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EXHIBIT 10.10
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ASSET PURCHASE AGREEMENT
AMONG
RENTX INDUSTRIES, INC.,
U-DO-IT RENTAL CENTERS, INC.,
THE SHAREHOLDER OF U-DO-IT RENTAL CENTERS, INC.,
CAAR PARTNERSHIP
AND
THE PARTNERS OF CAAR PARTNERSHIP
AS OF DECEMBER 17, 1996
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TABLE OF CONTENTS
Page
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Basic Transaction . . . . . . . . . . . . . . . . . . . . . 1
2.2. Assumption of Certain Liabilities . . . . . . . . . . . . . 1
2.3. Purchase Price; Payment . . . . . . . . . . . . . . . . . . 1
2.4. Sales Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . 2
2.5. Closing; Closing Date . . . . . . . . . . . . . . . . . . . 2
2.6. Deliveries at the Closing . . . . . . . . . . . . . . . . . 2
3. Representations and Warranties. . . . . . . . . . . . . . . . . . . 3
3.1. Representations and Warranties of the Seller,
the Shareholder, the Partnership and the Partner . . . . . . 3
3.2. Representations and Warranties of the Buyer . . . . . . . . 12
3.3. Survival of Representations . . . . . . . . . . . . . . . . 13
3.4. Representations as to Knowledge . . . . . . . . . . . . . . 13
4. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . 13
4.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2. Operation and Preservation of Business . . . . . . . . . . . 13
4.3. Full Access . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4. Notice of Developments . . . . . . . . . . . . . . . . . . . 14
4.5. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6. Conveyance of Shareholder Property . . . . . . . . . . . . . 14
4.7. Announcements . . . . . . . . . . . . . . . . . . . . . . . 15
4.8. Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . 15
5. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . 15
5.1. Further Assurances . . . . . . . . . . . . . . . . . . . . . 15
5.2. Transition . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . 15
5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 15
5.5. Post-Closing Announcements . . . . . . . . . . . . . . . . . 16
5.6. Financial Statements . . . . . . . . . . . . . . . . . . . . 16
5.7. Satisfaction of Liabilities . . . . . . . . . . . . . . . . 16
5.8. Certain Environmental Matters . . . . . . . . . . . . . . . 16
6. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . 17
6.1. Conditions to Obligation of the Buyer . . . . . . . . . . . 17
6.2. Conditions to Obligation of the Seller, the
Shareholder, the Partnership and the Partner . . . . . . . . 18
7. Remedies for Breaches of This Agreement . . . . . . . . . . . . . . 19
7.1. Indemnification Provisions for Benefit of the Buyer . . . . 19
(i)
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7.2. Indemnification Provisions for Benefit of the Seller, the
Shareholder, the Partnership and the Partner . . . . . . . . 20
7.3. Matters Involving Third Parties . . . . . . . . . . . . . . 21
7.4. Right of Offset. . . . . . . . . . . . . . . . . . . . . . . 22
7.5. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 22
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1. Termination of Agreement . . . . . . . . . . . . . . . . . . 22
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . 22
8.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 23
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.1. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . 23
9.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 23
9.3. Succession and Assignment . . . . . . . . . . . . . . . . . 23
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 23
9.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 24
9.8. Amendments and Waivers . . . . . . . . . . . . . . . . . . . 24
9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . 24
9.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . 24
9.12. Construction . . . . . . . . . . . . . . . . . . . . . . . . 25
9.13. Incorporation of Exhibits . . . . . . . . . . . . . . . . . 25
9.14. Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Exhibits:
Exhibit 1.1(a) Exhibit 3.1(g)(i)(B)
Exhibit 1.1(b) Exhibit 3.1(g)(ii)
Exhibit 1.1(c)(i) Exhibit 3.1(h)(i)
Exhibit 1.1(c)(ii) Exhibit 3.1(h)(ii)
Exhibit 1.1(d) Exhibit 3.1(i)
Exhibit 1.1(e) Exhibit 3.1(k)
Exhibit 1.1(f) Exhibit 3.1(l)
Exhibit 1.1(g) Exhibit 3.1(m)
Exhibit 1.1(h) Exhibit 3.1(n)
Exhibit 2.3(b) Exhibit 3.1(p)(i)
Exhibit 3.1(c) Exhibit 3.1(p)(ii)
Exhibit 3.1(d)(i) Exhibit 3.1(s)(ii)
Exhibit 3.1(e) Exhibit 3.1(s)(iii)
Exhibit 3.1(f) Exhibit 6.1(j)
Exhibit 3.1(g)(i)(A) Exhibit 6.2(e)
(ii)
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This Asset Purchase Agreement is entered into as of December 17,
1996 among RentX Industries, Inc., a Delaware corporation (the "Buyer"),
UoDooIt Rental Centers, Inc., an Idaho corporation (the "Seller"), ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ (the "Shareholder"), CAAR Partnership, an Idaho general partnership
(the "Partnership"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇") and ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇.
▇▇▇▇▇▇") (▇▇. ▇▇▇▇▇▇ and ▇▇▇. ▇▇▇▇▇▇ are referred to individually and
collectively as the "Partner").
Recitals
The Shareholder owns all of the issued and outstanding capital
stock of the Seller. The Shareholder and the Partner are the two general
partners of the Partnership. The Seller and the Partnership each desires to
sell, and the Buyer desires to purchase, substantially all of the Seller's
assets and all of the Partnership's assets as provided in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties agree as follows:
1. Definitions. The terms defined in Exhibit 1.1(a) shall have the meanings
designated therein.
2. Purchase and Sale.
2.1. Basic Transaction. Subject to the terms and conditions set forth
in this Agreement, the Buyer agrees to purchase (a) from the Seller, and the
Seller agrees to sell to the Buyer, all the Acquired Seller Assets free and
clear of any Encumbrance or Tax, and (b) from the Partnership, and the
Partnership agrees to sell to the Buyer, all of the Acquired Partnership Assets
free and clear of any Encumbrance or Tax, in each case for the consideration
specified in Section 2.3. The Buyer will have no obligation under this
Agreement to purchase less than all of the Acquired Assets.
2.2. Assumption of Certain Liabilities. Subject to the terms and
conditions set forth in this Agreement, the Buyer agrees to assume and become
responsible at the applicable Closing for all of the Assumed Liabilities
specified with respect to such Closing. The Buyer will not assume or have any
responsibility with respect to any other Liability not expressly assumed at a
Closing pursuant to the Assignment and Assumption Agreement executed at such
Closing.
2.3. Purchase Price; Payment.
(a) The cash purchase price for the First Closing Acquired
Seller Assets is $490,500, for the Second Closing Acquired Seller Assets is
$490,500 and for the Acquired Partnership Assets is $120,000. At the First
Closing, the Buyer will, by wire transfer or other delivery of
immediately available funds, (i) pay to the Seller $490,500 and (ii) assume the
First Closing Assumed Liabilities (and the amount paid to and in respect of the
Seller and the First Closing Assumed Liabilities will constitute the full
purchase price for the First Closing Acquired Seller Assets). At the
Second Closing, the Buyer will, by wire transfer or other delivery of
immediately available funds, (i) (A) pay to the Seller $440,500 and (B)
deposit $50,000 into the Escrow Account and (ii) assume the Second
Closing Assumed Liabilities (and the amounts paid and deposited to and
in respect of the Seller and the Second Closing Assumed Liabilities
will constitute the full purchase price for the Second Closing
Acquired Seller Assets). At the Second Closing,
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the Buyer will, by wire transfer or other delivery of immediately
available funds, pay to the Partnership $120,000. The amounts deposited in the
Escrow Account will belong to the Seller, subject to the Seller's
indemnification obligations set forth in this Agreement, and will be held,
invested, administered and disbursed according to Section 7.1(b) hereof and the
Escrow Agreement.
(b) As soon as practicable after the applicable Closing, but
effective as of such Closing, the Buyer and the Agent will prepare and initial
a "Price Allocation Schedule", allocating for Tax reporting purposes the total
consideration for the Acquired Seller Assets conveyed at such Closing among the
various categories of Acquired Seller Assets in the following order and
amounts: (i) to cash and cash equivalents, the $500 amount per store on the
Closing Balance Sheet; (ii) to Closing Inventory, the amount on the Closing
Balance Sheet; (iii) to equipment and leasehold improvements, the greater of
the appraised fair market value (if the Buyer in its sole discretion obtains an
appraisal before or after the applicable Closing) or the current book value
thereof as reflected on the Closing Balance Sheet; (iv) to prepaid expenses,
the unamortized balance on the Closing Balance Sheet; (v) to any other assets,
other than goodwill, the amount on the Closing Balance Sheet; and (vi) the
entire remaining balance of the consideration shall be allocated to the
goodwill of the Seller's business acquired at such Closing or, at the Buyer's
sole discretion, to the other intangible assets which are included in the
Acquired Seller Assets acquired at such Closing. The entire $120,000 paid to
the Partnership at the Second Closing shall be allocated as set forth on
Exhibit 2.3(b) to the equipment constituting the Acquired Partnership Assets.
The parties agree to be bound by the allocations set forth in the Price
Allocation Schedules and set forth on Exhibit 2.3(b) for all federal, state and
local Tax reporting purposes, including for purposes of determining any income,
gain, loss, depreciation or other deductions in respect of such assets. The
parties further agree to prepare and file all Tax Returns (including Form 8594
under the Code) in a manner consistent with such allocations. The parties
acknowledge that such allocations for Tax reporting purposes were determined
pursuant to arm's length bargaining regarding the fair market values of the
Acquired Assets in accordance with the provisions of Code Section 1060.
2.4. Sales Taxes, Etc. The Seller will pay all sales, use, transfer
and other Taxes, fees and charges payable in respect of the sale and transfer
of the Acquired Seller Assets to the Buyer pursuant to this Agreement. The
Partnership will pay all sales, use, transfer and other Taxes, fees and charges
payable in respect of the sale and transfer of the Acquired Partnership Assets
to the Buyer pursuant to this Agreement.
