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EXHIBIT 2.10
STOCK PURCHASE AGREEMENT
among
RENTERS CHOICE, INC.,
a Delaware corporation
and
APOLLO INVESTMENT FUND IV, L.P.,
a Delaware limited partnership
and
APOLLO OVERSEAS PARTNERS IV, L.P.,
an exempted limited partnership
registered in the Cayman Islands
Dated
August 5, 1998
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TABLE OF CONTENTS
(Not Part of Agreement)
Page
I DEFINITIONS 1
II SALE AND PURCHASE 6
2.1. Sale and Issuance of Shares 6
2.2. Closing 6
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
3.1. Organization and Standing 7
3.2. Capital Stock 7
3.3. Subsidiaries 8
3.4. Authorization; Enforceability 9
3.5. No Violation; Consents 9
3.6. Permits 10
3.7. Litigation 10
3.8. SEC Documents; Financial Statements 10
3.9. Change in Condition 11
3.10. Employee Benefit Plans and Labor Matters 12
3.11. Interests in Real Property 14
3.12. Leases 15
3.13. Compliance with Law 15
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3.14. Representations and Warranties in the Acquisition Documents 16
3.15. Tax Matters 16
3.16. Environmental Matters 18
3.17. Intellectual Property 19
3.18. Registration Rights 20
3.19. Insurance 20
3.20. Contracts 20
3.22. Ordinances, Regulations and Condition of Stores 25
3.23. Inventory 25
3.24. Product Liability 25
3.25. Questionable Payments 25
3.26. Solvency 25
3.27. Use of Financing 26
3.28. Accuracy of Information 26
3.29. HSR Act Filings 26
3.30. Private Offering 26
3.31. Related Party Transactions 26
IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 27
4.1. Authorization; Enforceability; No Violations 27
4.2. Consents 27
4.3. Xxxxxxx Xxxxxxxxx 00
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X XXXXXXXXX OF THE COMPANY 28
5.1. Amendment or Modification of or Waivers under Acquisition
Agreement 28
5.2. Notices Under the Acquisition Agreement 28
5.3. Agreement to Take Necessary and Desirable Actions 28
5.4. Compliance with Conditions; Best Efforts 29
5.5. Consents and Approvals 29
5.6. Stockholder Approval 29
5.7. Rights of Holders of Preferred Stock. 30
5.8. Other Activities of Purchasers 30
5.9. HSR Act Filings 30
VI COVENANTS OF THE PURCHASERS 30
6.1. Agreement to Take Necessary and Desirable Actions 30
6.2. Compliance with Conditions; Best Efforts 30
6.3. HSR Act Filings 30
VII CONDITIONS PRECEDENT TO CLOSING 30
7.1. Conditions to the Company's Obligations 31
7.2. Conditions to Purchasers' Obligations 31
VIII MISCELLANEOUS 35
8.1. Survival; Indemnification 35
8.2. Notices 38
8.3. Governing Law 39
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8.4. Entire Agreement 40
8.5. Modifications and Amendments 40
8.6. Waivers and Extensions 40
8.7. Titles and Headings 40
8.8. Exhibits and Schedules 40
8.9. Expenses; Brokers 40
8.10. Press Releases and Public Announcements 41
8.11. Assignment; No Third Party Beneficiaries 41
8.12. Severability 41
8.13. Counterparts 41
8.14. Further Assurances 41
8.15. Remedies Cumulative 42
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SCHEDULES
Schedule 2.1 Allocation of Shares / Purchase Price
Schedule 3.2 Capital Stock
Schedule 3.3 Subsidiaries
Schedule 3.5 No Violation; Consents
Schedule 3.7 Litigation
Schedule 3.8 SEC Documents; Financial Statements
Schedule 3.9 Change in Condition
Schedule 3.10 Employee Benefit Plans and Labor Matters
Schedule 3.11 Interests in Real Property
Schedule 3.12 Leases
Schedule 3.13 Compliance with Law
Schedule 3.15 Taxes
Schedule 3.16 Environmental
Schedule 3.17 Intellectual Property
Schedule 3.18 Registration Rights
Schedule 3.21 Franchise Matters
Schedule 3.24 Product Liability
Schedule 3.31 Related Party Transactions
EXHIBITS
Exhibit A Registration Rights Agreement - Series A Preferred Stock
Exhibit B Registration Rights Agreement - Series B Preferred Stock
Exhibit C Stockholders Agreement
Exhibit D Certificate of Designations - Series A Preferred Stock
Exhibit E Certificate of Designations - Series B Preferred Stock
Exhibit F Opinion of Xxxxxx, Xxxxx & Xxxxxxx LLP
Exhibit G Opinion of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
Exhibit H Opinion of X.X. Xxxxxx & Company
Exhibit I Opinion of Xxxxxxxx Xxxxxxxx & Xxxxxx, P.C.
Exhibit J Opinion of Xxxxxx & Xxxxxx
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of August
5, 1998, by and between Renters Choice, Inc., a Delaware corporation (the
"Company"), and Apollo Investment Fund IV, L.P., a Delaware limited
partnership, and Apollo Overseas Partners IV, L.P., an exempted limited
partnership registered in the Cayman Islands acting through its general partner
(each a "Purchaser," and together the "Purchasers").
NOW, THEREFORE, the parties hereto hereby agree as follows.
ARTICLE I
DEFINITIONS
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Acquisition" means the acquisition of the stock of Thorn Americas
pursuant to the Acquisition Agreement.
"Acquisition Agreement" means the Stock Purchase Agreement, dated
as of June 16, 1998, by and among Thorn International, Thorn and the Company.
"Acquisition Documents" shall mean (i) the Commitment Letter, (ii)
this Agreement, (iii) the Acquisition Agreement, (iv) the Financing Documents
and (v) all other documents and agreements referred to in Section 7.2(j) that
have been executed on or prior to the date hereof.
"Affiliate" with respect to any person means any other person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such person. For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" shall have the meaning set forth in the Preamble.
"Applicable Law" means, with respect to any person, any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any
Governmental Authority to which such person or any of its subsidiaries is bound
or to which any of their respective properties is subject.
"Certificate" means the Amended and Restated Certificate of
Incorporation,
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as amended, of the Company in the form attached as Exhibit A to the
Stockholders Agreement.
"Charter" with respect to any corporation means the certificate of
incorporation or articles of incorporation of such corporation.
"Commission" means the United States Securities and Exchange
Commission.
"Commitment Letter" means the letter agreement, dated June 15,
1998, by and between Apollo Management IV, L.P. and the Company.
"Common Stock" means the Common Stock, par value $.01 per share,
of the Company.
"Company" shall have the meaning set forth in the Preamble.
"Credit Facilities" means the Senior Secured Credit Facility, the
Revolving Credit Facility, the Letter of Credit and the Subordinated Facility.
"Designated Term" means, with respect to each Franchise Agreement,
(i) the territory in which the Renters Choice Entity is restricted from
operating Stores, (ii) obligations, including, without limitation, with respect
to Intellectual Property, of the applicable Renters Choice Entity upon
termination thereof, (iii) any guarantee by any Renters Choice Entity of any
obligation of the franchisee and (iv) any express right of the franchisee
thereunder to a remedy of specific performance.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means with respect to any person (within the
meaning of section 3(9) of ERISA) any other person that would be regarded
together with such person as a single employer under section 414(b), (c), (m)
or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financing" means (i) the extension of credit under the Senior
Secured Credit Facility , (ii) the extension of credit under the Revolving
Credit Facility, (iii) the extension of credit under the Letter of Credit and
(iv) the issuance of notes or extension of credit, as applicable, under the
Subordinated Facility.
"Financing Documents" means the agreements relating to the
Financing including, without limitation, (i) the Senior Secured Credit
Facility, (ii) the Revolving Credit Facility, (iii) the Letter of Credit and
(iv) the Subordinated Facility.
"GAAP" means generally accepted accounting principles consistently
applied.
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"Governmental Authority" means any Federal, state or local court
or governmental or regulatory authority.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and applicable rules and regulations and any similar state
acts.
"Letter of Credit" means that certain letter of credit facility in
the amount of One Hundred Sixty-Three Million Dollars ($163,000,000) to support
obligations relating to the New Jersey judgment with respect to Xxxxxxxx vs.
Thorn Americas, Inc.
"Lien" means any pledge, lien, claim, restriction, charge or
encumbrance of any kind.
"Material Adverse Effect" means, a material adverse effect (i) on
the business, operations, prospects, properties, earnings, assets, liabilities
or condition (financial or other) of the Company and its Subsidiaries and the
Thorn Entities, taken as a whole, or (ii) on the ability of the Company or any
of its Subsidiaries to perform its obligations hereunder or under any of the
Acquisition Documents, or (iii) on the value of the Purchasers' investment in
the Shares.
"Permitted Liens" means any Liens arising as a result of the
Credit Facilities.
"person" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Preferred Stock" shall mean the preferred stock, par value $.01
per share, of the Company.
"Preliminary Offering Memorandum" means that certain Renters
Choice, Inc. Preliminary Offering Memorandum with respect to $200,000,000
Senior Subordinated Notes due 2008.
"Purchasers" shall have the meaning set forth in the Preamble.
"Renters Choice Entities" means the Company and its Subsidiaries.
"Revolving Credit Facility" means that certain revolving credit
facility in the amount of One Hundred Twenty Million Dollars ($120,000,000)
available for general corporate purposes.
"Senior Secured Credit Facility" means that/those certain term
loan(s) in the amount of Seven Hundred Twenty Million Dollars ($720,000,000).
"Series A Preferred Stock" means the Series A Preferred Stock, $.01
par value
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per share, of the Company.
"Series B Preferred Stock" means the Series B Preferred Stock,
$.01 par value per share, of the Company.
"Series A Registration Rights Agreement" means the Registration
Rights Agreement relating to the Series A Preferred Stock to be entered into by
and among the Company, the Purchasers and certain other stockholders of the
Company concurrently with the Closing, substantially in the form attached as
Exhibit A hereto.
"Series B Registration Rights Agreement" means the Registration
Rights Agreement relating to the Series B Preferred Stock to be entered into by
and among the Company, the Purchasers and certain other stockholders of the
Company concurrently with the Closing, substantially in the form attached as
Exhibit B hereto.
"Shares" means the shares of Series A Preferred Stock and Series B
Preferred Stock to be issued and sold by the Company to the Purchasers under
Section 2.1(b) hereof.
"Stockholders Agreement" means the Stockholders Agreement to be
entered into among the Company and its stockholders concurrently with the
Closing, together with the exhibits thereto, substantially in the form attached
as Exhibit C hereto.
"Stores" means all of the individual retail outlets where the
Company and its Subsidiaries operate their retail rent-to-own or rent-to-rent
operations.
"Subordinated Facility" means either of (i) senior subordinated
unsecured notes of the Company issued in a public offering or Rule 144A private
placement in the amount of One Hundred Seventy-Five Million Dollars
($175,000,000) or (ii) a subordinated credit facility in the amount of One
Hundred Seventy-Five Million Dollars ($175,000,000).
"subsidiary" means, with respect to any person (a) a corporation a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by a subsidiary of such person, or by such person and one or
more subsidiaries of such person, (b) a partnership in which such person or a
subsidiary of such person is, at the date of determination, a general partner
of such partnership, or (c) any other person (other than a corporation) in
which such person, a subsidiary of such person or such person and one or more
subsidiaries of such person, directly or indirectly, at the date of
determination thereof, has (i) at least a majority ownership interest or (ii)
the power to elect or direct the election of the directors or other governing
body of such person.
"Subsidiary" means a subsidiary of the Company as of the time
immediately before the closing of the Acquisition.
"Taxes" means all taxes, however denominated, including any
interest,
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penalties or additions to tax that may become payable in respect thereof,
imposed by any governmental body, which taxes shall include, without limiting
the generality of the foregoing, all income taxes, payroll and employee
withholding taxes, unemployment insurance, social security, sales and use
taxes, excise taxes, franchise taxes, gross receipts taxes, occupation taxes,
real and personal property taxes, stamp taxes, transfer taxes, workmen's
compensation taxes and other obligations of the same or a similar nature,
whether arising before, on or after the Closing Date.
