EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
RENT-A-CENTER, INC.,
RENT-A-CENTER HOLDINGS, INC.
AND
RAC MERGER SUB, INC.
DATED DECEMBER 30, 2002
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER............................................................2
SECTION 1.1. The Merger......................................................2
SECTION 1.2. Effective Time..................................................2
SECTION 1.3. Certificate Of Incorporation....................................3
SECTION 1.4. Bylaws..........................................................3
SECTION 1.5. Directors.......................................................3
SECTION 1.6. Officers........................................................4
SECTION 1.7. Additional Actions..............................................4
SECTION 1.8. Conversion Of Securities........................................4
SECTION 1.9. No Surrender Of Certificates....................................5
ARTICLE II ACTIONS TO BE TAKEN IN CONNECTION WITH THE MERGER....................5
SECTION 2.1. Company Indebtedness............................................5
SECTION 2.2. Assumption Of Employee Benefit Plans............................5
SECTION 2.3. Reservation Of Shares...........................................6
ARTICLE III CONDITIONS OF MERGER................................................6
SECTION 3.1. Conditions Precedent............................................6
ARTICLE IV COVENANTS............................................................7
SECTION 4.1. Holdings Charter and Bylaws.....................................7
SECTION 4.2. Directors of Holdings...........................................7
SECTION 4.3. Employee Benefit Plans..........................................7
ARTICLE V TERMINATION AND AMENDMENT.............................................7
SECTION 5.1. Termination.....................................................7
SECTION 5.2. Amendments......................................................7
ARTICLE VI MISCELLANEOUS PROVISIONS.............................................7
SECTION 6.1. Governing Law...................................................7
SECTION 6.2. Counterparts....................................................8
SECTION 6.3. Entire Agreement................................................8
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT"), is entered into
on December 30, 2002, by and among Rent-A-Center, Inc., a
Delaware corporation
(the "COMPANY"), Rent-A-Center Holdings, Inc., a
Delaware corporation
("HOLDINGS") and a direct, wholly owned subsidiary of the Company, and RAC
Merger Sub, Inc., a
Delaware corporation ("MERGER SUB") and a direct, wholly
owned subsidiary of Holdings.
RECITALS
WHEREAS, as of December 27, 2002, the Company's authorized capital
stock consisted of (i) 125,000,000 shares of common stock, par value $0.01 per
share (the "COMPANY COMMON STOCK"), of which 34,927,718 shares were issued and
outstanding and 4,599,269 shares were held in the Company's treasury; and (ii)
5,000,000 shares of preferred stock, par value $0.01 per share, of which, (a)
400,000 shares have been designated as Series A Preferred Stock (the "COMPANY
SERIES A PREFERRED STOCK"), of which two shares were issued and outstanding, and
(b) 4,600,000 shares were undesignated; and
WHEREAS, immediately prior to the Effective Time (as defined below),
Holdings' authorized capital stock consisted of (i) 125,000,000 shares of common
stock, par value $0.01 per share (the "HOLDINGS COMMON STOCK"), of which 1,000
shares were issued and outstanding and owned by the Company; and (ii) 5,000,000
shares of preferred stock, par value $0.01 per share, of which (a) 400,000
shares have been designated as Series A Preferred Stock (the "HOLDINGS SERIES A
PREFERRED STOCK"), none of which were issued and outstanding, and (b) 4,600,000
shares were undesignated; and
WHEREAS, immediately prior to the Effective Time, Merger Sub's
authorized capital stock consisted of 1,000 shares of common stock, par value
$1.00 per share, (the "MERGER SUB COMMON STOCK"), of which 1,000 shares were
issued and outstanding and owned by Holdings; and
WHEREAS, the designations, rights and preferences, and the
qualifications, limitations and restrictions of the Holdings Common Stock and
the Holdings Series A Preferred Stock are identical to those of the Company
Common Stock and the Company Series A Preferred Stock, respectively; and
WHEREAS, the certificate of incorporation of Holdings (the "HOLDINGS
CHARTER") and the bylaws of Holdings (the "HOLDINGS BYLAWS") in effect
immediately after the Effective Time will contain provisions identical to the
