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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
Commission File No. 1-14146
CORT BUSINESS SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 54-1662135
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4401 Fair Lakes Court, Fairfax, VA 22033
(Address of principal executive offices) (Zip Code)
(703) 968-8500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding as of
Class May 14, 1999
----- -----------------
Common Stock, $.01 par value 13,094,585
Class B Common Stock, $.01 par value - 0 -
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<PAGE>
CORT BUSINESS SERVICES CORPORATION
INDEX TO FORM 10-Q
Page No.
--------
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets .......................... 1
Unaudited Condensed Consolidated Statements of Operations ...... 2
Unaudited Condensed Consolidated Statements of Cash Flows ...... 3
Notes to Unaudited Condensed Consolidated Financial Statements . 4
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ........................ 6
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS ......................................... 9
Item 6. EXHIBITS AND REPORTS ON FORM 8-K........................... 9
SIGNATURE............................................................... 10
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ -----------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents ........................... $ 703 $ 1,567
Accounts receivable, net ............................ 14,585 17,385
Prepaid expenses .................................... 5,918 6,216
Rental furniture, net ............................... 189,059 193,394
Property, plant and equipment, net .................. 43,861 43,954
Other receivables and assets, net ................... 3,048 2,015
Investment .......................................... 3,000 3,300
Goodwill, net ....................................... 72,722 76,981
-------- --------
Total assets ................................... $332,896 $344,812
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable .................................... $ 3,417 $ 5,289
Accrued expenses .................................... 21,076 24,392
Deferred revenue and security deposits .............. 21,122 22,865
Revolving credit facility ........................... 90,800 88,800
Deferred income taxes ............................... 20,819 20,827
-------- --------
157,234 162,173
Stockholders' equity ................................ 175,662 182,639
-------- --------
Total liabilities and stockholders' equity ..... $332,896 $344,812
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
1
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------
1998 1999
------- -------
<S> <C> <C>
Revenue:
Furniture rental ........................................... $62,814 $71,795
Furniture sales ............................................ 12,629 14,569
------- -------
Total revenue .......................................... 75,443 86,364
------- -------
Operating costs and expenses:
Cost of furniture rental ................................... 11,087 12,489
Cost of furniture sales .................................... 7,615 9,229
Selling, general and administrative expenses ............... 44,166 51,292
------- -------
Total costs and expenses ............................... 62,868 73,010
------- -------
Operating earnings ..................................... 12,575 13,354
Interest expense ............................................. 1,967 1,421
------- -------
Income before income taxes ............................. 10,608 11,933
Income taxes ................................................. 4,417 5,040
------- -------
Net Income ............................................. $ 6,191 $ 6,893
======= =======
Earnings per common share .................................... $ .48 $ .53
Weighted average number of common shares used in computation . 12,924 13,087
Earnings per common share - assuming dilution ................ $ .46 $ .51
Weighted average number of common shares used in computation -
assuming dilution .......................................... 13,472 13,394
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
2
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1998 1999
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income .......................................... $ 6,191 $ 6,893
Proceeds of disposals of rental furniture in
excess of gross profit ............................ 7,294 9,198
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization:
Rental furniture depreciation ................. 8,465 9,414
Other depreciation and amortization ........... 1,445 1,794
Goodwill amortization ......................... 434 587
Amortization of debt issuance costs ........... 184 15
Rental furniture inventory shrinkage ............ 830 668
Changes in operating accounts, net .............. (1,060) 4,371
-------- ---------
Net cash provided by operating activities .... 23,783 32,940
-------- ---------
Cash flows from investing activities:
Purchases of rental furniture ....................... (20,917) (21,399)
Portfolio acquisitions .............................. (9,175) (6,660)
Purchases of property, plant and equipment .......... (1,975) (1,871)
Sales of property, plant and equipment .............. 106 70
Purchase of investment .............................. -- (300)
-------- ---------
Net cash used by investing activities ........ (31,961) (30,160)
-------- ---------
Cash flows from financing activities:
Borrowings on the revolving credit facility ......... 22,700 15,100
Repayments on the revolving credit facility ......... (13,700) (17,100)
Issuance of common stock ............................ 600 84
Other ............................................... -- --
-------- ---------
Net cash provided by financing activities ..... 9,600 (1,916)
-------- ---------
Net increase (decrease) in cash and cash
equivalents ................................. 1,422 864
Cash and cash equivalents at beginning of period ...... -- 703
-------- ---------
Cash and cash equivalents at end of period ............ $ 1,422 $ 1,567
======== =========
Supplemental disclosure of cash flow information:
Interest paid ....................................... $ 3,206 $ 1,782
Income taxes paid ................................... 768 468
Tax benefit from exercise of stock options .......... 708 60
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(1) Basis of Presentation
---------------------
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting of
only normal recurring accruals, necessary for a fair presentation of the
consolidated financial position of CORT Business Services Corporation
("CORT" or the "Company") and Subsidiary as of March 31, 1999, and the
results of operations and cash flows for the three months ended March 31,
1999 and 1998. The results of operations for the three months ended March
31, 1999 are not necessarily indicative of the results that may be expected
for the full year. These condensed consolidated financial statements are
unaudited, and do not include all related footnote disclosures.
The interim unaudited condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements
included in the Company's 1998 Annual Report on Form 10-K.
(2) Income Taxes
------------
The Internal Revenue Service ("IRS") had proposed the disallowance of
certain deductions taken by Fairwood Corporation for a consolidated tax
group of which CORT Furniture Rental Corporation ("CFR") was previously a
member (the "Former Group") through the year ended December 31, 1988. The
IRS challenge included the assertion that certain interest deductions taken
by the Former Group should be recharacterized as non-deductible dividend
distributions and that deductions for certain expenses related to the
acquisition of Mohasco Corporation (now Consolidated Furniture Corporation
("Consolidated")), CFR's former shareholder, be disallowed. Fairwood
Corporation has indicated to the Company that it has reached an agreement
with the IRS regarding a settlement of the proposed adjustments. The
bankruptcy court handling Fairwood Corporation's bankruptcy filing approved
the terms of the settlement in October 1998. The total tax liability of the
Former Group under the terms of the settlement is approximately $5 million,
including interest through December 31, 1998.
Under IRS regulations, the Company and each other member of the Former
Group is severally liable for the full amount of any Federal income tax
liability of the Former Group while CFR was a member of the Former Group,
which could be as much as approximately $4 million for such periods
(including interest through December 31, 1998) under the terms of the
settlement. Under the agreement of sale for CFR, Consolidated agreed to
indemnify the Company in full for any consolidated tax liability of the
Former Group for the years during which CFR was a member of the Former
Group. In addition, the Company may have rights of contribution against
other members of the Former Group if the Company were required to pay more
than its equitable share of any consolidated tax liability. The Company is
not in a position to determine the probable impact on the Company's
consolidated financial statements, if any.
4
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(3) Earnings Per Share
------------------
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Weighted average shares outstanding
during the period ............................ 12,923,998 13,086,985
Effect of dilutive securities:
Stock options ................................ 489,099 306,770
Warrants ..................................... 58,699 --
----------- -----------
Weighted average common shares --
assuming Dilution .......................... 13,471,796 13,393,755
=========== ===========
Net income applicable to common shares ......... $ 6,191,000 $ 6,893,000
=========== ===========
Earnings per common share ...................... $ .48 $ .53
=========== ===========
Earnings per common share - assuming dilution .. $ .46 $ .51
=========== ===========
</TABLE>
(4) Other Information
-----------------
On March 25, 1999 the Company entered into an Agreement and Plan of Merger
among the Company, CBF Holding LLC, a Delaware limited liability company,
and CBF Mergerco Inc., a Delaware corporation (the "Merger Agreement").
Pursuant to the Merger Agreement, an investor group that includes
Bruckmann, Rosser, Sherrill & Co., Inc. ("BRS") and members of the
Company's management team would acquire the Company for consideration of
$24.00 per share in cash and $2.50 per share in liquidation value of a new
series of preferred stock. Citicorp Venture Capital, Ltd. ("CVC") will
retain a portion of its investment and thereby provide equity financing to
the resulting corporation.
The merger agreement requires approval by the holders of a majority of the
Company's voting stock and, in addition, approval by the holders of a
majority of the outstanding voting stock who are not affiliated with BRS,
CVC or other members of the investor group. The merger is also subject to
other conditions, including receipt of necessary financing, a limitation on
the number of dissenting shareholders and certain regulatory approvals. The
Company has received copies of commitment and highly confident letters for
the debt financing required to complete the transaction. There can be no
assurance that the merger will be completed, or that the merger will be
completed as contemplated.
