10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 1-9733

CASH AMERICA INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Texas	75-2018239
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1600 West 7th Street
Fort Worth, Texas	76102 — 2599
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:
(817) 335-1100

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.10 par value per share	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock Purchase Rights

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Security Act.

Yes þ                      No o

     Indicate by check if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o                      No þ

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ                      No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Large accelerated filer o            Accelerated filer þ            Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o                      No þ

     The aggregate market value of 27,405,000 shares of the registrant’s Common Stock held by non-affiliates on June 30, 2005 was approximately $551,387,000.

     At February 13, 2006 there were 29,360,895 shares of the registrant’s Common Stock, $.10 par value, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant’s definitive Proxy Statement pertaining to the 2006 Annual Meeting of Shareholders are incorporated herein by reference into PART III of this Form 10-K.

CASH AMERICA INTERNATIONAL, INC.

YEAR ENDED DECEMBER 31, 2005

INDEX TO FORM 10-K

PART I		1
	Item 1. Business	1
	Item 1A. Risk Factors	15
	Item 1B. Unresolved Staff Comments	17
	Item 2. Properties	18
	Item 3. Legal Proceedings	18
	Item 4. Submission of Matters to a Vote of Security Holders	19
PART II		20
	Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
	Item 6. Selected Financial Data	22
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk	44
	Item 8. Financial Statements and Supplementary Data	46
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	80
	Item 9A. Controls and Procedures	80
PART III		80
	Item 10. Directors and Executive Officers of the Registrant	80
	Item 11. Executive Compensation	81
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	81
	Item 13. Certain Relationships and Related Transactions	81
	Item 14. Principal Accounting Fees and Services	81
PART IV		81
	Item 15. Exhibits, Financial Statement Schedules	81
SIGNATURES		82
Amendment One - 2004 Long-Term Incentive Plan
Note Agreement
Subsidiaries
Consent of PricewaterhouseCoopers LLP
Certification of Chief Executive Officer
Certification of Chief Financial Offier
Certification of Chief Executive Officer
Certification of Chief Financial Offier

PART I

ITEM 1. BUSINESS

General

     Cash America International, Inc. (the “Company”) provides specialty financial services to individuals. The Company offers non-recourse loans secured by tangible personal property, commonly referred as pawn loans, short-term unsecured cash advances and provides check cashing and related financial services. It also sells merchandise in its pawnshops, primarily the personal property forfeited in connection with its pawn lending operations.

     The Company was incorporated in 1984 to engage in the business of owning and operating pawnshops. Since its formation, the Company has significantly broadened the scale and geographic scope of its operations and expanded its financial services offerings. As of December 31, 2005, the Company provided specialty financial services through 886 total locations.

     The Company is the nation’s largest provider of pawn loans and is believed to be the largest operator in the world. As of December 31, 2005, the Company operated 456 owned and 8 franchised pawnshop locations in 21 states. Most of these pawnshops operate under the “Cash America” trade name; however, 41 of these pawnshops (located in Arizona, California, Nevada and Washington) operate under the “SuperPawn” tradename.

     The Company also offers unsecured cash advances to individuals, sometimes also referred to as “payday loans” through most of its pawn lending locations and in standalone cash advance locations. Many of the cash advance locations also offer check cashing services and other retail financial services and products such as money orders and money transfers. As of December 31, 2005, the Company operated 286 cash advance locations, including 90 Cash America Payday Advance locations and 196 locations operated under the tradename “Cashland” by Cashland Financial Services, Inc. (“Cashland”), a wholly-owned subsidiary (collectively referred to as “cash advance locations”).

     The Company also offers check cashing services through 131 franchised and 5 company-owned check cashing centers franchised or owned by Mr. Payroll Corporation (“Mr. Payroll”), a wholly-owned subsidiary.

     Prior to September 7, 2004, the Company also provided financial services to individuals in the United Kingdom and Sweden (the “foreign pawn lending operations”). In order to dedicate its strategic efforts and resources on the growth opportunities of pawn lending and cash advance activities in the United States, the Company sold its foreign pawn lending operations on September 7, 2004. As a result of this sale, all discussions and financial information below have excluded the effect of the Company’s foreign pawn lending operations, as they have been classified as discontinued operations.

     The Company’s principal executive offices are located at 1600 West 7^th Street, Fort Worth, Texas 76102-2599, and its telephone number is (817) 335-1100. As used in this report, the term “Company” includes Cash America International, Inc. and its subsidiaries.

     The Company’s growth over the years has been the result of its business strategy of acquiring existing pawnshop locations and establishing new pawnshop locations that can benefit from the Company’s centralized management and standardized operations. In 2003, the Company expanded this strategy to include acquiring existing cash advance locations and establishing new cash advance locations. The Company intends to continue its business strategy of acquiring and establishing pawnshop and cash advance locations (collectively referred to as “lending locations”), increasing its share of the consumer loan business, and concentrating multiple lending locations in regional and local markets in order to expand market penetration, enhance name recognition and reinforce marketing programs. The Company also intends to

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offer new products and services in its lending locations in order to meet the growing financial services needs of its customers. Studies indicate to the Company that a large portion of its customers consists of individuals who do not regularly transact loan business with banks. (See, for example, Dr. Robert W. Johnson and Dr. Dixie P. Johnson, Pawnbroking in the U.S.: A Profile of Customers, Credit Research Center, Georgetown University, 1998.)

     In 2005, the Company added 16 pawnshops and closed one. The Company also added 35 cash advance locations and closed two. In addition to its owned pawnshops, the Company offers and sells franchises to third parties for their independent ownership and operation of “Cash America” or “SuperPawn” pawnshops. The Company added one franchise and purchased four franchised locations in 2005. As of December 31, 2005, there were eight franchised pawnshop locations in operation.

     Access to Reports. Through its home page at www.cashamerica.com, the Company provides free access to its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”).

     These reports may also be read and copied at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549, or at the SEC website at www.sec.gov. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

Pawn Lending Activities

     Pawnshops are convenient sources of consumer loans and are also retail sellers of merchandise, primarily of previously owned merchandise acquired from customers who do not redeem the pawned goods. When receiving a pawn loan from the Company, a customer pledges personal property to the Company as security for the loan; the Company does not have recourse against the customer for the loan. The customer who does not repay the loan or redeem the property forfeits the property to the Company, which relies on the disposition of pawned property to recover the principal amount loaned plus a yield on the investment. As a result, the customer’s creditworthiness is not a factor in the loan decision, and a decision not to redeem pawned property does not affect the customer’s personal credit status. Goods pledged to secure pawn loans are generally tangible personal property such as jewelry, tools, televisions and stereos, musical instruments, firearms, and other miscellaneous items. (Although pawn transactions can take the form of an advance of funds secured by the pledge of property or a “buy-sell agreement” involving the actual sale of the property with an option to repurchase it, the transactions are referred to throughout this report as “pawn loans” for convenience.)

     In a pawn transaction, the Company contracts for a finance and service charge to compensate it for the use of the funds loaned. The finance and service charge is typically calculated as a percentage of the pawn loan amount based on the size and duration of the transaction, in a manner similar to which interest is charged on a bank loan, and generally ranges from 12% to 300% annually, as permitted by applicable state pawnshop laws. These finance and service charges contributed approximately 23.5% of the Company’s total revenue in 2005, 23.6% in 2004 and 25.9% in 2003.

     When a customer enters into a pawn transaction with the Company, the Company delivers a pawn transaction agreement, commonly referred to as a pawn ticket to the customer. The pawn ticket sets forth, among other items: the name and address of the pawnshop and the customer; the customer’s identification number from his or her driver’s license or other approved identification; the date; the identification and description of the pledged goods, including applicable serial numbers; the amount financed; the finance and service charge; the maturity date; the total amount that must be paid to redeem the pledged goods on the maturity date; and the annual percentage rate.

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     The Company generally sets the amount of a pawn loan as a percentage of the pledged personal property’s estimated disposition value. The Company relies on many sources to determine the estimated disposition value, including its automated product valuation system, catalogues, “blue books”, newspapers, internet research and its (or its employees’) experience in disposing of similar items of merchandise in particular pawnshops. The Company does not use a standard or mandated percentage of estimated disposition value in determining the loan amount. Instead, employees may set the percentage for a particular item and determine the ratio of loan amount to estimated disposition value with the expectation that, if the item is forfeited to the pawnshop, its subsequent disposition would yield a profit margin consistent with the Company’s historical experience. The pledged property is held through the term of the transaction, which generally is one month with an automatic thirty to sixty-day redemption period (see “Regulation” for exceptions in certain states), unless earlier repaid, renewed or extended. A majority of the Company’s pawn loans are either paid in full with accrued finance and service charges or are renewed or extended through payment of accrued finance and service charges. If a customer does not repay, renew or extend his loan, the unredeemed collateral is forfeited to the Company and becomes merchandise available for disposition through the Company’s pawnshops, wholesale sources, internet sales or through a major gold bullion bank. The Company does not record pawn loan losses or charge-offs because the amount advanced becomes the carrying cost of the forfeited collateral that is to be recovered through the merchandise disposition function described below.

     The recovery of the amount advanced and the realization of a profit on the disposition of merchandise depends on the Company’s initial assessment of the property’s estimated disposition value when the pawn loan is made. While the Company has historically realized profits when disposing of merchandise, the improper assessment of the disposition value could result in the disposition of the merchandise for an amount less than the loan amount. For 2005, 2004 and 2003, the Company experienced profit margins on disposition of merchandise of 39.0%, 38.5% and 37.5%, respectively. Changes in gold prices generally will also increase or decrease the disposition value of jewelry items acquired in pawn transactions and could enhance or adversely affect the Company’s profit or recovery of the carrying cost of the acquired collateral.

     At December 31, 2005, the Company had approximately 1.2 million outstanding pawn loans totaling $115.3 million, with an average balance of approximately $95 per loan.

     Presented below is information with respect to pawn loans made, acquired, and forfeited for the pawn lending operations for the years ended December 31, 2005, 2004 and 2003 ($ in thousands):

	2005			2004			2003
Loans made, including loans renewed	$	438,955		$	336,021		$	313,264
Loans acquired		3,631			26,781			2,506
Loans repaid		(202,015	)		(157,624	)		(149,810	)
Loans renewed		(77,878	)		(46,008	)		(40,876	)
Loans forfeited for disposition		(156,766	)		(130,971	)		(122,545	)
Net increase in pawn loans outstanding	$	5,927		$	28,199		$	2,539
Loans repaid or renewed as a percent of loans made		63.8	%		60.6	%		60.9	%

Merchandise Disposition Activities

     The Company sells merchandise acquired when a pawn loan is not repaid, when used goods are purchased from the general public and some new merchandise, principally accessory merchandise that complements and enhances the marketability of items, such as tools, consumer electronics and jewelry. For the year ended December 31, 2005, $189.4 million of merchandise was added to merchandise held for disposition, of which $156.8 million was from loans not repaid, $31.9 million was purchased from customers and vendors, and $731,000 was added through acquisitions of pawnshops. Proceeds from

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disposition of merchandise contributed 50.7% of the Company’s total revenue in 2005, 53.3% in 2004 and 60.7% in 2003.

     While the Company offers refunds and exchanges for certain merchandise items, it generally does not provide its customers with warranties on used merchandise. Customers may purchase merchandise on a layaway plan under which the customer makes an initial cash deposit representing a small portion of the disposition price and pays the balance in regular scheduled, non-interest bearing payments. The Company segregates the layaway item and holds it until the customer has paid the full disposition price. Should the customer fail to make a required payment, the item is placed with the other merchandise held for disposition. At December 31, 2005, the Company held approximately $6.2 million in customer layaway deposits.

     The Company provides an allowance for valuation and shrinkage of its merchandise based on management’s evaluation. Management’s evaluation takes into consideration historical shrinkage, the quantity and age of merchandise on hand and markdowns necessary to liquidate slow-moving merchandise. At December 31, 2005, total pawn operations merchandise on hand was $72.7 million, after deducting an allowance for valuation and shrinkage of merchandise of $1.8 million.

Cash Advance Activities

     Since 2000, the Company has offered short-term unsecured cash advances in most of its Cash America pawnshops and since 2003, in standalone Cash America Payday Advance locations. In August 2003, the Company purchased substantially all of the assets of Cashland, Inc. a privately owned consumer finance company based in Dayton, Ohio. Cashland’s locations offer cash advances, check cashing and related financial services and operate under the “Cashland” name. During the third quarter of 2004, the Company acquired the operating assets of 32 cash advance locations in southern California. These California shops are operated as standalone Cash America Payday Advance locations.

     As of December 31, 2005, a cash advance product was available in 727 lending locations, which included 441 pawnshop locations and 286 cash advance locations. Cash advance products offered by commercial banks (“Bank products”) were available at 363 locations and cash advance products offered under the credit services program (the “CSO program”), were available at 313 locations. In most cases the Bank products were offered in the same location that also offered the CSO program. In California, 35 locations originate cash advances on behalf of both the Company and third-party lenders. Although cash advance transactions may take the form of loans or deferred check deposit transactions, the transactions, including cash advances originated by the Company and cash advances originated by banks and other third-party lenders are referred to throughout this report as “cash advances” for convenience. Cash advance fees earned by the Company contributed approximately 23.9% of the Company’s total revenue in 2005, 21.1% in 2004 and 12.1% in 2003.

     The cash advance products are generally offered as single payment cash advance loans. These cash advance loans generally have a loan term of 7 to 45 days and are generally payable on the customer’s next payday. The Company originates cash advances in some of its locations and arranges for customers to obtain cash advances from independent third-party lenders in other Company locations. These third-party lenders are either commercial banks or independent third-party non-bank lenders (collectively, “third-party lenders”). In a cash advance transaction, a customer executes a promissory note or other repayment agreement typically supported by that customer’s personal check or authorization to debit the customer’s checking account via an Automated Clearing House (“ACH”) transaction. Customers may repay the cash advance either with cash, by allowing their check to be presented for collection, or by allowing their checking account to be debited via an ACH transaction for the amount due. Collection activities are an important aspect of the cash advance product offering due to the high incidence of unpaid balances beyond stated terms. The Company operates centralized collection centers to coordinate a consistent approach to customer service and collections.

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     For single payment cash advances originated by independent non-bank third-party lenders, the Company introduced, on July 1, 2005, the CSO program, under which the Company acts as a credit services organization on behalf of consumers in accordance with applicable state laws. Credit services that the Company provides to its customers include arranging loans with independent third-party lenders, assisting in the preparation of loan applications and loan documents, and accepting loan payments at the location where the loans were arranged. If a customer obtains a loan from an independent non-bank third-party lender through the CSO program, the Company, on behalf of the customer, also guarantees the customer’s payment obligations under the loan to the third-party lender. A customer who obtains a loan through the CSO program pays the Company a fee for the credit services, including the guaranty, and enters into a contract with the Company governing the credit services arrangement. Losses on cash advances acquired by the Company as a result of its guaranty obligations are the responsibility of the Company.

     During the period from the initial offering of the CSO program, the Company offered both the bank originated cash advance products and the CSO program in the event the customer did not qualify for the bank originated cash advances. However, in July 2005, the Company elected to discontinue offering third-party bank originated cash advances to consumers in Michigan and in January 2006, the Company discontinued offering third-party bank originated cash advances to its Texas, Florida and North Carolina customers. It has effectively met customer demand in Texas, Florida and Michigan by replacing the Bank products with the CSO program. Customer acceptance in those states of the cash advance product offered by non-bank independent third-party lenders through the CSO program has been substantially the same as that of the Bank products. During the fourth quarter of 2005 the Company began offering third-party commercial bank originated multi-payment installment cash advances in California and Georgia as an alternative to single payment cash advances. The Company expects to discontinue offering third-party commercial bank originated multi-payment installment cash advances in California and Georgia during the first or second quarter of 2006 due to its third-party commercial banks’ anticipated response to concerns raised by the Federal Deposit Insurance Corporation (“FDIC”) in late February 2006. In California, upon any discontinuation of the Company’s offering of Bank products, the Company will still serve cash advance consumers by continuing to offer a Company-originated cash advance product pursuant to state law. The Company is also evaluating whether other alternative products might be available to meet the cash advance demands of its California, North Carolina and Georgia consumers, but has not yet identified specific alternatives for these markets and is not certain whether or when viable alternatives will be identified.

     For Bank products, the banks sell participation interests in the bank-originated cash advances to third parties, and the Company purchases sub-participation interests in certain of those participations. The Company also receives an administrative fee for its services. In order to benefit from the use of the Company’s collection resources and proficiency, the banks assign cash advances unpaid after their payment due date to the Company at a discount from the amount owed by the borrower.

     If the Company collects a delinquent amount owed by the customer that exceeds the amount assigned by the banks or acquired by the Company as a result of its guaranty to third-party lenders, the Company is entitled to the excess and recognizes it in income when collected. Since the Company may not be successful in collection of these delinquent accounts, the Company’s cash advance loss provision includes amounts estimated to be adequate to absorb credit losses from cash advances in the aggregate cash advance portfolio, including those expected to be assigned to the Company or acquired by the Company as a result of its guaranty obligations. As of December 31, 2005, $64.3 million of combined gross cash advances was outstanding, including a $16.9 million non-participated interest owned by the third-party lenders that is not included in the Company’s consolidated balance sheet. An allowance for losses of $6.3 million has been provided in the consolidated financial statements. The Company also provided accrued losses for third-party owned portfolios of $874,000 at December 31, 2005, which is included in “Accounts payable and accrued expenses” in the accompanying consolidated balance sheet. See Item 8. Financial Statements and Supplementary Data, Note 4 of “Notes to Consolidated Financial Statements.”

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     Presented below is information with respect to the cash advance product for the years ended December 31, 2005, 2004 and 2003:

	2005		2004		2003
Locations offering cash advances at end of year		727		678		544
On behalf of the Company		352		312		240
On behalf of the third-party lenders		340		366		304
On behalf of both the Company and the third-party lenders		35		—		—
Amount of cash advances written (in thousands)	$	930,335	$	647,746	$	300,518
On behalf of the Company	$	573,916	$	408,872	$	143,040
On behalf of the third-party lenders	$	356,419	$	238,874	$	157,478
Amount of cash advances assigned by the third-party lenders (in thousands)	$	67,555	$	45,895	$	29,981
Average cash advance amount written	$	359	$	336	$	311

Check Cashing Activities

     The Company also provides check cashing services primarily through its Mr. Payroll and Cashland subsidiaries. As of December 31, 2005, Mr. Payroll’s operations consisted of 131 franchised and 5 company-owned check cashing centers in 20 states. Cashland provides check cashing in all 196 of its cash advance locations. Aggregate check cashing franchise royalties and fees were 1.9% of the Company’s total revenue in 2005, 2.0% in 2004 and 1.3% in 2003.

Financial Information on Segments and Areas

     Additional financial information regarding the Company’s revenues and assets by each of its three operating segments is provided in Note 18 of “Notes to Consolidated Financial Statements.”

Operations

     Unit Management. Each location has a unit manager who is responsible for supervising its personnel and assuring that it is managed in accordance with Company guidelines and established policies and procedures. Each unit manager reports to a Market Manager, who typically oversees approximately ten unit managers. As of December 31, 2005, the Company had one pawn lending operating division, which is managed by an Executive Vice President. This operating division consists of five geographic operating regions, each of which is managed by a Region Vice President. Each Market Manager reports to a Region Vice President. The cash advance operating division consists of a similar geographic operating structure. The Chief Operating Officer of Cashland and the Vice President of Cash America Payday Advance are managed by an Executive Vice President. Each Cash America Payday Advance Market Manager reports to the Region Vice President for Cash America Payday Advance. Cashland’s two district managers oversee Cashland’s geographic operating regions and report to its Chief Operating Officer. Each Cashland Area Supervisor (similar to a Market Manager) reports to one of the two Cashland District Managers.

     Trade Names. The Company operates its locations under the trade names “Cash America,” “Cashland,” “Mr. Payroll,” and “SuperPawn”. The Company’s marks “Cash America,” “Cashland,” “SuperPawn,” “Cash When It Counts,” and “Mr. Payroll” are registered with the United States Patent and Trademark Office.

     Personnel. At December 31, 2005, the Company employed 4,565 persons in its operations. Of these employees 345 were in executive and administrative functions.

     The Company has an established training program that combines classroom instruction, video presentation and on-the-job loan and merchandise disposition experience. A new employee is introduced to the business through an orientation program and through a three-month training program that includes

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classroom and on-the-job training in pawn lending, cash advances, layaways, merchandise and general administration of unit operations.

     The experienced store employee receives training and an introduction to the fundamentals of management to acquire the skills necessary to move into management positions within the organization. Manager training involves a twelve-month program that includes additional management principles and more extensive training in income maximization, recruitment, merchandise control, and cost efficiency.

Future Expansion

     The Company’s objective is to continue to expand the number of pawnshops and cash advance locations (collectively referred to as “lending locations”) it owns and operates both through acquisitions and by establishing new units. Its business strategy is to continue expanding its lending business within its existing geographic markets and into other markets that meet its risk/reward considerations. Management believes that such expansion will continue to provide economies of scale in supervision, purchasing, administration and marketing by decreasing the overall average cost of such functions per unit owned. By concentrating multiple lending units in regional and local markets, the Company seeks to expand market penetration, enhance name recognition and reinforce marketing programs. The Company also intends to offer new products and services in its lending units in order to meet the growing financial services needs of its customers.

     The Company has expanded both by acquiring existing lending locations from others and by establishing new startup locations. When considering the acquisition of an existing lending location, the Company evaluates the annual volume of loan transactions at that location, the carrying cost of merchandise, outstanding loan balances and lease terms of the facility or, if it is to be purchased, the facility’s fair market value. When considering the startup of a new lending location, the Company evaluates the location of the prospective location, whether conditions in the surrounding community indicate a sufficient level of potential customers, and whether a suitable facility is available on acceptable terms.

     A new location can be ready for business within four to six weeks after the Company has leased or acquired a suitable location and obtained a license. The finish-out of a new location includes the completion of counters, installation of vaults and a security system and the transfer of merchandise from other locations (for pawnshop locations). The approximate start-up costs, defined as the investment in property and equipment, for recently established pawnshops have ranged from $176,000 to $393,000, with an average estimated cost per location of approximately $266,000 in 2005. This amount does not include merchandise transferred from other locations, funds to advance on pawn loans and cash advances or operating expenses. The start-up costs for recently established cash advance locations have ranged from $48,000 to $137,000, with an average estimated cost per location of approximately $93,000 in 2005. This amount does not include funds to advance on cash advances or operating expenses.

     The Company’s expansion program is subject to numerous unpredictable factors, such as the availability of attractive acquisition candidates or sites on suitable terms and general economic conditions. There can be no assurance that future expansion can be continued on a profitable basis. Among other factors, the following could affect the Company’s future planned expansion.

• Statutory Requirements. The Company’s ability to add start-up pawnshop locations in Texas counties having a population of more than 250,000 is limited by a law that restricts the establishment of new pawnshops within a certain distance of existing pawnshops. In addition, the current statutory and regulatory environment of some states renders expansion into those states impractical. See “Business — Regulation.”

• Availability of Real Estate. The Company’s ability to add start-up locations is subject to locating satisfactory real estate sites on terms and conditions acceptable to the Company. Factors that could limit the availability of acceptable real estate sites could include changes in general economic

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	conditions, increases in real estate values or market rents, increases in competition for suitable real estate, changing demographics in surrounding areas, restrictive zoning or sign ordinances, limited visibility or accessibility to public streets, and excessive finish-out costs, among other factors.
•	Competition. Several competing pawnshop and cash advance companies are also pursuing expansion and acquisition programs. A number of smaller companies have also entered the market. While the Company believes that it is the largest pawnshop operator in the United States, and one of the largest cash advance operators, there can be no assurance that it will be more successful than its competitors in pursuing acquisition opportunities and securing attractive start-up locations. Increased competition could also increase prices for attractive acquisition candidates.
•	Availability of Qualified Unit Management Personnel. The Company’s ability to expand may also be limited by the availability of qualified unit management personnel. While the Company seeks to train its existing personnel to enable those capable to assume management positions, there can be no assurance that sufficient qualified personnel will be available to satisfy the Company’s needs with respect to its planned expansion.
•	Capital Requirements. In some states, the Company is required by law to maintain a minimum amount of certain unencumbered net assets (currently $150,000 in Texas) for each pawnshop location. The Company’s expansion plans will therefore be limited in these states to the extent the Company is unable to maintain these required levels of unencumbered net assets. At present, these requirements do not limit the Company’s growth opportunities.

Competition

     While pawnbroking is a time-honored industry, the pawnshop industry in the United States remains very fragmented, with approximately 12,000 stores nationwide. Most pawnshops are owned by independent operators. The three largest publicly traded pawnshop companies operate approximately 850 total pawnshops in the United States. Management continues to believe that the Company can achieve economies of scale and increased operating efficiencies by increasing the number of stores under operation and utilizing modern point-of-sale systems and proven operating methods.

     The less fragmented cash advance industry is growing at a faster rate. According to the investment banking firm Stephens, Inc., the number of cash advance transactions is estimated to be growing nationwide at a rate of 15% to 20% per year, and the three largest operators service approximately one-quarter of the market. Despite the concentration of major competitors in the cash advance industry, management believes that significant opportunities for growth remain in this business.

     The Company encounters significant competition in connection with its lending and merchandise disposition operations. In connection with the lending of money, the Company competes with other pawnshops and cash advance shops and other forms of financial institutions such as consumer finance companies, which generally lend on an unsecured as well as a secured basis. Other lenders may lend money on terms more favorable than the Company. Some competitors, such as certain commercial banks and consumer finance companies, may have greater financial resources than the Company. Several competing pawnshop and cash advance companies have implemented expansion and acquisition programs. See “Business — Future Expansion.” These competitive conditions may adversely affect the Company’s revenues and profitability.

Regulation

     The Company’s operations are subject to extensive regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations. (For a geographic breakdown of operating locations, see “Properties”.)

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Pawnshop regulations

     Although pawnshop regulations vary from state to state to a considerable degree, the regulations summarized below are representative of the regulatory frameworks affecting the Company in the various states in which its pawnshops are located. The states whose regulations are summarized below are those in which the Company operates the preponderance of its pawnshops.

     Texas. The Texas Pawnshop Act provides the Office of Consumer Credit Commission with primary responsibility for the regulation of pawnshops and enforcement of laws relating to pawnshops in Texas. The Company is required to furnish the Texas Consumer Credit Commissioner with copies of information, documents and reports that it is required to file with the Securities and Exchange Commission.

     The Texas Pawnshop Act prescribes the stratified loan amounts and the maximum allowable rates of pawn service charges that pawnbrokers in Texas may charge for the lending of money within each stratified range of loan amounts. That is, the Texas law establishes the maximum allowable pawn service charge rates based on the amount financed per pawn loan. The maximum allowable rates under the Texas Pawnshop Act for the various stratified loan amounts for the years ended June 30, 2006, 2005 and 2004, are as follows:

Year Ending June 30, 2006				Year Ended June 30, 2005				Year Ended June 30, 2004
	Maximum				Maximum				Maximum
Amount	Allowable			Amount	Allowable			Amount	Allowable
Financed Per	Annual			Financed Per	Annual			Financed Per	Annual
Pawn Loan	Percentage Rate			Pawn Loan	Percentage Rate			Pawn Loan	Percentage Rate
$1 to $162		240	%	$1 to $156		240	%	$1 to $153		240	%
163 to 1,080		180		157 to 1,040		180		154 to 1,020		180
1,081 to 1,620		30		1,041 to 1,560		30		1,021 to 1,530		30
1,621 to 13,500		12		1,561 to 13,000		12		1,531 to 12,750		12

     These rates are reviewed and established annually by the Office of Consumer Credit Commission. The maximum allowable service charge rates were established and have not been revised since 1971, when the Texas Pawnshop Act was enacted. Since 1981, the ceiling amounts for stratification of the loan amounts to which these rates apply have been revised each July 1 in relation to the Consumer Price Index, except that the Texas legislature amended the Texas Pawnshop Act to establish the ceiling amounts for the year ended June 30, 2003. Under current Texas law, a pawn loan may not exceed $13,500. In addition to establishing maximum allowable service charge rates and loan ceilings, the Texas Pawnshop Act also provides for the licensing of pawnshops and pawnshop employees. To be eligible for a pawnshop license in Texas, an applicant must (i) be of good moral character; (ii) have net assets of at least $150,000 readily available for use in conducting the business of each licensed pawnshop; (iii) show that the pawnshop will be operated lawfully and fairly in accordance with the Texas Pawnshop Act; (iv) show that the applicant has the financial responsibility, experience, character, and general fitness to command the confidence of the public in its operations; and (v) in the case of a business entity, the good moral character requirement shall apply to each officer, director and holder of 5% or more of the entity’s outstanding shares.

     As part of the license application process, any existing pawnshop licensee who would be affected by the granting of the proposed application may request a public hearing at which to appear and present evidence for or against the application. For an application for a new license in a county with a population of 250,000 or more, the proposed facility must not be located within two miles of an existing licensed pawnshop.

     The Texas Consumer Credit Commissioner may, after notice and hearing, suspend or revoke any license for a Texas pawnshop upon finding, among other things, that (i) any fees or charges have not been paid; (ii) the licensee violates (whether knowingly or unknowingly without due care) any provisions of the

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Texas Pawnshop Act or any regulation or order thereunder; or (iii) any fact or condition exists which, if it had existed at the time the original application was filed for a license, would have justified the Commissioner in refusing such license.

     Under the Texas Pawnshop Act, a pawnbroker may not accept a pledge from a person under the age of 18 years; make any agreement requiring the personal liability of the borrower; accept any waiver of any right or protection accorded to a pledgor under the Texas Pawnshop Act; fail to exercise reasonable care to protect pledged goods from loss or damage; fail to return pledged goods to a pledgor upon payment of the full amount due; make any charge for insurance in connection with a pawn transaction; enter into any pawn transaction that has a maturity date of more than one month; display for disposition in storefront windows or sidewalk display cases, pistols, swords, canes, blackjacks and similar weapons; operate a pawnshop between the hours of 9:00 p.m. and 7:00 a.m.; or purchase used or secondhand personal property or certain building construction materials unless a record is established containing the name, address and identification of the seller, a complete description of the property, including serial number, and a signed statement that the seller has the right to sell the property.

     Florida. The Florida Pawnbroking Act, adopted in 1996, provides for the licensing and bonding of pawnbrokers in Florida and for the Department of Agriculture and Consumer Services’ Division of Consumer Services to investigate the general fitness of applicants and generally to regulate pawnshops in the state. The statute limits the pawn service charge that a pawnbroker may collect to a maximum of 25% of the amount advanced in the pawn for each 30-day period of the transaction. The law also requires pawnbrokers to maintain detailed records of all transactions and to deliver such records to the appropriate local law enforcement officials. Among other things, the statute prohibits pawnbrokers from falsifying or failing to make entries in pawn transaction forms, refusing to allow appropriate law enforcement officials to inspect their records, failing to maintain records of pawn transactions for at least two years, making any agreement requiring the personal liability of a pledgor, failing to return pledged goods upon payment in full of the amount due (unless the pledged goods had been taken into custody by a court or law enforcement officer or otherwise lost or damaged), or engaging in title loan transactions at licensed pawnshop locations. It also prohibits pawnbrokers from entering into pawn transactions with a person who is under the influence of alcohol or controlled substances, a person who is under the age of 18, or a person using a name other than his own name or the registered name of his business.

     Nevada. The Nevada statute governing pawnbrokers establishes a maximum allowable interest rate of 10% per month for pawn transactions and allows an initial charge of $5 in addition to interest. All pledged property must be held for redemption for at least 120 days before it can be offered for sale to the public. The statute also (i) requires that certain bookkeeping records be maintained, (ii) requires that pawn transaction information be reported to local law enforcement agencies, and (iii) establishes a procedure for law enforcement officials to place a hold on property alleged to be related to criminal activity. The Nevada law also prohibits pawnbrokers from making false entries in their books or records, making false reports to law enforcement agencies, removing pledged property from their business premises unless specifically authorized under the statute, and receiving pledged property from certain persons, including a person who is under age 18 or intoxicated.

     Tennessee. Tennessee state law provides for the licensing of pawnbrokers in that state. It also (i) requires that pawn transactions be reported to local law enforcement agencies; (ii) requires pawnbrokers to maintain insurance coverage on the property held on pledge for the benefit of the pledgor; (iii) establishes certain hours during which pawnshops may be open for business; and (iv) requires that certain bookkeeping records be maintained. Tennessee law prohibits pawnbrokers from selling, redeeming or disposing of any goods pledged or pawned to or with them within 48 hours after making their report to local law enforcement agencies. The Tennessee statute establishes a maximum allowable interest rate of 24% per annum; however, the pawnshop operator may charge an additional fee of up to one-fifth of the amount of the loan per month for investigating title, storing and insuring the security and various other expenses.

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     Louisiana. Louisiana law provides for the licensing and bonding of pawnbrokers in that state. In addition, the act requires that pawn transactions be reported to local law enforcement agencies, establishes hours during which pawnbrokers may be open for business and requires certain bookkeeping practices. Louisiana state law establishes maximum allowable rates of interest on pawn loans of 10% per month. In addition, Louisiana law provides that the pawnbroker may charge a service charge not to exceed 10% per month for all other services. Under the Louisiana statute, no pawnbroker may sell any pledged collateral until the lapse of three months from the time the loan was made. Various municipalities and parishes in the state of Louisiana have adopted additional ordinances and regulations pertaining to pawnshops.

     Georgia. Georgia law requires pawnbrokers to maintain detailed permanent records concerning pawn transactions and to keep them available for inspection by duly authorized law enforcement authorities. The Georgia statute prohibits pawnbrokers from failing to make entries of material matters in their permanent records; making false entries in their records; falsifying, obliterating, destroying, or removing permanent records from their places of business; refusing to allow duly authorized law enforcement officers to inspect their records; failing to maintain records of each pawn transaction for at least four years; accepting a pledge or purchase from a person under the age of 18 or who the pawnbroker knows is not the true owner of the property; making any agreement requiring the personal liability of the pledgor or seller or waiving any of the provisions of the Georgia statute; or failing to return or replace pledged goods upon payment of the full amount due (unless pledged goods have been taken into custody by a court or a law enforcement officer). If pledged goods are lost or damaged while in the possession of the pawnbroker, the pawnbroker must replace the lost or damaged goods with like kinds of merchandise. Under Georgia law, total interest and service charges may not, during each 30-day period of the loan, exceed 25% of the principal amount advanced in the pawn transaction (except that after ninety days from the original date of the loan, the maximum rate declines to 12.5% for each subsequent 30-day period). The statute provides that municipal authorities may license pawnbrokers, define their powers and privileges by ordinance, impose taxes upon them, revoke their licenses, and exercise such general supervision as will ensure fair dealing between the pawnbroker and his customers.

     Although pawnshop regulations vary from state to state to a considerable degree, the regulations summarized above are representative of the regulatory frameworks affecting the Company in the various states in which its operating units are located.

Cash Advance Regulations

     The Company offers cash advance products in most of its pawnshops and in all of its cash advance locations. Each state in which the Company originates cash advance products has specific laws dealing with the conduct of this business. These laws and regulations typically restrict the amount of finance and service charges that may be assessed and limit the customer’s ability to renew or extend these cash advances. In many instances, the regulations also limit the aggregate amount that a provider may advance (and, in some cases, the number of cash advances the provider may make) to any one customer at one time. Providers typically must obtain a separate license from the state licensing authority in order to offer this product. Also, many states have codified military best practices that require cash advance lenders to provide certain rights to borrowers in the military, including not conducting collection activities when the military customer is deployed to combat, not garnishing military wages, not contacting a servicemember’s chain of command in an effort to collect a cash advance, and honoring a base commander’s directives regarding the ability of servicemembers under his/her command to patron certain cash advance locations. The Company must also comply with the various disclosure requirements under the Federal Truth in Lending Act (and Federal Reserve Regulation Z under that Act) in connection with these cash advance transactions.

     As of December 31, 2005 the Company made available cash advance products offered by banks and other third-party lenders in 375 of its 727 locations. The federal banking regulators who supervise the banks’ activities closely scrutinize all aspects of each bank’s cash advance programs. Further, certain state regulators have asserted that the Company must have a license under state law in order to perform the administrative services that it performs for the third parties.

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     In addition to the regulators’ activities, certain consumer advocacy groups and federal and state legislators have asserted that laws and regulations governing cash advance products should be tightened in such a way that would severely limit or eliminate the availability of the cash advance product, despite the significant demand for it. The Company, along with other leaders of the cash advance industry opposes such overly restrictive regulation and legislation. Nevertheless, it is possible that some combination of federal and state regulation and legislation could be enacted that could restrict or eliminate the availability of cash advance products at some or all of the Company’s locations.

     As an example of restrictive legislation, the state of Georgia enacted a law in 2004 that, among other things, purported to prohibit a company from serving as an agent in connection with a third-party bank’s offering of cash advances to Georgia consumers if the agent “holds, acquires, or maintains a predominant economic interest in the revenues” generated by the cash advances. The Company serves as an agent for Community State Bank (the “Bank”) in connection with the Bank’s Georgia cash advance program. The Company and the Bank modified their contractual arrangement in 2004 to ensure that the Company’s compensation from the Bank is less than a predominant economic interest in the revenues generated by the Bank’s Georgia cash advances. In a federal lawsuit brought by the Company, the Bank, and several other banks and agents against the Georgia Attorney General and the Georgia Secretary of State, the Company, the Bank and the other plaintiffs sought to enjoin enforcement of the new law. In May 2004, the Federal District Court denied the injunction. The Plaintiffs appealed the denial to the 11th Circuit Court of Appeals. In June 2005, the 11th Circuit Court of Appeals affirmed the decision of the District Court. The Company and the other plaintiffs in the case filed a Petition for Rehearing En Banc with the 11th Circuit Court of Appeals. On December 28, 2005, the 11th Circuit Court of Appeals vacated the ruling previously issued by the 11^th Circuit Court of Appeals and agreed to hear the case en banc. As of February 1, 2006, the en banc hearing had not been scheduled.

     As a further example of restrictive legislation, states such as Indiana, Illinois and Michigan have recently enacted cash advance laws that require cash advance lenders to report their customer’s cash advance activities to a state-wide database. Cash advance lenders operating in conjunction with a state-wide database are generally restricted from making cash advance loans to customers who may have a certain amount of cash advances outstanding with other lenders. These database restrictions can have the effect of preventing customers from obtaining the cash advances they need and want. It is possible that legislators and regulators could pursue database or other restrictive legislation in other states, despite the increasing consumer demand for cash advance products. Additional restrictive legislative and regulatory activity surrounding cash advance products, if passed, could also adversely affect the Company’s cash advance business.

     In 2003, the Federal Deposit Insurance Corporation (“FDIC”) adopted guidelines for cash advance programs that apply to all financial institutions under the FDIC’s supervision that offer these programs. The banks that offer cash advances in the Company’s locations are state chartered banks which are supervised by the FDIC. The guidelines describe the FDIC’s expectations for prudent risk management practices for cash advance activities, particularly with regard to capital, allowance for loan losses, and loan classifications. The guidelines also address recovery practices, income recognition, and managing risks associated with third-party relationships, as well as compliance with consumer protection laws. The guidelines form the basis for sound and appropriate regulation of cash advance programs conducted by FDIC-supervised financial institutions. In March 2005, the FDIC issued revised guidelines affecting certain short-term cash advance products offered by FDIC regulated banks. The revised guidance, effective July 1, 2005, permits the banks to provide a customer with this cash advance product for no more than three months in any twelve-month period. With respect to the Company, as of February 1, 2006, the revised guidance directly covers only the single payment cash advance product originated by the Bank in the Company’s Georgia locations.

     In order to continue to meet the demand of consumers for cash advance products and in response to the March 2005 FDIC revised guidelines, the Company began offering the CSO program in Texas, Michigan and Florida in July 2005.

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     The Texas Credit Services Organization law governs the CSO program in Texas. Pursuant to this law, an affiliate of the Company, on a location by location basis, must register as a Credit Services Organization with the Texas Secretary of State, pay a registration fee and post a $10,000 surety bond. The Credit Services Organization may, for a fee, help a consumer obtain an extension of credit from an independent third-party lender. The Credit Services Organization must provide the consumer with a disclosure statement and a credit services agreement that describe in detail, among other things, the services the Credit Services Organization will provide to the consumer, the fees the consumer will be charged by the Credit Services Organization for these services, the details of the surety bond and the availability of the surety bond if the consumer believes the Credit Services Organization has violated the law, the consumer’s right to review his or her file, the procedures a consumer may follow to dispute information contained in his or her file, and the availability of non-profit credit counseling services. Additionally, the Credit Services Organization must give a consumer the right to cancel the credit services agreement without penalty within 3 days after the agreement is signed. The Company’s CSO programs in Michigan and Florida are substantially similar to the Company’s CSO program in Texas and the credit services organization laws in Michigan and Florida are generally similar to the credit services organization law in Texas.

     As a further response to the March 2005 FDIC guidelines, in October 2005 the Company began arranging for consumers to obtain multi-payment installment cash advances from third-party commercial banks. As of February 1, 2006, the Company only arranges for customers to obtain multi-payment installment cash advances from third-party commercial banks in the states of Georgia and California. In late February 2006, the FDIC notified FDIC-supervised banks that participate in certain cash advance products through the use of marketers and servicers, including the third-party commercial banks providing cash advances through the Company’s shops in Georgia and California, of its concern with the banks’ potential exposure to high levels of risk associated with these types of cash advances and the FDIC directed the banks either to address these concerns or exit this type of cash advance business. The Company expects to discontinue offering these types of cash advances from third-party commercial banks during the first or second quarter of 2006.

Other Regulatory Matters

     Each pawnshop that sells firearms must comply with the Brady Handgun Violence Prevention Act (the “Brady Act”). The Brady Act requires that federally licensed firearms dealers conduct a background check in connection with any disposition of handguns. In addition, the Company must comply with the longstanding regulations of the Department of the Treasury—Bureau of Alcohol, Tobacco and Firearms that require each pawnshop dealing in guns to maintain a permanent written record of all receipts and dispositions of firearms.

     Under the federal Gramm-Leach-Bliley Act and its underlying regulations, the Company must disclose to its customers its privacy policy and practices, including those relating to the sharing of customers’ nonpublic personal information with third parties. This disclosure must be made to customers when the customer relationship is established and at least annually thereafter. These regulations also require the Company to ensure that its systems are designed to protect the confidentiality of customers’ nonpublic personal information.

     Under the USA PATRIOT Act enacted in 2001, the Company must maintain an anti-money laundering compliance program covering certain of its business activities. The program must include: (1) the development of internal policies, procedures, and controls; (2) designation of a compliance officer; (3) an ongoing employee training program; and (4) an independent audit function to test the program. The United States Department of the Treasury is expected to issue regulations clarifying the requirements for anti-money laundering compliance programs for the pawnbroking and cash advance industries, but as of February 1, 2006 these regulations had not yet been issued.

     In addition to the federal and state statutes and regulations described above, many of the Company’s operating units are subject to municipal ordinances that may require, for example, local licenses or permits

13

and specified recordkeeping procedures, among other things. Most of the Company’s pawnshops voluntarily or pursuant to applicable laws provide to a law enforcement department having jurisdiction daily information on all transactions involving pawn loans and over-the-counter purchases. These information reports are designed to provide the local law enforcement with a detailed description of the goods involved, including serial numbers (if any) and the name and address of the owner obtained from a valid identification card. This information is provided to local law enforcement agencies for processing to determine conflicting claims of rightful ownership. The Company also voluntarily participates with other pawn lenders to provide similar information to a national database available to law enforcement in multiple jurisdictions. Goods held to secure pawn loans or goods purchased that are determined to belong to an owner other than the borrower or seller are subject to recovery by the rightful owner. However, the Company historically has not experienced a material number of claims of this nature, and the claims experienced have not had a material adverse effect on the Company’s results of operations.

     Casualty insurance, including burglary coverage, is maintained for each of the Company’s locations, and fidelity coverage is maintained on each of the Company’s employees.

     Management of the Company believes its operations are conducted in material compliance with all federal, state and local laws and ordinances applicable to its business.

     The Company’s franchising activities may be subject to various state regulations that, among other things, mandate disclosures to prospective franchisees and other requirements.

Executive Officers of the Registrant

     The following sets forth, as of February 23, 2006, certain data concerning the executive officers of the Company, all of whom are elected on an annual basis. There is no family relationship between any of the executive officers.

Name	Age		Position
Daniel R. Feehan		55	Chief Executive Officer and President
Thomas A. Bessant, Jr.		47	Executive Vice President — Chief Financial Officer
Robert D. Brockman		51	Executive Vice President — Administration
Jerry D. Finn		59	Executive Vice President — Pawn Operations
Michael D. Gaston		61	Executive Vice President — Business Development
James H. Kauffman		61	Executive Vice President — Financial Services
Jerry A. Wackerhagen		50	Executive Vice President — Chief Information Officer

     Daniel R. Feehan has been Chief Executive Officer and President since February 2000. He has served as President and Chief Operating Officer since January 1990. He served as Chairman and Co-Chief Executive Officer of Mr. Payroll Corporation from February 1998 to February 1999 before returning to the position of President and Chief Operating Officer of the Company.

     Thomas A. Bessant, Jr. joined the Company in May 1993 as Vice President — Finance and Treasurer. He was elected Senior Vice President — Chief Financial Officer in July 1997 and has served as Executive Vice President — Chief Financial Officer since July 1998. Prior to joining the Company, Mr. Bessant was a Senior Manager in the Corporate Finance Consulting Services Group of Arthur Andersen & Co., S.C. in Dallas, Texas from June 1989 to April 1993. Prior to that time, Mr. Bessant was a Vice President in the Corporate Banking Division of NCNB Texas, N.A., and its predecessor banking corporations, beginning in 1981.

     Robert D. Brockman joined the Company in July 1995 as Executive Vice President — Administration. Prior to that, he served as Vice President — Human Resources of THORN Americas, Inc., the then operator of the Rent-A-Center chain of rent-to-own stores, from December 1986 to June 1995.

