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Exhibit B
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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
RENT-WAY, INC.
AND
HOME CHOICE HOLDINGS INC.
DATED AS OF SEPTEMBER 1, 1998
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of September
1, 1998, is made by and between Rent-Way, Inc., a Pennsylvania corporation
("Rent-Way"), and Home Choice Holdings Inc., a Delaware corporation ("HCI").
WHEREAS, the Board of Directors of Rent-Way deems it advisable and in the
best interests of Rent-Way's shareholders, and the Board of Directors of HCI
deems it advisable and in the best interests of HCI's stockholders, that HCI
merge with and into Rent-Way, and such Boards of Directors have approved the
merger (the "Merger") of HCI with and into Rent-Way upon the terms and subject
to the conditions set forth herein; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting and financial reporting purposes, it is intended
that the Merger shall be treated as a pooling of interests; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Rent-Way and HCI have entered into Option Agreements dated the date
hereof as described herein.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto (each, a "Party"), intending to be legally
bound, hereby agree as follows:
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ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as hereinafter defined), HCI
shall merge with and into Rent-Way in accordance with the applicable provisions
of the laws of the Commonwealth of Pennsylvania and the State of Delaware. At
the Effective Time, the separate corporate existence of HCI shall cease and
Rent-Way shall be the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all of the rights and obligations of HCI in
accordance with the Pennsylvania Business Corporation Law.
Section 1.2 Effective Time of The Merger. The Merger shall become effective
when a properly executed Certificate of Merger (as hereinafter defined) is duly
filed with the Secretary of State of the State of Delaware and properly executed
Articles of Merger (as hereinafter defined) are duly filed with the Secretary of
State of the Commonwealth of Pennsylvania, or at such later time which Rent-Way
and HCI have agreed upon and designated in such filings in accordance with
Applicable Law (as hereinafter defined). Such filings shall be made as soon as
practicable after satisfaction or, to the extent permitted hereunder, waiver of
each condition to each Party's obligation to consummate the Merger contained in
Article VIII. When used in this Agreement, the term "Effective Time" shall mean
the date and time at which such Certificate of Merger and Articles of Merger
become effective.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation; Amendment. The Articles of
Incorporation of the Surviving Corporation at the Effective Time shall be the
Articles of Incorporation of Rent-Way as in effect on the date of this Agreement
except that Article 5 of the Articles of Incorporation of the Surviving
Corporation shall be amended to increase the number of authorized shares of
Rent-Way Common Stock (as hereinafter defined) from 20,000,000 to 50,000,000
shares (the "Amendment"). The Amendment shall be effectuated in the Articles of
Merger.
Section 2.2 By-Laws. Subject to Section 7.9 hereof, the By-Laws of the
Surviving Corporation at the Effective Time shall be the By-Laws of Rent-Way
that are in effect on the date of this Agreement with such changes, if any, as
may be mutually agreed upon by HCI and Rent-Way.
Section 2.3 Directors of Surviving Corporation. The initial directors of
the Surviving Corporation at the Effective Time shall be the persons who are the
directors of Rent-Way as of such date, which persons shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualify in the manner provided in the Articles of Incorporation and By-Laws
of the Surviving Corporation or as otherwise provided by Applicable Law.
Section 2.4 Name of Surviving Corporation. The name of the Surviving
Corporation shall be Rent-Way, Inc.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof:
(a) Each of the shares of HCI's Common Stock, par value $.01 per share
(the "Shares"), issued and outstanding immediately prior to the Effective Time
(other than Shares held in the treasury of HCI) shall be converted into the
right to receive 0.588 (the "Exchange Ratio") shares of Rent-Way Common Stock,
without par value (the "Rent-Way Common Stock," and upon such conversion, the
"Rent-Way Shares"), issuable upon the surrender of the certificate formerly
representing such Share (provided, however, that the Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Rent-Way Common Stock or Shares), reorganization, recapitalization or other
like change with respect to Rent-Way Common Stock or Shares occurring after the
date hereof and prior to the Effective Time); and
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(b) Each Share held in the treasury of HCI, if any, and each Share held
by Rent-Way or any subsidiary of Rent-Way immediately prior to the Effective
Time shall be canceled and retired and cease to exist, and no consideration
shall be delivered in exchange therefor.
Section 3.2 Exchange of Certificates Representing Shares.
(a) As of the Effective Time, Rent-Way shall deposit, or shall cause to
be deposited, with an exchange agent selected by Rent-Way and reasonably
satisfactory to HCI (the "Exchange Agent"), for the benefit of the holders of
Shares, for exchange in accordance with this Article III, (i) certificates
representing the number of Rent-Way Shares issuable in the Merger, to be issued
in respect of all Shares outstanding immediately prior to the Effective Time and
which are to be exchanged pursuant to the Merger (exclusive of Shares to be
canceled pursuant to Section 3.1(b)), and (ii) cash to be paid in lieu of the
issuance of fractional shares as provided in Section 3.4 hereof (such cash and
certificates for Rent-Way Shares being hereinafter referred to collectively as
the "Exchange Fund").
(b) Promptly after the Effective Time, Rent-Way shall cause the Exchange
Agent to mail (or deliver at its principal office) to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented Shares (i) a letter of transmittal which shall specify that delivery
shall be effected, and risk of loss and title to the certificates for Shares
shall pass, only upon delivery of the certificates for Shares to the Exchange
Agent and shall be in such form and have such other provisions, including
appropriate provisions with respect to back-up withholding, as Rent-Way may
reasonably specify, and (ii) instructions for use in effecting the surrender of
the certificates for Shares. Upon surrender of a certificate for Shares for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, the
holder thereof shall be entitled to receive in exchange therefor that portion of
the Exchange Fund which such holder has the right to receive pursuant to the
provisions of this Article III, after giving effect to any required withholding
tax, and the certificate for Shares so surrendered shall forthwith be canceled.
No interest will be paid or accrued on the cash to be paid which is in the
Exchange Fund as part of the Exchange Ratio. In the event of any transfer of
ownership of Shares which has not been registered in the transfer records of
HCI, certificates representing the proper number of Rent-Way Shares, if any,
together with a check in an amount equal to the proper amount of the cash
component, if any, of the Exchange Fund, will be issued to the transferee of the
certificate representing the transferred Shares presented to the Exchange Agent,
accompanied by all documents required to evidence and effect the prior transfer
thereof and to evidence that any applicable stock transfer taxes associated with
such transfer were paid.
Section 3.3 Dividends; Transfer Taxes. No dividends that are declared on
Rent-Way Shares will be paid to persons entitled to receive certificates
representing Rent-Way Shares until such persons surrender their certificates
representing Shares. Upon such surrender, there shall be paid to the person in
whose name the certificates representing such Rent-Way Shares shall be issued,
any dividends which shall have become payable with respect to such Rent-Way
Shares between the Effective Time and the time of such surrender. In no event
shall the person entitled to receive such dividends be entitled to receive
interest on such dividends. If any certificates for any Rent-Way Shares are to
be issued in a name other than that in which the certificate representing Shares
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance of
certificates for such Rent-Way Shares in a name other than that of the
registered holder of the certificate surrendered or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, (i) neither the Exchange Agent nor
any Party hereto shall be liable to a holder of Shares for any Rent-Way Shares
or dividends thereon or, in accordance with Section 3.4 hereof, proceeds of the
sale of fractional interests, delivered to a public official pursuant to
Applicable Law and (ii) any Rent-Way Shares held by the Exchange Agent prior to
surrender of certificates representing Shares shall not be deemed issued.
Section 3.4 No Fractional Securities. No certificates or scrip representing
fractional Rent-Way Shares shall be issued upon the surrender for exchange of
certificates representing Shares pursuant to this Article III, and no dividend,
stock split or other change in the capital structure of HCI shall relate to any
fractional security, and such fractional interests shall not entitle the owner
thereof to vote or to any rights of a security holder of HCI. In lieu of any
such fractional securities, each holder of Shares who would otherwise have been
entitled to a fraction of a
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Rent-Way Share upon surrender of stock certificates for exchange pursuant to
this Article III will be paid cash upon such surrender in an amount equal to the
market value immediately prior to the Effective Time of such fractional Rent-Way
Share calculated based on the average closing price on the Nasdaq National
Market ("Nasdaq") or the New York Stock Exchange (the "NYSE"), whichever is
applicable, for the last five trading days immediately preceding the day prior
to the Effective Time. For this purpose, Shares of any holder represented by two
or more certificates may be aggregated, and in no event shall any holder be paid
a cash amount in respect of one or more than one Rent-Way Share.
Section 3.5 Closing of HCI Transfer Books. At the Effective Time, the stock
transfer books of HCI shall be closed and no transfer of Shares shall thereafter
be made. If, after the Effective Time, certificates representing Shares are
presented to the Surviving Corporation, they shall be canceled and exchanged for
certificates representing Rent-Way Shares in accordance with this Article III.
Section 3.6 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx, Xxxx,
Xxxxxxx, Xxxxx & Goodyear, LLP, 0000 Xxx X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000, at
10:00 a.m., local time, on the later of (a) the date of the Stockholders'
meetings referred to in Section 7.4 hereof or (b) the day on which each
condition set forth in Article VIII hereof is either satisfied or waived, or at
such other date, time and place as Rent-Way and HCI shall agree.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RENT-WAY
Except as otherwise disclosed to HCI in a letter delivered to it prior to
the execution hereof (which letter shall contain appropriate references to
identify the representations and warranties herein to which the information in
such letter relates) (the "Rent-Way Disclosure Letter"), Rent-Way represents and
warrants to HCI as follows:
Section 4.1 Organization. Rent-Way is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Pennsylvania
and has the corporate power to carry on its business as it is now being
conducted or presently proposed to be conducted. Rent-Way is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities make such qualification necessary, except where the
failure to be so qualified would not individually or in the aggregate have a
Rent-Way Material Adverse Effect (as hereinafter defined). Rent-Way has
delivered to HCI prior to the execution of this Agreement complete and correct
copies of its Articles of Incorporation and By-Laws, as amended to date. In all
material respects, the minute books of Rent-Way contain accurate records of all
meetings and accurately reflect all other actions taken by the stockholders, the
Board of Directors and all committees of the Board of Directors of Rent-Way
since October 1, 1994. For purposes of this Agreement, a "Rent-Way Material
Adverse Effect" shall mean any effect that is material and adverse to the
business, assets, liabilities, results of operations or financial condition of
Rent-Way and the Rent-Way Subsidiaries (as hereinafter defined) taken as a
whole; provided, that a Rent-Way Material Adverse Effect shall not be deemed to
include the impact of (i) changes in Applicable Law of general applicability or
implementation thereof by courts or Governmental Authorities, (ii) acts or
omissions of HCI or any HCI Subsidiary (as hereinafter defined) taken with the
prior written consent of Rent-Way in contemplation of the transactions
contemplated hereby, (iii) circumstances affecting the rental-purchase industry
generally, and (iv) the effects of the Merger and the compliance by either Party
with the provisions of this Agreement on the business, assets, liabilities,
results of operations or financial condition of Rent-Way or any Rent-Way
Subsidiary.
Section 4.2 Capitalization. The authorized capital stock of Rent-Way
consists of 20,000,000 shares of Rent-Way Common Stock, and 1,000,000 shares of
preferred stock, no par value. As of August 27, 1998, (i) 11,032,500 shares of
Rent-Way Common Stock were issued and outstanding, (ii) options to acquire
1,534,527 shares of Rent-Way Common Stock (the "Rent-Way Employee Stock
Options") were outstanding under all stock option plans of Rent-Way (the
"Rent-Way Employee Stock Option Plans"), (iii) 1,534,527 shares of Rent-Way
Common Stock including the shares set forth in Section (ii) were reserved for
issuance in connection with the Rent-Way Employee Stock Option Plans, (iv)
warrants to purchase an aggregate of 105,000 shares of Rent-Way Common Stock
(the "Rent-Way Warrants") were outstanding; and (v) convertible subordinated
debentures in the aggregate principal amount of $20,000,000 were outstanding
which, at a conversion price of $13.37 per share, are
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convertible into 1,495,886 shares of Rent-Way Common Stock. Section 4.2 of the
Rent-Way Disclosure Letter sets forth a complete and correct list, as of August
31, 1998, of the number of shares of Rent-Way Common Stock subject to Rent-Way
Employee Stock Options, the Rent-Way Warrants or other rights to purchase or to
receive Rent-Way Common Stock granted under the Rent-Way Employee Stock Option
Plans and the Rent-Way Warrants, the dates of grant and the exercise prices
thereof. As of August 31, 1998, Rent-Way had no treasury shares and no shares of
Rent-Way Common Stock were held by Rent-Way Subsidiaries. All of the issued and
outstanding shares of Rent-Way Common Stock are validly issued, fully paid and
nonassessable and free of preemptive rights. All of the shares of Rent-Way
Common Stock issuable in exchange for Shares at the Effective Time in accordance
with this Agreement will be, when so issued, duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights. Except as set forth
in this Agreement and except as provided in the Rent-Way Option Agreement (as
hereinafter defined), as of the date of this Agreement, there are no shares of
capital stock of Rent-Way issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Rent-Way to issue, transfer, sell, redeem, repurchase or
otherwise acquire any shares of its capital stock. Except as set forth in this
Agreement and the Rent-Way Option Agreement, after the Effective Time, Rent-Way
will have no obligation to issue, transfer or sell any shares of its capital
stock pursuant to any employee benefit plan or otherwise. Except as set forth in
this Agreement and the Rent-Way Option Agreement, there are not now, and at the
Effective Time there will not be, any outstanding options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Rent-Way to issue, transfer or sell any securities of
Rent-Way. Other than agreements contemplated by this Agreement, there are not
now, and at the Effective Time there will not be, any voting trusts, standstill,
stockholder or other agreements or understandings to which Rent-Way is a party
or is bound with respect to the voting of, requiring the registration of, or
granting any preemptive rights or antidilution rights with respect to, the
capital stock of Rent-Way.
Section 4.3 Subsidiaries. Section 4.3 of the Rent-Way Disclosure Letter
lists all corporations, partnerships, joint ventures and other business
associations and entities, foreign and domestic, in which Rent-Way has any
direct or indirect ownership or economic interest. Such corporations,
partnerships, joint ventures or other business entities of which Rent-Way owns,
directly or indirectly, greater than 50% of the shares of capital stock or other
equity interests (including partnership interests) entitled (without regard to
the occurrence of any contingency) to cast at least a majority of the votes that
may be cast by all shares of equity interests having ordinary voting power for
the election of directors or other governing body of such entity are hereinafter
referred to as the "Rent-Way Subsidiaries."
(a) Each Rent-Way Subsidiary that is a corporation is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Rent-Way Subsidiary that is a partnership or
a limited liability company is duly formed, validly existing and in good
standing under the laws of its jurisdiction of formation.
(b) Each Rent-Way Subsidiary has the corporate power, the partnership
power or the company power, as the case may be, to carry on its business as it
is now being conducted or presently proposed to be conducted.
(c) Each Rent-Way Subsidiary that is a corporation is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not individually or in the aggregate have a
Rent-Way Material Adverse Effect. Each Rent-Way Subsidiary that is a partnership
is duly qualified as a foreign partnership authorized to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not individually or
in the aggregate have a Rent-Way Material Adverse Effect. Each Rent-Way
Subsidiary that is a limited liability company is duly qualified as a foreign
limited liability company authorized to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified would not individually or in the aggregate
have a Rent-Way Material Adverse Effect.
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(d) All of the outstanding shares of capital stock of the Rent-Way
Subsidiaries that are corporations are duly authorized, validly issued, fully
paid and nonassessable and are free of preemptive rights. All of the outstanding
ownership interests of the Rent-Way Subsidiaries that are partnerships or
limited liability companies are duly authorized, validly issued, fully paid and
nonassessable and are free of preemptive rights.
(e) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Rent-Way Subsidiaries owned by Rent-Way or a
Rent-Way Subsidiary are owned by Rent-Way or by a Rent-Way Subsidiary free and
clear of any liens, claims, charges or encumbrances. Except as set forth in
Section 4.2 hereof, there are not now, and at the Effective Time there will not
be, any outstanding options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating Rent-Way or any
Rent-Way Subsidiary to issue, transfer or sell any securities of Rent-Way or any
Rent-Way Subsidiary.
(f) Other than agreements contemplated by this Agreement, there are not
now, and at the Effective Time there will not be, any voting trusts, standstill,
shareholder or other agreements or understandings to which Rent-Way or any of
the Rent-Way Subsidiaries is a party or is bound with respect to the voting of,
requiring the registration of, or granting any preemptive rights or antidilution
rights with respect to, the capital stock of Rent-Way or any of the Rent-Way
Subsidiaries.
Section 4.4 Authority Relative To This Agreement. Rent-Way has the
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation by Rent-Way of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Rent-Way and, except for the approval of Rent-Way's shareholders to
be sought at the shareholders' meeting contemplated by Section 7.4(b) hereof, no
other corporate action or proceedings on the part of Rent-Way are necessary to
authorize this Agreement or the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Rent-Way and constitutes a
valid and binding agreement of Rent-Way, enforceable against Rent-Way in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights generally or to general principles of equity.
Section 4.5 Consents and Approvals; No Violations. Except for applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX Xxx"), the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), state laws
relating to takeovers, if applicable, state securities or blue sky laws, and the
filing and recordation of appropriate articles of merger (the "Articles of
Merger") in such form as required by, and executed in accordance with the
relevant provisions of, the Pennsylvania Business Corporation Law, no filing
with, and no permit, authorization, consent or approval of, any Governmental
Authority (as hereinafter defined) is necessary for the consummation by Rent-
Way of the transactions contemplated by this Agreement, except for such filings,
permits, authorizations, consents or approvals the failure of which to be made
or obtained would not individually or in the aggregate have a Rent-Way Material
Adverse Effect. Neither the execution and delivery of this Agreement by Rent-Way
nor the consummation by Rent-Way of the transactions contemplated hereby, nor
compliance by Rent-Way with any of the provisions hereof, will (a) conflict with
or result in any breach of any provisions of the Articles of Incorporation or
By-Laws of Rent-Way or any of the Rent-Way Subsidiaries, (b) result in a
violation or breach of, or constitute (with or without the notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which Rent-Way or any of the Rent-Way Subsidiaries is a party or
by which any of them or any of their properties or assets may be bound, or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Rent-Way or any of the Rent-Way Subsidiaries or any of their
properties or assets, except in the case of clauses (b) and (c) for violations,
breaches or defaults which would not individually or in the aggregate have a
Rent-Way Material Adverse Effect.
Section 4.6 Reports and Financial Statements. Rent-Way has timely filed all
reports required to be filed with the Securities and Exchange Commission (the
"SEC") pursuant to the Exchange Act since October 1, 1997 (collectively, the
"Rent-Way SEC Reports"). As of their respective dates, the Rent-Way SEC Reports
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Rent-Way SEC Reports. None of
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such Rent-Way SEC Reports, as of their respective dates, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the audited
balance sheets of Rent-Way and the related audited statements of operations,
stockholders equity and cash flows and unaudited interim financial statements
included in the Rent-Way SEC Reports complied as to form, as of their respective
dates of filing with the SEC, in all material respects, with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto and fairly presented the consolidated financial position and the
results of operations and the changes in financial position of Rent-Way and its
consolidated subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except as
otherwise noted therein.
Section 4.7 Absence of Certain Changes or Events. Except as set forth in
the Rent-Way SEC Reports or the Rent-Way Disclosure Letter, since September 30,
1997, Rent-Way has not: (a) taken any of the actions set forth in Section
6.2(b), 6.2(c) or 6.2(e) hereof; (b) suffered any material adverse change in the
business, financial condition, results of operations, properties, assets or
liabilities of Rent-Way or the Rent-Way Subsidiaries taken as a whole; or (c)
subsequent to such date, except as permitted by Section 6.2 hereof, conducted
its business and operations other than in the ordinary course of business and
consistent with past practices.
Section 4.8 Litigation. Except for litigation disclosed in (i) the notes to
the financial statements included in Rent-Way's Annual Report to Stockholders
for the year ended September 30, 1997 or (ii) the Rent-Way SEC Reports, there is
no suit, action or proceeding pending or, to the best of Rent-Way's knowledge,
threatened against or affecting Rent-Way, the outcome of which would
individually or in the aggregate have a Rent-Way Material Adverse Effect; nor is
there any judgment, decree, injunction, citation, settlement agreement, rule or
order of any federal, regional, state or local political subdivision, any
governmental or administrative body, instrumentality, department or agency or
any court, administrative hearing body, commission or similar dispute resolving
panel or body, or any other body exercising the executive, legislative,
judicial, regulatory or administrative functions of a government (collectively,
a "Governmental Authority") outstanding against Rent-Way having, or which,
insofar as can reasonably be foreseen, in the future may have, any such effect.
Section 4.9 Contracts and Commitments. Except as disclosed in the Rent-Way
SEC Reports or in the Rent-Way Disclosure Letter, neither Rent-Way nor any
Rent-Way Subsidiary is a party to or is bound by any of the following:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC);
(ii) any non-competition agreement or any other agreement or
obligation which purports to limit in any material respect the manner in
which, or the localities in which, the business of Rent-Way and the
Rent-Way Subsidiaries (including, for purposes of this Section 4.9, HCI and
the HCI Subsidiaries (as hereinafter defined), assuming the Merger has been
consummated) is or would be conducted; or
(iii) any contract or other agreement which would prohibit or
materially delay the consummation of the Merger or any of the other
transactions contemplated hereby (all such contracts of the type described
in clauses (i), (ii) and (iii) of this Section 4.9 being referred to herein
as "Rent-Way Material Contracts").
Each Rent-Way Material Contract is valid and binding on Rent-Way or, to the
extent that a Rent-Way Subsidiary is a party, such Rent-Way Subsidiary, and is
in full force and effect, and Rent-Way and each Rent-Way Subsidiary has in all
material respects performed all obligations to be performed by them to date
under each Rent-Way Material Contract, except where such nonperformance,
individually or in the aggregate, would not have a Rent-Way Material Adverse
Effect. Neither Rent-Way nor any Rent-Way Subsidiary knows of, or has received
notice of, any violation or default under (nor, to the knowledge of Rent-Way,
does there exist any condition which with the passage of time or the giving of
notice or both would result in such a violation or default under) any Rent-Way
Material Contract.
Section 4.10 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by Rent-Way for inclusion or
incorporation by reference in (a) the Registration Statement to be filed with
the SEC by Rent-Way on Form S-4 under the Securities Act for the purpose of
registering the offering of the
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Rent-Way Shares to be issued in the Merger (the "Registration Statement") or (b)
the joint proxy statement/prospectus to be distributed in connection with
Rent-Way's meeting of shareholders and HCI's meeting of stockholders at which
meetings this Agreement will be voted upon (the "Proxy Statement") will, in the
case of the Registration Statement, at the time it becomes effective and at the
Effective Time or, in the case of the Proxy Statement or any amendments thereof
or supplements thereto, at the time of the mailing of the Proxy Statement and
any amendments thereof or supplements thereto and at the time of the meetings of
shareholders and stockholders to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by Rent-Way with
respect to statements made or incorporated by reference therein based on written
information supplied by HCI specifically for inclusion or incorporation by
reference in the Registration Statement or the Proxy Statement. The Registration
Statement and the Proxy Statement will comply as to form in all material
respects with the provisions of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations promulgated thereunder.
