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EXHIBIT 10.17
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PURCHASE AGREEMENT
AMONG
RENTX INDUSTRIES, INC.,
A-Z RENTS IT OF FORT ▇▇▇▇▇▇▇, INC.
AND THE
SHAREHOLDERS
OF
A-Z RENTS IT OF FORT ▇▇▇▇▇▇▇, INC.
AS OF JULY 17, 1997
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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. Option to Purchase Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6. Closing; Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7. Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Representations and Warranties of the Seller and the Shareholders . . . . . . . . . . . . . . . . . . 3
3.2. Representations and Warranties of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4. Representations as to Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2. Operation and Preservation of Rental Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3. Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.4. Notice of Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6. Conveyance of Shareholder Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.7. Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.8. Certain Pre-Closing Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.1. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2. Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5. Post-Closing Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7. Satisfaction of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.8. Certain Post-Closing Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.9. Use of A-Z Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.10. Health Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.11. Restriction On Special Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1. Conditions to Obligation of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i)
3
6.2. Conditions to Obligation of the Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . 17
7. Remedies for Breaches of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1. Indemnification Provisions for Benefit of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . 17
7.2. Indemnification Provisions for Benefit of the Seller and the Shareholders . . . . . . . . . . . . . 19
7.3. Matters Involving Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.4. Right of Offset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.5. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.2. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.3. Succession and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.8. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.11. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.12. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.13. Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.14. Seller's and Shareholders' Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(ii)
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Exhibits:
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Exhibit 1.1(a) Exhibit 3.1(g)(i)(B)
Exhibit 1.1(b) Exhibit 3.1(g)(ii)
Exhibit 1.1(c) Exhibit 3.1(h)(i)
Exhibit 1.1(d) Exhibit 3.1(h)(ii)
Exhibit 1.1(e) Exhibit 3.1(i)(i)
Exhibit 1.1(f) Exhibit 3.1(i)(ii)
Exhibit 1.1(g) Exhibit 3.1(k)
Exhibit 3.1(c) Exhibit 3.1(l)
Exhibit 3.1(d)(i) Exhibit 3.1(m)
Exhibit 3.1(d)(ii) Exhibit 3.1(o)(i)
Exhibit 3.1(d)(iii) Exhibit 3.1(r)(ii)
Exhibit 3.1(e)(i) Exhibit 3.1(r)(iii)
Exhibit 3.1(e)(ii) Exhibit 6.1(j)
Exhibit 3.1(f) Exhibit 6.2(e)
Exhibit 3.1(g)(i)(A)
(iii)
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This Purchase Agreement is entered into as of July 17, 1997 among
RentX Industries, Inc., a Delaware corporation (the "Buyer"), A-Z Rents It of
Fort ▇▇▇▇▇▇▇, Inc., a Colorado corporation (the "Seller"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇ (individually, a "Shareholder" and collectively, the
"Shareholders").
Recitals
A. Seller operates two distinct businesses, a general
equipment rental business (the "Rental Business") and a contractor equipment
sales business (the "Sales Business"). The Rental Business and the Sales
Business are conducted in separate but adjoining facilities at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ (in the case of the Rental Business) and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (in the
case of the Sales Business), ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
B. The Seller desires to sell, and the Buyer desires to
purchase, substantially all of the Seller's assets used in the Rental Business
as provided in this Agreement. The Seller will retain and continue to operate
the Sales Business.
C. The Shareholders own all of the issued and outstanding
capital stock of the Seller.
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 from the Seller, and the Seller
agrees to sell to the Buyer, all the Acquired Assets free and clear of any
Encumbrance or Tax, 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 Closing for all of the Assumed Liabilities. The Buyer will
not assume or have any responsibility with respect to any other Liability not
expressly included within the definition of Assumed Liabilities.
2.3. Purchase Price; Payment.
(a) The purchase price for the Acquired Assets is $2,050,400,
plus the amount described in Section 4.8. At the Closing, the Buyer will, by
wire transfer or other delivery of immediately available funds, (i) (A) pay to
the Seller (subject to Section 2.3(b)) $1,845,400, and (B) deposit $205,000
into the Escrow Account and (ii) assume the Assumed Liabilities (and the
amounts paid and deposited to and in respect of the Seller and the Assumed
Liabilities will constitute the full purchase price for the Acquired Assets).
The amount deposited in the Escrow Account will belong to the Seller, subject
to the Seller's
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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) At or prior to the Closing, Seller shall pay to all
employees of the Rental Business who are expected to become employees of Buyer
after the Closing the full amount of all accrued vacation and other accrued
employee benefits to the extent that such accrued vacation and benefits exceed
40 hours for any employee as of the Closing Date. The remaining vacation and
benefits accrued as of the Closing Date shall be paid by Seller as provided in
Section 5.7.
(c) As soon as practicable after the Closing, but effective as
of the Closing, the parties will prepare and initial a "Price Allocation
Schedule," allocating for Tax reporting purposes the total consideration for
the Acquired Assets among the various categories of Acquired Assets in the
following order and amounts: (i) to cash and cash equivalents, the $400 amount
to be left in ▇▇▇▇▇ cash as of the Closing; (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 Closing) or (if no
appraisal is obtained) 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 or,
at the Buyer's sole discretion, to the other intangible assets which are
included in the Acquired Assets. No portion of the consideration for the
Acquired Assets shall be allocated to the Noncompetition Agreement. 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.
