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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Advantage Companies, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
00756E 10 5
(CUSIP Number)
Joseph J. Hlavacek, Esq.
Staff Attorney and Assistant Secretary
THORN Americas, Inc.
8200 East Rent-A-Center Drive
Wichita, Kansas 67226
(316) 636-7368
with a copy to:
Shook, Hardy & Bacon P.C.
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2118
Attention: Jennings J. Newcom
(816) 474-6550
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 9, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule
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13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with the statement[X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP No. 00756E 10 5
1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
THORN Americas, Inc.
- -----------------------------------------------------------------
2) Check the Appropriate Box if (a) [ ]
a Member of a Group (b) [ ]
- -----------------------------------------------------------------
3) SEC Use Only
- -----------------------------------------------------------------
4) Source of Funds
Not Applicable
- -----------------------------------------------------------------
5) Check if Disclosure of Legal
Proceedings is Required Pursuant [ ]
to Items 2(d) or 2(e)
- -----------------------------------------------------------------
6) Citizenship or Place of Organization
Delaware
- -----------------------------------------------------------------
7) Sole Voting Power
Number of 3,768,922
Shares ----------------------------------------
Beneficially 8) Shared Voting Power
Owned By
Each -0-
Reporting ----------------------------------------
Person With
9) Sole Dispositive Power
3,768,922
----------------------------------------
10) Shared Dispositive Power
-0-
- -------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned
by Each Reporting Person
3,768,922
- -------------------------------------------------------------------
12) Check if the Aggregate Amount in
Row (11) Excludes Certain Shares [ ]
- -------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11)
79.6%
- -------------------------------------------------------------------
14) Type of Reporting Person
CO
- -------------------------------------------------------------------
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Item 1. Security and Issuer.
The class of equity securities to which this Statement on Schedule
13D (the "Statement") relates is the Common Stock, par value $.01 per share
(the "Common Stock"), of Advantage Companies, Inc., a Delaware corporation (the
"Company"). The Company has its principal executive offices at 9323 East 37th
Street North, Wichita, Kansas 67226-2000.
Item 2. Identity and Background.
This statement is being filed by THORN Americas, Inc., a Delaware
corporation ("THORN"), which conducts its principal business and maintains its
principal office at 8200 East Rent-A-Center Drive, Wichita, Kansas 67226-2799.
THORN and its franchisees conduct a rental-purchase operation in the United
States, currently with 1,168 Rent-A-Center (Registered Trademark) stores in 49
states and the District of Columbia.
THORN EMI North America Holdings Inc., a Delaware corporation
("TENAH"), conducts its principal business and maintains its principal office
at Little Falls Centre II, 2751 Centreville Road, Second Floor, Wilmington,
Delaware 19808. THORN is owned by TENAH and TENAH is owned indirectly by THORN
EMI plc, a company existing under the laws of England ("PLC"). TENAH's
principal business is acting as a holding company for PLC's U.S. operations
and an investment company.
PLC conducts its principal business and maintains its principal
office at 4 Tenterden Street, Hanover Square, London, W1A2AY, England. PLC is
a public company and its principal businesses are located in approximately 40
countries and relate to (i) the music industry, including retailing of recorded
music and related products, repertoire development, studio recording and music
videos, (ii) the rental-purchase industry and (iii) transaction systems,
security and electronics.
The name, residence or business address, present principal
occupation or employment and the name, principal business and address of any
corporation in which such employment is conducted and citizenship of each
executive officer and director of THORN and PLC are set forth on Schedule A,
which is attached hereto and incorporated herein by reference.
During the past five years, neither THORN, TENAH nor PLC, nor, to
the best of THORN's knowledge, any of THORN's or PLC's executive officers or
directors (i) has been convicted in a
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criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
No funds were used in connection with entering into the Option
Agreement (as defined in Item 4 of this Statement).
Item 4. Purpose of Transaction.
On July 9, 1995, THORN and the Company entered into a letter of
intent (the "Proposal"), pursuant to which a newly formed subsidiary of THORN
will be merged with and into the Company (the "Merger"). The Proposal is an
expression of intent of the parties and is subject to negotiation of a
definitive merger agreement (the "Definitive Agreement"), legal and government
approvals and the other terms and conditions set forth therein. As a result of
the Merger, the Company will become a wholly owned subsidiary of THORN.
Pursuant to the Merger, the stockholders of the Company other than certain
majority stockholders who have granted an option to THORN (as discussed
below), will receive for each share of Common Stock owned at the Merger
effective time, cash in an amount equal to $18.50 per share (without interest),
and the certain majority stockholders who are party to the Option Agreement
will receive $17.50 per share (without interest) (the "Purchase Price"), of
Common Stock, all on the terms and subject to the conditions contained in the
Proposal, the Option Agreement and the Definitive Agreement. As discussed
above, certain of the Company's majority stockholders entered into the Option
Agreement with THORN in which such stockholders will vote in favor of the
sale of THORN and grant to THORN the option to purchase their security holdings
at $17.50 per share (without interest), of Common Stock, all on the terms and
subject to the conditions contained in the Option Agreement.
The Proposal provides that THORN's consummation of the Merger is
subject to (i) the total equity of the Company at the Closing Date (as defined
below) being at least $28,250,000; provided, however, that the Company may pay
reasonable expenses not
<PAGE> 6
to exceed $250,000 arising as a result of the Merger so long as such payments
do not result in total equity of less than $28,000,000, (ii) bonuses and
severance packages paid to the Company's personnel between July 9, 1995, and
the Closing Date not exceeding $1,400,000 (but in no event may the total equity
of the Company fall below $28,000,000 as a result of such payments) and (iii)
THORN being satisfied with the results of a complete due diligence
investigation regarding the Company.
Pursuant to the Proposal, the obligations of THORN and the Company
under the Definitive Agreement shall be subject to various conditions
precedent, including but not limited to: (i) compliance by the Company and
THORN with the requirements of the Proposal; (ii) performance by the Company
and THORN of their respective covenants, obligations and agreements as
contained in the Definitive Agreement; (iii) the truth and accuracy of the
respective representations and warranties of the Company and THORN contained in
the Definitive Agreement as of the date thereof, and as reaffirmed and remade
as of the Closing Date; (iv) approval of the transaction by the requisite vote
of the Boards of Directors of THORN and of the Company, and by the stockholders
of the Company, as required by applicable law; (v) obtaining of all required
governmental and third party approvals and consents; (vi) no statute, rule,
regulation, executive order, decree, ruling, injunction or other order having
been enacted, entered, promulgated or enforced by any court or governmental
authority of competent jurisdiction within the United States which prohibits
the Merger or makes the Merger illegal; (vii) execution and delivery by the
Company and THORN of all documents required by the Definitive Agreement to be
delivered by the parties at or prior to the Closing Date, each in form and
substance acceptable to THORN and the Company, respectively.
The Proposal provides that the obligations of THORN under the
Definitive Agreement shall be subject to the following additional conditions
precedent: (i) completion of the investigation of the Company by THORN,
confirming that the business, assets, prospects, financial and legal condition
of the Company are satisfactory to THORN; (ii) non-occurrence of any event,
fact, condition, change or effect that is or could be materially adverse to the
business, operations, results of operations, condition (financial or
otherwise), assets, prospects or liabilities of the Company; (iii) conversion
or redemption, prior to the Closing Date, of the Preferred Stock; (iv)
simultaneously with the execution of the Proposal, the execution and delivery
to THORN of the Option Agreement; and (v) at THORN's option at the Closing
Date, the execution of a lease allowing THORN to use the Company's current
office space at no cost for 30 days; provided, however, that THORN shall pay
utility and telephone
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expenses for such office space during the 30-day period. The obligations of
the Company under the Definitive Agreement shall also be subject to the receipt
of an opinion from an independent firm of investment bankers to the effect that
the purchase price for the Common Stock is fair from a financial point of view
to the Company's stockholders other than the Majority Stockholders (as defined
below).
