LOAN.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
Special Limited Agency Agreement | Page 28 of 29 |
IN WITNESS WHEREOF, this Agreement is executed by the authorized officers and representatives and of the parties shall be effective as of the Effective Date.
Lender: | ||
By: | /s/ John C. H. Hoof, Jr. | |
Name: John C. H. Hoof, Jr. | ||
Title: Managing Member | ||
CSO: | SCIL TEXAS, LLC | |
SCIL Texas, LLC | ||
By: | /s/ Roger Dean | |
Name: Roger Dean | ||
Title: EVP and CFO |
JOINDER OF PRINCIPAL GUARANTOR
AGREED AND CONSENTED to as of the Effective Date.
PRINICPAL GUARANTOR: CURO Intermediate Holding Corp.
CURO Intermediate Holding Corp.
By: | /s/ Roger Dean | |
Name: Roger Dean | ||
Title: EVP and CFO |
Special Limited Agency Agreement | Page 29 of 29 |
Exhibit 10.56
AMENDED AND RESTATED SPECIAL LIMITED AGENCY AGREEMENT
THIS AMENDED AND RESTATED SPECIAL LIMITED AGENCY AGREEMENT (as amended, modified or restated from time to time, this Agreement ) dated as of September 27, 2017 (the Effective Date), is made by and between INTEGRITY TEXAS FUNDING, LP , a Texas Limited Partnership (Lender), and SCIL TEXAS, LLC , a Nevada Limited Liability Company ( CSO ).
RECITALS
WHEREAS, Lender and CSO entered into that certain Special Limited Agency Agreement dated as of June 3, 2015 ( Original Agency Agreement ), and the parties desire to amend and restate the provisions of the Original Agency Agreement herein;
WHEREAS, pursuant to Section 303.001(b) and Section 342.004(b) of the Texas Finance Code, Lender intends to make Loans (as defined below) in the State of Texas to Borrowers (as defined below) charging annual interest rates not greater than TEN PERCENT (10.00% APR), secured by (1) CSOs Credit Enhancement (as defined below) on behalf of a Borrower, (2) Borrowers personal checks, remotely created checks, automated clearing house debit authorizations, or other electronic debit authorizations (a Debit Authorization ), and/or automobile titles (when applicable).
WHEREAS, CSO is a (1) credit services organization registered under Section 393, et seq., of the Texas Finance Code, and (2) credit access business, registered under Section 393, et seq. of the Texas Finance Code, CSO intends to provide, in consideration of the payment of certain fees and other charges by a Borrower, assistance or other services relating to obtaining an extension of consumer credit from Lender.
WHEREAS, Lender desires to appoint CSO as its non-exclusive, special, limited agent with authority to advertise, accept loan applications, prepare loan documentation, to collect payments, and to do and perform such other services as may be mutually agreed between Lender and CSO in furtherance of the transactions contemplated by this Agreement.
WHEREAS, the parties desire to enter into this Agreement for the purpose of setting forth the terms and conditions which will govern certain services to be provided by CSO to Lender in connection with the Loans.
NOW, THEREFORE, in consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and CSO agree as follows:
1. Definitions . Except as may be explicitly stated otherwise herein, the following terms shall have the following meanings ascribed to them below:
Advertising Materials means all materials and methods used by CSO in the performance of CSOs marketing and promotion of the Loans, including, without limitation, brochures, letters, print advertisements, internet advertisements, television and radio communications and other advertising, promotional and similar materials.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 1 of 29 |
Applicant means an individual who requests or applies for a Loan under the Loan Program through CSO.
Borrower means an individual obligor with respect to one or more Loans who is a resident of the State of Texas at the time such obligor signs the Loan Documents (as defined below). Borrowers means all such obligors.
Credit Enhancement means the guaranty, letter of credit or other credit enhancement issued by CSO or Principal Guarantor for each Loan in favor of Lender for the Borrower thereunder and, which provides for the unconditional and absolute guarantee of the payment in full of each such Loan of the Guarantied Obligations.
CSO Program means the program of CSO for providing credit services to Borrowers, including issuing CSOs Credit Enhancement on behalf of a Borrower to enhance their credit and the arrangement of Loans between Lender and Borrowers pursuant to this Agreement and the Program Guidelines (as defined below).
Loans means any extension of credit to Borrowers for personal, family, or household purposes with an interest rate not to exceed TEN PERCENT per annum (10.00% APR) made by Lender, with the assistance of CSO, under the Loan Program.
Loan Program means the lending program of Lender for originating and consummating Loans pursuant to this Agreement and the Program Guidelines.
Principal Guarantor means Curo Intermediate Holding Corporation which directly or indirectly owns ONE HUNDRED PERCENT (100.00%) of CSO.
Program means collectively the Loan Program and the CSO Program.
Program Guidelines means those guidelines established from time to time for the administration of the CSO Program and the Loan Program.
Program Materials means all promissory notes, security agreements, documents, agreements, instruments or other writings, as well as materials and methods used in connection with the performance of the parties obligations under this Agreement, including without limitation applications, disclosures and agreements required by the Rules, privacy policies, collection materials, red flag rules and the like, but excluding Advertising Materials.
Regulatory Authority means any local, state, or federal regulatory authority having valid jurisdiction or exercising regulatory or similar oversight with respect to Lender, CSO, or Third Party Service Providers.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 2 of 29 |
Rules means all local, state, and federal statutes, regulations, or ordinances applicable to the acts of Lender, CSO, or a Third Party Service Provider as they relate to the CSO Program and/or the Loan Program; any order, decision, injunction, or similar pronouncement of any court, tribunal, or arbitration panel issued with respect to Lender, CSO, or a Third Party Service Provider in connection with this Agreement or the Program; and any regulations, policy statements, and any similar pronouncement of a Regulatory Authority applicable to the acts of Lender, CSO, or a Third Party Service Provider as they relate to this Agreement or the Program.
Senior Debt means all debt and obligations of Lender to Senior Lender under the Senior Loan Documents.
Senior Lender means Lenders senior secured lender(s) or an agent designated by such senior secured lender(s).
Senior Loan Documents means all agreements, instruments and documents evidencing, securing, governing, guaranteeing or pertaining to the Senior Debt, certain indebtedness and obligations of Lender to Senior Lender.
Third Party Service Provider means any contractor or service provider directly or indirectly retained by Lender or CSO, who provides or renders services in connection with the CSO Program or the Loan Program.
Other terms defined herein have the meanings so given to them. Each reference in this Agreement to a definition is a reference to a definition contained in this Agreement, unless the context expressly provides otherwise. Whenever the context requires, references in this Agreement to the singular number shall include the plural, and the plural number shall include the singular. Words denoting gender shall include the masculine, feminine and neuter.
2. General Description of the Loan Program and the CSO Program .
a. Independence of CSO and Lender . CSO and Lender intend to comply with any applicable Rules and to operate independently of each other in their respective capacities as a credit service organization and/or a credit access business in the case of CSO and third-party lender in the case of Lender. CSO and Lender contemplate that CSO will provide credit services related to the Loans.
b. Loan Program . The parties agree that the Loan Program shall consist of the origination, funding, and collection of Loans to Borrowers in accordance with the Rules and Program Guidelines. The parties agree that Lender shall have sole responsibility for establishing credit and underwriting criteria for the Loans, making the decisions as to whether or not to make Loans to an Applicant, funding the Loans, and, subject to the timely performance of CSOs obligations hereunder, managing the Loan Program in accordance with the express obligations under this Agreement and the Program Guidelines. Except as expressly provided herein, (i) nothing herein shall be deemed to commit Lender to originate or fund any particular level or number of Loans, and (ii) Lender makes no representation, warranty or covenant as to the amount of funding it will be able to provide for the Loans. Except as expressly provided with respect to the rights and interest of CSO in this Agreement, Lender or its assigns shall be the sole owner of all Loans made pursuant to this Agreement and CSO shall have no right, title or interest in such Loans.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 3 of 29 |
c. CSO Program . The parties agree that CSOs responsibility under the Program shall be to act as a credit services organization and/or a credit access business on behalf of Borrowers in accordance with the Rules and Program Guidelines and as such CSO shall have the right to charge each Borrower a fee (a CSO Fee ) for providing credit services to each such Borrower (including issuing the Credit Enhancement for such Borrower) and arranging for a Loan on behalf of such Borrower. CSO shall not share with Lender, and Lender shall not accept as compensation, any portion of any CSO Fee obtained from a Borrower. If required by applicable Rules, CSO also shall act as a third party debt collector (as defined under Chapter 392 of the Texas Finance Code) on behalf of Lender with respect to the Loans in accordance with the Program Guidelines. The services CSO provides to each Borrower shall be governed by a Credit Services Disclosures, Terms and Conditions (each CSO Disclosure Statement ) and a Credit Services Agreement between CSO and each Borrower (each a CSO Contract ). CSO, in CSOs sole discretion, shall be solely responsible for determining the amount of the CSO Fee, the disclosures set forth in the CSO Disclosure Statement and the terms and conditions of each CSO Contract. CSO shall determine, in its sole discretion, whether or not it is appropriate to offer a Credit Enhancement in connection with an Applicant. Nothing herein shall be deemed to commit CSO to broker any particular level or number of Applicants for Loans, and CSO makes no representation, warranty or covenant as to the number of Loan applications CSO will submit to Lender on behalf of Applicants. Unless otherwise required by the Rules, nothing herein shall be deemed to require CSO to submit to Lender the application of any prospective Borrower to whom CSO has determined not to provide credit services or for whom CSO has determined not to issue a Credit Enhancement.
d. Commencement Date . The parties shall endeavor to begin the Program and commence providing credit services and making Loans hereunder as of the Effective Date or such other date as mutually agreed upon by the parties.
3. Duties and Responsibilities of Lender . Lender shall perform and discharge the following duties and responsibilities.
a. Develop (and from time to time as it determines appropriate, modify) and deliver to CSO or a Third-Party Service Provider credit and underwriting criteria determined by Lender, in Lenders sole discretion, to be appropriate, reasonable and prudent for the Loan Program and the Loans.
b. Make a determination, in Lenders sole discretion, as to whether or not to extend a Loan to each Applicant which determination shall be made on a case by case basis, pursuant to scoring systems or other criteria or models, established by Lender and in the manner set forth in the Program Guidelines.
c. Extend credit in the form of Loans to Applicants it deems eligible to be Borrowers and fund the Loans in amounts as it determines appropriate to extend credit thereto.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 4 of 29 |
d. Disburse or cause the disbursement of the proceeds of Loans to Borrowers in the manner set out in the Program Guidelines.
e. Manage the Loan Program in accordance with Lenders express obligations under this Agreement and under the Program Guidelines and manage the portfolio of Loans using commercially reasonable standards of care, skill and attention, in each case subject to the timely performance by CSO of CSOs obligations under this Agreement and the Program Guidelines.
f. Promptly deliver to CSO all communications received from Borrowers or Applicants (including, without limitation, information requests and bankruptcy filings).
g. Generate or cause the generation of adverse action notices and other communications that may be required under the Rules for Applicants who apply for but are denied a Loan, subject to CSOs responsibility as Lenders special limited agent to deliver and manage such adverse action notices as described in the Program Guidelines.
