SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 2, 1996
ADVANTAGE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-1234-8 48-1156618
- -------------- ------------ ------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
8200 East THORN Drive, Wichita, Kansas 67226
- -------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (316) 636-7368
--------------
9323 East 37th Street North, Wichita, Kansas 67226
- -------------------------------------------------------------------
- - (Former name or former address, if changed since last report)
Item 1. Changes in Control of Registrant.
---------------------------------
CHANGE IN CONTROL. On January 2, 1996, THORN Acquisition
Corp., a Delaware corporation ("Acquisition"), was merged (the
"Merger") with and into Advantage Companies, Inc., a Delaware
corporation (the "Company"), with the Company as the surviving
corporation and, as a result, now a wholly owned subsidiary of
THORN Americas, Inc., a Delaware corporation ("Parent"). Parent is
an indirect wholly owned subsidiary of THORN EMI plc, a company
existing under the laws of England ("THORN EMI").
The Merger occurred pursuant to a certain Agreement and Plan
of Merger dated as of September 25, 1995, as amended on November
27, 1995 (the "Merger Agreement"), by and among the Company, Parent
and Acquisition. The Merger Agreement provides for, among other
things, (i) the Merger and (ii) the conversion of each share of
common stock (the "Common Stock"), par value $.01 per share, of the
Company (the "Shares"), issued and outstanding immediately prior to
the effective time of the Merger (other than Shares held by Parent,
Acquisition or any of their direct or indirect subsidiaries, or
held in the treasury of the Company or any of its subsidiaries or
by a holder who has perfected appraisal rights pursuant to the
General Corporation Law of the State of Delaware) into the right to
receive the Merger Consideration. As used herein, "Merger
Consideration" shall mean (i) for stockholders of the Company other
than those who were parties to that certain option agreement
entitled the Advantage Agreement dated as of July 9, 1995, as
amended on October 6, 1995 and November 27, 1995 (the "Option
Agreement"), $18.50 per Share (without interest) in cash, and (ii)
for those stockholders of the Company who were parties to the
Option Agreement, $16.00 per Share (without interest) in cash.
The summary set forth herein of the Merger Agreement does not
purport to be complete and is qualified in its entirety by
reference to the Merger Agreement which is incorporated herein by
reference as Exhibit 2.1.
A copy of the press release issued by Parent on January 2,
1996, announcing the Merger and the Tidewater Acquisition (as
defined herein) is incorporated herein by reference as Exhibit 99.1
and is attached hereto.
AMOUNT AND SOURCE OF CONSIDERATION. The total amount of funds
required by Parent to purchase the Shares pursuant to the Merger
Agreement was approximately $82,669,548 plus the related fees and
expenses (the "Purchase Price").
Parent obtained the Purchase Price from general corporate
funds held on deposit by THORN EMI Inc., a Delaware corporation and
a wholly owned subsidiary of THORN EMI.
ADVANTAGE AGREEMENT. On July 9, 1995, Parent and Daniel J.
Taylor, Daniel M. Carney, Robert W. Moore and Leslie G. Rudd, the
principal stockholders of the Company (the "Stockholders") entered
into the Option Agreement, whereby, as of the effective date of the
Merger, the Stockholders agreed, among other things, (i) not to
compete with the businesses of Parent or any subsidiary, affiliate
or franchisee thereof, for a period of five (5) years, at any
location within the United States of America, (ii) not to divulge,
communicate or use to the detriment of Parent or any subsidiary or
affiliate thereof any Propriety Information (as defined in Section
7(c) of the Option Agreement), at any time in the future or (iii)
except as set forth in the Merger Agreement, not to solicit the
employment or engagement of the consulting or other services of any
person who shall then be employed by Parent or who shall have been
employed by Parent or any subsidiary or affiliate thereof, at any
time within the previous six months, for a period of five (5)
years. Additionally, pursuant to the First Amendment to the Option
Agreement dated as of October 6, 1995 (the "First Amendment"), on
January 2, 1996, Parent paid Mr. Taylor the sum of $750,000 as
consideration for Mr. Taylor's covenant not to compete with the
businesses of the Company, Parent or Acquisition, as discussed
above.
The summaries set forth herein regarding the First Amendment
and the Option Agreement do not purport to be complete and are
qualified in their entirety by reference to the First Amendment and
the Option Agreement which are incorporated herein by reference as
Exhibits 2.2 and 2.3, respectively.
TIDEWATER RENTAL CORP. Also on July 9, 1995, Parent and the
stockholders of Tidewater Rental Corp., a Virginia corporation
("Tidewater") and affiliated with the Company through common
ownership and management, entered into that certain option
agreement entitled the Tidewater Agreement, as amended on September
25, 1995 (the "Tidewater Option Agreement"), whereby, upon the
purchase of the Tidewater Shares (as defined herein) by Parent (the
"Tidewater Acquisition"), Messrs. Rudd, Taylor and A. Tracy Burton
agreed, among other things, (i) not to compete with the businesses
of Parent or any subsidiary, affiliate or franchisee thereof, for
a period of five (5) years, at any location within the United
States of America, (ii) not to divulge, communicate or use to the
detriment of Parent or any subsidiary or affiliate thereof any
Propriety Information (as defined in Section 6(c) of the Tidewater
Option Agreement), at any time in the future or (iii) except as set
forth in the Stock Purchase Agreement (as defined herein), not to
solicit the employment or engagement of the consulting or other
services of any person who shall then be employed by Parent or who
shall have been employed by Parent or any subsidiary or affiliate
thereof, at any time within the previous six months, for a period
of five (5) years.
In connection with the Tidewater Option Agreement, on January
1, 1996, pursuant to a certain Stock Purchase Agreement dated as of
September 25, 1995, as amended on November 27, 1995 (the "Stock
Purchase Agreement"), by and among Parent, Tidewater and the
stockholders of Tidewater (the "Tidewater Stockholders"), Parent
acquired all of the issued and outstanding common stock, par value
$1.00 per share, of Tidewater (the "Tidewater Shares") for an
amount equal to $15,000,000 in the aggregate in cash, plus the
assumption and payment of notes to certain of the Tidewater
Stockholders in an amount equal to $1,312,500. Additionally, in
accordance with the Stock Purchase Agreement, Tidewater and Parent,
jointly and severally, agreed to certain indemnifications of the
Tidewater Stockholders regarding the assessment of additional
income taxes (see Section 6.13 of the Stock Purchase Agreement).
The summaries set forth above regarding the Tidewater Option
Agreement and the Stock Purchase Agreement do not purport to be
complete and are qualified in their entirety by reference to the
Tidewater Option Agreement and the Stock Purchase Agreement which
are incorporated herein by reference as Exhibits 2.4 and 2.5,
respectively, which are attached hereto.
CERTAIN ARRANGEMENTS AND UNDERSTANDINGS. In accordance with
the terms of the Merger Agreement and as conditions precedent to
the consummation of the Merger, the following documents, among
others, were executed on January 2, 1996: (i) Parent's dismissal
with prejudice of its lawsuit against the Company and its
affiliates captioned as Case No. 94 C 3532 (the "THORN Lawsuit")
and a mutual release of liability by the parties to the THORN
Lawsuit regarding the subject matter thereof and the Company's and
its affiliates' dismissal with prejudice of all counterclaims
relating to the THORN Lawsuit and the entering of a mutual release
of liability by the parties to such counterclaim(s) regarding the
subject matter thereof (incorporated herein by reference as
Exhibits 2.6 and 2.7, respectively, which are attached hereto);
and (ii) commercial lease agreement between Property Management
Corp. ("PMC") and the Company for the use by the Company of the
property located at 9323 East 37th Street North, Wichita, Kansas,
at no cost for thirty (30) days (PMC is fifty (50%) percent owned
by Mr. Taylor (former chief executive officer, director and
stockholder of the Company)) (incorporated herein by reference as
Exhibit 2.8, which is attached hereto). Additionally, pursuant to
the Merger Agreement, Parent offered two-year employment agreements
to each of Mr. Burton and James G. Steckart (former directors
and/or officers and stockholders of the Company); however, such
agreements have not yet been executed.
The foregoing summaries of certain arrangements and
understandings executed in connection with the Merger Agreement do
not purport to be complete and are qualified in their entirety by
reference to the actual documents which are incorporated herein by
reference as Exhibits.
Additionally, in connection with the consummation of the
Merger and the Tidewater Acquisition, Parent and PMC entered into
a Service Agreement dated as of January 2, 1996 (the "Service
Agreement"), whereby PMC personnel agreed to assist Parent and the
Company with 1995 year-end closing procedures in connection with
the Merger and the Tidewater Acquisition.
The summary set forth herein regarding the Service Agreement
does not purport to be complete and is qualified in its entirety by
reference to the Service Agreement, which is incorporated herein by
reference as Exhibit 2.9, which is attached hereto.
Item 7. Financial Statements and Exhibits.
----------------------------------
(c) Exhibits.
Exhibit 2.1 Agreement and Plan of Merger dated as of
September 25, 1995, as amended on
November 27, 1995, by and among Advantage
Companies, Inc., THORN Americas, Inc. and
THORN Acquisition Corp. (incorporated
herein by reference to Annexes A-1 and A-
2 to the Proxy Statement dated December
6, 1995, of Advantage Companies, Inc.)
Exhibit 2.2 First Amendment to the Advantage
Agreement dated as of October 6, 1995, by
and among THORN Americas, Inc. and Daniel
J. Taylor, Robert W. Moore, Daniel M.
Carney and Leslie G. Rudd (incorporated
herein by reference to Exhibit 3 to the
Amendment No. 1 to the Statement on
Schedule 13D of THORN Americas, Inc.)
Exhibit 2.3 Advantage Agreement dated as of July 9,
1995, as amended on October 6, 1995 and
November 27, 1995, by and among THORN
Americas, Inc. and Daniel J. Taylor,
Robert W. Moore, Daniel M. Carney and
Leslie G. Rudd (incorporated herein by
reference to Annexes B-1, B-2 and B-3 to
the Proxy Statement dated December 6,
1995, of Advantage Companies, Inc.)
Exhibit 2.4 Tidewater Agreement dated as of July 9,
1995, as amended on September 25, 1995,
by and among THORN Americas, Inc. and the
stockholders of Tidewater Rental Corp.
Exhibit 2.5 Stock Purchase Agreement dated as of
September 25, 1995, as amended on
November 27, 1995, by and among THORN
Americas, Inc., Tidewater Rental Corp.
and the stockholders of Tidewater Rental
Corp.
Exhibit 2.6 Settlement Agreement and Mutual Release
Exhibit 2.7 Stipulation of Dismissal with Prejudice
Exhibit 2.8 Commercial Lease Agreement dated as of
January 2, 1996, by and between Property
Management Corp. and Advantage Companies,
Inc.
Exhibit 2.9 Service Agreement dated as of January 2,
1996, by and between THORN Americas, Inc.
and Property Management Corp.
Exhibit 99.1 Press Release issued by THORN Americas,
Inc. on January 2, 1995.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, Advantage Companies, Inc. has duly caused
this report to be signed on its behalf by the undersigned hereunto
duly authorized.
ADVANTAGE COMPANIES, INC.
Date: January 2, 1996 By: /s/ John H. Slaymaker
---------------------
Name: John H. Slaymaker
Title: President
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Description
- ------- -----------
# 2.1 Agreement and Plan of Merger dated
as of September 25, 1995, as
amended on November 27, 1995, by
and among Advantage Companies,
Inc., THORN Americas, Inc. and
THORN Acquisition Corp.
(incorporated herein by reference
to Annexes A-1 and A-2 to the Proxy
Statement dated December 6, 1995,
of Advantage Companies, Inc.)
# 2.2 First Amendment to the Advantage
Agreement dated as of October 6,
1995, by and among THORN Americas,
Inc. and Daniel J. Taylor, Robert
W. Moore, Daniel M. Carney and
Leslie G. Rudd (incorporated herein
by reference to Exhibit 3 to the
Amendment No. 1 to the Statement on
Schedule 13D of THORN Americas,
Inc.)
# 2.3 Advantage Agreement dated as of
July 9, 1995, as amended on October
6, 1995 and November 27, 1995, by
and among THORN Americas, Inc. and
Daniel J. Taylor, Robert W. Moore,
Daniel M. Carney and Leslie G. Rudd
(incorporated herein by reference
to Annexes B-1, B-2 and B-3 to the
Proxy Statement dated December 6,
1995, of Advantage Companies, Inc.)
# 2.4 Tidewater Agreement dated as of
July 9, 1995, as amended on
September 25, 1995, by and among
THORN Americas, Inc. and the
stockholders of Tidewater Rental
Corp.
# 2.5 Stock Purchase Agreement dated as
of September 25, 1995, as amended
on November 27, 1995, by and among
THORN Americas, Inc., Tidewater
Rental Corp. and the stockholders
of Tidewater Rental Corp.
# 2.6 Settlement Agreement and Mutual
Release
# 2.7 Stipulation of Dismissal with Prejudice
# 2.8 Commercial Lease Agreement dated as of January 2,
1996, by and between Property Management Corp. and
Advantage Companies, Inc.
# 2.9 Service Agreement dated as of January 2, 1996, by
and between THORN Americas, Inc. and Property
Management Corp.
#99.1 Press Release issued by THORN Americas, Inc. on
January 2, 1995.
<PAGE>
ANNEX 2.4
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
BY AND AMONG
THORN AMERICAS, INC.,
TIDEWATER RENTAL CORP.
AND
THE STOCKHOLDERS OF
TIDEWATER RENTAL CORP.
THIS FIRST AMENDMENT TO THE STOCK PURCHASE AGREEMENT
(this "First Amendment") is made and entered into as of November
27, 1995, by and among THORN AMERICAS, INC., a Delaware corporation
(the "Purchaser"), TIDEWATER RENTAL CORP., a Virginia corporation
(the "Company"), and the stockholders of the Company (the
"Stockholders").
WHEREAS, the Purchaser, the Company and the Stockholders
are parties to that certain Stock Purchase Agreement dated as of
September 25, 1995 (the "Stock Purchase Agreement"); and
WHEREAS, the Purchaser, the Company and the Stockholders
wish to amend the Stock Purchase Agreement to reflect the parties'
agreement that no dividends will be declared or distributed to the
Stockholders after November 26, 1995.
NOW, THEREFORE, in consideration of the agreements and
understandings set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the Purchaser, the Company and the Stockholders,
intending to be legally bound, hereby agree as follows:
1. Amendment to Section 3.7(c). Section 3.7(c) of the
Stock Purchase Agreement is hereby amended and restated to read in
its entirety as follows:
(c) any declaration, payment or set
aside for payment of any dividend or other
distribution of assets of the Company to the
Stockholders, or any of their affiliates, or
any direct or indirect retirement, redemption,
repurchase or other acquisition by the Company
of any shares of its capital stock; provided,
however, that as a Subchapter S corporation,
the Company has declared and paid dividends to
its Stockholders in an amount not in excess of
the earnings of the Company prior to November
26, 1995, as disclosed on the Financial
Statements; provided, further, that no
dividends will be declared or paid by the
Company after November 26, 1995;
2. Amendment to Section 6.1(h). Section 6.1(h) of the
Stock Purchase Agreement is hereby amended and restated to read in
its entirety as follows:
(h) declare, pay or make, or set aside
for payment or making, any dividend or other
distribution (whether in cash, stock, or
property or any combination thereof) in
respect of its capital stock or other
securities, or split, combine or reclassify
any shares of its capital stock, or directly
or indirectly redeem, purchase or otherwise
acquire any of its capital stock or other
securities; provided, however, that as a
Subchapter S corporation, the Company may pay
dividends to the Stockholders in an amount not
in excess of its earnings prior to November
26, 1995 so long as the Company meets the
$4,000,000 Total Equity requirement at
December 31, 1995; provided, further, that the
Stockholders will be liable for taxes on any
undistributed earnings of the Company through
the Closing Date; and provided, further, that
no dividends will be declared or paid by the
Company after November 26, 1995;
3. Stock Purchase Agreement. The Stock Purchase
Agreement, as amended by this First Amendment, is reaffirmed and
shall remain in full force and effect.
