<PAGE>
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
---------------
Date of Report (Date of earliest event reported):
January 2, 1997
ALRENCO, INC.
(Exact name of registrant as specified in its charter)
Indiana 0-27490 35-1480655
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1736 E. Main Street, New Albany, Indiana 47150
(Address of principal executive offices) (Zip Code)
(812) 949-3370
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
==============================================================================
<PAGE>
Item 2. Acquisition or Disposition of Assets.
------------------------------------
On January 2, 1997 (the "Closing Date"), pursuant to an
Asset Purchase Agreement of the same date (the "Agreement"),
Alrenco, Inc. ("Alrenco") acquired substantially all of the
assets of Fastway, Inc., an Arkansas corporation ("Fastway"), for
$11.9 million (the "Purchase Price"). The acquired assets
included all assets used and maintained in the operation of the
acquired rental-purchase stores, including without limitation,
customer contracts, rental inventory, leasehold improvements,
equipment, vehicles, furniture, fixtures and supplies. The
Purchase Price was determined based upon a multiple of revenues
generated by the acquired rental-purchase stores. The Purchase
Price was paid in cash on the Closing Date, which Alrenco funded
from the proceeds of its secondary public offering of shares of
common stock in September 1996 and an existing credit facility
with Star Bank, N.A.
Fastway, based in Little Rock, Arkansas, operates 28 rental-
purchase stores in Arkansas (20), Mississippi (4), Missouri (3)
and Texas (1). These stores generally offer durable consumer
goods such as televisions, video cassette recorders, stereos,
refrigerators, appliances, furniture and accessories, to
individuals under flexible rental-purchase arrangements.
Pursuant to the Agreement, each of William Charles Cloud and
Sherry Cloud, the sole shareholders of Fastway, entered into a
Noncompetition Agreement with Alrenco. The Noncompetiton
Agreements, among other things, prohibit each individual from
competing with Alrenco or an affiliated company until January 2,
2002.
No material relationships existed between Fastway, William
Charles Cloud, Sherry Cloud or any other affiliate of Fastway and
Alrenco or any director or officer of Alrenco.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements.
--------------------
Financial statements of Fastway required by this Item will
be filed as an amendment to this report within 60 days after the
required filing date of this report.
(b) Pro Forma Financial Information.
-------------------------------
The required pro forma financial information relating to the
transaction described in Item 2 above will be filed as an
amendment to this report within 60 days after the required filing
date for this report.
-2-
<PAGE>
(c) Exhibits.
--------
The following exhibit is filed as a part of this report:
Exhibit
Number Description of Exhibit
- ------- ----------------------
2 -- Asset Purchase Agreement, dated January 2, 1997,
between Alrenco, Inc. and Fastway, Inc.*
- ----------------
* All exhibits and schedules to the Asset Purchase Agreement
filed as an exhibit to this report are omitted. The
registrant will furnish supplementally copies of all omitted
exhibits and schedules to the Commission upon request.
-3-
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Dated: January 15, 1997
ALRENCO, INC.
By: /s/ Theodore H. Wilson
--------------------------------
Theodore H. Wilson
Executive Vice President and
Chief Financial Officer
-4-
<PAGE>
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ASSET PURCHASE AGREEMENT
BETWEEN
ALRENCO, INC.
and
FASTWAY, INC.
* * * * * * * * * *
Closing Date: JANUARY 2, 1997
=================================================================
<PAGE>
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered
into this 2nd day of January, 1997, by and between ALRENCO, INC.
(the "Buyer"), an Indiana corporation, and FASTWAY, INC., an
Arkansas corporation (the "Seller") to be effective at 12:00:01
a.m. on January 2, 1997, (the "Closing Date").
PRELIMINARY STATEMENTS:
The Seller is engaged in the business of operating rental-
purchase stores which offer consumer merchandise to individuals
under rental-purchase agreements.
The Seller desires to sell and the Buyer desires to purchase
all of the Seller's assets and business, including, but not
limited to, its current rental purchase contracts, vehicles,
computer equipment, furnishings, and idle inventory located in
its stores and headquarters office.
In consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and for other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
ARTICLE I. PURCHASE AND SALE OF ASSETS
----------------------------------------
SECTION 1.1 Assets to be Transferred. Upon the terms and
------------------------
subject to the conditions set forth in this Agreement, on the
Closing Date the Seller shall transfer to the Buyer all of its
right, title, and interest to the business, property, and assets,
including, but not limited to, (i) customer rental-purchase
contracts including all rental, rental-purchase and rent-to-own
agreements providing for the rental to customers of furniture,
appliances, equipment and other personal property, (the "Rental
Contracts"); (ii) accounts, NSF checks, notes, products, rents,
trade and other receivables of the Rental Contracts; (iii) files,
reports, records, account histories pertaining to the Rental
Contracts; (iv) rental inventory, idle inventory and warehouse
inventory at the Stores or any warehouse locations; (v) business
equipment at the Stores including, but not limited to, computer
hardware and computer equipment, systems and processes, machines,
machinery, service parts, service equipment, telephone equipment,
furniture, fixtures, tools, supplies; (vi) real estate leases for
the location of the Stores; (vii) vehicles; (viii) telephone, fax
and yellow page numbers for the Stores; (ix) yellow page and
other advertising; and (x) any and all trade names, registered or
not, (collectively the "Transferred Assets") owned by the Seller
in it's headquarters office and stores in the states of Arkansas,
Mississippi, Missouri, and Texas, which are listed on Schedule
1.1, (the "Stores").
SECTION 1.2 Excluded Assets. Notwithstanding any
---------------
provision of this Agreement to the contrary, there shall be excluded from
the Transferred Assets and retained by the Seller the following
assets (i) all bank balances, sales and income tax reserves and
store receipts up to the Closing Date; (ii) contracts pursuant to
which an early purchase option has been exercised; (iii) refunds
of expenses for insurance, yellow pages, and advertising which
were prepaid by Seller and applicable to actions or time periods
of or subsequent to the Closing Date; (iv) all contracts,
arrangements and understandings which are not capable of being
transferred or assigned; (v) personal office furniture and
equipment of Charles Cloud located in Seller's headquarters
office and personal residence of Charles Cloud; (vi) tax and
insurance refunds and purchasing rebates relating to actions or
time periods prior to the Closing Date; (vii) drop payments made
before store opening on the Closing Date; and (viii) Mercedes and
Lexus automobiles and the leases therefor, (collectively, the
"Excluded Assets").
SECTION 1.3 Fixed Assets. Schedule 1.3 sets forth all of
------------ ------------
the Seller's fixed assets, whether owned or leased. Except as
shown on Schedule 1.3, the Seller has good and marketable title
------------
to all of its fixed assets, free and clear of all claims, liens,
mortgages, charges and encumbrances. All of the Seller's fixed
assets, whether owned or leased, are adequate and usable for the
purposes for which they are currently used, are in good operating
condition and repair and have been properly maintained.
SECTION 1.4 Motor Vehicles. Schedule 1.4 sets forth all
-------------- ------------
of the Seller's vehicles, including the year, make, model, vehicle
identification number and location of each. Such vehicles are
mechanically sound and in a condition to perform in a manner
needed for the operation of the business and in compliance with
all applicable statutes, ordinances and regulations, including,
without limitation, those related to safety in each case ordinary
wear and tear accepted. Except as shown on Schedule 1.4, the
------------
Seller has good and marketable title to all of its vehicles and
equipment, free and clear of all claims, liens, mortgages,
charges and encumbrances.
