1
EXHIBIT 2.2
RENTERS CHOICE, INC.
00000 XXXXXXXX XXXX, XXXXX 000
XXXXXX, XXXXX 00000
Agreement dated as of
May 26, 1998
Central Rents, Inc.
Central Rents Holding, Inc.
Banner Holdings, Inc.
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Re: Asset Purchase Agreement, dated as of May 1, 1998, by and
among Renters Choice, Inc., Central Rents, Inc., Central Rents
Holding, Inc. and Banner Holdings, Inc.
Gentlemen:
Reference is made to that certain Asset Purchase Agreement (the "Asset
Purchase Agreement"), dated as of May 1, 1998, by and among Renters Choice,
Inc., a Delaware corporation (the "Acquiror"), Central Rents, Inc., a Delaware
corporation (the "Company"), Central Rents Holding, Inc., a Delaware
corporation ("Holdings"), and Banner Holdings, Inc., a Delaware corporation
("Banner"), pursuant to which the Acquiror has agreed to purchase (the
"Acquisition") substantially all of the assets of the Company used in, or
related to, the operation of 176 rent-to-own stores. Capitalized terms used
herein without definition shall be as defined in the Asset Purchase Agreement.
This letter agreement (this "Agreement") amends, modifies and supplements the
Asset Purchase Agreement as follows:
1. Bulk Transfer Matters. Notwithstanding the provisions of
Section 4.8 of the Asset Purchase Agreement, the Company and
the Acquiror acknowledge and agree that the notice provisions
with respect to the bulk sales laws of Georgia, South Carolina
and Tennessee will not be complied with at Closing. The
indemnification obligations of Holdings and Banner as provided
in Section 8.2(c) of the Asset Purchase Agreement are hereby
ratified and confirmed.
2. Open Inventory Contracts. The parties acknowledge and agree
that notwithstanding the provisions of Section 4.9 of the
Asset Purchase Agreement, the Company shall provide to the
Acquiror a list of the Open Inventory Contracts with respect
to the "RTO" Stores rather than a copy of each such Open
Inventory Contract. In addition, the parties acknowledge and
agree that
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notwithstanding the provisions of Section 1.1(n) of the Asset
Purchase Agreement, no agreements of the Company to purchase
inventory for the Stores that were entered into in the
ordinary course of business were cancelled pursuant to mutual
agreement between the Company and the Acquiror.
3. Store Leases. The Company shall use its reasonable efforts to
provide to the Acquiror fully executed copies of each of the
leases listed in Item 1 of Schedule 3.10 to the Asset Purchase
Agreement (the "Schedule 3.10 Leases") prior to Closing Date,
as provided by Section 4.12 of the Asset Purchase Agreement.
The Company and the Acquiror acknowledge and agree that fully
executed copies of some of the Schedule 3.10 Leases may not be
available to be delivered as of the Closing Date due to
circumstances beyond the control of the Company. Prior to the
Closing Date, the Company shall use its reasonable efforts to
provide to the Acquiror unsigned copies of the Schedule 3.10
Leases which the Company believes to be true and correct
copies of such Schedule 3.10 Leases. Within thirty (30) days
of the Closing Date, the Company shall provide to the Acquiror
with respect to each Schedule 3.10 Lease not provided prior to
the Closing either a fully executed copy of such lease or a
written confirmation from the landlord of the term and monthly
rent for such lease.
4. Certain Inventory.
(a) Aged Inventory Schedule and Charge Offs.
Notwithstanding the provisions of Section 4.13 of the Asset
Purchase Agreement, the Company shall not be required to
remove the Aged Inventory from the Stores prior to the
Closing. The Company, with the cooperation of the Acquiror
and its employees, shall determine which items of inventory
are Aged Inventory and the employees shall prepare an initial
Aged Inventory Schedule no later than the close of business on
Monday, June 1, 1998. The Company shall review and audit, and
in its sole and absolute discretion, revise the initial Aged
Inventory Schedule and cause to be prepared a final Aged
Inventory Schedule that shall include all items of Aged
Inventory to be charged off (and excluded from the Closing
Date Rental Merchandise Value pursuant to Section 6.2 of the
Asset Purchase Agreement). The Company shall coordinate with
the Acquiror to arrange for those items of Aged Inventory
listed on the final Aged Inventory Schedule to be charged off
by the Stores no later than the close of business on Monday,
June 1, 1998, with such charge off to be effective as of the
Closing Date. The Company and the Acquiror shall instruct the
Store employees to provide the final Aged Inventory Schedule,
together with the backup for such
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schedule to the Company by overnight mail for delivery on
Tuesday, June 2, 1998. No later than the close of business on
Monday, June 8, 1998, the Company shall provide such final
Aged Inventory Schedule and backup to the Acquiror together
with the Company's calculation of the Company Determined
Closing Date Rental Merchandise Value pursuant to Section 6.2
of the Asset Purchase Agreement. In accordance with Section
6.2 of the Asset Purchase Agreement, the Company shall pay to
the Acquiror the difference between the Expected Closing Date
Rental Merchandise Value ($66,002,000) and the Company
Determined Closing Date Rental Merchandise Value within thirty
(30) days of the Closing Date.