4. Counterparts. This First Amendment may be executed
in any number of counterparts and any party hereto may execute any
such counterpart, each of which when executed and delivered shall
be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument.
5. Defined Terms. All capitalized terms not otherwise
defined herein shall have the meanings assigned to them in the
Stock Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this
First Amendment as of the day and year first above written.
THORN AMERICAS, INC.
By:/s/ John H. Slaymaker
------------------------
Name: John H. Slaymaker
Title: Executive Vice President
TIDEWATER RENTAL CORP.
By: /s/ A. Tracy Burton
------------------------
Name: A. Tracy Burton
Title: President
PRINCIPAL STOCKHOLDERS:
/s/ Daniel J. Taylor
------------------------
Daniel J. Taylor
/s/ A. Tracy Burton
------------------------
A. Tracy Burton
/s/ William A. Simon
------------------------
William A. Simon
/s/ James G. Steckart
---------------------
James G. Steckart
STOCKHOLDERS:
/s/ Leslie G. Rudd
----------------------
Leslie G. Rudd
/s/Nestor R. Weigand, Jr.
-----------------------
Nestor R. Weigand, Jr.
/s/ Michael C. Weigand
------------------------
Michael C. Weigand
/s/ Michael W. Dart
------------------------
Michael W. Dart
/s/ Sherry Moore
-----------------------
Sherry Moore
/s/ Karon F. Perrill
------------------------
Karon F. Perrill
/s/ Henri L. Van Dam
------------------------
Henri L. Van Dam
<PAGE>
EXHIBIT 2.5
STOCK PURCHASE AGREEMENT
BY AND AMONG
THORN AMERICAS, INC.,
TIDEWATER RENTAL CORP.
AND
THE STOCKHOLDERS OF
TIDEWATER RENTAL CORP.
Dated as of September 25, 1995
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated
as of September 25, 1995, is by and among THORN AMERICAS, INC., a
Delaware corporation (the "Purchaser"), TIDEWATER RENTAL CORP., a
Virginia corporation (the "Company"), the persons listed on Exhibit
A hereto (individually, a "Principal Stockholder" and collectively,
the "Principal Stockholders"), and the persons listed on Exhibit B
hereto (individually, a "Stockholder" and together with the
Principal Stockholders, the "Stockholders").
WHEREAS, the Stockholders own all of the issued and
outstanding shares (the "Shares") of the Company's common stock,
par value $1.00 per share (the "Common Stock");
WHEREAS, the Purchaser, the Company and the Stockholders
desire that the Purchaser acquire the Shares upon the terms and
subject to the conditions hereof;
WHEREAS, the Purchaser, the Company and the Stockholders
have entered into a letter of intent dated July 9, 1995 (the
"Letter of Intent"), regarding the purchase of the Shares by the
Purchaser; and
WHEREAS, on July 9, 1995, the Purchaser and the
Stockholders entered into an option agreement entitled the
Tidewater Agreement, as amended on September 25, 1995, (the "Option
Agreement"), pursuant to which the Stockholders agreed, among other
things, to grant the Purchaser an irrevocable option to purchase
the Shares at a price of $15,000,000 in the aggregate in cash.
NOW, THEREFORE, in consideration of the premises set
forth above and the respective representations, warranties,
covenants, agreements and conditions contained herein, the parties
hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale of Shares. Upon the
terms and subject to the conditions contained herein, in reliance
upon the representations, warranties and agreements of each of the
Stockholders and the Company contained herein, on the Closing Date
(as defined in Section 2.1 hereof), each Stockholder shall sell,
transfer, convey, assign and deliver good, valid, marketable and
indefeasible title in and to the number of Shares set forth on
Exhibits A and B hereto opposite such Stockholder's name to the
Purchaser, and the Purchaser shall purchase the Shares.
Section 1.2 Purchase Price. Upon the terms and
subject to the conditions contained herein, in reliance upon the
representations, warranties and agreements of each of the
Stockholders and the Company contained herein, and in consideration
of the aforesaid sale, transfer, conveyance, assignment and
delivery of good, valid, marketable and indefeasible title in and
to the Shares, on the Closing Date the Purchaser will pay or cause
to be paid to the Stockholders the sum of $15,000,000 in the
aggregate in cash (the "Purchase Price").
ARTICLE II
CLOSING
Section 2.1 Time and Place. Upon the terms and
subject to the conditions contained herein, the closing of the
transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of the Purchaser, 8200 East Rent-A-Center
Drive, Wichita, Kansas 67226, beginning at 10:00 a.m. central time,
as soon as practicable, after the later of (a) January 2, 1996 and
(b) the satisfaction or waiver of the conditions contained in
Article VII hereof, or at such other place, time and date as may be
agreed upon by the parties. The actual date of the Closing is
sometimes referred to herein as the "Closing Date."
Section 2.2 Deliveries by the Company and the
Stockholders. At the Closing, the Company and the Stockholders
shall deliver or cause to be delivered to the Purchaser the
following:
(a) Certificates issued by the Company evidencing
ownership of the Shares by each of the Stockholders, duly
endorsed (or accompanied by a duly executed stock power) by
the appropriate Stockholder for transfer to the Purchaser;
(b) Copies of the articles of incorporation of the
Company (the "Articles of Incorporation"), certified as of a
recent date by the Secretary of State of the State of
Virginia;
(c) Certificates from the Secretary of State or other
equivalent authority as to (i) the good standing of the
Company in the state of incorporation and any jurisdiction in
which the Company is qualified to do business as a foreign
corporation and (ii) the payment of taxes by the Company in
each such jurisdiction, each such certificate to be dated as
of the most recent practicable date;
(d) A certificate of the secretary or assistant
secretary of the Company stating that (i) the resolutions
referred to in Section 3.1(b) hereof and attached to such
certificate were duly and validly adopted, have not been
modified, revoked or rescinded in any respect and are in full
force and effect on the Closing Date, (ii) the Shares
constitute all
of the issued and outstanding capital stock of the Company and
(iii) the Articles of Incorporation have not been amended or
modified since the date of the certification referred to in
Section 2.2(b) hereof. A true and correct copy of the by-laws
of the Company (the "By-Laws") as in effect on the date hereof
and at all times thereafter to and including the Closing Date
also shall be attached to such certificate;
(e) Evidence, satisfactory to the Purchaser and its
counsel, in the form of an officer's certificate of the
Company signed by the president and both vice presidents of
the Company, certifying compliance by the Company and the
Stockholders with the terms and conditions of Article VI and
Section 7.1 hereof;
(f) The opinion of the Company's counsel referred to in
Section 7.1(e) hereof;
(g) The Required Consents (as defined in Section 3.4
hereof);
(h) The results of a recent search of the Uniform
Commercial Code, judgment and tax lien filings which may have
been filed with respect to personal property of the Company
in each jurisdiction where such filings may have been made or
property is located, and the results of such search shall be
satisfactory to the Purchaser;
(i) Resignation letters, effective as of the Closing,
of the directors and officers of the Company, and resolutions
of the board of directors of the Company accepting the
resignation, effective as of the Closing, of the directors of
the Company; and
(j) All other documents, instruments, payments and
writings required to be delivered by the Company or the
Stockholders to the Purchaser at the Closing pursuant to this
Agreement or otherwise required or reasonably requested in
connection herewith.
Section 2.3 Deliveries by the Purchaser. At the
Closing, the Purchaser shall deliver or cause to be delivered to
the Company or the Stockholders (as appropriate) the following:
(a) Payment of the Purchase Price to the Stockholders
in accordance with Section 1.2 hereof by certified check (or
wire transfer if requested by a Stockholder);
(b) A certificate of the secretary or assistant
secretary of the Purchaser stating that the resolutions
referred to in Section 5.2 hereof and attached to such
certificate were duly and validly adopted, have not been
modified, revoked or rescinded in any respect and are in full
force and effect at the Closing Date; and
(c) All other documents, instruments, payments and
writings required to be delivered by the Purchaser to the
Company or the Stockholders at the Closing pursuant to this
Agreement or otherwise required or reasonably required in
connection herewith.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND PRINCIPAL STOCKHOLDERS
To induce the Purchaser to enter into this Agreement, the
Company and each of the Principal Stockholders hereby jointly and
severally represents and warrants to the Purchaser as follows:
Section 3.1 Organization and Standing; Corporate
Power; Authority.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Virginia. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to consummate
the transactions contemplated hereby, to own, lease and
operate its properties and assets, and to carry on its
business as presently conducted and as proposed to be
conducted. The Company possesses all governmental licenses,
franchises, rights and privileges required for the conduct of
its business. The Company is not qualified to do business as
a foreign corporation in any state or foreign jurisdiction,
and no such qualification is required.
(b) The execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated
hereby have been duly authorized by the board of directors of
the Company and the resolutions adopted by the board of
directors of the Company evidencing such authorization were
duly and validly adopted, and have not been modified, revoked
or rescinded in any respect and are in full force and effect.
No other corporate action or proceedings on the part of the
Company are necessary to authorize this Agreement or the
transactions contemplated hereby.
(c) This Agreement constitutes a valid and binding
obligation of the Company and each of the Principal
Stockholders, enforceable against the Company and each of the
Principal Stockholders in accordance with its terms.
(d) The Company has furnished to the Purchaser true,
complete and correct copies of the Articles of Incorporation,
and all amendments thereto, as certified by the Secretary of
State of the State of Virginia, and the By-Laws, each as
presently in effect. The Company is not in violation of any
of the provisions of the Articles of Incorporation or By-Laws.
All minutes of the Company are contained in the minute book
of the Company, a copy of which has been made available to the
Purchaser for examination, and the minute book contains a
complete and accurate record of the substance of all actions
taken at all meetings of the Company's board of directors, of
all committees thereof and of the Stockholders.
Section 3.2 Capitalization; Share Ownership. The
authorized capital stock of the Company consists solely of 15,000
Shares, of which 98 Shares are validly issued and outstanding, duly
authorized, fully paid and nonassessable, and no Shares are held in
the Company's treasury. All of the Shares are held by the
Stockholders as set forth on Exhibits A and B hereto. There are no
outstanding (i) securities convertible into or exchangeable for
capital stock of the Company, (ii) options, warrants, calls or
other rights to purchase or subscribe for capital stock of the
Company or rights to acquire any such rights or (iii) contracts,
commitments, agreements, understandings, arrangements or
restrictions to which the Company or any Principal Stockholder is
a party or by which it or he or she is bound relating to any shares
of capital stock or other securities of the Company (including the
Shares), other than this Agreement and the Option Agreement.
Immediately prior to the Closing, the Principal Stockholders will
lawfully own their Shares, of record and beneficially, free and
clear of all liabilities, obligations, claims, liens, pledges,
contractual rights, security interests, options, charges,
encumbrances and restrictions of any kind whatsoever (except this
Agreement and the Option Agreement) and shall transfer good, valid,
marketable and indefeasible title in and to such Shares to the
Purchaser.
Section 3.3 Equity Investments. Schedule 3.3 sets
forth a complete and correct list of each corporation, partnership
or other business organization in which the Company owns, directly
or indirectly, any capital stock or other equity interest or right
to acquire any equity interest. The Company has good and
marketable title to all of the securities listed on Schedule 3.3 as
owned by it free and clear of all liens, charges, encumbrances and
rights of others, and there are no irrevocable proxies with respect
to the securities listed on Schedule 3.3. Except as set forth on
Schedule 3.3, there are outstanding no subscriptions, options,
convertible securities, warrants, calls or rights of any kind
issued or granted by, or binding upon, the Company to purchase or
otherwise acquire any security of, or equity interest in, any
entity listed on Schedule 3.3. The Company does not own any note,
bond, debenture or other evidence of indebtedness, and is not
otherwise a creditor, of any entity listed on Schedule 3.3. The
Company has no subsidiaries.
Section 3.4 Consents; No Violation. Except as set
forth on Schedule 3.4, neither the execution nor delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, nor the compliance with any of the provisions hereof, (i)
violates or conflicts with, breaches, terminates or constitutes a
default under the Articles of Incorporation or By-Laws, (ii)
violates or conflicts with any statute or law or any rule,
regulation, order, writ, award, judgment or decree of any court or
governmental authority of any jurisdiction, affecting the Company,
(iii) violates or conflicts with, results in the breach or
termination of, or constitutes a default under, any contract,
commitment, mortgage, deed of trust, agreement, understanding,
arrangement, lease, trust, license or restriction of any kind to
which the Company is a party, or by which its assets are bound,
(iv) will cause, or give any persons valid grounds to cause (with
or without notice, the passage of time or both), the maturity of
any debt, liability or obligation of the Company to be accelerated,
or will increase any such liability or obligation or will result in
the imposition of any lien, encumbrance, charge or claim upon any
of the Company's assets or (v) requires any filing with, the
notification of, or the obtaining of any permit, authorization,
consent or approval of, any third party, court or governmental or
regulatory authority, foreign or domestic (collectively, the
"Required Consents").
Section 3.5 Financial Statements. The Company has
previously delivered to the Purchaser copies of (i) the Company's
most recent audited balance sheets, including those as of December
26, 1993 and December 25, 1994, and the related audited statements
of earnings, stockholders' equity and cash flows for the years then
ended, all of which have been audited by Grant Thornton L.L.P.,
independent public accountants for the Company, and (ii) the
Company's most recent unaudited balance sheet and related unaudited
statements of income (collectively, the "Financial Statements").
The Financial Statements (and the notes thereto): (i) present
fairly, in all material respects, the Company's financial position
and its results of operations and changes in financial position and
cash flows, (ii) were prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied and
(iii) reflect all necessary accruals and reserves.
Section 3.6 No Undisclosed Liabilities. Except as
disclosed on Schedule 3.6, the Company has no debts, liabilities or
financial obligations (whether absolute, accrued, contingent or
otherwise) which are not disclosed in the Financial Statements and
the notes thereto as required by GAAP. The Company has no other
liabilities or obligations of any nature which are not required by
GAAP to be set forth in its balance sheet, whether absolute,
accrued, contingent or otherwise, whether due or to become due,
which are not reflected in such balance sheet and does not know of
any basis for assertion against the Company of any such liability
or obligation.
