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Exhibit 10.21
SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT (the "Security Agreement") is
made and entered into as of December 1, 2006, by EXPRESS
CHECK ADVANCE OF SOUTH CAROLINA, LLC , a Tennessee limited
liability company ("Grantor") for the benefit of U.S. BANK
NATIONAL ASSOCIATION , a national banking association, as agent
(the "Agent") for each of the lenders (the "Banks") now or
hereafter party to the Credit Agreement (as defined below). All
capitalized terms used but not otherwise defined herein or pursuant
to Section 1 hereof shall have the respective meanings
assigned thereto in the Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS , the Banks have previously provided to QC Holdings,
Inc., a Kansas corporation ("Borrower") certain credit facilities
pursuant to the Credit Agreement dated as of January 19, 2006
by and among the Borrower, the Agent and the Banks (as from time to
time amended, revised, modified, supplemented or amended and
restated, the "Credit Agreement"); and
WHEREAS , Grantor is, directly or indirectly, a
Subsidiary of the Borrower and will materially benefit from the
Loans made and the Letter of Credits issued and to be issued under
the Credit Agreement; and
WHEREAS, contemporaneously with the execution of this
Security Agreement, Grantor is executing and delivering to Agent
for the benefit of the Banks a guaranty agreement (the "Subsidiary
Guaranty") pursuant to which Grantor has guaranteed payment and
performance of Borrower’s obligations under the Credit
Agreement and the other Loan Documents; and
WHEREAS, Grantor is required to enter into this Security
Agreement pursuant to the terms of the Credit Agreement; and
WHEREAS, a material part of the consideration given in
connection with and as an inducement to the execution and delivery
of the Credit Agreement by the Agent and the Banks was the
obligation of the Borrower to cause Grantor to enter into this
Security Agreement; and
WHEREAS, the Banks are unwilling to extend and/or
maintain the credit facilities provided under the Loan Documents
unless Grantor enters into this Security Agreement; and
WHEREAS , Grantor will materially benefit from the Loans
to be made, and the Letters of Credit to be issued, under the
Credit Agreement and the Agent and the Banks are unwilling to enter
into the Loan Documents unless the Grantor enters into this
Security Agreement;
NOW, THEREFORE , in order to induce the Agent and the
Banks to enter into the Loan Documents and to make Loans and issue
Letters of Credit pursuant to the Credit
Agreement, and in further consideration of the
premises and the mutual covenants contained herein, the parties
hereto agree as follows:
1. Certain Definitions . Terms used in this
Security Agreement, not otherwise expressly defined herein or in
the Credit Agreement, and for which meanings are provided in the
Uniform Commercial Code of the State of Kansas (the "UCC"), shall
have such meanings. The parties agree that with respect to terms
that describe items or types of Collateral, the parties intend to
and do hereby give effect, upon their respective effective dates,
to revisions to the UCC effective after the date hereof to the
extent, but only to the extent, such revisions either
(i) provide meanings of terms not previously defined as items
or types of property or (ii) expand the items of or interests
in property that are included within a previously defined term,
with the effect that each of such terms describing items or types
of property shall at all times be interpreted in its broadest
sense.
2. Grant of Security Interest . Grantor hereby
grants, as collateral security for the payment, performance and
satisfaction of all of its obligations and liabilities under the
Subsidiary Guaranty (collectively, the "Secured Obligations"), to
the Agent for the benefit of the Banks a continuing security
interest in and to, and collaterally assigns to the Agent for the
benefit of the Banks, the following property of Grantor or in which
Grantor has or may have or acquire an interest, whether now owned
or existing or hereafter created, acquired or arising and
wheresoever located, including the following:
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(a) All accounts, and including accounts receivable, contracts,
bills, acceptances, choses in action, and other forms of monetary
obligations at any time owing to Grantor arising out of property
sold, leased, licensed, assigned or otherwise disposed of or for
services rendered or to be rendered by Grantor and all of
Grantor’s rights with respect to any property represented
thereby, whether or not delivered, property returned by customers
and all rights as an unpaid vendor or lienor, including rights of
stoppage in transit and of recovering possession by proceedings
including replevin and reclamation (collectively referred to
hereinafter as "Accounts");
(b) All inventory, including all goods manufactured or acquired
for sale or lease, and any piece goods, raw materials, work in
process, finished merchandise, component materials, and all
supplies, goods, incidentals, office supplies, packaging materials
and any and all items used or consumed in the operation of the
business of Grantor or which may contribute to the finished product
or to the sale, promotion and shipment thereof, in which Grantor
now or at any time hereafter may have an interest, whether or not
the same is in transit or in the constructive, actual or exclusive
occupancy or possession of Grantor or is held by Grantor or by
others for Grantor’s account (collectively referred to
hereinafter as "Inventory");