"Tax Returns" means any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any governmental body in connection with the
determination, assessment, collection or administration of any Taxes.
"Thorn" means Thorn plc, a company incorporated under the laws of
England and Wales.
"Thorn Americas" means Thorn Americas, Inc., a Delaware
corporation.
"Thorn Entities" means Thorn Americas and its subsidiaries.
"Thorn International" means Thorn International BV, a Netherlands
corporation
"WARN Act" means the Worker Adjustment and Retraining Notification
Act of 1988, as amended, and any applicable state or local law with regard to
"plant closings" or mass layoffs" as such terms are defined in the WARN Act or
applicable state or local law.
(b) As used in this Agreement, the following terms shall have the
meanings given thereto in the Sections set forth opposite such
terms:
Term Section
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Bankruptcy Code 3.26
Benefit Plan 3.10
Closing 2.2
Closing Date 2.2
Code 3.10
Commitment 3.20
Development Agreement 3.21
Dow 7.2
Employee 3.10
Environmental Laws 3.16
Financial Statements 3.8
Franchise Agreement 3.21
Indemnified Party 8.1
Indemnifying Party 8.1
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Intellectual Property 3.17
Leases 3.12
Multiemployer Plan 3.10
Notices 8.2
Opening Dow 7.2
PBGC 3.10
SEC Documents 3.8
Securities Act 3.18
Series A Certificate of Designations 2.1
Series B Certificate of Designations 2.1
ARTICLE II
SALE AND PURCHASE
SECTION 1. Sale and Issuance of Shares.
(a) On or before the Closing, the Company shall adopt and file
with the Secretary of State of Delaware (i) the Certificate of
Designations, Preferences, and Relative Rights and Limitations
relating to the Series A Preferred Stock ("Series A Certificate of
Designations"), substantially in the form attached as Exhibit D
hereto, and (ii) the Certificate of Designations, Preferences,
and Relative Rights and Limitations relating to the Series B
Preferred Stock ("Series B Certificate of Designations"),
substantially in the form attached as Exhibit E hereto.
(b) On the Closing Date, and upon the terms and subject to the
conditions set forth in this Agreement, the Company shall issue
and sell to Purchasers, and Purchasers shall purchase and accept
from the Company in the relative amounts set forth on Schedule 2.1
hereto, (i) One Hundred Thirty Four Thousand Four Hundred Fourteen
(134,414) shares of the Company's Series A Preferred Stock, par
value $.01 per share and (ii) One Hundred Fifteen Thousand Five
Hundred Eighty Six (115,586) shares of the Company's Series B
Preferred Stock, par value $.01 per share, for the aggregate
purchase price of Two Hundred Fifty Million Dollars
($250,000,000).
SECTION 2. Closing. The closing of the purchase and sale
of the Series A Preferred Stock and the Series B
Preferred Stock (the "Closing") shall take place
at 8:00 a.m., local time, on August 5, 1998, or
such other date as promptly thereafter as of
which all of the conditions set forth in Article
VII hereof shall have been satisfied or duly
waived or at such other time and date as the
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parties hereto shall agree in writing (the
"Closing Date"), at the offices of Xxxx Xxxxx,
Rifkind, Xxxxxxx & Xxxxxxxx, 1285 Avenue of the
Americas, New York, NY or at such other place as
the parties hereto shall agree in writing.
On the Closing Date (i) each of the Purchasers shall deposit into
a bank account designated by the Company, by wire transfer of immediately
available funds, an amount equal to its share of the aggregate purchase price
of the Shares, and (ii) the Company shall deliver to the Purchasers, against
payment of the purchase price therefor, certificates representing, in the
aggregate, One Hundred Thirty Four Thousand Four Hundred Fourteen (134,414)
shares of the Company's Series A Preferred Stock and One Hundred Fifteen
Thousand Five Hundred Eighty Six (115,586) shares of the Company's Series B
Preferred Stock.
The Shares shall be in definitive form and registered in the name
of the respective Purchaser or its nominee or designee and in such
denominations (including fractional shares) as each Purchaser shall request not
later than one business day prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Purchasers as
follows:
SECTION 1. Organization and Standing. The Company is duly
incorporated, validly existing and in good
standing as a domestic corporation under the laws
of the State of Delaware and has all requisite
corporate power and authority to own its
properties and assets and to carry on its
business as it is now being conducted and as
proposed to be conducted. The Company is duly
qualified to transact business as a foreign
corporation and is in good standing in each
jurisdiction in which the character of the
properties owned or leased by it or the nature of
its business makes such qualification necessary,
except where the failure to so qualify or be in
good standing could not, individually or in the
aggregate, reasonably be expected to have a
Material Adverse Effect.
SECTION 2. Capital Stock. Immediately following the
Closing, (a) the authorized capital stock of the
Company will
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consist solely of (i) Fifty Million (50,000,000)
shares of Common Stock, of which (A) Twenty Five
Million Thirty Three Thousand Three Hundred Eight
(25,033,308) shares will be issued and
outstanding and (B) Sixteen Million (16,000,000)
will be reserved for issuance upon the conversion
of the Series A Preferred Stock and the Series B
Preferred Stock and (ii) Five Million (5,000,000)
shares of Preferred Stock, of which (A) One
Hundred Thirty Four Thousand Four Hundred
Fourteen (134,414) shares of Series A Preferred
Stock will be issued and outstanding, (B) One
Hundred Fifteen Thousand Five Hundred Eighty Six
(115,586) shares of Series B Preferred Stock will
be issued and outstanding, (C) Four Hundred
Thousand (400,000) will be reserved for issuance
of the Series A Preferred Stock and (D) Four
Hundred Thousand (400,000) will be reserved for
issuance of the Series B Preferred Stock, and (b)
each share of capital stock of the Company that
is issued and outstanding will be duly
authorized, validly issued, fully paid and
nonassessable. Upon conversion of the Series A
Preferred Stock and the Series B Preferred Stock
in accordance with their terms, all of the Common
Stock and the Non-Voting Common Stock (as defined
in the Series B Certificate of Designations), as
the case may be, will be duly authorized, validly
issued, fully paid and nonassessable. Except as
set forth on Schedule 3.2, at the date hereof
there are and immediately following the Closing
there will be (i) no outstanding options,
warrants, agreements, conversion rights,
preemptive rights or other rights to subscribe
for, purchase or acquire any issued or unissued
shares of capital stock of the Company and (ii)
no restrictions upon the voting or transfer of
any shares of capital stock of the Company
pursuant to its Charter, By-Laws or other
governing documents or any agreement or other
instruments to which it is a party or by which it
is bound.
The holders of the Series A Preferred Stock will, upon issuance
thereof, have the rights set forth in the Series A Certificate of Designations.
The holders of the Series B Preferred Stock will, upon issuance thereof, have
the rights set forth in the Series B Certificate of Designations.
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SECTION 3. Subsidiaries.
(a) Schedule 3.3 sets forth a complete and correct list of each
Subsidiary, including the respective percentage of the fully
diluted capital stock of each such Subsidiary owned, directly or
indirectly, by the Company. Immediately following the
Acquisition, Thorn Americas shall be a direct wholly-owned
subsidiary of the Company.
(b) Each of the Subsidiaries is duly incorporated, validly
existing and in good standing under the laws of its jurisdiction
of incorporation and has all requisite corporate power and
authority to own its properties and assets and to conduct its
business as now conducted and as proposed to be conducted. Each
Subsidiary is duly qualified to do business as a foreign
corporation in every jurisdiction in which the character of the
properties owned or leased by it or the nature of the business
conducted by it makes such qualification necessary, except where
the failure to so qualify could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(c) The outstanding shares of capital stock of each of the
Subsidiaries and of each of the Thorn Entities have been duly
authorized and validly issued and are fully paid and
nonassessable. Except as set forth on Schedule 3.3, immediately
following the Acquisition, (i) all of the shares of each of the
Subsidiaries and, to the best knowledge of the Company after due
inquiry, of each of the Thorn Entities will be owned of record and
beneficially, directly or indirectly, by the Company, free and
clear of all Liens (other than Permitted Liens) and (ii) there
will be no outstanding options, warrants, agreements, conversion
rights, preemptive rights or other rights to subscribe for,
purchase or otherwise acquire any issued or unissued shares of
capital stock of the Subsidiaries (or, to the best knowledge of
the Company, after due inquiry, any of the Thorn Entities).
SECTION 4. Authorization; Enforceability. Each of the
Company and its Subsidiaries has the corporate
power to execute, deliver and perform the terms
and provisions of each of the Acquisition
Documents to which it is a party and has taken
all necessary corporate action to authorize the
execution, delivery and performance by it of each
of the Acquisition Documents to which it is a
party and to consummate the transactions
contemplated hereby and thereby. No other
corporate proceedings on the part of the Company
or any Subsidiary is necessary therefor. The
Company has duly executed and delivered this
Agreement and each of the Renters Choice Entities
has duly executed and
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delivered each of the Acquisition Documents to
which it is a party. This Agreement constitutes,
and each of the Acquisition Documents to which
the Company or any Subsidiary is a party, when
executed and delivered by each of the Renters
Choice Entities which is a party thereto and,
assuming due execution by the other parties
hereto and thereto, constitute legal, valid and
binding obligations of the each of the Renters
Choice Entities enforceable against each of them
in accordance with their terms, except as
enforceability may be limited by applicable
bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the
enforcement of creditors' rights generally and by
general principles of equity (regardless of
whether enforcement is sought in a proceeding in
equity or at law).
SECTION 5. No Violation; Consents.
(a) The execution, delivery and performance by the each of the
Renters Choice Entities of each of the Acquisition Documents to
which it is a party and the consummation of the transactions
contemplated hereby and thereby does not and will not contravene
any Applicable Law, except for any such contraventions that could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule
3.5, the execution, delivery and performance by each of the
Renters Choice Entities of each of the Acquisition Documents to
which it is a party and the consummation of the transactions
contemplated hereby and thereby (i) will not (after giving effect
to all amendments or waivers obtained on or prior to the Closing
Date) (x) violate, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contract,
lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which any of them is
a party or by which any of them is bound or to which any of their
respective properties or assets is subject (except with respect to
any indebtedness that will be repaid in full at the Closing),
except for such violations, breaches or defaults that could not
individually or in the aggregate reasonably be expected to have a
Material Adverse Effect, or (y) result in the creation or
imposition of any Lien (other than Permitted Liens) upon any of
the properties or assets of any of them, except for any such
defaults or Liens that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect, and (ii) will not violate any provision of the Charter or
By-Laws of any of them.
(b) Except as set forth on Schedule 3.5, no consent, authorization
or order
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of, or filing or registration with, any Governmental Authority or
other person is required to be obtained or made by any of the
Renters Choice Entities for the execution, delivery and
performance of any of the Acquisition Documents to which any of
them is a party, or the consummation of any of the transactions
contemplated hereby or thereby, except (i) for those consents or
authorizations that will have been obtained or made on or prior to
the Closing Date or (ii) where the failure to obtain such
consents, authorizations or orders, or make such filings or
registrations, could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 6. Permits. Each of the Company and its
Subsidiaries has such licenses, permits,
exemptions, consents, waivers, authorizations,
orders and approvals from appropriate
Governmental Authorities ("Permits") as are
necessary to own, lease or operate their
properties and to conduct their businesses as
currently owned and conducted and all such
Permits are valid and in full force and effect,
except such Permits that the failure to have or
to be in full force and effect would not,
individually or in the aggregate, have a Material
Adverse Effect on the Company. No action by the
Company or any of its Subsidiaries outside the
normal course of business is required in order
that all material Permits shall remain in full
force and effect following the consummation of
the Acquisition Agreement and this Agreement.
SECTION 7. Litigation. Except as set forth on Schedule
3.7, there are no pending or, to the best
knowledge of the Renters Choice Entities,
threatened claims, actions, suits, labor
disputes, grievances, administrative or
arbitration or other proceedings or, to the best
knowledge of the Renters Choice Entities,
investigations against the Renters Choice
Entities or their respective assets or properties
before or by any Governmental Authority or before
any arbitrator that could, individually or in the
aggregate, reasonably be expected to have a
Material Adverse Effect. None of the transactions
contemplated by any of the Acquisition Documents
is restrained or enjoined (either temporarily,
preliminarily or permanently), and no material
adverse conditions have been imposed thereon by
any Governmental Authority or arbitrator. None
of the Renters Choice Entities or any of their
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respective assets or properties, is subject to
any order, writ, judgment, award, injunction or
decree of any Governmental Authority or
arbitrator, that could, individually or in the
aggregate, reasonably be expected to have a
Material Adverse Effect.