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     Jerry D. Finn joined the Company in August 1994 and has served in various operations management positions since then, including Division Vice President from January 1995 to July 1997, Division Senior Vice President from July 1997 to April 1998, and Executive Vice President — Pawn Operations since April 1998. Prior to joining the Company, he served as District Supervisor for Kelly-Moore Paint Co. from March 1981 to August 1994.

     Michael D. Gaston joined the Company in April 1997 as Executive Vice President — Business Development. Prior to joining the Company, Mr. Gaston served as President of The Gaston Corporation, a private consulting firm, from 1984 to April 1997, and Executive Vice President of Barkley & Evergreen, an advertising and consulting agency, from 1991 to April 1997.

     James H. Kauffman joined the Company in July 1996 as Executive Vice President — Chief Financial Officer. He served as President — Cash America Pawn from July 1997 to July 1998, and served as Chief Executive Officer of Rent-A-Tire, Inc. from July 1998 until August 2002. He also served as Executive Vice President — International Operations from October 1999 to September 2004. He has served as Executive Vice President — Financial Services since September 2004. Prior to joining the Company, Mr. Kauffman served as President of Keystone Steel & Wire Company, a wire products manufacturer, from July 1991 to June 1996.

     Jerry A. Wackerhagen joined the Company in June 2005 as Executive Vice President — Chief Information Officer. Prior to joining the Company, Mr. Wackerhagen served as Chief Executive Officer of EFT Services, Inc., a consumer financial services company from 2001 to 2005. In 2000, he was Vice President of Sales for Trade Management Company, a joint venture between International Business Machines Corporation, Fluor Corporation and the Royal Bank of Canada. From 1999 to 2000, Mr. Wackerhagen was Vice President and Chief Information Officer at AGL Resources. Prior to that, he served as a Principal at IBM Global Services from 1996 to 1999 and as the Vice President and Chief Information Officer of CMI Industries, Inc. from 1991 to 1996.

ITEM 1A. RISK FACTORS

     Important risk factors that could cause results or events to differ from current expectations are described below. These factors are not intended to be an all-encompassing list of risks and uncertainties that may affect the operations, performance, development and results of the Company’s business.

• A decreased demand for the Company’s products and specialty financial services and failure of the Company to adapt to such decrease could adversely affect results. Although the Company’s products and services are a staple of its customer base, the demand for a particular product or service may decrease due to a variety of factors, such as the availability of competing products, changes in customers’ financial conditions, or regulatory restrictions that reduce customer access to particular products. Should the Company fail to adapt to a significant change in its customers’ demand for, or access to, its products, the Company’s revenues could decrease significantly. Even if the Company does make adaptations, customers may resist or may reject products whose adaptations make them less attractive or less available. In any event, the effect of any product change on the results of the Company’s business may not be fully ascertainable until the change has been in effect for some time. In particular, the Company has changed, and will continue to change, some of the cash advance products and services it offers due to the revised guidelines issued by the FDIC effective July 1, 2005 and supplemented in February 2006. The long-term impact these changes will have on the Company’s business is not yet certain.

• Short-term consumer loan services have come under increased regulation and scrutiny. If changes in regulations affecting the Company’s cash advance business create increased restrictions, or have the effect of prohibiting loans in the states where the Company offers short- term consumer loans, such regulations could materially reduce the Company’s cash advance business and limit its expansion into new markets. The Company’s products and services are subject

15

	to extensive regulation and supervision under various federal, state and local laws, ordinances and regulations. The Company faces the risk that restrictions or limitations resulting from the enactment, change, or interpretation of laws and regulations could have a negative effect on the Company’s business activities. In particular, short-term consumer loans have come under increased scrutiny and increasingly restrictive regulation in recent years. Some regulatory activity may limit the number of short-term loans that customers may receive or have outstanding, such as the limits prescribed by the FDIC in March 2005 and supplemented in February 2006 and regulations adopted by some states requiring that all borrowers of certain short-term loan products be listed on a database and limiting the number of such loans they may have outstanding. Certain consumer advocacy groups and federal and state legislators have also asserted that laws and regulations should be tightened so as to severely limit, if not eliminate, the availability of this cash advance product to consumers, despite the significant demand for it. Adoption of such federal and state regulation or legislation could restrict, or even eliminate, the availability of cash advance products at some or all of the Company’s locations. See the discussion of Regulation in “Item 1 — Business” for more information about regulations affecting the Company.
•	The failure of third-parties who provide products, services or support to the Company to maintain their products, services or support could disrupt Company operations or result in a loss of revenue. The Company’s cash advance revenues depend in part on the willingness and ability of unaffiliated third party lenders to make loans to its customers. The loss of the relationship with these lenders, and an inability to replace them with new lenders, or the failure of these lenders to maintain quality and consistency in their loan programs, could cause the Company to lose customers and substantially decrease the revenues and earnings of the Company’s cash advance business. The Company makes other non-cash advance products and services provided by various third party vendors available to its customers. If a third-party provider fails to provide its product or service or to maintain its quality and consistency, the Company could lose customers and related revenue from those products or services. The Company also uses third parties to support and maintain certain of its communication systems and computerized point-of-sale and information systems. The failure of such a third party to fulfill its support and maintenance obligations could disrupt the Company’s operations.
•	The Company’s growth is subject to external factors and other circumstances over which the Company has limited control or that are beyond the Company’s control. These factors and circumstances could adversely affect the Company’s ability to grow through the opening and acquisition of new operating units. The Company’s expansion strategy includes the acquiring existing stores and opening new ones. The success of this strategy is subject to numerous external factors, such as the availability of attractive acquisition candidates, the availability of sites with acceptable restrictions and suitable terms, the Company’s ability to attract, train and retain qualified unit management personnel and the ability to obtain required government permits and licenses. Some of these factors are beyond the Company’s control. The failure to execute this expansion strategy would adversely affect the Company’s ability to expand its business and could materially adversely affect its business, prospects, results of operations and financial condition.
•	Increased competition from banks, savings and loans, other short-term consumer lenders, and other entities offering similar financial services, as well as retail businesses that offer products and services offered by the Company, could adversely affect the Company’s results of operations. The Company has many competitors to its core lending and merchandise disposition operations. Its principal competitors are other pawnshops, cash advance companies, consumer finance companies and other financial institutions that serve the Company’s primary customer base. Many other financial institutions or other businesses that do not now offer products or services directed toward the Company’s traditional customer base, many of whom may be much larger than the Company, could begin doing so. Significant increases in the number and size of competitors for the Company’s business could result in a decrease in the number of cash advances or pawn loans that the Company writes, resulting in lower levels of revenues and earnings in these categories. Furthermore, the Company has many competitors to its retail operations, such as retailers of new merchandise, retailers of pre-owned

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	merchandise, other pawnshops, thrift shops, online retailers and online auction sites. Increased competition or aggressive marketing and pricing practices by these competitors could result in decreased revenues, margins and turnover rates in the Company’s retail operations.
•	A sustained deterioration of economic conditions could reduce demand for the Company’s products and services and result in reduced earnings. While the credit risk for most of the Company’s consumer lending is mitigated by the collateralized nature of pawn lending, a sustained deterioration in the economy could adversely affect the Company’s operations through deterioration in performance of its pawn loan or cash advance portfolios, or by reducing consumer demand for the purchase of pre-owned merchandise.
•	Adverse real estate market fluctuations could affect the Company’s profits. The Company leases most of its locations. A significant rise in real estate prices could result in an increase in store lease costs as the Company opens new locations and renews leases for existing locations.
•	Changes in the capital markets or the Company’s financial condition could reduce available capital. The Company regularly accesses the debt capital markets to refinance existing debt obligations and to obtain capital to finance growth. Efficient access to these markets is critical to the Company’s ongoing financial success; however, the Company’s future access to the debt capital markets could become restricted should the Company experience deterioration of its cash flows, balance sheet quality, or overall business or industry prospects.
•	Media reports and public perception of short-term consumer loans as being predatory or abusive could materially adversely affect the Company’s cash advance business. In recent years, consumer advocacy groups and some media reports have advocated governmental action to prohibit or place severe restrictions on short-term consumer loans. The consumer advocacy groups and media reports generally focus on the cost to a consumer for this type of loan, which is higher than the interest typically charged by banks to consumers with better credit histories. Though the consumer advocacy groups and media reports do not discuss the lack of viable alternatives for our customers’ borrowing needs, they do typically characterize these short-term consumer loans as predatory or abusive despite the large customer demand for these loans. If the negative characterization of these types of loans becomes increasingly accepted by consumers, demand for the cash advance products could significantly decrease, which could materially affect the Company’s results of operations and financial condition. Additionally, if the negative characterization of these types of loans becomes increasingly accepted by legislators and regulators, the Company could become subject to more restrictive laws and regulations that could materially adversely affect the Company’s financial condition and results of operations.
•	Other risk factors are discussed under Quantitative and Qualitative Disclosures about Market Risk.
•	Other risks that are indicated in the Company’s filings with the Securities and Exchange Commission may apply as well.

ITEM 1B. UNRESOLVED STAFF COMMENTS

     None.

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ITEM 2. PROPERTIES

     As of December 31, 2005, the Company owned the real estate and buildings for seven of its pawnshop locations. The Company’s headquarters are located in a nine-story building adjacent to downtown Fort Worth, Texas. The Company purchased its headquarters building in January 1992. All of the Company’s other locations are leased under non-cancelable operating leases with terms ranging from 3 to 15 years.

     The following table sets forth, as of December 31, 2005, the number of owned pawn and cash advance locations by state. In addition to the locations listed below, the Company operates five owned Mr. Payroll check cashing locations in Texas.

			Cash
	Pawnshop		Advance
	Locations		Locations
Alabama		9		—
Arizona		10		—
California		1		35
Colorado		5		—
Florida		67		—
Georgia		17		—
Illinois		12		—
Indiana		13		33
Kentucky		10		16
Louisiana		20		—
Michigan		—		12
Missouri		16		—
Nevada		26		—
North Carolina		10		—
Ohio		6		135
Oklahoma		15		—
South Carolina		6		—
Tennessee		22		—
Texas		180		55
Utah		7		—
Washington		4		—
Total		456		286

     The Company considers its equipment, furniture and fixtures and owned buildings to be in good condition. The Company has its own construction supervisors who engage local contractors to selectively remodel and upgrade its lending facilities throughout the year.

     The Company’s leases typically require the Company to pay all maintenance costs, insurance costs and property taxes. For additional information concerning the Company’s leases, see Item 8. Financial Statements and Supplementary Data, Note 10 of “Notes to Consolidated Financial Statements.”

ITEM 3. LEGAL PROCEEDINGS

     On August 6, 2004, James E. Strong filed a purported class action lawsuit in the State Court of Cobb County, Georgia against Georgia Cash America, Inc., Cash America International, Inc. (together with Georgia Cash America, Inc., “Cash America”), Daniel R. Feehan, and several unnamed officers, directors, owners and “stakeholders” of Cash America. The lawsuit alleges many different causes of action, among the most significant of which is that Cash America has been making illegal payday loans in Georgia in violation of Georgia’s usury law, the Georgia Industrial Loan Act and Georgia’s Racketeer Influenced and

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Corrupt Organizations Act. Community State Bank (“CSB”) has for some time made loans to Georgia residents through Cash America’s Georgia operating locations. The complaint in this lawsuit claims that CSB is not the true lender with respect to the loans made to Georgia borrowers and that its involvement in the process is “a mere subterfuge.” Based on this claim, the suit alleges that Cash America is the “de facto” lender and is illegally operating in Georgia. The complaint seeks unspecified compensatory damages, attorney’s fees, punitive damages and the trebling of any compensatory damages. The Company believes that the claims in this suit are without merit and intends to vigorously defend this lawsuit. Cash America removed the case to the U.S. District Court for the Northern District of Georgia and filed a motion to compel the plaintiff to arbitrate his claim, in addition to denying the plaintiff’s allegations and asserting various defenses to his claim. The court approved a motion by the plaintiff to remand the case to Georgia state court on December 13, 2005. As of February 15, 2006, the entirety of this case is before the State Court of Cobb County, Georgia and the parties are awaiting the State Court’s ruling on certain motions, including a motion to compel arbitration. This case is still at a very early stage, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, with respect to this litigation can be determined at this time. In response to the Strong case, and to further assert the Company’s right to arbitrate that dispute, Cash America and CSB filed a separate complaint against Strong on September 7, 2004 in the U.S. District Court for the Northern District of Georgia to compel Strong to arbitrate the claims he asserts in his suit. The court dismissed Cash America’s complaint on February 7, 2006, based on a finding of a lack of subject matter jurisdiction. Cash America is likely to appeal this dismissal.

     The Company is a defendant in certain lawsuits encountered in the ordinary course of its business. Certain of these matters are covered to an extent by insurance. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to the Company’s security holders during the fourth quarter ended December 31, 2005.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) Market for Registrant’s Common Equity

     The New York Stock Exchange is the principal exchange on which Cash America International, Inc. common stock is traded under the symbol “CSH”. There were 645 stockholders of record (not including individual participants in security listings) as of February 13, 2006. The high, low and closing sales prices of common stock as quoted on the composite tape of the New York Stock Exchange and cash dividend declared per share during 2005 and 2004 were as follows:

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
2005
High	$	29.95	$	23.55	$	21.84	$	24.55
Low		21.40		13.45		19.00		19.40
Close		21.93		20.12		20.75		23.19
Cash dividend declared per share		0.025		0.025		0.025		0.025
2004
High	$	24.46	$	24.33	$	24.98	$	30.45
Low		18.85		18.60		20.00		23.85
Close		23.05		23.00		24.46		29.73
Cash dividend declared per share		0.0175		0.0175		0.3175		0.0175

     The following table provides information with respect to all compensation plans under which equity securities of the registrant are authorized for issuance as of December 31, 2005:

						Number of securities
						remaining available for
	Number of securities to be					future issuance under
	issued upon exercise of			Weighted-average exercise		equity compensation plans
	outstanding options,			price of outstanding		(excluding securities
	warrants and rights			options, warrants and rights		reflected in column (a))
Plan Name	(a)			(b)		(c)
Equity compensation plans approved by security holders
1987 Stock Option Plan		71,090			9.74		114,303
1989 Directors and Key Employees Plan		—			—		180,000
1994 Long-Term Incentive Plan		1,622,116	(1)		12.11		327,223
2004 Long-Term Incentive Plan (2)		105,127			24.41		744,873
Equity compensation plans not approved by security holders		—			—		—
Total		1,798,323			12.73		1,366,399

(1)	Includes 290,464 restricted stock units to be issued upon vesting with a weighted-average price of $20.18 per share at the dates of grant.
(2)	All restricted stock units. In 2004 the Company began issuing restricted stock units in lieu of stock options.

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(c) Issuer Purchases of Equity Securities

     The following table provides the information with respect to purchases made by the Company of shares of its common stock during each of the months in 2005:

						Total Number of		Maximum Number
	Total Number			Average		Shares Purchased as		of Shares that May
	of Shares			Price Paid		Part of Publicly		Yet Be Purchased
Period	Purchased			Per Share		Announced Plan		Under the Plan (1)
January 1 to January 31		2,689	(2)	$	26.77		—		518,000
February 1 to February 28		2,531	(2)		29.37		—		518,000
March 1 to March 31		122,658	(2)		24.15		122,000		396,000
Total first quarter		127,878			24.31		122,000
April 1 to April 30		55,832	(2)		15.62		55,000		1,445,000
May 1 to May 31		46,719	(2)		15.65		45,000		1,400,000
June 1 to June 30		9,475	(2)		17.56		8,800		1,391,200
Total second quarter		112,026			15.80		108,800
July 1 to July 31		384	(2)		20.80		—		1,391,200
August 1 to August 31		36,808	(2)		20.25		35,000		1,356,200
September 1 to September 30		20,562	(2)		20.68		20,000		1,336,200
Total third quarter		57,754			20.41		55,000
October 1 to October 31		369	(2)		20.90		—		1,336,200
November 1 to November 30		1,389	(2)		22.35		—		1,336,200
December 1 to December 31		15,435	(2)		23.32		15,000		1,321,200
Total fourth quarter		17,193			23.19		15,000
Total 2005		314,851		$	20.37		300,800

(1)

Purchases during the first quarter of 2005 were made under the authorization of July 25, 2002 by the Company’s Board of Directors. On April 20, 2005, the Board of Directors authorized the Company’s repurchase of up to a total of 1,500,000 shares of its common stock and terminated the open market purchase authorization established in 2002. Maximum number of shares that may yet to be purchased represents the shares under the 2005 authorization.

(2)

Includes shares purchased on behalf of participants relating to the Company’s Non-Qualified Savings Plan of 438; 2,531; 658; 832; 1,719; 675; 384; 1,471; 562; 369; 1,389 and 435 for each of the months in 2005, respectively. Also includes 2,251 and 337 shares received as partial tax payments for shares issued under stock-based compensation plans for the months of January and August, respectively.

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ITEM 6. SELECTED FINANCIAL DATA

Five-Year Summary of Selected Consolidated Financial Data of Continuing Operations
(Dollars in thousands, except per share data)
(Unuadited)

	Year Ended December 31,
	2005			2004			2003			2002			2001
Statement of Income Data (a)
Total revenue	$	594,346		$	469,478		$	388,635		$	350,501		$	324,088
Income from operations	$	80,712		$	61,413		$	41,819		$	27,872		$	21,930
Income from continuing operations before income taxes (b)	$	70,882		$	55,023		$	34,325		$	19,313		$	12,506
Income from continuing operations	$	44,821		$	34,965		$	22,030		$	11,917		$	7,281
Income from continuing operations per share:
Basic	$	1.53		$	1.23		$	0.86		$	0.49		$	0.30
Diluted	$	1.48		$	1.18		$	0.83		$	0.48		$	0.29
Dividends declared per share	$	0.10		$	0.37		$	0.07		$	0.05		$	0.05
Weighted average shares:
Basic		29,262			28,402			25,586			24,424			24,643
Diluted		30,206			29,584			26,688			24,841			24,963
Balance Sheet Data at End of Year
Pawn loans (a)	$	115,280		$	109,353		$	81,154		$	78,615		$	76,742
Cash advances, net (a)	$	40,704		$	36,490		$	28,401		$	2,639		$	1,695
Merchandise held for disposition, net (a)	$	72,683		$	67,050		$	49,432		$	49,564		$	60,270
Working capital (a)	$	232,556		$	209,463		$	156,142		$	118,619		$	121,067
Total assets (a)	$	598,648		$	555,165		$	377,194		$	287,006		$	299,131
Total debt (a)	$	165,994		$	166,626		$	148,040		$	137,000		$	159,220
Stockholders’ equity	$	374,716		$	333,936		$	276,473		$	192,335		$	168,431
Ratio Data at End of Year (a)
Current ratio		4.8	x		4.6	x		4.3	x		4.0	x		3.6	x
Debt to equity ratio		44.3	%		49.9	%		53.5	%		71.2	%		94.5	%
Owned and Franchised Locations at Year End (a)
Pawn lending operations		464			452			405			409			417
Cash advance operations (c)		286			253			154			2			—
Check cashing operations (d)		136			134			135			135			134
Total		886			839			694			546			551

(a)	In September 2004, the Company sold its foreign pawn lending operations. The amounts for all periods presented have been reclassified to reflect the foreign operations as discontinued operations. In addition, in September 2001, the Company announced plans to exit the rent-to-own business. The amounts for the years 2001 through 2002 also reflect the reclassified rent-to-own business as discontinued operations.
(b)	See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Financial Statements and Supplementary Data” for amounts related to details of discontinued operations for years 2003 through 2005 and the gain from disposal of asset for 2003.
(c)	Includes only cash advance locations.
(d)	Mr. Payroll locations only.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

     The Company is a provider of specialty financial services to individuals in the United States. The Company offers secured non-recourse loans, commonly referred to as pawn loans, to individuals through its pawn lending operations. The pawn loan portfolio generates finance and service charges revenue. A related activity of the pawn lending operations is the disposition of merchandise, primarily collateral from unredeemed pawn loans. As an alternative to a pawn loan, the Company offers unsecured cash advances in selected lending locations and on behalf of third-party banks and other independent third-party lenders in other locations. The Company also provides check cashing and related financial services through many of its cash advance locations and through its franchised and company-owned check cashing centers. Prior to September 7, 2004, the Company also provided financial services to individuals in the United Kingdom and Sweden (the “foreign pawn lending operations”). In September 2004, the Company sold its foreign pawn lending operations. The results of the foreign pawn lending operations have been reclassified as discontinued operations for all of the periods presented. See discussions of Discontinued Operations below and at Note 17 of Notes to Consolidated Financial Statements.

     In December 2004, the Company completed the acquisition of the pawn operating assets of Camco, Inc., which operated under the trade name “SuperPawn” in four states in the western United States. SuperPawn is a 41-store chain based in Las Vegas, Nevada. This transaction provided the Company its initial entry into the western United States for pawn lending activities. Effective August 1, 2003, the Company, through its wholly-owned subsidiary, Cashland Financial Services, Inc. (“Cashland”), completed the purchase of substantially all of the assets of Cashland, Inc., a privately-owned consumer finance company based in Dayton, Ohio. See Note 3 of Notes to Consolidated Financial Statements.

     As of December 31, 2005, the Company had 886 total locations offering products and services to its customers. Management segments its operations into three segments, pawn lending, cash advance and check cashing.

     As of December 31, 2005, the Company’s pawn lending operations consisted of 464 pawnshops, including 456 owned units and 8 unconsolidated franchised units in 21 states in the United States. For the three years ended December 31, 2005, the Company acquired 58 operating units, established 11 locations, and combined or closed 9 locations for a net increase in owned pawn lending units of 60. In addition, 6 franchise locations were either acquired or opened, and 11 were either terminated and/or converted to Company-owned locations.

     At December 31, 2005, the Company’s cash advance operations consisted of 286 cash advance locations in 6 states. For the three-year period ended December 31, 2005, the Company acquired 154 operating units, established 137 locations, and combined or closed 7 locations for a net increase in cash advance locations of 284.

     As of December 31, 2005, the Company’s check cashing operations consisted of 131 franchised and 5 company-owned check cashing centers in 20 states.

DISCONTINUED OPERATIONS

     In September 2004, in order to dedicate its strategic efforts and resources on the growth opportunities of its pawn lending and cash advance activities in the United States, the Company sold its foreign pawn lending operations in the United Kingdom and Sweden to Rutland Partners LLP for approximately $104.9 million cash after paying off the outstanding balance of the multi-currency line of credit, and notes receivable valued at $8.0 million. The Company realized a gain on the sale of $19.0 million ($15.4 million net of related tax). The results of the foreign pawn lending operations have been

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reclassified as discontinued operations for all periods presented in accordance with the Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” in the accompanying consolidated financial statements. Income from discontinued operations was $6.5 million (excluding gain on the sale) and $8.0 million for 2004 and 2003, respectively. See Note 17 of Notes to Consolidated Financial Statements. Income from discontinued operations of $197,000 for 2005 principally represents a change in the U.S. tax provision on the sale resulting from the final tax adjustments to the 2004 foreign pawn lending operations’ tax returns.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, merchandise held for disposition, allowance for losses on cash advances, long-lived and intangible assets, income taxes, contingencies and litigation. Management bases its estimates on historical experience, empirical data and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. The development and selection of the critical accounting policies and the related disclosures below have been reviewed with the Audit Committee of the Board of Directors.

     Management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Finance and service charges revenue recognition. The Company accrues finance and service charges revenue only on those pawn loans that the Company deems collectible based on historical loan redemption statistics. Pawn loans written during each calendar month are aggregated and tracked for performance. Loan transactions may conclude based upon redemption, renewal, or forfeiture of the loan collateral. The gathering of this empirical data allows the Company to analyze the characteristics of its outstanding pawn loan portfolio and estimate the probability of collection of finance and service charges. In the event the future actual performance of the loan portfolio differs significantly (positively or negatively) from expectations, revenue for the next reporting period would be likewise affected.

     Due to the short-term nature of pawn loans, the Company is able to quickly identify performance trends. For 2005, $138.6 million, or 99.1%, of recorded finance and service charges represented cash collected from customers and the remaining $1.2 million, or 0.9%, represented an increase in the finance and service charges receivable during the year. At the end of the current year and based on the revenue recognition method described above, the Company had accrued $22.0 million of finance and service charges receivable. Assuming the year-end accrual of finance and service charges revenue was over estimated by 10%, finance and service charges revenue would decrease by $2.2 million in 2005 and net income would decrease by $1.4 million. Some or all of the decrease would potentially be mitigated through the profit on the disposition of the related forfeited loan collateral.

Merchandise held for disposition. Merchandise held for disposition consists primarily of forfeited collateral from pawn loans not repaid. The carrying value of the forfeited collateral is stated at the lower of cost (cash amount loaned) or market. Management provides an allowance for shrinkage and valuation based on its evaluation of the merchandise. Because pawn loans are made without the borrower’s personal liability, the Company does not investigate the creditworthiness of the borrower, but evaluates the pledged personal property as a basis for its lending decision. The amount the Company is willing to finance is typically based on a percentage of the pledged personal property’s estimated disposition value. The sources

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for the Company’s determination of the estimated disposition value are numerous and include the Company’s automated product valuation system as well as catalogues, “blue books”, newspapers, internet research and previous experience with similar items. The Company performs a physical count of its merchandise in each location on a cyclical basis and reviews the composition of inventory by category and age in order to assess the adequacy of the allowance, which was $1.8 million, representing 2.4% of the balance of merchandise held for disposition at December 31, 2005. Adverse changes in the disposition value of the Company’s merchandise may result in the need to increase the valuation allowance.

Allowance for losses on cash advances. The Company maintains an allowance for losses on Company-owned cash advances (including fees and interest) and accrues losses for third-party lender-owned cash advances at a level estimated to be adequate to absorb credit losses in the outstanding combined cash advance portfolio. The cash advance product primarily services a customer base of non-prime borrowers. These advances are typically offered as single payment cash advances over a typical term of 7 to 45 days, however, in certain locations, the Company also arranges for its customers to obtain installment cash advances originated by commercial banks, which are typically payable over a term of 6 months. Cash advances written during each calendar month are aggregated and tracked to develop a performance history. The Company stratifies the outstanding portfolio by age, delinquency and stage of collection when assessing the adequacy of the allowance for losses. Current portfolio performance as well as the performance of cash advances made in the same period twelve months ago and collection history are utilized to develop expected loss rates which are used for the establishment of the allowance. Increased defaults and credit losses may occur during a national or regional economic downturn, or could occur for other reasons, resulting in the need to increase the allowance. Unlike pawn loans, cash advances are unsecured, and the performance of the portfolio depends on the Company’s ability to collect on defaulted loans. The Company believes it effectively manages the risks inherent in this product by utilizing a variety of underwriting criteria, maintaining a customer database of performance and by closely monitoring the performance of the portfolio. Any remaining unpaid balance of a cash advance is charged off once it has been in default for 60 days or sooner if deemed uncollectible. At December 31, 2005, allowance for losses on cash advances was $6.3 million and accrued losses on third-party lender-owned cash advances were $874,000, in aggregate representing 11.2% of the combined cash advance portfolio.

     During fiscal year 2005, the cash advance loss provision, which increases the allowance for loan losses, for the combined cash advance portfolio was $42.8 million and reflects 4.6% of gross combined cash advances written by the Company and third-party lenders. Assuming future loss rates increased, or decreased, by 10% (0.46%) for 2005, the cash advance loss provision would increase, or decrease, by $4.3 million and net income would decrease, or increase, by $2.8 million, assuming the same volume of cash advances written in 2005.

Valuation of long-lived and intangible assets. The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets having an indefinite useful life are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the assets might be impaired. Factors considered important which could trigger an impairment review include significant underperformance relative to expected historical or projected future cash flows, significant changes in the manner of use of the acquired assets or the strategy for the overall business, and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured based on the excess of the assets’ carrying value over the estimated fair value.

Income Taxes. As part of the process of preparing the consolidated financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves estimating the actual current tax exposure together with assessing temporary differences in recognition of income for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the Company’s consolidated balance sheet. Management must then assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent it believes that recovery is not likely, it must establish a valuation allowance. An expense, or benefit, is included within the

25

tax provision in the statement of operations for any increase, or decrease, in the valuation allowance for a given period.

     Management judgment is required in determining the provision for income taxes, the deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. The Company has recorded a valuation allowance of $65,000 as of December 31, 2005, due to uncertainties related to the ability to utilize the deferred tax assets resulting from capital losses. The valuation allowance is based on Company estimates of capital gains expected to be recognized during the period over which the capital losses may be used to offset such gains. In the event that the Company determined that it would not be able to realize all or part of its other net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to provision for income taxes in the period that such determination was made. Likewise, should the Company determine that it would be able to realize its deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax assets would reduce the provision for income taxes in the period that such determination was made.

RECENTLY ISSUED ACCOUNTING STANDARDS

     In May 2005, the Financial Accounting Standards Board (“FASB”) issued Statement No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”). SFAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle. It also requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported in an income statement. The statement will be effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of SFAS 154 to have a material effect on the Company’s consolidated financial position or results of operations.

     In December 2004, FASB issued Statement No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements over the period during which an employee is required to provide service in exchange for the award. SFAS 123R establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value based method in accounting for share-based transactions with employees. SFAS 123R also amends FASB Statement No. 95, “Statement of Cash Flows,” to require that excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. SFAS 123R is effective for annual periods that begin after June 15, 2005. The Company does not expect the adoption of SFAS 123R to have a material effect on the Company’s consolidated financial position or results of operations because of the Company’s decision in 2004 to begin granting restricted stock units in lieu of stock options. The value of restricted stock unit grants is generally recognized as expense over the vesting period. See Notes 2 and 15 of Notes to Consolidated Financial Statements.

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RESULTS OF CONTINUING OPERATIONS

     The following table sets forth the components of consolidated statements of operations as a percentage of total revenue for the periods indicated.

	Year Ended December 31,
	2005			2004			2003
Revenue
Finance and service charges		23.5	%		23.6	%		25.9	%
Proceeds from disposition of merchandise		50.7			53.3			60.7
Cash advance fees		23.9			21.1			12.1
Check cashing royalties and fees		1.9			2.0			1.3
Total Revenue		100.0			100.0			100.0
Cost of Revenue
Disposed merchandise		30.9			32.8			37.9
Net Revenue		69.1			67.2			62.1
Expenses
Operations		37.1			36.9			36.7
Cash advance loss provision		7.2			5.0			2.8
Administration		7.3			8.5			8.4
Depreciation and amortization		3.9			3.7			3.4
Total Expenses		55.5			54.1			51.3
Income from Operations		13.6			13.1			10.8
Interest expense		(1.8	)		(1.7	)		(2.3	)
Interest income		0.3			0.1			0.1
Foreign currency transaction (loss) gain		(0.2	)		0.2			—
Gain from disposal of asset		—			—			0.3
Income from Continuing Operations before Income Taxes		11.9			11.7			8.9
Provision for income taxes		4.4			4.3			3.2
Income from Continuing Operations		7.5	%		7.4	%		5.7	%

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     The following table sets forth certain selected consolidated financial and non-financial data as of December 31, 2005, 2004 and 2003, and for each of the three years then ended ($ in thousands) related to the Company’s continuing operations.

	Year Ended December 31,
	2005			2004			2003
PAWN LENDING OPERATIONS:
Pawn loans
Annualized yield on pawn loans		124.8	%		131.1	%		128.4	%
Total amount of pawn loans written and renewed	$	438,955		$	336,021		$	313,264
Average pawn loan balance outstanding	$	112,031		$	84,283		$	78,432
Average pawn loan balance per average location in operation	$	251		$	211		$	199
Ending pawn loan balance per location in operation	$	253		$	248		$	204
Average pawn loan amount at end of year (not in thousands)	$	95		$	89		$	86
Profit margin on disposition of merchandise as a percentage of proceeds from disposition of merchandise		39.0	%		38.5	%		37.5	%
Average annualized merchandise turnover		2.7	x		3.0	x		3.1	x
Average balance of merchandise held for disposition per average location in operation	$	151		$	130		$	122
Ending balance of merchandise held for disposition per location in operation	$	159		$	151		$	124
Pawnshop locations in operation –
Beginning of year, owned		441			398			396
Acquired		9			42			7
Start-ups		7			3			1
Combined or closed		(1	)		(2	)		(6	)
End of year, owned		456			441			398
Franchise locations at end of year		8			11			7
Total pawnshop locations at end of year		464			452			405
Average number of owned pawnshop locations in operation		447			399			394
Cash advances
Total amount of cash advances written (a)	$	275,375		$	220,303		$	172,667
Number of cash advances written (not in thousands) (a)		798,081			675,008			584,690
Average amount per cash advance (not in thousands) (a)	$	345		$	326		$	295
Combined cash advances outstanding (a)	$	19,354		$	18,318		$	16,612
Cash advances outstanding per location at end of year (a)	$	44		$	43		$	35
Cash advances outstanding before allowance for losses (b)	$	9,402		$	11,301		$	11,961
Locations offering cash advances at end of year		441			425			390
Average number of locations offering cash advances		430			391			385
CASH ADVANCE OPERATIONS (c):
Total amount of cash advances written (a)	$	654,960		$	427,443		$	127,851
Number of cash advances written (not in thousands) (a)		1,790,588			1,252,177			380,770
Average amount per cash advance (not in thousands) (a)	$	366		$	341		$	336
Combined cash advances outstanding (a)	$	44,921		$	33,352		$	20,045
Cash advances outstanding per location at end of year (a)	$	157		$	132		$	130
Cash advances outstanding before allowance for losses (b)	$	37,611		$	29,547		$	19,833
Cash advance locations in operation –
Beginning of year		253			154			2
Acquired		1			32			121
Start-ups		34			72			31
Combined or closed		(2	)		(5	)		—
End of year		286			253			154
Average number of cash advance locations in operation		271			192			70

(Continued on Next Page)

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	Year Ended December 31,
	2005			2004			2003
CHECK CASHING OPERATIONS (Mr. Payroll) (d):
Face amount of checks cashed	$	1,220,381		$	1,132,627		$	1,089,364
Gross fees collected	$	16,964		$	15,660		$	15,266
Fees as a percentage of check cashed		1.4	%		1.4	%		1.4	%
Average check cashed (not in thousands)	$	386		$	372		$	358
Centers in operation at end of year		136			134			135
Average centers in operation for the year		136			135			136

(a)	Includes cash advances made by the Company and cash advances made by third-party lenders offered at the Company’s locations.
(b)	Amounts recorded in the Company’s consolidated financial statements.
(c)	Includes only cash advance locations.
(d)	Includes franchised and company-owned locations.

OVERVIEW

Components of Consolidated Net Revenue. Consolidated net revenue is total revenue reduced by the cost of merchandise sold in the period. It represents the income available to satisfy expenses and is the measure management uses to evaluate top line performance. The growth in cash advance fees due to higher balances and the addition of new units, including the acquisition of 32 cash advance locations in southern California and the acquisition of Cashland in August 2004 and 2003, respectively, has increased the comparative contribution from this product to the consolidated net revenue of the Company during 2005 compared to 2004 and 2003. While slightly lower as a percent of total net revenue, pawn related net revenue, consisting of aggregate finance and service charges plus profit on the disposition of merchandise, remains the dominant source of net revenue at 62.7%, 65.6% and 78.5% for 2005, 2004 and 2003, respectively. The following graphs show consolidated net revenue and depict the mix of the components of net revenue for the years ended December 31, 2005, 2004 and 2003:

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Contribution to Increase in Net Revenue. Cash advance fees have increased as the result of the growth and development of new cash advance locations, higher average balances outstanding during the year, and the inclusion of Cashland since August 1, 2003. As illustrated below, these increases represented 45.2% of the overall increase from 2004 to 2005 and 70.2% of the Company’s overall increase in net revenue from 2003 to 2004. The increase in pawn related net revenue in the aggregate, combined finance and service charges and profit from the disposition of merchandise, represented 53.2% of the overall increase in net revenue from continuing operations for 2005 compared to 23.7% of the overall increase in net revenue in 2004; due mostly from the inclusion of the SuperPawn locations for all of 2005 compared to only 21 days in 2004 but also due to higher levels of pawn loans in the last half of 2005. Check cashing royalties and fees accounted for 1.6% and 6.1% of the overall increase in net revenue in 2005 and 2004, respectively. These trends are depicted in the following graphs:

Year Ended 2005 Compared to Year Ended 2004

Consolidated Net Revenue. Consolidated net revenue increased $94.9 million, or 30.1%, to $410.5 million during 2005 from $315.6 million during 2004. The following table sets forth 2005 and 2004 net revenue by operating segment ($ in thousands):

	2005		2004		Increase
Pawn lending operations	$	298,880	$	239,872	$	59,008	24.6	%
Cash advance operations		107,848		72,154		35,694	49.5
Check cashing operations		3,819		3,586		233	6.5
Consolidated net revenue	$	410,547	$	315,612	$	94,935	30.1	%

     Higher revenue from the cash advance product, higher finance and service charges from pawn loans, higher profit from the disposition of merchandise and higher revenue from check cashing operations accounted for the increase in net revenue. The increase in net revenue from pawn lending operations of 24.6% was partially due to the consolidation of the operating results of SuperPawn for the full year in 2005. Excluding the impact of SuperPawn, consolidated net revenue for 2005 was up $49.0 million, or 15.7%, compared to 2004. The growth in net revenue from cash advance operations was enhanced by the growth and development of newly opened cash advance locations and the related increase in cash advance balances within those locations.

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     The components of net revenue are finance and service charges from pawn loans, which increased $29.3 million; profit from the disposition of merchandise, which increased $21.3 million; cash advance fees generated both from pawn locations and cash advance locations, which increased $42.8 million; and check cashing royalties and fees generated both from cash advance locations and check cashing locations, which increased $1.5 million.

Finance and Service Charges. Finance and service charges increased $29.3 million, or 26.5%, from $110.5 million in 2004 to $139.8 million in 2005. The increase is primarily due to higher loan balances attributable to the addition of SuperPawn in December 2004. An increase in the average balance of pawn loans outstanding contributed $36.4 million of the increase that was offset by a $7.1 million decrease resulting from the lower annualized yield of the pawn loan portfolio which is a function of the blend in permitted rates for fees and service charges on pawn loans in all operating locations of the Company. The inclusion of the geographic areas of operation of SuperPawn for all of 2005 resulted in a blended yield on pawn loans lower than the prior year. Finance and service charges from same stores (stores that have been open for at least twelve months) increased $1.5 million in 2005 compared to 2004.

     The average balances of pawn loans were 32.9% higher in 2005 than in 2004. The increase in the average balance of pawn loans outstanding was driven by a 27.3% increase in the average number of pawn loans outstanding during 2005 coupled with a 4.4% increase in the average amount per loan. Pawn loan balances at December 31, 2005 were $5.9 million, or 5.4%, higher than at December 31, 2004. Annualized loan yield was 124.8% in 2005, compared to 131.1% in 2004 due to the acquisition of SuperPawn locations which operate in markets with lower statutory rates than the Company’s other locations. Excluding SuperPawn, annualized loan yield would have been up slightly to 131.9%. Same store pawn loan balances at December 31, 2005 were $1.9 million, or 2.3%, higher than at December 31, 2004.

Profit from the Disposition of Merchandise. Profit from the disposition of merchandise represents the proceeds received from the disposition of merchandise in excess of the cost of disposed merchandise. The following table summarizes the proceeds from the disposition of merchandise and the related profit for 2005 as compared to 2004 ($ in thousands):

	Year Ended December 31,
	2005									2004
	Merchan-			Refined						Merchan-			Refined
	dise			Gold			Total			dise			Gold			Total
Proceeds from disposition	$	244,659		$	56,843		$	301,502		$	208,571		$	41,720		$	250,291
Profit on disposition	$	102,289		$	15,414		$	117,703		$	83,396		$	13,029		$	96,425
Profit margin		41.8	%		27.1	%		39.0	%		40.0	%		31.2	%		38.5	%

     While the total proceeds from disposition of merchandise and refined gold increased $51.2 million, or 20.5%, the total profit from the disposition of merchandise and refined gold increased $21.3 million, or 22.1%, primarily due to higher profit margins on the disposition of merchandise. Excluding the effect of the disposition of refined gold, the profit margin on the disposition of merchandise (including jewelry sales) increased to 41.8% in 2005 from 40.0% in 2004 due predominately to a heavier mix of jewelry sales resulting from the addition of SuperPawn. The profit margin on the disposition of refined gold decreased to 27.1% in 2005 compared to 31.2% in 2004 due primarily to a higher average cost that more than offset a higher gold price received on dispositions. Proceeds from disposition of merchandise, excluding refined gold, increased $36.1 million, or 17.3%, in 2005 due primarily to the acquisition of SuperPawn and higher levels of merchandise available for disposition. Proceeds from disposition of refined gold increased $15.1 million, or 36.3%, due primarily to higher market prices for gold and an increase in the volume of refined gold sold. The consolidated merchandise turnover rate decreased to 2.7 times during 2005 from 3.0 times during 2004 primarily as a result of a heavier mix of jewelry items in inventory which historically have a slower turnover rate than other merchandise. Management anticipates that profit margin on the disposition of merchandise in the near term is likely to remain at current levels or decline slightly due to higher

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inventory levels and the potential of an increased percentage of refined gold sales, which typically have lower gross profit margins, due to recently prevailing higher market values of gold.

     The table below summarizes the age of merchandise held for disposition before valuation allowance at December 31, 2005 and 2004 ($ in thousands). Due to the magnitude of the impact of the SuperPawn stores on the Company’s total merchandise held for disposition, those stores are segmented separately at December 31, 2005 and 2004.

	2005									2004
	Cash			Super-			Total			Cash			Super-			Total
	America			Pawn			Pawn			America			Pawn			Pawn
Merchandise held for 1 year or less —
Jewelry	$	33,096		$	9,043		$	42,139		$	29,456		$	8,812		$	38,268
Other merchandise		22,871			1,916			24,787			20,996			1,832			22,828
		55,967			10,959			66,926			50,452			10,644			61,096
Merchandise held for more than 1 year —
Jewelry		2,652			2,032			4,684			2,253			2,671			4,924
Other merchandise		2,666			207			2,873			2,475			—			2,475
		5,318			2,239			7,557			4,728			2,671			7,399
Total merchandise held for disposition	$	61,288		$	13,198		$	74,483		$	55,180		$	13,315		$	68,495
Jewelry held for 1 year or less		54.0	%		68.5	%		56.6	%		53.4	%		66.2	%		55.9	%
Other merchandise held for 1 year or less		37.3			14.5			33.3			38.0			13.7			33.3
Jewelry held for more than 1 year		4.3			15.4			6.3			4.1			20.1			7.2
Other merchandise held for more than 1 year		4.4			1.6			3.8			4.5			—			3.6
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Cash Advance Fees. Cash advance fees increased $42.8 million, or 43.2%, to $142.0 million in 2005 as compared to $99.2 million in 2004. The increase was primarily due to the growth and development of new cash advance units and higher average cash advance balances outstanding during 2005. The acquisition of 33 cash advance units since late third quarter of 2004 also contributed to the increase in cash advance fees. As of December 31, 2005, the product was available in 727 lending locations, which included 441 pawnshops and 286 cash advance locations. These lending locations included 375 units that arrange for customers to obtain cash advance products from the independent third-party lenders for a fee. Cash advance fees from same stores increased $29.2 million, or 29.9%, to $126.9 million in 2005 compared to $97.7 million in 2004. Cash advance fees include revenue from the cash advance portfolio owned by the Company and fees paid to the Company for arranging cash advance products from independent third-party lenders for customers. See further discussion in Note 4 of Notes to Consolidated Financial Statements. (Although cash advance transactions may take the form of loans or deferred check deposit transactions, the transactions are referred to throughout this discussion as “cash advances” for convenience.)

     The following table sets forth cash advance fees by operating segment for the years ended December 31, 2005 and 2004 ($ in thousands):

	2005		2004		Increase
Cash advance operations	$	100,663	$	66,250	$	34,413	51.9	%
Pawn lending operations		41,405		32,952		8,453	25.7
Total	$	142,068	$	99,202	$	42,866	43.2	%

     While cash advance fees in the cash advance operating segment increased 51.9% and 25.7% in the pawn segment, mostly due to the addition of new locations and higher average balances outstanding, increases in expenses, including the cash advance loss provision, have impacted both segments in 2005. The increased expenses offset a portion of the revenue growth. Management believes the operating margins for this segment will improve as the new stores added develop and grow to maturity and the Company places greater emphasis on cash advance loan portfolio performance.

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     The amount of cash advances written increased $282.6 million, or 43.6% to $930.3 million in 2005 from $647.7 million in 2004. Included in the amount of cash advances written in 2005 and 2004 were $356.4 million and $238.9 million, respectively, extended to customers by all third-party lenders. The average amount per cash advance increased to $359 from $336 due to changes in permitted loan amounts and adjustments to underwriting. The combined Company and third-party lender portfolios of cash advances generated $150.7 million in revenue during 2005 compared to $106.6 million in 2004. The outstanding combined portfolio balance of cash advances increased $12.6 million, or 24.4%, to $64.3 million at December 31, 2005 from $51.7 million at December 31, 2004. Included in those amounts are $47.0 million and $40.8 million for 2005 and 2004, respectively, which are included in the Company’s consolidated balance sheets. An allowance for losses of $6.3 million and $4.4 million has been provided in the consolidated financial statements for December 31, 2005 and 2004, respectively, which is netted against the outstanding cash advance amounts on the Company’s consolidated balance sheets.

     Cash advance fees related to cash advances originated by all third-party lenders (bank and non-bank) were $52.6 million in 2005 on $356.4 million in cash advances originated by third-party lenders, representing 34.9% of combined cash advance revenue. The cash advance loss provision expense associated with these cash advances was $17.3 million, direct operating expenses, excluding allocated administrative expenses, were $20.6 million, and depreciation and amortization expense was $2.1 million in 2005. Therefore, management estimates that the approximate contribution before interest and taxes on cash advances originated by all third-party lenders in 2005 was $12.6 million. This estimate does not include shared operating costs in pawn locations where the product is offered.

