SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 1, 1996
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TEAM RENTAL GROUP, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-23962 59-3327576
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
125 Basin Street, Suite 210, Daytona Beach, Florida 32114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (904) 238-7035
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On August 1, 1996, Team Rental Group, Inc. (the "Registrant") acquired all of
the outstanding capital stock (the "Acquisition") of ValCar Rental Car Sales,
Inc., an Indiana corporation ("ValCar") from its sole shareholders, Jeffrey D.
Congdon and Gary L. Levine (the "Shareholders"). ValCar operates four retail
used vehicle sales facilities in the Indianapolis, Indiana area. These vehicle
sales facilities will continue to be operated by the Registrant. The Acquisition
was consummated in accordance with the terms of an agreement dated August 1,
1996 among the Registrant, ValCar and the Shareholders.
The aggregate consideration paid by the Registrant in connection with the
Acquisition was $400,000 in cash. The consideration paid in the Acquisition was
determined through arms-length negotiations between representatives of the
Registrant and ValCar. Jeffrey D. Congdon, the chief financial officer and a
director of the Registrant, was a shareholder of ValCar.
Other than as described herein, neither the Registrant nor any of its Affiliates
had, nor to the knowledge of the Registrant, did any director or officer or any
associate of any such director or officer of the Registrant have, any material
relationship with ValCar prior to the Acquisition. The Company financed the
Acquisition from cash reserves.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a) The required financial statements are not now available. They will be filed
by the Registrant under cover of Form 8K/A as soon as practicable, but not
later than October 13, 1996.
b) The required pro forma financial information are not now available. They
will be filed by the Registrant under cover of Form 8K/A as soon as
practicable, but not later than October 13, 1996.
c) Exhibits:
Exhibit 2. Agreement dated as of August 1, 1996 among the Registrant,
ValCar and the Shareholders.
Exhibit 99.1 Press release dated August 7, 1996
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEAM RENTAL GROUP, INC.
By: By: /s/ Sanford Miller
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Sanford Miller
Chief Executive Officer
Dated: August 14, 1996
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EXHIBIT 2
SHARE ACQUISITION AGREEMENT
THIS SHARE ACQUISITION AGREEMENT (the "Agreement") is made and entered into
as of the first day of August, 1996, by and among Team Rental Group, Inc., a
Delaware corporation (the "Buyer"), ValCar Rental Car Sales, Inc., an Indiana
corporation (the "Company"), and Gary L. Levine and Jeffrey D. Congdon, the sole
shareholders of the Company ("Shareholders").
WITNESSETH:
WHEREAS, the Shareholders are the owners of record and beneficially of 100%
of the authorized, issued and outstanding capital stock of the Company (the
"ValCar Shares"); and
WHEREAS, the Buyer, in reliance upon the representations, warranties and
covenants of the Shareholders set forth herein, desires to acquire from the
Shareholders the ValCar Shares, and the Shareholders desire to sell, transfer,
and convey the ValCar Shares to the Buyer pursuant to the terms and conditions
of this Agreement; and
WHEREAS, the Company is a part to this Agreement solely for the purpose of
joining in the waiver made in Section 8.02 hereof and the prohibition on public
announcements set forth in Section 8.03 hereof;
NOW THEREFORE, in consideration of the covenants, representations,
warranties and mutual agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Buyer, the Company and the Shareholders hereby agree as follows:
ARTICLE I.
ACQUISITION OF VALCAR SHARES
Section 1.01. Acquisition of ValCar Shares. Upon and subject to the terms
and conditions set forth in this Agreement, upon execution of this Agreement by
the parties the Buyer shall acquire from the Shareholders and the Shareholders
shall transfer, assign and deliver to the Buyer, all of the Shareholders'
respective rights, titles and interests in and to the ValCar Shares, free and
clear of all liens, pledges, security interests, encumbrances and rights of
other persons of every nature and description whatsoever.
Section 1.02. Acquisition Price. In exchange for the ValCar Shares, the
Buyer shall pay the sum of $400,000 (the "Purchase Price"). Each Shareholder
will receive 50% of the Purchase Price.