SECTION 8. SEC Documents; Financial Statements.
(a) The Company has provided to the Purchasers copies of the
audited consolidated balance sheets of the Company and its
consolidated Subsidiaries as of December 31, 1997, together with
the related audited consolidated statements of operations,
stockholders' equity and cash flows for the fiscal year then
ended, and the notes thereto, accompanied by the reports thereon
of Xxxxx Xxxxxxxx LLP (the "Financial Statements"). Each of the
Financial Statements, including the respective notes thereto, were
prepared in accordance with GAAP and present fairly the
consolidated financial position of the Company as of such dates
and for the periods then ended.
(b) Except as set forth on Schedule 3.8, as of the date hereof the
Company has no assets or liabilities that would have been required
to be reflected in consolidated financial statements of the
Company prepared in accordance with GAAP, including notes thereto
and that are not reflected in the Financial Statements.
(c) The Company has filed all required forms, reports and
documents with the Commission since August 1, 1996, including all
exhibits thereto (collectively, the "SEC Documents"), each of
which complied in all material respects with all applicable
requirements of the Securities Act and, the Exchange Act as in
effect on the dates so filed. None of (i) the SEC Documents (as
of their respective filing dates) contained or will contain any
untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The
Company has heretofore furnished to the Purchasers copies of each
of the SEC Documents.
(d) The pro forma financial statements contained in the SEC
Documents have been prepared on a basis consistent with the
Financial Statements and in accordance with the applicable
requirements of Regulation S-X promulgated under the Exchange Act
and have been properly computed on the bases described therein,
the assumptions used in the preparation thereof are reasonable,
and the adjustments used therein are appropriate to give effect to
the transactions contemplated by the Acquisition Documents and all
other transactions and circumstances referred to therein. The
other pro forma
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financial information included in the SEC Documents has been
derived from such pro forma financial statements. Such pro forma
financial statements fairly present, on a pro forma basis, the
financial position and results of operations of the Company on the
dates and for the periods specified therein, assuming that the
events and assumptions specified therein had actually occurred or
been true, as the case may be.
(e) No representation or warranty of the Renters Choice Entities
contained in any document, certificate or written statement
furnished to the Purchasers by or at the direction of any Renters
Choice Entity for use in connection with the transactions
contemplated by this Agreement, including, without limitation, the
Preliminary Offering Memorandum, contains any untrue statement of
a material fact or omits to state any material fact (known to any
of the Renters Choice Entities, in the case of information not
furnished by them) necessary in order to make the statements
contained herein or therein not misleading in light of the
circumstances in which the same were made. There are no facts
known (or which should upon the reasonable exercise of diligence
be known) to any of the Company or its Subsidiaries (other than
matters of a general economic nature) that could, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect and that have not been disclosed in the SEC
Documents, this Agreement or in such other documents, certificates
and statements furnished to the Purchasers for use in connection
with the transactions contemplated by the Acquisition Documents.
SECTION 9. Change in Condition.
(a) Since March 31, 1998, there has been no material adverse
change in the business, operations, properties, prospects or
condition (financial or other) of the Company or any Subsidiary,
whether or not arising in the ordinary course of business except
as contemplated by the Acquisition Documents (including the
schedules hereto or thereto).
(b) Except as set forth on Schedule 3.9, to the best knowledge of
the Renters Choice Entities, there is no event, condition,
circumstance or prospective development which could, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 10. Employee Benefit Plans and Labor Matters.
(a) For purposes of this Agreement:
(i) "Benefit Plan" means any employee benefit plan,
arrangement, policy or commitment, including, without limitation, any
employment,
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consulting, severance or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings,
retirement, stock option, stock purchase or severance pay plan, any
life, health, disability or accidental death and dismemberment
insurance plan, any holiday and vacation practice or any other
employee benefit plan within the meaning of section 3(3) of ERISA,
that is maintained, administered or contributed to by the Company or
any of its ERISA Affiliates;
(ii) "Code" means the Internal Revenue Code of 1986,
as amended;
(iii) "Employee" means any individual employed by the
Company or any of its ERISA Affiliates;
(iv) "IRS" means the United States Internal Revenue
Service; and
(v) "PBGC" means the Pension Benefit Guaranty
Corporation.
(b) Schedule 3.10 lists all Benefit Plans. With respect to each
such plan, the Company has delivered or made available to the
Buyer correct and complete copies of (i) all plan texts and
agreements and related trust agreements; (ii) all summary plan
descriptions and material Employee communications; (iii) the most
recent annual report (including all schedules thereto); (iv) the
most recent annual audited financial statement; (v) if the plan is
intended to qualify under Code section 401(a) or 403(a), the most
recent determination letter, if any, received from the IRS; and
(vi) all material communications with any Governmental Authority
(including, without limitation, the PBGC and the IRS).
(c) Except as set forth on Schedule 3.10, and as specifically
indicated with respect to each of the following, there are no
Benefit Plans that (i) are subject to any of Code section 412,
ERISA section 302 or Title IV of ERISA; (ii) are intended to
qualify under Code section 401(a) or 403(a); or (iii) are welfare
plans within the meaning of and subject to ERISA section 3(1) that
provide benefits to current or former Employees beyond their
retirement or other termination of service (other than coverage
mandated by Code section 4980B and Part 6 of Title I of ERISA), or
are self-insured "multiple employer welfare arrangements," as such
term is defined in section 3(40) of ERISA.
(d) Each Benefit Plan conforms in all material respects to, and
its administration is in all material respects in compliance with,
all Applicable Law, except for such failures to conform or comply
that, individually or in the aggregate, would not result in
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a Material Adverse Effect on the Company.
(e) Except as set forth on Schedule 3.10, the consummation of the
transactions contemplated by this Agreement will not (i) entitle
any current or former Employee to severance pay, unemployment
compensation or any similar payment; or (ii) accelerate the time
of payment or vesting, or increase the amount of any compensation
due to, any current or former Employee.
(f) Except as set forth on Schedule 3.10, no Benefit Plan is a
"multiple employer plan" or a "multiemployer plan" within the
meaning of the Code or ERISA.
(g) In the six years preceding the date hereof, (i) no Benefit
Plan that is or was subject to Title IV of ERISA has been
terminated; (ii) no reportable event within the meaning of section
4043 of ERISA has occurred; (iii) no filing of a notice of intent
to terminate such a Benefit Plan has been made; and (iv) the PBGC
has not initiated any proceeding to terminate any such Benefit
Plan.
(h) Except as set forth on Schedule 3.10, neither the Company nor
any of its Subsidiaries is a party to any agreement that has
resulted, or would result, in the payment of any compensation to
any Employee which would constitute a "parachute payment" as
defined in section 280G of the Code.
(i) Neither the Company nor any of its Subsidiaries has any
existing arrangement with any of its Employees providing for an
excise tax gross up in respect of any excise taxes imposed by
section 4999 of the Code.
(j) No Employee of the Company or any of its Subsidiaries is a
"covered employee" within the meaning of section 162(m) of the
Code.
(k) No material labor dispute exists with any of the Renters
Choice Entities and, to the best knowledge of the Renters Choice
Entities, none is threatened. No Renters Choice Entity has
experienced any concerted work stoppages during the preceding five
years that, individually or in the aggregate, had or could
reasonably be expected to have a Material Adverse Effect.
(ii) To the best knowledge of the
Renters Choice Entities, there are
no union organizing activities or
questions of representation taking
place
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that could, individually or in the
aggregate, reasonably be expected to
have a Material Adverse Effect.
(iii) There is no unfair labor practice charge or complaint
against any of the Renters Choice Entities which is served
and pending, or to the best knowledge of the Renters
Choice Entities, otherwise pending or threatened before
the National Labor Relations Board that could,
individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(iv) To the best knowledge of the Renters Choice Entities,
there are no charges or investigations with respect to or
relating to any Renters Choice Entity pending before the
Equal Employment Opportunity Commission or any state or
local agency responsible for the prevention of unlawful
employment practices that could, individually or in the
aggregate, reasonably be expected to have a Material
Adverse Effect.
(v) To the best knowledge of the Renters Choice Entities,
there exists no fact or circumstances that could reasonably
be likely to give rise to any claim by the Company for
willful misconduct or fraud against any officer or director
or former officer or director (in their capacity as such)
of the Company or any Subsidiary, or any person employed by
the Company or any Subsidiary on the date hereof.
(vi) The Renters Choice Entities have complied with the
WARN Act and any similar state or local law. No employee
of any Renters Choice Entity has suffered an "employment
loss" as that term is defined in the WARN Act since six
(6) months prior to the Closing Date.
SECTION 11. Interests in Real Property.
(a) Schedule 3.11 sets forth a true and complete list of all real
properties owned and all material real property leased by each of
the Renters Choice Entities. Each Renters Choice Entity has good
and marketable title in fee simple to all real properties owned by
it and valid and enforceable leasehold interests in all real
estate leased by it, except where the lack of such title or the
invalidity or unenforceability of such leasehold interests could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
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(b) Immediately following the Acquisition, none of the real
properties owned by or the leasehold estates of any Renters Choice
Entity will be subject to (i) any Liens other than Permitted Liens
or (ii) any easements, rights of way, licenses, grants, building
or use restrictions, exceptions, reservations, limitations or
other impediments that, in either case (i) or (ii), will
materially adversely affect the value thereof for their present
use, taken as a whole, or that interfere with or impair the
present and continued use thereof, taken as a whole, in the usual
and normal conduct of the business of any such person.
(c) To the best knowledge of the Renters Choice Entities, all
improvements on such real properties and the operations therein
conducted conform in all material respects to all applicable
health, fire, environmental, safety, zoning and building laws,
ordinances and administrative regulations (whether through
grandfathering provisions, permitted use exceptions, variances or
otherwise), except for possible nonconforming uses or violations
that do not and will not interfere with the present use, operation
or maintenance thereof as now used, operated or maintained or
access thereto, and that do not and will not materially affect the
value thereof for their present use. No Renters Choice Entity has
received notice of any violation of or noncompliance with any such
laws, ordinances or administrative regulations from any applicable
governmental or regulatory authority, except for notices of
violations or failures so to comply, if any, that could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(d) Immediately following the Closing and the Acquisition, the
Shares will not be a "United States real property interest" within
the meaning of section 897 of the Code.
SECTION 12. Leases.
(a) No Renters Choice Entity is in breach of or default (and no
event has occurred which, with due notice or lapse of time or
both, may constitute a material breach or default) under any lease
of the leased real property required to be set forth on Schedule
3.11 (the "Leases") and (ii) no party to any Lease has given any
Renters Choice Entity written notice of or made a claim with
respect to any breach or default, the consequences of which, in
either case (i) or (ii) could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 3.12, after taking into
account the exercise of any options (which are exercisable solely
at the discretion of one of the Renters Choice Entities), none of
the Leases terminates by its terms
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before January 1, 2000.
(c) None of the Leases require a consent to be obtained for the
execution, delivery and performance of any of the Acquisition
Documents or the consummation of any of the transactions
contemplated hereby or thereby.
(d) None of the Renters Choice Entities have ownership, financial
or other interests in the landlords under any of the Leases.
SECTION 13. Compliance with Law. The operations of the
Renters Choice Entities have been conducted in
accordance with all Applicable Laws, including,
without limitation, all such Applicable Laws
relating to consumer protection, currency
exchange, employment (including, without
limitation, equal opportunity and wage and hour),
safety and health, environmental protection,
conservation, wetlands, architectural barriers to
the handicapped, fire, zoning and building,
occupation safety, pension and securities, except
for violations or failures so to comply, if any,
that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect. No Renters Choice Entity has received
notice of any violation of or noncompliance with
any Applicable Laws except as set forth on
Schedule 3.13 and except for notices of
violations or failures so to comply, if any, that
could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect.
