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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) July 11, 1996
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BESTWAY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-8569 81-0332743
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(State of other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification
Number)
7800 N. Stemmons, Suite 320, Dallas, Texas 75247
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 630-6655
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) Pursuant to the Agreement for the Purchase and Sale of Assets by
and among Bestway, Inc., a Delaware corporation (the "Company"), REJA, Inc., a
privately-owned Arkansas corporation ("REJA"), and Gus Blass III, Tucker Morse,
D. Eugene Fortson, Warren Stephenson and Rod Reed, the Company, on July 1,
1996, acquired substantially all of the assets of REJA. The assets acquired by
the Company include, among other things, REJA's idle inventory, rental
contracts, vehicles, store furniture and fixtures, computers and leasehold
improvements. In addition, the Company assumed the leases for eight of REJA's
former store locations.
The Company will deliver to REJA 132,000 shares of the Company's
voting common stock, $.01 par value per share, and $500,000, as the aggregate
purchase price in connection with the acquisition.
(b) The equipment and other physical property acquired from REJA in
connection with its business will continue to be used by the Company for the
same purpose.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA
(a) Exhibits
2.1 Plan of acquisition
Filed herewith as "Exhibit 2.1"
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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.
BESTWAY, INC.
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(Registrant)
Date: July 11, 1996 By: /s/ Beth A. Durrett
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Beth A. Durrett
Vice President/Controller
of the Registrant
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
2.1 - Plan of Acquisition
</TABLE>
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EXHIBIT 2.1
AGREEMENT FOR THE PURCHASE
AND SALE OF ASSETS
THIS AGREEMENT, dated as of July 1, 1996, by and between Bestway, Inc., a
Delaware Corporation ("Buyer") and REJA, Inc., an Arkansas corporation
("Seller") and Gus Blass III, Tucker Morse, D. Eugene Fortson, Warren
Stephenson and Rod Reed (collectively referred to herein as the "Selling
Shareholders"):
IT IS AGREED AS FOLLOWS:
1. Assets to be Transferred.
On the Closing Date as defined herein, Seller shall sell, convey, assign
and transfer to Buyer or its designated affiliate the following specified
assets, (the "Assets") free and clear of all liens and encumbrances, such sale
and transfer to be evidenced by the documents of sale, transfer and conveyance
listed on Schedule 1.0 attached hereto, all such documents to be satisfactory
to Buyer in form and substance:
1.1 The assets to be conveyed under this agreement located or related
to the list of locations listed on Schedule 1.1 attached hereto.
1.2 It is Buyer's intent to rename all the locations identified in
Schedule 1.1 to Bestway Rental, Inc. Buyer may use the following name for a
reasonable length of time in order for it to change the names to "Bestway
Rental": "Express Rental."
1.3 All equipment of Seller as listed on Schedule 1.3;
1.4 Automobiles, trucks and other vehicles owned by Seller as listed
on Schedule 1.4 attached hereto;
1.5 All inventory of Seller which is owned but not leased ("Idle
Inventory") as shall exist on the date hereof and on the Closing Date, as
listed on Schedule 1.5;
1.6 All inventory in the hands of customers, and the rental contracts
related thereto (the "Rental Contracts") as listed on Schedule 1.6;
1.7 Certain contracts, leases and other agreements to which Seller is
a party listed on Schedule 1.7 attached hereto. It is understood that Buyer
cannot and does not guarantee the amount of rent or the continued occupancy of
the locations listed on Schedule 1.7 not covered by a written lease as
indicated by "no lease".
1.8 All books, records and files, and all transferable right, title
and interest in and to software and computer programs and other data
processing, storage and retrieval systems relating to Seller's business,
including, without limitation, all customer
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and supplier lists, credit information (excluding credit information on Seller)
and all employee payroll and personnel records and other similar assets
necessary to run the business of Seller; and
1.9 All accounts receivable, on the books on the date of transfer,
relating to Seller's business, together with any accrued interest, and any,
other accrued or future right relating to Seller's business to receive money.
2. Assumed Liabilities and Excluded Liabilities.
Subject to the proration provisions of Section 3 hereof, Buyer or its
designated affiliate agrees to assume the following liabilities (the "Assumed
Liabilities"), effective as of the Closing Date, and indemnify and hold Seller
harmless on the same:
(a) Those liabilities listed in Schedule 2 hereof (including the
assumption of any leasehold payments); and
(b) All obligations under the Rental Contracts listed on Schedule 1.6
hereof.
Except for the specific debts, obligations and liabilities of Seller set
forth in this Section 2, Buyer shall not assume and shall in no event be liable
for any debts, obligations or liabilities of Seller, whether accrued, absolute,
matured, known or unknown, liquidated or unliquidated, contingent or otherwise.
3. Prorations.
Property taxes, yellow page advertising, rental payments on leased
properties, utilities and all other revenues and expenses shall be prorated as
of the Closing Date, based upon the number of days during the month or year, as
the case may be, that Seller has operated the businesses. The Purchase Price
shall be adjusted accordingly to reflect any net balance owing to Buyer or
Seller. With respect to any such expense that has not been determined as of the
Closing Date, good faith estimates shall be arrived at and adjustments made
based upon such estimates. Such estimates shall be re-adjusted when actual
figures are available and appropriate credits, if any, given and payments made
promptly thereafter.
