STOCK PURCHASE AGREEMENT
Dated as of January 30, 1998
By and Among
RENT-WAY, INC.
(a Pennsylvania Corporation),
and
CHAMPION RENTALS, INC.
(a Florida corporation),
▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
and
THE OTHER SHAREHOLDERS
OF
CHAMPION RENTALS, INC.
- 33 -
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January
30, 1998, is by and among RENT-WAY, INC., a Pennsylvania corporation with its
principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Buyer"); ▇▇▇▇ ▇. ▇▇▇▇, ▇▇., an individual residing at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ - #806, Daytona Beach ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇"), and the individuals
whose names and addresses are set forth on the signature page of this Agreement
(the "Other Shareholders") (▇▇▇▇ and the Other Shareholders are herein referred
to individually as a "Seller" and collectively as the "Sellers"); and CHAMPION
RENTALS, INC., a Florida corporation with its principal place of business at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Corporation").
RECITALS:
WHEREAS, Sellers own all of the issued and outstanding shares of stock
of the Corporation; and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, all of the shares of the Corporation upon the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, Buyer, Sellers and the
Corporation agree as follows:
ARTICLE 1
DEFINITIONS
1.1Defined Terms. As used in this Agreement, the terms below shall have
the following meanings:
(a)"Accounts" shall mean the customer accounts established and existing
under the Rental Contracts.
(b)"Agreement" shall mean this Stock Purchase Agreement, together with
the Schedules and Exhibits attached to this Agreement and the certificates and
instruments to be executed and delivered in connection with this Agreement.
(c)"Business" shall mean the rental and rental-purchase business in
Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, North Carolina, Ohio,
South Carolina, Tennessee and Virginia conducted by the Corporation at the Store
Locations.
(d)"Business Records" shall mean all originals and copies of all
operating data and records of the Business on whatever media including, without
limitation, financial, accounting and bookkeeping books and records, purchase
and sale orders and invoices, sales and sales promotional data, advertising
materials, marketing analyses, past and present price lists, past and present
customer service and credit files, personnel records and other records
pertaining to the Business.
(e)"Closing Date" shall mean February 2, 1998 except that if all of the
conditions to Closing set forth in Articles 7 and 8 of this Agreement shall not
have been satisfied or waived on or prior to such date, "Closing Date" shall
mean the third business day after the satisfaction or waiver of all such
conditions to Closing, or on such other date as the parties may agree; provided,
however, that if the Closing does not occur by February 6, 1998, the Closing
shall not occur prior to February 16, 1998 unless the parties otherwise agree.
(f)"Code" shall mean the Internal Revenue Code of 1986, as amended to
date.
(g)"Defaulted Rental Purchase Contract" shall mean a Rental Purchase
Contract for which either of the following is true as of the Effective Time: (i)
a payment due on such contract has not been made within thirty (30) days after
the payment due date by the customer which is the party thereto or (ii) the
Rental Merchandise covered thereby was lost, damaged or destroyed by theft or
casualty.
(h)"Encumbrance" shall mean any restriction, charge, lien, pledge,
option, easement, security interest, right-of-way, encumbrance or other similar
right of any Person.
(i)"Environmental Claims" shall mean any regulatory agency notice of
violation, notice of potential or actual responsibility or liability, suit,
action, demand or order by any Person for any damage (including, but not limited
to, personal injury, tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
environmental removal, response or remediation costs, nuisance, pollution,
contamination or other adverse effects on the environment or for fines,
penalties or restrictions on existing environmental permits or licenses)
resulting from or relating to (i) the presence of, the Release or threatened
Release into the environment of, or exposure to, any Hazardous Substance, (ii)
the generation, manufacture, processing, distribution, use, handling,
transportation, storage, treatment or disposal of any Hazardous Substance, (iii)
the violation, or alleged violation, of any Environmental Laws or (iv) the
non-compliance or alleged non-compliance with any Environmental Laws.
(j)"Environmental Laws" shall mean any applicable statutes, ordinances
or other laws, any rules or regulations, orders, and any licenses, permits,
orders, judgments, notices or other requirements issued pursuant thereto,
enacted, promulgated or issued by any Governmental Authority, relating to
pollution or protection of public health or the environment (including, but not
limited to, any air, surface water, groundwater, land surface or sub-surface
strata, whether outside, inside or under any structure), or to the
identification, reporting, generation, manufacture, processing, distribution,
use, handling, treatment, storage, disposal, labelling, deposit, transporting,
presence, Release or threatened Release of, any Hazardous Substances,
pollutants, contaminants, wastes or any other substances or materials. Without
limiting the generality of the foregoing, Environmental Laws shall include in
the United States, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, the Toxic Substances Control Act, as amended,
the Hazardous Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Clean Water Act, as amended, the
Safe Drinking Water Act, as amended, the Clean Air Act, as amended, and all
analogous laws enacted, promulgated or lawfully issued by any Governmental
Authority.
(k)"ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended.
(l)[RESERVED]
(m)"GAAP" shall mean generally accepted accounting principles in the
United States.
(n)"Governmental Authority" shall mean any federal, state or local
government, or any political subdivision of any of the foregoing, or any court,
agency or other entity, body, organization or group, exercising any executive,
legislative, judicial, quasi-judicial, regulatory or administrative function of
government.
(o)"Governmental Requirement" shall mean any rule, regulation, code,
injunction, judgment, order, decree or ruling of any Governmental Authority.
(p)"Hazardous Substances" shall mean any pollutants, contaminants,
substances, chemicals, carcinogens, wastes and any ignitable, corrosive,
reactive, toxic or other hazardous substances of materials, whether solids,
liquids or gases (including, but not limited to, petroleum and its derivatives,
PCBs, asbestos, radioactive materials, waste waters, sludge, slag and any other
waste), as defined in or regulated by any Environmental Laws or as determined by
any Governmental Authority.
(q)"Intangible Property" shall mean all patents, trademarks, service
marks, trade names, copyrights, inventions, know how, trade secrets, products or
other developments in progress and other intangible property owned or used
pursuant to a license agreement or otherwise, by the Corporation in the conduct
of the Business.
(r)"Liabilities" shall mean all liabilities and obligations of every
nature of the Corporation as of the Effective Time, whether absolute, accrued,
contingent, known, unknown, matured, unmatured or otherwise, which are required
to be disclosed or provided for in the Corporation's Financial Statements in
accordance with GAAP, including but not limited to (A) all indebtedness for
borrowed monies, (B) all net trade accounts payable, (C) all liabilities and
obligations accrued on the Corporation's financial statements or pursuant to any
agreement to which the Corporation is a party and (D) any liability for Taxes
(taking into account that the Corporation is an S Corporation under the Code),
but excluding all obligations accruing after the Effective Time including but
not limited to (i) the Real Property Leases, (ii) any capital leases of the
Corporation and (iii) the Vehicle Leases.
(s)"Net Book Value of Rental Merchandise" shall mean the net book value
of Rental Merchandise of the Corporation which is in conformance to the
representations and warranties with respect to such Rental Merchandise set forth
in Section 4.16(c), as determined in accordance with GAAP applied on a
consistent basis and calculated using original cost depreciated on straight line
basis in the manner disclosed in the Financial Statements.
(t)"Non-Compliance Claim" shall mean any claim, suit, litigation or
proceeding by any Person alleging that any business practice, procedure or
transaction ("Business Practice") of the Corporation failed to comply with any
Governmental Requirement applicable to the Corporation prior to the Closing
Date. "Excluded Non-Compliance Claim" shall mean any Non-Compliance Claim (A)
where the Business Practice giving rise to such Non-Compliance Claim was a
Business Practice engaged in by the Corporation which Buyer also engaged in
prior to the Closing Date in a state the Governmental Requirements of which such
Non-Compliance Claim alleges were not complied with; or (B) where the Business
Practice giving rise to such Non-Compliance Claim shall not have been
discontinued by the Corporation and Buyer within 60 days following the Closing
Date ("60-Day Period") with written notice thereof by Buyers to Sellers to have
been given within the 60-Day Period setting forth in reasonable detail the
Business Practice discontinued. If any Non-Compliance Claim is asserted prior to
the expiration of the 60-Day Period, Clause (B) of this Section shall not apply
at all.
(u)"Permits" shall mean all licenses, permits and other authorizations
used in the Business.
(v)"Person" shall mean any Governmental Authority, individual,
corporation, partnership, trust or other entity.
(w)"Proceeding" shall mean any action, order, writ, injunction,
judgment, decree, claim, suit, litigation, dispute, grievance, arbitral action,
investigation or other proceeding.
(x)"Purchase Price" shall mean $88,500,000 payable in cash, (i) less
Liabilities net of any cash of the Corporation as of the Effective Time, (ii)
less the Cash Credit as provided for in Section 6.6(c) and (iii) less the
amount, if any, that the Net Book Value of Rental Merchandise as of the
Effective Time is less than $18,000,000, subject to adjustment after the Closing
in accordance with Section 2.2(b).
(y)"Real Property" shall mean all real property currently owned or
leased by the Corporation or which the Corporation previously owned in the past
10 years.
(z)"Release" shall mean any spillage, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment in violation of any Environmental Laws.
(aa) "Rental Contracts" shall mean all rental and rental-purchase
contracts relating to the Business, which are duly signed by a customer and made
in the ordinary course of business, providing for the rental to customers of
furniture, appliances, electronic equipment and/or other personal property.
Rental Contracts shall not include rental and rental-purchase contracts that
customers entered into as a part of a promotion or other marketing strategy that
did not require the customer to pay at least one week's rent prior to delivery
of the rental property; provided, however, that this exclusion shall not apply
to any rental or rental-purchase contracts for which a free rental period has
expired and the customer has paid at least one week's rent prior to Closing.
(bb) "Rental Merchandise" shall mean all merchandise of the Business
which is the subject of a Rental Contract or which is maintained by the
Corporation for the Business for rent or rental purchase by customers.
(cc) "Rental Purchase Contracts" shall mean those Rental Contracts which
permit customers to acquire ownership of the rental merchandise.
(dd) "Representative" shall mean any officer, director, principal,
attorney, accountant, agent, employee or other representative of any Person.
(ee) "Shares" shall mean all of the issued and outstanding shares of
stock of the Corporation.
(ff) "Store Locations" shall mean the rental store locations set forth
on Schedule 1.1(af).
(gg) "Tangible Personal Property" shall mean all tangible personal
property (other than Rental Merchandise) used to conduct the Business,
including, without limitation, vehicles, computers, modems, printers, fax
machines, file cabinets, desks, calculators, telephone systems, counters, safes
and security systems, together with any transferable manufacturer or vendor
warranties related thereto.
(hh) "Tax" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, start-up, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, intangible property, sales, use,
transfer, registration, value added, alternative or add-on minimum, or other tax
of any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not.
(ii) "Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and any amendment thereof.
(jj) "Vehicle Leases" shall mean the leases, as amended to date, listed
on Schedule 1.1(aj) under which the Corporation leases vehicles for use in the
Business.