4. Duties and Responsibilities of CSO . CSO shall perform and discharge the following duties and responsibilities:
a. Develop (and from time to time as it determines appropriate, modify) its credit and underwriting criteria for CSOs credit services and CSO fees in CSOs sole discretion to be appropriate, reasonable and prudent for the CSO Program and for the issuance of CSOs Credit Enhancement on behalf of a Borrower in favor of Lender.
b. Maintain all licenses and bonds required under applicable Rules during the term of this Agreement.
c. Make a determination, in CSOs sole discretion, as to whether or not to extend credit services and specifically issue a Credit Enhancement on behalf of a prospective Borrower (which determination shall be made on a case by case basis, pursuant to scoring systems or other criteria or models established or utilized by CSO).
d. Do and perform all other activities assigned to or expected of it as set forth herein or in the Program Guidelines relating to the CSO Program, which are incorporated herein by reference.
5. Appointment of CSO as Special Limited Agent . Lender hereby appoints CSO as its special limited agent to perform certain administrative and servicing functions in connection with this Agreement under the Program and retains CSO as its servicer for the Loans, as provided in this Agreement and in the Program Guidelines. CSO hereby accepts the appointment as Lenders special limited agent and agrees to perform and discharge the following duties and responsibilities at its own cost and expense.
a. Market and promote the Program and the Loans and solicit potential Applicants in the manner set forth herein.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 5 of 29 |
b. Provide certain disclosures and agreements to each Borrower, including a CSO Disclosure Statement and a CSO Contract, and such other disclosures and agreement as may be required by the Rules in the manner described in the Program Guidelines or in the Rules.
c. Administer the application process for Loans, solicit applications, and assist potential Borrowers in completing applications in accordance with the Rules.
d. If required, maintain a contract with a Third Party Service Provider or, alternatively, coordinate with or utilize another underwriting system approved by Lender that will receive Loan applications and evaluate such applications and any collateral using Lenders underwriting criteria.
e. To the extent required by the Program Guidelines, transmit Loan applications to Lender and/or a Third Party Service Provider in accordance with the Program Guidelines.
f. Receive evaluations of Loan applications and the resulting Loan approval or denial decisions from Lender and/or Third Party Service Provider and forward such decisions to the applicable Applicants.
g. Prepare and ensure the proper completion and delivery of Loan Documents in accordance with all applicable Rules to Lender, a Third Party Service Provider (if instructed by Lender) and Borrowers.
h. Prepare security documents to permit the perfection of liens on any collateral securing the Loans and file such security documents with the appropriate authority.
i. Receive for Lender from Borrowers payments due to Lender, other than dedicated CSO fees, under the Loans and forward any to Lender, in the manner specified in this Section 5(i ), any such payments delivered to CSO by Borrowers. The funds from these payments shall belong to Lender (or the recipient designated by Lender), shall be held in trust by CSO for Lender, and shall be remitted to Lender within ONE (1) business day of receipt by CSO to the bank account designated and controlled by Lender. Any payment on a Loan received by CSO, other than the CSO fee, shall be binding upon Lender with respect to the applicable Borrower. In accordance with this Agreement, CSO, as Lenders special limited agent, shall continue to accept payments and otherwise collect on the Loans as long as any Guarantied Obligations shall be outstanding.
j. Reflect all Loan transactions and track Loan balances on a loan management system and accounting system to be maintained by CSO pursuant to the requirements of this Agreement.
k. Comply with all registration, bonding and other requirements of the Texas Finance Code and other applicable Rules and any regulations promulgated thereunder, and with the Rules, including federal laws and regulations applicable to CSOs credit services, collection and servicing activities with respect to the Loans, to the extent that any such Rules including, federal statutes or regulations, are applicable to CSOs credit services, collection and servicing activities.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 6 of 29 |
l. Maintain and retain the original of all Program Materials with respect to each Loan (either in paper or electronic format), except that CSO may retain copies of Program Materials (other than any original promissory note which shall be retained by CSO or a person designated by Lender) in connection with a Loan in lieu of the original if Borrower is required to receive the original under applicable Rules or with Lenders prior written consent, for the period required by applicable Rules; provided, however, that in the event that CSO shall no longer be conducting business as a credit services organization and/or a credit access business in Texas, CSO shall deliver to Lender all Program Materials relating to all Loans then owned by Lender. CSO shall provide Lender access to such Program Materials no later than FIVE (5) business days after written request. The records and documentation maintained by CSO pursuant to this Agreement shall be maintained in a secure environment at all times and in compliance with applicable Rules.
6. Defaulted Loans and Credit Enhancement . A Loan shall default upon the occurrence of any of the following: (a) Borrower fails to make any payment when due, (b) Borrower makes any statement or representation in connection with obtaining a Loan which is materially false or misleading when made, (c) Borrower fails to keep any promise or agreement it made to Lender in any promissory note or other document evidencing or relating to a Loan, or (d) the CSO Contract related to such Loan is cancelled for any reason prior to Lender receiving payment in full on such Loan. Pursuant to each CSO Contract, and regardless of whether the CSO Contract is cancelled, CSO agrees to issue on behalf of each CSO approved Borrower, and for the benefit of Lender, a Credit Enhancement for the prompt payment of the amounts due to Lender under each Loan made by Lender under the Loan Program, as described in this paragraph; provided that such Credit Enhancement shall be in a form and substance satisfactory to Lender. A Credit Enhancement issued in respect of a Loan shall provide for the unconditional, irrevocable and absolute guarantee of the related Loan in an amount equal to the sum (the Guarantied Obligations ) of (or such lesser amount as may be agreed in writing from time to time by Lender and CSO): (a) the principal amount of the Loan and accrued and unpaid interest thereon, plus (b) to the extent that the same shall be due and owing in connection with a Loan, an NSF fee for items returned by a depository institution equal to the lesser of THIRTY AND NO/100 DOLLARS ($30.00) or the amount permitted by applicable law, plus (c) to the extent that the same shall be due and owing in connection with a Loan, a late fee equal to the greater of SEVEN AND 50/100 DOLLARS ($7.50) or FIVE PERCENT (5.00%) of the delinquent payment for any payment past due for more than the period required by applicable law or for such longer period as may be set forth in the Program Guidelines. Upon receipt of a Lender demand, CSO shall promptly pay Lender in full the respective Guarantied Obligations for the defaulted Loan under the Credit Enhancement. The parties agree that CSO may issue a Credit Enhancement covering more than one Loan, in which case Lender shall have all the rights and CSO shall have all the obligations with respect to such Credit Enhancement as the Parties would have if individual guaranties were issued for each Loan. If Lender draws on a Credit Enhancement and is paid in full for all amounts owing on a Loan attributable to the respective Guarantied Obligations, Lenders Interest in the related Loan shall be assigned automatically to CSO, without any representation or warranty. With respect to each Borrower to which CSO elects to extend credit services and which becomes a Borrower of a Loan under the Loan Program, CSO shall create and maintain books and records reflecting that the respective Guarantied Obligations of such Borrower
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 7 of 29 |
under such Loan are guaranteed by CSO under the Credit Enhancement, including, if applicable, appropriate documentation to substantiate and confirm that multiple Loans are being guaranteed under such Credit Enhancement, which documentation shall be in a form and substance satisfactory to Lender.
7. Settlement . Subject to the terms and conditions of this Agreement, including the offset and set-off rights in Section 11(d) below, the parties agree to settle all amounts due from one party to the other pursuant to this Agreement and the Program Guidelines on a daily basis or at such other times as the parties may agree (the date of any such settlement, being the Transaction Date ). Any payment due from one party to the other under this Agreement and the Program Guidelines shall be made by an automated clearing house transfer with next day settlement on the business day immediately succeeding the Transaction Date. Within TWENTY (20) days after the end of each calendar month, the parties shall prepare a recap and reconciliation of all the settlements made during that month, and if the reconciliation reveals that one party owes the other an amount necessary to correct an inaccuracy in the previous settlement process, that amount shall be paid within TWO (2) business days. The settlement obligations of the parties under this Agreement and the Program Guidelines shall survive the termination of this Agreement and will remain in effect as long as any Loans remain unpaid or any party owes any amount to the other party under this Section 7 . Pursuant to the requirements of this Agreement, CSO shall capture and record all relevant data concerning any Loan transaction and prepare appropriate reports and summaries as may be necessary to effect settlement hereunder, facilitate the review and analysis of all Loan activity, and permit Lender to reflect such Loan transactions on its books and records.
8. Program Guidelines . Lender and CSO will mutually agree upon the Program Guidelines in writing and will comply with such Program Guidelines, as the same may be amended from time to time by written agreement of the parties or as may be modified to insure compliance with the Rules. The parties may modify the then current Program Guidelines only in accordance with this Agreement. Both parties agree to act in good faith and in a commercially reasonable manner in connection with the establishment and modification, if any, of the Program Guidelines. The parties agree to perform their duties and responsibilities under this Agreement in accordance with the provisions of the Program Guidelines as applicable to it, as they may be modified from time to time.
9. Program Materials; Advertising Materials; Trade Names and Trademarks . The parties shall each be responsible for preparing their own respective Program Materials; provided, however, prior to the use of any Program Materials prepared by one party, the other party shall be entitled to review and approve such Program Materials in the manner described below. Each party agrees that it will not use any Program Materials unless such Program Materials have been approved in advance by the other party hereto (which approval shall not be unreasonably withheld, conditioned, or delayed). CSO shall be responsible for the development of proposed Advertising Materials concerning advertising and marketing of Loans and solicitation of potential Borrowers. The form and content of all Advertising Materials shall be subject to the prior review and approval of Lender in the manner described herein. The nature of the Advertising Materials, the scope of their dissemination, and the total expenditures to be made on Advertising Materials for the CSO Program and the Program shall be determined by CSO in its reasonable discretion, and CSO shall pay all expenses concerning the production, use, and dissemination of Advertising Materials. Notwithstanding anything herein to the contrary, each party agrees that it will respond in writing to any request from the other party for an approval of any Advertising Materials or Program
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 8 of 29 |
Materials within FIVE (5) business days following such other partys receipt of such materials and any such materials shall be deemed approved by such other party upon the earlier to occur of (a) the actual approval of such materials, or (b) upon the expiration of the above-described FIVE (5) business day period if the party whose approval is being sought fails to timely approve or disapprove such materials within such FIVE (5) business day period. If a party disapproves any proposed Program Materials or Advertising Materials within the required time frame, such party will detail its reasons for such disapproval in such partys written disapproval notice to the other party. A party hereto may at any time retract or modify any approval previously given by it with respect to any Program Materials or Advertising Materials if such action is necessary in order to remain in compliance with the Rules; provided, however, no party shall retract or modify a previously granted approval if there has been no intervening change in the Rules which would require such retraction or modification. CSO shall ensure that all Advertising Materials and the Program Materials shall comply with all applicable Rules. Each of Lender and CSO acknowledges that approved Program Materials and/or Advertising Materials may contain trade names, trademarks, or service marks of CSO and Lender, and Lender or CSO, as the case may be, shall have no authority to use any such names or marks of the other party separate and apart from their use in the Program Materials or Advertising Materials. The parties shall use Program Materials and Advertising Materials only for the purpose of implementing the provisions of this Agreement and shall not use Program Materials or Advertising Materials in any manner that would violate the Rules or any provision of the Program Guidelines.