Pursuant to the Proposal, from July 9, 1995 until the date of the
Definitive Agreement, the Company (a) will conduct its business and operations
in the ordinary course consistent with past practice and use its best efforts
to preserve its business organization intact, retain the services of its
present officers and employees at current compensation levels and preserve the
present business relationships and goodwill of its licensors, licensees,
suppliers, distributors, customers and others having business relations with
it; provided, however, that the Company may issue bonus and severance awards
not to exceed $1,400,000 and transfer the land, building and equipment used by
the Company as its home office to Mr. Daniel J. Taylor, Chief Executive Officer
of the Company, in exchange for consideration from Mr. Taylor of not less than
$500,000, subject to the total equity condition set forth above and (b) will
not (i) issue any new shares of Common Stock (other than upon exercise of
existing and outstanding stock options) or Preferred Stock, (ii) issue any
options or other rights to acquire Common Stock, (iii) hire any new employee or
replace any departing employee, in each case without THORN's permission or (iv)
declare any dividends on the Preferred Stock other than those regular quarterly
dividends declared on July 31, 1995, not to exceed an amount equal to $42,000;
provided, however, such declaration and subsequent payments do not result in
total equity less than that set forth above.
Pursuant to the Proposal, the Company confirmed that it is not
engaged in any discussions or negotiations with third parties with respect to
any Acquisition Proposal (as defined in Section 10(a) of the Proposal). The
Company also agreed that it will not, directly or indirectly, through any
officer, director, employee, representative or agent or any of its subsidiaries
(i) solicit, initiate or encourage any Acquisition Proposal, provided that the
Company may respond to unsolicited inquiries and proposals, (ii) subject to the
fiduciary duties of the Company's Board of Directors under applicable law,
engage in negotiations or discussions concerning, or provide any nonpublic
information to any person or entity relating to, any Acquisition Proposal or
(iii) subject to the fiduciary duties of the Company's Board of Directors under
applicable law, agree to, approve or recommend any Acquisition Proposal. The
Company may take the actions set forth in (ii) and (iii) of the immediately
preceding sentence only upon a majority vote of the directors capable of voting
thereon that
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such actions are in furtherance of the best interests of the Company's
stockholders, and only upon a determination that the third-party bidder is
reputable and financially responsible.
The Company has agreed in the Proposal to notify THORN immediately
(in no later than 24 hours) after receipt by the Company of any Acquisition
Proposal or any request for nonpublic information in connection with an
Acquisition Proposal or for access to the properties, books or records of the
Company by any person or entity that informs the Company that it is considering
making, or has made, an Acquisition Proposal. If, at any time after July 9,
1995, and the earlier of the date of the Definitive Agreement or November 30,
1995, the Company (i) enters into an agreement relating to the sale of the
Company or any substantial part thereof to a third party, (ii) ceases
negotiations with THORN for the purpose of entering into negotiations for the
sale of the Company or any substantial part thereof to a third party, then the
Company shall be liable for and shall promptly pay to THORN an amount equal to
all of THORN's out-of-pocket costs, fees and expenses incurred in connection
with the Merger, including but not limited to, all reasonable legal, investment
banking and accounting fees.
Pursuant to the Proposal and in connection with the Merger, THORN
filed, on July 12, 1995, a motion to stay certain litigation filed by THORN
in the District Court of Sedgwick County, Kansas on December 27, 1994,
against the Company.
Pursuant to the Proposal, THORN and the Company will proceed
diligently and in good faith to negotiate, execute and deliver the Definitive
Agreement. The Definitive Agreement will specify a date of closing (the
"Closing Date") of the Merger, which will not be later than October 31, 1995;
provided, however, that such date will be extended if delays occur as a result
of the regulatory approval process.
A copy of the Proposal is attached hereto as Exhibit 1 and is
incorporated herein by reference. The description of the Proposal herein is
qualified in its entirety by reference to the full text thereof.
Simultaneously with the execution and delivery of the Proposal,
THORN and the four majority stockholders of the Company (the "Majority
Stockholders") entered into an agreement dated as of July 9, 1995 (the "Option
Agreement"), pursuant to which the Majority Stockholders granted THORN the
irrevocable right (the "Option") to purchase 3,268,922 shares of Common Stock
and 10,000 shares of Preferred Stock from the Majority Stockholders at a price
of $17.50 per share of
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Common Stock and $875 per share of the Preferred Stock. The exercise price per
share of Common Stock is equal to the Purchase Price and the exercise price per
share of the Preferred Stock is equal to the Purchase Price multiplied by 50 to
reflect the 50:1 conversion rate of the Preferred Stock into Common Stock. The
Preferred Stock is also redeemable by the Company, and the holders thereof are
not entitled to vote on any matters prior to conversion. The exercise prices
are payable in cash (without interest). The Option must be exercised with
respect to the shares of Common Stock and Preferred Stock of all Majority
Stockholders.
The Option may be exercised by THORN at any time during the period
commencing on July 9, 1995, and ending on November 30, 1995 (the "Expiration
Date"), except that if the Option cannot be exercised by reason of any
applicable judgment, decree or order granted upon the application of the
Majority Stockholders the Expiration Date of the Option will be extended until
five business days after such impediment to exercise has been removed.
Pursuant to the Option Agreement and for so long as the Option
Agreement is in effect, (i) the Majority Stockholders will vote, or cause to be
voted, all of their respective shares of Common Stock in favor of the approval
and adoption of the Merger as provided for in the Definitive Agreement and the
transactions contemplated therein, and (ii) in any meeting of the stockholders
of the Company, however called, and in any action by consent of the stockholders
of the Company, the Majority Stockholders will vote or cause to be voted all of
their respective shares of Common Stock (A) against any action or agreement that
would result in a breach in any material respect of any covenant, representation
or warranty or any other obligation of the Company under the Proposal or the
Definitive Agreement or of the Majority Stockholders under the Option Agreement
and (B) against any action or agreement that would impede, interfere with or
discourage the transactions contemplated by the Proposal or the Definitive
Agreement.
In addition, upon the execution of the Option Agreement, each
Majority Stockholder granted THORN an irrevocable proxy appointing THORN or its
designee(s), with full power of substitution, its attorney and proxy to vote
all such Majority Stockholder's shares of Common Stock at any meeting of the
stockholders of the Company, however called, or in connection with any action
by written consent by the stockholders of the Company. Each Majority
Stockholder acknowledged and agreed that such proxy, if and when given, will
be coupled with an interest, will be irrevocable and will not be terminated by
operation of law or otherwise upon the occurrence of any event and that no
subsequent proxies will be given (and if given will not be effective).
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Pursuant to the terms of the Option Agreement, each Majority
Stockholder agreed: (i) not to (either directly or indirectly) sell, transfer,
pledge, assign, hypothecate or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, pledge, assignment, hypothecation or other disposition of such
Majority Stockholder's shares of Common Stock or Preferred Stock or options or
other rights to obtain an equity interest in the Company; (ii) not to (either
directly or indirectly) grant any proxy to any person regarding his\her
ownership of any shares of Common Stock or Preferred Stock, deposit such
securities into a voting trust or enter into a voting agreement regarding such
securities that would be inconsistent with the terms of this Agreement; (iii)
not to (either directly or indirectly) take any action which would make any
representation, warranty or covenant of such Majority Stockholder untrue or
incorrect; and (iv) to convert into shares of Common Stock all of such Majority
Stockholder's shares of Preferred Stock prior to the Closing Date.
The Option Agreement also contains a provision whereby the
Majority Stockholders agreed that they will not, directly or indirectly,
individually or with others, engage in the business of rent-to-own, rentals or
retail installment sales transactions of consumer household durable goods,
including televisions, video cassette recorders, stereos, furniture, appliances,
jewelry, pagers, computers or like or similar consumer household durable
goods merchandise rented or sold by THORN, or any subsidiary, franchisee or
affiliate thereof, for a period of five years following the purchase of the
Common Stock and the Preferred Stock by THORN, at any location within the United
States. In connection therewith, the Majority Stockholders agreed that they
will not, individually or with others, directly or indirectly, at any time in
the future following the purchase of the Common Stock and the Preferred Stock by
THORN, divulge, communicate, use to the detriment of THORN, or any subsidiary or
affiliate thereof, or for the benefit of any person or organization any
Proprietary Information (as defined in Section 7(c) of the Option Agreement).