SECTION 14. Representations and Warranties in the
Acquisition Documents. The representations and
warranties of the Company in the Acquisition
Agreement and the other Acquisition Documents
(including, without limitation, those made on the
Closing Date both immediately before and
immediately after giving effect to the
Acquisition and regardless of whether any such
representations or warranties survive beyond the
Closing Date) were (or will be) true in all
material respects as of the date thereof and are
true in all material respects on the Closing Date
(after giving effect to the Acquisition). To the
best knowledge of the Company after due inquiry,
the representations and warranties of the Thorn
Entities in the Acquisition
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Agreement and the other Acquisition Documents
(including, without limitation, those made on the
Closing Date both immediately before and
immediately after giving effect to the
Acquisition and regardless of whether any such
representations or warranties survive beyond the
Closing Date) were (or will be) true in all
material respects as of the date thereof and are
true in all material respects on the Closing Date
(after giving effect to the Acquisition).
SECTION 15. Tax Matters.
(a) Except as set forth on Schedule 3.15, the Renters Choice
Entities have duly and properly filed, or will duly and properly
file, on a timely basis, all Tax Returns which were or will be
required to be filed by them for all periods ending on or before
the Closing Date or including the Closing Date. All such Tax
Returns of the Renters Choice Entities were (or will be) true,
correct and complete in all material respects when filed. The
Renters Choice Entities have paid all Taxes required to be paid by
them in respect of the periods covered by such filed Tax Returns,
whether or not shown as due, other than (i) those being contested
in good faith or those currently payable without penalty or
interest, in each case for which an adequate reserve or accrual
has been established in the Financial Statements in accordance
with GAAP, or (ii) where failure so to pay could not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) All Taxes payable with respect to Tax Returns for periods
ending on or before the Closing Date, or, with respect to the
period that ends after the Closing Date, the portion of such
period up to and including the Closing Date, have been properly
reserved or accrued on the books of the appropriate persons. All
Taxes that the Renters Choice Entities are or were required by law
to withhold or collect through the Closing Date have been duly
withheld or collected and, to the extent required, have been paid
to the proper governmental body. There are no Liens with respect
to Taxes upon any of the properties or assets, real or personal,
tangible or intangible, of any Renters Choice Entity except for
statutory liens for Taxes not yet due or delinquent.
(c) Except as set forth on Schedule 3.15, no Renters Choice Entity
is currently the beneficiary of any waivers or extensions with
respect to any Tax Returns and no such Tax Returns for any taxable
year are currently under audit.
(d) The Company and each of its Subsidiaries has duly and timely
withheld from employee salaries, wages and other compensation and
paid
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over to the appropriate taxing authorities all material amounts
required to be so withheld and paid over for all periods under
applicable laws.
(e) None of the Renters Choice Entities are party to, are bound by
or have an obligation under any Tax allocation or Tax sharing
agreement or similar contract arrangement. None of the Renters
Choice Entities (i) have been a member of an affiliated group
filing a consolidated Tax Return (other than a group the common
parent of which was the Company) nor (ii) have any liability for
the Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or
successor, by contract, agreement to indemnify or otherwise. None
of the Renters Choice Entities have any obligation by contract,
agreement, arrangement or otherwise to permit any person, other
than the Renters Choice Entities, to use the benefit of a refund,
credit or offset of Tax of any of the Renters Choice Entities.
(f) No consent to the application of section 341(f)(2) of the Code
(or any predecessor provision) has been made or filed by or with
respect to any of the Renters Choice Entities or any of their
assets or properties.
(g) None of the Renters Choice Entities is obligated to make any
payments nor are any of the Renters Choice Entities a party to any
written or oral agreement or understanding that obligates or could
obligate any of the Renters Choice Entities to make payments under
section 280G of the Code.
(h) None of the Renters Choice Entities has been a United States
real property holding company within the meaning of section
897(c)(2) of the Code during the period specified in section
897(c)(1)(A)(ii) of the Code.
(i) The unpaid Taxes of the Renters Choice Entities (i) did not,
as of the most recent fiscal month end, exceed by a material
amount the reserve for Tax liability (rather than any reserve for
deferred taxes established to reflect timing differences between
book and tax income) set forth on the fact of the most recent
balance sheet (rather than in any notes thereto) and (ii) will not
exceed by any material amount that reserve as adjusted for
operations and transactions through the date of this Agreement, as
set forth in the preamble, in accordance with the past custom and
practice of the Renters Choice Entities in filing their Tax
Returns.
SECTION 16. Environmental Matters.
(a) Each Renters Choice Entity and its operations has obtained and
maintained in effect all licenses, permits and other
authorizations required under all Applicable Laws relating to
pollution or to the protection of the
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environment ("Environmental Laws") and is in compliance with all
Environmental Laws and with all such licenses, permits and
authorizations, except where the failure to obtain and maintain
such licenses, permits and other authorizations or any such
noncompliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 3.16:
(i) no Renters Choice Entity has (A) performed or suffered any
act which could give rise to, or has otherwise incurred or
expressly assumed by contract or operation of law, liability
to any person (governmental or not) under the Comprehensive
Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq. or any other Environmental Laws,
or (B) received notice of any such liability or any claim
therefor or submitted notice pursuant to section 103 of such
Act to any governmental agency with respect to any of their
respective assets, except for such liability as could not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect;
(ii) no hazardous substance, hazardous waste, contaminant,
pollutant or toxic substance (as such terms are defined in
any applicable Environmental Law) and no asbestos
containing material has been released, placed, dumped or
otherwise come to be located on, at, beneath or near any
of the assets or properties owned, leased or otherwise
operated by any Renters Choice Entity or any surface
waters or groundwaters thereon or thereunder, except as
could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(iii) no Renters Choice Entity owns or operates an
underground storage tank containing a regulated substance,
as such term is defined in Subchapter IX of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6991 et
seq. except as in accordance with Applicable Law; and
(iv) no Renters Choice Entity has Treated, Stored or
Disposed of any Hazardous Waste (as such capitalized terms
are respectively defined in (A) the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq. or (B)
Chapter 6.5 (Hazardous Waste Control) of the California
Health and Safety Code).
SECTION 17. Intellectual Property.
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(a) Immediately following the Closing, the Renters Choice Entities
will own or be licensed or have the right to use, free and clear
of all Liens (other than Permitted Liens), (i) all letters patent,
patent applications, inventions on which patent applications have
not been filed, trademarks, service marks, trade names (whether
registered or unregistered) and the registrations or applications
for registration therefor, logos, symbols, brands, copyrights
(whether registered or unregistered) and registrations therefor,
both United States and foreign, and all renewals, renewal rights,
reissues, modifications or extensions thereof, and know-how, trade
secrets, formulae, research and development data, new product
research data and manufacturing processes that are material to
their business as currently conducted (collectively, the
"Intellectual Property"), and (ii) all computer software presently
utilized in the operation of their businesses, except where the
absence of such software could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) To the best knowledge of the Renters Choice Entities all state
registrations, renewals and other filings relating to any of the
Intellectual Property (other than the Intellectual Property
registered in the United States Patent and Trademark Office) that
is material to the business of any Renters Choice Entity each as
currently conducted, have been filed in all appropriate state
offices.
(c) Except as set forth on Schedule 3.17, to the best knowledge of
the Renters Choice Entities (i) no claim has been asserted by any
person challenging or questioning the validity or the right of any
Renters Choice Entity to use the Intellectual Property, nor is
there any valid basis for any such claim, (ii) the use of any item
of Intellectual Property by any Renters Choice Entity does not
infringe and will not infringe on any right, title or interest
held by any other entity or person in any intellectual property
and (iii) the use of any intellectual property by any other person
or entity does not infringe on the Intellectual Property or on the
rights of any Renters Choice Entity in any of the Intellectual
Property.
(d) No Renters Choice Entity is a party to any license agreement
or any other agreement to use, sell, assign or encumber any of the
Intellectual Property that is material to its business as
currently conducted except those agreements set forth on Schedule
3.17. Such agreements set forth on Schedule 3.17 are in full force
and effect, and, to the best knowledge of the Renters Choice
Entities, each party to such agreements has complied with the
requirements of such agreements. No notice of termination has
been given pursuant to any of such agreements. As of the Closing,
(i) all notices required by such agreements in order to renew, or
to extend the term of, such agreements have been properly given in
accordance with any requirements
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relating thereto set forth in such agreements and (ii) to the best
knowledge of the Renters Choice Entities (A) there are no existing
or threatened bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other similar proceedings
relating to any of the parties to any of such agreements, (B)
there are no defaults by any party to such agreements and (C)
there exist no events, or failures to act, which, with the passage
of time or the giving of notice, or both, will constitute an event
of default under any of such agreements.
(e) All Intellectual Property in the form of computer software
that is utilized by any Renters Choice Entity or any Thorn Entity
in the operation of its respective business is capable of
processing date data between and within the twentieth and twenty-
first centuries.
SECTION 18. Registration Rights. Except as set forth on
Schedule 3.18, no Renters Choice Entity is under
any obligation to register any of its outstanding
securities pursuant to the Securities Act of
1933, as amended (the "Securities Act").
SECTION 19. Insurance. The Renters Choice Entities
maintain, with reputable insurers, insurance in
such amounts, including deductible arrangements,
and of such a character as is usually maintained
by reasonably prudent managers of companies
engaged in the same or similar business. All
policies of title, fire, liability, casualty,
business interruption, workers' compensation and
other forms of insurance including, but not
limited to, directors and officers insurance,
held by the Renters Choice Entities as of the
date hereof, are in full force and effect in
accordance with their terms. No Renters Choice
Entity is in default under any provisions of any
such policy of insurance and no Renters Choice
Entity has received notice of cancellation of any
such insurance.
SECTION 20. Contracts. All contracts and other instruments
to which any Renters Choice Entity is a party
that are material to the business, operations,
properties, prospects or financial condition of
any of them (collectively, the "Commitments") are
in full force and effect on the date hereof. No
Renters Choice Entity is in default in respect of
any Commitment, and no event has occurred which,
with due notice or lapse
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of time or both, would constitute such a default,
except for any such defaults that could not,
individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. To
the best knowledge of the Renters Choice
Entities, after due inquiry, no other party to
any Commitment is in default in respect thereof,
and no event has occurred which, with due notice
or lapse of time or both, would constitute such a
default.
SECTION 21. Franchising Matters.
(a) The Designated Terms of all franchise agreements to which any
Renters Choice Entity is a party ("Franchise Agreements")
materially conform to the Designated Terms of the form of
franchise agreement attached to the applicable Renters Choice
Entity's Uniform Franchise Offering Circular. Set forth on
Schedule 3.21 is a true and complete list in all material
respects, as of the date hereof, (i) with respect to each
Franchise Agreement, the Approved Location (as defined in each
Franchise Agreement) and (ii) with respect to each development
agreement to which any Renters Choice Entity is a party
("Development Agreement"), the Assigned Area (as defined in each
Development Agreement).
(b) Disclosure Documents. Each Renters Choice Entities' past and
present franchise disclosure documents and/or franchise offering
circulars (collectively "FOCs") for any area franchises,
individual franchises, any other type of franchise the Renters
Choice Entities offer, and/or, if applicable, any licenses: (i)
materially comply with all applicable Federal Trade Commission
("FTC") franchise disclosure regulations, any other applicable
foreign or federal laws and regulations, state franchise and
business opportunity sales laws and regulations, and local laws
and regulations; (ii) include and accurately state all material
information (including but not limited to the discussion of
litigation matters) set forth in them; (iii) do not omit any
required material information; (iv) accurately state the
applicable Renters Choice Entity's position that it does not
provide to prospective area or individual franchisees "earnings
claims" information (as that term is defined in the FTC's
franchise disclosure regulations and the North American Securities
Administrators Association's current Uniform Franchise Offering
Circular Guidelines); (v) have been timely revised to reflect any
material changes or developments in the applicable Renters Choice
Entity's franchise system, agreements, operations, financial
condition, litigation matters, or other matters requiring
disclosure under any applicable foreign, federal, state, and/or
local law; and (vi) include all material documents (including but
not limited to audited financial statements for the applicable
Renters Choice
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Entity) required by any applicable foreign, federal, state, and/or
local law to be provided to prospective area franchisees,
individual franchisees and/or, if applicable, any licensees.