(c) All goods, including all machinery, equipment, motor
vehicles (including those subject to and not subject to motor
vehicle certificate of title statutes), parts, supplies, apparatus,
appliances, tools, patterns, molds, dies, blueprints, fittings,
furniture, furnishings, fixtures and articles of tangible personal
property of every description (collectively referred to hereinafter
as "Equipment");
(d) All general intangibles, including all rights
now or hereafter accruing to Grantor under contracts, leases,
agreements or other instruments to perform or receive services, to
purchase or sell goods, to hold or use land or facilities, and to
enforce all rights thereunder, all causes of action, corporate or
business records, inventions, designs, goodwill, trademarks, trade
names, trade secrets, trade processes, licenses, permits,
franchises, customer lists, computer programs and software, all
payment intangibles, all claims under guaranties, tax refund
claims, all rights and claims against carriers and shippers,
leases, all claims under insurance policies, all interests in
general and limited partnerships, limited liability companies, and
other Persons not constituting Investment Property (as defined
below), all rights to indemnification and all other intangible
personal property and intellectual property of every kind and
nature (collectively referred to hereinafter as "General
Intangibles");
(e) All chattel paper, including tangible chattel paper,
electronic chattel paper, or any hybrid thereof (collectively
referred to hereinafter as "Chattel Paper");
(f) All investment property, all other securities, security
entitlements, securities accounts, commodity contracts and
commodity accounts of or maintained for the benefit of Grantor
(collectively referred to hereinafter as "Investment
Property");
(g) All instruments, including all promissory notes and payday
loan notes (collectively referred to hereinafter as
"Instruments");
(h) All documents, including warehouse receipts, bills of lading
and other documents of title (collectively referred to hereinafter,
as "Documents");
(i) All supporting obligations pertaining to any of the
foregoing, including all letter of credit rights (including rights
to proceeds of letters of credit), personal or other checks, and
all guaranties and other Contingent Obligations of any Person
(collectively referred to hereinafter as "Supporting
Obligations");
(j) The commercial tort claims, if any, identified on Schedule
2(j) hereto, as such Schedule may be supplemented from time to time
in accordance with the terms hereof (collectively referred to
hereinafter as "Commercial Tort Claims");
(k) All deposits and deposit accounts;
(l) All books and records relating to any of the forgoing
(including customer data, credit files, ledgers, computer programs,
printouts, and other computer materials and records (and all media
on which such data, files, programs, materials and records are or
may be stored)); and
(m) All proceeds, products and replacements of, accessions to,
and substitutions for, any of the foregoing, including without
limitation proceeds of insurance policies insuring any of the
foregoing.
All of the property and interests in property
described in subsections (a) through (l) are herein
collectively referred to as the "Collateral".
3. Perfection . At the time of execution of this
Security Agreement, Grantor shall have, to the extent expressly
required by the terms hereof or of the Credit Agreement, or
otherwise as the Agent may request, furnished the Agent with
properly executed control agreement, registrars’
certificates, issuer acknowledgments of the Agent’s interest
in letter of credit rights, and evidence of the electronic
identification of the Agent’s interest in electronic chattel
paper and of the placement of a restrictive legend on tangible
chattel paper, as appropriate, with respect to Collateral in which
either (i) a security interest can be perfected only by
control or such electronic identification or restrictive legending,
or (ii) a security interest perfected by control or
accompanied by such electronic identification or restrictive
legending shall have priority as against a security interest
perfected by Persons not having control or not accompanied by such
electronic identification or restrictive legending, in each case in
form and substance acceptable to the Agent and sufficient under
applicable law so that the Agent, for the benefit of the Banks,
shall have a security interest in all such Collateral perfected by
control, subject only to Liens allowed to exist under
Section 7.02(e) of the Credit Agreement. All financing
statements (including all amendments thereto and continuations
thereof), control agreements, certificates, acknowledgments, stock
powers and other documents, electronic identification, restrictive
legends, and instruments furnished in connection with the creation,
enforcement, protection, perfection or priority of the
Agent’s security interest in Collateral, including such items
as are described above in this Section 3 are sometimes
referred to herein as "Perfection Documents". The delivery of
possession of items of or evidencing Collateral, causing other
Persons to execute and deliver Perfection Documents as appropriate,
the filing or recordation of Perfection Documents, and the taking
of such other actions as may be necessary or advisable in the
determination of the Agent to create, enforce, protect, perfect, or
establish or maintain the priority of, the security interest of the
Agent for the benefit of the Banks in the Collateral is sometimes
referred to herein as "Perfection Action".
4. Maintenance of Security Interest; Further
Assurances.