2.5. Closing; Closing Date. The closing of the Buyer's acquisition of
the First Closing Acquired Seller Assets and the related transactions
contemplated by this Agreement (the "First Closing") is anticipated to take
place on December 19, 1996 (but in any event on or before December 31, 1996).
The closing of the Buyer's acquisition of the Second Closing Acquired Assets
and the Acquired Partnership Assets and the related transactions contemplated
by this Agreement (the "Second Closing") is anticipated to take place on
January 8, 1997 (but in any event on or before January 31, 1997). The term
"Closing" as used in this Agreement shall refer to the First Closing or the
Second Closing, as applicable. Each Closing will commence at 8:00 a.m. local
time in Denver, Colorado, at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C., and all
transactions contemplated by this Agreement with respect to a given Closing
will be effective at 11:59 p.m. Idaho time on the day immediately preceding
such Closing (such effective time being the "First Closing Date" or "Second
Closing Date," as applicable).
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2.6. Deliveries at the Closing. At the applicable Closing, (a) the
Seller, the Shareholder, the Partnership and the Partner, as applicable, will
deliver, or cause to be delivered, to the Buyer the certificates, instruments
and documents referred to in Section 6.1, (b) the Buyer will deliver to the
Seller, the Shareholder, the Partnership and the Partner, as applicable, the
certificates, instruments and documents referred to in Section 6.2, (c) the
Seller and the Partnership, as applicable, will deliver to the Buyer
instruments transferring to the Buyer title to the applicable Acquired Assets
free and clear of any Encumbrances or Taxes and (d) the Buyer will pay and
deposit the applicable purchase price in accordance with Section 2.3.
3. Representations and Warranties.
3.1. Representations and Warranties of the Seller, the Shareholder, the
Partnership and the Partner. The Seller and the Shareholder jointly and
severally represent and warrant to the Buyer that the statements contained in
this Section 3.1 (including, without limitation, those contained in the
Sections enumerated in the following sentence) are correct and complete as of
the date of this Agreement and will be correct and complete (i) as of the First
Closing Date (as though made then and as though the First Closing Date were
then substituted for the date of this Agreement throughout this Section 3.1)
and (ii) as of the Second Closing Date (as though made then and as though the
Second Closing Date were then substituted for the date of this Agreement
throughout this Section 3.1); provided, however, that, as of the Second Closing
Date, the First Closing Acquired Seller Assets, the Coeur D'Alene, Idaho
Premises, the First Closing Assumed Liabilities and other matters relating
exclusively to the Seller's business and operations conducted at the Coeur
D'Alene, Idaho Premises shall be deemed excluded from the representations and
warranties made as of the Second Closing Date. In addition, the Partnership
and the Partner jointly and severally represent and warrant to the Buyer that
the statements contained in Sections 3.1(a)(ii), 3.1(b)(ii), 3.1(c)(ii),
3.1(e)(ii), 3.1(f)(ii) and 3.1(g) (but in the case of Section 3.1(g), only to
the extent such representations and warranties specifically refer to the
Partnership, the Partner or the Acquired Partnership Assets) are correct and
complete as of the date of this Agreement and will be correct and complete (i)
as of the First Closing Date (as though made then) and (ii) as of the Second
Closing Date (as though made then).
(a) Organization, Good Standing, Authority, Etc.
(i) The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Idaho,
which is the only jurisdiction in which the nature of the business conducted by
it or the properties owned, leased or operated by it make such qualification
necessary. The Seller has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. This Agreement and the Other Seller Agreements and the consummation
of the transactions contemplated hereby and thereby have been duly and
unanimously approved by the board of directors and shareholders of the Seller,
and this Agreement has been duly executed and delivered by the Seller. The
Seller has full corporate power and authority to execute, deliver and perform
this Agreement and the Other Seller Agreements to which the Seller is a party,
and the Shareholder and each relative or affiliate of the Seller, the
Shareholder, the Partnership or the Partner who is party to any Other Seller
Agreement has full and absolute right, power, authority and legal capacity to
execute, deliver and perform this Agreement and all Other Seller Agreements to
which the Shareholder, the Partner or such relative or affiliate is a party,
and this Agreement constitutes, and the Other Seller Agreements will when
executed and delivered constitute,
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the legal, valid and binding obligations of, and shall be enforceable in
accordance with their respective terms against, the Seller, the Shareholder and
each such relative or affiliate who is a party thereto.
(ii) The Partnership is a general partnership duly
organized, validly existing and in good standing under the laws of the State of
Idaho, and the nature of the business conducted by it or the properties owned,
leased or operated by it do not require the Partnership to be qualified in any
other jurisdiction. The Partnership has not engaged in any business or
activities other than owning the Acquired Partnership Assets and leasing the
Acquired Partnership Assets to the Seller. The Partnership has all requisite
partnership power and authority, to own, lease and operate its properties and
to carry on its business as now being conducted. This Agreement and the Other
Seller Agreements and the consummation of the transactions contemplated hereby
and thereby have been duly and unanimously approved by the general partners of
the Partnership, and this Agreement has been duly executed and delivered by the
Partnership. The Partnership has full partnership power and authority to
execute, deliver and perform this Agreement and the Other Seller Agreements to
which the Partnership is a party, and the Partner has full and absolute right,
power, authority and legal capacity to execute, deliver and perform this
Agreement and all Other Seller Agreements to which the Partner is a party, and
this Agreement constitutes, and such Other Seller Agreements will when executed
and delivered constitute, the legal, valid and binding obligations of, and
shall be enforceable in accordance with their respective terms against, the
Partnership and the Partner.
(b) Ownership.
(i) The Shareholder owns, of record and beneficially,
free and clear of any Encumbrance or Tax, 5,000 shares of the common stock, no
par value, of the Seller, which constitute all outstanding shares of the
capital stock of the Seller. No other Person has any right to acquire any
equity interest in the Seller.
(ii) The Shareholder and ▇▇. ▇▇▇▇▇▇ own, of record,
and the Shareholder and the Partner own, beneficially, free and clear of any
Encumbrance or Tax, 50% and 50% general partnership interests in the
Partnership, respectively. The Shareholder and ▇▇. ▇▇▇▇▇▇ are the only
partners of the Partnership. No other Person has any right to acquire any
partnership interest in the Partnership.
(c) No Violation.
(i) The execution, delivery and performance of this
Agreement and the Other Seller Agreements and the consummation of the
transactions contemplated hereby and thereby will not (i) violate any Legal
Requirement to which the Seller, the Shareholder or any relative or affiliate
of the Seller, the Shareholder, the Partnership or the Partner who is a party
to any Other Seller Agreement is subject or any provision of the articles of
incorporation or bylaws of the Seller or any such affiliate, or (ii) violate,
with or without the giving of notice or the lapse of time or both, or conflict
with or result in the breach or termination of any provision of, or constitute
a default under, or give any Person the right to accelerate any obligation
under, or result in the creation of any Encumbrance upon any properties, assets
or business of the Seller, the Shareholder or any such relative or affiliate
pursuant to, any indenture, mortgage, deed of trust, lien, lease, license,
Permit, agreement, instrument or other arrangement to which the Seller, the
Shareholder or any such relative or affiliate is a party or by which the
Seller, the Shareholder, the Partnership, the Partner, or any such relative or
affiliate or any of their
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respective assets and properties is bound or subject. Except for notices that
will be given and consents that will be obtained by the Seller and the
Shareholder prior to the First Closing with respect to the transactions
contemplated thereby and prior to the Second Closing with respect to the
transactions contemplated thereby (all of which are set forth in Exhibit
3.1(c)), neither the Seller, the Shareholder, the Partnership, the Partner, nor
any such relative or affiliate need give any notice to, make any filing with or
obtain any authorization, consent or approval of any Governmental Authority or
other Person in order for the parties to consummate the transactions
contemplated by this Agreement and the Other Seller Agreements.
(ii) The execution, delivery and performance of this
Agreement and the Other Seller Agreements and the consummation of the
transactions contemplated hereby and thereby will not (i) violate any Legal
Requirement to which the Partnership or the Partner is subject or any provision
of the partnership agreement of the Partnership, or (ii) violate, with or
without the giving of notice or the lapse of time or both, or conflict with or
result in the breach or termination of any provision of, or constitute a
default under, or give any Person the right to accelerate any obligation under,
or result in the creation of any Encumbrance upon any properties, assets or
business of the Partnership or the Partner pursuant to, any indenture,
mortgage, deed of trust, lien, lease, license, Permit, agreement, instrument or
other arrangement to which the Partnership or the Partner is a party or by
which the Partnership or the Partner or any of their respective assets and
properties is bound or subject. The Partner need not give any notice to, make
any filing with or obtain any authorization, consent or approval of any
Governmental Authority or other Person in order for the Partner to consummate
the transactions contemplated by this Agreement and the Other Seller
Agreements.
(d) Financial Statements. The unaudited balance sheets of the
Seller prepared by management of the Seller as of December 31, 1994 and
December 31, 1995, the related unaudited income schedules prepared by
management of the Seller for the fiscal years then ended, the unaudited balance
sheet of the Seller prepared by management of the Seller as of October 31, 1996
(the latter being referred to as the "Latest Balance Sheet"), and the related
unaudited income schedule prepared by management of the Seller for the ten-
month period then ended, have been prepared in accordance with good accounting
practices and on a basis consistent with those of prior years, are in
accordance with the books and records of the Seller (which books and records
are complete and correct), are accurate and fairly present the financial
position and results of operations of the Seller as of such dates and for each
of the periods indicated, do not list book values for the assets that are in
excess of their fair market values, and, except as set forth on Exhibit
3.1(d)(i), make adequate provision for all Liabilities to which the Seller is
subject. Copies of the financial statements described in the first sentence in
this Section are attached as Exhibit 3.1(d)(i).
(e) Absence of Certain Leases, Changes or Events.
(i) The Seller is not, except as set forth on Exhibit
3.1(e), a party to or otherwise bound by any contract or agreement that has a
term of three or more months pursuant to which the Seller is obligated to
furnish any equipment, products or services, and no such contract or agreement
has been prepaid with respect to any period after the First Closing Date.