The Majority Stockholders also agreed that for a period of five years following
the purchase of the Common Stock and the Preferred Stock by THORN, they will
not, directly or indirectly, solicit the employment or engagement of the
consulting or other services of any person who will then be employed by THORN or
who will have been employed by THORN or any subsidiary or affiliate thereof at
any time within the previous six months, except as provided in the Definitive
Agreement.
In accordance with the Option Agreement, the Majority Stockholders
agreed (i) that none of the Majority Stockholders is engaged in any discussions
or negotiations with third parties with respect to any Acquisition Proposal (as
defined in Section 8(a) of the Option
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Agreement), (ii) to not solicit, initiate or encourage any Acquisition
Proposal, (iii) to not engage in negotiations or discussions concerning, or
provide any nonpublic information to any person or entity relating to, any
Acquisition Proposal or (iv) to not agree to, approve or recommend any
Acquisition Proposal. The Majority Stockholders will notify THORN immediately
(in no later than 24 hours) after receipt by any Majority Stockholder of any
Acquisition Proposal or any request for nonpublic information in connection
with an Acquisition Proposal or for access to the properties, books or records
of the Company by any person or entity that informed such party that it is
considering making, or has made, an Acquisition Proposal.
The Option Agreement will terminate, unless expressly provided
otherwise therein, upon the earlier of (i) the Closing Date, (ii) the
Expiration Date or (iii) notice of termination given by THORN to the
Majority Stockholders.
The Option Agreement is attached hereto as Exhibit 2 and
incorporated herein by reference. The description of the Option Agreement
herein is qualified in its entirety by reference to the full text thereof.
Also, a press release issued by THORN on July 10, 1995, announcing the
execution of the Proposal and the Option Agreement is attached hereto as
Exhibit 3 and incorporated herein by reference.
It is expected that immediately following the consummation of the
Merger the Common Stock will cease to be authorized to be quoted on the
National Association of Securities Dealers, Inc. Automated Quotation National
Market System ("NASDAQ") and registration of both the Common Stock and the
Preferred Stock pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), will be terminated.
Except as set forth in this Item 4 and as otherwise contemplated by
the Proposal and the Option Agreement, neither THORN, TENAH nor PLC, nor, to
the best of THORN's knowledge, any of THORN's or PLC's executive officers or
directors have any other present plans or proposals which would result in or
relate to any of the actions described in paragraphs (a) through (j) of Item 4
of Schedule 13D under the Exchange Act.
Item 5. Interest in Securities of the Issuer.
(a) Pursuant to the Company's Form 10-Q for the quarterly period
ended April 16, 1995, filed under the Exchange Act, there were 4,236,438 shares
of Common Stock and 14,000 shares of Preferred Stock issued and outstanding as
of April 16, 1995. As
<PAGE> 12
described under Item 4 of this Statement, THORN may be deemed to be the
beneficial owner of an aggregate of 3,268,922 shares of Common Stock and
10,000 shares of Preferred Stock. Pursuant to the Option Agreement, THORN has
the immediately exercisable right to acquire 3,268,922 shares of Common Stock
(representing approximately 77.2 percent of the outstanding Common Stock) and
10,000 shares of Preferred Stock (representing approximately 71.4 percent of
the outstanding Preferred Stock). Except as set forth in this Item 5(a),
neither THORN, TENAH, nor PLC, nor, to the best of THORN's knowledge, any of
THORN's or PLC's executive officers or directors owns any shares of Common
Stock or Preferred Stock.
(b) If THORN were to exercise the Option (i) THORN would have the
sole power to vote or to direct the vote of 3,268,922 shares of Common Stock
(as previously discussed, the shares of Preferred Stock confer no voting rights
upon the holders thereof) and (ii) THORN would have the sole power to dispose
or direct the disposition of 3,268,922 shares of Common Stock and 10,000 shares
of Preferred Stock.
Except as set forth in this Item 5(b), neither THORN, TENAH nor PLC,
nor, to the best of THORN's knowledge, any of THORN's or PLC's executive
officers or directors have the sole or shared power to (i) vote or direct the
vote of their shares of Common Stock or (ii) dispose or direct the
disposition of their shares of Common Stock or Preferred Stock.
(c) Neither THORN, TENAH nor PLC, nor, to the best of THORN's
knowledge, any of THORN's or PLC's executive officers or directors have
effected any transactions in the shares of Common Stock or Preferred Stock
during the past 60 days.
(d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale
of, the Common Stock or Preferred Stock.
(e) Not applicable.
<PAGE> 13
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
In a separate development, the controlling stockholders of Tidewater
Rental Corp., a Virginia corporation ("Tidewater"), a privately held entity
affiliated with the Company through common ownership and having common
management with the Company, entered into a letter of intent and option
agreement for Tidewater to be acquired by THORN. Exhibit 3 hereto is a press
release issued by THORN on July 10, 1995, announcing the execution of such
agreements regarding Tidewater and is incorporated herein by reference.
The discussion in Item 4 of this Statement regarding the Option
Agreement is incorporated herein by reference.
Except as described in this Statement, neither THORN, TENAH nor PLC,
nor, to the best of THORN's knowledge, any of THORN's or PLC's executive
officers or directors have any contracts, arrangements, understandings or
relationships (legal or otherwise) with any person with respect to any
securities of the Company.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 Letter of Intent dated as of July 9, 1995, between
THORN Americas, Inc. and Advantage Companies, Inc.
Exhibit 2 Advantage Agreement dated as of July 9, 1995, among
THORN Americas, Inc., Daniel J. Taylor, Robert W. Moore, Daniel M. Carney and
Leslie G. Rudd.
Exhibit 3 Press Release issued by THORN Americas, Inc. on July
10, 1995.
<PAGE> 14
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this Statement is true, complete
and correct.
Date: July 18, 1995
THORN AMERICAS, INC.
By: /s/ John H. Slaymaker
---------------------------------
Name: John H. Slaymaker
Title: Executive Vice President
<PAGE> 15
SCHEDULE A
The following information sets forth the name, residence or business
address and present principal occupation or employment and the name, principal
business and address of any corporation, if not THORN or PLC, in which such
employment is conducted and the citizenship of each of the directors and
executive officers of THORN and PLC.
DIRECTORS AND EXECUTIVE OFFICERS OF THORN
Walter E. Gates Chief Executive Officer/
THORN Americas, Inc. President/Director
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
John H. Slaymaker Senior Vice President/Director
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Philip David Egan Senior Vice President/
THORN Americas, Inc. General Counsel
8200 E. Rent-A-Center Drive Secretary/Director
Wichita, Kansas 67226
Citizenship: United States
Alan St. Clair Senior Vice President/Director
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
John R. Isaac, Jr. President/Chief Operating
THORN Americas, Inc. Officer-Rent-A-Center
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Joe Rotunda Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Paul Barry Senior Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Robert Bloom Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Robert DiGiacomo Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Randy Underwood Vice President/Treasurer
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Michael Boone Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Robert Alston Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Tom Hollingsworth Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Joseph J. Hlavacek Assistant Secretary
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Phyllis Greif Assistant Treasurer
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Vincent Watkins Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Jeffrey R. Sims Vice President
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Keith Wall Vice President/Controller
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
Stephen P. Lisi Vice President of Operations
THORN Americas, Inc.