(c) Franchise and License Agreements. The Renters Choice
Entities' past and present agreements with their area franchisees,
individual franchisees, and licenses: (i) materially comply with
applicable foreign, federal, state, and/or local laws and
regulations; (ii) do not include provisions that would prevent or
otherwise impair the applicable Renters Choice Entity's ability to
undergo a change in ownership or control or require the applicable
Renters Choice Entity to notify any area franchisees, individual
franchisees, and/or licensees of such a change in ownership or
control; (iii) do not obligate the Renters Choice Entities to buy
back or otherwise acquire the stock, assets, or contractual rights
of area franchisees, individual franchisees, and/or licensees;
(iv) do not impose on the Renters Choice Entities an obligation to
guarantee the lease obligations, third party financing
obligations, or other material obligations to third parties of the
area franchisees, individual franchisees, and/or licensees; (v)
impose on area franchisees, individual franchisees, and licensees
an obligation to comply with all applicable federal, state, and
local laws and regulations; and (vi) impose on area franchisees,
individual franchisees, and licensees an obligation to maintain
commercially reasonable insurance that names the applicable
Renters Choice Entity as an additional insured, requires the
insurer to notify the applicable Renters Choice Entity before it
terminates any such insurance policy for nonpayment, and permits
the applicable Renters Choice Entity to make such payments to
maintain such insurance coverage on behalf of any non-paying area
franchisee, individual franchisee, or licensee.
(d) Registration and Disclosure Compliance. All of the area
franchises, individual franchises, and licenses of the Renters
Choice Entities have been sold in material compliance with
applicable foreign, federal, state, and/or local franchise
disclosure and registration requirements. As a result,
(i) each prospective area franchisee, individual franchisee,
and, if applicable, licensee was provided with any required
FOC at the earlier of (A) the first personal face-to-face
meeting between the applicable Renters Choice Entity and the
then prospect for the purposes of discussing the acquisition
of an area franchise, individual franchise, or, if applicable,
license, (B) at least ten business days before the execution
of any agreement with the applicable Renters Choice Entity or
the payment of any funds to the applicable Renters Choice
Entity by the prospective area franchisee, individual
franchisee, or, if applicable, licensee, or (C) within any
other minimum time period imposed by law;
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(ii) at least five business days before execution of any
agreements with the Renters Choice Entities, each
prospective area franchisee, individual franchisee, and,
if applicable, licensee was provided with a completed
execution copy of the applicable Renters Choice Entity's
area franchise agreement, individual franchise agreement,
or, if applicable, license agreement, respectively,
together with any related documents (e.g., spousal consent
form, phone transfer agreement, software license, security
agreement, equipment lease, national account agreement)
with all pertinent specific information for such
prospective area franchisee, individual franchisee, or, if
applicable, licensee set forth in those agreements and
documents;
(iii) each FOC provided to a prospective area franchisee,
individual franchisee, or, if applicable, licensee
complied in all material respects at the time of the
delivery of such FOC with applicable foreign, federal,
state, and/or local laws regarding such franchise offering
circulars;
(iv) each of the Renters Choice Entities' required FOCs
were either properly registered with appropriate franchise
regulatory authorities, covered by a proper notice filing
with appropriate franchise regulatory authorities, or
qualified for an exemption from such registration or
notice filing requirements;
(v) each of the Renters Choice Entities' offerings were,
where applicable, either properly registered with
appropriate business opportunity sales authorities or
qualified for an exemption from such registration
requirements;
(vi) the Renters Choice Entities obtained signed
acknowledgments of receipt for the delivery of each FOC to
prospective area franchisees, individual franchisees, and,
if applicable, licensees;
(vii) to the extent that any of the Renters Choice Entities
may have experienced lapses in one or more jurisdictions
for its registrations for area franchise offerings,
individual franchise offerings, and/or, if applicable,
license offerings, the applicable Renters Choice Entity
did not offer or sell during the period of any such lapses
any such area franchises, individual franchises, or, if
applicable, licenses for franchises (A) in those
jurisdictions, (B) to be operated outside those
jurisdictions by residents of those jurisdictions, or (C)
the sale of which might otherwise have triggered the
application of the franchise registration laws of those
jurisdictions during the periods of any such
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lapse;
(viii) to the extent required by foreign, federal, state,
and/or local law, the Renters Choice Entities have
complied with all applicable franchise advertising filing
requirements;
(ix) to the best of its knowledge, the Renters Choice
Entities are not aware of any instances in which any of
their employees, sales agents, or sales brokers for area
franchises, individual franchises, or, if applicable,
licenses provided information to prospective area
franchisees, individual franchisees, or, if applicable,
individual licensees, that materially differed from the
information contained in the FOCs provided to such
prospects (including but not limited to "earnings claim"
information);
(x) where required, the Renters Choice Entities properly
filed with appropriate franchise regulatory authorities
amendments to their FOCs to reflect any material changes or
developments in the applicable Renters Choice Entity's
franchise system, agreements, operations, financial
condition, litigation or other matters requiring
disclosure;
(xi) where required, the Renters Choice Entities complied
with foreign, federal, state, and/or local laws (including
in particular those of California and North Dakota)
requiring registration, disclosure, and/or other
compliance activities associated with any "material
modifications" made to the applicable Renters Choice
Entity's then current area franchises, individual
franchises, or, if applicable, licenses; and
(xii) the Renters Choice Entities properly and timely
converted the format of their FOCs from the prior format
prescribed by the Uniform Franchise Offering Circular
guidelines to the so-called "plain English" guidelines
currently in effect for FOCs prepared in accordance with
Uniform Franchise Offering Circular guidelines.
(e) Franchise and Related Litigation. The
Renters Choice Entities' April 1997 FOCs for
their universal area franchise agreement and
universal individual franchise agreement set
forth accurate summary information about
(i) any governmental regulatory, criminal, and/or material
civil actions pending against the applicable Renters Choice
Entity alleging
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a violation of a foreign and/or United States franchise,
antitrust or securities law, fraud, unfair or deceptive
practices, or comparable allegations as well as actions
other than ordinary routine litigation incidental to the
applicable Renters Choice Entity's business which are
significant in the context of the number of the applicable
Renters Choice Entity's franchisees and the size, nature or
financial condition of the franchise system or its business
operations;
(ii) any convictions of a felony, nolo contendre pleas to
a felony charge, and adverse final judgments in a civil
action in foreign countries and/or the United States since
April 1987 as well as all material actions since April
1987 involving violation of a franchise, antitrust or
securities law, fraud, unfair or deceptive practices, or
comparable allegations; and
(iii) all currently effective injunctive or restrictive
orders or decrees relating to the franchise area under a
foreign, federal, state, or local franchise, securities,
antitrust, trade regulation, or trade practices law
resulting from a concluded or pending action or proceeding
brought by a public agency.
In addition, the Renters Choice Entities have not received notice of any
threatened administrative, criminal and/or material civil action against them
and/or any persons disclosed in Item II of the Renters Choice Entities' April
1997 FOCs for their Universal Area Franchise Agreement and Universal Individual
Franchise Agreement where such threatened administrative, criminal and/or
material civil action alleges a violation of a foreign and/or United States
franchise, antitrust law, or securities law, fraud, unfair or deceptive
practices, or comparable allegations as well as actions other than ordinary
routine litigation incidental to the applicable Renters Choice Entity's
business which are significant in the context of the number of the applicable
Renters Choice Entity's franchisees and the size, nature, or financial
condition of the franchise system or its business operations.
(f) Franchisee Relations and Operations. In
each of the Renters Choice Entities'
communications with its area franchisees,
individual franchisees, licensees, and
representative groups of those area franchisees,
individual franchisees, and/or licensees, the
applicable Renters Choice Entity is not aware of
any material misstatements regarding its
operations, franchise system, agreements,
financial condition, litigation matters, or plans
that could be used as a basis for a successful
fraud, misrepresentation, or franchise law
violation
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claim against the applicable Renters Choice
Entity. Each of the Renters Choice Entities have
taken and continue to take commercially
reasonable efforts to protect the confidentiality
of their current Operations Manual.
(g) Franchise Terminations. The Renters Choice Entities'
termination of or effort to terminate or refusal to renew any area
franchisee, individual franchisee, or, if applicable, licensee,
has complied with applicable federal, state, and/or local
franchise termination laws and regulations including, in
particular, but not limited to, having provided any such area
franchisee, individual franchisee, or, if applicable, licensee
involved in such a nonrenewal or termination any statutorily
required notice and opportunity to cure. The Renters Choice
Entities have complied with all other applicable foreign, federal,
state, and/or local laws and/or regulations relating to ongoing
franchise relationships, the termination of such relationships,
and/or the non-renewal of such relationships.
SECTION 22. Ordinances, Regulations and Condition of
Stores. The Stores and the operation and
maintenance thereof, as now operated or
maintained, do not contravene any material zoning
ordinances or other administrative regulations
(either because the Store is in compliance with
such material zoning ordinances or other
administrative regulations or because compliance
with such material zoning ordinances or other
administrative regulations is not required due to
a prior nonconforming use) or violate in any
material respect any existing restrictive
covenant or any provision of existing and
applicable law, the effect of which in any
respect would have a Material Adverse Effect on
(i) the continued use of the properties for the
purposes for which they are now being used or
(ii) the value of the properties. The Stores and
other facilities, taken as a whole, are in good
condition and repair, ordinary wear and tear
excepted.
SECTION 23. Inventory. All inventory of the Renters Choice
Entities was purchased, acquired or ordered in
the ordinary course of business and consistent
with past practice. The Renters Choice Entities'
rental merchandise in the aggregate is of a
quality useable and merchantable, except for
items of obsolete merchandise or merchandise
below standard quality,
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which have been in the aggregate written down to
the lower of cost or realizable market value, or
for which adequate reserves have been provided.
SECTION 24. Product Liability. Schedule 3.24 sets forth
the Company's general warranty policy with
respect to products rented or sold by the Company
or its Subsidiaries at any Stores. Other than as
described on Schedule 3.24, none of the Company
or the Subsidiaries have provided any written or,
to the knowledge of the Company, oral express
warranties with respect to products rented or
sold by the Company or its Subsidiaries at any
Stores. No Renters Choice Entity has knowledge
of any fact or event forming the basis of a claim
against any Renters Choice Entity for product
liability on account of any express warranty
which is not fully covered by insurance.
SECTION 25. Questionable Payments. No Renters Choice
Entity nor to the Company's knowledge any
employee, agent, representative or shareholder of
any Renters Choice Entity has, directly or
indirectly, made any bribes, kickbacks, illegal
payments or illegal political contributions using
corporate funds of any Renters Choice Entity or
made any illegal payments to obtain or retain
business using corporate funds of any Renters
Choice Entity.
SECTION 26. Solvency. No Renters Choice Entity is, or
after giving effect to the transactions
contemplated by the Acquisition Documents and
other obligations in connection therewith, will
be, (a) "insolvent" (as defined in section
101(31) of the Bankruptcy Code of 1978, as
amended (the "Bankruptcy Code")), (b) engaged in
business with unreasonably small capital or
assets (as contemplated by the Bankruptcy Code,
the Uniform Fraudulent Conveyance Act, as
amended, the Uniform Fraudulent Transfer Act, as
amended, or other similar laws) or (c) unable to
pay or provide for the payment of such
liabilities and obligations as and when due.
SECTION 27. Use of Financing. The proceeds received under
or as
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a result of the Acquisition Documents will solely
be used directly or indirectly for the
consummation of the transactions contemplated by
the Acquisition Documents, including the payment
of related fees and expenses, and for working
capital of the Renters Choice Entities.
SECTION 28. Accuracy of Information. None of the
representations, warranties or statements of the
Company contained in this Agreement or in the
exhibits hereto contains any untrue statement of
a material fact or, taken as a whole together
with the SEC Documents, omits to state any
material fact necessary in order to make any of
such representations, warranties or statements
not misleading. All information relating to the
Renters Choice Entities that may be material to a
purchaser for value of the Shares has been
disclosed to the Purchasers and any such
information arising on or before the Closing Date
will forthwith be disclosed to the Purchasers.