Second Restated Certificate of Incorporation of the Company (the "COMPANY
CHARTER") and the Amended and Restated Bylaws of the Company (the "COMPANY
BYLAWS") in effect immediately prior to the Effective Time (other than as
required or permitted by Section 251(g) of the
Delaware General Corporation Law
(the "DGCL")); and
WHEREAS, the directors of the Company immediately prior to the
Effective Time will be the directors of Holdings as of the Effective Time; and
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WHEREAS, Holdings and Merger Sub are newly formed corporations
organized for the sole purpose of participating in the transactions contemplated
herein and have nominal assets and liabilities, if any; and
WHEREAS, the Company desires to create a holding company organizational
structure by merging Merger Sub with and into the Company, with (i) the Company
continuing as the surviving corporation of such merger and becoming a wholly
owned subsidiary of Holdings; (ii) each outstanding share (or any fraction
thereof) of the Company Common Stock being converted in such merger into a like
number of shares of the Holdings Common Stock; and (iii) each outstanding share
(or any fraction thereof) of the Company Series A Preferred Stock being
converted in such merger into a like number of shares of the Holdings Series A
Preferred Stock, all in accordance with the terms of this Agreement (the
"MERGER"); and
WHEREAS, the purpose of creating the holding company structure is to
better reflect the operating practices and methods of the Company and to yield
economies in operations and otherwise; and
WHEREAS, the boards of directors of Holdings, Merger Sub and the
Company have approved and adopted this Agreement and the transactions
contemplated hereby, including the Merger, upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, BE IT RESOLVED, that, in consideration of the premises
and the covenants and agreements contained in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company, Holdings and Merger Sub, intending to be legally
bound hereby, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. In accordance with Section 251(g) of the DGCL
and subject to, and upon the terms and conditions of, this Agreement, Merger Sub
shall, at the Effective Time, be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation of the Merger (the "SURVIVING CORPORATION") and become
a wholly owned subsidiary of Holdings. At the Effective Time, the effects of the
Merger shall be as provided in Section 259 of the DGCL. It is the intent of the
parties that Holdings, as of the Effective Time, be deemed a "successor issuer"
for purposes of continuing offerings of securities pursuant to registration
statements of the Company under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and for registration and reporting purposes under the
Securities Exchange Act of 1934, as amended. For Federal income tax purposes, it
is intended that the Merger shall qualify as a tax-free reorganization under the
provisions of Sections 351 and 368(a) of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
SECTION 1.2. EFFECTIVE TIME. As soon as practicable on or after the
date hereof, the parties shall cause this Agreement, or a certificate of merger
in lieu of filing this Agreement, executed in accordance with the relevant
provisions of the DGCL, to be filed with the Secretary of State of
Delaware and
shall make all other filings or recordings required under the DGCL to
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effectuate the Merger. The Merger shall become effective as of 8:00 a.m. Eastern
Time on December 31, 2002 or as the parties shall otherwise agree (such date and
time being referred to herein as the "EFFECTIVE TIME").
SECTION 1.3. CERTIFICATE OF INCORPORATION. From and after the Effective
Time, the Company Charter, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation (the
"SURVIVING CORPORATION CHARTER") until thereafter amended as provided therein or
by the DGCL, except as follows:
(a) Article First thereof shall be amended so as to read in its
entirety as follows:
"FIRST: The name of the corporation is Rent-A-Center East,
Inc."
(b) Article Fourth thereof shall be amended so as to read in its
entirety as follows:
"FOURTH: The aggregate number of shares of capital stock which
the Corporation shall have authority to issue is 1,000 shares
of common stock, having a par value of $0.01 per share (the
"COMMON STOCK")."
(c) A new Article Eleventh shall be added thereto which shall be
and read in its entirety as follows:
"ELEVENTH: Vote of Stockholders of Rent-A-Center, Inc.