10. Loan Terms and Charges; CSO Terms and Fees . All underwriting criteria, Loan terms and all interest, fees, and other charges associated with the Loans, exclusive of any CSO Fees, shall be established by Lender and shall be reflected in the Program Guidelines. Notwithstanding the foregoing, however, Lender shall have the right to modify any underwriting criteria, Loan terms, interest rates, fees, or other charges (exclusive of any CSO Fees), from time to time, at its discretion (the Changed Terms ). Unless otherwise required by applicable Rules, Lender shall provide CSO with not less than THIRTY (30) days prior written notice of the Changed Terms. The terms and conditions of the CSO Disclosure Statements, CSO Contracts and the amount of any CSO Fees shall be established by CSO, shall comply with the Rules and shall be reflected in the Program Guidelines. Notwithstanding the foregoing, however, CSO shall have the right to modify any CSO Disclosure Statements, CSO Contracts and the amount of any CSO Fees, from time to time, at its discretion. In the event that either party hereto becomes aware that any aspect of the Loan Program or CSO Program, including but not limited to underwriting criteria, Loan terms, interest, fees or other charges associated with any Loan, any term or condition of any CSO Disclosure Statement or CSO Contract or the amount of any CSO Fee, or any activity of CSO as a third-party debt collector, is not in compliance with the Rules, the party becoming aware of the same shall notify the other party of such non-compliance and each party hereto agrees to cooperate in good faith with each other, and to diligently take commercially reasonable steps, as may be necessary in order to promptly correct and cure any such non-compliance.
11. Nature of Certain Credit Enhancements .
a. Guaranty by CSO . CSO hereby unconditionally, irrevocably and absolutely guarantees (i) the due and punctual payment and performance of the Guarantied Obligations, and ii) agrees that this guaranty shall be a continuing guaranty, shall be binding upon CSO, and upon its successors
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 9 of 29 |
and assigns, and shall remain in full force and effect, and shall not be discharged, impaired or affected by (1) the existence or continuance of any of the Guarantied Obligations (other than the payment or performance of the Guarantied Obligations in accordance with their terms; (2) the validity or invalidity of any document or agreement evidencing the Guarantied Obligations or any of them; (3) the existence or continuance of any Borrowers obligations with respect to the Guarantied Obligations; (4) any waiver, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the Guarantied Obligations, all of which Lender is hereby expressly authorized to make from time to time without notice to CSO; (5) the acceptance by Lender of any security for, or other guarantors upon, all or any part of the Guarantied Obligations; or (6) any defense (other than the payment or performance of the Guarantied Obligations). Upon final satisfaction of the Guarantied Obligations, Lender shall promptly (and in any event within FIVE (5) business days of such satisfaction) return to CSO any sums held as collateral for the Guarantied Obligations.
b. Principal Guaranty . As a material inducement to enter into this Agreement, Principal Guarantor:
i. Unconditionally, irrevocably and absolutely guarantees (1) the due and punctual payment of all amounts due and payable from CSO to Lender under this Agreement, including but not limited to, all Guarantied Obligations; and (2) the due and punctual performance and observance by CSO of all other obligations, warranties, covenants and duties of CSO set forth in this Agreement (all of which amounts payable and the terms, warranties, agreements, covenants and conditions being herein called the Principals Obligations ).
ii. Agrees that the guaranty set forth in this Section 11(b) shall be a continuing guaranty, shall be binding upon Principal Guarantor, and upon its successors and assigns, and shall remain in full force and effect, and shall not be discharged, impaired or affected by (1) the existence or continuance of any of the Principals Obligations (other than the payment or performance of the Principals Obligations in accordance with their terms); (2) the validity or invalidity of any document or agreement evidencing the Principals Obligations or any of them; (3) the existence or continuance of CSO as a legal entity; (4) any waiver, indulgence, alteration, substitution, exchange, change in, modification or other disposition of any of the Principals Obligations, all of which Lender or CSO is hereby expressly authorized to make from time to time without notice to Principal Guarantor; (5) the acceptance by Lender of any security for, or other guarantors upon, all or any part of the Principals Obligations; or (6) any defense (other than the payment or performance of the Principals Obligations in accordance with their terms) that Principal Guarantor may or might have to its undertakings, liabilities and obligations hereunder, each and every such defense being hereby waived by Principal Guarantor.
iii. Agrees that Principal Guarantor shall be held liable hereunder and Lender shall have the right to enforce this guaranty against Principal Guarantor for and to the full amount of the Principals Obligations, with or without enforcing or attempting to enforce
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 10 of 29 |
this guaranty against any other guarantor, without any obligation on the part of Lender, or anyone, at any time, to resort to any collateral, security, property, liens or other rights or remedies whatsoever, and whether or not other proceedings or steps are pending or have been taken or have been concluded to enforce or otherwise realize upon the obligations, properties, estates or security of CSO or any other guarantor; and the payment of any amount or amounts by Principal Guarantor, pursuant to its obligations hereunder, shall not entitle Principal Guarantor, either at law or otherwise, to any right, title or interest (whether by way of subrogation or otherwise) in and to any of the Principals Obligations, unless and until the full amount of the Principals Obligations has been fully paid, all other Principals Obligations have been fully performed and observed in accordance with their terms and the Agreement has been terminated.
iv. Agrees and acknowledges that the direct or indirect value of the consideration received and to be received by Principal Guarantor in connection herewith is reasonably worth at least as much as the liability and obligations of Principal Guarantor hereunder, and the incurrence of such liability and obligations in return for such consideration may reasonably be expected to benefit Principal Guarantor, directly or indirectly.
c. Pledge of Credit Support for Credit Enhancement . At the request of Lender, CSO shall pledge and does hereby pledge to Lender that amount of cash having a value equal to a percentage mutually agreed upon in writing between CSO and Lender of the total amount of principal of all Loans outstanding from time to time (such percentage to be modified only upon the mutual agreement of both parties) as collateral for CSOs obligations under its Credit Enhancement. Such pledge shall be in form and substance reasonably acceptable to Lender. On a weekly basis, CSO and Lender shall determine whether the amounts pledged to or held by Lender pursuant to this Section 11(c) shall equal the amount required above. In the event of any shortfall, CSO shall promptly pledge to Lender additional cash in an aggregate amount equal to such shortfall. In the event of any excess and provided that CSO is not in default under any Credit Enhancement or in default under Section 18 hereof, Lender shall promptly release cash in an aggregate amount equal to such excess. In order for Lender to have and maintain a first priority perfected security interest in the cash pledged to Lender pursuant to this section but only to the extent of actual sums due and owing, from time to time to Lender, CSO hereby authorizes Lender to file UCC financing statements and amendments with such governmental offices and in such jurisdictions as Lender may deem appropriate from time to time to perfect and maintain its security interests herein granted in such pledged cash. Stated otherwise for further clarification, CSO shall be entitled to full refund of the pledged cash upon settlement and payment in full of all outstanding Loans, irrespective of Senior Lenders security interest in such pledged cash. Under no circumstances may a Senior Lender receive more than the Lender would have received, absent some default by Lender or other occurrence, which results in Senior Lender acceding to Lenders position. CSO hereby further agrees to undertake reasonable actions as requested by Lender from time to time in order to perfect, protect or otherwise preserve the security interest herein granted to Lender in such pledged cash. To the extent that CSO pledges to Lender any cash pursuant to this section, then in connection with the pledge of such cash, CSO shall deposit such cash into a bank account as Lender may direct CSO in writing, which account shall be owned and subject to
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 11 of 29 |
the exclusive control by Lender. In lieu of the pledge required hereby, CSO may provide Lender with a letter of credit issued by a third party or other security having a value equal to the amount of cash that would otherwise be pledged and reasonably acceptable to Lender. At the termination of this Agreement or CSO Program, the sums of the pledged cash, subject to the settlement and payment in full of the amounts due the parties, shall be returned to CSO
d. Offset and Set-off Rights . In the event that (i) CSO is in default under any Credit Enhancement issued in respect of any Loan or (ii) in default under Section 18 hereof, then, without any prior notice to CSO, any such notice being expressly waived by CSO to the extent permitted by applicable law, Lender shall have the right to set-off, offset and apply against any Guarantied Obligations owed by CSO and/or Principal Guarantor to Lender, until paid in full, any and all pledged cash and any other credits, indebtedness or obligations, in each case whether direct or indirect, absolute or contingent, matured or unmatured, owed by Lender to or for the credit or the account of CSO under this Agreement or any other agreement between CSO and Lender; provided that the foregoing set-off, offset and application rights of Lender shall not limit in any manner, and shall be in addition to, any other rights and remedies of Lender provided by this Agreement and by law. Lender agrees promptly to notify CSO after any such set-off, offset and application made by Lender pursuant to the preceding sentence; provided that any failure to give such notice shall not affect the validity of such set-off, offset, appropriation and application.
12. Third Party Service Providers . No party hereto, whether directly or indirectly, shall retain any Third Party Service Provider to assist it in performing its duties hereunder or to otherwise participate in the Loan Program or the CSO Program except with the prior written consent of the other party hereto, which consent shall not be unreasonably withheld. In seeking the approval to retain a Third Party Service Provider, the party requesting such approval shall provide to the other party such information concerning the proposed Third Party Service Provider as such other party may reasonably request. A party may condition its willingness to approve a proposed Third Party Service Provider upon obtaining a written commitment from such Third Party Service Provider to comply with the terms of this Agreement and the Program Guidelines, to submit to audits and inspections by either party hereto, and to indemnify the parties hereto upon such terms and conditions as the parties hereto may reasonably require. CSO shall be responsible for supervising any Third Party Service Providers retained by CSO. Lender shall be responsible for supervising any Third Party Service Providers retained by Lender.