     In March 2005, the Federal Deposit Insurance Corporation (“FDIC”) issued revised guidelines affecting certain short-term cash advance products offered by FDIC regulated banks. The revised guidance applies to the cash advance product that was offered by third-party banks in many of the Company’s locations. The revised guidance, which became effective July 1, 2005, permits the banks to provide a customer with this cash advance product for no more than three months out of a twelve-month period. In order to address the short-term credit needs of customers who no longer had access to the banks’ cash advance product, the Company began offering an alternative short-term credit product in selected markets in 2005. On July 1, 2005, the Company introduced a credit services program (the “CSO program”). Under the CSO program, the Company acts as a credit services organization on behalf of consumers in accordance with applicable state laws. Credit services that the Company provides to its customers include arranging loans with independent third-party lenders, assisting in the preparation of loan applications and loan documents, and accepting loan payments at the location where the loans were arranged. If a Company customer obtains a loan from a third-party lender through the CSO program, the Company, on behalf of its customer, also guarantees the customer’s payment obligations under the loan to the third-party lender. A customer who obtains a loan through the CSO program pays the Company a CSO fee for the credit services, including the guaranty, and enters into a contract with the Company governing the credit services arrangement. Losses on cash advances assigned to the Company or acquired by the Company as a result of its guaranty are the responsibility of the Company. The Company currently offers the CSO program in Texas, Michigan and Florida.

     In July 2005, the Company elected to discontinue offering third-party bank originated cash advances to consumers in Michigan and in January 2006, the Company elected to discontinue offering third-party bank originated cash advances to consumers in Texas, Florida and North Carolina. Consumer demand for bank-originated cash advances in Michigan, Florida and Texas was effectively satisfied by replacing the bank originated cash advance program in those states with the CSO program instituted by the Company in July 2005. Customer acceptance of the cash advance product offered through the CSO program has been substantially the same as that of the cash advance products offered by the third-party banks. In most locations the Company offered both the bank program and the CSO program to customers during the last half of 2005.

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     During the third quarter, the Company discontinued offering single payment cash advances originated by third-party banks in California, representing 35 lending locations, and began offering Company-originated cash advances under applicable state law. As an additional service alternative to its customers, during the fourth quarter of 2005 the Company introduced third-party commercial bank originated multi-payment installment cash advances in California and Georgia. As of December 31, 2005, the outstanding principal balance of these bank originated multi-payment installment cash advances was $2.2 million in California and $39,000 in Georgia. The Company expects to discontinue offering bank products in California and Georgia during the first or second quarter of 2006 due principally to its third-party commercial banks’ anticipated response to concerns that the FDIC raised to FDIC-supervised banks in late February 2006 concerning the FDIC’s perception of risks associated with FDIC supervised banks’ origination of certain cash advance products with the assistance of third-party marketers and servicers. In California, upon any discontinuation of the Company’s offering of bank cash advance products, the Company will still serve cash advance consumers by continuing to offer Company-originated cash advance products re-introduced in August 2005 pursuant to state law. The Company is also evaluating whether other alternative products might be available to meet the cash advance demands of its North Carolina and Georgia consumers, but has not yet identified specific alternatives for these markets and is not certain whether or when viable alternatives will be identified.

     The 35 California locations generated $2.4 million in cash advances written and $487,000 (before loss provision) in revenue related to the multi-payment bank-originated cash advances for the fourth quarter ended December 31, 2005. These locations also generated $13.9 million in cash advances written and $1.5 million in revenue related to the Company-originated cash advances during the fourth quarter. Management estimates that revenue levels in 2006 in these 35 California locations will decrease from the levels in the fourth quarter of 2005 due to the elimination of the multi-payment bank-originated cash advance product.

     In North Carolina, represented by 10 pawn lending locations, the Company discontinued offering cash advances on behalf of third-party banks in January 2006, but continues to offer its core pawn services from all of these North Carolina lending locations. In Georgia, represented by 17 pawn lending locations, the Company does not currently have plans to offer an alternative cash advance product upon the anticipated discontinuance of the third-party bank cash advance program, however, the Company will continue to offer its core pawn services from all of these Georgia lending locations. The Georgia and North Carolina markets represented $24.9 million in total revenue for the fiscal year ending December 31, 2005, of which only $1.7 million was attributable to cash advance revenue generated on $16.2 million of cash advances originated by third-party banks during such fiscal year. During the fourth quarter of 2005, these markets represented $7.2 million in total revenue, of which only $223,000 was attributable to cash advance revenue (before loss provision) generated from $2.4 million of cash advances originated by third-party banks. Management estimates that the revenue levels in Georgia and North Carolina markets will be lower going forward due to the discontinuance of the Company arranging for third-party commercial bank originated cash advance products within the pawn lending locations in these markets but does not anticipate a change in pawn related revenue activities in these markets. Pawn related revenue in these markets could increase as customers seek alternative sources of needed credit due to the elimination of cash advance activities.

     Management anticipates continued growth in cash advance fees for fiscal 2006 due to increased consumer awareness and demand for the cash advance product, higher outstanding balances at December 31, 2005 compared to December 31, 2004, and the growth of balances from new units opened in 2004, 2005, and planned openings in 2006. In addition, the Company will receive the benefit of higher realized yields due to the probable elimination of cash advance products offered by third-party commercial banks and any corresponding reduction in the amount of cash advance fee revenue that might otherwise have been attributable to the third-party commercial banks.

Check Cashing Royalties and Fees. Check cashing fees increased $1.5 million to $11.0 million in 2005, or 16.0%, in 2005 from $9.5 million in 2004 due to the growth in cash advance units at the Company’s Cashland locations. Check cashing revenues for the cash advance segment and check cashing segment were $7.2 million and $3.8 million in 2005, and were $5.9 million and $3.6 million in 2004, respectively. The

34

Company expects to increase fees from check cashing and other services as it adds these products to its pawn lending and cash advance locations that did not offer these services during 2005.

     Operations Expenses. Consolidated operations expenses, as a percentage of total revenue, were 37.1% in 2005 compared to 36.9% in 2004. These expenses increased $47.1 million, or 27.2%, in 2005 compared to 2004. Pawn lending operating expenses increased $32.4 million, or 24.0%, primarily due to the addition of SuperPawn stores in December 2004. Cash advance operating expenses increased $14.7 million, or 39.8%, primarily as a result of the net establishment and acquisition of 33 locations which resulted in higher staffing levels. In addition, increased advertising expenditures for the cash advance products both at the pawnshops and the cash advance locations and growth in expenses in the Company’s collection centers also contributed to the expense increase.

     As a multi-unit operator in the consumer finance industry, the Company’s operations expenses are predominately related to personnel and occupancy expenses. Personnel expenses include base salary and wages, performance incentives, and benefits. Occupancy expenses include rent, property taxes, insurance, utilities, and maintenance. The combination of personnel and occupancy expenses represents 84.4% of total operations expenses in 2005 and 84.2% in 2004. The comparison is as follows ($ in thousands):

			% of					% of
	2005		Revenue			2004		Revenue
Personnel	$	125,661		21.1	%	$	99,267		21.1	%
Occupancy		60,376		10.2			46,691		9.9
Other		34,320		5.8			27,319		5.9
Total	$	220,357		37.1	%	$	173,277		36.9	%

     Of the $26.4 million, or 26.6%, increase in personnel expense from 2004 to 2005, $13.8 million was attributable to the acquisition of SuperPawn in December 2004. The balance of the increase is due to unit additions during the year, an increase in staffing levels mainly in the collection centers and normal recurring salary adjustments. Of the $13.7 million, or 29.3%, increase in occupancy expenses from 2004 to 2005, $6.9 million is due to the acquisition of SuperPawn. The balance of the increase is primarily due to unit additions. The increase in expenses in the collection centers accounted for $1.4 million, $183,000 and $811,000 of the increase in personnel, occupancy and other operating expenses, respectively.

     Administration Expenses. Consolidated administration expenses, as a percentage of total revenue, were 7.3% in 2005 compared to 8.5% in 2004. The components of administration expenses are as follows ($ in thousands):

			% of					% of
	2005		Revenue			2004		Revenue
Personnel	$	29,708		5.0	%	$	27,781		5.9	%
Other		13,519		2.3			12,402		2.6
Total	$	43,227		7.3	%	$	40,183		8.5	%

     The increase in administration expenses was principally attributable to increased staffing levels, annual salary adjustments and net unit additions. The increase was partially offset by a decrease of $1.7 million in employee incentive accruals, which are based on the Company’s performance relative to its business plan, and a gain of $408,000 from the settlement of an insurance claim filed in 2004.

Cash Advance Loss Provision. The Company maintains an allowance for losses on cash advances at a level projected to be adequate to absorb credit losses inherent in the outstanding combined cash advance portfolio. The cash advance loss provision is utilized to increase the allowance carried against the outstanding company owned cash advance portfolio as well as expected losses in the third-party lender-owned portfolios. The allowance is based on historical trends in portfolio performance based on the status

35

of the balance owed by the customer with the full amount of the customer’s obligations being completely reserved upon becoming 60 days past due. The cash advance loss provision increased $19.3 million to $42.8 million in 2005, compared to $23.5 million in 2004. Of the total increase, $10.2 million was attributable to the increased volume of cash advances written and $9.1 million was attributable to the increase in loss rate. In addition, the Company transitioned certain customers out of one product into another product in some markets during the last six months of 2005. In some instances the maximum available credit was lower than the customer’s original loan. Management believes that losses related to those customers contributed to the lower recoveries and higher loss rates. The Company also adjusted the terms of its underwriting related to these loans at the end of 2004 to broaden the number of customers who would qualify for a cash advance. Management believes this change led to higher loss rates in 2005. The loss provision as a percentage of cash advances written increased to 4.6% in 2005 from 3.6% in 2004 while actual net charge-offs (charge-offs less recoveries) were 4.3% in 2005 compared to 3.4% in 2004. The loss provision as a percentage of cash advance fees increased to 30.2% in 2005 from 23.7% in 2004. Due primarily to the addition of resources to its collection activities in the latter part of 2005 and ongoing adjustments to underwriting standards, management anticipates that loss rates will plateau, and possibly decline slightly during 2006.

Depreciation and Amortization. Depreciation and amortization expense as a percentage of total revenue was 3.9% in 2005 compared to 3.7% in 2004. Total depreciation and amortization expenses increased $6.2 million, or 36.1%, primarily due to the increase in operating locations and the amortization of certain intangible assets acquired in the SuperPawn and other acquisitions.

Interest Expense. Interest expense as a percentage of total revenue increased to 1.8% in 2005 from 1.7% in 2004. Interest expense increased $2.5 million, or 30.2%, to $10.6 million in 2005 as compared to $8.1 million in 2004. The increase was due to an increase in average debt levels during the year partially due to the acquisition of SuperPawn in December 2004 and also because the Company repaid all debt balances in 2004 under its line of credit following the sale of its European businesses and did not re-borrow until the purchase of SuperPawn. The average amount of debt outstanding increased during 2005 to $168.3 million from $130.0 million during 2004. The effective blended borrowing cost was 6.3% in both 2005 and 2004.

     In December 2005, the Company issued $40.0 million of 6.12% senior unsecured notes, due in December 2015. The notes are payable in six equal annual payments beginning December 2010. Net proceeds received under this agreement were used to reduce the amount outstanding under the $250.0 million bank line of credit.

Interest Income. Interest income increased $972,000 from $642,000 in 2004 to $1.6 million in 2005. Interest income totaling $1.5 million and $473,000 for 2005 and 2004, respectively, were recorded on the subordinated notes received in the sale of the Company’s foreign pawn lending operations.

Foreign Currency Transaction (Gain) Loss. The Company received two notes receivable denominated in Swedish kronor related to the sale of the Company’s foreign pawn lending operations in 2004. Exchange rate changes between the United States dollar and the Swedish kronor resulted in a net loss of $834,000 in 2005 and a gain of $1.1 million in 2004. The 2005 net loss includes offsetting gains of $731,000 resulting from the foreign currency forward contracts totaling 62 million Swedish kronor (approximately $8.0 million at maturity) that were established by the Company in 2005 to minimize the financial impact of currency market fluctuations.

Income Taxes. The Company’s effective tax rate for continuing operations for 2005 was 36.8% as compared to 36.5% for 2004.

Income from Continuing Operations. Income from continuing operations was $44.8 million and $35.0 million for 2005 and 2004, respectively, up 28.2%. Diluted income from continuing operations per share was $1.48 for 2005, as compared to $1.18 for 2004, reflecting a 25.4% increase.

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Year Ended 2004 Compared to Year Ended 2003

Consolidated Net Revenue. Consolidated net revenue increased $74.4 million, or 30.9%, to $315.6 million during 2004 from $241.2 million during 2003. The following table sets forth 2004 and 2003 net revenue by operating segment ($ in thousands):

	2004		2003		Increase
Pawn lending operations	$	239,872	$	216,292	$	23,580	10.9	%
Cash advance operations		72,154		21,319		50,835	238.5
Check cashing operations		3,586		3,568		18	—
Consolidated net revenue	$	315,612	$	241,179	$	74,433	30.9	%

     The increase in consolidated net revenue was partially due to the consolidation of the operating results of Cashland for the entire year for 2004 as compared to only five months for 2003. Excluding the impact of Cashland, net revenue for 2004 was up $31.0 million, or 14.0%, compared to 2003. Higher revenue from the cash advance product, higher finance and service charges from pawn loans, higher profit from the disposition of merchandise and a slight increase in revenue from the Company’s check cashing operations accounted for the increase in net revenue.

     The components of net revenue are finance and service charges from pawn loans, which increased $9.8 million; profit from the disposition of merchandise, which increased $7.9 million; cash advance fees generated both from pawn locations and cash advance locations, which increased $52.2 million; and check cashing royalties and fees, which increased $4.5 million.

Finance and Service Charges. Finance and service charges increased $9.8 million, or 9.8%, from $100.7 million in 2003 to $110.5 million in 2004. An increase in the average balance of pawn loans outstanding contributed $7.5 million of the increase and the higher annualized yield of the pawn loan portfolio resulted in $2.3 million of the increase.

     The average balances of pawn loans were 7.5% higher in 2004 than in 2003. The increase in the average balance of pawn loans outstanding was driven by a 4.3% increase in the average number of pawn loans outstanding during 2004 coupled with a 3.0% increase in the average amount per loan. Management believes the higher average pawn loan balance outstanding is partially attributable to the economic environment affecting the Company’s customers, which was conducive to an increase in loan demand. Pawn loan balances at December 31, 2004 were $28.2 million, or 34.7% higher than at December 31, 2003, principally as a result of the acquisition of SuperPawn in December 2004. Annualized loan yield was 131.1% in 2004, compared to 128.4% in 2003. Favorable changes in the statutory rates and terms of pawn loans in some markets and improved performance of the pawn loan portfolio, including higher redemption rates and a slightly higher concentration of extended or renewed loans in the portfolio, contributed to the higher yield.

Profit from the Disposition of Merchandise. The following table summarizes the proceeds from the disposition of merchandise and the related profit for 2004 as compared to 2003 ($ in thousands):

	Year Ended December 31,
	2004									2003
	Merchan-			Refined						Merchan-			Refined
	dise			Gold			Total			dise			Gold			Total
Proceeds from disposition	$	208,571		$	41,720		$	250,291		$	202,358		$	33,674		$	236,032
Profit on disposition	$	83,396		$	13,029		$	96,425		$	79,006		$	9,570		$	88,576
Profit margin		40.0	%		31.2	%		38.5	%		39.1	%		28.5	%		37.5	%

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     Total profit from the disposition of merchandise and refined gold increased $7.8 million, or 8.8%, primarily due to higher profit margins on the disposition of merchandise (from 37.5% in 2003 to 38.5% in 2004) and a 6.1% increase in total proceeds from the disposition of merchandise. Excluding the effect of the disposition of refined gold, the profit margin on the disposition of merchandise increased to 40.0% in 2004 from 39.1% in 2003 due predominately to a heavier mix of jewelry sales. The profit margin on the disposition of refined gold was 31.2% in 2004 compared to 28.5% in 2003 primarily due to the prevailing higher market prices of refined gold in 2004 than in 2003. Proceeds from disposition of merchandise, excluding refined gold, increased $6.3 million for 2004 due primarily to higher levels of merchandise available for disposition and the acquisition of the SuperPawn stores in December 2004. Proceeds from disposition of refined gold increased $8.0 million, or 23.7%, due primarily to higher market prices for gold and an increase in the volume of refined gold sold. The consolidated merchandise turnover rate decreased slightly to 3.0 times during 2004 from 3.1 times during 2003.

Cash Advance Fees. Cash advance fees increased $52.2 million to $99.2 million in 2004 as compared to $47.0 million in 2003, an increase of 111.1%. The increase was primarily due to the growth and development of new cash advance units and the inclusion of Cashland for the full year in 2004, while only five months of operating results of Cashland were included in 2003. Higher average cash advance balances outstanding during 2004 from new unit growth and from the acquisition of 32 California units during the third quarter also contributed to the increase in cash advance fees. As of December 31, 2004, the product was available in 678 lending locations, which included 425 pawnshops, and 253 cash advance locations. This included 366 units that offer the product on behalf of third-party banks for which the Company performs administrative services. Cash advance fees include revenue from the cash advance portfolio owned by the Company and fees for administrative services performed for the banks.

     The following table sets forth cash advance fees by operating segment for the years ended December 31, 2004 and 2003 ($ in thousands):

	2004		2003		Increase
Cash advance operations	$	66,250	$	19,938	$	46,312	231.0	%
Pawn lending operations		32,952		27,017		5,935	22.2
Total	$	99,202	$	46,955	$	52,247	111.1	%

     The amount of cash advances written increased $347.1 million, or 115.5% to $647.6 million in 2004 from $300.5 million in 2003. Included in the amount of cash advances written in 2004 and 2003 were $238.9 million and $157.5 million, respectively, extended to customers by the banks. The average amount per cash advance increased to $336 from $311 due primarily to changes in permitted loan amounts and adjustments to underwriting. The combined Company and bank portfolio of cash advances generated $106.6 million in revenue during 2004 compared to $51.2 million in 2003. The outstanding combined portfolio balance of cash advances increased $18.0 million, or 53.4%, to $51.7 million at December 31, 2004 from $33.7 million at December 31, 2003. Included in these amounts are $40.8 million and $31.8 million for 2004 and 2003, respectively, that are included in the Company’s consolidated balance sheets. An allowance for losses of $4.4 million and $3.4 million has been provided in the consolidated financial statements for December 31, 2004 and 2003, respectively, which is netted against the outstanding cash advance amounts on the Company’s consolidated balance sheets.

Check Cashing Royalties and Fees. Check cashing fees for Mr. Payroll remained constant at $3.6 million in 2004. Check cashing revenue for Cashland for 2004 and 2003 was $5.8 million and $1.4 million, respectively. The increase in fees for Cashland is predominantly due to the inclusion of the entire year for 2004 and the growth in the units.

Operations Expenses. Consolidated operations expenses, as a percentage of total revenue, was 36.9% in 2004 compared to 36.7% in 2003. These expenses increased $30.5 million, or 21.3%, in 2004 compared to 2003. Pawn lending operating expenses increased $4.8 million, or 3.7%, primarily due to slightly higher staffing levels and the addition of SuperPawn stores since December 11, 2004. Cash advance operating

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expenses increased $25.8 million, or 230.8%, primarily as a result of the net increase of 59 cash advance locations. Increased advertising expenditures for the cash advance product also contributed to the expense increase. Cashland accounted for $21.1 million of the increase primarily as a result of the establishment of 40 cash advance locations net of 5 closures and an additional seven months of expenses included for 2004 as compared to 2003 due to the acquisition on August 1, 2003. Check cashing operations accounted for the remaining increase.

     As a multi-unit operator in the consumer finance industry, the Company’s operations expenses are predominately related to personnel and occupancy expenses. Personnel expenses include base salary and wages, performance incentives, and benefits. Occupancy expenses include rent, property taxes and insurance, utilities, and maintenance. The combination of personnel and occupancy expenses represents 84.2% of total operations expenses in 2004 and 86.3% in 2003. The comparison is as follows ($ in thousands):

			% of					% of
	2004		Revenue			2003		Revenue
Personnel	$	99,267		21.1	%	$	83,009		21.4	%
Occupancy		46,691		9.9			40,235		10.4
Other		27,319		5.9			19,572		4.9
Total	$	173,277		36.9	%	$	142,816		36.7	%

     Of the $16.3 million, or 19.6%, increase in personnel expense from 2003 to 2004, $11.1 million is attributable to the addition of Cashland for twelve months in 2004 versus five months in 2003. The balance of the increase is due to unit additions during the year, an increase in staffing levels, slightly higher incentive expenses as a result of increased operating results, and normal recurring salary adjustments. Of the $6.5 million, or 16.0%, increase in occupancy expenses from 2003 to 2004, $4.3 million is due to the addition of Cashland for twelve months in 2004 versus five months in 2003. The balance of the increase is primarily due to unit additions.

Administration Expenses. Consolidated administration expenses, as a percentage of total revenue, were 8.5% in 2004 compared to 8.4% in 2003. The components of administration expenses are as follows ($ in thousands):

			% of					% of
	2004		Revenue			2003		Revenue
Personnel	$	27,781		5.9	%	$	22,911		5.9	%
Other		12,402		2.6			9,608		2.5
Total	$	40,183		8.5	%	$	32,519		8.4	%

     These expenses increased $7.7 million, or 23.6%, in 2004 compared to 2003. Cashland accounted for $5.1 million of the increase as a result of an additional seven months of expenses included for 2004 as compared to 2003 due to the acquisition on August 1, 2003. Slightly higher staffing levels also contributed to the expense increase.

Cash Advance Loss Provision. The cash advance loss provision increased $12.7 million to $23.5 million in 2004, compared to $10.8 million in 2003, principally due to the significant increase in the size of the portfolio and the inclusion of Cashland for the full year in 2004, while only five months of operating results were included in 2003. Cashland provided $12.7 million and $3.9 million of the 2004 and 2003 loss provisions, respectively. The loss provision as a percentage of cash advance fees increased to 23.7% in the current year from 22.9% in the prior year. The increase in the loss provision as a percentage of cash advance fees is attributable to an emphasis on broadening the customer base for the payday loan product offered in pawnshops. On average, cash advance locations tend to originate more advances and experience lower loss rates than cash advances originated at pawnshop locations.

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Depreciation and Amortization. Depreciation and amortization expense as a percentage of total revenue was 3.7% in 2004 compared to 3.4% in 2003. Total depreciation and amortization expenses increased $3.9 million, or 29.3%, primarily due to the increase in operating locations and the amortization of intangibles such as non-competition agreements and customer relationships acquired in the Cashland and other acquisitions.

Interest Expense. Interest expense as a percentage of total revenue declined to 1.7% in 2004 from 2.3% in 2003. Interest expense decreased $669,000, or 8.0%, to $8.1 million in 2004 as compared to $8.8 million in 2003. The decrease was due to the lower debt balances outstanding as a result of the repayment of the outstanding U.S. line of credit upon the sale of the foreign pawn lending operations. The effective blended borrowing cost was 6.3% in 2004 and 6.1% in 2003 as a result of the increase in short-term borrowing rates. The average amount of debt outstanding decreased during 2004 to $130.0 million from $145.4 million during 2003.

Interest Income. Interest income increased $332,000 from $310,000 in 2003 to $642,000 in 2004, primarily due to the interest income totaling $473,000 recorded on the subordinated notes received in the sale of the Company’s foreign pawn lending operations.

Foreign Currency Transaction Gain. The Company received two notes receivable denominated in Swedish kronor in the sale of the Company’s foreign pawn lending operations. Exchange rate changes between the United States dollar and the Swedish kronor resulted in gains of $1.1 million in 2004.

Gain from Disposal of Asset. During 2003, the Company sold real estate that was being held for investment purposes following the reconstruction of the corporate headquarters. The Company received cash proceeds of $1.6 million and realized a gain of $1.0 million.

Income Taxes. The Company’s effective tax rate for continuing operations for 2004 was 36.5% as compared to 35.8% for 2003. The Company’s consolidated effective tax rate for 2003 was affected by a reduction in the deferred tax valuation allowance for capital losses as a result of the recognition of the capital gain from the sale of real estate held for investment. The effective tax rate for 2003 would have been 37.3% excluding the gain and the related tax effect.

Income from Continuing Operations. Income from continuing operations was $35.0 million and $22.0 million for 2004 and 2003, respectively, up 59.1%. Diluted income from continuing operations per share was $1.18 for 2004, as compared to $0.83 for 2003, reflecting a 42.2% increase. Excluding the gain of $1.0 million from the sale of the asset ($1.1 million after income tax benefit), diluted income from continuing operations was $0.78 per share for 2003.

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LIQUIDITY AND CAPITAL RESOURCES

     The Company’s cash flows and other key indicators of liquidity are summarized as follows ($ in thousands):

	Year Ended December 31,
	2005			2004			2003
Operating activities cash flows	$	124,351		$	80,672		$	69,829
Investing activities cash flows:
Pawn loans		(19,697	)		(10,274	)		(5,131	)
Cash advances		(45,828	)		(28,466	)		(23,598	)
Acquisitions		(19,937	)		(122,413	)		(45,508	)
Property and equipment additions		(27,255	)		(28,491	)		(16,063	)
Proceeds from sale of subsidiaries/non-operating asset		1,016			104,908			1,639
Financing activities cash flows		(8,901	)		7,208			28,536
Working capital, excluding discontinued operations	$	232,556		$	209,463		$	156,142
Current ratio		4.8	x		4.6	x		4.3	x
Merchandise turnover		2.7	x		3.0	x		3.1	x

Cash flows from operating activities. Net cash provided by operating activities of continuing operations was $124.4 million for 2005. Net cash generated from the Company’s pawn lending operations, cash advance operations and check cashing operations were $80.5 million, $43.1 million and $830,000, respectively. The improvement in cash flows from operating activities in 2005 as compared to 2004 was primarily due to the improvement in results of pawn lending operations, including the addition of SuperPawn stores and the growth and development of cash advance locations opened in recent periods.

     Historically, the Company’s finance and service charge revenue is highest in the fourth and first fiscal quarters (October through March) due to higher average loan balances. Proceeds from the disposition of merchandise are also generally highest in the Company’s fourth and first fiscal quarters (October through March) due to the holiday season and the impact of tax refunds. The net effect of these factors is that revenues and income from continuing operations typically are highest in the fourth and first fiscal quarters and likewise the Company’s cash flow is generally greatest in these two fiscal quarters.

Cash flows from investing activities. Higher lending activities led to increases in the Company’s investment in pawn loans and cash advances during 2005 that used cash of $19.7 million and $45.8 million, respectively. In addition, the acquisition of the assets of 9 pawnshops and 1 cash advance location along with the final settlements of previous acquisitions of cash advance locations in California and SuperPawn used cash of $19.9 million. The Company also invested $27.3 million in property and equipment in 2005 for the establishment of 7 new pawnshop locations, 34 new cash advance locations, the remodeling of selected operating units and ongoing enhancements to the information technology infrastructure, and other property additions. In addition, the Company received proceeds of $486,000 from asset dispositions and $530,000 from the settlement of the insurance claim filed in 2004.

     Management anticipates that capital expenditures for 2006 will be approximately $40 to $45 million primarily for the establishment of approximately 50 to 60 combined total of new cash advance-only locations and pawnshops, for the remodeling of selected operating units, and for enhancements to communications and information systems. The additional capital required to pursue acquisition opportunities is not included in the estimate of capital expenditures because of the uncertainties surrounding any potential transaction of this nature at this time.

Cash flows from financing activities. During 2005, the Company repaid $21.3 million under its bank lines of credit. The Company reduced its long-term debt by $19.3 million including scheduled principal payments on senior unsecured notes and a $2.5 million prepayment of the 12% subordinated note that was

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issued in February 2004 as partial consideration of the final payment pursuant to an amended asset purchase agreement. Additional uses of cash included $1.3 million of debt issuance costs, $2.9 million for dividends paid and $6.2 million for the purchase of treasury shares (including $258,000 purchases on behalf of participants relating to the Non-Qualified Savings Plan). On July 25, 2002, the Company’s Board of Directors authorized management to purchase up to 1,000,000 shares of its common stock in the open market (the “2002 authorization”). On April 20, 2005, the Board of Directors authorized the Company’s repurchase of up to a total of 1,500,000 shares of its common stock (the “2005 authorization”) and terminated the 2002 authorization. During 2005, the Company purchased 122,000 shares for an aggregate amount of $2.9 million under the 2002 authorization and 178,800 shares for an aggregate amount of $3.2 million under the 2005 authorization. Management expects to continue to purchase shares of the Company from time to time in the open market, and funding will come from operating cash flow. During 2005, stock options for 225,134 shares were exercised by officers and employees and generated proceeds of $2.2 million of additional equity.

     In December 2005, the Company issued $40.0 million of 6.12% senior unsecured notes, due in December 2015. The notes are payable in six equal annual payments beginning December 2010. Net proceeds received under this agreement were used to reduce the amount outstanding under the $250 million bank line of credit.

     In November 2005, the Company’s Chief Executive Officer adopted a pre-arranged, systematic trading plan to sell company shares pursuant to guidelines specified by Rule 10b5-1 under the Securities and Exchange Act of 1934 and with the Company’s policies with respect to insider sales (the “Plan”). The net proceeds from the Plan will be used to fully repay the Chief Executive Officer’s remaining principal and interest on the related note receivable under a pre-2003 stock loan program. The Company will receive proceeds from the exercise of options and repayment of the receivable while the Plan is being executed, these proceeds are estimated to be approximately $4.4 million.

     In February 2005, the Company amended and restated the existing line of credit agreement to increase the credit limit to $250 million and extend the maturity to February 2010. Interest on the amended line of credit is charged, at the Company’s option, at either LIBOR plus a margin or at the agent’s base rate. The margin on the line of credit varies from 0.875% to 1.875%, depending on the Company’s cash flow leverage ratios as defined in the amended agreement (1.375% at December 31, 2005). The Company also pays a fee on the unused portion ranging from 0.25% to 0.30% (0.25% at December 31, 2005) based on the Company’s cash flow leverage ratios.

     The credit agreement and the senior unsecured notes require the Company to maintain certain financial ratios. The Company is in compliance with all covenants and other requirements set forth in its debt agreements. A significant decline in demand for the Company’s products and services may cause the Company to reduce its planned level of capital expenditures and lower its working capital needs in order to maintain compliance with the financial ratios in those agreements. A violation of the credit agreements could result in an acceleration of the Company’s debt and increase the Company’s borrowing costs and could even adversely affect the Company’s ability to renew existing credit facilities, or obtain access to new credit facilities in the future. The Company does not anticipate a significant decline in demand for its services and has historically been successful in maintaining compliance with and renewing its debt agreements.

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     The following table summarizes the Company’s contractual obligations of its continuing operations at December 31, 2005, and the effect such obligations are expected to have on its liquidity and cash flow in future periods (in thousands):

	2006		2007		2008		2009		2010		Thereafter		Total
Bank line of credit (1)	$	—	$	—	$	—	$	—	$	71,137	$	—	$	71,137
Other long-term debt		16,786		16,786		12,785		8,500		6,667		33,333		94,857
Interest on other long-term debt		6,308		5,066		3,824		3,060		2,448		6,120		26,826
Non-cancelable leases		31,080		25,762		19,478		14,127		7,250		11,709		109,406
Total	$	54,174	$	47,614	$	36,087	$	25,687	$	87,502	$	51,162	$	302,226

⁽¹⁾ Excludes interest obligations under the line of credit agreement. See Note 8 of Notes to Consolidated Financial Statements.

     Management believes that borrowings available ($176.1 million at December 31, 2005) under the credit facilities, cash generated from operations and current working capital of $232.6 million should be sufficient to meet the Company’s anticipated future capital requirements.

Off-Balance Sheet Arrangements with Third Party Lenders

     The Company arranges for consumers to obtain cash advance products from five independent third party lenders through the CSO program. As of December 31, 2005, the CSO program was made available to consumers in 313 of the Company’s lending locations located in the states of Michigan, Florida and Texas. When a consumer executes a credit services agreement with the Company, the Company agrees, for a fee payable to the Company by the consumer, to provide a variety of credit services to the consumer, one of which is to guarantee the consumer’s obligation to repay the loan received by the consumer from the third party lender if the consumer fails to do so.

     The Company also serves as a processing, marketing and servicing agent for cash advances originated by two FDIC insured, state chartered banks. Under the processing, marketing and servicing arrangements with these state chartered banks, the banks pay the Company administrative fees for processing, marketing and servicing the cash advances these lenders make to borrowers. As of December 31, 2005, the third party banks were offering their cash advances in 363 of the Company’s lending locations in Texas, Florida, North Carolina, California and Georgia even though many of these locations offered cash advances through the CSO program as well. However, in January of 2006, the Company elected to discontinue offering the third party banks’ cash advance product in Texas, Florida and North Carolina. The Texas and Florida locations continue to offer the cash advance product through the CSO program. The Company also expects to discontinue offering the third party banks’ cash advance product in its California and Georgia locations during the first or second quarter of 2006. (See further description of the cash advance products in Note 4 of Notes to Consolidated Financial Statements).

     For cash advance products originated by third party lenders, each lender is responsible for evaluating each of its customers’ applications, determining whether to approve a cash advance based on an application and determining the amount of the cash advance. The Company is not involved in the lenders’ cash advance approval processes or in determining the lenders’ approval procedures or criteria. Under the Company’s agreements with the banks, the Company is generally obligated to acquire defaulted cash advances from the banks by purchasing them at a discount upon the default. Under the CSO program, the Company guarantees borrowers’ payment obligations to the third-party lenders and acquires defaulted cash advances from the third party lenders through its guaranty obligations upon default. At December 31, 2005, the outstanding amount of active cash advances and fees receivable originated by third party lenders was $19.5 million, of which $13.4 million were cash advances originated under the CSO program and $6.1 million of which were cash advances originated by third party banks.

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     Since the Company may not be successful in collection of these delinquent accounts, the Company’s cash advance loss provision includes amounts estimated to be adequate to absorb credit losses from cash advances in the aggregate cash advance portfolio, including those expected to be assigned to the Company or acquired by the Company as a result of its guaranty obligations. Accrued losses of $874,000 on portfolios owned by the third-party lenders are included in “Accounts payable and accrued expenses” in the consolidated balance sheets. The Company believes that this amount is adequate to absorb credit losses from cash advances expected to be assigned to the Company or acquired by the Company as a result of its guaranty obligations.

CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

     This Annual Report on Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules. The Company intends that all forward-looking statements be subject to the safe harbors created by these laws and rules. When used in this Annual Report on Form 10-K, the words “believes”, “estimates”, “plans”, “expects”, “anticipates”, and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. All forward-looking statements are based on current expectations regarding important risk factors. These risks and uncertainties are beyond the ability of the Company to control, and, in many cases, the Company cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those expressed in the forward-looking statements. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and such statements should not be regarded as a representation by the Company or any other person that the results expressed in the statements will be achieved.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risks relating to the Company’s operations result primarily from changes in interest rates and gold prices. The Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes.

Interest Rate Risk. Management’s objective is to minimize the cost of borrowing through an appropriate mix of fixed and floating rate debt. Derivative financial instruments, such as interest rate cap agreements, may be used for the purpose of managing fluctuating interest rate exposures that exist from ongoing business operations. In 2005, the Company entered into an interest rate cap agreement with a notional amount of $15.0 million of the Company’s outstanding floating rate line of credit for a term of 24 months at a fixed LIBOR rate of 4.5%. This interest rate cap agreement is perfectly effective at December 31, 2005. The Company had net variable rate borrowings outstanding of $71.1 million and $92.5 million at December 31, 2005 and 2004, respectively. Interest rates on $15.0 million and $12.0 million of the net variable rate borrowings at December 31, 2005 and 2004, respectively, were capped at 4.5% and 4.0%, respectively. If prevailing interest rates were to increase 100 basis points over the rates at December 31, 2005 and 2004, respectively, and the variable rate borrowings outstanding remained constant, the Company’s interest expense would increase by $561,000 and $925,000, and net income after taxes would decrease by $365,000 and $601,000 in 2005 and 2004, respectively. If prevailing interest rates were to decrease 100 basis points from the rates at December 31, 2005 and 2004, respectively, the combined fair values of the Company’s outstanding fixed rate debt ($96.0 million and $76.6 million, respectively) would increase by $3.5 million and $1.8 million as of December 31, 2005 and 2004, respectively.

Gold Price Risk. The Company periodically uses forward sale contracts with a major gold bullion bank to sell a portion of the expected amount of refined gold produced in the normal course of business from its liquidation of forfeited gold merchandise. A significant decrease in the price of gold would result in a reduction of proceeds from the disposition of refined gold to the extent that amounts sold were in excess of the amount of contracted forward sales. In addition, a significant and sustained decline in the price of gold

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would negatively impact the value of some of the goods pledged as collateral by customers and identified for liquidation as refined gold. In this instance, management believes some customers would be willing to add additional items of value to their pledge in order to obtain the desired loan amount. However, those customers unable or unwilling to provide additional collateral would receive lower loan amounts, possibly resulting in a lower balance of pawn loans outstanding for the Company.

Foreign Exchange Risk. The notes receivable received in the sale of the Company’s foreign operations are subject to the risk of unexpected change in Swedish kronor exchange rates. As a result of fluctuations in Swedish kronor, the Company recorded foreign currency transaction losses of $834,000 (net of a gain of $731,000 on the foreign currency forward contracts) and gains of $1.1 million in 2005 and 2004, respectively. As a result of the establishment of the 62 million Swedish kronor currency forward contracts in mid year 2005 to minimize the market fluctuations, substantially all of the impact of a potential decline in the exchange rate of the Swedish kronor would be offset by the gains realized on those forward contracts. A hypothetical 10% decline in the exchange rate of the Swedish kronor at December 31, 2005 would have decreased net income by $77,000.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	47
Report of Management on Internal Control over Financial Reporting	49
Consolidated Balance Sheets — December 31, 2005 and 2004	50
Consolidated Statements of Income — Years Ended December 31, 2005, 2004 and 2003	51
Consolidated Statements of Stockholders’ Equity — Years Ended December 31, 2005, 2004 and 2003	52
Consolidated Statements of Comprehensive Income — Years Ended December 31, 2005, 2004 and 2003	52
Consolidated Statements of Cash Flows — Years Ended December 31, 2005, 2004 and 2003	53
Notes to Consolidated Financial Statements	54

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Cash America International, Inc.

We have completed integrated audits of Cash America International, Inc.’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, stockholders’ equity, comprehensive income and cash flows present fairly, in all material respects, the financial position of Cash America International, Inc. and its subsidiaries at December 31, 2005 and December 31, 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements 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, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in the accompanying Report of Management on Internal Control Over Financial Reporting, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control - - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the criteria established by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation

47

of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Fort Worth, Texas
February 23, 2006

48

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

     Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of the Company’s internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

     Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005. In making its assessment of the effectiveness of the Company’s internal control over financial reporting, management of the Company has utilized the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

     Based on management’s assessment, we concluded that, as of December 31, 2005, the Company’s internal control over financial reporting is effective based on those criteria.

     Our assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in this Form 10-K.

/s/ DANIEL R. FEEHAN	/s/ THOMAS A. BESSANT, JR.
Daniel R. Feehan	Thomas A. Bessant, Jr.
President and Chief Executive Officer	Executive Vice President and
	Chief Financial Officer
February 23, 2006	February 23, 2006

49

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents	$	18,852		$	15,103
Pawn loans		115,280			109,353
Cash advances, net		40,704			36,490
Merchandise held for disposition, net		72,683			67,050
Finance and service charges receivable		22,048			20,458
Other receivables and prepaid expenses		13,406			10,547
Deferred tax assets		11,274			9,293
Total current assets		294,247			268,294
Property and equipment, net		94,856			87,612
Goodwill		174,987			164,073
Intangible assets, net		23,391			24,361
Other assets		11,167			10,825
Total assets	$	598,648		$	555,165
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	37,217		$	33,854
Customer deposits		6,239			5,686
Income taxes currently payable		1,449			2,505
Current portion of long-term debt		16,786			16,786
Total current liabilities		61,691			58,831
Deferred tax liabilities		11,344			10,999
Other liabilities		1,689			1,559
Long-term debt		149,208			149,840
Total liabilities		223,932			221,229
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $.10 par value per share, 80,000,000 shares authorized, 30,235,164 shares issued		3,024			3,024
Additional paid-in capital		156,557			154,294
Retained earnings		229,975			187,860
Accumulated other comprehensive loss		(5	)		—
Notes receivable secured by common stock		(2,488	)		(2,488	)
Treasury shares, at cost (999,347 shares and 938,386 shares December 31, 2005 and 2004, respectively)		(12,347	)		(8,754	)
Total stockholders’ equity		374,716			333,936
Total liabilities and stockholders’ equity	$	598,648		$	555,165

See Notes to Consolidated Financial Statements.

50

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

	Year Ended December 31,
	2005			2004			2003
Revenue
Finance and service charges	$	139,772		$	110,495		$	100,699
Proceeds from disposition of merchandise		301,502			250,291			236,032
Cash advance fees		142,068			99,202			46,955
Check cashing royalties and fees		11,004			9,490			4,949
Total Revenue		594,346			469,478			388,635
Cost of Revenue
Disposed merchandise		183,799			153,866			147,456
Net Revenue		410,547			315,612			241,179
Expenses
Operations		220,357			173,277			142,816
Cash advance loss provision		42,834			23,529			10,756
Administration		43,227			40,183			32,519
Depreciation and amortization		23,417			17,210			13,269
Total Expenses		329,835			254,199			199,360
Income from Operations		80,712			61,413			41,819
Interest expense		(10,610	)		(8,148	)		(8,817	)
Interest income		1,614			642			310
Foreign currency transaction (loss) gain		(834	)		1,116			—
Gain on disposal of asset		—			—			1,013
Income from Continuing Operations before Income Taxes		70,882			55,023			34,325
Provision for income taxes		26,061			20,058			12,295
Income from Continuing Operations		44,821			34,965			22,030
(Loss) income from discontinued operations before income taxes (including (loss) gain on disposal of $56 for 2005 and $19,023 for 2004)		(56	)		28,284			11,809
Provision for income (benefit) taxes (including $3,608 on gain on disposal for 2004)		(253	)		6,414			3,803
Income from discontinued operations		197			21,870			8,006
Net Income	$	45,018		$	56,835		$	30,036
Earnings Per Share:
Basic —
Income from continuing operations	$	1.53		$	1.23		$	0.86
Income from discontinued operations	$	0.01		$	0.77		$	0.31
Net income	$	1.54		$	2.00		$	1.17
Diluted —
Income from continuing operations	$	1.48		$	1.18		$	0.83
Income from discontinued operations	$	0.01		$	0.74		$	0.30
Net income	$	1.49		$	1.92		$	1.13
Weighted average common shares outstanding:
Basic		29,262			28,402			25,586
Diluted		30,206			29,584			26,688
Dividends declared per common share	$	0.100		$	0.370		$	0.065

See Notes to Consolidated Financial Statements.

51

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

	Year Ended December 31,
	2005						2004						2003
	Shares			Amount			Shares			Amount			Shares			Amount
Common stock
Balance at end of year		30,235,164		$	3,024			30,235,164		$	3,024			30,235,164		$	3,024
Additional paid-in capital
Balance at beginning of year					154,294						141,867						127,819
Reissuance of treasury shares					—						7,298						5,597
Shares issued under stock-based plans					(445	)					210						(249	)
Stock-based compensation expense					1,677						1,199						14
Tax benefit from exercise of stock options					1,031						3,720						8,686
Balance at end of year					156,557						154,294						141,867
Retained earnings
Balance at beginning of year					187,860						141,642						113,278
Net income					45,018						56,835						30,036
Dividends declared					(2,903	)					(10,617	)					(1,672	)
Balance at end of year					229,975						187,860						141,642
Accumulated other comprehensive income (loss)
Balance at beginning of year					—						7,995						(2,718	)
Unrealized derivatives loss					(5	)					—						—
Foreign currency translation gain					—						(1,741	)					10,713
Sale of subsidiaries					—						(6,254	)					—
Balance at end of year					(5	)					—						7,995
Notes receivable secured by common stock
Balance at beginning of year					(2,488	)					(2,488	)					(5,864	)
Payments on notes receivable					—						—						3,376
Balance at end of year					(2,488	)					(2,488	)					(2,488	)
Treasury shares at cost
Balance at beginning of year		(938,386	)		(8,754	)		(2,040,180	)		(15,547	)		(5,939,794	)		(43,204	)
Purchases of treasury shares		(298,210	)		(6,239	)		(184,198	)		(4,328	)		(198,158	)		(2,320	)
Reissuance of treasury shares		—			—			578,793			5,264			1,533,333			11,208
Shares issued under stock-based plans		237,249			2,646			707,199			5,857			2,564,439			18,769
Balance at end of year		(999,347	)		(12,347	)		(938,386	)		(8,754	)		(2,040,180	)		(15,547	)
Total Stockholders’ Equity				$	374,716					$	333,936					$	276,493

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Year Ended December 31,
	2005			2004			2003
Net income	$	45,018		$	56,835		$	30,036
Other comprehensive loss —
Unrealized derivative loss, net of tax benefit of $3		(5	)		—			—
Foreign currency translation (loss) gain, net of taxes of $0		—			(1,741	)		10,713
Total Comprehensive Income	$	45,013		$	55,094		$	40,749

See notes to consolidated financial statements.