Section 4.11 Absence of Undisclosed Liabilities. Except for liabilities or
obligations which (i) are accrued or reserved against in Rent-Way's financial
statements (or reflected in the notes thereto) included in the Rent-Way SEC
Reports, or (ii) were incurred after September 30, 1997 in the ordinary course
of business and consistent in type and amount with past practices, neither
Rent-Way nor any Rent-Way Subsidiary has any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of a nature required by GAAP to be
reflected in a corporate balance sheet or the notes thereto.
Section 4.12 No Default. Neither Rent-Way nor any Rent-Way Subsidiary is in
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a default or violation) of any term, condition
or provision of (a) its Articles of Incorporation or By-Laws, (b) any note,
bond, mortgage, indenture, license, agreement, contract, lease, commitment or
other obligation to which Rent-Way or any of the Rent-Way Subsidiaries is a
party or by which it or any of its properties or assets may be bound, or (c) any
order, writ, injunction, decree, statute, rule or regulation applicable to
Rent-Way or any of the Rent-Way Subsidiaries, except in the case of clauses (b)
and (c) above for defaults or violations which would not individually or in the
aggregate have a Rent-Way Material Adverse Effect.
Section 4.13 Tax Returns; Taxes.
(a) For purposes of this Agreement, "Tax" means any federal, state,
local or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, customs
duty, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not; "Tax Return" means any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto and any amendment thereto.
(b) Rent-Way has filed all Tax Returns that it has been required to file
to date and all such Tax Returns were correct and complete in all respects. All
Taxes owed by Rent-Way (whether or not shown on any Tax Return) which are due
and payable have been paid except for such Taxes as would not, individually or
in the aggregate, have a Rent-Way Material Adverse Effect. Rent-Way is not
currently the beneficiary of any extension of time within which to file any Tax
Return. No taxing authority in a jurisdiction where Rent-Way does not file Tax
Returns has claimed in writing that Rent-Way is or may be subject to taxation by
that jurisdiction.
(c) Rent-Way has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(d) There is no dispute or claim concerning any Tax liability of
Rent-Way either (i) claimed or raised by any taxing authority in writing or (ii)
as to which any shareholder or employee of Rent-Way responsible for Tax matters
of Rent-Way has knowledge based upon personal contact with any agent of such
authority.
(e) Rent-Way has not waived any statute of limitations with respect to
Taxes or agreed to any extension of time with respect to assessment of Taxes.
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(f) All accounting periods and methods used by Rent-Way for Tax purposes
are permissible periods and methods, and Rent-Way is not required to make any
adjustments to its income under Section 481 of the Code in taxable years for
which Tax Returns have not yet been filed. Rent-Way has not filed a consent
under Section 341(f) of the Code concerning collapsible corporations. Rent-Way
has not made any payments, is not obligated to make any payments, and is not a
party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G of the Code.
Rent-Way is not a party to any Tax allocation or sharing agreement. Rent-Way (i)
has not been a member of an affiliated group filing a consolidated federal
income Tax return in any taxable year ending after September 30, 1993 and (ii)
has no liability for the Taxes of any person other than Rent-Way under Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or foreign
law, as a transferee or successor, by contract, or otherwise.
(g) The unpaid Taxes of Rent-Way did not, as of September 30, 1997,
exceed the reserve for Taxes (excluding any reserve for deferred taxes
attributable to differences between the timing of income or deductions for tax
and financial accounting purposes) set forth on the balance sheet as of
September 30, 1997 (excluding any notes thereto) contained in the Rent-Way SEC
Reports.
(h) Neither Rent-Way nor any of the Rent-Way Subsidiaries has taken any
action or has notice of any fact, agreement, plan or other circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a)(1)(A) of the Code.
(i) Rent-Way intends to continue the historic business of HCI and the
HCI Subsidiaries or to use a significant portion of the historic business assets
of HCI and the HCI Subsidiaries.
Section 4.14 Title to Properties; Encumbrances. Except as otherwise
provided in this Section 4.14, each of Rent-Way and the Rent-Way Subsidiaries
has good, valid and marketable title to, or a valid leasehold interest in, all
of its properties and assets (real, personal and mixed, tangible and
intangible), including, without limitation, all the properties and assets
reflected in the consolidated balance sheet of Rent-Way and the Rent-Way
Subsidiaries as of September 30, 1997 included in Rent-Way's Annual Report on
Form 10-K for the period ended on such date (except for properties and assets
disposed of in the ordinary course of business and consistent with past
practices since September 30, 1997). None of such properties or assets are
subject to any liability, obligation, claim, lien, mortgage, pledge, security
interest, conditional sale agreement, charge or encumbrance of any kind (whether
absolute, accrued, contingent or otherwise), except for (i) minor imperfections
of title and encumbrances, if any, which are not substantial in amount, do not
materially detract from the value of the property or assets subject thereto and
do not impair the operations of Rent-Way, (ii) liens for Taxes that are not yet
due or that are being contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with GAAP, (iii)
mortgages on real property in an aggregate amount not greater than $50,000 and
(iv) with respect to leased property, the rights of the owner of such property.
Section 4.15 Compliance With Applicable Law. Each of Rent-Way and the
Rent-Way Subsidiaries is in compliance with all applicable laws (whether
statutory or otherwise), rules, regulations, orders, ordinances, judgments or
decrees of all governmental authorities (federal, state, local, or otherwise)
(collectively, "Applicable Law"), except where the failure to be in such
compliance would not individually or in the aggregate have a Rent-Way Material
Adverse Effect.
Section 4.16 Labor Matters.
(a) Neither Rent-Way nor any Rent-Way Subsidiary is a party to, or bound
by, any collective bargaining agreement with a labor union or labor
organization;
(b) There is no unfair labor practice or labor arbitration proceeding
pending or, to the knowledge of Rent-Way, threatened against Rent-Way or any of
the Rent-Way Subsidiaries relating to their business, except for such
proceedings which would not individually or in the aggregate have a Rent-Way
Material Adverse Effect; and
(c) To the knowledge of Rent-Way, there are no organizational efforts
with respect to the formation of a collective bargaining unit presently being
made or threatened involving employees of Rent-Way or any of the Rent-Way
Subsidiaries.
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Section 4.17 Employee Benefit Plans; ERISA.
(a) With respect to each material bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement (including but not limited to employment agreements) or arrangement,
currently maintained or contributed to or required to be contributed to by (i)
Rent-Way or (ii) any Rent-Way Subsidiaries (the "Rent-Way Plans"), for the
benefit of any employee or former employee of Rent-Way or any Rent-Way
Subsidiary, Rent-Way has heretofore delivered to HCI true and complete copies of
each of the following documents:
(i) a copy of each written Rent-Way Plan (including all written
amendments thereto);
(ii) a copy of the annual report and actuarial report, if required
under the Employee Retirement Income Security Act of 1974, as amended, and
the rules and regulations promulgated thereunder ("ERISA"), with respect to
each such Rent-Way Plan for the last two plan years ending prior to the
date hereof;
(iii) a copy of the most recent Summary Plan Description, together
with each Summary of Material Modifications, if required under ERISA, with
respect to such Rent-Way Plan;
(iv) if the Rent-Way Plan is funded through a trust or any other third
Party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements with
respect to the last reporting period ended immediately prior to the date
hereof; and
(v) the most recent determination letter received prior to the date
hereof from the Internal Revenue Service with respect to each Rent-Way Plan
intended to qualify under section 401 of the Code.
(b) No liability under Title IV of ERISA has been incurred by Rent-Way,
any Rent-Way Subsidiary, or any trade or business, whether or not incorporated,
that together with Rent-Way is a "single employer" within the meaning of section
4001 of ERISA (any "Rent-Way ERISA Affiliate") that has not been satisfied in
full when due, and no condition exists that presents a material risk to
Rent-Way, any Rent-Way Subsidiary or any Rent-Way ERISA Affiliate of incurring a
liability under such Title which would individually or in the aggregate have a
Rent-Way Material Adverse Effect or give rise to a lien under Title IV of ERISA.
(c) No Rent-Way Plan subject to the minimum funding requirements of
section 412 of the Code or section 302 of ERISA or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of such Rent-Way Plan ended prior to
the date hereof; and all contributions required to be made with respect thereto
(whether pursuant to the terms of any such Rent-Way Plan or otherwise) on or
prior to the date hereof have been timely made.
(d) No Rent-Way Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Rent-Way Plan a plan described in Section
4063(a) of ERISA.
(e) Each Rent-Way Plan intended to be "qualified" within the meaning of
section 401(a) of the Code either, (i) has received a favorable determination
letter from the Internal Revenue Service as to its qualification and, to the
knowledge of Rent-Way, no amendment has been made to any such Rent-Way Plan
since the date of such letter that is likely to result in the disqualification
of such Rent-Way Plan or (ii) is a standardized prototype plan, the form of
which has been approved by the Internal Revenue Service.
(f) Each of the Rent-Way Plans has been operated and administered in all
respects in accordance with Applicable Law, including, but not limited to, ERISA
and the Code, except for any failure to so operate or administer such Rent-Way
Plans that would not individually or in the aggregate have a Rent-Way Material
Adverse Effect.
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(g) Neither the execution and delivery of this Agreement nor the Merger
nor the consummation of any of the other transactions contemplated by this
Agreement will:
(i) entitle any current or former officer, director, employee or
consultant of Rent-Way to severance pay, unemployment compensation or any
other payment, or
(ii) accelerate the time of payment or vesting, or increase the amount
of compensation due any such officer, director, employee or consultant.
(h) With respect to each Rent-Way Plan that is funded wholly or
partially through an insurance policy, Rent-Way and the Rent-Way Subsidiaries do
not have any current liability under any such insurance policy in the nature of
a retroactive rate adjustment or loss sharing arrangement arising wholly or
partially out of events occurring prior to the Closing other than any such
liability that individually or in the aggregate would not have a Rent-Way
Material Adverse Effect.
(i) There are no pending or, to the knowledge of Rent-Way, threatened
claims by or on behalf of any of the Rent-Way Plans, by any employee or
beneficiary covered under any such Rent-Way Plan involving any such Rent-Way
Plan (other than routine claims for benefits), other than any such claims that
would not individually or in the aggregate have a Rent-Way Material Adverse
Effect.
(j) Neither Rent-Way nor any Rent-Way Subsidiary or, to the knowledge of
Rent-Way, any Rent-Way ERISA Affiliate, any of the Rent-Way Plans, any trust
created thereunder, or any trustee or administrator thereof has engaged in a
transaction in connection with which Rent-Way or any Rent-Way Subsidiary or, to
the knowledge of Rent-Way, any Rent-Way ERISA Affiliate, any of the Rent-Way
Plans, any such trust, or any trustee or administrator thereof, or any party
dealing with the Rent-Way Plans or any such trust is likely to be subject to
either a civil liability under section 409 of ERISA or section 502(i) of ERISA,
or a tax imposed pursuant to section 4975 or 4976 of the Code, other than any
such liability or tax that would not individually or in the aggregate have a
Rent-Way Material Adverse Effect.
Section 4.18 Vote Required. Authorization of the Merger, the Amendment and
the issuance of the Rent-Way Shares to be issued in the Merger shall require the
affirmative vote of the holders of a majority of Rent-Way Common Stock voted at
the shareholders' meeting referred to in Section 7.4(b). No other vote of the
shareholders of Rent-Way is required by law, the Articles of Incorporation or
By-Laws of Rent-Way or otherwise in order for Rent-Way to consummate the Merger
and the transactions contemplated hereby.
Section 4.19 Vote of Board; Opinion of Financial Advisor. The Board of
Directors of Rent-Way (at a meeting duly called and held) has unanimously
determined that the transactions contemplated hereby are fair to and in the best
interests of Rent-Way. The Board of Directors of Rent-Way has received the
opinion of NationsBanc Xxxxxxxxxx Securities LLC ("NBM"), Rent-Way's financial
advisor, substantially to the effect that the Exchange Ratio is fair to the
shareholders of Rent-Way from a financial point of view.
Section 4.20 Takeover Status. The Board of Directors of Rent-Way has taken
all appropriate action so that the execution and delivery of this Agreement and
the Rent-Way Option Agreement and the consummation of the Merger and the other
transactions contemplated thereby will not be restricted by, or otherwise
subject to, the provisions of Section 2538 and Subchapters 25E, 25F, 25G and 25H
of the Pennsylvania Business Corporation Law.
Section 4.21 Accounting Matters. To Rent-Way's knowledge, neither Rent-Way
nor any of the Rent-Way Subsidiaries has taken or agreed to take any action that
would prevent the business combination to be effected by the Merger from being
accounted for as a pooling of interests and Rent-Way has no reason to believe
that the Merger will not qualify for pooling of interest accounting.
Section 4.22 Brokers. Except for NBM, Rent-Way's financial advisor, no
broker, finder or financial advisor is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Rent-Way, and Rent-Way's fee arrangements with NBM have been disclosed to HCI.
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Section 4.23 Environmental Matters. Except as set forth in Section 4.23 to
the Rent-Way Disclosure Letter or except as to matters previously remediated in
accordance with Applicable Law, none of Rent-Way or any Rent-Way Subsidiaries
or, to Rent-Way's knowledge, any other person has caused or permitted (a) the
presence of any Hazardous Materials (as hereinafter defined) at, in, on, or
under any of Rent-Way's properties in any amount, form, or location that would
be unlawful, require investigation, notification of Government Authorities, or
remedial action, or otherwise result in potential material liabilities under any
applicable local, state, or federal environmental laws, or (b) any spills,
releases, discharges or disposal of Hazardous Materials to have occurred or be
presently occurring on or from Rent-Way's properties or at any other location as
a result of any construction on or operation and use of such properties, which
presence of occurrence would, individually or in the aggregate, have or is
reasonably likely to have a Rent-Way Material Adverse Effect; and in connection
with the use of Rent-Way's properties, Rent-Way and the Rent-Way Subsidiaries
have not failed to comply in any material respect with all applicable local,
state and federal environmental laws, regulations, ordinances and administrative
and judicial orders relating to the generation, use, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous Materials. "Hazardous
Materials" means those substances, materials, and items, in any form, whether
solid, liquid, gaseous, semisolid, or any combination thereof, whether waste
materials, raw materials, chemicals, finished products, byproducts, or any other
material or article, which are regulated by or form the basis of liability under
federal, state or local environmental, health, and safety statutes or
regulations including, without limitation, hazardous wastes, hazardous
substances, pollutants, contaminants, asbestos, polychlorinated biphyenyls,
petroleum (including, but not limited to, crude oil, petroleum-derived
substances, waste, or breakdown or decomposition products thereof or any
fraction thereof), and radioactive substances.
Section 4.24 Insurance. Rent-Way maintains fire and casualty, general
liability and product liability insurance policies with reputable insurance
carriers, which Rent-Way reasonably believes provide full and adequate coverage
for all normal risks incident to the business of Rent-Way and the Rent-Way
Subsidiaries and their respective properties and assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HCI
Except as otherwise disclosed to Rent-Way in a letter delivered to it prior
to the execution hereof (which letter shall contain appropriate references to
identify the representations and warranties herein to which the information in
such letter relates) (the "HCI Disclosure Letter"), HCI represents and warrants
to Rent-Way as follows:
Section 5.1 Organization. HCI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power to carry on its business as it is now being conducted or
presently proposed to be conducted. HCI is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not, individually or in the aggregate, have a HCI Material
Adverse Effect (as hereinafter defined). HCI has delivered to Rent-Way prior to
the execution of this Agreement complete and correct copies of its Certificate
of Incorporation and By-laws, as amended to date. In all material respects, the
minute books of HCI contain accurate records of all meetings and accurately
reflect all other actions taken by the stockholders, the Board of Directors and
all committees of the Board of Directors of HCI since April 24, 1998. For
purposes of this Agreement, an "HCI Material Adverse Effect" shall mean any
effect that is material and adverse to the business, assets, liabilities,
results of operations or financial condition of HCI and the HCI Subsidiaries
taken as a whole; provided, that a HCI Material Adverse Effect shall not be
deemed to include the impact of (i) changes in Applicable Law of general
applicability or implementation thereof by courts or Governmental Authorities,
(ii) acts or omissions of Rent-Way or any Rent-Way Subsidiary taken with the
prior written consent of HCI in contemplation of the transactions contemplated
hereby, (iii) circumstances affecting the rental-purchase industry generally,
and (iv) the effects of the Merger and the compliance by either Party with the
provisions of this Agreement on the business, assets, liabilities, results of
operations or financial condition of HCI or any HCI Subsidiary.
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Section 5.2 Capitalization. The authorized capital stock of HCI consists of
100,000,000 Shares, and 25,000,000 shares of preferred stock, par value $.01 per
share. As of August 28, 1998, (i) 17,025,668 Shares were issued and outstanding,
(ii) stock options to acquire 1,276,588 Shares (the "HCI Stock Options") were
outstanding under all stock option plans of HCI (collectively, the "HCI Stock
Option Plans"), and (iii) 2,926,948 Shares were originally reserved for issuance
in connection with the HCI Stock Option Plans. Section 5.2 of the HCI Disclosure
Letter sets forth a complete and correct list, as of August 31, 1998, of the
number of shares of HCI Common Stock subject to HCI Stock Options or other
rights to purchase or to receive HCI Common Stock granted under the HCI Stock
Option Plans, the dates of grant and the exercise prices thereof. As of August
31, 1998, HCI had no treasury shares and no Shares were held by HCI
Subsidiaries. All of the issued and outstanding Shares are validly issued, fully
paid and nonassessable and free of preemptive rights. Except as set forth in
this Agreement and except as set forth in the HCI Option Agreement (as
hereinafter defined), there are not now, and at the Effective Time there will
not be, any shares of capital stock of HCI issued or outstanding or any options,
warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating HCI to issue, transfer, sell, redeem,
repurchase or otherwise acquire any shares of its capital stock. Except as set
forth in this Agreement and the HCI Option Agreement, after the Effective Time,
HCI will have no obligation to issue, transfer or sell any shares of its capital
stock pursuant to any employee benefit plan or otherwise. Other than the
agreements contemplated by this Agreement and the HCI Option Agreement, there
are not now, and at the Effective Time there will not be, any voting trusts,
standstill, stockholder or other agreements or understandings to which HCI is a
party or is bound with respect to the voting of, requiring the registration of,
or granting any preemptive rights or antidilution rights with respect to, the
capital stock of HCI.
Section 5.3 Subsidiaries. Section 5.3 of the HCI Disclosure Letter lists
all corporations, partnerships, joint ventures and other business associations
and entities, foreign and domestic, in which HCI has any direct or indirect
ownership or economic interest. Such corporations, partnerships, joint ventures
or other business entities of which HCI owns, directly or indirectly, greater
than 50% of the shares of capital stock or other equity interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to cast at least a majority of the votes that may be cast by all
shares or equity interests having ordinary voting power for the election of
directors or other governing body of such entity are hereinafter referred to as
the "HCI Subsidiaries".
(a) Each HCI Subsidiary that is a corporation is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each HCI Subsidiary that is a partnership or a
limited liability company is duly formed, validly existing and in good standing
under the laws of its jurisdiction of formation.
(b) Each HCI Subsidiary has the corporate power, the partnership power
or the company power, as the case may be, to carry on its business as it is now
being conducted or presently proposed to be conducted.
(c) Each HCI Subsidiary that is a corporation is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not individually or in the aggregate have
an HCI Material Adverse Effect. Each HCI Subsidiary that is a partnership is
duly qualified as a foreign partnership authorized to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not individually or
in the aggregate have an HCI Material Adverse Effect. Each HCI subsidiary that
is a limited liability company is duly qualified as a foreign limited liability
company authorized to do business, and is in good standing, in each jurisdiction
where the character of its properties owned or held under lease or the nature of
its activities makes such qualification necessary, except where the failure to
be so qualified would not individually or in the aggregate have an HCI Material
Adverse Effect.
(d) All of the outstanding shares of capital stock of the HCI
Subsidiaries that are corporations are duly authorized, validly issued, fully
paid and nonassessable and are free of preemptive rights. All of the outstanding
ownership interests of the HCI Subsidiaries that are partnerships or limited
liability companies are duly authorized, validly issued, fully paid and
nonassessable and are free of preemptive rights.
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(e) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the HCI Subsidiaries owned by HCI or an HCI
Subsidiary are owned by HCI or by an HCI Subsidiary free and clear of any liens,
claims, charges or encumbrances. Except as set forth in Section 5.2 hereof,
there are not now, and at the Effective Time there will not be, any outstanding
options, warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating HCI or any HCI Subsidiary to issue,
transfer or sell any securities of HCI or any HCI Subsidiary.
(f) Other than agreements contemplated by this Agreement and except as
disclosed in Section 5.3 of the HCI Disclosure Letter, there are not now, and at
the Effective Time there will not be, any voting trusts, standstill, stockholder
or other agreements or understandings to which HCI or any of the HCI
Subsidiaries is a party or is bound with respect to the voting of, requiring the
registration of, or granting any preemptive rights or antidilution rights with
respect to, the capital stock of HCI or any of the HCI Subsidiaries.
Section 5.4 Authority Relative To This Agreement. HCI has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation by HCI of the
transactions contemplated hereby have been duly authorized by HCI's Board of
Directors and, except for the approval of HCI's stockholders to be sought at the
stockholders meeting contemplated by Section 7.4(a) hereof, no other corporate
action or proceedings on the part of HCI are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by HCI and constitutes a valid and binding
agreement of HCI, enforceable against HCI in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
Section 5.5 Consents and Approvals; No Violations. Except for applicable
requirements of the HSR Act, the Securities Act, the Exchange Act, state laws
relating to takeovers, if applicable, state securities or blue sky laws, and the
filing and recordation of an appropriate certificate of Merger (the "Certificate
of Merger") as required by the Delaware General Corporation Law (the "DGCL"), no
filing with, and no permit, authorization, consent or approval of, any
Governmental Authority is necessary for the consummation by HCI of the
transactions contemplated by this Agreement, except for such filings, permits,
authorizations, consents or approvals the failure of which to be made or
obtained would not individually or in the aggregate have an HCI Material Adverse
Effect. Neither the execution and delivery of this Agreement by HCI, nor the
consummation by HCI of the transactions contemplated hereby, nor compliance by
HCI with any of the provisions hereof, will (a) conflict with or result in any
breach of any provisions of the Certificate of Incorporation or By-Laws of HCI
or any of the HCI Subsidiaries, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which HCI or
any of the HCI Subsidiaries is a Party or by which any of them or any of their
properties or assets may be bound, or (c) violate any other, writ, injunction,
decree, statute, rule or regulation applicable to HCI, any of the HCI
Subsidiaries or any of their properties or assets, except in the case of clauses
(b) and (c) for violations, breaches or defaults which would not individually or
in the aggregate have an HCI Material Adverse Effect.
Section 5.6 Reports and Financial Statements. HCI has timely filed all
reports required to be filed with the SEC pursuant to the Exchange Act since
January 1, 1998 (collectively, the "HCI SEC Reports"). As of their respective
dates, the HCI SEC Reports complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
HCI SEC Reports. None of such HCI SEC Reports, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Each
of the audited balance sheets of HCI and the related audited statements of
operations, stockholders equity and cash flows and unaudited interim financial
statements included in the HCI SEC Reports complied as to form, as of their
respective dates of filing with the SEC, in all material respects, with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and fairly presented the consolidated financial
position and the results of operations and the changes in financial position of
HCI and its consolidated
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subsidiaries as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during the periods
involved, except as otherwise noted therein.