8200 E. Rent-A-Center Drive
Wichita, Kansas 67226
Citizenship: United States
DIRECTORS AND EXECUTIVE OFFICERS OF PLC
Harald Einsmann Nonexecutive Director-PLC/President-
THORN EMI plc Proctor Gamble Europe, Middle
4 Tenterden Street East & Africa
London W1A 2AY The Proctor & Gamble Company
England European Technical Center
Citizenship: German Temselaam 100, B-1853
Strombeck-Bever, Belgium
Peter Ingram Walters Nonexecutive Deputy Chairman-PLC/
THORN EMI plc Chairman-SmithKline Beecham plc
4 Tenterden Street New Horizons Court
London W1A 2AY Brentford
England Middlesex TW8 9EP
Citizenship: British England
Sir Colin Southgate Chairman-PLC
THORN EMI plc
4 Tenterden Street
London W1A 2AY
England
Citizenship: British
Eric Luciano Nicoli Nonexecutive Director-PLC/
THORN EMI plc Group Chief Executive-United
4 Tenterden Street Biscuits (Holdings) plc
London W1A 2AY Church Road, West Drayton
England Middlesex UB7 7PL
Citizenship: British England
Simon Patrick Duffy Group Finance Director-PLC
THORN EMI plc
4 Tenterden Street
London W1A 2AY
England
Citizenship: British
James Guy Fifield Director-PLC/President and
THORN EMI plc Chief Executive Officer-EMI
4 Tenterden Street Music
London W1A 2AY
England
Citizenship: United States
Michael Edward Metcalf Director-PLC/Chief Executive-
THORN EMI plc THORN Group
4 Tenterden Street
London W1A 2AY
England
Citizenship: British
Brian Griffiths Nonexecutive Director-PLC/
(Lord Griffiths of International Advisor
Fforestfach) - Goldman Sachs International
THORN EMI plc Peterborough Court
4 Tenterden Street 133 Fleet Street
London W1A 2AY London EC4A 28B
England England
Citizenship: British
Sir Judson Graham Day Nonexecutive Director-PLC/
THORN EMI plc Legal Counsel Stewart, McKelvy,
4 Tenterden Street Sterling & Scales - Lawyers
London W1A 2AY P.O. Box 997
England Purdy's Wharf Tower One
Citizenship: British/Canadian 1959 Upperwater Street
Halifax
Nova Scotia 835 2K2
Canada
Robin Charlton Company Secretary-PLC
THORN EMI plc
4 Tenterden Street
London W1A 2AY
England
Citizenship: British
<PAGE> 16
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
1 Letter of Intent dated as of July 9, 1995, between 18
THORN Americas, Inc and Advantage Companies, Inc.
2 Advantage Agreement dated as of July 9, 1995, among 26
THORN Americas, Inc., Daniel J. Taylor, Robert W. Moore,
Daniel M. Carney and Leslie G. Rudd.
3 Press Release issued by THORN Americas, Inc. on 38
July 10, 1995.
<PAGE> 17
July 9, 1995
Mr. Daniel J. Taylor
Advantage Companies, Inc.
9323 E. 37th Street North
Wichita, Kansas 67226-2000
Re: Proposed Purchase of Advantage Companies, Inc. by THORN
Americas, Inc.
Dear Mr. Taylor:
THORN Americas, Inc., acting directly or through an affiliate
("THORN"), is pleased to set forth the following proposal to acquire Advantage
Companies, Inc. (the "Company") in a negotiated transaction. The purpose of
this proposal is to set forth the basis for proceeding toward the acquisition
of the Company by THORN (the "Acquisition") and to affirm the parties'
intention to negotiate in good faith a definitive agreement (the "Definitive
Agreement") for the Acquisition.
1. FORM OF ACQUISITION; CONSIDERATION. The Acquisition will be
effectuated by a merger of the Company with a newly formed subsidiary of THORN,
pursuant to which the Company will survive as a wholly owned subsidiary of
THORN (the "Surviving Company"). Pursuant to the merger, the shareholders of
the Company other than those shareholders who are party to the Advantage
Agreement (as defined below) will receive for each share of the Company's
common stock, par value $0.01 per share (the "Common Stock"), owned at the
merger effective time, cash in an amount equal to $18.50 per share (without
interest), and shareholders who are party to the Advantage Agreement will
receive $17.50 per share (without interest) of Common Stock, all on the terms
and subject to the conditions contained herein, in the Advantage Agreement and
in the Definitive Agreement (collectively, the "Purchase Price"). On a fully
diluted basis, there are approximately 5,100,000 shares of Common Stock,
assuming that all existing vested and unvested stock options are exercised and
all shares of the Company's Class A Cumulative Convertible Preferred Stock, par
value $100 per share (the "Preferred Stock"), are converted into shares of
Common Stock. This proposal is being made based upon information with respect
to the Company that is publicly available to THORN, and THORN's consummation of
the Acquisition is subject to (i) the total equity of the Company at the
Closing Date (as defined below) being at least $28,250,000; provided, however,
that the Company may pay reasonable expenses not to exceed $250,000 arising as
a result of the Acquisition so long as such payments do not result in total
equity of less than $28,000,000; (ii) bonuses and severance packages paid to
the Company's personnel between the date first written above and the Closing
Date not exceeding $1,400,000 (but in no event may the total equity of the
Company fall below $28,000,000
<PAGE> 18
Mr. Taylor
July 9, 1995
Page 2
as a result of such payments); and (iii) THORN being satisfied with the results
of a complete due diligence investigation regarding the Company.
2. KEY EMPLOYEES. On the Closing Date, the Surviving Company will
enter into employment agreements with certain key employees upon compensation
terms comparable to those currently enjoyed by such key employees and such
other terms as shall be mutually agreed and set forth in the Definitive
Agreement.
3. DUE DILIGENCE; ACCESS. Promptly following execution of this
proposal, the Company will grant THORN and its representatives access to
facilities, personnel, landlords, vendors, records, contracts and other
documents, including without limitation information related to financial,
accounting, commercial, legal, environmental, regulatory, tax and employee
benefits matters of the Company. THORN and its representatives shall not
contact or communicate with the Company's customers, employees, creditors,
outside auditors and other persons having business dealings with the Company
without the consent of the Company, which shall not be unreasonably withheld.
4. CONFIDENTIALITY. THORN will keep confidential and not divulge
(except to its employees, counsel, accountants and other advisors who need to
know such information in connection with the Acquisition) any material
confidential information obtained by them regarding the business and finances
of the Company; provided, however, that this prohibition will not include any
information (i) known generally to the public, (ii) accessible to third parties
on an unrestricted basis or (iii) of a type generally considered
nonconfidential by persons engaged in the same or similar business.
5. PUBLIC ANNOUNCEMENTS. From and after the date hereof until the
date of the Definitive Agreement, the parties shall consult with each other
upon the content of any press release or public announcement relating to the
transactions contemplated herein and will not issue any press release or make
any public announcements prior to such consultation, except as may be required
by applicable law and acceptable to the other party hereto. The parties agree
to issue a press release with respect to this proposal as soon as practicable.
6. DEFINITIVE AGREEMENT. THORN and the Company will proceed
diligently and in good faith to negotiate, execute and deliver the Definitive
Agreement. The Definitive Agreement shall specify a date of closing (the
"Closing Date") the Acquisition, which shall not be later than October 31,
1995; provided, however, that such date shall be extended if delays occur as a
result of the
<PAGE> 19
Mr. Taylor
July 9, 1995
Page 3
regulatory approval process. The Definitive Agreement will contain such
representations and warranties, agreements and covenants, conditions and other
provisions as are appropriate in such an agreement for a transaction of the
size, type and complexity of the Acquisition.
