EX-10 3 emexhibit10.txt EXHIBIT 10.1 EXHIBIT 10.1 MEMORANDUM OF UNDERSTANDING --------------------------- 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, David L. Greenberg, Tami Vangorder, Jerome Greenberg ("the Easy Money Defendants") and Sterling Financial Services Company, Inc. in the matter of Elaine S. Greene 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 & Todd, 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 17 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 18 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___________________________________ Tami Vangorder By___________________________________ David Greenberg By___________________________________ Jerome Greenberg By___________________________________ EASY MONEY OPERATING SUBSIDIARIES: Easy Money Holding Corporation by_________________________________ David Greenberg - President 19 Easy Money, Inc. By_________________________________ David Greenberg - President Easy Money of California, Inc. By_________________________________ David Greenberg - President Easy Money of Colorado, Inc. By_________________________________ David Greenberg - President Easy Money of Indiana, Inc. By_________________________________ David Greenberg - President Easy Money of Kansas, Inc. By_________________________________ David Greenberg - President Easy Money of Kentucky, Inc By_________________________________ David Greenberg - President Easy Money of Louisiana, Inc. By_________________________________ David Greenberg - President Easy Money of Maryland, Inc. By_________________________________ David Greenberg - President Easy Money of Nevada, Inc. By_________________________________ David Greenberg - President Easy Money of NM, Inc. By_________________________________ David Greenberg - President Easy Money of Tennessee, Inc. By_________________________________ David Greenberg - President Easy Money of Utah, Inc. by_________________________________ David Greenberg - President Easy Money of Virginia, Inc. by_________________________________ David Greenberg - President Gulf Investment Group, Inc. by_________________________________ David Greenberg - President 20 Lone Star Endeavors, Inc. by___________________________ David Greenberg - President Loan Alternative Corporation, The by___________________________ David Greenberg - President Money Express Leasing, Inc. by___________________________ David Greenberg - President Sunnybrook, Inc. by___________________________ David Greenberg - President Sunnybrook of Arizona, Inc. by___________________________ David Greenberg - President Sunnybrook of MD, Inc. by___________________________ David Greenberg - President Sunnybrook of Mississippi, Inc. by___________________________ David Greenberg - President Sunnybrook of Missouri, Inc. by___________________________ David Greenberg - President Sunnybrook of North Florida, Inc. by___________________________ David Greenberg - President Easy Money Auto Sales, Inc. by___________________________ As successor to Easy Money Title Loans, David Greenberg - President Inc. Easy Money Check Cashing, Inc. by___________________________ David Greenberg - President EM Consumer Services, Inc. by___________________________ David Greenberg - President EM Consumer Services of MD, Inc. by___________________________ Formerly Dollar Express, Inc. David Greenberg - President 21 JHF Enterprises, Inc. d/b/a Easy Money by___________________________ David Greenberg - President JHF Enterprises, Inc. d/b/a Cash 2 U by___________________________ David Greenberg - President Tidewater Services of Delaware, Inc. by___________________________ David Greenberg - President Payday Check Cashing, Inc. by___________________________ David Greenberg - President October 23, 2002 22