Section 5.7 Absence of Certain Changes or Events. Except as set forth in
the HCI SEC Reports or the HCI Disclosure Letter, since December 31, 1997,
neither HCI nor any of the HCI Subsidiaries has: (a) taken any of the actions
set forth in Section 6.1(b), 6.1(c) or 6.1(e) hereof; (b) suffered any material
adverse change in the business, financial condition, results of operations,
properties, assets or liabilities of HCI and the HCI Subsidiaries taken as a
whole; or (c) subsequent to such date, except as permitted by Section 6.1
hereof, conducted its business and operations other than in the ordinary course
of business and consistent with past practices.
Section 5.8 Litigation. Except for litigation disclosed in (i) the notes to
the financial statements included in HCI's Annual Report to Stockholders for the
year ended December 31, 1997 or (ii) the HCI SEC Reports, there is no suit,
action or proceeding pending or, to the best of HCI's knowledge, threatened
against or affecting HCI, the outcome of which would individually or in the
aggregate have an HCI Material Adverse Effect; nor is there any judgment,
decree, injunction, citation, settlement agreement, rule or order of any
Governmental Authority outstanding against HCI having, or which, insofar as can
reasonably be foreseen, in the future may have, any such effect.
Section 5.9 Contracts and Commitments. Except as disclosed in the HCI SEC
Reports or in the HCI Disclosure Letter, neither HCI nor any HCI Subsidiary is a
party to or is bound by any of the following:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC);
(ii) any non-competition agreement or any other agreement or
obligation which purports to limit in any material respect the manner in
which, or the localities in which, the business of HCI and the HCI
Subsidiaries (including, for purposes of this Section 5.9, Rent-Way and the
Rent-Way Subsidiaries, assuming the Merger has been consummated) is or
would be conducted; or
(iii) any contract or other agreement which would prohibit or
materially delay the consummation of the Merger or any of the other
transactions contemplated hereby (all such contracts of the type described
in clauses (i), (ii) and (iii) of this Section 5.9 being referred to herein
as "HCI Material Contracts").
Each HCI Material Contract is valid and binding on HCI (or, to the extent that
an HCI Subsidiary is a party, such HCI Subsidiary) and is in full force and
effect, and HCI and each HCI Subsidiary has in all material respects performed
all obligations to be performed by them to date under each HCI Material
Contract, except where such non-performance, individually or in the aggregate,
would not have an HCI Material Adverse Effect. Neither HCI nor any HCI
Subsidiary knows of, or has received notice of, any violation or default under
(nor, to the knowledge of HCI, does there exist any condition which with the
passage of time or the giving of notice or both would result in such a violation
or default under) any HCI Material Contract.
Section 5.10 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by HCI for inclusion or
incorporation by reference in the Proxy Statement or the Registration Statement
will, in the case of the Registration Statement, at the time it becomes
effective and at the Effective Time or, in the case of the Proxy Statement or
any amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement and any amendments thereof or supplements thereto and at the
time of the meetings of stockholders to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they made, not misleading,
except that no representation or warranty is made by HCI with respect to
statements made or incorporated by reference therein based on information
supplied by Rent-Way specifically for inclusion or incorporation by reference in
the Registration Statement or the Proxy Statement.
Section 5.11 Absence of Undisclosed Liabilities. Except for liabilities or
obligations which (i) are accrued or reserved against in HCI's financial
statements (or reflected in the notes thereto) included in the HCI SEC Reports,
or (ii) were incurred after December 31, 1997 in the ordinary course of business
and consistent in type and amount with past practices, neither HCI nor any HCI
Subsidiary has any liabilities or obligations (whether
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absolute, accrued, contingent or otherwise) of a nature required by GAAP to be
reflected in a corporate balance sheet or the notes thereto.
Section 5.12 No Default. Neither HCI nor any of the HCI Subsidiaries is in
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a default or violation) of any term, condition
or provision of (a) its Certificate of Incorporation or By-Laws, (b) any note,
bond, mortgage, indenture, license, agreement, contract, lease, commitment or
other obligation to which HCI or any of the HCI Subsidiaries is a party or by
which it or any of its properties or assets may be bound, or (c) any order,
writ, injunction, decree, statute, rule or regulation applicable to HCI or any
of the HCI Subsidiaries, except in the case of clauses (b) and (c) above for
defaults or violations which would not individually or in the aggregate have an
HCI Material Adverse Effect.
Section 5.13 Tax Returns; Taxes.
(a) HCI has filed all Tax Returns that it has been required to file to
date and all such Tax Returns were correct and complete in all respects. All
Taxes owed by HCI (whether or not shown on any Tax Return) which are due and
payable have been paid except such Taxes as would not, individually or in the
aggregate, have an HCI Material Adverse Effect. HCI is not currently the
beneficiary of any extension of time within which to file any Tax Return. No
taxing authority in a jurisdiction where HCI does not file Tax Returns has
claimed in writing that HCI is or may be subject to taxation by that
jurisdiction.
(b) HCI has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(c) There is no dispute or claim concerning any Tax liability of HCI
either (i) claimed or raised by any taxing authority in writing or (ii) as to
which any shareholder or employee of HCI responsible for Tax matters of HCI has
knowledge based upon personal contact with any agent of such authority.
(d) HCI has not waived any statute of limitations with respect to Taxes
or agreed to any extension of time with respect to assessment of Taxes.
(e) All accounting periods and methods used by HCI for Tax purposes are
permissible periods and methods, and HCI is not required to make any adjustments
to its income under Section 481 of the Code in taxable years for which Tax
Returns have not yet been filed. HCI has not filed a consent under Section
341(f) of the Code concerning collapsible corporations. HCI has not made nay
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 28OG of the Code. HCI is not
a party to any Tax allocation or sharing agreement. HCI (or its predecessors)
(i) has not been a member of an affiliated group filing a consolidated federal
income Tax return in any taxable year ending after December 31, 1993 and (ii)
has no liability for the Taxes of any person other than HCI under Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or foreign
law, as a transferee or successor, by contract, or otherwise.
(f) The unpaid Taxes of HCI did not, as of December 31, 1997, exceed the
reserve for Taxes (excluding any reserve for deferred taxes attributable to
differences between the timing of income or deductions for tax and financial
accounting purposes) set forth on the balance sheet as of December 31, 1997
(excluding any notes thereto) contained in the HCI Financial Statements.
(g) Neither HCI nor any of the HCI Subsidiaries has taken any action or
has notice of any fact, agreement, plan or other circumstance that is reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code.
Section 5.14 Title To Properties; Encumbrances. Except as otherwise
provided in this Section 5.14, each of HCI and the HCI Subsidiaries has good,
valid and marketable title to, or a valid leasehold interest in, all of its
properties and assets (real, personal and mixed, tangible and intangible),
including, without limitation, all the properties and assets reflected in the
consolidated balance sheet of HCI and the HCI Subsidiaries as of December 31,
1997 included in HCI's Annual Report on Form 10-K for the period ended on such
date (except for properties and assets disposed of in the ordinary course of
business and consistent with past practices since December 31, 1997). None of
such properties or assets are subject to any liability, obligation, claim, lien,
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mortgage, pledge, security interest, conditional sale agreement, charge or
encumbrance of any kind (whether absolute, accrued, contingent or otherwise),
except for (i) minor imperfections of title and encumbrances, if any, which are
not substantial in amount, do not materially detract from the value of the
property or assets subject thereto, and do not impair the operations of HCI and
the HCI Subsidiaries, (ii) liens for Taxes that are not yet due or that are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP, (iii) mortgages on real
property in an aggregate amount not greater than $50,000, and (iv) with respect
to leased property, the rights of the owner of such property.
Section 5.15 Compliance with Applicable Laws. Each of HCI and the HCI
Subsidiaries is in compliance with Applicable Law, except where the failure to
be in such compliance would not individually or in the aggregate have an HCI
Material Adverse Effect.
Section 5.16 Labor Matters.
(a) Neither HCI nor any of the HCI Subsidiaries is a party to, or bound
by, any collective bargaining agreement with a labor union or labor
organization;
(b) There is no unfair labor practice or labor arbitration proceeding
pending or, to the knowledge of HCI, threatened against HCI or any of the HCI
Subsidiaries relating to their business, except for any such proceeding which
would not individually or in the aggregate have an HCI Material Adverse Effect;
and
(c) To the knowledge of HCI, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened involving employees of HCI or any of the HCI Subsidiaries.
Section 5.17 Employee Benefit Plans; ERISA.
(a) With respect to each material bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement (including, but not limited to, employment agreements) or arrangement,
currently maintained or contributed to or required to be contributed to by (i)
HCI or (ii) any HCI Subsidiary for the benefit of any employee or former
employee of HCI or any HCI Subsidiary (the "HCI Plans"), HCI has heretofore
delivered to Rent-Way true and complete copies of each of the following
documents:
(i) a copy of each written HCI Plan (including all written amendments
thereto);
(ii) a copy of the annual report and actuarial report, if required
under ERISA, with respect to each such HCI Plan for the last two plan years
ending prior to the date hereof;
(iii) a copy of the most recent Summary Plan Description, together
with each Summary of Material Modifications, if required under ERISA, with
respect to such HCI Plan;
(iv) if the HCI Plan is funded through a trust or any other third
Party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements with
respect to the last reporting period ended immediately prior to the date
hereof; and
(v) the most recent determination letter received prior to the date
hereof from the Internal Revenue Service with respect to each HCI Plan
intended to qualify under section 401 of the Code.
(b) No liability under Title IV of ERISA has been incurred by HCI, any
HCI Subsidiary, or any trade or business, whether or not incorporated that
together with HCI or any HCI Subsidiary is a "single employer" within the
meaning of section 4001 of ERISA (an "HCI ERISA Affiliate") that has not been
satisfied in full when due, and no condition exists that presents a material
risk to HCI, any HCI Subsidiary or any HCI ERISA Affiliate of incurring a
liability under such Title which would individually or in the aggregate have an
HCI Material Adverse Effect, or give rise to a lien under Title IV of ERISA.
(c) No HCI Plan subject to the minimum funding requirements of section
412 of the Code or section 302 of ERISA or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined
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in section 302 of ERISA and section 412 of the Code), whether or not waived, as
of the last day of the most recent fiscal year of such HCI Plan ended prior to
the date hereof; and all contributions required to be made with respect thereto
(whether pursuant to the terms of any such HCI Plan or otherwise) on or prior to
the date hereof have been timely made.
(d) No HCI Plan is a "multiemployer pension plan," as defined in section
3(37) of ERISA, nor is any HCI Plan a plan described in section 4063(a) of
ERISA.
(e) Each HCI Plan intended to be "qualified" within the meaning of
section 401(a) of the Code either (i) has received a favorable determination
letter from the Internal Revenue Service as to its qualification and, to the
knowledge of HCI, no amendment has been made to any such HCI Plan since the date
of such letter that is likely to result in the disqualification of such HCI Plan
or (ii) is a standardized prototype plan, the form of which has been approved by
the Internal Revenue Service.
(f) Each of the HCI Plans has been operated and administered in all
respects in accordance with Applicable Law, including, but not limited to, ERISA
and the Code, except for any failure to so operate or administer such HCI Plans
that would not individually or in the aggregate have an HCI Material Adverse
Effect.
(g) Except as expressly provided in the HCI Disclosure Letter, neither
the execution and delivery of this Agreement nor the Merger nor the consummation
of any of the transactions contemplated by this Agreement will:
(i) entitle any current or former officer, director, employee or
consultant of HCI or any HCI Subsidiary to severance pay, unemployment
compensation or any other payment, or
(ii) accelerate the time of payment or vesting or increase the amount
of compensation due any such officer, director, employee or consultant.
(h) With respect to each HCI Plan that is funded wholly or partially
through an insurance policy, HCI and the HCI Subsidiaries do not have any
current liability under any such insurance policy in the nature of a retroactive
rate adjustment or loss sharing arrangement arising wholly or partially out of
events occurring prior to the Closing other than any such liability that
individually or in the aggregate would not have an HCI Material Adverse Effect.
(i) There are no pending or, to the knowledge of HCI, threatened claims
by or on behalf of any of the HCI Plans, by any employee or beneficiary covered
under any such HCI Plan involving any such HCI Plan (other than routine claims
for benefits), other than any such claims that would not individually or in the
aggregate have an HCI Material Adverse Effect.
(j) Neither HCI nor any HCI Subsidiary or, to the knowledge of HCI, any
HCI ERISA Affiliate, any of the HCI Plans, any trust created thereunder, or any
trustee or administrator thereof has engaged in a transaction in connection with
which HCI or any HCI Subsidiary or, to the knowledge of HCI, any HCI ERISA
Affiliate, any of the HCI Plans, any such trust or trustee or administrator
thereof, or any Party dealing with the HCI Plans or any such trust is likely to
be subject to either a civil liability under section 409 of ERISA or section
502(i) of ERISA, or a tax imposed pursuant to section 4975 or 4976 of the Code
other than any such liability or tax that would not individually or in the
aggregate have an HCI Material Adverse Effect.
Section 5.18 Vote Required. Approval of the Merger by the stockholders of
HCI shall require the affirmative vote of the holders of a majority of the
outstanding Shares at the stockholders' meeting referred to in Section 7.4(a).
No other vote of the stockholders of HCI is required by law, the Certificate of
Incorporation or By-Laws of HCI or otherwise in order for HCI to consummate the
Merger and the transactions contemplated hereby.
Section 5.19 Vote of Board; Opinion of Financial Advisor. The Board of
Directors of HCI (at a meeting duly called and held) has unanimously determined
that the transactions contemplated hereby are fair to and in the best interests
of HCI. The Board of Directors of HCI has received the opinions of Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation and Xxxxxxxx, Inc., HCI's financial
advisors, each substantially to the effect that the Exchange Ratio is fair to
the stockholders of HCI from a financial point of view.
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Section 5.20 Takeover Status. The Board of Directors of HCI has taken all
appropriate action so that Rent-Way will not be an "interested stockholder"
within the meaning of Section 203 of the DGCL by virtue of the execution and
delivery of this Agreement or the HCI Option Agreement or the consummation of
the Merger or any of the other transactions contemplated hereby.
Section 5.21 Accounting Matters. To its knowledge, neither HCI nor any of
the HCI Subsidiaries has taken or agreed to take any action that would prevent
the business combination to be effected by the Merger from being accounted for
as a pooling of interests and HCI has no reason to believe that the Merger will
not qualify for pooling of interest accounting.
Section 5.22 Brokers. Except for Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation and Xxxxxxxx, Inc., HCI's financial advisors, no broker, finder or
financial advisor is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of HCI, and HCI's
fee arrangements with Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and
Xxxxxxxx, Inc. have been disclosed to Rent-Way.
Section 5.23 Environmental Matters. Except as set forth in Section 5.23 to
the HCI Disclosure Letter or except as to matters previously remediated in
accordance with Applicable Law, none of HCI or any HCI Subsidiaries or, to HCI's
knowledge, any other person has caused or permitted (a) the presence of any
Hazardous Materials at, in, on, or under any of HCI's properties in any amount,
form, or location that would be unlawful, require investigation, notification of
Government Authorities, or remedial action, or otherwise result in potential
material liabilities under any applicable local, state, or federal environmental
laws, or (b) any spills, releases, discharges or disposal of Hazardous Materials
to have occurred or be presently occurring on or from HCI's properties or at any
other location as a result of any construction on or operation and use of such
properties, which presence or occurrence would, individually or in the
aggregate, have or is reasonably likely to have a HCI Material Adverse Effect;
and in connection with the use of HCI's properties, HCI and the HCI Subsidiaries
have not failed to comply in any material respect with all applicable local,
state and federal environmental laws, regulations, ordinances and administration
and judicial orders relating to the generation, use, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous Materials.
Section 5.24 Insurance. HCI maintains fire and casualty, general liability,
product liability, and professional liability insurance policies with reputable
insurance carriers, which HCI reasonably believes provide full and adequate
coverage for all normal risks incident to the business of HCI and the HCI
Subsidiaries and their respective properties and assets.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by HCI Pending the Merger. From the date of
this Agreement to the Effective Time, unless Rent-Way shall otherwise agree in
writing, or as otherwise contemplated by this Agreement, any Exhibit hereto or
the HCI Disclosure Letter:
(a) the respective businesses of HCI and the HCI Subsidiaries shall be
conducted only in the ordinary and usual course of business consistent with past
practices, and there shall be no material changes in the conduct of the
operations of HCI or any HCI Subsidiary;
(b) HCI shall not (i) sell or pledge or agree to sell or pledge any
stock owned by it in any of the HCI Subsidiaries; (ii) amend its Certificate of
Incorporation or By-Laws; or (iii) split, combine or reclassify any shares of
its outstanding capital stock or declare, set aside or pay any dividend or other
distribution payable in cash, stock or property, or redeem or otherwise acquire
any shares of its capital stock or shares of the capital stock of any of the HCI
Subsidiaries;
(c) neither HCI nor any of the HCI Subsidiaries shall (i) authorize for
issuance, issue or sell any additional shares of, or rights of any kind to
acquire any shares of, its capital stock of any class (whether through the
issuance or granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) or grant any stock appreciation rights; (ii) acquire,
dispose of, transfer, lease, license, mortgage, pledge or encumber
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any fixed or other assets in any one or series of related transactions that
would require the filing by HCI of a Current Report on Form 8-K pursuant to the
Exchange Act or would require that the Proxy Statement or Registration Statement
include or incorporate by reference financial statements of any business
acquired pursuant to Section 3-05 of Regulation S-X under the Securities Act;
(iii) incur, assume or prepay any indebtedness or any other material liabilities
other than in the ordinary course of business consistent with past practices;
(iv) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any person
other than an HCI Subsidiary in the ordinary course of business consistent with
past practices; (v) make any loans, advances or capital contributions to, or
investments in, any other person, other than to HCI Subsidiaries and other than
in the ordinary course of business consistent with past practices; (vi)
authorize capital expenditures substantially in excess of the amount currently
budgeted therefor; (vii) permit any insurance policy naming HCI or any HCI
Subsidiary as a beneficiary or a loss payee to be canceled or terminated other
than in the ordinary course of business; or (viii) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(d) HCI shall use commercially reasonable efforts to preserve intact the
business organization of HCI and the HCI Subsidiaries, to keep available the
services of its and their present officers and key employees, and to preserve
the goodwill of those having business relationships with it and the HCI
Subsidiaries;
(e) neither HCI nor any of the HCI Subsidiaries shall make any change in
the compensation payable or to become payable to any of its officers, directors
or employees, enter into or amend any employment, severance, termination or
other similar agreement, adopt any new HCI Plan or amend in any material respect
any existing HCI Plan, or make any loans to any of its officers, directors or
employees or make any changes in its existing borrowing or lending arrangement
for or on behalf of any of such persons, whether contingent on consummation of
the Merger or otherwise, other than (i) in the ordinary course of business
consistent with past practices and (ii) as may be required under Applicable Law
or the terms of any existing HCI Plan; and
(f) neither HCI nor any of the HCI Subsidiaries shall (i) knowingly take
or allow to be taken any action which would jeopardize the treatment of the
Merger as a pooling of interests for accounting purposes; or (ii) knowingly
take, or allow any party related to HCI within the meaning of Treas. Reg.
Section 1.368-1(e)(3) to take, any action that would jeopardize qualification of
the Merger as a reorganization within the meaning of section 368(a)(1)(A) of the
Code, including, but not limited to, the redemption or other acquisition of any
shares of capital stock of HCI or any HCI Subsidiary.
Section 6.2 Conduct of Business by Rent-Way Pending the Merger. From the
date of this Agreement to the Effective Time, unless HCI shall otherwise agree
in writing, or as otherwise contemplated by this Agreement, any Exhibit hereto
or the Rent-Way Disclosure Letter:
(a) the businesses of Rent-Way and the Rent-Way Subsidiaries shall be
conducted only in the ordinary and usual course of business consistent with past
practices, and there shall be no material changes in the conduct of the
operations of Rent-Way or any Rent-Way Subsidiary;
(b) Rent-Way shall not (i) sell, pledge or agree to sell or pledge any
stock owned by it in any of the Rent-Way Subsidiaries, (ii) amend its Articles
of Incorporation or By-Laws or (iii) split, combine or reclassify any shares of
its outstanding capital stock or declare, set aside or pay any dividend or other
distribution payable in cash, stock or property, or redeem or otherwise acquire
any shares of its capital stock or shares of the capital stock of any of the
Rent-Way Subsidiaries;
(c) Neither Rent-Way nor any of the Rent-Way Subsidiaries shall (i)
authorize for issuance, issue or sell any additional shares of, or rights of any
kind to acquire any shares of, its capital stock of any class (whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) or grant any stock appreciation rights, except
for the issuance of shares of Rent-Way Common Stock in connection with a
transaction permitted under clause (ii) of this Section 6.2(c); (ii) acquire,
dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or
other assets in any one or series of related transactions that would require the
filing by Rent-Way of a Current Report on Form 8-K pursuant to the Exchange Act
or required that the Proxy Statement or Registration Statement include or
incorporate by reference financial statements of any business acquired pursuant
to Section 3-05 of Regulation S-X under the Securities Act;
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(iii) incur, assume or prepay any indebtedness or any other material liabilities
other than in the ordinary course of business consistent with past practices;
(iv) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any person
other than in the ordinary course of business and consistent with past
practices; (v) make any loans, advances or capital contributions to, or
investments in, any other person, other than in the ordinary course of business
and consistent with past practices; (vi) authorize capital expenditures
substantially in excess of the amount currently budgeted therefor; (vii) permit
any insurance policy naming Rent-Way or any Rent-Way Subsidiary as a beneficiary
or a loss payee to be canceled or terminated other than in the ordinary course
of business; or (viii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) Rent-Way shall use commercially reasonable efforts to preserve
intact the business organization of Rent-Way and the Rent-Way Subsidiaries, to
keep available the services of its and their present officers and key employees,
and to preserve the goodwill of those having business relationships with it and
the Rent-Way Subsidiaries;
(e) Neither Rent-Way nor any of the Rent-Way Subsidiaries shall make any
change in the compensation payable or to become payable to any of its officers,
directors or employees, enter into or amend any employment, severance,
termination or other similar agreement, adopt any new Rent-Way Plan or amend in
any material respect any existing Rent-Way Plan, or make any loans to any of its
officers, directors or employees or make any changes in its existing borrowing
or lending arrangement for or on behalf of any of such persons, whether
contingent on consummation of the Merger or otherwise, other than (i) in the
ordinary course of business and consistent with past practices and (ii) as may
be required under Applicable Law or the terms of any existing Rent-Way Plan; and
(f) Neither Rent-Way nor any of the Rent-Way Subsidiaries shall (i)
knowingly take or allow to be taken any action which would jeopardize the
treatment of the Merger as a pooling of interests for accounting purposes; or
(ii) knowingly take, or allow any party related to Rent-Way within the meaning
of Treas. Reg. Section 1.368-1(e)(3) to take, any action that would jeopardize
qualification of the Merger as a reorganization within the meaning of section
368(a)(1)(A) of the Code, including, but not limited to, the redemption or other
acquisition of any shares of HCI or any HCI Subsidiary other than as set forth
in Article III of this Agreement.