52

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31,
	2005			2004			2003
Cash Flows from Operating Activities of Continuing Operations:
Net income	$	45,018		$	56,835		$	30,036
Income from discontinued operations		(197	)		(21,870	)		(8,006	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		23,417			17,210			13,269
Cash advance loss provision		42,834			23,529			10,756
Stock-based compensation expense		1,677			1,199			14
Foreign currency transaction loss (gain)		834			(1,116	)		—
Gain on disposal of asset		—			—			(1,013	)
Changes in operating assets and liabilities —
Merchandise held for disposition		12,499			4,830			5,907
Finance and service charges receivable		(1,861	)		(1,359	)		(928	)
Other receivables and prepaid expenses		(3,191	)		(2,569	)		1,530
Accounts payable and accrued expenses		4,264			(5,723	)		12,502
Customer deposits, net		461			714			8
Current income taxes, net		229			3,918			4,455
Deferred income taxes, net		(1,633	)		5,074			1,299
Net cash provided by operating activities of continuing operations		124,351			80,672			69,829
Cash Flows from Investing Activities of Continuing Operations:
Pawn loans made		(361,077	)		(290,013	)		(272,388	)
Pawn loans repaid		202,015			157,624			149,810
Principal recovered on forfeited loans through dispositions		139,365			122,115			117,447
Cash advances made, assigned or purchased		(624,303	)		(447,113	)		(181,190	)
Cash advances repaid		578,475			418,647			157,592
Acquisitions, net of cash acquired		(19,937	)		(122,413	)		(45,508	)
Purchases of property and equipment		(27,255	)		(28,491	)		(16,063	)
Proceeds from dispositions of assets and insurance claim		1,016			104,908			1,639
Net cash used by investing activities of continuing operations		(111,701	)		(84,736	)		(88,661	)
Cash Flows from Financing Activities of Continuing Operations:
Net (repayments) borrowings under bank lines of credit		(21,346	)		24,372			23,611
Issuance of long-term debt		40,000			—			—
Debt issuance costs paid		(1,328	)		—			—
Payments on notes payable and other obligations		(19,286	)		(8,286	)		(12,571	)
Change in notes receivable secured by common stock		—			—			2,968
Proceeds from exercise of stock options		2,202			6,067			18,520
Treasury shares purchased		(6,240	)		(4,328	)		(2,320	)
Dividends paid		(2,903	)		(10,617	)		(1,672	)
Net cash (used) provided by financing activities of continuing operations		(8,901	)		7,208			28,536
Cash Flows from Discontinued Operations (Revised — See Note 2):
Net cash provided by operating activities of discontinued operations		—			9,022			8,071
Net cash used by investing activities of discontinued operations		—			(6,527	)		(6,255	)
Net cash used financing activities of discontinued operations		—			(1,905	)		(924	)
Net cash provided by discontinued operations		—			590			892
Net increase in cash and cash equivalents		3,749			3,734			10,596
Less: Net cash provided by discontinued operations		—			(590	)		(892	)
Cash and cash equivalents at beginning of year		15,103			11,959			2,255
Cash and cash equivalents at end of year	$	18,852		$	15,103		$	11,959

See notes to consolidated financial statements.

53

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Company

     Cash America International, Inc. (the “Company”) is a provider of specialty financial services to individuals in the United States. The Company offers secured non-recourse loans, commonly referred to as pawn loans, to individuals through its pawn lending operations. The pawn loan portfolio generates finance and service charges revenue. A related activity of the lending operations is the disposition of merchandise, primarily collateral from unredeemed pawn loans. As an alternative to a pawn loan, the Company offers unsecured cash advances in selected locations and on behalf of third-party banks and other independent third-party lenders (collectively referred to as “third-party lenders”) in other locations. The Company also provides check cashing and related financial services through many of its cash advance locations and through its franchised and company owned check cashing centers.

     As of December 31, 2005, the Company’s pawn lending operations consisted of 464 pawnshops, including 456 owned units and 8 franchised units in 21 states. Included in the 456 owned units are 41 stores operating under the trade name “SuperPawn”(“SuperPawn”) that the Company acquired in December 2004.

     As of December 31, 2005, the Company’s cash advance operations consisted of 286 locations, including 196 Cashland locations through Cashland Financial Services, Inc. (“Cashland”), a wholly-owned subsidiary, and 90 Cash America Payday Advance locations (collectively referred to as “cash advance locations”).

     As of December 31, 2005, the check cashing operations of Mr. Payroll Corporation (“Mr. Payroll”), a wholly-owned subsidiary, consisted of 131 franchised and 5 company-owned check cashing centers in 20 states.

2. Summary of Significant Accounting Policies

Basis of Presentation • The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

     In September 2004, the Company sold its foreign pawn lending operations in the United Kingdom and Sweden. The results of the foreign pawn lending operations have been reclassified as discontinued operations for all periods presented in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. See Note 17.

Use of Estimates • The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, merchandise held for disposition, allowance for losses on cash advances, long-lived and intangible assets, income taxes, contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Foreign Currency Translations · Notes receivable and related interest receivable resulting from the sale of the Company’s foreign pawn lending operations are denominated in Swedish kronor. The balances are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Interest income on the

54

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

notes is translated at the monthly average exchange rates. All realized and unrealized transaction gains and losses are included in determining net income for the reporting period.

     For the periods prior to the sale of its foreign pawn lending operations, the functional currencies for the foreign subsidiaries were the local currencies. The assets and liabilities of those subsidiaries were translated into U.S. dollars at the exchange rates in effect at each balance sheet date, and the resulting adjustments were accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity. Revenue and expenses were translated at the monthly average exchange rates occurring during each year.

Cash and Cash Equivalents • The Company considers cash on hand in operating locations, deposits in banks and short-term marketable securities with original maturities of 90 days or less as cash and cash equivalents.

Revenue Recognition • Pawn loans are made on the pledge of tangible personal property. The Company accrues finance and service charges revenue only on those pawn loans that the Company deems collectible based on historical loan redemption statistics. Pawn loans written during each calendar month are aggregated and tracked for performance. The gathering of this empirical data allows the Company to analyze the characteristics of its outstanding pawn loan portfolio and estimate the probability of collection of finance and service charges. For loans not repaid, the carrying value of the forfeited collateral (“merchandise held for disposition”) is stated at the lower of cost (cash amount loaned) or market. Revenue is recognized at the time that merchandise is sold. Interim customer payments for layaway sales are recorded as customer deposits and subsequently recognized as revenue during the period in which the final payment is received.

     Cash advances provide customers with cash in exchange for a promissory note or other repayment agreement supported by that customer’s personal check or by that customer’s written authorization to debit their account via an Automated Clearing House (“ACH”) transaction for the aggregate amount of the payment due. To repay the cash advance, customers may pay cash, or, as applicable, they may allow the check to be presented for collection, or they may allow their checking account to be debited through an ACH for the amount due. The Company accrues fees and interest on cash advances on a constant yield basis ratably over their terms. For those locations that offer cash advances from third-party banks, the Company receives an administrative service fee for services provided on the banks’ behalf. These fees are recorded in revenue when earned.

     On July 1, 2005, the Company introduced a new cash advance product offered under a credit services program, whereby the Company assists customers in arranging loans for customers from independent third-party lenders. The Company also guarantees the customer’s payment obligations in the event of default if the customer is approved for and accepts the loan. Fees under the credit services program (“CSO fees”) are paid by the borrower to the Company for performing services on behalf of the borrower, including credit services and for agreeing to guarantee, on behalf of the borrower, the borrower’s payment obligations under the loan to the lender. As a result of providing the guaranty, a portion of the CSO fees are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). The CSO fees are deferred and amortized over the term of the loan and recorded as cash advance fees in the accompanying consolidated statements of income. The contingent loss on the guaranteed loans is accrued and recorded as a liability. See Note 4.

     The Company records fees derived from its owned check cashing locations and cash advance locations in the period in which the service is provided. Royalties derived from franchise locations are recorded on the accrual basis.

55

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Allowance for Losses on Cash Advances • In order to manage the portfolio of cash advances effectively, the Company utilizes a variety of underwriting criteria, monitors the performance of the portfolio, and maintains an allowance for losses.

     The Company maintains an allowance for losses on cash advances (including fees and interest) at a level estimated to be adequate to absorb credit losses inherent in the outstanding combined Company and third-party lender portfolio (the portion owned by banks and other independent third-party lenders). The allowance for losses on Company-owned cash advances offsets the outstanding cash advance amounts in the consolidated balance sheets. Active third-party lender-originated cash advances that the Company does not have a participation interest in are not included in the consolidated balance sheet. Since losses on cash advances assigned to the Company by the third-party lenders are the Company’s responsibility, an accrual for losses on third-party lender-owned cash advances is maintained and included in “Accounts payable and accrued expenses” in the accompanying consolidated balance sheet. See Note 4.

     Cash advances written during each calendar month are aggregated and tracked to develop a performance history. The Company stratifies the outstanding combined portfolio by age, delinquency, and stage of collection when assessing the adequacy of the allowance for losses. Historical collection performance adjusted for recent portfolio performance trends is utilized to develop expected loss rates, which are used for the establishment of the allowance. Increases in the allowance are created by recording a cash advance loss provision in the consolidated statements of income. The Company charges off all cash advances once they have been in default for 60 days or sooner if deemed uncollectible. Recoveries on losses previously charged to the allowance are credited to the allowance when collected.

     The allowance deducted from the carrying value of cash advances was $6.3 million and $4.4 million at December 31, 2005 and 2004, respectively. The accrual for losses on third-party lender-owned cash advances was $874,000 and $342,000 at December 31, 2005 and 2004, respectively. See Note 4.

Merchandise Held for Disposition and Cost of Disposed Merchandise • Merchandise held for disposition includes merchandise acquired from unredeemed loans, merchandise purchased directly from the public and merchandise purchased from vendors. Merchandise held for disposition is stated at the lower of cost (specific identification) or market. The cost of merchandise, computed on the specific identification basis, is removed from merchandise held for disposition and recorded as a cost of revenue at the time of sale. The Company provides an allowance for valuation and shrinkage based on management’s evaluation of the characteristics of the merchandise. The allowance deducted from the carrying value of merchandise held for disposition amounted to $1.8 million and $1.4 million at December 31, 2005 and 2004, respectively.

Property and Equipment • Property and equipment is recorded at cost. The cost of property retired or sold and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the consolidated statements of income. Depreciation expense is generally provided on a straight-line basis, using the following estimated useful lives:

Buildings and building improvements (1)	7 to 40 years
Leasehold improvements (2)	2 to 15 years
Furniture, fixtures and equipment	3 to 7 years
Computer software	3 to 5 years

(1)	Structural components are depreciated over 30 to 40 years and the remaining building systems and features are depreciated over 7 to 10 years.
(2)	Leasehold improvements are depreciated over the terms of the lease agreements.

Software Development Costs • The Company develops computer software for internal use. Internal and external costs incurred for the development of computer applications, as well as for upgrades and

56

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

enhancements that result in additional functionality of the applications, are capitalized. Internal and external training and maintenance costs are charged to expense as incurred. When an application is placed in service, the Company begins amortizing the related capitalized software costs using the straight-line method and an estimated useful life varying from 3 to 5 years.

Goodwill and Other Intangible Assets • SFAS No. 142, “Goodwill and Other Intangible Assets”, became effective January 1, 2002, and, as a result, the Company discontinued the amortization of goodwill as of that date. In lieu of amortization, the Company is required to perform an impairment review of goodwill at least annually. The Company completed its reviews during 2003, 2004 and 2005. Based on the results of these tests, management determined that there was no impairment as the respective fair values of each of the Company’s reporting units exceeded their respective carrying amounts. See Note 6.

     The Company amortizes intangible assets with an estimable life on the basis of their expected periods of benefit, generally 2 to 10 years. Accumulated amortization of these intangible assets was $5.1 million and $1.9 million at December 31, 2005 and 2004, respectively.

     The costs of start-up activities and organization costs are charged to expense as incurred.

Impairment of Long-Lived Assets • An evaluation of the recoverability of property and equipment and intangible assets subject to amortization is performed whenever the facts and circumstances indicate that the carrying value may be impaired. An impairment loss is recognized if the future undiscounted cash flows associated with the asset are less than the asset’s corresponding carrying value. The amount of the impairment loss, if any, is the excess of the asset’s carrying value over its estimated fair value.

Income Taxes • The provision for income taxes is based on income before income taxes as reported for financial statement purposes. Deferred income taxes are provided for in accordance with the assets and liability method of accounting for income taxes in order to recognize the tax effects of temporary differences between financial statement and income tax accounting.

Hedging and Derivatives Activity • As a policy, the Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. The Company does periodically use derivative financial instruments, such as interest rate cap agreements, for the purpose of managing interest rate exposures that exist from ongoing business operations. In September 2005, the Company entered into an interest rate cap agreement that is designated as a perfectly effective cash flow hedge at inception pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133), and its corresponding amendments under SFAS No. 138 “Accounting for Certain Derivative Instruments and Certain Hedging Activities – an Amendment of FASB Statement No. 133” (“SFAS 138”) and SFAS No. 149 “Amendment of FASB Statement No. 133 on Derivative and Hedging Activities” (“SFAS 149”). The fair value of the interest rate cap agreement is recognized in the accompanying consolidated balance sheets and changes in its fair value are recognized in accumulated other comprehensive income/loss. The Company also entered into foreign currency forward contracts in 2005 to minimize the effect of market fluctuations. See Note 13. The Company may periodically enter into forward sale contracts with a major gold bullion bank to sell fine gold that is produced in the normal course of business from the Company’s liquidation of forfeited gold merchandise. These contracts are not accounted for as derivatives because they meet the criteria for the normal purchases and normal sales scope exception in SFAS 133.

Advertising Costs • Costs of advertising are expensed at the time of first occurrence. Advertising expense for continuing operations was $12.9 million, $11.2 million and $7.4 million for the years ended December 31, 2005, 2004, and 2003, respectively.

57

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-Based Compensation • The Company accounts for its stock-based employee compensation plans in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), often referred to as the “intrinsic value” based method, and accordingly, no compensation expense has been recognized. In October 1995, FASB issued SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). SFAS 123 encourages expensing the fair value of employee stock options, but allows an entity to continue to account for stock based compensation under APB 25 with disclosures of the pro forma effect on net income had the fair value accounting provisions of SFAS 123 been adopted. In December 2002, SFAS 123 was amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an amendment of FASB Statement No. 123”. The table below illustrates the effect on net income and earnings per share if the Company had applied SFAS 123 and calculated the fair value of options granted using the Black-Scholes option-pricing model (in thousands, except per share amounts).

     Included in the pro forma amounts below for 2004 and 2003 is the effect of the vesting of 576,547 and 1,021,725 shares, respectively, which accelerated pursuant to the original terms of the options due to price performance of the underlying Company shares. As a result, the pro forma compensation expense of those option shares is reflected in 2004 and 2003, rather than in future years had scheduled vesting occurred during the years 2005 through 2007. No accelerated vesting of stock options occurred during 2005.

	2005		2004		2003
Income from continuing operations — as reported	$	44,821	$	34,965	$	22,030
Deduct: Total stock-based employee compensation expense (a)		65		1,005		4,107
Income from continuing operations — pro forma	$	44,756	$	33,960	$	17,923
Net income — as reported	$	45,018	$	56,835	$	30,036
Deduct: Total stock-based employee compensation expense (a)		65		1,005		4,107
Net income — pro forma	$	44,953	$	55,830	$	25,929
Net income per share —
Basic:
Income from continuing operations — as reported	$	1.53	$	1.23	$	0.86
Income from continuing operations — pro forma	$	1.53	$	1.20	$	0.70
Net income — as reported	$	1.54	$	2.00	$	1.17
Net income — pro forma	$	1.54	$	1.97	$	1.01
Diluted:
Income from continuing operations — as reported	$	1.48	$	1.18	$	0.83
Income from continuing operations — pro forma	$	1.48	$	1.14	$	0.67
Net income — as reported	$	1.49	$	1.92	$	1.13
Net income — pro forma	$	1.48	$	1.88	$	0.97

^(a) Determined under fair value based method for all awards, net of related tax effects. “All awards” refers to awards granted, modified, or settled in fiscal periods beginning after December 15, 1994, that is, options for which the fair value was required to be measured under SFAS 123.

     The pro forma amounts of stock options granted were estimated on the date of grant using the Black-Scholes option-pricing model. No stock options were granted during 2005 and 2004. For options granted during 2003, the following weighted average assumptions were made:

	2003
Expected term (years)		8.2
Risk-free interest rate		4.14	%
Expected dividend yield		0.54	%
Expected volatility		49.5	%

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net Income Per Share • Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the year. Diluted net income per share is calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the year. Units issued under the Company’s restricted stock awards are included in diluted shares upon the granting of the awards even though the vesting of shares will occur over time.

     The following table sets forth the reconciliation of numerators and denominators of basic and diluted earnings per share computations for the years ended December 31, 2005, 2004 and 2003 (in thousands, except per share amounts):

	2005		2004		2003
Numerator:
Income from continuing operations available to common stockholders	$	44,821	$	34,965	$	22,030
Income from discontinued operations available to common stockholders		197		21,870		8,006
Net income available to common shareholders	$	45,018	$	56,835	$	30,036
Denominator:
Weighted average common shares outstanding		29,215		28,401		25,586
Weighted average vested restricted stock units		47		1		—
Total weighted average basic shares		29,262		28,402		25,586
Effect of shares applicable to stock option plans		528		780		1,039
Effect of restricted stock unit compensation plans		352		336		—
Effect of shares applicable to non-qualified savings plan		64		66		63
Total weighted average diluted shares		30,206		29,584		26,688
Basic earnings per share:
Income from continuing operations	$	1.53	$	1.23	$	0.86
Income from discontinued operations		0.01		0.77		0.31
Net income	$	1.54	$	2.00	$	1.17
Diluted earnings per share:
Income from continuing operations	$	1.48	$	1.18	$	0.83
Income from discontinued operations		0.01		0.74		0.30
Net income	$	1.49	$	1.92	$	1.13

     There were no anti-dilutive shares for the years ended December 31, 2005, 2004 and 2003.

Recent Accounting Pronouncements • In May 2005, FASB issued Statement No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”). SFAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle. It also requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported in an income statement. The statement will be effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of SFAS 154 to have a material effect on the Company’s consolidated financial position or results of operations.

     In December 2004, FASB issued Statement No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements over the period during which an employee is required to provide service in exchange for the award. SFAS 123R establishes fair value as the measurement objective in

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

accounting for share-based payment arrangements and requires all entities to apply a fair-value based method in accounting for share-based transactions with employees. SFAS 123R also amends FASB Statement No. 95, “Statement of Cash Flows”, to require that excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. SFAS 123R is effective for annual periods that begin after June 15, 2005. The Company does not expect the adoption of SFAS 123R to have a material effect on the Company’s consolidated financial position or results of operations because of the Company’s decision in early 2004 to begin granting restricted stock units in lieu of stock options. The value of restricted stock unit grants is recognized as expense over the vesting period.

Revised Consolidated Statements of Cash Flows • The Company revised the consolidated statements of cash flows for the years ended December 31, 2004 and 2003, to include the disclosure of operating, investing and financing cash flows related to its discontinued foreign pawn lending operations. Previously, cash flows from discontinued operations were not presented in the consolidated statements of cash flows because cash and other assets of the foreign pawn lending operations were classified as assets of discontinued operations on the consolidated balance sheets. These revisions did not change any of the account balances on the accompanying consolidated balance sheets, consolidated statements of income, or the net increase in cash and cash equivalents from continuing operations included in the consolidated statements of cash flows for the years ended December 31, 2004 and 2003.

3. Acquisitions

     Pursuant to the Company’s business strategy of acquiring existing pawnshop and/or cash advance locations that can benefit from the Company’s centralized management and standardized operations, the Company acquired 9 pawnshops and one cash advance location in purchase transactions for an aggregate purchase price of $19.0 million in 2005. Three of the 9 pawnshops acquired in 2005 were previously franchised locations operated by an entity controlled by the Chairman of the Board of Directors of the Company. See Note 19. In December 2004, the Company acquired substantially all of the pawn operating assets of Camco, Inc., which operated under the trade name “SuperPawn” in four states in the western United States. The transaction provided the Company its initial entry into the western United States for pawn lending activities. The initial aggregate purchase consideration and costs totaled $118.4 million, which consisted of $104.8 million in cash and a payable for $1.5 million that was to be reconciled upon post transaction accounting, 578,793 shares of the Company’s stock valued at $12.6 million and acquisition costs of $1.0 million. After the post transaction accounting reconciliation, the payable for $1.5 million was adjusted and settled for $850,000 in 2005, reducing the final aggregate purchase consideration and costs to $117.7 million. Also in 2004, the Company acquired, in two distinct transactions, the operating assets of 32 cash advance locations in southern California for $14.6 million in cash, and a pawnshop in Florida in November 2004 for $589,000.

     The Company’s June 30, 2003 asset purchase agreement for the purchase of the assets of Cashland, Inc. through Cashland Financial Services, Inc. (“Cashland”), a wholly-owned subsidiary, contained a provision under which the seller could potentially have received additional consideration based upon the future earnings of the business. On February 2, 2004, the parties amended the asset purchase agreement to eliminate that provision and to provide instead for the Company to make a final payment of additional consideration in the amount of $5.4 million. The payment consisted of $2.9 million in cash and a subordinated note for $2.5 million. In June 2005, the Company prepaid the $2.5 million for a total amount of $2.7 million, including accrued interest of $123,000 and a prepayment fee of $75,000.

     All of the amounts of goodwill recorded in the acquisitions are expected to be deductible for tax purposes.

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     The following table provides information concerning the acquisitions made by the Company’s continuing operations during 2005, 2004 and 2003 ($ in thousands):

	2005			2004			2003
Number of store acquired:
Pawnshops		9			42			7
Cash advance locations		1			32			121
Check cashing franchise		—			—			1
Purchase price allocated to:
Pawn loans	$	3,631		$	26,781		$	2,506
Finance and service charges receivable		383			3,715			307
Cash advances and fees receivable		34			2,302			12,876
Merchandise held for disposition, net		1,283			13,592			677
Property and equipment		189			7,165			6,514
Goodwill		11,386			65,285			34,673
Non-competition agreements		1,570			5,310			1,170
Customer relationships		575			3,539			2,530
Tradenames		—			4,326			1,000
Licenses		25			7,649			—
Other assets, net of accrued liabilities		(78	)		(679	)		60
Total purchase price, net of cash acquired		18,998			138,985			62,313
Stock issued in acquisitions		—			(12,562	)		(16,805	)
Note issued in acquisition		—			(2,500	)		—
Final cash settlement for prior year acquisition		850			—			—
Purchase price adjustments for prior year acquisition		159			—			—
Cash consideration payable		(70	)		(1,510	)		—
Total cash paid for acquisitions	$	19,937		$	122,413		$	45,508

     The following table provides an unaudited condensed pro forma statement of income information on the acquisition of SuperPawn for the year ended December 31, 2004 (in thousands, except per share amounts):

	Year Ended
	December 31, 2004
	As Reported		Pro Forma (a)
Total revenue	$	469,478	$	536,276
Income from continuing operations	$	34,965	$	41,829
Income from continuing operations per share:
Basic	$	1.23	$	1.45
Diluted	$	1.23	$	1.39

(a) Pro forma adjustments reflect:

(i)	the inclusion of operating results of Camco, Inc. for the period January 1, 2004 through December 10, 2004, the date of acquisition, for 2004;
(ii)	the elimination of certain general and administrative expenses of Camco, Inc. primarily consisting of compensation and related expenses of Camco, Inc.’s owner and other members of its management team not employed by the Company;
(iii)	the adjustments of depreciable asset bases and lives for property and equipment and amortization of intangible assets acquired by the Company;
(iv)	the additional interest incurred in the acquisition of Camco, Inc.’s operating assets;
(v)	the elimination of bad debt expense on receivables due from a Camco, Inc. affiliate not associated with the core business;
(vi)	the tax effect of Camco, Inc. earnings and net pro forma adjustments at statutory rate of 35%; and
(vii)	the weighted average number of shares of common stock issued in the acquisition of Camco, Inc’s operating assets.

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.  Cash Advances, Allowance for Losses and Accruals for Losses on Third-Party Lender-Owned Cash Advances

     The Company offers the cash advance products through its cash advance locations and most of its pawnshops. The cash advance products are generally offered as single payment cash advance loans. These cash advance loans generally have a term of 7 to 45 days and are generally payable on the customer’s next payday. The Company originates cash advances in some of its locations and arranges for customers to obtain cash advances from independent third-party lenders in other Company locations. These third-party lenders are either commercial banks or independent third-party non-bank lenders (collectively, “third-party lenders”). In a cash advance transaction, a customer executes a promissory note or other repayment agreement typically supported by that customer’s personal check or authorization to debit the customer’s checking account via an Automated Clearing House (“ACH”) transaction. Customers may repay the cash advance either with cash, by allowing their check to be presented for collection, or by allowing their checking account to be debited via an ACH transaction for the amount due.

     For single payment cash advances originated by independent non-bank third-party lenders, the Company introduced a credit services program (the “CSO program”) on July 1, 2005, under which the Company acts as a credit services organization on behalf of consumers in accordance with applicable state laws. Credit services that the Company provides to its customers include arranging loans with independent third-party lenders, assisting in the preparation of loan applications and loan documents, and accepting loan payments at the location where the loans were arranged. If a customer obtains a loan from an independent non-bank third-party lender through the CSO program, the Company, on behalf of the customer, also guarantees the customer’s payment obligations under the loan to the third-party lender. A customer who obtains a loan through the CSO program pays the Company a fee for the credit services, including the guaranty, and enters into a contract with the Company governing the credit services arrangement. Losses on cash advances acquired by the Company as a result of its guaranty obligations are the responsibility of the Company. As of February 1, 2006, the Company offered the CSO program in Texas, Michigan and Florida.

     For cash advances originated by commercial banks, the banks sell participation interests in the bank-originated cash advances to third parties, and the Company purchases sub-participation interests in certain of those participations. The Company also receives an administrative fee for its services. In order to benefit from the use of the Company’s collection resources and proficiency, the banks assign cash advances unpaid after their payment due date to the Company at a discount from the amount owed by the borrower. The Company introduced a third-party commercial bank originated multi-payment installment cash advance product at 52 locations in California and Georgia during the fourth quarter of 2005.

     In January 2006, the Company discontinued offering third-party bank originated cash advances to its Texas, Florida and North Carolina customers. It has expanded its CSO program in Florida and Texas to meet customer demand for cash advances in those states.

     If the Company collects a delinquent amount owed by the customer that exceeds the amount assigned by the banks or acquired by the Company as a result of its guaranty to third-party lenders, the Company is entitled to the excess and recognizes it in income when collected. Since the Company may not be successful in collection of these delinquent accounts, the Company’s cash advance loss provision includes amounts estimated to be adequate to absorb credit losses from cash advances in the aggregate cash advance portfolio, including those expected to be assigned to the Company or acquired by the Company as a result of its guaranty obligations. The accrued losses on portfolios owned by the third-party lenders are included in “Accounts payable and accrued expenses” in the consolidated balance sheets.

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Cash advances outstanding at December 31, 2005 and 2004, were as follows (in thousands):

	2005		2004
Originated by the Company
Active cash advances and fees receivable	$	32,207	$	23,967
Cash advances and fees in collection		7,510		5,376
Total originated by the Company		39,717		29,343
Originated by third-party lenders (1)
Active cash advances and fees receivable		19,548		17,532
Cash advances and fees in collection		5,010		4,795
Total originated by third-party lenders (1)		24,558		22,327
Combined gross portfolio		64,275		51,670
Less: Elimination of cash advances owned by third-party lenders		16,912		10,150
Less: Discount on cash advances assigned by third-party lenders		350		672
Company-owned cash advances and fees receivable, gross		47,013		40,848
Less: Allowance for losses		6,309		4,358
Cash advances and fees receivable, net	$	40,704	$	36,490

⁽¹⁾ Amounts showing as originated by third-party lenders include $8,874 (which includes $6,590 single payment bank cash advance program balance offerings predominately discontinued in January 2006 and $2,284 of multi-payment installment bank cash advance program balance expected to be discontinued later in 2006) and $22,327 originated by commercial banks for 2005 and 2004, respectively.

     Changes in the allowance for losses for the years ended December 31, 2005, 2004 and 2003 were as follows (in thousands):

	2005			2004			2003
Company-owned cash advances
Balance at beginning of year	$	4,358		$	3,393		$	1,319
Cash advance loss provision		42,302			23,242			11,130
Charge-offs		(50,145	)		(29,833	)		(12,453	)
Recoveries		9,794			7,556			3,397
Balance at end of year	$	6,309		$	4,358		$	3,393
Accrual for third-party lender-owned cash advances
Balance at beginning of year	$	342		$	55		$	429
Increase/(decrease) in loss provision		532			287			(374	)
Balance at end of year	$	874		$	342		$	55
Combined statistics
Combined cash advance loss provision	$	42,834		$	23,529		$	10,756
Charge-offs, net of recoveries	$	40,351		$	22,277		$	9,056
Combined cash advances written	$	930,335		$	647,746		$	300,518
Combined cash advance loss provision as a % of combined cash advances written		4.6	%		3.6	%		3.6	%
Charge-offs (net of recoveries) as a % of combined cash advances written		4.3	%		3.4	%		3.0	%
Combined allowance for losses and accrued third-party lender losses as a % of combined gross portfolio		11.2	%		9.1	%		10.2	%

     Cash advances assigned to the Company for collection were $67.6 million and $45.9 million for 2005 and 2004, respectively. The Company’s participation interest in third-party lender originated cash advances at December 31, 2005 and 2004 was $2.6 million and $7.4 million, respectively.

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Property and Equipment

     Major classifications of property and equipment at December 31, 2005 and 2004 were as follows (in thousands):

	2005							2004
			Accumulated							Accumulated
	Cost		Depreciation			Net		Cost		Depreciation			Net
Land	$	5,014	$	—		$	5,014	$	3,263	$	—		$	3,263
Buildings and leasehold improvements		116,307		(57,228	)		59,079		107,124		(50,860	)		56,264
Furniture, fixtures and equipment		67,076		(40,910	)		26,166		57,456		(33,734	)		23,722
Computer software		21,229		(16,632	)		4,597		19,350		(14,987	)		4,363
Total	$	209,626	$	(114,770	)	$	94,856	$	187,193	$	(99,581	)	$	87,612

     The Company recognized depreciation expense of $20.1 million, $15.9 million and $12.5 million during 2005, 2004 and 2003, respectively.

6. Goodwill and Other Intangible Assets

     Goodwill and other intangible assets having an indefinite useful life are tested for impairment annually at June 30, or more frequently if events or changes in circumstances indicate that the assets might be impaired, using a two-step impairment assessment. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is not necessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The useful lives of other intangible assets must be reassessed and the remaining amortization periods adjusted accordingly.

     The Company adopted the provisions of SFAS 142 on January 1, 2002. Based on the results of the initial and the subsequent annual impairment tests, management determined that there have been no impairments.

     Goodwill • Changes in the carrying value of goodwill for the years ended December 31, 2005 and 2004, were as follows (in thousands):

	Pawn			Cash			Check
	Lending			Advance			Cashing		Consolidated
Balance as of January 1, 2005, net of amortization of $20,788	$	114,341		$	44,422		$	5,310	$	164,073
Acquisitions		11,196			190			—		11,386
Adjustments		(478	)		6			—		(472	)
Balance as of December 31, 2005	$	125,059		$	44,618		$	5,310	$	174,987
Balance as of January 1, 2004, net of amortization of $20,788	$	65,934		$	27,840		$	5,310	$	99,084
Acquisitions		48,425			16,860			—		65,285
Adjustments		(18	)		(278	)		—		(296	)
Balance as of December 31, 2004	$	114,341		$	44,422		$	5,310	$	164,073

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquired Intangible Assets • Acquired intangible assets that are subject to amortization as of December 31, 2005 and 2004, were as follows (in thousands):

	2005							2004
			Accumulated							Accumulated
	Cost		Depreciation			Net		Cost		Depreciation			Net
Non-competition agreements	$	8,555	$	(1,888	)	$	6,667	$	7,085	$	(680	)	$	6,405
Customer relationships		6,644		(3,098	)		3,546		6,069		(1,197	)		4,872
Other		269		(91	)		178		179		(70	)		109
Total	$	15,468	$	(5,077	)	$	10,391	$	13,333	$	(1,947	)	$	11,386

     Non-competition agreements are amortized over the applicable terms of the contracts. Customer relationships are generally amortized over five to six years based on the pattern of economic benefits provided. At December 31, 2005, tradenames of $4.3 million and $1.0 million obtained in the acquisition of SuperPawn and Cashland, respectively, and licenses of $7.6 million primarily obtained in the SuperPawn and other acquisitions are not subject to amortization.

     Amortization • Amortization expense for the acquired intangible assets is as follows (in thousands):

     Actual amortization expense for the year ended December 31:

2005	$	3,230
2004		1,315
2003		600

     Estimated future amortization expense for the years ended December 31:

2006	$	2,984
2007		2,501
2008		1,999
2009		1,502
2010		399

7. Accounts Payable and Accrued Expenses

     Accounts payable and accrued expenses at December 31, 2005 and 2004, were as follows (in thousands):

	2005		2004
Trade accounts payable	$	7,989	$	8,560
Accrued taxes, other than income taxes		3,912		2,577
Accrued payroll and fringe benefits		16,784		15,077
Accrued interest payable		1,854		2,540
Purchase consideration payable		70		1,510
Accrual for losses on third-party lender-owned cash advances		874		342
Other accrued liabilities		5,734		3,248
Total	$	37,217	$	33,854

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Long-term Debt

     The Company’s long-term debt instruments and balances outstanding at December 31, 2005 and 2004, were as follows (in thousands):

	2005		2004
Line of credit due 2010	$	71,137	$	92,483
6.12% senior unsecured notes due 2015		40,000		—
7.20% senior unsecured notes due 2009		34,000		42,500
7.10% senior unsecured notes due 2008		12,857		17,143
8.14% senior unsecured notes due 2007		8,000		12,000
12.0% subordinated note due 2014		—		2,500
Total debt		165,994		166,626
Less current portion		16,786		16,786
Total long-term debt	$	149,208	$	149,840

     In February 2005, the Company amended and restated the existing line of credit agreement to increase the credit limit to $250 million and extend the maturity to February 2010. Interest on the amended line of credit is charged, at the Company’s option, at either LIBOR plus a margin or at the agent’s base rate. The margin on the line of credit varies from 0.875% to 1.875% (1.375% at December 31, 2005), depending on the Company’s cash flow leverage ratios as defined in the amended agreement. The Company also pays a fee on the unused portion ranging from 0.25% to 0.30% (0.25% at December 31, 2005) based on the Company’s cash flow leverage ratios. The weighted average interest rate (including margin) on the line of credit at December 31, 2005 was 5.85%. On September 30, 2005, the Company entered into an interest rate cap agreement with a notional amount of $15.0 million of the Company’s outstanding floating rate line of credit for a term of 24 months at a fixed rate of 4.5%. This interest rate cap agreement was designated as a perfectly effective cash flow hedge at inception. See Note 13.

     In December 2005, the Company issued $40.0 million of 6.12% senior unsecured notes, due in December 2015. The notes are payable in six equal annual payments beginning December 2010. Net proceeds received from the issuance of the notes were used to reduce the amount outstanding under the Company’s bank line of credit.

     In connection with the sale of the foreign pawn lending operations and the acquisition of SuperPawn in 2004, the Company entered into agreements to amend certain terms and calculations of covenants under the line of credit, and the 8.14%, 7.10%, and 7.20% senior notes. The credit agreements governing the line of credit and the senior unsecured notes require the Company to maintain certain financial ratios. The Company is in compliance with all covenants or other requirements set forth in its credit agreements.

     In June 2005, the Company prepaid the 12% subordinated note due 2014 for a total amount of $2.7 million, including accrued interest of $123,000 and a prepayment fee of $75,000. The note was issued in February 2004, as partial consideration of the final payment pursuant to an amended asset purchase agreement.

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     As of December 31, 2005, annual maturities of the outstanding long-term debt, including the Company’s line of credit, for each of the five years after December 31, 2005 are as follows (in thousands):

2006	$	16,786
2007		16,786
2008		12,785
2009		8,500
2010		77,804
Thereafter		33,333
	$	165,994

9. Income Taxes

     The components of the Company’s deferred tax assets and liabilities as of December 31, 2005 and 2004, were as follows (in thousands):

	2005			2004
Deferred tax assets:
Allowance for valuation of merchandise held for disposition	$	402		$	278
Tax over book accrual of finance and service charges		4,752			4,349
Allowance for cash advance losses		2,515			1,639
Valuation of notes receivable — sale of discontinued operations		1,565			1,165
Deferred compensation		3,037			2,102
Net capital losses		180			356
Other		1,089			1,271
Total deferred tax assets		13,540			11,160
Valuation allowance for deferred tax assets		(65	)		(225	)
Deferred tax assets, net		13,475			10,935
Deferred tax liabilities:
Amortization of acquired intangibles		8,505			5,861
Property and equipment		4,169			5,928
Other		871			852
Total deferred tax liabilities		13,545			12,641
Net deferred tax liabilities	$	(70	)	$	(1,706	)
Balance sheet classification:
Current deferred tax assets	$	11,274		$	9,293
Non-current deferred tax liabilities		(11,344	)		(10,999	)
Net deferred tax liabilities	$	(70	)	$	(1,706	)

67

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     The components of the provision for income taxes and the income to which it relates for the years ended December 31, 2005, 2004 and 2003 are shown below (in thousands):

	2005			2004		2003
Income from continuing operations before income taxes	$	70,882		$	55,023	$	34,325
Current provision:
Federal	$	26,291		$	13,887	$	10,229
State and local		1,401			1,097		767
		27,692			14,984		10,996
Deferred provision (benefit):
Federal		(1,845	)		5,008		1,326
State and local		214			66		(27	)
		(1,631	)		5,074		1,299
Total provision	$	26,061		$	20,058	$	12,295

     The effective tax rate on income from continuing operations differs from the federal statutory rate of 35% for the following reasons ($ in thousands):

	2005			2004			2003
Tax provision computed at the federal statutory income tax rate	$	24,809		$	19,258		$	12,014
State and local income taxes, net of federal tax benefits		1,050			756			481
Valuation allowance		(123	)		(166	)		(487	)
Other		325			210			287
Total provision	$	26,061		$	20,058		$	12,295
Effective tax rate		36.8	%	$	36.5	%		35.8	%

     As of December 31, 2005, the Company had net capital loss carryovers of $513,000, principally related to a previous investment. These losses may only be used to offset net capital gains. Any unused losses expire in 2006 through 2007. The deferred tax valuation allowances at December 31, 2005 and 2004 were provided to reduce deferred tax benefits of capital losses that the Company does not expect to realize. During 2005 and 2004, the Company reduced the valuation allowance by $160,000 and $7.0 million, respectively, as a result of capital gains arising during those years or expected to arise in the carryforward years. The decrease in the valuation allowance during 2005 and 2004 includes $37,000 and $6.8 million, respectively, attributable to gains recognized on disposal of discontinued foreign operations. The tax benefit resulting from that portion of the decrease reduced the tax provision on the gain from disposal of discontinued foreign operations (see Note 17).

10. Commitments and Contingencies

Leases • The Company leases certain of its facilities under operating leases with terms ranging from 3 to 15 years and certain rights to extend for additional periods. Future minimum rentals due under non-cancelable leases for continuing operations are as follows for each of the years ending December 31 (in thousands):

2006	$	31,080
2007		25,762
2008		19,478
2009		14,127
2010		7,250
Thereafter		11,709
Total	$	109,406

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Rent expense for continuing operations was $32.6 million, $24.7 million and $21.2 million for 2005, 2004 and 2003, respectively.

Guarantees • The Company guarantees borrowers’ payment obligations to third-party lenders. At December 31, 2005, the amount of cash advances, excluding the Company’s participation interest, guaranteed by the Company was $16.9 million. Of which $13.4 million was cash advances originated by third-party lenders under the CSO program and $3.5 million was cash advances originated by third-party banks. The fair value of the liability related to these guarantees of $874,000 was included in the “Accounts payable and accrued expenses” in the accompanying financial statements.

     The Company guarantees obligations under certain operating leases for the premises related to 22 stores sold in June 2002 from a discontinued operating segment. In the event the buyer is unable to perform under the operating leases, the Company’s maximum aggregate potential obligation under these guarantees was approximately $686,000 at December 31, 2005. This amount is reduced dollar-for-dollar by future amounts paid on these operating leases by the buyer. In the event that the buyer fails to perform and the Company is required to make payments under these leases, the Company will seek to mitigate its losses by subleasing the properties or buying out of the leases.

Litigation • On August 6, 2004, James E. Strong filed a purported class action lawsuit in the State Court of Cobb County, Georgia against Georgia Cash America, Inc., Cash America International, Inc. (together with Georgia Cash America, Inc., “Cash America”), Daniel R. Feehan, and several unnamed officers, directors, owners and “stakeholders” of Cash America. The lawsuit alleges many different causes of action, among the most significant of which is that Cash America has been making illegal payday loans in Georgia in violation of Georgia’s usury law, the Georgia Industrial Loan Act and Georgia’s Racketeer Influenced and Corrupt Organizations Act. Community State Bank (“CSB”) has for some time made loans to Georgia residents through Cash America’s Georgia operating locations. The complaint in this lawsuit claims that CSB is not the true lender with respect to the loans made to Georgia borrowers and that its involvement in the process is “a mere subterfuge.” Based on this claim, the suit alleges that Cash America is the “de facto” lender and is illegally operating in Georgia. The complaint seeks unspecified compensatory damages, attorney’s fees, punitive damages and the trebling of any compensatory damages. The Company believes that the claims in this suit are without merit and intends to vigorously defend this lawsuit. Cash America removed the case to the U.S. District Court for the Northern District of Georgia and filed a motion to compel the plaintiff to arbitrate his claim, in addition to denying the plaintiff’s allegations and asserting various defenses to his claim. The court approved a motion by the plaintiff to remand the case to Georgia state court on December 13, 2005. As of February 15, 2006, the entirety of this case is before the State Court of Cobb County, Georgia and the parties are awaiting the State Court’s ruling on certain motions, including a motion to compel arbitration. This case is still at a very early stage, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, with respect to this litigation can be determined at this time. In response to the Strong case, and to further assert the Company’s right to arbitrate that dispute, Cash America and CSB filed a separate complaint against Strong on September 7, 2004 in the U.S. District Court for the Northern District of Georgia to compel Strong to arbitrate the claims he asserts in his suit. The court dismissed Cash America’s complaint on February 7, 2006, based on a finding of a lack of subject matter jurisdiction. Cash America is likely to appeal this dismissal.

     The Company is a defendant in certain lawsuits encountered in the ordinary course of its business. Certain of these matters are covered to an extent by insurance. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations or liquidity.

69

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Stockholders’ Equity

     During 2005 and 2004, the Company received net proceeds totaling $2.2 million and $6.1 million from the exercise of stock options for 225,134 and 707,199 shares, respectively. The Company issued 578,793 and 1,533,333 treasury shares valued at $12.6 million and $16.8 million, respectively, in connection with the acquisitions of SuperPawn in 2004 and Cashland in 2003.

     The Company received 2,588 shares during 2005 of its common stock valued at $67,000 as partial payment of taxes for shares issued under stock-based compensation plans and 5,605 shares during 2004 valued at $130,000 for the payment of stock exercise price.

     On April 20, 2005, the Company’s Board of Directors authorized management to purchase up to a total of 1,500,000 shares of its common stock and terminated the open market purchase authorization established on July 25, 2002. The following table summarizes the aggregate shares purchased under these plans during each of the three years ended December 31:

	2005		2004		2003
Shares purchased:
Under 2002 authorization		122,000		173,200		199,800
Under 2005 authorization		178,800		—		—
Total shares purchased		300,800		173,200		199,800
Aggregate amount (in thousands)	$	6,130	$	3,976	$	2,281
Average price paid per share	$	20.38	$	22.96	$	11.42

     Periodically, shares are purchased in the open market on behalf of participants relating to the Non-Qualified Savings Plan. Certain amounts are subsequently distributed or transferred to participants’ 401(k) account annually based on results of the plan’s administration testing results. Activities during each of the three years ended December 31 are summarized as follows:

	2005		2004		2003
Purchases:
Number of shares		11,463		13,355		13,756
Aggregate amount (in thousands)	$	258	$	315	$	173
Distributions and transfers to 401(k) savings plan:
Number of shares		16,441		8,162		15,834
Aggregate amount (in thousands)	$	215	$	83	$	143

     The Board of Directors adopted an officer stock loan program (the “Program”) in 1994 and modified it in 1996, 2001 and 2002. The amendment in 2002 provided that no further advances would be made to existing participants and closed the plan to new participants. Prior to the 2002 amendment, Program participants utilized loan proceeds to acquire and hold the Company’s and affiliates’ common stock by means of stock option exercises or otherwise. Common stock held as a result of the loan is pledged to the Company in support of the obligation. Interest accrues at 6% per annum. The entire unpaid balance of principal and interest on these loans is due and payable on July 24, 2007. During 2003, the Chairman of the Board of Directors sold 139,400 shares of common stock that had been pledged to the Company to secure a loan under the Program. The proceeds of $1.7 million from the sale were used to repay the loan in full. The Company’s Chief Executive Officer and other officers also made principal and interest payments totaling $1.8 million toward such loans during 2003. Amounts due under the Program are reflected as a reduction of stockholders’ equity in the accompanying consolidated balance sheets.

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     In November 2005, the Company’s Chief Executive Officer adopted a pre-arranged, systematic trading plan to sell company shares pursuant to guidelines specified by Rule 10b5-1 under the Securities and Exchange Act of 1934 and with the Company’s policies with respect to insider sales (the “Plan”). The net proceeds from the Plan will be used to fully repay the Chief Executive Officer’s remaining principal and interest on the related note receivable under a pre-2003 stock loan program. The Company will receive proceeds from the exercise of options and repayment of the receivable while the Plan is being executed, these proceeds are estimated to be approximately $4.4 million.

12. Employee Benefit Plans

     The Cash America International, Inc. 401(k) Savings Plan is open to substantially all employees who meet specific length of employment and age requirements. The Cash America International, Inc. Nonqualified Savings Plan is available to certain members of management. Participants may contribute up to 50% of their earnings to these plans subject to regulatory restrictions. The Company makes matching cash contributions of 50% of each participant’s contributions, based on participant contributions of up to 5% of compensation. Company contributions vest at the rate of 20% each year after one year of service; thus a participant is 100% vested after five years of service. The Company’s total contributions to the 401(k) Savings Plan and the Nonqualified Savings Plan for the continuing operations were $1.1 million, $1.0 million and $716,000 in 2005, 2004 and 2003, respectively.

     In addition to the plans mentioned above, the Company established a Supplemental Executive Retirement Plan (“SERP”) for its officers in 2003. The Company makes an annual discretionary cash contribution to the SERP based on the objectives of the plan as approved by the Management Development and Compensation Committee of the Board of Directors. The Company recorded compensation expense of $510,000, $513,000 and $432,000 for contributions to the SERP during 2005, 2004 and 2003, respectively.