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(a) Grantor will from time to time at its own expense, deliver
specific assignments of Collateral or such other Perfection
Documents, and take such other or additional Perfection Action, as
may be required by the terms of the Loan Documents or as the Agent
may reasonably request in connection with the administration or
enforcement of this Security Agreement or related to the Collateral
or any part thereof in order to carry out the terms of this
Security Agreement, to perfect, protect, maintain the priority of
or enforce the Agent’s security interest in the Collateral,
or otherwise to better assure and confirm unto the Agent its
rights, powers and remedies for the benefit of the Banks hereunder.
Without limiting the foregoing, Grantor hereby irrevocably
authorizes the Agent to file (with, or to the extent permitted by
applicable law, without the signature of the Grantor appearing
thereon) financing statements or other Perfection Documents
(including copies thereof) showing Grantor as "debtor" at such time
or times and in all filing offices as the Agent may from time to
time determine to be necessary or advisable to perfect or protect
the rights of the Agent and the Banks hereunder, or otherwise to
give effect to the transactions herein contemplated.
(b) Notwithstanding anything herein or in the
other Loan Documents to the contrary, Grantor may retain possession
of all payday loan promissory notes payable to Grantor; provided,
however, that so long as any Event of Default is in effect, Grantor
shall promptly deliver to the Agent, if the Agent so requests, the
originals of all such promissory notes together with any checks and
supporting obligations held for the payment of such promissory
notes.
(c) With respect to any and all Collateral, Grantor agrees to do
and cause to be done all things necessary to perfect, maintain the
priority of and keep in full force the security interest granted in
favor of the Agent for the benefit of the Banks, including, but not
limited to, the prompt payment upon demand therefor by the Agent of
all fees and expenses (including documentary stamp, excise or
intangibles taxes) incurred in connection with the preparation,
delivery, or filing of any Perfection Document or the taking of any
Perfection Action to perfect, protect or enforce a security
interest in Collateral in favor of the Agent for the benefit of the
Banks, subject only to Permitted Liens. All amounts not so paid
when due shall constitute additional Secured Obligations and (in
addition to other rights and remedies resulting from such
nonpayment) shall bear interest from the date of demand until paid
in full at the Default Rate.
(d) Grantor agrees to maintain among its books and records
appropriate notations or evidence of, and to make or cause to be
made appropriate disclosure upon its financial statements of, the
security interest granted hereunder to the Agent for the benefit of
the Banks.
5. Receipt of Payment. In the event an Event of
Default shall occur and be continuing and a Grantor (or any of its
Affiliates, Subsidiaries, stockholders, directors, officers,
employees or agents) shall receive any proceeds of Collateral,
including without limitation monies, checks, notes, drafts or any
other items of payment, Grantor shall hold all such items of
payment in trust for the Agent for the benefit of the Banks, and as
the property of the Agent for the benefit of the Banks, separate
from the funds and other property of Grantor, and no later than the
first Business Day following the receipt thereof, at the election
of the Agent, Grantor shall cause such Collateral to be forwarded
to the Agent for its custody, possession and disposition on behalf
of the Banks in accordance with the terms hereof and of the other
Loan Documents.
6. Preservation and Protection of Collateral.
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The Agent shall be under no duty or liability with respect to
the collection, protection or preservation of the Collateral, or
otherwise, except for the use of reasonable care in the custody and
preservation thereof while in its possession and to the extent
expressly contemplated under Section 25 . Grantor shall
be responsible for the safekeeping of its Collateral, and in no
event shall the Agent have any responsibility for (i) any loss
or damage thereto or destruction thereof occurring or arising in
any manner or fashion from any cause, (ii) any diminution in
the value thereof, or (iii) any act or default of any carrier,
warehouseman, bailee or forwarding agency thereof or other Person
in any way dealing with or handling such Collateral.
(a) Grantor shall keep and maintain its tangible
personal property Collateral in good operating condition and
repair, ordinary wear and tear excepted.
(b) Grantor agrees (i) to pay when due all taxes, charges
and assessments against the Collateral in which it has any
interest, unless being contested in good faith by appropriate
proceedings diligently conducted and against which adequate
reserves have been established in accordance with GAAP applied on a
consistent basis and evidenced to the satisfaction of the Agent in
the nature of levy or foreclosure are effectively stayed, and
(ii) to cause to be terminated and released all Liens on the
Collateral other than Liens in respect of such Collateral expressly
permitted under Section 7.02(e) of the Credit Agreement
("Permitted Liens").
Upon the failure of any Grantor to so pay or contest such taxes,
charges, or assessments, or cause such Liens to be terminated, the
Agent at its option may pay or contest any of them or amounts
relating thereto (the Agent having the sole right to determine the
legality or validity and the amount necessary to discharge such
taxes, charges, Liens or assessments) but shall not have any
obligation to make any such payment or contest. All sums so
disbursed by the Agent, including reasonable attorneys’ fees,
court costs, expenses and other charges related thereto, shall be
payable on demand by the applicable Grantor to the Agent and shall
be additional Secured Obligations secured by the Collateral, and
any amounts not so paid on demand (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from
the date of demand until paid in full at the Default Rate.