Section 6.3 Other Actions. Each of Rent-Way and HCI shall not, and shall
use commercially reasonable efforts to cause its respective subsidiaries not to,
take any action that would result in (i) any of the representations and
warranties of such party become untrue or (ii) except as contemplated by Section
7.2, any of the conditions to the Merger set forth in Article VIII not being
satisfied.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. HCI and Rent-Way shall each afford to
the other and to the other's financial advisors, legal counsel, accountants,
consultants and other agents and representatives full access at all reasonable
times throughout the period prior to the Effective Time to all of its books,
records, properties and personnel and, during such period, each shall furnish
promptly to the other (a) a copy of each report, schedule and other document
filed or received by it pursuant to the requirements of federal or state
securities laws, and (b) all other information as such other Party may
reasonably request, provided that no investigation pursuant to this Section 7.1
shall affect any representations or warranties made herein or the conditions to
the obligations of the respective Parties to consummate the Merger. Each Party
and its affiliates, advisors, legal counsel, accountants, consultants and other
agents and representatives shall hold in confidence all nonpublic information in
accordance with the terms of the confidentiality letter agreement dated August
24, 1998 (the "Confidentiality Agreement") between HCI and Rent-Way and, if this
Agreement is terminated, each Party will deliver to the other documents, work
papers and other material (including copies) obtained by such Party or on its
behalf from the other Party as a result of this Agreement or in connection
herewith, whether so obtained before or after the execution hereof, in
accordance with the terms of the Confidentiality Agreement.
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Section 7.2 Acquisition Proposals.
(a) HCI shall not, nor shall HCI authorize or permit any officer,
director or employee of, or investment banker, attorney or other advisor or
representative or agent of, HCI or any HCI Subsidiary to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action intended to facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that nothing contained in this Section
7.2(a) shall prohibit HCI's Board of Directors (and its authorized
representatives) from furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited Acquisition
Proposal if, and only to the extent that (A) HCI's Board of Directors, after
consultation with and based on the written opinion of outside legal counsel,
determines in good faith that in order for such HCI's Board of Directors to
comply with its fiduciary duties to stockholders under Applicable Law it should
take such action, (B) prior to taking such action, HCI receives from such person
or entity an executed agreement in reasonably customary form relating to the
confidentiality of information to be provided to such person or entity, and (C)
the Acquisition Proposal contains an offer of consideration that is superior to
the consideration represented by the Exchange Ratio.
Notwithstanding anything in this Agreement to the contrary, HCI shall
(i) promptly advise Rent-Way orally and in writing of (A) the receipt by it (or
any of the other entities or other persons referred to above) after the date
hereof of any Acquisition Proposal, or any inquiry which could reasonably be
expected to lead to any Acquisition Proposal, (B) the material terms and
conditions of such Acquisition Proposal or inquiry and (C) the identity of the
person making any such Acquisition Proposal or inquiry, (ii) keep Rent-Way
reasonably informed of the status and details of any such Acquisition Proposal
or inquiry, and (iii) negotiate with Rent-Way to make such adjustments in the
terms and conditions of this Agreement as would enable HCI to proceed with the
transactions contemplated herein. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the first
sentence of this Section 7.2 by any officer, director or employee of HCI or the
HCI Subsidiaries or any investment banker, attorney or other advisor,
representative or agent of HCI or the HCI Subsidiaries, whether or not such
person is purporting to act on behalf of HCI or otherwise, shall be deemed to be
a breach of this Section 7.2 by HCI. For purposes of this Agreement,
"Acquisition Proposal" means any bona fide proposal with respect to a merger,
consolidation, share exchange or similar transaction involving HCI or the HCI
Subsidiaries, or any purchase of all or any significant portion of the assets of
HCI or the HCI Subsidiaries other than the transactions contemplated hereby.
(b) Except as set forth below, HCI's Board of Directors shall not (i)
withdraw, or modify in a manner materially adverse to Rent-Way, the approval or
recommendation by HCI's Board of Directors of this Agreement or the Merger, or
(ii) approve, recommend or cause HCI to enter into any agreement with respect to
any Acquisition Proposal. Notwithstanding the foregoing, if HCI receives an
unsolicited Acquisition Proposal and HCI's Board of Directors determines in good
faith, following consultation with and based on the written opinion of outside
legal counsel, that it is necessary to do so in order to comply with its
fiduciary duties to stockholders under Applicable Law, HCI's Board of Directors
may (w) withdraw or modify its approval or recommendation of this Agreement and
the Merger, (x) approve or recommend such Acquisition Proposal to HCI's
stockholders, (y) cause HCI to enter into an agreement with respect to such
Acquisition Proposal or (z) terminate this Agreement pursuant to Section 9.3(c);
provided, however, that prior to taking such action, HCI shall, and shall cause
its respective financial and legal advisors to, negotiate with Rent-Way to make
such adjustments in the terms and conditions of this Agreement as would enable
HCI to proceed with the transactions contemplated herein on such adjusted terms.
Notwithstanding anything contained in this Agreement to the contrary, any action
by the Board of Directors of HCI permitted by this Section 7.2(b) shall not
constitute a breach of this Agreement by HCI.
(c) If the Board of Directors of HCI takes any action described in
clause (y) or (z) of Section 7.2(b) or Rent-Way exercises its right to terminate
this Agreement under Section 9.4(d), based on HCI's Board of Directors having
taken any action described in clause (w), (x) or (y) of Section 7.2(b), HCI
shall, simultaneously with the taking of such action or upon such termination
pay to Rent-Way upon demand the sum of $10,000,000 plus all fees and expenses
incurred by Rent-Way in connection with the transactions contemplated by this
Agreement
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(including without limitation, investment bankers' fees and expenses), payable
in same-day funds, as liquidated damages and not as a penalty. If HCI fails to
pay to Rent-Way any amounts due under this Section 7.2(c), HCI shall pay the
costs and expenses (including reasonable legal fees and expenses) in connection
with any action, including the filing of any lawsuit or other action, taken by
Rent-Way to collect payment, together with interest on the amount of any unpaid
fee at the publicly announced prime rate of Citibank, N.A. in effect from time
to time from the date such fee was required to be paid.
Section 7.3 Registration Statement; Listing Application.
(a) As promptly as practicable, Rent-Way and HCI shall prepare and file
with the SEC the Proxy Statement in form and substance satisfactory to each of
Rent-Way and HCI, and Rent-Way shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement will be included as a
prospectus. Rent-Way shall use commercially reasonable efforts to (i) respond to
any comments of the SEC and (ii) have the Registration Statement declared
effective under the Securities Act as promptly as practicable and to keep the
Registration Statement effective as long as is reasonably necessary to
consummate the Merger. Each Party will notify the other promptly of the receipt
of any comments from the SEC and of any request by the SEC for amendments or
supplements to the Registration Statement or the Proxy Statement or for
additional information and will supply the other with copies of all
correspondence between such Party or any of its representatives and the SEC with
respect to the Registration Statement or the Proxy Statement. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Registration Statement or the Proxy Statement, Rent-Way or HCI, as the case may
be, shall promptly inform the other of such occurrences and cooperate in filing
with the SEC and or mailing to the shareholders of Rent-Way and the stockholders
of HCI such amendment or supplement. The Proxy Statement shall include the
recommendations of the Board of Directors of Rent-Way in favor of the Merger
Agreement, the Amendment and the issuance of the Rent-Way Shares and the Board
of Directors of HCI as to the Merger Agreement, subject to the provisions of
Section 7.2. Rent-Way shall use commercially reasonable efforts to take any
action required to be taken under state securities or blue sky laws in
connection with the issuance of the Rent-Way Shares pursuant hereto and will pay
or cause to be paid all expenses incident thereto. HCI shall furnish Rent-Way
with all information concerning HCI and the holders of its capital stock and
shall take such other action as Rent-Way may reasonably request in connection
with such Proxy Statement and Registration Statement and issuance of Rent-Way
Shares.
(b) Rent-Way shall promptly prepare and submit to Nasdaq or the NYSE a
listing application covering the Rent-Way Shares to be issued in connection with
the Merger and this Agreement and shall use commercially reasonable efforts to
obtain, prior to the Effective Time, approval for the listing of such Rent-Way
Shares, subject to official notice of issuance.
Section 7.4 Proxy Statements; Stockholder Approvals.
(a) Rent-Way and HCI shall cause the definitive Proxy Statement to be
mailed to their respective shareholders and stockholders as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. It shall be a condition precedent to HCI's obligation to mail
the Proxy Statement that the opinions of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation and of Xxxxxxxx, Inc. referred to Section 5.19 not have been
withdrawn. It shall be a condition precedent to Rent-Way's obligation to mail
the Proxy Statement that the opinion of NBM referred to in Section 4.19 not have
been withdrawn. At the shareholders and stockholders' meetings, each of Rent-Way
and HCI shall vote or cause to be voted in favor of authorization, approval and
adoption of this Agreement and the Merger and, in the case of Rent-Way, the
Amendment and the issuance of the Rent-Way Shares to be issued in the Merger,
all capital stock entitled to vote as to which it holds proxies at such time.
(b) In connection with the preparation of the Proxy Statement and the
Registration Statement, Rent-Way shall use reasonable efforts to cause to be
delivered to Rent-Way and HCI prior to the mailing of the Proxy Statement to the
stockholders of Rent-Way and HCI the opinion of Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx &
Goodyear LLP, dated the date of the Proxy Statement, substantially to the effect
that the Merger will constitute a reorganization for federal income tax purposes
within the meaning of Section 368(a)(1)(A) of the Code.
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(c) Each of HCI's and Rent-Way's obligations under this Section 7.4
shall at all times remain subject to their fiduciary duties imposed under
Applicable Law and Section 7.2 of this Agreement, in the event that, if required
by such fiduciary duties as advised in writing by outside counsel, the Board of
Directors of HCI or Rent-Way, as the case may be, shall have withdrawn or
modified its recommendation that shareholders or stockholders authorize, approve
and adopt this Agreement and the Merger, in the case of Rent-Way and HCI, or
that shareholders authorize the Amendment and the issuance of the Rent-Way
Shares to be issued in connection with the Merger, in the case of Rent-Way.
(d) HCI, acting through its Board of Directors, shall, in accordance
with Applicable Law and its Certificate of Incorporation and By-Laws:
(i) promptly and duly call, give notice of, convene and hold as soon
as practicable (but in no event sooner than 20 business days following the
date the Proxy Statement is mailed to its Stockholders) following the date
upon which the Registration Statement becomes effective a meeting of its
stockholders for the purpose of voting to authorize, approve and adopt this
Agreement and the Merger and shall use commercially reasonable efforts to
obtain such stockholder approval; and
(ii) recommend authorization, approval and adoption of this Agreement
and the Merger by the stockholders of HCI and take all lawful action to
solicit such approval.
(e) Rent-Way, acting through its Board of Directors, shall, in
accordance with Applicable Law and its Articles of Incorporation and By-Laws:
(i) promptly and duly call, give notice of, convene and hold as soon
as practicable (but in no event sooner than 20 business days following the
date the Proxy Statement is mailed to its shareholders) following the date
upon which the Registration Statement becomes effective a meeting of its
shareholders for the purpose of voting to authorize; approve and adopt this
Agreement and the Merger, the Amendment and the issuance of the Rent-Way
Shares to be issued in the Merger and shall use commercially reasonable
efforts to obtain such shareholder approval; and
(ii) recommend authorization, approval and adoption of this Agreement
and the Merger, the Amendment and the issuance of the Rent-Way Shares to be
issued in the Merger by the shareholders of Rent-Way and include in the
Proxy Statement such recommendation and take all lawful action to solicit
such approval.
Section 7.5 Antitrust Laws. As promptly as practicable, HCI and Rent-Way
shall make all filings and submissions under the HSR Act as may be reasonably
required to be made in connection with this Agreement and the transactions
contemplated hereby. Subject to Section 7.1 hereof, HCI will furnish to
Rent-Way, and Rent-Way will furnish to HCI, such information and assistance as
the other may reasonably request in connection with the preparation of any such
filings or submissions. Subject to Section 7.1 hereof, HCI will provide
Rent-Way, and Rent-Way will provide HCI, with copies of all correspondence,
filings or communications (or memoranda setting forth the substance thereof)
between such Party or any of its representatives, on the one hand, and any
Governmental Authority or members of its staff, on the other hand, with respect
to this Agreement and the transactions contemplated hereby.
Section 7.6 Voting Agreements and Option Agreements. Concurrently herewith,
HCI is entering into voting agreements with each of Xxxxxx X. Xxxx and Xxxxxxx
X. Xxxxxxxxxxx substantially in the form attached hereto as Exhibit A (together,
the "Rent-Way Voting Agreements"); Rent-Way is entering into voting agreements
with each of GDJ, Jr. Investments, L.P., and Xxxxxxx X. Xxxxx substantially in
the form attached hereto as Exhibit B (collectively, the "HCI Voting Agreements"
and together with the Rent-Way Voting Agreements referred to herein as the
"Voting Agreements"); HCI and Rent-Way are entering into an option agreement
substantially in the form attached hereto as Exhibit C (the "HCI Option
Agreement"); and Rent-Way and HCI are entering into an option agreement
substantially in the form attached hereto as Exhibit D (the "Rent-Way Option
Agreement" and together with the HCI Option Agreement referred to herein as the
"Option Agreements").
Section 7.7 HCI Employee Stock Options and HCI Director Stock Options.
Except as provided in this Agreement or as may occur automatically pursuant to
the provisions of the HCI Stock Option Plans as in effect on the date hereof
from the date hereof HCI will not accelerate the vesting or exerciseability of
or otherwise
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modify the terms and conditions applicable to the HCI Stock Options. Except as
provided in this Agreement, Rent-Way will not exercise any right under any of
the Rent-Way Employee Stock Option Plans from the date hereof to accelerate the
vesting or exerciseability of or otherwise modify the terms and conditions
applicable to the Rent-Way Employee Stock Options. At the Effective Time, each
of the HCI Stock Options which is outstanding and unexercised at the Effective
Time shall be converted automatically into an option to purchase Rent-Way Shares
in an amount and at an exercise price determined as provided below (and
otherwise subject to the terms of the HCI Stock Option Plans governing the HCI
Stock Options):
(1) The number of Rent-Way Shares to be subject to the new option
shall be equal to the product of the number of Shares subject to the
original option and the Exchange Ratio, provided that any fractional Rent-
Way Share resulting from such multiplication shall be rounded down to the
nearest share and Rent-Way shall pay an amount in cash to the holder of
such HCI Stock Option within thirty (30) days after the Effective Time
equal to the fair market value immediately prior to the Effective Time of
such fractional Rent-Way Share calculated based on the average closing
price on Nasdaq or the NYSE National Market for the last five trading days
immediately preceding the day prior to the Effective Time; and
(2) The exercise price per Rent-Way Share under the new option shall
be equal to the aggregate exercise price of the shares issuable pursuant to
the original option divided by the total number of full Rent-Way Shares
subject to the new option (as determined under (1) immediately above),
provided that such exercise price shall be rounded up the nearest cent.
Rent-Way shall assume the obligations of HCI under the HCI Stock Option Plans in
respect of each such new option. The duration and other terms of the new option
shall be the same as that of the original option, except that all references to
HCI shall be deemed to be references to Rent-Way. Rent-Way shall file with the
SEC a registration statement on Form S-8 (or other appropriate form) as promptly
as practicable after the Effective Time for purposes of registering all Rent-Way
Shares issuable after the Effective Time upon exercise of the HCI Stock Options,
and shall have such registration statement or post-effective amendment become
effective and comply, to the extent applicable, with state securities or blue
sky laws with respect thereto at the Effective Time. Rent-Way shall give any
person who was an HCI employee who has options that are vested under any HCI
Stock Option Plans and who may be terminated as a result of the Merger not less
than 30 days notice of termination for the purpose of permitting their exercise
of such vested options.
Section 7.8 Benefit Plans. After the Effective Time, Rent-Way shall provide
benefits to employees of HCI and the HCI Subsidiaries that are not less
favorable to such employees than those provided to similarly situated employees
of Rent-Way and the Rent-Way Subsidiaries. With respect to any Rent-Way Plan
that is an "employee benefit plan" as defined in Section 3(3) of ERISA, solely
for purposes of satisfying the service requirements, if any, to participate in
such plans and to vest in benefits payable under such plans (but not for
purposes of computing the amount of the benefits, or the existence of a benefit,
under such plans), service with HCI or any HCI Subsidiary (or a predecessor
entity to either of them) shall be treated as service with Rent-Way or the Rent-
Way Subsidiaries (as applicable); provided, however, that such service shall not
be recognized to the extent that such recognition would result in a duplication
of benefits (or is not otherwise recognized for such purposes under the Rent-Way
Plans.
Section 7.9 Public Announcements. Rent-Way, on the one hand, and HCI, on
the other hand, agree that they will not issue any press release or otherwise
make any public statement or respond to any press inquiry with respect to this
Agreement or the transactions contemplated hereby without the prior approval of
the other Party, except as may be required by Applicable Law.
Section 7.10 Continuance of Existing Indemnification Rights.
(a) From and after the Effective Time, Rent-Way shall indemnify, defend
and hold harmless to the fullest extent permitted under Applicable Law each
person who is now, or has been at any time prior to the date hereof, an officer
or director of Rent-Way or HCI or any HCI Subsidiary (individually, an
"Indemnified Party" and collectively, the "Indemnified Parties"), against all
losses, claims, damages, liabilities, costs or expenses (including attorneys'
fees and expenses), judgments, fines, penalties and amounts paid in settlement
in connection with any claim, action, suit, proceeding or investigation arising
out of or pertaining to acts or omissions, or
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alleged acts or omissions, by them in their capacities as such occurring at or
prior to the Effective Time. In the event of any such claim, action, suit,
proceeding or investigation (an "Action"), (i) any Indemnified Party wishing to
claim indemnification shall promptly notify Rent-Way thereof, (ii) Rent-Way
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Party, which counsel shall be reasonably acceptable to Rent-Way, in
advance of the final disposition of any such Action to the full extent permitted
by Applicable Law, upon receipt of any undertaking required by Applicable Law,
and (iii) Rent-Way will cooperate in the defense of any such matter; provided,
however, that Rent-Way shall not be liable for any settlement effected without
its written consent (which consent will not be unreasonably withheld) and
provided, further, that Rent-Way shall not be obligated pursuant to this Section
7.9 to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single Action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two of more of such Indemnified
Parties have conflicting interests in the outcome of such action.
(b) Rent-Way shall keep in effect provisions in its Articles of
Incorporation and Bylaws providing for exculpation of director and officer
liability and its indemnification of the Indemnified Parties to the fullest
extent permitted under Applicable Law, which provisions shall not be amended
except as required by Applicable Law or except to make changes permitted by law
that would enlarge the Indemnified Parties' right of indemnification.
(c) Rent-Way shall cause to be maintained in effect for a period ending
not sooner than the sixth anniversary of the Effective Time directors' and
officers' liability insurance providing at least the same coverage with respect
to the officers and directors of HCI and the HCI Subsidiaries as the policies
maintained on behalf of directors and officers of HCI and the HCI Subsidiaries
as of the date hereof, and containing terms and conditions which are no less
advantageous, with respect to matters occurring on or prior to the Effective
Time (to the extent such insurance is available with respect to such matters).
(d) If in the event that Rent-Way or any of its successors and assigns
(i) consolidates or merges into any other person or shall not be the continuing
or surviving corporation or entity of which consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of Rent-Way shall assume the obligations
of Rent-Way under this Section 7.10.
(e) The provisions of this Section 7.10 are intended to be for the
benefit of, and shall be enforceable by, the officers and directors of HCI and
each HCI Subsidiary and his or her heirs and representatives.
Section 7.11 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the Party incurring such
expenses except that (a) (i) a filing fee in connection with any HSR Act filing
and (ii) the expenses incurred in connection with the printing and mailing of
the Proxy Statement shall be shared equally by Rent-Way and HCI and (b) all
transfer taxes shall be paid by HCI.
Section 7.12 Additional Agreements.
(a) Subject to terms and conditions herein provided, each of the Parties
hereto agrees to use all commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under Applicable Law and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
commercially reasonable efforts to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, Rent-Way and HCI shall cause their
respective proper officers and/or directors to take all such necessary action.
(b) Notwithstanding anything contained in this Agreement to the
contrary, the Parties agree that, to the extent that the consummation of the
transactions contemplated hereby requires that HCI or any HCI Subsidiary obtain
the consent of a landlord under any store lease of HCI or such HCI Subsidiary,
HCI will use commercially reasonable efforts to obtain the consent of the
landlord under each such store lease specified by Rent-Way to HCI in writing
within ten (10) days after the date hereof, and the Parties further agree that,
if despite its commercially reasonable efforts HCI is not able to obtain any
such consent prior to the Effective Time, such failure by HCI shall not
constitute a breach by HCI of any representation, warranty, covenant or
agreement in this Agreement or
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constitute a failure by HCI to satisfy any condition of Rent-Way to its
obligation to consummate the transactions contemplated hereby at the Effective
Time or otherwise give Rent-Way the right to terminate this Agreement.
Section 7.13 Affiliate Agreements.
(a) HCI shall, prior to the Effective Time, deliver to Rent-Way a list
(reasonably satisfactory to counsel for Rent-Way), setting forth the names and
addresses of all persons who are, at the time of the HCI stockholder's meeting
referred to in Section 7.4(a) hereof, in HCI's reasonable judgment, "affiliates"
of HCI for purposes of Rule 145 under the Securities Act or under applicable SEC
accounting releases with respect to pooling of interests accounting treatment.
HCI shall furnish such information and documents as Rent-Way may reasonably
request for the purpose of reviewing such list. HCI shall use commercially
reasonable efforts to cause each person who is identified as an "affiliate" in
the list furnished pursuant to this Section 7.12 to execute a written agreement
on or prior to the Effective Time, in substantially the form of Exhibit E
attached hereto (the "HCI Affiliate Agreements").
(b) Rent-Way shall, prior to the Effective Time, deliver to HCI a list
(reasonably satisfactory to counsel for HCI) setting forth the names and
addresses of all persons who are, at the time of the Rent-Way stockholders
meeting referred to in Section 7.4(b) hereof, in Rent-Way's reasonable judgment,
"affiliates" of Rent-Way under applicable SEC accounting releases with respect
to pooling of interests accounting treatment. Rent-Way shall furnish such
information and documents as HCI may reasonably request for the purpose of
reviewing such list. Rent-Way shall use its commercially reasonable efforts to
cause each person who is identified as an affiliate in the list furnished
pursuant to this Section 7.12 to execute a written agreement on or prior to the
Effective Time, in substantially the form of Exhibit F attached hereto (the
"Rent-Way Affiliate Agreements" and, together with the HCI Affiliate Agreements
referred to collectively herein as the "Affiliate Agreements").
Section 7.14 Publication of Post Merger Financial Results. HCI and Rent-Way
agree that the Surviving Corporation shall publish financial results covering at
least thirty (30) days of combined operations as soon as practicable after the
Effective Time; provided that if the Effective Time occurs after February 28,
1999, HCI and Rent-Way agree that upon the written request of any person who
shall have executed an Affiliate Agreement pursuant to Section 7.12, the
Surviving Corporation shall publish such combined financial results at the end
of the first full calendar month following the Effective Date which notice shall
be given at least thirty (30) days prior to the end of such first full calendar
month following the Effective Date.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each Party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Any waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated, and no action shall
have been instituted by the Department of Justice or Federal Trade Commission
challenging or seeking to enjoin the consummation of this transaction, which
action shall have not been withdrawn or terminated.