SECTION 1.5 Rental Contracts. Seller will provide Buyer a
----------------
list of the Rental Contracts as of the Closing Date which will be
attached hereto as Schedule 1.5. There are no known facts or
------------
circumstances which would materially impair the validity or
collectability of the rental due under any Rental Contracts. The
forms of Rental Contracts used by the Seller comply as to form
(including, without limitation, any instructions, procedures or
policies relating to the completion and processing of such Rental
Contracts) with all applicable laws, in all material respects, in
each case including but not limited to disclosure, billing, form,
content, manner of preparation and execution.
SECTION 1.6 Inventory. The Seller will provide Buyer an
---------
itemized list, as of the Closing Date, of all of the Seller's
rental inventory, idle inventory and inventory merchandise
ordered but not yet received showing the date of purchase, the
supplier, the cost, description of each item sufficient to
identify it to the Buyer, and the location of each item, which
will be attached hereto as Schedule 1.6. Except for Inventory to
------------
be serviced, which shall not exceed two percent (2%) of total
Inventory, to Seller's knowledge, the Inventory of the Seller is
in good, merchantable and usable condition, ordinary wear and
tear excepted, and is reflected on the books and records of the
Seller at the lower of cost or market value.
SECTION 1.7. Real Estate Leases. Schedule 1.7 sets forth a
------------------ ------------
description of each agreement by which the Seller leases each
parcel of real property (the "Leased Parcels") used in connection
with the business (the "Leases"). As of the Closing Date, Seller
will have delivered to the Buyer true, correct and complete
copies of all the Leases. The Seller and, to Seller's knowledge,
each other party thereto has performed all the obligations
required to be performed by it, has received no notice of default
and to Seller's knowledge, is not in default, with due notice or
lapse of time or both, under any of the Leases. The Seller does
not have any present expectation or intention of not fully
performing all its obligations under each of the Leases, and
Seller has no knowledge of any breach or anticipated breach by
the other party to any of the Leases. None of the Leases have
been terminated; no notice has been given by any party thereto of
any alleged default by any party thereunder; and Seller is not
aware of any intention or right of any party to declare another
party to any of the Leases to be in default. There exists no
actual or, to the best knowledge of Seller, threatened
termination, cancellation or limitation of the business
relationship of the Seller with any party to any of the Leases.
Buyer shall assume responsibility for the Leases effective
January 1. 1997, and for obtaining Landlord's consent to the
assignment of said Leases.
SECTION 1.8 Intellectual Properties. Schedule 1.8
----------------------- ------------
contains an accurate and compete list of all trade names used by
the Seller. To Seller's knowledge, no domestic and foreign
letters patent, patents, patent applications, patent licenses,
software licenses and know-how licenses, trade names, trademarks,
copyrights, unpatented inventions, service marks, trademark
registrations, and applications, service mark registrations and
applications and copyright registrations and applications is
owned or used by the Seller in the operation of the Business.
There have not been and are no pending or, to Seller's knowledge,
threatened proceedings or litigation or other adverse claims
affecting or with respect to the trade names. To Seller's
knowledge there is no reasonable basis upon which a claim may be
asserted against the Seller for infringement of any domestic or
foreign letters patent, patents, patent applications, patent
licenses and know-how licenses, trade names, trademark
registrations and applications, common law trademarks, service
marks, service mark registrations or applications copyrights,
copyright registrations or applications, trade secrets or other
confidential proprietary information.
SECTION 1.9 Consideration for the Transferred Assets. In
----------------------------------------
consideration for the transfer of the Transferred Assets, upon
the terms and subject to the conditions set forth in this
Agreement, the Buyer shall assume the Assumed Liabilities
pursuant to Section 1.10 hereof and shall pay to the Seller a sum
equal to twelve times the average of rental fees, related fees,
and club/waiver income, excluding cash sales, but not early
payouts, and sales/use taxes, for the months of October,
November, and December 1996, (the "Purchase Price").
SECTION 1.10 Assumption of Liabilities. (a) Buyer will (i)
-------------------------
perform all obligations required to be performed by and in the
manner set forth in the Rental Contracts, (ii) assume the leases
and the outstanding indebtedness on those motor vehicles listed
on Schedule 1.4, (iii) assume the Leases listed on Schedule 1.7,
(iv) assume bills listed on Schedule 1.6 for merchandise ordered
but not yet received, (v) be responsible for all utility,
telephone, yellow page and advertising expenses, taxes, and other
fees and costs, whether prepaid or yet to be charged, related to
obligations and time periods of and subsequent to the Closing
Date, and (vi) assume all obligations under the Contracts set
forth on Schedule 2.12. (b) Seller shall be responsible for
utility, telephone, and advertising expenses, taxes, and other
fees and costs arising related to obligations and time periods
prior to the Closing Date. (c) Buyer is purchasing the
Transferred assets free and clear of liabilities not specifically
assumed by Buyer in this Agreement.
SECTION 1.11 Disbursement of Funds. (a) On the Closing
---------------------
Date the Buyer shall pay the Seller, by wire transfer or
certified funds, a sum equal to ninety percent (90%) of the
Purchase Price plus the amount of the Purchase Price allocated to
William Charles Cloud and Sherry Cloud for execution of Non
Competition Agreements to Buyer. (b) Upon the earlier of thirty
(30) days or the release of record of all pending and valid UCC
or other liens secured by the Transferred Assets Buyer will
disburse to Seller one-half (1/2) of the funds held by Seller and
not disbursed to Seller at closing. (b) Sixty (60) calendar days
subsequent to the Closing Date the Parties shall complete a
reconciliation regarding the Purchase Price, the proration of
Assumed Liabilities as mutually agreed to in writing by the Buyer
and Seller, and the payment of any pending and valid UCC or other
liens at which time Buyer shall disburse to Seller the remaining
balance of the Purchase Price plus or minus the amount determined
by the reconciliation.
SECTION 1.12 Allocation of Purchase Price. Within sixty
----------------------------
(60) calendar days subsequent to the Closing Date the parties
shall mutually agree on the allocations of the considerations
paid and the liabilities assumed by Buyer pursuant to Sections
1.9 and 1.11 among the Transferred Assets purchased. The Seller
and Buyer hereby covenant and agree that none of them will take a
position on any income tax return, before any governmental
agency, or in any judicial proceeding that is in any way
inconsistent with the agreed upon allocation. Each party shall
duly and timely file Form 8594 with its appropriate tax returns.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER
-----------------------------------------------------
As an inducement to the Buyer to enter into this Agreement
and to consummate the transactions contemplated hereby, Seller
represents and warrants to the Buyer as follows:
SECTION 2.1 Organization and Qualification. Seller is a
------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the state of Arkansas and qualified to do
business in Mississippi, Missouri, and Texas. The nature of the
business or the Transferred Assets does not require the Seller to
be licensed or qualified in any other jurisdiction.
SECTION 2.2 Corporate Power and Authority. The Seller (a)
-----------------------------
has the corporate power and authority to execute, deliver and
perform this Agreement, the Exhibits and the Schedules hereto and
the other documents and instruments contemplated hereby
(collectively, the "Documents") and to consummate the
transactions contemplated hereby and thereby, and (b) has taken
all necessary corporate and shareholder action to authorize and
approve the execution, delivery and performance of the Documents
and the consummation of the transactions contemplated hereby and
thereby.