The parties agree to be bound by the allocations set forth in the Price
Allocation Schedule 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.
2.4. Sales Taxes, Etc. The Seller will pay all sales, use, transfer,
licensing and other Taxes, fees and charges payable in respect of or as a
result of the sale and transfer of the Acquired Assets (including those
relating to vehicles, trailers and mobile equipment) to the Buyer pursuant to
this Agreement.
2.5. Option to Purchase Note. At the Closing, the Seller shall grant
to the Buyer an option to purchase the Party Note by executing and delivering
to Buyer the Party Note Option.
2.6. Closing; Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") is anticipated to take place on
July 17, 1997 (but in any event on or before July 31, 1997), commencing at 8:00
a.m. local time in Denver, Colorado, at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.,
and all transactions contemplated by this Agreement will be effective at 12:00
a.m. local time in Fort ▇▇▇▇▇▇▇, Colorado on the day of the Closing (such
effective time being the "Closing Date").
2.7. Deliveries at the Closing. At the Closing, (a) the Seller and the
Shareholders 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 and the Shareholders the certificates,
instruments and documents referred to in Section 6.2, (c) the Seller will
deliver to the Buyer instruments transferring to the Buyer title
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to the Acquired Assets free and clear of any Encumbrances or Taxes and (d) the
Buyer will pay and deposit the purchase price in accordance with Section 2.3.
3. Representations and Warranties.
3.1. Representations and Warranties of the Seller and the Shareholders.
The Seller and the Shareholders jointly and severally represent and warrant to
the Buyer that the statements contained in this Section 3.1 are correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
then substituted for the date of this Agreement throughout this Section 3.1).
(a) Organization, Good Standing, Authority, Etc. The Seller
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Colorado, and is not required to be qualified or
authorized to do business as a foreign corporation in any jurisdiction. 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, each
Shareholder and each relative or affiliate of the Seller or of a Shareholder
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 such Shareholder, relative or affiliate is
a party, and this Agreement constitutes, and the 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 Seller and each such Shareholder, relative or affiliate who
is a party thereto.
(b) Ownership. ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇ own, as joint
tenants, beneficially and of record, free and clear of any Encumbrance or Tax,
10,000 shares of the common stock, $1.00 par value, of the Seller, and such
shares 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.
(c) No Violation. 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, any Shareholder, or any relative or affiliate
of the Seller or of any Shareholder 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 of 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, of any Shareholder, or of 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, any Shareholder or any such relative or affiliate is a party or by
which the Seller, any Shareholder, or any such relative or affiliate or any of
their 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
Shareholders prior to the Closing (which are set forth in Exhibit 3.1(c)),
neither the Seller, any Shareholder, nor any such relative or affiliate need
give any notice to,
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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.
(d) Financial Statements. The unaudited balance sheet of the
Rental Business as of December 31, 1996 and the related statement of income for
the fiscal year then ended, and the unaudited balance sheet of the Rental
Business as of May 31, 1997 (the latter being referred to as the "Latest
Balance Sheet") and the related statement of income for the five-month period
then ended, have been prepared in accordance with good accounting practices and
on a consistent basis, 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 Rental
Business as of such dates and for each of the periods indicated, do not list
book values for the Acquired 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 relating to the Rental Business. Copies of the financial
statements described in the first sentence in this Section are attached as
Exhibit 3.1(d)(ii). The expenses itemized on Exhibit 3.1(d)(iii) and reflected
in the financial performance of the Rental Business for the 12-month period
ended December 31, 1996 will not be realized on an on-going basis, and
information sufficient to determine such financial performance for such
12-month period has been provided by the Seller to the Buyer prior to the date
of this Agreement.
