EXHIBIT 10.1
MEMORANDUM OF UNDERSTANDING
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This is to evidence the understandings and agreement between and among
Easy Money of Kentucky, Inc., Easy Money Of Virginia, Inc., Easy Money Holding
Corporation, Xxxxx X. Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx ("the Easy
Money Defendants") and Sterling Financial Services Company, Inc. in the matter
of Xxxxxx X. Xxxxxx et al v. Easy Money of Kentucky, Inc. et al, Civil Action
No. 99-269 (the "Easy Money Case") and the Easy Money operating subsidiaries
listed on the signature page of this Memorandum of Understanding (the "Easy
Money Operating Subsidiaries").
1. Settlement is being made between the plaintiffs and defendants in
accordance with the attached summary letter from Walther, Roark, Gay &
Xxxx, PLC and a Settlement Agreement to be entered into among the
parties and to be approved by the Court.
2. The Easy Money Defendants will cooperate to effectuate the
Settlement Agreement.
3. a) Contributions to be made to the settlement by the
respective parties are: Sterling Defendants to fund the entire
settlement.
b) Repayment contribution by Easy Money shall be in the amount
of $1,300,000. Pursuant thereto, Sterling Financial Services Company,
Inc. will lend the Easy Money Group $1,300,000 under a 5 year secured
note, with a 15 year amortization schedule, at 5% (the "Note"). The
Note will be signed by all Easy Money Operating Subsidiaries (presently
borrowers of Sterling Financial Services Company, Inc.) and secured by
the stock of the Easy Money Operating Subsidiaries together with a
collateral pledge of their accounts receivable (already pledged to
Sterling Financial Services Company, Inc. under existing loan
agreements).
4. The Note will be funded by Sterling Financial Services Company, Inc
by advances upon the occurrence of the events necessary to fund
payments to the plaintiff class in the Easy Money Case.
5. The Note will stand in an equal position, pari passu, to the Easy
Money Shareholders' notes, in an aggregate amount of $1.5 million.
6. The Easy Money Shareholders will be permitted to distribute out
seven (7) stores with an approximate customer receivable base of
$600,000. The assets of said seven (7) stores shall be released from
Sterling Financial Services Company, Inc.'s collateral pool and shall
no longer serve as security for the existing obligations of Easy Money
or any future obligations of Easy Money.
7. The distribution will reduce the shareholders debt in the companyy
by $780,000 to $720,000. In addition the shareholders agree to give
$210,000 in cash to Sterling Financial Services Company, Inc. to be
applied to reduce the existing secured line of credit.
8. The shareholders will put forth their best efforts to sell the
remaining stores at their highest value within 120 days. In the event
that $900,000 is repaid to Sterling Financial Services Company, Inc.
Pursuant to
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the $1.3 million Note, within 120 days from the date
hereof, Sterling Financial Services Company, Inc. shall accept such
$900,000 in full satisfaction of the Note.
9. Upon the sale of any Easy Money subsidiary store before the
expiration of the 120 day period commencing on the date hereof, the
proceeds of said sale shall be allocated and used in the following
manner:
1) 35% to reduce the existing line of credit
2) 65% shall be retained by the company
10. The minimum sales price for the sale of any Easy Money subsidiary
store shall be no less than the face value of the assets, from such
subsidiary store, which were assigned to Sterling Financial Services
Company, Inc, as collateral security for the obligations of Easy Money
Operating Subsidiaries.
11. Easy Money shall not incur any debt outside of ordinary course
operating expenses without the express written consent of Sterling
Financial Services Company, Inc.
12. If not done so earlier, 120 days from the date hereof undistributed
proceeds of the sales of the Easy Money subsidiary stores shall be
immediately distributed in accordance with Paragraph 13 of this
agreement and all remaining receivables shall be immediately liquidated
unless otherwise agreed to by the parties.
13. The proceeds on the sale of the stores will be allocated as
follows:
First - The existing secured line of credit with Sterling
Financial Services Company, Inc. will be extinguished.
Second - All other secured creditors and creditors personally
guaranteed by the shareholders.
Third - All unsecured creditors. Easy Money will use its best
efforts to reduce operational expenses and to negotiate settlements
with existing creditors. Creditors will be paid at the expiration of
the 120-day period, unless otherwise agreed to by Sterling Financial
Services Company, Inc.