SECTION 2.3 Validity. Neither the execution and delivery
--------
of the Documents, the consummation of the transaction
contemplated hereby or thereby, nor the performance of the
Documents in compliance with the terms and conditions hereof and
thereof by the Seller will (i) violate, conflict with or result
in any breach of any trust agreement, Articles of Incorporation,
bylaw, judgment, decree, order, statute or regulation applicable
to the Seller, (ii) violate, conflict with or result in a
material breach, material default or termination or give rise to
any right of termination, cancellation or acceleration of the
maturity of any payment date of any of the obligations of the
Seller or increase or otherwise materially affect the obligations
of the Seller under any law, rule, regulation or any judgment,
decree, order, governmental permit, license or order or any of
the terms, conditions or provisions of any mortgage, indenture,
note, license, agreement or other instrument or obligation
related to the Seller or to Seller's ability to consummate the
transactions contemplated hereby or thereby, except for such
default or rights of termination, cancellation or acceleration
which have been disclosed to the Buyer and which waivers or
consents shall be the sole responsibility of the Buyer to obtain,
with the understanding that Seller will cooperate with and assist
Buyer in obtaining any such waivers or consents to the extent
reasonably requested by Buyer, (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Seller or (iv) result in the creation of any claim upon the
Transferred Assets.
SECTION 2.4 Subsidiaries and Investments. The Seller has
----------------------------
no subsidiaries or owns, directly or indirectly, any capital
stock or other equity or ownership or proprietary interest in any
other corporation, partnership, association, trust, joint venture
or other entity.
SECTION 2.5 Due Diligence Examination. In response to
-------------------------
Buyer's due diligence request, to Seller's knowledge, Seller has
provided Buyer with all, and most current version of, existing
corporate material and documentation and has identified to Buyer
those requested documents which do not exist.
SECTION 2.6 Absence of Undisclosed Liabilities. Except as
----------------------------------
set forth on Schedule 2.6, (a) the Seller is not bound by any
agreement, or subject to any charter or other corporate
restriction or any legal requirement, which has, or in the future
can reasonably be expected to have, a material adverse effect on
the business or prospects of the Seller; (b) no power of attorney
or similar authorization given by the Seller presently is in
effect or outstanding; and (c) no contract or agreement to which
the Seller is a party or is bound or to which the Seller's
properties or assets is subject limits the freedom of the Seller
to compete in any line of business or with any person.
SECTION 2.7 Labor and Employee Relations. The Seller is
----------------------------
not a party to or bound by any collective bargaining agreement
with any labor organization, group or association covering any of
its employees, and Seller has no knowledge of any attempt to
organize the Seller's employees by any person, unit or group
seeking to act as their bargaining agent. Except as set forth on
Schedule 2.7, to Seller's knowledge, there are no pending or
threatened charges by employees, their representatives or
governmental authorities of unfair labor practices or of
employment discrimination or of any other wrongful action with
respect to any aspect of employment of any person employed or
formerly employed by the Seller. No union representation
election relating to employees of the Seller has been scheduled
by any governmental agency or authority, no organizational effort
is being made with respect to any of such employees, and there is
no investigation of the Seller's employment policies or practices
by any governmental agency or authority pending or threatened.
The Seller is not currently, nor has it been, involved in labor
negotiations with any unit or group seeking to become the
bargaining unit for any employees of the Seller. The Seller has
not experienced any material work stoppages, and to the best
knowledge of Seller, no work stoppage is planned.
SECTION 2.8 Significant Suppliers. None of Sellers
---------------------
significant suppliers has terminated, materially reduced or
threatened to terminate or materially reduce its relationship
with the Seller.
SECTION 2.9 Governmental Approvals. To the best knowledge
----------------------
of Seller, no registration or filing with, or consent or approval
of or other action by, any federal, state, or other governmental
agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Seller as party to
this Agreement. Buyer is not familiar with approvals Seller may
be required to obtain.
SECTION 2.10 Compliance with Law; Licenses; Permits. To
--------------------------------------
the best knowledge of Seller, the Seller has complied in all
material respects with all laws, ordinances, legal requirements,
rules, regulations and orders applicable to it, its operations,
properties, assets, products and services. There is no existing
law, rule, regulation or order, and the Seller is not aware of
any proposed law, rule, regulation or order, whether federal,
state or local, which would prohibit or materially restrict the
Buyer from, or otherwise materially adversely affect the Buyer
in, conducting the business in the manner heretofore conducted by
the Seller in any jurisdiction in which the business is now
conducted. The Seller possesses all franchises, permits,
licenses, certificates and consents required from any
governmental or regulatory authority in order for the Seller to
carry on its business as currently conducted and to own and
operate its properties and assets as now owned and operated.
SECTION 2.11 Employee Benefits. (a) Set forth on Schedule
-----------------
2.11 is a list of all pension, profit sharing, retirement,
deferred compensation, multi-employer (as defined under ERISA),
stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical insurance, life
insurance, fringe benefit, welfare, and other employee benefit
plans, programs or arrangements pursuant to which the Seller or
its ERISA Affiliates provides, directly or indirectly,
individually or jointly through others, benefits or compensation
to or on behalf of employees or former employees of the Seller or
its ERISA Affiliates, whether formal or informal, whether or not
written ("Employee Plan"). (b) Neither the Seller nor any of its
ERISA Affiliates is or has been a participant in, or is or has
been obligated to maintain or to make contributions to, a multi-
employer plan, within the meaning of ERISA Section 3(37) and
ERISA Section 4001(a)(3) or an Employee Plan which is subject to
Title IV of ERISA. Neither the Seller nor any ERISA Affiliate
has sponsored, contributed to or been obligated under Title I or
IV of ERISA to contribute to a "defined benefit plan" as defined
in ERISA Section 3(35). (c) For purposes of this Section 2.12,
the term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and the term "ERISA Affiliate"
shall mean each trade or business, whether or not incorporated,
which together with the Company is treated as a single employer
under Section 414(b), (c), (m), (o) or (t).
SECTION 2.12. Outstanding Contracts. Except for Rental
---------------------
Contracts, leases on vehicles being transferred and related debts
and the Leases, Schedule 2.12 sets forth all contracts,
agreements, commitments, licenses and franchises, which involve
obligations or commitments by the Seller of One Thousand Dollars
($1,000) or more or are not cancelable by the Seller without
penalty within thirty (30) days (collectively "Contracts"),
whether written or oral, relating to the Seller. The Seller has
delivered or made available to the Buyer true, correct and
complete copies of all of the Contracts which are in writing and
provided Buyer a complete description of all Contracts which are
not in writing. To Seller's knowledge, all of the Contracts are
in full force and effect and enforceable in accordance with their
terms, except to the extent that the enforceability thereof may
be subject to or affected by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other laws
relating to or affecting the rights of creditors generally. The
Seller has materially performed all the obligations required to
be performed by it, has received no notice of default and is not
in default, with due notice or lapse of time or both, under any
of the Contracts. The Seller has no present expectation or
intention of not fully performing all its obligations under each
of the Contracts, and Seller has no knowledge of any breach or
anticipated breach by the other party to any of the Contracts to
which the Seller is a party. None of the Contracts has been
terminated; to Seller's knowledge, no notice has been given by
any party thereto of any alleged default by any party thereunder;
and Seller is not aware of any intention or right of any party to
declare another party to any of the Contracts to be in default.
There exists no actual or, to the best knowledge of Seller,
threatened termination, cancellation or limitation of the
business relationship of the Seller by any party to any of the
Contracts. Buyer will honor Seller's contract until said contact
expires or until Buyer vacates the location serviced by the MCI
contract.