13. Servicing and Accounting System . CSO agrees to develop and maintain, at its sole cost and expense, a comprehensive computerized servicing and accounting system (i) that will accurately and promptly reflect all Loan transactions and track all Loan balances and the related pledged cash, Credit Enhancements and Guarantied Obligations for all Loans on an individual and aggregate basis, (ii) that will satisfy the information requirements of CSO, Lender, Third Party Service Provider and Regulatory Authorities having jurisdiction over the Loan Program and/or the CSO Program, if any, and (iii) that will provide a mutually agreed web link by which Lender can access such system. CSO shall provide Lender on a daily basis (on each business day) with an electronic file with data concerning all Loans originated hereunder and the related Guaranties to assist Lender in incorporating such information into its internal accounting, record keeping, and audit systems, in form and substance as may be mutually agreed to by parties from time to time. Upon the termination of this Agreement, for any reason, CSO shall continue to
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 12 of 29 |
provide the accounting and servicing functions described herein for the Loans for the benefit of Lender and maintain the servicing and accounting system described herein for the Loans for the benefit of Lender and maintain the servicing and accounting system described herein for such purpose for TWO (2) years following the later of (a) the date on which this Agreement is terminated, and (b) the date on which the final outstanding Loan has been paid in full by the applicable Borrower or by CSO pursuant to a Credit Enhancement issued by CSO in accordance with the Program Guidelines and Section 6 hereof.
14. CSOs Representations, Warranties and Covenants . CSO makes the following warranties, representations and covenants to Lender:
a. This Agreement is valid, binding and enforceable against CSO in accordance with its terms, and CSO has received all necessary organization approvals to enter into this Agreement and to perform its obligations hereunder.
b. CSO is a Nevada limited liability company, duly formed, validly existing, and is in good standing under the laws of the State of Nevada and its authorized, registered, and licensed to do business in Texas and in each state in which the nature of its activities makes such authorization, registration, or licensing necessary or required. CSO is registered as required for credit services organizations or a credit access business (as the case may be) under Chapter 393 of the Texas Finance Code and will remain so registered throughout the term of this Agreement. CSO has obtained any third party debt collector surety bond required by Chapter 392 of the Texas Finance Code and, if required by Chapter 392, will retain such bond throughout the term of this Agreement.
c. CSO has the full organizational power and authority to execute and deliver this Agreement and perform all of its obligations hereunder.
d. The provisions of this Agreement and the performance of each of CSOs obligations hereunder do not conflict with CSOs articles of organization, by-laws, or any agreement, contract, lease, or obligation to which CSO is a party or by which CSO is bound.
e. The governing authority of CSO has approved the terms and conditions of this Agreement and has determined that entering into this Agreement is in the best interests of CSO.
f. This Agreement, the Program Guidelines and the provisions of each of them comply with and are enforceable under the Rules, and the operation of each of the Loan Program and the CSO Program in accordance with this Agreement and the Program Guidelines will not violate any of the Rules.
g. Neither CSO nor any principal thereof has been or is the subject of any of the following:
i. Criminal conviction (other than misdemeanor traffic offenses);
ii. IRS lien;
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 13 of 29 |
iii. Enforcement agreement, memorandum of understanding, cease and desist order, administrative penalty, or similar agreement concerning lending matters that has the effect of permanently precluding CSO or its principals from engaging in consumer financial services;
iv. Administrative or enforcement proceeding or material investigation commenced by the Securities Exchange Commission, state securities regulatory authority, Federal Trade Commission or any other state or federal Regulatory Authority (excluding routine examinations conducted by a Regulatory Authority and excluding communications received in the ordinary course of business from any Regulatory Authority such as communications concerning consumer complaints or communications related to immaterial issues); or
v. Restraining order, decree, injunction or judgment in any proceeding or lawsuit alleging fraud or deceptive practices or illegal activity on the part of CSO or any principal thereof.
For purposes of this Section 14(g) , the word principal of CSO shall include (i) any person directly or indirectly owning a TEN PERCENT (10.00%) or more equity interest of CSO, (ii) any officer or director of CSO, and (iii) any other person having the power or authority to control CSOs business.
h. CSO shall furnish Lender (within THIRTY (30) days) following the end of each calendar quarter) a compliance certificate affirming its current compliance and earlier compliance with each of the following covenants during the previous quarter:
i. CSO is now and was at all relevant times a duly licensed credit services organization registered under Section 393, et seq. , of the Texas Finance Code (CSO has not originated any loans under the tribal model and/or any offshore or commerce model);
ii. CSO is now and was at all relevant times and in all material respects in compliance with the Loan Program, all applicable Rules and the Program Guidelines;
iii. CSO is not now originating or providing credit services in the origination of, nor has it ever originated or provided credit services in the origination of, any loan at an interest rate greater than TEN PERCENT (10.00%) annual percentage rate as a credit service organization or as the agent of Lender;
iv. At all relevant times, all advertising and promotional materials for the Loans (1) have and continue to prominently identify Lender as the maker of the Loans, (2) have been and continue to be accurate, (3) have not been and are not now misleading, (4) have and continue to be in compliance with all applicable Rules, and (5) have been and continue to be submitted to Lender for prior approval;
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 14 of 29 |
v. CSO has not engaged and is not now engaged in any discriminatory practice in violation of the Rules, including without limitation any discriminatory practice for the purpose of discouraging any Applicant in any aspect of the credit process or any purpose prohibited by law;
vi. CSO has used and continues to use only commercially reasonable efforts to collect payments on the Loans at and after maturity thereof on behalf of Lender, and has complied and continues to comply with the federal Fair Debt Collection Practices Act, to the extent applicable, and any other applicable Rules, in the collection process;
vii. CSO has not made and will not make, explicitly or implicitly, any threats of criminal prosecution in connection with debt collection, and CSO has not engaged in, nor will it engage in, any practices that violates any applicable Rules;
viii. CSO has not imposed, nor will it impose, a charge for cashing a check or draft related or conditioned on its CSO services, but may charge a fee for cashing a check or draft as an ancillary financial service. CSO has been and will remain in compliance in all respects with the Gramm Leach-Bliley Act (GLBA) and Federal Trade Commission regulations implementing the GLBA, other applicable federal and state privacy rules, and this Agreement, as it pertains to Applicant and Borrower Information (as later defined);
ix. CSO has not violated and will not violate any term of this Agreement pertaining to the use and/or protection of Lenders Confidential Business Information;
x. CSO shall provide (in reasonable detail) the calculations and supporting documentation as Lender may require to demonstrate compliance with the financial covenants referred to in Section 26 of this Agreement;
xi. CSO has and will continue to timely furnish all information required herein, which information has and will be in all material respects, truthful, accurate and complete.
xii. In the event that CSO commences filing public reports with the SEC, CSO shall permit Lender to participate in any periodic conference calls regularly available to market analysts or investors.
xiii. CSO shall comply with all applicable federal, state and local statutes, regulations and ordinances in its performance of this Agreement, the performance of the credit services, and its operation of the Program.
xiv. CSO shall implement, and shall take measures to maintain, reasonable and appropriate administrative, technical, and physical security safeguards to (1) insure the security and confidentiality of non-public personal information relating to any consumer; (2) protect against anticipated threats or hazards to the security or integrity of non-public personal information; and (3) protect against unauthorized access or use of non-public personal information that could result in substantial harm or inconvenience to any consumer.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 15 of 29 |
Any failure or inability to timely or truthfully issue such compliance certificate shall be a default under this Agreement and shall give rise to Lenders rights and remedies under Section 18 .
15. Lenders Representations and Warranties . Lender makes the following warranties and representations to CSO, all of which shall survive the execution and termination of this Agreement for any reason:
a. This Agreement is valid, binding and enforceable against Lender in accordance with its terms, and Lender has received all necessary approvals to enter into this Agreement and to perform its obligations hereunder.
b. Lender is a limited partnership duly formed, validly existing, and in good standing under the laws of the State of Texas and is authorized and registered to do business in the State of Texas and in each state in which the Loans are being offered and in each state in which the nature of its activities makes such authorization, registration, or licensing necessary or required. Lender is not affiliated with CSO or any affiliate of CSO.
c. Lender has the full organizational power and authority to execute and deliver this Agreement and perform all of its obligations hereunder.
d. The provisions of this Agreement and the performance of each of Lenders obligations hereunder do not conflict with Lenders organizational documents or any agreement, contract, lease, or obligation to which Lender is a party or by which Lender is bound.
e. The governing authority of Lender has approved the terms and conditions of this Agreement and has determined that the entering of this Agreement by Lender is in the best interests of Lender.
f. Neither Lender nor any principal thereof has been or is the subject of any of the following:
i. Criminal conviction (other than misdemeanor traffic offenses);
ii. IRS lien;
iii. Enforcement agreement, memorandum of understanding, cease and desist order, administrative penalty, or similar agreement concerning lending matters that has not been resolved;
iv. Administrative or enforcement proceeding or investigation commenced by the Securities Exchange Commission, state securities regulatory authority, Federal Trade Commission, or any other state or federal Regulatory Authority (excluding routine
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 16 of 29 |
examinations conducted by a Regulatory Authority and excluding communications received in the ordinary course of business from any Regulatory Authority such as communications concerning consumer complaints or communications related to immaterial issues) that has not been resolved; or
v. Restraining order, decree, injunction, or judgment in any proceeding or lawsuit alleging fraud or deceptive practices or illegal activity on the part of Lender or any principal thereof.
For purposes of this Section 15(f) the word principal of Lender shall include (i) any person directly or indirectly owning a TEN PERCENT (10.00%) or more equity interest of Lender, (ii) any officer or director of Lender, and (iii) any other person having the power or authority to control Lenders business.