     The amounts included in the Company’s consolidated balance sheets relating to the Nonqualified Savings Plan and the SERP were as follows (in thousands):

	As of December 31,
	2005		2004
Other receivables and prepaid expenses	$	5,399	$	3,910
Accounts payable and accrued expenses		5,909		4,423
Other liabilities		869		630
Treasury shares		900		873

13. Derivative Instruments and Hedging Activities

     On September 30, 2005, the Company entered into an interest rate cap agreement with a notional amount of $15.0 million of the Company’s outstanding floating rate line of credit for a term of 24 months at a fixed rate of 4.5%. This interest rate cap agreement was designated as a perfectly effective cash flow hedge at inception. The change in the fair value of the effective portion of hedge is recorded in accumulated other comprehensive income (loss) ($5,000 loss at December 31, 2005) and reclassified into earnings when the hedged interest payment impacts earnings ($477 during 2005). The estimated net amount to be reclassified into earnings as interest expense within the next twelve months is $48,000. The change in the fair value of the ineffective portion of the hedge, if any, will be recorded as income or expense. The fair value of the interest rate cap agreement of $93,000 at December 31, 2005 is included in “Other receivables and prepaid expenses” of the accompanying consolidated balance sheet.

     During 2005, the Company entered into foreign currency contracts totaling 62 million Swedish kronor (approximately $8.0 million at maturity) with respect to the expected principal to be received under two notes

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

received upon the sale of the foreign pawn lending operations, to minimize the market fluctuations. Under the contracts, the Company will receive fixed total payments of $7.9 million and will pay the counter parties a total of 62 million Swedish kronor upon maturity (March 31, 2006) unless the contracts are effectively extended through the establishment of a new contract maturing in the future. These contracts resulted in gains of $731,000 during 2005 which offset most of the period exchange rate losses during the same time frame.

14. Stock Purchase Rights

     In August 1997, the Board of Directors declared a dividend distribution of one Common Stock Purchase Right (the “Rights”) for each outstanding share of its common stock. The Rights become exercisable in the event a person or group acquires 15% or more of the Company’s common stock or announces a tender offer, the consummation of which would result in ownership by a person or group of 15% or more of the common stock. If any person becomes a 15% or more shareholder of the Company, each Right (subject to certain limits) will entitle its holder (other than such person or members of such group) to purchase, for $37.00, the number of shares of the Company’s common stock determined by dividing $74.00 by the then current market price of the common stock. The Rights will expire on August 5, 2007.

15. Stock Options and Restricted Stock Units

     Under various equity compensation plans (the “Plans”) it sponsors, the Company is authorized to issue 9,150,000 shares of Common Stock pursuant to “Awards” granted as incentive stock options (intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended), nonqualified stock options and restricted stock units. At December 31, 2005, 1,366,399 shares were reserved for future grants under these equity compensation plans.

Stock Options • Stock options currently outstanding under the Plans have contractual terms of up to 10 years and have an exercise price equal to or greater than the fair market value of the stock at grant date. These stock options vest over periods ranging from 1 to 7 years. However, the terms of options with the 7-year vesting periods and certain of the 4-year and 5-year vesting periods include provisions that accelerate vesting if specified share price appreciation criteria are met. During 2004 and 2003, 576,547 and 1,021,725 shares vested due to the acceleration provisions. No accelerated vesting of stock options occurred in 2005.

     A summary of the Company’s stock option activity for each of the three years ended December  , is as follows (shares in thousands):

	2005						2004									2003
					Weighted						Weighted						Weighted
					Average						Average						Average
					Exercise						Exercise						Exercise
	Shares				Price		Shares				Price		Shares				Price
Outstanding at beginning of year		1,633			$	10.26		2,342			$	9.75		4,374			$	8.13
Granted		—				—		—				—		572				10.80
Exercised		(225	)			9.78		(707	)			8.58		(2,565	)			7.22
Forfeited		(5	)			17.14		(2	)			10.13		(39	)			9.65
Outstanding at end of year		1,403			$	10.31		1,633			$	10.26		2,342			$	9.75
Exercisable at end of year		1,358			$	10.09		1,583			$	10.04		1,559			$	9.29
Weighted average fair value of options granted				N/A						N/A					$	7.37

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Stock options outstanding and exercisable as of December 31, 2005, are summarized below (shares in thousands):

Options Outstanding							Options Exercisable
					Weighted Average				Weighted
			Weighted		Years of				Average
Range of	Number		Average		Remaining		Number		Exercise
Exercise Prices	Outstanding		Exercise Price		Contractual Life		Exercisable		Price
$  5.94 to $  9.41		255	$	7.85		4.9		255	$	7.85
$  9.42 to $12.63		1,029		10.22		4.0		1,029		10.22
$12.64 to $17.14		119		16.42		6.1		74		15.99
$  5.94 to $17.14		1,403	$	10.31		4.3		1,358	$	10.09

Restricted Stock Units • In January 2004, the Company changed its approach to annual equity based compensation awards and granted restricted stock units to its officers under the provisions of the 1994 Long-Term Incentive Plan in lieu of stock options. In April 2004, the Company adopted the 2004 Long-Term Incentive Plan, which was approved by shareholders at the 2004 annual shareholders meeting and granted restricted stock units to the non-management members of the Board of Directors. Each vested restricted stock unit entitles the holder to receive a share of the common stock of the Company to be issued upon vesting or, in the case of directors, upon retirement from the Board. The amount attributable to officer grants is being amortized to expense over a four-year period, as the officer units vest on each of the first four anniversaries of the grant date. Director units have the same vesting schedule, but for directors with five or more years of service the vesting of units held for one year or more accelerates upon the director’s departure from the Board. Because all of the Company’s current directors have served for more than five years, the market value of the units attributable to directors is being amortized to expense over a one-year period.

     In December 2003, the Company granted restricted stock units to its officers in conjunction with the adoption of the Supplemental Executive Retirement Plan. Each vested restricted stock unit entitles the holder to receive shares of the common stock of the Company to be issued upon termination of employment from the Company. The amount attributable to this grant is being amortized to expense over the vesting periods of 4 to 15 years.

     Compensation expense totaling $1.7 million ($1.1 million net of related taxes), $1.2 million ($779,000 net of related taxes) and $14,000 ($9,000 net of related taxes) were recognized for 2005, 2004 and 2003, respectively, for all of the above restricted stock units granted.

     The following table summarizes the restricted stock unit activity during 2005, 2004 and 2003:

	2005					2004					2003
				Weighted					Weighted				Weighted
				Average					Average				Average
				Fair Value					Fair Value				Fair Value
				at Date of					at Date of				at Date of
	Units			Grant		Units			Grant		Units		Grant
Outstanding at beginning of year		342,798		$	20.31		233,223		$	19.23		—	$	—
Units granted		100,061			24.99		114,749			22.63		233,223		19.23
Shares issued		(12,115	)		22.46		—			—		—		—
Units Forfeited		(35,153	)		21.75		(5,174	)		22.84		—		—
Outstanding at end of year		395,591		$	21.30		342,798		$	20.31		233,223	$	19.23
Units vested at end of year		74,901		$	20.12		26,111		$	19.23		—	$	—

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Supplemental Disclosures of Cash Flow Information

     The following table sets forth certain cash and non-cash activities for the years ended December 31 (in thousands):

	2005		2004		2003
Cash paid during the year for —
Interest	$	11,153	$	8,274	$	11,238
Income taxes		27,464		11,067		6,542
Non-cash investing and financing activities —
Pawn loans forfeited and transferred to merchandise held for disposition	$	156,766	$	130,971	$	122,548
Pawn loans renewed		77,878		46,008		40,875
Cash advances renewed		14,336		7,404		5,969
Notes payable issued in acquisition		—		2,500		—
Notes receivable received from sale of subsidiaries		—		7,962		—
Common stock issued in acquisitions		—		12,562		16,805
Liabilities assumed in acquisitions		172		950		176

17. Discontinued Operations

     In order to dedicate its strategic efforts and resources on the growth opportunities of pawn lending and cash advance activities in the United States, the Company sold in September 2004 its foreign pawn lending operations in the United Kingdom and Sweden to Rutland Partners LLP for $104.9 million cash after paying off the outstanding balance of the multi-currency line of credit, and two separate subordinated notes receivable valued at $8.0 million. The Company realized a gain of $19.0 million ($15.4 million net of related taxes) upon the sale of the discontinued operations. The amount of goodwill included in the determination of the gain was $18.5 million. In connection with the sale, the Company declared a special dividend of $0.30 per share to its shareholders that was paid in December 2004. The special dividend reflects a share of the significant gain realized on the sale.

     The two subordinated notes received are the sole obligation of the company that acquired the Swedish pawn lending operations and are both subordinated as to rights and payment terms to certain senior lenders in the transaction. The senior subordinated note received in the maximum principal amount of SEK 80.4 million (approximately $10.7 million face value at the date of sale with a discounted value after currency translation adjustment of $7.2 million at December 31, 2005) bears a coupon rate of 8.33% per annum (effective yield of 16.4% per annum) payable quarterly with scheduled principal payments due between 2007 and 2011 subject to terms of the senior indebtedness. The convertible junior subordinated note received in the amount of SEK 13.4 million (approximately $1.8 million face value at the date of sale with discounted value after currency translation adjustment of $755,000 at December 31, 2005) bears a coupon rate of 10.0% per annum (effective yield of 25.5% per annum) payable quarterly with the entire principal or remaining unconverted principal due in 2014. This subordinated note is convertible after two years, at the Company’s option, into approximately 27.7% of the equity interest on a fully diluted basis in the acquiring company. Upon conversion to equity shares, the Company has no voting rights.

     As the issuer of the two subordinated notes is heavily leveraged with minimal equity, and due to the subordination feature and the payment structure of the two notes, the Company has valued the notes based on comparable yields for securities of this nature and discounted the senior subordinated note with 8.33% coupon rate and face value of $10.7 million to $7.2 million at the date of sale to yield 16.4% per annum, and the junior subordinated convertible note with 10.0% coupon rate and face value of $1.8 million to $765,000 at the date of sale to yield 25.5% per annum. Foreign currency transaction losses of $834,000 and gains of

74

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

$1.1 million on the U.S. dollar equivalent value of the subordinated notes and the accrued interest receivable at December 31, 2005 and 2004, respectively, were recognized in the Company’s consolidated statements of income when incurred. The 2005 foreign currency transaction losses include offsetting gains of $731,000 recognized on foreign currency forward contracts totaling 62 million SEK (or approximately $8.0 million at maturity of these contracts) that the Company established in 2005 to minimize the financial impact of currency market fluctuations.

     The summarized financial information for the discontinued operations for the years ended December 31, 2004 and 2003 is as follows (in thousands, except per share amounts):

	Year Ended December 31,
	2005		2004(1)		2003
Revenue
Finance and service charges	$	—	$	23,820	$	28,608
Proceeds from disposition of merchandise		—		15,433		18,572
Check cashing royalties and fees		—		1,771		1,862
Total Revenue		—		41,024		49,042
Cost of Revenue
Disposed merchandise		—		11,140		12,557
Net Revenue		—		29,884		36,485
Expenses
Operations		—		13,865		16,107
Administration		—		4,365		5,026
Depreciation and amortization		—		1,963		2,872
Total Expenses		—		20,193		24,005
Income from Operations		—		9,691		12,480
Interest expense and other, net		—		430		671
Income before Income Taxes		—		9,261		11,809
Provision for income taxes		—		2,806		3,803
Income from Operations before Gain on Disposal		—		6,455		8,006
Gain on disposal of discontinued operations, net of applicable of income taxes (benefits) of $(253) for 2005 and $3,608 for 2004		197		15,415		—
Income from Discontinued Operations	$	197	$	21,870	$	8,006
Diluted Income Per Share from Discontinued Operations	$	0.01	$	0.74	$	0.30

⁽¹⁾ For period from January 1, 2004 through September 7, 2004 (the date of sale).

18. Operating Segment Information

     The Company has three reportable operating segments: pawn lending operations, cash advance operations, and check cashing operations. The cash advance and check cashing segments are managed separately due to the different operational strategies required and, therefore, are reported as separate segments.

     The accounting policies of the segments are the same as those described in Note 2. Management of the Company evaluates performance based on income from operations before net interest expense, other miscellaneous items of income or expense, and the provision for income taxes. There are no sales between operating segments.

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     As described in Note 17, the Company reclassified the results of operations of its foreign lending operations business as discontinued operations. These operations were previously reported as a separate operating segment. The segment data included below has been restated to exclude amounts related to these discontinued operations.

     Information concerning the operating segments is set forth below (in thousands):

	Pawn		Cash		Check
	Lending		Advance		Cashing		Consolidated
Year Ended December 31, 2005:
Revenue
Finance and service charges	$	139,772	$	—	$	—	$	139,772
Proceeds from disposition of merchandise		301,502		—		—		301,502
Cash advance fees		41,405		100,663		—		142,068
Check cashing royalties and fees		—		7,185		3,819		11,004
Total revenue		482,679		107,848		3,819		594,346
Cost of revenue — disposed merchandise		183,799		—		—		183,799
Net revenue		298,880		107,848		3,819		410,547
Expenses
Operations		167,272		51,706		1,379		220,357
Cash advance loss provision		15,663		27,171		—		42,834
Administration		32,769		9,503		955		43,227
Depreciation and amortization		15,786		7,299		332		23,417
Total expenses		231,490		95,679		2,666		329,835
Income from operations	$	67,390	$	12,169	$	1,153	$	80,712
Expenditures for property and equipment	$	19,961	$	7,086	$	208	$	27,255
As of December 31, 2005:
Total assets	$	475,527	$	115,778	$	7,343	$	598,648
Year Ended December 31, 2004:
Revenue
Finance and service charges	$	110,495	$	—	$	—	$	110,495
Proceeds from disposition of merchandise		250,291		—		—		250,291
Cash advance fees		32,952		66,250		—		99,202
Check cashing royalties and fees		—		5,904		3,586		9,490
Total revenue		393,738		72,154		3,586		469,478
Cost of revenue — disposed merchandise		153,866		—		—		153,866
Net revenue		239,872		72,154		3,586		315,612
Expenses
Operations		134,878		36,982		1,417		173,277
Cash advance loss provision		8,750		14,779		—		23,529
Administration		30,034		9,178		971		40,183
Depreciation and amortization		11,984		4,754		472		17,210
Total expenses		185,646		65,693		2,860		254,199
Income from operations	$	54,226	$	6,461	$	726	$	61,413
Expenditures for property and equipment	$	14,107	$	14,269	$	115	$	28,491
As of December 31, 2004:
Total assets	$	442,420	$	105,650	$	7,095	$	555,165

76

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Pawn		Cash		Check
	Lending		Advance		Cashing		Consolidated
Year Ended December 31, 2003:
Revenue
Finance and service charges	$	100,699	$	—	$	—	$	100,699
Proceeds from disposition of merchandise		236,032		—		—		236,032
Cash advance fees		27,017		19,938		—		46,955
Check cashing royalties and fees		—		1,381		3,568		4,949
Total revenue		363,748		21,319		3,568		388,635
Cost of revenue — disposed merchandise		147,456		—		—		147,456
Net revenue		216,292		21,319		3,568		241,179
Expenses
Operations		130,076		11,179		1,561		142,816
Cash advance loss provision		6,435		4,321		—		10,756
Administration		29,177		2,598		744		32,519
Depreciation and amortization		11,349		1,387		533		13,269
Total expenses		177,037		19,485		2,838		199,360
Income from operations	$	39,255	$	1,834	$	730	$	41,819
Expenditures for property and equipment	$	11,530	$	4,458	$	75	$	16,063
As of December 31, 2003:
Total assets	$	302,863	$	66,971	$	7,360	$	377,194

19. Related Party Transactions

     In October 2005, the Company acquired three pawnshops that were previously franchise units for a total purchase price of $3.1 million from Ace Pawn, Inc. (“Ace”), whose sole stockholder J.D. Credit, Inc is controlled by the Chairman of the Board of Directors of the Company. The purchase price was determined by independent appraisal and approved by the Board of Directors of the Company. The Company recorded royalties of $48,000 in 2005 before the completion of the acquisition, and $54,000 and $73,000, in 2004 and 2003 respectively.

     In February 2004, pursuant to the amended Cashland asset purchase agreement, the Company made a final payment of additional consideration in the amount of $5.4 million to the sellers, one of which was a senior officer of the Company through January 31, 2005. The payment consisted of $2.9 million in cash and a subordinated note for $2.5 million (see Note 8). The Company recorded interest expense of $223,000 (including a prepayment fee of $75,000) and $275,000 in 2005 and 2004, respectively. The note was prepaid in June 2005 for a total amount of $2.7 million. The Company also paid rent of $47,000, $122,000 and $51,000 during 2005, 2004 and 2003, respectively, for three Cashland administrative offices and facilities that are owned by the seller.

     Under the Company’s now discontinued officer stock loan program, the Company recorded interest income of $149,000, $150,000 and $299,000, respectively, in 2005, 2004 and 2003. During 2003, the Company’s Chief Executive Officer and other officers made total principal and interest payment of $3.5 million on these notes. At December 31, 2005 and 2004, the outstanding balance on these notes was $2.5 million, and accrued interest on these notes was $585,000 and $435,000, respectively.

77

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. Fair Values of Financial Instruments

     The carrying amounts and estimated fair values of financial instruments at December 31, 2005 and 2004 were as follows (in thousands):

	2005				2004
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Financial assets:
Cash and cash equivalents	$	18,852	$	18,852	$	15,103	$	15,103
Pawn loans		115,280		115,280		109,353		109,353
Cash advances, net		40,704		40,704		36,490		36,490
Subordinated notes receivable		7,994		8,270		9,136		9,243
Interest rate cap		93		93		9		9
Foreign currency forward contracts		77		77		—		—
Financial liabilities:
Bank line of credit	$	71,137	$	71,137	$	92,483	$	92,483
Senior unsecured notes		94,857		96,026		71,643		73,963
Subordinated note		—		—		2,500		2,683

     Cash and cash equivalents bear interest at market rates and have maturities of less than 90 days. Pawn loans have relatively short maturity periods depending on local regulations, generally 90 days or less. Cash advance loans generally have a loan term of 7 to 45 days. Finance and service charge rates are determined by regulations and bear no valuation relationship to the capital markets’ interest rate movements. Generally, pawn loans may only be resold to a licensed pawnbroker.

     The fair value of the subordinated notes receivables is estimated by taking the present value of the expected cash flow over the life of the notes discounted at a rate prevalent to financial instruments with similar credit profiles and like terms.

     The Company’s bank credit facility bears interest at a rate that is frequently adjusted on the basis of market rate changes. The fair values of the remaining long-term debt instruments are estimated based on market values for debt issues with similar characteristics or rates currently available for debt with similar terms.

78

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

21. Quarterly Financial Data (Unaudited)

     The Company’s operations are subject to seasonal fluctuations. Revenue tends to be highest during the first and fourth calendar quarters, when the average amount of pawn loans and cash advance balances are the highest and consistent with heavier disposition of merchandise activities compared to the other two quarters. The following is a summary of the quarterly results of operations for the years ended December 31, 2005 and 2004 (in thousands, except per share data):

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
2005
Total revenue	$	144,989	$	133,569	$	144,773	$	171,015
Cost of revenue		47,955		38,939		40,863		56,042
Net revenue		97,034		94,630		103,910		114,973
Income from continuing operations		11,902		6,900		9,563		16,456
Income from discontinued operations (2)		—		—		—		197
Net income		11,902		6,900		9,563		16,653
Diluted net income per share—
Income from continuing operations		0.39		0.23		0.32		0.55
Income from discontinued operations		—		—		—		0.01
Net income		0.39		0.23		0.32		0.55
Diluted weighted average common shares		30,396		30,079		30,142		30,169
2004(1)
Total revenue	$	117,018	$	101,143	$	110,536	$	140,781
Cost of revenue		40,829		31,338		33,588		48,111
Net revenue		76,189		69,805		76,948		92,670
Income from continuing operations		9,142		4,926		7,181		13,716
Income from discontinued operations (3)		2,248		2,413		16,483		726
Net income		11,390		7,339		23,664		14,442
Diluted income per share –
Income from continuing operations	$	0.31	$	0.17	$	0.24	$	0.46
Income from discontinued operations		0.08		0.08		0.56		0.02
Net income		0.39		0.25		0.80		0.48
Diluted weighted average common shares		29,453		29,443		29,522		29,884

(1)	On September 7, 2004, the Company sold its foreign pawn lending operations; all prior periods presented have been restated to reflect that business as discontinued operations.
(2)	Principally represents change in the U.S. tax provision on the disposal resulting from the final tax adjustments to the 2004 foreign pawn lending operations tax returns.
(3)	Includes a gain on sale of $15,415 (after related taxes of $3,608) for the quarter ended September 30, 2004.

79

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

          None.

ITEM 9A. CONTROLS AND PROCEDURES

     Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management of the Company has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2005 (“Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in timely alerting them to the material information relating to the Company required to be included in its periodic filings with the Securities and Exchange Commission.

     The Report of Management on Internal Control Over Financial Reporting is included in Item 8 of this annual report on Form 10-K. There have been no significant changes during the fourth quarter of the year ended December 31, 2005 in the Company’s internal control over financial reporting that were identified in connection with management’s evaluation described in Item 9A above and have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

     The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or internal controls will prevent all possible error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information required by this Item 10 with respect to directors, the Audit Committee of the Board of Directors and Audit Committee financial experts is incorporated into this report by reference to the Company’s Proxy Statement for the 2006 Annual Meeting of Shareholders (“Proxy Statement”), and in particular to the information in the Proxy Statement under the captions “Election of Directors” and “Meetings and Committees of the Board of Directors.” Information concerning executive officers is contained in Item 1 of this report under the caption “Executive Officers of the Registrant.” Information regarding Section 16(a) compliance is incorporated into this report by reference to the information contained under the caption “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Proxy Statement.

     The Company has adopted a Code of Business Conduct and Ethics that applies to all of its directors, officers, and employees. This Code is publicly available on the Company’s website at www.cashamerica.com. Amendments to this Code and any grant of a waiver from a provision of the Code requiring disclosure under applicable SEC rules will be disclosed on the Company’s website. These materials may also be requested in print and without charge by writing to the Company’s Secretary at Cash America International, Inc., 1600 West 7^th Street, Fort Worth, Texas 76102.

80

     In 2005, Daniel R. Feehan, Chief Executive Officer of the Company, filed his annual certification with the New York Stock Exchange (“NYSE”) regarding the NYSE’s corporate governance listing standards as required by Section 303A.12 of those listing standards.

ITEM 11. EXECUTIVE COMPENSATION

     Information contained under the caption “Executive Compensation” in the Proxy Statement is incorporated by reference into this report in response to this Item 11.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     Information contained under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation — Equity Compensation Plan Information” in the Proxy Statement is incorporated into this report by reference in response to this Item 12.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information contained under the caption “Executive Compensation” in the Proxy Statement is incorporated into this report by reference in response to this Item 13.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

     Information contained under the caption “Independent Registered Public Accounting Firm” in the Proxy Statement is incorporated into this report by reference in response to this Item 14.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)	(1	)	Financial Statements: See Item 8, “Financial Statements and Supplementary Data,” on pages 46 through 79 hereof, for a list of the Company’s consolidated financial statements and report of independent registered accounting firm.
	(2	)	Financial Statement Schedule: The following financial statement schedule of the Company is included herein on pages 83 through 84.
			Report of Independent Registered Public Accounting Firm on Financial Statement Schedule (page 83) Schedule II — Valuation Accounts (page 84)
			All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included elsewhere in the financial statements.
	(3	)	Exhibits required by Item 601 of Regulation S-K: The exhibits filed in response to this item are listed in the Exhibit Index on pages 85 through 87.

81

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 1, 2006.

CASH AMERICA INTERNATIONAL, INC.
By:	/s/ DANIEL R. FEEHAN
	Daniel R. Feehan
	Chief Executive Officer and President

     Pursuant to the requirements of the Securities and Exchange Act of 1934, the report has been signed by the following persons on March 1, 2006 on behalf of the registrant and in the capacities indicated.

Signature	Title	Date
/s/ JACK R. DAUGHERTY Jack R. Daugherty	Chairman of the Board Of Directors	March 1, 2006
/s/ DANIEL R. FEEHAN Daniel R. Feehan	Chief Executive Officer, President and Director (Principal Executive Officer)	March 1, 2006
/s/ THOMAS A. BESSANT, JR. Thomas A. Bessant, Jr.	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	March 1, 2006
/s/ A. R. DIKE A. R. Dike	Director	March 1, 2006
/s/ JAMES H. GRAVES James H. Graves	Director	March 1, 2006
/s/ B. D. HUNTER B. D. Hunter	Director	March 1, 2006
/s/ TIMOTHY J. McKIBBEN Timothy J. McKibben	Director	March 1, 2006
/s/ ALFRED M. MICALLEF Alfred M. Micallef	Director	March 1, 2006

82

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of
Cash America International, Inc.

     Our audits of the consolidated financial statements, of management’s assessment of the effectiveness of internal control over financial reporting and of the effectiveness of internal control over financial reporting referred to in our report dated February 23, 2006 appearing in this Annual Report on Form 10-K also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

Fort Worth, Texas
February 23, 2006

83

SCHEDULE II

CASH AMERICA INTERNATIONAL, INC.
VALUATION ACCOUNTS
For the Three Years Ended December 31, 2005
(dollars in thousands)

			Additions
	Balance at		Charged			Charged						Balance at
	Beginning		To			To						End
Description	of Period		Expense			Other			Deductions			of Period
Allowance for losses on cash advances —
Year Ended:
December 31, 2005	$	4,358	$	42,302		$	9,794	(a)	$	50,145		$	6,309
December 31, 2004	$	3,393	$	23,242		$	7,556	(a)	$	29,833		$	4,358
December 31, 2003	$	1,319	$	11,130		$	3,397	(a)	$	12,453		$	3,393
Accrual for losses on third-party lender-owned cash advances —
Year Ended:
December 31, 2005	$	342	$	532		$	—		$	—		$	874
December 31, 2004	$	55	$	287		$	—		$	—		$	342
December 31, 2003	$	429	$	(374	)	$	—		$	—		$	55
Allowance for valuation of inventory —
Year Ended:
December 31, 2005	$	1,445	$	1,070		$	—		$	715	(b)	$	1,800
December 31, 2004	$	1,410	$	542		$	—		$	507	(b)	$	1,445
December 31, 2003	$	1,435	$	552		$	—		$	577	(b)	$	1,410
Allowance for valuation of deferred tax assets —
Year Ended:
December 31, 2005	$	225	$	(123	)	$	—		$	37		$	65
December 31, 2004	$	7,204	$	(166	)	$	—		$	6,813		$	225
December 31, 2003	$	7,691	$	(487	)	$	—		$	—		$	7,204
Allowance for valuation of discontinued operations (c) —
Year Ended:
December 31, 2005	$	325	$	19		$	—		$	133		$	211
December 31, 2004	$	389	$	30		$	—		$	94		$	325
December 31, 2003	$	623	$	36		$	—		$	270		$	389

(a)	Recoveries.
(b)	Deducted from allowance for write-off or other disposition of merchandise.
(c)	Represents amounts related to business discontinued in 2001.

84

EXHIBIT INDEX

     The following documents are filed as a part of this report. Those exhibits previously filed and incorporated herein by reference are identified by reference to the list of prior filings after the list of exhibits. Exhibits not required for this report have been omitted.

Exhibit	Description
3.1	Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on October 4, 1984. (a) (Exhibit 3.1)
3.2	Articles of Amendment to the Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on October 26, 1984. (a) (Exhibit 3.2)
3.3	Articles of Amendment to the Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on September 24, 1986. (a) (Exhibit 3.3)
3.4	Articles of Amendment to the Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on September 30, 1987. (b) (Exhibit 3.4)
3.5	Articles of Amendment to the Articles of Incorporation of Cash America Investments, Inc. filed in the office of the Secretary of State of Texas on April 23, 1992 to change the Company’s name to “Cash America International, Inc.” (c) (Exhibit 3.5)
3.6	Articles of Amendment to the Articles of Incorporation of Cash America International, Inc. filed in Office of the Secretary of State of Texas on May 21, 1993. (d) (Exhibit 3.6)
3.7	Bylaws of Cash America International, Inc. (e) (Exhibit 3.5)
3.8	Amendment to Bylaws of Cash America International, Inc. dated effective September 26, 1990. (f) (Exhibit 3.6)
3.9	Amendment to Bylaws of Cash America International, Inc. dated effective April 22, 1992. (c) (Exhibit 3.8)
4.1	Form of Stock Certificate. (c) (Exhibit 4.1)
10.1	Note Agreement between the Company and Teachers Insurance and Annuity Association of America dated as of July 7, 1995. (g) (Exhibit 10.1)
10.2	First Supplement (November 10, 1995) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (h) (Exhibit 10.2)
10.3	Second Supplement (December 30, 1996) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (i) (Exhibit 10.16)
10.4	Third Supplement (December 30, 1997) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (j) (Exhibit 10.20)
10.5	Fourth Supplement (December 31, 1998) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (k) (Exhibit 10.23)
10.6	Fifth Supplement (September 29, 1999) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (l) (Exhibit 10.2)
10.7	Sixth Supplement (June 30, 2000) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (m) (Exhibit 10.2)
10.8	Seventh Supplement (September 30, 2001) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (n) (Exhibit 10.26)
10.9	Eighth Supplement (September 7, 2004) to 1995 Note Agreement between the Company and Teachers Insurance and Annuity Association of America. (o) (Exhibit 10.1)
10.10	Note Agreement dated as of December 1, 1997 among the Company and the Purchasers named therein for the issuance of the Company’s 7.10% Senior Notes due January 2, 2008 in the aggregate principal amount of $30,000,000. (j) (Exhibit 10.23)
10.11	First Supplement (December 31, 1998) to Note Agreement dated as of December 1, 1997 among the Company and the purchasers named therein. (k) (Exhibit 10.29)
10.12	Second Supplement (September 29, 1999) to Note Agreement dated as of December 1, 1997 among the Company and the purchasers named therein. (l) (Exhibit 10.1)

85

Exhibit	Description
10.13	Third Supplement (June 30, 2000) to Note Agreement dated as of December 1, 1997 among the Company and the purchasers named therein. (m) (Exhibit 10.1)
10.14	Fourth Supplement (September 30, 2000) to Note Agreement dated as of December 1, 1997 among the Company and the purchasers named therein. (n) (Exhibit 10.38)
10.15	Fifth Supplement (September 7, 2004) to Note Agreement dated as of December 1, 1997 among the Company and the purchasers named therein. (o) (Exhibit 10.1)
10.16	Note Agreement dated as of August 12, 2002 among the Company and the Purchasers named therein for the issuance of the Company’s 7.20% Senior Notes due August 12, 2009 in the aggregate principal amount of $42,500,000. (p) (Exhibit 10.1)
10.17	Amendment No. 1 (September 7, 2004) to Note Agreement dated as of August 12, 2002 among the Company and the purchasers named therein. (o) (Exhibit 10.1)
10.18	Supplemental Executive Retirement Plan dated effective January 1, 2003. (q) (Exhibit 10.32)
10.19	Form of Executive Change-in-Control Severance Agreement dated December 22, 2003 between the Company and each of its Executive Vice Presidents (Thomas A. Bessant, Jr., Robert D. Brockman, Jerry D. Finn, Michael D. Gaston, William R. Horne, James H. Kauffman) (q) (Exhibit 10.31)
10.20	Amended and Restated Executive Employment Agreement between the Company and Mr. Feehan dated as of January 21, 2004. (q) (Exhibit 10.30)
10.21	2004 Long-Term Incentive Plan (r) (Exhibit 10.21)
10.22	First Amended and Restated Credit Agreement among the Company, certain lenders named therein, and Wells Fargo Bank, National Association, as Administrative Agent dated as of February 24, 2005. (r) (Exhibit 10.22)
10.23	Administrative Credit Services Agreement, dated July 1, 2005, by and between Cash America Financial Services, Inc. and NCP Finance Limited Partnership. (s) (Exhibit 10.1)
10.24	Administrative Credit Services Agreement, dated July 1, 2005, by and between Cash America Financial Services, Inc. and NCP Finance Michigan, LLC. (s) (Exhibit 10.2)
10.25	Administrative Credit Services Agreement, dated July 1, 2005, by and between Cash America Financial Services, Inc. and NCP Finance Florida, LLC. (s) (Exhibit 10.3)
10.26	Administrative Credit Services Agreement, dated July 1, 2005, by and between Cash America Financial Services, Inc. and Midwest R&S Corporation. (s) (Exhibit 10.4)
10.27	Guaranty dated July 1, 2005 by Cash America International, Inc. for the benefit of NCP Finance Limited Partnership. (s) (Exhibit 10.5)
10.28	Guaranty dated July 1, 2005 by Cash America International, Inc. for the benefit of NCP Finance Michigan, LLC. (s) (Exhibit 10.6)
10.29	Guaranty dated July 1, 2005 by Cash America International, Inc. for the benefit of NCP Finance Florida. (s) (Exhibit 10.7)
10.30	Guaranty dated July 1, 2005 by Cash America International, Inc. for the benefit of Midwest R&S Corporation. (s) (Exhibit 10.8)
10.31	Amendment One (January 25, 2006) to the Cash America International, Inc. 2004 Long-Term Incentive Plan.
10.32	Note Agreement dated as of December 28, 2005 among the Company and the Purchasers named therein for the issuance of the Company’s 6.12% Senior Notes due December 28, 2015 in the aggregate principal amount of $40,000,000.
14	Code of Ethics. The Company’s Code of Business Conduct and Ethics may be accessed via the Company’s website at www.cashamerica.com.
21	Subsidiaries of Cash America International, Inc.
23	Consent of PricewaterhouseCoopers LLP.
31.1	Certification of Chief Executive Officer.
31.2	Certification of Chief Financial Officer.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

86

Exhibit	Description
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certain Exhibits are incorporated by reference to the Exhibits shown in parenthesis contained in the Company’s following filings with the Securities and Exchange Commission:

(a)	Registration Statement Form S-1, File No. 33-10752.
(b)	Amendment No. 1 to its Registration Statement on Form S-4, File No. 33-17275.
(c)	Annual Report on Form 10-K for the year ended December 31, 1992.
(d)	Annual Report on Form 10-K for the year ended December 31, 1993.
(e)	Post-Effective Amendment No. 1 to its Registration Statement on Form S-4, File No. 33-17275.
(f)	Annual Report on Form 10-K for the year ended December 31, 1990.
(g)	Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(h)	Quarterly Report on Form 10-Q for the quarter ended September 30, 1995.
(i)	Annual Report on Form 10-K for the year ended December 31, 1996.
(j)	Annual Report on Form 10-K for the year ended December 31, 1997.
(k)	Annual Report on Form 10-K for the year ended December 31, 1998.
(l)	Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
(m)	Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
(n)	Annual Report on Form 10-K for the year ended December 31, 2001.
(o)	Current Report on Form 8-K dated September 7, 2004.
(p)	Current Report on Form 8-K dated August 15, 2002.
(q)	Annual Report on Form 10-K for the year ended December 31, 2003.
(r)	Annual Report on Form 10-K for the year ended December 31, 2004.
(s)	Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.
(t)	Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.

87

EX-10.31

Exhibit 10.31

AMENDMENT ONE
TO THE
CASH AMERICA INTERNATIONAL, INC.
2004 LONG-TERM INCENTIVE PLAN

     By action of the Board of Directors of Cash America International, Inc. (the “Company”) on January 25, 2006, the Cash America International, Inc. 2004 Long-Term Incentive Plan (the “Plan”) is hereby amended as follows:

1. Section 12(b)(iii) of the Plan is amended by removing the second, third and fourth sentences, which permit a Director to elect to receive lump sum distributions of directors fees deferred under the Plan in the form of cash rather than Company Common Stock, and by removing a reference to cash distributions in the next-to-last sentence. As amended, such Section shall read as follows:

(iii) If the Outside Director elects to receive a lump sum distribution, the trustee of the trust shall distribute such shares of common stock free of restrictions within 60 days after the Outside Director’s termination Date or a later date elected by the Outside Director (no later than the mandatory retirement age of the Outside Director). If an Outside Director elects to receive payments in installments, the distribution shall commence within 60 days after the Outside Director’s termination date and will be made in shares of common stock. Notwithstanding anything to the contrary contained herein, any fractional shares of common stock shall be distributed in cash to the Outside Director.

CASH AMERICA INTERNATIONAL, INC.
 

BY: /s/ Curtis Linscott  

J. Curtis Linscott, Vice President, General Counsel 

and Secretary 

EX-10.32

Exhibit 10.32

CASH AMERICA INTERNATIONAL, INC.

NOTE AGREEMENT

Dated as of December 28, 2005

$40,000,000 6.12% Senior Notes due December 28, 2015

TABLE OF CONTENTS

	Page
1. PURCHASE AND SALE OF NOTES		1
1.01 Authorization of Notes		1
1.02 Sale and Purchase of Notes		1
1.03 The Closing		1
2. DEFINITIONS AND INTERPRETATIONS		2
2.01 Definitions		2
2.02 Interpretation		18
3. CONDITIONS OF CLOSING		20
3.01 Representations and Warranties		20
3.02 Performance; No Default		20
3.03 Compliance Certificate		21
3.04 Opinions of Counsel		21
3.05 Resolutions, Etc.		21
3.06 Purchase Permitted by Applicable Laws, Etc.		21
3.07 Payment of Closing Fees		22
3.08 Private Placement Number		22
3.09 Notes		22
3.10 Guaranty; Subrogation and Contribution Agreement		22
3.11 Other Loan Documents		22
3.12 Proceedings		22
4. USE OF PROCEEDS		22
4.01 Use of Proceeds		22
4.02 Margin Regulations		23
5. PREPAYMENTS		23
5.01 Required Prepayments of the Notes		23
5.02 Optional Prepayments of the Notes		23
5.03 Notice of Optional Prepayments; Officers’ Certificate		24
5.04 Allocation of Partial Prepayments		24
5.05 Maturity; Surrender, Etc.		24
5.06 Retirement of Notes		24
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY		25
6.01 Subsidiaries		25
6.02 Organization, Qualification, Authorization, Etc		25
6.03 Disclosure Documents		26
6.04 Changes, Etc.		27
6.05 Tax Returns and Payments		27
6.06 Indebtedness; Solvency		27
6.07 Permits		28

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	Page
6.08 Material Contracts		28
6.09 Title to Property, Etc.		28
6.10 Condition of Property		29
6.11 Compliance with Applicable Laws, Permits and Contracts		29
6.12 Litigation, Etc.		30
6.13 ERISA		30
6.14 No Governmental Consents Required for Overall Transaction		30
6.15 Offering of Notes		30
6.16 Use of Proceeds		31
6.17 Foreign Assets Control Regulations, Etc.		31
6.18 Status Under Certain Federal Statutes		31
6.19 Environmental Matters		32
6.20 Books and Records		34
6.21 Fiscal Year		34
6.22 Brokerage		34
6.23 Labor Matters		35
6.24 Patents, Trademarks, Etc.		35
6.25 Chief Executive Office		35
6.26 Permitted Investments		35
6.27 Liens		35
6.28 Full Disclosure		35
7. PURCHASE FOR INVESTMENT; SOURCE OF FUNDS		36
7.01 Representations of the Purchasers		36
8. AFFIRMATIVE COVENANTS		38
8.01 Financial Statements, Reports and Documents		38
8.02 Payment of Principal, Interest and Premium		41
8.03 Payment of Taxes, Claims and Indebtedness		41
8.04 Maintenance of Existence and Rights; Conduct of Business		41
8.05 Compliance with Loan Documents		42
8.06 Inspection		42
8.07 Books and Records		42
8.08 Compliance with Legal Requirements		42
8.09 Insurance		42
8.10 Maintenance of Properties		43
8.11 Further Assurances		43
9. NEGATIVE COVENANTS		43
9.01 Consolidated Indebtedness for Money Borrowed		43
9.02 Consolidated Net Worth		44
9.03 Fixed Charge Coverage		44
9.04 Restricted Payments		44
9.05 Limitation on Indebtedness		45
9.06 Assurances		48
9.07 Negative Pledge		48
9.08 Limitation on Investments		48

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	Page
9.09 Alteration of Contracts, Etc.		49
9.10 Transactions with Affiliates		49
9.11 Limitation on Sale or Issuance of Subsidiary Stock		50
9.12 Limitation on Sale of Properties		50
9.13 Dissolution; Liquidation; Merger; Consolidation		50
9.14 Change of Name, Fiscal Year and Method of Accounting		51
9.15 Lines of Business		51
9.16 Amendment of Organizational Documents		51
9.17 Limitation on Acquisition of New Subsidiaries		51
9.18 ERISA		54
9.19 No Inconsistent Agreements		55
10. EVENTS OF DEFAULT		55
10.01 Events of Default		55
10.02 Other Remedies		58
11. MISCELLANEOUS		58
11.01 Note Payments		58
11.02 Expenses		59
11.03 Consent to Waivers and Amendments		60
11.04 Solicitation of Holders		60
11.05 Form, Registration, Transfer and Exchange of Notes; Lost Notes		61
11.06 Persons Deemed Owners		61
11.07 Reliance on and Survival of Representations and Warranties		62
11.08 Successors and Assigns		62
11.09 Notices		62
11.10 Substitution of Purchasers		62
11.11 Satisfaction Requirement		63
11.12 Independence of Covenants		63
11.13 Remedies Cumulative		63
11.14 Reproduction of Documents		63
11.15 Notes as Securities		64
11.16 Severability of Provisions		64
11.17 Interest		64
11.18 Representations, Etc. Cumulative		65
11.19 Submission to Jurisdiction		65
11.20 Governing Law		66
11.21 Indemnification		66
11.22 Survival of Indemnities, Etc.		67
11.23 Judgment Currency		67
11.24 Liabilities of Holders		68
11.25 Taxes		68
11.26 Counterparts		68
11.27 Entire Agreement		68

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Schedules and Exhibits

Schedule I	–	Purchaser Information
Schedule II	–	List of Subsidiaries
Schedule III	–	List of Jurisdictions Where Company is Qualified to Do Business
		as a Foreign Corporation
Schedule IV	–	Permitted Liens
Schedule V	–	Material Contracts
Schedule VI	–	Description of Company Financials
Schedule VII	–	Description of Projections
Schedule VIII	–	Indebtedness
Schedule IX	–	Labor Contracts
Schedule X	–	Tradenames
Schedule XI	–	Investments
Schedule XII	–	Transferee Representations
Schedule XIII	–	Outstanding Indebtedness for Money Borrowed
Exhibit A	–	Form of Note
Exhibit B	–	Form of Opinion of Company Counsel
Exhibit C	–	Form of Opinion of General Counsel
Exhibit D	–	Form of Opinion of Purchasers’ Counsel
Exhibit E	–	Form of Guaranty
Exhibit F	–	Form of Subrogation and Contribution Agreement
Exhibit G	–	Form of Existing Bank Loan Agreement

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NOTE AGREEMENT

CASH AMERICA INTERNATIONAL, INC.

As of December 28, 2005

To each of the Persons listed on Schedule I
attached hereto (collectively, the “Purchasers”)

     Ladies and Gentlemen:

     Cash America International, Inc. (the “Company”), a Texas corporation, hereby agrees with each of you as follows:

1. PURCHASE AND SALE OF NOTES.

     1.01 Authorization of Notes.

     The Company will duly authorize the issue and sale of a series of its senior notes designated “6.12% Senior Notes due December 28, 2015” and limited in aggregate original principal amount to $40,000,000 (the “Notes”). The Notes will (a) be issuable as registered notes, without coupons, in denominations permitted by Section 11.05, (b) be dated the date of issue thereof, (c) mature December 28, 2015, (d) bear interest on the unpaid balance thereof from the date thereof to, but excluding, the date the principal thereof shall have become due and payable at the rate of 6.12% per annum, (e) bear interest on overdue principal, premium and (to the extent permitted by law) interest at the Default Rate, (f) be entitled to the benefits of the Guaranty and (g) be in the form of Exhibit A.

     1.02 Sale and Purchase of Notes.

     Subject to the terms and conditions of this Agreement, the Company agrees to sell to the Purchasers, and the Purchasers agree to purchase from the Company, the Notes at 100% of the principal amount thereof. Such sale and purchase is sometimes herein referred to as the “Private Placement.” The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

     1.03 The Closing.

     The closing of the Private Placement (the “Closing”) shall take place at the offices of Bingham McCutchen LLP, at 399 Park Avenue, New York, NY 10022 on such Business Day as may be agreed upon by the Company and the Purchasers (the “Closing Date”). At the Closing, the Company will deliver the Notes in the form of one or more Notes dated the date of the Closing, payable to the respective Purchasers or their registered assigns as specified on Schedule I against payment of the purchase price therefor by electronic funds transfer to account number 4761053503 at Wells Fargo Bank for credit to such account as the Company may designate in writing delivered to the Purchasers at least three Business Days prior to the Closing Date for use in accordance with Section 4.01. By delivering payment on the Closing Date for the Notes, each

Purchaser shall be deemed to have confirmed as of the Closing Date that the representations and warranties made by such Purchaser in Section 7 remains accurate as of the Closing Date. If, at the Closing, the Company shall fail to tender the Notes to the Purchasers as provided above, or any of the conditions specified in Section 3 shall not have been fulfilled to the satisfaction of the Purchasers, the Purchasers shall, at their election, be relieved of all further obligations under this Agreement, without thereby waiving any other rights it may have by reason of such failure or such nonfulfillment.

2. DEFINITIONS AND INTERPRETATIONS.

     2.01 Definitions.

     For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the following respective meanings:

     “Affiliate” means (a) when used with reference to any corporation, any Person that, directly or indirectly, owns or controls 5% or more of any class of Voting Stock of such corporation or is a director or officer of such corporation or is a Person in which such corporation has a 10% or greater direct or indirect equity interest, (b) when used with reference to any partnership, any Person that, directly or indirectly, owns or controls 5% or more of either the capital or profit interests of such partnership or is a partner of such partnership or is a Person in which such partnership has a 5% or greater direct or indirect equity interest, (c) when used with reference to any individual, any Person that is related to such individual by blood or marriage or is a present or former ward or, guardian of such individual or is a trust or estate in which such individual owns a 10% or greater beneficial interest or of which such individual serves as trustee, executor or in any similar capacity and (d) when used with reference to a trust or an estate, any Person that is a trustee, executor, administrator or beneficiary thereof. Moreover, the term “Affiliate”, when used with reference to any Person, shall also mean any other Person that, directly or indirectly, controls or is controlled by or is under common control with such Person. As used in the preceding sentence, the term “control” means the possession, directly or indirectly, of the power to direct or to cause the direction of the management and policies of the entity referred to, whether through ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controls” shall have meanings correlative to the foregoing.