SECTION 2.13. Proprietary Information of Third Parties.
----------------------------------------
Except as set forth on Schedule 2.13, no third party has claimed
or, to Seller's knowledge, has reason to claim that any person
employed by or consulting with the Seller ("Related Person") has
(i) violated or may be violating any of the terms or conditions
of such person's employment, non-competition or non-disclosure
agreement with such third party, (ii) disclosed or may be
disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party, or
(iii) interfered or may be interfering in the employment
relationship between such third party and any of its present or
former employees. No third party has requested information from
the Seller which suggests that such a claim might be
contemplated. To Seller's knowledge, no Related Person has
employed or proposes to employ any trade secret or any
information or documentation proprietary to any former employer
and, no Related Person has violated any confidential relationship
which such person may have had with any third party, in
connection with the development, or sale or any service of the
Seller, and the Seller has no reason to believe there will be any
such employment or violation.
SECTION 2.14. Transactions With Affiliates. Except for the
----------------------------
leasing of real estate to the Seller, no director, officer or
shareholder of the Seller, or member of the family of any such
person, or any corporation, partnership, trust or other entity in
which any such person, or any member of the family of any such
person, has a beneficial interest greater than five percent (5%)
or is an officer, director, trustee, partner or holder of any
equity interest greater than five percent (5%), is a party to any
transaction with the Seller, including any contract, agreement or
other arrangement providing for the employment of, furnishing of
services by, rental of personal property from or otherwise
requiring payments or involving other obligations to any such
person or firm.
SECTION 2.15. Taxes. All federal, state, local, and
-----
foreign tax returns and tax reports required to be filed by the
Seller on or before the date hereof have been timely filed with
the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed and all
amounts shown as owing thereon have been paid. All taxes
(including, without limitation, income, accumulated earnings,
property, sales, use, franchise, value added, fuel, employees'
income withholding and social security taxes) which have become
due or payable or are required to be collected by the Seller or
are otherwise attributable to any periods ending on or before the
Closing and all interest and penalties thereon, whether disputed
or not, have been paid or will be paid in full or adequately
reflected on the Seller's books and records in accordance with
generally accepted principles on or prior to the Closing Date.
All deposits required by law to be made by the Seller with
respect to employees' withholding taxes have been duly made, and
as of the Closing Date all such deposits due will have been made.
SECTION 2.16. Litigation. Except as set forth on Schedule
----------
2.16, there is no (i) action, suit, claim, proceeding or
investigation pending or, to the best knowledge of Seller,
threatened against or affecting the Seller (whether or not the
Seller is a party or prospective party thereto), at law or in
equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration
proceeding pending relating to the Seller or (iii) governmental
inquiry pending or to Seller's knowledge, threatened against or
involving the Seller, and there is no basis for any of the
foregoing. The Seller has not received any opinion or memorandum
or legal advice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or
disadvantage which may be material and adverse to the business,
prospects, financial condition, operations, property or affairs
of the Seller. To Seller's knowledge, there are no outstanding
orders, writs, judgments, injunctions, or decrees served upon the
Seller by any court, governmental agency or arbitration tribunal
against the Seller. To Seller's knowledge, there are no facts or
circumstances which may result in institution of any action,
suit, claim or legal, administrative or arbitration proceeding or
investigation against, involving or affecting the Seller or the
transactions contemplated hereby. The Seller is not in default
with respect to any order, writ, injunction or decree known to or
served upon it from any court or of any federal, state, municipal
or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign. There is no
action or suit by the Seller pending or threatened against
others.
SECTION 2.17 Environmental Matters.
---------------------
(a) Compliance. To Seller's knowledge, the Seller and all
----------
Leased Parcels are in compliance with all applicable laws, rules,
regulations, orders, ordinances, judgments and decrees of all
governmental authorities with respect to all environmental
statutes, rules and regulations. The Seller has not received
notice of, nor does Seller have knowledge of, any past, present
or future events, conditions, circumstances, activities,
practices, incidents, actions or plans of the Seller or the
Seller's predecessors, either collectively, individually or
severally, which may interfere with or prevent continued
compliance with, or which may give rise to any common law or
legal liability or otherwise form the basis of any claim, action,
suit, proceeding, hearing, or investigation, based on or related
to the disposal, storage, handling, manufacture, processing,
distribution, use, treatment or transport, or the emission,
discharge, release or threatened release into the environment, of
any Substance. The term "Substance" or "Substances" shall mean
any pollutant, hazardous substance, hazardous material, hazardous
waste or toxic waste, as defined in any presently enacted
federal, state or local statute or any regulation that has been
promulgated pursuant thereto. To Seller's knowledge, no part of
any of the Leased Parcels has been listed or proposed for listing
on the National Priorities List established by the United States
Environmental Protection Agency, or any other such list by any
federal, state or local authorities.
(b) Environmental Substance Liability. To Seller's
---------------------------------
knowledge, no event has occurred or condition exists or operating
practice is being employed that could give rise to liability on
the part of the Seller, either at the present time or in the
future, for any losses, liabilities, damages (whether
consequential or otherwise), settlements, penalties, interest,
expenses and costs of responses, including any such liability on
account of the right of any governmental or private entity or
person, and including closure expenses, costs of assessment,
containment, removal, or response (other than monitoring or
transportation or disposal of materials required to be
transported or disposed of in the ordinary course of business
consistent with past practice) arising under any rule or federal,
state, or local statute, or any regulation that has been
promulgated pursuant thereto, or common law, as a result of or in
connection with, or alleged to be as a result of or in connection
with, the following:
(1) the handling, storage, use, transportation or
disposal of any Substances in or near or from the
Leased Parcels;
(2) the handling, storage, use, transportation or
disposal of any Substances by the Seller or its
predecessors which Substances were a product, by-
product or otherwise resulted from the operations
conducted by or on behalf of the Seller or its
predecessors;
(3) any intentional or unintentional emission,
discharge or release of any Substances in or near
or from facilities into or upon the air, surface
water, ground water or land or any disposal,
handling, manufacturing, processing, distribution,
use, treatment, or transport of such Substances in
or near or from facilities by or on behalf of the
Seller or its predecessors; or
(4) the presence of any toxic or hazardous building
materials (including but not limited to asbestos
or similar substances) in any facilities of the
Seller, including but not limited to the inclusion
of such materials in the exterior and interior
walls, floors, ceilings, tile, insulation or any
other portion of building structures.
(c) Environmental Permits. To Seller's knowledge, the
---------------------
Seller has obtained and holds all registrations, permits,
licenses, and approvals issued by or on behalf of any federal,
state or local governmental body or agency if any ("Environmental
Permits") that are required in connection with the operation by
the Seller of the Leased Parcels, the discharge or emission of
Substances by the Seller from the Leased Parcels or the
generation, treatment, storage, transpiration, or disposal of any
such Substances by the Seller. To Seller's knowledge, such
Environmental Permits are currently effective and sufficient for
the operation of the Leased Parcels and the business of the
Seller as currently conducted and intended to be conducted. To
Seller's knowledge, the Seller is in compliance with all terms
and conditions of the Environmental Permits, and is also in
compliance with all other limitations, restrictions, conditions
standards, prohibitions, requirements, obligations, schedules,
and timetables contained in those laws or provisions or contained
in any regulation code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder
and applicable to the Seller.
SECTION 2.18 Product Liability. The Seller has not given or
-----------------
made any express warranties to third parties with respect to any
products rented or sold by it except for dealer warranties and
the warranties imposed by the provisions of the applicable law.