Except as set forth on Exhibit 3.1(e), neither the Partnership, the Shareholder
nor the Partner is party to or otherwise bound by any contract or agreement
relating to the Acquired Partnership Assets. Since June 1, 1996, the Seller
has not (A) except as otherwise set forth on Exhibit 3.1(e), incurred any debt,
indebtedness or other Liability, except current Liabilities incurred in the
ordinary course of business; (B) delayed
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or postponed the payment of accounts payable or other Liabilities or
accelerated the collection of any receivable beyond stated, normal terms; (C)
except as otherwise set forth on Exhibit 3.1(e), sold or otherwise transferred
any of its equipment or other assets or properties, except for such sales which
were in the ordinary course of business and did not involve more than $5,000
individually or in the aggregate; (D) cancelled, compromised, settled,
released, waived, written-off or expensed any account or note receivable,
right, debt or claim involving more than $5,000 in the aggregate; (E) changed
in any significant manner the way in which it conducts its business; (F) made
or granted any individual wage or salary increase in excess of 10% or $1.00 per
hour, any general wage or salary increase, or, except as otherwise set forth on
Exhibit 3.1(e), any additional benefits of any kind or nature; (G) except as
otherwise set forth on Exhibit 3.1(e) and except as otherwise expressly
permitted by this Section 3.1(e), (1) entered into any contracts or agreements,
or made any commitments, involving more than $5,000 individually or in the
aggregate or (2) accelerated, terminated, delayed, modified or cancelled any
agreement, contract, lease or license (or series of related agreements,
contracts, leases and licenses) involving more than $5,000 individually or in
the aggregate; (H) suffered any adverse fact or change, including, without
limitation, to or in its business, assets, financial condition, prospects or
customer relationships; (I) made any payment or transfer to or for the benefit
of the Shareholder, the Partner, any shareholder, officer or director, or any
relative or affiliate thereof or permitted any Person, including, without
limitation, the Shareholder, the Partner, any shareholder, officer, director,
or employee or any relative or affiliate thereof, to withdraw assets from the
Seller (other than (1) cash and accounts receivable of the Seller distributed
to its shareholder as set forth on Exhibit 3.1(e), (2) the payment to the
Shareholder of the proportionate monthly amount of their respective normal
annualized salaries due and payable during such period and (3) such other
payments, transfers and withdrawals as are set forth on Exhibit 3.1(e)); (J)
failed to make purchases of new or used equipment necessary to maintain its
rental/lease inventory at the level which is reasonably necessary to maintain
the revenue base experienced by the Seller during the 12 months preceding such
date; (K) except as otherwise set forth on Exhibit 3.1(e), rented or leased any
equipment or sold or otherwise transferred any inventory, equipment or services
at below-normal rental or lease rates or margins; (L) suffered any other
significant occurrence, event, incident, action, failure to act or transaction
outside the ordinary course of business; or (M) agreed to incur, take, enter
into, make or permit any of the matters described in clauses (A) through (L).
(ii) Since June 1, 1996, the Partnership has not (A)
except as otherwise set forth on Exhibit 3.1(e), incurred any debt,
indebtedness or other Liability; (B) sold or otherwise transferred any of the
Acquired Partnership Assets; (C) changed in any manner the way in which it
conducts its business; (D) suffered any adverse fact or change with respect to
the Acquired Partnership Assets; or (E) agreed to incur, take, enter into, make
or permit any of the matters described in clauses (A) through (D).
(f) Tax Matters.
(i) Neither the Seller nor the Shareholder has ever
filed (i) an election pursuant to Section 1362 of the Code that the Seller be
taxed as an "S" corporation, except as set forth on Exhibit 3.1(f), or (ii) a
consent pursuant to Section 341(f) of the Code relating to collapsible
corporations. The Seller and the Shareholder will pay all Taxes attributable
to the Seller's business and activities, including all Taxes attributable to
the transactions contemplated by this Agreement, on or before the due date.
There are no Encumbrances on any of the assets of the Seller, the Shareholder
or the Partnership that arose in connection with any failure (or alleged
failure) of the Seller, the
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Shareholder or the Partnership to pay any Tax. Exhibit 3.1(f) lists all
federal, state and local income Tax Returns filed with respect to the Seller
for taxable periods ended on or after January 1, 1993, indicates those Tax
Returns that have been audited and indicates those Tax Returns that currently
are the subject of audit. The Seller has delivered to the Buyer correct and
complete copies of all federal, state and local income Tax Returns and
examination reports of, and statements of deficiencies assessed against or
agreed to by, the Seller since January 1, 1993.
(ii) The Shareholder and the Partner will pay all
Taxes attributable to the Partnership's business and activities, including all
Taxes attributable to the transactions contemplated by this Agreement, on or
before the due date. There are no encumbrances on any of the assets of the
Shareholder or the Partner that arose in connection with any failure (or
alleged failure) to pay any Tax.
(g) Assets and Properties.
(i) As of the date of this Agreement, the Seller owns
all of the Acquired Seller Assets (other than certain items of Shareholder
Property) and the Partnership owns all of the Acquired Partnership Assets, free
and clear of all Encumbrances (except for those Encumbrances on the First
Closing Acquired Seller Assets which the Seller shall cause to be terminated as
of the First Closing and except for those Encumbrances on the Second Closing
Acquired Seller Assets and the Acquired Partnership Assets which the Seller and
the Partnership shall cause to be terminated as of the Second Closing). As of
the First Closing, all of the First Closing Acquired Seller Assets (including
all of the Shareholder Property) will be owned by the Seller, free and clear of
all Encumbrances, and the Seller will have good and marketable title to (or, in
the case of the First Closing Acquired Seller Assets that are leased, valid
leasehold interests in) all the First Closing Acquired Seller Assets. As of
the Second Closing, all of the Second Closing Acquired Seller Assets will be
owned by the Seller and all of the Acquired Partnership Assets will be owned by
the Partnership, free and clear of all Encumbrances, and the Seller will have
good and marketable title to (or, in the case of the Second Closing Acquired
Seller Assets that are leased, valid leasehold interests in) all the Second
Closing Acquired Seller Assets and the Partnership will have good and
marketable title to all of the Acquired Partnership Assets. The Acquired
Assets consist of (A) the tangible and intangible assets of the Seller
(exclusive of the Excluded Assets) in existence as of June 1, 1996 (except as
set forth on Exhibit 3.1(e) with respect to cash of the Seller which was
distributed to its shareholder and except for such changes in the Seller's
inventory in the ordinary course of business as are not in violation of Section
3.1(e)), (B) the tangible and intangible assets of the Partnership in existence
on June 1, 1996 and at any time since that date and (C) all tangible and
intangible assets, including, without limitation, all improvements, fixtures
and fittings, owned by the Shareholder or any relative or affiliate thereof or
of the Seller which have been used in its business at any time on or after June
1, 1996 (the "Shareholder Property"), including, without limitation, the
tangible and intangible assets set forth on Exhibit 3.1(g)(i)(A) owned by the
Shareholder or any relative or affiliate thereof. Except as set forth on
Exhibit 3.1(g)(i)(B), the Premises constitute all of the real property,
buildings and improvements used by the Seller in its business. The Acquired
Assets are all of the tangible and intangible assets (other than the Excluded
Assets) used by the Seller or the Partnership in, or necessary for the conduct
of, their respective businesses. The Acquired Assets encompass all equipment
used by the Seller to generate the income reflected in the financial statements
attached as Exhibit 3.1(d)(i). Except for the Acquired Partnership Assets, the
Seller does not lease any equipment from the Shareholder, the Partnership or
the Partner or any relative or affiliate of the Seller, the Shareholder, the
Partnership or the Partner. The total revenue earned by the Partnership from
the lease of the Acquired Partnership
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11
Assets to the Seller during the fiscal year ended December 31, 1995 and the
ten- month period ended October 31, 1996 was $51,742 and $34,557, respectively.
Except for items rented or leased to customers, all of the tangible Acquired
Assets are located on the Premises.
(ii) Except as set forth on Exhibit 3.1(g)(ii), the
Premises are free from defects, have been maintained in accordance with normal
industry practice, are in good operating condition and repair and are suitable
for the purposes for which they presently are used. The Seller has not
received notice of violation of any Legal Requirement or Permit relating to its
operations or its owned or leased properties. The Partnership has not received
notice of violation of any Legal Requirement or Permit relating to its
operations or the Acquired Partnership Assets.
(iii) To the best knowledge of the Seller and the
Shareholder, the Premises have received all approvals of Governmental
Authorities (including Permits) required in connection with the occupation and
operation thereof and have been occupied, operated and maintained in accordance
with applicable Legal Requirements. The Premises are supplied with utilities
and other services necessary for the operation of said Premises.
(h) Lists of Properties, Contracts and Other Data. Attached
as Exhibit 3.1(h)(ii) is a correct and complete list setting forth the items
identified on Exhibit 3.1(h)(i). True and complete copies of the items
referred to in Exhibit 3.1(h)(ii) have been delivered to the Buyer. All such
rights, licenses, leases, registrations, Permits, Intellectual Property,
applications, contracts, agreements and commitments and other items referred to
in Exhibit 3.1(h)(ii) are valid, in full force and effect, enforceable in
accordance with their respective terms for the period stated therein, and no
party has repudiated any provision thereof and no action or claim is pending or
threatened to revoke, modify, terminate or render invalid any of such items.
Neither the Seller, the Partnership nor any other party thereto is in breach or
default in performance of any of its respective obligations under, and no event
exists which, with the giving of notice or lapse of time or both, would
constitute a breach, default or event of default on the part of a party to, any
of the foregoing that is continuing unremedied.
(i) Litigation, Etc. There is no outstanding Order against,
nor except as set forth on Exhibit 3.1(i) is there any litigation, proceeding,
arbitration or investigation by any Governmental Authority or other Person
pending or threatened against, the Seller, its properties or its business or
relating to the transactions contemplated by this Agreement, nor is there any
basis for any such action.
(j) [RESERVED].