(b) The Registration Statement shall have become effective in accordance
with the provisions of the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no proceeding
for such purpose shall be pending before or threatened by the SEC.
(c) This Agreement and the Merger shall have been authorized, approved
and adopted by the requisite vote of the stockholders of HCI and the
shareholders of Rent-Way, and the Amendment and the issuance of the Rent-Way
Shares in connection with the Merger shall have been authorized and approved by
the requisite vote of the shareholders of Rent-Way, in each case in accordance
with Applicable Law.
(d) No temporary restraining order, preliminary or permanent injunction
or other order by any federal or state court in the United States which
prohibits the consummation of the Merger shall have been issued and remain in
effect.
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(e) Subject to Section 7.12(b), each of HCI and Rent-Way shall have
obtained such consents from third parties and Governmental Authorities in
addition to the HSR Act as shall be required and which are material to Rent-Way
and HCI and to consummation of the transactions contemplated hereby.
(f) Each of Rent-Way and HCI shall have received a letter from
PricewaterhouseCoopers, LLP dated the Effective Time, addressed to Rent-Way and
HCI stating that the Merger will qualify as a pooling of interests transaction
under Opinion No. 16 of the Accounting Principles Board and that Rent-Way and
HCI meet the conditions to qualify for a pooling of interests transaction under
opinion No. 16 of the Accounting Principles Board, "Business Combinations," and
the related published interpretations of the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board, and the
published rules and regulations of the SEC.
(g) Each of Rent-Way and HCI shall have received an opinion of Xxxxxxx,
Xxxx, Xxxxxxx, Xxxxx & Goodyear, LLP, in form and substance reasonably
satisfactory to Rent-Way and HCI, dated the date of the Proxy Statement, which
opinion shall be reconfirmed as of the Effective Time, substantially to the
effect that the Merger will constitute a reorganization for federal income tax
purposes within the meaning of section 368(a)(1)(A) of the Code.
Section 8.2 Conditions to Obligation of HCI to Effect the Merger. The
obligation of HCI to effect the Merger shall be subject to the satisfaction at
or prior to the Effective Time of the following additional conditions:
(a) Rent-Way shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of Rent-Way contained
in this Agreement shall be true and correct in all material respects at and as
of the Effective Time as if made at and as of such time, except (i) for changes
specifically permitted by this Agreement and (ii) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct in all material respects as of such date, and HCI shall have
received a certificate of the President of Rent-Way as to the satisfaction of
this condition.
(b) HCI shall have received an opinion from Xxxxxxx, Xxxx, Xxxxxxx,
Xxxxx & Goodyear, LLP, counsel to Rent-Way, dated the Effective Time,
substantially to the effect that:
(i) Rent-Way is a corporation validly existing under the laws of the
Commonwealth of Pennsylvania.
(ii) Rent-Way has the corporate power to enter into this Agreement
and to consummate the transactions contemplated hereby; and the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by requisite corporate action
taken on the part of Rent-Way.
(iii) This Agreement has been executed and delivered by Rent-Way and
is a valid and binding obligation of Rent-Way, enforceable against Rent-Way
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and general principles of equity.
(iv) Neither the execution and delivery of this Agreement by
Rent-Way, nor the consummation by Rent-Way of the transactions contemplated
hereby, will violate the Articles of Incorporation or By-Laws of Rent-Way
or, to the knowledge of such counsel, and except as set forth in the
Rent-Way Disclosure Letter without having made any independent
investigation, will constitute a violation of or a default under (except
for any such violation or default as to which requisite waivers or consents
either shall have been obtained by Rent-Way prior to the Effective Time or
shall have been waived by HCI in writing) any material contract, agreement
or instrument to which Rent-Way or any of the Rent-Way Subsidiaries is
subject and which has been specifically identified to such counsel by
Rent-Way in connection with rendering such opinion.
(v) The Rent-Way Shares to be issued in connection with the
transactions contemplated by this Agreement are duly authorized and
reserved for issuance and, when issued as contemplated by this Agreement,
will be validly issued, fully paid and nonassessable.
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(vi) While such counsel assumes no responsibility for any event,
occurrence or statement of fact relating to Rent-Way or for the accuracy
completeness or fairness of any statements contained or incorporated by
reference in or omitted from the Registration Statement or the Proxy
Statement, and while such counsel expresses no opinion as to the financial
statements or other financial or statistical data contained or incorporated
by reference therein with respect to information in the Registration
Statement or the Proxy Statement relating to Rent-Way, the Registration
Statement complies as to form in all material respects with the
requirements of the Securities Act and the applicable rules and regulations
promulgated thereunder.
In addition, in such opinion, such counsel shall state that such
counsel has no reason to believe that the Registration Statement or the
Proxy Statement, as amended or supplemented to the date of such opinion,
insofar as it relates to Rent-Way, contains any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, except
such counsel expresses no belief as to the financial statements or other
financial or statistical data contained or incorporated by reference in the
Registration Statement or the Proxy Statement.
As to any matter in such opinion which involves matters of fact, such
counsel may rely upon the certificates of officers and directors of
Rent-Way and of public officials and as to any matter in such opinion which
involves matters relating to laws other than the laws of the United States
or the corporate laws of the State of Delaware and the Commonwealth of
Pennsylvania, such counsel may rely on opinions of local counsel,
reasonably acceptable to HCI.
(c) The listing application referred to in Section 7.3(b) shall have
been approved by the National Association of Securities Dealers for listing of
the Rent-Way Shares on Nasdaq or shall have been approved by the NYSE for
listing on the NYSE, subject to official notice of issuance.
(d) From the date of this Agreement through the Effective Time, there
shall not have occurred any condition or event relating to the financial
condition, business or operations of Rent-Way or the Rent-Way Subsidiaries,
taken as a whole, that has had or would be reasonably likely to have a Rent-Way
Material Adverse Effect and HCI shall have received a certificate of the
President or Chief Financial Officer of Rent-Way as to the satisfaction of such
condition.
(e) Rent-Way shall have executed indemnification agreements with the
members of the HCI Board of Directors if, immediately prior to the Effective
Time, any such agreements are in effect between Rent-Way and its Board of
Directors, in which case, the form of agreement shall be substantially similar
to any such Rent-Way agreement.
Section 8.3 Conditions to Obligations of Rent-Way to Effect the Merger. The
obligations of Rent-Way to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions:
(a) HCI shall have performed in all material respects its obligations
under this Agreement required to be performed by it at or prior to the Effective
Time and the representations and warranties of HCI contained in this Agreement
shall be true and correct in all material respects at and as of the Effective
Time as if made at and as of such time, except (i) for changes specifically
permitted by this Agreement and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and correct
in all material respects as of such date and Rent-Way shall have received a
Certificate of the President and Chief Executive Officer of HCI as to the
satisfaction of this condition.
(b) Rent-Way shall have received an opinion from King & Spalding,
counsel for HCI, dated the Effective Time, substantially to the effect that:
(i) HCI is a corporation validly existing under the laws of the State
of Delaware.
(ii) HCI has the corporate power to enter into this Agreement and to
consummate the transactions contemplated hereby; and the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by requisite corporate action
taken on the part of HCI.
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(iii) This Agreement has been executed and delivered by HCI and is a
valid and binding obligation of HCI, enforceable against HCI in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and general principles of equity.
(iv) Neither the execution and delivery of this Agreement by HCI, nor
the consummation by HCI of the transactions contemplated hereby, will
violate the Certificate of Incorporation or By-Laws of HCI or, to the
knowledge of such counsel, and except as set forth in the HCI Disclosure
Letter without having made any independent investigation, will constitute a
violation of or a default under (except for any such violation or default
as to which requisite waivers or consents either shall have been obtained
by HCI prior to the Effective Time or shall have been waived by Rent-Way in
writing) any material contract, agreement or instrument to which HCI or any
of the HCI Subsidiaries is subject and which has been specifically
identified to such counsel by HCI in connection with rendering such
opinion.
In addition, in such opinion, such counsel shall state that such
counsel has no reason to believe that the Registration Statement or the
Proxy Statement, as amended or supplemented to the date of such opinion,
insofar as it relates to HCI, contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, except such
counsel expresses no belief as to the financial statements or other
financial or statistical data contained or incorporated by reference in the
Registration Statement or the Proxy Statement.
As to any matter in such opinion which involves matters of fact, such
counsel may rely upon the certificates of officers and directors of HCI and
of public officials and as to any matter in such opinion which involves
matters relating to laws other than the laws of the United States or the
corporate laws of the State of Delaware, such counsel may rely on opinions
of local counsel, reasonably acceptable to HCI.
(c) From the date of this Agreement through the Effective Time, there
shall not have occurred any condition or event relating to the financial
condition, business or operations of HCI or the HCI Subsidiaries, taken as a
whole, that has had or would be reasonably likely to have an HCI Material
Adverse Effect and Rent-Way shall have received a certificate of the President
or Chief Financial Officer of HCI as to the satisfaction of this condition.
(d) Rent-Way and Xxxxxx X. Xxxxxxx, Xx. shall have entered into a
noncompetition agreement in the form attached hereto as Exhibit G (the "Xxxxxxx
Noncompetition Agreement").
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Effective Time by mutual written consent of the
Parties.
Section 9.2 Termination by Either Rent-Way or HCI. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of Rent-Way or HCI if:
(a) The Merger is not consummated on or before February 28, 1999 (or
such later date as shall have been approved by Rent-Way and HCI) (the
"Termination Date"), provided, however, that the right to terminate this
Agreement under this Section 9.2(a) shall not be available to any Party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the
Termination Date, and provided, further, that if on the Termination Date the
conditions to the Closing set forth in Section 8.1(a) or (e) shall not have been
fulfilled, but all other conditions to the Closing shall be fulfilled or shall
be capable of being fulfilled, then the Termination Date shall automatically be
extended to April 30, 1999; and provided, further that if on the Termination
Date the condition to the Closing set forth in Section 8.1(b) shall not have
been fulfilled, but all other conditions to the Closing shall be fulfilled or
shall be capable of being fulfilled, the Termination Date shall automatically be
extended to April 30, 1999; or
(b) A court of competent jurisdiction or Governmental Authority shall
have issued an order, decree or ruling or taken any other action (which order,
decree or ruling the parties shall use their commercially reasonable
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efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and nonappealable.
Section 9.3 Termination by HCI. This Agreement may be terminated and the
Merger may be abandoned by action of the Board of Directors of HCI if:
(a) There shall have been any event or condition that has had a Rent-Way
Material Adverse Effect since the date hereof which is not cured within thirty
(30) days after notice thereof to Rent-Way, or if Rent-Way shall have breached
Section 7.2, 7.4 or 7.5 and, in the case of Sections 7.4 and 7.5, such breach
has not been cured within thirty (30) days' notice thereof to Rent-Way;
(b) This Agreement and the Merger, the Amendment and the issuance of the
Rent-Way Shares in connection with the Merger shall not have been authorized,
approved and adopted by the requisite vote of the stockholders of Rent-Way; or
(c) The Board of Directors of HCI shall have exercised any of its rights
set forth in Section 7.2(b).
Section 9.4 Termination by Rent-Way. This Agreement may be terminated and
the Merger may be abandoned by action of the Board of Directors of Rent-Way if:
(a) There shall have been any event or condition that has had a HCI
Material Adverse Effect since the date hereof which is not cured within thirty
(30) days after notice thereof to HCI, or if HCI shall have breached Section
7.2, 7.4 or 7.5 and, in the case of Sections 7.4 and 7.5, such breach has not
been cured within thirty (30) days' notice thereof to HCI;
(b) This Agreement and the Merger shall not have been authorized,
approved and adopted by the requisite vote of the stockholders of HCI; or
(c) The Board of Directors of HCI shall have (i) withdrawn or modified
in a manner adverse to Rent-Way its recommendation of this Agreement and the
Merger; (ii) approved or recommended an Acquisition Proposal; or (iii) caused
HCI to enter into an agreement with respect to an Acquisition Proposal.
Section 9.5 Effect of Termination and Abandonment. In the event of the
termination and abandonment of this Agreement under this Article IX, this
Agreement shall become void and have no effect, without any liability on the
part of any Party or its Directors, officers or stockholders except (i) as
provided in Sections 7.1, 7.2 and 7.10 and (ii) to the extent that such
termination results from the willful breach by any Party hereto of any material
representation, warranty, covenant or agreement hereunder.
Section 9.6 Amendment. This Agreement may be amended by the Parties
pursuant to a writing adopted by action taken by all of the Parties at any time
before the Effective Time, provided, however, that after approval by the
stockholders of HCI or Rent-Way, whichever shall occur first, no amendment may
be made which would (a) alter or change the amount or kinds of consideration to
be received by the holders of Shares upon consummation of the Merger, (b) alter
or change any term of the Certificate of Incorporation of HCI or the Articles of
Incorporation of Rent-Way, or (c) alter or change any of the terms and
conditions of this Agreement if such alteration or change would adversely affect
the holders of any class or series of securities of HCI or Rent-Way. This
Agreement may not be amended except by an instrument in writing signed by the
Parties.
Section 9.7 Waiver. At any time before the Effective Time, any Party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other Parties (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a Party to any such extension of waiver shall be
valid only as against such Party and only if set forth in an instrument in
writing signed by such Party.
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ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties and Agreements. No
representations, warranties, covenants or agreements contained herein shall
survive beyond the Effective Time, except that the representations, warranties,
covenants or agreements contained in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 7.1, 7.8,
7.9, 7.10, 7.11 and 7.13 and this Article X shall survive beyond the Effective
Time.
Section 10.2 Notices. All notices and other communications required or
permitted by this Agreement shall be made in writing and any such notice or
communication shall be deemed delivered when delivered in person, transmitted by
telex or telecopier, or seven (7) days after it has been sent by air mail, as
follows:
Rent-Way: Rent-Way, Inc.
Xxx XxxxXxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx & Goodyear, LLP
0000 Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
Tel: (000) 000-0000
Fax: (000) 000-0000
HCI: Home Choice Holdings Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Xx.
Tel: (000) 000-0000
Fax: (000)000-0000
The Parties shall promptly notify each other in the manner provided in this
Section 10.2 of any change in its address. A notice of change of address shall
not be deemed to have been given until received by the addressee. Communications
by telex or telecopier shall also be sent concurrently by mail, but shall in any
event be effective as stated above.
Section 10.3 Assignment. No Party shall assign this Agreement or any
rights, interests or obligations hereunder, or delegate performance of any of
its obligations hereunder, without the prior written consent of the other Party.
Section 10.4 Entire Agreement. This Agreement, the Exhibits hereto, the
Rent-Way Disclosure Letter, the HCI Disclosure Letter, the Voting Agreements,
the Option Agreements, the Xxxxxxx Noncompetition Agreement, the Affiliate
Agreements and the Confidentiality Agreement embody the entire agreement and
understanding of the Parties in respect of the subject matter contained herein.
This Agreement supersedes all prior agreements and understandings between the
Parties with respect to such subject matter.
Section 10.5 Waiver, Amendment, etc. This Agreement may not be amended or
supplemented, and no waivers of or consents to departures from the provisions
hereof shall be effective, unless set forth in a writing
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signed by, and delivered to, both Parties. No failure to delay of a Party in
exercising any power or right under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise of any right or power, or any
abandonment or discontinuance of steps to enforce such right or power, preclude
any other or further exercise thereof or the existence of any other right or
power.
Section 10.6 Binding Agreement; No Third Party Beneficiaries. This
Agreement will be binding upon and inure to the benefit of the Parties and their
successors and permitted assigns. Nothing expressed or implied herein is
intended or will be construed to confer upon or to give any third Party any
rights or remedies by virtue hereof.
Section 10.7 Governing Law; Dispute Resolution; Equitable Relief.
(a) HIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW).
(b) EACH PARTY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION,
SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO ITS OBLIGATIONS OR LIABILITIES
UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT
ONLY IN THE UNITED STATES DISTRICT COURT FOR THE STATE OF DELAWARE OR, IN THE
EVENT (BUT ONLY IN THE EVENT) SUCH COURT DOES NOT HAVE SUBJECT MATTER
JURISDICTION OVER SUCH ACTION, SUIT OR PROCEEDING, IN THE COURTS OF THE STATE OF
DELAWARE, AND EACH PARTY HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO THE
JURISDICTION OF EACH OF THE AFORESAID COURTS IN PERSONAM, WITH RESPECT TO ANY
SUCH ACTION, SUIT OR PROCEEDING (INCLUDING CLAIMS FOR INTERIM RELIEF,
COUNTERCLAIMS, ACTIONS WITH MULTIPLE DEFENDANTS AND ACTIONS IN WHICH SUCH PARTY
IS IMPLED). EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THAT IT
MAY HAVE TO A JURY TRIAL IN ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT
TO, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
(c) EACH PARTY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEM (IN SUCH
CAPACITY, THE "PROCESS AGENT"), AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE,
FOR AND ON ITS BEHALF, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL
ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, AND SUCH SERVICE
SHALL BE DEEMED COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT, PROVIDED
THAT IN THE CASE OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY EFFECTING
SUCH SERVICE SHALL ALSO DELIVER A COPY THEREOF TO THE OTHER PARTY IN THE MANNER
PROVIDED IN SECTION 10.2. EACH PARTY SHALL TAKE ALL SUCH ACTION AS MAY BE
NECESSARY TO CONTINUE SAID APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT
ANOTHER AGENT SO THAT SUCH PARTY WILL AT ALL TIMES HAVE AN AGENT FOR SERVICE OF
PROCESS FOR THE ABOVE PURPOSES IN THE STATE OF DELAWARE. IN THE EVENT OF THE
TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS AND BUSINESS OF THE PROCESS
AGENT TO ANY OTHER CORPORATION BY CONSOLIDATION, MERGER, SALE OF ASSETS OR
OTHERWISE, SUCH OTHER CORPORATION SHALL BE SUBSTITUTED HEREUNDER FOR THE PROCESS
AGENT WITH THE SAME EFFECT AS IF NAMED HEREIN IN PLACE OF CT CORPORATION SYSTEM.
EACH PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION, SUIT OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED AIR MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS
ADDRESS SET FORTH IN THIS AGREEMENT, SUCH SERVICE OF PROCESS TO BE EFFECTIVE
UPON ACKNOWLEDGMENT OF RECEIPT OF SUCH REGISTERED MAIL. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW. EACH PARTY EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING WAIVER IS
INTENDED TO BE IRREVOCABLE UNDER THE LAWS OF THE STATE OF DELAWARE AND OF THE
UNITED STATES OF AMERICA.
(d) EACH PARTY AGREES THAT MONEY DAMAGES WOULD NOT BE A SUFFICIENT
REMEDY FOR THE OTHER PARTY FOR ANY BREACH OF THIS AGREEMENT BY IT, AND THAT IN
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ADDITION TO ALL OTHER REMEDIES THE OTHER PARTY MAY HAVE, SUCH OTHER PARTY SHALL
BE ENTITLED TO SPECIFIC PERFORMANCE AND TO INJUNCTIVE OR OTHER EQUITABLE RELIEF
AS A REMEDY FOR ANY SUCH BREACH. EACH PARTY AGREES NOT TO OPPOSE THE GRANTING OF
SUCH RELIEF IN THE EVENT A COURT DETERMINES THAT A BREACH HAS OCCURRED, AND
AGREES TO WAIVE ANY REQUIREMENT FOR THE SECURING OR POSTING OF ANY BOND IN
CONNECTION WITH SUCH REMEDY.
Section 10.8 Severability. The invalidity or unenforceability of any
provision hereof in any jurisdiction will not affect the validity or
enforceability of the remainder hereof in that jurisdiction or the validity or
enforceability of this Agreement, including that provision in any other
jurisdiction. To the extent permitted by Applicable Law, each Party waives any
provision of Applicable Law that renders any provision hereof prohibited or
unenforceable in any respect. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than avoided, if
possible, in order to achieve the intent of the Parties to the extent possible.
Section 10.9 Counterparts. This Agreement may be executed in one or more
counterparts each of which when so executed and delivered will be deemed an
original but all of which will constitute one and the same Agreement.
Section 10.10 Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.
Section 10.11 Incorporation of Exhibits. The Rent-Way Disclosure Letter,
the HCI Disclosure Letter, the Voting Agreements, the Option Agreements, the
Xxxxxxx Noncompetition Agreement, the Affiliate Agreements and the
Confidentiality Agreement attached hereto or referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
[SIGNATURES FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
RENT-WAY, INC.
By: /s/ XXXXXXX X. XXXXXXXXXXX
--------------------------------------------------------
Xxxxxxx X. Xxxxxxxxxxx
President and Chief Executive Officer
HOME CHOICE HOLDINGS INC.
By: /s/ XXXXX X. XXXXXXXX
--------------------------------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
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EXHIBIT A
FORM OF
STOCKHOLDER VOTING AGREEMENT
THIS STOCKHOLDER VOTING AGREEMENT (this "Agreement") dated as of September
1, 1998, is made by and between Home Choice Holdings Inc., a Delaware
corporation ("HCI"), and the shareholder named on the signature page hereto
("Shareholder"). On the date hereof, the Shareholder Beneficially Owns (as
defined in Section 11(a) hereof) the number of shares of common stock, without
par value (the "Rent-Way Shares"), of Rent-Way, Inc., a Pennsylvania corporation
("Rent-Way"), set forth next to the Shareholder's name on the signature page
hereto.
W I T N E S S E T H:
WHEREAS, HCI and Rent-Way concurrently herewith are entering into an
Agreement and Plan of Merger, dated as of September 1, 1998 (the "Merger
Agreement"), providing for, among other things, the merger (the "Merger") of HCI
with and into Rent-Way, with Rent-Way as the surviving corporation; and
WHEREAS, as an essential condition and inducement to HCI's execution of the
Merger Agreement, HCI has requested that the Shareholder agree, and the
Shareholder has agreed, to vote (or consent with regard to) all Rent-Way Shares
as to which the Shareholder has voting power in favor of the Merger as provided
herein.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Merger
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto (each, a
"Party"), intending to be legally bound hereby, agree as follows:
1. Voting Agreement. The Shareholder agrees that at any time the Merger
Agreement remains in effect, he will vote all Shareholder Shares (as defined
below) on matters as to which the Shareholder is entitled to vote at any annual,
special or other meeting of the Shareholders of Rent-Way, and at any adjournment
or adjournments thereof, or by written consent without a meeting, with respect
to all Shareholder Shares, as follows: (i) in favor of the authorization,
approval and adoption of the Merger Agreement and the Merger, the Amendment (as
defined in the Merger Agreement) and the issuance of shares of common stock of
Rent-Way in connection with the Merger, and each of the other transactions
contemplated by the Merger Agreement; and (ii) against any action or agreement
(other than the Merger Agreement or the transactions contemplated thereby) that
would impede, interfere with, delay, postpone or attempt to discourage the
Merger, including without limitation: (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving Rent-Way and its subsidiaries; or (B) a sale or transfer of a material
amount of assets of Rent-Way and its subsidiaries or a reorganization,
recapitalization or liquidation of Rent-Way and its subsidiaries.