(e) Absence of Certain Leases, Changes or Events. The Seller
is not, except as set forth on Exhibit 3.1(e)(i), a party to or otherwise bound
by any contract or agreement relating to the Rental Business 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 Closing Date. Since December 31,
1996, the Seller has not (i) incurred any debt, indebtedness or other Liability
relating to the Rental Business, except current Liabilities incurred in the
ordinary course of business; (ii) delayed or postponed the payment of accounts
payable or other Liabilities relating to the Rental Business or accelerated the
collection of any receivable relating to the Rental Business beyond stated,
normal terms; (iii) sold or otherwise transferred any of its equipment or other
assets or properties used in or relating to the Rental Business; (iv)
cancelled, compromised, settled, released, waived, written-off or expensed any
account or note receivable, right, debt or claim relating to the Rental
Business involving more than $2,500 in the aggregate; (v) changed in any
significant manner the way in which it conducts the Rental Business; (vi) 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 any additional benefits of any
kind or nature to employees of the Rental Business; (vii) except as otherwise
expressly permitted by this Section 3.1(e), (A) entered into any contracts or
agreements, or made any commitments, involving more than $2,500 individually or
in the aggregate or (B) accelerated, terminated, delayed, modified or cancelled
any agreement, contract, lease or license (or series of related agreements,
contracts, leases and licenses) relating to the Rental Business involving more
than $2,500 individually or in the aggregate; (viii) suffered any adverse fact
or change relating to the Rental Business, including, without limitation, to or
in the business, assets, financial condition, prospects or customer or supplier
relationships of the Rental Business; (ix) made any payment or transfer to or
for the benefit of any shareholder, officer or director or any relative or
affiliate thereof or permitted any Person, including, without limitation, any
shareholder, officer, director or employee or any relative or affiliate
thereof, to withdraw assets from the Seller used in or relating to the Rental
Business (other than cash of the Seller distributed to its shareholders as set
forth on Exhibit 3.1(e)(ii) and other than the payment to the Shareholders of
the proportionate monthly amount of their respective normal annualized salaries
due and payable during such period); (x) failed to make purchases of new or
used equipment
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necessary to maintain the rental/lease inventory of the Rental Business at the
level which is reasonably necessary to maintain the revenue base experienced by
the Rental Business during the 12 months preceding such date; (xi) decreased
its lease rate with respect to any equipment by 10% or more from the applicable
lease rate in effect on December 31, 1996 or rented or leased any equipment or
sold or otherwise transferred any inventory, equipment or services relating to
the Rental Business at below-normal rental or lease rates or margins; (xii)
suffered any other significant occurrence, event, incident, action, failure to
act or transaction relating to the Rental Business outside the ordinary course
of business; or (xiii) agreed to incur, take, enter into, make or permit any of
the matters described in clauses (i) through (xii).
(f) Tax Matters. Neither the Seller nor any of its
shareholders 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 Shareholders 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 that arose in connection with any failure (or alleged failure) 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, 1991, 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, 1991.
(g) Assets and Properties.
(i) As of the date of this Agreement, the Seller owns
all of the Acquired Assets (other than certain items of Shareholder Property),
free and clear of all Encumbrances (except for those Encumbrances which the
Seller shall cause to be terminated as of the Closing). As of the Closing, all
of the Acquired 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 all the Acquired Assets. The Acquired Assets
consist of (A) the tangible and intangible assets of the Seller used in or
relating to the Rental Business (exclusive of the Excluded Assets) in existence
as of December 31, 1996 (except for such changes in inventory in the ordinary
course of business as are not in violation of Section 3.1(e)), including,
without limitation, the tangible and intangible assets set forth on Exhibit
3.1(h)(ii), and (B) all tangible and intangible assets, including, without
limitation, all improvements, fixtures and fittings, other than the Premises,
owned by any Shareholder or relative or affiliate thereof or of the Seller
which have been used in the Rental Business at any time on or after January 1,
1996 (the "Shareholder Property"), including, without limitation, the tangible
and intangible assets set forth on Exhibit 3.1(g)(i)(A) owned by any
Shareholder or relative or affiliate thereof. In the case of Acquired Assets
consisting of Seller's interest under an arrangement with the owner of
equipment who makes such equipment available for rental by Seller under a split
rental or similar arrangement ("Consigned Equipment"), such arrangement is in
full force and effect and the owner of the Consigned Equipment is not a
relative or affiliate of the Seller or any Shareholder. The Acquired Assets
and the Consigned Equipment are all of the tangible and intangible assets
(other than the Excluded Assets and the Premises) used by the Seller in, or
necessary for the conduct of, the Rental Business. The Acquired Assets and
the Consigned Equipment encompass all equipment used by the Seller to generate
the income reflected in the financial statements attached as Exhibit
3.1(d)(ii). The total cost to the Seller to use the Consigned Equipment as
part of its rental inventory during the fiscal year ended December 31, 1996 and
the
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five-month period ended May 31, 1997 did not exceed $12,549 and $5,837,
respectively. Exhibit 3.1(g)(i)(B) lists all Consigned Equipment as of the
date of this Agreement. Except for items rented or leased to customers, all of
the tangible Acquired Assets and the Consigned Equipment are located on the
Premises.
(ii) The Premises constitute all of the real property,
buildings and improvements used by the Seller in the Rental Business. The
Premises are supplied with utilities and other services necessary for the
operation thereof. 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. To the best knowledge of the
Seller and the Shareholders, 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 Seller has
not received notice of violation of any Legal Requirement or Permit relating to
its operations or its owned or leased properties.
(iii) No party to any lease with respect to any
Premises has repudiated any provision thereof, and there are no disputes, oral
agreements or forbearance programs in effect as to any such lease.
(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 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 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; Compliance with Applicable Laws and Rights.
(i) There is no outstanding Order against, nor,
except as set forth on Exhibit 3.1(i)(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.
(ii) To the best knowledge of the Seller and the
Shareholders, except as set forth on Exhibit 3.1(i)(ii), 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.
(j) Accounts Receivable. The accounts receivable of the
Seller reflected on the Latest Balance Sheet arose from bona fide transactions
by the Seller in the ordinary course of the Rental Business, are valid
receivables with trade customers subject to no setoffs or counterclaims, and
are current.