Section 3.7 Absence of Certain Changes. Except as set
forth on Schedule 3.7, there has not been since December 26, 1994:
(a) an occurrence of any event, fact, conditional change
or effect that is or could be adverse to the business, operations,
results of operations, condition (financial or otherwise), assets,
earnings, prospects or liabilities of the Company;
(b) any loan made by the Company to any officer,
director, employee or Stockholder, or any new agreement or
agreement to enter into any or any change in any, compensation
arrangement or agreement with any officer, director, employee,
Stockholder or consultant (other than normal salary increases in
the ordinary course of business for non-executive employees);
(c) any declaration, payment or set aside for payment
of any dividend or other distribution of assets of the Company to
the Stockholders, or any of their affiliates, or any direct or
indirect retirement, redemption, repurchase or other acquisition by
the Company of any shares of its capital stock; provided, however,
that as a Subchapter S corporation, the Company has paid dividends
to its Stockholders in an amount not in excess of the earnings of
the Company as disclosed on the Financial Statements;
(d) any change in the contingent obligations of the
Company by way of guaranty, endorsement, indemnity, warranty or
otherwise;
(e) except for purchase orders in the ordinary course
of business, any obligation or liability (absolute, accrued,
contingent or otherwise) incurred in an aggregate amount of $5,000
or more with respect to any event or transaction or any series of
related events or transactions by the Company;
(f) any waiver, cancellation or compromise by the
Company of a right or of a debt owed to it, or any delay or
deferral of payment of accounts payable or other obligations of the
Company or any acceleration of collection of receivables or other
obligations due the Company;
(g) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company;
(h) any issuance, redemption or sale by the Company of
its securities;
(i) any sale, assignment, license or transfer of any
patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, proprietary rights, codes, computer
software programs, processes or other intangible assets by the
Company;
(j) any mortgage, pledge, lien, charge or other
encumbrance, or grant to third parties of any rights to, any of the
Company's tangible assets;
(k) any change in any method of accounting, including
but not limited to accounting principles or methods of application
of said principles, or any business practice by the Company;
(l) any damage, destruction or loss, whether or not
covered by insurance, affecting the Company's properties or
business;
(m) any change in the relationship or course of dealing
between the Company and any of its respective suppliers, vendors or
customers;
(n) any merchandise promotion programs involving
discounted rental prices or terms involving reduced rental
payments, any inducements to prepay or any programs or collection
policies outside the ordinary course of business;
(o) any programs by the Company which would result in
an increased number of "rewritten" agreements (e.g., a rental
agreement issued to a customer involving the same merchandise as
contained in a predecessor agreement with the same customer) or any
change in policies or programs regarding store sales, collection
fees, reinstatement fees, processing fees, waiver fees, guaranteed
replacement plan fees, or any other fees or revenue items;
(p) other than in the ordinary course of business, any
sale, lease, license, encumbrance or other disposition of, or any
agreement to sell, lease, license, encumber or otherwise dispose
of, any assets of the Company by any party;
(q) except for purchase arrangements with employees in
the ordinary course of business, any payment, loan or advance of
any amount to or in respect of, or sold, transferred or leased any
properties or assets (whether real, personal or mixed, tangible or
intangible) to, or any agreement, arrangement or transaction with,
any Stockholder, any of the officers, directors or employees of the
Company, any affiliate or associate of any Stockholder, officer,
director or employee of the Company or any business or entity in
which any Stockholder, the Company, or any affiliate or associate
of any such persons has any direct or indirect interest;
(r) any transaction not in the ordinary course of
business;
(s) any settlement of non-insured litigation for amounts
in excess of $5,000;
(t) any grant of bonuses other than normal operating
bonuses in the ordinary course of business;
(u) any agreement to enter into, adoption, termination,
amendment or increase in benefits paid or payable under any
severance, termination, deferred, employee benefit or other
agreement or arrangement with any officer, director, employee,
Stockholder or consultant; or
(v) any agreement or commitment by the Company to do any
of the things described in this Section 3.7.
Section 3.8 Taxes. Except as set forth in Schedule 3.8,
(a) the Company has filed, been included in or sent, all returns,
declarations and reports and information returns and statements re-
quired to be filed or sent by or relating to it relating to any
Taxes (as defined below) with respect to any income, properties or
operations of the Company (collectively, "Returns"); (b) as of the
time of filing, the Returns correctly reflected in all respects the
facts regarding the income, business, assets, operations,
activities and status of the Company and any other information
required to be shown therein; (c) the Company has timely paid all
Taxes that are due and payable, whether or not such Taxes were
shown on any Return; (d) the Company has made or will make
provision for all Taxes payable for any periods that end before the
Closing for which no Returns have yet been filed and for any
periods that begin before the Closing and end after the Closing to
the extent such Taxes are attributable to the portion of any such
period ending at the Closing; (e) the charges, accruals and re-
serves for taxes reflected on the books of the Company are adequate
to cover the Tax liabilities accruing or payable by the Company in
respect of periods prior to the date hereof; (f) the Company is not
delinquent in the payment of any Taxes or has not requested any
extension of time within which to file or send any Return, which
Return has not since been filed or sent; (g) no deficiency for any
Taxes has been proposed, asserted or assessed against the Company
(or any member of any affiliated or combined group of which the
Company is or has been a member for which the Company could be
liable); (h) the Company has not granted any extension of the
limitation period applicable to any Tax claims; (i) the Company is
not subject to liability for Taxes of any person (other than the
Company), including, without limitation, liability arising from the
application of U.S. Treasury Regulation Section 1.1502-6 or any
analogous provision of state, local or foreign law; (j) the Company
is not or has not been a party to any tax sharing agreement with
any corporation which is not currently a member of the affiliated
group of which the Company is currently a member; (k) no claim has
ever been made by an authority in a jurisdiction where the Company
does not file Returns that it is or may be subject to taxation by
that jurisdiction; (l) the Company has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
Stockholder or other third party; (m) the Company has not made any
payments, is not obligated to make any payments, or is not a party
to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Code Sec.
162 (as unreasonable compensation), Code Sec. 162(m) or Code Sec.
280G; and (n) Schedule 3.8 lists all Returns that currently are the
subject of audit.
"Taxes" means with respect to any person (i) any net
income, gross income, gross receipts, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, value-
added, windfall profits, custom duty or other tax, governmental
fee, capital stock, social security (or similar), unemployment,
disability, transfer, registration, alternative or add-on minimum,
estimated or other like assessment or charge of any kind whatsoev-
er, together with any interest and any penalty, addition to tax or
additional amount imposed by any taxing authority (domestic or
foreign) on such person and (ii) any liability of the Company for
the payment of any amount of the type described in clause (i) as a
result of being a member of an affiliated or combined group.
Section 3.9 Real Property. The Company does not own
any real property in fee simple. Schedule 3.9(a) sets forth a list
of all real property leased by the Company (collectively, the
"Properties"). The Company holds a good and valid leasehold title
and estate in the Properties, in each case free and clear of all
mortgages, deeds of trust, pledges, liens, security interests,
claims, mechanic's or materialmen's liens, charges, easements,
restrictive covenants, rights-of-way and other encumbrances. There
are no eminent domain proceedings pending or threatened against any
of the Properties.
The Company hereby represents that:
(a) All buildings, structures and equipment located on
the Properties are structurally sound and are in good
operating condition and repair (ordinary wear and tear
excepted), and are usable in the ordinary course of business;
(b) Except as set forth in existing title insurance
policies and reports delivered to the Purchaser pursuant to
Section 3.12 hereto, the Company has not received written
notice (i) of any dispute from any contiguous boundary owners
concerning contiguous boundary lines, (ii) that any of the
Properties (or the buildings, structures or improvements
thereon), or the Company's operations, violate the zoning or
planning laws, ordinances, rules or regulations of the city,
county or state in which they are located, or any building
regulations or codes of such city, county or state, or land
use laws or regulations applicable to the Properties, and that
no such violations exist or (iii) of any claims of others to
rights over, under, across or through any of the Properties
by virtue of use or prescription;
(c) All permits, approvals, authorizations or licenses
required or necessary for the use of any of the Properties
have been obtained and are in full force and effect;
(d) The Company has not sublet, and is not subletting,
all or any part of any of the Properties, and has not assigned
all or any part of its interest in any of the leases;
(e) Schedule 3.9(e) sets forth a list of all service and
maintenance contracts affecting the Properties and all utility
and management contracts affecting the Properties to which the
Company is a party or to which the Properties are subject and
which in any individual contract obligate the Company to pay
more than $12,000 in any year. All such contracts are
currently in full force and effect, and there is no default,
or action or omission which with the giving of notice or
passage of time or both would constitute a default thereunder.
Copies of all such contracts have been delivered to Purchaser.
In addition, the Company has previously delivered to the
Purchaser copies of the most recently issued bills for real
estate tax assessments against any or all of the Properties;
(f) All the Properties are free and clear of any
agreements to sublease (or to grant an assignment of lease),
options to sublease (or to grant an assignment of lease) or
rights of first refusal relating thereto. All real property
with respect to which the Company has an agreement to
purchase, lease or sublease, option to purchase, lease, or
sublease or right of first refusal relating thereto is set
forth on Schedule 3.9(f);
(g) All the Properties are currently zoned in the zoning
category which permits operation of said properties as now
used, operated and maintained. The Company has not requested,
applied for, or given consent to, and there are no pending
zoning variances or changes with respect to any of the
Properties. The consummation of the transactions contemplated
herein will not result in a violation of any applicable zoning
ordinance or the termination of any applicable zoning variance
now existing, and if the improvements on the Properties are
damaged or destroyed subsequent to Closing, the repair or
replacement of the same by Purchaser to the condition existing
immediately prior to Closing will not violate applicable
zoning ordinances (assuming there has been no change in such
zoning ordinances);
(h) All buildings, structures or improvements owned
and/or leased by the Company on any of the Properties are
located entirely within the property boundary lines of the
Properties and do not encroach onto adjoining lands, and there
are no encroachments of buildings, structures or improvements
from adjoining lands onto the Properties;
(i) The Properties (i) currently have access to, at or
within their property boundary lines to all gas, water,
electricity, storm sewer, sanitary sewer, telephone and all
other utilities necessary or beneficial to the current
operation of the Properties, and all of such utilities are
adequate and sufficient for the current operation of the
Properties and (ii) are contiguous to and have vehicular and
pedestrian access to and from physically open and publicly
dedicated public streets;
(j) Except as set forth on Schedule 3.9(j), and except
for repair and maintenance in the ordinary course of business,
no construction, improvements, or expansion is currently on-
going at any of the Properties;
(k) The Company holds a valid leasehold estate pursuant
to each lease by which the Properties are leased, as shown on
Schedule 3.9(a), and enjoys peaceful and undisturbed
possession thereunder. The Company has previously delivered
to the Purchaser complete and accurate copies of all such
scheduled leases. All such leases are valid, binding, and
enforceable in accordance with their terms, and are in full
force and effect, the Company has complied with all
obligations thereunder, and there are no existing defaults by
the Company and there are no existing defaults by any other
party thereunder. No event has occurred which (whether with
or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default by
the Company, and no event has occurred which (whether with or
without notice, lapse of time or the happening or occurrence
of any other event) would constitute a default by any other
party thereunder. All such leases shall continue in full
force and effect (without default) after the Closing and
consummation of the transactions contemplated by this
Agreement without the consent, approval or act of any other
party;
(l) The Company has not received written notice of any
pending, proposed or threatened proceedings or governmental
or quasi-governmental actions to condemn or take by the power
of eminent domain (or to purchase in lieu thereof), or
otherwise to take or restrict the right to use or occupy, any
of the Properties; and
(m) The Company has not received notification that it
is in violation of any applicable antipollution, health or
other law, ordinance or regulation in respect of its
structures or their operation, which violation remains
uncured, and no such violation exists.
Section 3.10 Intellectual Property.
(a) Schedule 3.10 contains an accurate and complete
description of all domestic and foreign patents, patent
applications, patent licenses, shop rights, trademarks,
trademark registrations and applications therefor, service
marks, service mark registrations and applications therefor,
logos, trade names, assumed names, copyright registrations and
applications therefor, which are used by the Company, or which
are presently owned or held by the Company or under which the
Company owns or holds any license, or in which the Company
owns or holds any direct or indirect interest, other than
those rights granted or licensed by Purchaser (collectively,
the "Intellectual Property Rights"). Schedule 3.10 further
sets forth: (i) the nature of such Intellectual Property
Rights; (ii) the owner of such Intellectual Property Rights;
(iii) the jurisdiction by or in which such Intellectual
Property Rights has been issued or registered or in which an
application for such issuance or registration has been filed,
including the respective registration or application numbers;
and (iv) licenses, sublicenses and other agreements as to
which the Company is a party and pursuant to which the
Company, or any other person or entity is authorized to use
such Intellectual Property Rights, process, design, invention,
know-how, trade secret or other proprietary information
(collectively, the "Company Intellectual Property").
(b) Except as set forth on Schedule 3.10, the Company
does not infringe or unlawfully or wrongly use any patent,
trademark, trade name, service mark, copyright, trade secret,
confidential or proprietary right or any similar rights owned
or claimed by another.
(c) Except as set forth in Schedule 3.10, the Company
does not know of any use that has been or is now being made
by another of the Company Intellectual Property or that would
infringe such rights.
(d) Except as set forth on Schedule 3.10, the Company
is the sole and exclusive owner of or possesses valid licenses
and rights to use all Company Intellectual Property necessary
to conduct the businesses of the Company as are currently
being conducted.
(e) Except as set forth on Schedule 3.10, the Company
has not sold, licensed or otherwise disposed of or transferred
or granted any interest in the Company Intellectual Property.
The Company has taken all reasonable measures, which may or
may not have included the institution of litigation, to
maintain and protect the Company Intellectual Property and all
such rights remain valid and enforceable.
(f) Except as set forth on Schedule 3.10, no claims have
been asserted by any person to the use or validity of any of
the Company Intellectual Property or challenging or
questioning the validity or effectiveness of any license or
agreement related thereto, and there is no valid basis for any
such claim. None of the Company Intellectual Property is
subject to any outstanding order, judgment, decree,
stipulation or agreement restricting the use thereof by the
Company or restricting the licensing thereof by the Company
to any other person or entity. Except as set forth on
Schedule 3.10, the Company has not entered into any agreement
to indemnify any other person or entity against any charge of
infringement of any Company Intellectual Property.
Section 3.11 Absence of Litigation. Except as
disclosed in Schedule 3.11, as of the date hereof, there is no
action, suit, claim, investigation or proceeding pending or
threatened, nor is there any valid basis for any claim, against the
Company or any of its property before any court or arbitrator or
any administrative, regulatory or governmental body, or any agency
or official. Except as disclosed on Schedule 3.11, as of the date
hereof, there is no action, suit, claim, investigation or
proceeding pending or threatened, nor is there any valid basis for
any claim, against the Company or any of its property before any
court or arbitrator or any administrative, regulatory or
governmental body, or any agency or official which (i) challenges
or seeks to prevent, enjoin, alter or delay the transactions
contemplated hereby or (ii) alleges criminal action or inaction.
Except as disclosed on Schedule 3.11, as of the date hereof,
neither the Company nor any of its property is subject to any
order, writ, judgment, injunction, decree, determination or award
which would prevent or delay the consummation of the transactions
contemplated hereby.
Section 3.12 Insurance.
(a) Schedule 3.12(a) sets forth a complete and correct
list of all insurance policies (including a brief summary of
the nature and terms thereof and any amounts paid or payable
to the Company thereunder, their respective expiration dates,
deductibles and stop-loss thresholds) providing coverage in
favor of the Company or any of its respective properties.
Each such policy is valid, in full force and effect and will
remain in full force and effect at least through the
respective dates set forth in Schedule 3.12(a) without the
payment of additional premiums other than additional premiums
in the ordinary course of business prior to the Closing. No
notice of termination, cancellation or reservation of rights
has been received with respect to any such policy, there is
no default with respect to any provision contained in any such
policy, and there has not been any failure to give any notice
or present any claim under any such policy in a timely fashion
or in the manner or detail required by any such policy.
(b) The Company has insurance in an amount and of a type
normal in the ordinary course for businesses similar to the
Company. Other than as set forth on Schedule 3.12(b), the
Company has not received notice of any proposed increase in
premiums or deductible amounts, decrease in coverage or
termination of any policy.
Section 3.13 Accounts Receivable; Inventory; Motor
Vehicles; Assets Necessary to Business.
(a) Accounts Receivable. The Company has no accounts
or notes receivable.