"Shareholder Shares" shall mean the shares of capital stock of Rent-Way
(including without limitation the Rent-Way Shares) Beneficially Owned by such
Shareholder as of the date hereof, or Beneficially Owned by such Shareholder at
any time hereafter (including, without limitation, by way of exercise of options
or by way of dividend, distribution, exchange, merger, consolidation,
recapitalization, reorganization, stock split, grant of proxy or otherwise) by
such Shareholder (as adjusted as set forth herein). The Shareholder hereby
agrees to promptly notify HCI in writing of the number of any new Shareholder
Shares acquired by the Shareholder, if any, after the date hereof. In the event
of any change in the Rent-Way Shares by reason of a stock dividend, stock split,
split up, recapitalization, combination, exchange of shares or similar
transaction, the type and number of shares or securities that constitute
Shareholder Shares hereunder shall be adjusted appropriately.
2. Termination.
a. This Agreement shall terminate upon the earlier to occur of (i) the
termination of the Merger Agreement in accordance with its terms pursuant
to Section 9.1, 9.2, 9.3(a), 9.3(b), 9.3(c), 9.4(a), 9.4(b) or 9.4(c)
thereof, or (ii) the Effective Time (as defined in the Merger Agreement).
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b. Upon termination, this Agreement shall have no further force or
effect, except for Section 7 which shall continue to apply to any case,
action or proceeding relating to the enforcement of this Agreement.
3. Representations and Warranties of Shareholder. The Shareholder hereby
represents and warrants to HCI as follows:
a. Due Authorization. The Shareholder has the legal capacity and all
necessary power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. As of the date hereof, the
Shareholder Beneficially Owns the number of the Shareholder Shares listed
on the signature page hereof and specified as so owned with no restrictions
on the voting rights (except as specified in this Agreement) or rights of
disposition pertaining thereto, which constitute all Rent-Way Shares
Beneficially Owned by such Shareholder. Assuming this Agreement has been
duly and validly authorized, executed and delivered by HCI, this Agreement
constitutes a valid and binding agreement of the Shareholder, enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally or by the principles governing the availability
of equitable remedies.
b. No Conflicts. Neither the execution and delivery of this Agreement
nor the consummation by the Shareholder of the transactions contemplated
hereby will conflict with or constitute a violation of or default under any
contract, commitment, agreement, arrangement or restriction of any kind to
which the Shareholder is a party or by which the Shareholder is bound.
4. Representations and Warranties of HCI. HCI hereby represents and
warrants to the Shareholder as follows:
a. Due Authorization. HCI has the requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of HCI and this
Agreement has been duly executed by a duly authorized officer of HCI.
Assuming this Agreement has been duly and validly executed and delivered by
the Shareholder, this Agreement constitutes a valid and binding agreement
of HCI, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally or by the
principles governing the availability of equitable remedies.
b. No Conflicts. Neither the execution and delivery of this Agreement
nor the consummation by HCI of the transactions contemplated hereby will
conflict with or constitute a violation of or default under any contract,
commitment, agreement, arrangement or restriction of any kind to which HCI
is a party or by which HCI is bound.
5. No Transfer. Except as provided in this Agreement or the Merger
Agreement, the Shareholder hereby agrees, without the prior written consent of
HCI, except pursuant to the terms hereof, not to (i) sell, transfer, assign,
pledge or otherwise dispose of or hypothecate any of his Shareholder Shares
other than to a "Permitted Transferee" (as defined below) and except that the
Shareholder may transfer Shareholder Shares to Rent-Way in order to pay the
exercise price or withholding taxes applicable in connection with the exercise
of employee stock options; (ii) grant any proxies, deposit any Shareholder
Shares into a voting trust or enter into a voting agreement with respect to any
Shareholder Shares; (iii) take any action that would make any representation or
warranty of the Shareholder contained herein untrue or incorrect or have the
effect of preventing or disabling the Shareholder from performing his
obligations under this Agreement; or (iv) take any action which would jeopardize
the treatment of the Merger as a pooling of interests for accounting purposes.
For purposes of this Agreement, "Permitted Transferee" shall mean an
organization that qualifies for treatment under section 501(c)(3) of the
Internal Revenue Code of 1986, as amended. Any Permitted Transferee of
Shareholder Shares must become a party to this Agreement and any purported
transfer of Shareholder Shares to a person or entity that has not become a party
hereto shall be null and void. In furtherance of this Agreement, concurrently
herewith the Shareholder shall and hereby does hereby agree to authorize
Rent-Way to notify the Rent-Way transfer agent that there is a stop transfer
order with respect to all of the Shareholder Shares (and that this Agreement
places limits on the voting and transfer of such shares).
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6. Entire Agreement. Other than the Merger Agreement (including the
exhibits, schedules and other documents and instruments referred to therein),
this Agreement (including the documents and instruments referred to herein) (a)
constitutes the entire agreement among the Parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the Parties, or any of them, with
respect to the subject matter hereof; (b) shall not be assigned by operation of
law or otherwise without the prior written consent of the other Party hereto;
(c) shall not be amended, altered or modified in any manner whatsoever, except
by a written instrument executed by the other Party hereto; and (d) shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the Commonwealth of Pennsylvania (without giving effect to the
provisions thereof relating to conflicts of law).
7. Remedies. The Parties acknowledge that it would be impossible to fix
money damages for violations of this Agreement and that such violations will
cause irreparable injury for which adequate remedy at law is not available and,
therefore, this Agreement must be enforced by specific performance or injunctive
relief. The Parties hereto agree that any Party may, in its sole discretion,
apply to any court of competent jurisdiction for specific performance or
injunctive or such other relief as such court may deem just and proper in order
to enforce this Agreement or prevent any violation hereof and, to the extent
permitted by applicable law, each Party waives any objection or defense to the
imposition of such relief. Nothing herein shall be construed to prohibit any
Party from bringing any action for damages in addition to an action for specific
performance or an injunction for a breach of this Agreement.
8. Legends on Certificates. Until such time as this Agreement shall
terminate pursuant to Section 2 hereof, all certificates representing
Shareholder Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A SHAREHOLDER VOTING AGREEMENT, DATED AS OF SEPTEMBER 1, 1998, BY AND
BETWEEN HOME CHOICE HOLDINGS INC. AND THE SHAREHOLDER. ANY TRANSFEREE OF
THESE SHARES TAKES SUBJECT TO THE TERMS OF SUCH AGREEMENT, COPIES OF WHICH
ARE ON FILE AT THE OFFICES OF RENT-WAY, INC.
9. Parties in Interest. Subject to the provisions of Sections 5 and 6(b)
hereof, this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the Parties hereto and their respective successors, permitted
assigns, heirs, executors, administrators and other legal representatives, and
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
11. Definitions. The following terms shall have the following respective
meanings:
a. "Beneficial Owner" has the meaning set forth in Rule 13d-3 of the
Rules and Regulations to the Exchange Act, and "Beneficially Owned" and
"Beneficially Owns" shall have correlative meanings; provided, however,
that for purposes of this Agreement, a person shall be deemed to be the
Beneficial Owner of Rent-Way Shares that may be acquired pursuant to the
exercise of an option or other right regardless of when such option is
exercisable.
b. "Person" shall mean a corporation, association, partnership, joint
venture, organization, business, individual, trust, estate or any other
entity or group (within the meaning of Section 13(d)(3) of the Exchange
Act).
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00
00. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the Parties at the following addresses (or at such other address for a Party
as shall be specified by like notice):
a. If to HCI to: Home Choice Holdings Inc.
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Telecopy No.: 972/288-7753
Attention: Xxxxx X. Xxxxxxxx
with a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: 404/572-5145
Attention: Xxxx X. Xxxxxx, Xx.
b. If to the Shareholder, to the address set forth on the signature
page hereto.
13. Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
15. Further Assurances. The Shareholder further agrees to execute all
additional writings, consents and authorizations as may be reasonably requested
by HCI to evidence the agreements herein.
[SIGNATURES FOLLOW ON NEXT PAGE]
A-4
41
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
HOME CHOICE HOLDINGS INC.
By:
------------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Executive
Officer
SHAREHOLDER
--------------------------------------
Name:
No. of Shares Beneficially Owned:
--------------------------------------
Address for Notices:
--------------------------------------
--------------------------------------
A-5
42
EXHIBIT B
FORM OF STOCKHOLDER VOTING AGREEMENT
THIS STOCKHOLDER VOTING AGREEMENT (this "Agreement") dated as of September
1, 1998, is made by and between Rent-Way, Inc., a Pennsylvania corporation
("Rent-Way") and the stockholder named on the signature page hereto
("Stockholder"). On the date hereof, the Stockholder Beneficially Owns (as
defined in Section 11(a) hereof) the number of shares of common stock, par value
$.01 per share (the "HCI Shares"), of Home Choice Holdings Inc., a Delaware
corporation ("HCI"), set forth next to the Stockholder's name on the signature
page hereto.
W I T N E S S E T H:
WHEREAS, HCI and Rent-Way concurrently herewith are entering into an
Agreement and Plan of Merger, dated as of September 1, 1998 (the "Merger
Agreement"), providing for, among other things, the merger (the "Merger") of HCI
with and into Rent-Way, with Rent-Way as the surviving corporation; and
WHEREAS, as an essential condition and inducement to Rent-Way's execution
of the Merger Agreement, Rent-Way has requested that the Stockholder agree, and
the Stockholder has agreed, to vote (or consent with regard to) all HCI Shares
as to which the Stockholder has voting power in favor of the Merger as provided
herein.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Merger
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto (each, a
"Party"), intending to be legally bound hereby, agree as follows:
1. Voting Agreement. The Stockholder agrees that at any time the Merger
Agreement remains in effect, he will vote all Stockholder Shares (as defined
below) on matters as to which the Stockholder is entitled to vote at any annual,
special or other meeting of the Stockholders of HCI, and at any adjournment or
adjournments thereof, or by written consent without a meeting, with respect to
all Stockholder Shares, as follows: (i) in favor of authorization, approval and
adoption of the Merger Agreement and the Merger and each of the other
transactions contemplated by the Merger Agreement; and (ii) against any action
or agreement (other than the Merger Agreement or the transactions contemplated
thereby) that would impede, interfere with, delay, postpone or attempt to
discourage the Merger, including without limitation: (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving HCI and its subsidiaries; or (B) a sale or transfer of a
material amount of assets of HCI and its subsidiaries or a reorganization,
recapitalization or liquidation of HCI and its subsidiaries.
"Stockholder Shares" shall mean the shares of capital stock of HCI
(including without limitation the HCI Shares) Beneficially Owned by such
Stockholder as of the date hereof, or Beneficially Owned by such Stockholder at
any time hereafter (including, without limitation, by way of exercise of options
or by way of dividend, distribution, exchange, merger, consolidation,
recapitalization, reorganization, stock split, grant of proxy or otherwise) by
such Stockholder (as adjusted as set forth herein). The Stockholder hereby
agrees to promptly notify Rent-Way in writing of the number of any new
Stockholder Shares acquired by the Stockholder, if any, after the date hereof.
In the event of any change in the HCI Shares by reason of a stock dividend,
stock split, split up, recapitalization, combination, exchange of shares or
similar transaction, the type and number of shares or securities that constitute
Stockholder Shares hereunder shall be adjusted appropriately.
2. Termination.
a. This Agreement shall terminate upon the earlier to occur of (i) the
termination of the Merger Agreement in accordance with its terms pursuant
to Section 9.1, 9.2, 9.3(a), 9.3(b), 9.3(c), 9.4(a), 9.4(b) or 9.4(c)
thereof, or (ii) the Effective Time (as defined in the Merger Agreement).
b. Upon termination, this Agreement shall have no further force or
effect, except for Section 7 which shall continue to apply to any case,
action or proceeding relating to the enforcement of this Agreement.
43
3. Representations and Warranties of Stockholder. The Stockholder hereby
represents and warrants to Rent-Way as follows:
a. Due Authorization. The Stockholder has the legal capacity and all
necessary power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. As of the date hereof, the
Stockholder Beneficially Owns the number of the Stockholder Shares listed
on the signature page hereof and specified as so owned with no restrictions
on the voting rights (except as specified in this Agreement) or rights of
disposition pertaining thereto, which constitute all HCI Shares
Beneficially Owned by such Stockholder. Assuming this Agreement has been
duly and validly authorized, executed and delivered by Rent-Way, this
Agreement constitutes a valid and binding agreement of the Stockholder,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally or by the principles governing the
availability of equitable remedies.
b. No Conflicts. Neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions contemplated
hereby will conflict with or constitute a violation of or default under any
contract, commitment, agreement, arrangement or restriction of any kind to
which the Stockholder is a party or by which the Stockholder is bound.
4. Representations and Warranties of Rent-Way. Rent-Way hereby represents
and warrants to the Stockholder as follows:
a. Due Authorization. Rent-Way has the requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Rent-Way and
this Agreement has been duly executed by a duly authorized officer of
Rent-Way. Assuming this Agreement has been duly and validly executed and
delivered by the Stockholder, this Agreement constitutes a valid and
binding agreement of Rent-Way, enforceable against it in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by the principles governing the availability of equitable
remedies.
b. No Conflicts. Neither the execution and delivery of this Agreement
nor the consummation by Rent-Way of the transactions contemplated hereby
will conflict with or constitute a violation of or default under any
contract, commitment, agreement, arrangement or restriction of any kind to
which Rent-Way is a party or by which Rent-Way is bound.
5. No Transfer. Except as provided in this Agreement or the Merger
Agreement, the Stockholder hereby agrees, without the prior written consent of
Rent-Way, except pursuant to the terms hereof, not to (i) sell, transfer,
assign, pledge or otherwise dispose of or hypothecate any of his Stockholder
Shares other than to a "Permitted Transferee" (as defined below) and except that
the Stockholder may transfer Stockholder Shares to HCI in order to pay the
exercise price or withholding taxes applicable in connection with the exercise
of employee stock options; (ii) grant any proxies, deposit any Stockholder
Shares into a voting trust or enter into a voting agreement with respect to any
Stockholder Shares; (iii) take any action that would make any representation or
warranty of the Stockholder contained herein untrue or incorrect or have the
effect of preventing or disabling the Stockholder from performing his
obligations under this Agreement; or (iv) take any action which would jeopardize
the treatment of the Merger as a pooling of interests for accounting purposes.
For purposes of this Agreement, "Permitted Transferee" shall mean an
organization that qualifies for treatment under section 501(c)(3) of the
Internal Revenue Code of 1986, as amended. Any Permitted Transferee of
Stockholder Shares must become a party to this Agreement and any purported
transfer of Stockholder Shares to a person or entity that has not become a party
hereto shall be null and void. In furtherance of this Agreement, concurrently
herewith the Stockholder shall and hereby does hereby agree to authorize HCI to
notify the HCI transfer agent that there is a stop transfer order with respect
to all of the Stockholder Shares (and that this Agreement places limits on the
voting and transfer of such shares).
B-2
44
6. Entire Agreement. Other than the Merger Agreement (including the
exhibits, schedules and other documents and instruments referred to therein),
this Agreement (including the documents and instruments referred to herein) (a)
constitutes the entire agreement among the Parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the Parties, or any of them, with
respect to the subject matter hereof; (b) shall not be assigned by operation of
law or otherwise without the prior written consent of the other Party hereto;
(c) shall not be amended, altered or modified in any manner whatsoever, except
by a written instrument executed by the other Party hereto; and (d) shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Delaware (without giving effect to the provisions thereof
relating to conflicts of law).
7. Remedies. The Parties acknowledge that it would be impossible to fix
money damages for violations of this Agreement and that such violations will
cause irreparable injury for which adequate remedy at law is not available and,
therefore, this Agreement must be enforced by specific performance or injunctive
relief. The Parties hereto agree that any Party may, in its sole discretion,
apply to any court of competent jurisdiction for specific performance or
injunctive or such other relief as such court may deem just and proper in order
to enforce this Agreement or prevent any violation hereof and, to the extent
permitted by applicable law, each Party waives any objection or defense to the
imposition of such relief. Nothing herein shall be construed to prohibit any
Party from bringing any action for damages in addition to an action for specific
performance or an injunction for a breach of this Agreement.
8. Legends on Certificates. Until such time as this Agreement shall
terminate pursuant to Section 2 hereof, all certificates representing
Stockholder Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A STOCKHOLDER VOTING AGREEMENT, DATED AS OF SEPTEMBER 1, 1998, BY AND
BETWEEN RENT-WAY, INC. AND THE STOCKHOLDER. ANY TRANSFEREE OF THESE SHARES
TAKES SUBJECT TO THE TERMS OF SUCH AGREEMENT, COPIES OF WHICH ARE ON FILE
AT THE OFFICES OF HOME CHOICE HOLDINGS INC.
9. Parties in Interest. Subject to the provisions of Sections 5 and 6(b)
hereof, this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the Parties hereto and their respective successors, permitted
assigns, heirs, executors, administrators and other legal representatives, and
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
11. Definitions. The following terms shall have the following respective
meanings:
a. "Beneficial Owner" has the meaning set forth in Rule 13d-3 of the
Rules and Regulations to the Exchange Act, and "Beneficially Owned" and
"Beneficially Owns" shall have correlative meanings; provided, however,
that for purposes of this Agreement, a person shall be deemed to be the
Beneficial Owner of HCI Shares that may be acquired pursuant to the
exercise of an option or other right regardless of when such option is
exercisable.
b. "Person" shall mean a corporation, association, partnership, joint
venture, organization, business, individual, trust, estate or any other
entity or group (within the meaning of Section 13(d)(3) of the Exchange
Act).
B-3
45
12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the Parties at the following addresses (or at such other address for a Party
as shall be specified by like notice):
a. If to Rent-Way to: Rent-Way, Inc.
0000 Xxxx Xxxx Xxxx
Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx
& Goodyear, LLP
0000 Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
b. If to the Stockholder, to the address set forth on the signature
page hereto.
13. Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
15. Further Assurances. The Stockholder further agrees to execute all
additional writings, consents and authorizations as may be reasonably requested
by Rent-Way to evidence the agreements herein.
[SIGNATURES FOLLOW ON NEXT PAGE]
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46
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
RENT-WAY, INC.
By:
------------------------------------
Xxxxxxx X. Xxxxxxxxxxx
President and Chief Executive
Officer
STOCKHOLDER
--------------------------------------
Name:
No. of Shares Beneficially Owned:
--------------------------------------
Address for Notices:
--------------------------------------
--------------------------------------
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47
EXHIBIT C
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of September 1, 1998 (this
"Agreement"), by and between RENT-WAY, INC., a Pennsylvania corporation
("Issuer"), and HOME CHOICE HOLDINGS INC., a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer propose to enter into an Agreement and Plan of
Merger dated as of September 1, 1998 (the "Merger Agreement"; capitalized terms
not defined herein shall have the meanings set forth in the Merger Agreement),
providing for, among other things, the merger of Grantee with and into Issuer,
with Issuer as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer
has agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Merger
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Issuer and Grantee agree as
follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 19.9% (as adjusted as set forth herein) shares (the "Option Shares") of
Common Stock, without par value ("Issuer Common Stock"), of Issuer at a purchase
price of $29.42 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) Grantee may exercise the Option, in whole or in
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined below); provided, however, that, except as provided in the
last sentence of this Section 2(a), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (i) the Effective Time,
(ii) twelve (12) months after the first occurrence of a Purchase Event or (iii)
termination of this Agreement in accordance with Section 11(k); and provided,
further that any purchase of shares upon exercise of the Option shall be subject
to compliance with Applicable Law. The rights set forth in Sections 7 and 8
shall not terminate when the right to exercise the Option terminates as set
forth herein, but shall extend to such time as is provided in Sections 7 and 8,
respectively. Notwithstanding the termination of the Option, Grantee shall be
entitled to purchase those Option Shares with respect to which it has exercised
the Option in accordance with the terms hereof prior to the termination of the
Option.
(b) As used herein, a "Purchase Event" means any of the following events:
(i) any person (other than Grantee or any subsidiary of Grantee) shall
have commenced (as such term is defined in Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), or shall have filed
a registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon consummation of
such offer, such person would own or control 10% or more of the then
outstanding Issuer Common Stock;
(ii) Issuer or any subsidiary of Issuer, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced an intention to authorize, recommend or
propose, or entered into, an agreement with any person (other than Grantee
or any subsidiary of Grantee) to (A) effect a merger, consolidation or
similar transaction involving Issuer or any subsidiary of Issuer, (B) sell,
lease or otherwise dispose of assets of Issuer or its subsidiaries
representing 15% or more of the consolidated assets of Issuer and its
subsidiaries or (C) issue, sell or otherwise dispose of (including by way
of merger, consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of Issuer or any of
its subsidiaries (any of the foregoing an "Acquisition Transaction");
provided, however, that neither (x) any transaction permitted by Section
6.2(c)(ii) nor (y) any merger of a Rent-Way Subsidiary into Rent-Way shall
constitute an Acquisition Transaction.
48
(iii) any person (other than any person or "group" (as such term is
defined under the Exchange Act) that, at the date hereof, beneficially owns
or has the right to acquire beneficial ownership (as such term is defined
in Rule 13d-3 under the Exchange Act) of 10% or more of the outstanding
shares of Issuer Common Stock shall have acquired beneficial ownership or
the right to acquire beneficial ownership of, or any group shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding Issuer Common Stock; or
(iv) the holders of Issuer Common Stock shall not have authorized,
approved and adopted the Merger Agreement, the Merger, the Amendment and
the issuance of the shares of Common Stock of Issuer in connection with the
Merger at the meeting of such stockholders held for the purpose of voting
on the Merger Agreement and the Merger, such meeting shall not have been
held or shall have been canceled prior to termination of the Merger
Agreement or Issuer's Board of Directors shall have withdrawn or modified
in a manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Merger Agreement and the Merger, in each case
after any person (other than Grantee or any subsidiary of Grantee) shall
have publicly announced a proposal, or publicly disclosed an intention to
make a proposal, to engage in an Acquisition Transaction. As used in this
Agreement, "person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three (3) business days nor later than fifteen (15) business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided that
if the closing of the purchase and sale pursuant to the Option cannot be
consummated by reason of any Applicable Law, the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which
such restriction on consummation has expired or been terminated.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date be
more than eighteen (18) months after the related Notice Date, and if the Closing
Date shall not have occurred within eighteen (18) months after the related
Notice Date, the exercise of the Option effected on the Notice Date shall be
deemed to have expired.
3. Payment and Delivery of Certificates. (a) On each Closing Date, Grantee
shall pay to Issuer in immediately available funds by wire transfer to a bank
account designated by Issuer in writing an amount equal to the Purchase Price
multiplied by the number of Option Shares to be purchased on such Closing Date.
(b) At each closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such closing, which Option Shares shall be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever, and Grantee shall deliver to
Issuer a letter agreeing that Grantee shall not offer to sell or otherwise
dispose of such Option Shares in violation of Applicable Law.
(c) Certificates for the Option Shares delivered at each closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
4. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Issuer. This Agreement has been duly
C-2
49
executed and delivered by Issuer and constitutes a valid and binding obligation
of Issuer, enforceable in accordance with its terms.