Section 1.03. Release from Personal Guarantees. As soon as practicable,
Buyer will obtain release on behalf of the Shareholders and other former
shareholders of the Company of their liability for certain existing bank
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indebtedness of the Company personally guaranteed by the Shareholders and other
former shareholders of the Company identified and described on Schedule 1.03 or,
in the event that any lender refuses to grant such a release, Buyer will
indemnify the Shareholders or other former shareholders, as the case may be, for
any personal liabilities incurred in connection with said personal guarantees.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
As a material inducement to the Buyer to enter into this Agreement and to
consummate the transaction contemplated hereby, each Shareholder individually
makes the representation and warranty set forth in Section 2.01, and the
Shareholders jointly and severally make the representations and warranties set
forth in the remainder of the sections in this Article II.
Section 2.01. Title to Shares. Each Shareholder has good title to, and is
the beneficial and record owner of, his respective ValCar Shares. The ValCar
Shares of each Shareholder are free and clear of any and all mortgages, liens,
pledges, charges, claims, security interests, encumbrances and rights of other
persons of every nature and description whatsoever.
Section 2.02. Consents and Approvals. The execution, delivery and
performance of this Agreement by the Shareholders and the Company and the
consummation by the Shareholders of the transactions contemplated hereby will
not require any notice to, or consent, authorization or approval from any court
or governmental authority or any other third party, except consents that have
been obtained prior to the execution of this Agreement.
Section 2.03. Tax Matters.
(a) The Company is an "S Corporation" within the meaning of Section
1361(a)(1) of the Code, and has been an "S Corporation" during each year of its
existence. Neither the Company, either Shareholder or any previous shareholder
of the Company has taken any action that would cause a termination, prior to
August 1, 1996, of the Company's status as an "S Corporation."
(b) Except as set forth in Schedule 2.03:
(1) All federal, state, county and local taxes of any kind or character
which are due and payable by or on behalf of the Company, and all
interest and penalties thereon (collectively, the "Taxes"), have been
paid (and, to the extent applicable, withheld) in full or are
adequately reflected as a liability in the Company's financial
statements.
(2) The Company has timely filed, or the Shareholders on behalf of the
Company have timely filed, all federal, state, county, local and other
Tax returns, statements, forms, reports and other similar documents
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with respect to Taxes required to be filed on or before the Execution
Date with the appropriate authorities (collectively, the "Returns");
and all such Returns are true, correct and complete in all material
respects.
Section 2.04. Pending Litigation/Governmental Actions. Except as set forth
on Schedule 2.04:
(a) The Company is not in default or violation (nor is there any event
which, with notice or lapse of time or both, would constitute a default or
violation) in any respect (i) under any contract, agreement or other commitment
to which it is a party or its business is subject or bound or (ii) under any
law, rule, regulation, writ, injunction, order or decree of any court or any
governmental department, commission, board, bureau, agency or instrumentality,
except to the extent such default or violation would not have a material adverse
financial impact on the Company; and
(b) There are no actions, suits, claims, investigations or legal
arbitration or administrative proceedings in progress, pending or, to the
knowledge of the Sellers, threatened by or against the Company (or any of its
assets or properties) whether at law or in equity, whether civil or criminal in
nature, or whether before a federal, state, county, local or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.
Section 2.05. Title to Vehicles. The Company has good and valid title to
all vehicles contained in the inventory of the Company, except to the extent
that failure to possess such title does not have a material adverse effect on
the financial condition of the Company; subject only to the purchase money
security interests of vehicle vendors securing the purchase prices for vehicles
that are not yet due and payable.