16. Ownership of Borrower Information . Each party shall take all steps necessary and appropriate to maintain the confidentiality of any Applicant and Borrower names, addresses, and telephone numbers and all account and other information, including payment information, regarding Borrowers and Applicants who have been declined, and all records, data, and information pertaining to the foregoing (collectively, Borrower Information ). Lender and CSO jointly and severally shall own all Borrower Information; provided, however, that neither party will use any of such Borrower Information except to the extent permitted by the Program Guidelines and the privacy policies of each of CSO and Lender set forth in the documents described in the Program Guidelines. Notwithstanding the foregoing, without the need for obtaining Lenders consent, CSO may use Borrower Information for purposes of marketing, offering, selling, brokering, underwriting and providing other products and services, including, without limitation, other loan products and services that may be offered to Borrowers by CSO, any Third Party Service Provider of CSO or any other lenders through the distribution channels of CSO and any Third Party Service Provider of CSO, provided that, in all cases, however, any use by CSO of any such Borrower Information shall comply with (a) all applicable Rules, (b) the requirements of the Program Guidelines, and (c) the above-described privacy policies of both CSO and Lender and in the event any such Borrower Information is used in connection with marketing, offering, selling, brokering, underwriting or providing loans made by any party other than CSO, Lender agrees that such other lender may jointly own such Borrower Information with CSO and Lender, so long as such other lender has a privacy policy no less restrictive than Lenders privacy policy described in the Program Guidelines and agrees in writing to comply with such privacy policy and the privacy policies of CSO and Lender. In addition, notwithstanding that Lender has an ownership interest in Borrower Information, Lender agrees that it will not use Borrower Information to market any other products or services to Borrowers or to Applicants without the prior written consent of CSO. Without limiting the foregoing, each of CSO and Lender shall adopt and maintain reasonable procedures relating to administrative, technical, and physical safeguards to: (a) ensure the security and confidentiality of any Borrower Information that such party receives; (b) protect against any anticipated threats or hazards to the security or integrity of any Borrower Information that such party receives; (c) protect against the unauthorized access to or use of any Borrower Information that such party has in its possession which could result in substantial harm or inconvenience to any Borrower or Applicant; and (d) ensure the proper disposal of any Borrower Information that such party has in its possession. Notwithstanding anything herein to the contrary, CSO shall be the sole owner of all CSO Disclosure Statements and all CSO Contracts and any information contained therein. The rights and obligations of the parties under this Section 16 shall survive the termination of this Agreement for a period of TWO (2) years.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 17 of 29 |
17. Term . The term of this Agreement shall be for a period of TWO (2) years commencing as of the Effective Date; provided, however, that either party may terminate this Agreement prior to the expiration of its term pursuant to the provisions of this Section 17 and Section 18 below. This Agreement shall be renewed automatically for successive one-year terms unless the party not wishing to renew provides the other party with at least NINETY (90) days advance written notice of non-renewal. Each party hereto shall have the right to terminate this Agreement immediately upon written notice to the other party hereto, if (a) the terminating party determines in its reasonable discretion that the activities of the parties under this Agreement, the Loan Program or the CSO Program are illegal under, prohibited by or not permitted under any of the Rules; (b) any Regulatory Authority having jurisdiction over the Program, CSO or Lender requires the terminating party to terminate this Agreement; (c) the terminating party determines in its reasonable discretion that continued operation of the Loan Program or the CSO Program may materially adversely affect the ongoing operations of the terminating party or those of the terminating partys affiliates; and in the event of a termination of this Agreement pursuant to this clause (c), the terminating party shall provide the other party with a written explanation of the basis for such termination, or (d) the terminating party determines in its reasonable discretion that continued operation of the Loan Program or the CSO Program may materially adversely affect the relationship between the terminating party or any of its affiliates and any Regulatory Authority having jurisdiction over any of them. In addition, if Lender modifies any Loan term, interest rate, fee, or other charge pursuant to Section 10 above, or if Lender materially modifies any underwriting criteria for the Loans pursuant to Section 10 above, CSO may terminate this Agreement upon THIRTY (30) days prior written notice to Lender if CSO determines in its reasonable discretion that such modification by Lender would render it economically infeasible for CSO to continue to perform its duties and responsibilities hereunder or that such modification would cause any aspect of the Loan Program or the CSO Program to be in violation of any Rules. Notwithstanding any termination of this Agreement, each partys respective obligations and covenants hereunder with respect to outstanding Loans and the related pledged cash, Credit Enhancements and Guarantied Obligations shall remain in effect for so long as such Loans remain outstanding.
18. Termination Upon Default .
a. Either party hereto shall have the right to terminate this Agreement upon occurrence of one or more of the following events:
i. Failure by the other party to observe or perform that partys obligations to the other hereunder or to comply with any provision of this Agreement, so long as the failure or nonperformance is not due to the actions of the terminating party;
ii. In the event any Financial Information (as defined below) representation, warranty, statement or certificate furnished to either party by the other in connection with this Agreement, or any separate material statement or document delivered or to be delivered hereunder by either party hereto to the other party, is materially false, misleading, or inaccurate as of the date made or delivered; and
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 18 of 29 |
iii. In the event a party hereto (or an affiliate of such party) defaults under any other agreement executed between the parties hereto (and/or any of their respective affiliates) and such default continues beyond any applicable notice and cure period provided for such default under such other agreement.
b. The Agreement may be terminated pursuant to Section 18(a)(i) above only if the default continues for a period of THIRTY (30) days after the defaulting party receives written notice from the other party specifying the default in the case of a non-monetary default, or TEN (10) days after the default in the case of a failure to pay any amount when due hereunder.
c. In addition to any other right to terminate this Agreement, a party may terminate this Agreement if the other party hereto, or such other partys principals is the subject of any of the following or if any of the following occurs with respect to such other party or such other partys principals: insolvency, inability to pay its debts as they become due, the filing of a voluntary bankruptcy petition, the filing of an involuntary bankruptcy petition which is not dismissed within THIRTY (30) days after filing thereof, dissolution or termination of its existence as a going concern, or the appointment of a receiver for any part of its property.
d. In order to preserve the goodwill of each Party with its customers, the Parties shall act in good faith and cooperate in order to ensure a smooth and orderly termination of their relationship and the termination of the Loan origination and marketing program contemplated hereunder. Unless prohibited by applicable Rules, or as otherwise provided in this Agreement, upon Lenders written request CSO shall continue to service outstanding Loans following termination or expiration of this Agreement until all Loans are repaid or charged off in accordance with Lenders collection policies and procedures. Except as otherwise set forth in Section 13 herein, upon the termination or expiration of this Agreement, all rights and benefits herein granted to CSO (but none of the obligations of CSO hereunder) shall revert to Lender, and CSO shall immediately cease using Lender Loan Program and any Lenders properties or materials.
19. Indemnification .
a. Indemnification Obligations . To the furthest extent allowable by law, CSO shall indemnify, defend and hold Lender and its partners and affiliates and their respective directors, officers, employees, shareholders, lenders, partners and agents (herein, the Lender Indemnified Parties ) harmless from and against any and all claims, causes of action, demands, liabilities, losses, penalties, fines, judgments, damages or expenses (including, without limitation, legal fees, fines, court costs, accounting fees and class action costs) (collectively Damages ) whether based on contract, tort, common law, equity, or statute (each, a Claim ), asserted by or on behalf of any Applicant, Borrower, Regulatory Authority, or other person or entity relating to, arising or alleged to have arisen in whole or in part out of or in consequence of all of the following: (i) any breach by CSO of its obligations under this Agreement or the inaccuracy of any warranty or representation of CSO set forth in this Agreement; (ii) any act or omission (whether one or more) of any Third Party Service Provider retained by CSO, the inaccuracy of any warranty or
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 19 of 29 |
representation made for the benefit of Lender by any Third Party Service Provider retained by CSO, or the breach of any obligation owed to Lender by any Third Party Service Provider retained by CSO; (iii) any claim or determination that the Loans or the activities of the parties hereunder are illegal under or prohibited by any of the Rules and any other claim asserted by or on behalf of any Applicants, Borrowers or Regulatory Authority with respect to the Loans; (iv) any examination, investigation or audit conducted by a Regulatory Authority; (v) any actual or alleged injury to any Applicant, Borrower and/or actual or prospective customer of CSO or to any employee of CSO actually caused or alleged to have been caused in whole or in part by CSO or any of its employees, agents or representatives; (vi) any transaction (whether one or more) arising out of, relating to, and/or pursuant to this Agreement; (vii) any claim by a Borrower relating to the documentation of a Loan by CSO or Lender and/or (viii) any act or omission (whether one or more) of CSO, and/or its employees, agents, representatives and/or third party service providers in connection with their performance or lack of performance of any duty or activity contemplated by this Agreement. The obligation under this Section 19(a) shall include payment of all reasonable and necessary counsel fees and expert fees.
THE OBLIGATIONS OF CSO TO INDEMNIFY AND DEFEND INDEMNIFIED PARTIES UNDER THIS SECTION 19(a) SHALL EXTEND WITHOUT LIMITATION TO CLAIMS THAT ALLEGE THE NEGLIGENCE, GROSS NEGLIGENCE, AND/OR INTENTIONAL ACTS OF LENDER, EXCEPT THAT CSO SHALL HAVE NO INDEMNIFICATION OBLIGATION CAUSED BY LENDERS GROSS NEGLIGENCE AND/OR INTENTIONAL TORTS, EXCEPT TO THE EXTENT SUCH GROSS NEGLIGENCE OR INTENTIONAL TORT ARISES FROM ACTIONS REASONABLY REQUIRED TO PERFORM LENDER OBLIGATIONS UNDER THIS AGREEMENT.
Additionally, CSOs indemnification obligations under this Section 19(a) shall include the payment of all costs of defense, if any, including without limitation, all reasonable and necessary attorneys fees, court costs, accounting fees, class action costs and expert fees, subject to CSOs reimbursement rights under Section 19(c) below. Except as otherwise provided in this Section 19(a) , the obligations of CSO to defend, indemnify and hold Lender Indemnified Parties harmless under this Section 19(a) shall extend without limitation to the actual or alleged omissions, negligence, gross negligence, and intentional acts of Lender, including Lenders sole or concurrent negligence.
NOTHING CONTAINED HEREIN SHALL REQUIRE CSO TO DEFEND, INDEMNIFY OR HOLD LENDER INDEMNIFIED PARTIES HARMLESS FROM LENDERS BREACH OF THIS AGREEMENT.
b. Indemnification Procedures . Lender shall promptly notify CSO of any suit or threat of suit of which Lender becomes aware which may give rise to a right to indemnification under this Agreement but in any event within THIRTY (30) days of the discovery of such claim; provided, however, that the failure of Lender alleging a right of indemnity hereunder to provide prompt notice to CSO shall relieve CSO of its obligations hereunder only to the extent that CSO can prove that such failure to provide prompt notice actually and materially prejudiced the rights of CSO. CSO shall promptly reimburse Lender for all Damages incurred by Lender (including Damages incurred in advance of the final disposition of the underlying claim), shall bear all expenses in
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 20 of 29 |
defending any such claim or matter, and shall be entitled to participate in the settlement or defense of any matter for which Lender seeks indemnity hereunder and, if CSO elects, to take over and control the defense and settlement thereof utilizing counsel of its choice in consultation with Lender (in which case Lender shall have the right to employ separate counsel of its choice, but the fees and expenses of such counsel shall be at the expense of CSO). CSO may not enter into a final settlement of any claim or matter without the prior consent of Lender, which consent shall not be unreasonably withheld or delayed; provided that Lenders withholding of or delaying consent shall not be deemed unreasonable if the proposed settlement arrangement allocates liability or financial obligations directly to Lender. In all cases, Lender and CSO shall cooperate and assist each other in all reasonable respects in the defense and settlement of any such action.
c. Obligation to Refund Advanced Damages . In the event that CSO reimburses Lender for Damages pursuant to the indemnification provisions of this Section 19 , in advance of the final disposition of the underlying claim, and if it is ultimately determined by settlement or pursuant to the dispute resolution provisions hereof that such Damages directly arose out of an occurrence that did not require such indemnification under Section 19(a) , then Lender agrees to repay to the other party any such Damages for which it received advanced reimbursement to which it was not entitled hereunder. All Damages required to be repaid under this Section 19(c) shall be repaid within FIVE (5) business days following the above described ultimate determination.
d. Survival . This Section 19 shall survive any termination or expiration of this Agreement. Each party expressly agrees, warrants and represents that it has read the terms of this Section 19 , understands the same and that the terms of this Section 19 are clear, conspicuous and unequivocal.