1.2Other Defined Terms. The following terms shall have meanings defined
for such terms in the Sections set forth below:
Term Section
Accounts Receivable 4.20
Allocation Statement 10.3(b)
Bank Accounts 4.22
Bank Payoff 2.3(c)
Benefit Arrangement 4.23(m)
Business Reports 4.5
Buyer's Accountant 2.2(b)
Buyer's Audit 2.2(b)
Business Practice 1.1(t)
Cash Credit 6.8(b)(iii)
Closing 3.1
Closing Certificate 2.2(b)
Closing Financials 6.8(a)
COBRA 4.23(h)
Confidentiality Agreement 6.2
Corporate Records 10.1
Default 2.5(b)
Deposit 2.5(a)
Effective Time 3.1
Employee Plans 4.23(a)
ERISA Affiliate 4.23(e)
Escrow Agent 2.3(b)
Escrow Funds 2.3(b)
Estimated Allocation Statement 10.3(b)
Excluded Non-Compliance Claim 1.1(t)
Final S Period(s) Tax Returns 10.3(c)
Financial Statements 4.9
HSR Act 6.7
Indemnified Party 9.2(c)
Indemnifying Party 9.2(c)
Indemnifying Sellers 9.2(a)
Indemnity Escrow Amount 2.3(b)
Intangible Assets 10.3(b)
Internal Financial Statements 4.9
Litigation Expenses 9.2(a)
Losses 9.2(a)
New Bank Accounts 6.8(e)
Non-Compete Agreement 6.5
Pension Plans 4.23(a)
Real Property Leases 4.10
Restricted Sellers 6.6
Section 338 Elections 10.3(a)
Sellers' Agent 11.5
Sellers' Banks 2.3(c)
Third-Party Accountants 2.2(b)
Welfare Plans 4.23(a)
60-Day Period 1.1(t)
1.3Usage of Terms. Except where the context otherwise requires, words
importing the singular number shall include the plural number and vice versa.
1.4References to Articles, Sections, Exhibits and Schedules. All
references in this Agreement to Articles, Sections (and other subdivisions),
Exhibits and Schedules refer to the corresponding Articles, Sections (and other
subdivisions), Exhibits and Schedules of or attached to this Agreement, unless
the context expressly, or by necessary implication otherwise requires.
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1Transfer of Shares. Subject to the terms and conditions contained in
this Agreement, on the Closing Date Sellers shall sell, convey, transfer, assign
and deliver to Buyer, and Buyer shall acquire from Sellers, the Shares, free and
clear of all Encumbrances.
2.2Purchase Price; Post-Closing Adjustment.
(a)At the Closing (as hereinafter defined) Buyer shall pay to Sellers
for the sale, assignment and delivery of the Shares an amount equal to the
Purchase Price as provided in Sections 2.2 and 2.3.
(b)Three (3) days prior to the Closing Date, Sellers shall deliver to
Buyer a certificate, certified by an executive officer of the Corporation (the
"Closing Certificate"), setting forth (i) a pro forma estimate of the
Liabilities, net of cash, as of the Effective Time, and (ii) a pro forma
computation of the Net Book Value of Rental Merchandise as of the Effective
Time. The Closing shall proceed, and all preliminary adjustments to the Purchase
Price shall be made, based on the Closing Certificate.
There shall be conducted within seventy-five (75) days following the
Closing Date an audit by Buyer's certified public accountants ("Buyer's
Accountants") of the Corporation's financial statements and Business Records
pursuant to which Buyer's Accountants shall determine (i) the Liabilities, net
of cash, of the Corporation as of the Effective Time, and (ii) the Net Book
Value of Rental Merchandise of the Corporation as of the Effective Time (the
"Buyer's Audit"). The Buyer's Audit shall be conducted in a manner consistent
with Section 6.8(a). Buyer shall report any increase or any decrease in the
amount of the Liabilities together with any change in the Net Book Value of
Rental Merchandise to Sellers as soon as discovered during Buyer's Audit. As
promptly as reasonably possible, but in any event not later than ninety (90)
days after the Closing Date, Buyer shall deliver the Buyer's Audit report to
Sellers.
Sellers shall have fifteen (15) days after receipt of Buyer's Audit
report (A) to object to any reported increase in the amount of Liabilities, net
of cash, and (B) to object to any reported changes in the Net Book Value of
Rental Merchandise. If Sellers do not so object, within such 15-day period, to
any changes in the Net Book Value of Rental Merchandise, the Purchase Price
shall be further reduced by the difference, if positive, between the Net Book
Value of Rental Merchandise set forth in the Closing Certificate and the Net
Book Value of Rental Merchandise as determined in the Buyer's Audit report;
provided, however, that such dollar-for-dollar reductions in the Purchase Price
shall only occur if the Net Book Value of Rental Merchandise set forth in the
Closing Certificate is below $18,000,000. Otherwise, such dollar-for-dollar
reduction in the Purchase Price shall not occur unless and until, and, in such
event, only to the extent that the Net Book Value of Rental Merchandise, as
calculated after the Buyer's Audit is below $18,000,000. In addition, if (A) the
amount of Liabilities, net of cash, as finally determined pursuant to this
Section 2.2(b) is in excess of the Liabilities, net of cash, set forth on the
Closing Certificate, the Purchase Price shall be further reduced by such amount
or (B) the amount of the Liabilities, net of cash, as finally determined
pursuant to this Section 2.2(b) is less than the Liabilities, net of cash, set
forth on the Closing Certificate, the Purchase Price shall be increased by an
amount equal to the amount by which the amount of the Liabilities, net of cash,
set forth on the Closing Certificate exceed the sum of the Liabilities, net of
cash, as finally determined pursuant to this Section 2.2(b).
In addition to the foregoing, the Buyer's Audit shall review whether or
not the parties' allocation of revenues and expenses provided for in Section 6.8
has been properly effectuated. In the event that any correction shall be
required (which shall not have previously been made), it shall be taken into
account in determining any final Purchase Price adjustment.
If Buyer and Sellers are unable to reach agreement as to any final
Purchase Price adjustment within 15 days after the end of Sellers' 15-day review
period, then Deloitte & Touche or, if they are unwilling to be engaged as
contemplated hereby, such other firm of certified public accountants as mutually
agreed to by Buyer and Sellers (the "Third-Party Accountants") shall promptly be
retained to undertake the determination of any adjustments to the Purchase Price
necessary under this Section 2.2(b), which determination shall be made as
quickly as possible. Such determination of the Third-Party Accountants shall be
final and binding upon Buyer and Sellers, and all expenses of the Third-Party
Accountants shall be borne equally by Sellers, on the one hand, and Buyer, on
the other hand.
The amount of any final adjustment to the Purchase Price shall be
payable by Sellers or Buyer, as the case may be, within five (5) days after the
parties have agreed upon the amount of any such adjustment or within five (5)
days after any final determination by the Third-Party Accountants. Any
adjustments to the Purchase Price pursuant to this Section 2.2(b) payable by
Sellers shall be borne by the Sellers in proportion to the percentages set forth
on Exhibit A, and shall be payable from the Escrow Funds (as defined in Section
2.3(b)).
2.3Payment of Purchase Price. On the Closing Date, Buyer shall pay the
Purchase Price to Sellers as follows:
(a)Buyer shall pay the Purchase Price (as adjusted, if applicable) minus
the Escrow Funds and minus the Deposit, to the Sellers as provided for in
Exhibit A hereto.
(b)Buyer shall deliver to Manufacturers and Traders Trust Company,
Buffalo, New York (the "Escrow Agent") $2,500,000 (the "Escrow Funds") by wire
transfer as instructed by the Escrow Agent in a letter delivered to Buyer not
less than two days prior to the Closing, such funds to be held (i) to pay for
any adjustments in the Purchase Price pursuant to Section 2.2 and (ii) to
provide partial security for Sellers' indemnity obligations in Article 9 hereof.
The Escrow Funds shall be held as follows: $1,500,000 shall be held until the
audit of the Corporation's financial statements and Business Records pursuant to
Section 2.2 shall have been completed, and $1,000,000 (the "Indemnity Escrow
Amount") shall be held for a period of one (1) year after the Closing Date.
Seller and Buyer agree to jointly direct the release of the Escrow Funds, other
than the Indemnity Escrow Amount, as soon as practical after the Purchase Price
adjustment and Buyer's Audit are completed under Section 2.2. The Indemnity
Escrow Amount, as well as the other Escrow Funds, shall be held and disbursed in
accordance with, and pursuant to, the terms and conditions of an Escrow
Agreement among Seller, Buyer and Escrow Agent in substantially the form of
Exhibit B.
(c)At the Closing, Buyer shall pay to State Street Bank and Trust Company
and ▇▇▇▇▇▇▇ Bank, N.A. ("Sellers'Banks") an amount equal to the indebtedness of
the Corporation to Sellers' Banks as of the Closing Date (the "BankPayoff").
2.4Sales Taxes. Sellers shall be responsible for any transfer, sales or
use tax imposed by reason of the transfer of the Shares provided hereunder.
2.5Deposit. (a) Buyer will deliver to ▇▇▇▇ and Sellers' counsel a check
for $500,000 (the "Deposit") payable to ▇▇▇▇ upon the execution of this
Agreement by Sellers. Subject to Paragraph (b) below, the Deposit shall be held
by ▇▇▇▇ and Sellers' counsel (on behalf of Sellers) until the Closing of the
transactions provided for in this Agreement, in which case the Deposit shall be
credited against payment of the Purchase Price.
(b)If the Closing does not occur, the Deposit shall be either retained
by ▇▇▇▇ (on behalf of Sellers) or returned to Buyer, as follows:
i. If all of the conditions to Buyer's
obligations to consummate the transactions
provided for in this Agreement except for
those set forth in Sections 8.5 and 8.7
shall have been satisfied by February 2,
1998, and Buyer exercises its rights under
Article 8 hereof not to close because the
conditions in either Section 8.5 or 8.7
shall have not been satisfied, then ▇▇▇▇ (on
behalf of Sellers) may retain the Deposit
and Buyer shall have no further claim or
interest in the Deposit; or
ii. If any of the conditions to Buyer's
obligations to consummate the transactions
provided for in this Agreement, excluding
those set forth in Sections 8.5 and 8.7,
shall not have been satisfied by March 13,
1998, and Buyer exercises its rights under
Article 8 hereof not to close, then Buyer
may so notify ▇▇▇▇, and ▇▇▇▇ shall then
return the Deposit to Buyer (without
interest) within ten (10) days after such
notice from Buyer; or
iii. If the conditions to Sellers' obligations to
consummate the transactions provided for in
this Agreement which are set forth in
Sections 7.1, 7.4, 7.5, 7.6 and 7.7 shall
have been satisfied, and Sellers exercise
their rights under Article 7 hereof not to
close, because the conditions set forth in
Section 7.2 or Section 7.3 shall not have
been satisfied, then ▇▇▇▇ shall return the
Deposit to Buyer within ten (10) days after
notice from Buyer; or
iv. If the conditions to Sellers' obligations to
consummate the transactions provided for in
this Agreement which are set forth in
Sections 7.1, 7.4, 7.5, 7.6 and 7.7 shall
not have been satisfied, and Sellers
exercise their rights under Article 7 hereof
not to close unless clause (ii) of this
Paragraph (b) shall also apply, then ▇▇▇▇
may retain the Deposit and Buyer shall have
no further claim or interest in the Deposit.
If clause (ii) shall also apply, then the
Deposit shall be returned to Buyer as set
forth therein.
v. Notwithstanding the provisions of clause (i)
- (iv) of this Paragraph (b), (A) if Sellers
or the Corporation shall breach or be in
default of any material covenant of Sellers
or the Corporation set forth in this
Agreement and shall not have cured such
breach or default within ten (10) days after
notice from Buyer ("Default"), then ▇▇▇▇
shall be required to return the Deposit
(without interest) to Buyer within ten (10)
days after notice of Sellers' Default from
Buyer; or (B) if Buyer shall breach or be
in default of any material covenant of Buyer
set forth in this Agreement and shall
not have cured such breach or default within
ten (10) days after notice from ▇▇▇▇,
then ▇▇▇▇ may retain the Deposit.