(b) Authorized Stock. Issuer has taken all necessary corporate and other
action to authorize and reserve and, subject to obtaining the governmental and
other approvals and consents referred to herein, to permit it to issue, and, at
all times from the date hereof until the obligation to deliver Issuer Common
Stock upon the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, shares of Issuer Common Stock necessary
for Grantee to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of Issuer
Common Stock or other securities which may be issued pursuant to Section 6 upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
or other securities which may be issuable pursuant to Section 6, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid and nonassessable,
and shall be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including any preemptive rights
of any stockholder of Issuer.
(c) No Conflicts. Except as disclosed pursuant to the Merger Agreement, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation pursuant to any provision of the Certificate of Incorporation or
By-laws of Issuer or any subsidiary of Issuer or, subject to obtaining any
approvals or consents contemplated hereby, result in any violation of any loan
or credit agreement, note, mortgage, indenture, lease or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Issuer or any
subsidiary of Issuer or their respective properties or assets which violation
would have an HCI Material Adverse Effect (as defined in the Merger Agreement).
(d) Board Action. The Board of Directors of Issuer has taken all necessary
action to approve this Agreement and the consummation of the transactions
contemplated hereby and the provisions of Section 2538 and Subchapters 25E, 25F,
25G and 25H of the Pennsylvania Business Corporation Law will not apply to this
Agreement or the purchase of shares of Issuer Common Stock pursuant to this
Agreement.
5. Representations and Warranties of Grantee. Grantee hereby represents and
warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee and constitutes a valid and binding obligation of
Grantee, enforceable in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not result in
any violation pursuant to any provision of the Articles of Incorporation or
By-laws of Grantee or, subject to obtaining any approvals or consents
contemplated hereby, result in any violation of any loan or credit agreement,
note, mortgage, indenture, lease or other agreement, obligation, instrument
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Grantee or its properties or assets
which violation would have a Rent-Way Material Adverse Effect (as defined in the
Merger Agreement).
(c) Purchase Not for Distribution. Any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be taken with a view to
the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of any
change in Issuer Common Stock by reason of a stock dividend, split-up,
recapitalization, combination, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Option shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that Grantee shall receive upon exercise of the Option and
payment of the aggregate Purchase Price hereunder the number and class of shares
or other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised in full immediately prior
to such event, or the record date therefor, as applicable. Whenever the
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number of shares of Issuer Common Stock purchasable upon exercise of the Option
is adjusted as provided in this Section 6, the Purchase Price shall be adjusted
by multiplying the Purchase Price by a fraction, the numerator of which shall be
equal to the number of shares of Issuer Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
of Issuer Common Stock purchasable after the adjustment. If any additional
shares of Issuer Common Stock are issued after the date of this Agreement (other
than pursuant to an event described in the first sentence of this Section 6(a)
and other than in connection with the exercise of stock options of Issuer
outstanding on the date hereof), the number of shares of Issuer Common Stock
subject to the Option shall be adjusted so that, after such issuance, it equals
19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or a subsidiary of
Grantee, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or a
subsidiary of Grantee, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property or the then outstanding shares of Issuer Common Stock shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or a
subsidiary of Grantee, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute Option")
to purchase, at the election of Grantee, of either (X) shares of capital stock
of the Acquiring Corporation (as defined below) or (Y) shares of capital stock
of any person that controls the Acquiring Corporation.
(c) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, and (C) the transferee of all or substantially all of
Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Grantee
may elect.
(d) The Substitute Option shall have the same terms as the Option, provided
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Grantee. The issuer of the Substitute Option shall also
enter into an agreement with the Grantee of the Substitute Option in
substantially the same form as this Agreement, which shall be applicable to the
Substitute Option. Without limiting the generality of the foregoing, the
provisions of Sections 7, 8, 9 and 10 shall apply with respect to the Substitute
Option and any securities for which the Substitute Option becomes exercisable
with the same effect as if all references to "Issuer" in such Sections were
references to the "Substitute Option Issuer," all references to "Issuer Common
Stock" were references to "Substitute Common Stock," and all references to the
"Option" were references to the "Substitute Option."
(e) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Applicable Price (as defined below)
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Purchase
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
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denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (f), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (f)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (f). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Grantee.
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 6 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
7. Repurchase at the Option of Grantee. (a) At the request of Grantee at
any time during the period commencing upon the first occurrence of a Repurchase
Event (as defined below) and ending twelve (12) months immediately thereafter,
Issuer (or any successor entity thereof) shall repurchase from Grantee (x) the
Option, unless the Option shall have expired or been terminated in accordance
with the terms hereof, and (y) all shares of Issuer Common Stock purchased by
Grantee pursuant to the Option with respect to which Grantee then has beneficial
ownership. The date on which Grantee exercises its rights under this Section 7
is referred to as the "Request Date." Such repurchase shall be at an aggregate
price (the "Section 7 Repurchase Consideration") equal to the sum of:
(i) the aggregate exercise price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to which
Grantee then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 6), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the Purchase
Price (subject to adjustment pursuant to Section 6) paid (or, in the case
of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Grantee for each share of
Issuer Common Stock with respect to which the Option has been exercised and
with respect to which Grantee then has beneficial ownership, multiplied by
the number of such shares.
(b) If Grantee exercises its rights under this Section 7, Issuer shall,
within ten (10) business days after the Request Date, pay the Section 7
Repurchase Consideration to Grantee in immediately available funds, and Grantee
shall surrender to Issuer the Option and the certificates evidencing the shares
of Issuer Common Stock purchased thereunder with respect to which Grantee then
has beneficial ownership, and Grantee shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever. If any
regulatory authority disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 7, Issuer shall promptly give notice of such fact to
Grantee and redeliver to Grantee the Option Shares it is then prohibited from
repurchasing, and Grantee shall have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the number of shares as to which payment has been made pursuant to Section
7(a)(ii); provided that if the Option shall have terminated prior to the date of
such notice or shall be scheduled to terminate at any time before the expiration
of a period ending on the thirtieth (30th) business day after such date, Grantee
shall nonetheless have the right so to exercise the Option or exercise its
rights under Section 8 until the expiration of such period of thirty (30)
business days.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share at which a tender or exchange offer
has been made for shares of Issuer Common Stock after the date hereof and on or
prior to the Request Date, (ii) the price per share to be paid by any third
party for shares of Issuer Common Stock or the consideration per share to be
received by holders of Issuer Common Stock, in each case
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pursuant to an agreement for a merger or other business combination transaction
with Issuer entered into on or prior to the Request Date or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the New York
Stock Exchange (the "NYSE") (or, if Issuer Common Stock is not quoted on the
NYSE, the highest bid price per share as quoted on the Nasdaq National Market
("Nasdaq") or, if the shares of Issuer Common Stock are not quoted thereon, on
the principal trading market on which such shares are traded as reported by a
recognized source) during the sixty (60) business days preceding the Request
Date. If the consideration to be offered, paid or received pursuant to either of
the foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Grantee and reasonably acceptable
to Issuer, which determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, a "Repurchase Event" means any of the following events:
(i) the occurrence of any of the Purchase Events specified in Section
2(b)(ii), (iii) or (iv); or
(ii) there shall have occurred any of the Purchase Events specified in
Section 2(b)(i) and thereafter the holders of Issuer Common Stock shall not
have authorized, approved and adopted the Merger Agreement and the Merger,
the Amendment and the issuance of Issuer Common Stock in connection with
the Merger at the meeting of such stockholders held for the purpose of
voting on the Merger Agreement and the Merger or such meeting shall not
have been held or shall have been canceled prior to termination of the
Merger Agreement.
8. Registration Rights. Issuer shall, if requested by Grantee at any time
and from time to time within three (3) years of the first exercise of the
Option, as expeditiously as possible, prepare and file up to two registration
statements under the Securities Act if such registration is necessary in order
to permit the sale or other disposition of any or all shares of Issuer Common
Stock or other securities that have been acquired by or are issuable to Grantee
upon exercise of the Option in accordance with the intended method of sale or
other disposition stated by Grantee, including a "shelf" registration statement
under Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its best efforts to qualify such shares or other securities under any
applicable state securities laws. Grantee agrees to use all reasonable efforts
to cause, and to cause any underwriters of any sale or other disposition to
cause, any sale or other disposition pursuant to such registration statement to
be effected on a widely distributed basis so that upon consummation thereof no
purchaser or transferee shall own beneficially more than 2% of the then
outstanding voting power of Issuer. Issuer shall use all reasonable efforts to
cause each such registration statement to become effective, to obtain all
consents or waivers of other parties which are required therefor and to keep
such registration statement effective for such period not in excess of 180 days
from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The obligations
of Issuer hereunder to file a registration statement and to maintain its
effectiveness may be suspended for one or more periods of time not exceeding
sixty (60) days in the aggregate if the Board of Directors of Issuer shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would require disclosure of nonpublic information that would
materially and adversely affect Issuer. Any registration statement prepared and
filed under this Section 8, and any sale covered thereby, shall be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
fees and disbursements of Grantee's counsel related thereto. Grantee shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If during the time period referred
to in the first sentence of this Section 8 Issuer effects a registration under
the Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
form), it shall allow Grantee the right to participate in such registration, and
such participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 8; provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer. In connection with
any registration pursuant to this Section 8, Issuer and Grantee shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification and contribution in connection with such
registration.
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9. Listing. If Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then listed on the NYSE or the Nasdaq, Issuer,
upon the request of Grantee, will promptly file an application to list the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE or Nasdaq, as applicable, and will use its best
efforts to obtain approval of such listing as soon as practicable.
10. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
11. Miscellaneous. (a) Expenses. Except as otherwise provided in Sections 7
and 8, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability, etc. Except
as otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein and
therein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided in Sections 2 and 7 (as adjusted pursuant to Section
6), it is the express intention of Issuer to allow Grantee to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to Issuer to: Rent-Way, Inc.
Xxx Xxxx Xxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
with copies to: Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx & Goodyear, LLP
0000 Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
If to Grantee to: Home Choice Holdings Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
with a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Xx., Esq.
(g) Counterparts. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
(k) Termination. This Agreement and all rights and obligations hereunder
shall terminate upon the termination of the Merger Agreement prior to the
occurrence of a Purchase Event.
[SIGNATURES FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
RENT-WAY, INC.
By:
------------------------------------
Xxxxxxx X. Xxxxxxxxxxx
President
HOME CHOICE HOLDINGS INC.
By:
------------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Executive
Officer
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EXHIBIT D
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of September 1, 1998 (this
"Agreement"), by and between HOME CHOICE HOLDINGS INC., a Delaware corporation
("Issuer"), and RENT-WAY, INC., a Pennsylvania corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer propose to enter into an Agreement and Plan of
Merger dated as of September 1, 1998 (the "Merger Agreement"; capitalized terms
not defined herein shall have the meanings set forth in the Merger Agreement),
providing for, among other things, the merger of Issuer with and into Grantee,
with Grantee as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer
has agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Merger
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Issuer and Grantee agree as
follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 19.9% (as adjusted as set forth herein) shares (the "Option Shares") of
Common Stock, par value $.01 per share ("Issuer Common Stock"), of Issuer at a
purchase price of $13.24 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) Grantee may exercise the Option, in whole or in
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined below); provided, however, that, except as provided in the
last sentence of this Section 2(a), the Option shall terminate and be of no
further force and effect upon the earliest to occur of (i) the Effective Time,
(ii) twelve (12) months after the first occurrence of a Purchase Event or (iii)
termination of this Agreement in accordance with Section 11(k); and provided,
further that any purchase of shares upon exercise of the Option shall be subject
to compliance with Applicable Law. The rights set forth in Sections 7 and 8
shall not terminate when the right to exercise the Option terminates as set
forth herein, but shall extend to such time as is provided in Sections 7 and 8,
respectively. Notwithstanding the termination of the Option, Grantee shall be
entitled to purchase those Option Shares with respect to which it has exercised
the Option in accordance with the terms hereof prior to the termination of the
Option.
(b) As used herein, a "Purchase Event" means any of the following events:
(i) any person (other than Grantee or any subsidiary of Grantee) shall
have commenced (as such term is defined in Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), or shall have filed
a registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon consummation of
such offer, such person would own or control 10% or more of the then
outstanding Issuer Common Stock;
(ii) Issuer or any subsidiary of Issuer, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced an intention to authorize, recommend or
propose, or entered into, an agreement with any person (other than Grantee
or any subsidiary of Grantee) to (A) effect a merger, consolidation or
similar transaction involving Issuer or any subsidiary of Issuer, (B) sell,
lease or otherwise dispose of assets of Issuer or its subsidiaries
representing 15% or more of the consolidated assets of Issuer and its
subsidiaries or (C) issue, sell or otherwise dispose of (including by way
of merger, consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of Issuer or any of
its subsidiaries (any of the foregoing an "Acquisition Transaction");
provided, however, that any merger of an HCI Subsidiary into HCI shall not
constitute an Acquisition Transaction;
57
(iii) any person shall have acquired beneficial ownership or the right
to acquire beneficial ownership of, or any group shall have been formed
which beneficially owns or has the right to acquire beneficial ownership
of, 10% or more of the then outstanding Issuer Common Stock; provided,
however, that it shall not constitute a Purchase Event for any person who
on the date of this Agreement owns or has the right to acquire beneficial
ownership of Issue Common Stock to continue to own or to acquire such
Issuer Common Stock; or
(iv) the holders of Issuer Common Stock shall not have authorized,
approved and adopted the Merger Agreement and the Merger at the meeting of
such stockholders held for the purpose of voting on the Merger Agreement
and the Merger, such meeting shall not have been held or shall have been
canceled prior to termination of the Merger Agreement or Issuer's Board of
Directors shall have withdrawn or modified in a manner adverse to Grantee
the recommendation of Issuer's Board of Directors with respect to the
Merger Agreement and the Merger, in each case after any person (other than
Grantee or any subsidiary of Grantee) shall have publicly announced a
proposal, or publicly disclosed an intention to make a proposal, to engage
in an Acquisition Transaction. As used in this Agreement, "person" shall
have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act.
(c) In the event Grantee wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three (3) business days nor later than fifteen (15) business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided that
if the closing of the purchase and sale pursuant to the Option cannot be
consummated by reason of any Applicable Law, the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which
such restriction on consummation has expired or been terminated.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date be
more than eighteen (18) months after the related Notice Date, and if the Closing
Date shall not have occurred within eighteen (18) months after the related
Notice Date, the exercise of the Option effected on the Notice Date shall be
deemed to have expired.
3. Payment and Delivery of Certificates. (a) On each Closing Date, Grantee
shall pay to Issuer in immediately available funds by wire transfer to a bank
account designated by Issuer in writing an amount equal to the Purchase Price
multiplied by the number of Option Shares to be purchased on such Closing Date.
(b) At each closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such closing, which Option Shares shall be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever, and Grantee shall deliver to
Issuer a letter agreeing that Grantee shall not offer to sell or otherwise
dispose of such Option Shares in violation of Applicable Law.
(c) Certificates for the Option Shares delivered at each closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act.
4. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Issuer. This Agreement has been duly executed and delivered by Issuer and
constitutes a valid and binding obligation of Issuer, enforceable in accordance
with its terms.
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(b) Authorized Stock. Issuer has taken all necessary corporate and other
action to authorize and reserve and, subject to obtaining the governmental and
other approvals and consents referred to herein, to permit it to issue, and, at
all times from the date hereof until the obligation to deliver Issuer Common
Stock upon the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, shares of Issuer Common Stock necessary
for Grantee to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of Issuer
Common Stock or other securities which may be issued pursuant to Section 6 upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
or other securities which may be issuable pursuant to Section 6, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid and nonassessable,
and shall be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including any preemptive rights
of any stockholder of Issuer.
(c) No Conflicts. Except as disclosed pursuant to the Merger Agreement, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation pursuant to any provision of the Certificate of Incorporation or
By-laws of Issuer or any subsidiary of Issuer or, subject to obtaining any
approvals or consents contemplated hereby, result in any violation of any loan
or credit agreement, note, mortgage, indenture, lease or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Issuer or any
subsidiary of Issuer or their respective properties or assets which violation
would have an HCI Material Adverse Effect (as defined in the Merger Agreement).
(d) Board Action. The Board of Directors of Issuer has taken all necessary
action to approve this Agreement and the consummation of the transactions
contemplated hereby and the provisions of Section 243 of the Delaware General
Corporation Law will not apply to this Agreement or the purchase of shares of
Issuer Common Stock pursuant to this Agreement.
5. Representations and Warranties of Grantee. Grantee hereby represents and
warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee and constitutes a valid and binding obligation of
Grantee, enforceable in accordance with its terms.
(b) No Conflicts. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not result in
any violation pursuant to any provision of the Articles of Incorporation or
By-laws of Grantee or, subject to obtaining any approvals or consents
contemplated hereby, result in any violation of any loan or credit agreement,
note, mortgage, indenture, lease or other agreement, obligation, instrument
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Grantee or its properties or assets
which violation would have a Rent-Way Material Adverse Effect (as defined in the
Merger Agreement).
(c) Purchase Not for Distribution. Any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be taken with a view to
the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of any
change in Issuer Common Stock by reason of a stock dividend, split-up,
recapitalization, combination, exchange of shares or similar transaction, the
type and number of shares or securities subject to the Option shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that Grantee shall receive upon exercise of the Option and
payment of the aggregate Purchase Price hereunder the number and class of shares
or other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised in full immediately prior
to such event, or the record date therefor, as applicable. Whenever the number
of shares of Issuer Common Stock purchasable upon exercise of the Option is
adjusted as provided in this Section 6, the Purchase Price shall be adjusted by
multiplying the Purchase Price by a fraction, the numerator of
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which shall be equal to the number of shares of Issuer Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Issuer Common Stock purchasable after the adjustment. If any
additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 6(a) and other than in connection with the exercise of stock
options of Issuer outstanding on the date hereof), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or a subsidiary of
Grantee, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or a
subsidiary of Grantee, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property or the then outstanding shares of Issuer Common Stock shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or a
subsidiary of Grantee, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute Option")
to purchase, at the election of Grantee, of either (X) shares of capital stock
of the Acquiring Corporation (as defined below) or (Y) shares of capital stock
of any person that controls the Acquiring Corporation.
(c) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, and (C) the transferee of all or substantially all of
Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Grantee
may elect.
(d) The Substitute Option shall have the same terms as the Option, provided
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Grantee. The issuer of the Substitute Option shall also
enter into an agreement with the Grantee of the Substitute Option in
substantially the same form as this Agreement, which shall be applicable to the
Substitute Option. Without limiting the generality of the foregoing, the
provisions of Sections 7, 8, 9 and 10 shall apply with respect to the Substitute
Option and any securities for which the Substitute Option becomes exercisable
with the same effect as if all references to "Issuer" in such Sections were
references to the "Substitute Option Issuer," all references to "Issuer Common
Stock" were references to "Substitute Common Stock," and all references to the
"Option" were references to the "Substitute Option."
(e) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Applicable Price (as defined below)
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Purchase
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
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(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (f), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (f)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (f). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Grantee.
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 6 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
7. Repurchase at the Option of Grantee. (a) At the request of Grantee at
any time during the period commencing upon the first occurrence of a Repurchase
Event (as defined below) and ending twelve (12) months immediately thereafter,
Issuer (or any successor entity thereof) shall repurchase from Grantee (x) the
Option, unless the Option shall have expired or been terminated in accordance
with the terms hereof, and (y) all shares of Issuer Common Stock purchased by
Grantee pursuant to the Option with respect to which Grantee then has beneficial
ownership. The date on which Grantee exercises its rights under this Section 7
is referred to as the "Request Date." Such repurchase shall be at an aggregate
price (the "Section 7 Repurchase Consideration") equal to the sum of:
(i) the aggregate exercise price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to which
Grantee then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 6), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the Purchase
Price (subject to adjustment pursuant to Section 6) paid (or, in the case
of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Grantee for each share of
Issuer Common Stock with respect to which the Option has been exercised and
with respect to which Grantee then has beneficial ownership, multiplied by
the number of such shares.
(b) If Grantee exercises its rights under this Section 7, Issuer shall,
within ten (10) business days after the Request Date, pay the Section 7
Repurchase Consideration to Grantee in immediately available funds, and Grantee
shall surrender to Issuer the Option and the certificates evidencing the shares
of Issuer Common Stock purchased thereunder with respect to which Grantee then
has beneficial ownership, and Grantee shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever. If any
regulatory authority disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 7, Issuer shall promptly give notice of such fact to
Grantee and redeliver to Grantee the Option Shares it is then prohibited from
repurchasing, and Grantee shall have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the number of shares as to which payment has been made pursuant to Section
7(a)(ii); provided that if the Option shall have terminated prior to the date of
such notice or shall be scheduled to terminate at any time before the expiration
of a period ending on the thirtieth (30th) business day after such date, Grantee
shall nonetheless have the right so to exercise the Option or exercise its
rights under Section 8 until the expiration of such period of thirty (30)
business days.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share at which a tender or exchange offer
has been made for shares of Issuer Common Stock after the date hereof and on or
prior to the Request Date, (ii) the price per share to be paid by any third
party for shares of Issuer Common Stock or the consideration per share to be
received by holders of Issuer Common Stock, in each case pursuant to an
agreement for a merger or other business combination transaction with Issuer
entered into on or prior to the Request Date or (iii) the highest closing sales
price per share of Issuer Common Stock quoted on the
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New York Stock Exchange (the "NYSE") (or, if Issuer Common Stock is not quoted
on the NYSE, the highest bid price per share as quoted on the Nasdaq National
Market ("Nasdaq") or, if the shares of Issuer Common Stock are not quoted
thereon, on the principal trading market on which such shares are traded as
reported by a recognized source) during the sixty (60) business days preceding
the Request Date. If the consideration to be offered, paid or received pursuant
to either of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Grantee and reasonably
acceptable to Issuer, which determination shall be conclusive for all purposes
of this Agreement.
(d) As used herein, a "Repurchase Event" means any of the following events:
(i) the occurrence of any of the Purchase Events specified in Section
2(b)(ii), (iii) or (iv); or
(ii) there shall have occurred any of the Purchase Events specified in
Section 2(b)(i) and thereafter the holders of Issuer Common Stock shall not
have authorized, approved and adopted the Merger Agreement and the Merger
at the meeting of such stockholders held for the purpose of voting on the
Merger Agreement and the Merger or such meeting shall not have been held or
shall have been canceled prior to termination of the Merger Agreement.
8. Registration Rights. Issuer shall, if requested by Grantee at any time
and from time to time within three (3) years of the first exercise of the
Option, as expeditiously as possible, prepare and file up to two registration
statements under the Securities Act if such registration is necessary in order
to permit the sale or other disposition of any or all shares of Issuer Common
Stock or other securities that have been acquired by or are issuable to Grantee
upon exercise of the Option in accordance with the intended method of sale or
other disposition stated by Grantee, including a "shelf" registration statement
under Rule 415 under the Securities Act or any successor provision, and Issuer
shall use its best efforts to qualify such shares or other securities under any
applicable state securities laws. Grantee agrees to use all reasonable efforts
to cause, and to cause any underwriters of any sale or other disposition to
cause, any sale or other disposition pursuant to such registration statement to
be effected on a widely distributed basis so that upon consummation thereof no
purchaser or transferee shall own beneficially more than 2% of the then
outstanding voting power of Issuer. Issuer shall use all reasonable efforts to
cause each such registration statement to become effective, to obtain all
consents or waivers of other parties which are required therefor and to keep
such registration statement effective for such period not in excess of 180 days
from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The obligations
of Issuer hereunder to file a registration statement and to maintain its
effectiveness may be suspended for one or more periods of time not exceeding
sixty (60) days in the aggregate if the Board of Directors of Issuer shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would require disclosure of nonpublic information that would
materially and adversely affect Issuer. Any registration statement prepared and
filed under this Section 8, and any sale covered thereby, shall be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
fees and disbursements of Grantee's counsel related thereto. Grantee shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If during the time period referred
to in the first sentence of this Section 8 Issuer effects a registration under
the Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
form), it shall allow Grantee the right to participate in such registration, and
such participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 8; provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer. In connection with
any registration pursuant to this Section 8, Issuer and Grantee shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification and contribution in connection with such
registration.