     “Agreement” means this Note Agreement, as amended, supplemented or modified from time to time.

     “Anti-Terrorism Order” means United States Executive Order 13224, effective as of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, 66 U.S. Fed. Reg. 49,079 (2001), as amended.

     “Applicable Contract” means any contract or agreement to which the Company or any Subsidiary is a party or by which it or any of its Properties is bound or under or

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pursuant to which it owns, maintains or operates any of its Properties or conducts business.

     “Applicable Percentage” shall have the meaning set forth in §9.01 hereof.

     “Applicable Permit” means any Permit to which the Company or any Subsidiary is a party or by which it or any of its Properties is bound or under or pursuant to which it owns, maintains or operates any of its Properties or conducts business.

     “Assurance” means, as to any Person, any contract, agreement or understanding to guarantee, or in effect guarantee, any indebtedness or obligation (the “Primary Obligation”) of any other Person (the “Primary Obligor”) in any manner, whether directly or indirectly, including agreements:

     (a) to purchase the Primary Obligation or any Property constituting security therefor;

     (b) to advance or supply funds (i) for the purchase or payment of the Primary Obligation or (ii) to maintain working capital or other balance sheet conditions, or otherwise to advance or make available funds for the purchase or payment of the Primary Obligation; or

     (c) to purchase Property, securities or services primarily for the purpose of assuring the holder of the Primary Obligation of the ability of the Primary Obligor to make payment of the Primary Obligation;

provided, however, that “Assurance” shall not include the endorsement by any Person, in the ordinary course of business, of negotiable instruments or documents for deposit or collection. The amount of any Assurance shall be deemed to be an amount equal to the stated or determinable amount of the Primary Obligation in respect of which such Assurance is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming the Person giving such Assurance is required to perform in respect thereof) as determined by such Person in good faith.

     “Bankruptcy Law” has the meaning specified in Section 10.01(j).

     “Benefit Arrangement” means an employee benefit plan (within the meaning of Section 3(3) of ERISA) which is not a Plan and with respect to which the Company or a member of the ERISA Group has an obligation or liability, whether or not current or contingent, to make contributions or pay benefits.

     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banking institutions in New York, New York or Fort Worth, Texas are authorized or required by law, regulation or executive order to be closed.

     “Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 5.02 (any partial prepayment being applied in satisfaction of required payments of principal in inverse order of their scheduled due

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dates) or is declared to be or becomes immediately due and payable pursuant to Section 10.01, as the context requires.

     “CERCLA” means the Federal Comprehensive Environmental Response, Compensation and Liability Act, as amended from time to time, together with all regulations and rulings thereunder and all interpretations thereof by the Environmental Protection Agency.

     “Closing” has the meaning specified in Section 1.03.

     “Closing Date” has the meaning specified in Section 1.03.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, together with all regulations and rulings thereunder and all interpretations thereof by the Internal Revenue Service.

     “Company” has the meaning specified in the opening paragraph of this Agreement.

     “Company Financials” has the meaning specified in Section 6.03(a)(5).

     “Consolidated Adjusted Net Income” means, with respect to any period, consolidated net income (after income taxes) of the Company and the Consolidated Subsidiaries for such period, determined in accordance with GAAP (excluding, (i) any gain or loss in excess of $1,000,000 (before income taxes) arising from the sale of capital assets during such period and (ii) any other items during such period which would be considered extraordinary items, in accordance with GAAP).

     “Consolidated Assets” means, as of any date, the total assets as would be reflected on a consolidated balance sheet of the Company and the Consolidated Subsidiaries prepared as of such date in accordance with GAAP.

     “Consolidated EBITDA” means, in respect of any period, Consolidated Adjusted Net Income for such period plus, to the extent deducted in calculating such Consolidated Adjusted Net Income, interest, income taxes, depreciation, amortization and any non-cash gains or losses attributable to market fluctuations in the value of derivative contracts provided that, with respect to any period during which a Person shall have become, or ceased to be, a Subsidiary, or during which the Company or any Subsidiary shall have acquired or disposed of an On-Going Business, the calculation of Consolidated EBITDA shall (a) include the EBITDA (as defined below) for such period of each Person who shall have become a Subsidiary, and of each On-Going Business acquired by the Company or any Subsidiary, during such period as if such Person had been a Subsidiary or such On-Going Business had been owned by the Company or a Subsidiary for the entire period, or (b) exclude the EBITDA for such period of each Person who shall have ceased to be a Subsidiary, and of each On-Going Business disposed of by the Company or any Subsidiary, during such period as if such Person had not been a Subsidiary at any time during the entire period or such On-Going Business had not been owned or operated by the Company or any Subsidiary at any time during such period. As used in this

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definition, “EBITDA” with respect to any Person or On-Going Business for any period shall mean, the net income (after income taxes) of such Person or On-Going Business for such period, determined in accordance with GAAP plus, to the extent deducted in calculating such net income, interest, income taxes, depreciation, amortization and any non-cash gains or losses attributable to market fluctuations in the value of derivative contracts.

     “Consolidated Indebtedness for Money Borrowed” means, at any date, the Indebtedness for Money Borrowed of the Company and the Consolidated Subsidiaries consolidated as of such date in accordance with GAAP.

     “Consolidated Net Worth” means, as of any date, the total shareholders’ equity which would appear on a consolidated balance sheet of the Company and the Consolidated Subsidiaries prepared as of such date in accordance with GAAP.

     “Consolidated Subsidiary” means, at any date, any Subsidiary the accounts of which would, in accordance with GAAP, be consolidated with those of the Company in its consolidated financial statements as of such date.

     “Consumer Obligations” [means any Assurance by the Company or any Subsidiary entered into in the ordinary course of business described in Section 9.15 pursuant to which the Company or such Subsidiary guaranties financial commitments or obligations of its customers to third party funding sources pursuant to an established customer financing program.

     “Default” means, with respect to any Loan Document, any event or condition that constitutes, or with the giving of notice or the lapse of time or both would constitute, a default thereunder or breach thereof. Without limitation of the foregoing, “Default” shall include any Event of Default as well as any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

     “Default Rate” means, at any time, a rate of interest per annum equal to the lesser of (a) 2% above the interest rate then payable on the Notes and (b) the Highest Lawful Rate.

     “Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on a semiannual basis) equal to the Reinvestment Yield with respect to such Called Principal.

     “Dollar Equivalent” shall have the meaning set forth in §11.23 hereof.

     “Dollars” and the sign “$” means lawful currency of the United States of America.

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     “Domestic Subsidiary” means any Subsidiary other than a Non-Domestic Subsidiary.

     “Environmental Claim” shall mean any investigation, notice, violation, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding or claim (whether administrative, judicial or private in nature) arising (a) pursuant to, or in connection with an actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Material, (c) from any abatement, removal, remedial, corrective or other response action in connection with a Hazardous Material, Environmental Law or other order of a Governmental Authority or (d) from any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

     “Environmental Laws” means applicable laws (including the common law), regulations or rules, and any applicable judicial or administrative interpretations thereof, as well as any applicable judicial or administrative orders, decrees or judgments, relating to pollution, environmental, health, safety, industrial hygiene or similar matters.

     “Environmental Permit” means any Permit required under applicable Environmental Laws.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings and interpretations adopted by the Internal Revenue Service or the Department of Labor thereunder.

     “ERISA Group” means all corporations, trades or businesses (whether or not incorporated) and other persons or entities which, together with the Company, are treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

     “Event of Default” has the meaning specified in Section 10.01.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

     “Executive Officer” means (a) the chairman of the board, the chief executive officer, the chief operating officer(s), the chief financial officer, the chief accounting officer or the chief legal officer of the Company or (b) any other officer of the Company who has been elected by the Board of Directors of the Company and designated as an executive officer in any Form 10-K or successor Form filed by the Company with the SEC.

     “Existing Bank Loan Agreement” means that certain First Amended and Restated Credit Agreement dated as of February 24, 2005, among the Company, the banks party thereto, Wells Fargo Bank, National Association, as administrative agent and JPMorgan Chase, N.A., as syndication agent, as in effect on the Closing Date.

     “Existing Notes” means the 1995 Notes, the 1997 Notes and the 2002 Notes.

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     “Fiscal Quarter” means a fiscal quarter of the Company.

     “Fiscal Year” means the fiscal year of the Company.

     “Funded Debt” means, in respect of any Person, all Indebtedness for Money Borrowed of such Person (other than Indebtedness for Money Borrowed described in clauses (h), (i) and (k) of the definition thereof).

     “GAAP” means generally accepted accounting principles as in effect from time to time as set forth in the opinions, statements and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, the Financial Accounting Standards Board and such other Persons who shall be approved by a significant segment of the accounting profession and concurred in by the Independent Registered Public Accounting Firm.

     “Governmental Authority” means any foreign governmental authority, the United States of America, any State of the United States or any political subdivision, agency or instrumentality of any of the foregoing, and any agency, department, commission, board, bureau, court or other tribunal having jurisdiction over any Loan Party, the Purchasers or any other Holder or their respective Property, including the Texas Consumer Credit Commissioner, the United States Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms and any other governmental authority charged with the enforcement of the Regulatory Acts or otherwise having authority with respect to the regulation, supervision and licensing of pawnshop activities in any jurisdiction in which the Company or any of the Subsidiaries conducts business.

     “Guarantors” means the Subsidiaries listed in Schedule II and each other Person that becomes bound by the Guaranty as contemplated by Section 9.17(a).

     “Guaranty” has the meaning specified in Section 3.10.

     “Hazardous Materials” means any hazardous substance, hazardous or toxic waste, pollutant, contaminant, oil, petroleum product or other substance (a) which is listed, regulated or designated as toxic or hazardous (or words of similar meaning and regulatory effect), or with respect to which remedial obligations may be imposed, under any Environmental Laws or (b) exposure to which may pose a health or safety hazard.

     “Hedging Obligations” means, in respect to any Person, the obligations of such Person in respect of options, warrants, caps, floors, collars, swaps, swaptions, forwards and futures which is entered into and at all times maintained to reduce: (a) the risk of economic loss due to a change in the value, yield, price, cash flow or quantity of assets or liabilities which such Person has acquired or incurred or anticipates acquiring or incurring or (b) the risk of economic loss due to changes in the currency exchange rate or the degree of exposure as to assets or liabilities denominated in a foreign currency which such Person has acquired or incurred or anticipates acquiring or incurring.

     “Highest Lawful Rate” means the maximum nonusurious rate of interest permitted to be charged by applicable federal or state law (whichever shall permit the

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higher lawful rate, without conflict with other applicable federal or state laws) from time to time in effect. The parties agree that, insofar as the provisions of Chapter 306 of the Texas Finance Code are at any time applicable to the determination of the Highest Lawful Rate, the Highest Lawful Rate shall be the “applicable ceiling” (as such term is used in such Chapter 306) from time to time in effect, provided that, to the extent permitted by such Chapter 306, each Holder may from time to time by notice to the Company revise the election of such interest rate ceiling as such ceiling affects the then current or future amounts outstanding under the Notes held by such Holder.

     “Holder” means (a) the Purchasers so long as any such Purchaser is obligated to purchase the Notes hereunder or holds any outstanding Note and (b) any other holder from time to time of any outstanding Note.

     “Indebtedness for Money Borrowed” means, with respect to any Person and without duplication:

     (a) the principal amount of all indebtedness of such Person, current or funded, secured or unsecured, incurred in connection with borrowings (including the sale of debt securities),

     (b) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to any Property acquired by such Person,

     (c) all indebtedness of such Person issued, incurred or assumed in respect of the purchase price of Property or services except for accounts payable incurred in the ordinary course of business,

     (d) all obligations of such Person evidenced by a note, bond, debenture or similar instrument,

     (e) the present value (determined in accordance with GAAP) of all obligations of such Person under leases which shall have been or should be recorded as capitalized leases in accordance with GAAP or under any Synthetic Lease of such Person,

     (f) all Assurances (other than Consumer Obligations) of such Person in respect of indebtedness of any other Person of any of the types described in the preceding clauses (a) through (e), provided that, when calculating the amount of any Person’s Indebtedness for Money Borrowed, no Assurance of such Person of the type described in this clause (f) shall be included in such calculation unless, and then only to the extent that, the indebtedness relating to such Assurance, when aggregated with the total indebtedness relating to all other outstanding Assurances of the Loan Parties of the type described in this clause (f), exceeds $1,000,000,

     (g) the amount of all sinking fund payments or other mandatory redemption or payments on any class of capital stock of such Person,

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     (h) the maximum stated amount from time to time available for drawing under any letters of credit issued at the request of such Person,

     (i) the amount of any unreimbursed drawings under letters of credit issued at the request of such Person,

     (j) Receivables Facility Attributed Indebtedness of such Person, and

     (k) accrued obligations of such Person in respect of earnout or similar payments which (i) are due and payable or (ii) constitute “Indebtedness” under the Existing Bank Loan Agreement.

     For all purposes hereof, the Indebtedness for Money Borrowed of any Person shall include the Indebtedness for Money Borrowed of any partnership or joint venture in which such person is a general partner or a joint venturer, unless such Indebtedness for Money Borrowed is non-recourse to such Person.

     “Indemnified Liabilities” has the meaning specified in §11.21 hereof.

     “Indemnitees” means, collectively, the Purchasers, each Transferee and each Holder and their respective successors and assigns, and the officers, trustees, directors and employees of each of the foregoing.

     “Independent Registered Public Accounting Firm” means PricewaterhouseCoopers LLP or another firm of independent public accountants of recognized national standing and registered with the Public Company Accounting Oversight Board selected by the Company.

     “Investment” means, as applied to any Person, (i) any direct or indirect purchase or other acquisition by such Person of stocks, bonds, notes, debentures or other securities of any other Person, (ii) any direct or indirect loan, advance, extension of credit or capital contribution by such Person to any other Person, (iii) any Assurance by such Person of any indebtedness of any other Person, (iv) the subordination by such Person of any claim against any other Person to other indebtedness of such other Person and (v) any other item which would be classified as an “investment” on a balance sheet of such Person prepared in accordance with GAAP, including any direct or indirect contribution by such Person of Property to a joint venture, partnership or other business entity in which such Person retains an interest.

     “Judgment Currency” and “Judgment Currency Conversion Date” have the meanings set forth in §11.23 hereof.

     “Legal Requirements” means any and all (a) applicable constitutional provisions, laws (statutory, administrative, judicial or otherwise, including those established pursuant to common law or equity) ordinances, treaties, rules, codes, standards and regulations (or any interpretation of any of the foregoing), whether foreign or domestic, including, without limitation, the Anti-Terrorism Order, the USA Patriot Act and Environmental Laws, (b) judgments, orders, injunctions and decrees, (c) Permits and

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(d) contracts with Governmental Authorities relating to compliance with the items described in (a), (b) or (c) above.

     “Lien” means any mortgage, pledge, charge, encumbrance, security interest, collateral assignment, conditional sale or title retention arrangement or other lien or restriction of any kind, whether based on common law, constitutional provision, statute or contract.

     “Loan Documents” means, collectively, this Agreement, the Notes, the Guaranty, the Subrogation and Contribution Agreement and all other instruments and documents executed and delivered to the Purchasers by the Loan Parties, or any of them, pursuant to this Agreement.

     “Loan Parties” means, collectively, the Company and the Guarantors.

     “Make-Whole Premium” means, with respect to the Called Principal of any Note, a premium equal to the excess, if any, of the Discounted Value of such Called Principal over such Called Principal. The Make-Whole Premium shall in no event be less than zero.

     “Material Adverse Effect” means any circumstance or event of whatever nature which (a) could reasonably be expected to have a material adverse effect on the financial condition, business, operations or Properties of the Company and the Subsidiaries, taken as a whole, (b) could reasonably be expected to diminish or impair in any material respect the ability of the Company to perform any of its obligations under the Loan Documents to which it is a party, (c) could reasonably be expected to diminish or impair in any material respect the ability of the Purchasers or any other Holder to enforce any of the Obligations or to exercise or enforce any of their rights and remedies under the Loan Documents, (d) causes an Event of Default, (e) causes a Default which could reasonably be expected to become an Event of Default or (f) could reasonably be expected to subject the Purchasers or any other Holder to civil or criminal liability.

     “Material Contract” means any contract, agreement or instrument to which the Company or any Subsidiary is a party (a) which calls for payments to or from the Company or such Subsidiary of more than $10,000,000 (or its equivalent in other currencies) during any 12-month period or (b) pursuant to which the Company or such Subsidiary acquires any right to an interest in Property or a right to obtain services if the Company’s or such Subsidiary’s inability to obtain such interest or services, as the case may be, could reasonably be expected to have a Material Adverse Effect, provided that “Material Contract” shall not include any Loan Document or any agreement creating or evidencing Indebtedness for Money Borrowed.

     “Net Equity Proceeds” means the proceeds, after payment of all underwriters fees and other expenses, received by the Company in consideration of its sale of its equity securities, provided that the gross amount of such proceeds shall be deemed to be the amount of cash received or the fair value of any property received or obligations satisfied in connection with such sale.

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     “New Entity” has the meaning specified in §9.17 hereof.

     “1995 Guaranty” means that certain Joint and Several Guaranty dated as of July 7, 1995 delivered by the Company and certain of its Subsidiaries in connection with the issuance and sale of the 1995 Notes.

     “1995 Loan Documents” means the “Loan Documents” — as defined in the 1995 Note Agreement.

     “1995 Note Agreement” means that certain Note Agreement dated as of July 7, 1995 between the Company and Teachers Insurance and Annuity Association of America, as amended.

     “1995 Notes” means those certain 8.14% Senior Notes due July 7, 2007 issued by the Company under and pursuant to the 1995 Note Agreement.

     “1997 Guaranty” means that certain Joint and Several Guaranty dated as of December 1, 1997 delivered by the Company and certain of its Subsidiaries in connection with the issuance and sale of the 1997 Notes.

     “1997 Loan Documents” means the “Loan Documents” as defined in the 1997 Note Agreement.

     “1997 Note Agreement” means that certain Note Agreement dated as of December 1, 1997 between the Company and the purchasers listed on Schedule I thereto, as amended.

     “1997 Notes” means those certain 7.10% Senior Notes due January 2, 2008 issued by the Company under and pursuant to the 1997 Note Agreement.

     “Non-Domestic Indebtedness” means Indebtedness for Money Borrowed of one or more Non-Domestic Subsidiaries.

     “Non-Domestic Subsidiary” means a Subsidiary which is incorporated in, or conducts a significant portion of its business activities in, any one or more jurisdictions outside of the United States.

     “Non-Wholly-Owned Subsidiary” means any Subsidiary (other than a Wholly-Owned Subsidiary).

     “Notes” has the meaning specified in Section 1.01.

     “Obligations” means all obligations, liabilities and indebtedness of every nature of the Loan Parties from time to time owing to the Purchasers and the other Holders under the Loan Documents, including, without limitation, (a) all obligations of the Company under the Loan Documents to pay principal, premium and interest in respect of the Notes, (b) all obligations of the Guarantors in respect of the Guaranty, (c) all obligations of the Loan Parties under the Loan Documents to reimburse or indemnify the

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Purchasers or any other Indemnitee and (d) all obligations of the Loan Parties to pay fees and expenses pursuant to Section 11.02 and similar sections of the other Loan Documents.

     “Officers’ Certificate” means a certificate executed on behalf of the Company by at least two of its Responsible Officers (in their representative capacities and not in their individual capacities).

     “On-Going Business” means a distinct operating business, whether operated as a division of a larger business operation or operated independently, which regardless of the form of legal entity, owns or operates the assets and has the liabilities, of such business.

     “Organizational Documents” means (i) with reference to any Person that is a corporation, its articles or certificate of incorporation and its bylaws and (ii) with reference to any Person that is a partnership, its partnership agreement and all other instruments relating to its formation, existence or governance.

     “Overall Transaction” means the Private Placement and the guarantees and other transactions and activities contemplated by the Loan Documents.

     “Permits” means any and all permits, authorizations, certificates, approvals, registrations, variances, licenses, franchises, exemptions or orders issued, granted or otherwise made available by any Governmental Authority.

     “Permitted Liens” means:

     (a) Liens (if any) granted to, or for the benefit of, all of the Holders to secure the Obligations;

     (b) Liens in existence on the date hereof and described in Schedule IV;

     (c) bonds, pledges or deposits made to secure payment of worker’s compensation (or to participate in any fund in connection with worker’s compensation), unemployment insurance, pensions or social security programs;

     (d) Liens imposed by mandatory provisions of law such as for materialmen’s, mechanics, warehousemen’s and other like Liens arising in the ordinary course of business, securing indebtedness whose payment is not yet due, and landlords liens, whether arising through contract or by operation by law, but only if the same are not yet due and payable or if the same are being contested in good faith and the payment of which is not at the time required by Section 8.03,

     (e) Liens for taxes, assessments and governmental charges or levies imposed upon a Person or upon such Person’s income or profits or property, but only if the same are not yet due and payable or if the same are being contested in good faith and the payment of which is not at the time required by Section 8.03;

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     (f) good faith deposits in connection with tenders, leases, real estate bids or contracts (other than contracts involving the borrowing of money), bonds, pledges or deposits to secure insurance policies or to secure public or statutory obligations, deposits to secure (or in lieu of) surety, stay, appeal or customs bonds and deposits to secure the payment of taxes, assessments, customs duties or other similar charges;

     (g) encumbrances consisting of zoning restrictions, easements, or other restrictions on the use of real property, provided that such do not materially impair the use of such property for the uses intended, and none of which is violated by existing or proposed structures or land use;

     (h) Liens on Property of any Consolidated Subsidiary securing obligations of such Consolidated Subsidiary owing to the Company or to any Wholly-Owned Subsidiary;

     (i) Liens created to secure (A) purchase money indebtedness incurred to finance the purchase price of the Property acquired in the ordinary course of business, but only if each such Lien shall secure only the purchase money indebtedness incurred to purchase the Property so acquired and shall be confined solely to such Property and (B) the indebtedness permitted by Section 9.05(b)(11); provided, however, that the aggregate amount, without duplication, of all obligations at any time secured by all Liens referred to in this clause (i) and Liens referred to in clause (l) and clause (m) of this definition of Permitted Liens does not exceed the greater of $10,000,000 or 2% of Consolidated Assets];

     (j) Liens on Temporary Cash Investments, but only if (A) such Liens secure short-term indebtedness owed by the Company or a Consolidated Subsidiary to the broker or investment banking firm which is holding such Temporary Cash Investments for the account of the Company or a Consolidated Subsidiary and (B) such indebtedness is to be repaid, in the ordinary course of business, by the collection or liquidation of such Temporary Cash Investments at the maturity of such Temporary Cash Investments;

     (k) Liens arising by operation of law (and not by contract) in connection with judgments being appealed to the extent such judgment or judgments would not otherwise result in an Event of Default described in Section 10.01(p)

     (l) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Subsidiary of the Company; provided that (i) such Liens were not incurred 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 the Subsidiary and (ii) the aggregate amount, without duplication, of all obligations at any time secured by Liens referred to in this clause (l) and Liens referred to in clause (i) and clause

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     (m) of this definition of Permitted Liens does not exceed the greater of (i) $10,000,000 or (ii) 2% of Consolidated Assets;

     (m) Liens on property existing at the time of acquisition thereof by the Company or any Subsidiary of the Company, provided (i) that such Liens were not incurred in contemplation of such acquisition and (ii) the aggregate amount, without duplication, of all obligations at any time secured by Liens referred to in this clause (m) and Liens referred to in clause (i) and clause (l) of this definition of Permitted Liens does not exceed the greater of (i) $10,000,000 or (ii) 2% of Consolidated Assets;

     (n) Liens securing Permitted Refinancing Indebtedness in respect of any Indebtedness for Money Borrowed secured by Liens referred to in the foregoing clauses (b), (i), (l) and (m) of this definition, provided that such Liens do not extend to any other property of the Company or any Subsidiary of the Company and the principal amount of the Permitted Refinancing Indebtedness secured by such Lien is not increased; and

     (r) Liens securing other Indebtedness for Money Borrowed not exceeding $2,500,000 at any time outstanding.

     “Permitted Refinancing Indebtedness” means any Indebtedness for Money Borrowed of the Company or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness for Money Borrowed of the Company or any of its Subsidiaries (other than intercompany indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus accrued interest or premium (including any make-whole premium), if any, on, the Indebtedness for Money Borrowed so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith), (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final 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 for Money Borrowed being extended, refinanced, renewed, replaced, defeased or refunded; provided that if the original maturity date of such Indebtedness for Money Borrowed is after the stated maturity of the Notes, then such Permitted Refinancing Indebtedness shall have maturity at least 180 days after the Notes, (iii) if the Indebtedness for Money Borrowed being extended, refinanced renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of the Notes and is subordinated in right of payment to the Notes on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness for Money Borrowed being extended, refinanced, renewed, replaced, defeased or refunded, and (iv) such Indebtedness for Money Borrowed is incurred either by the Company or by the Subsidiary who is the obligor on the Indebtedness for Money Borrowed being extended, refinanced, renewed, replaced, defeased or refunded.

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     “Person” means and includes an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a Governmental Authority.

     “Plan” means an employee pension benefit plan (within the meaning of Section 3(3) of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company, any Subsidiary or any Related Person or as to which the Company, any Subsidiary or any Related Person would be treated as a contributing sponsor under Section 4069 of ERISA if such plan were to be terminated.

     “Private Placement” has the meaning specified in Section 1.02.

     “Projections” has the meaning specified in Section 6.03(a)(6).

     “Property” means any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

     “Purchasers” has the meaning specified in the opening paragraph of this Agreement.

     “Receivables Facility Attributed Indebtedness” means, in respect of any Person, the amount of obligations outstanding under a receivables purchase facility on any date of determination that would be characterized as principal payment obligations of such Person if such facility were structured under GAAP as a secured lending transaction other than a purchase.

     “Regulatory Acts” means (a) the Texas Pawnshop Act and (b) all other foreign, Federal or state laws (statutory, administrative, judicial or otherwise) relating to pawnshops and activities incidental thereto in any jurisdiction in which the Company or any Subsidiary conducts business.

     “Reinvestment Yield” means with respect to the Called Principal of any Note, the sum of 50 basis points (0.50%) over the yield to maturity implied by (a) the yields reported, as of 10:00 A.M. (New York City time) two Business Days next preceding the Settlement Date with respect to such Called Principal, on the display designated as page PX1 as reported by the Bloomberg Financial Markets (or such other display as may replace page PX1 on Bloomberg Financial Markets), or if Page PX1 (or its successor screen on Bloomberg Financial Markets) is unavailable, the Telerate Access Service screen which corresponds most closely to Page PX1, for the most recently issued traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or, if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, (b) the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield shall be determined, if necessary, by (i) converting U.S. Treasury bill quotations to bond equivalent yields in

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accordance with accepted financial practice and (ii) interpolating linearly between reported yields. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

     “Related Person” means any trade or business, whether or not incorporated, which, together with the Company, would be treated as a single employer under Section 414 of the Code.

     “Release” has the meaning specified in CERCLA § 101(22) (42 U.S.C. § 9601(22)).

     “Remaining Average Life” means, with respect to the Called Principal of any Note, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (i) the principal component of each Remaining Scheduled Payment of such Called Principal (but not of interest thereon) by (ii) the number of years (calculated to the nearest one-twelfth year) which will elapse between the Settlement Date with respect to such Called Principal and the respective scheduled due date of such Remaining Scheduled Payment of such Called Principal.

     “Remaining Dollar-Years” means, with respect to any Indebtedness for Money Borrowed at any time, the amount obtained by (1) multiplying the amount of each then remaining required repayment, including repayment at final maturity, by the number of years (calculated at the nearest one-twelfth) which shall elapse between such time and the date of that required repayment, and (2) totaling all the products obtained in (1).

     “Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due on or after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date provided that, if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 5.02 or Section 10.01, as the case may be.

     “Required Holders” means, at any time, the Holder or Holders of at least 51% of the aggregate principal amount of the Notes then outstanding.

     “Responsible Officer” means, as to any Loan Party, the chairman of the board, the chief executive officer, the president, the chief operating officer(s), the chief financial officer, the principal accounting officer, the chief legal officer, the vice president of finance or the treasurer of such Loan Party.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

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     “Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 5.02 or is declared to be or becomes immediately due and payable pursuant to Section 10, as the context requires.

     “Stock” means (i) in the case of any corporation, capital stock of any class of such corporation (however designated) and warrants or options to purchase such capital stock, (ii) in the case of any partnership, partnership interests of such partnership (however designated) and warrants or options to purchase such partnership interests and (iii) in the case of any other entity, equity interests of such entity (however designated) and warrants or options to purchase such equity interests.

     “Subrogation and Contribution Agreement” means the Subrogation and Contribution Agreement of even date herewith among the Company and the Guarantors substantially in the form of Exhibit F.

     “Subsidiary” means, at any time, (a) any corporation 50% or more of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company at such time and (b) any partnership, association, joint venture or other entity in which the Company owns, directly or indirectly, a 50% or greater equity interest (however designated) at such time.

     “Synthetic Lease” means, in respect of any Person, the monetary obligation of such Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

     “Temporary Cash Investment” mean any of the following investments: (a) Investments in open market commercial paper maturing within 180 days after acquisition thereof and rated at least A-1 (or the equivalent thereof) by Standard & Poor’s Ratings Group (or any successor thereto which is a nationally recognized rating agency) or at least P-1 (or the equivalent thereof) by Moody’s Investors Service, Inc. (or any successor thereto which is a nationally recognized rating agency), (b) Investments in marketable obligations, maturing within 180 days after acquisition thereof, issued or unconditionally guaranteed by the United States of America or an instrumentality or agency thereof and entitled to the full faith and credit of the United States of America, (c) Investments in money market funds that invest solely in the types of Investments permitted under clauses (a) and (b) above, (d) Investments in repurchase agreements of any financial institution or brokerage firm acceptable to the Required Holders which are fully secured by securities described in clause (b) above, (e) certificates of deposit and time deposits (including Eurodollar deposits), maturing within 180 days from the date of deposit thereof, with a domestic office of (i) any national or state bank or trust company organized under the laws of the United States of America or any state therein and having capital, surplus and undivided profits of at least $100,000,000 or (ii) any other national or state bank so long as all such deposits are federally insured and (f) in the case of any

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Non-Domestic Subsidiary, certificates of deposit and other instruments substantially equivalent to a certificate of deposit maturing within 180 days from the date of acquisition and issued by a bank or trust company organized and located in the jurisdiction where such Non-Domestic Subsidiary maintains its headquarters having capital, surplus and undivided profits of at least $100,000,000 (or its equivalent in other currencies).

     “Transferee” means any direct or indirect transferee of all or any part of any Note purchased by the Purchasers under this Agreement.

     “2002 Guaranty” means that certain Joint and Several Guaranty dated as of August 12, 2002, delivered by the Company and certain of its Subsidiaries in connection with the issuance and sale of the 2002 Notes.

     “2002 Loan Documents” means the “Loan Documents” as defined in the 2002 Note Agreement.

     “2002 Note Agreement” means that certain Note Agreement dated as of August 12, 2002 between the Company and the purchasers listed on Schedule I thereto, as amended.

     “2002 Notes” means those certain 7.20% Senior Notes due August 12, 2009 issued by the Company under and pursuant to the 2002 Note Agreement.

     “USA Patriot Act” means United States Public Law 107-56, Uniting and Strengthening America By Providing Appropriate Tools Required To Intercept and Obstruct Terrorism (USA Patriot Act) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

     “Voting Stock” means, when used with respect to any Person, any Stock of such Person having general voting power under ordinary circumstances to elect a majority of the board of directors (or other governing body) of such Person (irrespective of whether at the time any Stock of such Person shall have or might have voting power by reason of the happening of any contingency).

     “Weighted Average Life to Maturity” means, with respect to any Indebtedness for Money Borrowed, as at the time of the determination thereof the number of years obtained by dividing the then Remaining Dollar-Years of such indebtedness at such time by the then outstanding principal amount of such indebtedness.

     “Wholly-Owned Subsidiary” means a Consolidated Subsidiary, all of the outstanding Stock (other than directors’ qualifying shares, if required by law) of which are at the time owned directly by the Company or by one or more Wholly-Owned Subsidiaries or by the Company and one or more Wholly-Owned Subsidiaries.

     2.02 Interpretation.

     (a) In this Agreement, unless a clear contrary intention appears:

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     (1) the singular number includes the plural number and vice versa;

     (2) reference to any gender includes each other gender;

     (3) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision;

     (4) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually, provided that nothing in this clause (4) is intended to authorize any assignment not otherwise permitted by this Agreement;

     (5) reference to any agreement, document, instrument or report means, unless the context otherwise requires, such agreement, document, instrument or report as in effect when delivered to the Purchasers pursuant to this Agreement and as the same may thereafter be amended, supplemented or modified in accordance with the terms thereof and hereof, and reference to any Note includes any note issued pursuant hereto in renewal, rearrangement, reinstatement, enlargement, amendment, modification, extension, substitution or replacement therefor;

     (6) reference to any Section, Schedule or Exhibit means such Section hereof or such Schedule or Exhibit hereto;

     (7) the words “including” (and with correlative meaning “include”) means including, without limiting the generality of any description preceding such term;

     (8) with respect to the determination of any period of time, the word “from” means “from and including” and the word “to” means “to but excluding”;

     (9) reference to any Legal Requirement means such Legal Requirement as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time;

     (10) accounting terms used but not defined herein shall be construed in accordance with GAAP, and whenever the character or amount of any asset or liability or item of income or expense is required to be determined, or any consolidation or accounting computation is required to be made, for purposes hereof, such determination or computation shall be made in accordance with GAAP;

     (11) the word “knowledge”, when used in any representation or warranty of the Company contained herein, means the actual knowledge of any Responsible Officer;

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     (12) where any provision of this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person; and

     (13) if any action or failure to act by the Company violates any covenant or obligation of the Company contained herein, such violation shall not be excused by the fact that such action or failure to act is permitted by any other covenant or obligation of the Company contained herein.

     (b) Should there be a change in GAAP following the date of this Agreement and should either (i) the Company determine (in good faith) that the requirements of one or more of the covenants contained in Section 9 are materially increased or made more severe as a result thereof or (ii) the Required Holders determine (in good faith) that the requirements of one or more of the covenants contained in Section 9 are materially reduced or relaxed as a result thereof, then the Company and such Required Holders shall enter into good faith negotiations with the desired result being that such covenant(s) shall be amended in such a way that the criteria therein set forth for evaluating the financial condition of the Company and/or the Subsidiaries shall be the same after such amendment as if such change in GAAP had not been made.

     (c) The Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

     (d) No provision of this Agreement shall be interpreted or construed against any Person solely because that Person or its legal representative drafted such provision.

3. CONDITIONS OF CLOSING.

     The obligation of the Purchasers to purchase and pay for the Notes hereunder is subject to the satisfaction of the following conditions:

     3.01 Representations and Warranties.

     The representations and warranties of the Loan Parties contained in the following instruments shall be true and correct at the time of Closing: (i) this Agreement, (ii) the other Loan Documents and (iii) the instruments delivered by one or more of the Loan Parties pursuant to this Section 3.

     3.02 Performance; No Default.

     The Loan Parties shall have performed and complied with all agreements and conditions contained in this Agreement or in the other Loan Documents required to be performed or complied with by them prior to or at the Closing. At the time of Closing, no Default shall have occurred and be continuing or would result from the consummation of the Overall Transaction.

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     3.03 Compliance Certificate.

     The Purchasers shall have received an Officers’ Certificate, dated the Closing Date and satisfactory in form and substance to the Purchasers, certifying that the conditions specified in Sections 3.01 and 3.02 have been fulfilled. If required by the Purchasers, such Officers’ Certificate will also certify as to such matters of fact as the Purchasers may reasonably request to enable the Purchasers to determine compliance with such conditions.

     3.04 Opinions of Counsel.

     The Purchasers shall have received (a) a favorable opinion from Jenkens & Gilchrist, a Professional Corporation, counsel for the Company and the Guarantors, in the form of Exhibit B, (b) a favorable opinion of J. Curtis Linscott, General Counsel to the Company and the Guarantors, in the form of Exhibit C and (c) a favorable opinion from Bingham McCutchen LLP, special counsel for the Purchasers, in the form of Exhibit D. Each such opinion shall (i) be addressed to the Purchasers, (ii) be dated the Closing Date and (iii) state that all Transferees are entitled to rely thereon as though it were addressed to them.

     3.05 Resolutions, Etc.

     The Purchasers shall have received (a) copies of resolutions of the Board of Directors of each Loan Party, certified as of the Closing Date by the Secretary or an Assistant Secretary of such Loan Party, duly authorizing the Overall Transaction, (b) a certificate as to the incumbency and authority of the Person or Persons executing and delivering Loan Documents on behalf of such Loan Party and (c) such other documents and evidence as the Purchasers or its special counsel may request with respect to any Loan Party or the Overall Transaction, including the taking of all corporate proceedings in connection therewith and compliance with the conditions set forth herein, in each case in form and substance satisfactory to the Purchasers.

     3.06 Purchase Permitted by Applicable Laws, Etc.

     The consummation of the Private Placement on the terms and conditions herein provided (including the use of the proceeds of such Notes by the Company) shall (i) not violate any Legal Requirement (including, without limitation, section 5 of the Securities Act or Regulation U, T or X of the Board of Governors of the Federal Reserve System), (ii) not subject the Purchasers to any tax (other than routine income taxes), penalty, liability or other onerous condition under or pursuant to any Legal Requirement and (iii) constitute a legal investment under the laws and regulations of each jurisdiction to which the Purchasers are subject, but without resort to provisions (such as Section 1405(a)(8) of the New York Insurance Law) which permit the making of an investment without restriction as to the character of the particular investment being made. If required by the Purchasers, the Purchasers shall have received an Officers’ Certificate, dated the Closing Date, certifying as to such matters of fact as the Purchasers may reasonably specify to enable the Purchasers to determine compliance with the conditions set forth in the preceding sentence.

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     3.07 Payment of Closing Fees.

     The Company shall have paid the fees and disbursements which it is obligated to pay pursuant to Section 11.02 and which have been invoiced to the Company prior to the time of Closing.

     3.08 Private Placement Number.

     The CUSIP Service Bureau of Standard & Poor’s Information Group shall have issued to the Purchasers a private placement number with respect to the Notes.

     3.09 Notes.

     The Purchasers shall have received the Notes complying with the requirements of Section 1.03.

     3.10 Guaranty; Subrogation and Contribution Agreement.

     Each Guarantor and the Company shall have duly authorized, executed and delivered to the Purchasers a Joint and Several Guaranty, dated the Closing Date, in the form of Exhibit E (as may be amended from time to time, the “Guaranty”) and a Subrogation and Contribution Agreement.

     3.11 Other Loan Documents.

     Each of the other Loan Documents shall (a) have been duly authorized, executed, acknowledged (if appropriate) and delivered by the respective Loan Parties thereto, (b) be dated as of the Closing Date, (c) be in form and substance satisfactory to the Purchasers and (d) be in full force and effect on the Closing Date without any default existing thereunder. A counterpart of each Loan Document executed by the Loan Parties thereto shall have been delivered to the Purchasers or its special counsel. Each Loan Document shall constitute the valid and binding obligation of each Loan Party thereto, enforceable against such Loan Party in accordance with the terms thereof.

     3.12 Proceedings.

     All proceedings taken or to be taken in connection with the Overall Transaction prior to or on the Closing Date (and all documents incident thereto) shall be satisfactory in substance and form to the Purchasers, and the Purchasers and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as the Purchasers may reasonably request.

4. USE OF PROCEEDS.

     4.01 Use of Proceeds.

     The Company will apply the proceeds of the Private Placement solely to pay the costs and expenses described in Section 11.02 and to repay indebtedness of the Company. Nothing in

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this Section 4.01 is intended to prohibit the Company from borrowing or re-borrowing under the Existing Bank Loan Agreement.

     4.02 Margin Regulations.

     The Company will not, directly or indirectly, use any of the proceeds of the Private Placement for the purpose, whether immediate, incidental or ultimate, of buying a “margin stock” or of maintaining, reducing or retiring any indebtedness originally incurred to purchase a stock that is currently a “margin stock”, or for any other purpose which might constitute the private placement of a “purpose credit,” in each case within the meaning of Regulation U (12 C.F.R. 221, as amended) or Regulation T (12 C.F.R. 220, as amended) of the Board of Governors of the Federal Reserve System, or otherwise take or permit to be taken any action which would involve a violation of such Regulation U or T or of Regulation X (12 C.F.R. 224, as amended) of the Board of Governors of the Federal Reserve System or any other regulation of such Board.

5. PREPAYMENTS.

     5.01 Required Prepayments of the Notes.

     (a) Unless the aggregate principal amount of the then outstanding Notes shall have become due and payable pursuant to Section 10.01, the Company shall apply to the prepayment of the Notes, without premium, and there shall become due and payable, the sum of $6,666,666.67 on December 28 in each of the years 2010 through 2014 (or, in the case of any such prepayment, such lesser principal amount of the Notes as shall then be outstanding), leaving $6,666,666.67 principal amount (or such other principal amount thereof as then remains unpaid) of the Notes for payment at their stated maturity on December 28, 2015. Each such prepayment shall be at 100% of the principal amount of the Notes so prepaid, together with all accrued and unpaid interest thereon to the date of prepayment. No partial prepayment of the Notes pursuant to Section 5.02 shall relieve the Company from its obligation to make the required prepayments provided for in this Section 5.01.

     (b) Whenever any prepayment to be made under this Section 5.01 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 the amount of such prepayment shall bear interest at the applicable rate during such extension.

     5.02 Optional Prepayments of the Notes.

     The Company may, at its option, upon notice as provided in Section 5.03, at any time or from time to time, prepay any part (in a principal amount of at least $1,000,000 or an integral multiple of $100,000 in excess thereof) or all of the Notes at 100% of the principal amount so prepaid, together with all accrued and unpaid interest thereon to the date of prepayment, plus a premium equal to the Make-Whole Premium, if any, on the amount so prepaid, determined as of two Business Days prior to the date of such prepayment pursuant to this Section 5.02.

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     5.03 Notice of Optional Prepayments; Officers’ Certificate.

     The Company shall give each Holder irrevocable written notice of each optional prepayment of Notes made under Section 5.02 not less than 30 nor more than 60 days prior to the date fixed for such prepayment (which shall be a Business Day), in each case specifying (a) such prepayment date, (b) the aggregate principal amount of the Notes to be prepaid, (c) the aggregate principal amount of the Notes held by such Holder to be prepaid, (d) that a Make-Whole Premium may be payable, (e) the date when such Make-Whole Premium will be calculated, (f) the estimated Make-Whole Premium together with a reasonably detailed calculation of such Make-Whole Premium and (g) the accrued interest applicable to the prepayment. The Company will give each Holder, one Business Day prior to the date scheduled for any such prepayment, an Officers’ Certificate certifying that the conditions of Section 5.02 have been fulfilled and specifying the particulars of such fulfillment, and setting forth the calculations used in computing such Make-Whole Premium, or stating that no Make-Whole Premium is due and including the reason for such statement.

     5.04 Allocation of Partial Prepayments.

     Any partial prepayment of the Notes shall be allocated among all Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts of the Notes so outstanding, with adjustments, to the extent practicable, to compensate for any prior payments not made exactly in such proportion. All partial prepayments shall be applied to the Notes in anticipation and satisfaction of the prepayments required to be made by the provisions of Section 5.01, in inverse order of the maturity thereof.

     5.05 Maturity; Surrender, Etc.

     In the case of any prepayment of the Notes pursuant to this Section 5, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Premium, if any. From and after such date, unless the Company shall fail to pay such principal amount when due and payable, together with the interest and Make-Whole Premium, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall, after such payment or prepayment in full, be surrendered to the Company and be cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

     5.06 Retirement of Notes.

     The Company shall not, and shall not permit any of its Affiliates to, prepay or otherwise retire, in whole or in part, prior to their stated final maturity (other than by prepayment pursuant to this Section 5 or upon acceleration of such final maturity pursuant to Section 10.01), or purchase or otherwise acquire, directly or indirectly, Notes held by any Holder unless the Company or such Affiliate shall have offered to prepay or otherwise retire or purchase or otherwise acquire, as the case may be, the same proportion of the aggregate principal amount of Notes held by each other Holder at the time outstanding upon the same terms and conditions. Any Notes prepaid pursuant to this Section 5 or Section 10.01 or otherwise retired or purchased

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or otherwise acquired by the Company or any of its Affiliates shall not be deemed to be outstanding for any purpose under this Agreement, provided that, with respect to each prepayment pursuant to this Section 5, all Notes then held by the Company and its Affiliates shall nonetheless be entitled to participate in such prepayment the same as if such Notes were deemed outstanding.

6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants that:

     6.01 Subsidiaries.

     (a) The Company has no Subsidiaries on the date hereof except those listed in Schedule II, each of which is a Consolidated Subsidiary, other than RATI Holding, Inc., a Wholly-Owned Subsidiary.

     (b) Schedule II sets forth, with respect to each of the Subsidiaries listed therein, (i) whether such Subsidiary is a corporation or partnership, (ii) the jurisdiction of its incorporation or formation (as the case may be) and (iii) each jurisdiction in which it is qualified to do business as a foreign Person.

     (c) All of the issued and outstanding Stock or partnership interests of each Subsidiary is validly issued, fully-paid and is nonassessable and, except for directors’ qualifying shares of partnership interests (if any), is owned (beneficially and of record) by the Company or other Subsidiaries free and clear of any Lien.

     (d) No Subsidiary owns any Stock of the Company.

