EXHIBIT 1
===========================================================================
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
____________________________
===========================================================================
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
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
i
IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS........................... 27
4.1. Authorization; Enforceability; No Violations........................ 27
4.2. Consents............................................................ 27
4.3. Private Placement................................................... 27
V COVENANTS 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
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
ii
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
iii
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.
1
"Certificate" means the Amended and Restated Certificate of
Incorporation, 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.
2
"GAAP" means generally accepted accounting principles consistently
applied.
"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.
3
"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 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.
4
"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,
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
---- -------
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
5
Environmental Laws 3.16
Financial Statements 3.8
Franchise Agreement 3.21
Indemnified Party 8.1
Indemnifying Party 8.1
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 2.1. 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 2.2. 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
6
time and date as the parties hereto shall agree in writing (the "Closing Date"),
at the offices of Xxxx Xxxxx, Xxxxxxx, 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 3.1. 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 3.2. Capital Stock. Immediately following the Closing, (a)
-------------
the authorized capital stock of the Company will 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
7
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.
SECTION 3.3. 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
8
capital stock of the Subsidiaries (or, to the best knowledge of the Company,
after due inquiry, any of the Thorn Entities).
SECTION 3.4. 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 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 3.5. 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 of, or filing or registration with, any Governmental Authority or other
person is required to
9
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 3.6. 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 3.7. 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 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 3.8. 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.
10
(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 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 3.9. Change in Condition.
-------------------
11
(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 3.10. 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, 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
12
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 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.
13
(k) (i) 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 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 3.11. 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
14
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.
(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 3.12. Leases.
------
(a)(i) 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
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.
15
(d) None of the Renters Choice Entities have ownership, financial
or other interests in the landlords under any of the Leases.
SECTION 3.13. 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 3.14. 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 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 3.15. 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.
16
(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 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.
17
(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 3.16. 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
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. (S) 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. (S) 6991 et seq. except as in accordance with
-- ---
Applicable Law; and
18
(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. (S) 6901 et seq. or (B) Chapter 6.5 (Hazardous Waste
-- ---
Control) of the California Health and Safety Code).
SECTION 3.17. Intellectual Property.
---------------------
(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 relating thereto
19
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 3.18. 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 3.19. 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 3.20. 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 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 3.21. 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
20
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
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.
21
(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;
(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;
22
(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 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.
23
(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 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 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.
24
(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 3.22. 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 3.23. 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, 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 3.24. 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 3.25. 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.
25
SECTION 3.26. 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 3.27. Use of Financing. The proceeds received under or as 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 3.28. 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 3.29. 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 3.30. 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 3.31. Related Party Transactions. Except as set forth on
--------------------------
Schedule 3.31, no Renters Choice Entity or Thorn 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.
26
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 4.1. 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 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 4.2. 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 4.3. Private Placement.
-----------------
27
(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 to such reliance.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. 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 5.2. 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 5.3. 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
28
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 5.4. 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, 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 5.5. 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 5.6. 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 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 5.7. 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
29
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 5.8. 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 5.9. 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.
ARTICLE VI
COVENANTS OF THE PURCHASERS
SECTION 6.1. 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 6.2. 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 6.3. 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
30
SECTION 7.1 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:
(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 7.2 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 shall be solely for the purposes of effecting the Closing and
31
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.
(h) The Purchasers and the Company shall have entered into or
caused to become effective the Stockholders Agreement.
(i) [intentionally omitted]
32
(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 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
33
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.
(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.
34
(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 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 VII
MISCELLANEOUS
SECTION 8.1 Survival; Indemnification.
-------------------------
35
(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 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
36
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
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.
37
(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 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.
SECTION 8.2 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,
38
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
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
39
SECTION 8.3 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 8.4 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 8.5 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 8.6 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, 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 8.7 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 8.8 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 8.9 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
40
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 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 8.10 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 8.11 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 8.12 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 and be valid and enforceable.
SECTION 8.13 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 8.14 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
41
documents as may be necessary or desirable to convey and transfer to each
Purchaser the Shares to be purchased by it hereunder.
SECTION 8.15 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.
* * *
42
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:_______________________
43
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
44