(c)The parties agree that, in the event that the Closing does not occur
as a result of Buyer's conditions in Sections 8.5 and 8.7 not being satisfied by
February 2, 1998, and the Deposit is to be retained by Sellers, the payment by
Buyer and retention by the Sellers of the Deposit as provided for in this
Section 2.5 shall constitute Sellers' sole and exclusive remedy on account of
any failure by the Buyer to consummate the purchase of the Shares, under this
Agreement or on any other legal basis.
(d)The obligations and provisions of this Section 2.5 shall survive the
termination of this Agreement.
ARTICLE 3
CLOSING
3.1Closing. The consummation of the transactions contemplated in this
Agreement (the "Closing") shall be held at 9:00 a.m. local time on the Closing
Date at the offices of Holland & Knight, LLP, Orlando, Florida, or at such other
place as shall be agreed to by Sellers and Buyer, and the Closing shall be
effective as of the close of business on the Closing Date (the "Effective
Time").
3.2Stock Certificates and Instruments of Assignment. To effect the
transfer referred to in Section 2.1 on the Closing Date, Sellers shall deliver
to Buyer, each certificate representing any of the Shares held by Sellers and
all stock powers or other instruments of assignment reasonably requested by
Buyer. Such instruments of assignment shall be in form and substance, and shall
be executed and delivered in a manner, satisfactory to Buyer.
3.3Purchase Price; Certificates and Agreements. On the Closing Date,
Buyer shall deliver and tender the Purchase Price to Sellers and make the other
payments provided for in Article 2. Buyer and Sellers shall deliver the
certificates, agreements and other items described in Articles 7 and 8 of this
Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE CORPORATION
Sellers and the Corporation, jointly and severally, represent and
warrant to Buyer that the following are true, correct and complete on the date
of this Agreement, and shall be true, correct and complete as of the Closing
Date:
4.1Organization and Good Standing. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. Schedule 4.1 sets forth each jurisdiction other than Florida where the
Corporation is qualified to do business and each trade name or assumed name used
by the Corporation in the conduct of the Business. The Corporation is duly
qualified to do business in, and in good standing under the laws of, each
jurisdiction in which such qualification is necessary under the applicable laws
as a result of the conduct of its respective business or the ownership of its
respective properties. Except as disclosed on Schedule 4.1, the Corporation has
full power and authority to conduct its business as it is presently being
conducted and to own and lease its properties and assets. The Corporation has no
subsidiaries. The Corporation conducts the Business directly and not through any
association, joint venture, partnership or other business entity.
4.2Authority; Authorization; Binding Effect. Sellers and the Corporation
have all necessary power and authority and have taken all action necessary to
execute and deliver this Agreement and the instruments to be executed and
delivered pursuant hereto, to consummate the transactions contemplated by this
Agreement and to perform their obligations under this Agreement. This Agreement
has been duly executed and delivered by Sellers and the Corporation and
constitutes a legal, valid and binding obligation of Sellers and the Corporation
enforceable against Sellers and the Corporation in accordance with its terms,
except as enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors
rights generally and (ii) the discretion of the appropriate court with respect
to specific performance, injunctive relief or other forms of equitable remedies.
4.3No Conflicts, Violations or Proceedings. The execution and delivery
of this Agreement, the consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not and will not result in
(i) a violation of or conflict with any provision of the Articles of
Incorporation, Bylaws or other organization certificates or documents of the
Corporation, (ii) a breach of, or a default under, any material term or
provision of any contract, agreement, indebtedness, encumbrance, commitment,
license, franchise, permit, authorization or concession relating to the Business
to which Sellers or the Corporation is a party, (iii) a violation by Sellers or
the Corporation in any material respect of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award or (iv) an
imposition of any Encumbrance on any of the Shares. There is no pending or, to
the knowledge of Sellers or the Corporation, threatened or anticipated
Proceeding against, relating to or affecting the transactions contemplated by
this Agreement.
4.4No Consents or Approvals. Except as otherwise set forth on Schedule
4.4, no consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Authority or any other Person is required to
be made or obtained by Sellers or the Corporation in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated by this Agreement.
4.5Customer/Account Information. The Corporation has delivered to Buyer
the reports set forth on Schedule 4.5 (the "Business Reports"). The Business
Reports are true and correct in all material respects.
4.6Title to Shares. On the Closing Date, Sellers shall own all of the
Shares issued in their names free of any Encumbrance and subject to no
restrictions with respect to transferability, other than restrictions generally
applicable under federal or state securities laws.
4.7Capitalization. Schedule 4.7 sets forth the authorized, issued and
outstanding shares of capital stock of the Corporation, the legal and beneficial
ownership thereof and any Encumbrances thereon. All of the Shares are duly
authorized, validly issued, fully paid and nonassessable, and were issued in
compliance with all applicable laws. All voting rights with respect to the
Corporation are vested in the Shares. Except as set forth in Schedule 4.7, (a)
there are no outstanding shares of capital stock of the Corporation, or
outstanding securities convertible into or exchangeable or exercisable for
shares of capital stock of the Corporation, (b) there are no bonds, debentures,
notes, or other indebtedness having the right to vote on any matters on which
the Corporation's shareholders may vote, (c) there are no outstanding options,
warrants, rights, contracts, commitments, understandings or arrangements by
which the Corporation is bound to issue, repurchase or otherwise acquire or
retire any capital stock of the Corporation, (d) there are no voting agreements,
voting trusts, buy-sell agreements, options or rights or obligations relating to
the shareholders or the capital stock of the Corporation, and (e) except for
certain provisions of this Agreement, there are no agreements between Sellers
and the Corporation which will survive the Closing. Upon consummation of the
transactions contemplated by this Agreement, Buyer will acquire the Shares, free
of any Encumbrance.
4.8Corporate Records. Except as set forth on Schedule 4.8, the minute
books of the Corporation are complete and accurate and contain a complete and
accurate record of all material meetings and actions of shareholders and
directors and of any executive committee or other committee of the shareholders
or board of directors. The stock record book of the Corporation is complete and
accurate and contains a complete and accurate record of all share transactions
for the Corporation from the date of its incorporation. True and complete copies
of the Business Records, the minute book and stock record book of the
Corporation have been made or will be made available for review by Buyer.
4.9Financial Statements. The Corporation and Sellers have delivered or
will deliver to Buyer (a) financial statements of the Corporation for each of
the years in the two-year period ended December 28, 1996 (consisting of a
balance sheet, statement of income, profit and loss and a statement of cash
flows), which have been audited by the Corporation's accountants (the "Financial
Statements") and (b) unaudited internal financial statements of the Corporation
(consisting of a balance sheet, statement of income, profit and loss and a
statement of cash flows) for the 12-month period ended December 27, 1997 (the
"Internal Financial Statements"). Except as set forth on Schedule 4.9, the
Financial Statements and the Internal Financial Statements fairly present the
financial condition and the results of operations of the Corporation as of their
respective dates and for the periods then ended, and the Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis. The
books and records of the Corporation fairly reflect the assets, liabilities and
operations of the Corporation in accordance with GAAP, and the Financial
Statements and the Internal Financial Statements are in conformity therewith,
except that the Internal Financial Statements do not contain footnotes and are
subject to customary year-end adjustments applied on a basis consistent with the
Corporation's past experience.
4.10 Real Property. Schedule 4.10 lists and describes briefly all Real
Property. Except as set forth on Schedule 4.10, in the past ten years the
Corporation has not owned any Real Property and currently owns no Real Property.
The Corporation will deliver to Buyer correct and complete copies of the leases
and subleases, as amended to date, for the Real Property (the "Real Property
Leases"). With respect to each Real Property Lease: (i) the lease or sublease is
legal, valid, binding, enforceable and in full force and effect, (ii) the lease
or sublease will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby, provided, however, that certain leases may
require the landlord's consent to the sale of stock contemplated by this
Agreement, (iii) to the knowledge of the Corporation and Sellers no party to the
lease or sublease is in breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default or permit
termination, modification or acceleration thereunder, (iv) the Corporation has
not assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered
any interest in the leasehold or subleasehold and (v) to the knowledge of the
Corporation and Sellers, all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules and
regulations.
4.11 Tangible Personal Property. Except as set forth on Schedule 4.11,
Schedule 4.11, lists all Tangible Personal Property owned or leased by the
Corporation as of December 31, 1997. To Sellers' and the Corporation's
knowledge, the Tangible Personal Property constitutes all the material tangible
personal property used in the operation of the Business and necessary to conduct
the Business as presently conducted. Except as set forth on Schedule 4.11, the
Tangible Personal Property owned by the Corporation is free and clear of all
Encumbrances. All of the Tangible Personal Property is located at the Real
Property. EXCEPT AS EXPRESSLY SET FORTH ABOVE IN THIS SECTION 4.11, THE
CORPORATION AND THE SELLERS MAKE NO EXPRESS WARRANTIES REGARDING THE TANGIBLE
PERSONAL PROPERTY SET FORTH IN SCHEDULE 4.11 AND EXPRESSLY DISCLAIMS THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
4.12 Intangible Property. Schedule 4.12, lists all Intangible Property
other than software (which is listed on Schedule 4.11). Except as set forth on
Schedule 4.12, (i) the Intangible Property is legally and beneficially owned
exclusively by the Corporation and is used exclusively by the Corporation and is
not the subject of any pending or threatened proceeding for opposition,
cancellation, reexamination, revocation or rectification and there are no facts
or matters which might give rise to any such proceeding. The use by the
Corporation of the Intangible Property is not infringing upon or otherwise
violating the rights of any third party in or to such Intangible Property, and
no proceedings have been instituted against, and no notices have been received
by, the Corporation that are presently outstanding alleging that the use by the
Corporation of the Intangible Property infringes upon or otherwise violates any
rights of a third party in or to such Intangible Property. The consummation of
the transactions contemplated by this Agreement will not result in the loss of
or impairment of any of the Corporation's rights in the Intangible Property.
Except as set forth on Schedule 4.12, no shareholder, director, officer or
employee of the Corporation owns, directly or indirectly, in whole or in part,
any right in the Intangible Property that the Corporation has used or the use of
which is necessary for the Business as now conducted.
4.13 Compliance with Laws; Permits. (a) Except as set forth in Schedule
4.13, to the knowledge of Sellers and the Corporation, the Corporation and the
conduct of the Business has duly complied with and is in substantial compliance
with all Governmental Requirements. Except as set forth in Schedule 4.13, the
Corporation has not received any notice to the effect that, or otherwise been
advised that, the Corporation is not in compliance with any Governmental
Requirement.
(b)Except as set forth in Schedule 4.13, to the best of Sellers'
knowledge, the Permits set forth on Schedule 4.13 constitute all material
permits, consents, licenses, franchises, authorizations and approvals of any
Governmental Authority or other Person (a) which are used in the operation of
the Business and (b) which are necessary to conduct the Business as presently
conducted, other than those the failure of which to obtain would not have a
material adverse effect on the Business, assets or financial condition of the
Corporation. All of the Permits are valid and in full force and effect, no
violations thereof have been issued or are anticipated and no proceeding is
pending, or to the knowledge of the Corporation or Sellers threatened, to revoke
or limit any of them. Except as set forth on Schedule 4.13, the consummation of
the transactions contemplated by this Agreement do not and will not violate or
render any of the Permits invalid, require any amendment or reissuance of any of
the Permits or require the consent of the Governmental Authority which has
issued any of the Permits.
4.14 Litigation. Except as set forth in Schedule 4.14, there is no
claim, legal action, suit, arbitration, Governmental Authority investigation or
other legal or administrative proceeding, or any order, decree, or judgment
pending, or to the knowledge of the Corporation and Sellers threatened, against
or relating to the Corporation, its officers, directors or employees, or its
properties, assets or business. Except as set forth in Schedule 4.14, neither
Sellers nor the Corporation knows of any basis or grounds for any such claim,
legal action, suit, arbitration, Governmental Authority investigation or other
legal or administrative proceeding. None of the matters disclosed in Schedule
4.14 has or will have a material adverse affect on the Business or financial
condition of the Corporation.