Required to Approve Certain Actions.
Any act or transaction by or involving the Corporation, other
than the election or removal of directors of the Corporation,
that requires for its adoption under the DGCL or this Restated
Certificate of Incorporation the approval of the stockholders
of the Corporation shall, pursuant to and in accordance with
Section 251(g) of the DGCL, require, in addition, the approval
of the stockholders of Rent-A-Center, Inc., a
Delaware
corporation, or any successor thereto by merger, by the same
vote that is required by the DGCL or this Restated Certificate
of Incorporation."
SECTION 1.4. BYLAWS. From and after the Effective Time, the Company
Bylaws, as in effect immediately prior to the Effective Time, shall constitute
the Bylaws of the Surviving Corporation (the "SURVIVING CORPORATION BYLAWS")
until thereafter amended as provided therein or by applicable law, except that
all references in the Surviving Corporation Bylaws to "Rent-A-Center, Inc."
shall be changed to "Rent-A-Center East, Inc."
SECTION 1.5. DIRECTORS. The directors of the Company in office
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation and will continue to hold office from the Effective Time until the
earlier of their resignation or removal or until their successors are duly
elected or appointed and qualified in the manner provided in the Surviving
Corporation Charter and the Surviving Corporation Bylaws, or as otherwise
provided by law.
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SECTION 1.6. OFFICERS. The executive officers of the Company in office
immediately prior to the Effective Time shall be the executive officers of the
Surviving Corporation until the earlier of their resignation or removal or until
their successors are duly elected or appointed and qualified in the manner
provided in the Surviving Corporation Charter and the Surviving Corporation
Bylaws, or as otherwise provided by law.
SECTION 1.7. ADDITIONAL ACTIONS. Subject to the terms of this
Agreement, the parties hereto shall take all such reasonable and lawful actions
as may be necessary, advisable or appropriate in order to effectuate the Merger,
which shall include executing and delivering an Assignment and Assumption
Agreement (the "ASSUMPTION AGREEMENT"), in such form as the Company and Holdings
determine to be appropriate to evidence the assignment to, and assumption by,
Holdings of such rights, interests, obligations and liabilities as the Company
and Holdings determine to be appropriate. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either Merger Sub or the Company acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of each of Merger Sub and the Company, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of Merger Sub and the Company or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
SECTION 1.8. CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Holdings, Merger Sub, the
Company or the holder of any of the following securities:
(a) Conversion of the Company Common Stock. Each share of the
Company Common Stock (or fraction of a share of the Company
Common Stock) issued and outstanding immediately prior to the
Effective Time shall be converted into and thereafter
represent one duly issued, fully paid and nonassessable share
(or equal fraction of a share) of the Holdings Common Stock.
(b) Conversion of the Company Common Stock Held as Treasury Stock.
Each share of the Company Common Stock (or fraction of a share
of the Company Common Stock) held by the Company as treasury
stock immediately prior to the Effective Time shall be
converted into and thereafter represent one share (or equal
fraction of a share) of the Holdings Common Stock held by the
Company.
(c) Conversion of the Company Series A Preferred Stock. Each share
of the Company Series A Preferred Stock (or fraction of a
share of the Company Series A Preferred Stock) issued and
outstanding immediately prior to the Effective Time shall be
converted into and thereafter represent one duly issued, fully
paid and nonassessable share (or equal fraction of a share) of
the Holdings Series A Preferred Stock.
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(d) Conversion of Capital Stock of Merger Sub. Each share of
Merger Sub Common Stock (or fraction of a share of Merger Sub
Common Stock) issued and outstanding immediately prior to the
Effective Time shall be converted into and thereafter
represent one duly issued, fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving
Corporation and shall, upon conversion, constitute all of the
issued and outstanding shares of common stock of the Surviving
Corporation, so that, following the Merger, the Surviving
Corporation shall be a wholly owned subsidiary of Holdings.
(e) Cancellation of Capital Stock of Holdings. Each share of the
Holdings Common Stock owned by the Company immediately prior
to the Merger shall automatically be canceled and retired and
shall cease to exist.
