EXHIBIT 2.5
[RAC Letterhead]
February 7, 2003
VIA FACSIMILE (814) 461-5401
Rent-Way, Inc.
Rent-Way of Michigan, Inc.
Rent-Way of TTIG, L.P.
Attn: Chief Executive Officer
One Rent Way Place
Erie, Pennsylvania 16505
Dear Sir:
Reference is made to that certain Asset Purchase Agreement, dated as of
December 17, 2002, by and among Rent-A-Center East, Inc., a Delaware corporation
(formerly known as Rent-A-Center, Inc.) ("ACQUIROR"), and Rent-Way, Inc. (the
"COMPANY"), Rent-Way of Michigan, Inc. ("RENT-WAY MICHIGAN") and Rent-Way of
TTIG, L.P. ("TTIG" and, together with Rent-Way Michigan, the "OPERATING
SUBSIDIARIES"), as amended by that certain letter agreement dated December 31,
2002 and that certain letter agreement dated January 7, 2003 (together, the
"ASSET PURCHASE AGREEMENT"). Capitalized terms not otherwise defined herein
shall have the meaning ascribed to such terms in the Asset Purchase Agreement.
WHEREAS, on January 29, 2002, the Company and the Operating
Subsidiaries delivered to Acquiror, pursuant to Section 4.6(b) of the Asset
Purchase Agreement, a Schedule Supplement (the "FIRST SCHEDULE SUPPLEMENT")
related to newly threatened litigation arising from alleged unpaid overtime
wages (the "THREATENED LITIGATION"); and
WHEREAS, the parties to the Asset Purchase Agreement desire to
memorialize their understanding with respect to various transitional and other
matters.
NOW, THEREFORE, this letter agreement, in accordance with Section 7.4
of the Asset Purchase Agreement, memorializes the understanding of the parties
to the Asset Purchase Agreement regarding certain changes thereto and hereby
amends, modifies and supplements the Asset Purchase Agreement as follows:
1. Extension of Supplemental Review Period. The parties hereby agree that,
notwithstanding the provisions of Section 4.6(b) of the Asset Purchase
Agreement, the Supplemental Review Period related to the First Schedule
Supplement shall extend until and include February 21, 2003, provided,
however, that such period shall earlier terminate on the date of the
Settlement (as hereinafter defined) of the Threatened Litigation.
2. Additional Closing Condition. The parties hereby agree that the Asset
Purchase Agreement be amended such that the Settlement (as hereinafter
defined) of the Threatened Litigation by the Company and the Operating
Subsidiaries shall be deemed an additional condition to Acquiror's
obligations to close under Section 5.2 of the Asset Purchase Agreement.
For purposes of this letter agreement, "SETTLEMENT" shall mean that the
named plaintiffs in the Threatened Litigation and the Company and its
Subsidiaries have entered into a signed, written final agreement,
whereby such plaintiffs agree to release the Company and its
Subsidiaries from their claims contemplated by the Threatened
Litigation and any and all other existing claims, and that proper
documents have been filed with the court of competent jurisdiction
seeking to dismiss all lawsuits filed by any of the plaintiffs against
the Company or its Subsidiaries. The Company and the Operating
Subsidiaries shall promptly notify Acquiror upon the Settlement of the
Threatened Litigation.
3. Closing Date.
(a) The parties hereby agree that, notwithstanding the provisions
of Section 1.6 of the Asset Purchase Agreement, in the event
that (i) all of the conditions to Closing set forth in Article
V of the Asset Purchase Agreement shall have been satisfied or
waived by the party entitled to waive the same on or prior to
February 8, 2003, and (ii) the Settlement of the Threatened
Litigation shall have occurred on or prior to February 7,
2003, then the Closing Date shall be February 8, 2003;
provided, however, that the Closing Date may be extended by
(a) the entire Supplemental Review Period required to evaluate
any Supplemental Schedule in addition to the First
Supplemental Schedule delivered on or prior to February 8,
2003 as set forth in Section 4.6(b) of the Asset Purchase
Agreement, (b) the entire period, including any extension
thereof, contemplated by Section 7.1(g) of the Asset Purchase
Agreement with respect to the delivery of opinions
contemplated by Section 5.2(k) and Section 5.2(l) of the Asset
Purchase Agreement, or (c) any period of time upon mutual
agreement in writing of the parties hereto. The parties hereby
acknowledge that, in the event the Closing occurs on February
8, 2003, the Creditor Payment and the Non-Competition Payment
shall be made on February 10, 2003, and, notwithstanding that
fact, the Closing Date shall be deemed to be February 8, 2003.