(b) Inventory. The Company has inventory, including,
without limitation, supplies, of a quantity and quality
sufficient to conduct, and reasonably related to the needs of,
its business. Except for inventory in repair which shall not
exceed 400 units of inventory, all of the Company's inventory
is in good working order and rentable condition.
(c) Motor Vehicles. All of the Company's vehicles are
listed on Schedule 3.13(c). The Company expressly warrants
(i) that such vehicles, subject to ordinary wear and tear, are
mechanically sound and are in good working order and condition
to perform in the manner needed for the operation of the
Company's business; (ii) are in good cosmetic condition, so
as to convey the high quality image of the Company's business;
(iii) are in compliance with all applicable statutes,
ordinances and regulations, including, without limitation,
those related to safety; and (iv) are owned by the Company
free and clear of all liens, security interests, encumbrances
or other restrictions on title.
(d) Assets Necessary to Business. Except as described
on Schedule 3.13(d), the Company has good, valid, indefeasible
and marketable title to all properties and assets, real,
personal and mixed, tangible and intangible, and is a party
to all leases, licenses and other agreements, currently being
used or that are reasonably necessary to permit it to carry
on its businesses and operations as presently conducted.
Section 3.14 Employee Benefits.
(a) Schedule 3.14(a) contains a true and complete list
of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay,
hospitalization or other medical, dental, life, disability or
other insurance, supplemental unemployment benefits,
profit-sharing, pension, savings or retirement plan, program,
agreement or arrangement, plans within the meaning of section
125 of the Code, retiree medical plans and any trust fund,
plan, program or arrangement funding any plan (including any
voluntary employee beneficiary association within the meaning
of section 501(c)(9) of the Code), and each other employee
benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to
by the Company, or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the
Company would be deemed a "single employer" within the meaning
of section 4001 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), for the benefit of any employee
or terminated employee of the Company or any ERISA Affiliate
(the "Plans"). Schedule 3.14(a) identifies each of the Plans
that is an "employee benefit plan," as that term is defined
in section 3(3) of ERISA (the "ERISA Plans").
(b) With respect to each Plan, the Company has hereto-
fore delivered to Purchaser true and complete copies of each
of the following documents (to the extent applicable):
(i) a copy thereof;
(ii) a copy of the three most recent annual reports
and actuarial reports, if required under ERISA, and the
most recent report prepared with respect thereto in
accordance with Statement of Financial Accounting
Standards No. 87, Employer's Accounting for Pensions;
(iii) a copy of the most recent actuarial
report prepared with respect thereto in accordance with
Statement of Financial Accounting Standards No. 106,
Employer's Accounting for Non-Pension Postretirement
Benefits;
(iv) a copy of the most recent Summary Plan
Description, summaries of all modifications,
administrative forms and other documents that constitute
a part of or are incident to the administration of the
Plans;
(v) copies of any insurance contracts and
administrative service contracts;
(vi) if the Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or
other funding agreement and the latest financial state-
ments thereof;
(vii) the most recent determination letter re-
ceived from the Internal Revenue Service with respect to
each Plan intended to qualify under section 401(a) of
the Internal Revenue Code of 1986, as amended (the
"Code") and any pending determination letter request;
and
(viii) Schedule 3.14(a) also shall contain a
written description of all communications regarding any
Plan to employees or former employees who may be
affected by this transaction.
(c) Neither the Company nor any ERISA Affiliate or
predecessor maintains or has ever maintained a plan which is
or was subject to (i) the minimum funding requirements of
ERISA or the Code or (ii) Title IV of ERISA.
(d) Neither the Company, nor any ERISA Affiliate, nor
any ERISA Plan, nor any trust created thereunder, nor any
trustee or administrator thereof has engaged in a transaction
in connection with which the Company or any ERISA Affiliate,
any ERISA Plan, any such trust, or any trustee or
administrator thereof, or any party dealing with any ERISA
Plan or any such trust could be in violation of sections 404,
405, or 406 of ERISA or could be subject to either a civil
penalty assessed pursuant to section 409, 502(i) or 502(l) of
ERISA or a Tax imposed pursuant to section 4975 or 4976 of the
Code.
(e) No ERISA Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, nor is any ERISA Plan a
plan described in section 4063(a) of ERISA. Neither the
Company nor any ERISA Affiliate or predecessor has ever
maintained, contributed to or been required to contribute to
a "multiemployer pension plan" as defined in section 3(37) of
ERISA.
(f) Each Plan has been operated and administered in
accordance with its terms and applicable law, including but
not limited to ERISA and the Code.
(g) Each ERISA Plan intended to be qualified within the
meaning of section 401(a) of the Code and each related trust
intended to be qualified within the meaning of section 501(a)
of the Code has been established and operated so as to be
qualified and tax-exempt under such sections. Nothing has
occurred or, in connection with the transactions contemplated
by this Agreement, will occur, which would adversely affect
the qualified status of such plans and trusts. In the event
the Company (or any affiliated entity) sponsors or maintains
a voluntary employee beneficiary association within the
meaning of section 501(c)(9) of the Code, all necessary
governmental approvals for obtaining tax exempt status have
been obtained, and such determination letter is dated on or
after January 1, 1985.
(h) No amounts payable under the Plans as a result of
or in connection with the consummation of the transactions
contemplated by this Agreement will fail to be deductible for
federal income tax purposes by application of section 162(m),
section 280G or section 404 of the Code.
(i) Except as set forth on Schedule 3.14(i), no Plan
provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to
current or former employees of the Company or any ERISA
Affiliate beyond their retirement or other termination of
service (other than (i) coverage mandated by applicable law
or (ii) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in section
3(2) of ERISA).
(j) Except as provided in Schedule 3.14(j), the consum-
mation of the transactions contemplated by this Agreement will
not (i) entitle any current or former employee or officer of
the Company or any ERISA Affiliate to severance pay, unem-
ployment compensation or any other payment, except as
expressly provided in this Agreement or (ii) accelerate the
time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
(k) There are no pending or threatened claims by or on
behalf of any Plan, by any employee or beneficiary covered
under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(l) The Company has reserved the right to amend or
terminate any Plan.
(m) Neither the Company nor any ERISA Affiliate has
announced any plan or legally binding commitment to create any
additional Plans which are intended to cover employees or
former employees of the Company or any ERISA Affiliate or to
amend or modify any existing Plan which covers or has covered
employees or former employees of the Company or any ERISA
Affiliate.
(n) No event has occurred in connection with which the
Company or any ERISA Affiliate or any Plan, directly or
indirectly, could be subject to any liability (i) under any
statute, regulation or governmental order relating to any
Plans or (ii) pursuant to any obligation of the Company or any
ERISA Affiliate to indemnify any person against liability
incurred under any such statute, regulation or order as they
relate to the Plans.
Section 3.15 Contracts and Commitments. Schedule 3.15
contains a true and complete list of (i) all agreements and other
commitments for the purchase of any materials or supplies; (ii) all
employment and consulting agreements; (iii) all license agreements
with third parties; (iv) other than rental agreements with
customers, all leases, whether for real property or personal
property; (v) all loan agreements, mortgages or indentures; (vi)
all agreements, arrangements or commitments with any director,
officer, employee, Stockholder or beneficial owner of any of the
shares or any of their affiliates; and (vii) all other
arrangements, commitments and understandings (written or oral) to
which the Company is a party or by which it or its properties are
bound that require (or that the Company has reason to believe it
will require) payment by any party to the agreement, commitment or
understanding of, or the performance by any party to the agreement,
commitment or understanding of services having a value of, more
than $5,000 individually. True and complete copies of the
Company's agreements, commitments and understandings, or in the
case of unwritten agreements, commitments and understandings,
summaries thereof, referred to in Schedule 3.15 (collectively, the
"Commitments") have been delivered to Purchaser.
Except as set forth in Schedule 3.15, (i) all of the
Commitments are valid, binding and enforceable and in full force
and effect in accordance with their respective terms and there is
no existing default that would permit the other party to a
Commitment to terminate the Commitment, not to perform its
obligations under the Commitment or accelerate the payment of
money, and no condition exists that, with notice or lapse of time
or both, would constitute a default on any Commitment, by the
Company or any other party under any Commitment; (ii) all of the
respective parties' covenants and obligations under all Commitments
accrued to date have been performed; (iii) no party has made or
asserted or has any defense, setoff or counterclaim under any
Commitment; (iv) the Company has no notice that any party under any
Commitment has exercised any option granted to it to cancel or
terminate its Commitment, to shorten the term of its Commitment or
to renew or extend the term (other than automatic renewals) of the
Commitment and the Company has not received any notice of
termination of any Commitment; (v) the Company has not received any
notice (written or otherwise) of cancellation or termination of, or
any expression or indication of an intention or desire to cancel or
terminate, any of the Commitments; and (vi) no Commitment is the
subject of, or has been threatened to be made the subject of, any
arbitration, suit or other legal proceeding. Except as noted on
Schedule 3.15, every contract listed on such schedule may be
assigned or otherwise transferred pursuant to this Agreement or the
transactions contemplated hereby without the consent of any third
party.
Section 3.16 Labor Matters. Except as set forth in
Schedule 3.16, the Company is not a party to any collective bar-
gaining or other labor union contract or labor union agreement
applicable to persons employed by the Company, no collective bar-
gaining agreement is being negotiated by the Company and no activi-
ties or proceedings of any labor union are being held to organize
any of its respective employees. There is no labor dispute, strike
or work stoppage against the Company pending or threatened which
may interfere with the respective business activities of the
Company. The Company is in compliance with all federal, state and
local laws, including without limitation the rules and regulations
of the Department of Labor and the Office of Federal Contract
Compliance Programs, respecting employment and employment
practices, terms and conditions of employment and wages and hours
and not engaged in any unfair labor practice. There is no unfair
labor practice complaint against the Company pending or threatened
before the National Labor Relations Board. Except as set forth on
Schedule 3.16, no charges with respect to or relating to the
Company are threatened or pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency
responsible for the enforcement of labor or employment laws or for
the conduct of an investigation of or relating to the Company and
no such investigation is in process.
Section 3.17 Compliance. Except as set forth on
Schedule 3.17, the Company is not in violation of, has not
violated, and has not received any notification of any asserted
present or past failure to comply with, any applicable provisions
of (i) any laws, rules, statutes, orders, ordinances or regulations
or (ii) any note, bond mortgage, indenture, contract, agreement,
lease, license, permit, franchise, or other instrument or
obligations to which the Company is a party or by which the Company
or its property is bound or affected.
Section 3.18 Environmental Matters.
(a) Except as set forth in Schedule 3.18, the Company
is in compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession by
the Company of all permits and other governmental authoriza-
tions required under applicable Environmental Laws, and
compliance with the terms and conditions thereof).
Except as set forth on Schedule 3.18, the Company has not
received any communication (written or oral), whether from a
governmental authority, private party, citizens group,
employee or otherwise, that alleges that the Company is not
in such compliance, and there are no past or present actions,
activities, circumstances, conditions, events or incidents
that would prevent or interfere with such compliance in the
future.
(b) Except as set forth in Schedule 3.18, there is no
Environmental Claim pending or threatened against the Company
or against any person or entity whose liability for any
Environmental Claim the Company has retained or assumed either
contractually or by operation of law.
(c) Except as set forth in Schedule 3.18, there are no
past or present actions, activities, circumstances, condi-
tions, events or incidents (including, without limitation, the
release, emission, discharge, presence or disposal of any
Hazardous Material) which could form the basis of any Environ-
mental Claim against the Company or against any person or
entity whose liability for any Environmental Claim the Company
has or may have retained or assumed either contractually or
by operation of law.
(d) Except as set forth in Schedule 3.18, the Company
has not, and no other person has, Released, placed, stored,
buried or dumped Hazardous Materials on, beneath or adjacent
to any property owned, operated or leased or formerly owned,
operated or leased by the Company, and the Company has not
received notice that it is a potentially responsible party for
the Cleanup of any property, whether or not owned or operated
by the Company.
(e) The Company has delivered to Purchaser true, com-
plete and correct copies and results of any reports, studies,
analyses, tests or monitoring possessed or initiated by the
Company pertaining to Hazardous Materials in, on, beneath or
adjacent to the property owned or leased by the Company or
regarding the Company's compliance with applicable Environmen-
tal Laws.
(f) Except as set forth in Schedule 3.18, no transfers
of permits or other governmental authorizations under Environ-
mental Laws, and no additional permits or other governmental
authorizations under Environmental Laws, will be required to
permit the Company or its successors, as the case may be, to
be in full compliance with all applicable Environmental Laws
for the period immediately following the transactions
contemplated hereby, as conducted by the Company immediately
prior to the date hereof. To the extent that such transfers
or additional permits and other governmental authorizations
are required, the Company agrees to use reasonable best
efforts to effect such transfers and obtain such permits and
other governmental authorizations at the time such transfers,
permits and other governmental authorizations are required by
law.
(g) The following terms as used in this Section 3.18
shall have the following meanings:
"Cleanup" means all actions required by governmental
entities or Environmental Laws to: (1) cleanup, remove, treat
or remediate Hazardous Materials in the indoor or outdoor
environment; (2) prevent the Release of Hazardous Materials
so that they do not migrate, endanger or threaten to endanger
public health or welfare of the indoor or outdoor environment;
(3) perform preremedial studies and investigations and post-
remedial monitoring and care; or (4) respond to any government
requests for information or documents in any way relating to
cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment.
"Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any
person or entity alleging potential liability (including,
without limitation, potential liability for investigatory
costs, Cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (a) the
presence, or Release into the indoor or outdoor environment,
of any Hazardous Materials at any location, whether or not
owned or operated by the Company or (b) circumstances forming
the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all federal, state, local and
foreign laws, regulations and ordinances relating to pollution
or protection of human health or the environment, including
without limitation, laws relating to Releases or threatened
Releases of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, ambient air, sur-
face water, ground water, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, dis-
tribution, use, treatment, storage, Release, disposal, trans-
port or handling of Hazardous Materials and all laws,
regulations and ordinances with regard to recordkeeping, noti-
fication, disclosure and reporting requirements respecting
Hazardous Materials.
"Hazardous Materials" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the
National Oil and Hazardous Substances Pollution Contingency
Plan, 40 C.F.R. Section 300.5, or defined as such by, or regulated
as such under, any Environmental Law.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor
environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata)
or into or out of any property, including the movement of
Hazardous Materials through or in the air, soil, surface
water, groundwater or property.
Section 3.19 Employees. Except as set forth on
Schedule 3.19, the Company (i) has not been informed of any current
plans of any home office or multi-unit management personnel of the
Company to terminate their employment with the Company, (ii) agrees
that employees of the Company have no greater rights upon
termination as a result of this Agreement and the transactions
contemplated herein and (iii) agrees to use its reasonable best
efforts to ensure that this Agreement and the transactions
contemplated herein will not cause the termination of any employees
of the Company.
Section 3.20 Licenses and Permits. The Company has
obtained all licenses, product and establishment registrations,
franchises, permits, easements, certificates, consents, rights and
privileges necessary or appropriate to the conduct of the Company's
business (collectively, the "Licenses," all of which are set forth
on Schedule 3.20). The Licenses are valid and in full force at the
Closing and will remain valid and in full force from and after the
Closing.
Section 3.21 Products Liability. Except as set forth
on the Company's form customer agreements listed on Schedule 3.21,
the Company has not given or made any warranties to third parties
with respect to any products rented or sold by it except for the
warranties imposed by the provisions of the applicable commercial
codes. The Company has no knowledge of any state of facts or the
occurrence of any event forming the basis of any present claim
against the Company for product liability on account of any express
or implied warranty which is not fully covered by insurance.