SECTION 29. HSR Act Filings. With respect to the
Acquisition, each of the Company and its
Subsidiaries has filed all reports and documents
as may be necessary to comply with the HSR Act
and the Company is in full compliance with
Section 6.3 of the Acquisition Agreement. The
HSR waiting period with respect to the
Acquisition has expired.
SECTION 30. Private Offering. Based, in part, on the
Purchasers' representations in Section 4.3, the
sale of the Shares by the Company to the
Purchasers is exempt from the registration and
prospectus delivery requirements of the
Securities Act. None of the Renters Choice
Entities, nor anyone acting on their respective
behalf, has offered or sold or will offer or sell
any securities, or has taken or will take any
other action, which would subject the offer,
issuance or sale of the Shares or Common Stock as
contemplated hereby to the registration
provisions of the Securities Act.
SECTION 31. Related Party Transactions. Except as set
forth on Schedule 3.31, no Renters Choice Entity
or Thorn
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Entity is, or immediately following the Closing
and the Acquisition will be, a party to any
agreement or arrangement (which will continue to
be in effect after giving effect to the
transactions contemplated by the Acquisition
Documents) with or for the benefit of any person
who is a holder of 5% or more of the outstanding
equity securities of the Company (other than
employees who are not Affiliates of the Company)
or any officer, director, partner or Affiliate of
any such person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally as to itself only, and not jointly,
hereby represents and warrants to the Company as follows:
SECTION 1. Authorization; Enforceability; No Violations.
(a) Each Purchaser is duly organized and validly existing, in each
case, in good standing as a partnership under the laws of its
jurisdiction of organization or registration and has all requisite
corporate or partnership power and authority to own its properties
and assets and to carry on its business as it is now being
conducted. Each Purchaser has the partnership power to execute,
deliver and perform the terms and provisions of the Acquisition
Documents to which it is a party and has taken all necessary
partnership action to authorize the execution, delivery and
performance by it of such Acquisition Documents and to consummate
the transactions contemplated hereby and thereby. No other
partnership proceedings on the part of any such Purchaser is
necessary therefor.
(b) The execution, delivery and performance by such Purchaser of
the terms and provisions of the Acquisition Documents to which it
is a party and the consummation of the transactions contemplated
hereby and thereby do not and will not violate, in any material
respect, any provision of the partnership agreement or other
governing documents of such Purchaser, or of any other agreement
or instrument to which such Purchaser is a party or by which it is
bound, or to which any of its properties or assets is subject, or
of any Applicable Law. Each such Purchaser has duly executed and
delivered this Agreement and, at the Closing, will have duly
executed and delivered the Acquisition Documents to which it is a
party. This Agreement constitutes, and the Acquisition Documents
to which each such Purchaser is a party when
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executed and delivered by such Purchaser, and, assuming the due
execution by the other parties hereto and thereto, will constitute
the legal, valid and binding obligations of such Purchaser,
enforceable against such Purchaser in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
SECTION 2. Consents. No consent, authorization or order
of, or filing or registration with, any
Governmental Authority or other person is
required to be obtained or made by such Purchaser
for the execution, delivery and performance by
such Purchaser of this Agreement or any
Acquisition Documents to it is a party or the
consummation of any of the transactions
contemplated hereby or thereby other than those
that will have been made or obtained on or prior
to the Closing Date.
SECTION 3. Private Placement.
(a) Such Purchaser understands that (i) the offering and sale of
the Shares by the Company to the Purchasers are intended to be
exempt from registration under the Securities Act pursuant to
section 4(2) thereof, and (ii) there is no existing public or
other market for the Shares.
(b) The Shares to be acquired by such Purchaser pursuant to this
Agreement are being acquired for its own account and without a
view to making a distribution thereof in violation of the
Securities Act.
(c) Such Purchaser has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Shares and such
Purchaser is capable of bearing the economic risks of such
investment, including a complete loss of its investment in the
Shares.
(d) Such Purchaser is an "accredited investor" as such term is
defined in Regulation D under the Securities Act.
(e) Such Purchaser acknowledges that the Company and, for purposes
of the opinions to be delivered to the Purchasers pursuant to
Section 7.2(t) hereof, Xxxxxxxx Xxxxxxxx & Xxxxxx P.C. will rely
on the accuracy and truth of its representations in this Section
4.3, and such Purchaser hereby consents
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to such reliance.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 1. Amendment or Modification of or Waivers under
Acquisition Agreement. The Company agrees that,
without the prior written consent of the
Purchasers, it will not consent to any amendment
or modification to, or waive any of its rights
under, the Acquisition Agreement, which
amendment, modification or waiver would have a
Material Adverse Effect on the rights of the
Company or the Purchasers with respect to the
business, assets, operations and properties of
the Company, the Subsidiaries and the Thorn
Entities.
SECTION 2. Notices Under the Acquisition Agreement. The
Company shall promptly provide the Purchasers
with such notices and reports as any Renters
Choice Entity may send to or receive from Thorn
Americas or Thorn International pursuant to the
terms of or relating to the Acquisition
Agreement.
SECTION 3. Agreement to Take Necessary and Desirable
Actions. The Company shall, and shall cause each
Subsidiary, to execute and deliver the
Acquisition Documents to which each shall be a
party and such other documents, certificates,
agreements and other writings and to take such
other actions as may be necessary, desirable or
reasonably requested by the Purchasers in order
to consummate or implement expeditiously the
transactions contemplated hereby.
SECTION 4. Compliance with Conditions; Best Efforts. The
Company shall use its best efforts to cause all
of the obligations imposed upon it in this
Agreement to be duly complied with and to cause
all conditions precedent to the obligations of
the Company and the Purchasers to be satisfied.
Upon the terms and subject to the conditions of
this Agreement, the Company shall use its best
efforts to take, or cause to be taken,
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all action, and to do, or cause to be done, all
things necessary, proper or advisable consistent
with applicable law to consummate and make
effective in the most expeditious manner
practicable the transactions contemplated hereby.
SECTION 5. Consents and Approvals. The Company (a) shall
use its best efforts to obtain all necessary
consents, waivers, authorizations and approvals
of all Governmental Authorities and of all other
persons, firms or corporations required in
connection with the execution, delivery and
performance by them of this Agreement, any other
Acquisition Document or any of the transactions
contemplated hereby or thereby, and (b) shall
diligently assist and cooperate with the
Purchasers in preparing and filing all documents
required to be submitted by the Purchasers to any
Governmental Authority in connection with such
transactions and in obtaining any governmental
consents, waivers, authorizations or approvals
which may be required to be obtained by the
Purchasers in connection with such transactions
(which assistance and cooperation shall include,
without limitation, timely furnishing to the
Purchasers all information concerning the Renters
Choice Entities that counsel to the Purchasers
determines is required to be included in such
documents or would be helpful in obtaining any
such required consent, waiver, authorization or
approval).
SECTION 6. Stockholder Approval. The Company shall (i) on
or before the twentieth (20) day following the
Closing, file a proxy statement with the
Commission with respect to the holding of a
special stockholders' meeting for the purpose of
obtaining stockholder approval of a proposal to
allow the Series B Preferred Stock to be
converted into shares of the Series A Preferred
Stock, (ii) promptly notice such a meeting
following the Commission's clearance of such
proxy statement and (iii) on or before the
fortieth (40) day following the Commission's
clearance of such proxy statement, hold such
meeting. The Company shall use its best efforts
to obtain such stockholder approval, including,
but not limited to, recommending the
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transactions contemplated by this Agreement to
the stockholders of the Company and responding
promptly to the Commission's comments in order to
obtain clearance.
SECTION 7. Rights of Holders of Preferred Stock. The
Company covenants and agrees that, unless
otherwise agreed to by a majority of the holders
of the Series A Preferred Stock, the
designations, powers, preferences, rights,
qualifications, limitations and restrictions of
the Series A Preferred Stock shall be as set
forth in the Series A Certificate of
Designations, and the Company covenants and
agrees not to amend, without the consent of a
majority of the holders of Series A Preferred
Stock, (i) the Company's Certificate or By-laws
in a manner that would impact the holders of the
Series A Preferred Stock, or (ii) the Series A
Certificate of Designations. The Company
covenants and agrees that, unless otherwise
consented to by a majority of the holders of the
Series B Preferred Stock, the designations,
powers, preferences, rights, qualifications,
limitations and restrictions of the Series B
Preferred Stock shall be as set forth in the
Series B Certificate of Designations, and the
Company covenants and agrees not to amend,
without the consent of a majority of the holders
of Series B Preferred Stock, (i) the Company's
Certificate or By-laws in a manner that would
impact the holders of the Series B Preferred
Stock, or (ii) the Series B Certificate of
Designations.
SECTION 8. Other Activities of Purchasers. Nothing
contained in this Agreement or any other
agreement of the Company shall be deemed to
prohibit the Purchasers or any of their
respective Affiliates from forming or investing
in other entities engaged in activities similar
to those of the Company.
SECTION 9. HSR Act Filings. The Company has filed, or
caused to be filed, all reports and documents as
may be necessary to comply with the HSR Act.
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ARTICLE VI
COVENANTS OF THE PURCHASERS
SECTION 1. Agreement to Take Necessary and Desirable
Actions. Each of the Purchasers agrees to
execute and deliver each of the Acquisition
Documents to which it shall be a party and such
other documents, certificates, agreements and
other writings and to take such other actions as
may be necessary, desirable or reasonably
requested by the Company in order to consummate
or implement expeditiously the transactions
contemplated hereby.
SECTION 2. Compliance with Conditions; Best Efforts. Each
of the Purchasers will use its best efforts to
cause all of the obligations imposed upon it in
this Agreement to be duly complied with, and to
cause all conditions precedent to the obligations
of the Company and the Purchasers to be
satisfied. Upon the terms and subject to the
conditions of this Agreement, each of the
Purchasers shall use its best efforts to take, or
cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or
advisable consistent with applicable law to
consummate and make effective in the most
expeditious manner practicable the transactions
contemplated hereby.
SECTION 3. HSR Act Filings. Each of the Purchasers has
filed, or caused to be filed, all reports and
documents as may be necessary to comply with the
HSR Act.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
SECTION 1. Conditions to the Company's Obligations. The
obligations of the Company hereunder required to
be performed on the Closing Date shall be
subject, at its election, to the satisfaction or
waiver (which waiver, if so requested by the
Purchasers, shall be made in writing), at or
prior to the Closing, of the following
conditions:
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(a) The representations and warranties of the Purchasers contained
in this Agreement shall be true and correct in all material
respects on and as of the Closing Date.
(b) The Purchasers shall have performed in all material respects
all obligations and agreements, and complied in all material
respects with all covenants, contained in this Agreement, to be
performed and complied with by the Purchasers at or prior to the
Closing Date.
(c) All conditions precedent to the consummation of the
transactions contemplated by the Acquisition Documents shall have
been satisfied or waived.
(d) The Purchasers shall have delivered to the Company a
certificate, executed by each Purchaser or on its behalf by a duly
authorized representative, dated as of the Closing Date,
certifying that each of the conditions specified in this Section
7.1 has been satisfied with respect to the Purchasers.
(e) Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel to the Purchasers, shall
have delivered to the Company an opinion, dated the Closing Date,
addressed to the Company, substantially in the form attached as
Exhibit F hereto.
(f) Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., counsel to the
Purchasers, shall have delivered to the Company an opinion, dated
the Closing Date, addressed to the Company, substantially in the
form attached as Exhibit G hereto.
(g) X.X. Xxxxxx & Company, counsel to the Purchasers, shall have
delivered to the Company an opinion, dated the Closing Date,
addressed to the Company, substantially in the form attached as
Exhibit H hereto.
SECTION 2. Conditions to Purchasers' Obligations. The
obligations of the Purchasers hereunder required
to be performed at the Closing shall be subject,
at their joint election, to the satisfaction or
waiver (which waiver, if so requested by the
Company, shall be made in writing), at or prior
to the Closing, of the following conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects
on and as of the Closing Date (after giving effect to the
transactions contemplated hereby). Any waiver by the Purchasers of
this condition to the Purchasers' obligations
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shall be solely for the purposes of effecting the Closing and
shall not constitute a waiver of the Purchasers' or any other
Indemnified Party's right to indemnification for the Company's
failure to satisfy this condition.