(k) Product Quality, Warranty and Liability. All products and
services sold, rented, leased, provided or delivered by the Seller to customers
on or prior to (i) the First Closing Date, with respect to the First Closing,
and (ii) the Second Closing Date, with respect to the Second Closing, conform
to applicable contractual commitments, express and implied warranties, product
and service specifications and quality standards, and the Seller has no
Liability and there is no basis for any Liability for replacement or repair
thereof or other damages in connection therewith. No product or service sold,
rented, leased, provided or delivered by the Seller to customers on or prior to
(i) the First Closing Date, with respect to the First Closing, and (ii) the
Second Closing Date, with respect to the Second Closing, is subject to any
guaranty, warranty or other indemnity beyond the applicable standard terms and
conditions of sale, rent or lease. The Seller has no Liability and there is no
basis for any Liability arising out of any injury to a Person or property as a
result of the ownership, possession,
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provision or use of any product or service sold, rented, leased, provided or
delivered by the Seller on or prior to (i) the First Closing Date, with respect
to the First Closing, and (ii) the Second Closing Date, with respect to the
Second Closing. All product or service liability claims that have been
asserted against the Seller since January 1, 1990, whether covered by insurance
or not and whether litigation has resulted or not, are listed and summarized on
Exhibit 3.1(k).
(l) Insurance. The Seller has policies of insurance (i)
covering risk of loss on its Acquired Assets, (ii) covering products and
services liability and liability for fire, property damage, personal injury and
workers' compensation coverage and (iii) for business interruption, all, to the
best knowledge of the Seller and the Shareholder, with responsible and
financially sound insurance carriers in adequate amounts and in compliance with
governmental requirements and in accordance with good industry practice. All
such insurance policies are valid, in full force and effect and enforceable in
accordance with their respective terms and no party has repudiated any
provision thereof. All such policies will remain in full force and effect
until midnight on the Closing Date. Neither the Seller nor any other party to
any such policy is in breach or default (including with respect to the payment
of premiums or the giving of notices) in the performance of any of their
respective obligations thereunder, and no event exists which, with the giving
of notice or the lapse of time or both, would constitute a breach, default or
event of default, or permit termination, modification or acceleration under any
such policy. There are no claims, actions, proceedings or suits arising out of
or based upon any of such policies nor, to the best knowledge of the Seller and
the Shareholder, does any basis for any such claim, action, suit or proceeding
exist. All premiums have been paid on such policies as of the date of this
Agreement and will be paid on such policies through the Closing Date. The
Seller has been covered during the five years prior to the date of this
Agreement by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. All
claims made during such five-year period with respect to any insurance coverage
of the Seller, other than those described on Exhibit 3.1(k), are set forth on
Exhibit 3.1(l).
(m) Compliance with Applicable Laws and Rights. To the best
knowledge of the Seller and the Shareholder, except as set forth on Exhibit
3.1(m), neither the Seller nor the Seller's assets (including its Premises,
facilities, machinery and equipment) are in violation of any applicable Legal
Requirement or Right. The Seller has not received notice from any Governmental
Authority or other Person of any violation or alleged violation of any Legal
Requirement or Right, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice has been filed or commenced or is
pending or threatened against the Seller alleging any such violation.
(n) Pension and Employee Benefit Matters. The Buyer will not
suffer any Liability or Adverse Consequence from the Seller's administration or
termination of any of its Employee Benefit Plans or from any failure of any
post-Closing distribution of benefits to employees of the Seller to be made by
the Seller in compliance with all applicable Legal Requirements. The Buyer
will have no obligation to employ any employee of the Seller or to continue any
Employee Benefit Plan, and will have no Liability under any plan or arrangement
maintained by the Seller for the benefit of any employee. The Seller will
remain liable for all costs of employee compensation, including benefits and
Taxes relating to employment and employees attributable to periods through the
First Closing Date and the Second Closing Date, whether reported by such
Closing Date or thereafter, and all group health plan continuation coverage to
which any employee, former employee or dependent is entitled because of a
qualifying event (as defined in Section 4980B(f)(3) of the Code) occurring
through the applicable Closing Date with respect to such Person or as a result
of termination of employment with the Seller
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because of the transactions contemplated by this Agreement and any benefit or
excise tax liability or penalty or other costs arising from any failure by the
Seller to provide group health plan continuation coverage. Except as set forth
on Exhibit 3.1(n), neither the Seller nor any Affiliated Group which includes
the Seller (if any) maintains, administers or contributes to, has maintained,
administered or contributed to, or has any Liability to contribute to, any
Employee Benefit Plan. Exhibit 3.1(n) lists each Employee Benefit Plan that
is, or at any time during the past six years was, maintained, administered,
contributed to or required to be contributed to by the Seller or any Affiliated
Group (if any) which includes or has included the Seller, and the date of
termination of each such Employee Benefit Plan (if any) which has been
terminated. The Seller has no Liability (and there is no basis for the
assertion of any Liability) as a result of the Seller's or any such Affiliated
Group's maintenance, administration or termination of, or contribution to, any
Employee Benefit Plan. Neither the Seller nor any member of any Affiliated
Group (if any) which includes or has included the Seller has ever been required
to contribute to any Multiemployer Plan (as defined in ERISA Section 3(37)) nor
has incurred any Liability under Title IV of ERISA.
(o) Employees and Labor. The Seller has not received any
notice, nor, to the best knowledge of the Seller and the Shareholder, is there
any reason to believe that any executive or key employee of the Seller or any
group of employees of the Seller has any plans to terminate his, her or its
employment with the Seller. No executive or key employee is subject to any
agreement, obligation, Order or other legal hindrance that impedes or might
impede such executive or key employee from devoting his or her full business
time to the affairs of the Seller prior to the Second Closing Date and, if such
person becomes an employee of the Buyer subsequent to a Closing, to the affairs
of the Buyer after such Closing. The Seller will not be required to give any
notice under the Worker Adjustment and Retraining Notification Act, as amended,
or any similar Legal Requirement as a result of this Agreement, the Other
Seller Agreements or the transactions contemplated hereby or thereby. The
Seller does not have any labor relations problems or disputes, nor has the
Seller experienced any strikes, grievances, claims of unfair labor practices or
other collective bargaining disputes. The Seller is not a party to or bound by
any collective bargaining agreement, there is no union or collective bargaining
unit at the Seller's facilities, and no union organization effort has been
threatened, initiated or is in progress with respect to any employees of the
Seller.
(p) Customer Relationships. Exhibit 3.1(p)(i) lists each
customer that individually or with its affiliates accounted for 2% or more of
the sales, rental or lease revenues of the Seller's Coeur D'Alene, Idaho store
during either the fiscal year ending December 31, 1995 or the ten-month period
ending October 31, 1996 (the "Principal Coeur D'Alene Customers"). Exhibit
3.1(p)(ii) lists each customer that individually or with its affiliates
accounted for 2% or more of the sales, rental or lease revenues of the Seller's
Sandpoint, Idaho store during either the fiscal year ending December 31, 1995
or the ten- month period ending October 31, 1996 (the "Principal Sandpoint
Customers"). The Seller has good commercial working relationships with its
Principal Coeur D'Alene Customers and its Principal Sandpoint Customers and
since January 1, 1995, no Principal Coeur D'Alene Customer or Principal
Sandpoint Customer has cancelled or otherwise terminated its relationship with
the Seller, materially decreased or limited its purchases, rentals or leases
from the Seller, or threatened to take any such action. The Seller and the
Shareholder have no basis to anticipate any problems with the Seller's customer
or business relationships. Except as set forth on Exhibit 3.1(p)(i) or Exhibit
3.1(p)(ii), to the best knowledge of the Seller and the Shareholder, no
Principal Coeur D'Alene Customer or Principal Sandpoint Customer has any plans
to reduce its purchases, rentals or leases from the Seller below levels
prevailing since January 1, 1995, and the execution and delivery of this
Agreement and the
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consummation of the transactions contemplated hereby will not adversely affect
the relationship of the Seller with any Principal Coeur D'Alene Customer or
Principal Sandpoint Customer prior to the First Closing Date or the Second
Closing Date or of the Buyer with any Principal Coeur D'Alene Customer or
Principal Sandpoint Customer after the First Closing Date or the Second Closing
Date.
(q) Resale Inventory. The resale inventory of the Seller
consists of goods which, in the aggregate, are merchantable, are fit for the
purposes for which they were procured and are held by the Seller, are usable in
the ordinary course of the Seller's business and are not obsolete.
(r) Condition, Adequacy and Type of Equipment. The
rental/lease inventory of the Seller, including, without limitation, the
Acquired Partnership Assets, consists of machinery, equipment and other
tangible personal property which are merchantable, are fit and suitable for the
purpose for which they were procured and are held by the Seller, useable in the
ordinary course of the Seller's business and are not obsolete. All of the
machinery, equipment and other tangible personal property included in the
Acquired Assets (including that held for rental, lease or sale) has been well
maintained and is in good repair and good operating condition. None of the
machinery, equipment or other tangible personal property included in the
Acquired Assets (including that held for rental, lease or sale) is damaged
(except for such minor damage to individual pieces of equipment which has
occurred in the ordinary course of business but which is not material to that
piece of equipment and does not affect its merchantability, fitness or
suitability for the rental business) or defective, neither the Seller nor the
Partnership has experienced material problems or deficiencies with respect to
any machinery, equipment and other tangible personal property included in the
Acquired Assets, and, to the best knowledge of the Seller and the Shareholder,
there is no basis to anticipate any such problems or deficiencies.
(s) Environmental Matters.
(i) The Seller is conducting and at all times has
conducted its business and operations, and has occupied, used and operated the
Premises and all other real property and facilities presently or previously
owned, occupied, used or operated by the Seller, in compliance with all
Environmental Obligations and so as not to give rise to Liability under any
Environmental Obligations or to any impact on the Seller's business or
activities. The Seller and the Shareholder do not have any knowledge of
pending or proposed changes to any Environmental Obligations which would
require any changes in any of the Seller's Premises, facilities, equipment,
operations or procedures or affect the Seller's business or its cost of
conducting its business as now conducted.