Section 3.22 Bank Accounts. Schedule 3.22 sets forth
the names and locations of all banks in which the Company has an
account or safe deposit box, the amounts therein or the contents
thereof, and the names of all persons authorized to draw thereon or
have access thereto.
Section 3.23 Seller's Documentation. All documents
supplied by the Company to the Purchaser for the Company's business
including customer agreements, payment cards, ledgers and similar
records, and other information related to the Company's business
are true, accurate and complete.
Section 3.24 Disclosure. Schedule 3.24 lists any
information, of which management of the Company is aware, that is
(a) material to the business of the Company or to the transactions
contemplated by this Agreement, and (b) not already disclosed in
the Schedules hereto or in any representation or warranty to the
Purchaser contained in this Agreement.
Section 3.25 No Finder's Fee. The Company has retained
no finder or broker in connection with the transactions
contemplated by this Agreement and hereby agrees to indemnify and
to hold the Purchaser and the Stockholders harmless of and from any
liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or asserted
liability) for which the Purchaser and the Stockholders, or any of
their respective employees or representatives (as applicable), is
responsible.
Section 3.26 Amount of Notes. The amount of the Notes
(as defined in Section 6.9 hereof) as of the date of this Agreement
is $1,575,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each of the Stockholders severally represents and
warrants to the Purchaser, with respect to the Shares to be sold by
such Stockholder, as follows:
Section 4.1 Authorization and Valid and Binding
Agreement. The Stockholder has all requisite power and authority
to execute and deliver this Agreement, to sell and convey the
Shares to be sold by such Stockholder hereunder and to carry out
and perform its obligations under the terms of this Agreement. All
proceedings, if any, required to be taken by the Stockholder to
authorize the execution, delivery and performance of this Agreement
and the agreements relating hereto have been properly taken, or
will be taken prior to the Closing. This Agreement has been duly
executed and delivered by the Stockholder and constitutes the
legal, valid and binding obligation of the Stockholder.
Section 4.2 Compliance with Other Instruments. The
execution, delivery and performance of and compliance with this
Agreement by such Stockholder and the sale and transfer of the
Shares to be sold by such Stockholder pursuant to the terms hereof,
will not result in (i) any violation or breach of any term of such
Stockholder's charter documents, if any, (ii) any violation or
breach by such Stockholder of any term of any indenture, mortgage,
deed of trust or other agreement, instrument, court order,
judgment, decree, statute, rule or regulation to which such
Stockholder is a party or by which such Stockholder is bound, (ii)
any conflict with or default under any such term or (iii) the
creation of any mortgage, pledge, lien, encumbrance or charge upon
any of the properties or assets of such Stockholder.
Section 4.3 Governmental Consents. No consent,
approval or authorization of, or designation, declaration or filing
with, any federal or state governmental authority in the United
States is required on the part of such Stockholder in connection
with the valid sale and transfer of the Shares to be sold by such
Stockholder hereunder or the consummation of any other transaction
contemplated hereby.
Section 4.4 No Finder's Fee. Such Stockholder has
retained no finder or broker in connection with the transactions
contemplated by this Agreement and hereby agrees to indemnify and
to hold the Company, Purchaser and the other Stockholders harmless
of and from any liability for any commission or compensation in the
nature of a finder's fee to any broker or other person or firm (and
the costs and expenses of defending against such liability or
asserted liability) for which the Company, Purchaser, and the other
Stockholders, or any of their respective employees or
representatives (as applicable), is responsible.
Section 4.5 Good Title. Such Stockholder has, and on
the Closing Date will have, good, valid, marketable and
indefeasible title to the Shares proposed to be sold by such
Stockholder hereunder on the Closing Date and full right, power and
authority to enter into this Agreement and to sell, assign,
transfer and deliver such Shares hereunder, free and clear of all
voting trust arrangements, liens, encumbrances, equities, security
interests, restrictions and claims whatsoever; and upon delivery of
and payment at the Closing of the amount to be paid with respect to
such Shares at the Closing, Purchaser will acquire good, valid,
marketable and indefeasible title thereto, free and clear of all
liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts or other defects of title whatsoever.
Section 4.6 Legal Representation. Each Stockholder
acknowledges that both the Company and the Purchaser are
represented by separate legal counsel and that such Stockholder has
been advised he or she may wish to consult independent legal
counsel with regard to the transactions contemplated by this
Agreement. Such Stockholder further acknowledges that he or she
has had the opportunity to consult with such independent legal
counsel or has chosen not to do so.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the
Company and each of the Stockholders as follows:
Section 5.1 Organization. The Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power
and authority to enter into this Agreement and to carry out the
transactions contemplated hereby.
Section 5.2 Authorization. The execution and delivery
of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by the board of
directors of the Purchaser and the resolutions adopted by the board
of directors of the Purchaser evidencing such authorization were
duly and validly adopted, and have not been modified, revoked or
rescinded in any respect and are in full force and effect. No
other corporate proceedings on the part of the Purchaser are
necessary to authorize this Agreement or the transactions
contemplated hereby.
Section 5.3 Valid and Binding Agreement. This
Agreement constitutes a valid and binding agreement of the
Purchaser enforceable against the Purchaser in accordance with its
terms.
Section 5.4 Consents; No Violation. Except as set
forth on Schedule 5.4, neither the execution nor the delivery of
this Agreement, the consummation of the transactions contemplated
hereby, nor the compliance with any of the provisions hereof, by
the Purchaser (i) violates any statute or law or any rule,
regulation, order, award, judgment or decree of any court or
governmental authority, affecting the Purchaser, (ii) violates or
conflicts with, or constitutes a default under any contract,
commitment, agreement, understanding, arrangement, trust or
restriction of any kind to which the Purchaser is a party, by which
it is bound or which otherwise in any way affects it, (iii) will
cause, or give any persons valid grounds to cause (with or without
notice, the passage of time or both), the maturity of any debt,
liability or obligation of the Purchaser to be accelerated, or will
increase any such liability or obligation, (iv) requires any filing
with, the notification of, or the obtaining of any permit,
authorization, consent or approval of any third party or
governmental or regulatory authority, foreign or domestic or (v)
violates or conflicts with or constitutes a default under the
certificate of incorporation or by-laws, as amended, of the
Purchaser.
Section 5.5 Availability of Funds. Purchaser will
have available at the Closing sufficient funds to enable it to
consummate the transactions contemplated by this Agreement and the
Option Agreement.
Section 5.6 Absence of Litigation. As of the date
hereof, there is no action, suit, claim, investigation or
proceeding pending or threatened against, Purchaser or any of its
property before any court or arbitrator or any administrative,
regulatory or governmental body, or any agency or official which
challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement. As of the date
hereof, neither Purchaser nor any of its property is subject to any
order, writ, judgment, injunction, decree, determination or award
which would prevent or delay the consummation of the transactions
contemplated hereby.
ARTICLE VI
COVENANTS
Section 6.1 Conduct and Preservation of Business. The
Company and the Stockholders agree with the Purchaser that, except
as contemplated by this Agreement, from the date hereof until the
Closing Date, unless otherwise consented to by the Purchaser in
writing, the Company will conduct its business diligently, in the
ordinary course and consistent with past practice. The Company
will not create any subsidiaries. The Company will use its best
efforts to assure the preservation of the business organization,
maintain the quantity and quality of its customer rental
agreements, and preserve the assets and the operating staff of the
Company. The Company will conduct its business in a fiscally sound
manner as approved by the Purchaser. The Company will continue all
practices, policies, procedures and operations relating to the
business in the same manner as heretofore conducted; provided,
however, that any change in policies, practices, procedures or
operations relating to the disposition of cash or other assets must
be approved by the Purchaser. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this
Agreement or with the prior written consent of Purchaser, from the
date hereof to the Closing Date, the Company will not:
(a) incur any obligations or liabilities (whether
absolute, accrued, contingent or otherwise and whether due or
to become due), except to the extent approved by the
Purchaser, or make any loans, advances or capital
contributions to, or investments in, any other person;
(b) permit any change in any accounting principles, or
methods of application of said principles, or practices used
by it;
(c) pay, discharge or satisfy any claim, lien,
encumbrance or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due)
except in the ordinary course of business consistent with past
practices;
(d) permit or allow any of its properties or assets
(whether real, personal or mixed, tangible or intangible) to
be mortgaged, pledged or subjected to any lien or encumbrance,
or pledge or otherwise encumber shares of capital stock of the
Company;
(e) acquire, sell, lease, distribute or dispose of any
assets outside the ordinary course of business, including but
not limited to any write-down of the value of any inventory,
or write-off as uncollectible any notes or accounts receivable
or any portion thereof or cancel or release any debts or
claims, or waive any rights of substantial value or sell,
transfer or convey any of its properties or assets (whether
real, personal or mixed, tangible or intangible);
(f) enter into, adopt, amend or terminate any bonus,
profit sharing, 401(k) plan, compensation, severance,
termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock
purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit
agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer, employee or
Stockholder, or increase in any manner the compensation or
benefits of any director, officer, employee or Stockholder
(other than normal salary increases in the ordinary course of
business for non-executive employees) or pay any benefits not
required by any plan or arrangement as in effect as of the
date hereof; provided, that the Company may pay accrued bonus
amounts as such accrued bonus amounts become due and payable
in accordance with the terms of any plan or arrangement as in
effect as of the date hereof; provided, that such bonus
amounts may be paid only when due and may not be accelerated;
(g) (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof; (ii)
authorize any capital expenditures or commitments in excess
of $5,000 individually; (iii) settle any litigation for
amounts in excess of $5,000; or (iv) enter into or amend any
contract, agreement, commitment or arrangement with respect
to any of the foregoing;
(h) declare, pay or make, or set aside for payment or
making, any dividend or other distribution (whether in cash,
stock, or property or any combination thereof) in respect of
its capital stock or other securities, or split, combine or
reclassify any shares of its capital stock, or directly or
indirectly redeem, purchase or otherwise acquire any of its
capital stock or other securities; provided, however, that as
a Subchapter S corporation, the Company shall pay dividends
to the Stockholders in the amount of its earnings prior to but
not after December 31, 1995 so long as the Company meets the
$4,000,000 Total Equity requirement at December 31, 1995;
provided, further, that John Slaymaker and Dan Taylor must
have agreed upon the amount of such earnings for the month of
December 1995 and payment shall be made not later than January
31, 1996;
(i) authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of
any class or any other securities or equity equivalents
(including, without limitation, stock appreciation rights);
(j) delay or defer payment of accounts payable or other
obligations of the Company or accelerate collection of
receivables or other obligations due the Company;
(k) pay, distribute, loan or advance any amount to or
in respect of, or sell, transfer or lease any properties or
assets (whether real, personal or mixed, tangible or
intangible) to, or enter into any agreement, arrangement or
transaction with, any Stockholder, any of the officers or
directors of the Company, any affiliate or associate of any
Stockholder, the Company or any of their respective officers
or directors, or any business or entity in which any
Stockholder, or any affiliate or associate of any such persons
has a direct or indirect interest;
(l) make any Tax election or settle or compromise any
Tax liability;
(m) terminate or voluntarily suffer the termination of
any contract, lease, agreement or license, or fail to perform
all of its obligations or suffer or permit any default to
exist under, any contract, lease, agreement or license;
provided, that rental agreements, trash hauling agreements,
security service agreements and pest control agreements can
be terminated in the ordinary course of business;
(n) amend the Articles of Incorporation or By-Laws;
(o) take any action outside of the ordinary course of
business, including but not limited to making any unauthorized
distributions; or
(p) agree, whether in writing or otherwise, to take any
action prohibited in this Section 6.1.
Section 6.2 Access to Information.
(a) Subject to applicable law and the agreements set
forth in Section 6.2(b), between the date hereof and the
Closing Date, the Company will give Purchaser and its counsel,
financial advisors, auditors and other authorized representa-
tives reasonable access to all employees, landlords,
suppliers, customers, vendors, plants, offices, warehouses and
other facilities and to all books and records of the Company,
will permit Purchaser and its counsel, financial advisors,
auditors and other authorized representatives to make such in-
spections as Purchaser may reasonably require and will cause
the Company's officers to furnish Purchaser or its representa-
tives with such financial and operating data and other
information with respect to the business and properties of the
Company as Purchaser may from time to time reasonably request.
No investigation pursuant to this Section 6.2(a) shall affect
any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereunder.
(b) Purchaser will keep confidential and not divulge
(except to its employees, counsel, accountants and other
advisors who need to know such information in connection with
this Agreement) any material confidential information obtained
by it 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.
Section 6.3 Reasonable Best Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement. Without limiting the generality of
the foregoing, Purchaser and the Company shall cooperate with one
another (i) in determining whether action by or in respect of, or
filing with, any governmental body, agency, official or authority
(either domestic or foreign) is required, proper or advisable or
any actions, consents, waivers or approvals are required to be ob-
tained from parties to any contracts, in connection with the
transactions contemplated by this Agreement and (ii) in timely
seeking to obtain any such actions, consents and waivers and to
make any such filings. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes
of this Agreement, the proper officers and directors of each party
hereto shall take all such necessary action.
Section 6.4 Public Announcements. Purchaser, on the one
hand, and the Company and the Stockholders, on the other hand, will
consult with each other before issuing any press release with
respect to the transactions contemplated by this Agreement, and
shall not issue any such press release prior to such consultation,
except as may be required by applicable law or by applicable rules
of any securities exchange.
Section 6.5 Notification of Certain Matters. The
Company and the Stockholders shall give prompt notice to Purchaser,
and Purchaser shall give prompt notice to the Company and the
Stockholders, upon becoming aware of (i) the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence of which
would cause any representation or warranty contained in this
Agreement to be untrue or inaccurate, (ii) any fact which was in
existence on the date of this Agreement and, if known on such date,
would have been required to be set forth as described on the
Schedules hereto, and (iii) any failure of the Company and the
Stockholders, on the one hand, or Purchaser, on the other hand, as
the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder;
provided, that the delivery of any notice pursuant to this Section
6.5 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 6.6 No Solicitation.
(a) The Company and the Stockholders are not engaged in
and will not engage in any discussions or negotiations with
any third parties with respect to any Acquisition Proposal (as
defined below). Neither the Company nor the Stockholders
shall, directly or indirectly, through any officer, director,
employee, representative or agent (as applicable), (i) solic-
it, initiate or encourage any inquiries or proposals that
constitute, or would lead to, a proposal or offer for a sale
of the Common 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 the Company, other than the transactions
contemplated by this Agreement and the Option 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 non-
public information to any person or entity relating to, any
Acquisition Proposal or (iii) agree to, approve or recommend
any Acquisition Proposal.
(b) The Company or the Stockholders shall notify
Purchaser immediately (in no case later than 12 hours) after
receipt by the Company or the Stockholders 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 the Company by any person or
entity that informs the Company or the Stockholders that it
is considering making, or has made, an Acquisition Proposal.
Such notice shall indicate the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact.
Section 6.7 Insurance. The Company shall maintain the
insurance coverage specified in Section 3.12 hereto in full force
and effect through the Closing.
Section 6.8 Employment Agreement. Prior to the
Closing, the Purchaser will offer to enter into an employment
agreement with A. Tracy Burton.
Section 6.9 Repayment of Notes. Effective immediately
after the Closing Date, the Purchaser shall repay to the
Stockholders all outstanding obligations between the Company and
the Stockholders for borrowed money (including principal and
interest) (the "Notes"), the principal of which the Company and the
Stockholders have represented will be $1,312,500.
Section 6.10 Consents of Third Parties. The Company
shall obtain, prior to Closing, consents of all third parties to
change of control of the Company with respect to all leases,
licenses, product and establishment registrations, contracts and
commitments that require such consents.