5
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollar figures in thousands)
Results of Operations
- ---------------------
Three months ended March 31, 1999 as compared to three months ended March 31,
1998
Revenue
Total revenue increased 14.5% to $86,364 for the three months ended March 31,
1999 from $75,443 for the three months ended March 31, 1998. Furniture rental
revenue for the three months ended March 31, 1999 was $71,795, a 14.3% increase
from $62,814 in 1998. Rental revenue growth before the impact of acquisitions
and trade show operations was approximately 2% which reflects growth in the
number of leases as well as revenue per lease. Furniture sales increased 15.4%
to $14,569 for the three months ended March 31, 1999. This increase reflects the
Company's continued efforts to reduce the level of rental furniture.
Operating Costs and Expenses
Cost of furniture rental has decreased from 17.7% of furniture rental revenue in
1998 to 17.4% of furniture rental revenue in 1999. This improvement is primarily
attributed to the expansion of CORT's housewares business, a reduction in
depreciation as a percent of revenue and improvements in inventory control from
the continued installation of the perpetual system. Cost of furniture sales
increased from 60.3% of furniture sales revenue in 1998 to 63.3% in 1999. Lower
sales margins were the result of aggressive clearance sales designed to lower
the Company's level of idle inventory.
Selling, general and administrative expenses totaled $51,292 or 59.4% of total
revenue for the quarter ended March 31, 1999 as compared to $44,166 or 58.5% of
total revenue in 1998. This increase as a percentage of revenue is attributed to
investments in personnel, facilities and marketing efforts which the Company
believes are an integral part of its plans for future growth.
Operating Earnings
As a result of the changes in revenue, operating costs and expenses discussed
above, operating earnings were $13,354 or 15.5% of total revenue in the first
quarter of 1999 compared to $12,575 or 16.7% of total revenue in the first
quarter of 1998.
Furniture Purchases
Furniture purchases, which totaled $21,399 in the three months ended March 31,
1999, were up from the $20,917 purchased in the three months ended March 31,
1998. Furniture purchases increased primarily due to purchases by acquired
businesses to standardize the product offering with CORT's current line. The
increase was largely offset by reduced furniture requirements for prior year
acquisitions whose conversions to the CORT Furniture line are complete and the
impact of merged cities.
Liquidity and Capital Resources
- -------------------------------
CORT Business Services Corporation is a holding company with no independent
operations, no material obligations and no material assets other than its
ownership of CFR. The Company is dependent on the receipt of dividends or
distributions from CFR to fund any obligations. The revolving credit facility
restricts the ability of CFR to make advances and pay dividends to the Company.
The Company's primary capital requirements are for purchases of rental
furniture. The Company purchases furniture throughout each year to replace
furniture which has been sold and to maintain adequate levels of rental
furniture to meet existing and new customer needs. As the Company's growth
strategies continue to be implemented, furniture purchases are expected to
increase.
6
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(dollar figures in thousands)
The Company's other capital requirements consist primarily of purchases of
property, plant and equipment, including leasehold improvements, warehouse and
office equipment, standard programming enhancements and computer hardware. Net
purchases of property, plant and equipment were $1,869 and $1,801 in the three
months ended March 31, 1998 and 1999, respectively.
During the three months ended March 31, 1998 and 1999, net cash provided by
operations was $23,783 and $32,940, respectively. During the three months ended
March 31, 1998 and 1999, net cash used by investing activities was $31,961 and
$30,160, respectively, consisting primarily of purchases of rental furniture and
portfolio acquisitions. During the three months ended March 31, 1998 and 1999,
net cash provided by financing activities was $9,600 and ($1,916), respectively.
CFR has available a revolving line of credit of $125,000 to meet acquisition and
expansion needs as well as seasonal working capital and general corporate
requirements. The Company had $32,160 available under the revolving credit
facility at March 31, 1999. The Company believes that future cash flows from
operations, together with the borrowings available under the revolving credit
facility will provide the Company with sufficient liquidity and financial
resources to finance its growth and satisfy its working capital requirements
through the term of the revolving credit facility.
The Internal Revenue Service ("IRS") had proposed the disallowance of certain
deductions taken by Fairwood Corporation for a consolidated tax group of which
CORT Furniture Rental Corporation ("CFR") was previously a member (the "Former
Group") through the year ended December 31, 1988. The IRS challenge included the
assertion that certain interest deductions taken by the Former Group should be
recharacterized as non-deductible dividend distributions and that deductions for
certain expenses related to the acquisition of Mohasco Corporation (now
Consolidated Furniture Corporation ("Consolidated")), CFR's former shareholder,
be disallowed. Fairwood Corporation has indicated to the Company that it has
reached an agreement with the IRS regarding a settlement of the proposed
adjustments. The bankruptcy court handling Fairwood Corporation's bankruptcy
filing approved the terms of the settlement in October 1998. The total tax
liability of the Former Group under the terms of the settlement is approximately
$5 million, including interest through December 31, 1998.
Under IRS regulations, the Company and each other member of the Former Group is
severally liable for the full amount of any Federal income tax liability of the
Former Group while CFR was a member of the Former Group, which could be as much
as approximately $4 million for such periods (including interest through
December 31, 1998) under the terms of the settlement. Under the agreement of
sale for CFR, Consolidated agreed to indemnify the Company in full for any
consolidated tax liability of the Former Group for the years during which CFR
was a member of the Former Group. In addition, the Company may have rights of
contribution against other members of the Former Group if the Company were
required to pay more than its equitable share of any consolidated tax liability.
The Company is not in a position to determine the probable impact on the
Company's consolidated financial statements, if any.
Year 2000 Compliance
- --------------------
As is the case with other companies using computers in their operations, the
Company is faced with the task of addressing the Year 2000 issue. The Year 2000
issue arises from the widespread use of computer programs that rely on two-digit
codes to perform computations or decision-making functions. The Company has done
a comprehensive review of its significant computer programs to identify the
systems that would be affected by the Year 2000 issue.
The Company relies on computer-based technology and utilizes a variety of
third-party hardware and software. The Company's rental and retail functions,
including lease writing, inventory control, billing and accounts receivable use
the software called "RTR". This software, which is the Company's primary
operating system, has been recently developed and installed in most of the
Company's operations. The RTR software has been modified for Year 2000
compliance, but the modified version has not yet been installed in the
operations of the Company. The installation of RTR, as well as the Year 2000
modification, is expected to be completed in the third quarter of 1999.
7
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(dollar figures in thousands)
The Company utilizes third party software for administrative functions such as
accounting, payroll and human resources. The Company expects to upgrade the
administrative function third party software to the Year 2000 version or install
new software which is Year 2000 compliant in the first half of 1999. The Company
currently estimates the cost of modifying its computer systems to be Year 2000
compliant to be approximately $300; the majority of these costs will be incurred
by September 30, 1999.
The Company is still in the process of reviewing its Year 2000 exposure to
customers and vendors. The Company is not dependent on any one supplier or
customer for more than 10% of its rental furniture or revenue, respectively. As
part of its contingency planning efforts, the Company is sending inquiries as to
the Year 2000 readiness to selected vendors in order to identify any significant
exposures that may exist and establish alternative sources or strategies where
necessary. The Company is currently unaware of any Year 2000 problems faced by
any customers or vendors that are likely to have a material adverse effect on
the Company.
In worst-case scenario, if the Company's operating system was not to be ready
for Year 2000, the Company would continue to make deliveries, record revenue and
bill customers utilizing a personal computer until the computer system was
ready. This would not stop the operations of the Company and currently is done
whenever a location experiences temporary down time.
There can be no guarantee that the foregoing cost estimates or deadlines will be
achieved and actual results could differ from current expectation. Specific
factors that might cause differences include, but are not limited to, the
ability of customers, suppliers, and other companies on which the Company's
operations rely to modify or convert their systems to be Year 2000 ready, the
ability of the Company to locate and correct all relevant computer code, or
similar uncertainties. The Company is in the process of developing contingency
plans for such scenarios.
Forward-Looking Statements
- --------------------------
In addition to historical information, this Quarterly Report on Form 10-Q
includes certain forward-looking statements as such term is defined in Section
27A of the Securities Act and Section 21E of the Exchange Act. These
forward-looking statements involve certain risks and uncertainties, including
but not limited to acquisitions, additional financing requirements, development
of new products and services, purchases of rental property, the effect of
competitive products and pricing and the effect of general economic conditions,
that could cause actual results to differ materially from those in such
forward-looking statements.
8
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Three alleged stockholders have separately filed complaints in Delaware
Chancery Court against the Company, each of the Company's directors,
and Citicorp Venture Capital Ltd. One of the three complaints also
includes Bruckmann, Rosser, Sherrill & Co. as an additional defendant.