4. Purchase Price, Terms and Allocation.
4.1 Purchase Price. Buyer shall, as soon as practicable after
Closing, deliver to certain of the Selling Shareholders as set forth in Section
4.2 hereof, as and for the purchase price of the Assets, 132,000 shares of
voting common stock of Buyer, $0.01 par value per share (the "Shares"). In
addition, Buyer shall deliver to Seller at closing the sum of $500,000.00 cash.
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4.2 Transfer and Delivery of Shares.
The Shares shall be delivered by Buyer to Seller in the form of
twenty (20) separate stock certificates for 6,600 Shares each issued to the
following individuals (referred to collectively as the "Holders") as follows:
Gus Blass III Five certificates totalling 33,000 shares
Tucker Morse Five certificates totalling 33,000 shares
D. Eugene Fortson Five certificates totalling 33,000 shares
Warren Stephenson Five certificates totalling 33,000 shares
4.3 Brokerage Commission. Seller has not employed any broker, agent
or finder in connection with any transaction contemplated by this Agreement and
hereby indemnifies Buyer against any liability for a brokerage commission or
finders fee of any description incurred by Seller with respect to any
transaction contemplated by this Agreement.
4.4 Utility Deposit. Buyer shall pay Seller $7,613.35 for the transfer
of all utilities deposits.
4.5 Personal Property Taxes. Buyer shall pay Seller the sum of
$12,876.69 for its pro rata share of personal property taxes through the end of
1996. Seller shall pay $12,876.69 for its pro rata share. This is based on an
estimated per diem of $70.36. If the actual amount of the taxes differ, the
amount will be adjusted and Seller shall refund or Buyer shall pay an
additional amount on or before January 1, 1997.
5. Representations and Warranties by Seller and Selling Shareholders.
Seller and the Selling Shareholders represent and warrant the following:
5.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas, and has full corporate power to carry on its business as now
conducted by it and to own and operate its assets as now owned and operated by
it. Seller is qualified to do business and is in good standing in each
jurisdiction where such qualification is necessary. Seller is conducting and
has in the past conducted its business in accordance with all applicable
federal, state and local laws, the violation of which would affect the property
or business of Seller, and has no notice of any claimed violation of any such
laws.
5.2 Title to Assets. Seller has good, indefeasible and marketable
title to the Assets, which are free and clear of all
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liens and encumbrances. The Assets are in good operating condition and repair,
and are fit and useable for the purposes for which they are being used. All
liens will be paid off at Closing by Seller.
5.3 Contracts. Attached hereto as Schedule 5.3 is a Schedule of
Contracts listing the following contracts, understandings, commitments and
agreements to which Seller is a party or is bound;
(a) All oral or written contracts, other than Rental Contracts, which
are listed on Schedule 1.6, understandings or commitments, whether in the
ordinary course of business or not, involving a present or future
obligation to deliver goods or services of an amount of value in excess of
Five Thousand Dollars ($5,000) each;
(b) All bonus, incentive compensation, profit sharing, pension,
vacation, group insurance or employee welfare plans of any nature
whatsoever;
(c) All collective bargaining agreements or other contracts or
commitments to or with any labor union, employee representative or group
of employees;
(d) All employment contracts, and all other contracts, agreements or
commitments (whether written or oral) to or with individual employees,
agent, or representatives, for a period excess of thirty (30) days, or for
a remuneration which exceeds or will exceed in accordance with present
commitments, $20,000 per annum, identifying the individual and his
position; and
(e) Any oral or written contract, understanding or commitment which
requires the consent of any party thereto to the consummation of the
transaction contemplated by the Agreement.
There has not been any default in any obligation to be performed by Seller
under any contract, commitment or agreement listed in Schedule 5.3 which
default could adversely affect the business or property of Seller or the
Assets, and Seller has not waived any right under any such contract, commitment
or agreement so as to adversely affect the business, Assets or property of
Seller. Copies of all such written contracts and written summaries of all such
oral contracts will be furnished or made available to Buyer within a reasonable
time before the Closing Date.
5.4 Franchises, Trademarks, Licenses, etc. Section 1.1 lists all
trade names, any interest in which is owned by or registered in the name of
Seller. Seller owns no trademark registration, trademark licenses, patents,
patent applications
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therefor, licenses, authorizations and or other assets of like kind. Nothing
herein is deemed to mean that Seller does not claim the right to use said names
as its trademark.
5.5 Litigation. There is no actual or threatened litigation,
proceeding or governmental investigation in progress, nor is there basis for
any affecting the Assets. There is no outstanding order, judgment or award by
any court, arbitrator or governmental body against or affecting the Assets.