(b) The Company shall have performed in all material respects all
obligations and agreements, and complied in all material respects
with all covenants, contained in this Agreement, to be performed
and complied with by it at or prior to the Closing Date.
(c) All conditions precedent to the transactions contemplated by
the Acquisition Documents shall have been satisfied; provided that
no waiver of any of the conditions of, or amendment to, any of the
Acquisition Documents shall have occurred except such as shall
have been consented to in writing by the Purchasers, and, with
respect to any conditions thereunder the fulfillment of which is
or may be determined in the judgment or discretion of any party to
an Acquisition Document other than the Purchasers, such conditions
shall not be deemed fulfilled unless each of the Purchasers, in
its sole judgment, shall also be satisfied that such conditions
are fulfilled.
(d) The Company, Thorn and Thorn International shall have
executed the Acquisition Agreement, and the consummation of the
Acquisition contemplated thereby shall occur concurrently with the
Closing.
(e) The Company and Chase Securities, Inc., The Chase Manhattan
Bank, NationsBank, N.A., NationsBanc Xxxxxxxxxx Securities LLC,
Comerica Bank and/or NationsBridge, L.L.C. shall have entered into
definitive agreements with respect to the Credit Facilities in
form and substance reasonably satisfactory to the Purchasers, and
all amounts shall have been funded to the Company pursuant to the
terms of the Credit Facilities as described herein.
(f) Simultaneously with the receipt of the proceeds of the sale of
the Shares hereunder, the Renters Choice Entities shall receive
proceeds under or as a result of the Credit Facilities which shall
be sufficient to consummate the Acquisition, including payment of
fees and expenses in respect thereof.
(g) In connection with the issuance of the Series A Preferred
Stock and the Series B Preferred Stock, (i) the charter and
By-laws and other governing documents of the Company shall have
been amended as the Purchasers deem appropriate to effect the
understandings described in the Commitment Letter, (ii) each of
such agreements and documents shall be in full force and effect
and (iii) all existing shareholders' agreements or similar
agreement relating to the Company or Thorn Americas shall have
been terminated.
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(h) The Purchasers and the Company shall have entered into or
caused to become effective the Stockholders Agreement.
(i) [intentionally omitted]
(j) All documents, instruments, agreements and arrangements
relating to the transactions contemplated by the Acquisition
Documents shall be satisfactory to the Purchasers, shall have been
executed and delivered by the parties thereto and no party to any
of the foregoing shall have breached any of its material
obligations thereunder.
(k) (i) Since March 31, 1998, no change, occurrence or development
shall have occurred, been threatened or become known to the
Purchasers that could reasonably be expected to have a Material
Adverse Effect on the business, operations, prospects, properties
or condition (financial or other) of the Company, Thorn Americas
and their subsidiaries, taken as a whole which, in the reasonable
judgment of the Purchasers, is or may be materially adverse to the
Company, Thorn Americas and their respective subsidiaries, taken
as a whole, and (ii) the Purchasers shall not have become aware of
any information or other matter that in its sole judgement was
inconsistent in a material and adverse manner with any information
or other matter disclosed to the Purchasers prior to June 15,
1998; provided, however, that the following events shall not be
deemed to constitute a materially adverse change, occurrence or
development (all defined terms in the remainder of this paragraph
are as set forth in the Acquisitions Agreement): (i) transactions
contemplated by the Acquisition Documents; (ii) following the
closing of the Acquisition Agreement, the filing with any
Governmental Entity, or the threat thereof, of any Claim by any
Person containing allegations against the Company or any of its
Subsidiaries similar or analogous to the allegations raised in any
of the Claims listed on Schedules 6.17 and 8.2 (other than item
no. 3 thereon) to the Acquisition Agreement, (ii) the entry of
any interlocutory or final Order in any Claims listed on Schedules
6.17 and 8.2 (other than item no. 3 thereon) to the Acquisition
Agreement, which is subject to any appeal, or (iii) any other
condition, event or occurrence regarding any Claim listed on
Schedules 6.17 and 8.2 (other than item no. 3 thereon) to the
Acquisition Agreement.
(l) Since March 31, 1998, the business of the Company shall have
been operated in compliance with all federal, state and local laws
and other regulations, except where the failure to do so would
have a Material Adverse Effect on the Company and their
subsidiaries taken as a whole.
(m) The Purchasers shall have received a copy of the letter
delivered in connection with the Acquisition and the Financing
with respect to the
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solvency and financial condition of Thorn Americas after giving
effect to the Acquisition and the transactions contemplated by the
Acquisition Documents and other obligations in connection
therewith, which letter need not be addressed to the Purchasers.
(n) There shall be no action continuing, and no statute, rule,
regulation, judgment, administrative interpretation, order or
injunction shall have been enacted, promulgated, entered or
enforced, and there shall be no action deemed applicable to the
sale of the Shares to the Purchasers, which would (i) make illegal
or otherwise restrict or prohibit the consummation of the sale of
the Shares to the Purchasers or the Acquisition, (ii) result in a
significant delay in the consummation of the Acquisition or (iii)
materially restrict the ability of the Purchasers, or render the
Purchasers unable, to effect the purchase of the Shares from the
Company.
(o) There shall be no litigation, proceeding or other action
(including, without limitation, relating to environmental and
pension matters) pending or threatened against the Company, Thorn
Americas or their respective subsidiaries which could,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(p) (i) During the seven-calendar-day period ending on the Closing
Date, (A) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or the over-the-counter
market shall not have been suspended and minimum prices shall not
have been established on either of such exchanges or such market
by such exchange or by the Commission, (B) a general banking
moratorium shall not have been declared by Federal or New York or
California authorities, and (C) no change (or any condition, event
or development involving a prospective change) shall have occurred
or be threatened that, in the reasonable judgment of the
Purchasers, has had or could, individually or in the aggregate,
reasonably be expected to have a material adverse effect upon the
prices or trading of securities generally traded on financial
markets in the United States, and (ii) the Dow Xxxxx Industrial
Average (the "Dow") on the business day immediately preceding the
Closing Date shall not be more than 20% lower than the Dow on the
date of this Agreement (the "Opening Dow") and the Dow on any
business day between the date of this Agreement and the Closing
Date shall not have been more than 20% lower than the Opening Dow.
(q) All corporate and other proceedings taken or to be taken by
the parties to the Acquisition Documents in connection with the
transactions contemplated thereby shall be in form and substance
reasonably satisfactory to the Purchasers as being consistent with
satisfaction of the foregoing conditions.
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(r) All governmental and regulatory approvals and clearances and
all third-party consents necessary for the consummation of the
transactions contemplated by the Acquisition Documents shall have
been obtained and shall be in full force and effect, including
(without limitation) expiration of the applicable waiting periods
under the HSR Act, and the Purchasers and the Company shall be
reasonably satisfied that the consummation of such transactions
does not and will not contravene any Applicable Law, except to the
extent any contravention or contraventions, individually or in the
aggregate, could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(s) The Company shall have delivered to the Purchasers a
certificate, executed by it or on its behalf by a duly authorized
representative, dated as of the Closing Date, certifying that each
of the conditions (other than any condition the fulfillment of
which is subject to the reasonable satisfaction of the Purchasers)
specified in this Section 7.2 has been satisfied.
(t) Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., counsel to the Company, shall
have delivered to the Purchasers an opinion, dated the Closing
Date, addressed to the Purchasers, substantially in the form
attached as Exhibit I hereto.
(u) Xxxxxx & Xxxxxx, counsel to the Company, shall have delivered
to the Purchasers an opinion, dated the Closing Date, addressed to
the Purchasers, substantially in the form attached as Exhibit J
hereto.
(v) The Purchasers shall have received copies of in form and
substance reasonably satisfactory to each of the Purchasers, dated
the Closing Date, addressed to the Purchasers with respect to:
(i) opinion of Xxxxxxxx Xxxxxxxx & Xxxxxx P.C. delivered
pursuant to Section 11.7 of the Acquisition Agreement;
(ii) opinion of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
and any additional legal opinions of special and/or in
house counsel to Thorn and Thorn International delivered
pursuant to Section 10.10 of the Acquisition Agreement;
and
(iii) any opinions of legal counsel delivered pursuant to
any of the Credit Facilities.
(w) All proceeds received by the Company
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on the Closing Date under or as a result of the
transactions contemplated by the Acquisition
Documents shall be used (or shall be usable)
solely to consummate the transactions
contemplated by the Acquisition Documents,
including payment of fees and expenses thereof,
and to provide working capital to the Renters
Choice Entities.
(x) The Purchasers shall have received delivery of the Shares as
set forth hereunder.
(y) The Purchasers shall have received such other certificates,
instruments and documents in furtherance of the transactions
contemplated by this Agreement as it may reasonably request.
ARTICLE VIII
MISCELLANEOUS
SECTION 1. Survival; Indemnification.
(a) All representations, warranties, covenants and agreements
(except covenants and agreements which are expressly required to
be performed and are performed in full on or before the Closing
Date) contained in this Agreement shall be deemed made at the
Closing as if made at such time and shall survive the Closing for
two years, except that (i) with respect to claims asserted
pursuant to this Section 8.1 before the expiration of the
applicable representation or warranty, such claims shall survive
until the date they are finally liquidated or otherwise resolved,
(ii) Sections 3.15 and 3.16 shall survive until the end of the
applicable statute of limitations, and (iii) Section 3.2 and this
Section 8.1 shall survive indefinitely. All statements as to
factual matters contained in any certificate executed and
delivered by the parties pursuant hereto shall be deemed to be
representations, warranties and covenants by such party hereunder.
No claim may be commenced under this Section 8.1 (or otherwise)
following expiration of the applicable period of survival, and
upon such expiration the Indemnifying Party shall be released from
all liability with respect to claims under each such section not
theretofore made by the Indemnified Party. No right of indemnity
against any claim of a third party shall arise from any
representation, warranty or covenant of an Indemnifying Party
herein contained, unless such third-party claim is filed or lodged
against the Indemnified Party on or prior to the expiration of the
applicable period of survival provided above, and all other
conditions hereunder are satisfied. A claim shall be made or
commenced
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hereunder by the Indemnified Party delivering to the Indemnifying
Party a written notice specifying in reasonable detail the nature
of the claim, the amount claimed (if known or reasonably
estimable), and the factual basis for the claim.
(b) (i) The Company agrees to indemnify and hold harmless
each of the Purchasers and its respective partners, affiliates,
officers, directors, employees and duly authorized agents and each
of their affiliates and each other person controlling such
Purchaser or any of their affiliates within the meaning of either
section 15 of the Securities Act or section 20 of the Exchange Act
and any partner of any of them from and against all losses,
claims, damages or liabilities resulting from any claim, lawsuit
or other proceeding by any person to which any party indemnified
under this clause may become subject which is related to or arises
out of (A) any breach or failure of any of the representations,
warranties, covenants or agreements made in any of the Acquisition
Documents by the Company or (B) any action or omission of the
Company or in connection with the transactions contemplated
hereby or by the other Acquisition Documents, and will reimburse
each of the Purchasers and any other party indemnified under this
clause for all reasonable out-of-pocket expenses (including
reasonable counsel fees and disbursements) incurred by the
Purchasers or any such other party indemnified under this clause
and further agrees that the indemnification and reimbursements
commitments herein shall apply whether or not the Purchasers or
any such other party indemnified under this clause is a formal
party to any such lawsuits, claims or other proceedings. The
foregoing provisions are expressly intended to cover reimbursement
of legal and other expenses incurred in a deposition or other
discovery proceeding.
(ii) Notwithstanding the foregoing clause (i), the
Company shall not be liable to any party otherwise entitled to indemnification
pursuant thereto: (A) in respect of any loss, claim, damage, liability or
expense to the extent the same is determined, in final judgment by a court
having jurisdiction, to have resulted primarily from the gross negligence or
willful misconduct of such party or (B) for any settlement effected by such
party without the written consent of the Company, which consent shall not be
unreasonably withheld.