(ii) Except as set forth in the Environmental Study,
no conditions, circumstances or activities have existed or currently exist, and
neither the Seller nor the Shareholder has engaged in any acts or omissions,
with respect to the Premises or any other real properties, facilities or
business presently or previously owned, occupied, used or operated by the
Seller or any predecessor (including, without limitation, off-site disposal or
treatment of Hazardous Materials) which could give rise to any Liability
pursuant to any Environmental Obligation. Exhibit 3.1(s)(ii) identifies all
real properties and facilities, including the addresses thereof, which have
been owned, occupied, used or operated by the Seller or any predecessor at any
time on or prior to the date of this Agreement. There are no outstanding,
pending or threatened Orders against the Seller or the Shareholder, nor are
there any current, pending or threatened investigations of any kind against the
Seller or the Shareholder, concerning any Environmental Obligations. There are
no actions, suits or administrative,
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arbitral or other proceedings alleged, claimed, threatened, pending against or
affecting the Seller or the Shareholder at law or in equity with respect to any
Environmental Obligations, and neither the Seller nor the Shareholder has
knowledge of any existing grounds on which any such action, suit or proceedings
might be commenced.
(iii) Any chemicals and chemical compounds and mixtures
which are included among the assets of the Seller are integral to and required
for the conduct of the its business, have not been and are not intended to be
discarded or abandoned, and are not waste or waste materials. Except as set
forth in the environmental studies attached as Exhibit 3.1(s)(iii)
(collectively, the "Environmental Study"), the Seller has not generated,
handled, used, transported or disposed of Hazardous Materials. All waste
materials which are generated as part of the business of the Seller are
handled, stored, treated and disposed of in accordance with applicable Legal
Requirements and Environmental Obligations.
(iv) Except as set forth in the Environmental Study,
no underground or above ground storage tanks are or have been located on the
Premises or any other real properties or any facilities presently or previously
owned, occupied, used or operated by the Seller or any predecessor. Except as
set forth in the Environmental Study, neither any of the Premises nor any other
real properties or facilities presently or previously owned, occupied, used or
operated by the Seller or any predecessor has been used at any time as a
gasoline service station or any facility for storing, pumping, dispensing or
producing gasoline or any other petroleum products (other than such storage,
pumping and dispensing of gasoline and other petroleum products as is
incidental to the Seller's equipment rental/lease business) or Hazardous
Materials. No building or other structure on any of the Premises contains
asbestos-containing materials. There are not nor have there been any
incinerators, septic tanks, ▇▇▇▇▇ fields, cesspools or ▇▇▇▇▇ (including without
limitation dry, drinking, industrial, agricultural and monitoring ▇▇▇▇▇) on any
of the Premises.
(t) Intellectual Property. The Seller owns or has the legal
right to use and, except for the Solutions by Computer Software License
Agreement, to transfer to the Buyer each item of Intellectual Property required
to be identified on Exhibit 3.1(h)(ii). The continued operation of the
business of the Seller as currently conducted will not interfere with, infringe
upon, misappropriate or conflict with any Intellectual Property rights of
another Person. To the best knowledge of the Seller and the Shareholder, no
other Person has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of the Seller or any
Intellectual Property included in the Shareholder Property. Neither the Seller
nor any owner of any Intellectual Property included in the Shareholder Property
has granted any license, sublicense or permission with respect to any
Intellectual Property owned or used in the Seller's business. The Partnership
does not own any Intellectual Property, nor is any necessary for the ownership,
operation or use of the Acquired Partnership Assets.
(u) Disclosure. None of the documents or information provided
to the Buyer by the Seller, the Shareholder, the Partnership or the Partner or
any agent or employee thereof in the course of the Buyer's due diligence
investigation and the negotiation of this Agreement and Section 3.1 of this
Agreement and the disclosure Exhibits referred to therein, including the
financial statements referred to above in Section 3.1, contain any untrue
statement of any material fact or omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact which materially adversely affects the business, prospects,
condition, affairs or operations of the
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Seller, any of its properties or assets or any of the Acquired Partnership
Assets which has not been set forth in this Agreement or such Exhibits,
including such financial statements.
Nothing in the disclosure Exhibits referred to in Section 3.1
shall be deemed adequate to disclose an exception to a representation or
warranty made herein unless the applicable disclosure Exhibit identifies the
exception with particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a representation or warranty made herein (unless
the representation or warranty has to do with the existence of the document or
other item itself). The Seller, the Shareholder, the Partnership and the
Partner acknowledge and agree that the fact that they have made disclosures
pursuant to Section 3.1 or otherwise of matters, or did not have knowledge of
matters, which result in Adverse Consequences to the Buyer shall not relieve
the Seller, the Shareholder, the Partnership and the Partner of their
obligation pursuant to Article 7 to indemnify and hold the Buyer harmless from
all Adverse Consequences.
3.2. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller, the Shareholder, the Partnership and the Partner
that the statements contained in this Section 3.2 are correct and complete as
of the date of this Agreement and will be correct and complete as of the
applicable Closing Date (as though made then and as though the applicable
Closing Date were substituted for the date of this Agreement throughout this
Section 3.2).
(a) Organization, Good Standing, Power, Etc. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. This Agreement and the Other Buyer Agreements
and the transactions contemplated hereby and thereby have been duly approved by
all requisite corporate action. The Buyer has full corporate power and
authority to execute, deliver and perform this Agreement and the Other Buyer
Agreements, and this Agreement constitutes, and the Other Buyer Agreements will
when executed and delivered constitute, the legal, valid and binding
obligations of the Buyer, and shall be enforceable in accordance with their
respective terms against the Buyer.
(b) No Violation of Agreements, Etc. The execution, delivery
and performance of this Agreement and the Other Buyer Agreements, and the
consummation of the transactions contemplated hereby and thereby will not (i)
violate any Legal Requirement to which the Buyer is subject or any provision of
the certificate of incorporation or bylaws of the Buyer or (ii) violate, with
or without the giving of notice or the lapse of time or both, or conflict with
or result in the breach or termination of any provision of, or constitute a
default under, or give any Person the right to accelerate any obligation under,
or result in the creation of any Encumbrance upon any properties, assets or
business of the Buyer pursuant to, any indenture, mortgage, deed of trust,
lien, lease, license, agreement, instrument or other arrangement to which the
Buyer is a party or which the Buyer or any of its assets and properties is
bound or subject. Except for notices and consents that will be given or
obtained by the Buyer prior to the applicable Closing, the Buyer does not need
to give any notice to, make any filing with or obtain any authorization,
consent or approval of any Governmental Authority or other Person in order for
the parties to consummate the transactions contemplated by this Agreement.
3.3. Survival of Representations. The representations and warranties
contained in Sections 3.1 and 3.2 and the Liabilities of the parties with
respect thereto shall survive any investigation thereof
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by the parties and shall survive for four years following the later of the
First Closing or the Second Closing, except that the Liabilities of the Seller
and the Shareholder with respect to the representations and warranties set
forth in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(f), 3.1(g), 3.1(n), 3.1(s),
3.1(t) and 3.1(u), the Liabilities of the Partnership and the Partner with
respect to the Partnership's and the Partner's representations and warranties
set forth in Sections 3.1(a)(ii), 3.1(b)(ii), 3.1(c)(ii), 3.1(f)(ii) and
3.1(g), and the Liabilities of the Buyer with respect to the representations
and warranties set forth in Sections 3.2(a) and 3.2(b), shall survive without
termination.
3.4. Representations as to Knowledge. The representations and
warranties contained in Article 3 hereof will in each and every case where an
exercise of discretion or a statement to the "best knowledge," "best of
knowledge" or "knowledge" is required on behalf of any party to this Agreement
be deemed to require that such exercise of discretion or statement be in good
faith after reasonable investigation, with due diligence, to the reasonable
best efforts of such party and be exercised always in a reasonable manner and
within reasonable times.
4. Pre-Closing Covenants. The parties agree as follows with respect to the
period between the execution of this Agreement and the Second Closing.
4.1. General. Each of the parties will use its reasonable best efforts
to take all actions necessary, proper or advisable in order to consummate and
make effective the transactions contemplated by this Agreement (including the
satisfaction, but not the waiver, of the closing conditions set forth in
Section 6) and the other agreements contemplated hereby. Without limiting the
foregoing, the Shareholder will and will cause the Seller and the Partnership
to, and the Partner will and will cause the Partnership to, give any notices,
make any filings and obtain any consents, authorizations or approvals needed to
consummate the transactions contemplated by this Agreement.
4.2. Operation and Preservation of Business. The Seller will not, and
the Shareholder will not cause or permit the Seller to, engage in any practice,
take any action or enter into any transaction outside its ordinary course of
business; provided, however, that in no event will any action be taken or fail
to be taken or any transaction be entered into which would result in a breach
of any representation, warranty or covenant of the Seller, the Shareholder, the
Partnership or the Partner. The Seller will, and the Shareholder will cause
the Seller to, keep its business and properties, including its current
operations, physical facilities, working conditions, and relationships with
customers, suppliers, lessors, licensors and employees, intact and, in
connection therewith, to continue to purchase new or used equipment necessary
to maintain its rental/lease inventory at the level specified in Section
3.1(e)(i)(J). The Partnership will not, and the Shareholder and the Partner
will not cause or permit the Partnership to, enter into any transaction with
any other Person which would have any effect on the Acquired Partnership Assets
or the transaction contemplated hereby; provided, however, that in no event
will any action be taken or fail to be taken or any transaction entered into
which would result in a breach of any representation, warranty or covenant of
the Seller, the Shareholder, the Partnership or the Partner. The Partnership
will, and the Shareholder and the Partner will cause the Partnership to, keep
the Acquired Partnership Assets intact and in compliance with all applicable
representations and warranties.
4.3. Full Access. The Seller and the Partnership will permit the Buyer
and its agents to have full access at all reasonable times, and in a manner so
as not to interfere with the normal business
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operations of the Seller or the Partnership, to all premises, properties,
personnel, books, records (including Tax records), contracts and documents of
or pertaining to the Seller or the Partnership.