Each complaint alleges breaches of fiduciary duties in connection with
the directors' approval of the merger and other claims. The complaints
purport to be class action complaints and the plaintiffs seek to enjoin
the transactions contemplated by the Merger Agreement or, in the
alternative, to recover compensatory damages. The Company believes that
the claims are without merit. Copies of each complaint are attached as
Exhibit 99.4, Exhibit 99.5 and Exhibit 99.6 to the Company's Form 8-K
that was filed on April 29, 1999.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (see Index on page E-1)
(b) Reports on Form 8-K:
On March 29, 1999, the Company filed Form 8-K disclosing an
Agreement and Plan of Merger, dated as of March 25, 1999, among
the Company, CBF Holding LLC, a Delaware limited liability
company, and CBF Mergerco Inc., a Delaware corporation.
9
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORT BUSINESS SERVICES CORPORATION
(Registrant)
Date: May 15, 1999 By: /s/ Frances Ann Ziemniak
--------------------- ----------------------------
Frances Ann Ziemniak
Executive Vice President,
Chief Financial Officer
and Secretary
(Principal financial officer)
Date: May 15, 1999 By: /s/ Maureen C. Thune
--------------------- ----------------------------
Maureen C. Thune
Vice President, Corporate
Controller and Assistant
Secretary
(Principal accounting officer)
10
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
EXHIBIT INDEX
Exhibit
Number Description Page
- ------- ----------- ----
2.1 Agreement and Plan of Merger, dated as of March 25, 1999,
among the Company, CBF Holding LLC and CBF Mergerco, Inc.;
incorporated by reference to Exhibit 2.1 the Company's Form
8-K, filed on March 29, 1999.
3.1 Restated Certificate of Incorporation of the Company;
incorporated by reference to Exhibit 3.1 to Amendment No. 3 to
the Company's Registration Statement on Form S-1, No. 33-97568
filed on November 13, 1995
3.2 Amendment to Restated Certificate of Incorporation;
incorporated by reference to Appendix A to the Company's
Definitive Proxy Statement on Schedule 14A, filed as of March
31, 1997
3.3 By-laws of the Company; incorporated by reference to Exhibit
3.2 to Amendment No. 3 to the Company's Registration Statement
on Form S-1, No. 33-97568 filed on November 13, 1995
10.1 Credit Agreement dated as of February 13, 1998 by and among
CFR, the Company, the lenders identified therein, and
NationsBank, N.A., as agent; incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997
10.2 Stock Option, Securities Purchase and Stockholders Agreement,
dated as of January 18, 1994, by and among the Company, CFR,
Citicorp Venture Capital Ltd. and certain investors named
therein; incorporated by reference to Exhibit 4.6 to the
Company's Registration Statement on Form S-8, No. 33-72724,
filed on December 9, 1993
10.3 Amendment 1 to New Cort Holdings Corporation and Subsidiary
Employee Stock Option and Stock Purchase Plan as adopted by
the Board of Directors of the Company on December 21, 1993;
incorporated by reference to Exhibit 10.11 to CFR's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993
10.4 New Cort Holdings Corporation and Subsidiary Employee Stock
Option and Stock Purchase Plan (1995 Plan Distribution) as
adopted by the Board of Directors of the Company on December
16, 1994; incorporated by reference to Exhibit 10.13 to CFR's
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1995
10.5 Form of First Amendment to Stockholders Agreement, dated as of
November 13, 1995, by and among the Company, Citicorp Venture
Capital Ltd., and certain investors named therein;
incorporated by reference to Exhibit 10.5 to Amendment No. 3
to the Company's Registration Statement on Form S-1, No.
33-97568 filed on November 13, 1995
10.6 Registration Rights Agreement for Common Stock, dated as of
January 18, 1994, by and among the Company, Citicorp Venture
Capital Ltd. and certain investors named therein; incorporated
by reference to Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 1994
10.7 CFR's Supplemental Executive Retirement Plan, dated October 28,
1992, as revised effective January 1, 1993, restated through
the Second Amendment; incorporated by reference to Exhibit 10.8
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, as amended by the Third Amendment dated
October 20, 1998
E-1
<PAGE>
Exhibit
Number Description Page
- ------- ----------- ----
10.8 Agreement for Irrevocable Trust Under CORT Furniture Rental
Supplemental Executive Retirement Plan, dated June 1, 1996,
between CFR and Mentor Trust Company; incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996
10.9 Employment Agreement, dated September 1, 1994, between CFR and
Charles M. Egan; incorporated by reference to Exhibit 10.10 to
CFR's Annual Report on Form 10-K for the year ended December
31, 1994
10.10 Amended and Restated CORT Business Services Corporation 1995
Directors Stock Option Plan adopted by the Board of Directors
October 18, 1995 and amended and restated on May 14, 1997;
incorporated by reference to Exhibit 10.13 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1997
10.11 Amended and Restated CORT Business Services Corporation 1995
Stock Based Incentive Compensation Plan as adopted by the
Board of Directors on July 25, 1995 and amended and restated
on May 14, 1997; incorporated by reference to Exhibit 10.17 to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1997
10.12 CORT Business Services Corporation 1997 Directors Stock Option
Plan, as adopted by the stockholders of the Company at the
Annual Meeting of Stockholders on May 14, 1997; incorporated
by reference to Appendix C to the Company's Definitive Proxy
Statement on Schedule 14A, filed as of March 31, 1997
10.13 Letter Agreement dated March 25, 1999 between the Company and
Paul N. Arnold
10.14 Letter Agreement dated March 25, 1999 between the Company and
Anthony J. Bellerdine
10.15 Letter Agreement dated March 25, 1999 between the Company and
Steven D. Jobes
10.16 Letter Agreement dated March 25, 1999 between the Company and
Lloyd Lenson
10.17 Letter Agreement dated March 25, 1999 between the Company and
Kenneth W. Hemm
10.18 Letter Agreement dated March 25, 1999 between the Company and
Frances Ann Ziemniak
11.1 Statement re computation of per share earnings; incorporated
by reference to page 5 of the Company's Form 10-Q for the
fiscal quarter ended March 31, 1999
27 Financial Data Schedules
E-2
Exhibit 10.7
CORT FURNITURE RENTAL CORPORATION
Fairfax, Virginia
of
MEETING OF DIRECTORS
Containing
THIRD AMENDMENT
and
Authorizing
Additional Participants Under a Separate Exhibit C
to the
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The undersigned being the Secretary of Cort Furniture Rental Corporation, a
Delaware corporation, with principal office located at 4401 Fair Lakes Court,
Fairfax, Virginia 22033-3898 (hereinafter referred to as "Corporation"), does
hereby certify that the following Resolution was adopted by the Board of
Directors of the Corporation at a meeting duly held on the 20th day of October,
1998, in which a quorum was present:
WHEREAS, the Corporation maintains the Cort Furniture Rental Supplemental
Executive Retirement Plan (hereinafter referred to as "Plan") for certain key
management employees; and
WHEREAS, under Paragraph 12.4 of the Plan the Board of Directors of the
Corporation retained the right to amend the Plan in any and all respects and
from time to time which right has been exercised on two prior occasions; and
WHEREAS, under Paragraph 1.8 of the Plan the Board of Directors of the
Corporation has the right to select certain employees of the Corporation whose
responsibilities and actions have a substantial impact on the success of Cort as
a whole and that are part of a select group of management and highly compensated
employees; and
WHEREAS, the Board of Directors of the Corporation now desires to add
participants to the Plan; and
WHEREAS, the Board of Directors of the Corporation now desires to amend the Plan
effective January 1, 1999 to establish a separate Exhibit C to add these new
participants to the Plan under the same terms and conditions that apply to
Exhibit B participants;
<PAGE>
NOW, THEREFORE, the premises considered,
Be It
RESOLVED, that the Board of Directors of the Corporation hereby authorizes that
the Plan be amended by adding the words "or Exhibit C" after the words "Exhibit
B" wherever they appear in the Plan document text;
And Be It
FURTHER RESOLVED, that the Board of Directors of the Corporation hereby
authorizes that the attached marked Exhibit C be attached to the Plan.
Secretary
(Corporate Seal)
<PAGE>
EXHIBIT C
Part I
<TABLE>
<CAPTION>
Name of Participant Date of Participation Job Classification
<S> <C> <C>
a. George Bertrand 1/1/99 Operating Group Vice President
b. Richard Ritter 1/1/99 Operating Group Vice President
c. John Lackey 1/1/99 Operating Group Vice President
d. Duane DeArmond 1/1/99 Operating Group Vice President
e. Louis Caston 1/1/99 Operating Group Vice President
f. David Janecek 1/1/99 Operating Group Vice President
g. William Swets 1/1/99 Operating Group Vice President
h. Robert Baker 1/1/99 Operating Group Vice President
i. Maureen Thune 1/1/99 Staff Vice President
</TABLE>
Exhibit 10.13
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
March 25, 1999
Paul N. Arnold
Dear Paul:
In recognition of the importance and value to CORT Business Services
Corporation (the "Company") of your continued services, you and we agree as set
forth below.