4.15 Tax Matters. Except as set forth on Schedule 4.15, the Corporation
has filed all Tax Returns relating to the Business that it was required to file.
All such Tax Returns were correct and complete in all respects. The shareholders
of the Corporation have elected to be treated, for federal Tax purposes, as a
corporation under Subchapter S of the Code. Except as set forth on Schedule
4.15, all Taxes owed by the Corporation and the Sellers (whether or not shown on
any Tax Return) prior to the date hereof have been paid in full. There are no
Encumbrances on any of the Shares that arose in connection with any failure (or
alleged failure) to pay any Tax. The Corporation has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other third
party. Except as set forth on Schedule 4.15, there are no federal, state, local
or foreign tax liens upon any of the properties or assets of the Corporation or
the Shares, and there are no unpaid taxes which are or could become a lien on
the properties or assets of the Corporation or the Shares, except for current
taxes not yet due and payable. The Corporation has delivered, or will deliver
upon execution of this Agreement, copies of all federal and state tax returns
and reports filed by the Corporation in the past three years (1994, 1995 and
1996).
4.16 Rental Contracts; Rental Merchandise.
(a)The Rental Contracts of the Corporation in all material respects: (i)
are in full force and effect according to their terms and (ii) to Sellers' and
Corporation's knowledge, comply in all respects with the laws of each state the
laws of which may apply to such Rental Contract.
(b)The Net Book Value of Rental Merchandise as of the close of business
on the day before the Closing Date will be greater than or equal to $18,000,000;
provided, however, that Buyer's sole remedy in the event that such
representation is not true as of the Closing Date shall be to accept the
adjustment of the Purchase Price as provided in Section 2.2(b) and to proceed
with the Closing.
(c)The Rental Merchandise is in good, merchantable and usable condition,
ordinary wear and tear excepted. Sellers and the Corporation have delivered to
Buyer or will deliver to Buyer upon execution of this Agreement, an itemized
list of all of the Rental Merchandise as of December 27, 1997 showing the date
of purchase, the supplier, the cost, description of each item sufficient to
identify it to Buyer, and the location of each item. For purposes of this
Section, the term "good, merchantable and usable" shall mean merchandise which
is in good condition and of the quality regularly rented to customers of the
Corporation in the usual course of the Business.
4.17 Employees. Schedule 4.17 identifies all employees of the Business.
To the knowledge of the Corporation and Sellers, the Corporation is in
compliance with all applicable laws respecting employment practices, terms and
conditions of employment, management-labor relations and wages and hours which
are in effect as of the date of this Agreement. The Corporation is not a party
to any labor agreement with any labor organization. There is no unfair labor
practice, charge or complaint against the Corporation pending or, to the
knowledge of Sellers and the Corporation, threatened before any Governmental
Authority. There is no labor strike or labor disturbance pending or threatened
against the Corporation nor is any material grievance currently being asserted.
The Corporation has not experienced a work stoppage or work slowdown at any time
during the three (3) years immediately preceding the date of this Agreement.
There is no organizational campaign being conducted and no dispute as to the
representation of any employees of the Corporation. The Corporation has good
business relations with its employees at the store manager level and above and
there is no reason to believe that the transactions contemplated by this
Agreement will adversely affect such business relations.
4.18 Customers. To the best of Sellers' knowledge, no records of
customers who have rented merchandise from the Corporation within the last two
years have been destroyed. The customer lists of the Business accurately
identify the customers of the Business in all material respects. All
transactions with customers have been and are currently conducted on an arm's
length basis.
4.19 Environmental Matters. Except as disclosed in Schedule 4.19, to the
knowledge of the Sellers and the Corporation, the Corporation, its assets and
its operations are now and, at all times prior to the Closing Date, have been in
compliance with all Environmental Laws. To the knowledge of the Sellers, there
has been and is no Release or threatened Release of any Hazardous Substance at,
on, under, in, to or from any of the Real Property (or, to the knowledge of the
Corporation at, on, under, in, to or from any of the Real Property) whether as a
result of or in connection with the operations and activities at the Real
Property or otherwise, except as disclosed in Schedule 4.19. Neither the
Corporation nor Sellers have received any notice of alleged, actual or potential
responsibility for, or any inquiry or investigation regarding, the presence,
Release or threatened Release of any Hazardous Substance at any location,
whether at the Real Property or otherwise, which Hazardous Substances were
allegedly manufactured, used, generated, processed, treated, stored, disposed or
otherwise handled at or transported from the Real Property or otherwise, except
as set forth in Schedule 4.19. Neither the Corporation, nor Sellers have
received any notice of any other claim, demand or action by any Person alleging
any actual or threatened injury or damage to any Person, property, natural
resource or the environment arising from or relating to the presence, Release or
threatened Release of any Hazardous Substances at, on, under, in, to or from the
Real Property or in connection with any operations or activities thereat, except
as set forth on Schedule 4.19. To the knowledge of Sellers and the Corporation,
neither the Real Property nor any operations or activities thereat is or has
been subject to any judicial or administrative proceeding, order, consent,
agreement or any lien relating to any Environmental Laws or Environmental
Claims. Except as set forth on Schedule 4.19, to the knowledge of the Sellers
and the Corporation, (a) there are no underground storage tanks presently
located at the Real Property and there have been no releases of any Hazardous
Substances from any underground storage tanks or related piping at the Real
Property, (b) there are no PCBs located at, on or in the Real Property and (c)
there is no asbestos or friable asbestos-containing material located at, on or
in the Real Property. The Corporation has delivered to Buyer or its
Representatives copies of all information requested by Buyer which has been
supplied by or on behalf of the Corporation to any Governmental Authority having
the duties of regulation, registration, authorization or enforcement of or under
any Environmental Laws.
4.20 Accounts Receivable. Except as set forth on Schedule 4.20, all of
the accounts or notes receivable of the Corporation excluding amounts due under
any Accounts (the "Accounts Receivable") are bona fide receivables, arose during
the ordinary course of the Business and will be collected at their full face
amount, net of reserves. Except as set forth on Schedule 4.20, no Person has any
liens on the Accounts Receivable, there is no right of off-set on any of the
Accounts Receivable, and no agreement for reduction or discount has been made
with respect to any of the Accounts Receivable.
4.21 RESERVED.
4.22 Bank Accounts. Schedule 4.22 contains true, complete and correct
lists of all bank accounts and safe deposit boxes maintained by the Corporation
(the "Bank Accounts"), and all persons entitled to draw thereon, to withdraw
therefrom, or with access thereto.
4.23 Employee Benefits Plans.
(a)Attached hereto as Schedule 4.23(a)(1), is a list identifying each
"employee pension benefit plan," as defined in Section 3(2) of ERISA (the
"Pension Plans") and as Schedule 4.23(a)(2), a list identifying each "employee
welfare benefit plan," as defined in Section 3(1) of ERISA, (the "Welfare
Plans") that, in either case, are maintained, administered or contributed to by
the Corporation, or which cover any employee or former employee of the
Corporation. Collectively, the Pension Plans and the Welfare Plans shall
hereafter be referred to as the "Employee Plans." Except as otherwise identified
on Schedule 4.23(a)(1) and Schedule 4.23(a)(2) and on Schedule 4.23(m), (i) no
Employee Plan or Benefit Arrangement (as defined in Section 4.23(m) of this
Agreement) is maintained, administered or contributed to by any entity other
than the Corporation, and (ii) no Employee Plan is maintained under any trust
arrangement which covers any employee benefit arrangement which is not an
Employee Plan.
(b)Sellers have delivered or will deliver to Buyer true and complete
copies of (i) the Employee Plans (and related trust agreements and other funding
arrangements, if any, and adoption agreements, if any), (ii) any amendments to
the Employee Plans, (iii) written interpretations of the Employee Plans to the
plan administrator of such Plan (iv) material employee communications by the
plan administrator of any Employee Plan (including, but not limited to, summary
plan descriptions and summaries of material modifications as defined under
ERISA), and (v) the three most recent annual reports (e.g., the complete Form
5500 series) prepared in connection with each Employee Plan (if any such report
was required), including all attachments (including without limitation the
actuarial valuation reports).
(c)To the knowledge of the Corporation and the Sellers, each Employee
Plan has been maintained in all material respects in compliance with its terms
and the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to, ERISA and the Code, which are
applicable to such Employee Plan.
(d)To the knowledge of the Corporation and the Sellers, there are no
pending or, to the knowledge of the Corporation or the Sellers, threatened
claims, suits or other proceedings by any employees, former employees or plan
participants or the beneficiaries, spouses or representatives of any of them,
against any Employee Plan, the assets held thereunder, the trustee of any such
assets, or the Corporation relating to any of the Employee Plans, any other
employee benefit plans, contracts or arrangements, other than ordinary and usual
claims for benefits by participants or beneficiaries. Furthermore, there are no
pending or, to the knowledge of the Corporation or the Sellers, threatened
suits, investigations or other proceedings by any federal, state, local or other
governmental agency or authority of or against any Employee Plan, the trustee of
any assets held thereunder, or the Corporation relating to any of the Employee
Plans, any other employee benefit plans, contracts or arrangements. If any of
the actions described in this subsection are initiated prior to the Closing
Date, the Sellers shall notify the Buyers of such action prior to the date of
Closing.
(e)No liability has been incurred by the Corporation or by a trade or
business, whether or not incorporated, which is deemed to be under common
control or affiliated with the Corporation within the meaning of Section 4001 of
ERISA or Sections 414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate") for
any tax, penalty or other liability with respect to any Employee Plan and, to
the knowledge of the Corporation or the Sellers, such Plans do not expect to
incur any such liability prior to the date of Closing. The Corporation, for all
periods ending on the prior to the date of this Agreement, have administered,
and between the date of this Agreement and the date of Closing, will administer
each Employee Plan in compliance with the reporting, disclosure, fiduciary and
all other requirements applicable thereto under ERISA, the Code or any other
applicable law.
(f)To the knowledge of the Corporation and Sellers, the Corporation or
the Sellers have not engaged in any transaction or acted or failed to act in a
manner that violates the fiduciary requirements of Section 404 of ERISA with
respect to any Employee Plans, and will not so engage, act or fail to act prior
to the date of Closing. To the knowledge of the Corporation and the Sellers, the
Corporation or the Sellers have not engaged in any "prohibited transaction"
within the meaning of Section 406(a) or 406(b) of ERISA, or of Section 4975(c)
of the Code with respect to any Employee Plan. Furthermore, to the knowledge of
the Corporation or the Sellers, no other "party in interest," as defined in
Section 3(14) of ERISA, or "disqualified person," as defined in Section
4975(e)(2) of the Code, has engaged in any such "prohibited transaction."
(g)No Employee Plan provides benefits, including without limitation,
death, disability, or medical benefits (whether or not insured), with respect to
current or former employees of the Corporation beyond their retirement or other
termination of service other than (i) coverage mandated by applicable law, (ii)
death, disability or retirement benefits under any Pension Plan, (iii) deferred
compensation benefits accrued as liabilities on the financial statements of the
Corporation, or (iv) benefits, the full cost of which is borne by the current or
former employee (or his or her beneficiary).