7. CONDITIONS PRECEDENT FOR THORN. The obligations of THORN under
the Definitive Agreement shall be subject to various conditions precedent,
including but not limited to:
(a) Completion of the investigation of the Company by THORN,
confirming that the business, assets, prospects, financial and legal condition
of the Company are satisfactory to THORN;
(b) Compliance by the Company with the requirements of this
proposal;
(c) Performance by the Company of its covenants, obligations
and agreements as contained in the Definitive Agreement;
(d) The truth and accuracy of the representations and
warranties of the Company contained in the Definitive Agreement as of the date
thereof, and as reaffirmed and remade as of the Closing Date;
(e) Approval of the transaction by the requisite vote of the
Boards of Directors of THORN and of the Company, and by the shareholders of the
Company, as required by applicable law;
(f) Obtaining of all required governmental and third party
approvals and consents;
(g) Non-occurrence of any event, fact, condition, change or
effect that is or could be materially adverse to the business, operations,
results of operations, condition (financial or otherwise), assets, prospects or
liabilities of the Company;
(h) No statute, rule, regulation, executive order, decree,
ruling, injunction or other order having been enacted, entered, promulgated or
enforced by any court or governmental authority of competent jurisdiction
within the United States which prohibits the Acquisition or makes the
Acquisition illegal;
(i) Execution and delivery by the Company of all documents
required by the Definitive Agreement to be delivered by
<PAGE> 20
Mr. Taylor
July 9, 1995
Page 4
it at or prior to the Closing Date, each in form and substance acceptable to
THORN;
(j) Conversion or redemption, prior to the Closing Date, of
the Preferred Stock;
(k) Simultaneously with the execution of this proposal, the
execution and delivery to THORN by the four majority shareholders of the
Company of an option, voting and noncompetition agreement between THORN and
such shareholders (the "Advantage Agreement"); and
(l) At THORNS's option at Closing, the execution of a lease
allowing THORN to use the Company's current office space at no cost for 30
days; provided, however, that THORN shall pay utility and telephone expenses
for such office space during the 30-day period.
8. CONDITIONS PRECEDENT FOR THE COMPANY. The obligations of the
Company under the Definitive Agreement shall be subject to various conditions
precedent, including but not limited to:
(a) Compliance by THORN with the requirements of this proposal;
(b) Performance by THORN of its covenants, obligations and
agreements as contained in the Definitive Agreement;
(c) The truth and accuracy of the representations and
warranties of THORN contained in the Definitive Agreement as of the date
thereof, and as reaffirmed and remade as of the Closing Date;
(d) Approval of the transaction by the requisite vote of the
Boards of Directors of THORN and of the Company, and by the shareholders of the
Company, as required by applicable law;
(e) Obtaining of all required governmental and third party
approvals and consents;
(f) No statute, rule, regulation, executive order, decree,
ruling, injunction or other order having been enacted, entered, promulgated or
enforced by any court or governmental authority of competent jurisdiction
within the United States which prohibits the Acquisition or makes the
Acquisition illegal;
<PAGE> 21
Mr. Taylor
July 9, 1995
Page 5
(g) Execution and delivery by THORN of all documents required
by the Definitive Agreement to be delivered by it at or prior to the Closing
Date, each in form and substance acceptable to the Company; and
(h) The receipt of an opinion from an independent firm of
investment bankers to the effect that the purchase price for the Common Stock
is fair from a financial point of view to the Company's shareholders other than
the Company's shareholders who are party to the Advantage Agreement.
9. INTERIM OPERATIONS. From the date hereof until the date of the
Definitive Agreement, the Company (a) will conduct its business and operations
in the ordinary course consistent with past practice and use its best efforts
to preserve its business organization intact, retain the services of its
present officers and employees at current compensation levels and preserve the
present business relationships and goodwill of its licensors, licensees,
suppliers, distributors, customers and others having business relations with
it; provided, however, that the Company may issue bonus and severance awards
not to exceed $1,400,000 and transfer the land, building and equipment used by
the Company as its home office to Mr. Taylor in exchange for consideration from
Mr. Taylor of not less than $500,000, subject to the total equity condition set
forth in paragraph 1 hereof; and (b) will not (i) issue any new shares of
Common Stock (other than upon exercise of existing and outstanding stock
options) or Preferred Stock, (ii) issue any options or other rights to acquire
Common Stock, (iii) hire any new employee or replace any departing employee, in
each case without THORN permission, or (iv) declare any dividends on the
Preferred Stock other than those regular quarterly dividends declared on July
31, 1995, not to exceed an amount equal to $42,000; provided, however, such
declaration and subsequent payments do not result in total equity less than
that set forth in paragraph 1 hereof.
10. NO OTHER ARRANGEMENTS.
(a) The Company is not engaged in any discussions or
negotiations with third parties with respect to any Acquisition Proposal (as
defined below). The Company shall not, directly or indirectly, through any
officer, director, employee, representative or agent or any of its subsidiaries
(i) solicit, initiate or encourage any inquiries or proposals that constitute,
or would lead to, a proposal or offer for a sale of the Common Stock or the
Preferred Stock, merger, consolidation, business combination, sale of
substantial assets, sale of a substantial percentage of shares of capital stock
(including, without limitation, by way of a tender
<PAGE> 22
Mr. Taylor
July 9, 1995
Page 6
offer) or similar transactions involving the Company or any of its
subsidiaries, other than the transactions contemplated by this proposal, the
Definitive Agreement or the Advantage Agreement (any of the foregoing inquiries
or proposals being referred to in this proposal as an "Acquisition Proposal"),
provided that the Company may respond to unsolicited inquiries and proposals,
(ii) subject to the fiduciary duties of the Company's Board of Directors under
applicable law, engage in negotiations or discussions concerning, or provide
any nonpublic information to any person or entity relating to, any Acquisition
Proposal or (iii) subject to the fiduciary duties of the Company's Board of
Directors under applicable law, agree to, approve or recommend any Acquisition
Proposal. The Company may take the actions set forth in (ii) and (iii) of the
immediately preceding sentence only upon a majority vote of the directors
capable of voting thereon that such actions are in furtherance of the best
interests of the Company's stockholders, and only upon a determination that the
third-party bidder is reputable and financially responsible.
(b) The Company shall notify THORN immediately (in no later
than 24 hours) after receipt by the Company of any Acquisition Proposal or any
request for nonpublic information in connection with an Acquisition Proposal or
for access to the properties, books or records of the Company by any person or
entity that informs the Company that it is considering making, or has made, an
Acquisition Proposal. Such notice shall be made orally or by facsimile and
shall indicate the identity of the offeror and the terms and conditions of such
proposal, inquiry or contract.
(c) If, at any time after the date hereof and the earlier of
the date of the Definitive Agreement or November 30, 1995, the Company (i)
enters into an agreement relating to the sale of the Company or any substantial
part thereof to a third party, or (ii) ceases negotiations with THORN for the
purpose of entering into negotiations for the sale of the Company or any
substantial part thereof to a third party, then the Company shall be liable for
and shall promptly pay to THORN an amount equal to all of THORN's out-of-pocket
costs, fees and expenses incurred in connection with the Acquisition, including
but not limited to, all reasonable legal, investment banking and accounting
fees.
11. LITIGATION. In connection with the Acquisition, THORN has
agreed to, on or about July 10, 1995, file a motion to stay certain litigation
filed by THORN in the District Court of Sedgwick County, Kansas on December 27,
1994, against the Company.
12. FURTHER ASSURANCES. Subject to the fiduciary duties of the
Company's Board of Directors under applicable law, the
<PAGE> 23
Mr. Taylor
July 9, 1995
Page 7
Company and THORN agree to use their reasonable best efforts to obtain the
requisite shareholder approval of, and any requisite third party or
governmental approvals and consents with respect to, the Acquisition. Each of
the parties agrees to prepare and file a notification form under the
Hart-Scott-Rodino Act of 1976, as amended, as promptly as practicable following
the execution of this proposal.
13. FEES AND EXPENSES. Except as otherwise set forth in this
proposal, THORN, on the one hand, and the Company, on the other hand, each
shall bear its own fees and expenses in connection with the proposed
transaction, including without limitation the negotiation and preparation of
this proposal, the negotiation and drafting of the Advantage Agreement and
[THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE> 24
Mr. Taylor
July 9, 1995
Page 8
the Definitive Agreement, financial advisory fees, legal fees, finders fees and
the obtaining of all regulatory and other approvals and consents.
14. NO BINDING OBLIGATION. This proposal is an expression of the
intent of the parties only and is subject to due diligence review and to the
other terms and conditions set forth herein. Except for the provisions of
Paragraphs 4, 5, 9, 10, 13 and 14, this proposal does not constitute or create,
and shall not be deemed to constitute or create, any legally binding or
enforceable obligation on the part of any party hereto. No such obligation
shall be created, except by the execution and delivery of the Definitive
Agreement containing such terms and conditions of the proposed transaction as
shall be agreed upon by the parties, and then only in accordance with the terms
and conditions of the Definitive Agreement.