(f) Rights of Certificate Holders. From and after the Effective
Time, holders of certificates formerly evidencing the Company
Common Stock and the Company Series A Preferred Stock shall
cease to have any rights as stockholders of the Company,
except as provided by law; except, however, that such holders
shall have the rights set forth in Section 1.9 herein.
SECTION 1.9. NO SURRENDER OF CERTIFICATES. Until thereafter surrendered
for transfer or exchange, each outstanding stock certificate that, immediately
prior to the Effective Time, evidenced the Company Common Stock or the Company
Series A Preferred Stock shall be deemed and treated for all corporate purposes
to evidence the ownership of the number of shares of the Holdings Common Stock
or the Holdings Series A Preferred Stock, as applicable, into which such shares
of the Company Common Stock or the Company Series A Preferred Stock were
converted pursuant to the provisions of Section 1.8 herein, unless otherwise
determined by the board of directors of Holdings.
ARTICLE II
ACTIONS TO BE TAKEN IN CONNECTION WITH THE MERGER
SECTION 2.1. COMPANY INDEBTEDNESS. As of the Effective Time, with
respect to the Indenture dated as of December 19, 2001, as supplemented by the
First Supplemental Indenture, dated May 1, 2002, and the Second Supplemental
Indenture, dated September 30, 2002 (the "INDENTURE"), among the Company,
ColorTyme, Inc., a Texas corporation, Advantage Companies, Inc., a
Delaware
corporation, Get It Now, LLC, a
Delaware limited liability company (together
with ColorTyme, Inc. and Advantage Companies, Inc., the "SUBSIDIARY GUARANTORS")
and The Bank of New York, a New York banking corporation, as Trustee (the
"TRUSTEE") providing for the issuance of the Company's 11% Senior Subordinated
Notes due 2008, Series D, Holdings, the Company, the Subsidiary Guarantors and
the Trustee shall execute, acknowledge and deliver a supplemental indenture
pursuant to which Holdings shall guarantee the Company's obligations under the
Indenture, to the extent such may be deemed necessary or advisable by the
Company and Holdings.
SECTION 2.2. ASSUMPTION OF EMPLOYEE BENEFIT PLANS. Holdings and the
Company shall, as of the Effective Time, execute, acknowledge and deliver the
Assumption Agreement pursuant to which Holdings will, from and after the
Effective Time, assume and agree to perform
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all obligations of the Company pursuant to the Amended and Restated
Rent-A-Center, Inc. Long-Term Incentive Plan (the "LTIP") and certain other
option agreements relating to ColorTyme, Inc., a Texas corporation (together
with the LTIP, the "EQUITY COMPENSATION PLANS") and other employee benefit plans
as agreed to by the officers of Holdings and the Company. As of the Effective
Time, each option to purchase a share of the Company Common Stock which has been
granted and is then outstanding and unexercised under the Equity Compensation
Plans (an "EXISTING STOCK OPTION") shall be automatically converted into an
option to purchase one share of the Holdings Common Stock at the same exercise
price, for the same period and subject to substantially the same terms and
conditions applicable to the relevant Existing Stock Option (each a "SUBSTITUTE
OPTION" and collectively, the "SUBSTITUTE OPTIONS").
SECTION 2.3. RESERVATION OF SHARES. On or prior to the Effective Time,
Holdings will reserve sufficient authorized but unissued shares of the Holdings
Common Stock to provide for the issuance of the Holdings Common Stock upon (a)
the exercise of the Substitute Options or in satisfaction of other benefits
payable and outstanding under the Company's Equity Compensation Plans; and/or
(b) the conversion of the Holdings Series A Preferred Stock.