1. If you are employed by the Company when a Change of Control occurs:
a. The Company will pay or cause to be paid to you a bonus (the
"Bonus") equal to $1,200,000.00. The Bonus shall be payable to you
within three business days of a Change of Control. All payments due to
you hereunder will be subject to all applicable employment and
withholding taxes.
b. In addition to the Bonus, if your employment with the Company
is terminated (i) by the Company within one year of a Change of
Control other than for Cause or (ii) by you for Good Reason, you and
your eligible family members shall be entitled to a continuation of
the welfare benefits of medical insurance, dental insurance, and life
insurance until the third anniversary of your termination. These
benefits shall be provided to you at the same premium cost, and at the
same coverage level, as in effect as of your effective date of
termination. However, in the event the premium cost and/or level of
coverage shall change for all similarly situated executive employees
of the Company, the cost and/or coverage level, likewise, shall change
for you in a corresponding manner. The continuation of these welfare
benefits shall be discontinued prior to the end of such period in the
event you have available substantially similar benefits from a
subsequent employer, as determined by the Company's Board of Directors
or the Board's designee.
c. If any benefit or payment from the Company to you (whether
paid or payable or distributed or distributable pursuant to the terms
of this letter agreement or otherwise) (a "Payment") shall be
determined to be an "Excess Parachute Payment" as defined in section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), then the aggregate present value of amounts or benefits
payable to you pursuant to this letter agreement ("Agreement
Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present
value that maximizes the aggregate present value of Agreement Payments
without causing any payments or benefits hereunder to be an Excess
Parachute Payment. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any payment
from the Company to you that is not an Agreement Payment would
nevertheless be an Excess Parachute Payment, then the aggregate
present value of Payments that are not Agreement Payments shall also
be reduced (but not below zero) to an amount, if any, so that the
present value of such lesser amount maximizes the aggregate present
value of Payments to you on an after-tax basis, taking into account
income and excise taxes under section 1 and section 4999 of the Code.
For purposes of this Section 1, present value shall be determined in
accordance with section 280G(d)(4) of the Code.
<PAGE>
2. As used herein, the following shall have the meanings set forth
below:
a. "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the
Board of Directors of the Company:
(1) your conviction of a felony involving moral turpitude;
or
(2) your willful refusal, after notice and a thirty (30) day
opportunity to cure, to perform such services as may be
reasonably delegated or assigned to you, consistent with your
position, by the Board of Directors.
b. "Change of Control" means and shall be deemed to have occurred
upon:
(1) any person, other than the Company or a Related Party,
acquires directly or indirectly the beneficial ownership of any
voting security of the Company and immediately after such
acquisition such person has, directly or indirectly, the
beneficial ownership of voting securities representing 20% or
more of the total voting power of all the then-outstanding voting
securities of the Company, or
(2) those individuals who as of the date hereof constitute
the Board of Directors of the Company (the "Board") or who
thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors as of the date hereof or whose election
or nomination for election was previously so approved, cease for
any reason to constitute a majority of the members of the Board;
or
(3) the consummation of a merger, consolidation,
recapitalization or reorganization of the Company, or an
acquisition of securities or assets by the Company (a
"Transaction"), other than a Transaction with Related Parties,
and other than a Transaction which would result in the holders of
voting securities having 100% of the total voting power
represented by the voting securities outstanding immediately
prior thereto continuing to hold voting securities of the Company
or voting securities of the surviving entity having at least a
majority of the total voting power represented by the voting
securities of the Company or the voting securities of such
surviving entity outstanding immediately after such Transaction;
or
(4) the consummation of a complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other
than any such transaction which would result in Related Parties
owning or acquiring more than 50% of the assets owned by the
Company immediately prior to the transaction.
<PAGE>
Notwithstanding the foregoing, no Change of Control shall be deemed to
have occurred for purposes of this letter agreement if you are an equity
participant with the acquiror in the transaction that would otherwise
result in a Change of Control.
c. "Good Reason" shall mean the occurrence or existence of any of
the following with respect to you:
(1) your base salary plus bonus at target is reduced from
that currently in effect, or your other employee benefits are in
the aggregate materially reduced from those currently in effect
(unless such reduction of employee benefits applies to employees
of the Company generally), or
(2) you are assigned duties that are otherwise materially
inconsistent with the duties currently performed by you;
provided, that (i) you notify the Company in writing of your
intention to terminate for either of the foregoing reasons
and (ii) the Company shall have not remedied such situation
within fifteen (15) days after receiving such written
notice.
d. "Related Party" means (A) a majority-owned subsidiary of the
Company; or (B) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any majority-owned
subsidiary of the Company; or (C) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the
same proportion as their ownership of voting securities of the
Company; or (D) any executive officer or director of the Company or
any affiliate of any executive officer or director of the Company.
3. Nothing in this letter agreement shall be construed as giving you
any right to remain in the employ of the Company and you hereby acknowledge
that you are and will remain an employee-at-will of the Company, terminable
with or without Cause.
4. This letter agreement shall terminate one year from the date hereof
if no Change of Control has occurred by such date.
5. This letter agreement may be amended or modified only by an
agreement in writing executed by you and the Company.
6. This letter agreement shall be construed and interpreted under the
laws of the State of Virginia. Because it is agreed that time will be of
the essence in determining whether any payments are due to you under this
letter agreement, any disputes arising hereunder shall be submitted to
binding arbitration in Fairfax, Virginia, or such other place as the
parties may agree. The parties agree that the arbitration award shall be
the sole and exclusive remedy between them regarding any and all claims
arising hereunder.
<PAGE>
The arbitration shall be conducted pursuant to the commercial rules of
the American Arbitration Association, subject to the following provisions:
a. the arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the selection of the arbitrator, no
continuance of said hearing shall be allowed without the mutual
consent of the parties, absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of an award,
hearing procedures which will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close the hearing
in his or her sole discretion when he or she decides he or she has
heard sufficient evidence to satisfy issuance of an award;
b. the arbitrator's award shall be rendered as expeditiously as
possible and the parties will request that the arbitrator render the
award no later than one week after the close of the hearing, the award
of the arbitrator shall be final and binding upon the parties, the
award may be enforced in any appropriate court as soon as possible
after its rendition and if an action is brought to confirm the award,
both parties agree that no appeal shall be taken by either party from
any decision rendered in such action; and
c. if you are the prevailing party as determined by the
arbitrator, in any such arbitration proceeding, you shall be awarded
reasonable costs and attorneys' fees.
7. This agreement shall inure to the benefit of your heirs, assigns,
and legal representatives. Additionally, this agreement shall be binding
upon the parties hereto, and their respective successors and assigns.
<PAGE>
If the foregoing accurately sets forth our understanding with respect to
the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: ______________________________
Title:
Agreed and Accepted,
March ____, 1999
Exhibit 10.14
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
March 25, 1999
Anthony J. Bellerdine
Dear Mr. Bellerdine:
In recognition of the importance and value to CORT Business Services
Corporation (the "Company") of your continued services, you and we agree as set
forth below.
1. Subject to the conditions set forth in Paragraph 3 below, if a
Change of Control occurs and your employment with the Company is terminated
within one year of such Change of Control:
a. The Company will pay or cause to be paid to you a bonus (the
"Bonus") equal to $150,000.00. The Bonus shall be payable to you
within three business days of your termination. All payments due to
you hereunder will be subject to all applicable employment and
withholding taxes.
b. In addition to the Bonus, you and your eligible family members
shall be entitled to a continuation of the welfare benefits of medical
insurance, dental insurance, and life insurance until the third
anniversary of your termination. These benefits shall be provided to
you at the same premium cost, and at the same coverage level, as in
effect as of your effective date of termination. However, in the event
the premium cost and/or level of coverage shall change for all
similarly situated executive employees of the Company, the cost and/or
coverage level, likewise, shall change for you in a corresponding
manner. The continuation of these welfare benefits shall be
discontinued prior to the end of such period in the event you have
available substantially similar benefits from a subsequent employer,
as determined by the Company's Board of Directors or the Board's
designee.
c. If any benefit or payment from the Company to you (whether
paid or payable or distributed or distributable pursuant to the terms
of this letter agreement or otherwise) (a "Payment") shall be
determined to be an "Excess Parachute Payment" as defined in section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), then the aggregate present value of amounts or benefits
payable to you pursuant to this letter agreement ("Agreement
Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present
value that maximizes the aggregate present value of Agreement Payments
without causing any payments or benefits hereunder to be an Excess
Parachute Payment. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any payment
from the Company to you that is not an Agreement Payment would
nevertheless be an Excess Parachute Payment, then the aggregate
present value of Payments that are not Agreement Payments shall also
be reduced (but not below zero) to an amount, if any, so that the
present value of such lesser amount maximizes the aggregate present
value of Payments to you on an after-tax basis, taking into account
income and excise taxes under section 1 and section 4999 of the Code.