(h)The Welfare Plans that are group health plans (as defined for the
purposes of Section 4980B of the Code and Part 6 of Subtitle B of Title I of
ERISA, and all regulations thereunder, ("COBRA")) have complied at all times,
and will continue to comply through the date of Closing, with requirements of
COBRA to provide health care continuation coverage to qualified beneficiaries
who have elected, or may elect to have, such coverage. The Corporation, or its
agents who administer any of the Welfare Plans, have complied at all times and
will continue to comply through the date of Closing, with the notification and
written notice requirements of COBRA. There are no pending, and to the knowledge
of the Corporation or the Sellers, threatened claims, suits, or other
proceedings by any employee, former employee, participants or by the
beneficiary, dependent or representative of any such person, involving the
failure of any Welfare Plan or of any other group health plan ever maintained by
the Corporation to comply with the health care continuation coverage
requirements of COBRA.
(i)To the knowledge of the Corporation and the Sellers, each Pension
Plan is "qualified" within the meaning of Section 401(a) of the Code, and has
been qualified during the period from the date of its adoption to the date of
this Agreement, and each trust created thereunder is tax-exempt under Section
501(a) of the Code. The Sellers have delivered or will deliver to the Buyers the
latest determination letters of the Internal Revenue Service relating to each
Pension Plan. Such determination letters have not been revoked. Furthermore,
there are no pending proceedings or, to the knowledge of the Corporation or the
Sellers, threatened proceedings in which the "qualified status of any Pension
Plan is at issue and in which revocation of the determination letter has been
threatened. Each such Pension Plan has not been amended or operated, since the
receipt of the most recent determination letter, in a manner that would
adversely affect the "qualified" status of the Plan. To the knowledge of the
Corporation or Sellers, there has been no partial termination as defined in
Section 411(d) of the Code and the regulations thereunder, of any Pension Plan.
(j) The Corporation has made all required contributions under each
Pension Plan on a timely basis or, if not yet due, adequate accruals therefore
have been provided for in the financial statements. No Pension Plan is subject
to Section 302 of ERISA or the minimum funding standards imposed by Section 412
of the Code.
(k)At any time prior to the date of this Agreement and from such date to
the date of Closing, neither the Corporation nor any of its ERISA Affiliates
have at any time participated in or been liable to contribute to any plan
subject to Title IV of ERISA.
(l)The Corporation and its ERISA Affiliates have not been, nor will they
become through the date of Closing, liable to contribute to any "multiemployer
plan" (as defined in Section 3(37) of ERISA).
(m)Schedule 4.23(m) contains a list identifying each employment,
severance or similar contract, arrangement or policy (exclusive of any such
contract which is terminable within thirty (30) days without liability to the
Sellers and the Corporation), and each plan or arrangement providing for
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental employment benefits, vacation
benefits, retirement benefits, deferred compensation, bonuses, profit-sharing,
stock options, stock appreciation rights, or other forms of incentive
compensation or post-retirement compensation or benefit which (i) is not an
Employee Plan, (ii) has been entered into or maintained, as the case may be, by
the Sellers or the Corporation, and (iii) covers any employee or former employee
of the Corporation. Such contracts, plans and arrangements are hereinafter
referred to collectively as the "Benefit Arrangements". True and complete copies
or descriptions of the Benefit Arrangements have been or will be delivered to
Buyer. Each Benefit Arrangement has been maintained in substantial compliance
with the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangements.
(n)There has been no amendment to, written interpretation or
announcement (whether or not written) by the Corporation relating to, or change
in employee participation or coverage under, any Employee Plan or Benefit
Arrangement that would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of expense incurred in
respect of such Employee Plan or Benefit Arrangement for the most recent plan
year with respect to Employee Plans or the most recent fiscal year with respect
to Benefit Arrangements.
(o)There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Corporation that, individually or in
aggregate, could give rise to the payment by the Corporation, directly or
indirectly, of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.
4.24 Vehicle Leases. Sellers have delivered to Buyer correct and
complete copies of the Vehicle Leases. Schedule 1.1(aj) sets forth the Vehicle
Leases, and a list of the other vehicles owned by the Corporation and used in
the Business. With respect to each Vehicle Lease: (i) the lease is legal, valid,
binding, enforceable and in full force and effect, (ii) the lease will continue
to be legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby, (iii) to the knowledge of Sellers and the Corporation no party to the
lease is in breach or default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit termination,
modification or acceleration thereunder and (iv) except as provided for in
Section 6.5 and Schedule 6.5(ii), the Corporate has not assigned, transferred or
conveyed any interest in the lease.
4.25 Insurance.
(a) The Corporation delivered to Buyer true and complete copies of
all policies of insurance to which the Corporation is a party or under which the
Corporation or any officer or director thereof, is or has been covered at any
time within the three (3) years immediately preceding the date of this
Agreement.
(b) Schedule 4.25(b) describes:
(i) any self-insurance arrangement by or
affecting the Corporation, including
any reserves established thereunder;
(ii) any contract or arrangement, other
than a policy of insurance, for the
transfer or sharing of any risk by
the Corporation; and
(iii) all obligations of the Corporation
to provide insurance coverage to
third parties (for example, under
leases or service agreements), and
identifies the policy under which
such coverage is provided.
(c) Schedule 4.25(c) sets forth, by year, for the current policy year
and each of the three (3) preceding policy years:
(i) a summary of the loss experience
under each policy of insurance;
(ii) a statement describing each claim
under a policy of insurance for an
amount in excess of $10,000, which
sets forth:
(A) the name of the claimant;
(B) a description of the policy
by insurer, type of insurance,
and period of coverage; and
(C) the amount and a brief
description of the claim; and
(iii) a statement describing the loss
experience for all claims that were
self-insured, including the number
and aggregate cost of such claims.
(d) Except as set forth on Schedule 4.25(d):
(i) all policies of insurance to which
the Corporation is a party or that
provide coverage to the Corporation
or any officer or director thereof:
(A) are valid, outstanding, and enforceable;
(B) to the knowledge of the
Corporation and Sellers, are
issued by an insurer that is
financially sound and reputable;
(C) taken together, provide
adequate insurance coverage
for the assets and the
operations of the
Corporation for all risks
normally insured against by
a Person carrying on the
same business or businesses
as the Corporation; and
(D) are sufficient for
compliance with all legal
requirements and contracts
to which of the Corporation
is a party or by which it
is bound;
(ii) Except as set forth on Schedule 4.25(d), the
Corporation has not has received (A) any
refusal of coverage or any notice that a
defense will be afforded with reservation of
rights, or (B) any notice of cancellation or
any other indication that any policy of
insurance is no longer in full force or
effect or that the issuer of any policy of
insurance is not willing or able to perform
its obligations thereunder;
(iii) The Corporation has paid all premiums due,
and has otherwise performed all of its
obligations, under each policy of insurance
to which it is a party or that provides
coverage to such Sellers or any officer or
director thereof; and
(iv) The Corporation has given notice to the
insurer of all claims that may be insured
thereby.
4.26 Brokers. Neither Sellers nor the Corporation have entered into and
will not enter into any agreement, arrangement or understanding with any Person
which will result in the obligation of Buyer to pay any finder's fee, brokerage
commission or similar payment in connection with the transaction contemplated
hereby.
4.27 Material Contracts. Except as listed on Schedule 4.27, and except
for the Real Property Leases, the Vehicle Leases and any other contract required
to be disclosed in another Schedule, the Corporation is not a party to any
contract, agreement, mortgage, commitment or obligation, whether oral or
written, express or implied, that is legally binding and:
(a) which involves performance of services or
the delivery of goods to the Corporation of
an amount or value in excess of $50,000 in
the aggregate;
(b) which was not entered into in the ordinary
course of business and that involves
expenditures or receipt by the Corporation
of an amount or value in excess of $5,000;
(c) which is for capital expenditures in excess
of $50,000 in the aggregate;
(d) which is a guaranty, warranty or similar
undertaking by the Corporation (excluding
warranties associated with insurance and the
Champion Advantage Club);
(e) which is a power of attorney;
(f) which restricts or purports to restrict the
business activity of the Corporation or
any Seller; or
(g) which involves a licensing arrangement with
respect to trademarks, patents, copyrights
or other intellectual property.
4.28 Material Misstatements or Omissions. No representation or warranty
by Sellers or the Corporation in this Agreement, or in any document, exhibit,
statement, certificate, document or schedule furnished to Buyer pursuant to this
Agreement, or in connection with the transactions contemplated by this
Agreement, contains or will contain at the Closing Date any untrue statement of
a material fact, or intentionally omits or will omit to state any material fact
necessary to make the statements or facts contained therein not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers and the Corporation that
the following are true, correct and complete on the date hereof, and shall be
true, correct and complete as of the Closing Date:
5.1Organization and Good Standing. Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Buyer is duly qualified to do business and is in
good standing in each jurisdiction in which such qualification is necessary
under the applicable law as a result of the conduct of its business or the
ownership of its properties. Buyer has all necessary power and authority to
execute and deliver this Agreement, to consummate the transactions contemplated
by this Agreement and to perform its obligations under this Agreement.
5.2Authority; Authorization; Binding Effect. Buyer has all necessary
power and authority and has taken all action necessary to execute and deliver
this Agreement and the instruments to be executed and delivered pursuant hereto,
to consummate the transactions contemplated by this Agreement and to perform its
obligations under this Agreement. This Agreement has been duly executed and
delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as
enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors
rights generally and (ii) the discretion of the appropriate court with respect
to specific performance, injunctive relief or other forms of equitable remedies.
5.3No Conflicts, Violations or Proceedings. The execution and delivery
of this Agreement, the consummation of the transactions contemplated by this
Agreement and the performance by Buyer of its obligations under this Agreement
do not and will not result in (i) a violation of or a conflict with any
provision of the Articles of Incorporation, Bylaws or other organizational
certificates or documents of Buyer, (ii) a breach of, or a default under, any
term or provision of any contract, agreement, indebtedness, encumbrance,
commitment, license, franchise, permit, authorization or concession to which
Buyer is a party or (iii) a violation by Buyer of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award. There is no
pending or, to the knowledge of Buyer, threatened or anticipated Proceeding
against, relating to or affecting the transactions contemplated by this
Agreement.
5.4No Consents or Approvals. No consent, approval or authorization of,
or declaration, filing or registration with, any Governmental Authority or any
other Person is required to be made or obtained by Buyer in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transaction contemplated hereby.
5.5No Brokers. Buyer has not entered into and will not enter into any
agreement, arrangement or understanding with any Person which will result in the
obligation of Sellers to pay any finder's fee, brokerage commission or similar
payment in connection with the transaction contemplated hereby.
5.6Material Misstatements or Omissions. No representations or warranties
by Buyer in this Agreement, or in any document, exhibit, statement, certificate,
document or schedule furnished to Sellers pursuant to this Agreement, or in
connection with the transaction contemplated by this Agreement, contains or will
contain any untrue statement of a material fact, or intentionally omits or will
omit to state any material fact necessary to make the statements or facts
contained therein not misleading.
ARTICLE 6
COVENANTS PRIOR TO CLOSING
Sellers and the Corporation on the one hand, and Buyer on the other
hand, each covenant with the other as follows:
6.1Conduct of Business Prior to Closing. The Corporation shall continue
to carry on the Business in the ordinary course and substantially in accordance
with past practice and will not take any action inconsistent therewith or with
the consummation of the transactions, except as expressly provided for in this
Agreement. The Corporation shall promptly inform Buyer of any material changes
in the Business.
6.2Investigation by Buyer. Sellers acknowledge and agree that between
the date of this Agreement and February 2, 1998, Buyer and each Representative
of Buyer shall continue to conduct a due diligence review with respect to the
Corporation and the Business. In connection with such due diligence review, the
Corporation and each Representative of the Corporation shall, upon reasonable
prior notice, (i) cooperate with Buyer, and each Representative of Buyer (ii)
provide all information, and all documents and other tangible items containing
or relating to such information, reasonably requested by Buyer, any
Representative of Buyer or any financial institution and (iii) permit each
Representative of Buyer to inspect any part of the Business. Buyer shall conduct
its due diligence investigation in a manner so as not to unreasonably disrupt
the Business. Buyer agrees that the Confidentiality Agreement between Buyer and
the Corporation, dated November 12, 1997 (the "Confidentiality Agreement") shall
apply to all information disclosed to Buyer pursuant to it due diligence
investigation.