(b) In the event that (i) all of the conditions to Closing set
forth in Article V of the Asset Purchase Agreement shall not
have been satisfied on or prior to February 8, 2003 or (ii)
the Settlement of the Threatened Litigation has not occurred
on or prior to February 7, 2003, the Closing shall occur on
the earlier of (x) the third Business Day following the date
of Settlement of the Threatened Litigation or (y) February 21,
2003; provided, however, that the Closing Date may be extended
by (a) the entire Supplemental Review Period required to
evaluate any Supplemental Schedule in addition to the First
Supplemental Schedule as set forth in Section 4.6(b) of the
Asset Purchase Agreement, (b) the entire period, including any
extension thereof, contemplated by Section 7.1(g) of the Asset
Purchase Agreement with respect to the delivery of opinions
contemplated by Section 5.2(k) and Section 5.2(l) of the Asset
Purchase Agreement, or (c) any
2
period of time upon mutual agreement in writing of the parties
hereto. Nothing in this paragraph shall be deemed to otherwise
amend any other conditions to closing set forth in Article V
of the Asset Purchase Agreement, each of which shall be
satisfied or waived by the party entitled to waive the same
prior to the Closing Date contemplated hereunder.
4. Amendment to Section 9.9. Section 9.9 of the Asset Purchase Agreement
is hereby amended to read in its entirety as follows:
"9.9 Governing Law; Exclusive Jurisdiction. THIS AGREEMENT AND
THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF LAW
PRINCIPLES). COURTS WITHIN THE STATE OF TEXAS WILL HAVE
EXCLUSIVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE
PARTIES HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND
DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES CONSENT TO AND
AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS.
EACH OF THE PARTIES HEREBY WAIVES, AND AGREES NOT TO ASSERT IN
ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY CLAIM THAT (i) SUCH PARTY IS NOT
PERSONALLY SUBJECT TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS, (ii) SUCH PARTY AND SUCH PARTY'S PROPERTY IS IMMUNE
FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (iii) ANY
LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN
INCONVENIENT FORUM."
5. Amendment to Form of Non-Competition and Non-Solicitation Agreement.
Section 12 of the form of Non-Competition and Non-Solicitation
Agreement referenced in Section 5.2(g) of the Asset Purchase Agreement
and attached as Exhibit "B" thereto is hereby amended to read in its
entirety as follows:
"12. GOVERNING LAW; EXCLUSIVE JURISDICTION. THIS AGREEMENT AND
THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS (EXCLUSIVE OF CONFLICTS OF LAW
PRINCIPLES). COURTS WITHIN THE STATE OF TEXAS WILL HAVE
EXCLUSIVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN THE
PARTIES HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE AGREEMENTS, INSTRUMENTS AND
DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES CONSENT TO AND
3
AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS.
EACH OF THE PARTIES HEREBY WAIVES, AND AGREES NOT TO ASSERT IN
ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY CLAIM THAT (i) SUCH PARTY IS NOT
PERSONALLY SUBJECT TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS, (ii) SUCH PARTY AND SUCH PARTY'S PROPERTY IS IMMUNE
FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR (iii) ANY
LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN
INCONVENIENT FORUM."
6. Inactive Rental Purchase Agreements. Notwithstanding Section 1.2(c) of
the Asset Purchase Agreement, the parties hereby acknowledge that,
following the Closing Date, Acquiror may have in its possession at the
Stores certain Rental Purchase Agreements of the Company or the
Operating Subsidiaries which have terminated on or before the Closing
Date (the "INACTIVE AGREEMENTS"). In the event that the Company or its
Operating Subsidiaries need a copy of one or more Inactive Agreements
in connection with the defense of pending or threatened litigation, the
parties hereby agree that upon specific written request by the Company,
the Acquiror shall use its reasonable efforts to locate and (i) forward
copies of any such Inactive Agreements then in its possession or (ii)
notify Company of its inability to locate same within five (5) days of
receipt of such request.
7. Gateway Computers. The parties hereby agree that Acquiror shall
reimburse the Company and the Operating Subsidiaries for fees actually
paid by the Company or the Operating Subsidiaries to Gateway for the
purchase and maintenance of internet service charges for Gateway
computers on rent in the Stores following the Closing Date. Acquiror
shall provide the Company with a list of such computers that are no
longer on rent at least four (4) days prior to the first of each month.
8. Real Property Leases of Acquired Stores. The parties hereby acknowledge
that, with respect to the Acquired Stores, upon the Closing, Acquiror
shall notify the lessors of any real property related to the Acquired
Stores that the transactions contemplated by the Asset Purchase
Agreement have been consummated. The Company and the Operating
Subsidiaries shall cooperate in good faith with Acquiror to obtain any
consents of such lessors and enter into any documents as are reasonably
necessary to ensure that such leases are properly assigned to Acquiror
as contemplated by the Asset Purchase Agreement.
9. Vehicles. The parties hereby agree that, notwithstanding the provisions
of Section 5.2(i) of the Asset Purchase Agreement, the Company and the
Operating Subsidiaries may provide at Closing, in lieu of actual
certificates of title on all vehicles which constitute Assets, a letter
from the lessor of such vehicles stating that upon receipt of a
specified amount of the Closing Payment, such vehicles shall be
transferred free and clear of all liens and encumbrances. The Company
and the Operating Subsidiaries shall provide the actual certificates of
title to Acquiror as promptly as practicable following the Closing
Date.