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(k) Product Quality, Warranty and Liability. All products and
services sold, rented, leased, provided or delivered by the Seller to customers
in the Rental Business on or prior to the Closing Date 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 in the Rental Business on or
prior to the 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, except as set forth on Exhibit 3.1(i)(ii),
there is no basis for any Liability arising out of any injury to a Person or
property as a result of the ownership, possession, provision or use of any
product or service sold, rented, leased, provided or delivered by the Seller in
the Rental Business on or prior to the Closing Date. All product or service
liability claims that have been asserted against the Seller with respect to the
Rental Business since January 1, 1992, whether covered by insurance or not and
whether litigation has resulted or not, other than those listed and summarized
on Exhibit 3.1(i)(i), are listed and summarized on Exhibit 3.1(k).
(l) Insurance. The Seller has policies of insurance (i)
covering risk of loss on the Acquired Assets and Consigned Equipment, (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
Shareholders, 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 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. Except as set forth on
Exhibit 3.1(l), 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 Shareholders, 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) 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
pre-Closing or 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 Closing Date, whether reported by the 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)
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occurring through the Closing Date or as a result of termination of employment
with the Seller 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(m), 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(m) 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.
(n) Employees and Labor. The Seller has not received any
notice, nor, to the best knowledge of the Seller and the Shareholders, is there
any reason to believe that any executive or key employee of the Seller or any
group of employees of the Seller employed in the Rental Business has any plans
to terminate his, her or its employment with the Seller. No executive or key
employee employed in the Rental Business 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 Closing Date and, if such person becomes an
employee of the Buyer, to the affairs of the Buyer after the Closing Date. 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.
(o) Customer Relationships. Exhibit 3.1(o)(i) lists each
customer that individually or with its affiliates accounted for 2% or more of
the sales, rental or lease revenues of the Rental Business during either the
fiscal year ended December 31, 1996 or the five-month period ended May 31, 1997
(the "Principal Customers"). The Seller has good commercial working
relationships with its Principal Customers and since December 31, 1996, no
Principal Customer has cancelled or otherwise terminated its relationship with
the Seller, materially decreased or limited its purchases, rentals or leases
the Seller, or threatened to take any such action. The Seller and the
Shareholders have no basis to anticipate any problems with the Seller's
customer or business relationships. To the best knowledge of the Seller and
the Shareholders, no Principal Customer has any plans to reduce its purchases,
rentals or leases from the Seller below levels prevailing since January 1,
1996, and the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not adversely affect the relationship
of the Seller with any Principal Customer prior to the Closing Date or of the
Buyer with any Principal Customer after the Closing Date.
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(p) Resale Inventory. The resale inventory of the Rental
Business 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 Rental Business and are not obsolete.
(q) Condition, Adequacy and Type of Equipment. The
rental/lease inventory of the Rental Business 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 Rental Business and are not
obsolete. In the aggregate, the machinery, equipment and other tangible
personal property included in the Acquired Assets (including that held for
rental, lease or sale) and the Consigned Equipment 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) and the Consigned Equipment is
damaged or defective, the Seller has not experienced material problems or
deficiencies with respect to such machinery, equipment and other tangible
personal property, and, to the best knowledge of the Seller and the
Shareholders, there is no basis to anticipate any such problems or
deficiencies.
(r) Environmental Matters.
(i) Except as set forth in the Environmental Study,
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. Except as set forth in the
Environmental Study, the Seller and the Shareholders 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 or as conducted prior to the Closing
Date.
(ii) Except as set forth in the Environmental Study,
no conditions, circumstances or activities have existed or currently exist, and
neither the Seller nor any 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(r)(ii) identifies all
real properties and facilities, including the addresses thereof, which have
been owned, occupied, used or operated by the Seller or its predecessors at any
time on or prior to the date of this Agreement. There are no outstanding,
pending or threatened Orders against the Seller or any Shareholder, nor are
there any current, pending or threatened investigations of any kind against the
Seller or any Shareholder, concerning any Environmental Obligations. Except as
set forth in the Environmental Study, there are no actions, suits or
administrative, arbitral or other proceedings alleged, claimed, threatened,
pending against or affecting the Seller or any Shareholder at law or in equity
with respect to any Environmental Obligations, and neither the Seller nor any
Shareholder has knowledge of any existing grounds on which any such action,
suit or proceedings might be commenced.
(iii) Except as set forth in the Environmental Study,
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
Seller's business, have not been and are not intended to be discarded or
abandoned, and
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are not waste or waste materials. Except as set forth in the environmental
studies attached as Exhibit 3.1(r)(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 fuels and lubricants as is incidental to the Rental
Business or the Sales Business) or Hazardous Materials. Except as set forth in
the Environmental Study, no building or other structure on any of the Premises
contains asbestos-containing materials. Except as set forth in the
Environmental Study, 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.
(s) Intellectual Property. The Seller owns or has the legal
right to use and 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 Shareholders,
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.