     6.02 Organization, Qualification, Authorization, Etc.

     (a) The Company and each Subsidiary (i) is a corporation or partnership (as the case may be) duly organized or formed (as the case may be) and existing in good standing under the laws of the jurisdiction of its organization or formation (as the case may be), (ii) is duly qualified or registered and in good standing as a foreign Person in each jurisdiction in which the nature of such qualification or registration is necessary and in which the failure to so qualify or register could have a Material Adverse Effect and (iii) has the corporate or partnership (as the case may be) power (A) to own its Properties, (B) to carry on its business as now being conducted and (C) to consummate the Overall Transaction. Schedule III sets forth each jurisdiction in which the Company is qualified or registered to do business as a foreign corporation.

     (b) The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party have been duly authorized by all necessary corporate or partnership (as the case may be) action on the part of such Loan Party. This Agreement constitutes, and the Notes and such other Loan Documents (when executed and delivered as contemplated hereby) will each constitute, a legal, valid and binding obligation of each Loan Party thereto, enforceable in accordance with its terms, except as the enforceability

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thereof may be limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights.

     6.03 Disclosure Documents.

     (a) The Company has heretofore furnished the Purchasers with true, correct and complete copies of the following documents, and each of the Purchasers has acknowledged receipt of same:

     (1) the Organizational Documents of the Company and each Subsidiary as in effect on the date hereof;

     (2) the Company’s Annual Reports to Stockholders for the Fiscal Years ended December 31, 2000 through 2004 (inclusive);

     (3) the Company’s Annual Reports on Form 10-K for the Fiscal Years ended December 31, 2000 through 2004 (inclusive), as filed with the SEC;

     (4) the Company’s Quarterly Report on Form 10-Q for the Fiscal Quarter ended September 30, 2005 as filed with the SEC;

     (5) the consolidated financial statements of the Company and the Consolidated Subsidiaries described in Schedule VI (the “Company Financials”);

     (6) the projections described in Schedule VII (the “Projections”); and

     (7) the Existing Bank Loan Agreement (in the form of Exhibit G).

     (b) The Company Financials (including any related schedules and/or notes) (i) were true and correct in all material respects as at the dates thereof, (ii) were prepared in accordance with GAAP consistently followed throughout the periods involved and (iii) show all liabilities, direct and contingent, of the Company and the Consolidated Subsidiaries required to be shown in accordance with GAAP. The balance sheets included in the Company Financials fairly present the consolidated financial condition of the Company and the Consolidated Subsidiaries as at the dates thereof, and the statements of operations and statements of cash flows included in the Company Financials fairly present the consolidated results of operations and cash flows of the Company and the Consolidated Subsidiaries for the periods indicated.

     (c) The Projections are based on good faith estimates and assumptions believed by the Company to be reasonable at the time made, it being recognized by the Purchasers that the Projections, insofar as they relate to future events, are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ materially from the projected results. Since the preparation of the Projections, nothing has occurred to cause the Company to believe that the estimates and assumptions on which the Projections are based are no longer reasonable.

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     6.04 Changes, Etc.

     (a) Since December 31, 2004, (i) neither the Company nor any Subsidiary has entered into any material transactions not in the ordinary course of business, nor incurred any material liabilities or obligations, direct or contingent, except for the Loan Documents, the Existing Bank Loan Agreement and Material Contracts listed on Schedule V hereto entered into subsequent to December 31, 2004 and (ii) except as has been disclosed in Company’s public filings with the SEC, no events have occurred which, individually or in the aggregate, have had, or in the future could reasonably be expected to have, a Material Adverse Effect.

     (b) Neither the business nor the Properties of the Company or any of the Subsidiaries are presently affected by any fire, explosion, accident, labor controversy, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty which could reasonably be expected to have a Material Adverse Effect.

     6.05 Tax Returns and Payments.

     (a) The Company and each Subsidiary has filed all tax returns required by law to be filed by it (or obtained extensions with respect thereto) and has paid all taxes, assessments and other governmental charges levied upon it or any of its Properties, income or franchises which are shown to be due and payable on such returns and all other taxes and assessments payable by it, other than (i) those which are not past due, (ii) those which are presently being contested in good faith by appropriate proceedings diligently conducted for which such reserves or other appropriate provisions, if any, as shall be required by GAAP have been made and (iii) those not reflected on such returns the non-payment of which could not reasonably be expected to have a Material Adverse Effect. No contest referred to in the foregoing clause (ii) could reasonably be expected to have a Material Adverse Effect.

     (b) After due inquiry, the Company knows of no proposed tax assessment against the Company or any Subsidiary which could reasonably be expected to have a Material Adverse Effect. In the opinion of the Company, all tax liabilities of the Company and the Subsidiaries are adequately provided for on their respective books. The Federal income tax returns of the Company and the Subsidiaries for 2002 and subsequent Fiscal Years are open to examination by the IRS.

     6.06 Indebtedness; Solvency.

     (a) The Company and the Subsidiaries have no outstanding Indebtedness for Money Borrowed other than (i) the indebtedness evidenced by the Notes and the Guaranty, (ii) the indebtedness evidenced by the 1995 Notes and the 1995 Guaranty, (iii) the indebtedness evidenced by the 1997 Notes and the 1997 Guaranty, (iv) the indebtedness evidenced by the 2002 Notes and the 2002 Guaranty, (v) indebtedness outstanding under the Existing Bank Loan Agreement, (vi) the indebtedness described in

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Schedule XIII, and (vii) other indebtedness permitted under Section 9.05 which indebtedness does not exceed $500,000 in the aggregate.

     (b) Each of the Loan Parties (i) has, and after giving effect to the Overall Transaction will have, capital sufficient to carry on its business and transactions and all the business and transactions in which it is about to engage, (ii) is, and after giving effect to the Overall Transaction will be, solvent and able to pay its debts as they mature and (iii) owns, and after giving effect to the Overall Transaction will own, Property having a value, both at fair valuation and present fair salable value, greater than the amount required to pay the probable liability on its debts.

     6.07 Permits.

     The Company and each Subsidiary possess all Permits that are necessary or desirable in connection with the ownership, use or operation by it of its Properties and the conduct by it, in the ordinary course, of its business as now conducted and as currently proposed to be conducted, except those Permits the absence of which would not have a Material Adverse Effect. None of such Permits impose any material burden or restriction on the Company or any Subsidiary. The Company and the Subsidiaries are in compliance with all terms of such Permits. All such Permits are valid and in full force and effect and, to the Company’s knowledge (after due inquiry), none are threatened to be revoked, cancelled, suspended or modified for any reason.

     6.08 Material Contracts.

     Schedule V describes all Material Contracts existing on the date hereof. Each of such Material Contracts (a) has been duly executed and delivered by, and constitutes the legal, valid and binding obligation of, each Loan Party thereto, enforceable against each such Loan Party in accordance with its terms, (b) is in full force and effect and (c) except as reflected in Schedule V, has not been amended or modified, nor any provision thereof waived, in any respect. The Company and each Subsidiary has, and, to the Company’s knowledge, all other parties to such Material Contracts have, performed and complied in all material respects with all of the terms and conditions set forth therein. No default by the Company, any Subsidiary or, to the Company’s knowledge, any such other party exists under any such Material Contract, which individually, or in the aggregate for all such defaults, could reasonably be expected to have a Material Adverse Effect.

     6.09 Title to Property, Etc.

     (a) The Company and each Subsidiary has good and indefeasible fee simple title to its real property and good and defensible title to all of its other Property, including the Property reflected in the balance sheets included in the Company Financials (other than Properties disposed of in the ordinary course of business), subject to no Lien of any kind except Permitted Liens which do not, individually or in the aggregate, materially affect or interfere with, or if used or availed of will not materially affect or interfere with, the occupancy, use or operation of such item of Property for its intended purpose or the peaceful and quiet use and enjoyment thereof by the Company or such Subsidiary, as the case may be.

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     (b) No lease under which the Company or any Subsidiary is the lessee or is operating contains any provision which individually or in the aggregate interferes with the ordinary conduct of the business of the Company or such Subsidiary or otherwise could reasonably be expected to have a Material Adverse Effect. The Company and each Subsidiary enjoys peaceful and undisturbed possession under all leases under which it is the lessee or is operating, except where the absence of such possession would not have a Material Adverse Effect. All of such leases are valid and subsisting and no default by the Company, such Subsidiary or, to the Company’s knowledge, any such other party exists thereunder, which individually, or in the aggregate for all such defaults, could reasonably be expected to have a Material Adverse Effect.

     6.10 Condition of Property.

     The facilities of the Company and the Subsidiaries, taken as a whole, are in a condition and state of repair which are sufficient and adequate to operate their respective businesses in a proper and efficient manner.

     6.11 Compliance with Applicable Laws, Permits and Contracts.

     (a) Neither the Company nor any Subsidiary is in violation of (i) any provision of its Organizational Documents, (ii) any Applicable Permit or Applicable Contract (including the Existing Bank Loan Agreement, the 1995 Note Agreement, the 1997 Note Agreement and the 2002 Note Agreement) or (iii) any instrument evidencing or otherwise relating to Indebtedness for Money Borrowed (other than, in the case of the foregoing clauses (ii) and (iii), violations which, individually or collectively, could not reasonably be expected to have a Material Adverse Effect), and the execution, delivery and performance of the Loan Documents and the consummation of the Overall Transaction will not result in any violation of or constitute a default under any of the foregoing or result in the creation of (or impose any obligation on the Company or any Subsidiary to create) any Lien that is not a Permitted Lien upon any Property of the Company or any Subsidiary.

     (b) Neither the Company nor any Subsidiary is in violation of any Legal Requirement other than violations which, individually or collectively, will not have a Material Adverse Effect, and the execution, delivery and performance of the Loan Documents and the consummation of the Overall Transaction will not result in a violation of any Legal Requirement.

     (c) Except for this Agreement, the Existing Bank Loan Agreement, the 1995 Note Agreement, the 1997 Note Agreement and the 2002 Note Agreement, neither the Company nor any Subsidiary is a party to or bound by any Permit, agreement or instrument (including its Organizational Documents) which contains any restrictions or limitations on the incurrence by the Company or such Subsidiary of any Indebtedness for Money Borrowed.

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     (d) Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness for Money Borrowed of the Company or such Subsidiary.

     6.12 Litigation, Etc.

     No action, suit, investigation or proceeding is pending or, to the knowledge of the Company (after due inquiry), threatened against or affecting the Company or any Subsidiary or any Property of the Company or any Subsidiary which (a) individually or collectively, could reasonably be expected to have a Material Adverse Effect or (b) questions the validity of any Loan Document or any action taken or to be taken pursuant thereto.

     6.13 ERISA.

     Each Benefit Arrangement is (and has been) maintained and operated in compliance in all material respects with the applicable provisions of ERISA, the Code and other Legal Requirements. Neither the Company nor any member of the ERISA Group has failed to timely make any required contribution or payment to or in respect of any Benefit Arrangement. No Benefit Arrangement provides post employment health benefits except as required by Part 6 of Subtitle B of ERISA. No litigation, investigation or claim (other than a routine claim for benefits) is pending or, to the knowledge of the Company (after due inquiry), threatened or anticipated concerning any Benefit Arrangement. The Company and/or the members of its ERISA Group may at any time unilaterally, without the consent of any Person, terminate any and/or all Benefit Arrangement(s) without incurring any material liability. The execution and delivery of this Agreement and the other Loan Documents and the issue and sale of the Notes will not involve any transaction which is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975 of the Code. The representation by the Company in the next preceding sentence is made in reliance upon and subject to the accuracy of the representation of the Purchasers in Section 7 as to the source of the funds to be used to pay the purchase price of the Notes.

     6.14 No Governmental Consents Required for Overall Transaction.

     Neither the nature of the Company nor any Subsidiary, nor the business or Properties of the Company or any Subsidiary, nor any relationship between the Company or any Subsidiary and any other Person, nor any circumstance in connection with the offering, issuance, sale or delivery of the Notes is such as to require any authorization, consent, approval, exemption or other action by or notice to or filing with any Governmental Authority in connection with the execution and delivery of this Agreement, the other Loan Documents or the consummation of the Overall Transaction other than routine SEC filings by the Company under the Exchange Act.

     6.15 Offering of Notes.

     Neither the Company nor its Affiliates nor anyone acting on its or their behalf has, directly or indirectly, (a) offered the Notes or any similar security of the Company for sale to, or solicited any offers to buy the Notes or any similar security of the Company from, or otherwise approached or negotiated with respect thereto with, any Person other than the Purchasers and not more than 70 other institutional investors, each of which has been offered the Notes at a private

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sale for investment or (b) taken or will take any action which would require the issuance or sale of the Notes to be registered pursuant to the provisions of section 5 of the Securities Act or pursuant to the provisions of any securities or Blue Sky law of any jurisdiction.

     6.16 Use of Proceeds.

     The Company will apply the proceeds of the sale of the Notes in accordance with Section 4. No indebtedness being reduced or retired, directly or indirectly, out of the proceeds of the sale of the Notes was incurred for the purpose of purchasing or carrying any stock which is currently a “margin stock” (as defined in Section 4.02), and the Company neither owns nor has any present intention of acquiring any amount of “margin stock.” None of the proceeds of the sale of the Notes will be used to acquire any security in any transaction which is subject to section 13 or 14 of the Exchange Act, including particularly sections 13(d) and 14(d) thereof.

     6.17 Foreign Assets Control Regulations, Etc.

     (a) Neither the issue and sale of the Notes by the Company nor its use of the proceeds thereof as contemplated by this Agreement will violate the Trading with the Enemy Act, (50 U.S.C. App. §§1 et seq., as amended), or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.

     (b) No Loan Party is a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (ii) knowingly engages in any dealings or transactions with any such Person. The Company and its Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.

     (c) No part of the proceeds from the sale of the Notes hereunder will 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, assuming in all cases that such Act applies to the Company.

     6.18 Status Under Certain Federal Statutes.

     No Loan Party is (a) an “investment company” or a Person “controlled” by or acting on behalf of an “investment company,” in each case within the meaning of the Investment Company Act of 1940, as amended, (b) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, (c) subject to regulation under the Federal Power Act, as amended, (d) subject to the ICC Termination Act of 1995, as amended, or (e) a “rail carrier” or a “person controlled by or affiliated with a rail carrier”, within the meaning of Title 49, U.S.C.

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     6.19 Environmental Matters.

     (a) The Company and each Subsidiary has all Environmental Permits necessary for the conduct of its business and for the ownership, use, maintenance and operation of its assets, and is in compliance with all material terms thereof. All such Environmental Permits are valid and in full force and effect and, to the Company’s knowledge, none are threatened to be revoked, cancelled, suspended or modified adversely for any reason. As to any such Environmental Permit that is about to expire or is needed for the proposed conduct of its business, the Company or such Subsidiary, as the case may be, has timely and properly applied for renewal or receipt of the same or, if such Permit is not reasonably expected to be renewed, such nonrenewal will not have a Material Adverse Effect.

     (b) Without in any manner limiting any other representations and warranties set forth in this Agreement:

     (i) neither the Company nor any Subsidiary, nor any real property or facility presently owned, used, maintained or operated by the Company or any Subsidiary, nor any of the other assets of the Company or any Subsidiary is in violation of or is in noncompliance with, any Environmental Laws, except for violations or noncompliances which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; and

     (ii) without in any manner limiting the generality of clause (i) above:

     (A) no Hazardous Materials have been used, generated, manufactured, transported, stored or treated, or disposed of, landfilled or in any other way Released by or on behalf of the Company or any Subsidiary, except for those of the foregoing activities which, individually or in the aggregate, could not have a Material Adverse Effect;

     (B) to the Company’s knowledge, no Hazardous Materials have been used, generated, manufactured, stored or treated, or disposed of, landfilled or in any other way Released (and no Release is threatened), by any Person other than the Company or any Subsidiary on, under, about or from any Property now or previously owned, used, maintained or operated by the Company or any Subsidiary or any Property adjacent to any such Property except for those of the foregoing activities (including Releases and threatened Releases) which, individually or in the aggregate, could not have a Material Adverse Effect;

     (C) neither the Company nor any Subsidiary is subject, as a result of the operation or condition of its business or assets prior to or at Closing, to any (1) contingent liability in connection with any Release or threatened Release of any Hazardous Materials into the environment

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whether on or off any Property owned, used, maintained or operated by the Company or such Subsidiary or (2) reclamation or remediation requirements under Environmental Laws, or any reporting requirements related thereto, except for liabilities or requirements which, individually or in the aggregate, could not have a Material Adverse Effect;

     (D) neither the Company nor any Subsidiary has been named as a potentially responsible party under, and none of its Property has been nominated or identified as a facility which is subject to an existing or potential claim under, CERCLA or comparable Environmental Laws, and no such Property is subject to any Lien arising under Environmental Laws;

     (E) to the Company’s knowledge, the Company and each Subsidiary has all environmental and pollution control equipment necessary for (1) compliance in all material respects with all Environmental Laws (including all applicable Permits) and (2) operation of the business of the Company or such Subsidiary as it is presently conducted;

     (F) no Hazardous Materials have been incorporated into or contained in any of the personal property or improvements to real property owned, used, maintained or operated by the Company or any Subsidiary such that such Hazardous Materials could reasonably be expected to have a Material Adverse Effect;

     (G) none of the locations where Hazardous Materials have been used, generated, manufactured, stored, treated, recycled, disposed of or Released by or on behalf of the Company or any Subsidiary has been nominated or identified as a facility which may be subject to an existing or potential claim under CERCLA or comparable Environmental Laws;

     (H) to the knowledge of the Company, none of the offsite locations where Hazardous Materials from any of the assets of the Company or any Subsidiary have been stored, treated, recycled, disposed of or Released has been nominated or identified as a facility which may be subject to an existing or potential claim under CERCLA or comparable Environmental Laws;

     (I) neither the Company nor any Subsidiary has received any written notices of (1) any violation of, noncompliance with or remedial obligation under Environmental Laws relating to the ownership, use, maintenance, operation of, or conduct of business related to, any Property of the Company or such Subsidiary or (2) any Release or threatened Release of Hazardous Materials, except for violations, noncompliances, obligations, Releases or threatened Releases which,

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individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect;

     (J) there are no writs, injunctions, decrees, orders or judgments outstanding, or lawsuits, claims, proceedings or investigations pending or, to the knowledge of the Company, threatened relating to the ownership, use, maintenance, operation of, or conduct of business related to, any Property of the Company or any Subsidiary arising out of or relating to Environmental Laws, nor does the Company or any Subsidiary have knowledge (after due inquiry) of any basis for any of the foregoing, except for writs, injunctions, decrees, orders, judgments, lawsuits, claims, proceedings or investigations which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect;

     (K) no underground or aboveground storage tanks or surface impoundments are located at any Property owned, used, maintained or operated by the Company or any Subsidiary other than those which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; and

     (L) there are no material obligations, undertakings or liabilities arising out of or relating to Environmental Laws which the Company or any Subsidiary has agreed to, assumed or retained, by contract or otherwise.

     6.20 Books and Records.

     The Company maintains books, records and accounts with respect to itself and the Subsidiaries which, in reasonable detail, accurately and fairly reflect their transactions and dispositions of their assets, and maintains a system of internal accounting controls sufficient to provide reasonable assurances that (a) transactions are executed in accordance with management’s general or specific authorization, (b) transactions are recorded as necessary (i) to permit preparation of financial statements in accordance with GAAP, and (ii) to maintain accountability for assets, (c) access to assets is permitted only in accordance with management’s general or specific authorization and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

     6.21 Fiscal Year.

     The fiscal year of the Company and each Subsidiary coincides with the calendar year.

     6.22 Brokerage.

     All negotiations relative to this Agreement, the other Loan Documents and the transactions contemplated hereby have been carried on by the Company and the other Loan

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Parties without the intervention of any Person which might give rise to a valid claim against the Purchasers for a brokerage commission or other like payment.

     6.23 Labor Matters.

     Schedule IX lists each employment, consultant or similar agreement and all labor contracts and collective bargaining agreements to which the Company or any Subsidiary is a party or by which it is bound. Except as otherwise listed on Schedule IX, no strikes or other labor disputes are pending or threatened against the Company or any Subsidiary. All payments due from the Company or any Subsidiary on account of employee health and welfare insurance have been paid or, if not due, have been accrued as liabilities on the books of the Company or such Subsidiary.

     6.24 Patents, Trademarks, Etc.

     The Company and each Subsidiary owns, or is licensed or otherwise has the lawful right to use, all patents, trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as now conducted and as proposed to be conducted. All tradenames used by the Company or any Subsidiary are listed on Schedule X. Assumed name certificates have been duly filed of record with appropriate Governmental Authorities for each of such tradenames, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect..

     6.25 Chief Executive Office.

     The chief executive office of the Company and the office where it maintains its records is located at 1600 West 7^th Street, Fort Worth, Texas 76102-2599.

     6.26 Permitted Investments.

     Schedule XI specifies the aggregate amount of each investment held by the Company and any of its Subsidiaries on the date hereof other than those permitted by clauses (a) through (k) of Section 9.08.

     6.27 Liens.

     None of the Properties of the Company or any Subsidiary is subject to any Lien other than Permitted Liens.

     6.28 Full Disclosure.

     (a) Neither this Agreement (including the Schedules and Exhibits hereto), the other Loan Documents, the Company Financials, the instruments described in Section 6.03(a) nor any document delivered by the Company or any of its Affiliates pursuant to Section 3 contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which the same were made.

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     (b) There is no fact (excluding general economic or industry conditions not peculiar to the Company or any Subsidiary) which (i) has had a Material Adverse Effect or, in the opinion of any Responsible Officer of the Company, could reasonably be expected in the future to have a Material Adverse Effect and (ii) has not been set forth in this Agreement (including the Schedules and Exhibits hereto) or in the Company Financials.

7. PURCHASE FOR INVESTMENT; SOURCE OF FUNDS

     7.01 Representations of the Purchasers.

     (a) Each of the Purchasers hereby represents to the Company that it (i) is purchasing the Notes for its own account for investment and not with a view to, or for sale in connection with, the distribution thereof or with any present intention of distributing or selling any of the Notes, provided that the disposition of the Purchaser’s property shall at all times be within its control, (ii) is an “accredited investor”, as defined in Regulation D under the Securities Act, and (iii) (x) has knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of the investment in the Notes and (y) is able to bear the economic risk of such investment. Each of the Purchasers understands that the Notes have not been registered under the Securities Act and may not be sold or otherwise transferred by the Purchasers except pursuant to an effective registration statement under such Act or pursuant to an available exemption therefrom under such Act.

     (b) Each of the Purchasers further represents to the Company that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by it to pay the purchase price of the Notes to be purchased by it hereunder:

     (i) the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

     (ii) the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary

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of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

     (iii) the Source is either (1) an insurance company pooled separate account, within the meaning of PTE 90-1 or (2) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (iii), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

     (iv) (1) the Source constitutes assets of an “investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), (2) no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, (3) the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, (4) neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and (5) the identity of such QPAM and the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this clause (iv); or

     (v) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the 1NHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(d) of the INHAM Exemption) owns a 5% or more interest in the Company and (1) the identity of such INHAM and (2) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (v); or

     (vi) the Source is a governmental plan; or

     (vii) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (vii); or

     (viii) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

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     As used in this Section 7.01(b), the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.

     (c) Purchasers have received all of the items described in Section 6.03.

8. AFFIRMATIVE COVENANTS

     8.01 Financial Statements, Reports and Documents.

     The Company shall deliver to each Holder (in duplicate):

     (a) as soon as available, and in any event within 45 days, after the end of each Fiscal Quarter (other than the last Fiscal Quarter in any Fiscal Year), a consolidated balance sheet of the Company and the Consolidated Subsidiaries (in reasonable detail) as of the end of such Fiscal Quarter and the related consolidated statements of income, stockholders’ equity and cash flows of the Company and the Consolidated Subsidiaries (in reasonable detail) for such Fiscal Quarter and for the portion of the current Fiscal Year ending on the last day of such Fiscal Quarter, in each case (i) prepared in accordance with GAAP and (ii) setting forth in comparative form the figures for the corresponding period of the preceding Fiscal Year, which financial statements shall be certified (subject to normal year-end audit adjustments) as to fairness of presentation, compliance with GAAP and consistency with prior periods by a Responsible Officer of the Company, it being understood that no such statement need be accompanied by complete footnotes;

     (b) as soon as available, and in any event within 90 days, after the end of each Fiscal Year, a consolidated balance sheet of the Company and the Consolidated Subsidiaries (in reasonable detail) as of the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows of the Company and the Consolidated Subsidiaries (in reasonable detail) for such Fiscal Year, in each case (i) prepared in conformity with GAAP and (ii) setting forth in comparative form the figures for the preceding Fiscal Year, which financial statements shall be accompanied by an opinion thereon (which shall not be qualified by reason of any limitation imposed by the Company) of the Independent Registered Public Accounting Firm stating that such financial statements, in the opinion of the Independent Registered Public Accounting Firm, present fairly, in all material respects, the consolidated financial position of the Company and the Consolidated Subsidiaries as at the end of such year, and the results of their operations and their cash flows for such period in conformity with accounting principles generally accepted in the United States of America (except for noted changes in which the Independent Registered Public Accounting Firm concurs) and that the examination of the Independent Registered Public Accounting Firm in connection with such financial statements has been made in accordance with the standards of the Public Company Accounting Oversight Board (United States), and such examination includes examining, on a test basis, evidence supporting the amounts and disclosures in the

38

financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation;

     (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, an Officers’ Certificate (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 9.01, 9.02, 9.03 and 9.04, on the date of such financial statements, (ii) stating that the signers have reviewed this Agreement and the other Loan Documents and have made, or caused to be made under their supervision, a review of the transactions and condition of the Company during the accounting period covered by such financial statements and (iii) stating that such review did not disclose the existence during or at the end of such accounting period of any Default or, if any Default exists, specifying the nature and period of existence thereof and what action the Company has taken, is taking or proposes to take with respect thereto;

     (d) so long as the Existing Notes are outstanding, simultaneously with the delivery of each set of financial statements referred to in clause (b) above, a written statement by the Independent Registered Public Accounting Firm giving the opinion thereon stating (i) that their audit has included a review of the terms of this Agreement and that such review is sufficient to enable them to make the statement referred to in clause (iv) of this paragraph (d) (it being understood that such Independent Registered Public Accounting Firm shall not be required to conduct or make any special or additional audit procedures or examinations for purposes of such written statement, other than those required by generally accepted auditing standards, and that their audit will not have been directed primarily toward obtaining knowledge of any Default), (ii) whether, in the course of their audit, they obtained knowledge (and whether, as of the date of such written statement, they have knowledge) of the existence and continuance of any Default and, if so, specifying the nature and period of existence thereof, (iii) that they have examined the Officers’ Certificate delivered in connection therewith pursuant to clause (c) above and (iv) that the matters set forth in such Officers’ Certificate pursuant to subclause (i) of clause (c) above have been properly stated in accordance with this Agreement;

     (e) so long as the Existing Notes are outstanding, promptly upon receipt thereof, a copy of each management letter submitted to the Company by the Independent Registered Public Accounting Firm (and each response of the Company thereto), it being understood and agreed that all material items which are furnished to the Holders pursuant to this clause (e) shall be treated as confidential if such items are not previously known to any Holder and if, and so long as, such items are not generally available to the public, but nothing herein contained shall limit or impair the right of any Holder to (i) disclose such items to any other Holder, any prospective Transferee, the National Association of Insurance Commissioners or any Governmental Authority pursuant to an applicable legal requirement or agreement, (ii) disclose such items in connection with any litigation, investigation or similar proceeding, (iii) use such information to the extent pertinent to an evaluation of the Obligations or to enforce compliance with the terms and conditions of this Agreement, (iv) take any action required by law or (v) take any lawful action which such Holder deems necessary to protect its interests under this Agreement or any other

39

Loan Document provided that such Holder shall use reasonable efforts to provide to the Company notice of such disclosure and a reasonable opportunity to contest or limit such disclosure;

     (f) so long as the Existing Notes are outstanding, promptly upon becoming available, a copy of each consolidating balance sheet and income statement of the Company and the Consolidated Subsidiaries prepared by or on behalf of the Company after the date hereof;

     (g) promptly upon transmission thereof, a copy of each (i) financial statement, proxy statement, notice and report sent or made available by the Company to its security holders in compliance with the Exchange Act or any comparable federal or state laws relating to the disclosure by any Person of information to its security holders, (ii) regular and periodic report, registration statement (excluding exhibits) and prospectus filed by the Company with any securities exchange or with the SEC or any Governmental Authority succeeding to any of its functions (other than any such reports, registration statements or prospectuses transmitted after the Existing Notes are no longer outstanding and which are not material to the business of the Company) and (iii) press release or other statement made available by the Company to the public concerning material developments in the business of the Company;

     (h) as soon as practicable, and in any event within two Business Days, after the Company obtains knowledge of any Default, an Officers’ Certificate specifying the nature and period of existence thereof and what action the Company has taken, is taking or proposes to take with respect thereto;

     (i) as soon as practicable, and in any event within ten Business Days, after the Company obtains knowledge of any condition (excluding general economic or industry conditions not peculiar to the Company or any Subsidiary), happening or event which, in the opinion of the Board of Directors or any Responsible Officer of the Company, could reasonably be expected to have a Material Adverse Effect, an Officers’ Certificate specifying the nature and period of existence thereof and what action the Company has taken, is taking or proposes to take with respect thereto;

     (j) promptly, a copy of each Material Contract entered into or assumed by the Company after the date hereof and each material amendment, supplement or modification entered into after the date hereof in respect of any Material Contract; and

     (k) such other information concerning the business, financial condition, results of operation, prospects or Properties of the Company or any Subsidiary as any Holder shall reasonably request.

     Documents required to be delivered pursuant to Sections 8.01(a), 8.01(b), 8.01(c) or 8.01(g) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto on the Company’s website on the Internet at

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http://www.cashamerica.com or any other website on the Internet designated in writing to each of the Holders or (ii) on which such documents are posted on the Company’s behalf on http://www.sec.gov; provided that, in each case, the Company (A) shall have notified each Holder (by telecopier or to an electronic mail address provided to the Company by such Holder) of the posting of each of such documents and (B) shall deliver paper copies of such documents to any Holder that requests the Company to deliver such paper copies until a written request to cease delivering paper copies is given by such Holder.

     8.02 Payment of Principal, Interest and Premium.

     The Company will duly and punctually pay the principal of, and interest and premium (if any) on, the Notes in accordance with the terms of the Notes and this Agreement.

     8.03 Payment of Taxes, Claims and Indebtedness.

     The Company will, and will cause each Subsidiary to, pay and discharge, as and when due and payable, (a) all taxes, assessments and governmental charges or levies imposed upon it or any of its Properties or in respect of any of its franchises, business, income or profits, (b) all claims (including claims for labor, services, materials and supplies) for sums which, if unpaid, might become a Lien upon any of its Property and (c) all of its other indebtedness in excess of $5,000,000; provided, however, that no such tax, assessment, charge or levy, claim or indebtedness (other than the Obligations) need be paid if and so long as (i) (A) no Default shall be in existence, (B) the amount, applicability or validity thereof is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and (C) such reserves or other appropriate provision (if any) as shall be required by GAAP shall have been made therefor or (ii) the nonpayment of all such taxes, assessments, charges or levies, claims or indebtedness in the aggregate could not reasonably be expected to result in a Material Adverse Effect.

     8.04 Maintenance of Existence and Rights; Conduct of Business.

     The Company will, and will cause each Subsidiary to, (a) preserve and keep in full force and effect (except as permitted by Section 9.13) its corporate or partnership, as the case may be, existence and all of its rights, privileges and franchises necessary or desirable in the normal conduct of its business, (b) qualify and remain qualified as a foreign Person authorized to do business in each jurisdiction in which such qualification is required except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect and (c) carry on and conduct its business (i) in the ordinary course, (ii) in an orderly and efficient manner consistent with good business practices and (iii) in accordance, in all material respects, with all Legal Requirements.

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     8.05 Compliance with Loan Documents.

     The Company will, and will cause each Subsidiary to, promptly comply with any and all covenants and provisions of each Loan Document to which it is a party.

     8.06 Inspection.

     The Company will, and will cause each Subsidiary to, permit any Person designated by any Holder, at all reasonable times, to (i) visit and inspect any of its Properties, (ii) examine, copy or make excerpts from, any and all books, records, software, documents and other information in the possession of the Company or such Subsidiary and relating to its affairs and (iii) discuss its affairs, finances and accounts with its directors, officers and its then current Independent Registered Public Accounting Firm; and, by this provision, the Company (on behalf of itself and each Subsidiary) irrevocably authorizes such accountants to discuss with such Person the affairs, finances and accounts of the Company and such Subsidiary. All such visits and inspections shall be at the expense of such Holder unless a Default shall exist, in which event the reasonable costs and expenses associated with all such events and inspections shall be at the expense of the Company.

     8.07 Books and Records.

     The Company will, and will cause each Subsidiary to, (a) maintain (in accordance with good accounting practices and all Legal Requirements) complete and accurate books, records and accounts accurately and fairly reflecting its transactions in reasonable detail and (b) maintain a system of internal accounting controls sufficient to provide reasonable assurances that its transactions are recorded as necessary (i) to permit preparation of financial statements in accordance with GAAP and (ii) to maintain accountability for its assets.

     8.08 Compliance with Legal Requirements.

     The Company will, and will cause each Subsidiary to, comply with all Legal Requirements applicable to it or any of its Properties, business, operations or transactions except for noncompliances which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

     8.09 Insurance.

     The Company will, and will cause each Subsidiary to, maintain in full force and effect, with sound and reputable insurers, such insurance on its Properties and business against such casualties, risks, liabilities and contingencies, and in such types and amounts, as are consistent with customary practices and standards of companies engaged in similar businesses; provided, however, except as may be required by any Legal Requirement, neither the Company nor any Subsidiary shall be required to maintain (i) business interruption insurance, (ii) insurance on its inventories, (iii) plate glass insurance, or (iv) flood or earthquake insurance.

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     8.10 Maintenance of Properties.

     The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

     8.11 Further Assurances.

     The Company will, and will cause each Subsidiary to, promptly take all such actions as the Required Holders may, at any time or from time to time, reasonably request in order to (i) further carry out and consummate the Overall Transaction or (ii) comply with or accomplish the covenants and agreements of the Loan Parties in any of the Loan Documents.

9. NEGATIVE COVENANTS

     Until payment in full of the Notes and all other Obligations, the Company covenants and agrees as follows:

     9.01 Consolidated Indebtedness for Money Borrowed.

     (a) The Company will not permit Consolidated Indebtedness for Money Borrowed, as of the last day of any Fiscal Quarter ending on or after the Closing Date, to be greater than the amount determined by multiplying the Applicable Percentage times the sum of (a) Consolidated Indebtedness for Money Borrowed as of such date and (b) Consolidated Net Worth as of such date. As used in this Section 9.01, “Applicable Percentage” means 75%.

     (b) The Company will not permit the ratio of

     (i) Consolidated Indebtedness for Money Borrowed, minus an amount equal to what would be classified as cash or cash equivalents on a consolidated balance sheet of the Company and the Consolidated Subsidiaries prepared in accordance with GAAP, in each case determined as of the end of each Fiscal Quarter, to

     (ii) Consolidated EBITDA for the period of four (4) consecutive Fiscal Quarters ending with such Fiscal Quarter

     to be greater than 3.0 to 1.00, as of each Fiscal Quarter ending after the Closing Date.

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     9.02 Consolidated Net Worth.

     The Company will not permit Consolidated Net Worth at any time to be less than the sum of (a) $270,000,000 plus (b) 50% of Consolidated Adjusted Net Income (but only if positive) for each Fiscal Quarter ending on or after September 30, 2005 plus (c) 100% of Net Equity Proceeds received after the Closing Date.

     9.03 Fixed Charge Coverage.

     The Company will not at any time permit the ratio of (a) the sum of Consolidated EBITDA for the period of four consecutive Fiscal Quarters then most recently ended plus the aggregate amount of all rents and leases deducted in the calculation of such Consolidated EBITDA to (b) the aggregate amount of (i) all such rents, leases and interest expenses deducted in the calculation of such Consolidated EBITDA plus (ii) all regularly scheduled principal payments on Funded Debt of the Company and the Consolidated Subsidiaries (after elimination of intercompany items) made in such period to be less than 1.75 to 1.

     9.04 Restricted Payments.

     (a) The Company will not, and will not permit any Subsidiary to, (i) declare or make any dividends or distributions on any of its Stock (other than dividends payable in shares of its Stock), (ii) purchase, redeem or acquire for value any of the Company’s or any Subsidiary’s Stock, (iii) make any principal payment on (or make any payment, transfer or deposit for the purpose of canceling, extinguishing, satisfying or defeasing) any indebtedness of the Company which is subordinate in right of payment to the Notes or any other Obligation, (iv) set aside funds for any such purposes or (v) become liable to do any of the foregoing (in each case, a “Restricted Payment”) unless, immediately after giving effect thereto, (A) no Default shall exist and (B) the aggregate amount of all Restricted Payments made by the Company and all Subsidiaries on or after August 12, 2002 does not exceed the sum of $42,000,000 plus 50% of Consolidated Adjusted Net Income for the period (treated as one accounting period) from August 12, 2002 to the end of the calendar month then most recently ended.

     (b) Notwithstanding the foregoing provisions of this Section 9.04, the Company may, so long as no Default shall be in existence or shall result therefrom, purchase, redeem or acquire shares of the Company’s capital stock with the net cash proceeds received by the Company during the immediately preceding 18-month period from the sale of other shares of the Company’s capital stock, in which event both the receipt and expenditure of such proceeds shall be excluded from any calculation under paragraph (a) above.

     (c) Nothing in this Section 9.04 shall prohibit any Subsidiary from making any Restricted Payment to the Company or any Wholly-Owned Subsidiary, and no such Restricted Payment shall be taken into account in any calculation under paragraph (a) above.

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     9.05 Limitation on Indebtedness.

     (a) The Company will not incur, create, assume or have outstanding any indebtedness, except:

     (1) (A) indebtedness of the Company arising out of this Agreement and the other Loan Documents, (B) indebtedness of the Company arising out of the 1995 Note Agreement and the other 1995 Loan Documents, (C) indebtedness of the Company arising out of the 1997 Note Agreement and the other 1997 Loan Documents, and (D) indebtedness of the Company arising out of the 2002 Note Agreement and the other 2002 Loan Documents;

     (2) indebtedness of the Company arising out of the Existing Bank Loan Agreement or any extension, renewal or refinancing of the Indebtedness for Money Borrowed outstanding thereunder;

     (3) purchase money indebtedness (not to exceed the greater of $10,000,000 or 2% of Consolidated Assets in the aggregate for the Company and all Subsidiaries at any time outstanding);

     (4) current liabilities for taxes and assessments incurred in the ordinary course of business and not yet due, and other liabilities for unpaid taxes being contested in good faith by the obligor the payment of which is not at the time required by Section 8.03;

     (5) current indebtedness (other than Indebtedness for Money Borrowed) for accounts payable or other claims (including claims for labor, services, materials and supplies) incurred in the ordinary course of business, provided that all such accounts and claims shall be promptly paid and discharged when due or in conformity with customary trade terms, except for those being contested in good faith by the obligor and the payment of which is not at the time required by Section 8.03;

     (6) contingent liabilities resulting from the endorsement of negotiable instruments in the ordinary course of business;

     (7) indebtedness constituting Assurances of the Company permitted by Section 9.06;

     (8) Indebtedness for Money Borrowed of the Company owing to any Subsidiary, but only if permitted by Section 9.08;

     (9) indebtedness secured by Liens described in clause (i), clause (l) and clause (m) of the definition of “Permitted Liens” in Section 2.01;

     (10) Hedging Obligations of the Company, provided that (i) such obligations are (or were) entered into by the Company in the ordinary course of business and not for purposes of speculation, and (ii) the agreement or document

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creating such obligations does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

     (11) Indebtedness for Money Borrowed of the Company not otherwise permitted by the foregoing provisions of this Section 9.05(a) if (A) immediately after giving effect to the incurrence or assumption thereof by the Company, the Company is in compliance with Sections 9.01, 9.02 and 9.03 and (B) at the time of the incurrence or assumption thereof by the Company and immediately thereafter, no Default shall exist;

     (12) Non-Domestic Indebtedness, so long as the aggregate amount of all such Non-Domestic Indebtedness together with the indebtedness described in clause (10) and clause (11) of Section 9.05(b) does not exceed the greater of $20,000,000 or 7.5% of Consolidated Net Worth, and;

     (13) Permitted Refinancing Indebtedness with respect to Indebtedness for Money Borrowed described in each of the other clauses of this Section 9.05(a) so long as the Company shall be in compliance with the specific limitations set forth in each of such clauses.

     (b) The Company will not permit any Subsidiary to incur, create, assume or have outstanding any indebtedness, except:

     (1) (A) indebtedness of Subsidiaries arising out of this Agreement and the other Loan Documents, (B) indebtedness of Subsidiaries arising out of the 1995 Guaranty, (C) indebtedness of Subsidiaries arising out of the 1997 Guaranty, and (D) indebtedness of Subsidiaries arising out of the 2002 Guaranty;

     (2) Assurances issued by the Subsidiaries pursuant to the Existing Bank Loan Agreement;

     (3) purchase money indebtedness (not to exceed the greater of $10,000,000 or 2% of the Consolidated Assets in the aggregate for the Company and all Subsidiaries at any time outstanding);

     (4) current liabilities for taxes and assessments incurred in the ordinary course of business and not yet due, and other liabilities for unpaid taxes being contested in good faith by the obligor the payment of which is not at the time required by Section 8.03;

     (5) current indebtedness (other than Indebtedness for Money Borrowed) for accounts payable or other claims (including claims for labor, services, materials and supplies) incurred in the ordinary course of business, provided that all such accounts and claims shall be promptly paid and discharged when due or in conformity with customary trade terms, except for those being contested in good faith by the obligor and the payment of which is not at the time required by Section 8.03;

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     (6) contingent liabilities resulting from the endorsement of negotiable instruments in the ordinary course of business;

     (7) indebtedness constituting Assurances of Subsidiaries permitted by Section 9.06;

     (8) Indebtedness for Money Borrowed of any Subsidiary owing to the Company or to any other Subsidiary, but only if permitted by Section 9.08;

     (9) indebtedness secured by Liens described in clause (i), clause (l) and clause (m) of the definition of “Permitted Liens” in Section 2.01;

     (10) indebtedness of Non-Domestic Subsidiaries or Non-Wholly-Owned Subsidiaries so long as the aggregate amount of all such indebtedness together with the indebtedness described in clause (11) of this Section 9.05(b) does not at any time exceed the greater of $20,000,000 or 7.5% of Consolidated Net Worth;

     (11) in the case of any Wholly-Owned Subsidiary acquired by the Company after the date hereof in accordance with Section 9.17(a)(1), all indebtedness of such Subsidiary outstanding on the date of its acquisition by the Company, but only if (i) the amount of such indebtedness, when aggregated with the total amount of all other indebtedness of all Persons (including such Wholly-Owned Subsidiary) outstanding pursuant to this clause (11), and all indebtedness described in clause (10) of this Section 9.05(b), does not exceed the greater of $20,000,000 or 7.5% of Consolidated Net Worth and (ii) such indebtedness was incurred, created or assumed by such Subsidiary prior to its acquisition by the Company and not in anticipation of, or in connection with, such acquisition;

     (12) Hedging Obligations of any Subsidiary, provided that (i) such obligations are (or were) entered into by such Subsidiary in the ordinary course of business and not for purposes of speculation, and (ii) the agreement or document creating such obligations does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

     (13) other indebtedness of any Subsidiary not otherwise permitted by the foregoing provisions of this Section 9.05(b), but only if such indebtedness is outstanding on the date hereof and described in Schedule VIII and (B) excluding any extensions, renewals and rearrangements of such indebtedness; and

     (14) Permitted Refinancing Indebtedness with respect to Indebtedness for Money Borrowed described in each of the other clauses of this Section 9.05(b) so long as the Company shall be in compliance with the specific limitations set forth in each of such clauses.

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     9.06 Assurances.

     The Company will not, and will not permit any Subsidiary to, enter into, assume or become or be liable in respect of any Assurance, except for (i) Assurances by the Company of indebtedness of Subsidiaries permitted by Section 9.05(b), (ii) Assurances by one or more Guarantors of indebtedness (other than the Obligations) of the Company permitted by Section 9.05(a) (including, without limitation, Hedging Obligations) but only if and so long as the Guaranty is in full force and effect, (iii) Assurances of the Guarantors evidenced by the Guaranty, (iv) Assurances by the Company and the Guarantors of the Non-Domestic Indebtedness, (v) Assurances under any of the Material Contracts, (vi) Consumer Obligations, and (vii) other Assurances not otherwise permitted by this Section 9.06 but only to the extent that the aggregate amount of all indebtedness relating to such Assurances does not exceed $5,000,000.

     9.07 Negative Pledge.

     The Company will not, and will not permit any Subsidiary to, assume, create or suffer to exist any Lien upon any of its Properties (whether now owned hereafter acquired) except Permitted Liens.

     9.08 Limitation on Investments.

     The Company will not, and will not permit any Subsidiary to, make or have outstanding any Investments in any Person, except for:

     (a) pawn transactions and pawn loans made in the ordinary course of business;

     (b) travel advances and other similar advances made to employees in the ordinary course of business;

     (c) consumer loans, advances and extensions of credit (in the form of accounts receivable or otherwise) made to customers in the ordinary course of business;

     (d) advances and deposits made by the Company or any Subsidiary in the ordinary course of business in connection with products or services provided to the Company or such Subsidiary, as the case may be, or in connection with leases of real property;

     (e) in the case of the Company or any Subsidiary, Investments in Non-Domestic and Non-Wholly Owned Subsidiaries (including Subsidiaries acquired after the date hereof in accordance with Section 9.17(a)(1)) resulting from its acquisition or ownership of Stock of, or capital contributions to, such Subsidiaries but, in each case, only to the extent not prohibited by Section 9.17(a), provided that after giving effect to each such Investment the aggregate book value of all Investments of the Company and all Subsidiaries in Non-Domestic Subsidiaries and Non-Wholly-Owned Subsidiaries at such time does not exceed 10% of Consolidated Net Worth;

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     (f) in the case of any Subsidiary, Investments in the Company;

     (g) loans and advances by the Company to any Wholly-Owned Subsidiary;

     (h) loans and advances made by any Subsidiary to the Company or to any Wholly-Owned Subsidiary;

     (i) Temporary Cash Investments;

     (j) to the extent permitted by applicable law, loans to officers of the Company and Subsidiaries in an aggregate amount not exceeding $5,000,000 at any one time outstanding;

     (k) Assurances permitted in Section 9.06;

     (l) other Investments not otherwise permitted by this Section 9.08, but only if owned by the Company and/or any Subsidiary on the date hereof and described in Schedule XI; and

     (m) other Investments made after the date hereof and not otherwise permitted by this Section 9.08, provided that neither the Company nor any Subsidiary shall make any Investment under this clause (m) if a Default shall be in existence immediately before or after such Investment or if the amount of such Investment, when aggregated with the total amount of all other Investments then outstanding under this clause (m), exceeds 7.5% of Consolidated Net Worth as of the date of such Investment.