20. Expenses . Except as expressly provided to the contrary in this Agreement, each party shall be responsible for all expenses incurred by it in the performance of its obligations under this Agreement, including any expenses incurred by it in performing its respective duties set forth in this Agreement.
21. Scope of Relationship . The parties agree that the relationship established by this Agreement is non-exclusive. Without limiting the foregoing and subject to the provisions of this Agreement, each party hereto is expressly permitted, without the need for obtaining any further consent or approval from the other party hereto, to market, offer, sell, broker, underwrite and/or provide other products and services, including without limitation, any other loan products and services and specifically including, without limitation, any loan products and services similar in scope and nature to the Loans and the related services contemplated by the Program Guidelines, through any of their respective distribution channels and the distribution channels of their respective Third Party Service Providers, Including, without limitation, any of such distribution channels through which Loans are offered pursuant to this Agreement.
22. Confidential Information . In performing their obligations pursuant to this Agreement, each party may have access to and receive disclosure of certain confidential information about the other party or parties, including, without limitation, the names and addresses of a partys Borrowers or members, marketing plans and objectives, research and test results, and other information which is confidential and the property of the party disclosing the information ( Confidential Information ). The parties agree that
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 21 of 29 |
the term Confidential Information shall include this Agreement, the Program Guidelines, and the Program Materials, as the same may be amended and modified from time to time. Confidential Information shall not include information in the public domain, which is independently developed by any party hereto, or as defined under Section 16 as Borrower Information which may be used only as indicated therein, to the extent that it may conflict with the provisions contained in this Section 22 . Lender and CSO agree that Confidential Information shall be used by each party solely in the performance of its obligations under this Agreement or in connection with activities related to such performance (including, without limitation, activities involving the financing of the Loans by Lender). Each party shall receive Confidential Information in confidence and shall not disclose Confidential Information to any third party, except as may be permitted hereunder or under the Program Documents, or as may be necessary to perform its obligations hereunder, or as may be otherwise agreed in writing by the party furnishing the information, or as required by the Rules or any Regulatory Authority. In the event that either party (the Restricted Party ) is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, such party will provide the other party with prompt notice of such request(s) so that the other party may seek an appropriate protective order or other appropriate remedy and/or waive the Restricted Partys compliance with the provisions of this Agreement. In the event that the other party does not seek such a protective order or other remedy, or such protective order or other remedy is not obtained, or the other party grants a waiver hereunder, the Restricted Party may furnish that portion (and only that portion) of the Confidential Information which the Restricted Party is legally compelled to disclose and will exercise such efforts to obtain reasonable assurance that confidential treatment will be accorded any Confidential Information so furnished as a Restricted Party would reasonably exercise in assuring the confidentiality of any of its own confidential information. Notwithstanding anything herein to the contrary, nothing herein shall prohibit either party hereto from entering into agreements with any other party that include program guidelines and program materials that may or may not be the same as, or substantially similar to, the Program Guidelines and Program Materials. Upon request or upon any expiration or termination of this Agreement, each party shall return to the other party or destroy (as the latter may instruct) all of the latters Confidential Information in the formers possession which is in any written or other recorded form, including data stored in any computer medium; provided, however, that a party hereto may retain the Confidential Information of the other party (but subject to the requirements of this Section 22 ) to the extent that such party needs access to such information to continue to perform any of its obligations hereunder or to broker or service Loans or otherwise perform obligations owed by such party to the other party.
23. Regulatory Examinations and Financial Information . Each party agrees to submit to any examination which may be required by any Regulatory Authority with audit and examination authority over the other party, to the fullest extent that such Regulatory Authority may require and to the fullest extent provided by law. Lender (either directly or by the use of accountants or other agents or representatives) may audit, inspect, and review CSOs files, records, and books with respect to the Loans and compliance with the Loan Program and the CSO Program. CSO (either directly or by the use of accountants or other agents or representatives) may audit, inspect, and review Lenders files records, and books with respect to the Loans and compliance with the Loan Program and the CSO Program. CSO agrees to prepare quarterly balance sheets and quarterly statements of income, retained earnings and cash flows for the last TWELVE (12) months together with complete and accurate books, records, and accounts
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 22 of 29 |
prepared and maintained on a consistent basis and in accordance with generally accepted accounting principles (collectively, the Financial Information ). Upon the request by Lender, CSO hereto agrees to deliver to Lender, within THIRTY (30) days of receiving such request, the Financial Information, certified as true and correct by an officer or principal of CSO (such request not to be made more often than one time every calendar quarter). CSO agrees to submit to operational audits and audits of CSOs electronic data processing functions, as the other party may reasonably request from time to time. The auditing party will promptly submit the results of such audits to the audited party. Any such audit shall be performed at CSOs sole cost and expense. Additionally, CSO shall provide to Lender, as soon as available and in any event (i) within NINETY (90) days after the end of each fiscal year, financial statements of CSO (on a consolidated and consolidating basis) to include a balance sheet, income statement, cash flow statement, and Managements Discussion and Analysis of Financial Condition and Results of Operations that describes the financial condition and results of operations of the CSO and its consolidated subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Managements Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the CSO and its subsidiaries), as of the end of such fiscal year, audited by independent certified public accountants of recognized standing satisfactory to Lender, and (ii) promptly from time to time following the occurrence of an event required to be reported on Form 8-K pursuant to Items 1.01, 1.02, 1.03, 2.01, 2.03, 2.04, 2.06, 3.03, 4.01, 4.02, 5.01, 5.02 and 5.03 thereof, the information that would be required to be filed with the SEC on Form 8-K if the CSO were required to file such reports with respect to any of such items.
24. Relationship of Parties; No Authority to Bind . Lender and CSO agree that (a) Lender and CSO are independent contractors to each other in performing their respective obligations hereunder, (b) Lender shall not hold any ownership in CSO or possess a leasehold interest in CSOs offices or any personal property located therein, except that Lender shall be the exclusive owner of all Loans and Loan Documents, (c) no Lender employees shall work in the CSO offices (except for Lender auditors who may examine CSOs practices from time to time for compliance with the Program Guidelines), and (d) other than as may be necessary to generally effectuate CSOs performance of its duties under this Agreement, Lender shall exercise no authority or control over CSOs employees or methods of operation. Nothing in this Agreement or in the working relationship established and developed hereunder shall be deemed or is intended to be deemed, nor shall it cause, Lender and CSO to be treated as partners, joint venturers, joint associates for profit or otherwise be deemed to create a relationship of agent and principal. Neither party shall have any authority to bind the other party to any agreement except to the extent expressly permitted herein. Except as expressly set forth in this Agreement to the contrary, no actions or failure to act by one party on the part of the other party hereto shall be construed to imply the existence of any authority not expressly granted herein. Except as expressly provided herein or in the Program Guidelines, CSO is not authorized to, and shall not (i) make or amend any contract incur any debt or liability, or extend any credit or enter into any obligation on behalf of Lender, other than as intended by this Agreement in its role as CSO with Lender; (ii) modify or amend any document, instrument, promissory note, or security agreement evidencing or relating to a Loan or the related Credit Enhancement (individually, a Loan Document and collectively, the Loan Documents ), or extend the time for making any payment which may become due under any Loan; or (iii) waive any of Lenders rights or privileges under any Loan, Loan Document or other agreement made by Lender. CSO understands and agrees the that CSOs name shall not appear on any Loan Document as the maker of a Loan and that CSO shall not have any participation
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 23 of 29 |
in the credit decision to make or provide a Loan, a Loan renewal or a Loan refinance or any participation in any act pertaining to the funding of a Loan, a Loan renewal or a Loan refinance. CSO shall refer to Lender any inquiries concerning the accuracy, interpretation, or legal effect of any Loan Document. CSO shall not negotiate the terms of any Loan Document on behalf of Lender. Lender shall be deemed to have received and reviewed the Loan Documents and supporting materials only after the Loan Documents and materials have been previously received at Lenders offices or if designated by Lender, by a Third Party Service Provider. CSO shall not represent to anyone that CSO has the authority or power to do any of the foregoing and shall make no representations concerning Lenders transaction except as expressly authorized in writing. Lender shall not have any authority or control over any of the property interests or employees of CSO, nor shall Lender have any authority or control over any of the property interests or employees of those affiliates of CSO that own and operate stores at which Applicants or other potential Borrowers are offered the opportunity to complete and submit applications for Loans. As used herein, the term Loan Document shall not include any agreements that CSO or any affiliate of CSO may enter into directly with any party that governs the agreement of CSO or an affiliate of CSO to attempt to broker a Loan on behalf of any Borrower or any party who applies for, but is denied, a Loan. In each and every instance, the acts that this Agreement authorizes CSO to perform for or on Lenders behalf shall solely constitute CSO a special, limited agent of Lender to perform the duties and services set forth herein. In no event may CSO act as Lenders general agent or represent to others that it may act as Lenders general agent. In the event that either party reasonably determines that any provision of this Agreement requires an act that applicable Rules disallow in order for CSO and Lender to operate lawfully as an independent credit services organization and lender, respectively, or otherwise causes a material risk of violating applicable Rules, then the parties shall promptly and in good faith attempt to agree to a modification so as to reduce or eliminate such risk of not conforming to applicable Rules.