For purposes of this Section 1, present value shall be determined in
accordance with section 280G(d)(4) of the Code.
<PAGE>
2. As used herein, the following shall have the meanings set forth
below:
a. "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the
Board of Directors of the Company:
(1) your conviction of a felony involving moral turpitude;
or
(2) your willful refusal, after notice and a thirty (30) day
opportunity to cure, to perform such services as may be
reasonably delegated or assigned to you, consistent with your
position, by the Board of Directors.
b. "Change of Control" means and shall be deemed to have occurred
upon:
(1) any person, other than the Company or a Related Party,
acquires directly or indirectly the beneficial ownership of any
voting security of the Company and immediately after such
acquisition such person has, directly or indirectly, the
beneficial ownership of voting securities representing 20% or
more of the total voting power of all the then-outstanding voting
securities of the Company, or
(2) those individuals who as of the date hereof constitute
the Board of Directors of the Company (the "Board") or who
thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors as of the date hereof or whose election
or nomination for election was previously so approved, cease for
any reason to constitute a majority of the members of the Board;
or
(3) the consummation of a merger, consolidation,
recapitalization or reorganization of the Company, or an
acquisition of securities or assets by the Company (a
"Transaction"), other than a Transaction with Related Parties,
and other than a Transaction which would result in the holders of
voting securities having 100% of the total voting power
represented by the voting securities outstanding immediately
prior thereto continuing to hold voting securities of the Company
or voting securities of the surviving entity having at least a
majority of the total voting power represented by the voting
securities of the Company or the voting securities of such
surviving entity outstanding immediately after such Transaction;
or
(4) the consummation of a complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other
than any such transaction which would result in Related Parties
owning or acquiring more than 50% of the assets owned by the
Company immediately prior to the transaction.
<PAGE>
Notwithstanding the foregoing, no Change of Control shall be
deemed to have occurred for purposes of this letter agreement if you
are an equity participant with the acquiror in the transaction that
would otherwise result in a Change of Control.
c. "Good Reason" shall mean the occurrence or existence of any of
the following with respect to you:
(1) your base salary plus bonus at target is reduced from
that currently in effect, or your other employee benefits are in
the aggregate materially reduced from those currently in effect
(unless such reduction of employee benefits applies to employees
of the Company generally), or
(2) you are assigned duties that are otherwise materially
inconsistent with the duties currently performed by you;
provided, that (i) you notify the Company in writing of your
intention to terminate for either of the foregoing reasons
and (ii) the Company shall have not remedied such situation
within fifteen (15) days after receiving such written
notice.
d. "Related Party" means (A) a majority-owned subsidiary of the
Company; or (B) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any majority-owned
subsidiary of the Company; or (C) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the
same proportion as their ownership of voting securities of the
Company; or (D) any executive officer or director of the Company or
any affiliate of any executive officer or director of the Company.
3. Payment of the Bonus and other benefits set forth in Paragraph 1 is
subject to the following conditions:
a. you shall not have breached any term of this letter agreement
in any material respect;
b. your employment with the Company shall not have been
terminated for Cause; and
c. you shall not have voluntarily terminated your employment with
the Company unless you have Good Reason.
4. Nothing in this letter agreement shall be construed as giving you
any right to remain in the employ of the Company and you hereby acknowledge
that you are and will remain an employee-at-will of the Company, terminable
with or without Cause.
5. This letter agreement shall terminate one year from the date hereof
if no Change of Control has occurred by such date.
6. This letter agreement may be amended or modified only by an
agreement in writing executed by you and the Company.
<PAGE>
7. This letter agreement shall be construed and interpreted under the
laws of the State of Virginia. Because it is agreed that time will be of
the essence in determining whether any payments are due to you under this
letter agreement, any disputes arising hereunder shall be submitted to
binding arbitration in Fairfax, Virginia, or such other place as the
parties may agree. The parties agree that the arbitration award shall be
the sole and exclusive remedy between them regarding any and all claims
arising hereunder.
The arbitration shall be conducted pursuant to the commercial rules of
the American Arbitration Association, subject to the following provisions:
a. the arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the selection of the arbitrator, no
continuance of said hearing shall be allowed without the mutual
consent of the parties, absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of an award,
hearing procedures which will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close the hearing
in his or her sole discretion when he or she decides he or she has
heard sufficient evidence to satisfy issuance of an award;
b. the arbitrator's award shall be rendered as expeditiously as
possible and the parties will request that the arbitrator render the
award no later than one week after the close of the hearing, the award
of the arbitrator shall be final and binding upon the parties, the
award may be enforced in any appropriate court as soon as possible
after its rendition and if an action is brought to confirm the award,
both parties agree that no appeal shall be taken by either party from
any decision rendered in such action; and
c. if you are the prevailing party as determined by the
arbitrator, in any such arbitration proceeding, you shall be awarded
reasonable costs and attorneys' fees.
8. This agreement shall inure to the benefit of your heirs, assigns,
and legal representatives. Additionally, this agreement shall be binding
upon the parties hereto, and their respective successors and assigns.
<PAGE>
If the foregoing accurately sets forth our understanding with respect to
the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: ______________________________
Title:
Agreed and Accepted,
March ____, 1999
Exhibit 10.15
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
March 25, 1999
Steven D. Jobes
Dear Mr. Jobes:
In recognition of the importance and value to CORT Business Services
Corporation (the "Company") of your continued services, you and we agree as set
forth below.
1. Subject to the conditions set forth in Paragraph 3 below, if a
Change of Control occurs and your employment with the Company is terminated
within one year of such Change of Control:
a. The Company will pay or cause to be paid to you a bonus (the
"Bonus") equal to $400,000.00. The Bonus shall be payable to you
within three business days of your termination. All payments due to
you hereunder will be subject to all applicable employment and
withholding taxes.
b. In addition to the Bonus, you and your eligible family members
shall be entitled to a continuation of the welfare benefits of medical
insurance, dental insurance, and life insurance until the third
anniversary of your termination. These benefits shall be provided to
you at the same premium cost, and at the same coverage level, as in
effect as of your effective date of termination. However, in the event
the premium cost and/or level of coverage shall change for all
similarly situated executive employees of the Company, the cost and/or
coverage level, likewise, shall change for you in a corresponding
manner. The continuation of these welfare benefits shall be
discontinued prior to the end of such period in the event you have
available substantially similar benefits from a subsequent employer,
as determined by the Company's Board of Directors or the Board's
designee.
c. If any benefit or payment from the Company to you (whether
paid or payable or distributed or distributable pursuant to the terms
of this letter agreement or otherwise) (a "Payment") shall be
determined to be an "Excess Parachute Payment" as defined in section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), then the aggregate present value of amounts or benefits
payable to you pursuant to this letter agreement ("Agreement
Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present
value that maximizes the aggregate present value of Agreement Payments
without causing any payments or benefits hereunder to be an Excess
Parachute Payment. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any payment
from the Company to you that is not an Agreement Payment would
nevertheless be an Excess Parachute Payment, then the aggregate
present value of Payments that are not Agreement Payments shall also
be reduced (but not below zero) to an amount, if any, so that the
present value of such lesser amount maximizes the aggregate present
value of Payments to you on an after-tax basis, taking into account
income and excise taxes under section 1 and section 4999 of the Code.
For purposes of this Section 1, present value shall be determined in
accordance with section 280G(d)(4) of the Code.
<PAGE>
2. As used herein, the following shall have the meanings set forth
below:
a. "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the
Board of Directors of the Company:
(1) your conviction of a felony involving moral turpitude;
or
(2) your willful refusal, after notice and a thirty (30) day
opportunity to cure, to perform such services as may be
reasonably delegated or assigned to you, consistent with your
position, by the Board of Directors.
b. "Change of Control" means and shall be deemed to have occurred
upon:
(1) any person, other than the Company or a Related Party,
acquires directly or indirectly the beneficial ownership of any
voting security of the Company and immediately after such
acquisition such person has, directly or indirectly, the
beneficial ownership of voting securities representing 20% or
more of the total voting power of all the then-outstanding voting
securities of the Company, or
(2) those individuals who as of the date hereof constitute
the Board of Directors of the Company (the "Board") or who
thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors as of the date hereof or whose election
or nomination for election was previously so approved, cease for
any reason to constitute a majority of the members of the Board;
or
(3) the consummation of a merger, consolidation,
recapitalization or reorganization of the Company, or an
acquisition of securities or assets by the Company (a
"Transaction"), other than a Transaction with Related Parties,
and other than a Transaction which would result in the holders of
voting securities having 100% of the total voting power
represented by the voting securities outstanding immediately
prior thereto continuing to hold voting securities of the Company
or voting securities of the surviving entity having at least a
majority of the total voting power represented by the voting
securities of the Company or the voting securities of such
surviving entity outstanding immediately after such Transaction;
or
(4) the consummation of a complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other
than any such transaction which would result in Related Parties
owning or acquiring more than 50% of the assets owned by the
Company immediately prior to the transaction.