5.6 Inventory. The inventory of Seller on the Closing Date will
consist of items substantially all of which were and will be of the usual
quality and quantity necessary for the normal conduct of the business and
reasonably expected to be useable or rentable within a reasonable period of
time in the ordinary course of business, except items of inventory which have
been written down to realizable market value or written off completely, and
damaged, broken or spoiled items in an amount which does not materially affect
the value of the inventory as reflected on said statements. With respect to
inventory in the hands of customers for which Seller is committed as of the
date hereof or the Closing Date, such inventory is described in Schedule 1.5
and is reasonably expected to be usable in the ordinary course of business as
presently being conducted.
5.7 Rental Contracts. Schedule 1.6 attached hereto contains a
complete and accurate list of all Rental Contracts to which Seller is a lessor
as of the Closing Date, the name and address of each lessee, the expiration
date of each Rental Contract, the monthly rent and any additional rent payable
under such Rental Contract. All of the Rental Contracts are free of liens and
encumbrances, are in compliance with applicable laws, and each customer is in
compliance with the terms and conditions thereunder within the acceptable
industry norms.
5.8 Real Property Leases. Schedule 1.7 includes a complete and
accurate list of all real property leases to which the Seller is a party which
are to be assigned to Buyer including the address of each property, together
with a summary description of the buildings and improvements thereon, the name
and address of each lessor where Seller is a tenant and each tenant where
Seller is a lessor and the expiration date of each lease. Copies of such leases
and any amendments have been furnished to Buyer prior to the Closing Date.
Seller is not in default under any such lease. Seller is the tenant in good
standing under a valid lease with respect to all property used by Seller in the
operation of its business which is to be transferred or assigned to Buyer.
5.9 Employees. Schedule 5.9 contains a list of all employees of
Seller, together with their job titles, fringe
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benefits and date of employment. Seller has previously provided to Buyer
compensation information on its employees.
5.10 Environmental Matters.
(a) There has been no storage, generation, manufacture, refinement,
transportation, production, treatment or disposal of solid wastes, toxic wastes
or hazardous wastes or substances by Seller (or, to the best of Seller's
knowledge, any of its predecessors ill interest) at the leased properties
described on Schedule 1.7 attached hereto in violation of any applicable law or
permit or which would require significant remedial action under any such
applicable law or permit. There has been no spill, discharge, leak, emission,
injection, escape, dumping or any other release by Seller of any kind onto the
leased properties described on Schedule 1.7 attached hereto or from such real
properties into the environment surrounding such real properties of any solid
wastes, toxic wastes or hazardous wastes or substances as such terms are
defined under any such applicable law.
(b) Seller has not sent, arranged for disposal or treatment, arranged
with a transporter for transport for disposal or treatment, transported or
accepted for transport any hazardous substance or petroleum, including crude
oil or any fraction thereof, to a facility, site or location, which, pursuant
to the Comprehensive Environmental Response, Compensation And Liability Act of
1980, as amended, or any similar state or local law, (a) has been placed or is
proposed to be placed, on the National Priorities List or its state equivalent
or (b) which is subject to a claim, administrative order or other request to
take clean up action, removal or remedial action by any person or entity
(including any governmental entity) or which is subject to a claim for damages
by any person or entity (including any governmental entity).
5.11 Taxes.
(a) Seller has (i) timely filed all returns required to be filed by
it with respect to all taxes, (ii) paid all taxes shown to have become due
pursuant to such returns and (iii) paid all other taxes for which a notice of
assessment or demand for payment has been received.
(b) All tax returns filed by or on behalf of Seller have been
prepared in accordance with all applicable laws and requirements and accurately
reflect the taxable income (or other measure of tax) of the corporation filing
the return.
(c) There are no tax liens upon any of the Assets, except liens with
respect to personal property taxes not yet delinquent, and Seller is not aware
of any audit or other proceeding or investigation, or of any position taken on
a tax
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return of Seller which could give rise to a tax lien upon any Assets.
5.12 Employment Benefit Plans - ERISA.
(a) Seller does not currently maintain or contribute to and has not
maintained or contributed to (i) any incentive, bonus, commission, or deferred
compensation or severance or termination pay plan, agreement or arrangement,
whether formal or informal and whether legally binding or not; (ii) any
pension, profit sharing, stock purchase, stock option, disability, retirement
or any other employee; benefit plan, agreement or arrangement, whether formal or
informal and whether legally binding or not; (iii) any fringe benefit plan,
agreement or arrangement, whether formal or informal and whether legally
binding or not or (iv) any other "employee pension benefit plan" as such term
is defined in Section 3(2) of the ERISA (collectively, the "Plans").
(b) Seller has not engaged in a transaction in connection with which
it could be subject either to a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code
of 1986, as amended.
(c) Seller has not maintained or contributed to or been required to
contribute to a "multi-employer plan," as such term is defined in Section 4001
(a) (3) of ERISA.
6. Restrictions on Transfer of Shares.
6.1 The Holders understand and agree that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and that accordingly they will not be fully transferable except as permitted
under various exemptions contained in the Securities Act, or upon satisfaction
of the registration and prospectus delivery requirements of the Securities Act.