If the foregoing is acceptable to the Company, please so indicate
acceptance by executing and returning the enclosed copy of this proposal prior
to 8:30 a.m. Central Daylight Time on Monday, July 10, 1995. We look forward
to proceeding with this transaction.
AGREED AND ACCEPTED: Very truly yours,
ADVANTAGE COMPANIES, INC. THORN AMERICAS, INC.
By: /s/ Daniel J. Taylor By: /s/ John H. Slaymaker
---------------------------------- ----------------------------------
Name: Daniel J. Taylor Name: John H. Slaymaker
Title: Chief Executive Officer Title: Executive Vice President
<PAGE> 25
ADVANTAGE AGREEMENT
THIS AGREEMENT dated as of July 9, 1995, by and among THORN
AMERICAS, INC., a Delaware corporation ("THORN"), and the shareholders of
ADVANTAGE COMPANIES, INC., a Delaware corporation ("Advantage"), who are
signatories hereto (each, a "Shareholder" and collectively, the
"Shareholders").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, THORN and Advantage are entering into a letter of intent (the
"Proposal"), which provides, among other things, upon the terms and subject to
the conditions thereof, that (i) a newly formed subsidiary of THORN will be
merged with and into Advantage in accordance with the General Corporation Law
of the State of Delaware and (ii) each share of common stock, par value $0.01
per share, of Advantage (the "Shares") issued and outstanding at the effective
time of the merger will, except as otherwise expressly provided in the Proposal
or in the Definitive Agreement (as defined in the Proposal), be converted into
the right to receive $17.50 per Share (without interest) in cash (the "Purchase
Price"); and
WHEREAS, in order to induce THORN to enter into the Proposal and
subsequently, into the Definitive Agreement, each Shareholder desires to enter
into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, THORN and the Shareholders agree as follows.
SECTION 1. CAPITALIZED TERMS. Capitalized terms used but not
defined herein shall have the meanings assigned to such terms in the Proposal.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
Each of the Shareholders hereby represents and warrants to THORN as follows:
(a) Each Shareholder owns the number of equity securities of
Advantage set forth opposite the name of such Shareholder on Schedule A hereto,
and no Shareholder owns any equity securities of Advantage other than those
shown on such Schedule.
(b) Each Shareholder has good and marketable title to such
Shareholder's Shares and Preferred Stock, free and clear of any liens,
encumbrances, restrictions on transfer or rights of others.
(c) Other than as disclosed on Schedule A attached hereto, there
are no options or other rights to acquire any Shares or Preferred Stock from
any Shareholder or any equity securities from Advantage, to which any
Shareholder is a party, other than this Agreement.
<PAGE> 26
(d) The execution and delivery of this Agreement, and the
consummation of the transactions herein provided, do not and will not violate
any agreement binding upon any Shareholder; and this Agreement is the valid and
binding agreement of each Shareholder, enforceable against each Shareholder in
accordance with its terms.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THORN. THORN
hereby represents and warrants to the Shareholders that this Agreement has been
duly authorized by all necessary corporate action on the part of THORN, has
been duly executed by a duly authorized officer of THORN and constitutes a
valid and binding agreement of THORN enforceable against THORN in accordance
with its terms.
SECTION 4. COVENANTS. Each Shareholder agrees:
(a) not to (either directly or indirectly) sell, transfer, pledge,
assign, hypothecate or otherwise dispose of, or enter into any contract, option
or other arrangement or understanding with respect to the sale, transfer,
pledge, assignment, hypothecation or other disposition of such Shareholder's
Shares, Preferred Stock or options or other rights to obtain an equity interest
in Advantage;
(b) not to (either directly or indirectly) grant any proxy to any
person regarding his\her ownership of any Shares or Preferred Stock, deposit
such securities into a voting trust or enter into a voting agreement regarding
such securities that would be inconsistent with the terms of this Agreement;
(c) not to (either directly or indirectly) take any action which
would make any representation, warranty or covenant of such Shareholder untrue
or incorrect; and
(d) to convert into Shares all of such Shareholder's shares of
Preferred Stock prior to the Closing Date.
SECTION 5. VOTING AGREEMENT; PROXY.
(a) For so long as this Agreement is in effect, the Shareholders
shall vote, or cause to be voted, all of their respective Shares in favor of
the approval and adoption of the merger as provided for in the Definitive
Agreement and the transactions contemplated therein.
(b) For so long as this Agreement is in effect, in any meeting of
the stockholders of Advantage, however called, and in any action by consent of
the stockholders of Advantage, the Shareholders shall vote or cause to be voted
all of their respective Shares: (i) against any action or agreement that would
result in a breach in any material respect of any covenant, representation or
warranty or any other obligation of Advantage under the Proposal or the
Definitive Agreement or of the Shareholders under this Agreement; and (ii)
against any action or
2
<PAGE> 27
agreement that would impede, interfere with or discourage the transactions
contemplated by the Proposal or the Definitive Agreement, including, without
limitation: (1) any extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving Advantage or any of its subsidiaries,
(2) a sale or transfer of a material amount of assets of Advantage or any of
its subsidiaries or the issuance of securities by Advantage or any of its
subsidiaries; provided, however, that Advantage may issue bonus and severance
awards and transfer the land, building and equipment used by Advantage as its
home office to Mr. Taylor subject to the total equity condition set forth in
paragraph 1 of the Proposal, (3) any change in the Advantage Board of Directors
(other than as contemplated by the Proposal or the Definitive Agreement), (4)
any change in the present capitalization or dividend policy of Advantage or any
of its subsidiaries (other than as contemplated by the Proposal or the
Definitive Agreement) or (5) any other material change in Advantage's or any of
its subsidiaries' corporate structure or business.
(c) Upon the execution of this Agreement, each Shareholder shall
grant THORN an irrevocable proxy appointing THORN or its designee(s), with full
power of substitution, its attorney and proxy to vote all such Shareholder's
Shares at any meeting of the stockholders of Advantage, however called, or in
connection with any action by written consent by the stockholders of Advantage.
Each Shareholder acknowledges and agrees that such proxy, if and when given,
will be coupled with an interest, will be irrevocable and shall not be
terminated by operation of law or otherwise upon the occurrence of any event
and that no subsequent proxies will be given (and if given will not be
effective).
SECTION 6. OPTION TO PURCHASE SHAREHOLDERS' SHARES AND
PREFERRED STOCK.
(a) Each Shareholder grants to THORN an irrevocable option (the
"Option") (i) to purchase all Shares owned by such Shareholder at the Option
Closing (as defined below) at the Purchase Price multiplied by the number of
Shares owned by such Shareholder and (ii) to purchase all shares of Preferred
Stock owned by such Shareholder at the Option Closing at the Purchase Price
multiplied by fifty for each share of Preferred Stock so purchased (all such
amounts being the "Aggregate Purchase Price"), all payable at the Option
Closing.
(b) The Option may be exercised by THORN at any time during the
period commencing on the date first above written and ending on the Expiration
Date (as defined below); provided, however, that the Option must be exercised
with respect to the Shares and Preferred Stock of all Shareholders.
(c) In the event that THORN wishes to exercise the Option, THORN
shall give written notice to each Shareholder of its intention to exercise the
Option. The closing of the purchase of the Shareholders' Shares and Preferred
Stock hereunder (the "Option Closing") shall take place in Wichita, Kansas, on
a date and at a
3
<PAGE> 28
time designated by THORN at the time that it gives notice of its intention to
exercise the Option (which date and time may be one day after the delivery of
such notice or earlier if reasonably practicable).
(d) The Option shall expire on November 30, 1995 (the "Expiration
Date"), except that if the Option cannot be exercised by reason of any
applicable judgment, decree or order granted upon the application of the
Shareholders, the Expiration Date of the Option shall be extended until five
business days after such impediment to exercise shall have been removed.