4.4. Notice of Developments. The Seller and the Partnership will give
prompt written notice to the Buyer of any material development which occurs
after the date of this Agreement and affects the business, assets, Liabilities,
financial condition, operations, results of operations, future prospects,
representations, warranties, covenants or disclosure Exhibits of the Seller or
the Acquired Partnership Assets. No such written notice, however, will be
deemed to amend or supplement any disclosure Exhibit (except as set forth in
the next two sentences with respect to clause (i)(J) of Exhibit 3.1(e)) or to
prevent or cure any misrepresentation, breach of warranty or breach of
covenant. Between the First Closing and the Second Closing, the Seller may
make payments or transfers to or for the benefit of the Shareholder of the type
described in clause (i)(J) of Section 3.1(e)(i) in connection with the Seller's
year-end tax planning; provided, however, that such payments or transfers may
only be of Excluded Assets or proceeds therefrom and may not be of Acquired
Seller Assets or any assets which, but for their sale, transfer, liquidation or
other disposition by the Seller would have been Acquired Seller Assets, or from
any proceeds therefrom. Between the First Closing and the Second Closing, the
Seller may update clause (i)(J) of Exhibit 3.1(e) to reflect such permitted
tax-planning payments and transfers.
4.5. Exclusivity. Neither the Seller, the Shareholder, the Partnership
nor the Partner will, and neither the Shareholder nor the Partner will cause or
permit the Seller or the Partnership to, (a) solicit, initiate or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, any partnership or similar
interest in, or any portion of the assets of, the Seller or the Partnership
(including any acquisition structured as a merger, consolidation or share
exchange) or (b) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in or facilitate
in any other manner any effort or attempt by any Person to do or seek any of
the foregoing. Neither the Shareholder nor the Partner will vote shares of the
Seller's stock or interests in the Partnership in favor of any such
transaction. The Seller, the Shareholder, the Partnership and the Partner will
notify the Buyer immediately if the Person makes any proposal, offer, inquiry
or contact with respect to any of the foregoing.
4.6. Conveyance of Shareholder Property. Prior to the First Closing
Date, the Shareholder shall convey, and shall cause each relative or affiliate
to convey, to the Seller, free and clear of any Encumbrance or Tax, all of the
Shareholder's, relative's or affiliate's right, title and interest to the
Shareholder Property included in the Acquired Seller Assets.
4.7. Announcements. Prior to the First Closing, no party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
parties.
4.8. Bulk Sales Laws. In reliance upon its indemnification rights set
forth in Section 7, the Buyer waives compliance by the Seller and the
Partnership with the bulk transfer law and any other similar law of any
applicable jurisdiction in respect to the transactions contemplated by this
Agreement.
5. Post-Closing Covenants. The parties agree as follows with respect to the
period following the First Closing.
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5.1. Further Assurances. In case at any time after the First Closing
any further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
party reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to indemnification
therefor under Section 7).
5.2. Transition. The Shareholder will assist with the transition of
(a) the Seller's Coeur D'Alene, Idaho business to the Buyer during the first
six months following the First Closing and (b) the Seller's Sandpoint, Idaho
business to the Buyer during the first six months following the Second Closing,
in each case, at no cost to the Buyer. Notwithstanding the foregoing, the
Shareholder shall not be required to devote more than an average of 15 hours
per week to such activities. The assistance with transition to be provided by
the Shareholder shall be in answering in person or by telephone during normal
business hours, questions of any employee of the Buyer, not to exceed a total
of three hours on any one day of the week. Neither the Seller, the
Shareholder, the Partnership nor the Partner will take any action at any time
that is designed or intended to have the effect of discouraging any customer,
supplier, lessor, licensor or other business associate of (a) the Seller's
Coeur D'Alene, Idaho operations from establishing or continuing a business
relationship with the Buyer after the First Closing or (b) the Seller's
Sandpoint, Idaho operations from establishing or continuing a business
relationship with the Buyer after the Second Closing.
5.3. Cooperation. In the event and for so long as any party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with (a) any
transaction contemplated by this Agreement or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to (a) the First
Closing Date involving any of the First Closing Acquired Seller Assets or the
Seller's business relating thereto or (b) the Second Closing Date involving any
of the Second Closing Acquired Seller Assets, the Acquired Partnership Assets
or the Seller's business relating thereto, each of the other parties will
cooperate with such party and its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefor under Section 7).
5.4. Confidentiality. The Seller, the Shareholder, the Partnership and
the Partner will treat and hold as confidential all Confidential Information
concerning the Buyer, the Seller's business or the Acquired Assets, refrain
from using any such Confidential Information and deliver promptly to the Buyer
or destroy, at the request and option of the Buyer, all of such Confidential
Information in its or their possession.
5.5. Post-Closing Announcements. Following the First Closing, neither
the Seller, the Shareholder, the Partnership nor the Partner will issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Buyer.
5.6. Financial Statements. The Seller, the Shareholder, the
Partnership and the Partner will, upon request of the Buyer, cooperate with the
Buyer to produce such historical and on-going financial statements and audits
as the Buyer may request, all at the sole cost and expense of the Buyer.
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5.7. Satisfaction of Liabilities.
(a) The Seller and the Shareholder will pay and perform, as
and when due, all Liabilities (other than Assumed Liabilities) relating to the
Seller, the business and activities of the Seller and the Acquired Seller
Assets, including, without limitation, all Taxes attributable to the
transactions contemplated by this Agreement and all accrued vacation and other
accrued employee benefits; provided, however, that accrued vacation and other
accrued employee benefits with respect to those persons who as of the
applicable Closing Date are employees of the Seller and who become employees of
the Buyer in connection with the Closing corresponding to such Closing Date
will be satisfied by payment of the amount thereof by the Seller to the Buyer
as the Buyer provides such benefits or makes cash payments in lieu thereof to
such employees. The Partnership, the Shareholder and the Partner will pay and
perform, as and when due, all Liabilities of the Partnership, the business of
the Partnership and the Acquired Partnership Assets, including, without
limitation, all Taxes attributable to the transactions contemplated by this
Agreement. Further, the Seller and the Shareholder, at their expense, will,
upon receipt of notice from the Buyer at any time, promptly take or cause to be
taken any action necessary to remedy any failure of the Premises or the
acquired business to comply at the applicable Closing Date with any Legal
Requirement.
(b) The Seller will pay to the applicable Governmental
Authorities, on or before December 20, 1996, all personal property taxes on the
Acquired Seller Assets and the Acquired Partnership Assets attributable to the
period from January 1, 1996 to and including December 31, 1996. If the Second
Closing occurs, the Buyer will be responsible for all personal property taxes
on the Second Closing Acquired Seller Assets and the Acquired Partnership
Assets attributable to the period commencing on January 1, 1997, including,
without limitation those attributable to the period from January 1, 1997 to and
including the date on which the Second Closing occurs.
(c) The Buyer will pay and perform, as and when due (except to
the extent the validity thereof or the liability therefor is being contested by
the Buyer), the Assumed Liabilities.
5.8. Certain Environmental Matters. The Seller and the Shareholder
shall, within 14 days after receipt of notice from the Buyer, pay to the Buyer
an amount equal to all costs and expenses incurred by the Buyer in installing a
wash water recycling system at the Coeur D'Alene store in compliance with
applicable Environmental Obligations, connecting the wash system at the
Sandpoint, Idaho store to the store's sanitary sewer connection in compliance
with applicable Environmental Obligations, obtaining all applicable Permits in
connection therewith and taking such actions as are necessary in connection
therewith; provided, however, that the amount payable by the Seller and the
Shareholder pursuant to this sentence shall not exceed $16,000. The Seller and
the Shareholder shall, within 120 days of the Second Closing, complete all
actions necessary to comply with applicable Environmental Obligations relating
to the removal by the Seller in 1996 of two underground storage tanks from its
Sandpoint, Idaho Premises, including, without limitation, making any required
filings with Governmental Authorities. Nothing in this Section 5.8 shall
relieve the Seller or the Shareholder from any obligation or Liability under
Section 7 of this Agreement, obligate the Buyer to take any action (except as
specifically set forth in the first sentence of this Section 5.8) or impose any
Liability on the Buyer.
5.9. Second Closing. The Buyer shall be obligated to consummate the
Second Closing if the conditions set forth in Section 6.1 applicable to the
Second Closing have been satisfied. The Seller,
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the Shareholder, the Partnership and the Partner shall be obligated to
consummate the Second Closing if the conditions set forth in Section 6.2
applicable to the Second Closing have been satisfied.
6. Conditions to Closing.
6.1. Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the purchase of the Acquired Assets and the consummation of
the other transactions contemplated by this Agreement at the applicable Closing
is subject to satisfaction of the following conditions:
(a) the Seller's, the Shareholder's, the Partnership's and the
Partner's representations and warranties shall be correct and complete at and
as of such Closing Date and such Closing and any written notices delivered to
the Buyer pursuant to Section 4.5 and the subject matter thereof shall be
satisfactory to the Buyer;
(b) the Seller, the Shareholder, the Partnership and the
Partner shall have performed and complied with all of their covenants hereunder
through such Closing;
(c) the Seller, the Shareholder, the Partnership and the
Partner shall have given all notices and procured all of the third-party
consents, authorizations and approvals required to consummate the transactions
contemplated by this Agreement with respect to such Closing, all in form and
substance reasonably satisfactory to the Buyer;
(d) no action, suit or proceeding shall be pending or
threatened before any Governmental Authority or any other Person wherein an
unfavorable Order would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation or (iii) affect
adversely the right of the Buyer to own the Acquired Assets or to conduct the
acquired business, and no such Order shall be in effect;
(e) there shall have been no adverse change in the Acquired
Assets or the Seller's business between the date of execution of this Agreement
and such Closing;
(f) the Seller and the Partnership shall have delivered to the
Buyer a certificate to the effect that each of the conditions specified above
in Sections 6.1(a) through (e) is satisfied in all respects and as to the
adoption of resolutions by the board of directors and shareholders of the
Seller and the partners of the Partnership authorizing the execution, delivery
and performance of this Agreement and the Other Seller Agreements and the
consummation of the transactions contemplated hereby and thereby;
(g) the Buyer shall have completed its due diligence with
respect to the Seller, the Partnership, the Seller's business and the Acquired
Assets with results satisfactory to the Buyer.