Section 2.06. Environmental Compliance. To the knowledge of the
Shareholders and except as set forth in the Phase I Environmental Assessment of
the premises located at 5075 West 38th Street (the "38th Street Premises")
prepared by Paul I. Cripe, Inc. ("Cripe"); the Final Report, Environmental
Property Assessment of the premises located at 1525 North Shadeland Avenue (the
"Shadeland Premises") prepared by August Mack Environmental, Inc. ("August
Mack"); the Final Report, Phase II Site Assessment of the Shadeland Premises
prepared by August Mack; the Final Report, Hydraulic Lift Sampling at the
Shadeland Premises prepared by August Mack; the Final Report, Hydraulic Lift
Decontamination and Removal at the Shadeland Premises prepared by August Mack;
the Final Report, Phase II Environmental Property Assessment of the premises
located at 5425 North Keystone Avenue (the "North Keystone Premises," and,
together with the 38th Street Premises and the Shadeland Premises and all
buildings, structures, improvements and fixtures thereon, the "Leased Premises")
prepared by August Mack; the UST System Removal Report for the North Keystone
Premises prepared by Cripe; the Indiana Department of Environmental Management
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UST System Closure Report Review Checklist dated August 30, 1995; the Phase II
Environmental Investigation for the North Keystone Premises prepared by Cripe,
and the Final Report for the North Keystone Premises prepared by Cripe (a) at no
time has any hazardous waste, substance or material been used, disposed of,
generated, stored, treated, released, dumped or otherwise handled in, under, or
on the Leased Premises, except in accordance with applicable law; (b) the Leased
Premises are free from any lien or encumbrance which may be created by any
applicable federal, state, regional or local law or regulation pertaining to
hazardous wastes, materials or substances; (c) the Leased Premises have never
been used as landfills or trash dumps; and (d) none of the Leased Premises are
the subject of any present or threatened enforcement or other legal action with
regard to the past or present presence of hazardous waste, substances or
materials in, under, or on the Leased Premises. For purposes of this Section
2.06, the terms "hazardous waste," "hazardous substance" and "hazardous
material" mean all such wastes, substances and materials regulated as such under
any federal, state, regional or local law, regulation, order or other authority.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As a material inducement to the Sellers to enter into this Agreement and to
consummate the transaction contemplated by this Agreement, the Buyer represents
and warrants to the Sellers that:
Section 3.01. Corporate Matters. Buyer is a corporation duly organized and
validly existing under the laws of the State of Delaware, and possesses all
requisite corporate power and authority to enter into, be bound by, and perform
this Agreement. The execution, delivery, and performance of this Agreement by
the Buyer have been duly authorized by all necessary corporate action on the
part of the Buyer, and do not require any notice to, or consent, authorization
or approval from any court or governmental authority or any other third party,
except consents that have been obtained prior to the execution of this
Agreement.
ARTICLE IV.
[INTENTIONALLY OMITTED]
ARTICLE V.
EXECUTION MATTERS
Section 5.0l. Execution; Consummation. The transaction contemplated by this
Agreement shall be consummated simultaneously with the execution by the parties
of this Agreement at the offices of Tranex Management Services, Inc., 7050 West
Washington Street, Suite 100, Indianapolis, Indiana, or at such other place or
time or on such other date as the parties shall mutually agree (the "Execution
Date").
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Section 5.02. Delivery of the ValCar Shares; Resignations. Simultaneously
with the execution of this Agreement, the Shareholders or the Company, as the
case may be, shall deliver or cause to be delivered to the Buyer certificates
representing the ValCar Shares, duly endorsed, or accompanied by stock powers
duly endorsed, by the respective Shareholder for transfer to the Buyer. The
Shareholders shall, simultaneously with the execution of this Agreement, tender
their resignations as directors and officers of the Company, which such
resignations shall be set forth in writing in a form satisfactory to the Buyer.
Section 5.03. Payment of Purchase Price. Simultaneously with the execution
of this Agreement, the Buyer shall pay one-half of the purchase price to each of
the Shareholders by wire transfer or check as set forth on Schedule 5.03.
ARTICLE VI.
INDEMNIFICATION
Section 6.01. Indemnification by Parties. The Shareholders, jointly and
severally, shall indemnify and hold harmless the Buyer from and against any and
all losses, costs, damages, or expenses sustained or incurred by the Buyer by
reason of any misrepresentation contained in any representation or warranty made
in this Agreement by the Shareholders, provided that neither Shareholder shall
have any liability hereunder in respect of a misrepresentation made by the other
Shareholder in Section 2.01. The Buyer shall indemnify and hold harmless each of
the Shareholders from and against any and all losses, costs, damages, or
expenses sustained or incurred by either of them by reason of any
misrepresentation contained in any representation or warranty made in this
Agreement by the Buyer. The amount of any loss, cost, damage, or expense for
which a party is entitled to indemnity hereunder shall be determined after
deducting therefrom all insurance proceeds received by such party with respect
thereto.
Section 6.02. Reimbursement by the Shareholders. In addition to the
indemnification provided for in Section 6.01, the Shareholders, jointly and
severally, agree to reimburse the Company for the amount of any final,
non-appealable judgment entered against the Company in actions filed by Larry
Evans, Jack W. Jones and Albert Jerry Jones against the Company in Marion County
Superior Court (case number 49D02-9602-CT-0161) identified in Schedule 2.04, or
the amount required to be paid by the Company in settlement thereof in order to
obtain a dismissal of such case with prejudice and a release by the Company of
all claims; provided, however, that the Shareholders shall be required to
reimburse the Company only for that portion of the judgment or settlement amount
that is in excess of $100,000. No settlement of such case shall be made without
the consent of the Shareholders, which consent shall not be unreasonably
withheld.