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9. Listing. If Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then listed on the NYSE or the Nasdaq, Issuer,
upon the request of Grantee, will promptly file an application to list the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE or Nasdaq, as applicable, and will use its best
efforts to obtain approval of such listing as soon as practicable.
10. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
11. Miscellaneous. (a) Expenses. Except as otherwise provided in Sections 7
and 8, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability, etc. Except
as otherwise set forth in the Merger Agreement, this Agreement (including the
Merger Agreement and the other documents and instruments referred to herein and
therein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided in Sections 2 and 7 (as adjusted pursuant to Section
6), it is the express intention of Issuer to allow Grantee to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to Issuer to: Home Choice Holdings Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
with copies to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Xx., Esq.
If to Grantee to: Rent-Way, Inc.
Xxx Xxxx Xxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
with a copy to: Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx & Goodyear, LLP
0000 Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
(g) Counterparts. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
(k) Termination. This Agreement and all rights and obligations hereunder
shall terminate upon the termination of the Merger Agreement prior to the
occurrence of a Purchase Event.
[SIGNATURES FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
HOME CHOICE HOLDINGS INC.
By:
------------------------------------
Xxxxx X. Xxxxxxxx
President and Chief Executive
Officer
RENT-WAY, INC.
By:
------------------------------------
Xxxxxxx X. Xxxxxxxxxxx
President
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EXHIBIT E
FORM OF AFFILIATE AGREEMENT
FOR AFFILIATES OF HCI
Rent-Way, Inc.
Xxx Xxxx Xxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of Home Choice Holdings Inc., a Delaware corporation ("HCI"),
as the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of
Rule 145 of the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act") and/or (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the SEC. Pursuant to the
terms of the Agreement and Plan of Merger dated as of September 1, 1998 (the
"Merger Agreement") by and between HCI and Rent-Way, Inc., a Pennsylvania
corporation ("Rent-Way"), HCI will be merged with and into Rent-Way, with
Rent-Way continuing as the surviving corporation (the "Merger"). Capitalized
terms used in this letter without definition shall have the meanings assigned to
them in the Merger Agreement.
As a result of the Merger, I may receive shares of Common Stock, without
par value, of Rent-Way (the "Rent-Way Common Stock"). I will have received such
Rent-Way Common Stock in exchange for shares owned by me of common stock, $.01
par value per share, of HCI (the "Shares").
1. I hereby represent, warrant and covenant to Rent-Way that in the event I
receive my Rent-Way Common Stock as a result of the Merger:
(a) I shall not make any sale, transfer or other disposition of the
Rent-Way Common Stock in violation of the Securities Act or the Rules and
Regulations.
(b) I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of the Rent-Way Common
Stock, to the extent I felt necessary, with my counsel or counsel for HCI.
(c) I have been advised that the issuance of the Rent-Way Common Stock
to me pursuant to the Merger has been registered with the SEC under the
Securities Act pursuant to a Registration Statement on Form S-4. However, I have
also been advised that, because at the time the Merger is submitted for a vote
of the stockholders of HCI, (i) I may be deemed to be an affiliate of HCI and
(ii) the distribution by me of the Rent-Way Common Stock has not been registered
under the Securities Act, I may not sell, transfer or otherwise dispose of the
Rent-Way Common Stock issued to me in the Merger unless, (x) such sale, transfer
or other disposition is made in conformity with the volume and other limitations
of Rule 145 promulgated by the SEC under the Securities Act, (y) such sale,
transfer or other disposition has been registered under the Securities Act, or
(z) in the opinion of counsel reasonably acceptable to Rent-Way, such sale,
transfer or other disposition is otherwise exempt from registration under the
Securities Act.
(d) I understand that except as provided for in the Merger Agreement,
Rent-Way is under no obligation to register the sale, transfer or other
disposition of the Rent-Way Common Stock by me or on my behalf under the
Securities Act or, except as provided in paragraph 2(a) below, to take any other
action necessary in order to make compliance with an exemption from such
registration available.
(e) I also understand that there will be placed on the certificates for
the Rent-Way Common Stock issued to me, or any substitutions therefor, a legend
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED SEPTEMBER 1, 1998
BETWEEN THE REGISTERED HOLDER HEREOF AND RENT-WAY, INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF RENT-WAY, INC."
66
(f) I also understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145 or pursuant to a registration
statement, Rent-Way reserves the right to put the following legend on the
Certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THESE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT
OF 1933 AND MAY NOT SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
(g) I further represent to and covenant with Rent-Way that I will not,
during the thirty (30) days prior to the Effective Time (as defined in the
Merger Agreement), sell, transfer or otherwise dispose of or reduce my risk (as
contemplated by SEC Accounting Series Release No. 135) with respect to Shares or
shares of the capital stock of HCI that I may hold and, furthermore, that I will
not sell, transfer or otherwise dispose of or reduce my risk (as contemplated by
SEC Accounting Series Release No. 135) with respect to the Rent-Way Common Stock
received by me in the Merger or any other shares of capital stock of Rent-Way
until after such time as results covering at least thirty (30) days of combined
operations of HCI and Rent-Way have been published by Rent-Way, in the form of
an annual earnings report, a quarterly earnings report, an effective
registration statement filed with the SEC or a post-effective amendment to the
Registration Statement on Form S-4 filed in connection with the Merger, a report
to the SEC on Form 10-K, 10-Q or 8-K, or any other public filing or announcement
which includes the combined results of operations (the period commencing thirty
(30) days prior to the Effective Time and ending on the date of publication of
the post-merger financial results is referred to herein as the "Pooling
Period"). Rent-Way agrees to notify me in writing of the publication of such
results. Notwithstanding the foregoing, I understand that during the Pooling
Period, subject to providing written notice to Rent-Way, I will not be
prohibited from selling up to 10% of the Rent-Way Common Stock (the "10%
Shares") received by me or Shares owned by me or from making charitable
contributions or bona fide gifts of the Rent-Way Common Stock received by me or
Shares owned by me, subject to the same restrictions. The 10% Shares shall be
calculated in accordance with SEC Accounting Series Release 135 as amended by
Staff Accounting Bulletin No. 76. I covenant with Rent-Way that I will not sell,
transfer or otherwise dispose of any 10% Shares during the period commencing
from the Effective Time and ending on the last day of the Pooling Period except
in compliance with Rule 145(d)(i) under the Securities Act or pursuant to
charitable contributions or bona fide gifts.
(h) Execution of this agreement should not be considered an admission on
my part that I am an "affiliate" of HCI as described in the first paragraph of
this agreement, nor as a waiver of any rights that I may have to object to any
claim that I am such an affiliate on or after the date of this agreement.
2. By Rent-Way's acceptance of this agreement, Rent-Way hereby agrees with
me as follows:
(a) For so long as and to the extent necessary to permit me to sell the
Rent-Way Common Stock pursuant to Rule 145 and, to the extent applicable, Rule
144 under the Securities Act, Rent-Way shall (i) use its reasonable best efforts
to (x) file, on a timely basis, all reports and date of required to be filed
with the SEC by it pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and (y) furnish to me upon request a
written statement as to whether Rent-Way has complied with such reporting
requirements during the twelve (12) months preceding any proposed sale of the
Rent-Way Common Stock by me under Rule 145, and (ii) otherwise used its
reasonable efforts to permit such sales pursuant to Rule 145 and Rule 144. I
understand that Rent-Way has filed all reports required to be filed with the SEC
under Section 13 of the Exchange Act during the preceding twelve (12) months.
(b) It is understood and agreed that certificates with the legends set
forth in paragraphs (1)(e) and (f) above will be substituted by delivery of
certificates without such legend if (i) one year shall have elapsed from the
date the undersigned acquired the Rent-Way Common Stock received in the Merger
and the provisions of Rule 145(d)(2) are then applicable to the undersigned,
(ii) two years shall have elapsed from the date the
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67
undersigned acquired the Rent-Way Common Stock in the Merger and the provisions
of Rule 145(d)(3) are then applicable to the undersigned, or (iii) Rent-Way has
received either an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to Rent-Way, or a "no-action" letter obtained by the
undersigned from the staff of the SEC, to the effect that the restrictions
imposed by Rule 144 and 145 under the Securities Act no longer apply to the
undersigned.
(c) Pursuant to and in accordance with Section 7.13 of the Merger
Agreement, Rent-Way shall publish financial results covering at least thirty
(30) days of combined operations as soon as practicable after the Effective
Time.
Very truly yours,
--------------------------------------
Name:
Agreed and accepted,
this __ day ______ of 1998.
RENT-WAY, INC.
By:
--------------------------------------------------------
Name:
Title:
X-0
00
XXXXXXX X
FORM OF AFFILIATE AGREEMENT
FOR AFFILIATES OF RENT-WAY
Home Choice Holdings Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Rent-Way, Inc.
Xxx Xxxx Xxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
Ladies and Gentlemen:
I have been advised that as of date of this agreement I may be deemed to be
an "affiliate" of Rent-Way, Inc., a Pennsylvania corporation ("Rent-Way"), as
the term "affiliate" is defined for purposes of Accounting Series Releases 130
and 135, as amended, of the Securities and Exchange Commission (the "SEC").
Pursuant to the terms of the Agreement and Plan of Merger dated as of September
1, 1998 (the "Merger Agreement") by and between Rent-Way and Home Choice
Holdings Inc., a Delaware corporation ("HCI"), HCI will be merged with and into
Rent-Way, with Rent-Way continuing as the surviving corporation (the "Merger").
Capitalized terms used in this Agreement without definition shall have the
meanings assigned to them in the Merger Agreement.
I represent to and covenant with HCI and Rent-Way that I will not, during
the thirty (30) days prior to the Effective Time (as defined in the Merger
Agreement) and until after such time as results covering at least thirty (30)
days of combined operations of HCI and Rent-Way have been published by Rent-Way,
in the form of an annual earnings report, a quarterly earnings report, an
effective registration statement filed with the SEC or a post-effective
amendment to the Registration Statement on Form S-4 filed in connection with the
Merger, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other public
filing or announcement which includes the combined results of operations, sell,
transfer or otherwise dispose of or reduce my risk (as contemplated by SEC
Accounting Series Release No. 135) with respect to any shares of the capital
stock of Rent-Way or HCI that I may hold. Rent-Way agrees to notify me in
writing of the publication of such results. Notwithstanding the foregoing, I
understand that subject to providing written notice to Rent-Way and subject to
SEC Accounting Series Release No. 135 as amended by Staff Accounting Bulletin
No. 76, during the forementioned period I will not be prohibited from selling up
to 10% of the shares of capital stock of Rent-Way that I hold or from making
charitable contributions or bona fide gifts of such capital stock that I hold
subject the same restrictions.
Execution of this agreement should not be considered as an admission on my
part that I am an "affiliate" of Rent-Way as described in the first paragraph of
this agreement, nor as a waiver of any rights that I may have to object to any
claim that I am such an affiliate on or after the date of this agreement.
By Rent-Way's acceptance of this agreement, Rent-Way hereby agrees with me
as follows:
(a) For so long as and to the extent necessary to permit me to sell
Rent-Way Common Stock pursuant to Rule 144 under the Securities Act, Rent-Way
shall (i) use its reasonable best efforts to (x) file, on a timely basis, all
reports required to be filed with the SEC by it pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and (y) furnish
to me upon request a written statement as to whether Rent-Way has complied with
such reporting requirements during the twelve (12) months preceding any proposed
sale of the Rent-Way Common Stock by me under Rule 144, and (ii) otherwise used
its reasonable efforts to permit such sales pursuant to Rule 144. I understand
that Rent-Way has filed all reports required to be filed with the SEC under
Section 13 of the Exchange Act during the preceding twelve (12) months.
(b) It is understood and agreed that certificates with legends required by
Rule 144 will be substituted by delivery of certificates without such legend if
Rent-Way has received either an opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to Rent-Way, or a "no-action" letter obtained
by the undersigned
69
from the staff of the SEC, to the effect that the restrictions imposed by Rule
144 under the Securities Act no longer apply to the undersigned.
(c) Pursuant to and in accordance with Section 7.13 of the Merger
Agreement, Rent-Way shall publish financial results covering at least thirty
(30) days of combined operations as soon as practicable after the Effective
Time.
Very truly yours,
--------------------------------------
Name:
[SIGNATURES CONTINUED ON NEXT PAGE]
70
Agreed and accepted,
this __ day ______ of 1998.
HOME CHOICE HOLDINGS INC.
By:
----------------------------------------------------
Name:
Title:
RENT-WAY, INC.
By:
----------------------------------------------------
Name:
Title:
71
EXHIBIT G
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "Agreement") is entered into as of
, 1998 (the "Effective Date") by and among Rent-Way, Inc., a
Pennsylvania corporation (the "Surviving Corporation"), and Xxxxxx X. Xxxxxxx,
an individual residing at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx
00000 (the "Executive").
RECITALS
A. Home Choice Holdings Inc., a Delaware corporation (the "Company") and
the Surviving Corporation have entered into a certain Agreement and Plan of
Merger dated as of September 1, 1998 (the "Merger Agreement"), pursuant to which
the Company will merge with and into the Surviving Corporation (the "Merger").
Capitalized terms not defined herein shall have the meanings ascribed to them in
the Merger Agreement.
B. The Executive is a major stockholder of the Company and has had
extensive experience in the rental purchase industry as a director, stockholder
and executive of the Company and its predecessors and subsidiaries.
C. It is a condition to the Surviving Corporation's obligations to
consummate the transactions contemplated by the Merger Agreement that the
Executive enter into this Non-Competition Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Merger Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
affirmed, the parties hereto, intending to be legally bound, hereby agree as
follows:
AGREEMENT
1. Non-Competition. As material consideration for the Surviving
Corporation's performance of its obligations under and as provided for in the
Merger Agreement, for all benefits to be conferred on the Executive and his
affiliates pursuant to and in connection with the transactions contemplated by
the Merger Agreement, and in order to protect the confidential information of
the Company and the Surviving Corporation, Executive covenants and agrees, for
the benefit of the Surviving Corporation and each subsidiary of the Surviving
Corporation, that for three years after the Effective Date the Executive shall
not, directly or indirectly, do any of the following:
(a) engage in any rental purchase, rental or rent-to-own business or any
related business activities that are competitive with the current rental
purchase, rental, rent-to-own and related business of the Company or of the
Surviving Corporation in the states, or otherwise within a twenty-five mile
radius of any store location, at which the Surviving Corporation conducts or at
which, immediately prior to the Merger, the Company conducted its rental
purchase, rental, rent-to-own and related business all of which states and
locations are set forth on Exhibit A attached hereto [TO BE ATTACHED AT
SIGNING]. As used herein, the term "engage in any business" shall mean and be
deemed to include, but not be limited to: (i) directly engaging in a business;
or (ii) carrying on a business through: (a) a general or limited or partnership
in which Executive is a general or limited partner; (b) any joint venture in
which Executive is an owner; or (c) any corporation in which Executive is an
officer, director, employee, shareholder, option holder or consultant.
Notwithstanding the foregoing, the Executive shall be entitled (A) to own
Rent-Way Common Stock, including RWI Shares received in connection with the
Merger and (B) to purchase or own, solely as a passive investment, up to two
percent (2%) of the issued and outstanding shares of any securities of any
corporation the shares of common stock of which are traded on a national
securities exchange or on the Nasdaq National Market which is engaged in
business that is competitive to that of the Surviving Corporation; provided that
Executive renders no advice of any kind to management of such corporation and
does not actively participate in or control, directly or indirectly, any
investment or other decision with respect to such corporation or other entity
without the express prior written consent of Surviving Corporation exercisable
in its sole discretion;
72
(b) solicit any employee of the Surviving Corporation with whom the
Executive has had contact or any subsidiary of the Surviving Corporation with
whom the Executive has had contact to terminate his or her employment with the
Surviving Corporation or such subsidiary of the Surviving Corporation; or
(c) intentionally cause, by word or deed, any person, firm, corporation or
other entity having a business relationship with the Surviving Corporation or
any subsidiary of the Surviving Corporation to sever such relationship with, or
commit any act inimical to, the Surviving Corporation or such subsidiary of the
Surviving Corporation.
2. Confidentiality. As material consideration for the Surviving
Corporation's performance of its obligations under and as provided for in the
Merger Agreement, for all benefits to be conferred on Executive and his
affiliates pursuant to and in connection with the consummation of the
transactions contemplated by the Merger Agreement, and in order to protect the
confidential information of the Company and the Surviving Corporation and their
subsidiaries, Executive covenants and agrees, for the benefit of the Surviving
Corporation and each subsidiary of the Surviving Corporation, that the Executive
shall not for a period of three years after the Effective Date use for his
personal benefit, or disclose, communicate, or divulge to, or use for the direct
or indirect benefit of any person, firm, association, or company other than the
Surviving Corporation or any subsidiary of the Surviving Corporation, any
Confidential Information. "Confidential Information" means information relating
to the products, services, customers, or operations of the Company, the
Surviving Corporation or any subsidiary of the Surviving Corporation, that (a)
is not generally known, (b) is or was proprietary to the Company, the Surviving
Corporation or any subsidiary of the Surviving Corporation, and (c) is made
known to Executive or learned or acquired by Executive while serving the
Company, or any subsidiary or predecessor thereof, in any capacity. However,
Confidential Information shall not include under any circumstances any
information with respect to the foregoing matters that becomes publicly
available through no fault of Executive.
3. Remedies; Resolution of Disputes. The parties hereto acknowledge that
the Surviving Corporation and each subsidiary of the Surviving Corporation would
be irreparably harmed by a breach of this Agreement by Executive and that it
would not be possible to estimate damages resulting from such a breach and,
consequently, the parties hereto agree that the Surviving Corporation and each
subsidiary of the Surviving Corporation (each of which may act alone to enforce
the provisions of this Agreement) shall be entitled to injunctive or other
equitable relief to prevent a breach or continuing breach of this Agreement, or
any part hereof, and to secure the enforcement of this Agreement, in addition to
any other remedy which may be available to the Surviving Corporation or each
subsidiary of the Surviving Corporation at law or in equity, and shall be
entitled to recover from Executive reasonable attorneys' fees and all costs and
expenses incurred in connection with any such action.
4. Amendment; Waiver. This Agreement may not be amended or modified except
by a writing signed by each of Executive and the Surviving Corporation. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provisions, whether or not similar, nor shall
any waiver of any other provision constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the waiver.
5. Entire Agreement. This Agreement supersedes any other agreement, whether
written or oral, that may have been made or entered into by the Company or
Surviving Corporation (or by any director, officer or representative of the
Surviving Corporation or Company) or by Executive with respect to the subject
matter hereof. This Agreement constitutes the entire agreement by and between
the parties hereto with respect to the subject matter hereof.
6. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given on the earlier of (a) the
date actually received by the party in question, by whatever means and however
addressed, or (b) the date sent if sent by telecopy (answerback received), or on
the date of personal delivery if delivered by hand, or on the date signed for if
sent by an overnight delivery service, to the following addresses, or to such
other address for a party as shall be specified by like notice:
G-2
73
To Executive:
Xxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopier: (000) 000-0000
With a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Xx.
Telecopy: (000) 000-0000
To Surviving Corporation:
Rent-Way, Inc.
Xxx Xxxx-Xxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: President
With a copy to:
Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx & Goodyear, LLP
0000 Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Xx.
Telecopy: (000) 000-0000
The failure of any party to deliver any notice to any of the above persons
specified to receive copies of notices, demands or requests shall not limit the
effectiveness of any notice given in accordance herewith to either Executive or
Surviving Corporation. The foregoing shall not preclude the effectiveness of
actual written notice actually received by any party delivered by any means
other than those specified above.
7. Assignment; Successors; Benefits. This Agreement shall not be assignable
by the parties hereto, except that Surviving Corporation may assign its rights
and obligations hereunder to any affiliate of Surviving Corporation that
directly or indirectly acquires all or substantially all of the assets of
Surviving Corporation whether by sale, merger, consolidation, reorganization or
otherwise. The parties hereto acknowledge and agree that each subsidiary of the
Surviving Corporation shall be a third party beneficiary of this Agreement.
Nothing herein, expressed or implied, is intended to or shall confer on any
person other than the parties hereto (and each subsidiary of the Surviving
Corporation) and their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
8. Construction; Severability. (a) It is the agreement of the parties
hereto that the maximum protection available under the law shall be provided to
the Surviving Corporation and each subsidiary of the Surviving Corporation by
this Agreement, to protect the Company's, the Surviving Corporation's and each
such subsidiary's interest in the assets and business acquired under the terms
of the Merger Agreement and that, if the restrictions hereby imposed are held by
a court to be unreasonably broad in time, territory or scope, this Agreement
shall be construed to impose such restrictions in this regard as are not
unreasonable as to time, territory or scope, as the case may be.
(b) In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions hereof and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein and,
in lieu and reformation of each such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement, a
provision as similar in
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74
terms to such illegal, invalid or unenforceable provision as may be possible to
cause such illegal, invalid and unenforceable provision to be legal, valid and
enforceable.
9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original and all of which
taken together will constitute one and the same instrument.
10. Headings. The headings set forth in this Agreement are for convenience
only and will not control or affect the meaning or construction of the
provisions of this Agreement.
11. Further Assurances. After the date hereof, each party shall from time
to time, at the request of the other party and without further cost or expense
to such party, execute and deliver such other instruments and take such other
actions as may reasonably be requested in order to more effectively consummate
the transactions contemplated hereby.
12. Governing Law. This Agreement, including, without limitation, the
interpretation, construction, validity and enforceability hereof, shall be
governed by the internal laws of the State of Delaware without regard to the
principles of conflict of laws thereof.
13. Submission to Jurisdiction. (a) Any legal action or proceeding with
respect to this Agreement, the Shares or any document related thereto may be
brought in the courts of the State of Delaware or of the United States of
America for the Western District of Delaware, and, by execution and delivery of
this Agreement, each party hereby accepts generally and unconditionally, the
jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably
waive any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which any of them may
now or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(b) Each party irrevocably consents to the service of process of any of the
aforesaid courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party,
respectively, at its address provided herein.
(c) Nothing contained in this Section 13 shall affect the right of any
party hereto to serve process in any other manner permitted by law.
14. Waiver of Jury Trial. Each of the parties hereto waives any right it
may have to trial by jury in respect of any litigation based on, or arising out
of, under or in connection with this Agreement or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Non-Competition
Agreement as of the date first above written.
--------------------------------------
Xxxxxx X. Xxxxxxx
RENT-WAY, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
-----------------------------------
G-4