(b) Disposal of Aged Inventory. No later than the close
of business on June 1, 1998, the Company, with the cooperation
and assistance of the Acquiror, shall use its reasonable
efforts to ship out of the Stores all small items of Aged
Inventory which have been charged-off. Within ten (10) days
of the Closing, the Company shall use its reasonable efforts
to pick up from those Stores located in California and Arizona
those items of Aged Inventory not already shipped out of the
Stores by the Company. All items of Aged Inventory remaining
in the Stores after the tenth day following the Closing shall
be tagged as Aged Inventory and picked up by the Company
within forty-five days following the Closing. All shipping
and delivery costs of the Company in disposing of the Aged
Inventory in the forty-five days following the Closing shall
be borne by the Company. Any items of Aged Inventory
remaining in the Stores after the forty-fifth day following
the Closing may be disposed of by the Acquiror in its
discretion and at its cost and expense.
5. Repurchase of Notes. The Note Repurchase Agreements require
that the Noteholder receive notice of the anticipated date of
closing the purchase of the Seller Notes (as defined in the
Note Repurchase Agreements) in writing no earlier than five
(5) business days prior to such scheduled closing date. Such
five (5) day notice period shall not have expired as of the
Closing Date and, therefore, the Company and the Acquiror
acknowledge and agree that all of the Notes may not be
repurchased simultaneously with the Closing. To the extent
that all of the Notes are not repurchased simultaneously with
the Closing due to the pendency of the five (5) day notice
period, the parties waive the condition contained in Section
5.1(c) of the Asset Purchase Agreement and agree to effect the
Closing despite the nonoccurrence of such condition.
Notwithstanding the foregoing, the Company shall use its
reasonable efforts to repurchase all of the
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Notes simultaneously with the Closing. In the event that any
of the Notes are not repurchased on the Closing Date, the
Acquiror shall withhold from the Closing Date Payment an
amount equal to the amount required to repurchase, in
accordance with the Note Repurchase Agreements, the Notes
which remain outstanding on the Closing Date.
6. Certain Equipment Leases and Service Contracts. The Company
shall use its reasonable efforts to provide to the Acquiror
prior to the Closing copies of the contracts identified in
Items 1-3 of Schedule 1.1(h) to the Asset Purchase Agreement
and Items 1(c) and 2 of Schedule 1.1(o) to the Asset Purchase
Agreement which are not terminable on 30 days' or less notice,
as provided by Section 1.2(c) of the Asset Purchase Agreement,
provided, however, that any such contracts for which copies
are not provided as of the Closing will not become Excluded
Assets as of the Closing Date, but shall become Excluded
Assets pursuant to Section 1.2(c) of the Asset Purchase
Agreement only to the extent that the Company fails to deliver
copies of such contracts within thirty (30) days following the
Closing.
7. Payroll. The Company has arranged for its Employees to be
paid through May 31, 1998. To the extent that the Closing
Date occurs prior to May 31, 1998, the Acquiror shall pay to
the Company an amount equal to the payroll expense for all
Employees for the number of paydays elapsed between the
Closing Date and May 31, 1998 (except for any Employees which
the Acquiror notifies the Company of in writing no later than
the close of business on the Closing Date that it will not
hire following the Closing). Such payment shall be made in
accordance with Section 13 hereof.
8. Liens. Attached hereto as Annex I is a list of additional
Liens which were inadvertently omitted from Schedule 3.11 to
the Asset Purchase Agreement. The parties acknowledge and
agree that Schedule 3.11 shall be deemed to include the Liens
listed on Annex I as of the date of the Asset Purchase
Agreement.
9. Intellectual Property. The parties acknowledge and agree that
none of the trademarks or service marks listed on Schedule
3.22 to the Asset Purchase Agreement are subject to current
federal or state registration. Accordingly, the Company shall
transfer, pursuant to the Asset Purchase Agreement, all of its
common law right, title and interest, if any, in and to the
trademarks and service marks listed on Schedule 3.22 to the
Asset Purchase Agreement.