6.3Consents and Best Efforts. As soon as practicable, Buyer, Sellers and
the Corporation, as applicable, will commence all reasonable action required
hereunder to obtain all consents, approvals and agreements of, and to give all
notices and make all filings with, any Person as may be necessary (a) to
authorize, approve or permit the full and complete sale, conveyance, assignment
or transfer of the Shares, free and clear of any Encumbrances, by a date early
enough to allow the sale hereunder to be consummated by the Closing Date and (b)
to obtain consents from any Person who is a party to a Real Property Lease or
other material contract with the Corporation, the terms of which give such
Person a right to terminate such lease or contract as a result of the
transactions provided for in this Agreement. Buyer, Sellers and the Corporation
agree to use commercially reasonable best efforts to satisfy all conditions
precedent to their respective obligations to consummate the transactions
contemplated by this Agreement.
6.4Certain Prohibited Transactions. Except as contemplated by Section
6.5, during the period beginning on the date of this Agreement and ending on the
Closing Date, the Corporation and Sellers shall not:
(a)except in the ordinary course of business, mortgage, pledge or
otherwise encumber or sell, transfer or otherwise dispose of any of the Tangible
Personal Property other than as contemplated by this Agreement;
(b)enter into or terminate any material contract or agreement, or make
any material change in any of its material contracts or agreements relating to
or otherwise affecting the Tangible Personal Property or the Business, other
than in the ordinary course of business and consistent with past practice;
(c)borrow any money, enter into any agreement or commitment to borrow
any money or otherwise take any action which will materially increase the
indebtedness of the Corporation over the indebtedness of the Corporation as of
the Effective Time; or
(d)do any other act which would cause any representation or warranty of
the Corporation or Sellers in this Agreement to be or become untrue in any
material respect.
6.5Pre-Closing Transactions. The Corporation shall proceed to make the
capital expenditures relating to the opening or remodeling of the stores at the
Store Locations listed, and as summarized in, Schedule 6.5(i), which shall
aggregate approximately $200,000. In addition, Buyer and Sellers agree that,
prior to the Closing, the actions involving the Corporation set forth on
Schedule 6.5(ii) will be effectuated.
6.6Non-Compete Agreement. On the Closing Date, each of ▇▇▇▇, J. ▇▇▇
▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇,▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the
"Restricted Sellers") and Buyer shall enter into a non-compete agreement
substantially in the form of Exhibit C.
6.7▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. Each party hereto agrees to make an
appropriate filing, if necessary, pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvement Act of 1976, as amended (the "HSR Act"), with respect to the
transactions contemplated by this Agreement and to supply, as promptly as
practicable, to the appropriate governmental entity any additional information
and documentary material that may be requested pursuant to the HSR Act.
6.8Additional Closing Arrangements.
(a)The determination of (i) the Liabilities, net of cash, and Net Book
Value of Rental Merchandise of the Corporation as of the Effective Time for
purposes of Buyer's Audit and Section 2.2(b) and (ii) the allocation of the net
revenue and expenses of the Corporation relating to the closing of its books on
the Closing Date for purposes of Section 10.3(c)(i), shall be made based on the
Corporation's fiscal month-end balance sheet and income statement which occur
closest to the Effective Time, i.e., either the Corporation's January 24, 1998
or February 21, 1998 Internal Interim Financial Statements, as applicable (the
"Closing Financials"), with adjustments to be made to the Closing Financials to
reflect all business transactions by the Corporation in the period subsequent to
the Closing Financials (or prior to the Closing Financials, if applicable) based
on the Corporation's ledger and other records, consistently applied.
(b)The parties agree that:
(i) All revenues and expenses of the Corporation
prior to the Effective Time shall be for the
account and benefit of the Sellers.
(ii) All revenues and expenses of the Corporation
after the Effective Time shall be for the
account and benefit of the Buyer.
(iii) The Sellers shall have the right to all
monies received by the Stores as of the
Effective Time including all revenues
received by the stores at the Store
Locations on the Closing Date. Sellers shall
cooperate with Buyer changing the authorized
signatories of the Bank Accounts in a
reasonably prompt manner to the extent
requested by Buyer. Buyer shall receive a
credit of $100,000 at Closing against the
Purchase Price in lieu of the Sellers
causing the Corporation to have any
cash-in-drawer at the Store Locations at the
Effective Time (the "Cash Credit").
(iv) The Corporation shall pay all February 1998
rents in a timely manner.
(v) All prepaid expenses of the Corporation as
of the Effective Time in excess of $100,000
shall be treated as cash for purposes of
determining the final Purchase Price.
6.9Champion TV & Appliance Rentals ▇▇▇▇. ▇▇▇▇ will execute and deliver
to the Corporation at or before Closing an assignment of the "Champion TV &
Appliance Rentals" servicemark, in form and substance satisfactory to Buyer.
ARTICLE 7
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers to consummate the transactions contemplated
by this Agreement are subject, in the discretion of Sellers, to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions (any of which may, in Sellers' absolute and sole discretion, be
waived in whole or in part in writing):
7.1Representations, Warranties and Covenants. All representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date, and Buyer shall have performed
all agreements and covenants required hereby to be performed by it prior to or
at the Closing Date.
7.2Consents. All consents, approvals and waivers necessary to permit
Sellers to transfer the Shares to Buyer as contemplated hereby shall have been
obtained, unless the failure to obtain any such consent, approval or waiver
would not have a material adverse effect upon Sellers and the expiration or
early termination of the waiting period under the HSR Act shall have occurred.
7.3No Proceedings. No Proceeding by any Person shall have been
instituted or threatened which questions the validity or legality of the
transaction contemplated hereby and which could reasonably be expected to affect
materially the right or ability of Sellers to transfer the Shares to Buyer.
7.4Certificates. Buyer will furnish Sellers with such certificates of
its officers and others to evidence compliance with the conditions set forth in
this Article 7 as may be reasonably requested by Sellers. In addition, the
Estimated Allocation Statement shall be consistent with the principles sets
forth in Section 10.3(b)(i) and, subject to the foregoing, otherwise
satisfactory to Sellers.
7.5Corporate Documents. Sellers shall have received from Buyer (i)
resolutions adopted by the board of directors of Buyer approving this Agreement
and the transactions contemplated hereby and (ii) a list of the officers of
Buyer executing this Agreement and any agreement contemplated by this Agreement,
certified by the Secretary or an Assistant Secretary of Buyer.
7.6Other Agreements. Concurrently with the Closing, Buyer shall have
executed and delivered the Non-Compete Agreement to Restricted Sellers and Buyer
shall have executed and delivered the Escrow Agreement to Sellers and Escrow
Agent.
7.7Payment. Buyer shall have, concurrently with the Closing, paid the
Purchase Price to Sellers, the Bank Payoff to Sellers' Bank and the Escrow Funds
to the Escrow Agent.
7.8Opinion Letter. Sellers shall have received an opinion from ▇▇▇▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Goodyear, LLP, counsel to Buyer, substantially in the
form attached hereto as Exhibit D.
ARTICLE 8
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transaction provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions (any of which may, in
Buyer's absolute and sole discretion, be waived in whole or in part in writing):
8.1Representations, Warranties and Covenants. All representations and
warranties of Sellers and the Corporation contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date, and
Sellers and the Corporation shall have performed all agreements and covenants
required hereby to be performed by each of them prior to or at the Closing Date.
8.2Consents. All consents, approvals and waivers necessary to permit
Sellers to transfer the Shares to Buyer as contemplated hereby shall have been
obtained, except for consents which in the aggregate if not obtained would not
have any material adverse affect on the Business, and the expiration or early
termination of the waiting period under the HSR Act shall have occurred;
provided, however, that with respect to any landlord consents, Sellers shall
only be required to have used their best efforts to obtain them.
8.3No Proceedings. No Proceeding by any Person shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby and which could reasonably be expected to
affect materially the right or ability of Buyer to own or operate the Business
after the Closing.
8.4Certificates. Sellers and the Corporation will furnish Buyer with
such certificates to evidence compliance with the conditions set forth in this
Article 8 as may be reasonably requested by Buyer. In addition, the Estimated
Allocation Statement shall be consistent with the principles set forth in
Section 10.3(b)(i) and, subject to the foregoing, otherwise satisfactory to
Buyer.
8.5Due Diligence. Buyer shall have completed its due diligence review
contemplated by Section 6.2 by February 2, 1998 and shall not have found any
material variance from the representations and warranties set forth in Article
4.
8.6No Interruption or Adverse Change. Prior to or at the time of
Closing, (i) no interruption or suspension of a material volume of the Business
as now conducted shall have occurred and (ii) no material adverse change in the
Business shall have occurred.
8.7Financing. Buyer shall have obtained all financing necessary to
consummate the transactions contemplated by this Agreement by February 2, 1998.
8.8Corporate Documents. On or before the Closing Date, Buyer shall have
received from Sellers and the Corporation (i) resolutions adopted by the board
of directors of the Corporation approving this Agreement and the transactions
contemplated hereby and (ii) a list of the officers of the Corporation executing
this Agreement and each agreement contemplated by this Agreement, certified by
the Secretary or Assistant Secretary of the Corporation.
8.9Other Agreements. At or before the Closing, each Restricted Seller
shall have executed and delivered the Non-Compete Agreement to Buyer, and
Sellers shall have executed and delivered the Escrow Agreement to Buyer and
Escrow Agent.
8.10 Opinion Letter. Buyer shall have received an opinion from Holland &
Knight, LLP, counsel to Sellers, substantially in the form attached hereto as
Exhibit E.
ARTICLE 9
INDEMNIFICATION
9.1Survival of Representations, Warranties and Covenants. (a) Except as
provided for in Paragraph (b) of this Section 9.1, the representations and
warranties of Sellers and the Corporation, and of Buyer, contained in this
Agreement shall, without regard to any investigation made by any of the parties
hereto, survive the Closing Date until the first anniversary of the Closing
Date; provided, however, that the representations and warranties made in Section
4.6 (Title) shall survive the Closing indefinitely. The covenants and agreements
of Sellers, the Corporation and Buyer contained in this Agreement, including but
not limited to those set forth in Section 9.2, shall survive the Closing Date
until they have been fully satisfied or otherwise discharged.
(b)The representations and warranties set forth in Section 4.16(a)(i)
shall terminate on February 1, 1998, and Buyer's sole remedy in the event of any
breach of Section 4.16(a)(i) shall be to elect, on or before February 2, 1998
not to proceed with the Closing as provided for in Section 8.5 and 11.1(b).
9.2Indemnifications and Payment of Losses.