To Seller's knowledge, there is no fact or event forming the
basis of a claim against the Seller for product liability on
account of any express warranty.
SECTION 2.19 Broker's or Finder' Fees. No agent, broker,
------------------------
person or firm acting on behalf of Seller is, or will be,
entitled to any commission or broker's or finder's fees from of
the Seller or from any person controlling, controlled by or under
common control with the Seller in connection with any of the
transactions contemplated herein.
SECTION 2.20 Disclosure. To Seller's knowledge, all
----------
Documents delivered or to be delivered by or on behalf of the
Seller in connection with this Agreement and the transactions
contemplated hereby are true, complete and correct. To Seller's
knowledge, neither this Agreement, nor any of the other Documents
contains any untrue statement of a material fact or omits a
material fact necessary to make the statements made by Seller
herein or therein, in light of the circumstances in which
materially and adversely affects the business. prospects or
financial condition of the Seller or its properties or assets,
which has not been set forth in the Documents.
SECTION 2.21 Certain Practices. Neither the Seller, nor to
-----------------
Seller's knowledge, any of its directors or officers, or to
Seller's knowledge, its employees have, directly or indirectly,
used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political
activity, made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as
amended; established or maintained any unlawful or unrecorded
fund of corporate monies or other assets; made any false or
fictitious entry on the books or records of the Seller or any
subsidiary; made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment; given any favor or gift
which is not deductible for federal income tax purposes; or made
any bribe, kickback, or other payment of a similar or comparable
nature, whether lawful or not, to any person or entity, private
or public, regardless of form, whether in money, business or to
obtain special concessions, or to pay for favorable treatment for
business secured or for special concessions already obtained.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER
-----------------------------------------------------
As an inducement to the Seller to enter into this Agreement
and to consummate the transactions contemplate hereby, the Buyer
represents and warrants to the Seller as follows:
SECTION 3.1 Organization. The Buyer is a corporation duly
------------
organized, validly existing and in good standing under the laws
of the State of Indiana and is duly qualified to transact
business as a foreign corporation in each jurisdiction in which
the failure to so qualify would have a material adverse impact on
the Buyer's ability to purchase the business pursuant to this
Agreement and perform its obligations under this Agreement.
SECTION 3.2 Corporate Power and Authority. The Buyer has
-----------------------------
the corporate power and authority to execute, deliver and perform
this Agreement and the other Documents. The execution, delivery
and performance of the Documents contemplated hereby and the
consummation of the transactions contemplated hereby and thereby
have been duly authorized and approved by all necessary corporate
action of the Buyer. The Documents to be executed and delivered
by the Buyer have been duly executed and delivered by, and
constitute the legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with their terms.
SECTION 3.3 Validity. Neither the execution and delivery
--------
by the Buyer of this Agreement and the other Documents, the
consummation by the Buyer of the transactions contemplated hereby
or thereby, nor the performance by the Buyer of this Agreement
and such other agreements in compliance with the terms and
conditions hereof and thereof will (i) violate, conflict with or
result in any breach of any trust agreement, articles of
incorporation, bylaw, judgment, decree, order, statute or
regulation applicable to the Buyer, (ii) violate, conflict with
or result in a breach of or default (or give rise to any right of
termination, cancellation or acceleration) under any law, rule or
regulation or any judgment, decree, order, governmental permit,
license or order or any of the terms, conditions or provisions of
any mortgage, indenture, note, license, agreement or other
instrument to which the Buyer is a party, or (iii) violate any
order, writ, injunction, decree statute, rule or regulation
applicable to the Buyer.
SECTION 3.4 Broker's or Finder's Fees. No agent, broker,
-------------------------
person or firm acting on behalf of the Buyer is, or will be,
entitled to any commission or broker's or finder's fees from the
Buyer, or from any person controlling, controlled by or under
common control with the Buyer, in connection with any of the
transactions contemplated herein.
SECTION 3.5 Disclosure. All Documents delivered or to be
----------
delivered by or on behalf of the Buyer in connection with this
Agreement and the transactions contemplated hereby are true,
complete and correct. Neither this Agreement, nor any of the
other Documents contains any untrue statement of a material fact
or omits a material fact necessary to make the statements made by
Buyer herein or therein, in light of the circumstances in which
made, not misleading. There is no fact known to the Buyer which
may have a material adverse effect on the Buyer's ability to pay
its obligations under this Agreement, which has not been set
forth in the Documents.
SECTION 3.6 Governmental Approvals. To the best knowledge
----------------------
of Buyer, no registration or filing with, or consent or approval
of or other action by, any federal, state, or other governmental
agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Buyer as party to this
Agreement. Seller is not familiar with approvals Buyer may be
required to obtain.
SECTION 3.7 Compliance with Law; Licenses; Permits. To
--------------------------------------
the best knowledge of Buyer, the Buyer has complied in all
material respects with all laws, ordinances, legal requirements,
rules, regulations and orders applicable to it, its operations,
properties, assets, products and services. The Buyer possesses
all franchises, permits, licenses, certificates and consents
required from any governmental or regulatory authority in order
for the Buyer to carry on its business as currently conducted and
to own and operate its properties and assets as now owned and
operated.
ARTICLE IV. COVENANTS AND AGREEMENTS
-------------------------------------
SECTION 4.1 Cooperation. Each of the parties hereto shall
-----------
use their best efforts in good faith to perform and fulfill all
conditions and obligations to be fulfilled or performed by it
hereunder to the end that the transactions contemplated hereby
will be fully and timely consummated.
SECTION 4.2 Best Efforts. The Seller and Buyer shall use
------------
their best efforts to procure upon reasonable terms and
conditions all consents and approvals, completion of all
filings, all registrations and certificates, and satisfaction of
all other requirements prescribed by law which are necessary for
the consummation of the transactions contemplated by this
Agreement. Prior to the Closing Date, the Seller will use its
best efforts to preserve its relationships with its employees,
customers, suppliers, and others having business relationships
with the Seller.
SECTION 4.3 Taxes and Tax Returns. All transfer taxes,
---------------------
and sales or use taxes, if any, payable by reason of the transfer
or delivery of the Transferred Assets shall be borne and paid by
the Buyer. The Seller shall cause to be prepared and timely
filed, at its sole expense, all of its required tax returns for
all periods up to and including the Closing Date. The Seller
shall be responsible for the payment of, and will indemnify,
defend and hold the Buyer harmless against all taxes due or
assessed which relate to the operations of the Business for all
periods up to and including the Closing Date.
SECTION 4.4 Payment of Liabilities. Except for the
----------------------
Assumed Liabilities, the Seller shall pay and satisfy in full all
of its other obligations and liabilities, of any nature
whatsoever, which accrue prior or subsequent to the Closing Date.
SECTION 4.5 Preservation of Business. Seller shall use
------------------------
its best efforts to preserve the possession and control of all of
its Transferred Assets.
SECTION 4.6 Electronic Data Transfer. The Seller shall
------------------------
cooperate with the Buyer and use its best efforts to make an
electronic data transfer of information, data and records used or
useful in the record keeping with the Seller's software vendor.
SECTION 4.7 UCC Termination Statements. The Seller shall
--------------------------
cause all valid and existing UCC-1 Financing Statements secured
by the Transferred Assets to be duly and validly terminated in
accordance with all applicable state laws within sixty (60) days
following the Closing Date.