(e) In the event THORN exercises the Option, THORN shall make
payment of the Aggregate Purchase Price to the Shareholders at the Option
Closing by delivering immediately available funds. At the Option Closing, the
Shareholders shall transfer, assign and deliver to THORN certificates
evidencing the Shares and Preferred Stock, which shall be duly endorsed in
blank, or be accompanied by stock powers duly executed in blank, with all
necessary transfer tax stamps affixed and cancelled and signatures guaranteed.
(f) In the event THORN exercises the Option, THORN and the
Shareholders each will execute and deliver all such further documents and
instruments and take all such further action as may be necessary in order to
consummate the transactions contemplated hereby.
(g) In the event of any change in the number of Shares or Preferred
Stock outstanding by recapitalization, declaration of a stock split or
combination or payment of a stock dividend, the exercise of stock options,
conversion of preferred stock or the like, the number of Shares or shares of
Preferred Stock, as the case may be, subject to the Option and the per share
payments to be made to the Shareholders shall be adjusted appropriately.
SECTION 7. NONCOMPETITION.
The provisions of this Section 7 will not be applicable until THORN
purchases the Shares and the Preferred Stock.
(a) The Shareholders hereby acknowledge that the identity and
particular needs of THORN'S and Advantage's clients are not generally known and
are confidential information; that, in THORN'S and Advantage's business,
information is an extremely valuable commodity because of the importance of
marketing and business strategies with respect to profitability; that THORN and
Advantage have a proprietary interest in the information concerning the
identity of its clients, its marketing and business strategies, and its prices
and profit margins; that THORN and Advantage have a legitimate interest in
preserving and protecting its customer contacts and good will; that THORN and
Advantage's customer lists, marketing information, price lists, accounting
procedures, business plans and the like are the private, privileged, and
confidential information of THORN and Advantage respectively; and that THORN
and
4
<PAGE> 29
Advantage have a legitimate interest in protecting their confidential
information and other proprietary information from even the threat of
disclosure.
(b) The Shareholders jointly and severally agree that they shall
not directly or indirectly, individually or with others, engage in the business
of rent-to-own, rentals or retail installment sales transactions of consumer
household durable goods, including televisions, video cassette recorders,
stereos, furniture, appliances, jewelry, pagers, computers or like or similar
household durable goods merchandise rented or sold by THORN, or any
subsidiary, affiliate or franchisee thereof, for a period of five years
following the purchase of Shares and the Preferred Stock by THORN, at any
location within the United States of America.
(c) During the term of the Shareholders's franchise relationship,
the Shareholders have had access to and become familiar with the confidential
information and other proprietary information of THORN and Advantage, including
but not limited to the information referred to in paragraph (a) above. The
Shareholders acknowledge that such information is owned by and shall continue
to be owned solely by THORN and Advantage. The Shareholders jointly and
severally agree that they will not, individually or with others, directly or
indirectly, at any time in the future following the purchase of the Shares and
the Preferred Stock by THORN, divulge, communicate, use to the detriment of
THORN, or any subsidiary or affiliate thereof, or for the benefit of any person
or organization any Proprietary Information. As used in this Agreement,
"Proprietary Information" means information disclosed as a result of or related
to such Shareholder's relationship with Advantage or any of its affiliates,
whether or not acquired during business hours, concerning Advantage's or it
affiliates' business, research activities, operations, products, manufacturing
or other processes, services, customers, customer scattergrams, customer lists,
vendors and costs and pricing policies, including, but not limited to,
information relating to research, development, marketing demographics, methods,
expertise, techniques, inventions, equipment, purchasing, merchandising and
selling, including, but not limited to, reports relating to inventory,
administration, profit and loss, and similar financial documents; provided,
however, this prohibition will not include any information (i) known generally
to the public, (ii) accessible to third parties on an unrestricted basis or
(iii) of a type generally considered nonconfidential by persons engaged in the
same or similar business.
(d) The Shareholders jointly and severally agree that for a period
of five years following the purchase of the Shares and the Preferred Stock by
THORN, they will not, directly or indirectly, solicit the employment or
engagement of the consulting or other services of any person who shall then be
employed by THORN or who shall have been employed by THORN or any subsidiary or
affiliate thereof (including Advantage or Tidewater Rental Corp.),
5
<PAGE> 30
at any time within the previous six months, except as provided in the
Definitive Agreement.
(e) The Shareholders acknowledge that each has carefully read and
considered the provisions of this Section 7 and, having done so, agree that the
restrictions are reasonable and necessary restrictions for purposes of
protecting the value received by THORN, which includes the expectation of THORN
or any subsidiary or affiliate thereof, of expanding their business without
competition from the Shareholders for a five-year period following the purchase
of the Shares and the Preferred Stock by THORN, and for an indefinite period
regarding the confidentiality provisions in Section 7(c). The parties further
agree that the geographic area described in Section 7(b) above are reasonable.
(f) In the event that, notwithstanding the foregoing, any part of
the covenants set forth in this Section 7 shall be held to be invalid or
unenforceable, the remaining parts thereof shall nevertheless continue to be
valid and enforceable as though the invalid or unenforceable parts had not been
included therein. In the event that any provision of this Section 7 relating
to time periods and/or areas of restriction shall be declared by a court of
competent jurisdiction to exceed the maximum time period or areas such court
deems reasonable and enforceable, said time period and/or areas of restriction
shall be deemed to become and thereafter be the maximum time period and/or
areas which such court deems reasonable and enforceable. Any provision of this
Section 7 otherwise prohibited by or unenforceable under any applicable law or
public policy in any jurisdiction which cannot be reformed in accordance with
the provisions herein shall, as to such jurisdiction, be ineffective without
affecting any other provision of this Section or shall be deemed to be severed
or otherwise modified to conform with such law or public policy; and the
remaining provisions of this Agreement shall remain in force, provided that the
purpose of this Agreement can be effected. To the full extent, however, that
the provisions of such applicable law or public policy may be waived, this
Agreement shall be deemed to be a waiver thereof. The parties hereto
understand and agree that all of the covenants set forth herein are and shall
be separately enforceable, and the parties shall promptly meet to negotiate a
substitute for any invalid provision in order to preserve, to the extent
legally possible, the original intent of this Agreement.
(g) It is agreed by the parties hereto that THORN would be
irreparably damaged by reason of any violation of the provisions of this
Section 7 and that any remedy at law for a breach of the provisions of this
Section would be inadequate. Therefore, THORN shall be entitled to seek
injunctive or other equitable relief in a court of competent jurisdiction
against the Shareholders, their agents, employees, affiliates, partners or
other associates, for any breach or threatened breach of this Section without
the necessity of proving actual monetary loss. It is expressly understood that
the remedy described in this Section 7(g) shall not be the exclusive remedy of
THORN for any breach of this Agreement,
6
<PAGE> 31
and THORN shall be entitled to seek such other relief or remedy, at law or in
equity, to which it may be entitled as a consequence of any breach of this
Agreement, including its expenses in enforcing this Section 7, including
attorneys' fees.
SECTION 8. NO SOLICITATION.
(a) None of the Shareholders is engaged in any discussions or
negotiations with third parties with respect to any Acquisition Proposal (as
defined below). The Shareholders shall not, individually or with others,
directly or indirectly, through any employee, representative or agent (i)
solicit, initiate or encourage any inquiries or proposals that constitute, or
would lead to, a proposal or offer for a sale of the Shares or the Preferred
Stock, a merger, consolidation, business combination, sale of substantial
assets, sale of a substantial percentage of Shares of capital stock (including,
without limitation, by way of a tender offer) or similar transactions
involving Advantage or any of its subsidiaries, other than the transactions
contemplated by this Agreement, the Proposal or the Definitive Agreement (any
of the foregoing inquiries or proposals being referred to in this Agreement as
an "Acquisition Proposal"), (ii) engage in negotiations or discussions
concerning, or provide any nonpublic information to any person or entity
relating to, any Acquisition Proposal or (iii) agree to, approve or recommend
any Acquisition Proposal.
(b) The Shareholders shall notify THORN immediately (in no later
than 24 hours) after receipt by any Shareholder of any Acquisition Proposal or
any request for non-public information in connection with an Acquisition
Proposal or for access to the properties, books or records of Advantage by any
person or entity that informed such party that it is considering making, or has
made, an Acquisition Proposal. Such notice shall be made orally or by
facsimile and shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or contract.