Section 6.11 Taxes. The Stockholders shall be
responsible for payment of Taxes, including any and all income
taxes, sales taxes, use taxes and personal property taxes related
to periods through the Closing Date including taxes arising out of
this transaction, such payments to be made in whole or in part, but
no later than such time as such taxes become due and payable.
Section 6.12 Waiver of Right of First Refusal. The
Company and the Stockholders agree to waive all of their rights
pursuant to Article V of the Articles of Incorporation, including
any waiting periods or written notification, and to give any
consents which may be required to effectuate the transactions
contemplated hereby. The Company and the Stockholders agree to
waive all of their rights pursuant to the Stockholder Agreements
dated December 30, 1991, by and between the Company and each of the
Stockholders.
Section 6.13. Additional Tax Matters.
(a) Limited Indemnity. The Company and the
Purchaser, jointly and severally, agree to indemnify and hold each
Stockholder harmless from the assessment of additional income taxes
against the Stockholders arising from any income tax deduction
taken on the Company's tax returns which is disallowed with respect
to a tax period of the Company ending on or prior to the Closing
Date (but only to the extent such disallowance relates to a
determination that the Company is not entitled to use the income
forecast method of depreciation) and allowable to the Company or
Purchaser in a later tax period. This indemnity will be limited to
the amount of income taxes assessed against the Stockholders for
tax periods of the Company ending on or prior to the Closing Date
arising from disallowances described in this paragraph, and this
indemnity will not include interest or penalties assessed against
the Stockholders.
(b) Control of Audits and Litigation. With respect
to any proposed tax liability relating to the Company (the
"Liability"), the party authorized under applicable law to settle,
compromise or dispose of the Liability (the "Controlling Party")
may not settle, compromise or otherwise dispose of the Liability
without first notifying the non-Controlling Party in writing of (i)
the Liability and (ii) the Controlling Party's proposal for
settling, compromising or disposing of the Liability; provided,
however, this paragraph (b) shall apply only if such settlement,
compromise or other disposition would have a detrimental effect on
the non-Controlling Party (including, without limitation, either
(A) the situation in which a taxing authority challenges a position
taken on the Controlling Party's tax return and a similar issue may
arise in a taxable period, or a portion of a taxable period, for
which the non-Controlling Party bears ultimate responsibility for
taxes or (B) the situation in which a taxing authority has proposed
an adjustment relating to a tax liability with respect to which the
non-Controlling Party may have payment responsibility under
paragraph (a) above or Section 9.1 below). After the Controlling
Party has provided such written notice (the "Liability Notice"),
the Controlling Party and the non-Controlling Party shall cooperate
as to how the Liability will be handled, answered, defended,
compromised or settled. The Controlling Party, however, agrees to
contest the Liability at the level of the auditing agent and to
further pursue the contest, as the non-Controlling Party shall
reasonably request in writing, provided, that within 30 days after
receipt of the Liability Notice by the non-Controlling Party, (A)
the non-Controlling Party shall have requested that the Controlling
Party contest the Liability, and (B) the non-Controlling Party
shall have agreed to indemnify the Controlling Party in a manner
reasonably satisfactory to the Controlling Party for any loss
(including interest on taxes and outside counsel and independent
accountant fees and expenses) incurred by the Controlling Party as
a result of the contest of the Liability. For purposes of
determining the loss incurred by the Controlling Party as a result
of the contest of the Liability, it shall be assumed that, in the
absence of the contest, the Controlling Party would have settled or
disposed of the Liability in accordance with the proposal set forth
in the Liability Notice.
(c) Termination of Subchapter S Status. The parties
agree that the Subchapter S election of the Company will be
properly terminated (pursuant to a revocation under Section
1362(d)(1) of the Internal Revenue Code) such that the last day of
the Company's Subchapter S tax year will be December 31, 1995.
ARTICLE VII
CLOSING CONDITIONS
Section 7.1 Conditions to the Obligations of the
Purchaser. All obligations of the Purchaser hereunder are subject
to the fulfillment, prior to or at the Closing, unless waived by
the Purchaser, of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties made by the Company and by the Stockholders in
this Agreement (as supplemented pursuant to Section 6.5 of
this Agreement) shall be true and correct as of the date of
this Agreement and at and as of the Closing Date, as if made
at and as of such time, and Purchaser shall have received a
certification of the Company signed by the president and both
vice presidents of the Company to that effect dated the
Closing Date;
(b) Performance. The Company and the Stockholders shall
have performed and complied with all covenants, agreements,
obligations and conditions required by this Agreement to be
so performed or complied with by them on or prior to Closing;
(c) Resignations of Directors. The directors and
officers of the Company immediately prior to the Closing shall
have resigned effective as of the Closing;
(d) Approvals and Consents. All governmental and third
party approvals and consents required to be obtained by the
Company or the Stockholders for consummation of the
transactions contemplated by this Agreement shall have been
obtained at or prior to Closing. All waiting periods
applicable to this Agreement and the transactions contemplated
hereby under the HSR Act shall have expired or terminated;
(e) Opinion of Counsel. Purchaser shall have received
an opinion of counsel to the Company, dated the Closing Date,
in the form of Exhibit C hereto and satisfactory to Purchaser
and its counsel;
(f) Condition of Company. The Purchaser shall have
determined, in its sole discretion, that as of the Closing
Date, the business, operations, results of operations,
condition, assets, prospects and liabilities of the Company
are such that the acquisition of the Company pursuant to and
in accordance with the terms of this Agreement is in the best
interest of the Purchaser; provided that in making such
determination the Purchaser shall not be subject to any
requirement of reasonableness;
(g) No Prohibition. No statute, rule, regulation,
executive order, decree, ruling, injunction or other order
shall have been enacted, entered, promulgated or enforced by
any court or governmental authority of competent jurisdiction
within the United States which prohibits or makes illegal the
transactions contemplated by this Agreement;
(h) Total Equity. The Total Equity of the Company, as
of November 26,1995, was at least $4,000,000. As used herein,
"Total Equity" means the Company's stockholders' equity,
calculated in a manner consistent with the Financial
Statements of the Company. Prior to the Closing Date
Purchaser shall have verified that the Total Equity amount as
of November 26, 1995 was as required above;
(i) Reasonable Expenses. The Purchaser agrees that the
Company may pay and/or account for its reasonable transaction
expenses, including but not limited to, attorneys' fees,
accounting fees, and financial advisor fees (collectively,
"Reasonable Expenses"), which shall not exceed the remainder
of $250,000 less the amount of expenses paid under Section
6.3(f) of the Agreement and Plan of Merger dated September 25,
1995 (the "Merger Agreement"), by and among Advantage
Companies, Inc., a Delaware corporation ("Advantage"), the
Purchaser and THORN Acquisition Corp., a Delaware corporation
("THORN");
(j) Officers' Certificates and Other Closing Deliveries.
The officers of the Company shall have executed and delivered
to the Purchaser the officers' certificates and any other
documents required by Section 2.2 hereof;
(k) Lawsuit Dismissal. All counterclaims relating to
the lawsuit captioned as Case No. 94 C 3532, THORN Americas,
Inc. v. COMCOA, Inc.; Tidewater Rental Corp.; AdvantEdge
Rental Purchase Inc.; Advantage Companies, Inc.; and certain
other parties, pending in the 18th Judicial District Court of
Sedgwick County, Kansas, shall have been dismissed with
prejudice and the parties to such action shall have entered
into a mutual release from liability with respect to the
subject matter of such action; and
(l) Waiver and Consent. Purchaser shall have received
the written agreement of the Company and all Stockholders
waiving all of their rights, and issuing those consents,
discussed in Section 6.12 hereof, in the form of Exhibit D
attached hereto. In addition, the Articles of Incorporation
shall have been amended to delete Article V thereof.
Section 7.2 Conditions to the Obligations of the
Company and the Stockholders. All obligations of the Company and
the Stockholders hereunder are subject to the fulfillment, prior to
or at the Closing, unless waived by the Company and the
Stockholders, of each of the following conditions:
(a) Representations and Warranties. The representations
and warranties made by the Purchaser in this Agreement shall
be true when made and shall continuously remain true and shall
be reaffirmed and remade at and as of the Closing Date as
though such representations and warranties were made at and
as of the Closing Date;
(b) Performance. The Purchaser shall have performed and
complied with all covenants, agreements, obligations and
conditions required by this Agreement to be so performed or
complied with by it;
(c) Approvals and Consents. All governmental and third
party approvals and consents required to be obtained by the
Purchaser for consummation of the transactions contemplated
by this Agreement shall have been obtained at or prior to
Closing. All waiting periods applicable to this Agreement and
the transactions contemplated hereby under the HSR Act shall
have expired or terminated;
(d) No Prohibition. No statute, rule, regulation,
executive order, decree, ruling, injunction or other order has
been enacted, entered, promulgated, or enforced by any court
or governmental authority of competent jurisdiction within the
United States which prohibits or makes illegal the
transactions contemplated by this Agreement;
(e) Advantage Transaction. Consummation at or prior to
the Closing Date of either (i) the merger of THORN with and
into Advantage or (ii) the purchase of the Common Stock, par
value $.01 per share, and the Class A Cumulative Convertible
Preferred Stock, par value $1.00 per share, of Advantage
pursuant to the Advantage Agreement dated as of July 9, 1995,
between the Purchaser and certain Advantage majority
stockholders; and
Dismissal of Lawsuit. The lawsuit captioned as Case
No. 94 C 3532, THORN Americas, Inc. v. COMCOA, Inc.; Tidewater
Rental Corp.; AdvantEdge Rental Purchase Inc.; Advantage
Companies, Inc.; and certain other parties, pending in the
18th Judicial District Court of Sedgwick County, Kansas, shall
have been dismissed with prejudice and the parties to such
action shall have entered into a mutual release from liability
with respect to the subject matter of such action.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. Subject to Section 8.2
hereof, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing:
(a) by mutual written consent of Purchaser, on the one
hand, and the Company and Stockholders, on the other hand;
(b) by Purchaser, on one hand or the Company and the
Stockholders, on the other hand, if any court or governmental
authority of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action restraining, enjoining
or otherwise prohibiting the transactions contemplated hereby and
such order, decree, ruling or other action shall have become final
and nonappealable;
(c) by Purchaser, on one hand or the Company and the
Stockholders, on the other hand, at any time after January 31, 1996
if the transactions contemplated hereby shall not have occurred by
such date; provided, that the right to terminate this Agreement
under this subparagraph (c) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has
been the cause or resulted in the failure of the transactions
contemplated hereby to have occurred by such date; and provided,
further, that this date shall be extended no more than ninety (90)
days if the transactions contemplated hereby have not been
consummated because of delays in the regulatory approval process;
(d) by Purchaser, if (i) in Purchaser's sole discretion
it determines that any fact revealed in a supplemental
representation and warranty as required by Section 6.5 of this
Agreement makes it not in Purchaser's best interest to consummate
the transactions contemplated hereby, (ii) there shall have been a
breach of any representation or warranty of the Company contained
herein, or (iii) there shall have been a breach of any covenant or
agreement of the Company contained herein which shall not have been
cured prior to ten (10) business days following notice of such
breach; or
(e) by Company if there shall have been a breach of any
representation, warranty, covenant or agreement of Purchaser
contained herein which would prevent the consummation of the
transactions contemplated hereby which shall not have been cured
prior to ten (10) business days following notice of such breach.
Section 8.2 Effect of Termination. In the event of
termination of this Agreement as provided in Section 8.1 hereof,
this Agreement shall forthwith become void and have no effect,
without any liability on the part of any party hereto, except based
upon obligations set forth in Sections 6.2(b) and 9.2 hereof. The
termination of this Agreement shall not relieve any party from
liability for any breach of this Agreement.
Section 8.3 Amendment, Extension and Waiver. At any
time prior to the Closing, the Purchaser, on the one hand, and the
Company and the Stockholders, on the other hand, may by an
instrument in writing signed on behalf of each party hereto (a)
amend, alter or modify this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of the parties
hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or any document delivered pursuant
hereto and (d) waive compliance with any of the agreements or
conditions contained herein. This Agreement may not be amended
except by an instrument in writing signed on behalf of the
Purchaser, on the one hand, and Company and the Stockholders, on
the other hand. The aforementioned requirement of a signed writing
to amend, alter or modify this Agreement may not be waived, except
in writing, and may not be deemed waived orally or by implication.
Subject to the express terms and conditions of this Agreement, the
failure of any party at any time or times to require performance of
any provision hereof shall in no manner affect its right at a later
time to enforce the same.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Survival. The representations,
warranties, covenants and agreements made herein shall not survive
the Closing; provided, however, that the parties' obligations in
Section 6.13 hereof shall survive the Closing.
Section 9.2 Expenses. Each Stockholder shall bear all
fees and expenses incurred by him or the Company in connection with
this Agreement, and prior activities related to the sale of the
Shares; subject to the provisions of Section 7.1(i) hereof if the
transactions contemplated by this Agreement are consummated.
Section 9.3 Parties In Interest. All the terms and
provisions of this Agreement shall be binding upon, shall inure to
the benefit of and shall be enforceable by the respective heirs,
successors and assigns of the parties hereto.
Section 9.4 Entire Agreement; Assignment. This
Agreement, including the Schedules attached hereto and the Exhibits
delivered pursuant hereto, (i) contains the entire understanding of
the parties with respect to its subject matter and supersedes all
prior agreements and understandings between the parties with
respect to its subject matter and (ii) shall not be assigned by
operation of law or otherwise; provided, that the Purchaser may
assign its rights and obligations in whole or in part to any
subsidiary or affiliate of the Purchaser (provided that such
transferee agrees to be bound by this Agreement), but no such
assignment shall relieve Purchaser of its obligations hereunder if
such assignee does not perform such obligations..
Section 9.5 Headings; Section References. The section
and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. All section references in
this Agreement are to sections of this Agreement, unless
specifically set forth in this Agreement to the contrary. All
Schedule references in this Agreement are to Schedules of this
Agreement, unless specifically set forth in this Agreement to the
contrary.
Section 9.6 Notices. All notices, requests, claims,
demands and other communications hereunder (collectively,
"Notices") shall be in writing and shall be deemed to have been
duly given if (i) delivered in person against signed and dated
receipt, (ii) sent by recognized commercial overnight delivery
service on the next business day, (iii) sent by registered or
certified mail, first class postage prepaid, return receipt
requested or (iv) sent by telecopy (with receipt orally confirmed
on the same date) and simultaneously mailed, first class, postage
prepaid, as follows:
If to the Company prior to the Closing Date:
Tidewater Rental Corp.
9323 East 37th Street North
Wichita, Kansas 67226-2000
Attention: Law Department
Telecopy No.: (316) 634-3340
If to the Stockholders:
Daniel J. Taylor
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
Leslie G. Rudd
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
Nestor R. Weigand, Jr.
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
A. Tracy Burton
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
Michael C. Weigand
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
Michael W. Dart
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
Sherry Moore
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
Karon F. Perrill
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
William A. Simon
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
James G. Steckart
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
and
Henri Van Dam
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
with a copy to:
Tidewater Rental Corp.
9323 East 37th Street North
Wichita, Kansas 67226-2000
Telecopy No.: (316) 634-3340
Attention: Law Department.
If to the Purchaser and, after the Closing
Date, the Company:
THORN Americas, Inc.
8200 East Rent-A-Center Drive
Wichita, Kansas 67226-2799
Attention: P. David Egan, Senior Vice
President and General Counsel
Telecopy No.: (316) 636-7328
Copy to:
Shook, Hardy & Bacon P.C.
One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2118
Attention: Jennings J. Newcom, Esq.