25. Governing Law; Arbitration; Consent to Jurisdiction . This Agreement shall be construed and performed in accordance with the laws of the State of Texas, without reference to Texas choice of law or conflicts rules. At the request of either party, any dispute between the parties relating to this Agreement shall be submitted to binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association, provided, however, that a party seeking specific performance hereunder pursuant to Section 33 below may pursue such remedy in court. Unless otherwise agreed to by both parties, the location for any arbitration proceedings concerning this Agreement shall be in Dallas County, Texas. In the event that a party hereto initiates a lawsuit in court concerning an arbitrable claim, controversy or dispute, such party shall pay the other party for the costs, including attorneys fees that the other party incurs to obtain an order from the court to stay or dismiss the lawsuit or otherwise compel arbitration. The arbitrator shall be authorized to award such relief as is allowed by law. Except as provided below, each party shall be responsible for its own attorneys fees incurred during the course of the arbitration, as well as the costs of any witnesses or other evidence such party produces or causes to be produced. The award of the arbitrator shall include findings of fact and conclusions of law. Except as required by law, such award shall be kept confidential, and shall be final, binding, and conclusive on the parties. Judgment on the award may be entered by any court of competent jurisdiction. The prevailing party in the resolution of any dispute ( Dispute Resolution ) concerning this Agreement, any provision hereof or any actual or alleged breach shall be entitled to its reasonable attorneys fees, including investigation and costs of discovery, and other costs connected with such Dispute Resolution, in addition to all other recovery or relief. The prevailing party shall be that party receiving substantially the relief sought or
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 24 of 29 |
successfully defending substantially the position maintained in the Dispute Resolution, whether or not brought to final award or judgment. The parties agree that in the event of any litigation hereunder, the exclusive venue and place of jurisdiction for such litigation shall be in the state courts or the federal district courts situated in Dallas County, Texas, and each party hereto specifically consents and submits to the personal jurisdiction of such courts.
26. Financial Covenants . CSO and Principal Guarantor shall comply with all financial covenants contained in any senior debt obligation of such person and shall promptly provide Lender with any notice received from or provided to the holder of such senior debt obligation relating non-compliance with or violation of such covenants.
27. Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
28. Force Majeure . In the event of an act of God or other natural disaster which makes the carrying out of this Agreement impossible, or if a partys performance hereunder is rendered illegal or materially adversely affected by reason of changes in applicable Rules, or if a Lender or CSO is advised in writing by any Regulatory Authority having or asserting jurisdiction over Lender, CSO or the Loans, respectively, that the performance of its obligations under this Agreement is or may be unlawful, then the party unable to perform, or whose performance has been rendered illegal or who has been so advised by a Regulatory Authority, may terminate this Agreement by giving written notice at least ONE HUNDRED EIGHTY (180) days in advance of termination to the other party, unless such changes in the Rules or communication from such Regulatory Authority require earlier termination, in which case termination shall be effective upon such earlier required date.
29. Successors and Third Parties . This Agreement and the rights and obligations hereunder shall bind and inure to the benefit of the parties hereto and their successors and assigns. Except as expressly provided herein with respect to Third Party Service Providers, the obligations, rights and benefits hereunder are specific to the parties hereto and shall not be delegated or assigned without the prior written consent of the other party, which shall not be unreasonably withheld. As a condition to an assignment of any obligations, rights or benefits hereunder, the assignee of such rights and benefits must agree to be bound by the terms of this Agreement pursuant to an assignment document executed by such assignee, in form and substance reasonably satisfactory to both Lender and CSO. Nothing in this Agreement is intended to create or grant any right, privilege, or other benefit to or for any person or entity other than the parties hereto. Notwithstanding anything in this Agreement to the contrary, the parties acknowledge that Lender can freely assign its rights with respect to the Loans and the Loan Documents (including, without limitation, its rights under Section 6 and 11 hereof and its rights to grant a first right and security interest to Senior Lenders under Section 35 , subject to CSOs rights and reservations in those sections in which case, Senior Lender will also include the assignees secured lenders) without CSOs prior written consent.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 25 of 29 |
30. Notices . All notices, requests, and approvals required or permitted by this Agreement shall be in writing and addressed/directed to the other party at the address below or at such other address of which the notifying party hereafter receives notice in conformity with this Section 30 . All such notices, requests, and approvals shall be deemed given upon actual receipt thereof:
To Lender: |
INTEGRITY TEXAS FUNDING, LP | |
84 Villa Rd Greenville SC 29615 Attention: C. Dan Adams E-mail: danadams@thecapitalcorp.com |
||
With copy to: |
GARDERE WYNNE SEWELL LLP 2021 McKinney Avenue, Suite 1600 Dallas, TX 75201 Attention: Steven S. Camp Email: scamp@gardere.com |
|
To CSO: |
SCIL TEXAS, LLC 3527 North Ridge Road Wichita, Kansas 67205 Attention: Roger Dean, EVP & CFO Email: rogerdean@curo.com |
|
With a Copy to: |
SCIL TEXAS, LLC | |
3527 North Ridge Road Wichita, Kansas 67205 Attention: Vin Thomas, Chief Legal Officer Email: vinthomas@curo.com |
31. Waiver . Neither party hereto shall be deemed to have waived any of its rights, powers or remedies hereunder except in an express writing signed by an authorized agent or representative of the party to be charged with such waiver.
32. Counterparts . This Agreement may be executed and delivered by the parties hereto in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. In proving this Agreement in any judicial proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Delivery of a signature hereto by an email transmission of an Adobe portable digital file (PDF) shall be as effective as delivery of a manually executed counterpart hereof, and any such PDF signature shall be treated as an original signature hereto.
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 26 of 29 |
33. Specific Performance . Certain rights which are subject to this Agreement are unique and are of such a nature as to be inherently difficult or impossible to value monetarily. In the event of a breach of this Agreement by either party hereto, an action at law for damages or other remedies at law would be inadequate to protect the unique rights and interests of the parties. Accordingly, the terms of this Agreement shall be enforceable in a court of equity by a decree of specific performance or injunction. Such remedies shall, however, be cumulative and not be exclusive and shall be in addition to any other remedy which the parties may have.
34. Further Assurances . From time to time, the parties will execute and deliver to the other such additional documents and will provide such additional information as either may reasonably require to carry out the terms of this Agreement.
35. Lien of Senior Lender . Subject to the rights of the CSO contained herein and specifically to the return of the pledged cash upon the discharge of its obligations, CSO acknowledges and agrees that Lender has granted a first priority lien and security interest to Senior Lender as security for the Senior Debt in all right, title and interest of Lender in and to (a) the Loans, (b) all documents and instruments executed by a Borrower or CSO in connection with the Loans (including, but not limited to all Credit Enhancements, this Agreement, and all Loan Documents), (c) all collateral securing the Loans (whether granted by a Borrower or CSO); including, without limitation and (d) all proceeds arising therefrom. CSO further acknowledges and agrees that Senior Lender shall be entitled to exercise all rights of Lender under this Agreement and any Program Documents with respect to the Loans, the Loan Documents and any Credit Enhancements upon notification by Senior Lender in accordance with the exercise of any rights or remedies of the Senior Lender under the Senior Loan Documents which shall terminate immediately upon payment of the Loans or Guarantied Obligations, as such monies are owed Lender. CSO agrees that all liens and whatever other right, title or interest (if any) which CSO may have at any time in any collateral, including but not limited to motor vehicles, as security for the obligations of a Borrower to CSO shall, at all times and in all respects, be subject, junior and subordinate as to priority and in all other respects to all liens and any other right, title or interest of Lender to any such collateral as security for the Loan or Loans to such Borrower, irrespective of the time or order of the creation or perfection of any such lien, right, title or interest and irrespective of any failure by Lender to create or perfect any such lien, right, title or interest. CSO agrees that it will not foreclose or exercise any right or remedy it may have at any time in or with respect to the collateral until such time as the Loan or Loans to a Borrower secured by such collateral have been indefeasibly paid.
36. Amendment and Restatement . On the Effective Date, the Original Agency Agreement shall be amended and restated in its entirety by this Agreement. On and after the Effective Date, the Original Agency Agreement shall be of no further force and effect except as amended and restated hereby. Until the Effective Date, the Original Agency Agreement shall remain in full force and effect in accordance with its terms.
REMAINDER OF PAGE INTENTIONALLY BLANK
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 27 of 29 |
NOTICE OF FINAL AGREEMENT
THIS AGREEMENT, AND THE DOCUMENTS EXECUTED AND DELIVERED PURSUANT HERETO, CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES, AND MAY BE AMENDED OR MODIFIED ONLY BY A WRITING SIGNED BY DULY AUTHORIZED REPRESENTATIVES OF EACH PARTY AND DATED SUBSEQUENT TO THE DATE HEREOF. THIS AGREEMENT SHALL SUPERSEDE AND MERGE ALL PRIOR COMMUNICATIONS, REPRESENTATIONS, OR AGREEMENTS, EITHER ORAL OR WRITTEN, BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF, EXCEPT WHERE SURVIVAL OF PRIOR WRITTEN AGREEMENTS IS EXPRESSLY PROVIDED FOR HEREIN. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
NOTICE RELATING TO DEFAULTED LOANS
CSO HEREBY EXPRESSLY ACKNOWLEDGES AND CONSENTS TO THE PROVISION OF SECTION 6 ABOVE, WHICH, IN CERTAIN CIRCUMSTANCES, COULD RESULT IN CSO MAKING PAYMENT TO LENDER IN CONNECTION WITH A LOAN.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 28 of 29 |
IN WITNESS WHEREOF, this Agreement is executed by the authorized officers and representatives and of the parties shall be effective as of the Effective Date.
Lender: INTEGRITY TEXAS FUNDING LP | ||
INTEGRITY TEXAS FUNDING LP By: IF GP LLC, General Partner |
||
By: |
/s/ C. Dan Adams |
|
Name: | C. Dan Adams | |
Title: | President and CEO |
CSO: SCIL TEXAS, LLC | ||
SCIL Texas, LLC | ||
By: |
/s/ Roger Dean |
|
Name: | Roger Dean | |
Title: | EVP and CFO |
JOINDER OF PRINCIPAL GUARANTOR
AGREED AND CONSENTED to as of the Effective Date.
PRINICPAL GUARANTOR: CURO Intermediate Holding Corp.
CURO Intermediate Holding Corp. | ||
By: |
/s/ Roger Dean |
|
Name: | Roger Dean | |
Title: | EVP and CFO |
Special Limited Agency Agreement SCIL TX INTEGRITY TEXAS FUNDING LP |
Page 29 of 29 |
Exhibit 10.57
SPEEDY GROUP HOLDINGS CORP.
NONQUALIFIED DEFERRED COMPENSATION PLAN
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT dated as of [DATE] (this Agreement ) is between SPEEDY GROUP HOLDINGS CORP., a Delaware corporation (the Employer ), and [PARTICIPANT] ( Participant ).
WHEREAS, the Employer sponsors the Speedy Group Holdings Corp., Nonqualified Deferred Compensation Plan, as amended (the Plan ), attached hereto as Exhibit A ; and
WHEREAS , the Employer has designated the Participant as an Eligible Employee under the Plan and decided to make a LTIP Contribution for the 2016 Plan Year (as each term is defined in the Plan) pursuant to the terms of the Plan upon certain terms and conditions.
NOW , THEREFORE, the Participant and the Employer agree as follows:
1. LTIP Contribution . An LTIP Contribution of $[ ] (the LTIP Contribution ) shall be credited to the Participants LTIP Contribution Account on [DATE], provided that the Participant is still in the employ of the Employer at such time.