ARTICLE III
CONDITIONS OF MERGER
SECTION 3.1. CONDITIONS PRECEDENT. The obligations of the parties to
this Agreement to consummate the Merger and the transactions contemplated by
this Agreement shall be subject to fulfillment or waiver by the parties hereto
of each of the following conditions:
(a) Prior to the Effective Time, the Company shall have notified
the NASDAQ National Market ("NASDAQ") of the Merger and the
effects thereof and shall have received confirmation,
satisfactory to the parties hereto, that no further action
shall be required in connection with the quotation of the
Holdings Common Stock to be issued pursuant to the Merger on
NASDAQ.
(b) Prior to the Effective Time, no order, statute, rule,
regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted,
entered, promulgated or enforced by any court or governmental
or regulatory authority or instrumentality which prohibits or
makes illegal the consummation of the Merger or the
transactions contemplated hereby.
(c) Prior to the Effective Time, Holdings, in its capacity as the
sole stockholder of Merger Sub, shall have approved and
adopted this Agreement and the transactions contemplated
hereby, including the Merger, upon the terms and subject to
the conditions set forth in this Agreement.
(d) Prior to the Effective Time, the Company shall have received
the approval of the holders of the Company Series A Preferred
Stock to consummate the Merger.
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ARTICLE IV
COVENANTS
SECTION 4.1. HOLDINGS CHARTER AND BYLAWS. Holdings shall take or cause
to be taken all actions necessary or desirable to ensure that, as of the
Effective Time, the Holdings Charter and the Holdings Bylaws contain provisions
identical to the Company Charter and the Company Bylaws, respectively,
immediately prior to the Effective Time (other than as required or permitted by
Section 251(g) of the DGCL).
SECTION 4.2. DIRECTORS OF HOLDINGS. Holdings shall take or cause to be
taken all actions necessary or desirable to ensure that, as of the Effective
Time, each person who is a member of the board of directors of the Company
immediately prior to the Merger becomes or remains a director of Holdings (and
are the only directors of Holdings), each of whom shall serve in accordance with
the Holdings Charter and the Holdings Bylaws.
SECTION 4.3. EMPLOYEE BENEFIT PLANS. The Company and Holdings shall
take or cause to be taken all actions necessary or desirable in order for
Holdings to assume the Equity Compensation Plans and to assume (or become a
participating employer in) each other existing employee benefit plan, trust and
agreement of the Company, with or without amendments, or to adopt comparable
plans, all to the extent such may be deemed necessary or advisable by the
Company and Holdings and permitted under applicable law.
ARTICLE V
TERMINATION AND AMENDMENT
SECTION 5.1. TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time by action of the board of directors of the Company, or a duly authorized
committee thereof, Holdings or Merger Sub if it is determined that for any
reason the completion of the transactions provided for herein would be
inadvisable or not in the best interest of such corporation or its stockholders.
In the event of such termination and abandonment, this Agreement shall become
void and none of the Company, Holdings or Merger Sub nor their respective
stockholders, directors or officers shall have any liability with respect to
such termination and abandonment.
SECTION 5.2. AMENDMENTS. This Agreement may be supplemented, amended or
modified by the mutual consent of the parties to this Agreement; provided,
however, that, any amendment effected subsequent to stockholder approval shall
be subject to the restrictions contained in the DGCL. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by all of the parties hereto.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws.
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SECTION 6.2. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when executed shall be deemed to be an original
but all of which shall constitute one and the same agreement.
SECTION 6.3. ENTIRE AGREEMENT. This Agreement, including the documents
and instruments referred to herein, constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Company, Holdings and Merger Sub have caused
this Agreement to be executed as of the date first above written by their
respective officers thereunto duly authorized.
RENT-A-CENTER, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
RENT-A-CENTER HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
RAC MERGER SUB, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Secretary of the Company, do hereby certify
that (i) all of the holders of the Company Series A Preferred Stock adopted the
Agreement by written consent dated December 23, 2002; and (ii) the Agreement has
been adopted by the board of directors of the Company, pursuant to Subsection
251(g) of the DGCL ("SUBSECTION 251(g)") and that the conditions specified in
the first sentence of Subsection 251(g) have been satisfied.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Rent-A-Center Inc., Secretary
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