(t) Disclosure. None of the documents or information provided
to the Buyer by the Seller, any Shareholder 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 Rental
Business or any properties or assets used in or relating to the Rental Business
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 and the Shareholders acknowledge and agree that
the fact that they have made disclosures pursuant to
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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
and the Shareholders 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 and the Shareholders 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 Closing Date (as though made then
and as though the 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 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 by the parties and
shall survive the Closing for four years, except that the Liabilities of the
Seller and the Shareholders 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(m), 3.1(r),
3.1(s) and 3.1(t), 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 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 Closing.
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4.1. General. Each of the parties will use its 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 Shareholders will, and will cause the Seller 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 Rental Business. The Seller will
not, and the Shareholders will not cause or permit the Seller to, engage in any
practice, take any action or enter into any transaction relating to the Rental
Business 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 or any Shareholder. The Seller will, and the
Shareholders will cause the Seller to, keep the Rental Business and related
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)(x).
4.3. Full Access. The Seller 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 operations of the Seller, to all premises,
properties, personnel, books, records (including Tax records), contracts and
documents of or pertaining to the Seller.
4.4. Notice of Developments. The Seller 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.
No such written notice, however, will be deemed to amend or supplement any
disclosure Exhibit or to prevent or cure any misrepresentation, breach of
warranty or breach of covenant.
4.5. Exclusivity. Neither the Seller nor any Shareholder will, and the
Shareholders will not cause or permit the Seller 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 of the Seller
or any portion of the Acquired Assets (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. No Shareholder will
vote shares of the Seller's stock in favor of any such transaction. The Seller
and Shareholders 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 Closing Date,
the Shareholders shall convey, and shall cause each relative or affiliate of
the Seller or of any Shareholder to convey, to the Seller, free and clear of
any Encumbrance or Tax, all of each Shareholder's and each such relative's or
affiliate's right, title and interest to the Shareholder Property.
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4.7. Announcements. Prior to the 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. Certain Pre-Closing Environmental Matters. The Seller and the
Shareholders shall, prior to the Closing, take or cause to be taken, in
compliance with applicable Environmental Obligations, the following actions:
(a) remove and dispose of the existing underground storage
tanks and excavate and dispose of any contaminated soils, both in compliance
with all applicable legal requirements; and
(b) cease use of the current wash water disposal system and
replace such system with a wash system containing an oil-water separator, and
further plumb such system to the sanitary sewer, in compliance with all
applicable legal requirements, including, without limitation, obtaining the
necessary discharge permit(s).
The Seller and the Shareholders shall take such actions at their expense;
provided, however, that Buyer shall pay to Seller, at the Closing, as
additional purchase price for the Acquired Assets, the sum of $8,000 to
partially offset the cost to Seller of such actions. Nothing in this Section
4.8 shall relieve the Seller or any Shareholder from any obligation or
Liability under Section 7 of this Agreement, obligate the Buyer to take any
action or impose any Liability on the Buyer.
5. Post-Closing Covenants. The parties agree as follows with respect to the
period following the Closing.
5.1. Further Assurances. In case at any time after the 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. Each of the Shareholders will assist with the
transition of the Seller's business to the Buyer during the first six months
following the Closing at no cost to the Buyer. Neither the Seller nor any
Shareholder 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 the Seller from establishing or continuing a
business relationship with the Buyer after the 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 the Closing Date
involving any of the Acquired Assets or the Rental Business, 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).
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5.4. Confidentiality. The Seller and the Shareholders 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, at the request and
option of the Buyer, a copy of such Confidential Information in its or their
possession. Seller shall be entitled to retain all original records.
5.5. Post-Closing Announcements. Following the Closing, neither the
Seller nor any Shareholder 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 and the Shareholders will, upon
request of the Buyer, cooperate with the Buyer and render such assistance to
the Buyer and its accountants as may be required 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, but without additional consideration to the
Seller or the Shareholders. The Seller and the Shareholders acknowledge that
the Buyer may be required by applicable law to include audited financial
statements with respect to the Rental Business in reports filed with
governmental agencies and that the inability to audit the financial statements
of the Rental Business promptly after the Closing could have a material adverse
effect on the Buyer. The Seller and the Shareholders represent and warrant to
the Buyer that the Seller's records with respect to the Rental Business are
auditable in their current form for at least one full fiscal year prior to the
Closing.
5.7. Satisfaction of Liabilities. The Seller and the Shareholders will
pay and perform, as and when due, all Liabilities (other than the Assumed
Liabilities) relating to the Seller, the business of the Seller and the
Acquired 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 are employees of
the Seller as of immediately prior to the Closing Date and who become employees
of the Buyer effective as of the Closing will be paid by Seller and the
Shareholders to Buyer as the Buyer provides such benefits or makes cash
payments in lieu thereof to such employees, each such payment to be made within
ten days after receipt of Buyer's statement therefor. In addition, the Seller
and the Shareholders will pay to the Buyer an amount equal to the portion of
the personal property taxes on the Acquired Assets attributable to all periods
prior to the Closing Date, including, without limitation, the period from
January 1, 1997 to the Closing Date (the "Pre-Closing Personal Property Tax
Amount"). The Pre-Closing Personal Property Tax Amount payable by the
Shareholders and the Seller will be determined by prorating personal property
taxes on the Acquired Assets of the Seller for 1997 in proportion to the number
of days in the year prior to the Closing Date compared to the number of days in
the year remaining after the date on which the Closing occurs. The Seller and
the Shareholders shall pay the Pre-Closing Personal Property Tax Amount to the
Buyer within five days after their receipt of notice from the Buyer stating the
amount payable by them and a copy of the invoices from Governmental Authorities
relating thereto. Further, the Seller and the Shareholders, at their expense,
promptly will take or cause to be taken any action necessary to remedy any
failure of the Premises or the acquired business to comply at the Closing Date
with any Legal Requirement, upon receipt of notice from the Buyer at any time.