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ARTICLE VII.
POST-EXECUTION MATTERS
Section 7.01. Shareholder Notes. Certain existing notes representing
outstanding indebtedness of the Company to the Shareholders are identified and
described on Schedule 7.01 (the "Notes"). At the request of the Buyer,
Shareholders shall take any and all actions necessary to subordinate the
indebtedness of the Company evidenced by the Notes to the Company's indebtedness
to any institutional lender or other outside financing source ("Senior Debt")
provided that such subordination permits the Company to make payments on the
Notes as long as the Company is not in default with respect to the Senior Debt.
Section 7.02. Filing of tax returns. The Buyer shall be responsible for
filing all required Tax returns, statements, forms, reports and other similar
documents with respect to Taxes required to be filed after the execution of this
Agreement. (the "Post-Execution Returns") with the appropriate authorities. The
Shareholders shall, upon the request of the Buyer, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such further
instruments and other documents, and perform or cause to be performed such
further acts, as may be reasonably required in connection with the filing of
Post-Execution Returns.
ARTICLE VIII.
MISCELLANEOUS
Section 8.01. Expenses. Each party shall bear its own legal, accounting and
out-of-pocket expenses in connection with this Agreement and the negotiation and
consummation of the transaction contemplated herein.
Section 8.02. Waiver of Rights. Each of the Shareholders and the Company
expressly consents to, and waives any right of first refusal or pre-emptive
right with respect to the transfer of the ValCar Shares to Buyer contemplated by
this Agreement, including any right granted by the terms of a Stock Purchase and
Sale Agreement dated as of November 1, 1991 by and among the Shareholders, the
Company and certain former shareholders of the Company. No person or entity,
other than the Shareholders and the Company, has any right of first refusal,
pre-emptive right or other right which must be waived to permit the transfer of
the ValCar Shares to Buyer.
Section 8.03. Public Announcements. Neither the Buyer, the Shareholders nor
the Company, nor anyone representing any of them, shall make any announcement,
press release, or similar communication to any other person, except as may be
required by law or as shall be agreed upon in writing by the parties to this
Agreement, concerning this Agreement or the transactions contemplated herein.
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Section 8.04. Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, or on the date of receipt by the party to whom
notice is to be given if transmitted to such party by telefax, provided a copy
is mailed as set forth below on date of transmission, or on the third day after
mailing if mailed to the party to whom notice is to be given by registered or
certified mail, return receipt requested, postage prepaid, to the following
addresses:
If to the Buyer, to:
Sanford Miller
Team Rental Group, Inc.
125 Basin Street Suite 210
Daytona Beach, Florida 32114
Telephone: 904/238-7035
Facsimile: 904/238-7461
Copy to:
Steven K. Humke
ICE MILLER DONADIO & RYAN
One American Square
Box 82001
Indianapolis, Indiana 46282-0002
Telephone: 317/236-2394
Facsimile: 317/236-5817
If to the Shareholders, to:
Gary L. Levine
Jeffrey D. Congdon
7050 West Washington Street
Indianapolis, Indiana 46241
Telephone:
Facsimile:
7
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Copy to:
Rebecca A. Richardson
BAKER & DANIELS
300 North Meridian Street
Suite 2700
Indianapolis, Indiana 46204
Telephone: 317/257-0300
Facsimile: 317/257-1000
If to the Company, to:
ValCar Rental Car Sales, Inc.
5075 West 38th Street
Indianapolis, Indiana 46254
Telephone:
Facsimile:
Any party may change its address for purposes of this Section 8.04 by giving the
other parties written notice of the new address in the manner set forth above.
Section 8.05. Entire Agreement. This Agreement, including the schedules
hereto, is intended by the parties as a final expression of their agreement and
is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the transaction contemplated hereby.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of 12:01 a.m. on the date first above written.
BUYER
TEAM RENTAL GROUP, INC.
By: /s/ Jeffrey D. Widholm
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Jeffrey D. Widholm
Vice President
(title)
COMPANY
VALCAR RENTAL CAR SALES, INC.