<PAGE>
Notwithstanding the foregoing, no Change of Control shall be
deemed to have occurred for purposes of this letter agreement if you
are an equity participant with the acquiror in the transaction that
would otherwise result in a Change of Control.
c. "Good Reason" shall mean the occurrence or existence of any of
the following with respect to you:
(1) your base salary plus bonus at target is reduced from
that currently in effect, or your other employee benefits are in
the aggregate materially reduced from those currently in effect
(unless such reduction of employee benefits applies to employees
of the Company generally), or
(2) you are assigned duties that are otherwise materially
inconsistent with the duties currently performed by you;
provided, that (i) you notify the Company in writing of your
intention to terminate for either of the foregoing reasons
and (ii) the Company shall have not remedied such situation
within fifteen (15) days after receiving such written
notice.
d. "Related Party" means (A) a majority-owned subsidiary of the
Company; or (B) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any majority-owned
subsidiary of the Company; or (C) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the
same proportion as their ownership of voting securities of the
Company; or (D) any executive officer or director of the Company or
any affiliate of any executive officer or director of the Company.
3. Payment of the Bonus and other benefits set forth in Paragraph 1 is
subject to the following conditions:
a. you shall not have breached any term of this letter agreement
in any material respect;
b. your employment with the Company shall not have been
terminated for Cause; and
c. you shall not have voluntarily terminated your employment with
the Company unless you have Good Reason.
4. Nothing in this letter agreement shall be construed as giving you
any right to remain in the employ of the Company and you hereby acknowledge
that you are and will remain an employee-at-will of the Company, terminable
with or without Cause.
5. This letter agreement shall terminate one year from the date hereof
if no Change of Control has occurred by such date.
6. This letter agreement may be amended or modified only by an
agreement in writing executed by you and the Company.
7. This letter agreement shall be construed and interpreted under the
laws of the State of Virginia. Because it is agreed that time will be of
the essence in determining whether any payments are due to you under this
letter agreement, any disputes arising hereunder shall be submitted to
binding arbitration in Fairfax, Virginia, or such other place as the
parties may agree. The parties agree that the arbitration award shall be
the sole and exclusive remedy between them regarding any and all claims
arising hereunder.
<PAGE>
The arbitration shall be conducted pursuant to the commercial rules of
the American Arbitration Association, subject to the following provisions:
a. the arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the selection of the arbitrator, no
continuance of said hearing shall be allowed without the mutual
consent of the parties, absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of an award,
hearing procedures which will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close the hearing
in his or her sole discretion when he or she decides he or she has
heard sufficient evidence to satisfy issuance of an award;
b. the arbitrator's award shall be rendered as expeditiously as
possible and the parties will request that the arbitrator render the
award no later than one week after the close of the hearing, the award
of the arbitrator shall be final and binding upon the parties, the
award may be enforced in any appropriate court as soon as possible
after its rendition and if an action is brought to confirm the award,
both parties agree that no appeal shall be taken by either party from
any decision rendered in such action; and
c. if you are the prevailing party as determined by the
arbitrator, in any such arbitration proceeding, you shall be awarded
reasonable costs and attorneys' fees.
8. This agreement shall inure to the benefit of your heirs, assigns,
and legal representatives. Additionally, this agreement shall be binding
upon the parties hereto, and their respective successors and assigns.
<PAGE>
If the foregoing accurately sets forth our understanding with respect to
the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: ______________________________
Title:
Agreed and Accepted,
March ____, 1999
Exhibit 10.16
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
March 25, 1999
Lloyd Lenson
Dear Mr. Lenson:
In recognition of the importance and value to CORT Business Services
Corporation (the "Company") of your continued services, you and we agree as set
forth below.
1. Subject to the conditions set forth in Paragraph 3 below, if a
Change of Control occurs and your employment with the Company is terminated
within one year of such Change of Control:
a. The Company will pay or cause to be paid to you a bonus (the
"Bonus") equal to $400,000.00. The Bonus shall be payable to you
within three business days of your termination. All payments due to
you hereunder will be subject to all applicable employment and
withholding taxes.
b. In addition to the Bonus, you and your eligible family members
shall be entitled to a continuation of the welfare benefits of medical
insurance, dental insurance, and life insurance until the third
anniversary of your termination. These benefits shall be provided to
you at the same premium cost, and at the same coverage level, as in
effect as of your effective date of termination. However, in the event
the premium cost and/or level of coverage shall change for all
similarly situated executive employees of the Company, the cost and/or
coverage level, likewise, shall change for you in a corresponding
manner. The continuation of these welfare benefits shall be
discontinued prior to the end of such period in the event you have
available substantially similar benefits from a subsequent employer,
as determined by the Company's Board of Directors or the Board's
designee.
c. If any benefit or payment from the Company to you (whether
paid or payable or distributed or distributable pursuant to the terms
of this letter agreement or otherwise) (a "Payment") shall be
determined to be an "Excess Parachute Payment" as defined in section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), then the aggregate present value of amounts or benefits
payable to you pursuant to this letter agreement ("Agreement
Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present
value that maximizes the aggregate present value of Agreement Payments
without causing any payments or benefits hereunder to be an Excess
Parachute Payment. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any payment
from the Company to you that is not an Agreement Payment would
nevertheless be an Excess Parachute Payment, then the aggregate
present value of Payments that are not Agreement Payments shall also
be reduced (but not below zero) to an amount, if any, so that the
present value of such lesser amount maximizes the aggregate present
value of Payments to you on an after-tax basis, taking into account
income and excise taxes under section 1 and section 4999 of the Code.
For purposes of this Section 1, present value shall be determined in
accordance with section 280G(d)(4) of the Code.
<PAGE>
2. As used herein, the following shall have the meanings set forth
below:
a. "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the
Board of Directors of the Company:
(1) your conviction of a felony involving moral turpitude;
or
(2) your willful refusal, after notice and a thirty (30) day
opportunity to cure, to perform such services as may be
reasonably delegated or assigned to you, consistent with your
position, by the Board of Directors.
b. "Change of Control" means and shall be deemed to have occurred
upon:
(1) any person, other than the Company or a Related Party,
acquires directly or indirectly the beneficial ownership of any
voting security of the Company and immediately after such
acquisition such person has, directly or indirectly, the
beneficial ownership of voting securities representing 20% or
more of the total voting power of all the then-outstanding voting
securities of the Company, or
(2) those individuals who as of the date hereof constitute
the Board of Directors of the Company (the "Board") or who
thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors as of the date hereof or whose election
or nomination for election was previously so approved, cease for
any reason to constitute a majority of the members of the Board;
or
(3) the consummation of a merger, consolidation,
recapitalization or reorganization of the Company, or an
acquisition of securities or assets by the Company (a
"Transaction"), other than a Transaction with Related Parties,
and other than a Transaction which would result in the holders of
voting securities having 100% of the total voting power
represented by the voting securities outstanding immediately
prior thereto continuing to hold voting securities of the Company
or voting securities of the surviving entity having at least a
majority of the total voting power represented by the voting
securities of the Company or the voting securities of such
surviving entity outstanding immediately after such Transaction;
or
(4) the consummation of a complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other
than any such transaction which would result in Related Parties
owning or acquiring more than 50% of the assets owned by the
Company immediately prior to the transaction.
<PAGE>
Notwithstanding the foregoing, no Change of Control shall be
deemed to have occurred for purposes of this letter agreement if you
are an equity participant with the acquiror in the transaction that
would otherwise result in a Change of Control.
c. "Good Reason" shall mean the occurrence or existence of any of
the following with respect to you:
(1) your base salary plus bonus at target is reduced from
that currently in effect, or your other employee benefits are in
the aggregate materially reduced from those currently in effect
(unless such reduction of employee benefits applies to employees
of the Company generally), or
(2) you are assigned duties that are otherwise materially
inconsistent with the duties currently performed by you;
provided, that (i) you notify the Company in writing of your
intention to terminate for either of the foregoing reasons
and (ii) the Company shall have not remedied such situation
within fifteen (15) days after receiving such written
notice.
d. "Related Party" means (A) a majority-owned subsidiary of the
Company; or (B) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any majority-owned
subsidiary of the Company; or (C) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the
same proportion as their ownership of voting securities of the
Company; or (D) any executive officer or director of the Company or
any affiliate of any executive officer or director of the Company.
3. Payment of the Bonus and other benefits set forth in Paragraph 1 is
subject to the following conditions:
a. you shall not have breached any term of this letter agreement
in any material respect;
b. your employment with the Company shall not have been
terminated for Cause; and
c. you shall not have voluntarily terminated your employment with
the Company unless you have Good Reason.