The Holders acknowledge that they must bear the economic risk of their
investment in the Shares for an indefinite period of time since they have not
been registered under the Securities Act and therefore cannot be sold unless
they are subsequently registered or an exemption from registration is
available.
6.2 The Holders hereby represent and warrant to the Buyer that they
are acquiring the Shares for investment purposes only, for their own account,
and not as nominee or agent for any other person, and not with a view to, or
for resale in connection with, any distribution thereof within the meaning of
the Securities Act. The Holders represent and warrant that they have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of their investment.
6.3 The Holders hereby agree with the Buyer as follows:
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(a) The certificates evidencing the Shares, and each certificate
issued in transfer thereof, will bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES OR BESTWAY, INC. RECEIVES AN OPINION OF
COUNSEL (WHICH MAY BE COUNSEL FOR BESTWAY, INC.) STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT."
(b) The certificates representing such Shares, and each certificate
issued in transfer thereof, will also bear any legend required under any
applicable state corporate and state securities law.
(c) Absent an effective notification under Regulation A or
registration statement under the Securities Act covering the disposition of the
Shares, the Holders will not sell, transfer, assign, pledge, hypothecate or
otherwise dispose of any or all of the Shares without first providing the Buyer
with an opinion of counsel (which may be counsel for the Buyer) to the effect
that such sale, transfer, assignment, pledge, hypothecation or other
disposition will be exempt from the registration and the prospectus delivery
requirements of the Securities Act and the registration or qualification
requirements of any applicable state securities laws.
(d) The Holders consent to the Buyer's making a notation on its
records or giving instructions to any transfer agent of the Shares in order to
implement the restrictions on transfer of the Shares mentioned in this Section
6.
(e) Any legend endorsed on a certificate pursuant to Section 6.3(a)
hereof and the stop transfer instructions and record notations with respect
thereto shall be removed, and the Buyer shall issue a certificate without such
legend to the holder thereof at such time as securities evidenced thereby cease
to be "restricted securities" under the Securities Act and rules and
regulations promulgated thereunder.
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7. Holders' Piggy-Back Registration Rights.
7.1 If at any time after the consummation of the Holders' receipt of
the Shares, the Buyer proposes to register (including for this purpose a
registration effected by the Buyer for stockholders other than the Holders) any
of its stock or other securities under the Securities Act in connection with
the public offering of such securities solely for cash (other than a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Shares), the Buyer shall, at such time, promptly give
the Holders written notice of such registration. Upon the written request of
the Holders, or any one of them, given within twenty (20) days after mailing of
such notice by the Buyer, the Buyer shall use its best efforts to cause to be
registered under the Securities Act all of the Shares that each Holder has
requested to be registered.
7.2 obligations of the Buyer. Whenever required under this Agreement
to effect the registration of any Shares, the Buyer shall, as expeditiously as
reasonably possible, perform those obligations customarily imposed upon the
issuing company during an underwritten, registered offering, including but not
limited to the following:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a registration statement with respect to such Shares and use its
best efforts to cause such registration statement to become effective.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the
disposition of Shares owned by them.
(d) Notify the Holders in the event the Buyer has delivered
preliminary or final prospectuses to the Holders and, after having done
so, such prospectus is amended to comply with the requirements of the
Securities Act. Upon such notification, the Holder shall immediately cease
making offers of the Shares and return all prospectuses to the Buyer. The
Buyer shall promptly provide the Holders with revised
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prospectuses and, following receipt of the revised prospectuses, the
Holders shall be free to resume making offers of the Shares.
7.3 Expenses of Piggy-Back Registration.
The Buyer shall bear and pay all expenses incurred in connection
with all registration, filing or qualification of the Shares with respect to
all Piggy-Back Registrations pursuant to Section 7.1 for the Holders, including
(without limitation) all registration, filing, and qualification fees, printing
and accounting fees relating or apportionable thereto, and the fees and
disbursements of separate counsel for the Holders but excluding underwriting
discounts and commissions relating to the Shares.
7.4 Indemnification.
In the event any of the Shares are included in a registration
statement under this Agreement:
(a) To the extent permitted by law, the Buyer will indemnify and hold
harmless each Holder or his underwriter and each person, if any, who
controls the Holder or underwriter within the meaning of the Securities
Act or the Securities Exchange Act of 1934, as amended (the "1934 Act")
(each, an "Indemnitee"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, or the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"); (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including an preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein
not misleading, or (iii) any violation or alleged violation by the Buyer
of the Securities Act, the 1934 Act, any state securities law; and the
Buyer will pay to each such Indemnitee, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Subsection 7.4 (a)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the
consent of the Buyer (which consent shall not be unreasonably withheld),
nor shall the Buyer be liable in any such case for any such loss, claim,
damage, liability, or action to the
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extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such
Indemnitee or person related thereto.