SECTION 4.8 Employees and Employee Benefits. (a) As of
-------------------------------
the Closing Date the Seller shall terminate and/or accept the
resignations of employment from all employees who currently
employed by the Seller in the Stores. (b) The Buyer will extend
offers of employment to substantially all of the Store employees
of the Seller, but not those employed and working in the
headquarters office. (c) Any of Seller's employees who are
subsequently hired by Buyer will be considered new employees of
the Buyer and will have only the same benefits and rights as any
other new employee of the Buyer. (d) The Buyer shall have no
obligation or liability of any kind or nature for any
compensation or benefits of any kind or nature to the employees
or consultants of the Seller for services rendered prior to the
Closing Date. The Seller will maintain the benefits in full force
and effect through the Closing Date. The Buyer shall have no
obligation or liability of any kind or nature to the employees or
consultants of the Seller for services rendered prior to the
Closing Date.
SECTION 4.9 Bulk Sales Waiver. The parties hereto agree
-----------------
to waive compliance with all applicable Bulk Sales or Bulk
Transfers Acts, laws or statutes. The Seller further covenants
that in the event any inventory vendor or similar creditor
judicially challenges the transfer and sale of the Transferred
Assets to Buyer under any applicable bulk sales statutes, in
connection with any obligations arising as a result of the
operation of the business prior to the Closing Date, and thereby,
asserts a lien against the Transferred Assets, the Seller shall
take reasonable steps to satisfy the claims of any such creditor
or to litigate that dispute to a successful conclusion.
SECTION 4.10 Auditor Statements. Seller agrees that if
------------------
subsequent to closing, SEC rules require audited financial
statements of the Seller, it agrees to fully cooperate with
agents of Buyer, at Buyer's expense, to expedite the completion
of the audit.
SECTION 4.11 Non-Competition. The Seller agrees that for
---------------
the period commencing on the Closing Date and ending five (5)
years from the date thereof , the Seller shall not, without the
prior written consent of Buyer, in any manner, directly or
indirectly, (i) engage in, have benefit of, guaranty the
repayment of any funds by, or render services of any executive,
advertising, marketing, sales, administrative, supervisory,
engineering, computer program or system development, maintenance
or consulting nature to any business conducting operations in
Arkansas, Mississippi, Missouri, or Texas which is competitive
with the business activities being directly engaged in by the
Buyer as of the Closing Date, or (ii) solicit to employ, on its
own behalf or on behalf of any other person, firm or corporation,
any person who was employed by the Buyer and who has not
thereafter ceased to be employed by the Buyer or a Related
Company for a period of at least one year. The term "Related
Company" shall mean Alrenco, any subsidiary of Alrenco or any
other corporation, twenty percent (20%) of whose stock is owned
by Alrenco, and any other corporation owning at lease twenty
percent (20%) of the capital stock of Alrenco, any subsidiary
thereof, and any successor to any of them. Notwithstanding
anything contained herein to the contrary, the Seller shall not
be prohibited from owning, directly or indirectly, up to five
percent (5%) of the outstanding equity interest of any company,
which is in competition with Alrenco and the stock of which is
publicly traded.
SECTION 4.12 Necessary Actions. At any time and from time
-----------------
to time after the Closing Date, at the request of the Buyer or
Seller and without further consideration, the Seller or Buyer,
respectively, shall execute and deliver such other instruments of
sale, transfer, conveyance, assignment and confirmation as may be
reasonably requested in order to more effectively carryout the
transactions contemplated by this Agreement.
ARTICLE V. CONDITIONS TO THE BUYER'S OBLIGATION
------------------------------------------------
The obligation of the Buyer to pay the consideration to the
Seller and to consummate the other transactions contemplated
hereby is subject to the satisfaction, on or before the Closing
Date, of the following conditions each of which is waived by the
Buyer if not completed prior to or on the Closing Date.
SECTION 5.1 Consents. All requisite governmental
--------
approvals identified on and consents of third parties identified
by the Seller as required to be received to prevent any material
license, permit or agreement relating to the business from
terminating prior to its scheduled termination, as a result of
the consummation of the transactions contemplated hereby, shall
have been obtained and all permits shall, if necessary, be
transferred or reissued to the Buyer.
SECTION 5.2 No Actions, Suits or Proceedings. As of the
--------------------------------
Closing Date, no action, suit, investigation or proceeding
brought by any person, corporation, governmental agency or other
entity shall be pending or, to the best knowledge of the Seller,
threatened, before any court of governmental body (i) to
restrain, prohibit, restrict or delay, or to obtain damages or a
discovery order in respect of this Agreement or the consummation
of the transactions contemplated hereby, or (ii) which has had or
may have a materially adverse effect on the condition, financial
or otherwise, or prospects of the business. No order, decree or
judgment of any court of governmental body shall have been issued
restraining, prohibiting, restricting or delaying, the
consummation of the transaction contemplated by this Agreement.
No insolvency proceeding of any character including without
limitation, bankruptcy, receivership, reorganization, dissolution
or arrangement with creditors, voluntary or involuntary,
affecting the Seller shall be pending, and the Seller shall not
have taken any action in contemplation of, or which would
constitute the basis for, the institution of any such
proceedings.
SECTION 5.3 Non-Competition Agreements. All shareholders
--------------------------
of the Seller shall have executed and delivered to Buyer, a Non-
Competition Agreement.
SECTION 5.4 Closing Documents. The Seller shall have
-----------------
delivered all of the resolutions, certificates, documents and
instruments required by this Agreement.
SECTION 5.5 Approval of the Buyer and Its Counsel. All
-------------------------------------
actions, proceedings, consents, instruments and documents
required to be delivered by, or at the behest or direction of,
the Seller hereunder or incident to its performance hereunder,
and all other related matters, shall be reasonably satisfactory
as to form and substance to the Buyer and its counsel.
SECTION 5.6 Due Diligence Store Audit. The Seller shall
-------------------------
conduct an audit and examination of the Seller's Stores and the
merchandise and records contained therein, which shall not reveal
any information which is materially inconsistent with the
documentation, records, information, or representations
previously provided or made by Seller to Buyer.
ARTICLE VI. CONDITIONS TO THE SELLER'S OBLIGATIONS
---------------------------------------------------
The obligation of the Seller to transfer the Transferred
Assets to the Buyer and to consummate the other transactions
contemplated hereby is subject to the satisfaction, on or before
the Closing Date, of the following conditions each of which is
waived by the Seller if not completed prior to or on the Closing
Date:
SECTION 6.1 No Actions, Suits or Proceedings. As of the
--------------------------------
Closing Date, no action, suit, investigations or proceeding
brought by any person, corporation ,governmental agency or other
entity shall be pending or, to the knowledge of the parties to
this Agreement, threatened, before any court or governmental body
to restrain prohibit, restrict or delay, or to obtain damages or
a discovery order in respect of this Agreement or the
consummation of the transactions contemplated hereby. No order
decree or judgment of any court or governmental body shall have
been issued restraining, prohibiting, restricting or delaying,
the consummation of the transactions contemplated by this
Agreement. No insolvency proceeding of any character including
without limitation, bankruptcy, receivership, reorganization,
dissolution or arrangement with creditors, voluntary or
involuntary, affecting the Buyer shall be pending, and the Buyer
shall not have taken any action in contemplation of, or which
would constitute the basis for, the institution of any such
proceedings.
SECTION 6.2 Closing Documents. The Buyer shall have
-----------------
delivered all of the resolutions, certificates, documents and
instruments required by this Agreement.