(a)By Indemnifying Sellers. Subject to Section 9.2(b), ▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (the "Indemnifying Sellers"), jointly and severally, shall indemnify,
save and hold harmless Buyer (before and after the Closing) and the Corporation
(after the Closing only) and each of Buyer's Representatives from, against and
in respect of and will pay to such Persons, whether or not involving a third
party claim, the following (individually a "Loss" and collectively "Losses"):
(i) any and all loss, liability, deficiency or damage suffered or
incurred by Buyer by reason of (A) any untrue representation or breach of
warranty or (B) nonfulfillment of any covenant or agreement by Sellers or the
Corporation in this Agreement or in any agreement, instrument or other writing
delivered to Buyer by Sellers or the Corporation pursuant to or in connection
with this Agreement;
(ii) any claim by any Person for (x) a finder's fee, investment
banker's fee, or brokerage or other commission or (y) any legal expenses, in
each case by any Person for services alleged to have been rendered at the
instance of the Corporation or Sellers with respect to this Agreement or the
transactions contemplated by this Agreement;
(iii) any and all loss, liability, deficiency or damage suffered or
incurred by Buyer or the Corporation or any Buyer Representative relating to any
claim, suit, litigation or proceeding with respect to events occurring prior to
the Closing Date which are not fully reserved for on the Corporation's Financial
Statements or Internal Financial Statements (therefore constituting a Liability
for purposes of this Agreement), including, but not limited to, any
Non-Compliance Claim;
(iv) any liabilities and obligations for Taxes which are or shall be
incurred by Buyer or the Corporation with respect to the operation of the
Corporation on or prior to the Effective Time;
(v) any and all loss, liability, deficiency or damage suffered or
incurred by Buyer, the Corporation or any Buyer Representative in connection
with any Employee Plan with respect to the operation of the Corporation on or
prior to the Closing Date which is not fully reserved for on the Corporation's
Financial Statements or Internal Financial Statements (therefore constituting a
Liability for purposes of this Agreement);
(vi) any and all loss, liability, deficiency or damage suffered or
incurred by Buyer, the Corporation or any Representative caused by or arising
out of the generation, treatment, handling, storage or disposal of Hazardous
Substances or noncompliance with any Environmental Laws prior to the Closing
Date regardless of whether or not the matter or matters giving rise to any such
Losses were disclosed to Buyer in Schedule 4.19 or known by Sellers at the date
of this Agreement, in each case which is not fully reserved for on the
Corporation's Financial Statements or Internal Financial Statements (therefore
constituting a Liability for purposes of this Agreement);
(vii) any matter described in Schedule 4.14 to this Agreement; and
(viii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, (including, but not limited to,
legal fees and expenses) incident to any of the foregoing or incurred in
enforcing this Agreement or any agreement provided for in this Agreement
("Litigation Expenses").
(b)Limitations on Indemnifying Sellers Obligations. The Indemnifying
Sellers' obligations under Section 9.2(a)are limited as follows:
(i) With respect to any Losses covered by the Indemnifying Sellers'
indemnification obligations under Section 9.2(a)(i), the Indemnifying Sellers
shall have liability for such Losses only if the aggregate amount of any such
Losses exceed One Hundred Thousand Dollars ($100,000), in which case the
Indemnifying Sellers shall indemnify Buyer (or any other indemnified person
hereunder) for all Losses (beginning with the first dollar thereof); provided,
however, that such limitation shall not apply to any other Losses covered by
Section 9.2(a) nor to any Losses incurred as a result of fraud.
(ii) The indemnification obligations of Indemnifying Sellers under
Section 9.2(a) shall only apply if a claim for indemnification in accordance
with Section 9.2(d) is made by the dates indicated herein:
(A) For indemnification claims under Section 9.2(a)(i),
by the first anniversary of the Closing Date except
in the case of any claim alleging a breach of any
warranty in Section 4.6, which must be made within 90
days after any such breach shall have been
discovered;
(B) For indemnification claims under Section 9.2(a)(iii),
by the first anniversary of the Closing Date;
(C) For indemnification claims under Section 9.2(a)(ii)
and Sections 9.2(a)(iv) through (a)(vii), by the
fifth anniversary of the Closing Date;
(D) For indemnification claims under Section 9.2(a)(viii)
for Litigation Expenses (other than any such
Litigation Expenses incurred in connection with
enforcing this Agreement), they shall be made by the
date as of which the indemnification claim giving
rise to such Litigation Expenses must be made under
any of Sections 9.2(a)(i) through 9.2(a)(vii), as the
case may be.
(iii) With respect to any indemnification claims under Sections
9.2(a)(i) and 9.2(a)(iii), and any Litigation Expenses pertaining thereto, the
Indemnifying Sellers' indemnification obligations shall not, in the aggregate,
exceed $12,500,000; provided, however, that such limitation shall not apply to
any of Indemnifying Sellers' other indemnification obligations under Section
9.2(a).
(iv) Notwithstanding the provisions of Section 9.2(a)(iii), the
Indemnifying Sellers shall not be required to indemnify and pay Buyer (or
Corporation) pursuant to Section 9.2(a)(iii) for any Losses arising out of any
Excluded Non-Compliance Claims.
(c)By Buyer. Buyer shall indemnify and save and hold harmless Sellers
from, against and in respect of the following (individually, a "Loss" and,
collectively, "Losses"):
(i) any and all loss, liability, deficiency or damage suffered or
incurred by Sellers, resulting from any untrue representation, breach of
warranty or nonfulfillment of any covenant or agreement by Buyer (including
failure to deliver the Purchase Price) contained in this Agreement or in any
agreement, instrument or other writing delivered to Sellers pursuant to or in
connection with this Agreement;
(ii) any claim against Sellers for a finder's fee, investment
banker's fee, or brokerage or other commission by any Person for services
alleged to have been rendered at the instance of Buyer with respect to this
Agreement or the transaction contemplated by this Agreement;
(iii) any and all loss, liability, deficiency or damage suffered or
incurred by Sellers relating to any claim, suit, litigation or proceeding
relating to the Corporation or the Business with respect to the operation of the
Business or events occurring after the Closing Date; and
(iv) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, (including, but not limited to,
legal fees and expenses) incident to any of the foregoing or incurred in
enforcing this Agreement or any agreement provided for in this Agreement.
(d)Notification of Claims. In the event that any party entitled to
indemnification pursuant to this Agreement (the "Indemnified Party") proposes to
make any claim for such indemnification, the Indemnified Party shall deliver to
the indemnifying party (the "Indemnifying Party"), which delivery with respect
to the Losses arising from breaches of representations and warranties shall be
on or prior to the date upon which the applicable representations and warranties
expire pursuant to Section 9.1 hereof, a signed certificate, which certificate
shall (i) state that Losses have been incurred or that a claim has been made for
which Losses may be incurred, (ii) specify the sections of this Agreement under
which such claim is made and (iii) specify in reasonable detail each individual
item of Loss or other claim including the amount thereof and the date such Loss
was incurred. In addition, each Indemnified Party shall give notice to the
Indemnifying Party within ten (10) days of its receipt of service of any suit or
proceeding initiated by a third party which pertains to a matter for which
indemnification may be sought; provided, however, that the failure to give such
notice shall not relieve the Indemnifying Party of its obligations hereunder if
the Indemnifying Party has not been prejudiced thereby.
(e)Defense of Third Party Claims and Extension of Statute of
Limitations. Any Indemnified Party shall in good faith cooperate and assist the
Indemnifying Party in defending against any claims or asserted claims with
respect to which the Indemnified Party seeks indemnification under this
Agreement. If requested by the Indemnifying Party, the Indemnified Party shall
join in any action, litigation, arbitration or proceeding, provided that the
Indemnifying Party shall pay the costs of the Indemnified Party, including
reasonable attorney's fees, caused by such joinder. The Indemnified Party shall
not settle or compromise any claim or asserted claim, nor agree to extend any
statute of limitations applicable to any claim or asserted claim, which the
Indemnified Party seeks indemnification under this Agreement, without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. Any right of participation of the Indemnifying Party
shall be subject, as a condition precedent, to such party's acknowledging to the
Indemnified Party, in writing, the obligation of the Indemnifying Party to
indemnify the other party hereto in accordance with the terms of this Agreement.
Upon such acknowledgement, the Indemnified Party will provide the Indemnifying
Party will all reasonably available information, assistance, and authority to
enable the Indemnifying Party to jointly participate in such defense or
settlement, and upon the Indemnifying Party's payment of any amounts due with
respect to such Proceeding, the Indemnified Party will, to the extent of such
payment, assign or cause to be assigned to the Indemnifying Party the claims of
the Indemnified Party, if any, against such third parties with respect to which
such payment is made.
(f)Escrow. Upon a notice by Buyer to Sellers pursuant to Section 9.2(d),
Buyer may give a Notice (as defined in the Escrow Agreement) under the Escrow
Agreement for the amount of Loss specified therein. Neither the exercise of nor
the failure to exercise such right to give a Notice under the Escrow Agreement
will constitute an election of remedies or limit Buyer in any manner in the
enforcement of any other remedies that may be available to it.
9.3Reduction for Insurance Proceeds. If an Indemnified Party actually
receives any insurance proceeds following an indemnification payment by an
Indemnifying Party pursuant to Section 9.2 (including but not limited to the
delivery of any Indemnity Escrow Amount to Buyer), and the proceeds relate to
the same event or events for which such indemnification payment was made, the
Indemnified Party shall return the indemnification payment to such Indemnifying
Party up to the actual amount of insurance proceeds received in respect of such
same event or events.
9.4Exclusive Remedy. The indemnification provisions of this Article 9
are the exclusive remedy that any party may have for any breach of a
representation, warranty or covenant herein, or for any other remedy any party
may have in connection with the transactions contemplated hereby (other than for
Losses incurred as a result of fraud).
ARTICLE 10
COVENANTS AFTER THE CLOSING
10.1 Books and Records. Sellers shall deliver the Corporation's original
minute books and stock record books to Buyer (the "Corporate Records"). In
addition, for a period of five (5) years following the Closing Date, Buyer shall
afford Sellers and their Representatives, during normal business hours,
reasonable access to the Corporate Records with respect to the period prior to
the Closing Date to the extent that such access may be reasonably required by
Sellers to facilitate (i) the preparation by Sellers of tax returns as they may
be required to file with respect to their operation of the Business prior to
Closing or in connection with any audit, amended return, claim for refund or any
proceeding with respect thereto, (ii) the investigation, litigation and final
disposition of any claims which may have been or may be made against Sellers in
connection with their operation of the Business prior to Closing, (iii) the
payment of any indemnity under this Agreement or (iv) any other reasonable
purpose. At any time after the Closing Date, Buyer may dispose of, alter or
destroy any such Corporate Records upon giving sixty (60) days' prior notice to
Sellers to permit Sellers, at their expense, to examine, duplicate or repossess
such Buyer Retained Records.
10.2 Further Assurances. Both before and after the Closing Date, each
party will cooperate in good faith with the other and will take all appropriate
action and execute any documents, instruments or conveyances of any kind which
may be reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder.
10.3 Tax Related Matters.
(a) Section 338 Elections. Sellers and Buyer shall take all actions
necessary and appropriate (including timely filing such forms, tax returns,
elections, schedules and other documents as may be required), at each party's
cost and expense, to effect and preserve a timely Section 338(h)(10) election in
accordance with the requirements of Section 338 of the Code (and any
corresponding elections under state or local tax law) (collectively, the
"Section 338 Elections"), and Sellers and Buyer shall report the sale of the
Shares pursuant to this Agreement consistently with the Section 338 Elections
and shall take no position contrary thereto or inconsistent therewith in any Tax
Return, any discussion with or proceeding before any taxing authority, or
otherwise. All taxes attributable to the election made pursuant to this Section
10.3(a) shall be the liability of the Sellers.
(b) Allocation of Purchase Price.