(b) To the extent permitted by law, the Holders will indemnify and
hold harmless the Buyer, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls
the Buyer within the meaning of the Securities Act, any underwriter and
any controlling person of any such underwriter against any losses, claims,
damages, or liabilities (joint or several) in which any of the foregoing
persons may become subject, under the Securities Act, or the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in connection with such
registration: and each Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified
pursuant to this Subsection 7.4 (b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Subsection 7.4(b)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Holders, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this Subsection
7.4(b) exceed the gross proceeds from the offering received by the
Holders.
(c) Promptly after receipt by an indemnified party under this Section
7.4 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
7.4, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties,
provided, however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the
fees and expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented
by such
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counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
such action, if prejudicial to his ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party
under this Section 7.4 to the extent of such prejudice, but the omission
so to deliver written notice to the indemnifying party will not relieve it
of any 'liability that it may have to any indemnified party otherwise than
under this Section 7.4.
(d) The obligations of the Buyer and the Holders under this Section
7.4 shall survive the completion of any offering, of the Shares under this
Agreement, and otherwise.
7.5 Assignment of Registration Rights.
The rights to cause the Buyer to register the Shares pursuant to this
Agreement may be assigned (but only with all related obligations) by the
Holders to a transferee or assignee of such Shares, provided: (i) the Buyer is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; (ii) such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act; (iii) such transferee or assignee shall as
a condition to such transfer, deliver to the Buyer a written instrument by
which such transferee agrees to be bound by the obligations imposed on the
Holder pursuant to this Agreement; and (iv) any such transferee or assignee may
not again transfer such rights to any other person or entity, other than as
provided in this Section 7.5.
8. Reports Under Securities Exchange Act of 1934.
With a view to making available to the Holders the benefits of Rule
144 promulgated under the Securities Act and any other rule or regulation of
the SEC that may at any time permit a Holder thereof to sell securities of the
Buyer to the public without registration or pursuant to a registration on Form
S-3, the Buyer agrees to use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Buyer under the
Securities Act and the 1934 Act.
9. Representations, Covenants, and Warranties by Buyer.
Buyer represents and warrants the following:
9.1 Organization and Good Standing. Buyer is duly organized and
existing and in good standing under the laws of the State of Delaware.
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9.2 Authority. The execution of this Agreement by Buyer, its delivery
to Seller and the performance of its terms have been fully authorized by the
Board of Directors of Buyer, and no further corporate action will be necessary
on its part to make this Agreement valid and binding upon Buyer in accordance
with its terms. Neither the execution nor delivery of this Agreement nor its
performance will result in a violation or breach of any term or provision of,
nor constitute a default under its Certificate of Incorporation or By-laws.
9.3 Capitalization. As of the date hereof, there are 20 million
authorized shares of Common Stock, 1,615,717 shares of which are outstanding,
and one million authorized shares of preferred stock, $10.00 par value per
share, none of which is outstanding. The issued and outstanding shares of
capital stock of Buyer have been validly issued, are fully paid and
nonassessable and were issued in compliance with applicable federal and state
laws regulating the offer and sale of securities.
9.4 Full Disclosure. No representation or warranty of Buyer made in
this Agreement, nor any written statement furnished to Seller pursuant hereto,
or in connection with the transactions contemplated hereby, heretofore
furnished to Seller by Buyer, contains or will contain any untrue statement of
a material fact which affects the business or financial condition of Buyer, or
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading.
9.5 Tradenames. Buyer covenants to have the names of all stores
listed on Schedule 1.1 changed to "Bestway Rental, Inc." or such other NAMES it
deems appropriate (other than trade names used by Seller) and covenants not to
do anything to damage the reputation of Seller's tradenames. Buyer further
covenants and agrees to indemnify and hold Seller harmless for any suits and/or
damages caused to Seller due to Buyer's limited use of Seller's Tradenames.
9.6 Inspection of Inventory. Buyer represents and warrants that it
has inspected the Inventory set forth on schedule 1.5 and that it will accept
such assets in their present condition as of the date of this Agreement.
9.7 Compliance with Laws. Buyer represents and warrants that the
Shares are being lawfully issued and transferred under this Agreement in
compliance with applicable federal and state securities laws.
10. Agreements by Seller.
10.1 Except to the extent waived or consented to in writing by Buyer,
Seller agrees that pending the Closing:
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(a) The business of Seller shall be conducted only in the ordinary
course and consistent with past practice;
(b) No new agreement or arrangement, written or oral, shall be made
with any employee with respect to employment for a term which extends more
than thirty (30) days after the Closing Date, and no decrease shall be
made in present prices for goods sold by Seller;
(c) Seller will use such efforts as are consistent with prior
practices to keep the business of Seller intact, to maintain, preserve and
protect the property used to conduct the business, to keep in faithful
service the present key employees, and to preserve the good will of
Suppliers and customers and others having business relations with it; and
(d) Seller will promptly notify Buyer of any lawsuits, claims,
proceedings or investigations which are threatened or commenced against
Seller, or the officers or directors of Seller between the date of this
Agreement and the Closing Date which may affect Seller. From the date of
this Agreement until the Closing Date, Seller shall comply with all laws,
regulations, orders and decrees applicable to Seller, its assets and its
business.