(h) the Other Seller Agreements and documentation necessary to
accomplish the conveyance of the specific ownership tax and fee payments made
by the Seller or the Partnership prior to such Closing in respect of vehicles
and mobile equipment included in the Acquired Assets relating to such Closing
shall have been executed and delivered by the Seller, the Shareholder, the
Partnership and the Partner, as applicable;
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(i) the Premises Leases shall have been executed and delivered
by the parties thereto and the owners of the real property underlying the
Premises Leases, and each Person having an Encumbrance on such property, shall
have executed and delivered estoppel, nondisturbance and landlord waiver
agreements relating thereto satisfactory to the Buyer;
(j) the Buyer shall have received from counsel to the Seller,
the Shareholder, the Partnership and the Partner an opinion in form and
substance as set forth in Exhibit 6.1(j) addressed to the Buyer and its debt
and equity financing sources and dated as of such Closing;
(k) financing necessary for the consummation of the
transactions contemplated by such Closing and the operation of the business to
be acquired at such Closing shall be available to the Buyer on terms and
conditions satisfactory to the Buyer;
(l) a "Phase I" environmental study of the Premises, and such
additional environmental testing as the Buyer shall request, shall have been
completed at the Seller's expense and supplied to the Buyer, and the contents
and results thereof shall be satisfactory to the Buyer;
(m) the Seller shall have delivered to the Buyer possession
and control of the Acquired Assets relating to such Closing;
(n) the Seller and the Shareholder shall have executed and
delivered to the Buyer (i) appropriate documentation to transfer to the Buyer
record ownership of the trade name "▇.▇▇.▇▇ Rental Centers" and all other
registered Intellectual Property and applications therefor and (ii) an
amendment to the Seller's articles of incorporation for the purpose of changing
its name to a name that does not include the term "▇.▇▇.▇▇" or any derivation
thereof; and
(o) the Seller, the Shareholder, the Partnership and the
Partner shall have delivered, or caused the Seller to deliver, to the Buyer
such other instruments, certificates and documents as are reasonably requested
by the Buyer in order to consummate the transactions contemplated by this
Agreement, all in form and substance reasonably satisfactory to the Buyer.
The Buyer may waive any condition specified in this Section 6.1 at or prior to
the applicable Closing.
6.2. Conditions to Obligation of the Seller, the Shareholder, the
Partnership and the Partner. The obligation of the Seller, the Shareholder,
the Partnership and the Partner to consummate the sale of the Acquired Assets
at the applicable Closing is subject to satisfaction of the following
conditions:
(a) the Buyer's representations and warranties shall be
correct and complete at and as of such Closing Date and such Closing;
(b) the Buyer shall have performed and complied with all of
its covenants hereunder through such Closing Date;
(c) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in Sections 6.2(a)
and (b) is satisfied in all respects;
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(d) the Other Buyer Agreements shall have been executed and
delivered by the Buyer;
(e) the Seller, the Shareholder, the Partnership and the
Partner shall have received from counsel to the Buyer an opinion in form and
substance as set forth in Exhibit 6.2(e), addressed to the Seller, the
Shareholder, the Partnership and the Partner and dated as of such Closing; and
(f) the Buyer shall have paid and deposited the purchase price
for the Acquired Assets relating to such Closing pursuant to Section 2.3.
The Agent may waive any condition specified in this Section 6.2 at or prior to
the applicable Closing.
7. Remedies for Breaches of This Agreement.
7.1. Indemnification Provisions for Benefit of the Buyer.
(a) If the Seller, the Shareholder, the Partnership or the
Partner breaches (or if any Person other than the Buyer alleges facts that, if
true, would mean the Seller, the Shareholder, the Partnership or the Partner
has breached) any of the representations or warranties of the Seller, the
Shareholder, the Partnership or the Partner contained herein and the Buyer
gives notice thereof to the Agent within the Survival Period, or if the Seller,
the Shareholder, the Partnership or the Partner breaches (or if any Person
other than the Buyer alleges facts that, if true, would mean the Seller, the
Shareholder, the Partnership or the Partner has breached) any covenants of the
Seller, the Shareholder, the Partnership or the Partner contained herein or any
representations, warranties or covenants of the Seller, the Shareholder, the
Partnership or the Partner contained in any Other Seller Agreement and the
Buyer gives notice thereof to the Agent, then the Seller, the Shareholder and
the Partner agree to jointly and severally indemnify and hold harmless the
Buyer from and against any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to or caused by any of the foregoing regardless
of whether the Adverse Consequences are suffered during or after the Survival
Period; provided, however, that the Partner shall be required to indemnify and
hold harmless the Buyer from and against only such Adverse Consequences as
result from, arise out of, relate to or are caused by breaches of the
representations, warranties or covenants of the Partner. In determining
whether there has been a breach of any representation or warranty contained in
Section 3.1 and in determining for purposes of the preceding sentence the
amount of Adverse Consequences suffered by the Buyer, such representations and
warranties shall not be qualified (other than by the references to "material"
set forth in Section 3.1(u)) by "material," "materiality," "in all material
respects," "best knowledge," "best of knowledge" or "knowledge" or words of
similar import, or by any phrase using any such terms or words. The Seller and
the Shareholder also agree to jointly and severally indemnify and hold harmless
the Buyer from and against any Adverse Consequences the Buyer may suffer which
result from, arise out of, relate to or are caused by the consummation of the
transactions contemplated by this Agreement, whether or not such matter was
known or disclosed to the Buyer, was disclosed on any Exhibit hereto or is a
matter with respect to which the Seller, the Shareholder, the Partnership or
the Partner did or did not have knowledge, including, without limitation, any
act or omission of the Seller, the Shareholder, the Partnership or the Partner
or any predecessor with respect to, or any event or circumstance related to,
the Seller's, the Shareholder's, the Partnership's or the Partner's or any
predecessor's ownership, occupation, use or operation of any of the Acquired
Assets, the Excluded Assets or any other assets or properties or the conduct of
its or their business, regardless of whether
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such act, omission, event or circumstance occurred or existed prior to or at
the Closing Date or whether a claim with respect to such matter was asserted
before or is asserted after the Closing Date, any Liability of the Seller, the
Shareholder, the Partnership or the Partner not included in the Assumed
Liabilities (including, without limitation, those concerning Hazardous
Materials or the failure of the Seller, the Shareholder, the Partnership or
the Partner or any predecessor to comply with any Environmental Obligation or
other Legal Requirement), and any Liability resulting from any failure of the
parties to comply with any applicable bulk sales or transfer Legal Requirement
in connection with the transactions contemplated by this Agreement. If any
dispute arises concerning whether any indemnification is owing which cannot be
resolved by negotiation among the parties within a reasonable time, the dispute
will be resolved by arbitration pursuant to this Agreement.
(b) Amounts needed to cover any indemnification claims
resolved in favor of the Buyer against the Seller, the Shareholder, the
Partnership or the Partner during the Escrow Period will be paid to the Buyer
first out of the funds escrowed pursuant to the Escrow Agreement, along with
interest from the applicable Closing Date at the rate applicable to the
escrowed funds. The Seller and the Shareholder will have joint and several
Liability for any additional amounts needed to cover such claims, which amounts
will be paid directly to the Buyer. At the end of the Escrow Period amounts
that may be needed to cover pending indemnification claims made by the Buyer
(such amounts to be determined by the Buyer based upon the reasonable exercise
of its business judgment) will be retained in the Escrow Account until such
claims are resolved, and any excess on deposit therein, including any accrued
interest, will be paid to the Seller. Nothing in this Section 7.1(b) will be
construed to limit the Buyer's right to indemnification to amounts on deposit
in the Escrow Account. The Buyer and the Agent shall jointly give instructions
to the Escrow Agent to carry out the intent of this Section 7.1(b). Any
disputes concerning the escrowed funds will be settled by arbitration as
provided in this Agreement. The Buyer, on the one hand, and the Seller and the
Shareholder jointly and severally, on the other hand, shall each be responsible
for one-half of the fees, charges and expenses payable to the Escrow Agent
pursuant to paragraph a. of Article 2 of the Escrow Agreement and, except as
otherwise determined pursuant to Section 9.11 of this Agreement, one-half of
any amounts payable pursuant to paragraph b. of such Article 2.
7.2. Indemnification Provisions for Benefit of the Seller, the
Shareholder, the Partnership and the Partner. If the Buyer breaches (or if any
Person other than the Seller, the Shareholder, the Partnership or the Partner
alleges facts that, if true, would mean the Buyer has breached) any of its
representations or warranties contained herein and the Agent gives notice of a
claim for indemnification against the Buyer within the Survival Period, or if
the Buyer breaches (or if any Person other than the Seller, the Shareholder,
the Partnership or the Partner alleges facts that, if true, would mean the
Buyer has breached) any of its covenants contained herein or any of its
representations, warranties or covenants contained in any Other Buyer Agreement
and the Agent gives notice thereof to the Buyer, then the Buyer agrees to
indemnify and hold harmless the Seller, the Shareholder, the Partnership and
the Partner from and against any Adverse Consequences the Seller, the
Shareholder, the Partnership and the Partner may suffer which result from,
arise out of, relate to, or are caused by the breach or alleged breach,
regardless of whether the Adverse Consequences are suffered during or after the
Survival Period. In determining whether there has been a breach of any
representation or warranty contained in Section 3.2 and in determining the
amount of Adverse Consequences suffered by the Buyer for purposes of this
Section, such representations and warranties shall not be qualified by
"material," "materiality," "in all material respects," "best knowledge," "best
of knowledge" or "knowledge" or words of similar import, or by any phrase using
any such terms or words. If any
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dispute arises concerning whether any indemnification is owing which cannot be
resolved by negotiation among the parties within a reasonable time, the dispute
will be resolved by arbitration pursuant to this Agreement.