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 Post-Closing Environmental Matters.
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(a) The Seller and the Shareholders shall, within 180 days of
the Closing, obtain a "clean closure" letter from the state of Colorado
Department of Public Health and Environment, Oil Inspection Section, regarding
the removal of the underground storage tanks as described in Section 4.8. The
Seller and the Shareholders shall take such actions at their expense.
(b) Within 30 days of Closing, Seller and Shareholders shall
request and use best efforts to obtain access from Union Pacific Railroad (UP)
to collect environmental samples and conduct any necessary remedial actions on
the area on UP's property where wash water from Seller's operations previously
have been deposited. Seller and Shareholders shall commence such sampling
activities within 10 days from the granting of such access and shall diligently
pursue completion of those activities once commenced. The sampling conducted
by Seller and Shareholders shall be adequate to determine the nature and scope
of contamination resulting from the disposal of such wash water. Upon
completion of sampling, Seller and Shareholders shall cause the samples to be
analyzed as promptly as reasonably practicable and shall provide Buyer a copy
of the results thereof. Upon receipt of the results Seller and Shareholders
shall promptly commence and diligently pursue completion of such remedial
activities as may be required by applicable Environmental Obligations or by UP.
If a work plan or similar document is prepared by Seller and Shareholders or
their consultant as part of those activities, such documents shall be provided
to Buyer. Upon completion of those activities, Seller and Shareholders shall
provide Buyer with a final report which identifies the sampling and remedial
activities conducted on the UP property or other properties relating to the
past disposal of wash water by Seller and Shareholders. The final report shall
contain a certification, signed by Seller's consultant, stating that all
sampling and remedial activities were accomplished pursuant to and in
accordance with applicable Environmental Obligations and to the satisfaction of
UP and that no further actions are required. In the event that Seller and
Shareholders are unable to obtain access to UP property, Seller and
Shareholders shall promptly notify Buyer and Buyer and Seller and Shareholders
shall negotiate in good faith to reach a mutually agreeable alternative course
of action. All actions under this Section 5.8(b) shall be at the cost and risk
of Seller and Shareholders and they shall be solely responsible for the conduct
thereof.
(c) Nothing in this Section 5.8 shall relieve the Seller or
any Shareholder from any obligation or Liability under Section 7 of this
Agreement or obligate the Buyer to take any action or impose any Liability on
the Buyer.
5.9. Use of A-Z Names. For a period of two years following the
Closing, the Seller and the Shareholders shall not, and shall not allow any of
their affiliates to, use any name containing "A-Z" or any variation thereof
except as follows:
(a) Seller may continue to use the name A-Z Safety Supply,
Inc. and the A-Z logo in connection with the operation of the business
consisting of selling and servicing safety supplies, including respirators,
medical emergency kits and fire extinguishers, currently conducted by Seller
under that name, but shall not authorize any other person to use that name.
(b) Seller may continue to use the name A-Z
Contractor/Industrial Sales, Inc. and the A-Z logo in connection with the
operation of the business consisting of selling (but not renting) and servicing
power tools and related merchandise to contractors and industrial customers
currently conducted by Seller under that name, but shall not authorize any
other person to use that name.
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(c) Seller may use "A-Z Sales & Service, Inc." as its
corporate name.
5.10. Health Insurance. At the request of Buyer, Seller will allow
Buyer to pay the premiums necessary to continue health insurance coverage under
Seller's existing policies for all former employees of Seller who become
employees of Buyer after the Closing for a period of up to 90 days after the
Closing.
5.11. Restriction On Special Events. The Seller and ▇▇▇▇▇▇ ▇. ▇▇▇▇ are
parties to a Mutual Covenant Not to Compete with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated May 6,
1996 (the "▇▇▇▇▇ Covenant"). In the ▇▇▇▇▇ Covenant, the Seller and ▇▇▇▇▇▇ ▇.
▇▇▇▇ agree not to compete with the party rental business operated by ▇▇. ▇▇▇▇▇
within a 50-mile radius of Fort ▇▇▇▇▇▇▇, with an exception for up to $20,000
per year in gross rental revenues for equipment similar to that rented by ▇▇.