10.2 Supplying of Information. Prior to Closing, Seller shall furnish
to Buyer or its representatives complete and accurate information as Buyer may
reasonably request in cooperation with any investigation or examination of the
books and records, accounts, contracts, properties, assets, operations and
facilities of Seller. In connection therewith, Seller has made available to
Buyer and its agents all working papers and financial records relating to
Seller which have been requested by Buyer. The Schedules described in Section
1 and 5 shall be delivered prior to the Closing Date. Prior to Closing, Seller
shall supply to Buyer full and adequate information and data as reasonably
requested by Buyer in order to be assured that Seller has the right and power
to transfer the assets to Buyer, free and clear of any liens, claims,
encumbrances or judgments. Any Schedule which is not attached hereto at the
time that Buyer executes this Agreement shall not be subsequently attached
hereto or incorporated herein unless such Schedule is acceptable to Buyer.
10.3 Notices and Approvals. Seller agrees to give all notices to
third parties and obtain all consents, approvals, permits and authorizations
which may be necessary or deemed desirable by Buyer in connection with this
Agreement and the consummation of the transactions contemplated herein,
including the release of all liens and encumbrances attached to the Assets on
the date hereof and the Closing Date.
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10.4 Employees. Seller will do nothing to dissuade any of its
employees from remaining in the employ of Buyer after the Closing and Seller
will not terminate, lay off or transfer any such employees without the written
consent of Buyer, prior to the Closing.
10.5 Further Assurances. Seller will, at the request of Buyer,
execute and deliver to Buyer all such further instruments, assignments,
assurances and documents as Buyer may reasonably request in connection with the
carrying out of this Agreement.
10.6 Insurance Proceeds. If any property being sold hereunder shall
be substantially damaged or destroyed by fire or other cause prior to the time
of Closing, Seller shall immediately notify Buyer and furnish to Buyer a
written statement of the amount of insurance, if any, payable on account
thereof. In the event of such damage or destruction, Buyer may elect (i) to
require that Seller restore the property to its condition on the date of this
Agreement of (ii) to declare this Agreement null and void.
10.7 Cooperation On Audit. Seller agrees to assist Buyer in the audit
of the assets by Buyer's public accounting firm and Buyer agrees not to
disclose information relating to assets, books and accounts of Seller not
purchased by Buyer.
11. Covenant Not to Compete. Seller and the Selling Shareholders shall
agree to the covenant not to compete as enumerated in Exhibit A hereto.
12. Conditions Precedent to the Obligation of Buyer to close.
The obligation of Buyer to close shall be subject to the following
conditions precedent:
12.1 Fulfillment by Seller and the Selling Shareholders of their
covenants, obligations and agreements as set forth in this Agreement.
12.2 The representations and warranties of Seller and the Selling
Shareholders contained in this Agreement shall be accurate in all material
respects on the date when made and shall also be accurate on the Closing Date
to the same extent as if made on such date. Seller shall deliver to Buyer a
certificate dated the Closing Date and executed by such officers of Seller as
Buyer shall reasonably require stating that said representations are accurate
in all material respects as of the Closing Date and that all covenants,
agreements and conditions required by this Agreement to be performed by Seller
prior to Closing have been performed on or prior to the Closing Date.
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12.3 Buyer shall have received a certified copy of the resolution of
the Board of Directors of Seller, certified by its Secretary or an Assistant
Secretary, authorizing the execution of this Agreement and the consummation of
the transactions contemplated hereby. Buyer shall have received a certified
copy of the written consent of the shareholders of Seller, certified by its
Secretary or Assistant Secretary, approving and authorizing the sale of the
Assets to Buyer provided in this Agreement.
12.4 No material adverse change with respect to the business or
financial condition, or the prospects of Seller shall have occurred.
12.5 Buyer shall have satisfied itself with respect to its due
diligence review of Seller's business.
13. Conditions Precedent to the obligations of Seller to Close.
The obligation of Seller to close shall be subject to the following
conditions precedent:
13.1 Fulfillment by Buyer of its covenants, obligations and
agreements as set forth in this Agreement.
13.2 The representations and warranties of Buyer contained in this
Agreement shall be accurate in all material respects on the Closing Date to the
same extent as if made on such date. The Buyer shall deliver to Seller a
certificate dated on the Closing Date executed by its President or Vice
President and its Secretary or an Assistant Secretary or its Treasurer stating
that said representations and warranties are accurate in all material respects
as of the Closing Date and that all conditions precedent to Closing to be
performed by Buyer shall have been performed.
13.3 Seller shall have received a certified copy of the resolution of
the Board of Directors of Buyer, certified by its Secretary or an Assistant
Secretary, authorizing the execution of this Agreement and the consummation of
the transactions contemplated hereby.