4. Nothing in this letter agreement shall be construed as giving you
any right to remain in the employ of the Company and you hereby acknowledge
that you are and will remain an employee-at-will of the Company, terminable
with or without Cause.
5. This letter agreement shall terminate one year from the date hereof
if no Change of Control has occurred by such date.
6. This letter agreement may be amended or modified only by an
agreement in writing executed by you and the Company.
7. This letter agreement shall be construed and interpreted under the
laws of the State of Virginia. Because it is agreed that time will be of
the essence in determining whether any payments are due to you under this
letter agreement, any disputes arising hereunder shall be submitted to
binding arbitration in Fairfax, Virginia, or such other place as the
parties may agree. The parties agree that the arbitration award shall be
the sole and exclusive remedy between them regarding any and all claims
arising hereunder.
<PAGE>
The arbitration shall be conducted pursuant to the commercial rules of
the American Arbitration Association, subject to the following provisions:
a. the arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the selection of the arbitrator, no
continuance of said hearing shall be allowed without the mutual
consent of the parties, absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of an award,
hearing procedures which will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close the hearing
in his or her sole discretion when he or she decides he or she has
heard sufficient evidence to satisfy issuance of an award;
b. the arbitrator's award shall be rendered as expeditiously as
possible and the parties will request that the arbitrator render the
award no later than one week after the close of the hearing, the award
of the arbitrator shall be final and binding upon the parties, the
award may be enforced in any appropriate court as soon as possible
after its rendition and if an action is brought to confirm the award,
both parties agree that no appeal shall be taken by either party from
any decision rendered in such action; and
c. if you are the prevailing party as determined by the
arbitrator, in any such arbitration proceeding, you shall be awarded
reasonable costs and attorneys' fees.
8. This agreement shall inure to the benefit of your heirs, assigns,
and legal representatives. Additionally, this agreement shall be binding
upon the parties hereto, and their respective successors and assigns.
<PAGE>
If the foregoing accurately sets forth our understanding with respect to
the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: ______________________________
Title:
Agreed and Accepted,
March ____, 1999
Exhibit 10.17
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
March 25, 1999
Kenneth W. Hemm
Dear Mr. Hemm:
In recognition of the importance and value to CORT Business Services
Corporation (the "Company") of your continued services, you and we agree as set
forth below.
1. Subject to the conditions set forth in Paragraph 3 below, if a
Change of Control occurs and your employment with the Company is terminated
within one year of such Change of Control:
a. The Company will pay or cause to be paid to you a bonus (the
"Bonus") equal to $400,000.00. The Bonus shall be payable to you
within three business days of your termination. All payments due to
you hereunder will be subject to all applicable employment and
withholding taxes.
b. In addition to the Bonus, you and your eligible family members
shall be entitled to a continuation of the welfare benefits of medical
insurance, dental insurance, and life insurance until the third
anniversary of your termination. These benefits shall be provided to
you at the same premium cost, and at the same coverage level, as in
effect as of your effective date of termination. However, in the event
the premium cost and/or level of coverage shall change for all
similarly situated executive employees of the Company, the cost and/or
coverage level, likewise, shall change for you in a corresponding
manner. The continuation of these welfare benefits shall be
discontinued prior to the end of such period in the event you have
available substantially similar benefits from a subsequent employer,
as determined by the Company's Board of Directors or the Board's
designee.
c. If any benefit or payment from the Company to you (whether
paid or payable or distributed or distributable pursuant to the terms
of this letter agreement or otherwise) (a "Payment") shall be
determined to be an "Excess Parachute Payment" as defined in section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), then the aggregate present value of amounts or benefits
payable to you pursuant to this letter agreement ("Agreement
Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present
value that maximizes the aggregate present value of Agreement Payments
without causing any payments or benefits hereunder to be an Excess
Parachute Payment. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any payment
from the Company to you that is not an Agreement Payment would
nevertheless be an Excess Parachute Payment, then the aggregate
present value of Payments that are not Agreement Payments shall also
be reduced (but not below zero) to an amount, if any, so that the
present value of such lesser amount maximizes the aggregate present
value of Payments to you on an after-tax basis, taking into account
income and excise taxes under section 1 and section 4999 of the Code.
For purposes of this Section 1, present value shall be determined in
accordance with section 280G(d)(4) of the Code.
<PAGE>
2. As used herein, the following shall have the meanings set forth
below:
a. "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the
Board of Directors of the Company:
(1) your conviction of a felony involving moral turpitude;
or
(2) your willful refusal, after notice and a thirty (30) day
opportunity to cure, to perform such services as may be
reasonably delegated or assigned to you, consistent with your
position, by the Board of Directors.
b. "Change of Control" means and shall be deemed to have occurred
upon:
(1) any person, other than the Company or a Related Party,
acquires directly or indirectly the beneficial ownership of any
voting security of the Company and immediately after such
acquisition such person has, directly or indirectly, the
beneficial ownership of voting securities representing 20% or
more of the total voting power of all the then-outstanding voting
securities of the Company, or
(2) those individuals who as of the date hereof constitute
the Board of Directors of the Company (the "Board") or who
thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors as of the date hereof or whose election
or nomination for election was previously so approved, cease for
any reason to constitute a majority of the members of the Board;
or
(3) the consummation of a merger, consolidation,
recapitalization or reorganization of the Company, or an
acquisition of securities or assets by the Company (a
"Transaction"), other than a Transaction with Related Parties,
and other than a Transaction which would result in the holders of
voting securities having 100% of the total voting power
represented by the voting securities outstanding immediately
prior thereto continuing to hold voting securities of the Company
or voting securities of the surviving entity having at least a
majority of the total voting power represented by the voting
securities of the Company or the voting securities of such
surviving entity outstanding immediately after such Transaction;
or
(4) the consummation of a complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other
than any such transaction which would result in Related Parties
owning or acquiring more than 50% of the assets owned by the
Company immediately prior to the transaction.
<PAGE>
Notwithstanding the foregoing, no Change of Control shall be
deemed to have occurred for purposes of this letter agreement if you
are an equity participant with the acquiror in the transaction that
would otherwise result in a Change of Control.
c. "Good Reason" shall mean the occurrence or existence of any of
the following with respect to you:
(1) your base salary plus bonus at target is reduced from
that currently in effect, or your other employee benefits are in
the aggregate materially reduced from those currently in effect
(unless such reduction of employee benefits applies to employees
of the Company generally), or
(2) you are assigned duties that are otherwise materially
inconsistent with the duties currently performed by you;
provided, that (i) you notify the Company in writing of your
intention to terminate for either of the foregoing reasons
and (ii) the Company shall have not remedied such situation
within fifteen (15) days after receiving such written
notice.
d. "Related Party" means (A) a majority-owned subsidiary of the
Company; or (B) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any majority-owned
subsidiary of the Company; or (C) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the
same proportion as their ownership of voting securities of the
Company; or (D) any executive officer or director of the Company or
any affiliate of any executive officer or director of the Company.
3. Payment of the Bonus and other benefits set forth in Paragraph 1 is
subject to the following conditions:
a. you shall not have breached any term of this letter agreement
in any material respect;
b. your employment with the Company shall not have been
terminated for Cause; and
c. you shall not have voluntarily terminated your employment with
the Company unless you have Good Reason.
4. Nothing in this letter agreement shall be construed as giving you
any right to remain in the employ of the Company and you hereby acknowledge
that you are and will remain an employee-at-will of the Company, terminable
with or without Cause.
5. This letter agreement shall terminate one year from the date hereof
if no Change of Control has occurred by such date.
6. This letter agreement may be amended or modified only by an
agreement in writing executed by you and the Company.
7. This letter agreement shall be construed and interpreted under the
laws of the State of Virginia. Because it is agreed that time will be of
the essence in determining whether any payments are due to you under this
letter agreement, any disputes arising hereunder shall be submitted to
binding arbitration in Fairfax, Virginia, or such other place as the
parties may agree. The parties agree that the arbitration award shall be
the sole and exclusive remedy between them regarding any and all claims
arising hereunder.
<PAGE>
The arbitration shall be conducted pursuant to the commercial rules of
the American Arbitration Association, subject to the following provisions:
a. the arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the selection of the arbitrator, no
continuance of said hearing shall be allowed without the mutual
consent of the parties, absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of an award,
hearing procedures which will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close the hearing
in his or her sole discretion when he or she decides he or she has
heard sufficient evidence to satisfy issuance of an award;
b. the arbitrator's award shall be rendered as expeditiously as
possible and the parties will request that the arbitrator render the
award no later than one week after the close of the hearing, the award
of the arbitrator shall be final and binding upon the parties, the
award may be enforced in any appropriate court as soon as possible
after its rendition and if an action is brought to confirm the award,
both parties agree that no appeal shall be taken by either party from
any decision rendered in such action; and
c. if you are the prevailing party as determined by the
arbitrator, in any such arbitration proceeding, you shall be awarded
reasonable costs and attorneys' fees.