SECTION 6.3 Approval of the Seller and Its Counsel. All
--------------------------------------
actions, proceedings, consents, instruments and documents
required to be delivered by, or at the behest or direction of,
the Buyer hereunder or incident to its performance hereunder, and
all other related matters, shall be reasonably satisfactory as to
form and substance to the Seller and its counsel.
SECTION 6.4 Closing Date. The closing shall be January
------------
2, 1997, at Seller's office in Little Rock, Arkansas, unless
mutually agreed otherwise, in writing, by the parties.
ARTICLE VII. THE CLOSING AND CERTAIN CLOSING DELIVERIES
--------------------------------------------------------
SECTION 7.1 Time and Place of Closing. Upon the terms and
-------------------------
subject to the satisfaction or waiver of the conditions contained
in this Agreement, the closing of the transactions contemplated
by this Agreement shall take place at Seller's office in Little
Rock, Arkansas, on January 2, 1997, unless mutually agreed
otherwise, in writing, by the parties.
SECTION 7.2 Deliveries by the Seller. At the Closing, the
------------------------
Seller will deliver or cause to be delivered to the Buyer the
following:
(a) Bill of Sale for the Transferred Assets,
(b) An Assignment of Lease for each of the Leases,
(c) Computer printout of all Rental Contracts as of the
Closing Date,
(d) Computer printout of all idle and rented inventory as
of the Closing Date,
(e) Certificates of title for vehicles being transferred,
(f) Leases for vehicles being transferred with leases to be
assumed,
(g) Limited power of attorney for the transfer and
registration of vehicles,
(h) A certificate of the Secretary of the Seller certifying
a true, correct, and complete copy of the resolution
adopted by the Boards of Directors and Shareholders of
the Seller authorizing and approving the execution,
performance and delivery of this Agreement and the
transactions contemplated by this Agreement,
(i) The Non-Competition Agreement required from all
shareholders,
(j) Certificates of good standing for the states of
Arkansas, Mississippi, Missouri, and Texas.
(k) All other documents, instruments and writings required
to be delivered by the Seller at or prior to the
Closing Date pursuant to this Agreement or otherwise
required in connection herewith.
SECTION 7.3 Deliveries by the Buyer. At the Closing, the
-----------------------
Buyer will deliver the following to or for the account of Seller:
(a) The payment required by Section 1.12;
(b) An Assignment of Lease for each of the Leases ;
(c) A certificate of the Secretary of the Buyer certifying
a true, correct, and complete copy of the resolution
adopted by the Boards of Directors and Shareholders of
the Seller authorizing and approving the execution,
performance and delivery of this Agreement and the
transactions contemplated by this Agreement,
(d) All other documents, instruments and writings required
to be delivered by the buyer at or prior to the Closing
Date pursuant to this Agreement or otherwise required
in connection herewith.
ARTICLE VIII. INDEMNIFICATION.
-------------------------------
SECTION 8.1 Survival. All representations and warranties
--------
in this Agreement and the other Documents shall survive the
Closing of the transactions contemplated by this Agreement and
any investigation at any time made by or on behalf of any party
for a period of two (2) years and all such representations and
warranties shall expire on the second anniversary of the Closing
Date, except that (a) claims, if any, asserted in writing prior
to such second anniversary identified as a claim for
indemnification pursuant this Article VIII, and (b) tax or
environmental claims arising from the breach of Sections 2.15 and
2.17, respectively, shall survive the closing of the transactions
contemplated by this Agreement and for the full period of the
applicable statute of limitations.
SECTION 8.2 Indemnification by Seller. Subject to the
-------------------------
terms herein, the Seller shall indemnify, defend, and hold the
Buyer and the respective officers, directors, and employees of
Buyer, and their successors and assignees (the "Seller's
Indemnitees") harmless from, against and with respect to any
claim, liability, obligation, loss, damage, assessment, judgment,
legal fee, cost and expense of any kind or character (the
"Damages"), arising out of or in any manner incident, relating or
attributable to:
(a) Any material inaccuracy in any material representation
or material breach of any material warranty of the
Seller contained in this Agreement;
(b) Any material failure by the Seller to perform or
observe, or to have performed or observed, in full any
material covenant, material agreement or material
condition to be performed or observed by it under this
Agreement;
(c) Reliance by the Buyer on any books or records of the
Seller or written information furnished to the Buyer
pursuant to this Agreement by or on behalf of the
Seller in the event that such books and records or
written information are false in some material respect
or materially inaccurate; or
(d) Liabilities or obligations of, or claims against, the
Buyer (whether absolute, accrued, contingent or
otherwise) relating to, or arising out of, the
operation of the business prior to the Closing Date,
not otherwise permitted hereunder.
(e) Valid claims of employees of Seller, general creditor
claims, vendor claims and product liability claims
arising prior to the closing date, but asserted after
the Closing Date and warranty refund and customer
damage claims asserted prior to the Closing Date.
Provided, however, Seller's Indemnitees shall not be
entitled to indemnification or offset hereunder until Damages in
the total exceed Two Thousand Dollars ($2,000) and then only to
the extent of aggregated Damages in excess of Two Thousand
Dollars ($2,000). Indemnification Damages, if any, are to be
calculated separate from the Purchase Price and not to be an
addition to or deduction from the disbursement of the Purchase
Price.
SECTION 8.3 Notice to Seller. If any of the matters as to
----------------
which the Seller's Indemnitees are entitled to receive
indemnification under Section 8.2 should entail litigation with
or claims asserted by parties other than the Seller, the Seller
shall be given prompt notice thereof and shall have the right, at
its expense, to control such claim or litigation upon prompt
notice to Buyer of its election to do so. To the extent
requested by the Seller, the Buyer, at its expense, shall
cooperate with and assist the Seller, in connection with such
claim or litigation. Buyer shall have the right to appoint
single counsel to consult with and remain advised by the Seller
in connection with such claim or litigation. The Seller shall
have final authority to determine all matters in connection with
such claim or litigation; provided, however, that the Seller
-------- -------
shall not settle any third party claim without the consent of the
Buyer, which shall not be unreasonably denied or delayed.
SECTION 8.4 Indemnification by Buyer. The Buyer shall
------------------------
indemnify, defend, and hold the Seller and its successors and
assigns (the "Buyer's Indemnitees") harmless from , against and
with respect to any claim, liability, obligation, loss, damage,
assessment, judgment, cost and expense of any kind or character
(the "Damages"), arising out of or in any manner incident,
relating or attributable to:
(a) Any material inaccuracy in any material representation
or material breach of material warranty of the Buyer
contained in this Agreement;
(b) Any material failure by the Buyer to perform or
observe, or to have performed or observed, in full, any
material covenant, material agreement or material
condition to be performed or observed by it under any
of the Documents;
(c) Reliance by the Seller on any books or records of the
Buyer or reliance by the Seller on any written
information furnished to the Seller pursuant to this
Agreement by or on behalf of the Buyer in the event
that such books and records or written information are
false in some material respect or inaccurate;
(d) The failure of Buyer to pay or perform the Assumed
Liabilities, Contracts, Rental Contracts and Leases
subsequent to the Closing Date; or
Provided, however, Buyer's Indemnitees shall not be entitle
to indemnification hereunder until Damages in total exceed Two
Thousand Dollars ($2,000) and then only to the extent of
aggregate damages in excess of Two Thousand Dollars ($2,000).
Indemnification Damages, if any, are to be calculated separate
from the Purchase Price and not to be an addition to or deduction
from the disbursement of the Purchase Price.