▇▇▇▇▇. The Buyer does not intend or agree, expressly or by implication, to
assume the obligations of the Seller or ▇▇▇▇▇▇ ▇. ▇▇▇▇ under the ▇▇▇▇▇
Covenant. However, the Buyer agrees, for the benefit of the Seller and not for
the benefit of ▇▇. ▇▇▇▇▇, that the Buyer shall not carry any "special events
equipment", as that term is generally used within the Buyer's organization, in
the Premises, or deliver any special events equipment from the Premises, on or
before May 5, 2001; provided, however, that the Buyer may rent up to $20,000 in
gross revenues of special events equipment from the Premises in any fiscal year
of the Buyer. Nothing contained herein shall restrict the Buyer's right to
rent or deliver special events equipment within the geographic area covered by
the ▇▇▇▇▇ Covenant, from a location within or without that area, as long as the
Buyer does not carry special events equipment at or deliver special events
equipment from the Premises. Without limiting the generality of the foregoing,
the Buyer shall be free to refer inquiries concerning special events rentals
received at the Premises to other stores owned by the Buyer at which special
events equipment is rented. All obligations of the Seller or ▇▇▇▇▇▇ ▇. ▇▇▇▇
under the ▇▇▇▇▇ Covenant shall be considered Liabilities that are not Assumed
Liabilities for all purposes of this Agreement and shall be subject to Sections
5.7 and 7.1.
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 is subject to
satisfaction of the following conditions:
(a) the Seller's and each Shareholder's representations and
warranties shall be correct and complete at and as of the Closing Date and the
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 and the Shareholders shall have performed and
complied with all of their covenants hereunder through the Closing;
(c) the Seller and the Shareholders 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, 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
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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 the Closing;
(f) the Seller shall have delivered to the Buyer (i) a
certificate to the effect that each of the conditions specified above in
Sections 6.1(a) through (e) is satisfied in all respects, (ii) a certificate as
to the adoption of resolutions by the board of directors and shareholders of
the Seller authorizing the execution, delivery and performance of this
Agreement and the Other Seller Agreements and the consummation of the
transactions contemplated hereby and thereby and (iii) a good standing
certificate, dated within 10 days of the Closing, from the Secretary of State
of the State of the Seller's jurisdiction of incorporation and each other state
in which the Seller is qualified or authorized to do business as a foreign
corporation;
(g) the Buyer shall have completed its due diligence with
respect to the Seller, 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 prior to the Closing in respect of vehicles and mobile equipment
included in the Acquired Assets shall have been executed and delivered by the
Seller and the Shareholders, as applicable;
(i) the Shareholder Lease shall have been executed and
delivered by the parties thereto and the owners of the real property
underlying the Shareholder Lease, 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
and the Shareholders 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 the Closing;
(k) financing necessary for the consummation of the
transactions contemplated hereby and the operation of the acquired business
shall be available to the Buyer on terms and conditions satisfactory to the
Buyer;
(l) a "Phase I" environmental study of each of the properties
comprising 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;
(n) the Seller and the Shareholders shall have executed and
delivered to the Buyer (i) appropriate documentation to release on the records
of the Colorado Secretary of State the trade names "A-Z Rents It" and "A-Z
Rental Center" and all other trade names containing the letters "A-Z", other
than the
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names expressly included in the Excluded Assets, and (ii) an amendment to the
Seller's articles of incorporation for the purpose of changing its name to "A-Z
Sales & Service, Inc."
(o) the Seller and the Shareholders 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 Closing.
6.2. Conditions to Obligation of the Seller and the Shareholders. The
obligation of the Seller and the Shareholders to consummate the sale of the
Acquired Assets is subject to satisfaction of the following conditions:
(a) the Buyer's representations and warranties shall be
correct and complete at and as of the Closing Date and the Closing;
(b) the Buyer shall have performed and complied with all of
its covenants hereunder through the 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;
(d) the Other Buyer Agreements shall have been executed and
delivered by the Buyer;
(e) the Seller and the Shareholders 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 and the Shareholders and dated as of the
Closing; and
(f) the Buyer shall have paid and deposited the purchase price
for the Acquired Assets pursuant to Section 2.3.
The Shareholders' Agent may waive any condition specified in this Section 6.2
at or prior to the Closing.