8. This agreement shall inure to the benefit of your heirs, assigns,
and legal representatives. Additionally, this agreement shall be binding
upon the parties hereto, and their respective successors and assigns.
<PAGE>
If the foregoing accurately sets forth our understanding with respect to
the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: ______________________________
Title:
Agreed and Accepted,
March ____, 1999
Exhibit 10.18
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
March 25, 1999
Frances Ann Ziemniak
Dear Ms. Ziemniak:
In recognition of the importance and value to CORT Business Services
Corporation (the "Company") of your continued services, you and we agree as set
forth below.
1. Subject to the conditions set forth in Paragraph 3 below, if a
Change of Control occurs and your employment with the Company is terminated
within one year of such Change of Control:
a. The Company will pay or cause to be paid to you a bonus (the
"Bonus") equal to $400,000.00. The Bonus shall be payable to you
within three business days of your termination. All payments due to
you hereunder will be subject to all applicable employment and
withholding taxes.
b. In addition to the Bonus, you and your eligible family members
shall be entitled to a continuation of the welfare benefits of medical
insurance, dental insurance, and life insurance until the third
anniversary of your termination. These benefits shall be provided to
you at the same premium cost, and at the same coverage level, as in
effect as of your effective date of termination. However, in the event
the premium cost and/or level of coverage shall change for all
similarly situated executive employees of the Company, the cost and/or
coverage level, likewise, shall change for you in a corresponding
manner. The continuation of these welfare benefits shall be
discontinued prior to the end of such period in the event you have
available substantially similar benefits from a subsequent employer,
as determined by the Company's Board of Directors or the Board's
designee.
c. If any benefit or payment from the Company to you (whether
paid or payable or distributed or distributable pursuant to the terms
of this letter agreement or otherwise) (a "Payment") shall be
determined to be an "Excess Parachute Payment" as defined in section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), then the aggregate present value of amounts or benefits
payable to you pursuant to this letter agreement ("Agreement
Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present
value that maximizes the aggregate present value of Agreement Payments
without causing any payments or benefits hereunder to be an Excess
Parachute Payment. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any payment
from the Company to you that is not an Agreement Payment would
nevertheless be an Excess Parachute Payment, then the aggregate
present value of Payments that are not Agreement Payments shall also
be reduced (but not below zero) to an amount, if any, so that the
present value of such lesser amount maximizes the aggregate present
value of Payments to you on an after-tax basis, taking into account
income and excise taxes under section 1 and section 4999 of the Code.
For purposes of this Section 1, present value shall be determined in
accordance with section 280G(d)(4) of the Code.
<PAGE>
2. As used herein, the following shall have the meanings set forth
below:
a. "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the
Board of Directors of the Company:
(1) your conviction of a felony involving moral turpitude;
or
(2) your willful refusal, after notice and a thirty (30) day
opportunity to cure, to perform such services as may be
reasonably delegated or assigned to you, consistent with your
position, by the Board of Directors.
b. "Change of Control" means and shall be deemed to have occurred
upon:
(1) any person, other than the Company or a Related Party,
acquires directly or indirectly the beneficial ownership of any
voting security of the Company and immediately after such
acquisition such person has, directly or indirectly, the
beneficial ownership of voting securities representing 20% or
more of the total voting power of all the then-outstanding voting
securities of the Company, or
(2) those individuals who as of the date hereof constitute
the Board of Directors of the Company (the "Board") or who
thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors as of the date hereof or whose election
or nomination for election was previously so approved, cease for
any reason to constitute a majority of the members of the Board;
or
(3) the consummation of a merger, consolidation,
recapitalization or reorganization of the Company, or an
acquisition of securities or assets by the Company (a
"Transaction"), other than a Transaction with Related Parties,
and other than a Transaction which would result in the holders of
voting securities having 100% of the total voting power
represented by the voting securities outstanding immediately
prior thereto continuing to hold voting securities of the Company
or voting securities of the surviving entity having at least a
majority of the total voting power represented by the voting
securities of the Company or the voting securities of such
surviving entity outstanding immediately after such Transaction;
or
(4) the consummation of a complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other
than any such transaction which would result in Related Parties
owning or acquiring more than 50% of the assets owned by the
Company immediately prior to the transaction.
<PAGE>
Notwithstanding the foregoing, no Change of Control shall be
deemed to have occurred for purposes of this letter agreement if you
are an equity participant with the acquiror in the transaction that
would otherwise result in a Change of Control.
c. "Good Reason" shall mean the occurrence or existence of any of
the following with respect to you:
(1) your base salary plus bonus at target is reduced from
that currently in effect, or your other employee benefits are in
the aggregate materially reduced from those currently in effect
(unless such reduction of employee benefits applies to employees
of the Company generally), or
(2) you are assigned duties that are otherwise materially
inconsistent with the duties currently performed by you;
provided, that (i) you notify the Company in writing of your
intention to terminate for either of the foregoing reasons
and (ii) the Company shall have not remedied such situation
within fifteen (15) days after receiving such written
notice.
d. "Related Party" means (A) a majority-owned subsidiary of the
Company; or (B) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any majority-owned
subsidiary of the Company; or (C) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the
same proportion as their ownership of voting securities of the
Company; or (D) any executive officer or director of the Company or
any affiliate of any executive officer or director of the Company.
3. Payment of the Bonus and other benefits set forth in Paragraph 1 is
subject to the following conditions:
a. you shall not have breached any term of this letter agreement
in any material respect;
b. your employment with the Company shall not have been
terminated for Cause; and
c. you shall not have voluntarily terminated your employment with
the Company unless you have Good Reason.
4. Nothing in this letter agreement shall be construed as giving you
any right to remain in the employ of the Company and you hereby acknowledge
that you are and will remain an employee-at-will of the Company, terminable
with or without Cause.
5. This letter agreement shall terminate one year from the date hereof
if no Change of Control has occurred by such date.
6. This letter agreement may be amended or modified only by an
agreement in writing executed by you and the Company.
7. This letter agreement shall be construed and interpreted under the
laws of the State of Virginia. Because it is agreed that time will be of
the essence in determining whether any payments are due to you under this
letter agreement, any disputes arising hereunder shall be submitted to
binding arbitration in Fairfax, Virginia, or such other place as the
parties may agree. The parties agree that the arbitration award shall be
the sole and exclusive remedy between them regarding any and all claims
arising hereunder.
<PAGE>
The arbitration shall be conducted pursuant to the commercial rules of
the American Arbitration Association, subject to the following provisions:
a. the arbitration hearing shall be held within seven days (or as
soon thereafter as possible) after the selection of the arbitrator, no
continuance of said hearing shall be allowed without the mutual
consent of the parties, absence from or nonparticipation at the
hearing by either party shall not prevent the issuance of an award,
hearing procedures which will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close the hearing
in his or her sole discretion when he or she decides he or she has
heard sufficient evidence to satisfy issuance of an award;
b. the arbitrator's award shall be rendered as expeditiously as
possible and the parties will request that the arbitrator render the
award no later than one week after the close of the hearing, the award
of the arbitrator shall be final and binding upon the parties, the
award may be enforced in any appropriate court as soon as possible
after its rendition and if an action is brought to confirm the award,
both parties agree that no appeal shall be taken by either party from
any decision rendered in such action; and
c. if you are the prevailing party as determined by the
arbitrator, in any such arbitration proceeding, you shall be awarded
reasonable costs and attorneys' fees.
8. This agreement shall inure to the benefit of your heirs, assigns,
and legal representatives. Additionally, this agreement shall be binding
upon the parties hereto, and their respective successors and assigns.
<PAGE>
If the foregoing accurately sets forth our understanding with respect to
the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: ______________________________
Title:
Agreed and Accepted,
March ____, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Art. 5 FDS for 1999 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,567
<SECURITIES> 0
<RECEIVABLES> 20,518
<ALLOWANCES> 3,133
<INVENTORY> 193,394
<CURRENT-ASSETS> 0
<PP&E> 66,403
<DEPRECIATION> 22,449
<TOTAL-ASSETS> 344,812
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 131
<OTHER-SE> 182,508
<TOTAL-LIABILITY-AND-EQUITY> 344,812
<SALES> 14,569
<TOTAL-REVENUES> 86,364
<CGS> 9,229
<TOTAL-COSTS> 21,718
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 341
<INTEREST-EXPENSE> 1,421
<INCOME-PRETAX> 11,933
<INCOME-TAX> 5,040
<INCOME-CONTINUING> 6,893
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,893
<EPS-PRIMARY> .53
<EPS-DILUTED> .51
</TABLE>