SECTION 8.5 Notice to the Buyer. If any of the matters as
-------------------
to which the Buyer's Indemnitees are entitled to receive
indemnification under Section 8.4 should entail litigation with
or claims asserted by parties other than the Buyer, the Buyer
shall be given prompt notice thereof an shall have the right, at
its expense, to control claim or litigation upon prompt notice to
Seller of its election to do so. To the extent requested by the
Buyer, the Seller, at its expense, shall cooperate with and
assist the Buyer, in connection with such claim or litigation.
The Seller shall have the right to appoint single counsel to
consult with and remain advised by the Buyer in connection with
such claim or litigation. The Buyer shall have final authority
to determine all matters in connection with such claim or
litigation; provided, however, that the Buyer shall not settle
-------- -------
any third party claim without the consent of the Seller, which
shall not be unreasonably denied or delayed.
ARTICLE IX. MISCELLANEOUS
--------------------------
SECTION 9.1 Knowledge of Seller. Where any representation
-------------------
or warranty contained in this Agreement is expressly qualified by
reference to "the Seller's knowledge", "the Seller's knowledge"
shall mean the actual knowledge of its Board of Directors and
corporate officers or the knowledge they should have acquired in
the prudent and reasonable exercise of their duties as to the
matters that are the subject of such representations and
warranties.
SECTION 9.2 Knowledge of Buyer. Where any representation
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or warranty contained in this Agreement is expressly qualified by
reference to "the Buyer's knowledge", "the Buyer's knowledge"
shall mean the actual knowledge of its Board of Directors and
corporate officers or the knowledge they should have acquired in
the prudent and reasonable exercise of their duties as to the
matters that are the subject of such representations and
warranties.
SECTION 9.3 "Person" Defined. "Person" Shall mean and
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include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a
government or other department or agency thereof.
SECTION 9.4 Notices. All notices, requests, consents and
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other communications hereunder shall be in writing, shall be
addressed to the receiving party's address set forth below or to
such other addresses as a party may designate by notice
hereunder, and shall be either (i) delivered by hand, (ii) sent
by recognized overnight courier, or (iii) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Buyer:
Alrenco, Inc.
P. O. Box 85
1736 East Main Street
New Albany, Indiana 47151-0085
Attn: Michael D. Walts, President
With a copy to:
Stites & Harbison
Court House Plaza
323 East Court Avenue
Jeffersonville, Indiana 47131
Attn: Robert W. Lanum, Esq.
If to the Seller:
Charles Cloud
37 Edgehill
Little Rock, Arkansas 72207
With a copy to:
Cal Donsky, Esq.
Gardere & Wynne
3000 Thanksgiving Tower
Dallas, Texas 75201
All notices, requests, consents and other communications
hereunder shall be deemed to have been given (i) if by hand, at
the time of the delivery thereof to the receiving party at the
address of such party set forth above, (ii) if sent by overnight
courier, on the next business day following the day such notice
is delivered to the courier service, or (iii) if sent by
registered or certified mail, on the fifth business day following
the day such mailing is sent. The address of any party herein
may be changed at any time by written notice to the parties.
SECTION 9.5 Entire Agreement. This Agreement and the
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other Documents embody the entire agreement and understanding
between the parties hereto with respect to the subject matter
hereof and supersede all prior oral or written agreements and
understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement of any
kind not expressly set forth in the other Documents shall affect,
or be used to interpret, change or restrict, the express terms
and provisions of this Agreement.
SECTION 9.6 Modification and Amendments. The terms and
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provisions for this Agreement may be modified or amended only by
written agreement executed by all parties hereto.
SECTION 9.7 Assignment/Binding Effect. Neither this
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Agreement, nor any right hereunder, may be assigned by any of the
parties hereto without the prior written consent of the other
parties. This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective heirs,
personal representatives, successors and permitted assigns.
SECTION 9.8 Parties in Interest. Nothing in this
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Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement
shall be construed to create any rights or obligations except
among the parties hereto, and no person or entity shall be
regarded as a third-party beneficiary of this Agreement.
SECTION 9.9 Governing Law. THIS AGREEMENT AND THE RIGHTS
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AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
INDIANA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLE
THEREOF.
SECTION 9.10 Arbitration. Any dispute or difference
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between the parties hereto arising out of or relating to this
Agreement shall be finally settled by arbitration in accordance
with the Commercial Rules of the American Arbitration Association
by a panel of three (3) qualified arbitrators. The Seller and
the Buyer shall each choose an arbitrator and the third shall be
chosen by the two (2) so chosen. If either the Seller or the
buyer fail to choose an arbitrator within thirty (30) days after
notice of the commencement of arbitration or if the two
arbitrators fail to choose a third arbitrator within thirty (30)
days after their appointment, the American Arbitration
Association shall, upon the request of any party to the dispute
or difference, appoint the arbitrator or arbitrators to
constitute or complete the panel as the case may be. Arbitration
proceedings hereunder may be initiated by either the Seller or
the Buyer making a written request to the American Arbitration
Association, together with any appropriate filing fee, at the
office of the American Arbitration Association in Louisville,
Kentucky. All arbitration proceedings shall be held in
Louisville, Kentucky. Any order or determination of the arbitral
tribunal shall be final and binding upon the parties to the
arbitration and may be entered in any court having jurisdiction.
SECTION 9.11 Severability. In the event that any arbitral
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tribunal of competent jurisdiction shall finally determine that
any provision, or any portion thereof, contained in this
Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such
arbitral tribunal determines it enforceable, and as so limited
shall remain in full force and effect. In the event that such
arbitral tribunal shall determine any such provision, or portion
thereof, wholly unenforceable, the remaining provisions of this
Agreement shall nevertheless remain in full force and effect.
SECTION 9.12 Interpretation. The parties hereto
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acknowledge and agree that: (i) the rule of construction to the
effect that any ambiguities are resolved against the drafting
party shall not be employed in the interpretation of this
Agreement, and (ii) the terms and provisions of this Agreement
shall be construed fairly as to all parties hereto and not in
favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
SECTION 9.13 Headings and Captions. The headings and
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captions of the various subdivisions of this Agreement are for
convenience of reference only and shall in no way modify, or
affect, or be considered in construing or interpreting the
meaning or construction of any of the terms or provisions hereof.
SECTION 9.14 Reliance. The parties hereto agree that,
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notwithstanding any right of any party to the Agreement to
investigate the affairs of any other party of this Agreement, the
party having such right to investigate shall have the right to
rely fully upon the representations and warranties of the other
party expressly contained herein
SECTION 9.15 Expenses. Each party shall pay its own fees
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and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) incurred in
connection with this Agreement and the transactions contemplated
hereby whether or not the transaction contemplated hereby are
consummated.
SECTION 9.16 Gender. All pronouns and any variation
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thereof shall be deemed to refer to the masculine, feminine,
neuter, singular, or plural as the identity of the person or
entity or the context may require.
SECTION 9.17 Publicity. Except by the mutual agreement
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between the Seller and Buyer, no party shall issue any press
release or otherwise make any public statement with respect to
the execution of, or the transactions contemplated by, this
Agreement except as may be required by law.
SECTION 9.18 Counterparts. This Agreement may be executed
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in one or more counterparts, and by different parties hereto on
separate counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Buyer and the Seller have each
caused this Agreement to be executed by its duly authorized
officer all as of the day and year first above written.
Buyer: ALRENCO, INC.
By: /s/ Michael D. Walts
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Michael D. Walts
President
Seller: FASTWAY, INC.
By: /s/ William Charles Cloud
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William Charles Cloud
President