By: /s/ Gary L. Levine
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Gary L. Levine
President
(title)
SHAREHOLDERS
/s/ Gary L. Levine
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Gary L. Levine
/s/ Jeffrey D. Congdon
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Jeffrey D. Congdon
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EXHIBIT 99
T E A M
RENTAL GROUP, INC.
CONTACT:
Sandy Miller
Chief Executive Officer
904/238-7035
FOR IMMEDIATE RELEASE
TEAM RENTAL GROUP REPORTS SECOND QUARTER RESULTS AND
ANNOUNCES ACQUISITION OF INDIANAPOLIS CAR SALES COMPANY
Daytona Beach, FL (August 7, 1996)...Team Rental Group, Inc., (NASDAQ:TBUD)
released its second quarter operating results, reporting net income for its
second quarter of $0.30 per share, an increase of $0.18 over the comparable
period of 1995. Net income increased 202% from $0.7 million for the quarter
ended June 30, 1995 to $2.2 million for the quarter ended June 30, 1996. Primary
earnings per share for the six-month period ended June 30, 1996 increased $.55
from a $.07 loss in the 1995 period to earnings of $.48 for the first six months
of 1996. Team also announced that it has acquired ValCar Rental Car Sales, Inc.,
a retailer of late-model used cars with four locations in Indianapolis, Indiana.
Revenue increased 190% in the second quarter of 1996 to $93.7 million due to a
$35 million increase in rental revenues and a $26 million increase in revenues
from retail vehicle sales. This growth fueled a $6.8 million increase in
operating income from $4.0 million in the second quarter of 1995 to $10.8
million for the comparable period of 1996. Revenues for the six-month period
ended June 30 increased 192% from $54.6 million in 1995 to $159.5 million in
1996 and operating income for the same period increased 311% from $4.4 million
in 1995 to $18.1 million in 1996.
Rental revenues were again favorably impacted by price increases. Daily dollar
average earned on vehicle rentals increased over 9% in the second quarter of
1996 for the thirteen franchise territories currently owned by Team as compared
to those same combined territories' performance in the prior year.
Commenting on Team Rental Group's second quarter results, Chief Executive
Officer Sandy Miller stated, "The last few months have been very good for us. In
April, we opened two more retail car sales facilities, our first facility in the
Cincinnati market and our second facility in Dayton, Ohio. On July 9, we
successfully completed our secondary public offering, raising $46.9 million of
proceeds net of underwriters' commissions. These proceeds were utilized to pay
<PAGE>
Team Rental Group, Inc., August 7, 1996
page 2
off $33.0 million of non-vehicle debt and $5.8 million of vehicle debt, with the
balance utilized for general corporate purposes, including funding future growth
of our rental, retail car sales and commuter van pooling operations. On August
1, we acquired ValCar Rental Car Sales with its four Indianapolis car sales
facilities. This addition brings us to a total of 13 retail car sales locations,
placing us ahead of schedule in the growth of our car sales operations. Bringing
ValCar into Team Rental Group will allow it to benefit from the corporate
structure Team has assembled and will further enhance the economies of scale
Team currently enjoys."
Team owns and operates 13 Budget Rent a Car franchises with a total of 159
locations engaged in car, truck and passenger van rentals in Arizona,
California, Connecticut, Delaware, Indiana, Kentucky, Massachusetts, New Jersey,
New York, North Carolina, Ohio, Pennsylvania and Virginia. The Company also
operates airport parking facilities at certain locations, leases vans for van
pooling operations in 22 states and markets retail used vehicles in Charlotte,
Cincinnati, Dayton, Indianapolis, Philadelphia, Richmond and three locations in
Southern California.
The following table summarizes Team's operating results for the three- and
six-month periods ended June 30, 1996 and 1995.
<PAGE>
Team Rental Group, Inc., August 7, 1996
page 3
Team Rental Group, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
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Three-Month Period Ended June 30, Six-Month Period Ended June 30,
1996 1995 1996 1995
- --------------------------------- ------------------ ------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Operating Revenues $ 93,734 $ 32,322 $159,528 $ 54,592
Operating income 10,842 4,034 18,096 4,406
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Net income $ 2,246 $ 743 $ 3,523 $ (403)
======== ======== ======== ========
Net income per common share $ 0.30 $ 0.12 $ 0.48 $ (0.07)
======== ======== ======== ========
Average shares outstanding
for the period 7,569 6,144 7,413 6,091
</TABLE>