(i) Buyer and Sellers agree that the Purchase Price shall be
allocated to the rental merchandise, the fixed assets and the monetary assets of
the Corporation at fair market value, and the balance of the Purchase Price
shall be allocated to goodwill and other intangible assets of the Corporation
(collectively, the "Intangible Assets"). Buyer and Sellers shall agree prior to
the Closing Date on estimated allocations of the Purchase Price, consistent with
the foregoing, for purposes of making any timely transfer tax filings and for
purposes of this Section 10.3(b) (the "Estimated Allocation Statement"). In
addition, as soon as practicable after the Closing Date, but in no event later
than March 31, 1998, Buyer shall provide to Sellers a proposed statement (the
"Allocation Statement") allocating the total of the Purchase Price, and any
other payments made by Buyer pursuant to this Agreement that are properly
treated as additional purchase price for tax purposes, among the different
classes of assets of the Corporation to be acquired pursuant to the rules of
Section 338 of the Code and the regulations thereunder. Within ten (10) days
following delivery of the proposed Allocation Statement, Sellers may propose
changes to the Allocation Statement. Buyer shall consider Sellers' proposed
changes in good faith, but shall have no obligation to amend the Allocation
Statement to reflect any proposed changes to which Buyer objects unless it
relates to a material difference between the Estimated Allocation Statement and
the Allocation Statement (for purposes hereof, material shall mean a change of
5% or more in the aggregate amount of the non-Intangible Assets). Within five
(5) days following delivery to Buyer of Sellers' proposed changes, Buyer shall
deliver to Sellers a statement of objections (if any) to such proposed changes.
If Buyer and Sellers are unable, within five (5) days after receipt by Sellers
of Buyer's statement of objections, to resolve the disputed objections, such
disputed objections shall be referred to the Third-Party Accountants. The scope
of the Third-Party Accountants' review will be restricted to addressing only any
such disputed objections. The Third-Party Accountants shall, within ten (10)
business days following their selection (or such longer period as may be
proposed by the Third Party Accountants and agreed to by Buyer and Sellers),
deliver to Sellers and Buyer a written resolution of the disputed objections.
Such resolution shall be conclusive and binding upon the parties hereto for all
purposes, and the Allocation Statement shall be adjusted to reflect such
resolution. The fees and disbursements of the Third-Party Accountants acting
under this Section shall be shared equally by Buyer and Sellers. The parties
shall cooperate with one another and with each other's Representatives in order
to resolve any and all matters in dispute as quickly as practicable.
(ii) Buyer and Sellers shall file and cause to be filed all tax
returns, and execute such other documents as may be required by any taxing
authority, in a manner consistent with the Allocation Statement as revised from
time to time. Buyer shall prepare the Form 8023 under Section 338(h)(10) of the
Code relating to the transactions contemplated by this Agreement based on the
Allocation Statement and shall deliver such Form 8023 to Sellers within 30
calendar days after finalization of the Allocation Statement as provided above.
Buyer and Sellers shall timely file, or cause the timely filing of, such Form
8023 with each relevant taxing authority, and shall refrain, and cause their
affiliates to refrain, from taking any position inconsistent with such
Allocation Statement as revised from time to time with any taxing authority
unless, and then only to the extent, required to do so by a taxing authority.
(c)Termination of Corporation's Subchapter S Election.
(i)On the Closing Date, the Corporation's Subchapter S election will
terminate and the termination will be effective as of the Closing Date. The
Corporation will close its books as of the Closing Date and assign items of
income, gain, loss, deduction, and credit to the final short S corporation tax
year (ending on the Closing Date) based on the Corporation's normal methods of
accounting. Sellers agree to prepare, and Buyer agrees to cause to be timely
filed, federal and state Tax Returns for all periods ending prior to and on
Closing Date, including the Corporation's final short S corporation year ending
on the Closing Date ("Final S Period(s) Tax Returns"). Sellers shall control
preparation of the Final S Period(s) Tax Returns, shall be responsible for any
Taxes due on those returns, and shall pay all costs associated with the
preparation of those returns; provided, however, such returns shall be submitted
to the Corporation and Buyer for filing. Buyer shall file such returns unless it
shall have filed a written objection with Sellers on or prior to the due date;
and, provided, further, that all tax returns relating to the final S corporation
tax year shall be prepared on a basis consistent with that used in making the
determination provided for in Section 10.3(a) and (b). The parties shall use
their best efforts to promptly resolve any disagreements as to the Final S
Period(s) Tax Returns. Any remaining disagreements will be referred to the Third
Party Accountants for resolution, provided that (x) the scope of review by the
Third Party Accountants shall be limited to the disputed items and (y) any
resolution must comply with the provisions of Section 10.3(a) and (b).
(ii) Buyer shall cause the Corporation to timely file all tax returns
required to be filed by the Corporation after the Closing, including any and all
Final S Period(s) Tax Returns. Buyer agrees that the Corporation shall be
responsible for and pay all Taxes, in respect of periods beginning on and after
the Closing Date.
ARTICLE 11
MISCELLANEOUS
11.1 Termination. This Agreement may be terminated upon ten (10) days
prior written notice at any time prior to Closing without liability of any party
or any other party:
(a) by mutual written consent of Buyer and
Sellers;
(b) by Buyer on or before February 2, 1998 if
the conditions to Buyer's obligation to
perform contained in Section 8.5 or 8.7
shall not have been satisfied;
(c) by Buyer, if Closing has not occurred on or
before March 13, 1998 as a result of the
nonfulfillment of any of the conditions to
Buyer's obligation to perform contained in
Article 8 of this Agreement (other than
those set forth in Sections 8.5 or 8.7)
after written notice of such nonfulfillment
and reasonable opportunity to cure; or
(d) by Sellers if Closing has not occurred on or
before March 13, 1998 as a result of the
nonfulfillment of any of the conditions to
its obligations to perform contained in
Article 7 of this Agreement after written
notice of such nonfulfillment and reasonable
opportunity to cure.
This Agreement may also be terminated by Sellers, on the one hand, or Buyer, on
the other hand, upon ten (10) days prior written notice if a non-terminating
party has breached any material covenant to be performed by it pursuant to this
Agreement and such breach has not been cured within such 10-day notice period.
Termination of this Agreement shall not affect in any way the continuing
obligations of the parties hereto pursuant to Section 11.7 hereof relating to
expenses and is subject to Section 2.5.
11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Sellers or the Corporation on the one
hand, or Buyer on the other hand, without the prior written consent of the other
parties. Notwithstanding the preceding sentence, Buyer may collaterally assign
its rights under this Agreement to National City Bank of Pennsylvania, as Agent.
No assignment of this Agreement by Buyer shall relieve Buyer of any of its
obligations hereunder. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of Sellers, the Corporation and Buyer and their
respective successors and assigns, and no other Person shall have any right or
obligation under this Agreement.
11.3 Notices. Unless otherwise provided in this Agreement, any notice,
request, instruction or other document to be given hereunder by either party to
the other shall be in writing and delivered personally or mailed by certified
mail, postage prepaid, return receipt requested, or by telecopy, with a
confirmation via one of the preceding methods, as follows:
If to Sellers or the Corporation, before the Closing, addressed to:
c/o ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Sellers after the Closing, addressed to:
▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - #806
Daytona Beach Share, Florida 32118
Telephone: (___)___-_____
Facsimile: (___)___-_____
With a copy in either case to:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
Holland & Knight, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer, addressed to:
Rent-Way, Inc.
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President and General Counsel
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Goodyear, LLP
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇ ▇&▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
and be effective (i) if given by hand delivery, when left at the address of the
addressee as above provided, (ii) if given by mail, on the third business day
after such communication is deposited in the mail, addressed as above provided,
and (iii) if given by telecopy, when telecopied to the number above provided,
except that notices of a change of address shall not be effective until
received; or to such other place and with such other copies as either party may
designate as to itself by written notice to the other party.
11.4 Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
Florida (without reference to the choice of law provisions of Florida law)
except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement,
and as to those matters the law of the jurisdiction under which the respective
entity was incorporated shall govern. Buyer (a) consents in each action and
other legal proceeding relating to this Agreement commenced by Sellers to
personal jurisdiction of any court that is a court of record of the State of
Florida or a court of the United States located in the State of Florida and (b)
waives each objection to the laying of venue of any such action or other legal
proceeding.
11.5 Appointment of Sellers' Agent. Each of the Sellers hereby
irrevocably appoints ▇▇▇▇ ▇. ▇▇▇▇, ▇▇. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (herein called the
"Sellers' Agent"), as such Sellers' agents and attorneys-in-fact to take any
action required or permitted to be taken by such Seller under the terms of this
Agreement and the Escrow Agreement, including, without limiting the generality
of the foregoing, the giving and receipt of any notices to be delivered or
received by or on behalf of any or all of the Sellers, the payment of expenses
relating to the transactions contemplated by this Agreement and the Escrow
Agreement, the representation of the Sellers in any indemnification proceedings
hereunder, and the right to waive, modify or amend any of the terms of this
Agreement or the Escrow Agreement in any respect, whether or not material, and
agrees to be bound by any and all actions taken by the Sellers' Agent on his or
her behalf. The Sellers agree jointly and severally to indemnify the Sellers'
Agent from and against and in respect of any and all liabilities, damages,
claims, costs and expenses, including, but not limited to, attorneys' fees
arising out of or due to any action as the Sellers' Agent and any and all
actions, proceedings, demands, assessments or judgments, costs and expenses
incidental thereto, except to the extent that the same result from bad faith or
gross negligence on the part of the Sellers' Agent. Buyer shall be entitled to
rely exclusively upon any communications given by the Sellers' Agent on behalf
of any Seller, and shall not be liable for any action taken or not taken in
reliance upon the Sellers' Agent. The Buyer shall be entitled to disregard any
notices or communications given or made by Sellers unless given or made through
the Sellers' Agent. In the event that one of the individuals named herein as
Sellers' Agent dies, resigns, refuses to act or becomes disabled or unavailable,
the surviving individual named herein as Sellers' Agent shall continue to act as
Sellers' Agent hereunder and the Sellers may (or if there is no surviving
Sellers' Agent, the Sellers shall) promptly by majority vote in accordance with
their prior ownership of the Shares appoint another Person as their substitute
Sellers' Agent to act under this Agreement and the Escrow Agreement. Such
substitute Sellers' Agent shall have all the powers of the initial Sellers'
Agent hereunder and, the Sellers shall promptly deliver a copy of such
appointment to the Buyer.
11.6 Entire Agreement; Amendments and Waivers. This Agreement, together
with all Exhibits and Schedules hereto, constitutes the entire agreement between
Sellers, the Corporation and Buyer pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of Sellers, the Corporation and Buyer. In addition,
this Agreement shall not supersede the terms of a previously executed
Confidentiality Agreement between the Corporation and Buyer. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision of
this Agreement (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided in such writing.
11.7 Multiple Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Any party may execute
this Agreement by facsimile signature and the other party shall be entitled to
rely on such facsimile signature as evidence that this Agreement has been duly
executed by such party. Any party executing this Agreement by facsimile
signature shall immediately forward to the other party an original signature
page by overnight mail.
11.8 Expenses. Except as otherwise specified in this Agreement, the
Corporation shall pay its own and Sellers shall pay their own, and Buyer shall
pay its own, legal, accounting and other expenses incident to the negotiation
and preparation of this Agreement and the consummation of the transactions
contemplated hereby.
11.9 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.10 Titles. The titles, captions or headings of the articles and
sections of this Agreement are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement.
11.11 Publicity. Neither Sellers nor the Corporation shall issue any
press release or make any public statement regarding the transaction
contemplated hereby prior to the Closing Date, without the prior approval of
Buyer, except as may be required by applicable law, in which case the party
required to issue such press release or make such public statement will consult
with the other party prior to issuing such press release or making such public
statement.
IN WITNESS WHEREOF, the Corporation and Buyer have caused this Agreement
to be duly executed on their respective behalf by their respective duly
authorized officers, and Sellers have executed this Agreement, as of the day and
year indicated at the beginning of this Agreement. Any individual signing on
behalf of a corporation represents and warrants that he has power and authority
to bind the corporation.
RENT-WAY, INC.
By:_______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
CHAMPION RENTALS, INC.
By:_______________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
SELLERS:
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▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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J. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇
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▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