(c) (i) The Purchasers agree to indemnify and hold harmless each
of the Company and its partners, affiliates, officers, directors,
employees and duly authorized agents and each of their affiliates
and each other person controlling the Company or any of their
affiliates within the meaning of either section 15 of the
Securities Act or section 20 of the Exchange Act and any partner
of any of them from and against all losses, claims, damages or
liabilities resulting from any claim, lawsuit or other proceeding
by any person to which any party indemnified under this clause may
become subject which is related to or arises out of (A) any breach
or failure of any of the
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representations, warranties, covenants or agreements made in any
of the Acquisition Documents by such Purchaser, or (B) any action
or omission of such Purchaser in connection with the transactions
contemplated hereby or by the other Acquisition Documents, and
will reimburse the Company and any other party indemnified under
this clause for all reasonable out-of-pocket expenses (including
reasonable counsel fees and disbursements) incurred by the Company
or any such other party indemnified under this clause and further
agrees that the indemnification and reimbursements commitments
herein shall apply whether or not the Company or any such other
party indemnified under this clause is a formal party to any such
lawsuits, claims or other proceedings. The foregoing provisions
are expressly intended to cover reimbursement of legal and other
expenses incurred in a deposition or other discovery proceeding.
(ii) Notwithstanding the foregoing clause (i), the
Purchasers shall not be liable to any party otherwise entitled to
indemnification pursuant thereto: (A) in respect of any loss, claim,
liability, cost, expense or damage to the extent the same is determined, in
final judgment by a court having jurisdiction, to have resulted primarily from
the gross negligence or willful misconduct of such party or (B) for any
settlement effected by such party without the written consent of the
Purchasers, which consent shall not be unreasonably withheld.
(d) If a person entitled to indemnity hereunder (an "Indemnified
Party") asserts that any party hereto (the "Indemnifying Party")
has become obligated to the Indemnified Party pursuant to Section
8.1(b) or (c), or if any suit, action, investigation, claim or
proceeding is begun, made or instituted as a result of which the
Indemnifying Party may become obligated to the Indemnified Party
hereunder, the Indemnified Party agrees to notify the Indemnifying
Party promptly and to cooperate with the Indemnifying Party, at
the Indemnifying Party's expense, to the extent reasonably
necessary for the resolution of such claim or in the defense of
such suit, action or proceeding, including making available any
information, documents and things in the possession of the
Indemnified Party which are reasonably necessary therefor.
Notwithstanding the foregoing notice requirement, the right to
indemnification hereunder shall not be affected by any failure to give, or
delay in giving, notice unless, and only to the extent that, the rights and
remedies of the Indemnifying Party shall have been prejudiced as a result of
such failure or delay.
(e) In fulfilling its obligations under this Section 8.1, after
providing each Indemnified Party with a written acknowledgment of
any liability under this Section 8.1 as between such Indemnified
Party and the Indemnifying Party, the Indemnifying Party shall
have the right to investigate, defend, settle or otherwise handle,
with the aforesaid cooperation, any claim, suit, action or
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proceeding brought by a third party in such manner as the
Indemnifying Party may in its sole discretion deem appropriate;
provided, however, that (i) counsel retained by the Indemnifying
Party is reasonably satisfactory to the Indemnified Party and (ii)
the Indemnifying Party will not consent to any settlement imposing
any material obligations on any other party hereto other than
financial obligations for which such party will be indemnified
hereunder, unless such party has consented in writing to such
settlement. Notwithstanding anything to the contrary contained
herein, the Indemnifying Party may retain one firm of counsel to
represent all Indemnified Parties in such claim, action or
proceeding; provided, however, that in the event that the
defendants in, or targets of, any such claim, action or proceeding
include more than one Indemnified Party, and any Indemnified Party
shall have reasonably concluded, based on the opinion of its own
counsel, that there may be one or more legal defenses available to
it which are in conflict with those available to any other
Indemnified Party, then such Indemnified Party may employ separate
counsel to represent or defend it or any other person entitled to
indemnification and reimbursement hereunder with respect to any
such claim, action or proceeding in which it or such other person
may become involved or is named as defendant and the Indemnifying
Party shall pay the reasonable fees and disbursement of such
counsel. Notwithstanding the Indemnifying Party's election to
assume the defense or investigation of such claim, action or
proceeding, the Indemnified Party shall have the right to employ
separate counsel and to participate in the defense or
investigation of such claim, action or proceeding at the expense
of the Indemnifying Party, if (i) in the written opinion of
counsel to the Indemnified Party use of counsel of the
Indemnifying Party's choice could reasonably be expected to give
rise to a conflict of interest, (ii) the Indemnifying Party shall
not have employed counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party within a
reasonable time after notice of the assertion of any such claim or
institution of any such action or proceeding or (iii) if the
Indemnifying Party shall authorize the Indemnified Party to employ
separate counsel at the Indemnifying Party's expense.
(f) If for any reason (other than the gross negligence or willful
misconduct referred to in subclause (b)(ii) above) the foregoing
indemnification by the Company is unavailable to any Indemnified
Party or is insufficient to hold it harmless as and to the extent
contemplated by subclauses (b), (d) and (e) above, then the
Company shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the
relative benefits received by the Company and its affiliates, on
the one hand, and the Purchasers and any other applicable
Indemnified Party, as the case may be, on the other hand, as well
as any other relevant equitable considerations.
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SECTION 2. Notices. All notices, demands, requests,
consents, approvals or other communications
(collectively, "Notices") required or permitted
to be given hereunder or which are given with
respect to this Agreement shall be in writing and
shall be personally served, delivered by
reputable air courier service with charges
prepaid, or transmitted by hand delivery,
telegram, telex or facsimile, addressed as set
forth below, or to such other address as such
party shall have specified most recently by
written notice. Notice shall be deemed given on
the date of service or transmission if personally
served or transmitted by telegram, telex or
facsimile. Notice otherwise sent as provided
herein shall be deemed given on the next business
day following delivery of such notice to a
reputable air courier service.
To the Company:
Renters Choice, Inc.
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: J. Xxxxxx Xxxxxx, Chief Executive Officer
Facsimile: (000)000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000)000-0000
To the Purchasers:
Apollo Investment Fund IV, L.P. and/or
Apollo Overseas Partners IV, L.P.
c/o Apollo Management IV, L.P.
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000)000-0000
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with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 3. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE CHOICE-OF-LAW PROVISIONS
THEREOF, AND EACH PARTY HERETO SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS WITHIN THE STATE OF NEW YORK.
SECTION 4. Entire Agreement. This Agreement (including
all agreements entered into pursuant hereto and
all certificates and instruments delivered
pursuant hereto and thereto) constitutes the
entire agreement of the parties with respect to
the subject matter hereof and supersedes all
prior and contemporaneous agreements,
representations, understandings, negotiations and
discussions between the parties, whether oral or
written, with respect to the subject matter
hereof other than the provisions set forth in
Sections 6, 8 and 9 of the Commitment Letter
which remain in full force and effect.
SECTION 5. Modifications and Amendments. No amendment,
modification or termination of this Agreement
shall be binding upon any other party unless
executed in writing by the parties hereto
intending to be bound thereby.
SECTION 6. Waivers and Extensions. Any party to this
Agreement may waive any right, breach or default
which such party has the right to waive, provided
that such waiver will not be effective against
the waiving party unless it is in writing, is
signed by such party,
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and specifically refers to this Agreement.
Waivers may be made in advance or after the right
waived has arisen or the breach or default waived
has occurred. Any waiver may be conditional. No
waiver of any breach of any agreement or
provision herein contained shall be deemed a
waiver of any preceding or succeeding breach
thereof nor of any other agreement or provision
herein contained. No waiver or extension of time
for performance of any obligations or acts shall
be deemed a waiver or extension of the time for
performance of any other obligations or acts.
SECTION 7. Titles and Headings. Titles and headings of
sections of this Agreement are for convenience
only and shall not affect the construction of any
provision of this Agreement.
SECTION 8. Exhibits and Schedules. Each of the annexes,
exhibits and schedules referred to herein and
attached hereto is an integral part of this
Agreement and is incorporated herein by
reference.
SECTION 9. Expenses; Brokers. The Company shall pay or
cause to be paid all reasonable out-of-pocket
fees and expenses incurred by the Purchasers and
their respective Affiliates on or after April 1,
1998, in connection with the transactions
contemplated by this Agreement, the Commitment
Letter, the Acquisition Documents and all matters
related thereto (including, without limitation,
HSR Act filing fees, and reasonable fees and
disbursements of counsel and consultants). In
addition, if the event that the Company is paid
any Break-Up Fee (as defined in the Acquisition
Agreement), the Company shall promptly pay to the
Purchasers an amount equal to Three Million Five
Hundred Thousand Dollars ($3,500,000). Each of
the parties represents to the others that neither
it nor any of its affiliates has used a broker or
other intermediary, in connection with the
transactions contemplated by this Agreement for
whose fees or expenses any other party will be
liable and respectively agrees to indemnify and
hold the others harmless from and against any and
all claims, liabilities or obligations with
respect to any such fees
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or expenses asserted by any person on the basis
of any act or statement alleged to have been made
by such party or any of its affiliates.
SECTION 10. Press Releases and Public Announcements. All
public announcements or disclosures relating to
the transactions contemplated by the Acquisition
Documents shall be made only if mutually agreed
upon by the Company and the Purchasers, except to
the extent that such disclosure is, in the
opinion of counsel, required by law or by stock
exchange regulation, provided that any such
required disclosure shall only be made, to the
extent consistent with law, after consultation
with the Purchasers.
SECTION 11. Assignment; No Third Party Beneficiaries. This
Agreement and the rights, duties and obligations
hereunder may not be assigned or delegated by
either the Company or the Purchasers without the
prior written consent of the other; provided that
either of the Purchasers may assign or delegate
its rights, duties and obligations hereunder to a
Permitted Transferee (as defined in the
Stockholder Agreement). Except as provided in
the preceding sentence, any assignment or
delegation of rights, duties or obligations
hereunder made without the prior written consent
of the other party hereto shall be void and of no
effect. This Agreement and the provisions hereof
shall be binding upon and shall inure to the
benefit of each of the parties and their
respective successors and permitted assigns.
This Agreement is not intended to confer any
rights or benefits on any persons that are not
party hereto other than as expressly set forth in
Sections 8.1 and 8.12.
SECTION 12. Severability. This Agreement shall be deemed
severable, and the invalidity or unenforceability
of any term or provision hereof shall not affect
the validity or enforceability of this Agreement
or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties
hereto intend that there shall be added as a part
of this Agreement a provision as similar in terms
to such invalid or unenforceable provision as may
be possible
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and be valid and enforceable.
SECTION 13. Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall be
deemed an original, and all of which taken
together shall constitute one and the same
instrument.
SECTION 14. Further Assurances. Each party hereto, upon
the request of any other party hereto, shall do
all such further acts and execute, acknowledge
and deliver all such further instruments and
documents as may be necessary or desirable to
carry out the transactions contemplated by this
Agreement, including, in the case of the Company,
such acts, instruments and documents as may be
necessary or desirable to convey and transfer to
each Purchaser the Shares to be purchased by it
hereunder.
SECTION 15. Remedies Cumulative. The remedies provided
herein shall be cumulative and shall not preclude
the assertion by any party hereto of any other
rights or the seeking of any remedies against the
other party hereto.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY RENTERS CHOICE, INC.
a Delaware corporation
By: __________________________________
Name: ______________________________
Title: ______________________________
PURCHASERS APOLLO INVESTMENT FUND IV., L.P.
a Delaware limited partnership
By: Apollo Advisors IV, L.P.
its General Partner
By: Apollo Capital Management IV, Inc.
its General Partner
By: _____________________________
Name: ________________________
Title: ________________________
APOLLO OVERSEAS PARTNERS IV, L.P.
an exempted limited partnership registered
in the Cayman Islands
By: Apollo Advisors IV, L.P.
its General Partner
By: Apollo Capital Management IV, Inc.
its Managing General Partner
By: _____________________________
Name: ________________________
Title: ________________________
59
SCHEDULE 2.1
ALLOCATION OF SHARES/PURCHASE PRICE
Series A Series B
Preferred Stock Preferred Stock
--------------- ---------------
Apollo Investment Fund IV, L.P. 127,569 shares 109,700 shares
Apollo Overseas Partners IV, L.P. 6,845 shares 5,886 shares
=====================================
Total 134,414 shares 115,586 shares
53