4
10. Inventory Adjustment Amendment. Section 1.3(b)(iv) of the Asset
Purchase Agreement is hereby amended and restated to read in its
entirety as follows:
"with respect to the failure to represent and warrant on the Closing
Date the matters set forth in Section 3.30, the Purchase Price shall be
reduced by an amount equal to (a) $54,500,000, less the Closing
Inventory (net of 30-days past due) (the "SHORT INVENTORY AMOUNT"), (b)
multiplied by 1.0 (such adjustment being referred to as the "SHORT
INVENTORY AMOUNT Adjustment")."
11. Closing Date Payment Adjustment. Solely for the purposes of determining
the Purchase Price adjustment required at Closing pursuant to Section
1.3(b)(iv) of the Agreement as amended above, the parties agree that,
on the Closing Date, the net book value of the Store inventory being
sold pursuant to the Asset Purchase Agreement calculated under the
accounting methods set forth in the Company's consolidated financial
statements (including inventory ordered on or before the Closing Date
but not yet delivered on the Closing Date), shall be $53,400,000 (the
"ESTIMATED CLOSING DATE INVENTORY"). Accordingly, the parties agree
that the Purchase Price shall be reduced by $1,100,000 for purposes of
the Closing Date Payment. No later than three (3) days following the
Closing Date, the parties shall determine the actual net book value of
the Store inventory calculated under the accounting methods set forth
in the Company's consolidated financial statements as of the Closing
Date (including inventory ordered on or before the Closing Date but not
yet delivered on the Closing Date)(the "ACTUAL CLOSING DATE
Inventory"). In the event the Actual Closing Date Inventory amount
shall exceed the Estimated Closing Date Inventory amount, such
resulting amount shall be paid by Acquiror to the Company, on behalf of
the Company and the Operating Subsidiaries. In the event the Actual
Closing Date Inventory amount shall be less than the Estimated Closing
Date Inventory amount, such resulting amount shall be paid by the
Company, on behalf of the Company and the Operating Subsidiaries, to
Acquiror. All such payments shall be made promptly by wire transfer
upon the determination of such amount, but in any event within two (2)
Business Days.
12. Non-Competition Payment. Notwithstanding Section 1.3(a) of the Asset
Purchase Agreement, the parties hereby agree that, as directed by the
Company, the Non-Competition Payment shall be paid, on behalf of the
Company and the Operating Subsidiaries, directly to the bank designated
by the Company, together with the Creditor Payment.
13. Entire Agreement. Notwithstanding the provisions of Section 9.5 of the
Asset Purchase Agreement and consistent with Section 7.4 of the Asset
Purchase Agreement, this letter agreement, together with the Asset
Purchase Agreement and all other documents and instruments referred to
therein, including, but not limited to, the letter agreement from
Acquiror to the Company and the Operating Subsidiaries, dated December
31, 2002, relating to the extension of the Due Diligence Period, and
the letter agreement from Acquiror to the Company and the Operating
Subsidiaries, dated January 7, 2003, relating to the Acquiror's
internal reorganization, constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written
and oral, among the parties with respect to the transactions
contemplated by the Asset Purchase Agreement.
5
14. No Further Amendments. Other than as specifically provided for herein,
all other terms and conditions of the Asset Purchase Agreement shall
remain in full force and effect in accordance with its terms.
15. Governing Law. The provisions of Section 9.9 of the Asset Purchase
Agreement, as amended hereby, shall apply to this letter agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
RENT-A-CENTER EAST, INC.,
formerly known as Rent-A-Center, Inc.
By: /s/ Mark E. Speese
------------------------------------
Name: Mark E. Speese
------------------------------
Title:Chairman of the Board and
------------------------------
Chief Executive Officer
------------------------------
AGREED AND ACCEPTED:
RENT-WAY, INC.
By: /s/ Ronald D. DeMoss
-----------------------------------------
Name: Ronald D. DeMoss
-----------------------------
Title: Vice President
-----------------------------
RENT-WAY OF MICHIGAN, INC.
By: /s/ Ronald D. DeMoss
-----------------------------------------
Name: Ronald D. DeMoss
-----------------------------
Title: Vice President
-----------------------------
RENT-WAY OF TTIG, L.P.
By: Rent-Way Development, Inc.,
its general partner
By: /s/ Ronald D. DeMoss
-----------------------------------------
Name: Ronald D. DeMoss
-----------------------------
Title: Vice President
-----------------------------
cc: Hodgson Russ, LLP
One M&T Plaza, Suite 2000
Buffalo, New York 14203-2391
Attention: John J. Zak, Esq.
Telecopy: 716-849-0349
7