Telecopy No.: (816) 421-5547
Notice shall be deemed effective on the day of delivery if given
pursuant to clause (i) or (iv) above, or on the following business
day following mailing if given pursuant to clause (iii) above. Any
party may change its address for purposes hereof by written Notice
in accordance herewith, except that Notices regarding change of
address shall only be effective upon receipt. Failure to accept a
Notice shall not invalidate such Notice.
Section 9.7 Law Governing. Regardless of the place
of its execution, this Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware
without regard to its conflict of laws rules.
Section 9.8 Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of which
shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
Section 9.9 Construction; Invalidity. This Agreement
shall be construed according to its fair meaning as if prepared
mutually by all parties hereto, and no party shall be deemed to be
the draftsman hereof. Each section and subsection of this
Agreement constitutes a separate and distinct undertaking, covenant
and/or provision thereof. If any provision of this Agreement is
held invalid, such invalidity shall not affect the other provisions
hereof which can be given effect without the invalid provisions,
and, to this end, the provisions of this Agreement are intended and
shall be deemed severable. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by
applicable law, the parties hereby waive any provision of law which
renders any provision of this Agreement prohibited or unenforceable
in any way, and any prohibited or unenforceable provision of this
Agreement shall be considered to have been superseded by a legally
permissible and enforceable clause which corresponds most closely
to the intent of the parties as evidenced by the provisions held to
be unenforceable.
Section 9.10 Remedies. 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.
Section 9.11 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.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the Stockholders and by the duly authorized
officers of the Company and the Purchaser as of the date first
above written.
THORN AMERICAS, INC.
By: s/s John L. Slaymaker
-------------------------
Name: John L. Slaymaker
Title: Executive Vice President
TIDEWATER RENTAL CORP.
By: /s/ Daniel J. Taylor
--------------------------
Name: Daniel J. Taylor
Title: Vice President
PRINCIPAL STOCKHOLDERS:
/s/ Daniel J. Taylor
----------------------------
Daniel J. Taylor
/s/ A. Tracy Burton
---------------------------
A. Tracy Burton
/s/ William A. Simon
---------------------------
William A. Simon
/s/ James G. Steckart
---------------------------
James G. Steckart
STOCKHOLDERS:
/s/ Leslie G. Rudd
---------------------------
Leslie G. Rudd
/s/ Nestor R. Weigand, Jr.
---------------------------
Nestor R. Weigand, Jr.
/s/ Michael C. Weigand
---------------------------
Michael C. Weigand
/s/ Michael W. Dart
---------------------------
Michael W. Dart
/s/ Sherry Moore
---------------------------
Sherry Moore
/s/ Karon F. Perrill
---------------------------
Karon F. Perrill
/s/ Henri Van Dam
---------------------------
Henri Van Dam
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF SHARES. . . . . . . . . . . . . 1
Section 1.1 Purchase and Sale of Shares. . . . . . . . 1
Section 1.2 Purchase Price.. . . . . . . . . . . . . . 2
ARTICLE II CLOSING . . . . . . . . . . . . . . . . . . . . 2
Section 2.1 Time and Place.. . . . . . . . . . . . . . 2
Section 2.2 Deliveries by the Company and the
Stockholders . . . . . . . . . . . . . . . 2
Section 2.3 Deliveries by the Purchaser. . . . . . . . 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND PRINCIPAL STOCKHOLDERS. . . . . . . . . . . 4
Section 3.1 Organization and Standing; Corporate
Power; Authority . . . . . . . . . . . . . 4
Section 3.2 Capitalization; Share Ownership. . . . . . 5
Section 3.3 Equity Investments . . . . . . . . . . . . 5
Section 3.4 Consents; No Violation.. . . . . . . . . . 6
Section 3.5 Financial Statements . . . . . . . . . . . 6
Section 3.6 No Undisclosed Liabilities.. . . . . . . . 6
Section 3.7 Absence of Certain Changes.. . . . . . . . 7
Section 3.8 Taxes. . . . . . . . . . . . . . . . . . 9
Section 3.9 Real Property. . . . . . . . . . . . . . . 10
Section 3.10 Intellectual Property. . . . . . . . . . . 12
Section 3.11 Absence of Litigation. . . . . . . . . . . 13
Section 3.12 Insurance. . . . . . . . . . . . . . . . . 14
Section 3.13 Accounts Receivable; Inventory; Motor
Vehicles; Assets Necessary to Business . . 14
Section 3.14 Employee Benefits. . . . . . . . . . . . . 15
Section 3.15 Contracts and Commitments. . . . . . . . . 18
Section 3.16 Labor Matters. . . . . . . . . . . . . . . 19
Section 3.17 Compliance.. . . . . . . . . . . . . . . . 19
Section 3.18 Environmental Matters. . . . . . . . . . . 19
Section 3.19 Employees. . . . . . . . . . . . . . . . . 22
Section 3.20 Licenses and Permits . . . . . . . . . . . 22
Section 3.21 Products Liability . . . . . . . . . . . . 22
Section 3.22 Bank Accounts. . . . . . . . . . . . . . . 22
Section 3.23 Seller's Documentation . . . . . . . . . . 22
Section 3.24 Disclosure . . . . . . . . . . . . . . . . 23
Section 3.25 No Finder's Fee. . . . . . . . . . . . . . 23
Section 3.26 Amount of Notes. . . . . . . . . . . . . . 23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
STOCKHOLDERS. . . . . . . . . . . . . . . . . . 23
Section 4.1 Authorization and Valid and Binding
Agreement. . . . . . . . . . . . . . . . . 23
Section 4.2 Compliance with Other Instruments. . . . . 23
Section 4.3 Governmental Consents. . . . . . . . . . . 24
Section 4.4 No Finder's Fee. . . . . . . . . . . . . . 24
Section 4.5 Good Title . . . . . . . . . . . . . . . . 24
Section 4.6 Legal Representation . . . . . . . . . . . 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. . . 24
Section 5.1 Organization . . . . . . . . . . . . . . . 24
Section 5.2 Authorization. . . . . . . . . . . . . . . 25
Section 5.3 Valid and Binding Agreement. . . . . . . . 25
Section 5.4 Consents; No Violation . . . . . . . . . . 25
Section 5.5 Availability of Funds. . . . . . . . . . . 25
Section 5.6 Absence of Litigation. . . . . . . . . . . 25
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . 26
Section 6.1 Conduct and Preservation of Business . . . 26
Section 6.2 Access to Information. . . . . . . . . . . 28
Section 6.3 Reasonable Best Efforts. . . . . . . . . . 29
Section 6.4 Public Announcements . . . . . . . . . . . 29
Section 6.5 Notification of Certain Matters. . . . . . 29
Section 6.6 No Solicitation. . . . . . . . . . . . . . 30
Section 6.7 Insurance. . . . . . . . . . . . . . . . . 30
Section 6.8 Employment Agreement . . . . . . . . . . . 30
Section 6.9 Repayment of Note. . . . . . . . . . . . . 30
Section 6.10 Consents of Third Parties. . . . . . . . . 31
Section 6.11 Taxes. . . . . . . . . . . . . . . . . . . 31
Section 6.12 Waiver of Right of First Refusal . . . . . 31
Section 6.13 Additional Tax Matters . . . . . . . . . . 31
ARTICLE VII CLOSING CONDITIONS . . . . . . . . . . . . . . 32
Section 7.1 Conditions to the Obligations of the
Purchaser. . . . . . . . . . . . . . . . . 32
Section 7.2 Conditions to the Obligations of the
Company and the
Stockholders . . . . . . . . . . . . . . . 34
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER. . . . . . . 35
Section 8.1 Termination. . . . . . . . . . . . . . . . 35
Section 8.2 Effect of Termination. . . . . . . . . . . 36
Section 8.3 Amendment, Extension and Waiver. . . . . . 36
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . 37
Section 9.1 Survival . . . . . . . . . . . . . . . . . 37
Section 9.2 Expenses . . . . . . . . . . . . . . . . . 37
Section 9.3 Parties In Interest. . . . . . . . . . . . 37
Section 9.4 Entire Agreement; Assignment . . . . . . . 37
Section 9.5 Headings; Section References . . . . . . . 37
Section 9.6 Notices. . . . . . . . . . . . . . . . . . 37
Section 9.7 Law Governing. . . . . . . . . . . . . . . 40
Section 9.8 Counterparts . . . . . . . . . . . . . . . 41
Section 9.9 Construction; Invalidity . . . . . . . . . 41
Section 9.10 Remedies . . . . . . . . . . . . . . . . . 41
Section 9.11 Consent to Jurisdiction. . . . . . . . . . 41
SCHEDULES
Schedule 3.3 Equity Investments
Schedule 3.4 Non-Contravention; Required Consents
Schedule 3.6 Undisclosed Liabilities
Schedule 3.7 Changes Since December 26, 1994
Schedule 3.8 Taxes
Schedule 3.9(a) Leased Real Property
Schedule 3.9(e) Real Property Service and Maintenance
Contracts
Schedule 3.9(f) Agreements or Options to Purchase Real
Property
Schedule 3.9(j) Construction Improvement or Expansion Projects
Schedule 3.10 Intellectual Property
Schedule 3.11 Litigation
Schedule 3.12(a) Insurance Policies
Schedule 3.12(b) Notice of Insurance Matters
Schedule 3.13(c) Motor Vehicles
Schedule 3.13(d) Assets Necessary to Business but Excluded from
Transaction
Schedule 3.14(a) Employee Benefit Plans
Schedule 3.14(i) Benefits Beyond Retirement or Termination
Schedule 3.14(j) Severance Pay and Acceleration of Vesting of
Stock Options
Schedule 3.15 Contracts and Commitments
Schedule 3.16 Labor Matters
Schedule 3.17 Compliance
Schedule 3.18 Environmental Matters
Schedule 3.19 Employee Matters
Schedule 3.20 Licenses and Permits
Schedule 3.21 List of Form Customer Agreements
Schedule 3.22 Bank Accounts
Schedule 3.24 Material Matters
Schedule 5.4 Consent; No Violation
Exhibit A Principal Stockholders
Exhibit B Stockholders
Exhibit C Opinion of Counsel
Exhibit D Waiver and Consent
<PAGE>
EXHIBIT A
PRINCIPAL STOCKHOLDERS
Shares of Options
Common & Other
Name Stock Rights Percentage
Daniel J. Taylor 22 None 22.5
A. Tracy Burton 6 None 6.1
William A. Simon 2 None 2.0
James G. Steckart 2 None 2.0
--- ----
32 32.6%
== =====
<PAGE>
EXHIBIT B
STOCKHOLDERS
Shares of Options
Common & Other
Name Stock Rights Percentage
Leslie G. Rudd 22 None 22.5
Nestor R. Weigand, Jr. 22 None 22.5
Michael C. Weigand 6 None 6.1
Michael W. Dart 5 None 5.1
Sherry Moore 4 None 4.1
Karon F. Perrill 2 None 2.0
Henri Van Dam 5 None 5.1
--- ---
66 67.4%
=== =====
<PAGE>
EXHIBIT 2.6
IN THE EIGHTEENTH JUDICIAL DISTRICT
DISTRICT COURT, SEDGWICK COUNTY, KANSAS
CIVIL DEPARTMENT
THORN AMERICAS, INC., )
)
Plaintiff, )
)
vs. ) Case No. 94 C 3532
)
COMCOA, INC.; TIDEWATER RENTAL )
CORP.; ADVANTEDGE RENTAL )
PURCHASE, INC.; ADVANTAGE )
COMPANIES, INC.; DANIEL J. )
TAYLOR; JAMES STECKART; GREGG )
BUNN; KURT DOERR; AND EDWARD )
STANKO, )
)
Defendants. )
__________________________________ )
SETTLEMENT AGREEMENT
AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release ("Settlement
Agreement") made as of the 2nd day of January, 1996 between THORN
Americas, Inc., a Delaware corporation ("THORN Americas"); Comcoa,
Inc., a Kansas corporation ("Comcoa"); Tidewater Rental Corp., a
Virginia corporation ("Tidewater"); AdvantEdge Rental Purchase,
Inc., a Kansas corporation ("AdvantEdge"); Advantage Companies,
Inc., a Delaware corporation ("Advantage"); Daniel J. Taylor; James
Steckart; Gregg Bunn; Kurt Doerr; and Edward Stanko.
RECITALS
I. WHEREAS, on or about December 27, 1994, THORN
Americas commenced an action in the Eighteenth Judicial District
Court, Sedgwick County, Kansas entitled Thorn Americas, Inc. v.
Comcoa, Inc.; Tidewater Rental Corp.; AdvantEdge Rental Purchase,
Inc.; Advantage Companies, Inc.; Daniel J. Taylor; James Steckart;
Gregg Bunn; Kurt Doerr and Edward Stanko, Court File No. 94 C 3532
(the "Action"); and
II. WHEREAS, defendants filed an Answer and
Counterclaim denying any liability for the claims raised by THORN
Americas and seeking a declaratory judgment as well as defendants'
costs and disbursements including reasonable attorney fees; and
III. WHEREAS, the parties wish to settle their dispute
without any admission of liability and without incurring any
additional litigation costs;
NOW, THEREFORE, the parties hereto agree as follows:
1. THORN Americas hereby releases and forever
discharges Comcoa, Tidewater, Advantage, AdvantEdge, Daniel J.
Taylor, James Steckart, Gregg Bunn, Kurt Doerr and Edward Stanko,
together with their respective officers, directors, employees,
consultants, advisors, shareholders, partners, owners, attorneys,
and all affiliated companies and predecessors, from and against any
and all liabilities, claims, obligations, judgments, causes of
action, demands, losses or damages that THORN Americas may have
against them, including any claim arising out of the parties' prior
business relationship or any claim that has been or could be raised
in or in connection with the Action, or upon any facts or events
from the beginning of time until the date of the Settlement
Agreement. This Release does not extend to or limit any right or
cause of action THORN Americas, Comcoa, Tidewater, Advantage, or
AdvantEdge may have against Daniel J. Taylor, James Steckart, Gregg
Bunn, Kurt Doerr and Edward Stanko relating to claims brought by
third parties against THORN Americas, Comcoa, Tidewater, Advantage,
or AdvantEdge, arising out of the acts or omissions of Daniel J.
Taylor, James Steckart, Gregg Bunn, Kurt Doerr and Edward Stanko.
In addition, this Release does not extend to or limit any claim or
right which Comcoa, Tidewater, Advantage, or AdvantEdge may have
against Daniel J. Taylor, James Steckart, Gregg Bunn, Kurt Doerr
and Edward Stanko. This Settlement Agreement shall not be
considered a Release of any claims arising out of the Agreement and
Plan of Merger and Stock Purchase Agreement described in paragraph
3 of this Settlement Agreement.
2. Comcoa, Tidewater, Advantage, AdvantEdge, Daniel J.
Taylor, James Steckart, Gregg Bunn, Kurt Doerr and Edward Stanko
hereby release and forever discharge THORN Americas, together with
its officers, directors, employees, consultants, advisors,
shareholders, partners, owners, attorneys and all affiliated
companies and predecessors, from and against any and all
liabilities, claims, obligations, judgments, causes of action,
demands, losses and damages that Comcoa, Tidewater, Advantage,
AdvantEdge, Daniel J. Taylor, James Steckart, Gregg Bunn, Kurt
Doerr or Edward Stanko may have against it, including any claim
arising out of the parties' prior business relationship or any
claim that has been or could be raised in or in connection with the
Action, or upon any facts or events from the beginning of time
until the date of the Settlement Agreement. This Release does not
extend to or limit any claim or right which Daniel J. Taylor, James
Steckart, Gregg Bunn, Kurt Doerr or Edward Stanko may have against
Comcoa, Tidewater, Advantage or AdvantEdge. This Settlement
Agreement shall not be considered a Release of any claims arising
out of the Agreement and Plan of Merger and the Stock Purchase
Agreement described in paragraph 3 of this Settlement Agreement.