14. Limitation of Liability. Buyer has waived the requirements of the bulk
transfer provisions of the Uniform Commercial Code, to the extent such
provisions apply. Except for the obligations expressly taken by Buyer
hereunder, there shall be no liability or obligation of Buyer to Seller, to
Seller's creditors or to others, growing out of or arising from the sale by
Seller of the Assets to Buyer under the provisions of this Agreement, nor for
any Federal, state or local tax liabilities of Seller including any sales tax
or title transfer fee attributable
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to the sale of assets included herein. Seller agrees to protect Buyer against
and hold Buyer harmless from any and all such liabilities and obligations,
including all claims made by creditors of Seller.
15. Closing Date.
The consummation of the transactions contemplated by this Agreement (the
"Closing") shall and has taken place at the offices of Buyer, 7800 Stemmons
Freeway, Suite 320, Dallas, TX at 8:00 o'clock a.m. on July 1, 1996, such time
and date being herein called the "Closing Date".
16. Survival of Representations and Agreement.
16.1 The representations and agreements made herein are true and
binding as of the date hereof and shall continue in full force and effect for a
period of one (1) year on and after the Closing Date, notwithstanding any
investigations which may have been made by any of the parties prior thereto.
16.2 Upon receipt of notice thereof, Seller and the Selling
Shareholders shall jointly and severally indemnify and hold harmless Buyer from
any liability, damage, deficiency, loss, cost of expense, including attorney
fees and any costs of investigation (being hereafter referred to as "costs"),
arising from or attributable to any breach of any representation, warranty or
agreement made by Seller and the Selling Shareholders herein or in any
certificate delivered at the Closing with respect thereto, even though any such
representation, warranty or agreement may have been made by Seller and the
Selling Shareholders in good faith and to the best of its or his knowledge.
16.3 If any claim of, liability is made by a third person against
Buyer based on any liability, the existence of which would constitute a breach
of any of the representations, warranties or agreements herein, Buyer shall
with reasonable promptness give to Seller and the Selling Shareholders written
notice of the claim and request Seller and the Selling Shareholders to defend
the same. Seller and the Selling Shareholders shall have the right to defend
against such liability at Seller's and the Selling Shareholders, expense, and
shall give written notice to Buyer of the commencement of such defense with
reasonable promptness after the giving of the written notice of the claim by
Buyer. Failure to receive notice from Buyer shall relieve Seller and the
Selling Shareholders of any liability which they might otherwise have to Buyer
under Section 16.2 hereof. Buyer its subsidiaries, successors and assigns shall
be entitled to participate with Seller and the Selling Shareholders in such
defense, but shall not be entitled in any way to release, waive, settle, modify
or pay such claim without the consent of Seller and the Selling Shareholders if
they have assumed such
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defense. In the event Seller and the Selling Shareholders have assumed said
defense and have employed counsel with respect thereto, Buyer shall also be
entitled to employ counsel at Seller's and the Selling Shareholders' expense
unless the counsel selected by Seller and the Selling Shareholders is approved
by Buyer (which approval shall not be unreasonably withheld) and represents
Seller, the Selling Shareholders and Buyer. In the event Seller and the Selling
Shareholders do not accept the defense of the matter as provided above, Buyer,
its subsidiaries, successors or assigns shall have the full right to defend
against such liability, and shall be entitled to settle or agree to pay in full
such claimed liability in its sole discretion and thereafter pursue its rights
under this Agreement. In the event Seller and the Selling Shareholders shall
assume the defense, Seller, the Selling Shareholders and Buyer, their
subsidiaries, successors and assigns shall cooperate in the defense of such
action and the records of each shall be available to the other with respect to
such defense.
16.4 Upon receipt of notice thereof, Buyer shall indemnify and hold
harmless Seller and the Selling Shareholders from any liability, damage,
deficiency, loss, cost or expense, including attorney fees and any costs of
investigation (being hereafter referred to as "costs"), arising from or
attributable to (i) any breach of any representation, warranty or agreement
made by Buyer herein or in any certificate delivered at the Closing with
respect thereto, even though any such representation, warranty or agreement may
have been made by Buyer in good faith and to the best of its or his knowledge,
or (ii) any liability arising from the operation of the businesses on or after
the Closing date.
16.5 If any claim of liability is made by a third person against
Seller or the Selling Shareholders based on any liability, the existence of
which would constitute a breach of any of the representations, warranties or
agreements herein, Seller and the Selling Shareholders shall with reasonable
promptness give to Buyer written notice of the claim and request Buyer to
defend the same. Buyer shall have the right to defend against such liability at
Buyer's expense, and shall give written notice to Seller and the Selling
Shareholders of the commencement of such defense with reasonable promptness
after the giving of the written notice of the claim by Seller and the Selling
Shareholders. Failure to receive notice from Seller and the Selling
Shareholders shall relieve Buyer of any liability which it might otherwise have
to Seller and the Selling Shareholders under Section 16.4 hereof. Seller, the
Selling Shareholders, and their subsidiaries, successors and assigns shall be
entitled to participate with Buyer in such defense, but shall not be entitled
in any way to release, waive, settle, modify or pay such claim without the
consent of Buyer if it has assumed such defense. In the event Buyer has assumed
said defense and has employed counsel with respect thereto, Seller and the
Selling Shareholders shall also be entitled to employ counsel
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at Buyer's expense unless the counsel selected by Buyer is approved by Seller
and the Selling Shareholders (which approval shall not be unreasonably
withheld) and represents Buyer and Seller and the Selling Shareholders. In the
event Buyer does not accept the defense of the matter as provided above,
Seller, the Selling Shareholders, their subsidiaries, successors or assigns
shall have the full right to defend against such liability, and shall be
entitled to settle or agree to pay in full such claimed liability in its sole
discretion and thereafter pursue its rights under this Agreement. In the event
Buyer shall assume the defense, Buyer and Seller, the Selling Shareholders,
their subsidiaries, successors and assigns shall cooperate in the defense of
such action and the records of each shall be available to the other with
respect to such defense.