SECTION 9. PUBLIC ANNOUNCEMENTS. THORN and the Shareholders
will consult with each other before issuing any press release with respect to
the transactions contemplated by this Agreement, the Proposal and the
Definitive Agreement, and shall not issue any press release prior to such
consultation, except as may be required by applicable law. Promptly upon
execution of this Agreement and the Proposal, THORN and Advantage shall issue a
joint press release.
SECTION 10. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
7
<PAGE> 32
SECTION 11. EXPENSES. Each party shall bear its own expenses
and costs in connection with this Agreement and the transactions contemplated
hereby.
SECTION 12. SURVIVAL. Except as otherwise set forth in this
Agreement, all of the representations, warranties and covenants contained
herein shall survive the exercise of the Option and the Closing Date
indefinitely and shall be deemed to have been made as of the date hereof and as
of the Closing Date. Notwithstanding anything contained herein to the
contrary, the representations, warranties and covenants made herein by the
Shareholders shall be joint and several.
SECTION 13. AMENDMENT; ASSIGNMENT. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto. No party to
this Agreement may assign any of its rights or obligations under this Agreement
without the prior written consent of the other parties and provided that such
transferee agrees in writing to be bound under this Agreement; provided,
however, that THORN may assign its rights under this Agreement to an affiliate,
and an affiliate may assign its rights under this Agreement to another
affiliate of THORN or to THORN. As used herein, "THORN" includes THORN and its
affiliates.
SECTION 14. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever.
SECTION 15. NOTICES. All notices, requests, claims, demands and
other communications hereunder, unless this Agreement expressly provides
otherwise, shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by facsimile or by
registered or certified mail (postage prepaid, return receipt requested), to
the other party as follows:
(a) If to THORN, to:
THORN Americas, Inc.
8200 East Rent-A-Center Drive
Wichita, Kansas 67226-2799
Fax: 316-636-7328
Attention: P. David Egan, Senior Vice President and
General Counsel
with a copy to:
8
<PAGE> 33
Shook, Hardy & Bacon P.C.
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2118
Fax: 816-421-5547
Attention: Jennings J. Newcom
(b) If to the Shareholders, to:
Daniel J. Taylor
9323 East 37th Street North
Wichita, Kansas 67226-2000
Fax: 316-634-3340
and
Robert W. Moore
9323 East 37th Street North
Wichita, Kansas 67226-2000
Fax: 316-634-3340
and
Daniel M. Carney
9323 East 37th Street North
Wichita, Kansas 67226-2000
Fax: 316-634-3340
and
Leslie G. Rudd
9323 East 37th Street North
Wichita, Kansas 67226-2000
Fax: 316-634-3340
with a copy to:
Advantage Companies, Inc.
9323 East 37th Street North
Wichita, Kansas 67226-2000
Fax: 316-634-3340
Attention: Law Department
and
Shughart, Thomson & Kilroy, P.C.
1800 Twelve Wyandotte Plaza
120 West 12th Street
Kansas City, Missouri 64105
Fax: 816-374-0509
Attention: Robert T. Schendel
9
<PAGE> 34
SECTION 16. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Kansas without giving
effect to the provisions thereof relating to conflicts of laws.
SECTION 17. TERMINATION. This Agreement shall terminate, unless
this Agreement expressly provides otherwise, upon the earlier of (i) the
Closing Date, (ii) the Expiration Date or (iii) notice of termination being
given by THORN to the Shareholders. No such termination shall relieve any
party from liability for any breach of this Agreement.
SECTION 18. SEVERABILITY. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid and unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.
SECTION 19. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
SECTION 20. DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
10
<PAGE> 35
SECTION 21. CONSENT TO JURISDICTION. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to jurisdiction of
the courts of the State of Kansas for any litigation arising out of or relating
to this Agreement and the transactions contemplated hereby, waives any
objection to laying of venue of any such litigation in the courts located in
the State of Kansas and agrees not to plead or claim in any court in the State
of Kansas that such litigation brought therein has been brought in an
inconvenient forum.
SECTION 22. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, THORN and the Shareholders have caused this
Agreement to be duly executed on the date first above written.
THORN AMERICAS, INC.
By: /s/ John H. Slaymaker
----------------------------------
Name: John H. Slaymaker
Title: Executive Vice President
SHAREHOLDERS:
/s/ Daniel J. Taylor
----------------------------------
Daniel J. Taylor
/s/ Robert W. Moore
----------------------------------
Robert W. Moore
/s/ Daniel M. Carney
----------------------------------
Daniel M. Carney
/s/ Leslie G. Rudd
----------------------------------
Leslie G. Rudd
11
<PAGE> 36
SCHEDULE A
ADVANTAGE
<TABLE>
<CAPTION>
SHARES OF SHARES OF TOTAL SHARES
NAME COMMON PREFERRED OF COMMON STOCK
DATE 1 STOCK STOCK AT CLOSING
- ------ ----- ----- ---------------
<S> <C> <C> <C>
Daniel J. Taylor 960,750 3,800 1,150,750
Robert W. Moore 849,310 3,900 1,044,310
Daniel M. Carney 797,600 2,300 912,600
Leslie G. Rudd 661,262 None 661,262
--------- ------ ---------
3,268,922 10,000 3,768,922
</TABLE>
________________________
1. Assuming conversion of Preferred Stock.
12
<PAGE> 37
FOR IMMEDIATE RELEASE:
THORN Americas to Acquire
Advantage Companies, Inc. and Tidewater Rental Corp.
July 10, 1995: Wichita, KS -- Advantage Companies, Inc. (Nasdaq:ADVG) and THORN
Americas, Inc. today announced the signing of a letter of intent for THORN to
acquire Advantage Companies, Inc., a Delaware corporation that owns 100 percent
of the outstanding stock of COMCOA, Inc. and AdvantEdge Rental Purchase, Inc.
COMCOA Inc. is a THORN franchisee operating 98 Rent-A-Center stores in Florida,
Alabama, Mississippi and Georgia. AdvantEdge operates six rental-purchase
stores in Colorado and Indiana.
The transaction, with a purchase price of $18.50 per publicly held share of
Advantage Companies, Inc. common stock, is subject to negotiation of a
definitive merger agreement and legal and governmental clearance, and the
approval process of the two companies. Certain majority shareholders of
Advantage Companies have entered into an option agreement in which they will
vote in favor of the sale and grant THORN the option to purchase their security
holdings at $17.50 per share. As part of the transaction, THORN has agreed to
file a motion to stay certain litigation filed by THORN in the District Court
of Sedgwick County, Kansas, on December 27, 1994, against Advantage Companies.
In a separate development, the controlling shareholders of Tidewater Rental
Corp., a privately held company affiliated with Advantage Companies, Inc.
entered a letter of intent for Tidewater to be acquired by THORN. Tidewater is
a THORN franchisee, operating 20 Rent-A-Center stores in Virginia.
Daniel J. Taylor, chairman and chief executive officer of Advantage Companies,
Inc. stated, "We are very pleased to announce the proposed merger with THORN,
whom we are confident will continue valued relationships with our customers and
employees, at a cash price which maximizes value for our shareholders."
"These acquisitions will be good additions to THORN Americas for an obvious
reason: We have enjoyed a strong relationship with COMCOA and Tidewater as
Rent-A-Center franchisees, and we know their stores have been operated in a
well-managed, customer-service oriented manner," said Walter E. "Bud" Gates,
Chairman and Chief Executive Officer of THORN Americas.
THORN Americas and its franchisees constitute the largest rental-purchase
operation in the United States, currently with 1,168 Rent-A-Center stores in 49
states and the District of Columbia. THORN also operates 19 Rent-A-Center
stores in Canada, and 121 Remco stores in 16 states.
The reported closing price for Advantage common stock on Friday, July 7, 1995,
was $16 per share. CONTACT: A. Tracy Burton of Advantage Companies, Inc.,
316-634-0333.