3. This Settlement Agreement will not be effective
until the following agreements have closed: The Agreement and Plan
of Merger dated as of September 25, 1995, as amended November 27,
1995, by and among Advantage, THORN Americas and THORN Acquisition
Corporation; and the Stock Purchase Agreement dated as of September
25, 1995, as amended November 27, 1995, by and among Tidewater and
THORN Americas. These agreements are unaffected by the terms of
the releases set forth in paragraphs 1 and 2.
4. The parties recognize that this Settlement
Agreement does not constitute an admission by any party that it has
violated any state or federal statute or any principle of common
law or engaged in any wrongdoing whatsoever.
5. THORN Americas, Comcoa, Tidewater, Advantage,
AdvantEdge, Daniel J. Taylor, James Steckart, Gregg Bunn, Kurt
Doerr and Edward Stanko, by and through their respective counsel,
shall execute and file with the court, on the date of the closing
of the Agreement and Plan of Merger and the Stock Purchase
Agreement described in paragraph 3 of the Settlement Agreement, the
Stipulation of Dismissal with Prejudice, in the form attached
hereto as Exhibit "A".
6. The parties agree that pursuant to the provisions
of the Stipulation and Protective Order dated February 27, 1995,
they will destroy or return to the appropriate party all documents,
transcripts of testimony, discovery responses, and other papers as
well as all copies or summaries, memoranda and notes, reflecting
the contents or substance of such documents. Within fifteen (15)
days of executing this Settlement Agreement, counsel for any
producing party may provide a written list of those documents the
producing party desires to be returned rather than destroyed. The
party in possession of such documents shall return the same to the
producing party within twenty (20) days after its receipt of the
written list. Within forty-five (45) days of executing this
Settlement Agreement, counsel for the party which received such
documents shall certify in writing to the producing party that any
produced documents which have not been returned have been
destroyed.
7. This Settlement Agreement shall be interpreted in
accordance with the laws of the State of Kansas. The parties
hereby submit themselves to the jurisdiction of the courts of the
State of Kansas for the enforcement, interpretation, construction,
or any other matter regarding or relating to this Settlement
Agreement.
8. This Settlement Agreement constitutes the entire
agreement between the parties as to its subject matter and binds
the parties hereto, their successors and assigns. All prior
agreements, representations and understandings, oral or written,
between the parties or their representatives as to the terms of
this Settlement Agreement, if any, are hereby superseded by this
Settlement Agreement.
9. This Settlement Agreement may be executed in
counterpart, and by telefacsimile, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
THORN AMERICAS, INC.
Dated: By /s/ John Slaymaker
--------------------------
Its Vice President
COMCOA, INC.
Dated: By /s/ Daniel J. Taylor
--------------------------
Its President
TIDEWATER RENTAL CORP.
Dated: By /s/
-------------------------
Its
ADVANTAGE RENTAL PURCHASE,
INC.
Dated: By /s/
---------------------------
Its
ADVANTAGE COMPANIES, INC.
Dated: By /s/
----------------------------
Its
Dated: By /s/ Daniel J. Taylor
----------------------------
Daniel J. Taylor
Dated: /s/ James G. Steckart
-----------------------------
James G. Steckart
Dated: /s/ Greg Bunn
----------------------------
Gregg Bunn
Dated: /s/ Kurt Doerr
----------------------------
Kurt Doerr
Dated: /s/ Edward Stanko
-----------------------------
Edward Stanko
<PAGE>
EXHIBIT 2.7
IN THE EIGHTEENTH JUDICIAL DISTRICT
DISTRICT COURT, SEDGWICK COUNTY, KANSAS
CIVIL DEPARTMENT
THORN AMERICAS, INC. ) Case No. 94 C 3532
)
Plaintiff, ) STIPULATION OF
) DISMISSAL
v ) WITH PREJUDICE
)
COMCOA, INC., TIDEWATER RENTAL )
CORP.; ADVANTEDGE RENTAL PURCHASE )
INC.; ADVANTAGE COMPANIES, INC.; )
DANIEL J. TAYLOR; JAMES STECKART; )
GREGG BUNN; KURT DOERR; AND )
EDWARD STANKO )
)
Defendants. )
The parties to the above-entitled matter, by their respective
attorneys, hereby stipulate and agree to the dismissal of this
action with prejudice pursuant to Kansas Rules of Civil Procedure
Section 60-241, with each party bearing its own or their own costs,
disbursements, and attorneys' fees.
DATED: 12-29-95.
J. MICHAEL DADY & ASSOCIATES, P.A.
By /s/ J. Michael Dady
---------------------------------
J. Michael Dady (#2062X)
Jeffery S. Haff (#202265)
4000 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
(612) 359-9000
DATED:
WOODARD, BLAYLOCK, HERNANDEZ
PILGREEN & ROTH
By /s/
--------------------------------
Lee H. Woodard (#05936)
833 North Waco
P. O. Box 127
Wichita, KS 67201-0127
ATTORNEYS FOR DEFENDANTS
DATED:
KLENDA, MITCHELL, AUSTERMAN
& ZUERCHER
By /s/
-----------------------------
Gary M. Austerman (#8222)
Christopher A. McElgunn (#13359)
301 N. Main, Suite 1600
Wichita, KS 67202
(316) 267-0331
ATTORNEYS FOR PLAINTIFF
<PAGE>
EXHIBIT 2.8
COMMERCIAL LEASE AGREEMENT
THIS LEASE is made as of ___________________, 199__,
between Property Management Corp. ("Landlord"), and Advantage
Companies, Inc. ("Tenant"), who hereby agree as follows:
A. PREMISES. Subject to the covenants and conditions
of this Lease, Landlord leases to Tenant, and Tenant leases from
Landlord, the premises (the "Premises") commonly known and numbered
as 9323 East 37th Street North, in the City of Wichita, State of
Kansas, together with the right of ingress and egress.
B. TERM. The term of this Lease (the "Term") is for
thirty (30) days, commencing on January 2, 1996 and ending on
February 1, 1996.
C. RENT PAYMENTS. Tenant shall pay to Landlord an
aggregate sum of $0.00 as rent.
D. PROPERTY INSURANCE. Landlord shall maintain
property damage insurance on the Premises and the building of which
the Premises are a part.
E. LIABILITY INSURANCE. Tenant shall, at its sole cost
and expense, obtain and maintain at all times during the Term, for
the protection of Landlord and Tenant, liability insurance,
including employer's liability coverage, with a combined personal
injury and property damage limit of not less than $1,000,000 for
each occurrence, insuring against all liability of Tenant and its
representatives arising out of and in connection with Tenant's use
or occupancy of the Premises. Tenant shall also maintain workers'
compensation insurance for its employees located at the Premises.
F. CONDITION OF PREMISES AT BEGINNING AND END OF TERM.
Tenant acknowledges Tenant has inspected the Premises and accepts
the Premises in their present condition.
G. MAINTENANCE AND REPAIR BY LANDLORD. During the Term
and at Landlord's sole cost and expense, Landlord will maintain and
keep in good order, repair and condition and, when necessary, will
replace all parts of the Premises, including, but not limited to,
utility service lines from the point where they enter the building
of which the Premises are a part, interior walls, inside surfaces
of exterior walls, fixtures, floor coverings, lighting fixtures,
heating, ventilating, air-conditioning, plumbing, sprinkler system,
glass, windows, doors, elevator, electrical and other mechanical
equipment, appliances and systems. Landlord shall also maintain
and keep in good repair the roof, exterior walls, gutters,
downspouts, foundations and all other structural components of the
building of which the Premises are a part, all underground plumbing
and sewer lines, and water, gas and electric service lines to the
point where such service lines enter the building of which the
Premises are a part. Landlord shall be responsible for
maintenance, cleaning, repainting and repairs of the parking areas,
driveways, sidewalks and approaches, except for snow removal which
shall be the responsibility of Tenant under paragraph 10 hereof.
H. DAMAGE BY CASUALTY. In case, during the Term or
previous thereto, the Premises hereby let, or the building of which
said Premises are a part, shall be destroyed or shall be so damaged
by fire or other casualty as to become untenantable, then in such
event, the Term shall cease and this Lease shall become null and
void from the date of such damage or destruction and Tenant shall
immediately surrender said Premises and all interest therein to
Landlord.
I. PERSONAL PROPERTY. Landlord shall not be liable for
any loss or damage to any merchandise inventory, goods, fixtures,
improvements or personal property of Tenant (collectively,
"Personal Property") in or about the Premises, regardless of the
cause of such loss or damage. Tenant shall maintain insurance
coverage for the replacement cost of any Personal Property in or
about the Premises.
J. UTILITIES AND SERVICES. THORN Americas, Inc., the
parent corporation of the Tenant, shall pay for all electricity,
gas, water or other utilities, for telephone expenses and for snow
removal, janitorial service and supplies, coffee service and
supplies, and other disposable supplies (e.g., paper towels, toilet
tissue, etc.) used in or assessed against the Premises during the
Term, unless otherwise herein expressly provided.
K. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS. Landlord
shall pay the real estate taxes and installments of special
assessments, payable with respect to the Premises.
L. WAIVER OF SUBROGATION. As part of the consideration
for this Lease, each of the parties hereby releases the other party
hereto from all liability for damage due to any act or neglect of
the other party (except as hereinafter provided) occasioned to
property owned by said parties which is or might be incident to or
the result of a fire or any other casualty against loss for which
either of the parties is now carrying or hereafter may carry
insurance; provided, however, that the releases herein contained
shall not apply to any loss or damage occasioned by intentional
acts of either of the parties hereto, and the parties hereto
further covenant that any insurance they obtain on their respective
properties shall contain an appropriate provision whereby the
insurance company, or companies, consent to the mutual release of
liability contained in this paragraph.
M. SUCCESSORS. The provisions, covenants and
conditions of this Lease shall bind and inure to the benefit of the
legal representatives, heirs, successors and assigns of each of the
parties hereto, except that no assignment or subletting by Tenant
without the written consent of Landlord shall vest any rights in
the assignee or subtenant of Tenant.
N. QUIET POSSESSION. Landlord agrees, so long as
Tenant fully complies with all of the terms, covenants and
conditions herein contained on Tenant's part to be kept and
performed, that Tenant shall and may peaceably and quietly have,
hold and enjoy the Premises for the Term aforesaid, it being
expressly understood and agreed that the aforesaid covenant of
quiet enjoyment shall be binding upon Landlord, its heirs,
successors or assigns, but only during such party's ownership of
the Premises. Landlord and Tenant further covenant and represent
that each has full right, title, power and authority to make,
execute and deliver this Lease.
O. ENTIRE AGREEMENT. This Lease contains the entire
agreement between the parties, and no modification of this Lease
shall be binding upon the parties unless evidenced by an agreement
in writing signed by Landlord and Tenant after the date hereof. If
there be more than one Tenant named herein, the provisions of this
Lease shall be applicable to and binding upon such Tenants, jointly
and severally.
P. SIGNAGE. Tenant covenants and agrees that it shall
not, without the prior written consent of Landlord, change any
existing signage on the Premises or construct or erect any new or
additional signage on the Premises.
IN WITNESS WHEREOF, said parties hereunto subscribed
their names. Executed in two (2) originals.
Landlord Tenant
PROPERTY MANAGEMENT CORP. ADVANTAGE COMPANIES, INC.
By: Daniel J. Taylor By: /s/
- ------------------------- -------------------------------
Title: President Title: ________________________
Agreed to and accepted by:
THORN AMERICAS, INC.
By: _________________________
Title: ______________________
<PAGE>
EXHIBIT 2.9
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (this "Agreement") is made and
entered into as of January 2, 1996, by and between THORN AMERICAS,
INC. ("THORN") and PROPERTY MANAGEMENT CORP. ("PMC").
W I T N E S S E T H:
WHEREAS, PMC and ADVANTAGE COMPANIES, INC. ("Advantage"),
a Delaware corporation and a wholly owned subsidiary of THORN, are
parties to that certain Commercial Lease Agreement dated as of
January 2, 1996, pursuant to which Advantage will lease the
premises at 9323 East 37th Street North, Wichita, Kansas; and
WHEREAS, PMC personnel have agreed to assist THORN and
Advantage with 1995 year-end closing procedures in connection with
THORN's acquisition of the stock of Advantage and of Tidewater
Rental Corp. ("Tidewater").
NOW, THEREFORE, in consideration of the agreements and
understandings set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged, THORN and PMC, intending to be legally bound, hereby
agree as follows:
Q. Closing Procedures. PMC will assist Advantage and
THORN with the December 31, 1995, year-end closing procedures
relating to Advantage and Tidewater. Such procedures, shall
include, but not be limited to, (i) payroll matters; (ii) accounts
payable matters; (iii) conversion of fixed asset system; (iv)
inventory depreciation and reconciliation matters; (v) recordation
and reconciliation of cash receipts; (vi) general ledger entries,
financial statement preparation and account reconciliations; and
(vii) sales and use tax return preparation, among other things, as
described in more detail on Appendix A attached hereto. The
parties agree that Appendix A is not all-inclusive and that PMC
will provide other assistance with respect to year-end closing
procedures as requested by THORN or Advantage.
R. Further Assurances. PMC agrees that if THORN or
Advantage request further action and to help carry out the year-end
closing procedures, PMC shall take all such necessary or desirable
actions.
S. Compensation. As compensation for the services of
PMC, THORN shall reimburse PMC for its actual out-of-pocket labor
costs incurred while providing the services described above for
THORN and Advantage.
T. Counterparts. This Agreement may be executed in one
or more counterparts, each of which when executed and delivered
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be executed as of the date first above written.
PROPERTY MANAGEMENT CORP.
By: /s/ Daniel J. Taylor
-------------------------
Name: Daniel J. Taylor
Title: President
THORN AMERICAS, INC.
By: /s/
-----------------------
Name:
Title:
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE:
THORN Americas Acquires Advantage Companies and Tidewater Rental
January 2, 1996, Wichita, KS - THORN Americas, Inc. today announced
the acquisition of Advantage Companies, Inc. (formerly traded on
NASDAQ as ADVG). Advantage Companies, a Delaware corporation, owns
100 percent of the outstanding stock of COMCOA, Inc., and
AdvantEdge Rental Purchase, Inc. COMCOA is a THORN franchisee,
operating 99 Rent-A-Center stores in Florida, Alabama, Mississippi
and Georgia. AdvantEdge operates seven rental-purchase stores in
Colorado and Indiana. The acquisition was effected by the merger
of Advantage and a wholly owned subsidiary of THORN, with Advantage
as the surviving corporation.
In a separate transaction, THORN Americas purchased the stock of
Tidewater Rental Corp., a privately held company affiliated with
Advantage. Tidewater is a THORN franchisee, operating 20 Rent-A-
Center stores in Virginia.
The closing of the Advantage acquisition occurred after a special
shareholders' meeting held December 29, 1995, where shareholders
voted to approve the merger. The public shareholders of Advantage
will receive letters from THORN's transfer agent, with instructions
for tendering stock certificates for the purchase price of $18.50
per share. Certain majority shareholders of Advantage will receive
$16.00 per share.
THORN Americas and its franchisees constitute the largest rental-
purchase operation in the United States, currently with 1,232 Rent-
A-Center stores in 49 states and the District of Columbia. THORN
also operates 24 Rent-A-Centre stores in Canada, and 141 Remco
stores in 17 states.
Contact: Nancy Johnson
Public Affairs Director
Phone: 316-636-7541