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10. Interim Operations of the Company. The Company and the
Acquiror acknowledge that in connection with the replacement
of the Company's existing line of credit and letters of credit
as contemplated by Item 5 of Schedule 4.2, the Company amended
the Credit Agreement.
11. Indemnification. The Acquiror agrees to indemnify and hold
harmless the Company and its directors, officers, employees,
affiliates, agents and assigns from and against any and all
Losses (as defined below) of the Company which arise or result
from and to the extent they are attributable to the failure of
the Company to obtain the consent of any of its employees to
the release of employment information about such employees to
the Acquiror. For the purposes of this Section 11, "Losses"
means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation,
penalty, fine or settlement of any kind or nature, whether
foreseeable or unforeseeable, including but not limited to,
penalties, legal, accounting and other professional fees and
expenses incurred in the investigation, collection,
prosecution and defense of claims and amounts paid in
settlement, that may be imposed on or otherwise incurred or
suffered by the Company or any of its directors, officers,
employees, affiliates, agents and assigns.
12. Waiver of Condition. The Acquiror hereby waives the condition
set forth in Section 5.2(c) of the Asset Purchase Agreement.
The Company and the Acquiror shall use their reasonable
efforts to obtain the consents set forth on Schedule 5.2(c) to
the Asset Purchase Agreement as soon as practicable after the
Closing.
13. Proration. The Company has prepared the schedule attached
hereto as Annex II which reflects certain proration items
known to the Company as of the Closing Date (the "Closing Date
Proration Schedule"). The Acquiror agrees to review the
Closing Date Proration Schedule and provide to the Company
within ten (10) days after the Closing Date the payments
called for by the Closing Date Proration Schedule, other than
any individual proration items that Acquiror disputes, which
the Company and the Acquiror shall resolve in accordance with
the terms of the Asset Purchase Agreement. The parties
acknowledge and agree that there will be additional items to
be prorated after the Closing pursuant to Section 6.8 of the
Asset Purchase Agreement.
14. Reasonable Access to Employees. The Acquiror shall provide
the Company with reasonable access to its employees after the
Closing Date to enable the
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Company to comply with the provisions of Section 4 of this
Agreement. In addition, the Acquiror shall, and shall cause
its affiliates to, cooperate fully with the Company and its
representatives and provide the Company and its
representatives with reasonable access to those employees of
the Acquiror that were previously employees of the Company in
connection with any action, suit, arbitration, proceeding,
hearing, investigation, charge, complaint, claim, demand,
notice, audit or investigation of the Company relating to any
matters or periods (or portion thereof) on or before the
Closing Date.
15. Entire Agreement. Notwithstanding the provisions of Section
9.6(a) of the Asset Purchase Agreement, this Agreement,
together with the Asset Purchase Agreement and all other
documents and instruments referred to therein, constitutes the
entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties with
respect to the Acquisition.
16. No Further Amendments. Except as expressly provided in this
Agreement, the Asset Purchase Agreement is not further amended
or modified and shall remain in full force and effect in
accordance with its terms.
17. Governing Law. The provisions of Section 9.7 of the Asset
Purchase Agreement shall apply to this Agreement.
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Dated as of May 26, 1998
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Please evidence your agreement and acceptance of the foregoing by
signing below. This Agreement may be executed in two or more counterparts
which together shall constitute a single agreement.
Very truly yours,
RENTERS CHOICE, INC.,
a Delaware corporation
By:
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Name:
---------------------------------
Title:
--------------------------------
AGREED TO AND
ACCEPTED BY:
CENTRAL RENTS, INC.,
a Delaware corporation
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CENTRAL RENTS HOLDING, INC.,
a Delaware corporation
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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Dated as of May 26, 1998
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BANNER HOLDINGS, INC.,
a Delaware corporation
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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ANNEX I
ADDITIONAL LIENS
FINANCING
STATEMENT
NUMBER JURISDICTION SECURED PARTY
------------ ------------------------------ -------------
5855 City of Newport News, Xxxxxxxx Xxxxx Fargo
5854 City of Newport News, Xxxxxxxx Xxxxx Fargo
63-95-0950 Xxxxx County, Xxxxxxx Xxxxx Fargo
000-0000-000 Xxxx County, Xxxxxxx Xxxxx Fargo
0143597 Xxxxxxxxx County, Kentucky Xxxxx Fargo
95-25754 Pulaski County, Arkansas Xxxxx Fargo
17-1107303 East Baton Rouge Parish, Louisiana Xxxxx Fargo
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ANNEX II
CLOSING DATE PRORATION SCHEDULE
Begins on the following page.