7. Status of Grantor and Collateral Generally .
Grantor represents and warrants to, and covenants with, the Agent
for the benefit of the Banks, with respect to itself and the
Collateral as to which it has or acquires any interest, that:
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(a) It is (or as to Collateral acquired after the date hereof
will be upon the acquisition of the same) and, except as permitted
by the Credit Agreement and subsection (b) of this
Section 7 , will continue to be, the owner of the
Collateral, free and clear of all Liens, other than the security
interest hereunder in favor of the Agent for the benefit of the
Banks and Permitted Liens, and that it will at its own cost and
expense defend such Collateral and any products and proceeds
thereof against all claims and demands of all Persons (other than
holders of Permitted Liens) at any time claiming the same or any
interest therein adverse to the Agent. Upon the failure of any
Grantor to so defend, the Agent may do so at its option but shall
not have any obligation to do so. All sums so disbursed by the
Agent, including reasonable attorneys’ fees, court costs,
expenses and other charges related thereto, shall be payable on
demand by the applicable Grantor to the Agent and shall be
additional Secured Obligations secured by the Collateral, and any
amounts not so paid on demand (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from
the date of demand until paid in full at the Default Rate.
(b) It shall not (i) sell, assign, transfer, lease, license
or otherwise dispose of any of, or grant any option with respect
to, the Collateral, except for dispositions permitted under the
Credit Agreement, (ii) create or suffer to exist any Lien upon
or with respect to any of the Collateral except for the security
interests created by
this Security Agreement and Permitted Liens, or
(iii) take any other action in connection with any of the
Collateral that would materially impair the value of the interest
or rights of Grantor in the Collateral taken as a whole or that
would materially impair the interest or rights of the Agent for the
benefit of the Banks.
(c) It has full power, legal right and lawful authority to enter
into this Security Agreement and to perform its terms, including
the grant of the security interests in the Collateral herein
provided for.
(d) No authorization, consent, approval or other action by, and
no notice to or filing with, any Governmental Authority or any
other Person is required either (i) for the grant by Grantor
of the security interests granted hereby or for the execution,
delivery or performance of this Security Agreement by Grantor, or
(ii) for the perfection of or the exercise by the Agent, on
behalf of the Banks, of its rights and remedies hereunder, except
for action required by the Uniform Commercial Code to perfect the
security interest conferred hereunder.
(e) No effective financing statement or other Perfection
Document similar in effect, nor any other Perfection Action,
covering all or any part of the Collateral purported to be granted
or taken by or on behalf of Grantor (or by or on behalf of any
other Person and which remains effective as against all or any part
of the Collateral) has been filed in any recording office,
delivered to another Person for filing (whether upon the occurrence
of a contingency or otherwise), or otherwise taken, as the case may
be, except such as pertain to Permitted Liens and such as may have
been filed for the benefit of, delivered to, or taken in favor of,
the Agent for the benefit of the Banks in connection with the
security interests conferred hereunder.
(f) Schedule 7(f) attached hereto contains true and
complete information as to each of the following: (i) the
exact legal name of Grantor as it appears in its organizational
documents as of the date hereof and at any time during the five
(5) year period ending as of the date hereof (the "Covered
Period"), (ii) the jurisdiction of formation and form of
organization of Grantor, (iii) the address of the chief
executive office of Grantor as of the date hereof and at any time
during the Covered Period, (iv) all trade names or trade
styles used by Grantor as of the date hereof, (v) the address
of each location of Grantor at which any tangible personal property
Collateral is located as of the date hereof and, with respect to
each location that is not owned beneficially and of record by
Grantor, Grantor will provide to Agent, upon the request of Agent,
the name and address of the owner thereof. Grantor shall not change
its name or its jurisdiction of formation without providing Agent
fifteen (15) days prior written notice thereof.
(g) Grantor shall not engage in any consignment transaction in
respect of any of the Collateral, whether as consignee or
consignor, without the prior written consent of the Agent in each
instance.
8. Inspection. The Agent (by any of its officers,
employees and agents), on behalf of the Banks, shall have the right
upon prior notice to an executive officer of any Grantor, and at
any reasonable times during Grantor’s usual business hours,
to inspect the Collateral, all records
related thereto (and to make extracts or copies
from such records), and the premises upon which any of the
Collateral is located, to discuss Grantor’s affairs and
finances with any Person and to verify with any Person the amount,
quality, quantity, value and condition of, or any other matter
relating to, the Collateral. Upon or after the occurrence and
during the continuation of an Event of Default, the Agent, acting
in a commercially reasonable manner, may at any time and from time
to time employ and maintain on Grantor’s premises a custodian
selected by the Agent who shall have full authority to
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