     9.09 Alteration of Contracts, Etc.

     The Company will not, and will not permit any Subsidiary to, (a) cancel, terminate, surrender, release, alter, amend, modify or supplement any Material Contract or Applicable Permit, (b) waive timely performance of any of the provisions of any Material Contract or Applicable Permit or (c) consent or agree to, or permit, any of the foregoing, provided that any such action may be taken if the Company shall determine in good faith that such action could not reasonably be expected to have a Material Adverse Effect.

     9.10 Transactions with Affiliates.

     The Company will not, and will not permit any Subsidiary to, enter into any transaction with, or pay any management fees to, any of its Affiliates except in the ordinary course of business and then only upon terms that are no less favorable to Company or such Subsidiary, as the case may be, than would be obtainable at the time in arms’-length transactions with Persons which are not Affiliates of the Company or such Subsidiary, as the case may be, provided that this Section 9.10 shall not apply to transactions between the Company and any Wholly-Owned Subsidiary or to any management fees payable by any Subsidiary to the Company or any Wholly-Owned Subsidiary.

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     9.11 Limitation on Sale or Issuance of Subsidiary Stock.

     (a) The Company will not permit any Subsidiary to issue or sell any shares of Stock (or any securities convertible into or exchangeable for or carrying rights to subscribe for shares of Stock) of such Subsidiary to any Person if after giving effect thereto the Company would be in violation of its obligations set forth in Section 9.08.

     (b) The Company will not (i) sell, transfer or otherwise dispose of any shares of Stock (or any securities convertible into or exchangeable for or carrying rights to subscribe for shares of Stock) of any Subsidiary or (ii) permit any Subsidiary to sell, transfer or otherwise dispose of any shares of Stock (or any securities, convertible into or exchangeable for or carrying rights to subscribe for shares of Stock) of any other Subsidiary.

     9.12 Limitation on Sale of Properties.

     The Company will not, and will not permit any Subsidiary to, sell, assign, convey, exchange, lease or otherwise dispose of any of its Properties (including accounts receivable and pawn loans), whether now owned or hereafter acquired, except in the ordinary course of its business; provided, however, that the Company and the Subsidiaries may sell Properties during any Fiscal Year having an aggregate net book value (at the time of the disposition thereof) not in excess of 7.5% of Consolidated Net Worth as at the end of the immediately previous Fiscal Year and, provided further, that this Section 9.12 shall not operate to prevent the transactions permitted by Section 9.11 or Section 9.13 or any sale, transfer or lease of Property by a Wholly-Owned Subsidiary to the Company or to another Wholly-Owned Subsidiary and, provided further, that the Company will not, and will not permit any Subsidiary to, sell, assign, discount or otherwise dispose of any accounts receivable, except in the ordinary course of business consistent with the Company’s collection practices as in effect from time to time and not a part of a financing.

     9.13 Dissolution; Liquidation; Merger; Consolidation.

     The Company will not, and will not permit any Subsidiary to, dissolve or liquidate or consolidate or merge with, or sell, assign, convey, exchange, lease or otherwise dispose of its Properties as an entirety or substantially as an entirety to, any other Person except that:

     (a) any corporation may consolidate with or merge into the Company if (i) the Company shall be the surviving corporation, (ii) immediately after giving effect to such transaction, (A) no Default or Event of Default shall have occurred and be continuing, (B) the Company is solvent and no less creditworthy than immediately prior to the consummation of such transaction and (C) the consummation of such transaction did not have, and could not reasonably be expected to have, a Material Adverse Effect and (iii) each Holder shall have received an Officers’ Certificate, dated not more than 10 days prior to the effective date of such transaction, describing such transaction and stating that such transaction is permitted by this Section 9.13;

     (b) the Company may consolidate with or merge into, or sell, assign, convey, exchange, lease or otherwise dispose of its Properties as an entirety or substantially as an

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entirety to, any Person if (i) such Person shall be a solvent corporation organized under the laws of any state of the United States of America, (ii) such Person shall, by written instrument in form and substance acceptable to the Required Holders, expressly and unconditionally assume, agree to pay and perform all the Obligations and to be bound by this Agreement and the other Loan Documents the same as if such Person had originally executed this Agreement in place of the Company and had been the original maker of the Notes, (iii) immediately after giving effect to such transaction, (A) no Default or Event of Default shall have occurred and be continuing, (B) such Person is no less creditworthy than was the Company immediately prior to the consummation of such transaction and (C) the consummation of such transaction did not have, and could not be reasonably expected to have, a Material Adverse Effect and (iv) each Holder shall have received an Officers’ Certificate, dated not more than ten days prior to the effective date of such transaction, describing such transaction and stating that such transaction is permitted by this Section 9.13;

     (c) any Wholly-Owned Subsidiary may consolidate with or merge into, or sell, assign, convey, exchange, lease or otherwise dispose of its Properties as an entirety or substantially as an entirety to, the Company or any other Wholly-Owned Subsidiary; and

     (d) any Wholly-Owned Subsidiary may consolidate or merge with any Person solely for the purpose of the Company’s acquisition of such Person in accordance with Section 9.17(a)(1).

     9.14 Change of Name, Fiscal Year and Method of Accounting.

     The Company will not, and will not permit any Subsidiary to, (i) change its name, except for Subsidiary name changes that could not be reasonably expected to have a Material Adverse Effect, (ii) change its fiscal year, (iii) change its principal accounting firm to an accounting firm other than an Independent Registered Public Accounting Firm or (iv) change its method of accounting unless required under GAAP.

     9.15 Lines of Business.

     The Company will not, and will not permit any Subsidiary to, engage in any business other than (i) the pawnshop business, (ii) the business of cashing checks and conducting related cash dispensing transactions, (iii) the business of offering consumer loans and other consumer financial services, and (iv) activities related to the above.

     9.16 Amendment of Organizational Documents.

     The Company will not, and will not permit any Subsidiary to, amend its Organizational Documents if such action could reasonably be expected to have a Material Adverse Effect.

     9.17 Limitation on Acquisition of New Subsidiaries.

     (a) The Company will not, and will not permit any Subsidiary to, (i) acquire any Stock of any Person, (ii) enter into any partnership or joint venture or (iii) take any

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action which would result in the Company having any Subsidiary other than those listed in Schedule II except that, from time to time, the Company may:

     (1) acquire (whether by purchase, merger or other similar transaction) any Person, but only if:

(A)	immediately after giving effect to such acquisition, such Person shall constitute a Wholly-Owned Subsidiary or, a Non-Wholly Owned Subsidiary subject to limits set forth in Section 9.08(e) hereof;
(B)	immediately after giving effect to such acquisition, no Default shall be in existence, and the consummation of such acquisition did not have, and could not be reasonably expected to have, a Material Adverse Effect;
(C)	each Holder shall have received an Officers’ Certificate, dated not more than ten days prior to the effective date of such acquisition, describing such acquisition (including the name of such Person and the business conducted by it) and stating that such acquisition is permitted by this Section 9.17, which Officers’ Certificate shall be accompanied by complete and accurate copies of the Organizational Documents of such Person;
(D)	promptly (and in any event within 15 days) after the consummation of such acquisition, such Person (if such Person is organized under the laws of the United States of America or any state or political subdivision thereof) shall duly authorize, execute and deliver to each Holder an instrument in writing pursuant to which such Person agrees to become a Guarantor under, and to be bound as a Guarantor by the terms of, the Guaranty and the Subrogation and Contribution Agreement; and
(E)	promptly (and in any event within 15 days) after the consummation of such acquisition, if an opinion of counsel to the Company, any Subsidiary or such Person is delivered to any other holder of Indebtedness for Money Borrowed of the Company in connection with such acquisition, the Company shall obtain or cause to be provided in favor of the Holders an opinion of counsel satisfactory to the Required Holders that opines (a) to such Person’s (i) existence and good standing in its jurisdiction of formation, (ii) due authority to become a Guarantor under, and to be bound as a Guarantor by the terms of, the Guaranty and the Subrogation and Contribution Agreement and (iii) due execution, delivery and performance of the Guaranty and the Subrogation and Contribution Agreement, and (b) to the enforceability of the Guaranty and the Subrogation and Contribution Agreement against such Person; and

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     (2) create or form a new corporation or limited partnership (the “New Entity”) and thereupon cause the New Entity to become a Wholly-Owned Subsidiary, but only if:

(A)	no Default shall exist immediately after the New Entity becomes a Subsidiary;
(B)	subject to paragraph (b) below, promptly (and in any event within 15 days) after its creation or formation, the New Entity (if such New Entity is organized under the laws of the United States of America or any state or political subdivision thereof) shall duly authorize, execute and deliver to each Holder an instrument in writing pursuant to which the New Entity agrees to become a Guarantor under, and to be bound as a Guarantor by the terms of, the Guaranty and the Subrogation and Contribution Agreement;
(C)	except as required by clause (B) above, the New Entity shall not conduct any business prior to becoming a Subsidiary;
(D)	subject to paragraph (b) below, promptly (and in any event within 15 days) after the creation or formation of the New Entity, the Company shall deliver to each Holder an Officers’ Certificate notifying the Holders of the formation or creation of the New Entity, which Officers’ Certificate shall (i) specify the name of the New Entity and the jurisdiction of its incorporation or formation, (ii) describe, in reasonable detail, the business proposed to be conducted by the New Entity, (iii) state that the Company is authorized to form or create the New Entity and to cause it to become a Subsidiary in accordance with this Section 9.17 and (iv) be accompanied by complete and accurate copies of the Organizational Documents of the New Entity; and
(E)	promptly (and in any event within 15 days) after the consummation of such acquisition, if an opinion of counsel to the Company, any Subsidiary or such Person is delivered to any other holder of Indebtedness for Money Borrowed of the Company in connection with such acquisition, the Company shall obtain or cause to be provided in favor of the Holders an opinion of counsel satisfactory to the Required Holders that opines (a) to such Person’s (i) existence and good standing in its jurisdiction of formation, (ii) due authority to become a Guarantor under, and to be bound as a Guarantor by the terms of, the Guaranty and the Subrogation and Contribution Agreement and (iii) due execution, delivery and performance of the Guaranty and the Subrogation and Contribution Agreement, and (b) to the enforceability of the Guaranty and the Subrogation and Contribution Agreement against such Person; and

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     (b) In no event shall any New Entity created or formed pursuant to paragraph (a)(2) above be required to execute and deliver a written instrument with respect to the Guaranty as contemplated by clause (B) thereof nor shall the Company be required to deliver the documents described with respect to such New Entity in clause (D) thereof until the earlier of (i) the date on which the Company makes an Investment in such New Entity (other than the incurrence of routine organizational expenses and other than capital contributions totaling less than $250,000) and (ii) the date on which such New Entity first conducts business.

     (c) Subject to provisions of Sections 9.08(e), nothing in this Section 9.17 shall operate to prevent any transaction permitted by Section 9.08 or Section 9.13.

     (d) If any Person becomes a Subsidiary at any time after the date hereof, such Person shall be deemed to have incurred or made, as the case may be, at the time it becomes a Subsidiary (i) all Assurances, indebtedness, loans, advances and Investments of such Person which are outstanding at such time and (ii) all Liens then in effect with respect to any of its Properties.

     (e) Notwithstanding the foregoing, in no event shall any Non-Domestic Subsidiary be required to be or become a Guarantor so long as such Non-Domestic Subsidiary is not obligated as a guarantor or obligor for any Indebtedness for Money Borrowed of the Company or any Subsidiary.

     9.18 ERISA.

     The Company will not, and will not permit any Subsidiary or Related Person to,

     (a) engage in any transaction in connection with which the Company or any Subsidiary could be subject to either a civil penalty assessed pursuant to section 502(i) of ERISA or a tax imposed by section 4975 of the Code, terminate any Plan (other than a multiemployer plan) in a manner, or take any other action with respect to any such Plan, which could result in any liability of the Company or any Subsidiary to the Pension Benefit Guaranty Corporation, fail to make full payment when due of all amounts which, under the provisions of applicable law, or the terms of any Plan or collective bargaining agreement, the Company or any Subsidiary is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency, whether or not waived, with respect to any Plan (other than a multiemployer plan), if, in any such case, such penalty or tax or such liability, or the failure to make such payment, or the existence of such deficiency, as the case may be, could reasonably be expected to have a Material Adverse Effect;

     (b) permit the aggregate present value of all benefit liabilities under all Plans maintained at such time by the Company, any Subsidiary and any Related Persons (other than multiemployer plans) that are subject to Title IV of ERISA to exceed the aggregate current value of the assets of such Plans allocable to such benefit liabilities by more than $500,000; or

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     (c) permit the aggregate complete or partial withdrawal liability under Title IV of ERISA with respect to multiemployer plans incurred by the Company, the Subsidiaries and Related Persons to exceed $250,000.

As used in this Section 9.18, (i) the term “accumulated funding deficiency” has the meaning specified in section 302 of ERISA and section 412 of the Code, (ii) the terms “present value,” “benefit liabilities” and “current value” have the respective meanings specified in sections 3 and 4001 of ERISA and (iii) “multiemployer plan” means a Plan which is a “multiemployer plan” as defined in section 4001(a)(3) of ERISA.

     9.19 No Inconsistent Agreements.

     The Company will not enter into, assume or otherwise become obligated under any agreement or instrument which restricts the ability of the Company to consummate the Private Placement or perform its obligations under any Loan Document.

10. EVENTS OF DEFAULT

     10.01 Events of Default.

     If any of the following events (each such event being an “Event of Default”) shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise):

     (a) the Company shall fail to pay when due under this Agreement any principal of or premium, if any, on any Note; or

     (b) any Loan Party shall fail to pay any interest, premium or other Obligation when due under any Loan Document, and such failure shall have continued for five days; or

     (c) any representation or warranty made by or on behalf of any Loan Party in any Loan Document shall prove to be untrue or inaccurate as of the date hereof or as of the Closing Date; or

     (d) any representation or warranty made by or on behalf of any Loan Party in any certificate, statement or other writing furnished to any Holder after the date hereof in connection with or pursuant to any Loan Document shall prove to be untrue or inaccurate in any material respect as of the date on which such representation or warranty is made; or

     (e) the Company shall fail to perform or observe any covenant or agreement contained in Section 8.01(h), Sections 9.01 through 9.04 or Sections 9.10 through 9.12; or

     (f) the Company shall fail to perform or observe any other covenant, agreement, term or condition contained in any Loan Document and such failure shall not be remedied within 30 consecutive days after the earlier of (i) the date on which such

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failure became known to any Responsible Officer of the Company and (ii) the date on which written notice thereof shall have been received by the Company from any Holder; or

     (g) any Guarantor shall fail to perform or observe any agreement contained in its Guaranty; or

     (h) any Loan Party or any Subsidiary shall (i) default in any payment of principal of or interest on any other indebtedness in excess of $2,500,000 (or its equivalent in another currency) beyond any period of grace provided with respect thereto or (ii) fail to perform or observe any other covenant or agreement contained in any agreement under which any such indebtedness is created or outstanding within any applicable grace period provided therein (or if any other event thereunder or under any such agreement shall occur and be continuing) and the effect of such failure or other event is (A) to cause such indebtedness to become due prior to its stated maturity or (B) to permit the holder or holders of such indebtedness (or any Person acting on behalf of such holder or holders) to cause such indebtedness to become due prior to its stated maturity; or

     (i) the Company or any Subsidiary shall make an assignment for the benefit of creditors or shall fail to generally pay its debts as such debts become due; or

     (j) any decree or order for relief in respect of the Company or any Subsidiary shall be entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law, whether now or hereafter in effect, of any jurisdiction (herein called the “Bankruptcy Law”) and such decree or order remains unstayed and in effect for more than 60 days; or

     (k) the Company or any Subsidiary petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official of such Person, or of any substantial part of the assets of such Person, or commences a voluntary case under the federal Bankruptcy Law or any proceedings relating to such Person under the Bankruptcy Law of any other jurisdiction; or

     (l) any such petition or application is filed, or any such proceedings as described in clause (k) above are commenced, against the Company or any Subsidiary and such Person by any act indicates its approval thereof, consent thereto or acquiescence therein; or

     (m) an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days; or

     (n) any order, judgment or decree is entered in any proceedings against the Company or any Subsidiary decreeing the dissolution, winding-up or liquidation of such

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Person and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days; or

     (o) any order, judgment or decree is entered in any proceedings against the Company or any Subsidiary decreeing a split-up of such Person which requires the divestiture of assets and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days; or

     (p) any final judgment or final judgments for the payment of money in excess of the sum of $1,000,000 in the aggregate shall be rendered against the Company or any Subsidiary and such judgment or judgments shall not be satisfied, discharged or stayed (with sufficient reserves having been set aside by the Company or such Subsidiary to pay such judgment or judgments) at least ten days prior to the date on which any of its assets could be lawfully sold to satisfy such judgment; or

     (q) this Agreement or any other Loan Document shall at any time, for any reason, cease to be in full force and effect or shall be declared to be null and void in whole or in any material part by the final judgment of any court or other Governmental Authority having jurisdiction in respect thereof, or the validity or the enforceability of this Agreement or any other Loan Document shall be contested by or on behalf of any Loan Party, or any Loan Party shall renounce this Agreement or any other Loan Document, or deny that it is bound by the terms hereof or thereof or has any further liability hereunder or thereunder; or

     (r) the Company or any Subsidiary shall have (i) concealed or removed, or permitted to be concealed or removed, any part of its Property with the intent to hinder, delay or defraud its creditors or any of them or (ii) made or suffered a transfer under any bankruptcy, fraudulent conveyance or similar law;

then (i) if such event is an Event of Default specified in clauses (i), (j), (k), (l) or (m) of this Section 10.01, all of the Notes shall thereupon be and become automatically due and payable together with interest accrued thereon and together with the Make-Whole Premium, if any, with respect to each Note, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by the Company, (ii) if such event is an Event of Default specified in clause (a) or clause (b) (but only with respect to the failure of any Loan Party to pay interest) of this Section 10.01, any Holder may at its option, by notice in writing to the Company, declare all of the Notes held by such Holder to be, and all of such Notes shall thereupon be and become, immediately due and payable together with interest accrued thereon and together with the Make-Whole Premium, if any, with respect to each such Note, without presentment, demand, protest, notice of intent to accelerate or other notice of any kind, all of which are hereby waived by the Company, and (iii) if such event is any other continuing Event of Default, the Holders of at least 66-2/3% of the aggregate principal amount of the Notes at the time outstanding may at their option, by notice in writing to the Company, declare all of the Notes to be, and all of the Notes shall thereupon be and become, immediately due and payable together with interest accrued thereon and together with the Make-Whole Premium, if any, with respect to each Note, without presentment, demand, protest, notice of intent to accelerate or other notice of any kind, all of which are hereby waived by the Company;

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provided that in the case of each acceleration of the Notes solely on account of any Default (other than a payment default) described in clause (c), (d), (e), (f), (g), (h) or (p) of this Section 10.01, the Make-Whole Premium, if any, with respect to each Note shall be due and payable upon such acceleration only if such Default is the result of an intentional or willful act of the Company or any Affiliate of the Company.

     At any time after the principal of, and interest accrued on, any or all of the Notes are declared due and payable pursuant to this Section 10.01, the Holders of at least 66-2/3% of the aggregate principal amount of the Notes at the time outstanding may at their option, by written notice to the Company, rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, the principal of and premium, if any, on any Notes which have become due otherwise than by reason of such declaration, and interest on such overdue principal and premium and (to the extent permitted by applicable law) any overdue interest in respect of such Notes at a rate per annum from time to time equal to the Default Rate, (b) the Company has paid all sums paid or advanced by any Holder under any Loan Document (other than the loans evidenced by the Notes), (c) all Defaults, other than nonpayment of amounts which have become due solely by reason of such declaration, have been cured or waived pursuant to Section 11.03, and (d) no judgment or decree has been entered for the payment of any monies due pursuant to the Notes or any other Loan Document; but no such rescission and annulment shall extend to or affect any subsequent Default or impair any right consequent thereon.

     10.02 Other Remedies.

     If any Event of Default shall occur and be continuing, any Holder may proceed to protect and enforce its rights under this Agreement and the other Loan Documents by exercising such remedies as are available to such Holder in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or any other Loan Document or in aid of the exercise of any power granted in this Agreement or in any other Loan Document, or such Holder may proceed to enforce the payment of all Obligations or to enforce any other legal or equitable right of such Holder.

11. MISCELLANEOUS

     11.01 Note Payments.

     (a) The Company agrees that, so long as the Purchasers or their respective nominees shall hold any Note, it will make payments of principal thereof (and premium if any, and interest thereon) which comply with the terms of this Agreement, by electronic funds transfer to the account or accounts of the Purchasers as specified in Schedule I or such other account or accounts in the United States of America as the Purchasers may designate in writing, notwithstanding any contrary provision herein or in any Note with respect to the place of payment.

     (b) The Purchasers agree that, before disposing of any Note, they will make a notation thereon (or on a schedule attached thereto) of all principal payments previously

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made thereon and of the date to which interest thereon has been paid, provided that the failure to so endorse or any error in so endorsing any such amount on such schedule (or on a continuation thereof) shall not limit or otherwise affect the obligation of the Company or any other Loan Party to pay the Obligations.

     (c) The Company agrees to afford the benefits of paragraph (a) of this Section 11.01 to any Transferee which shall have made the same agreement as the Purchasers have made in paragraph (b) of this Section 11.01.

     11.02 Expenses.

     (a) Whether or not the transactions contemplated by this Agreement shall be consummated, the Company will pay and will indemnify and hold harmless the Purchasers and each other Indemnitee in respect of all reasonable expenses in connection with such transactions and in connection with any amendments or waivers (whether or not the same become effective) under or in respect of this Agreement, the Notes or any other Loan Document, including: (i) the reasonable costs and expenses of preparing and reproducing this Agreement, the Notes and the other Loan Documents, of furnishing all opinions of counsel referred to herein and all certificates on behalf of the Company and the Subsidiaries, and of the performance of and compliance with all agreements and conditions contained herein and in the other Loan Documents on the part of the Company and the Subsidiaries to be performed or complied with, (ii) the cost of delivering to the principal office of the Purchasers, insured to the satisfaction of the Purchasers, the Notes originally issued to the Purchasers hereunder and any Notes delivered to the Purchasers upon any substitution of such Notes and of the Purchasers delivering any Notes, insured to the satisfaction of the Purchasers, upon any such substitution, (iii) the reasonable fees, expenses and disbursements of special counsel to the Purchasers in connection with such transactions (including the costs and expenses incurred in connection with obtaining a private placement number) and any such amendments or waivers (whether or not such amendments or waivers become effective), and (iv) the reasonable costs and expenses, including attorneys’ fees, incurred by the Purchasers or any Transferee in enforcing any rights under this Agreement or the other Loan Documents or in responding to any subpoena or any other legal process issued in connection with this Agreement, the other Loan Documents or the Overall Transaction or by reason of the Purchasers’ or any Transferee’s having acquired any Note, including reasonable costs and expenses incurred in any bankruptcy case.

     (b) The Company also will pay, and will indemnify, and hold the Purchasers and each other Indemnitee harmless from, all claims in respect of the fees, if any, of brokers and finders engaged by or on behalf of the Company.

     (c) In furtherance of the foregoing, at the Closing the Company will pay the reasonable fees and disbursements of Bingham McCutchen LLP, special counsel to the Purchasers, which are reflected as unpaid in the statement of special counsel to the Purchasers delivered to the Company at or prior to the time of Closing.

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     (d) The obligations of the Company under this Section 11.02 shall survive the transfer of any Note or portion thereof or interest therein by the Purchasers or any Transferee and the payment of the Notes.

     (e) In the event any Holder or Holders propose to engage special counsel in connection with any amendments or waivers requested by the Company under or in respect of this Agreement or any other Loan Document, such Holder or Holders agree to engage only one special counsel for each such matter and to use reasonable efforts to cause such special counsel to furnish the Company with an estimate of the total fees, expenses and disbursements to be incurred by such special counsel in connection with such engagement, provided that the failure (for any reason) of such special counsel to provide such an estimate (nor any error therein or deviation therefrom) shall not relieve the Company of any of its obligations under this Section 11.02.

     11.03 Consent to Waivers and Amendments.

     (a) This Agreement and the other Loan Documents may be amended, and the Company may take any action herein or therein prohibited, or omit to perform any act herein or therein required to be performed by it, if the Company shall obtain the written consent to such amendment, action or omission to act, of the Required Holders except that, without the written consent of the Holder or Holders of all Notes at the time outstanding, no amendment to this Agreement or any other Loan Document shall change the maturity of any Note, or change the principal of, or the rate or time of payment of interest or any premium payable with respect to any Note, or affect the time, amount or allocation of any required prepayments, or alter or amend the right of any Holder to declare all of the Notes held by such Holder to be due and payable in accordance with the provisions of Section 10.01 or change or modify any of the provisions of this Section 11.03. Each Holder of any Note at the time or thereafter outstanding shall be bound by any consent authorized by this Section 11.03, whether or not such Note shall have been marked to indicate such consent, but any Notes issued thereafter may bear a notation referring to any such consent.

     (b) Executed or true and correct copies of any consent, waiver and amendment effected pursuant to the provisions of this Section 11.03 shall be delivered by the Company to each Holder forthwith following the date on which the same shall have been executed and delivered by the Required Holders.

     (c) No course of dealing between the Company and the Holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any Holder of such Note.

     11.04 Solicitation of Holders.

     The Company will not solicit, request or negotiate for or with respect to any proposed consent, waiver or amendment of any of the provisions of this Agreement or any other Loan Document unless each Holder shall concurrently be informed thereof in writing by the Company and shall be afforded the opportunity to consider the same and shall be supplied by the Company

60

with sufficient information to enable it to make an informed decision with respect thereto. The Company will not pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any Holder as consideration for or as an inducement to the entering into by any such Holder of any waiver or amendment of any of the terms and provisions of this Agreement or any other Loan Document unless such remuneration is concurrently paid, on the same terms, ratably to each Holder.

     11.05 Form, Registration, Transfer and Exchange of Notes; Lost Notes.

     (a) The Notes are issuable as registered notes without coupons in minimum denominations equal to $1,000,000 (except as may be necessary to reflect any principal amount not evenly divisible by $1,000,000). The Company shall keep at its principal executive office a register in which the Company shall provide for the registration of Notes and of transfers of Notes. Upon surrender for registration of transfer of any Note at the principal executive office of the Company, the Company shall, at its expense, execute and deliver one or more new Notes of like tenor and of a like aggregate principal amount, registered in the name of the designated Transferee or Transferees. Every Note surrendered for registration of transfer shall be duly endorsed, or be accompanied by a written instrument of transfer duly executed, by the Holder of such Note, or such Holder’s attorney, duly authorized in writing.

     (b) At the option of any Holder, any Note held by such Holder may be exchanged for other Notes of like tenor and of any authorized denominations, of a like aggregate principal amount, upon surrender of the Note to be exchanged at the principal office of the Company. Whenever any Notes are so surrendered for exchange, the Company shall, at its expense, execute and deliver the Notes which the Holder making the exchange is entitled to receive.

     (c) Any Note or Notes issued in exchange for any Note or upon transfer thereof shall carry the rights to unpaid interest and interest to accrue which were called by the Note so exchanged or transferred, so that neither gain nor loss of interest shall result from any such transfer or exchange. Upon receipt of written notice from the Holder of any Note of the loss, theft, destruction or mutilation of such Note and, in the case of any such loss, theft or destruction, upon receipt of such Holder’s unsecured indemnity agreement, or in the case of any such mutilation upon surrender and cancellation of such Note, the Company will make and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.

     11.06 Persons Deemed Owners.

     Prior to due presentment for registration of transfer, the Company may treat the Person in whose name any Note is registered in accordance with Section 11.05 as the owner and Holder of such Note for the purpose of receiving payment of principal of and premium, if any, and interest on such Note and for all other purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary.

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     11.07 Reliance on and Survival of Representations and Warranties.

     (a) All of the representations and warranties of the Loan Parties contained in the Loan Documents or in any certificates or other instruments delivered by any Loan Party at or after the Closing pursuant to any Loan Document shall (i) survive the execution and delivery of this Agreement, the Notes and the other Loan Documents, the transfer by the Purchasers of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by the Purchasers or any Transferee, regardless of any investigation made at any time by or on behalf of the Purchasers, any Transferee or any other Person and (ii) be deemed to be material and to have been relied upon by each Holder, notwithstanding any investigation heretofore or hereafter made by or on behalf of any Holder.

     (b) All representations, warranties and covenants contained herein made by the Purchasers or any Holder shall survive the execution and delivery of this Agreement, the Notes and the other Loan Documents, and may be relied upon by the Company and its successors and assigns. No Holder (including the Purchasers) shall be responsible for the truth, correctness or performance of the representations or warranties of the Company, the Guarantors or any other Holder (including any Transferee).

     11.08 Successors and Assigns.

     All covenants and other agreements in this Agreement contained by or on behalf of either of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including, without limitation, any Transferee) whether so expressed or not. Each Transferee, by taking any Note, shall be deemed to have made the representation contained in Part 1 of Schedule XII and at least one of the representations contained in Part 2 of Schedule XII and to have agreed to be bound by the terms and conditions of this Agreement.

     11.09 Notices.

     All written communications provided for hereunder shall be sent by first class mail or nationwide overnight delivery service (with charges prepaid) and (a) if to the Purchasers, addressed to it at the address specified for such communications in Schedule I, or at such other address as the Purchasers shall have specified to the Company in writing, (b) if to any other Holder, addressed to such other Holder at such address as such other Holder shall have specified to the Company in writing or, if any such other Holder shall not have so specified an address to the Company, then addressed to such other Holder in care of the last holder of such Note which shall have so specified an address to the Company and (c) if to the Company, addressed to it at 1600 West 7^th Street, Fort Worth, Texas 76102-2599, Attention: President, or at such other address as the Company shall have specified to each Holder in writing.

     11.10 Substitution of Purchasers.

     The Purchasers shall have the right, by written notice to the Company, to substitute any one of its Affiliates as the purchaser of the Notes, which notice shall be signed by both the Purchasers and such Affiliate and shall contain such Affiliate’s agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of

62

the representation contained in Part 1 of Schedule XII and of at least one of the representations set forth in Part 2 of Schedule XII. Upon receipt of such notice, wherever the word “Purchaser” is used in this Agreement (other than in this Section 11.10) or any other Loan Document or certificate, opinion or other instrument delivered or to be delivered pursuant hereto or thereto, such word shall be deemed to refer to such Affiliate in lieu of the Purchaser. In the event such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to the Purchaser all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word “Purchaser” is used in this Agreement or any other Loan Document or certificate, opinion or other instrument delivered or to be delivered pursuant hereto or thereto, such word shall no longer be deemed to refer to such Affiliate, but shall refer to the Purchaser, and the Purchaser shall have all the rights of an original Holder of the Notes under this Agreement.

     11.11 Satisfaction Requirement.

     If any agreement, certificate or other writing, or any action taken or to be taken, is by the terms of this Agreement required to be satisfactory to the Purchasers or to the Required Holders, the determination of such satisfaction shall be made by the Purchasers or the Required Holders, as the case may be, in the sole and exclusive judgment of the Person or Persons making such determination unless, by the terms of this Agreement, such matter is required to be reasonably satisfactory to the Purchasers or to the Required Holders, as the case may be, in which event the determination of such satisfaction shall be made by the Purchasers or the Required Holders, as the case may be, in the reasonable judgment of the Person or Persons making such determination.

     11.12 Independence of Covenants.

     All covenants contained in this Agreement shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that such action or condition would be permitted by an exception to, or otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

     11.13 Remedies Cumulative.

     No right, power or remedy granted under any Loan Document is intended to be exclusive, but each shall be cumulative and in addition to any other rights, powers or remedies referred to in such Loan Document or otherwise available at law or in equity and the exercise or beginning of exercise by any party hereto of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by such party of any or all such other rights, powers or remedies.

     11.14 Reproduction of Documents.

     This Agreement, the Notes, and the other Loan Documents and all documents relating hereto and thereto, including (a) consents, waivers and notifications which may hereafter be executed, (b) documents received by the Purchasers at the Closing and (c) financial statements, certificates and other information previously or hereafter furnished to any Holder of a Note, may

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be reproduced by such Holder or the Company by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and any original document so reproduced may be destroyed. The Company and the Purchasers agree and stipulate that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

     11.15 Notes as Securities.

     The Company and the Purchasers agree that the Notes are securities as defined in each of the Securities Act and the Exchange Act.

     11.16 Severability of Provisions.

     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 or affecting the validity or enforceability of such provision in any other jurisdiction.

     11.17 Interest.

     (a) Each provision in this Agreement, the Notes and the other Loan Documents is expressly limited so that in no event whatsoever shall the amount paid, or otherwise agreed to be paid, to any Holder for the use, forbearance or detention of the indebtedness evidenced by the Notes or any other Loan Document or otherwise (including any sums paid as required by any covenant or obligation contained herein or in any other Loan Document which is for the use, forbearance or detention of such money), exceed that amount of money which would cause the effective rate of interest to exceed the Highest Lawful Rate, and all amounts owed under this Agreement, the Notes and each other Loan Document shall be held to be subject to reduction to the effect that such amounts so paid or agreed to be paid which are for the use, forbearance or detention of money under this Agreement, the Notes or any other Loan Documents shall in no event exceed that amount of money which would cause the effective rate of interest to exceed the Highest Lawful Rate.

     (b) Anything in this Agreement, any Note or any other Loan Document to the contrary notwithstanding, the Company shall never be required to pay unearned interest on any Note or ever be required to pay interest on such Note at a rate in excess of the Highest Lawful Rate, and if the effective rate of interest which would otherwise be payable under this Agreement, such Note or any other Loan Document would exceed the Highest Lawful Rate, or if the Holder of such Note shall receive any unearned interest or shall receive monies that are deemed to constitute interest which would increase the effective rate of interest payable by the Company under this Agreement, such Note and the other Loan Documents to a rate in excess of the Highest Lawful Rate, then (i) the amount of interest which would otherwise be payable by the Company under this

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Agreement, such Note and the other Loan Documents shall be reduced to the amount allowed under applicable law and (ii) any unearned interest paid by the Company or any interest paid by the Company in excess of the Highest Lawful Rate shall be in the first instance credited on the principal of such Note with the excess thereof, if any, refunded to the Company.

     (c) It is further agreed that, without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received by any Holder under the Notes held by it, or under this Agreement or the other Loan Documents, which are made for the purpose of determining whether such rate exceeds the Highest Lawful Rate shall be made, to the extent permitted by usury laws applicable to such Notes (now or hereafter enacted), by amortizing, prorating and spreading in equal parts during the period of the full stated term of the loans evidenced by said Notes all interest at any time contracted for, charged or received by such Holder in connection therewith.

     (d) If, at any time and from time to time, (i) the amount of interest payable to any Holder on any date shall be computed at the Highest Lawful Rate and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such holder would be less than the Highest Lawful Rate, then the amount of interest payable to such Holder in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate until the total amount of interest payable to such Holder shall equal the total amount of interest which would have been payable to such Holder if the total amount of interest had been computed without giving effect to this Section 11.17.

     11.18 Representations, Etc. Cumulative.

     All representations, covenants, agreements and indemnities contained in this Agreement shall be in addition to and cumulative of the representations, covenants, agreements and indemnities contained in the other Loan Documents.

     11.19 Submission to Jurisdiction.

     THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN NEW YORK, NEW YORK OVER ANY ACTION OR PROCEEDING (A) TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS AGREEMENT OR UNDER ANY OTHER LOAN DOCUMENT OR (B) ARISING FROM OR RELATING TO ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT AND THE LOAN DOCUMENTS, AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR FEDERAL COURT. THE COMPANY HEREBY 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 THE COMPANY AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 11.09, SUCH SERVICE TO BECOME

65

EFFECTIVE 10 DAYS AFTER SUCH MAILING. EACH SUCH SERVICE IS HEREBY ACKNOWLEDGED BY THE COMPANY TO BE SUFFICIENT, EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. IF ANY AGENT APPOINTED BY THE COMPANY REFUSES TO ACCEPT SERVICE, THE COMPANY HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM OR VENUE TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. THE COMPANY HEREBY AGREES THAT A FINAL 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 SECTION 11.19 SHALL AFFECT THE RIGHT OF ANY HOLDER OR ANY OTHER PERSON TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR THE PROPERTY OF THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.

     11.20 Governing Law.

     THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.

     11.21 Indemnification.

     The Company hereby waives any claim for contribution against any Indemnitee and agrees to indemnify, exonerate and hold each Indemnitee free and harmless from and against any and all actions, causes of action, suits, citations, directives, demands, assessments, losses, liabilities, damages and expenses, including (without limitation) reasonable attorneys’ fees and disbursements and, in the case of clause (e) below, fees and disbursements of environmental consultants (collectively, the “Indemnified Liabilities”), incurred, suffered, sustained or required to be paid by the Indemnitees or any of them as a result of, or arising out of, or relating to (a) any transaction financed in whole or in part directly or indirectly with the proceeds of any of the Notes, (b) the exercise, protection or enforcement of any Holder’s rights, remedies, powers or privileges under this Agreement or any other Loan Document, (c) the breach of any representation or warranty of any Loan Party contained herein or in any other Loan Document, (d) the nonfulfillment by any Loan Party of, or its failure to perform, any of its covenants or agreements contained in this Agreement or any of the other Loan Documents or (e) the presence of Hazardous Materials on, or the escape, seepage, leakage, spillage, discharge, emission or release of Hazardous Materials from, any of the real Properties of the Company or any Subsidiary or any site, facility or location to which any material, products, waste or other substances from or attributable to the business or operations of the Company or any Subsidiary have been transported for treatment, disposal, storage or deposit, any violation of, or noncompliance with, any Environmental Law at any such Property, site, facility or location, any Environmental Claim in connection with the Company or any Property of the Company, except, in each case, for any of such Indemnified Liabilities arising on account of such Indemnitee’s

66

gross negligence or willful misconduct, and if and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of the Indemnified Liabilities that is permissible under applicable law. The obligations of the Company under this Section 11.21 shall survive the transfer and payment of the Notes.

     11.22 Survival of Indemnities, Etc.

     (a) The indemnities contained in this Agreement are cumulative and in addition to the indemnities contained in the other Loan Documents and shall survive the termination of this Agreement and the transfer and payment of the Notes.

     (b) THE INDEMNITIES CONTAINED IN THIS AGREEMENT SHALL COVER AND INCLUDE LOSSES, COSTS, EXPENSES, CLAIMS, DAMAGES, PENALTIES AND OBLIGATIONS ARISING OUT OF OR RESULTING FROM THE NEGLIGENCE OTHER THAN GROSS NEGLIGENCE OF ANY INDEMNITEE, REGARDLESS OF WHETHER SUCH NEGLIGENCE BE ORDINARY OR SOLE.

     11.23 Judgment Currency.

     (a) The obligation of the Company hereunder and under the other Loan Documents to make payments in Dollars shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than Dollars, except to the extent that such tender or recovery results in the effective receipt by each Holder of the full amount of Dollars expressed to be payable to such Holder under this Agreement or any other Loan Documents. If for the purpose of obtaining or enforcing judgment against the Company in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than Dollars (such other currency being referred to in this Section 11.23 as the “Judgment Currency”) an amount due in Dollars, the conversion shall be made, at the Dollar Equivalent, as of the Business Day immediately preceding the day on which the judgment is given (such Business Day being referred to in this Section 11.23 as the “Judgment Currency Conversion Date”). For purposes of this Section 11.23, the term “Dollar Equivalent” shall mean, with respect to any monetary amount in a currency other than Dollars, at any time for the determination thereof, the amount of Dollars obtained by converting such foreign currency involved in such computation into Dollars at the spot rate for the purchase of Dollars with the applicable foreign currency as quoted to such Holder by a nationally recognized commercial bank or investment bank, which is not affiliated with such Holder, at approximately 10:00 A.M. (New York City time) on the date of determination thereof specified herein.

     (b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Company covenants and agrees to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount), as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange

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prevailing on the date of payment, will produce the amount of Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date.

     (c) For purposes of determining the Dollar Equivalent for this Section 11.23, such amounts shall include any premium and costs payable in connection with the purchase of the Dollars.

     11.24 Liabilities of Holders.

     Neither this Agreement nor any other Loan Documents nor any disposition of the Notes shall be deemed to create any liability or obligation of any Holder to enforce any provision hereof or of any other Loan Document for the benefit or on behalf of any other Person who may be the holder of any Note.

     11.25 Taxes.

     The Company will (a) pay all taxes (including interest and penalties) that may be payable in connection with the execution and delivery of this Agreement or any other Loan Document or any amendment of, or waiver or consent under or with respect to, this Agreement or any other Loan Document and (b) indemnify and hold the Purchasers and each other Holder harmless from and against any loss or liability resulting from nonpayment or delay in payment of any such tax. The obligations of the Company under this Section 11.25 shall survive the transfer and payment of the Notes.

     11.26 Counterparts.

     This Agreement may be executed simultaneously 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.

     11.27 Entire Agreement.

     This Agreement and the other Loan Documents to which the Company is a party constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Subject to Section 11.08, nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any Person other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

[Remainder of page intentionally left blank. Next page is signature page.]

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     The Purchasers should indicate their agreement with the foregoing by signing the form of acceptance on the enclosed counterpart of this letter and return the same to the Company, whereupon this letter shall become a binding agreement between the Purchasers and the Company.

Very truly yours, CASH AMERICA INTERNATIONAL, INC.
By /s/ Austin D. Nettle
Name:	Austin Nettle
Title:	Vice President, Treasurer

The foregoing Agreement is hereby accepted
as of the date first above written

MIDLAND NATIONAL LIFE INSURANCE COMPANY
By	/s/Kaitlin Trinh
Name:		Kaitlin Trinh
Title:		Vice President
NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE
By	/s/ Kaitlin Trinh
Name:		Kaitlin Trinh
Title:		Vice President
THE COMMERCE INSURANCE COMPANY
By	/s/ John W. Hawie
Name:		John W. Hawie
Title:		Vice President & Chief Investment Officer
EQUITRUST LIFE INSURANCE COMPANY
By	/s/ Herman L. Riva
Name:		Herman L. Riva
Title:		Senior Portfolio Manager
FARM BUREAU LIFE INSURANCE COMPANY
By	/s/ Herman L. Riva
Name:		Herman L. Riva
Title:		Senior Portfolio Manager

[Signature Page to note Agreement]

EX-21

EXHIBIT 21

SUBSIDIARIES OF CASH AMERICA INTERNATIONAL, INC.

	Jurisdiction of
Subsidiaries	Incorporation
Cash America International, Inc.	Texas
Cash America, Inc.	Delaware
Cash America, Inc. of Louisiana	Delaware
RATI Holding, Inc.	Texas
Cash America, Inc. of Tennessee	Tennessee
Cash America, Inc. of Oklahoma	Oklahoma
Cash America, Inc. of South Carolina	South Carolina
Florida Cash America, Inc.	Florida
Georgia Cash America, Inc.	Georgia
Cash America, Inc. of North Carolina	North Carolina
Cash America Pawn, Inc. of Ohio	Ohio
Cash America, Inc. of Alabama	Alabama
Cash America, Inc. of Colorado	Colorado
Cash America, Inc. of Indiana	Indiana
Cash America Acquisition Company, Inc.	Texas
Cash America Pawn L.P.	Delaware
Cash America Management L.P.	Delaware
Cash America Holding, Inc.	Delaware
Mr. Payroll Corporation	Delaware
Express Cash International Corporation	Delaware
Cash America of Missouri, Inc.	Missouri
Vincent’s Jewelers and Loan, Inc.	Missouri
Cash America, Inc. of Utah	Utah
Cash America Franchising, Inc.	Delaware
Cash America Financial Services, Inc.	Delaware
Cash America, Inc. of Illinois	Illinois
Uptown City Pawners, Inc.	Illinois
Doc Holliday’s Pawnbrokers & Jewellers, Inc.	Delaware
Longhorn Pawn and Gun, Inc.	Texas
Bronco Pawn and Gun, Inc.	Oklahoma
Gamecock Pawn and Gun, Inc.	South Carolina
Hornet Pawn and Gun, Inc.	North Carolina
Tiger Pawn and Gun, Inc.	Tennessee
Cashland Financial Services, Inc.	Delaware
Cash America, Inc. of Kentucky	Kentucky
Cash America Advance, Inc.	Delaware
Cash America, Inc. of Nevada	Nevada
Cash America, Inc. of Virginia	Virginia

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 33-29658, 33-36430, 33-59733, 333-95827 and 333-97273) of Cash America International, Inc. of our report dated February 23, 2006 relating to the financial statements, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. We also consent to the incorporation by reference of our report dated February 23, 2006 relating to the financial statement schedule, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Fort Worth, Texas
February 23, 2006

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Daniel R. Feehan, certify that:

1.	I have reviewed this report on Form 10-K of Cash America International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2006

/s/ Daniel R. Feehan

Daniel R. Feehan

Chief Executive Officer and President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Thomas A. Bessant, Jr., certify that:

1.	I have reviewed this report on Form 10-K of Cash America International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2006

/s/ Thomas A. Bessant, Jr.

Thomas A. Bessant, Jr.

Executive Vice President and

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Cash America International, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel R. Feehan, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Daniel R. Feehan

Daniel R. Feehan

Chief Executive Officer and President

Date: March 1, 2006

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Cash America International, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas A. Bessant, Jr, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas A. Bessant, Jr.

Thomas A. Bessant, Jr.

Executive Vice President and Chief Financial Officer

Date: March 1, 2006