7. Remedies for Breaches of This Agreement.
7.1. Indemnification Provisions for Benefit of the Buyer.
(a) If the Seller or any Shareholder breaches (or if any
Person other than the Buyer alleges facts that, if true, would mean the Seller
or any Shareholder has breached) any of the representations or warranties of
the Seller or any Shareholder contained herein and the Buyer gives notice
thereof to the Shareholders' Agent within the Survival Period, or if the Seller
or any Shareholder breaches (or if any Person other than the Buyer alleges
facts that, if true, would mean the Seller or any Shareholder has breached) any
covenants of the Seller or any Shareholder contained herein or any
representations, warranties or covenants of the Seller or any Shareholder
contained in any Other Seller Agreement and the Buyer gives notice thereof to
the Shareholders' Agent, then the Seller and the Shareholders agree to jointly
and severally indemnify and
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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. 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 (A) the reference to "knowledge" set forth in the last sentence of
Section 3.1(o) and (B) the references to "material" set forth in Section
3.1(t)) 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 Shareholders
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 (i) any Liability of the Seller or any
Shareholder not included in the Assumed Liabilities (including, without
limitation, those concerning Hazardous Materials or the failure of the Seller,
any Shareholder or any predecessor to comply with any Environmental Obligation
or other Legal Requirement), (ii) any act or omission of the Seller, any
Shareholder or any predecessor with respect to, or any event or circumstance
related to, the Seller's, any Shareholder's or any predecessor's ownership,
occupation, use or operation of any of the Acquired Assets, the Excluded
Assets, the Premises or any other assets or properties or the conduct of its or
their business, regardless, in the case of (i) or (ii), of (A) whether or not
such Liability, act, omission, event, circumstance or matter was known or
disclosed to the Buyer, was disclosed on any Exhibit hereto or is a matter with
respect to which the Seller or any Shareholder did or did not have knowledge,
(B) when such Liability, act, omission, event, circumstance or matter occurred,
existed, occurs or exists and (C) whether a claim with respect thereto was
asserted before or is asserted after the Closing Date, and (iii) 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 30 days of notice of claim for indemnification from the party
claiming indemnification to the party against whom such claim is asserted, 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 or any Shareholder 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 date of the
Closing at the rate applicable to the escrowed funds. The Seller and the
Shareholders 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
Shareholders' 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 Shareholders 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.
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7.2. Indemnification Provisions for Benefit of the Seller and the
Shareholders. If the Buyer breaches (or if any Person other than the Seller or
a Shareholder alleges facts that, if true, would mean the Buyer has breached)
any of its representations or warranties contained herein and the Shareholders'
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 or a Shareholder 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
Shareholders' Agent gives notice thereof to the Buyer, then the Buyer agrees to
indemnify and hold harmless the Seller and the Shareholders from and against
any Adverse Consequences the Seller and the Shareholders 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 Seller and the Shareholders 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 dispute arises concerning
whether any indemnification is owing which cannot be resolved by negotiation
among the parties within 30 days of notice of claim for indemnification from
the party claiming indemnification to the party against whom such claim is
asserted, the dispute will be resolved by arbitration pursuant to this
Agreement.
7.3. Matters Involving Third Parties.
(a) If any Person not a party to this Agreement (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 assume control of the defense
or settlement of any Third Party Claim in the manner described above, it will
be bound by the results obtained by the Indemnified Party with respect to the
Third Party Claim.
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(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 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, any Shareholder or any
relative or affiliate of the Seller or any Shareholder at or after the Closing;
provided, however, that Buyer's right to offset against amounts payable under
the Shareholder Lease shall terminate upon the expiration of the Primary Lease
Term (as defined in the Shareholder Lease).
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 Shareholders' Agent may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written
notice to the Shareholders' Agent at any time prior to the Closing (i) in the
event the Seller or any Shareholder has breached any representation, warranty
or covenant contained in this Agreement in any material way, the Buyer has
notified the Shareholders' Agent of the breach, and the breach has not been
cured within 10 days after the notice of breach or (ii) if the Closing has not
occurred on or before July 31, 1997 because of the failure of any condition
precedent to the Buyer's obligations to consummate the 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 Shareholders' Agent may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Closing (i) if the
Buyer has breached any representation, warranty or covenant
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26
contained in this Agreement in any material way, the Shareholders' Agent has
notified the Buyer of the breach, and the breach has not been cured within 10
days after the notice of breach or (ii) if the Closing has not occurred on or
before July 31, 1997 because of the failure of any condition precedent to the
Seller's and the Shareholders' obligations to consummate the Closing (unless
the failure results primarily from the Seller or any Shareholder breaching any
representation, warranty or covenant contained in this Agreement in any
material way).
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 nor any Shareholder 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:
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If to the Seller or
the Shareholders:
Addressed to the
Shareholders' Agent at:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer: Copy to:
RentX Industries, Inc. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇ 633 Seventeenth Street, Suite 3000
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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 Shareholders' 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 and the Shareholders 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
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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 or any Shareholder either before or after the date of this Agreement in
connection with this Agreement or the transactions contemplated hereby.
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 Shareholders' 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. Seller's and Shareholders' Agent. The Seller and each Shareholder
hereby authorize and appoint the Shareholders' 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 or any Shareholder 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 or any Shareholder. The Shareholders' Agent hereby
accepts such
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29
authorization and appointment. Upon the receipt of written evidence
satisfactory to the Buyer to the effect that the Shareholders' Agent has been
substituted as agent of the Seller and the Shareholders by 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 Shareholders' Agent with respect to the matters covered by this
Section 9.14. Neither the Seller nor any Shareholder shall act with respect to
any of the matters which are the subject of this Agreement except through the
Shareholders' Agent. The Seller and the Shareholders acknowledge and agree
that the Buyer may deal exclusively with the Shareholders' 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.
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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 - CEO
------------------------------
SELLER:
A-Z RENTS IT OF FORT ▇▇▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Title: President
------------------------------
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
[SIGNATURE PAGE TO PURCHASE AGREEMENT.]
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