7.3. Matters Involving Third Parties.
(a) If any third party (including, without limitation, any
Governmental Authority) notifies any party (the "Indemnified Party") with
respect to any matter (a "Third Party Claim") which may give rise to a claim
for indemnification against any other party (the "Indemnifying Party"), then
the Indemnified Party will notify each Indemnifying Party thereof in writing
within 15 days after receiving such notice. No delay on the part of the
Indemnified Party in notifying any Indemnifying Party will relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right, at its sole
cost and expense, to defend the Indemnified Party against the Third Party Claim
with counsel of its choice satisfactory to the Indemnified Party so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing within 10 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable relief,
(iv) settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently. If the Indemnifying Party does not elect to assume control of or
otherwise participate in the defense or settlement of any Third Party Claim, it
will be bound by the results obtained by the Indemnified Party with respect to
the Third Party Claim.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 7.3(b) above, (i)
the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 7.3(b) above
is or becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (iii) the Indemnifying
Parties will
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remain responsible for any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to or caused by the Third Party
Claim to the fullest extent provided in this Section 7.
7.4. Right of Offset. The Buyer will have the right to offset any
Adverse Consequences it may suffer against any amounts payable pursuant to this
Agreement or any Other Seller Agreement to the Seller, the Shareholder, the
Partnership, the Partner or any relative or affiliate of any of them at or
after the First Closing or the Second Closing.
7.5. Other Remedies. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable or common law
remedy any party may have.
8. Termination.
8.1. Termination of Agreement. The parties may terminate this
Agreement as provided below:
(a) the Buyer and the Agent may terminate this Agreement by
mutual written consent at any time prior to the First Closing or the Second
Closing;
(b) the Buyer may terminate this Agreement by giving written
notice to the Agent at any time prior to either Closing (i) in the event the
Seller, the Shareholder, the Partnership or the Partner has breached any
representation, warranty or covenant contained in this Agreement in any
material way, the Buyer has notified the Agent of the breach, and the breach
has not been cured within 10 days after the notice of breach, (ii) if the First
Closing has not occurred on or before December 31, 1996 because of the failure
of any condition precedent to the Buyer's obligations to consummate the First
Closing (unless the failure results primarily from the Buyer breaching any
representation, warranty or covenant contained in this Agreement in any
material way) or (iii) if the Second Closing has not occurred on or before
January 31, 1997 because of the failure of any condition precedent to the
Buyer's obligations to consummate the Second Closing (unless the failure
results primarily from the Buyer breaching any representation, warranty or
covenant contained in this Agreement in any material way); or
(c) the Agent may terminate this Agreement by giving written
notice to the Buyer at any time prior to either Closing (i) if the Buyer has
breached any representation, warranty or covenant contained in this Agreement
in any material way, the Agent has notified the Buyer of the breach, and the
breach has not been cured within 10 days after the notice of breach, (ii) if
the First Closing has not occurred on or before December 31, 1996 because of
the failure of any condition precedent to the Seller's, the Shareholder's, the
Partnership's and the Partner's obligations to consummate the First Closing
(unless the failure results primarily from the Seller, the Shareholder, the
Partnership or the Partner breaching any representation, warranty or covenant
contained in this Agreement in any material way) or (iii) if the Second Closing
has not occurred on or before January 31, 1997 because of the failure of any
condition precedent to the Seller's, the Shareholder's, the Partnership's and
the Partner's obligations to consummate the Second Closing (unless the failure
results primarily from the Seller, the Shareholder, the Partnership or the
Partner breaching any representation, warranty or covenant contained in this
Agreement in any material way).
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8.2. Effect of Termination. The termination of this Agreement by a
party pursuant to Section 8.1 will in no way limit any obligation or liability
of any other party based on or arising from a breach or default by such other
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement, and the terminating party will be
entitled to seek all relief to which it is entitled under applicable law.
8.3. Confidentiality. If this Agreement is terminated, each party will
treat and hold as confidential all Confidential Information concerning the
other parties which it acquired from such other parties in connection with this
Agreement and the transactions contemplated hereby.
9. Miscellaneous.
9.1. No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
9.2. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, to the extent they relate in any way to the
subject matter hereof.
9.3. Succession and Assignment. This Agreement will be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Neither the Seller, the Shareholder, the Partnership nor
the Partner may assign this Agreement or any of their rights, interests or
obligations hereunder without the prior written approval of the Buyer. The
Buyer may assign its rights and obligations hereunder as permitted by law,
including, without limitation, to any debt or equity financing source.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall be deemed to be one and the same instrument. The execution of a
counterpart of the signature page to this Agreement will be deemed the
execution of a counterpart of this Agreement.
9.5. Headings. The section headings contained in this Agreement are
inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
9.6. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is
sent by registered or certified mail, return receipt requested, postage
prepaid, or by courier, telecopy or facsimile, and addressed to the intended
recipient as set forth below:
If to the Seller, the Shareholder Copy to:
the Partnership or the Partner:
Addressed to the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Agent at: ▇▇▇▇▇, Lamanna, Smith, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ Chartered
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ P.O. Box C
2221 Gypsy ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Sagle, Idaho 83860 ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (___) ___-____ Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
If to the Buyer: Copy to:
RentX Industries, Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Attn: B. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices will be deemed given three days after mailing if sent by certified
mail, when delivered if sent by courier, and upon receipt of confirmation by
person or machine if sent by telecopy or facsimile transmission. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
9.7. Governing Law. This Agreement will be governed by and construed
in accordance with the domestic laws of the State of Colorado without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Colorado or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Colorado.
9.8. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same is in writing and signed by the Buyer
and the Agent. No waiver by any party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, will be
deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence, and no waiver
will be effective unless set forth in writing and signed by the party against
whom such waiver is asserted.
9.9. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
9.10. Expenses. Except as otherwise provided in Section 8.2, (a) the
Buyer shall bear its own costs and expenses (including, without limitation,
legal fees and expenses) incurred either before or after the date of this
Agreement in connection with this Agreement or the transactions contemplated
hereby and (b) the Seller, the Shareholder, the Partnership and the Partner
will bear all costs and expenses (including, without limitation, all legal,
accounting and tax related fees and expenses, all fees, commissions, expenses
and other amounts payable to any broker, finder or agent and the costs of any
environmental study and additional environmental testing contemplated by
Section 6.1) incurred by the Seller, the Shareholder, the Partnership or the
Partner either before or after the date of this Agreement in connection with
this Agreement or the transactions contemplated hereby; provided, however, that
the Buyer shall bear any cost of the Environmental Study charged to the Seller
by ▇▇▇▇▇▇▇ Environmental Consultants which is in excess of the first $2,400 so
charged by ▇▇▇▇▇▇▇ Environmental Consultants.
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9.11. Arbitration. Any disputes arising under or in connection with
this Agreement, including, without limitation, those involving claims for
specific performance or other equitable relief, will be submitted to binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association under the authority of federal and state arbitration statutes, and
shall not be the subject of litigation in any forum. EACH PARTY, BY SIGNING
THIS AGREEMENT, VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHTS SUCH
PARTY MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER FORUMS, INCLUDING
THE RIGHT TO JURY TRIAL. The arbitration will be conducted only in Denver,
Colorado, before a single arbitrator selected by the parties or, if they are
unable to agree on an arbitrator, before a panel of three arbitrators, one
selected by the Buyer, one selected by the Agent and the third selected by the
other two arbitrators. The arbitrators shall have full authority to order
specific performance and award damages and other relief available under this
Agreement or applicable law, but shall have no authority to add to, detract
from, change or amend the terms of this Agreement or existing law. All
arbitration proceedings, including settlements and awards, shall be
confidential. The decision of the arbitrators will be final and binding, and
judgment on the award by the arbitrators may be entered in any court of
competent jurisdiction. THIS SUBMISSION AND AGREEMENT TO ARBITRATE WILL BE
SPECIFICALLY ENFORCEABLE. The prevailing party or parties in any such
arbitration or in any action to enforce this Agreement will be entitled to all
reasonable costs and expenses, including fees and expenses of the arbitrators
and attorneys, incurred in connection therewith.
9.12. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed
as if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" will mean including
without limitation. The parties intend that each representation, warranty and
covenant contained herein will have independent significance. If any party
breaches any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached will not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
9.13. Incorporation of Exhibits. The Exhibits identified in this
Agreement are incorporated herein by reference and made a part hereof.
9.14. Agent. The Seller, the Shareholder, the Partnership and the
Partner hereby authorizes and appoints the Agent to act as its, his or her
exclusive agent and attorney-in-fact to act on behalf of each of them with
respect to all matters which are the subject of this Agreement, including,
without limitation, (a) receiving or giving all notices, instructions, other
communications, consents or agreements that may be necessary, required or given
hereunder and (b) asserting, settling, compromising, or defending, or
determining not to assert, settle, compromise or defend, (i) any claims which
the Seller, the Shareholder, the Partnership or the Partner may assert, or have
the right to assert, against the Buyer, or (ii) any claims which the Buyer may
assert, or have the right to assert, against the Seller, the Shareholder, the
Partnership or the Partner. The Agent hereby accepts such authorization and
appointment. Upon the receipt of written evidence satisfactory to the Buyer to
the effect that the Agent has been substituted as agent of the Seller, the
Shareholder, the Partnership and the Partner by
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30
reason of his death, disability or resignation, the Buyer shall be entitled to
rely on such substituted agent to the same extent as they were theretofore
entitled to rely upon the Agent with respect to the matters covered by this
Section 9.14. Neither the Seller, the Shareholder, the Partnership nor the
Partner shall act with respect to any of the matters which are the subject of
this Agreement except through the Agent. The Seller, the Shareholder, the
Partnership and the Partner acknowledge and agree that the Buyer may deal
exclusively with the Agent in respect of such matters, that the enforceability
of this Section 9.14 is material to the Buyer, and that the Buyer has relied
upon the enforceability of this Section 9.14 in entering into this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER:
RENTX INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Title: President
----------------------------------------
SELLER:
U-DO-IT RENTAL CENTERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
SHAREHOLDER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT.]
PARTNERSHIP:
CAAR PARTNERSHIP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
General Partner
PARTNER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
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[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT.]
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