Fourth - 50/50 split between Sterling Financial Services
Company, Inc. and the Shareholders, until Sterling Financial Services
Company, Inc. receives the full amount due pursuant to the Note.
Fifth - All excess proceeds to be distributed to the
shareholders.
14. Sterling Financial Services Company, Inc. agrees, that so long as
the Easy Money Defendants and Easy Money Operating Subsidiaries are in
compliance with the terms of the Memorandum of Understanding, it will
reduce the revolving interest rate set forth in paragraph 1.2 of the
Loan, Security and Service Agreement, between Sterling Financial
Services Company, Inc. and the Easy Money Operating Subsidiaries, dated
December 12, 1996 and amended from time to time, to 5% per annum for a
period of six months from the date of this Memorandum of Understanding,
at which time the interest rate on the revolving loan will revert back
to the interest rate set forth in paragraph 1.2.
15. All of the Easy Money Defendants, Easy Money Operating Subsidiaries
and the Sterling Defendants, together with their respective parent and
subsidiaries, related entities and each of their respective
shareholders, officers, directors, employees, heirs, executors,
administrators and their respective successors and assigns, mutually
release and discharge each other and each others' parents, subsidiaries
and related parties' shareholders, officers, directors, employees,
heirs, executors, administrators and their respective successors and
assigns from any and all actions, proceedings, causes of
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action, suits,
claims, including but not limited to tort, contract and other claims,
defaults, alleged actions, liabilities, accountings, costs and
expenses, in law or in equity, known and unknown , from the beginning
of time through and including the date hereof arising or relating to
any and all transactions and/or relationships by , between and among
the Easy Money Defendants, the Sterling Defendants and the Easy Money
Operating Subsidiaries.
Notwithstanding the foregoing, the release contained in this paragraph
s shall not:
(1) relieve Easy Money from its pre-existing monetary obligations
(i.e. Easy Money shall still be obligated to pay the
approximately $1,200,000 that it presently owes Sterling
Financial Services Company, Inc.)
(2) have any effect on each respective party's obligations
contained in this Memorandum of Understanding; or
(3) relieve Easy Money from any liability to the Sterling
Defendants, together with their parent, subsidiaries, related
entities, shareholders, officers, directors employees, heirs
or assigns, relating to or arising out of litigation involving
or relating to the operations of the Easy Money Defendants or
Easy Money Operating Subsidiaries.
EASY MONEY DEFENDANTS
By___________________________________
STERLING FINANCIAL SERVICES COMPANY, INC.
By___________________________________
Xxxx Xxxxxxxxx
By___________________________________
Xxxxx Xxxxxxxxx
By___________________________________
Xxxxxx Xxxxxxxxx
By___________________________________
EASY MONEY OPERATING SUBSIDIARIES:
Easy Money Holding Corporation by_________________________________
Xxxxx Xxxxxxxxx - President
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Easy Money, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of California, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Colorado, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Indiana, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Kansas, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Kentucky, Inc By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Louisiana, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Maryland, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Nevada, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of NM, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Tennessee, Inc. By_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Utah, Inc. by_________________________________
Xxxxx Xxxxxxxxx - President
Easy Money of Virginia, Inc. by_________________________________
Xxxxx Xxxxxxxxx - President
Gulf Investment Group, Inc. by_________________________________
Xxxxx Xxxxxxxxx - President
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Lone Star Endeavors, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Loan Alternative Corporation, The by___________________________
Xxxxx Xxxxxxxxx - President
Money Express Leasing, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Sunnybrook, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Sunnybrook of Arizona, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Sunnybrook of MD, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Sunnybrook of Mississippi, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Sunnybrook of Missouri, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Sunnybrook of North Florida, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Easy Money Auto Sales, Inc. by___________________________
As successor to Easy Money Title Loans, Xxxxx Xxxxxxxxx - President
Inc.
Easy Money Check Cashing, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
EM Consumer Services, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
EM Consumer Services of MD, Inc. by___________________________
Formerly Dollar Express, Inc. Xxxxx Xxxxxxxxx - President
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JHF Enterprises, Inc. d/b/a Easy Money by___________________________
Xxxxx Xxxxxxxxx - President
JHF Enterprises, Inc. d/b/a Cash 2 U by___________________________
Xxxxx Xxxxxxxxx - President
Tidewater Services of Delaware, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
Payday Check Cashing, Inc. by___________________________
Xxxxx Xxxxxxxxx - President
October 23, 2002
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