2. Vesting . The Participants LTlP Contribution (including Deemed Investment gains and losses attributable thereto) shall become vested in accordance with Section 6.3 and 6.4 of the Plan. In addition, notwithstanding the vesting schedule in Section 6.3 of the Plan, the Participants LTIP Contribution Account shall fully vest upon the occurrence of a Disposition Event, so long as the Participant has not incurred a Separation from Service prior to the occurrence of such Disposition Event.
3. Definitions . As used herein, the following terms have the meanings set forth below:
Disposition Event shall mean (a) (i) the sale of all or substantially all of the assets of the Employer and its subsidiaries in a single transaction or series of related transactions whether by liquidation, dissolution, merger, consolidation or sale or (ii) the sale or other transfer of at least a majority of the outstanding shares of Common Stock in a single transaction or a series of related transactions, in either case to any Person who is not an Affiliate of the Employer, or of a stockholder thereof, immediately prior to such transaction or transactions, or (b) the effective time of any merger, share exchange, consolidation, or other business combination of the Employer if immediately after such transaction Persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) are not Persons who, immediately prior to such transaction, held the securities of the Employer entitled to vote generally in the election of directors; provided , however , that such sale, transfer or other event described in (a) and (b) herein results in a change in the ownership or effective control, or a change in the ownership of a substantial portion of the assets, of the Employer within the meaning of Section 409A of the Code.
Common Stock shall mean Class A Voting Common Stock and Class B Non-Voting Common Stock of the Employer, and any capital stock of the Employer which is (a) not preferred as to dividends or assets over any class of stock of the Employer, (b) not subject to redemption, and (c) issued to the holders of Common Stock upon any reclassification thereof.
Person shall means an individual , partnership, limited liability company, corporation, association, trust, joint venture, unincorporated organization, or any government, governmental department or agency or political subdivision thereof.
4. Incorporation of Plan Terms . This Agreement is made in accordance with, and subject to all of the applicable terms and provisions of, the Plan. All of the applicable terms and provisions of the Plan are deemed incorporated herein. Unless otherwise defined herein, capitalized terms used in this Agreement shall have the same meaning ascribed to them in the Plan.
5. Governing Law . This Agreement shall be administered , construed and governed in all respects under and by the laws of the State of Delaware, without reference to the principles of conflicts of law (except and to the extent preempted by applicable federal law).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
SPEEDY GROUP HOLDINGS CORP. | ||
By: | ||
Name: | ||
Title: | ||
PARTICIPANT | ||
|
||
Signature |
- 2 -
Exhibit 10.58
August 10, 2017
CURO FINANCIAL TECHNOLOGIES CORP. (the Company)
SPECIAL BONUS NOTICE
On or about August 10, 2017, our parent company CURO Group Holdings Corp. ( Holdings ) paid a dividend in the amount of $8.07 per share to its holders of common stock. While there is no requirement to pay a dividend in respect of the stock options issued to you by Holdings (as the options have not been exercised) and you are not otherwise entitled to receive the bonuses set forth herein pursuant to such stock options, subject to the terms and conditions set forth herein, we have determined to pay to you the bonuses set forth herein as discretionary compensation in recognition of your dedication and commitment to the Company. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in that certain Stock Option Agreement(s), between you and Holdings, entered into as of the date hereof (the Stock Option Agreement(s) ).
BONUSES
Initial Bonus . Following the date upon which you return an executed copy of this Special Bonus Notice, the Company will pay or cause to be paid to you a bonus (the Initial Bonus ) equal to (a) the number of Vested Optioned Shares under the Stock Option Agreement(s) on the date hereof (as set forth in the chart below) multiplied by (b) $ 8.07 per share (the Per Share Amount ).
Quarterly Bonuses for 2017-2022 Calendar Years . If you have any Unvested Optioned Shares as of the date hereof and remain employed with the Company or any of its subsidiaries on the last day of each calendar quarter during each of 2017, 2018, 2019, 2020, 2021, and 2022 commencing with the first calendar quarter ending after the date hereof (each, a Quarterly Payment Date ), the Company will cause its subsidiary to pay to you a bonus for each such calendar quarter (each, a Quarterly Bonus ) equal to the Quarterly Payment Amount. The term Quarterly Payment Amount means, for each applicable calendar quarter, (i) the number of Unvested Optioned Shares under the Stock Option Agreement(s) that become Vested Option Shares pursuant to the Stock Option Agreement(s) during the calendar quarter, in each case, other than due to a Disposition Event, multiplied by (ii) the Per Share Amount (as may be equitably adjusted by the Company for any recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar event affecting the outstanding shares of Common Stock of the Company). Quarterly Bonuses will be paid to you upon or within ten (10) business days following the applicable Quarterly Payment Date.
Disposition Event Bonus . If you have any Unvested Optioned Shares as of the date hereof and remain employed with the Company or any of its subsidiaries on the date on which the first Disposition Event is consummated after the date hereof (such date, the Disposition Event Payment Date ), the Company will pay or cause to be paid to you a bonus (the DE Bonus ) equal to the DE Payment Amount. The term DE Payment Amount means (i) the number of Unvested Optioned Shares under the Stock Option Agreement(s) which become Vested Option Shares solely as a result of the Disposition Event multiplied by (ii) the Per Share Amount (as may be equitably adjusted by the Company for any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar event affecting the outstanding shares of Common Stock of the Company). Subject to the terms hereof, the DE Bonus will be paid to you upon or within ten (10) business days following the Disposition Event whereupon the Companys undertakings hereunder shall be terminated and discharged in full.
OTHER TERMS
In all cases, each bonus shall be subject to reduction for applicable federal, state and local tax or other withholdings made by the Company or its subsidiary in the ordinary course. As a condition to the payment of any DE Bonus in connection with a Disposition Event, the Company or its subsidiary may require you to provide reasonable cooperation and assistance in connection with a Disposition Event and/or to satisfy other reasonable requirements in respect of the payment of the DE Bonus (including, without limitation, the execution and delivery by you (prior to a specified date) of a release of claims against the Company and its affiliates in a form to be determined by the Company).
Notwithstanding the payment dates specified above for the bonuses payable pursuant to this Special Bonus Notice in respect of the 2017 calendar year, such bonuses shall be deferred pursuant to the Companys Nonqualified Deferred Compensation Plan if and to the extent you have validly elected to defer your Bonus Compensation in respect of the 2017 calendar year thereunder.
All determinations related to the calculation of, conditions to the payment of, and your eligibility to receive any bonus in accordance herewith, or any adjustments contemplated hereby, will be made by the Company in its discretion, in good faith, and all such determinations shall be final, binding and conclusive. The terms of this notice shall not be deemed to amend, supplement or modify in any way the terms and conditions of your Stock Option Agreement(s) with the Company. The Companys undertakings hereunder shall terminate in full upon any termination of your employment for any reason. This Special Bonus Notice embodies the complete agreement and understanding among you, the Company with respect to the subject matter hereof and supersedes any prior understandings, agreements, communications or representations by or among the parties, written or oral, relating in any way to the subject matter hereof.
[Remainder of page intentionally left blank.]
- 2 -
Please acknowledge your agreement to the terms and conditions set forth in this Special Bonus Notice by returning a copy executed by you where indicated below to Vin Thomas NO LATER THAN 5:00 p.m. CST ON August 30, 2017 . The Company and its subsidiaries shall have no obligations to pay bonuses hereunder if you have not returned your executed copy of this notice prior to such time.
Name:
Date:
NAME |
VESTED OPTIONED
SHARES AS OF DATE HEREOF |
UNVESTED
OPTIONED SHARES AS OF DATE HEREOF |
INITIAL
BONUS |
|||||||||
[ ] |
[ | ] | [ | ] | $ | [ | ] |
- 3 -
Exhibit 21.1
Subsidiaries of CURO Group Holdings Corp.
Entity Name |
Jurisdiction of Incorporation/Organization |
|||
CURO Financial Technology Corp. |
Delaware |
|||
CURO Intermediate Holdings Corp. |
Delaware |
|||
A Speedy Cash Car Title Loans, LLC |
Nevada |
|||
Advance Group, Inc. |
Nevada |
|||
Attain Finance, LLC |
Nevada |
|||
Attain Finance Canada, Inc. |
Canada |
|||
Avio Credit, Inc. |
Delaware |
|||
Cash Colorado, LLC. |
Nevada |
|||
Cash Money Cheque Cashing, Inc. |
Canada |
|||
Concord Finance, Inc. |
Nevada |
|||
CFTC Finance, Inc. |
Delaware |
|||
Evergreen Financial Investments, Inc. |
Nevada |
|||
FMMR Investments, Inc. |
Nevada |
|||
Galt Ventures, LLC |
Kansas |
|||
LendDirect Corp. |
Canada |
|||
Principal Investments, Inc. |
Nevada |
|||
SCIL Texas, LLC |
Nevada |
|||
SC Aurum, LLC |
Nevada |
|||
SCIL, Inc. |
Nevada |
|||
Speedy Cash |
Nevada |
Entity Name |
Jurisdiction of Incorporation/Organization |
|||
Speedy Cash Illinois, Inc. |
Nevada |
|||
SRC Transatlantic Limited |
United Kingdom |
|||
SC Texas MB, Inc. |
Nevada |
|||
The Money Store, L.P. |
Texas |
|||
CURO Management LLC |
Nevada |
|||
Todd Car Title, Inc. |
Nevada |
|||
Todd Financial, Inc. |
Nevada |
|||
CURO Transatlantic Limited |
United Kingdom |
|||
Ennoble Finance, Inc. |
Delaware |
|||
CURO Receivables Holdings I, LLC |
Delaware |
|||
CURO Receivables Finance I, LLC |
Delaware |
-2-
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We have issued our report dated July 12, 2017, with respect to the consolidated financial statements of Curo Group Holdings Corp. and Subsidiaries contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption Experts.
/s/ GRANT THORNTON LLP
Kansas City, Missouri
October 23, 2017
Exhibit 99.1
Consent of Director Nominee
I hereby consent, pursuant to Rule 438 under the Securities Act of 1933, to my being named in the Registration Statement on Form S-1 of CURO Group Holdings Corp. (the Company ) as a person who will become a director of the Company in connection with the initial public offering of the Companys common stock contemplated in the Registration Statement. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
By: |
/s/ Andrew Frawley |
|
Name: | Andrew Frawley | |
Date: | 9/29/17 |
Exhibit 99.2
Consent of Director Nominee
I hereby consent, pursuant to Rule 438 under the Securities Act of 1933, to my being named in the Registration Statement on Form S-1 of CURO Group Holdings Corp. (the Company ) as a person who will become a director of the Company in connection with the initial public offering of the Companys common stock contemplated in the Registration Statement. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
By: |
/s/ Dale E. Williams |
|
Name: | Dale E. Williams | |
Date: | 9/26/17 |