17. Expenses. Each party hereto shall bear its own expenses incurred
pursuant to this Agreement.
18. Entire Agreement. This Agreement, together with the Schedules referred
to herein which are incorporated herein by this reference, and the agreements
referred to herein, shall constitute the entire agreement between the parties
hereto with respect to the transactions contemplated hereby.
19. Governing Law. The parties hereto agree that this Agreement shall be
construed in accordance with the laws of the State of Arkansas. The
jurisdiction and venue of any proceeding between the parties arising out of
this Agreement shall be Pulaski County, Arkansas.
20. Number and Gender of Words. When the context so requires in this
Agreement, words of gender shall include either or both of the other genders
and the singular number shall include the plural.
21. Assignment. This Agreement shall be binding upon the parties hereto,
their successors and assigns, and shall inure to the benefit of the parties
hereto and their successors and assigns. This Agreement shall not be assignable
without the express written consent of all parties hereto.
22. Amendments. This Agreement may be amended only by a written agreement
executed by all of the parties hereto.
23. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person or by registered
or certified mail, return receipt requested, postage and fees prepaid, first
class mail:
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To Seller: Gus Blass III
Capital Properties Ltd.
212 Center, Suite 800
Little Rock, Arkansas 72201
To Selling
Shareholders: Gus Blass III
Capital Properties Ltd.
212 Center, Suite 800
Little Rock, Arkansas 72201
D. Eugene Fortson
28 Kings Arms Rd.
Little Rock, Arkansas 72207
Warren Stephenson
68 Robinwood Drive
Little Rock, Arkansas 72207
Rod Reed
2913 Imperial Valley
Little Rock, Arkansas 72212
Tucker Morse
10 Legare St.
Charleston, S.C. 29401
Buyer: Bestway, Inc.
Attention: R. Brooks Reed
7800 N. Stemmons Freeway, Suite 320
Dallas, TX 75247
Any party hereto may change the address designated for mailing by written
notice to the other party by registered or certified mail. It will be deemed
delivered upon receipt.
24. Authority. Each party executing this Agreement warrants his authority
to execute this Agreement.
25. Counterparts. This Agreement may be executed in several counterparts
and it shall not be necessary for each party to execute each of such
counterparts, the counterparts, when taken together, shall be deemed to
constitute one and the same instrument enforceable against each party in
accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
REJA, Inc.
By: /s/ ROD REED
------------------------------
Rod Reed, President
BESTWAY, INC.
By: /s/ TERESA SHEFFIELD
------------------------------
Teresa Sheffield, Vice President
- ---------------------------------
Gus Blass III
- ---------------------------------
D. Eugene Fortson
- ---------------------------------
Tucker Morse
- ---------------------------------
Warren Stephenson
/s/ ROD REED
- ---------------------------------
Rod Reed
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EXHIBIT "A"
For a period of five (5) years, neither Seller, any affiliate of Seller, nor
any Selling Shareholder will compete in the rent-to-own business within 25
miles of any store acquired from Seller at locations in Schedule 1.1. Seller
and the Selling Shareholders agree not to solicit or recruit for hire, or
assist others in recruiting for hiring, any current employee of Seller, for a
period of two (2) years following the Closing Date. Seller or the Selling
Shareholders may hire an employee if the employee leaves or is terminated from
the employment of Buyer and seeks employment, through no solicitation of Seller
or the Selling Shareholders, with Seller.
The undersigned agree that the covenants herein are, taken as a whole,
reasonable in their geographic scope and their duration, and that the
undersigned shall not raise any issue of the reasonableness of the scope or
duration of the covenants in any proceeding to enforce any such covenants. If,
in any judicial proceedings, a court shall refuse to enforce any of the
separate covenants included in this Covenant not to Compete, then the
unenforceable covenant shall be modified for the purpose of those proceedings
to the extent necessary to permit them to be enforced.
REJA, Inc.
By: /s/ ROD REED
------------------------------
Rod Reed, President
- --------------------------------- ---------------------------------
Gus Blass III Tucker Morse
/s/ ROD REED
- --------------------------------- ---------------------------------
D. Eugene Fortson Rod Reed
- ---------------------------------
Warren Stephenson
Agreed and Accepted by BESTWAY, INC.
By: /s/ TERESA SHEFFIELD
------------------------------
Teresa Sheffield, Vice President
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